Dr. Mark Sloan is a single, self-employed heart surgeon who uses the cash method of accounting. During 2019, he received $600,000 in total cash payments from patients. Of that total amount, $175,000 was for services performed and billed during 2018, $25,000 was for a surgery he will perform in January 2020, and the rest was for 2019 services. On July 1, 2019 he prepaid $36,000 to a company that will provide services to his office for the next 9 months. On November 15, 2019, he agreed to settle a malpractice claim for $80,000. Under the settlement, he will pay this entire payment liability on January 15, 2020. During 2019, he paid his staff salaries and wages of $150,000, including paychecks issued on January 1st 2019 for work they performed the prior December (for this problem, ignore any other costs that might apply to employees such as benefits and FICA taxes). His utility costs paid during the year for his office were $7,000. What is Dr. Sloan’s net business income or loss for 2019?

B.Use the information from the previous question (including your answer) about Dr. Mark Sloan, the single, self-employed heart surgeon. Dr. Sloan heard about a new deduction for small businesses. If he files single and takes the standard deduction, and his income is what you calculated in the previous question, how much can he claim as a deduction for Qualified Business Income?

Problem C, Contingencies Z Corp. filed a claim for patent infringement against M Corp. in October 2020. In preparing its financial statements for the year ending December 31, 2020, M Corp. financial accounting group obtained the following information related to this claim:

• M Corp’s Risk Management Department believes that M will incur a loss from this lawsuit. They estimate the loss will be in a range from $15 million to $20 million, but cannot give a more precise estimate.

• The trial will likely not take place for two years, in 2022 or 2023.

• M Corp’s CFO insists that the company will fight this claim “until the end of time.” Based on that, the CFO maintains that no loss need be recorded because none will be incurred … ever!

• M Corp’s legal department believes the case will be resolved within four years, if appeals are necessary. They agree with Risk Management’s assessment.

Your Assignment Assume that you are the Controller of M Corp (you are the top accounting officer and report directly to the CFO). What do you say to the CFO about this matter? You must resolve this issue now so that financial statements can be prepared. You can literally write what you would say, or you can do it in the form of a brief message. But you must state your opinion on how this should be handled (not forgetting that your boss thinks nothing needs to be done). And it must be brief (the CFO does not like to read long messages … get to the point!)

QUESTION 1
Kasabrunu Enterprise is a business operating in the second-hand clothing in Kwadaso. Mr. Bruni the owner of Kasabrunu Enterprise (KE) employed Mr. Ojidomi a BSc. Accounting graduate as the Accountant. Business is booming and KE is expected to be in operation for a long time. Mr. Odjidomi has been with the business for 5 years and has assured Mr. Bruni that profits declared will not be deceptive since the same method will be continuously used for the accounting treatment of similar items until Mr. Bruni decides to change from dealing in second hand clothing to the purchase and sale of spare parts which they discussed. As part of the policy adopted by the business, the Accountant records only transactions that can be valued in monetary terms in the books of account and produces financial information at regular period for the perusal of Mr. Bruni.
On reaching home, Sefakor Ojidomi, the daughter of Mr. Ojidomi who is pursuing an accounting programme in Owusuwusu College of Accountancy asked his father to guide her with an assignment. Sikadanka, the Chairman and CEO of Defenders Ltd recently confronted the Chief Accountant of the company over the way and manner the financial statements were presented for the 2019 financial year. The following points are summaries of the CEO’s reservations about the financial statements:

a. He argued that the values of the company’s assets be shown at current market values since these values will provide a better view of the company’s value. The Chief Accountant is still insisting that the assets should be stated at original cost. b. He expressed shock when the financial statements did not show a value for the company’s efficient staff. He argued that the company’s beautiful and handsome sales personnel are valuable assets used to attract customers and therefore insisted that this “power of attraction” should be recognised in the books of accounts and reflected on the face of the financial statement. c. He was worried when a potential sale of millions of Ghana cedis to a certain buyer from whom purchase orders have been received have not been recognized in the books of accounts as sales. The Chief Accountant argued that these potential customers have only been sent pro-forma invoices and so are not obliged to pay the company. d. The CEO recently bought a saloon car for his son out of company funds. The Chief Accountant recorded this on a current account for the CEO. This resulted in an intense argument. The CEO threatened to dismiss the Chief Accountant should he refuse to recognize the purchase of the saloon car as a transaction of the company. e. The CEO insisted that the value of expired inventory should be maintained in the books of accounts and not written off.

