PROBLEM 1 Gomez Corporation, a manufacturer of household paints, is preparing annual financial statements at December 31, 2011. Because of a recently proven health hazard in one of its paints, the government has clearly indicated its intention of having Gomez recall all cans of this paint sold in the last six months. The management of Gomez estimates that this recall would cost $800,000

. Part A - What accounting recognition, if any, should be accorded this situation?

Part B - How would your answer change to Part A if 70% of the paint cans were sold before 12/31/2011 and the remainder were sold after 12/31/2011 but before the financial statements were issued on 3/5/2012?

Part C - How would your answer change to Part A if the health hazard was only alleged (but not yet probable) when the 2011 financial statements were published.

Please Answer the following problem 1 and 2. write clearly.

PROBLEM 1

A 5.96 − kg block is placed against a compress spring on a frictionless 27.0 degrees incline. The spring,

whose force constant is 2.5 N/cm, is compressed 21.3 cm, after which the block is released. How far up

the incline will the block go before coming to rest? Measure the final position of the block with respect

to its position just before being released. Consider two cases:

(a) the block is firmly attached to the spring, and

(b) the block is not attached to the spring and can loosely move up the incline

PROBLEM 2

During a rockslide, a 524 − kg rock slides from the rest down the hill slope that is 488 m long and

292 m high. The speed of the rock when it reaches the bottom of the hill is 62.6 m/s. How much

mechanical energy does the rock lose in the slide due to friction.

Kara is a 14-year-old, 125-pound, high school basketball player. She has been feeling fatigued and sore lately, and has been sick three separate times in the last 3–4 months. Kara typically eats the following on a daily basis:
7 AM: 10–12 oz orange juice (at home before school)
11:30 AM: 2 cups macaroni and cheese, and a small fruit cup (lunch in school cafeteria)
3 PM: granola bar (before basketball practice)
7 PM: 2–3 cups spaghetti with tomato sauce, 1 piece garlic bread, 10 oz skim milk (at home after practice)
10 PM: 2 cups ice cream (bedtime snack)
Why is Kara feeling fatigued, sore and sick? What dietary recommendations would you give to Kara? Please be specific with your recommendation, especially regarding protein intake

The government of Markville started charging an excise tax on gasoline. After one year, it was found that gasoline demand was not different from that before the imposition. The governor of Markville argues that the excise tax has no burden because it showed no change in demand. She also argues that a gas tax can be a relatively efficient way to raise tax revenue. Evaluate her arguments. Note: Let X-axis denote gasoline, and Y-axis denote other goods.

1. Analyze the argument at an individual level. Draw an indifference curve and income line. Show how the demand was different before the imposition.

   a) Analyze the argument at a market level. Draw a supply and demand curve of gasoline. Feel free to attach your illustration. Show how the demand was not changed by the imposition.

b) What is the magnitude of the deadweight loss? What problems can we expect when the government increases the proportion of excise tax?

1. A water slide is constructed so that swimmers, starting from rest at the top of the slide, leave the end of the slide traveling horizontally. As the drawing shows, one person hits the water 5.00 m from the end of the slide in a time of 1.500 s after leaving the slide. Ignoring friction and air resistance, find the height H in the drawing. The answer is 11.6 m (please explain)

2. An extreme skier, starting from rest, coasts down a mountain slope that makes an angle of 25.0° with the horizontal. The coefficient of kinetic friction between her skis and the snow is 0.200. She coasts down a distance of 12.6 m before coming to the edge of a cliff. Without slowing down, she skis off the cliff and lands downhill at a point whose vertical distance is 4.30 mbelow the edge. How fast is she going just before she lands? The answer is 12 m/s. Please explain!

My physics teacher explained the difference between voltage and current using sandwiches. Each person gets a bag full of sandwiches when they pass through the battery. Current = the number of people passing through a particular point per unit time. Voltage = the (change in) number of sandwiches per person. In a parallel circuit the number of people (current) is divided between the two paths, but the number of sandwiches per person (voltage) remains the same. In a series circuit the number of people passing through a particular point remain the same, but they drop off a certain percentage of their sandwiches at every resistor. Therefore, there is a voltage drop that occurs between the points before and after every resistor.

