Wasatch Corp. (WC) received a $200,000 dividend from Tager Corporation (TC). WC owns 15 percent of the TC stock. Compute WC’s deductible DRD in each of the following situations:

a. WC’s 2020 taxable income (loss) without the dividend income or the DRD is $10,000.

b. WC’s 2020 taxable income (loss) without the dividend income or the DRD is $(10,000).

c. WC’s 2020 taxable income (loss) without the dividend income or the DRD is $(101,000).

Dreamland Security Services Inc. had the following account balances as of January 1, 2020:

* Terms: Notes Payable with Trust Bank - $15,000 - 1 yr. at 6% int. rate began on 10/1/19.

During 2020 Dreamland Security Services experienced the following transactions:

1. On January 1, 2020, Dreamland purchased land for $10,000 and a building for $90,000. The land was paid for with cash. The building was paid for with $5,000 cash and the remainder was financed with a 10-year notes payable.

2. Paid the accounts payable balance from 2019.

3. Purchase $500 of supplies on account.

4. Purchased 100 alarm systems (inventory) on account at a cost of $200 each.

5. Paid $6,000 of advertising expense during the year.

6. Sold 95 alarm systems for $400 each. All sales were on account. (Note - Be sure to compute cost of goods sold using the FIFO cost flow method.)

7. Paid $7,500 of utilities expense for the year.

8. Billed $65,000 of monitoring services on account for the year.

9. Replenished the petty cash fund on June 30. The fund had $25 cash remaining and receipts of $90 for yard mowing and $35 for postage.

10. After numerous attempts to collect from customers, the company wrote off $650 of uncollectible accounts receivable.

11. Collected $83,000 of accounts receivable during the year.

12. On July 1, 2020, issued $25,000 of 5 percent, five year bonds. The bonds were issued at 98.

13. On October 1, 2020, paid the note and interest owed to Trust Bank (See Beg. Balance in Notes Payable). (Note - Record Interest Expense for January-September)

14. Paid employees a total of $20,000 for salaries for the year. Federal income taxes withheld amounted to $2,200. The net amount of salaries was paid in cash. (Note - $20,000 is the gross salary amount and the actual amount paid in cash will be less due to the federal income taxes withheld. Ignore employer taxes.)

15. Paid the Federal Income Taxes withheld from salaries.

16. Paid the annual installment on the note used to finance the purchase of the building. The note had an interest rate of 5 percent and annual payments of $11,008.

17. Paid a dividend of $10,000 to the shareholders.

Adjustments:

18. There was $275 of supplies on hand at the end of the year.

19. Recognized the expired rent for the office building for the year.

20. Recognized the uncollectible accounts expense for the year using the allowance method. Dreamland estimates that 2 percent of sales on account will not be collected.

21. Recognized depreciation expense on the equipment. The equipment has a six-year life and a $2,500 salvage value. The company uses straight-line depreciation for the equipment. The equipment was purchased in 2018 and a full year of depreciation was taken in 2018 and in 2019. (Only record 2020 depreciation.)

22. Recognized depreciation expense on the service truck. The service truck has a five-year life and an $8,000 salvage value. The company uses double-declining-balance for the service truck. The truck was purchased in 2018 and a full year of depreciation was taken in 2018 and in 2019. (Only record 2020 depreciation.)

23. Recognized depreciation expense on the building. The building has a 40-year life and a $50,000 salvage value. The company uses straight-line depreciation for the building.

Required:

a. Record the above transactions in general journal form. Round all amounts to nearest whole dollar.

b. Prepare a trial balance.

Plug Products owns 80 percent of the stock of Spark Filter Company, which it acquired at underlying book value on August 30, 20X6. At that date, the fair value of the noncontrolling interest was equal to 20 percent of the book value of Spark Filter. Summarized trial balance data for the two companies as of December 31, 20X8, are as follows:

On January 1, 20X8, Plug's inventory contained filters purchased for $77,000 from Spark Filter, which had produced the filters for $57,000. In 20X8, Spark Filter spent $117,000 to produce additional filters, which it sold to Plug for $158,053. By December 31, 20X8, Plug had sold all filters that had been on hand January 1, 20X8, but continued to hold in inventory $47,416 of the 20X8 purchase from Spark Filter.

What is the consolidated net income? I'm coming up with 126,790 but that's not correct

Part B Short answer questions

Assume you are the financial controller of a new established company. The CEO has asked your choice of accounting policy regarding the measurement of intangible assets at the time of recognition and after the acquisition.

Required:

State your choice of accounting policy regarding the measurement of intangible assets at the time of recognition and after the initial acquisition. Explain the reason (s) of your choice (s). You should provide comments regarding the choice of accounting method.      

As the Data Manager (DM) on the “TES-100” project, the CEO has decided to proceed with the study and wants you to consider using the new savvy company system of remote data entry/electronic data capture. Review the current literature (i.e. internet) regarding this topic and decide if this study would be RDE/EDC appropriate, then write a 2-3 page paper or 20-25 slides on why you have made the decision you have made including pros and cons.

uring the past year, Jim Hunt, CEO of KMP Corporation, read about several different frauds occurring in his industry. As a result of these recent frauds, Jim would like to know if fraud is present in his company. As Jim's new assistant, he has asked you to help him determine whether or not fraud is occurring. In preparation for the investigation, Jim has asked you to create a list of five types of fraud symptoms and briefly define and discuss each type.