Sefakor presented the assignment and scored a 100% for the 1st time.   

On the 27th of March, 2019, Mr. Ogboro, the purchasing officer of KE prepared documents to purchase on credit 1,500 bales of second-hand clothing from Osimeyo and brothers (OB.). O.B delivered the goods to KE 4 (four) days after the order was placed with all appropriate documents. KE only deals in male second-hand clothing but included in the goods delivered were 15 bales of ladies second-hand clothing which Mr. Ogboro returned to OB as it did not meet the description provided. Customers purchased the goods either on credit or outright payment with cash or cheque. Documents showing evidence of payment were given to these
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customers. All customers who purchased on credit paid through their bankers by transfers made directly to the bank accounts of KE. KE is later advised accordingly by her bankers. Mr. Odjidomi prepares bank reconciliation statements quarterly. He made a request on the 15th of March 2019 for a bank statement from Obidibi commercial bank. Upon receipt of the bank statement, he compared the balance with that of the Cash book and it did not agree. The Accountant’s friend, Oyeni Bawabawat, an accounts officer at Oshikishiki Enterprise requested for reasons for the disagreement. He confessed his inability to grasp these reasons during his studies. After an in-depth explanation, Mr. Odjidomi, the Accountant asked his friend to assist him prepare a bank reconciliation statement as he had to urgently attend an important meeting. The Accountant provided his friend with the information below:

The cash book, bank column of Kasabrunu Enterprise showed a credit balance of GHS578,000 while the bank statement for the period showed a debit balance of GH¢338,000 on 31st March,2019. A thorough investigation revealed the following:

i. Cheques drawn amounting to GHS195,0000 had not been presented to the bank for payment. ii. A cash deposit into the bank of GHS97,800 was recorded as GHS79,800 in the cash book. iii. Bank charges of GHS10,900 and standing order payment of GHS12,100 relating to telephone bills entered on the bank statement had not been recorded in the cash book. iv. A cheque of GHS245,000 drawn by the firm had been charged by the bank in error to another customer’s account. v. A dividend of GHS15,000 paid directly to the bank had not been entered in the cash book. vi. A cheque for GHS20,000 paid into bank had been dishonoured and shown as such by the bank but no entry of the dishonour had been made in the cash book. vii. The following cheques and cash deposits entered in the cash book and paid to the bank have not been credited by the bank: cash deposits GHS76,500; cheques receipts: Maame Dakona GH¢54,500; Ntekuma Ananse GHS34,000. viii. A cheque drawn for GHS32,000 had been entered in the cash book in the error GHS23,000. ix. A cheque for GHS16,000 drawn by another customer of the same name had been charged to the firm’s bank account in error.

After adjusting the cash book balance, Oyeni Bawabawat prepared the bank reconciliation statement. After waiting for 3 hours, he was informed that Mr. Odjidomi will be in the meeting for 6 hours. Oyeni then left for his office.   

