Cecil C. Seymour is a 64-year-old widower. He had income for 2020 as follows:Pension from former employer$39,850Interest income from Alto National Bank5,500Interest income on City of Alto bonds4,500Dividends received from IBM stock held for over one year2,000Collections on annuity contract he purchased from Great Life Insurance5,400Social Security benefits14,000Rent income on townhouse9,000The cost of the annuity was $46,800, and Cecil was expected to receive a total of 260 monthly payments of $450. Cecil has received 22 payments through 2020.Cecil’s 40-year-old daughter, Sarah C. Seymour, borrowed $60,000 from Cecil on January 2, 2020. She used the money to start a new business. Cecil does not charge her interest because she could not afford to pay it, but he does expect to collect the principal eventually. Sarah is living with Cecil until the business becomes profit-able. Except for housing, Sarah provides her own support from her business and $1,600 in dividends on stocks that she inherited from her mother.Other relevant information is presented below.•             Expenses on rental townhouse:Utilities$2,800Maintenance1,000Depreciation2,000Real estate taxes750Insurance700• State income taxes paid: $3,500•              County personal property taxes paid: $3,100•         Payments on estimated 2020 Federal income tax: $5,900•               Charitable contributions of cash to Alto Baptist Church: $7,400• Federal interest rate: 6%•            Sales taxes paid: $912Compute Cecil’s 2020 Federal income tax payable (or refund due)."

requirement

1) What is the 2020 Adjusted Gross Income for Cecil Seymour?

2) What is the 2020 taxable income for Cecil Seymour?
3) What is the 2020 balance due or (refund) for Cecil Seymour?

What accounts do I credit and debit?

On December 1, Photography issued 10,000 shares of common stock to john in exchange for $40,000 cash

On December 1, Photography purchased photography equipment for $7,560 cash

On December 1, Photography prepaid $2,300 for the first 2 month's rent for their photography studio. The company's policy is to initially record prepaid expenses and unearned revenues in balance sheet accounts

On December 4, Photography received a $4,200 deposit (partial payment) from john for their June wedding. The company's policy is to initially record prepaid expenses and unearned revenues in balance sheet accounts

On December 9, Photography received $2,160 cash for full payment in advance from john for a late December photo shoot

On December 12, Photography purchased $1,680 of photography supplies on account

On December 15, Photography performed photography services for a local church and billed the client $8,800

On December 18, Photography received its electric bill (utilities) in the amount of $1,680. Payment is due on January 18

On December 28, Photography paid $700 on account

On December 30, Photography paid $1,450 in staff assistant's salary for December

On December 30, Photography paid a $1,300 cash dividend

Information for adjusting entries: The photography equipment purchased on December 1 has an estimated useful of of 3 years and no residual value. Prepare the adjusting entry to record depreciation for the month of December

Prepare the adjusting entry required for rent expired during December

Prepare the adjusting entry to record revenue earned from the photo shoot for Edward Taylor. Taylor paid $2,160 in advance on December 9, and the service was completed late in December

A physical count of photography supplies indicate that $340 of supplies are on hand as of December 31. Prepare the required adjusting entry, if any

Andy and Currie met in Tax class and were married. They have five children: Miranda age 6, Savannah age 10, Wenbo age 12, Rachel age 15, and Luke age 20. Luke has his own apartment but he works in the family business, he earned $25,000 last year. Andy works for a CPA firm. In 2020 he earned $77,000, $12,000 of federal income tax was withheld, and $3,000 of state income tax was withheld. In addition, they earned $300 of interest on their joint savings account, they received dividends of $1,200 on stock that they own (all the dividends are qualified), and they sold 100 shares of stock for $20 a share (they paid $10 a share three years ago).

Currie operates a welding shop in a facility that she rents. The business motto is “Still not as fun as Tax Class”. She operates as a sole proprietor, she has one part-time employee, plus Luke who does most of the welding (the rest of the children have to clean up the shop each evening before they get their supper).

Income and expenses of the welding business in 2020 were:

            Gross revenues                         $248,000

            Employee salaries                         54,000

            Employee payroll taxes                   5,400

            Building Insurance                         16,000

            Welding supplies                           55,000

            Rent                                             18,900

Currie paid estimated State income tax of $4,300 during the year, and estimated federal income tax of $15,000.

