Note: This problem is for the 2019 tax year.

Alice J. and Bruce M. Byrd are married taxpayers who file a joint return. Their Social Security numbers are 123-45-6784 and 111-11-1113, respectively. Alice's birthday is September 21, 1972, and Bruce's is June 27, 1971. They live at 473 Revere Avenue, Lowell, MA 01850. Alice is the office manager for Lowell Dental Clinic, 433 Broad Street, Lowell, MA 01850 (Employer Identification Number 98-7654321). Bruce is the manager of a Super Burgers fast-food outlet owned and operated by Plymouth Corporation, 1247 Central Avenue, Hauppauge, NY 11788 (Employer Identification Number 11-1111111).

The following information is shown on their Wage and Tax Statements (Form W–2) for 2019.

The Byrds provide over half of the support of their two children, Cynthia (born January 25, 1995, Social Security number 123-45-6788) and John (born February 7, 1999, Social Security number 123-45-6780). Both children are full-time students and live with the Byrds except when they are away at college. Cynthia earned $6,200 from a summer internship in 2019, and John earned $3,800 from a part-time job.

During 2019, the Byrds provided 60% of the total support of Bruce's widower father, Sam Byrd (born March 6, 1943, Social Security number 123-45-6787). Sam lived alone and covered the rest of his support with his Social Security benefits. Sam died in November, and Bruce, the beneficiary of a policy on Sam's life, received life insurance proceeds of $1,600,000 on December 28.

The Byrds had the following expenses relating to their personal residence during 2019:

The Byrds had the following medical expenses for 2019:

The medical expenses for Sam represent most of the 60% that Bruce contributed toward his father's support.

Other relevant information follows:

• When they filed their 2018 state return in 2019, the Byrds paid additional state income tax of $900.
• During 2019, Alice and Bruce attended a dinner dance sponsored by the Lowell Police Disability Association (a qualified charitable organization). The Byrds paid $300 for the tickets. The cost of comparable entertainment would normally be $50.
• The Byrds contributed $5,000 to Lowell Presbyterian Church and gave used clothing (cost of $1,200 and fair market value of $350) to the Salvation Army. All donations are supported by receipts, and the clothing is in very good condition.
• Via a crowdfunding site (gofundme.com), Alice and Bruce made a gift to a needy family who lost their home in a fire ($400). In addition, they made several cash gifts to homeless individuals downtown (estimated to be $65).
• In 2019, the Byrds received interest income of $2,750, which was reported on a Form 1099–INT from Second National Bank, 125 Oak Street, Lowell, MA 01850 (Employer Identification Number 98-7654322).
• The home mortgage interest was reported on Form 1098 by Lowell Commercial Bank, P.O. Box 1000, Lowell, MA 01850 (Employer Identification Number 98-7654323). The mortgage (outstanding balance of $425,000 as of January 1, 2019) was taken out by the Byrds on May 1, 2015.
• Alice's employer requires that all employees wear uniforms to work. During 2019, Alice spent $850 on new uniforms and $566 on laundry charges.
• Bruce paid $400 for an annual subscription to the Journal of Franchise Management and $741 for annual membership dues to his professional association.
• Neither Alice's nor Bruce's employer reimburses for employee expenses.
• The Byrds do not keep the receipts for the sales taxes they paid and had no major purchases subject to sales tax.
• This year the Byrds gave each of their children $2,000, which was then deposited into their Roth IRAs.
• Alice and Bruce paid no estimated Federal income tax, and they did not engage in any virtual currency transactions during the year. Neither Alice nor Bruce wants to designate $3 to the Presidential Election Campaign Fund.

Required:

Compute net tax payable or refund due for Alice and Bruce Byrd for 2019. If they have overpaid, they want the amount to be refunded to them.

• Make realistic assumptions about any missing data.
• If an amount box does not require an entry or the answer is zero, enter "0".
• Enter all amounts as positive numbers.
• It may be necessary to complete the tax schedules before completing Form 1040.
• When computing the tax liability, do not round your immediate calculations. If required, round your final answers to the nearest dollar.

Minden Company introduced a new product last year for which it is trying to find an optimal selling price. Marketing studies suggest that the company can increase sales by 5,000 units for each $2 reduction in the selling price. The company’s present selling price is $91 per unit, and variable expenses are $61 per unit. Fixed expenses are $834,600 per year. The present annual sales volume (at the $91 selling price) is 25,800 units.

Required:

1. What is the present yearly net operating income or loss?

2. What is the present break-even point in unit sales and in dollar sales?

3. Assuming that the marketing studies are correct, what is the maximum annual profit that the company can earn? At how many units and at what selling price per unit would the company generate this profit?

4. What would be the break-even point in unit sales and in dollar sales using the selling price you determined in (3) above (e.g., the selling price at the level of maximum profits)?

Consider a 1-year forward contract on a stock with a price of $51. The current price of the stock is $50. A cash dividend payment of $2 per share is anticipated in 9 months. The interest rate is 3% per annum with continuously compounding. Assume that there are no transaction costs. (a) Determine the fair price and the initial value of the forward contract today. (b) Is there any arbitrage opportunity? Verify your trading positions taken at each point in time. (c) After 10 months, the stock price falls 2% and the interest rate remains unchanged. Calculate the value of the forward contract. What is the mark-to-market?

