Pastina Company sells various types of pasta to grocery chains as private label brands. The company's fiscal year-end is December 31. The unadjusted trial balance as of December 31, 2018, appears below.

Information necessary to prepare the year-end adjusting entries appears below.

Depreciation on the office equipment for the year is $12,000.

Employee salaries and wages are paid twice a month, on the 22nd for salaries and wages earned from the 1st through the 15th, and on the 7th of the following month for salaries and wages earned from the 16th through the end of the month. Salaries and wages earned from December 16 through December 31, 2018, were $1,400.

On October 1, 2018, Pastina borrowed $52,000 from a local bank and signed a note. The note requires interest to be paid annually on September 30 at 12%. The principal is due in 10 years.

On March 1, 2018, the company lent a supplier $22,000 and a note was signed requiring principal and interest at 9% to be paid on February 28, 2019.

On April 1, 2018, the company paid an insurance company $6,240 for a two-year fire insurance policy. The entire $6,240 was debited to insurance expense.

$900 of supplies remained on hand at December 31, 2018.

A customer paid Pastina $2,200 in December for 1,560 pounds of spaghetti to be delivered in January 2019. Pastina credited sales revenue.

On December 1, 2018, $2,400 rent was paid to the owner of the building. The payment represented rent for December 2018 and January 2019, at $1,200 per month.

Required:
Prepare the necessary December 31, 2018, adjusting journal entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.)

Williams-Santana, Inc., is a manufacturer of high-tech industrial parts that was started in 2006 by two talented engineers with little business training. In 2018, the company was acquired by one of its major customers. As part of an internal audit, the following facts were discovered. The audit occurred during 2018 before any adjusting entries or closing entries were prepared. The income tax rate is 40% for all years.

1. A five-year casualty insurance policy was purchased at the beginning of 2016 for $38,000. The full amount was debited to insurance expense at the time.
2. Effective January 1, 2018, the company changed the salvage values used in calculating depreciation for its office building. The building cost $624,000 on December 29, 2007, and has been depreciated on a straight-line basis assuming a useful life of 40 years and a salvage value of $100,000. Declining real estate values in the area indicate that the salvage value will be no more than $25,000.
3. On December 31, 2017, merchandise inventory was overstated by $28,000 due to a mistake in the physical inventory count using the periodic inventory system.
4. The company changed inventory cost methods to FIFO from LIFO at the end of 2018 for both financial statement and income tax purposes. The change will cause a $990,000 increase in the beginning inventory at January 1, 2019.
5. At the end of 2017, the company failed to accrue $16,100 of sales commissions earned by employees during 2017. The expense was recorded when the commissions were paid in early 2018.
6. At the beginning of 2016, the company purchased a machine at a cost of $780,000. Its useful life was estimated to be ten years with no salvage value. The machine has been depreciated by the double-declining balance method. Its book value on December 31, 2017, was $499,200. On January 1, 2018, the company changed to the straight-line method.
7. Warranty expense is determined each year as 1% of sales. Actual payment experience of recent years indicates that 0.75% is a better indication of the actual cost. Management effects the change in 2018. Credit sales for 2018 are $4,600,000; in 2017 they were $4,300,000.

Required:
For each situation:
1. Identify whether it represents an accounting change or an error. If an accounting change, identify the type of change. For accounting errors, choose "Not applicable".
2. Prepare any journal entry necessary as a direct result of the change or error correction as well as any adjusting entry for 2018 related to the situation described. Any tax effects should be adjusted for through Income tax payable or Refund income tax.

Problem 5-27 (LO 5-1, 5-2, 5-3, 5-4, 5-5, 5-7)

Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $513,000 in cash. The subsidiary's stockholders' equity accounts totaled $497,000 and the noncontrolling interest had a fair value of $57,000 on that day. However, a building (with a ten-year remaining life) in Brey's accounting records was undervalued by $51,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (five-year remaining life).

Brey reported net income from its own operations of $83,000 in 2016 and $99,000 in 2017. Brey declared dividends of $28,500 in 2016 and $32,500 in 2017.

At December 31, 2018, Pitino owes Brey $35,000 for inventory acquired during the period.

The following separate account balances are for these two companies for December 31, 2018, and the year then ended.

Note: Parentheses indicate a credit balance.

What was the annual amortization resulting from the acquisition-date fair-value allocations?