In addition the family also had the following expenses:

Family medical and dental expenses    $19,000

Real estate taxes                                   3,400

Home mortgage interest                       9,000 (their mortgage is $300,000)

Credit card finance charges                    2,600

Sales tax                                               4,200

Cash donations to their church              4,000

Assume that there is no Alternative Minimum Tax (AMT) for them.

What is their taxable income? taxes before tax credits? total tax liability? refund?

Mr. Charlie Brown has spent his entire career with the Peanuts Manufacturing Company. He is located in Sarnia, Ontario and started with the company as a production line manager. He has since moved up the ranks of the company, and most recently has been supervising the entire production department. In early 2020, Charlie was offered an opportunity to oversee the construction of a new manufacturing operation in Jacksonville, Florida, USA. If Mr. Brown takes the position, he would move to the United States on May 1, 2020 and when the facility is completed, Mr. Brown would remain as the senior vice president in charge of all of the Florida operations. Mr. Brown and his wife have 2 school age children who are enrolled at the local elementary school in grades 3 and 5. The Browns own a home in Sarnia and are involved in their community. They belong to their local church and a local recreational club where their children take swimming lessons and the family enjoys socializing. The Brown Family is considering the offer to move and is looking for advice on how their Canadian residency for tax purposes would be affected by this potential move. Mr. Brown has been told by the American payroll department that his tax rate will be lower if he is taxed in the United States. Mr. Brown would leave on May 1st, but the Browns are considering having Mrs. Brown and the children stay in Sarnia to finish out the school year which finishes at the end of June.

Required: Create a short (one page) memo explaining the tax policy to your client. Keep in mind that he will have limited understanding of income taxation, so you need to analyze the issue at a high level and then clearly describe the options available to Mr. Brown so that he can make an informed decision about his move and the tax consequences.

Cecil C. Seymour is a 64-year-old widower. He had income for 2018 as follows:

Pension from former employer $39,850

Interest income from Alto National Bank 5,500

Interest income on City of Alto bonds  4,500

Dividends received from IBM stock held for over one year 2,000

Collections on annuity contract he purchased from Great Life Insurance  5,400

Social Security benefits 14,000

Rent income on townhouse 9,000

The cost of the annuity was $46,800, and Cecil was expected to receive a total of 260 monthly payments of $450. Cecil has received 22 payments through 2017. Cecil’s 40-year-old daughter, Sarah C. Seymour, borrowed $60,000 from Cecil on January 2, 2017. She used the money to start a new business. Cecil does not charge her interest because she could not afford to pay it, but he does expect to collect the principal eventually. Sarah is living with Cecil until the business becomes profitable. Except for housing, Sarah provides her own support from her business and $1,600 in dividends on stocks that she inherited from her mother. Other relevant information is presented below: • Expenses on rental townhouse:

Utilities $2,800

Maintenance 1,000

Depreciation 2,000

Real estate taxes 750

Insurance 700

• State income taxes paid: $3,500

• County personal property taxes paid: $2,100

• Payments on estimated 2016 Federal income tax: $5,900

• Charitable contributions of cash to Alto Baptist Church: $6,400

• Federal interest rate: 6%

• Sales taxes paid: $912

Compute Cecil’s 2018 Federal income tax payable (or refund due).