1a). The following information is available for the year ended December 31: The amount of raw materials used in production for the year is:

a. $4,100.

b. $5,100.

c. $3,500.

d. $6,500.

e. $4,000

1.b) Bard Manufacturing uses a job order cost accounting system. During one month Bard purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Bard incurred a factory payroll of $150,000, paid in cash, of which $40,000 is classified as indirect labor. Bard uses a predetermined overhead application rate of 150% of direct labor cost. The journal entry to record the purchase of materials is:

a. Debit Raw Materials Inventory $198,000; credit Accounts Payable $198,000.

b. Debit Goods in Process Inventory $198,000; credit Accounts Payable $198,000.

c. Debit Raw Materials Inventory $198,000; credit Goods in Process Inventory $198,000.

d. Debit Goods in Process Inventory $195,000; credit Raw Materials Inventory $195,000.

e. Debit Raw Materials Inventory $198,000; credit Finished Goods Inventory $198,000.

1. c) Bard Manufacturing uses a job order cost accounting system. During one month Bard purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Bard incurred a factory payroll of $150,000, paid in cash, of which $40,000 is classified as indirect labor. Bard uses a predetermined overhead application rate of 150% of direct labor cost. The journal entry to record the issuance of materials to production is:

a. Debit Raw Materials Inventory $195,000; credit Accounts Payable $195,000.

b. Debit Goods in Process Inventory $195,000; credit Raw Materials Inventory $195,000.

c. Debit Raw Materials Inventory $195,000; credit Goods in Process Inventory $195,000.

d. Debit Goods in Process Inventory $165,000; debit Factory Overhead $30,000; credit Raw Materials Inventory $195,000.

e. Debit Finished Goods Inventory $195,000; credit Raw Materials Inventory $195,000.

1.d) Bard Manufacturing uses a job order cost accounting system. During one month Bard purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Bard incurred a factory payroll of $150,000, paid in cash, of which $40,000 is classified as indirect labor. Bard uses a predetermined overhead application rate of 150% of direct labor cost. The journal entry to record the application of factory overhead to production is:

a. Debit Goods in Process Inventory $225,000; credit Factory Overhead $225,000.

b. Debit Goods in Process Inventory $165,000; credit Factory Overhead $165,000.

c. Debit Factory Payroll $150,000; credit Goods in Process Inventory $150,000.

d. Debit Factory Overhead $165,000; credit Goods in Process Inventory $165,000.

e. Debit Goods in Process Inventory $165,000; credit Factory Payroll $165,000.

1.e) Bard Manufacturing uses a job order cost accounting system. During one month Bard purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Bard incurred a factory payroll of $150,000, paid in cash, of which $40,000 is classified as indirect labor. Bard uses a predetermined overhead application rate of 150% of direct labor cost. Bard's beginning and ending Goods in Process Inventory are $15,500 and $27,000 respectively. Compute the cost of product transferred to Finished Goods Inventory:

a. $558,500.

b. $440,000.

c. $413,000.

d. $428,500.

e. $415,000.

At the end of the preceding year, Gonzales Industries had a deferred tax asset of $17,500, attributable to its only temporary difference of $50,000 for estimated expenses. At the end of the current year, the temporary difference is $45,000. At year-end, Gonzales Industries now estimates that it is more likely than not that one-third of the deferred tax asset will never be realized. Taxable income is $12,000 for the current year and the tax rate is 30% for all years. Required Show well-labeled supporting computations for each component of the journal to record Gonzales Industries' income tax expense for the current year, assuming that at the beginning of the year, the valuation allowance account for the deferred tax asset had a balance of $1,000.

A lessor has signed a non-cancelable 5-year lease of a warehouse with a lessee:

• The lessor believes that the lessee will make all 5 of the beginning-of-the-year rentals of $62,018 each, i.e., the lessor believes collection of the rentals is probable.

• The structure has an estimated useful life of 40 years, and at the end of the lease, it will be returned to the lessor, who plans to maintain it for storage of idled machinery.

• The warehouse has a fair value of $800,000, and unknown to the lessee, the cost of the property to the lessor was $500,000.

• The lease contains a residual guarantee of $700,000, and unknown to the lessor, the lessee does not expect the residual value to exceed $650,000.

• In setting the terms of the lease, the lessor used a 6% rate of return, although that fact is not known to the lessee, whose borrowing rate is 8% and who is unable to determine the lessor’s implicit rate.

Required—Identify the type of lease the above contract represents to the lessor by applying each of the five lease classification criteria of FASB ASC 842.

The following data is related to sales and production for Blue sky company for last year.

Selling price per unit $140

Variable manufacturing costs per unit $62

Variable selling and administrative expenses per unit $6

Fixed manufacturing overhead (in total) $32,000

Fixed selling and administrative expenses (in total) $6000

Units produced during the year 2000

Units sold during year 900

a) Using variable costing, what is the operating income for last year?

b) Management is considering the following courses of actions to increase net income:

1) Increase selling price by 15% with no change in variable costs.

2) Decrease variable costs to 40% of sales.

3) Decrease fixed manufacturing costs by 28000.

If the management is aiming to maximize the net income, which one is the best course of action? Present all of your calculations.