CHAPTER 16 (11.) Zekany Corporation Would Have Had Identical Income Before Taxes On Both

CHAPTER 16 (11.) Zekany Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2018 through 2021 except for differences in depreciation on an operational asset. The asset cost $150,000 and is depreciated for income tax purposes in the following amounts: 2018 $ 49,500 2019 66,000 2020 22,500 2021 12,000    The operational asset has a four-year life and no residual value. The straight-line method is used for financial reporting purposes.    Income amounts before depreciation expense and income taxes for each of the four years were as follows.     2018 2019 2020 2021 Accounting income before taxes and depreciation $ 85,000 $ 105,000 $ 95,000 $ 95,000    Assume the average and marginal income tax rate for 2018 and 2019 was 30%; however, during 2019 tax legislation was passed to raise the tax rate to 40% beginning in 2020. The 40% rate remained in effect through the years 2020 and 2021. Both the accounting and income tax periods end December 31.     Required: Prepare the journal entries to record income taxes for the years 2018 through 2021.

Modern Convenience Stores Realize They Have To Offer More Than Late Night Hours And

Modern convenience stores realize they have to offer more than late night hours and a diverse product assortment to attract customers they have to change with the times or face extinction. Over the years convenience stores have stocked new products and services such as gasoline, lottery tickets, and even internet shopping and delivery services. A walk through any convenience store is likely to reveal in excess of 3,000 different products and services often available 24 hours a day 7 days a week. There are iclose to 132,500 convenient stores in the USA. The industry generated $337 billion in sales for 2003 Store 24 based in Waltham Massachusetts operates 82 stores in its chain of convenience stores. Locations are primarily in the New England and the Mid Atlantic regions of the USA where there are about 19,000 convenience stores, approximately 14% of the country’s total. As part of an accounting class assignment Tanisha Jones made a visit to the Store 24 headquarters to learn more about the company. The class instructor directed students to find a local business that uses cost volume profit analysis for decision making and to identify a scenario where cost volume profit analysis was used. Since Tanisha worked part time at the Store 24 in her neighborhood after school she wanted to use her employer for the assignment. Paul Doucette is Store 24’s chief financial officer. He agreed to meet with Tanisha and help with her assignment. Paul assembled a set of reports and information Tanisha may useful for the assignment. Paul told Tanisha that Store 24 uses cost volume profit analysis in many situations. For example company managers recently evaluated preparing in store deli sandwiches for lunchtime customers vs prepackaged deli sandwiches provided by an outside vendor. This effect on income of the store’s sales mix also had been reviewed and sensitivity analysis had been performed to see the effect of changing the selling price of milk One recent use of cost volume profit analysis that Paul thought would make a good illustration was the company’s decision regarding the sale of money orders at its stores. Paul explained that this was a new product area for the company, a financial service much like a bank would offer. By offering this new service Store 24 hoped to boost its customer count. Previous studies have shown that customers were likely to buy more than just the items they originally intended to purchase. So Store 24 wanted to boost sales revenue by giving customers another reason to come into the store and buy more than intended. Paul outlined for Tanisha the following information related to the analysis. The cost of renting the machine used in each store to prepare money orders is $30 a month. For each money order processed Store 24 paid a processing fee of 6 cents. After conducting an informal survey of banks and other local businesses that offered money order services Store 24 found most charging 99 cents for each money order transaction. Store 24 decided to price its money order fee at 79 cents to undercut the local competition. Paul estimated that a money order transaction would take one counter clerk 90 seconds to complete vs only 30 seconds for ringing up a product sale. The average hourly wage for a store clerk is $9 per hour. Store 24 considered this labor cost as a variable cost Question 1 What kinds of customers may be attracted to the money order service? Would you expect these customers to be typical of a convenience store such as Store 2?