Although people’s acceptance of homosexuality and homosexuals has improved, prejudice and stigma remain, and attitudes towards homosexuals are frequently negative (Avery et al., 2007; Ben-Ari, 2001; Petersen & Hyde, 2010). Prejudice and stigma against the (LGBT) community have also been reported by several studies in Turkey, the findings of which were consistent with those of other international studies (Çırakoğlu, 2006; Gelbal & Duyan, 2006). Some of these negative attitudes and oppositions arise from misconceptions and stereotypes about homosexuals. homosxual men were generally described as people who act different … wearing feminine clothes, talking feminine, being similar to females, etc.’ (Sakallı, 2002, p. 116). Since masculine traits are overvalued and feminine traits are undervalued, homosexuals in Turkey have been rejected by a heterosexist society, and homosexuality is regarded as intolerable and dishonourable to manhood (Akpınar, 2003). Prejudice and negative attitudes towards homosexuality in Turkey have also been profoundly affected by another factor: the Islamic religion. Turkey is a secular country which has a 99% Muslim majority (Bereket & Adam, 2008). Although there are many controversies about Islam’s view of homosexuality and homosexuals (Siraj, 2006), referring to the hadiths (an interpretation of the Islamic Holy Book Qur’an) on the destruction of sexual deviants, homosexuality is explicitly condemned, absolutely forbidden and punishable by death, and many Islamic scholars regard homosexuality as a major sin and a crime (Siraj, 2009). Accepting homosexuality as legal, homosexuals and homosexual acts are neither appreciated nor tolerated; homosexuality is regarded as a violation of human nature in Turkish society (Tapınç, 1992). In addition to identifying the hostility within the sociocultural structures and religion towards homosexuality, the social context in the field of physical education (PE) and sports is not a welcoming environment for LGBT individuals either. Davison and Frank (2006) defined masculinity as ‘not-feminine’ and as having ideal physical and athletic qualities including strength, power, speed and endurance. In addition, masculine men were expected to be heterosexual; lesbian women and men were considered to be deviant, and not suited for sports (Elling & Janssens, 2009). Several studies have shown negative attitudes and behaviours towards lesbians and homosexual men in PE and sports settings (Roper & Halloran, 2007; Southall, Nagel, Anderson, Polite, & Southall, 2009). The Turkish PE and sports literature is bereft of studies investigating the existence of homophobic attitudes. One of the most well-known arguments related to sports homophobia in Turkey started with a statement made by a famous Turkish ballet dancer. He stated that ‘there are more homosexual football players than homosexual ballet dancers. I know homosexual football players’. Many people from the Turkish soccer world protested against his statements for bringing soccer players under suspicion (Akbaş, 2004). Following these attacks, the ballet dancer made a statement that his friends who are homosexual soccer players played in another country. He stressed that he had not intended to cast aspersions on soccer players. After his statements the Turkish soccer world returned to a ‘normal’ heterosexual life. Given the marginalization of homosexuality in Turkish society and, perhaps even more so in the Turkish sporting world, the topic is predictably an understudied and seemingly taboo subject for investigation. As a sport psychology consultant in training working at a public university, your client today is Reza, a 20 year old student-athlete from Turkey studying in the US who is disclosing his preference for men in relationships to you and sharing his country's atittude and belief about homosexual men in sport as cited above.

1. Analyse a homosexual university student’s experiences of homophobia in Turkish society 2. Discuss if the fact that he is a major in Health and Fitness Management can help with his motivation to play, the stress to deal with the situation he returns to every summer on holidays. 3. What kind of feedback could you give him to help him? 4. Could imagery be useful when dealing with adversity? if so, how. 5. How would you introduce self confidence and well-being concepts to him to help him process what is going on in his country and in the sport in this country?

Question: In January 2009, Tom Sosa, the purchasing manager, received a telephone call from their Columbus,...

In January 2009, Tom Sosa, the purchasing manager, received a telephone call from their Columbus, Indiana, diesel engine supplier informing him that effective June they were no longer producing the D-342 diesel engines at the Columbus plant. The D-342 engine sales were decreasing and would no longer be in their product line. Tom was in shock. He was now forced to deal with the sole supplier of the D-342 located in Portland, Oregon. The most recent price schedule submitted by the Oregon engine supplier is given below:

The prices had been basically the same as the Columbus supplier except that they are F.O.B. Portland. The traffic department informed Tom that the transportation cost per hundredweight is $10 for carload lots of 50,000 pounds. The less than carload rate is $15 per hundredweight. The replenishment cycle normally takes one week.

BACKGROUND

Tom Sosa, the supply manager for MARS, Inc. was contemplating several significant changes in the D-342 diesel engine market. Mr. Sosa was concerned because in its production of the 98-D loader, MARS used 10 diesel engines each working day of the month. (MARS operated on a 20-day-per-month schedule.) Each engine weighs 500 pounds. Engine orders are currently placed every Monday morning. For the past 10 years, the D-342 engines had been produced in only two locations in the United States, one in Columbus, Indiana, and the other in Portland, Oregon. Mr. Sosa felt fortunate that the Columbus producer was located approximately 30 miles from his facility. The Columbus supplier offered just-in-time delivery service at no charge to MARS.

MARS implemented lean manufacturing in 2002. The kanban-controlled JIT production system was implemented based on the premise of minimizing work-in-process inventories (waste) by reducing lot sizes in order to increase production efficiency and product quality.

