Example 6-2 John Jenkins earns $1,290 per week. The deductions from his pay were: FIT $116.00 FICA—OASDI 79.98 FICA—HI 18.71 State income tax 31.00 State disability insurance 9.03 Credit union deduction 40.00 Health insurance premium 47.50 Charitable contribution 5.00 John’s disposable earnings would be: $1,290.00 - $116.00 (FIT) - $79.98 - $18.71 (FICA deductions) - $31.00 (SIT) - $9.03 (disability insurance) = $1,035.28 Example 6-3 Huffman Company has a child support order outstanding on one of its employees (Charles Suffert—$170 per week). Charles Suffert's disposable income is $950 per week. A new garnishment is received for a $5,000 debt to a credit card company. The company would take an additional $237.50 out of Suffert's pay. Lesser of: 25% × $950 = $237.50 or $950 − (30 × $7.25) = $732.50 Kalen O'Brien earned $735 this week. The deductions from her pay were as follows: FIT $74.00 FICA-OASDI 45.57 FICA-HI 10.66 State income tax 36.75 State disability insurance 8.41 Health insurance premium 19.60 Credit union contribution 37.00 United Fund contribution 5.00 O'Brien's employer just received a garnishment order (credit card debt of $3,330) against her pay. Compute the following; round your answers to the nearest cent. a. O'Brien's disposable earnings: $ b. The amount of her pay subject to the garnishment: $

Always Fresh is in the business of delivering home meal kits. Noah the Chief Marketing Officer for Always Fresh wants to assess how much the firm is worth. To do so, Noah assesses transactional data for 2019 (Prior research in Finance has concluded that 1 year of transaction data is an acceptable amount of time to arrive at firm value).

Always Fresh has two SKU's (Stock keeping units) - individual meals and a bouquet of 10 meals. Each is delivered directly to the customer's doorsteps. To keep the operation lean, Always Fresh has followed a 100% digital business model by not owning any physical property. It has partnered with certified professionals across the country who source, pack, and ship the orders. The following is the transactional data for 2019.

For individual meal customers, Always Fresh spent USD 6.3 mn dollars in 2019 to acquire them. The retention rate for these customers is 15% per annum and Always Fresh makes a 30% margin on these orders.

For customers that order 10 meals, Always Fresh spent USD 2.1 mn dollars in 2019 to acquire them. The retention rate for these customers is 22% and Always Fresh makes a hefty 40% margin on these orders.

Based on the above information, you have to help Noah in computing the customer value Always Fresh.

You can assume the discount rate to be 2%. As time is not mentioned, you should assume time to be infinity.

Always Fresh is in the business of delivering home meal kits. Noah the Chief Marketing Officer for Always Fresh wants to assess how much the firm is worth. To do so, Noah assesses transactional data for 2019 (Prior research in Finance has concluded that 1 year of transaction data is an acceptable amount of time to arrive at firm value).

Always Fresh has two SKU's (Stock keeping units) - individual meals and a bouquet of 10 meals. Each is delivered directly to the customer's doorsteps. To keep the operation lean, Always Fresh has followed a 100% digital business model by not owning any physical property. It has partnered with certified professionals across the country who source, pack, and ship the orders. The following is the transactional data for 2019.

For individual meal customers, Always Fresh spent USD 6.3 mn dollars in 2019 to acquire them. The retention rate for these customers is 15% per annum and Always Fresh makes a 30% margin on these orders.

For customers that order 10 meals, Always Fresh spent USD 2.1 mn dollars in 2019 to acquire them. The retention rate for these customers is 22% and Always Fresh makes a hefty 40% margin on these orders.

Based on the above information, you have to help Noah in computing the customer value Always Fresh.

You can assume the discount rate to be 2%. As time is not mentioned, you should assume time to be infinity.

Required information

Problem 3-5A Preparing financial statements from the adjusted trial balance and computing profit margin LO P6, A1

[The following information applies to the questions displayed below.]
  