This analogy naturally leads to the question: how do the electrons "know" that they are going to have to share their voltage between two resistors before they reach the second one? (In other words, not drop off all their sandwiches at the first resistor they find)

You are an internal auditor for Shannon Supplies, Inc., and are reviewing the company’s preliminary financial statements. The statements, prepared after making the adjusting entries, but before closing entries for the year ended December 31, 2021, are as follows:

SHANNON SUPPLIES, INC. Balance Sheet December 31, 2021 ($ in thousands)

Assets

Cash $ 2,350

Investment in equity securities 225

Accounts receivable, net 760

Inventory 1,010

Equipment 1,190

Less: Accumulated depreciation (610 )

Total assets $ 4,925

Liabilities and Shareholders’ Equity

Accounts payable and accrued expenses $ 3,270

Income tax payable 170

Common stock, $1 par 150

Additional paid-in capital 700

Retained earnings 635

Total liabilities and shareholders’ equity $ 4,925

SHANNON SUPPLIES, INC. Income Statement For the Year Ended December 31, 2021 ($ in thousands)

Sales revenue $ 3,850

Operating expenses:

Cost of goods sold $ 1,090

Selling and administrative 891

Depreciation 89 2,070

Income before income tax $ 1,780

Income tax expense (445 )

Net income $ 1,335

Shannon’s income tax rate was 25% in 2021 and previous years. During the course of the audit, the following additional information (not considered when the above statements were prepared) was obtained:

a. Shannon’s investment portfolio consists of blue chip stocks held for long-term appreciation. To raise working capital, some of the shares with an original cost of $175,000 were sold in May 2021. Shannon accountants debited cash and credited investment in equity securities for the $210,000 proceeds of the sale.

b. At December 31, 2021, the fair value of the remaining equity securities in the investment portfolio was $246,500.

c. The state of Alabama filed suit against Shannon in October 2019, seeking civil penalties and injunctive relief for violations of environmental regulations regulating emissions. Shannon’s legal counsel previously believed that an unfavorable outcome of this litigation was not probable, but based on negotiations with state attorneys in 2021, now believes eventual payment to the state of $125,000 is probable, most likely to be paid in 2024.

d. The $1,010,000 inventory total, which was based on a physical count at December 31, 2021, was priced at cost. Based on your conversations with company accountants, you determined that the inventory cost was overstated by $127,000.

e. Electronic counters costing $110,000 were added to the equipment on December 29, 2020. The cost was charged to repairs.

f. Shannon’s equipment, on which the counters were installed, had a remaining useful life of four years on December 29, 2020, and is being depreciated by the straight-line method for both financial and tax reporting.

g. A new tax law was enacted in 2021 which will cause Shannon’s income tax rate to change from 25% to 20% beginning in 2022.

Required: Prepare journal entries to record the effects on Shannon’s accounting records at December 31, 2021, for each of the items described above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in whole dollars not in thousands of dollars.)

• a1

  Record the gain on sale of investment with an original cost of $175,000 for $210,000.

• a2

  Record the adjustment of equity securities for the investment of $210,000 as on the date of sale.

• b

  Record the fair value adjustment.

• c

  Record the loss-lawsuit.

• d

  Record correction of inventory error.

• e

  Record correct assets that were incorrectly expensed.

• f

  Record the 2021 adjusting entry for depreciation.

• g

  Record the income tax expense.

Purple Company has $200,000 in net income for 2017 before deducting any compensation or other payment to its sole owner, Kirsten. Kirsten is single and has no dependents. She claims the $6,350 standard deduction, and her personal exemption is $4,050 for 2017. Purple Company is Kirsten's only source of income.

Ignoring any employment tax considerations, compute Kirsten's after-tax income for each of the following situations.

Click here to access the corporate tax table and 2017 individual tax rate schedule to use for this problem.

When required, carryout intermediate tax computations to the nearest cent and then round your final tax liability to the nearest dollar.

a. If Purple Company is a proprietorship and Kirsten withdraws $50,000 from the business during the year, Kirsten 's taxable income is
$, and her after-tax income is $.