ACTION TAKEN BY TOM

Mr. Sosa compiled cost and warehouse capacity data on the D-342 engine from the accounting department. See Table C17.1.

Mr. Sosa wonders what effects these new developments will have on his cost structure.

Assignment Questions

• What is the difference between all-unit quantity discount and incremental discount schedules? How would the costs and EOQs differ? Which would be preferable assuming that both share the same cost figures?

TABLE C17.1
Cost and Warehouse Capacity

Please only answer the first question!

The OECD is a club of the most advanced economic nations in the world – based on living standards and per capita income more than absolute size. Newer members include Turkey, Mexico and Hungary. China and India are not yet members despite their vast populations. Currently the OECD has 32 members.

The 2009 OECD Employment Outlook discusses prospects for unemployment and possible policy responses. The evolution of unemployment depends on (a) the size of the shock, (b) the flexibility of the economy to respond and (c) the extent of support by government. In the worst previous postwar recession of 1973-76, OECD unemployment increased by half. By 2009, the OECD reckoned that unemployment would rise by 80 per cent - from 5.5 per cent to 10 per cent of the labour force - during 2007-10.

This analysis reflected the magnitude of the initial shock. Clearly, this would affect different countries differently. One way in which to assess which economies were most vulnerable is to estimate their capacity to absorb shocks through flexible labour markets that match potential workers and job opportunities more quickly. This is likely to depend on wage flexibility, labour market mobility, attitudes of trade unions and the extent of labour market regulation.

The figure below shows a measure of labour market flexibility based on labour market history during 2000-05. It plots the annual fraction of workers hired to new jobs or leaving existing jobs (by choice or dismissal) during the year. It shows that in Turkey, Denmark and the United States, half of all workers are changing jobs annually. In contrast, the countries with the lowest labour market mobility are Greece, Italy and Austria.

Annual fraction of workers hired or fired, 2000-05 (%)


Source : OECD Employment Outlook, 2009  
Econ 1110 Section D Case # 1 Winter 2018 3

Countries with greater job stability are probably slower to experience initial unemployment but, when unemployment does increase, they are also less successful at helping people out of unemployment back into work. Since there is considerable cross-country evidence that those in longer-term unemployment find it ever more difficult to reconnect with the labour market, in the medium run this fiscal burden of unemployment benefits is likely to be greater in countries with less flexible labour markets.

Governments provide two kinds of support. The first is measurable by the generosity of unemployment benefit, which has two dimensions – the replacement rate (the ratio of benefit to previous wages in work) and the number of years for which benefit is available. The table below documents considerable differences across countries.

In Norway and Belgium, with strong traditions of social democracy, unemployment benefit is generous both because it is high relative to wages in work and because it continues for at least 5 years after a spell of unemployment begins. French unemployment benefit is initially as generous but less so after year 2. The UK is considerably less generous in replacement rate, but entitlement continues undiminished over the 5 year period. In countries such as Japan, Greece and the USA, unemployment benefit is almost worthless after the first year in unemployment.

Duration of unemployment Year 1 Year 2 Year 5   Replacement rate (%) Norway 72 72 72 Belgium 65 63 63 France 67 64 31 UK 28 28 28 Japan 45 3 3 Greece 33 5 1 USA 28 0 0 Source: OECD Employment Outlook, 2009

The second aspect of state support for the unemployed are active labour market policies that enhance incentives, confidence and the ability of the unemployed to look for jobs. Even if the post-crash recession reflected a sharp fall in demand – for output and then for labour – it is important not to neglect supply-side policies that maintain the maximum labour market flexibility.

With the benefit of hindsight, the most puzzling features of the labour market since the financial crash have been (a) the relatively small increase in unemployment and (b) the disappointing performance of labour productivity. For example, UK unemployment was still only 8 per cent in late 2012. The US has also avoided double-digit unemployment and appeared to have resumed steady if modest output growth. Two explanations consistent with facts (a) and (b) are that (i) firms engaged in more labour hoarding in recession than in previous cyclical recessions, and (ii) that many workers who would otherwise have become unemployed took up part-time working or self-employment. The rise of the Internet allowed many people to embark on small businesses in the service sector.