The adjusted trial balance for Chiara Company as of December 31 follows.

Problem 3-5A Part 1

Required:
1(a) Prepare the income statement for the year ended December 31.
1(b) Prepare the statement of owner's equity for the year ended December 31. [Note: R. Chiara, Capital at Dec. 31 of the prior year was $255,800.]
1(c) Prepare Chiara Company's balance sheet as of December 31.
  

1. HK Limited has 100 employees. Each employee earns two weeks of paid vacation per year. Vacation time not taken in the year earned can be carried over to two calendar years. Paid leave is first taken out of the balance brought forward from the previous year and then out of the current year’s entitlement (a FIFO basis). During 2019, 30 employees took both weeks’ vacation, but at the end of the year, 70 employees had vacation time carryover as follows:

During 2019, the average salary for employees is $5,000 per week.                       

2. The profit sharing plan requires HK Ltd. to pay 2% of its net profit to its two directors, Mr. Yau Wen and Ms. Shally Tin. The net profit for 2019 is $3,500,000. Mr. Wen will receive the bonus six months after the end of 2019, whereas Ms. Tin would be paid on July 2021 since she joined the company in March of 2019.                     

3. HK Ltd. agrees to pay a fixed contribution of 5% of employees’ salary to a retirement plan, subject to a cap of $1,250 per month for each employee. The contribution is paid monthly on or before the 10th of the following month. Out of the 200 employees, 160 employees earn an average monthly salary of $20,000.   The remaining employees earn more than $35,000 per month.   

Required:

Classify the nature of the employee benefit(s) above and explain the accounting treatment (provide journal entries if necessary)

Provide positive feedback:

Powerful incentives can cause undesired behaviors. Suggest ways to solve this problem, using something you know a great deal about – academic performance. With incentives come the challenges of ethical, moral, and legal behavior having a diminished impact on the choices one makes to achieve the incentive. This effect was shown with outstanding in the banking sector during the 2008 economic meltdown. The large incentives offered to the people working in the financial sector drove large groups to conduct unethical and what became illegal operations that led to the collapse of the US housing market and had ripple effects throughout the world’s economies. In the scholastic arena, having training to educate students on what unethical and illegal behavior is a first step. Then by giving students the tools needed to verify that their work is not breaching these two things before turning their work in. And finally, by giving instructors and institutions the tools to check and verify a student’s work ins their own. This system works by e3ducating then having checks and balances in place to verify. How would you design a pay-performance system that uses powerful incentives to motivate behavior, yet keep the behavior from veering into the unethical? (Hint: You want to keep the powerful incentive effect of pay. So, don’t recommend eliminating incentive pay or reducing the size of the incentive component.) What’s left? The first step is offering an equal ability to all employees to obtain the incentive. This will involve training, mentoring, and the opportunity to have access to the incentives. Next the incentives must be set in a way that ensures the methods of reaching the incentives encourages employees to behave in a manner that is congruent to the company’s mission and culture. Lastly the methods employees use to reach the incentives must be able to be verified with a checks and balances by someone that the incentives will not effect. How do you ensure ethical behavior? This starts with the company and its core mission statement, then this has to be followed up with training on the standards, laws and expectations. Lastly the company must use checks and balances to verify the methods being used are following the ethical standards put in place. These checks must be conducted by someone who is not going to benefit from the manipulation of ethical judgment.

A researcher took a random sample of 64 individuals across the country to investigate the relation between hours worked per week and income earned per year. each individual, the hours worked per week and yearly income (measured in ‘000’s dollars) were recorded. The data are stored in HOURSWORKED64 worksheet. In addition to the variables of hours worked and income earned, the individuals were also asked to respond to survey questions concerning other variables (e.g. location, age, etc).

categorised the data into six location groups and six age groups, and calculated frequencies as presented in the tables below.

                                                       Frequency tables

Using Excel and the data in the frequency tables above, answer t questions.