Required: A i) Identify and explain two (2) accounting policies adopted by Kasabrunu Enterprise (1mark) ii) State the accounting concept in each of the CEO’s reservation in Sefakor’s assignment. Explain your reason for choosing the concept. NB: Present your answer in a tabular form as illustrated below Concept/Principle Definition/Explanation Reason
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B. Identify and explain the use of three (3) source documents in the transaction to purchase and sell 1,500 bales of second-hand clothing. (4.5 marks)

C. i) State and explain six (6) reasons Mr. Odjidomi will give to his friend for the disagreement in the cash book and bank statement balances. i) Imagine you are Oyeni Bawabawat. Show the appropriate adjustments to be made in the cash book (4.5 marks) ii) Prepare a Bank Reconciliation Statement for Mr. Odjidomi. (Total 20 marks)

QUESTION 2

Halibatu, a sole trader, deals in phones and computer accessories at the Ohiamankwa Enterprise. The following Trial Balance was extracted from her books at 31st December, 2019

DR. CR. GHS’000 GHS’000 Drawings & Capital 2,128 18,043 Receivables & Payables 7,689 5,462 Purchases & Sales 62,101 122,242 Rent & Rates 900 Gas &Electricity 246 Carriage 200 Salaries & Wages 8,268 Bad debts 247 Allowance for receivables 326 Inventory (1/1/2019) 9,274 Insurance 172 Discounts 150 350 Advertising 933 Cash at bank & on hand 2,142 Investment in 91-Day Treasury Bills 740 Interest on investment received 56 Motor Vans at cost 16,000 Computers (cost GH¢5million) 3,600 Provision for depreciation: Motor Vans 8,600 Motor Expenses 861 Returns 232 54 Rent received 750 Freehold premises at cost 40,000 155,883 155,883



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Additional information: a) Inventory as at 31st December, 2019 was GHS 9,884,000 b) Rent & Rates paid covered the period 1st January, 2019 to 31st March, 2020. c) Some tenants have not yet paid their rent to Ohiamankwa Enterprise. The amount involved was GHS 250,000. d) Electricity bill of GHS 85,000 for December, 2019 has just been received. Halibatu intends to pay within the third week of January, 2020. No record has been made in the books. e) GHS 80,000 out of total carriage of GHS 200,000 relates to carriage on purchases made f) Allowance for receivables is adjusted to 5% of total receivables at the end of the year. g) An amount of GHS 202,000 was spent on the personal vehicle of Halibatu. This was included in the motor expenses. h) Depreciation is to be charged on vans at annual rate of 20% on cost. Computers are to be depreciated at the rate of 25% using the reducing balance method.

You are required to prepare: i) Income statement for the year ended 31st December, 2019 ii) Statement of financial position as at 31st December, 2019 (Total 20 marks)


QUESTION 3
A The agreement of the trial balance totals is an indication that all transactions have been properly recorded in the books of accounts. Do you agree with this statement?

Required: Outline 4 reasons to justify your response.

B ABC Ltd started business on 1/1/14, and its financial year ends on 31st December each year. The following information was extracted from the company’s asset register. DATE TRANSACTION AMOUNT (GHS) 2016 January, 1 Purchased one motor van 58,500 2016 September, 1 Purchased two motor vans 78,000 each 2018 March, 1 Purchased one motor van 45,200 2018 May, 2 Sold the motor van purchased in January,2016 18,240 2019 April 1 Purchased three motor vans 62,000 each

Additional Information The company’s policy is to depreciate Motor vehicles at a rate of 20% per annum on cost. You are required to prepare: i) The Motor vehicles account (2016-2019) ii) Provision for depreciation account (2016-2019) iii) Disposal account for 2018 iv) Statement of profit or loss extract for 2018 and 2019 (1 mark) v) Statement of financial position extract for 2018 and 2019   

interview someone about their end of life wishes. pick a family, friend or colleague and ask them to help you complete your work for this class by discussing their end of life wishes. Take a health care proxy form and discuss the different parts with the person. Speak about the purpose of having a health care proxy. Explain the difference between a health care proxy and a living will. Explain the difference between a DNR and a DNI. Talk to the person about what their wishes might be for treatment should they be unable to speak for themselves. Write up a summary of what happened

DISCUSSION
George needs to go on a job interview in two days, but his car broke down. He mentions this to his friend Sam who decides to let George use the car. Sam surprises George by dropping the car off in front of the house and leaving the keys inside. About an hour later, a drunk driver hits the car causing significant damages. Sam is very upset and sues George for the cost of repair. Using the material you learned in this chapter, discuss the outcome of this case.