Econ 1110 Section D Case # 1 Winter 2018 4

With long-term demographic trends also implying that pension schemes would face greater and greater financial strains, and with governments removing subsidies to pension contributions in an effort to retain fiscal solvency, it is also possible that some older workers simply retired while the going was good, rather than face a period of unemployment when rehiring of older workers was likely to be a tough prospect.


Questions on case study 23.2

1. The case study highlights the difference between two types of unemployment, namely frictional and structural unemployment. Explain these two types with examples from the case study.

2. With reference to the case study, explain how higher labour market flexibility can be less costly to both the unemployed and the economy.

3. Unemployment tends to fall during economic booms and rise in periods of economic recession. This type of unemployment is known as cyclical or demand-deficient unemployment. Explain what supply–side policies are and how they can be implemented to reduce unemployment.

Case 4.21 Arthur Anderson: a Fallen Giant

1. With regard to the destruction of the documents, was there a difference between what was legally obstruction of justice and what was ethical in terms of understanding what was happening at Enron? When the U.S. Supreme Court reversed the Andersen decision, the Wall Street Journal noted that the Andersen case was a bad legal case and a poor prosecutorial decision on the part of the Bush administration. Why do you think the prosecutors took the case forward? What changes under SOX would make the case easier to pursue today?

2. David Duncan was active in his church, a father of three young daughters, and a respected alumnus of Texas A&M. Mr. Duncan’s pastor talked with the New York Times following Enron’s collapse and Duncan’s indictment, and discussed with the reporter what a truly decent human being Duncan was. What can we learn about the nature of   those who commit these missteps? What can you add to your credo as a result of Duncan’s experience? Was the multimillion-dollar compensation he received a factor in his decision-making processes? Can you develop a decision tree on Duncan’s thought processes from the time of the first SPE until the shredding? Using the models you learned in Units 1 and 2, what can you see that he missed in his analysis?

3. In 2000, a full two years before WorldCom’s collapse, Steven Brabbs, WorldCom’s director of international finance and control, who was based in London, raised objections when he discovered after he had completed his division’s books for the year that $33.6 million in line costs had been dropped from his books through a journal entry. He was told that the changes were made pursuant to orders from CFO Scott Sullivan. He next suggested that the treatment be cleared with Arthur Andersen. When there was no response to his suggestion that the external auditor be consulted, Mr. Brabbs again raised his bjections in a meeting with internal financial executives a few months later. Following the meeting, Mr. Brabbs was chastised by WorldCom’s controller for raising the issue again. The following quarter, Mr. Brabbs received orders from WorldCom headquarters to make another similar change, but to do so at his level rather than having it done from corporate headquarters via journal entry. Unwilling to have the entries generate from his division, he created another entity and transferred the costs to it. He voiced his concerns again and was told that there was no choice because the accounting was a“Scott Sullivan directive.” Mr. Brabbs also had a meeting with Arthur Andersen auditors to discuss his concerns. Following the meeting he received e-mail from WorldCom’s controller, David Myers, which directed that Mr. Brabbs was“not [to] have any more meetings with AA for any reason.” When WorldCom’s internal audit staff began to raise questions about the reserves and the capitalization of ordinary expenses, they were prohibited from doing further work and, for the most part, worked nights and weekends to untangle the accounting nightmare they had first discovered with a simple question about receipts for some   capitalized expenses. CFO Scott Sullivan asked the audit staff to wait at least another quarter before continuing with their investigation. Andersen auditors reported any internal audit inquiries to Sullivan and did not follow through on questions and concerns raised. What controls were missing? Why the reporting lines to Sullivan?

4. One of the tragic ironies to emerge from the collapse of Arthur Andersen, following its audit work for Sunbeam, WorldCom, and Enron, was that it had survived the 1980s savings-and-loan scandals unscathed. In Final Accounting: Ambition, Greed and the Fall of Arthur Andersen, the following poignant description appears: “The savings and-loan crisis, when it came, ensnared almost every one of the Big 8. But Arthur Andersen skated away virtually clean, because it had made the decision, years earlier[,] to resign all of its clients in the industry. S&Ls for years had taken advantage of a loophole that allowed them to boost earnings by recording the value of deferred taxes. Arthur Andersen accountants thought the rule was misleading and tried to convince their clients to change their accounting. When they refused, Andersen did what it felt it had to: It resigned all of its accounts rather than stand behind accounting that it felt to be wrong.” What takes a company from the gold standard to indictment and conviction?