Were the intra-entity transfers upstream or downstream?

What intra-entity gross profit in inventory existed as of January 1, 2018?

What intra-entity gross profit in inventory existed as of December 31, 2018?

What amounts make up the $105,255 Equity Earnings of Brey account balance for 2018?

What is the net income attributable to the noncontrolling interest for 2018?

What amounts make up the $645,300 Investment in Brey account balance as of December 31, 2018?

Prepare the 2018 worksheet entry to eliminate the subsidiary’s beginning owners’ equity balances.

Without preparing a worksheet or consolidation entries, determine the consolidation balances for these two companies.

Note: This problem is for the 2018 tax year. Alfred E. Old and Beulah A. Crane, each age 42, married on September 7, 2016. Alfred and Beulah will file a joint return for 2018. Alfred's Social Security number is 111-11-1112. Beulah's Social Security number is 123-45-6789, and she adopted "Old" as her married name. They live at 211 Brickstone Drive, Atlanta, GA 30304. Alfred was divorced from Sarah Old in March 2016. Under the divorce agreement, Alfred is to pay Sarah $1,250 per month for the next 10 years or until Sarah's death, whichever occurs first. Alfred pays Sarah $15,000 in 2018. In addition, in January 2018, Alfred pays Sarah $50,000, which is designated as being for her share of the marital property. Also, Alfred is responsible for all prior years' income taxes. Sarah's Social Security number is 123-45-6788. Alfred's salary for 2018 is $150,000, and his employer, Cherry, Inc. (Federal I.D. No. 98-7654321), provides him with group term life insurance equal to twice his annual salary. His employer withheld $24,900 for Federal income taxes and $8,000 for state income taxes. The proper amounts were withheld for FICA taxes. Beulah recently graduated from law school and is employed by Legal Aid Society, Inc. (Federal I.D. No. 11-1111111), as a public defender. She receives a salary of $42,000 in 2018. Her employer withheld $7,500 for Federal income taxes and $2,400 for state income taxes. The proper amounts were withheld for FICA taxes. Beulah has $500 in qualified dividends on Yellow Corporation stock she inherited. Alfred and Beulah receive a $1,900 refund on their 2017 state income taxes. They itemized deductions on their 2017 Federal income tax return (total of $15,000). Alfred and Beulah pay $4,500 interest and $1,450 property taxes on their personal residence in 2018. Their charitable contributions total $2,400 (all to their church). They paid sales taxes of $1,400, for which they maintain the receipts. Both spouses had health insurance for all months of 2018 and do not want to contribute to the Presidential Election Campaign. Required: Compute Alfred and Beulah's net tax payable (or refund due) for 2018, on a joint return, by providing the following information that would be reported on Form 1040, Schedule A, and Schedule B. Enter all amounts as positive numbers. If is zero, enter "0". Make realistic assumptions about any missing data. If required round your final answers to the nearest dollar.

Variable cost (per pound)

Direct materials $3.75

Direct manufacturing labor 8.00

Variable overhead (manufacturing, marketing, distribution and customer service) 2.05

Total variable cost per bowl $13.80

Fixes costs

Manufacturing $12,000

Marketing, distribution, and customer service 214,800

Total fixed cost $226,800

Selling price $30

Expected sales, 19,500 units $585,000

Income tax rate 40%

S.L. Brook and​ Company, a manufacturer of quality handmade walnut​ bowls, has had a steady growth in sales for the past 5 years.​ However, increased competition has led Mr. Brooks, the​ president, to believe that an aggressive marketing campaign will be necessary next year to maintain the​ company's present growth. To prepare for next​ year's marketing​ campaign, the​ company's controller has prepared and presented Mr. Brooks with the following data for the current​ year, 2017​:

Requirement 1. What is the projected net income for 2017​?

Compute the target net income for 2017 using the above formula. The Net Income is: ?

Requirement 2. What is the breakeven point in units for 2017​?

Compute how many bowls are needed to break even using this formula ​(Enter applicable values to the nearest​ cent, $X.XX.)

Requirement 3. Mr. Brooks has set the revenue target for 2018 at a level of$ 690,000 (or 23,000 ​bowls). He believes an additional marketing cost of $19,440 for advertising in 2018​, with all other costs remaining ​constant, will be necessary to attain the revenue target. What is the net income for 2018 if the additional $19,440 is spent and the revenue target is​ met?

