Conquer Advanced Taxation Assignments with Confidence

Published: 11 months ago

Conquer Advanced Taxation Assignments with Confidence

longer in use.

Required:

For each transaction, indicate (1) whether cash is involved (yes or no), and, if cash is involved, (2)

whether Witherspoon should classify it as operating, investing, or financing in a statement of cash flows,

and (3) whether the cash is an inflow or outflow. Enter N/A if the question is not applicable to the

state

35. Calculate the normal and overtime wages payable to a worker from the following data:

Calculate the normal and overtime wages payable to a worker from the following data:

Normal working hours is eight per day, and normal rate is Re 0.50 per hour. Overtime rate is up to 9 hours in a day at single rate and over 9 hours in a day at double rate, or up to 48 hours in a week at single rate and over 48 hours at double rate, whichever is more beneficial to the workers.

Hint: Saturday should be taken as half day with four normal working hours.

36. 13) Berhannan's Cellular sells phones for $100. The unit variable cost per phone is $50 plus a..

13) Berhannan's Cellular sells phones for $100. The unit variable cost per phone is $50 plus a selling commission of 10%. Fixed manufacturing costs total $1,250 per month, while fixed selling and administrative costs total $2,500.

Required:

a.What is the contribution margin per phone?

b.What is the break-even point in phones?

c.How many phones must be sold to earn pre-tax income of $7,500?

14) Gilley Inc., sells a single product. The company's most recent income statement is given below.

Sales (4,000 units)$120,000

Less variable expenses(68,000)

Contribution margin52,000

Less fixed expenses(40,000)

Net income $12,000

Required:

a.Contribution margin per unit is$ ________

b.If sales are doubled to $240,000,

total variable costs will equal$ ________

c.If sales are doubled to $240,000,

total fixed costs will equal$ ________

d.If 10 more units are sold, profits will increase by$ ________

e.Compute how many units must be sold to break-even. # ________

f.Compute how many units must be sold

to achieve profits of $20,000.# ________

15) Blankinship, Inc., sells a single product. The company's most recent income statement is given below.

Sales$200,000

Less variable expenses(120,000)

Contribution margin80,000

Less fixed expenses(50,000)

Net income$30,000

Required:

a.Contribution margin ratio is________ %

b.Break-even point in total sales dollars is$ ________

c.To achieve $40,000 in operating income, sales must total$ ________

d.If sales increase by $50,000, net income will increase by$ ________

37. It takes 5 minutes per customer to be processed by the tellers The average customer arrivals are...

The National State Bank is trying to make sure that it has enough tellers to handle the Friday afternoon

rush of workers wanting to cash their paychecks It is only concerned with the last hour of the day from

400 to 5 00 p m. It takes 5 minutes per customer to be processed by the tellers The average customer

arrivals are shown in the table below.

The bank currently has 8 teller stations and all are staffed during the Friday afternoon rush hour.

a. What is the current maximum output at the bank during rush hour?

b. Can the bank process all the customers by 5:00 p.m.?

c. What is the maximum waiting time for customers and what time period does it occur in?

38. PR 7-3A Bank reconciliation and entries The cash account for Capstone Medical Co. at November 30,...

PR 7-3A Bank reconciliation and entries

The cash account for  Capstone  Medical  Co.  at  November  30,  2016,  indicated  a  balance of  $89,620.  The  bank  statement  indicated  a  balance  of  $128,660  on  November  30, 2016.

Comparing the bank statement and the accompanying canceled checks and memos with

the records revealed the following reconciling    items:

a.     Checks outstanding totaled $32,700.

b.     A deposit of $18,550, representing receipts of November 30, had been made too late to appear on the bank statement.

c.     The bank collected $26,750 on a $25,000 note, including interest of $1,750.

d.     A check for $1,500 returned with the statement had been incorrectly recorded by Capstone Medical Co. as $150. The check was for the payment of an obligation to ABC Supply Co. for a purchase on account.

e.     A check drawn for $490 had been erroneously charged by the bank as $940.

f.      Bank service charges for November amounted to $60.

Instructions

1.     Prepare a bank reconciliation.

2.     Journalize the necessary entries. The accounts have not been closed.

3.     If a balance sheet were prepared for Capstone Medical Co. on November 30, 2016, what amount should be reported as cash?

39. Net Income and Retained Earnings

Ken Young and Kim Sherwood organized Reader Direct as a corporation; each contributed $40,000 cash to start the business and received 4,000 shares of stock. The store completed its first year of operations on December 31, 2009. On that date, the following financial items for the year were determined...

40. During May, Joliet Fabrics Corporation manufactured 500 units of a special multilayer fabric with...

Direct-Material and Direct-Labor Variances

During May, Joliet Fabrics Corporation manufactured 500 units of a special multilayer fabric with the trade name Stylex. The following information from the Stylex production department also pertains to May.

