The pretax financial income (or loss) figures for Tamarisk Company are as follows.

Pretax financial income (or loss) and taxable income (loss) were the same for all years involved. Assume a 45% tax rate for 2016, and a 20% tax rate for the remaining years.

Prepare the journal entries for the years 2017 to 2021 to record income tax expense and the effects of the net operating loss carrybacks and carryforwards assuming Tamarisk Company uses the carryback provision. All income and losses relate to normal operations. (In recording the benefits of a loss carryforward, assume that no valuation account is deemed necessary.)

Business (Ethics) and the use of Normative Theories.

Question 1.

You've been engaged by an IT company (Coastal IT) as an independent Ethics Consultant. Coastal IT's ethic problem is: They have moved all their technical and support rescources to an off shore company based in India to reduce costs. This means four local staff have been made redundant and morale is very low and client work is behind as the new staff get trained. Coastal IT's customers have NOT been told of this move either.

a) Choose an appropriate normative theory? (Approx 400 words).

b) Discuss the application of that theory? (Approx 200 words).

Due 29 April 2020

Portions of the financial statements for Parnell Company are provided below.

Required:
2. Prepare the cash flows from operating activities section of the statement of cash flows for Parnell Company using the indirect method. (Enter your answers in thousands (i.e., 10,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.)

Problem 20-05A a, b1-b3, c (Part Level Submission)

Brislin Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $212,000 and the following divisional results.

Analysis reveals the following percentages of variable costs in each division.

Discontinuance of any division would save 50% of the fixed costs and expenses for that division.

Top management is very concerned about the unprofitable divisions (I and II). Consensus is that one or both of the divisions should be discontinued.

Prepare a columnar condensed income statement for Brislin Company, assuming Division II is eliminated. Division II’s unavoidable fixed costs are allocated equally to the continuing divisions. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Andrew works at a public company called TNN Manufacturing Ltd. He has observed that the company is trying to expand its operation in the market over the past one year. The management has heavily invested in plant and equipment over this period. Considering the high growth potential of the business, Andrew is planning to invest in this company by purchasing shares. He consulted with this friend Peter regarding this plan. After reviewing TNN Manufacturing’s balance sheet for past two years, Peter commented, "While I understand that this company is focusing on growth, they have a taken a risky approach to achieve the growth". Do you agree with Peter's comments? Justify your answer. TNN Manufacturing Ltd Comparative Balance Sheet As at 30th June 2019 and 2020 2019 2020 ASSETS ($) ($) Current Assets Cash at Bank 23,600 6,200 Accounts Receivable 41,800 51,100 Inventory 32,000 40,400 Other current Assets 6,400 5,900 Total Current Assets 103,800 103,600 Non-current Assets Land and Building 54,000 54,000 Plant and Equipment 62,000 190,000 Furniture 5,800 5,300 Long-term investment 9,200 9,000 Total Non-current Assets 131,000 258,300 Total Assets 234,800 361,900 LIABILITIES Current liabilities Accounts Payable 52,400 52,100 Total current-liabilities 52,400 52,100 Non-current liabilities Long-term debt 82,400 208,800 Total non-current liabilities 82,400 208,800 Total Liabilities 134,800 260,900 EQUITY Share Capital 100,000 101,000 Total Equity 100,000 101,000 Total Liability and Equity 234,800 361,900

Problem 4.

Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 32,000 Rets per year. Costs associated with this level of production and sales are given below:

The Rets normally sell for $53 each. Fixed manufacturing overhead is $224,000 per year within the range of 23,000 through 32,000 Rets per year.

Required:

1. Assume that due to a recession, Polaski Company expects to sell only 23,000 Rets through regular channels next year. A large retail chain has offered to purchase 9,000 Rets if Polaski is willing to accept a 16% discount off the regular price. There would be no sales commissions on this order; thus, variable selling expenses would be slashed by 75%. However, Polaski Company would have to purchase a special machine to engrave the retail chain’s name on the 9,000 units. This machine would cost $18,000. Polaski Company has no assurance that the retail chain will purchase additional units in the future. What is the financial advantage (disadvantage) of accepting the special order? (Round your intermediate calculations to 2 decimal places.)