Requirement 4. What is the breakeven point in revenues for 2018 if the additional $19,440 is spent for​ advertising? ​(Do not round any of your​ calculations.)

Requirement 5. If the additional $19,440 is​ spent, what are the required 2018 revenues for 2018 net income to equal 20172017 net​ income?

Using the basic formula determined in requirement​ 1, compute the required number of units​ first, then the required revenue. ​(Do not round any of your​ calculations.)

Requirement 6. At a sales level of 23,000 units, what maximum amount can be spent on advertising if a 2018 net income of $75,516 is​ desired? ​(Do not round any of your​ calculations.) Use the basic formula determined in requirement 1.

Jacob Weaver is a contractor operating as a sole proprietorship (EIN 12-3456789).

2018 Gross income: $243,322.25.

Business expenses: Fuel for equipment $64,080.00

                                 Repairs and maintenance $17,342.00

                                 Lubricants for Equipment $9,670.00

                                 Insurance $6,500.00

                                 Wages $6,300.00

                                 Vehicles $1,768.00

                                 Legal and Professional Expenses $1,750.00

                                 Taxes and Licenses $1,412.00

                                  Advertising $300.00

Clients owe him a total of $53,000, for work completed in 2018.

2018 estimated tax payments were $25,000.

He is using a bedroom in his house as a home office. (Square footage of home 5,600 Office 240 sq. ft.)

He has one half-time employee, Martin, who had been unemployed since returning

from Afghanistan, and is disabled.

Martin worked for Jacob for 20 hours a week, for 41 weeks of 2018.

He earned $10,500.

Jacob had to spend $7,350 for disabled access equipment for Martin.

--------------------------------

Scenario

Jacob and Taylor Weaver, ages 45 and 42 respectively, are married and are filing jointly in
2018.

They have three children, Ashley, age 9; Patrick, age 6; and John, age 18.

Social Security numbers are: Jacob, 222-33-4444; Taylor, 555-66-7777; Ashley, 888-99-1234; Patrick, 789-56-4321; John, 123-45-6789.

Taylor works part-time as a paralegal.

She earned $26,000 in 2018.

Taxes withheld: $4,200 withheld.

Estimated tax payments: $25,000.

$350 paid with their 2017 state tax return.

Jacob and Taylor bought their first house in 2018.

Home mortgage interest: $7,246.

Property tax: $2,230.

Federal income withholding: $2,350.

Charities: $4,500.

$435 to rent a moving truck.

$8,000 to put new siding on the house.

$11,600 for child care expenses ($5,800 for each child).

It was paid to Lil Tigers Daycare, 1115 S. Garrison St., Muncie, IN 47305 (EIN 98-7654321).

Taylor is a part-time student at Ball State University in Muncie.

She received a 1098-T indicating tuition and fees for 2018 in the amount of $6,011.

Health insurance for the family, through Taylor's job, cost $6000 for all 12 months of 2018.

They paid deductibles and co-payments of $550.

QUESTIONS

Please can you show all the exclusions to Taxable income and AGI only on a Form 1040 using above information. I have already completed the other parts of the form, I can do the rest additions and subtractions. Thank you

Williams-Santana, Inc., is a manufacturer of high-tech industrial parts that was started in 2006 by two talented engineers with little business training. In 2018, the company was acquired by one of its major customers. As part of an internal audit, the following facts were discovered. The audit occurred during 2018 before any adjusting entries or closing entries were prepared. The income tax rate is 40% for all years.

1. A five-year casualty insurance policy was purchased at the beginning of 2016 for $35,000. The full amount was debited to insurance expense at the time.
2. Effective January 1, 2018, the company changed the salvage values used in calculating depreciation for its office building. The building cost $600,000 on December 29, 2007, and has been depreciated on a straigh-tline basis assuming a useful life of 40 years and a salvage value of $100,000. Declining real estate values in the area indicate that the salvage value will be no more than $25,000.
3. On December 31, 2017, merchandise inventory was overstated by $25,000 due to a mistake in the physical inventory count using the periodic inventory system.
4. The company changed inventory cost methods to FIFO from LIFO at the end of 2018 for both financial statement and income tax purposes. The change will cause a $960,000 increase in the beginning inventory at January 1, 2019.
5. At the end of 2017, the company failed to accrue $15,500 of sales commissions earned by employees during 2017. The expense was recorded when the commissions were paid in early 2018.
6. At the beginning of 2016, the company purchased a machine at a cost of $720,000. Its useful life was estimated to be ten years with no salvage value. The machine has been depreciated by the double-declining balance method. Its book value on December 31, 2017, was $460,800. On January 1, 2018, the company changed to the straight-line method.
7. Warranty expense is determined each year as 1% of sales. Actual payment experience of recent years indicates that 0.75% is a better indication of the actual cost. Management effects the change in 2018. Credit sales for 2018 are $4,000,000; in 2017 they were $3,700,000.