Direct material purchased: 18,000 yards at $1.38 per yard 24,840

Direct material used: 9,500 yards at $1.38 per yard 13,110

Direct labor: 2,100 hours at $9.15 per hour 19,215

The standard prime costs for one unit of Stylex are as follows:

Direct material: 20 yards at $1.35 per yard 27

Direct labor: 4 hours at $9.00 per hour 36

Total standard prime cost per unit of output 63

Required: Compute the following variances for the month of May, indicating whether each variance is favorable or unfavorable.

1. Direct-material price variance.

2. Direct-material quantity variance.

3. Direct-labor rate variance.

4. Direct-labor efficiency variance.

41. BE2–10 The following transactions occur for the Wolfpack Shoe Company during the month of June:...

BE2–10 The following transactions occur for the Wolfpack Shoe Company during the month of June:

a. Provide services to customers for $30,000 and receive cash.

b. Purchase office supplies on account for $20,000.

c. Pay $7,000 in salaries to employees for work performed during the month.

1. Analyze each transaction. For each transaction, indicate by how much each category in the

accounting equation increases or decreases.

2. Record the transactions. The company uses the following accounts: Cash, Supplies, Accounts

Payable, Salaries Expense, and Service Revenue.

3. Post the transactions to T-accounts. Assume the opening balance in each of the accounts is zero.

42. Maria Juarez is a licensed dentist. During the first month of the operation of her business, the...

Maria Juarez is a licensed dentist. During the first month of the operation of her business, the following events and transactions occurred.

April 1 Invested $40,000 cash.

1 Hired a secretary-receptionist at a salary of $600 per week payable monthly.

2 Paid office rent for the month $1,000.

3 Purchased dental supplies on account from Smile Company $4,000.

10 Provided dental services and billed insurance companies $5,100.

11 Received $1,000 cash advance from Trudy Borke for an implant.

20 Received $2,100 cash for services completed and delivered to John Stanley.

30 Paid secretary-receptionist for the month $2,400.

30 Paid $1,600 to Smile Company for accounts payable due.

Maria uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126 Supplies, No. 201 Accounts Payable, No. 205 Unearned Revenue, No. 301 Maria Juarez, Capital; No. 400 Service Revenue, No. 726 Salaries Expense, and No. 729 Rent Expense.

Instructions

(a) Journalize the transactions.

(b) Post to the ledger accounts.

(c) Prepare a trial balance on April 30, 2010.

43. Prepare the perpetual inventory schedule for transactions using (1) FIFO, (2) LIFO, and (3)...

Jensen’s Department Store uses a perpetual inventory system. Data for product E2-

D2 include the following purchases.

Date Number of Units Units Price

May 7 50 $10

July 28 30 $13

On June 1 Jensen’s sold 30 units, and on August 27, 40 more units. Prepare the perpetual inventory schedule for th...

44. Cash budget—Basic Grenoble Enterprises had sales of $50,000 in March and $60,000 in April. Forecast...

Cash budget—Basic Grenoble Enterprises had sales of $50,000 in March and $60,000 in April. Forecast sales for May, June, and July are $70,000, $80,000, and $100,000, respectively. The firm has a cash balance of $5,000 on May 1 and wishes to maintain a minimum cash balance of $5,000. Given the following data, prepare and interpret a cash budget for the months of May, June, and July.

(1) The firm makes 20% of sales for cash, 60% are collected in the next month, and the remaining 20% are collected in the second month following sale.

(2) The firm receives other income of $2,000 per month.

(3) The firm’s actual or expected purchases, all made for cash, are $50,000, $70,000, and $80,000 for the months of May through July, respectively.

(4) Rent is $3,000 per month.

(5) Wages and salaries are 10% of the previous month’s sales.

(6) Cash dividends of $3,000 will be paid in June.

(7) Payment of principal and interest of $4,000 is due in June.

(8) A cash purchase of equipment costing $6,000 is scheduled in July.

(9) Taxes of $6,000 are due in June.

45. The AMS technical services department has embarked on a quality improvement effort. Its first...

The AMS technical services department has embarked on a quality improvement effort. Its first project relates to maintaining the target upload speed for its Internet service subscribers. Upload speeds are measured on a standard scale in which the target value is 1.0. Data collected over the past year indicate that the upload speed is approximately normally distributed, with a mean of 1.005 and a standard deviation of 0.10. Each day, one upload speed is measured. The upload speed is considered acceptable if the measurement on the standard scale is between 0.95 and 1.05. EXERCISES 1. Assuming that the distribution has not changed from what it was in the past year, what is the probability that the upload speed is a. less than 1.0? b. between 0.95 and 1.0? c. between 1.0 and 1.05? d. less than 0.95 or greater than 1.05? 2. The objective of the operations team is to reduce the probability that the upload speed is below 1.0. Should the team focus on process improvement that increases the mean upload speed to 1.05 or on process improvement that reduces the standard deviation of the upload speed to 0.075? Explain.

