Corporate tax return problem-Custom Designs, Inc. (CDI)

Tammy Adams and Fernando Hernandez each own 50% of Custom Designs, Inc. (CDI). On May 6, 2004, they formed CDI to provide architectural services. CDI’s information is summarized as follows:

• CDI’ s business address is 2120 Adobe Drive, Las Cruces, NM 88011; its employer identification number is 11-1111111, and the principal business activity code is 541310.

CDI’s financial statement for 2019 is show below:

During 2019, CDI made estimated tax payment of $10,000 each quarter to the IRS. Prepare a Form 1120 page 1 and schedule M-1 on page 6 for CDI for tax year 2019 (Check your figure: Taxable income: $168220)

Also: report dividend income of $24000 on line 4 and do not forget report DRD of $10000 on line 29b

12/31/03 had the following balances in its S.E section of the B.S:

Common Stock, $.50 par $300k

APIC - Common Stock $4 million

APIC - Share Repurchase $50k

R.E $2 million

Treasury Stock, at cost, 30k shares $(600k)

During 2004 completed the follwing transactions

#1)

2/20: Issued40k shares of common stock (with a $.50 par value) in exchange for a machine w/ an appraised value of $800k

Required:

Answr the following Q's regarding certain amounts that would report within its 12/31/04 S.E section of the B.S

What is the required journal entry on 2/20?

#2)

6/17 : Resold 15k shares of treasury stock for $240k (The treasury stock was resold relates to common stock that was originally issue for $18 per share & was reacquired for $20 per share during 2003.)

Required:

Answr the following Q's regarding certain amounts that would report within its 12/31/04 S.E section of the B.S

What is the required journal entry on 6/17?

#3)

12/2: Issued 10k shares of common stock for $24 per share. Share issue costs to promote the stock issuance totaled $15k

Required:

Answr the following q's regarding certain amounts that would report within its 12/31/04 S.E section of the B.S

What is the required journal entry on 12/2?

#4)

12/31: Reported NI of $1.5 million and other comprehensve income of $200k on the companys statement of comprehensive income.

Required:

Answr the following Q's regarding certain amounts that would report within its 12/31/04 S.E section of the B.S

What is the required journal entry on 12/31? *There are 2 journal entries*

Use the information below for ABC Co. to answer the following questions.

Balance Sheet                                      December 31

2005                   2004    

Assets

Cash                                                                                                        $  20,000            $  10,000

Accounts receivable                                                                                  160,000              110,000

Inventories 80,000                50,000

Prepaid Rent                                                                                               15,000 10,000

Investments                                                                                              100,000                75,000

Plant assets                                                                                               210,000              250,000

Accumulated depreciation (65,000)             (60,000)

         Total $520,000            $445,000

Liabilities and Stockholders' Equity

Accounts payable                                                                                    $  50,000            $  40,000

Interest payable 20,000                  5,000

Income tax payable                                                                                       5,000                10,000

Note payable                                                                                             130,000              140,000

Common stock                                                                                         155,000              100,000

Retained earnings 160,000              150,000

         Total $520,000            $445,000

Income Statement

For the Year Ended December 31, 2005

Sales                                                                                                                                   $800,000

Cost of goods sold                                                                                                                480,000

Gross Profit                                                                                                                            320,000                        

Operating expenses (including Depreciation Expense) 120,000

Interest expense 20,000

Income tax expense 25,000

         Total 165,000

Income before Gains and Losses                                                                                           155,000

Gain on sale of plant assets                                                                                                      5,000   

Net income $  160,000

Additional information:

Accounts payable pertain to the purchase of inventory.

Plant assets were sold for $40,000. The cost of the plant assets was $40,000.

All dividends are cash.

For the year 2005

1. Cash paid for income taxes is:

2. Cash provided by/(used in)*operating activities is:  

3. Cash provided by/(used in)*investing activities is:  

4. Cash paid for dividends is:

5. Cash provided by/(used in)*financing activities is:

If your answer is cash “used in”, you must indicate this by writing your answer in parenthesis. For example, ($10,000). If your answer is cash “provided by”, you must write your answer without parentheses.

Refer to the balance sheet and income statement for ABC Co.:

6. If Rent Expense for the period was $20,000, the Cash paid for Prepaid Rent is:

The US has threatened new trade tariffs on beer, chocolate, and olives from the European Union, as part of a long-running row over subsidies to plane maker Airbus.

The US Trade Representative said it was considering duties on 30 products worth $3.1bn (£2.5bn) in trade every year.

It has already put 15% to 25% tariffs on $7.5bn worth of other EU goods as part of the dispute.

The EU warned it would damage firms on both side of the Atlantic.

And UK Trade Minister Liz Truss said she was disappointed by the move, warning against the use of "tit-for-tat" tariffs.

The row centres on EU subsidies given to Airbus before 2004, which Washington says created an unfair advantage over the US aircraft manufacturer Boeing.

Last year, the World Trade Organization (WTO) ruled the subsidies were illegal and allowed the US to levy tariffs on EU goods, including aircraft, wines, and cheese.

But it is now considering a parallel case involving illegal support for Boeing, which could see the EU imposing duties later this year.