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Business operations can be conducted in a number of different forms. Among the various possibilities are the following: Sole proprietorships; Partnerships; Trusts and estates; S corporations; Regular corporations and Limited liability companies. For Federal income tax purposes, the distinctions among these forms of business organization are very important.

b. Purple Company is a C corporation and the corporation pays out all of its after-tax income as a dividend to Kirsten. Purple Corporation's after-tax income is $ and Kristen's after tax income is $.

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Incorrect

c. Purple Company is a C corporation and the corporation pays Kirsten a salary of $138,750. Kirsten's after-tax income is $.

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Incorrect

Kabwe Medical Center Limited is a small health care provider owned by an Insurance Company. It employs five salaried physicians 5(doctors), five nurses, three support staff, and three clerical workers. The clerical workers perform activities such as reception, correspondence, cash receipts, billing, and appointment scheduling. Most patients pay for services rendered by cash or cheque on the day of their visit. Sometimes, however, the physician approves credit and files a memo with one of the clerks to set up the receivable using data the physician generates.The front office clerks receive cash and cheques directly from patients and give each patient a pre-numbered receipt. The clerks take turns opening the mail. All cheques are stamped “for deposit only “by one of the clerks. Each day, just before lunch, one of the clerks prepares a list of all cash and cheques to be deposited in Kabwe Medical Center’s bank account. The office is closed from 13:00until 14:00 hrs for lunch. The office manager takes the daily deposit to the bank during the lunch hours. Updates to patient’s accounts are done during the same period.The clerks are responsible for preparing and mailing monthly statements to patients with unpaid balances. Write-offs of uncollectible accounts are done only after the physician whoperformed the respective services approves it indicate to the office manager verbally. The credit memo is issued to effect the write- off.The manager is responsible for issuance of write-off memos, scheduling of appointments for the doctors, bank deposits, reconciling of bank statements, and general correspondence duties.An externally hired local accountant comes at the end of the month to posts summaries prepared by the clerks to the general ledger, prepares income statements, and files the appropriate payroll forms and tax returns.
Required:
a. Identify at least three control weaknesses at Kabwe Medical Center. Describe the potential
threat and exposure associated with each weakness, and recommend how to best correct
them.
b. Draw a data flow diagram or a work flow chart to depict Kabwe Medical Center’s existing
revenue cycle.
c. Draw a data flow diagram revised to incorporate your solutions to requirement “a” above

Pack Rite manufactures back packs for schools. The business uses a perpetual inventory system
and has a highly labour intensive production process, so it applies manufacturing overhead based
on direct labour hours. Any overhead variance is closed out to Cost of Goods Sold.
Pack Rite’s pre-determined overhead application rate for 2017 was computed from the following
data:
Total estimated factory overheads
Total estimated direct labour hours
$4,200,000
35,000
During the first month of 2017, the business recorded the following transactions.
i) Purchased materials on account, $500,000
ii) Incurred manufacturing wages of $1,065,000
iii) Issued direct materials and used direct labour in manufacturing
Direct Materials Direct Labour Direct Labour Hours
Job 401 $100,000 $220,000 1,200
Job 402 81,000 190,000 1,000
Job 403 90,000 205,000 1,100
Job 404 150,000 290,250 1,800
iv) Issued indirect materials to production, $80,000
v) Charged indirect manufacturing wages to production, $159,750
vi) Depreciation expense on factory equipment used on the different jobs, $300,000
vii) Other overhead costs incurred on jobs 401 to 404 amounted to $112,750
viii) Applied factory overhead to the various jobs using the pre-determined factory overhead rate.
ix) Finished Jobs 401 – 403 and transferred to the finished goods inventory account
x) Shipped Job 401 and 402 and billed customers at a margin of 25% on cost.
Required:
a) Compute Pack Rite’s predetermined manufacturing overhead rate.
b) Calculate the total manufacturing cost for each job.
c) Using the total figures, record the transactions in the general journal.
d) Post the manufacturing overhead transactions to the Manufacturing Overhead T-account and
state the balance on the account before closing the account. Show the journal entries necessary
to dispose of this variance.
e) What is the balance in the Cost of Goods Sold account after the adjustment?
f) Calculate the gross profit earned by Pack Rite for the month.
g) Open T-accounts for Work in Process Inventory and Finished Goods Inventory. Post the
appropriate entries to these accounts & determine the ending account balances. Assume that
the beginning balances were zero.