Required:
For each situation:
1. Identify whether it represents an accounting change or an error. If an accounting change, identify the type of change. For accounting errors, choose "Not applicable".
2. Prepare any journal entry necessary as a direct result of the change or error correction as well as any adjusting entry for 2018 related to the situation described. Any tax effects should be adjusted for through Income tax payable or Refund income tax.

Williams-Santana, Inc., is a manufacturer of high-tech industrial parts that was started in 2006 by two talented engineers with little business training. In 2018, the company was acquired by one of its major customers. As part of an internal audit, the following facts were discovered. The audit occurred during 2018 before any adjusting entries or closing entries were prepared. The income tax rate is 40% for all years.

1. A five-year casualty insurance policy was purchased at the beginning of 2016 for $30,500. The full amount was debited to insurance expense at the time.
2. Effective January 1, 2018, the company changed the salvage values used in calculating depreciation for its office building. The building cost $574,000 on December 29, 2007, and has been depreciated on a straight-line basis assuming a useful life of 40 years and a salvage value of $110,000. Declining real estate values in the area indicate that the salvage value will be no more than $27,500.
3. On December 31, 2017, merchandise inventory was overstated by $20,500 due to a mistake in the physical inventory count using the periodic inventory system.
4. The company changed inventory cost methods to FIFO from LIFO at the end of 2018 for both financial statement and income tax purposes. The change will cause a $915,000 increase in the beginning inventory at January 1, 2019.
5. At the end of 2017, the company failed to accrue $14,600 of sales commissions earned by employees during 2017. The expense was recorded when the commissions were paid in early 2018.
6. At the beginning of 2016, the company purchased a machine at a cost of $630,000. Its useful life was estimated to be ten years with no salvage value. The machine has been depreciated by the double-declining balance method. Its book value on December 31, 2017, was $403,200. On January 1, 2018, the company changed to the straight-line method.
7. Warranty expense is determined each year as 1% of sales. Actual payment experience of recent years indicates that 0.80% is a better indication of the actual cost. Management effects the change in 2018. Credit sales for 2018 are $3,100,000; in 2017 they were $2,800,000

Required:
For each situation:
1. Identify whether it represents an accounting change or an error. If an accounting change, identify the type of change. For accounting errors, choose "Not applicable".
2. Prepare any journal entry necessary as a direct result of the change or error correction as well as any adjusting entry for 2018 related to the situation described. Any tax effects should be adjusted for through Income tax payable or Refund income tax.

Jason invested $1,000 in large U.S. stocks at the beginning of 2012. This investment earned 15.60 percent in 2012, 30.25 percent in 2013, 11.65 percent in 2014, and 2.30 percent in 2015. What return did he earn in the average year during the 2012–2015 period? (Round answer to 2 decimal places, e.g. 1.52.) Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen for easy reference to the values you’ve been given here, and be sure to update any values that may have been pre-entered in the template based on the textbook version of the problem.) Return earned in the average year %

1. On October 1, a company received $3,600 for services to be performed over the next 6 months, with an equal amount of work to be completed each month. If no adjusting entry is made on December 31,

Select one:

a. net income will be understated by $3,600

b. net income will be understated by $1,800

c. net income will be overstated by $1,800

d. net income will be overstated by $3,600

e. net income will be understated by $2,400

2. At the end of the fiscal year, the usual adjusting entry to update Prepaid Insurance for the portion of the benefit that was used up / expired was accidentally omitted. Which of the following statements is true?

Select one:

a. Total assets at the end of the year will be understated.

b. Stockholders' Equity at the end of the year will be understated.

c. Net Income for the year will be overstated.

d. Insurance expense will be overstated.

e. None of the above.