1. Which graphical technique or chart should be used if the researcher is interested in comparing the number of individuals in each location group? Explain the reason for the selection of this graphical chart. Construct and display the chart, also briefly describe what you can observe about the number of individuals belonging to each location category.            

2. Which graphical technique or chart should be used if the researcher is interested in comparing the proportion of the number of individuals in each age group? Explain the reason for the selection of this graphical chart. Construct and display the chart, also briefly describe what you can observe about the proportion of the number of individuals belonging to each age category.

Question II :

The Water Bottle Company was incorporated on October 1, 2016. The following transactions occurred during November:

Transaction Number Date

1) 1-Nov Issue additional common stock for $4500---------------------4,500

2) 1-Nov Purchase 800 water bottles @ $10 each on account------------------- 8,000

3A) 3-Nov Sell 300 water bottles @ $30 each for cash----------------------------- 9,000

3B) 3-Nov Same…. COGS entry 300 water bottles @ 10 each -----------------3,000

4A ) 10-Nov Sell 400 water bottles @ $40 each on account----------------------------------------------- 16,000

4B) 10-Nov Same…COGS entry 400 water bottles @$10 each----------- 4,000

5) 15-Nov Pay employees for work performed ($800 from October and $2400 November) ----------3,200

6) 15-Nov Pay $450 cash for advertising to be run in current month -----------------------------------------450

7A) 17-Nov Remaining goods from prepayment customer in October have been delivered (10 bottles @$30) -------------300

7B) 17-Nov Same…remaining goods from prepayment are delivered (COGS entry) ----------------------------------100

8) 27-Nov The Water Bottle Company makes a partial payment for the water bottles purchased Nov 1 - pay $500------------- 500

9) 28-Nov Pay $220 in utlities for current month use --------220

10) 30-Nov A customer paid in advance for 150 water bottles @ $30 each to be delivered in the future ---------4,500

11) 30-Nov Receive full payment from customer who bought on account on Nov 10 --------------------16,000

12) 30-Nov Pay cash dividends to your shareholders in the amount of $600. ------------------------------600

Adjusting Entries for November:

a) 30-Nov Adjust for use of prepaid rent 1 month

b) 30-Nov Adjust for use of insurance policy 1 month

c) 30-Nov Adjust for depreciation of equipment ($140 a month given)

d) 30-Nov Adjust for $1200 of salaries earned but not paid by month end

e) 30-Nov Adjust for interest on the loan 5% annual rate .

Deliverables:

Record all November transactions in the Financial Statement Impact Template

Record all November adjusting entries in the Financial Statement Impact Template

Create November Financial Statements

Record all closing entries in the Financial Statement Impact Template for November to set up for the following month .

Question

Allison Boone had been practicing medicine for seven years. Her specialty

was neurology. She had received her bachelor’s degree in chemistry from Kent State University and her M.D. from Washington University in St. Louis. She did her residency at Columbia Presbyterian Hospital in New York. Allison practiced neurology in a clinic with three other doctors in Hurst, Texas.

Her husband, Samual L. Boone, held an administrative position for Harris Methodist HMO in Arlington, Texas. Allison and Samuel had been married for five years and were parents of young twin sons, Todd and Trey. They lived in Arlington in a beautiful four-room house overlooking Lake Arling-ton.

Allison normally left for work at 7:30 a.m. and closed her office at 5:30 p.m. to return home. On Tuesday, July 6th, 1999 at 5:15 p.m., she received an emergency call from Arlington General Hospital and immediately went to the hospital to help a patient who had suffered serious brain damage. By the time she had administered aid and helped prepare the patient for surgery it was 11:00 p.m.

On her way home as she passed the Ballpart in Arlington (home of the Texas Rangers baseball team), she was confronted head on by a drunken driver going over 80 miles an hour. A crash was inevitable and Allison and the other driver were killed instantly. The drunken driver was making a late delivery for Wayland Frozen Foods, Inc.

