You have an interview for a junior management accounting role with a medium sized IT firm which has plans to list on the ASX. The interviewer informs you of a debate within the firm about whether or not to produce ‘corporate responsibility’ reports. She asks you what your opinion on the issue is. How would you respond?

John and Sandy Ferguson got married eight years ago and have a seven-year-old daughter, Samantha. In 2020, John worked as a computer technician at a local university earning a salary of $152,000, and Sandy worked part time as a receptionist for a law firm earning a salary of $29,000. John also does some Web design work on the side and reported revenues of $4,000 and associated expenses of $750. The Fergusons received $800 in qualified dividends and a $200 refund of their state income taxes. The Fergusons always itemize their deductions, and their itemized deductions were well over the standard deduction amount last year. The Fergusons had qualifying insurance for purposes of the Affordable Care Act (ACA). Use Exhibit 8-9, Tax Rate Schedule, Dividends and Capital Gains Tax Rates, 2020 AMT exemption for reference.

The Fergusons reported making the following payments during the year:

State income taxes of $4,400. Federal tax withholding of $21,000.

Alimony payments to John’s former wife of $10,000 (divorced on 12/31/2014).

Child support payments for John’s child with his former wife of $4,100.

$12,200 of real property taxes.

Sandy was reimbursed $600 for employee business expenses she incurred. She was required to provide documentation for her expenses to her employer.

$3,600 to Kid Care day care center for Samantha’s care while John and Sandy worked.

$14,000 interest on their home mortgage ($400,000 acquisition debt).

$3,000 interest on a $40,000 home-equity loan. They used the loan to pay for a family vacation and new car.

$15,000 cash charitable contributions to qualified charities.

Donation of used furniture to Goodwill. The furniture had a fair market value of $400 and cost $2,000.

Complete pages 1 and 2, Schedule 1, Schedule 2, and Schedule 3 of Form 1040 and Form 6251 for John and Sandy. Use 2020 tax rules.

Raider Red Construction entered into a contract to build a commercial building for $3,600,000. Raider Red Construction uses the percentage-of-completion method for recognizing revenue on the project. Construction began in September of 2018 and the building was completed in June of 2020. The company provided the following additional information on the project.

Instructions:

(1.) Prepare the journal entries for the balance sheet in each year of the project.

A company purchased equipment for $400,000 which was estimated to have a useful life of 14 years with a salvage or residual value of $22,000 at the end of that time. Depreciation has been recorded for 2 years on a straight-line basis. In 2020 (year 3), it is determined that the total estimated life should be 17 years with a residual or salvage value of $16,000 at the end of that time.

What is the net book value a the time of the change?  write out the number, include a comma where appropriate, do not include decimals, do not use a dollar sign (i.e. 200,000)

What is depreciation expense for 2020?   

X Company uses an activity-based costing allocation system. On January 1, 2020, its accountant budgeted the following costs and cost drivers for three of the activities that are used in the ABC system:

In May of 2020, 600 units of Product C were finished, requiring $13,300 of direct materials, 4,000 direct labor hours, 1,382 parts, and 49 purchase orders.

How much of the three activity costs was allocated to Product C?

The Swifty Corporation issued 10-year, $4,080,000 par, 7% callable convertible subordinated debentures on January 2, 2020. The bonds have a par value of $1,000, with interest payable annually. The current conversion ratio is 13:1, and in 2 years it will increase to 20:1. At the date of issue, the bonds were sold at 98. Bond discount is amortized on a straight-line basis. Swifty’s effective tax was 20%. Net income in 2020 was $10,950,000, and the company had 1,830,000 shares outstanding during the entire year.

Compute both basic and diluted earnings per share.

X Company uses an activity-based costing allocation system. On January 1, 2020, its accountant budgeted the following costs and cost drivers for three of the activities that are used in the ABC system:

In May of 2020, 521 units of Product C were finished, requiring $18,400 of direct materials, 4,000 direct labor hours, 1,464 parts, and 38 purchase orders.

How much of the three activity costs was allocated to Product C?

At the beginning for the year 2020, Shanghai Healthy Food Production Company budgeted its cost at 4 different capacity levels as follows:

A) What is the flexible budget formula for the year 2020?

B) What is the Predetermined MOH Rate (Applied MOH Rate) if the budgeted capacity is set at 18,000 mh?

The Carla Corporation issued 10-year, $5,060,000 par, 7% callable convertible subordinated debentures on January 2, 2020. The bonds have a par value of $1,000, with interest payable annually. The current conversion ratio is 14:1, and in 2 years it will increase to 18:1. At the date of issue, the bonds were sold at 99. Bond discount is amortized on a straight-line basis. Carla’s effective tax was 20%. Net income in 2020 was $11,200,000, and the company had 1,815,000 shares outstanding during the entire year. Compute both basic and diluted earnings per share.