Once You Attempt Discussion Points One To Three, It Will Be Rectified That There

Once you attempt discussion points one to three, it will be rectified that there are potential difficulties for Fiji as being a developing nation to completely shift from cash to accrual accounting, it surely will take some more years. DISCUSSION POINT 4: However, to you as students for Public Sector Accounting, questions that should be coming up to your minds are: Is it wise for Fiji and other developing countries to adopt accrual accounting or IPSAS? Whether cost vs. benefit analysis will be favorable? Will modified accrual accounting reports prove to be a better measure of decision making and assessing financial performance? To be fair from my perspective, these are unanswered questions in accounting literature. Critically present your contentions on these questions from your viewpoint.

A Ledger Is An Accounting Book That Facilitates The Transfer Of All Journal Entries

A ledger is an accounting book that facilitates the transfer of all journal entries in a chronological sequence to individual accounts. Discuss

For Each Of The Unrelated Transactions Described Below, Present The Entries Required To Record

For each of the unrelated transactions described below, present the entries required to record each transaction. 1. Sheridan Corp. issued $19,500,000 par value 11% convertible bonds at 98. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 95. 2. Skysong Company issued $19,500,000 par value 11% bonds at 97. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $5. 3. Suppose Sepracor, Inc. called its convertible debt in 2017. Assume the following related to the transaction. The 12%, $10,500,000 par value bonds were converted into 1,050,000 shares of $1 par value common stock on July 1, 2017. On July 1, there was $57,000 of unamortized discount applicable to the bonds, and the company paid an additional $82,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method.

On January 1, 2018, Sage Inc. Granted Stock Options To Officers And Key Employees

On January 1, 2018, Sage Inc. granted stock options to officers and key employees for the purchase of 18,000 shares of the company’s $10 par common stock at $23 per share. The options were exercisable within a 5-year period beginning January 1, 2020, by grantees still in the employ of the company, and expiring December 31, 2024. The service period for this award is 2 years. Assume that the fair value option-pricing model determines total compensation expense to be $343,400. On April 1, 2019, 1,800 options were terminated when the employees resigned from the company. The market price of the common stock was $36 per share on this date. On March 31, 2020, 10,800 options were exercised when the market price of the common stock was $41 per share. Prepare journal entries to record issuance of the stock options, termination of the stock options, exercise of the stock options, and charges to compensation expense, for the years ended December 31, 2018, 2019, and 2020.

He Carlberg Company Has Two Manufacturing Departments, Assembly And Painting. The Assembly Department

he Carlberg Company has two manufacturing departments, assembly and painting. The assembly department started 12,200 units during November. The following production activity unit and cost information refers to the assembly department’s November production activities.   Assembly Department Units Percent of Direct Materials Added Percent of Conversion Added   Beginning work in process 3,100 65 % 35 %   Units transferred out 10,980 100 % 100 %   Ending work in process 4,320 85 % 35 %   Beginning work in process inventory—Assembly   dept $ 2,681 (includes $1,656 for direct materials and $1,025 for conversion)   Costs added during the month:      Direct materials $ 21,404      Conversion $ 27,685 Required: Assign costs to the assembly department’s output—specifically, the units transferred out to the painting department and the units that remain in process in the assembly department at month-end. Use the FIFO method. (Do not round intermediate calculations. Round final answer to nearest whole dollar.) CARLBERG COMPANY FIFO method Costs of units transferred out Cost of beginning work in process inventory Costs to complete beginning work in process Direct materials Conversion Total costs to complete Cost of units started and completed this period Direct materials Conversion Total cost of units started and completed Total costs of units transferred out Cost of ending work in process inventory Direct materials Conversion Total costs of ending work in process Total costs assigned

The Carlberg Company Has Two Manufacturing Departments, Assembly And Painting. The Assembly Department

The Carlberg Company has two manufacturing departments, assembly and painting. The assembly department started 10,700 units during November. The following production activity unit and cost information refers to the assembly department’s November production activities.   Assembly Department Units Percent of Direct Materials Added Percent of Conversion Added   Beginning work in process 2,350 65 % 35 %   Units transferred out 9,630 100 % 100 %   Ending work in process 3,420 85 % 35 %   Beginning work in process inventory—Assembly   dept $ 1,931 (includes $1,206 for direct materials and $725 for conversion)   Costs added during the month:      Direct materials $ 13,904      Conversion $ 17,185 Required: Prepare the November 30 journal entry to record the transfer of units (and costs) from the assembly department to the painting department. Use the FIFO method. (Do not round intermediate calculations but round your final answers to whole decimals places.) Journal entry worksheet Note: Enter debits before credits. Transaction General Journal Debit Credit 1 Work in process inventory—Painting Work in process inventory—Assembly