46. The Lamplighter Company, the lessor, agrees to lease equipment t

The Lamplighter Company, the lessor, agrees to lease equipment to Tilson Company, the lessee, beginning January 1, 2007. The lease terms, provisions, and related events are as follows:

The lease is non-cancelable and has a term of eight years. The annual rentals are $32,000, payable at the end of each year. The Tilson Company agrees to pay all executory costs. The interest rate implicit in the lease is 14%. The cost of the equipment to the lessor is $110,000. The lessor incurs no material initial direct costs. The collectibility of the rentals is reasonably assured, and there are no important uncertainties surrounding the amount of unreimbursable costs yet to be incurred by the lessor. The lessor estimates that the fair value at the end of the lease term will be $20,000 and that the economic life of the equipment is nine years.

Required

1. Calculate the selling price implied by the lease and prepare a table summarizing the lease receipts and interest revenue earned by the lessor for this sales-type lease.

2. State why this is a sales-type lease.

3. Prepare journal entries for Lamplighter Company for the years 2007, 2008, and 2010.

4. Prepare partial balance sheets for Lamplighter Company for December 31, 2007 and December 31, 2008, showing how the accounts should be disclosed.

47. Oct. 1 Diane Lexington begins business as a real estate agent with a cash investment of $20,000 i...

All the days, debuts or credits has the same shoices

Oct. 1 Diane Lexington begins business as a real estate agent with a cash investment of $20,000 in exchange for common stock. 2 Hires an administrative assistant. 3 Purchases office furniture for $2,300, on account. 6 Sells a house and lot for N Fennig: bills N. Fennig $3,600 for realty services performed. 27 Pays $850 on the balance related to the transaction of October 3. 30 ays the administrative assistant $2,500 in salary for October.

48. 68.Read the following letter and help Shady Slim with his tax situation. Please assume that gross...

68.Read the following letter and help Shady Slim with his tax situation.  Please assume that gross income is $172,900 for purposes of this problem.

December 31, 2015

To the friendly student tax preparer:

Hi, it’s Shady Slim again. I just got back from my 55th birthday party, and I’m told that you need some more information from me in order to complete my tax return. I’m an open book  I’ll tell you whatever I think you need to know.

I had to move this year after getting my job at Roca Cola. We moved on February 3 of this year, and I worked my job at Roca Cola for the rest of the year. I still live in the same state, but I moved 500 miles away from my old house. I left a little bit early to go on a house-hunting trip that cost me a total of $450. I hired a moving company to move our stuff at a cost of $2,300, and I drove Junior in my car. Junior and I got a hotel room along the way that cost us $45 (I love Super 8). We spent $35 on meals on the way to our new home. Oh yeah, I took Junior to a movie on the way and that cost $20.

Can you believe I’m still paying off my student loans, even after 15 years?  I paid a total of $900 in interest on my old student loans this year.

Since Roca Coca (my employer) never started a retirement plan, I decided I should probably start saving for my golden years.  I contributed $3,000 to what the bank referred to as a regular IRA (or was it a REM?).  Oh yeah. I also did a little investing this year. I bought a limited partnership interest in Duds, Ltd. for $10,000.  I thought it was going to be a real winner, but this year they took a bath. My portion of the loss was $8,000. Well, at least I did not actually do any work for Duds, and I get the tax deduction - right?

That should be all the information you need right now. Please calculate my adjusted gross income and complete page 1 of Form 1040.  You’re still doing this for free, right?

49. Estimating a cost function The controller of the Ijiri Company

Estimating a cost function The controller of the Ijiri Company wants you to estimate a cost function from the following two observations in a general ledger account called Maintenance:



Required

1. Estimate the cost function for maintenance.

2. Can the constant in the cost function be used as an estimate of fixed maintenance cost per month? Explain.

50. Canyon reported $106,000 of net income for the year by using variable costing. The company had no...

Canyon reported $106,000 of net income for the year by using variable costing. The company had no beginning inventory, planned and actual production of 50,000 units, and sales of 47,000 units. Standard variable manufacturing costs were $15 per unit, and total budgeted fixed manufacturing overhead was $150,000. If there were no variances, net income under absorption costing would be:

A. $52,000.

B. $97,000.

C. $106,000.

D. $115,000.

E. $160,000.

Please show work so that I can apply this to another problem. Thanks!