Ratchet Company uses budgets in controlling costs. The August 2020 budget report for the company’s Assembling Department is as follows.

The monthly budget amounts in the report were based on an expected production of 64,000 units per month or 768,000 units per year. The Assembling Department manager is pleased with the report and expects a raise, or at least praise for a job well done. The company president, however, is unhappy with the results for August because only 62,000 units were produced.

In September, 68,000 units were produced. Prepare the budget report using flexible budget data, assuming (1) each variable cost was 10% higher than its actual cost in August, and (2) fixed costs were the same in September as in August. (List variable costs before fixed costs.)

Bill Johnson's Company Sales for January, February, and March are expected to be $200,000, $210,000, and $190,000, respectively. All sales are on account and are collected 50% in the month of the sale and 45% in the following month. The remaining 5% is determined to be uncollectible. Raw materials are purchased one month before being needed, and all purchases and expenses are paid for as incurred. The cash balance at February 1 is $8,750. Activities for January, February, and March are expected to be:

Directions: Prepare a cash budget for the month of August 2020.

Do not enter dollar signs or commas in the input boxes.
Do not use the negative sign.

Required information

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Portions of the financial statements for Parnell Company are provided below.

Required:
1. Prepare the cash flows from operating activities section of the statement of cash flows for Parnell Company using the direct method. (Enter your answers in thousands (i.e., 10,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.)

Required:
2. Prepare the cash flows from operating activities section of the statement of cash flows for Parnell Company using the indirect method. (Enter your answers in thousands (i.e., 10,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.)

BL Aircraft manufactures and distributes aircraft parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan, JBL granted options to key officers on January 1, 2018. The options permit holders to acquire 9 million of the company's $1 par common shares for $38 within the next six years, but not before January 1, 2021 (the vesting date). The market price of the shares on the date of grant is $42 per share. The fair value of the 9 million options, estimated by an appropriate option pricing model, is $6 per option. Because the plan does not qualify as an incentive plan, JBL will receive a tax deduction upon exercise of the options equal to the excess of the market price at exercise over the exercise price. The tax rate is 40%.

Required:
1. Determine the total compensation cost pertaining to the incentive stock option plan. Determine the total compensation cost pertaining to the incentive stock option plan. (Enter your answer in millions (i.e., 10,000,000 should be entered as 10).)

2. & 3. Record the necessary journal entries on December 31, 2018, 2019, and 2020. Assume all of the options are exercised on August 21, 2022, when the market price is $43 per share. Record the necessary journal entries on December 31, 2018, 2019, and 2020. Assume all of the options are exercised on August 21, 2022, when the market price is $43 per share. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).

The following balance sheet (statement of financial position) is presented for Level Up Corporation.

Additional information from December 31, 2019 statement of financial position:

Accounts receivable                            $180

Merchandise inventory                        200

Property, Plant and Equipment (net) 250

Retained earnings                                   80

Preferred shares                                  120

Common Shares                                  250   

Requirements:

1. Compute the following ratios, showing all work.

Current ratio

Acid-test ratio

Accounts receivable collection period

Number of days of sales in inventory

Debt to shareholders’ equity ratio

Return on shareholder’s equity

2. What do these ratios tell you about the Level Up Corporation?

On January 1, 2018, Winn Heat Transfer leased office space under a three year operating lease agreement. The arrangement specified three annual rent payments of $75,000 each, beginning December 31, 2018, and at each December 31 through 2020. The lessor, HVAC Leasing calculates lease payments based on an annual interest rate of 7%. Winn also paid a $330,000 advance payment at the beginning of the lease in addition to the first $75,000 rent payment. With permission of the owner, Winn made structural modifications to the building before occupying the space at a cost of $405,000. The useful life of the building and the structural modifications were estimated to be 30 years with no residual value. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:

Prepare the appropriate entries for Winn Heat Transfer from the beginning of the lease through the end of 2020. Winn’s fiscal year is the calendar year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to nearest whole dollars.)

1.Record the beginning of the lease for Winn.

2.Record the lease payment for Winn

3.Record the lease and interest payment for Winn.

4.Record the amortization of right-to-use asset for Winn.

5.Record the depreciation expense for Winn.

6.Record the lease and interest payment for Winn.

7.Record the amortization of right-to-use asset for Winn.

8.Record the depreciation expense for Winn.

9.Record the lease and interest payment for Winn.

10.Record the amortization of right-to-use asset for Winn.

11.Record the depreciation expense for Winn.

Myers Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows.

Fixed overhead costs per month are Supervision $3,900, Depreciation $1,100, and Property Taxes $700. The company believes it will normally operate in a range of 5,900–9,800 direct labor hours per month.

Assume that in July 2020, Myers Company incurs the following manufacturing overhead costs.

(a) Prepare a flexible budget performance report, assuming that the company worked 8,500 direct labor hours during the month and prepare a flexible budget performance report, assuming that the company worked 7,800 direct labor hours during the month.. (List variable costs before fixed costs.)

Question

Jack is performing the audit on leases of Anglo Ltd for the year ended 31 December 2019. From the ledger, Jack noticed that there are three items, which are on the lease, i.e. a van, a lathe machine and the oven. As part of the audit, Jack would send standard confirmation letters to the lessors. Two days before the end of the fieldwork,Jack received confirmation from the van’s lessor. Jack’s client has had a short payment of the van lease by$10,000. Jack sent the second reminder confirmation and managed to receive the confirmation from the lathemachine’s lessor. The lease would only start from 1 January 2020. Jack has to yet to receive any confirmationpertaining to the leasing of the oven.

Requirements:

a)Suggest three (3) actions/procedures that Jack should take in the future to make sure that the confirmation letter will be received and answered promptly.
b)Propose two (2) further actions/procedures that Jack should take for the discrepancies to two of the items listed above.

Required information

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During the current year, Ron and Anne sold the following assets: (Use the dividends and capital gains tax rates and tax rate schedules.)

*$30,000 of the gain is 25 percent gain (from accumulated depreciation on the property).

Ignore the Net Investment Income Tax.

a. Given that Ron and Anne have taxable income of only $20,000 (all ordinary) before considering the tax effect of their asset sales, what is their gross tax liability for 2020 assuming they file a joint return? (Round all your intermediate computations to the nearest whole dollar amount.)

Gross tax Liability=

Accounting Changes-Depreciation
Described below are two independent and unrelated situations involving accounting
changes. Each change occurs during 2016 before any adjusting entries or closing entries
were prepared.
a. On December 30, 2012, Rival Industries acquired its office building at a cost of
$1,000,000. It was depreciated on a straight-line basis assuming a useful life of 40
years and no salvage value. However, plans were finalized in 2016 to relocate the
company headquarters at the end of 2020. The vacated office building will have a
salvage value at that time of $700,000.
b. At the beginning of 2013, the Hoffman Group purchased office equipment at a cost of
$330,000. Its useful life was estimated to be 10 years with no salvage value. The
equipment was depreciated by the sum-of-the years’-digits method. On January 1,
2016, the company changed to the straight-line method.
Instructions:
a. Briefly describe the way company should report this accounting change in the
financial statements.
b. Prepare any 2016 journal entry related to the change.