The Crane Hotel opened for business on May 1, 2022. Here is its trial balance before adjustment on May 31.

Other data:

Prepare a ledger using T-accounts. Enter the trial balance amounts and post the adjusting entries. (Post entries in the order of journal entries presented in the previous question.)

A General Hospital needs a new MRI machine due to increasing volume of outpatient MRI orders and the state of the existing machine.  The current machine is over 10 years old and breaks down on a regular basis, causing significant inconvenience to patients while at the same time, decreasing revenues and increasing costs.

The new MRI costs $1,100,000 and its useful life is 5 years with a $100,000 salvage value.  It is anticipated that it will generate $250,000 of revenue per year for each of the next 5 years.

Given the above information:

1. Calculate the depreciation expense per year using the straight line method.
2. Compute the present value of the yearly cash flows (all 5 years) using a 4% interest (or discount) rate.  Hint – use the present value annuity table in your text. Use only the revenue that is projected for each year (ignore depreciation). (NEED FORMULAS)
3. Subtract the original cost of the MRI machine from your answer in b.
4. Determine if the project will generate enough cash for the total 5 years to pay for the machine. Hint – just a yes or no.
5. Explain your answer to letter d in a few short sentences.
6. What other factors should be considered before finalizing your decision?

Scenario:

Mike and Carol Gold's 12-year-old daughter Rebecca was abducted on her way home from school on May 15, 2016. Police reports indicated that a stranger had physically dragged Rebecca into a waiting car and sped away. Everyone hoped that the kidnapper and Rebecca would be located quickly. However, as of the end of the year, Rebecca was still missing. The police were still pursuing several promising leads and had every reason to believe that Rebecca was still alive. In 2017, Rebecca was returned safely to her parents. Are the Golds allowed to claim an exemption deduction for Rebecca in 2016 even though she only lived in the Gold's home for four-and-one-half months?

Requirements: Using RIA Checkpoint, research the answer to the question. Use key word search and only the Internal Revenue Code to find your answer.

Write a less sophisticated client letter to the Golds. Keep your letter to 1 page.

On the second page, include the key word(s) used in your search and provide the exact citation for the Internal Revenue Code where you found your answer.

For example, §101 is not a sufficient citation. But, §101(b)(2) would be.

Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington State that explosively erupted in 1982. Data concerning the company’s operations in July appear below:

The company measures its activity in terms of flights. Customers can buy individual tickets for overflights or hire an entire plane for an overflight at a discount.

Required:

1. Prepare a flexible budget performance report for July that includes revenue and spending variances and activity variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,150,000. During 2018, costs of $2,050,000 were incurred with estimated costs of $4,050,000 yet to be incurred. Billings of $2,550,000 were sent, and cash collected was $2,300,000.

In 2019, costs incurred were $2,550,000 with remaining costs estimated to be $3,675,000. 2019 billings were $2,800,000 and $2,525,000 cash was collected. The project was completed in 2020 after additional costs of $3,850,000 were incurred. The company’s fiscal year-end is December 31. Arrow recognizes revenue over time according to percentage of completion.

Required:
1. Compute the amount of revenue and gross profit or loss to be recognized in 2018, 2019, and 2020 using the percentage of completion method?
2a. Prepare journal entries for 2018 to record the transactions described (credit "various accounts" for construction costs incurred).
2b. Prepare journal entries for 2019 to record the transactions described (credit "various accounts" for construction costs incurred).
3a. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2018.
3b. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2019.

Jane Botosan operates a bed and breakfast hotel in a resort area near Lake Michigan. Depreciation on the hotel is $60,000 per year. Jane employs a maintenance person at an
annual salary of $41,000 and a cleaning person at an annual salary of $24,000. Real estate taxes are $10,000 per year. The rooms rent at an average price of $60 per person per night
including breakfast. Other costs are laundry and cleaning service at a cost of $10 per person per night and the cost of food which is $5 per person per night.