Please With Complete Solutions. A Consumer With A Utility Function U=W1/2U=W1/2 (square Root Of

Please with complete solutions. A consumer with a utility function U=W1/2U=W1/2 (square root of WW, wealth) has an initial wealth of $50,000, the cost of illness is $25,000, with the probability of illness p=0.25.p=0.25. a. Calculate an actuarially fair health insurance premium for this consumer. b. Illustrate the consumer’s utility and expected utility on a graph. Indicate pure premium, different wealth amounts, etc. c. Can you tell how much extra this consumer will be willing to pay for health insurance on top of the actuarially fair/pure premium?

CHAPTER 19 (2.) On January 1, 2018, Hugh Morris Comedy Club (HMCC) Granted 1.4

CHAPTER 19 (2.) On January 1, 2018, Hugh Morris Comedy Club (HMCC) granted 1.4 million stock options to key executives exercisable for 1.4 million shares of the company’s common stock at $20 per share. The stock options are intended as compensation for the next three years. The options are exercisable within a four-year period beginning January 1, 2021, by the executives still in the employ of the company. No options were terminated during 2018. The market price of the common stock was $25 per share at the date of the grant. HMCC estimated the fair value of the options at $6 each. 1% of the options are forfeited during 2019 due to executive turnover. What amount should HMCC record as compensation expense for the year ended December 31, 2019, assuming HMCC chooses the option to record forfeitures as they actually occur?

CHAPTER 19 (3.) On October 1, 2018, Farmer Fabrication Issued Stock Options For 180,000

CHAPTER 19 (3.) On October 1, 2018, Farmer Fabrication issued stock options for 180,000 shares to a division manager. The options have an estimated fair value of $5 each. To provide additional incentive for managerial achievement, the options are not exercisable unless divisional revenue increases by 5% in four years. Suppose that Farmer initially estimates that it is not probable the goal will be achieved, but then after one year, Farmer estimates that it is probable that divisional revenue will increase by 5% by the end of 2020. Required: 1. What is the revised estimate of the total compensation? 2. What action will be taken to account for the options in 2019? 3. Prepare the journal entries to record compensation expense in 2019 and 2020.

CHAPTER 19 (4.) McDonnell-Myer Corporation Reported Net Income Of $2,958 Million. The Company Had

CHAPTER 19 (4.) McDonnell-Myer Corporation reported net income of $2,958 million. The company had 571 million common shares outstanding at January 1 and sold 18 million shares on Feb. 28. As part of an annual share repurchase plan, 9 million shares were retired on April 30 for $42 per share. Calculate McDonnell-Myer’s earnings per share for the year. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

CHAPTER 19 (5.) Allied Paper Products, Inc., Offers A Restricted Stock Award Plan To

CHAPTER 19 (5.) Allied Paper Products, Inc., offers a restricted stock award plan to its vice presidents. On January 1, 2018, the company granted 25 million of its $1 par common shares, subject to forfeiture if employment is terminated within two years. The common shares have a market price of $8 per share on the grant date. Required: 1. Determine the total compensation cost pertaining to the restricted shares. 2. Prepare the appropriate journal entries related to the restricted stock through December 31, 2019.

CHAPTER 19 (6.) On January 1, 2018, Adams-Meneke Corporation Granted 15 Million Incentive Stock

CHAPTER 19 (6.) On January 1, 2018, Adams-Meneke Corporation granted 15 million incentive stock options to division managers, each permitting holders to purchase one share of the company’s $1 par common shares within the next six years, but not before December 31, 2020 (the vesting date). The exercise price is the market price of the shares on the date of grant, currently $52 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. Management’s policy is to estimate forfeitures. No forfeitures are anticipated. Ignore taxes. Required: 1. Determine the total compensation cost pertaining to the options on January 1, 2018. 2. Prepare the appropriate journal entry to record compensation expense on December 31, 2018. 3. Unexpected turnover during 2019 caused an estimate of the forfeiture of 5% of the stock options. Determine the adjusted compensation cost, and prepare the appropriate journal entry(s) on December 31, 2019 and 2020.