2. Refer to the original data. Assume again that Polaski Company expects to sell only 23,000 Rets through regular channels next year. The U.S. Army would like to make a one-time-only purchase of 9,000 Rets. The Army would pay a fixed fee of $1.20 per Ret, and it would reimburse Polaski Company for all costs of production (variable and fixed) associated with the units. Because the army would pick up the Rets with its own trucks, there would be no variable selling expenses associated with this order. What is the financial advantage (disadvantage) of accepting the U.S. Army's special order?

3. Assume the same situation as described in (2) above, except that the company expects to sell 32,000 Rets through regular channels next year. Thus, accepting the U.S. Army’s order would require giving up regular sales of 9,000 Rets. Given this new information, what is the financial advantage (disadvantage) of accepting the U.S. Army's special order?

Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 32,000 Rets per year. Costs associated with this level of production and sales are given below:

The Rets normally sell for $53 each. Fixed manufacturing overhead is $224,000 per year within the range of 23,000 through 32,000 Rets per year.

Required:

1. Assume that due to a recession, Polaski Company expects to sell only 23,000 Rets through regular channels next year. A large retail chain has offered to purchase 9,000 Rets if Polaski is willing to accept a 16% discount off the regular price. There would be no sales commissions on this order; thus, variable selling expenses would be slashed by 75%. However, Polaski Company would have to purchase a special machine to engrave the retail chain’s name on the 9,000 units. This machine would cost $18,000. Polaski Company has no assurance that the retail chain will purchase additional units in the future. What is the financial advantage (disadvantage) of accepting the special order? (Round your intermediate calculations to 2 decimal places.)

2. Refer to the original data. Assume again that Polaski Company expects to sell only 23,000 Rets through regular channels next year. The U.S. Army would like to make a one-time-only purchase of 9,000 Rets. The Army would pay a fixed fee of $1.20 per Ret, and it would reimburse Polaski Company for all costs of production (variable and fixed) associated with the units. Because the army would pick up the Rets with its own trucks, there would be no variable selling expenses associated with this order. What is the financial advantage (disadvantage) of accepting the U.S. Army's special order?

3. Assume the same situation as described in (2) above, except that the company expects to sell 32,000 Rets through regular channels next year. Thus, accepting the U.S. Army’s order would require giving up regular sales of 9,000 Rets. Given this new information, what is the financial advantage (disadvantage) of accepting the U.S. Army's special order?

Problem 5.

Prepared from a situation suggested by Professor John W. Hardy.) Lone Star Meat Packers is a major processor of beef and other meat products. The company has a large amount of T-bone steak on hand, and it is trying to decide whether to sell the T-bone steaks as they are initially cut or to process them further into filet mignon and the New York cut.

If the T-bone steaks are sold as initially cut, the company figures that a 1-pound T-bone steak would yield the following profit:

If the company were to further process the T-bone steaks, then cutting one side of a T-bone steak provides the filet mignon and cutting the other side provides the New York cut. One 16-ounce T-bone steak cut in this way will yield one 6-ounce filet mignon and one 8-ounce New York cut; the remaining ounces are waste. It costs $0.14 to further process one T-bone steak into the filet mignon and New York cuts. The filet mignon can be sold for $4.00 per pound, and the New York cut can be sold for $3.40 per pound.

Required:

1. What is the financial advantage (disadvantage) of further processing one T-bone steak into filet mignon and New York cut steaks?

2. Would you recommend that the T-bone steaks be sold as initially cut or processed further?

Problem 6.

Jackson County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their own homes within the Jackson County area. Three services are provided for seniors—home nursing, Meals On Wheels, and housekeeping. Data on revenue and expenses for the past year follow:

*Allocated on the basis of program revenues.