The US said pastry and cakes, gin, cashmere clothes and hardware products could all be in the firing line for new tariffs, affecting exporters across the continent.

In a statement the EU said Washington was going beyond what was allowed by the WTO.

"It creates uncertainty for companies and inflicts unnecessary economic damage on both sides of the Atlantic," it added.

"This is particularly the case as companies are now trying to overcome the economic difficulties in the aftermath of the Covid-19 crisis."

Questions: (Your answers should not exceed 400 words).

1. This story raises two major international trade issues. What are they?

2. Give two reasons why retaliatory tariffs are wrong in international trade. Name the remedy allowed under WTO rules for government subsidies?

Once a pinnacle of luxury clothing found only in high-end fashion stores, by 2006 cashmere sweaters, which typically sold for hundreds of dollars, could be found in big box stores for as little as $20. The reason for this substantial price drop: increased production and competition from China. The cashmere industry has been around for centuries. Historically, however, Chinese and Mongolian herders exported the raw fiber to Europe, where it was spun and converted into clothing. Beginning in the 1980’s, China made a charge toward industrialization and the market economy. One area of rapid growth was the textile industry.

To increase production of cashmere wool, the number of wool-producing goats in Inner Mongolia, home to a vast grassland that the animals can graze on, increased tenfold, from 2.4 million in 1949 to 25.8 million in 2004. This dramatically increased the production of cashmere in China, but not without its consequences. One of the biggest problems, however, is that goats are devastating to the topsoil. The combination of pointy hooves and a voracious appetite leads to a rise in desertification. That is, turning grassland to desert. Over a 5-year period, “the Gobi Desert expanded in size by an area larger than the Netherlands.”

A consequence of this desertification is an increase in dust storms. Over the last several decades, the number and size of dust storms originating in China has grown dramatically. These storms impose a tremendous external cost on the regions through which they travel. One storm, “forced 1.8 million South Koreans to seek medical help and cost the country $7.8 billion in damage to industries such as airlines and semiconductors.” Another storm was so large it traveled around the entire world, causing damage in the US, Europe, and Africa.

1. There are several methods for reducing the costs of negative externalities. Why might some of these be difficult to implement at the global level? and what policies could the Chinese government implement to prevent the Tragedy of the Commons outcome of desertification?

A regression model to predict Y, the state-by-state 2005 burglary crime rate per 100,000 people, used the following four state predictors: X1 = median age in 2005, X2 = number of 2005 bankruptcies per 1,000 people, X3 = 2004 federal expenditures per capita, and X4 = 2005 high school graduation percentage. Predictor Coefficient Intercept 4,304.4610 AgeMed -26.903 Bankrupt 20.8921 FedSpend -0.0312 HSGrad% -29.1815 (a) Write the fitted regression equation. (Round your answers to 4 decimal places. Negative values should be indicated by a minus sign.) yˆ =_____ + _____ AgeMed + _______ Bankrupt + _____ FedSpend + ______ HSGrad%

(b-1) The 2005 state-by-state crime rate per 100,000

increases by about 27 as the state median age increases.

decreases by about 27 as the state median age increases.

(b-2) The 2005 state-by-state crime rate per 100,000

decreases by about 21 for every 1,000 new bankruptcies filed.

increases by about 21 for every 1,000 new bankruptcies filed.

(b-3) The 2005 state-by-state crime rate per 100,000

decreases by 0.0312 for each dollar increase in federal funding per person.

increases by 0.0312 for each dollar increase in federal funding per person.

(b-4) The 2005 state-by-state crime rate per 100,000

decreases by about 29 for each 1% increase in high school graduations.

increases by about 29 for each 1% increase in high school graduations.

(c) Would the intercept seem to have meaning in this regression?

Yes No

(d) Make a prediction for Burglary when X1 = 30 years, X2 = 5.0 bankruptcies per 1,000, X3 = $5,723, and X4 = 80 percent.

(Round your answers to 4 decimal places.)

Burglary Rate $_______

Do a case study of Northeastern Airlines.

Northeastern Airlines is a regional airline serving nine cities in the New England states as well as cities in New York, New Jersey, and Pennsylvania. While nonstop flights are available for some of the routes, connecting flights are often necessary. Northeastern Airlines Service Area The network shows the cities served and profit in U.S. dollars per passenger along each of these routes. The routes from ?Boston-to-Providence and from Providence-to-Boston make only $ 9 per passenger profit after all expenses. To service these cities, Northeastern operates a fleet of sixteen 122-passenger Embraer E-195 jets. These jets, which were first introduced by Embraer in late 2004, have helped Northeastern Airlines remain profitable for a number of years. However, in recent years, the profit margins have been falling, and Northeastern is facing the prospect of downsizing their operations. Management at Northeastern Airlines has considered several options to reduce cost and increase profitability. Due to Federal Aviation Administration regulations, the company must continue to serve each of the nine cities. How they serve these cities, however, is up to the management at Northeastern. One suggestion has been made to provide fewer direct flights, which would mean that a city served by Northeastern might only have direct flights to one other city. The company plans to hire a marketing analytics consultant to determine how demand would be impacted by longer flights with more connections, and to forecast the demand along each of the routes based on a modified flight operations map. Before hiring the consultant, the company would like to first determine the most profitable (on a profit per passenger basis) way to continue serving all of the cities.

