EcoSacks manufactures cloth shopping bags. The controller is preparing a budget for the coming year and asks for your assistance. The following costs and other data apply to bag production.

You learn that equipment costs and building occupancy are fixed and are based on a normal production of 520,000 units per year. Other overhead costs are variable. Plant capacity is sufficient to produce 635,000 units per year.

Labor costs per hour are not expected to change during the year. However, the cotton supplier has informed EcoSacks that it will impose a 20 percent price increase at the start of the coming budget period. No other costs are expected to change.

During the coming budget period, EcoSacks expects to sell 460,000 bags. Finished goods inventory is targeted to increase from the current balance of 140,000 units to 175,000 units to prepare for an expected sales increase the year after next as a result of legislation in several states regarding plastic bags. Production will occur evenly throughout the year. Inventory levels for cotton and canvas are expected to remain unchanged throughout the year. There is no work-in-process inventory.

Required:

a. Prepare a production budget for the coming year.
b. Estimate the materials, labor, and overhead costs for the coming year.

2. An office building has the following investment characteristics:

            Year 1 NOI                             $2,100,000

            Year 2 NOI                             $2,200,000

            Year 3 NOI                             $2,300,000

            Year 4 NOI                             $2,400,000

            Initial (going in) cap rate        7%

            Loan Principal                        $18,000,000

            Interest rate                             5%

            Amortization                           30 years

            Exit cap rate                            8%

            Holding period                        3 years

Solve for each of the following:

            Purchase price                                                                                    

            Loan to value ratio                                                                             

            Annual debt service                                                                           

            Debt service coverage ratio for year 1                                               

            Loan balance at the end of year 3                                                      

            Equity (Levered) IRR                                                                        

Bill paints portraits and treats the activity as a hobby. This year he had $2,500 of income from painting sales, and spent the following amounts:

Easel $   400

Brushes $   550

Paint $1,300

Canvases $   300

Advertising $   175

Studio Rental $   600

Assuming all the supplies were used up in the paintings he sold, how should Bill report his hobby income and expense on this year’s tax return?

Group of answer choices

Include $2,500 in income, deduct $ - 0 -

Do not include any of the income or expenses

Include $900 in income, deduct $ - 0 –

Include $2,500 in income, deduct $2,500 for AGI

Include $900 in income, deduct $175

eriodic Inventory by Three Methods

The units of an item available for sale during the year were as follows:

1. There are 5 units of the item in the physical inventory at December 31. The periodic inventory system is used. Round average unit cost to one decimal and final answers to the nearest whole dollar, if required.

   a. Determine the inventory cost by the first-in, first-out method.
   $

   b. Determine the inventory cost by the last-in, first-out method.
   $

   c. Determine the inventory cost by the weighted average cost method.
   $

27) The Town of Greenfield issued the following during the year: (1) $600,000 in bonds for the installation of street lights, to be assessed against properties benefited, but secondarily backed by the town; (2) $800,000 in bonds for construction of a public golf course to be self-supported from fees collected from golf course users. How much should be accounted for through debt service funds for payments of principal over the life of the bonds?

A. $0.

B. $600,000.

C. $800,000.

D. $1,400,000.

28) On March 2, 2020, 20-year, 6 percent, general obligation serial bonds were issued at the face amount of $3,000,000. Interest of 6 percent per annum is due semiannually on March 1 and September 1. The first payment of $150,000 for redemption of principal is due on March 1, 2017. Fiscal year-end occurs on December 31. What is the interest expenditure reported in the debt service fund for the fiscal year ending December 31, 2020?

A. $90,000.

B. $135,000.

C. $150,000.

D. $180,000

            29) Which of the following may properly be reported as a component of net position in the proprietary fund statement of net position?   

            30) Internal service funds should be used only if:

A. The reporting government funds the activity with general obligation debt.

B. The reporting government provides services primarily to external participants.

C. The reporting government provides services primarily to other departments of the same

      government.

D. The reporting government provides services below full cost.

            31) The comprehensive annual financial report (CAFR) of a government should contain a statement of revenues, expenses, and changes in fund net position for:

A. Both proprietary and governmental funds.

B. Proprietary but not governmental funds.

C. Governmental but not proprietary funds.

D. Proprietary and fiduciary funds.

            32) Under GASB standards, an internal service fund should prepare all of the following financial statements except a:

Personal Budget

At the beginning of the school year, Katherine Malloy decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the spring semester tuition, which is the same as the fall tuition. The following information relates to the budget:

a. Prepare a cash budget for September, October, November, and December. Enter all amounts as positive values except an overall cash decrease which should be indicated with a minus sign.

b. Are the four monthly budgets that are presented prepared as static budgets or flexible budgets?

c. Malloy can see that her present plan   sufficient cash. If Malloy did not budget but went ahead with the original plan, she would be $   at the end of December, with no time left to adjust.

Public officials for the city of San Francisco, California, have questioned the accuracy of the year 2000 national census. An SRS of 1000 city residents was used to check the percentage of different ethnic groups living in San Francisco. The pertinent data are given in the table below.

Ethnic Origin            Census Percent                      Observed frequency from sample

Asian                             30%                                                  290

Black                             10%                                                  65

Latino                             35%                                                  400

Native American              5%                                                    30

Anglo                              15%                                                  160

Other                               5%                                                    55

Use the significance level of 0.05 to test the accuracy of the year 2000 census regarding the different ethnic groups.

For tax year 2018 all of the following are true regarding the Claim of Right deduction under California tax law except: Group of answer choices

Deductions of $3,000 or less are not allowed because they are subject to the 2% Federal adjusted gross income (AGI) limit

If the amount repaid was not taxed by California, then no credit is allowed

If the taxpayer is eligible to take the credit for California, he or she adds the credit amount on line 76, the total payment line, of the Form 540

If the taxpayer claimed a credit for the repayment on his or her Federal tax return and is deducting the repayment for California, enter the allowable deduction as a positive amount on Schedule CA (540), line 21

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The following table shows the accounts from The Mockers Ltd for the year ended 31 March 2017.

Required:

1. Prepare a Statement of Changes in Owners’ Equity
2. Prepare a Balance Sheet.

Other information is: The repayment terms for the mortgage: payments of $1,000 are due on the 1 December each year. The profit for the year was $11,000 after tax.