The head administrator of Jackson County Senior Services, Judith Miyama, considers last year’s net operating income of $29,300 to be unsatisfactory; therefore, she is considering the possibility of discontinuing the housekeeping program.

The depreciation in housekeeping is for a small van that is used to carry the housekeepers and their equipment from job to job. If the program were discontinued, the van would be donated to a charitable organization. None of the general administrative overhead would be avoided if the housekeeping program were dropped, but the liability insurance and the salary of the program administrator would be avoided.

Required:

1-a. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program?

1-b. Should the Housekeeping program be discontinued?

2-a. Prepare a properly formatted segmented income statement.

2-b. Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services?

Suppose that a U.S. firm wants to identify the optimal amount of petroleum to extract. The U.S. petroleum market comprises 10 identical firms, and each firm extracts the same quantity of petroleum and sells each unit at the market price. The functional form of the U.S. market demand for petroleum is given by Q(P) = 475 −1/2P, and the inverse market supply function is given by P(Q) = 65 + 3Q. Prices are represented in U.S. dollars and quantities are measured in thousands of gallons.

(a) How much petroleum do you recommend that each firm extract in order to be efficient? What would be the net benefits for each firm?

(b) Graph the U.S. market for petroleum. For full credit, label the equilibrium point as well as all axes, curves, and intercepts.

(c) Indicate consumer and producer surplus on your graph.

(d) Compute and interpret the market price elasticity of demand at equilibrium. Does the price elasticity you calculated make sense for the petroleum market? Explain your answer in 20 words or less.

For most of the 1800s, the United States did not recognize the copyrights of books written by foreign authors. As a result, many U.S. publishers printed “pirated”—unauthorized—editions of Charles Dickens and other British authors without paying them royalties. A history of book publishing noted, “[U.S.] publishers claimed that pirating [foreign] works allowed their prices to remain low, which in turn made the works more accessible to the public at large.” There were (eventually successful) attempts in Congress to recognize foreign copyrights in exchange for other countries recognizing U.S. copyrights. At the time, one U.S. publisher described these efforts as the “clamor of two hundred authors against the interests of fifty-five million people.” Do copyright laws benefit authors at the expense of readers? If so, why does the U.S. Constitution give Congress the right to enact copyright laws?

Source: J. P. Romney and Rebecca Romney, Printer’s Error: Irreverent Stories from Book History, New York: Harper, 2017, pp. 218, 227.

Between 2002 and 2005, French wine exports to the United States dropped by nearly 18 percent. Some wine experts blamed part of the decline on what they perceived to be a drop in the quality of French wine. Others blamed a shift in U.S. tastes in favor of domestic wines, and others suggested U.S. residents’ unhappiness with the French government’s foreign policies.

Economists offered a different explanation. During 2003, the dollar depreciated by almost 20 percent relative to the euro. Even if the euro price of a bottle of French wine remained the same, U.S. residents would have seen its dollar price rise by nearly 20 percent. The effective increase in the U.S. price of French wines resulted in a decrease in the quantity of French wine demanded by U.S. residents. Thus, French wine exports to the United States decreased.

What do you predict will happen to French wine exports to the United States, other things being equal, if the dollar appreciates considerably in relation to the euro?

(a) Over the past decade, some of Japanese savings has been used to purchase large amounts of U.S. financial assets (typically U.S. government bonds). Suppose Japan suddenly stopped purchasing U.S. financial assets. Graphically illustrate the effect of Japan’s reduction in purchases of U.S. financial assets using the Open Economy model developed in the Ch 6 appendix. (Hint: In your model you will need to draw three diagrams). Clearly label the axes and curves in each of your graphs in the model. Clearly indicate the direction of any shifting curves. In your model, label the initial equilibrium points as Point A and label the new equilibrium points as Point B. Using your model drawn in Part (a), indicate what effect the reduction in Japanese investment in U.S. financial assets will have on the following economic variables in the United States: (i) real interest rate, (ii) domestic investment, (iii) net capital outflow, (iv) real exchange rate, (v) net exports.