A regression model to predict Y, the state-by-state 2005 burglary crime rate per 100,000 people, used the following four state predictors: X₁ = median age in 2005, X₂ = number of 2005 bankruptcies per 1,000 people, X₃ = 2004 federal expenditures per capita, and X₄ = 2005 high school graduation percentage.

(a) Write the fitted regression equation. (Round your answers to 4 decimal places. Negative values should be indicated by a minus sign.)

yˆy^ =  +  AgeMed +  Bankrupt +  FedSpend +  HSGrad%

(b-1) The 2005 state-by-state crime rate per 100,000

(b-2) The 2005 state-by-state crime rate per 100,000    

(b-3) The 2005 state-by-state crime rate per 100,000           

(b-4) The 2005 state-by-state crime rate per 100,000      

(c) Would the intercept seem to have meaning in this regression?

(d) Make a prediction for Burglary when X₁= 34 years, X₂= 7.2 bankruptcies per 1,000, X₃= $5,044, and X₄= 84 percent.

Burglary Rate

rev: 09_26_2016_QC_CS-62964, 09_20_2017_QC_CS-1011

China is seen as a global powerhouse in manufacturing, though the products that are made in China are often assumed to be lacking quality and creativity. Certainly, the “Made in China” label is attached to these negative assumptions. In turn, the high-volume-low-quality stigma of Chinese products is a difficult one to break. In Shanghai, however, there is a design firm that is trying to overcome the longstanding Chinese approach to mass manufacturing, and is imitating Western product design.

The introduced you to the Neri and Hu design firm, which was started in 2004 by Lyndon Neri and Rossana Hu. Both Neri and Hu were born and educated in Western countries and eventually moved to China. Their design firm is aimed at helping young designers enter the international market with new and uniquely designed products that oppose the stereotypes of being “made in China.” The ultimate goal is to show the world that China is capable of producing original ideas that are competitive in the international market.

Interestingly, toward the end of the video, Hu says, “Having a lot of international infiltration into the Chinese culture, I think that’s how China can grow into its next identity.” In Shanghai, the city where the firm is located, there has clearly been an infiltration of Western culture, with Western brands and stores. Although China is a communist country, it has embraced the free market economy. This may either strengthen or weaken the Chinese brand.

1. Due to the preconceived notion that products made in China are not original or of high quality, Hu and Neri‘s vision was to combat the “Made in China” stereotype. Encompassing any vision, however, is a mission statement. Explain
   1. What mission statement would you create for Hu and Neri’s firm?Explain
2. What role do you think China plays in the world product market?Explain
3. Is assimilation to the international marketplace beneficial or harmful for a country’s brand identity? Explain
4. What is your main take-away from this video?

Review the income statements on the Absorption Statement and Variable Statement panels, then complete the following table. The company’s sales price per unit is $75.00, and the number of units in ending inventory is 4,000.

Absorption costing does not distinguish between variable and fixed costs. All manufacturing costs are included in the cost of goods sold.

Under variable costing, the cost of goods manufactured includes only variable manufacturing costs. This type of income statement includes a computation of manufacturing margin.

Whenever the units manufactured differ from the units sold, finished goods inventory is affected. In analyzing income from operations, such increases and decreases could be misinterpreted as operating efficiencies or inefficiencies. Each decision-making situation should be carefully analyzed in deciding whether absorption or variable costing reporting would be more useful.

All costs are controllable in the long run by someone within a business. For a given level of management, costs may be controllable costs or noncontrollable costs.

The production manager for Saxon, Inc. is worried because the company is not showing a high enough profit. Looking at the income statements on the Absorption Statement panel and the Variable Statement panel, he notices that the net income is higher on the absorption cost income statement. He is considering manufacturing another 10,000 units, up to the company’s capacity for manufacturing, in the coming year. He reasons that this will boost net income and satisfy the company’s owner that the company is sufficiently profitable. Although the total units manufactured changes, assume that total fixed costs, unit variable costs, unit sales price, and the sales levels are the same. Complete questions (1)-(4) that follow. If the answer is zero, enter "0".

1. Use the income statements on the Absorption Statement and Variable Statement panels to complete the following table for the original production level. Then prepare similar income statements at a production level 10,000 units higher and add that information to the table. Assume that total fixed costs, unit variable costs, unit sales price, and the sales levels are the same at both production levels.

2. What is the change in net income from producing 10,000 additional units under absorption costing?

3. What is the change in net income from producing 10,000 additional units under variable costing?

For planning and control purposes, managers often compare planned and actual contribution margin. Variable costing is used as a basis for such analyses.

Examine the following contribution margin data, and then complete the Contribution Margin Analysis panel.

Contribution margin analysis focuses on explaining the differences between planned and actual contribution margins, considering the quantity factor and the unit price factor.

After reviewing the data on the Contribution Margin Data panel, complete the following contribution margin analysis. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

I got some of the work done just struggling with the rest