CHAPTER 19 (7.) Karlovac Motor’s Disclosure Notes For The Year Ending December 31, 2015,

CHAPTER 19 (7.) Karlovac Motor’s disclosure notes for the year ending December 31, 2015, included the following regarding its $0.001 par common stock: Employee Stock Purchase Plan Employees are eligible to purchase common stock through payroll deductions of up to 20% of their eligible compensation, subject to any plan limitations. The purchase price of the shares on each purchase date is equal to 80% of the lower of the fair market value of our common stock on the first and last trading days of each six-month offering period. During the years ended December 31, 2015, 2014 and 2013, 221,771, 164,800 and 519,673 shares were issued under the ESPP for $38.7 million, $29.8 million and $15.0 million, respectively. A total of 3,627,749 shares of common stock have been reserved for issuance under the ESPP, and there were 2,127,851 shares available for issuance under the ESPP as of December 31, 2015. Required: Prepare the journal entry that summarizes employee share purchases for the year ending December 31, 2015.

CHAPTER 19 (8.) The Alford Group Had 150,000 Shares Of Common Stock Outstanding At

CHAPTER 19 (8.) The Alford Group had 150,000 shares of common stock outstanding at January 1, 2018. The following activities affected common shares during the year. There are no potential common shares outstanding.    2018 Feb. 28 Purchased 3,000 shares of treasury stock. Oct. 31 Sold the treasury shares purchased on February 28. Nov. 30 Issued 12,000 new shares. Dec. 31 Net income for 2018 is $1,639,000. 2019 Jan. 15 Declared and issued a 2-for-1 stock split. Dec. 31 Net income for 2019 is $1,639,000. Required: 1. Determine the 2018 EPS. 2. Determine the 2019 EPS. 3. At what amount will the 2018 EPS be presented in the 2019 comparative financial statements?

CHAPTER 19 (9.) On December 31, 2017, Berclair Inc. Had 400 Million Shares Of

CHAPTER 19 (9.) On December 31, 2017, Berclair Inc. had 400 million shares of common stock and 14 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purchased 120 million shares of its common stock as treasury stock. Berclair issued a 6% common stock dividend on July 1, 2018. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2018, was $700 million. Also outstanding at December 31 were 63 million incentive stock options granted to key executives on September 13, 2013. The options were exercisable as of September 13, 2017, for 63 million common shares at an exercise price of $60 per share. During 2018, the market price of the common shares averaged $70 per share. The options were exercised on September 1, 2018. Required: Compute Berclair’s basic and diluted earnings per share for the year ended December 31, 2018.

Pastner Brands Is A Calendar-year Firm With Operations In Several Countries. As Part Of

Pastner Brands is a calendar-year firm with operations in several countries. As part of its executive compensation plan, at January 1, 2018, the company issued 320,000 executive stock options permitting executives to buy 320,000 shares of Pastner stock for $44 per share. One-fourth of the options vest in each of the next four years beginning at December 31, 2018 (graded vesting). Pastner elects to separate the total award into four groups (or tranches) according to the year in which they vest and measures the compensation cost for each vesting date as a separate award. The fair value of each tranche is estimated at January 1, 2018, as follows: Vesting Date Amount Vesting Fair Value per Option Dec. 31, 2018 25 % $ 4.50 Dec. 31, 2019 25 % $ 5.00 Dec. 31, 2020 25 % $ 5.40 Dec. 31, 2021 25 % $ 6.00 Required: 1. Determine the compensation expense related to the options to be recorded each year 2018–2021, assuming Pastner allocates the compensation cost for each of the four groups (tranches) separately. 2. Determine the compensation expense related to the options to be recorded each year 2018–2021, assuming Pastner uses the straight-line method to allocate the total compensation cost.

