Ryan is a Canadian resident who lives with his family in Victoria, Canada, but works for a small donut cafe in Seattle, U.S., where he commutes every day. On a typical day, Ryan produces 400 donuts that sell for $1 apiece. Of the revenue from selling the donuts, Ryan is paid $200 per day. The remaining $200 revenue is distributed as follows: $50 pays for inputs such as water, flour, sugar, butter, and energy, $100 is rent for using the facilities and interest for an initial loan to start the business, and $50 goes to salary to the manager and profit to the owner of the cafe.

a) How much is the increase in U.S. GDP and GNP generated by the production of the 400 donuts?

b) How much is the increase in Canada's GDP and GNP generated by the production of the 400 donuts?

c) How much is Ryan's contribution to the creation of the $400 value donuts? Explain your answer.

d) Since Ryan takes his income home to Canada, should the U.S. allow foreign workers such as Ryan to take jobs that might otherwise go to American workers?

Bowman Corporation is considering an investment in special-purpose equipment to enable the company to obtain a five-year government contract for the manufacture of a special item. The equipment costs $500,000 and would have no salvage value when the contract expires at the end of the five years. Estimated annual operating results of the project are as follows.

All revenue and all expenses other than depreciation will be received or paid in cash in the same period as recognized for accounting purposes. Compute the following for Bowman’s proposal to undertake the contract work.

a. Payback period. (Round pay back period year to 2 decimal places.)

b. Return on average investment.

c. Net present value of the proposal to undertake contract work, discounted at an annual rate of 10 percent. (Refer to the annuity table in Exhibit 26–4.) (Round your "PV factors" to 3 decimal places.)

1_ “Sales taxes are fairer than income taxes because sales taxes cannot be avoided by the rich.” Discuss & evaluate this idea, using tax policy concepts to provide support for your evaluation. Is it possible to design a sales tax that is more progressive than a personal income tax? What would this tax structure look like? “Sales taxes are fairer than income taxes because sales taxes cannot be avoided by the rich.” Discuss & evaluate this idea, using tax policy concepts to provide support for your evaluation. Is it possible to design a sales tax that is more progressive than a personal income tax? What would this tax structure look like?

2_States are increasingly relying on revenue from gambling to generate funds for their financial plans on annual basis. Lotteries, for example, have been on the rise with states providing their own jackpots, and increasing the jack-pots by utilizing multi-state games. Please provide some of the policy rationale for using this revenue source, along with some of the issues that policy makers should focus on in the future.

In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: 2021 2022 2023 Cost incurred during the year $ 2,156,000 $ 3,388,000 $ 2,371,600 Estimated costs to complete as of year-end 5,544,000 2,156,000 0 Billings during the year 2,130,000 3,414,000 4,456,000 Cash collections during the year 1,865,000 3,300,000 4,835,000 Westgate recognizes revenue over time according to percentage of completion.

1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. (Do not round intermediate calculations. Loss amounts should be indicated with a minus sign.)

2-a. In the journal below, complete the necessary journal entries for the year 2021 (credit "Various accounts" for construction costs incurred).
2-b. In the journal below, complete the necessary journal entries for the year 2022 (credit "Various accounts" for construction costs incurred).
2-c. In the journal below, complete the necessary journal entries for the year 2023 (credit "Various accounts" for construction costs incurred).

1. AICPA auditing standards address the confirmation of accounts receivable for private company audits. What are the circumstances under which confirmation of accounts receivable is not required? 2. When confirming accounting receivable, the auditor may use positive confirmations, negative confirmations, or a combination of both. Although the use of negative confirmations is less expensive than positive confirmation, negative confirmations are less reliable. Therefore, negative confirmations should be used only in certain circumstances. Discuss those circumstances. 3. Auditing standards indicate that the auditor should ordinarily presume that there is a risk of material misstatement due to fraud relating to revenue recognition. How might this concern related to revenue recognition affect the nature and extent of confirmation procedures? 4. Responses are often not received for positive accounts receivable confirmation requests. What should the auditor do if a confirmation response is not received? 5. Many differences identified on positive confirmation are timing differences, rather than misstatements. Explain the nature of a timing difference and give examples of common timing differences.

Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill, a larger stationary gas grill, and the specialty smoker. In the coming year, Texas-Q expects to sell 18,400 portable grills, 46,000 stationary grills, and 4,600 smokers. Information on the three models is as follows: Portable Stationary Smokers Price $92 $201 $252 Variable cost per unit 45 135 144 Total fixed cost is $2,064,960. Required:

1. What is the sales mix of portable grills to stationary grills to smokers?

2. Compute the break-even quantity of each product.

3. Prepare an income statement for Texas-Q for the coming year. What is the overall contribution margin ratio? Use the contribution margin ratio to compute overall break-even sales revenue. Enter the contribution margin ratio as a percentage rounded to two decimal places; round the break-even sales revenue to the nearest dollar.

4. Compute the margin of safety for the coming year.

Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill, a larger stationary gas grill, and the specialty smoker. In the coming year, Texas-Q expects to sell 21,200 portable grills, 47,700 stationary grills, and 5,300 smokers. Information on the three models is as follows:

Total fixed cost is $1,904,700.

LN Corporation, a U.S corporation, owns all the stock of Foreign Sub 1, a foreign corporation. Foreign Sub 1 in turn owns 20% of the voting stock of Foreign Sub 2, also a foreign corporation. LN Corporation also owns 10% of the nonvoting common stock of Foreign Sub 2 but owns no voting stock in Foreign Sub 2. During the current year, Foreign Sub 2 pays dividends on its nonvoting common stock, but pays no dividends on its voting stock. Is LN Corporation eligible for an Internal Revenue Code Section 902 indirect foreign tax credit for the current year with respect to the foreign income taxes paid by Foreign Sub 2? See Revenue Ruling 74-549, 1974-2 C.B. 207, 208 (holding that the Section 902 credit is not available to a U.S. parent corporation receiving a dividend owned only nonvoting stock of the second-tier corporation; IRS reasoned that the Section 902 credit is “contingent upon distribution [of a dividend] through the chain of corporations possessing voting stock ownership in the distributing corporation”).

The data in the table, from a survey of resort hotels with comparable rates on Hilton Head Island, show that room occupancy during the off-season (November through February) is related to the price charged for a basic room.

• First make a linear equation using linear regression on your calculator where x = price and y = occupancy rate.
• Convert occupancy rate to quantity of rooms in a 200-room hotel.
• Write down a revenue function for a 200-room hotel.
• What price per day will maximize the daily off-season revenue for a typical 200-room hotel? Use Calculus to determine the maximum.
• If this 200-room hotel has daily operating costs of $5510 plus $30 per occupied room. What price will maximize the daily profit during the off-season? Again use calculus to determine the maximum

More detailed instructions are given on page 690 of the textbook (12th edition).

Colah Company purchased $1 million of Jackson, Inc., 5% bonds at par on July 1, 2018, with interest paid semiannually.
Colah determined that it should account for the bonds as an available-for-sale investment. At December
31, 2018, the Jackson bonds had a fair value of $1.2 million. Colah sold the Jackson bonds on July 1, 2019 for
$900,000.

Required:
1. Prepare Colah’s journal entries to record:
a. The purchase of the Jackson bonds on July 1
b. Interest revenue for the last half of 2018
c. Any year-end 2018 adjusting entries
d. Interest revenue for the first half of 2019
e. Any entries necessary upon sale of the Jackson bonds on July 1, 2019, including updating the fair-value
adjustment, recording any reclassification adjustment, and recording the sale
2. Fill out the following table to show the effect of the Jackson bonds on Colah’s net income, other comprehensive
income, and comprehensive income for 2018, 2019, and cumulatively over 2018 and 2019.

2018 2019 Total
Net Income
OCI
Comprehensive Income