Instructions:

1. Determine the number of rentals and the sales revenue Jane needs to break even using the contribution margin technique.

2. If the current level of rentals is 4,000, by what percentage can rentals decrease before Jane has to worry about having a net loss?

3. Jane is considering upgrading the breakfast service to attract more business and increase prices. This will cost an additional $3 for food costs per person per night. Jane feels she
can increase the room rate to $68 per person per night. Determine the number of rentals and the sales revenue Jane needs to break even if the changes are made.

Suppose in its income statement for the year ended June 30, 2017, The Clorox Company reported the following condensed data (dollars in millions).

Salaries and wages expense $450 Research and development expense $110

Depreciation expense 85 Income tax expense 198

Sales revenue 8,225 Loss on disposal of plat assets 45

Interest expense 210 Cost of goods sold    5,440

Advertising expense 490 Rent expense 115

Sales returns and allowances 225 Utilities expense 65

a) Prepare a multiple-step income statement

Calculate the gross profit rate and the profit margin. (Round answers to 1 decimal place, e.g. 15.2%)

b) Assume the marketing department has presented a plan to increase advertising expenses by $130 million. It expects this plan to result in an increase in both net sales and cost of goods sold of 25%. Assume a tax rate of 34%. (Hint: Increase both sales revenue and sales returns and allowances by 25%.)

Prepare a multiple-step income statement. (Round answers to 0 decimal places, e.g. 15,222.)

Calculate the gross profit rate and the profit margin. (Round answers to 1 decimal place, e.g. 15.2%)

MARKETING - BREAKEVEN AND PROFIT ANALYSIS

After years of buying overpriced scarves that she doesn’t really need, Val has decided to start a business that manufactures a range of stylish yet affordable scarves in the U.A.E, she can sell in the U.S. (amounts in U.S dollars).

Each new scarf costs $6 to manufacture, and will retail at $16. The scarves are first sent to wholesalers in the U.S who earn $3 per scarf. The wholesalers distribute them to retailers who have a 15% margin. The plan is to ship the scarves in boxes (5 scarves in each box). shipping costs $5 per box.

Val has decided to attend trade shows in Washington, New York and Los Angeles in order to generate awareness of the new scarves. Each trade show costs $3,000. End user advertising has also been budgeted at $10,000. A part time sales agent has also been appointed (hiring cost $5,000) and this individual earns $0.5 for each scarf sold.

Questions:

1. What level of dollar sales (revenue) and volume (units) is required to break even?
2. What level of dollar sales (revenue) and volume (units) is required to meet a profit objective of $20,000?

Braddock Inc. had the following long-term receivable account balances at December 31, 2016.

Note receivable from sale of division $1,500,00

Note receivable from officer $400,000

Transactions during 2017 and other information relating to Braddocks long-term recievables were as follows.

1. The $1,500,000 note receivable is dated May 1, 2016, bears interest at 9%, and represents the balance of the consideration recieved from the sale of Braddock's electronics divison to New York Company. Principal payments of $500,000 plus appropriate interest are due on May 1, 2017, 2018, and 2019. The first principal and interest payment was made on May 1, 2017. Collection of the note installments is reasonably assured.

a) Prepare all journal entries related to this note for 2016 and 2017. For the journal entry to record the note issuance credit "Miscellaneous Accounts."

b) How much interest revenue would Braddock report related to this note in 2016?

c) How much interest revenue would Braddock report related to this note in 2017?

d) How much interest receivable would Braddock report reltaed to this note in 2016?

e) What is the current portion of this Notes Receivables at 12/31/2017?

Divisional Income Statements and Return on Investment Analysis

E.F. Lynch Company is a diversified investment company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y8, are as follows:

The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations.

Required:

1. Prepare condensed divisional income statements for the three divisions, assuming that there were no support department allocations.

2. Using the DuPont formula for return on investment, compute the profit margin,investment turnover, and return on investment for each division. Round your answers to one decimal place.