CHAPTER 16 (14.) Tru Developers, Inc., Sells Plots Of Land For Industrial Development. Tru

CHAPTER 16 (14.) Tru Developers, Inc., sells plots of land for industrial development. Tru recognizes income for financial reporting purposes in the year it sells the plots. For some of the plots sold this year, Tru took the position that it could recognize the income for tax purposes when the installments are collected. Income that Tru recognized for financial reporting purposes in 2018 for plots in this category was $70 million. The company expected to collect 60% of each sale in 2019 and 40% in 2020. This amount over the next two years is as follows: 2019 $ 42 million 2020 28 million $ 70 million Tru’s pretax accounting income for 2018 was $100 million. In its income statement, Tru reported interest income of $15 million, unrelated to the land sales, for which the company’s position is that the interest is not taxable. Accordingly, the interest was not reported on the tax return. There are no differences between accounting income and taxable income other than those described above. The enacted tax rate is 40 percent. Management believes the tax position taken on the land sales has a greater than 50% chance of being upheld based on its technical merits, but the position taken on the interest has a less than 50% chance of being upheld. It is further believed that the following likelihood percentages apply to the tax treatment of the land sales ($ in millions): Amount Qualifying for Installment Sales Treatment Percentage Likelihood of Tax Treatment Being Sustained $ 70 20 % 60 20 % 50 20 % 40 20 % 30 20 % Required: 1. What portion of the tax benefit of tax-free interest will Tru recognize on its 2018 tax return? 2. What portion of the tax benefit of tax-free interest will Tru recognize on its 2018 financial statements? 3-a. What portion of the tax on the $70 million income from the plots sold on an installment basis will Tru defer on its 2018 tax return? 3-b. What portion of the tax on the $70 million income from the plots sold on an installment basis will Tru defer in its 2018 financial statements? 4. Prepare the journal entry to record income taxes in 2018 assuming full recognition of the tax benefits in the financial statements of both differences between pretax accounting income and taxable income. 5. Prepare the journal entry to record income taxes in 2018 assuming the recognition of the tax benefits in the financial statements you indicated in requirements 1-3.

CHAPTER 16 (13.) Fores Construction Company Reported A Pretax Operating Loss Of $240 Million

CHAPTER 16 (13.) Fores Construction Company reported a pretax operating loss of $240 million for financial reporting purposes in 2018. Contributing to the loss were (a) a penalty of $15 million assessed by the Environmental Protection Agency for violation of a federal law and paid in 2018 and (b) an estimated loss of $20 million from accruing a loss contingency. The loss will be tax deductible when paid in 2019. The enacted tax rate is 40%. There were no temporary differences at the beginning of the year and none originating in 2018 other than those described above. Taxable income in Fores’s two previous years of operation was as follows: 2016 $ 105 million 2017 50 million Required: 1. Prepare the journal entry to recognize the income tax benefit of the net operating loss in 2018. Fores elects the carryback option. 2. What is the net operating loss reported in 2018 income statement? 3. Prepare the journal entry to record income taxes in 2019 assuming pretax accounting income is $90 million. No additional temporary differences originate in 2019.

CHAPTER 16 (12.) The DeVille Company Reported Pretax Accounting Income On Its Income Statement

CHAPTER 16 (12.) The DeVille Company reported pretax accounting income on its income statement as follows:     2018 $ 395,000 2019 315,000 2020 385,000 2021 425,000     Included in the income of 2018 was an installment sale of property in the amount of $46,000. However, for tax purposes, DeVille reported the income in the year cash was collected. Cash collected on the installment sale was $18,400 in 2019, $23,000 in 2020, and $4,600 in 2021. Included in the 2020 income was $19,000 interest from investments in municipal bonds. The enacted tax rate for 2018 and 2019 was 30%, but during 2019 new tax legislation was passed reducing the tax rate to 25% for the years 2020 and beyond. Required: Prepare the year-end journal entries to record income taxes for the years 2018–2021. (If no entry is required for a transaction/event, select “No journal entry required” in the first account field.)

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