Legal Considerations

The families of both drivers were devastated by the news of the accident. After the funeral and explaining the situation to the children, Samuel Boone knew he must seek legal redress for his family’s enormous loss. Following interviews with a number of lawyers, he decided to hire Sloan Whitaker.

Sloan was with a Dallas law firm (Hanson, Sloan, and Thomason) that specialized in plaintiff’s lawsuits. He had been in practice for over 20 years since graduating from Southern Methodist University (SMU) law school in 1978.

When Sloan began his investigation on behalf of Samuel Boone and his family, he was surprised to find out the driver of the delivery vehicle had a prior record of alcohol abuse and that Wayland Frozen Foods, Inc. had knowledge of the problem when they hired him. It appears the driver was a relative of the owner and at the time of employment he revealed what he termed “a past alcoholic problem that was now under control”. In any event, he was acting as an employee for Wayland Frozen Foods in using their truck to make a business related delivery at the time of the accident. The fact that he was speeding and intoxicated at the time of the impact only increased the legal exposure for Wayland Frozen Foods.

After much negotiating with the law firm that represented Wayland Frozen Foods (and its insurance company), Sloan Whitaker received three proposals for an out-of-court settlement to be paid to Allison Boone’s family. The intent of the proposals was to replace the future earning’s power of Allison Boone, less any of the earnings she would have personally needed for her normal living requirements. Also, the value that she provided for her family as a wife and mother, quite aside from her earning power, had to be considered. Finally, there was the issue of punitive damages that Wayland Frozen Foods was exposed to as a result of letting an unqualified driver operate its truck. If the case went to court, there was no telling how much a jury might assign to this last factor.

The three proposals are listed below. An actuarial table indicated that Allison, age 37 at the time of the accident, had an anticipated life expectancy of 40 more years.

Proposal 1       Pay the family of Allison Boone $300,000 a year for the next 20 years, and $500,000 a year for the remaining 20 years.

Proposal 2      Pay the family a lump sum payment of $5 million today.

Proposal 3       Pay the family of Allison Boone a relatively small amount of $50,000 a year for the next 40 years, but also guarantee them a final payment of $75 million at the end of 40 years.

I NEED HELP DOING CALCULATIONS FOR PROPOSAL 2.

A Ltd, is a company incorporated and carrying on business in Hong Kong, is organizing a pop music concert to be staged in Hong Kong in January 2018. A Ltd has appointed another Hong Kong resident company, B Ltd, to procure the performance of an overseas artist at the concert, for which A Ltd will pay B Ltd $11 million. Ms. Happy, a famous international star singer from the US, has been approached by B Ltd to undertake this performance. The remuneration for her performance in Hong Kong has been agreed as $10 million, payable to Mr. Money, the US resident manager of Ms. Happy. In the performance agreement, there will be a clause providing that when paying the remuneration, B Ltd will be entitled to deduct a sum equivalent to 10% of the gross payment, or any other amount which is sufficient to cover the Hong Kong tax applicable. Ms. Happy is not convinced of the need for this clause and has raised the following challenges: (1) She deals with B Ltd on a principal-to-principal basis and thus, B Ltd is not an ‘agent’ acting on her behalf. Therefore, B Ltd has no authority to deduct any tax from the payment. (2) Should there be any tax liability incurred, an assessment should be made by the Hong Kong Inland Revenue Department and issued to her directly as a demand for tax, given that Hong Kong does not operate a self assessment system. (3) Hong Kong profits tax should be based on the net assessable profits which are calculated by reference to gross income and deductible expenses. The 10% or any other deemed notional percentage has no legal basis.

Required:

(a) Explain why Ms. Happy will be chargeable to Hong Kong tax.

(b) Explain how the Hong Kong tax payable by Ms. Happy will be determined and collected. Note: with the exception of Mr. Money, none of the parties referred to are agents for any other person.

(c) State, giving reasons, whether there will be any difference in the tax position if Ms. Happy incorporates a company in Hong Kong to receive the payment on her behalf.