11.5) Brandywine Clinic, a not-for-profit business, had revenues of $12 million in 2016. Expenses other than depreciation totaled 75 percent of revenues, and depreciation expense was $1.5 million. All revenues were collected in cash during the year, and all expenses other than depreciation were paid in cash.

1. Brandywine’s 2016 income statement.
2. Brandywine’s net income, total profit margin, and cash flow.
3. Depreciation doubled. Brandywine’s net income, total profit margin, and cash flow.
4. Depreciation halved Brandywine’s net income, total profit margin, and cash flow.
5. Reason for similarities or differences in parts b, c, and d.

Inventory Management Three companies that compete in the footwear market are Foot Locker, Finish Line and DSW. The table below shows inventory levels and cost of goods sold for each company for the 2016, 2015 and 2014 fiscal years. Calculate the inventory turnover ratio for each company in each year and summarize your findings. All values are in $ millions.

The pretax financial income (or loss) figures for Tamarisk Company are as follows.

Pretax financial income (or loss) and taxable income (loss) were the same for all years involved. Assume a 45% tax rate for 2016, and a 20% tax rate for the remaining years.

Prepare the journal entries for the years 2017 to 2021 to record income tax expense and the effects of the net operating loss carrybacks and carryforwards assuming Tamarisk Company uses the carryback provision. All income and losses relate to normal operations. (In recording the benefits of a loss carryforward, assume that no valuation account is deemed necessary.)

Blue Spruce Company had $152,600 of net income in 2016 when the selling price per unit was $153, the variable costs per unit were $93, and the fixed costs were $573,300. Management expects per unit data and total fixed costs to remain the same in 2017. The president of Blue Spruce Company is under pressure from stockholders to increase net income by $61,700 in 2017. Assume that Blue Spruce Company sells the same number of units in 2017 as it did in 2016. What would the selling price have to be in order to reach the stockholders’ desired profit level? (Round answer to 2 decimal places, e.g. 12.25.)

The Blueberry Phone Company operates a factory to build its Crackberry phone. Technological advances by Blueberry’s competitors demolished Crackberry sales. Consequently, management is evaluating the Crackberry factory for impairment as of December 31, 2014. Below are facts about the factory. Original cost $150 million Accumulated depreciation 65 million Future cash flows: 2015 45 million 2016 20 million 2017 10 million Is factory impaired? ____________ Why? ________________________________________________

What is the present value of future cash flows rounded to $100,000 (Assume the cash is received at the end of each year and use an interest rate of 10%.):

             2015                 ________________________________

             2016                 ________________________________

2017                 ________________________________

            Total               ________________________________

What is the impairment loss?

What is the applicable statue of limitations in each of the following independent situations?

a. Not return was filed by the taxpayer.

b. A corporation is determined to have been a personal holding company for the year in question.

c. for 2011, the XYZ associates filed Form 1065 (a partnership return). In 2016, the IRS determined that the organization was not a partnership in 2016 but a corporation.

d. in 2011, T incurred a bad-debt loss that she failed to claim.

e. on his 1996 return a taxpayer inadvertently committed a lard amount of gross income.

F. Assume the same situation as that in situation e, except that the omission was deliberate.

g. For 1996, a taxpayer innocently overstated her deductions by a large amount.

Beavis Construction Company was the low bidder on a construction project to build an earthen dam for $1,720,000. The project was begun in 2015 and completed in 2016. Cost and other data are presented below: 2015 2016 Costs incurred during the year $ 411,000 $1,020,000 Estimated costs to complete 959,000 0 Billings during the year 465,000 1,310,000 Cash collections during the year 365,000 1,410,000 Assume that Beavis recognizes revenue on this contract over time according to percentage of completion. Required: Prepare all journal entries to record costs, billings, collections, and profit recognition. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Purnama Bhd acquired 45% of the ordinary shares of Bulan Bhd on 1 January 2016. The remaining shares are held by Bintang Bhd and Matahari Bhd ,each holding 25% and 30% of the ordinary shares of Bulan Bhd respectively. Starting from 1 January 2016, it has been agreed that the key management of Purnama Bhd will direct the relevant activities of Bula Bhd which include approving any kind of transactions related to sales and purchases of goods as well as other transactions related to the assets and liabilities of Bulan Bhd.

Required:

Advise whether Purnama Bhd has control over Bulan Bhd in accordance with MFRS 10 Consolidated Financial Statements.

E14-2 Knudsen Corporation was organized on January 1, 2016. During its first year, the

corporation issued 2,000 shares of $50 par value preferred stock and 100,000 shares of $10

par value common stock. At December 31, the company declared the following cash dividends:

2016, $5,000; 2017, $12,000; and 2018, $28,000.

Instructions

(a) Show the allocation of dividends to each class of stock, assuming the preferred stock

dividend is 6% and noncumulative.

(b) Show the allocation of dividends to each class of stock, assuming the preferred stock

dividend is 7% and cumulative.

(c) Journalize the declaration of the cash dividend at December 31, 2018, under part (b).