You are the Director of Global Compliance for a U.S. company that just created a revolutionary new portable personal computer (PPC) that is half the size of a laptop, performs the same functions as existing laptop computers but costs only half as much to manufacture. Several patents were filed and approved protect the unique design of this computer. Your CEO asked you to formulate a recommendation for how to expand into South America. Evaluate the pros and cons if you were to set up a wholly owned subsidiary in South America.

Information for 2020:

1.   Sales forecast: January: 2,600 units; February: 4,500 units; March: 10,200 units; April: 12,000 units. The unit sales price is $125. All sales are on credit and collections are 30% in the month of sale, 60% the following month, and 10% two months following the sale. Accounts receivable as of the end of December is $4,600 and this amount is expected to be collected in January.

2. End of month inventory must equal 40% of next month’s sales. The inventory at the end of December was 150 units.

3. The following are the expected costs for direct materials, direct labor and manufacturing overhead:

DM                             DL                                         Overhead

January          $15/unit                                 $28/unit              $15,500 + $8.00 per unit produced     

February        $15/unit                                 $28/unit              $15,500 + $8.00 per unit produced

March          $15/unit $28/unit              $15,500 + $8.00 per unit produced

A. Direct materials are paid 60% in the month incurred and 40% in the following month.

      Account payable for materials at the end of December is $2,900; this amount will be paid in January.

B. Direct labor is paid in the month incurred.

C. Overhead costs are paid in the month incurred. Fixed overhead includes depreciation of $7,000 per month.

4.   Selling costs are sales commissions: $5 per unit sold; shipping costs: $1 per unit sold. Administrative costs per month are: salaries: $3,000; rent: $2,000; depreciation: $1,500. All costs are paid in the month incurred.

5. The company plans to purchase equipment in January costing $15,000 and will pay for it in cash.

6. The company plans to pay $4,500 cash dividends in February.

7. The cash balance as of December 31 is $25,050. The company borrows money only if the cash balance falls below $5,000 at the end of the month. The company has a revolving credit with US Bank to borrow in increments of $1,000 at the beginning of each month at interest of 12% annual rate. The company repays interest at the end of each month and principle (or portion) at the end of the month when they have the resources to do so. As of December 31, the company has no outstanding loans.

Required:

Based on the information given, prepare the following budgets for each month of the first quarter of 2020 and the quarter totals:

1. Sales Budget, including a schedule of expected cash collections;
2. Production Budget (in units);
3. Direct material, including schedule of expected cash disbursements;
4. Direct labor budget;
5. Manufacturing Overhead Budget;
6. Selling and Administrative Expenses Budget;
7. Cash Budget.

***ONLY NEED QUESTIONS 6 & 7 ANSWERED***

Information for 2020:

1.   Sales forecast: January: 2,600 units; February: 4,500 units; March: 10,200 units; April: 12,000 units. The unit sales price is $125. All sales are on credit and collections are 30% in the month of sale, 60% the following month, and 10% two months following the sale. Accounts receivable as of the end of December is $4,600 and this amount is expected to be collected in January.

2. End of month inventory must equal 40% of next month’s sales. The inventory at the end of December was 150 units.

3. The following are the expected costs for direct materials, direct labor and manufacturing overhead:

DM                             DL                                         Overhead

January          $15/unit                                 $28/unit              $15,500 + $8.00 per unit produced     

February        $15/unit                                 $28/unit              $15,500 + $8.00 per unit produced

March          $15/unit $28/unit              $15,500 + $8.00 per unit produced

A. Direct materials are paid 60% in the month incurred and 40% in the following month.

      Account payable for materials at the end of December is $2,900; this amount will be paid in January.

B. Direct labor is paid in the month incurred.

C. Overhead costs are paid in the month incurred. Fixed overhead includes depreciation of $7,000 per month.

4.   Selling costs are sales commissions: $5 per unit sold; shipping costs: $1 per unit sold. Administrative costs per month are: salaries: $3,000; rent: $2,000; depreciation: $1,500. All costs are paid in the month incurred.

5. The company plans to purchase equipment in January costing $15,000 and will pay for it in cash.

6. The company plans to pay $4,500 cash dividends in February.

7. The cash balance as of December 31 is $25,050. The company borrows money only if the cash balance falls below $5,000 at the end of the month. The company has a revolving credit with US Bank to borrow in increments of $1,000 at the beginning of each month at interest of 12% annual rate. The company repays interest at the end of each month and principle (or portion) at the end of the month when they have the resources to do so. As of December 31, the company has no outstanding loans.

Required:

Based on the information given, prepare the following budgets for each month of the first quarter of 2020 and the quarter totals:

1. Sales Budget, including a schedule of expected cash collections;
2. Production Budget (in units);
3. Direct material, including schedule of expected cash disbursements;
4. Direct labor budget;
5. Manufacturing Overhead Budget;
6. Selling and Administrative Expenses Budget;
7. Cash Budget.

The opening case in Chapter 12, “Big Data and the Internet of Things Drive Precision Agriculture,” demonstrates how the effective use of data analytics can help employees and managers at all levels, in many different industries, make better decisions. Using Purdue’s University College of Agriculture as an example, explain how you think this technology could help a company with which you are familiar.