DISCUSSION
George needs to go on a job interview in two days, but his car broke down. He mentions this to his friend Sam who decides to let George use the car. Sam surprises George by dropping the car off in front of the house and leaving the keys inside. About an hour later, a drunk driver hits the car causing significant damages. Sam is very upset and sues George for the cost of repair. Using the material you learned in this chapter, discuss the outcome of this case.

Please choose the right answer and write the reason whay:

According to the Adult Attachment Interview, which of the following is NOT an adult attachment classification?

Insecure-dismissive

Insecure-emotionally immature

Insecure-preoccupied

secure

Wade is quiet, adjusts only gradually to new situations, and has moderately predictable biological cycles. Which kind of temperament does he have?

easy

slow-to-warm-up

fragile

difficult

A young child sees a dog and exclaims, “Look dad, a cat!” The child only noticed that the animal had 4 legs, like the family’s pet cat. Which Piagetian concept does this scenario best exemplify?

Assimilation

Cognitive dissonance

Accommodation

Symbolic representation

1. Interview an accountant at a local business, nonprofit organization, or government entity. How does the firm use budgets? How does budgeting help managers plan business activities? How does budgeting help them control activities? Give examples.

2. Discuss the role of a private accountant within large and small firms.

3. What two sources of capital make up owners' equity?

4. What is the accounting equation?

5. What is the statement of cash flow required by the SEC and why is it required?

6. If you were assessing the value of a business which two factors would you take into account and in which financial statement would you find them?

Advanced Scenario 6: Matthew and Mary Donnelly
Interview Notes
• Matthew and Mary are married and want to file a joint return. They provided all the
cost of keeping up the home and all of the support for their son Ryan.
• Ryan has no income and no filing requirement.
• Matthew retired and began receiving retirement income on April 1, 2018. No distributions
were received prior to his retirement. Matthew selected a joint survivor annuity
for these payments.
• Matthew was covered by Medicare all year. Mary and Ryan had minimum essential
healthcare coverage (MEC) through Mary’s employer until October 14th when
she was laid off. Mary and Ryan did not have MEC all of November and December
2018.
• Matthew and Mary stated if they are entitled to a refund, they want half of it deposited
into their checking account and the other half deposited into their savings
account. The checking account number is 123456789 and the savings account
number is 987654321.

18.Ryan qualifies the Donnellys for the credit for other dependents.  
True
False
19.The Donnellys must pay an individual shared responsibility payment because Mary and Ryan did NOT have
healthcare coverage for each month of 2018.  
True
False
20.The net capital gain or loss reported on Schedule D, Capital Gains and Losses, is a gain of $638.  
True
False  
21.The combined age used to calculate the taxable portion of the pension using the Simplified Method is 129.  
True
False  
22.None of Matthew's Social Security income is taxable.  
True
False
23.The Donnellys can split their refund using Form 8888, Allocation of Refund (Including Savings Bond
Purchases).  
True
False  
24.The total withholding on the tax return is $4,146.  
True
False

During an interview with an IRS official on Dateline, the interviewer asks, "So how do you decide which Forms 1040 get audited and which do not?"

a. Complete below the hypothetical IRS response to the question posed by Dateline.

"The IRS does not reveal the details of its audit selection process, so the interviewee should keep his or her comments within the agency's policies. Tax returns for audit are chiefly selected by use of the (Data identification factor/ discriminant individual factoring/ discriminant inventory functioning) (DIF), which projects the amount of (profit/ revenue/ tax credits) the IRS will gain from pursuing tax returns."

b. Classify each of the following as either "Yes" would probably result in an audit and "No" probably not.