Question 1 – CVP Analysis

Brandon Manufacturing provides the data below relating to its single product for 2020:

• Selling price per unit $20
• Annual fixed costs $280,800
• Variable costs per unit $14
• Annual sales volume expected in 2020: 52,000 units

Required:

1. Complete the following table calculating each requirement listed in the table.

2. Prepare a Contribution Margin Income Statement for the expected sales in 2020: (given the original data)

(b)Raymond Traders is a small business, and it undertakes periodical stock-takes to determine its inventory value. On 30 June 2020, Raymond Traders completed a physical stock-take, and inventory on hand as at 30 June 2020 had a cost of $39,600. However, some of the inventory items were deemed to be obsolete and Net Realisable value was determined to be $36,000.

(i) Based on the information above, what inventory management system is Raymond Traders currently using? Outline one advantage and one disadvantage of the inventory management system.

(ii)Advice Raymond Traders on the value of inventories to be shown in the Statement of Financial Position as at 30 June 2020, with reference to NZ IAS 2. Explain. (iii)In light of your answer (ii) above, prepare a journal entry to record any required adjustments on 30 June 2020.

(c) NZ IAS 2, paragraph 36 requires companies to make disclosures to present inventory fairly in their financial statements. List six disclosures that companies must include in the financial statements as additional disclosures.

Bridgeport Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2020, the following balances related to this plan.

As a result of the operation of the plan during 2020, the actuary provided the following additional data for 2020.

1.Using the preceding data, compute pension expense for Bridgeport Corp. for the year 2020 by preparing a pension worksheet that shows the journal entry for pension expense. (Enter all amounts as positive.)

2. Use the market-related asset value to compute the expected return and for corridor amortization.

The following information is available for Bob and Brenda Horton, a married couple filing a joint return for 2020. Bob is 61 and Brenda is 60.  They have fully supported their son, Charles age 31 (a US citizen) who lived with Bob and Brenda all of 2020. Bob and Brenda fully supported Charles for all of 2020. Charles only source of income was $3,990 from unemployment.

The following information relates to Bob and Brenda for 2020:

      Salary – Bob                                               $80,000

      Salary – Brenda                                              120,000                                                  

      Interest income (from bank account)                   150

      Interest Income from State of NY bonds             4,000

      Capital Loss on the sale of ZeZ, Inc stock         (7,220)

      Property taxes paid                                          4,000

      State income taxes paid                                   5,000

      Home mortgage interest paid                           6,000

      Charitable contributions paid                           3,000

      Federal Withholding                                      39,000

1. What is the amount of their gross income?

2. What is the amount of their adjusted gross income?

3. What is the amount of their taxable income?

4. What is the amount of their tax liability?

Tax liability (using rate schedule)

5. What is the amount of their tax due or (refund)?

Brady Construction Company contracted to build an apartment complex for a price of $6,900,000. Construction began in 2018 and was completed in 2020. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars.

Required:
Complete the following table. (Do not round intermediate calculations. Enter answers in dollars. Round your final answers to the nearest whole dollar. Negative amounts should be indicated by a minus sign.)

Gross Profit (loss) Recogonized

Revenue Recogonized over time/Revenue Recogonized upon completed for situation 1-6 years 2018, 2019, 2020

use the data below to explain the current state of the economy. Explain what EACH piece of data illustrates about the economy’s health as well as the OVERALL health of the economy. Use the information from this week's lesson to help you formulate your answer and use those economic terms and concepts.

Economic Data:

1. According to the Bureau of Economic Analysis the 2^nd quarter of 2020 saw anunprecedented decline in real GDP of 32.9% due to the Coronavirus pandemic.

2. According to the Bureau of Labor Statistics the Inflation Rate calculated using the CPI is 0.6% as of June 2020 which is significantly lower than an average of 2.3% in 2019. According to the Federal Reserve, the inflation rate over the past 18 years as measured by the PCE index is as follows:

3. According to the Bureau of Labor Statistics the unemployment rate for August of 2020 is 10% which has risen significantly from 3.5% from March of 2020.
4. The Dow Jones Industrial Average (Links to an external site.) indicates the movement of the stock market over the past 130 years:
5. According to the University of Michigan’s Consumer Sentiment Survey, consumers’ expectations are:

Martinez Inc. had the following balance sheet at December 31, 2019.

During 2020, the following occurred.

Prepare a statement of cash flows for the year 2020 for Martinez. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

During 2020, Monty Furniture Limited purchased a railway carload of wicker chairs. The manufacturer of the chairs sold them to Monty for a lump sum of $58,600, because it was discontinuing manufacturing operations and wanted to dispose of its entire stock. Three types of chairs are included in the carload. The three types and the estimated selling price for each are as follows:

Monty estimates that the costs to sell this inventory would be $4 per chair. During 2020, Monty sells 390 lounge chairs, 270 armchairs, and 150 straight chairs, all at the same prices as estimated. At December 31, 2020, the remaining chairs were put on sale: the lounge chairs at 25% off the regular price, the armchairs at 30% off, and the straight chairs at 40% off. All were expected to be sold at these prices.

What is the total cost of the chairs remaining in inventory at the end of 2020, using the relative sales value method?

The stockholders' equity account balances of Kay Corporation for 2020 are
given below:

                                                         January 1      December 31
Common stock ($12 par, 54,000 shares outstanding) .....   648,000         720,000
Paid-in capital – common stock ........................   540,000         594,000
Treasury stock (10,000 share; $16 cost per share) .....   160,000          36,800
Paid-in capital – treasury stock ......................     5,000            ?
Retained earnings .....................................   425,000            ?

During 2020, Kay Corporation entered into the following transactions:

March 23     Re-issued 2,400 of the treasury shares for $13 per share

June 9       Re-issued 3,700 of the treasury shares for $22 per share

August 15    Issued 6,000 shares of previously un-issued common stock

November 2   Re-issued 1,600 of the treasury shares for $14 per share

December 18  Declared and paid a $3.75 dividend per share on the
             outstanding shares of common stock

Kay Corporation reported a net income of $293,670 for 2020.

Calculate the balance in the paid-in capital - treasury stock account
at December 31, 2020.

A comparative balance sheet for Blossom Corporation is presented as follows. December 31 Assets 2020 2019 Cash $ 72,800 $ 22,000 Accounts receivable 83,260 67,460 Inventory 181,260 190,460 Land 72,260 111,460 Equipment 261,260 201,460 Accumulated Depreciation-Equipment (70,260 ) (43,460 ) Total $600,580 $549,380 Liabilities and Stockholders' Equity Accounts payable $ 35,260 $ 48,460 Bonds payable 150,000 200,000 Common stock ($1 par) 214,000 164,000 Retained earnings 201,320 136,920 Total $600,580 $549,380 Additional information: 1. Net income for 2020 was $127,520. No gains or losses were recorded in 2020. 2. Cash dividends of $63,120 were declared and paid. 3. Bonds payable amounting to $50,000 were retired through issuance of common stock. (a) Prepare a statement of cash flows for 2020 for Blossom Corporation. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) BLOSSOM CORPORATION Statement of Cash Flows $ Adjustments to reconcile net income to $ $ Issued common stock to retire $ of bonds outstanding