(Various Time Value Situations) Using the appropriate interest table, provide the solution to each of the following four questions by computing the unknowns

P6-2 (Various Time Value Situations) Using the appropriate interest table, provide the solution to each of the following four questions by computing the unknowns.

(a) What is the amount of the payments that Ned Winslow must make at the end of each of 8 years to accumulate a fund of $90,000 by the end of the eighth year, if the fund earns 8% interest, compounded annually?

(b) Robert Hitchcock is 40 years old today and he wishes to accumulate $500,000 by his sixty-fifth birthday so he can retire to his summer place on Lake Hopatcong. He wishes to accumulate this amount by making equal deposits on his fortieth through his sixty-fourth birthdays. What annual deposit must Robert make if the fund will earn 12% interest compounded annually?

(c) Diane Ross has $20,000 to invest today at 9% to pay a debt of $47,347. How many years will it take her to accumulate enough to liquidate the debt?

(d) Cindy Houston has a $27,600 debt that she wishes to repay 4 years from today; she has $19,553 that she intends to invest for the 4 years. What rate of interest will she need to earn annually in order to accumulate enough to pay the debt?

Click here for the solution: (Various Time Value Situations) Using the appropriate interest table, provide the solution to each of the following four questions by computing the unknowns

Presented on page 890 are two independent situations

Exercise 17-12 (E17-12) (Journal Entries for Fair Value and Equity Methods) Presented on page 890 are two independent situations.

Situation 1
Conchita Cosmetics acquired 10% of the 200,000 shares of common stock of Martinez Fashion at a total cost of $13 per share on March 18, 2007. On June 30, Martinez declared and paid a $75,000 cash dividend. On December 31, Martinez reported net income of $122,000 for the year. At December 31, the market price of Martinez Fashion was $15 per share. The securities are classified as available-for-sale.

Situation 2
Monica, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles’s 30,000 outstanding shares of common stock at a total cost of $9 per share on January 1, 2007. On June 15, Seles declared and paid a cash dividend of $36,000. On December 31, Seles reported a net income of $85,000 for the year.

Instructions
Prepare all necessary journal entries in 2007 for both situations.

Click here for the solution: Presented on page 890 are two independent situations

Presented below are two independent situations

E14-3 (Entries for Bond Transactions) Presented below are two independent situations.

1.) On January 1. 2008, Paul Simon Company issued $200,000 of 9%. 10-year bonds dated June 1 at par. Interest quarterly on April 1, July 1, October 1 and January 1.
2.) On January 1, 2008, Graceland Company issued $100,000 of 12%, 10-year bonds dated June 1 at par. Interest is payable semiannually on July 1 and January 1.

Instructions
For each of these two independent situations, prepare journal entries to record:
a.) The issuance of bonds
b.) The payment of interest on July 1
c.) The accrual of interest on December 31

Click here for the solution: Presented below are two independent situations

The following situations involve accounting principles and assumptions

ACC 557 Week 1 Assignment

E1-4 The following situations involve accounting principles and assumptions.

1. Grossman Company owns buildings that are worth substantially more than they originally cost. In an effort to provide more relevant information, Grossman reports the buildings at market value in its accounting reports.

2. Jones Company includes in its accounting records only transaction data that can be expressed in terms of money.

3. Caleb Borke, president of Caleb’s Cantina, records his personal living costs as expenses of the Cantina.

Instructions
For each of the three situations, say if the accounting method used is correct or incorrect. If correct, identify which principle or assumption supports the method used. If incorrect, identify which principle or assumption has been violated.

Click here for the solution: The following situations involve accounting principles and assumptions

(Bad-Debt Reporting) Presented below are a series of unrelated situations

P7-2 (Bad-Debt Reporting) Presented below are a series of unrelated situations.

1. Halen Company’s unadjusted trial balance at December 31, 2010, included the following accounts.
Debit Credit
Allowance for doubtful accounts $4,000
Net Sales $1,200,000
Halen Company estimates its bad debt expense to be 1 and 1/2% of net sales. Determine its bad debt expense for 2010.

2. An analysis and aging of Stuart Corp. accounts receivable at December 31, 2010, disclosed the following.
Amounts estimated to be uncollectible $ 180,000
Accounts receivable 1,750,000
Allowance for doubtful accounts (per books) 125,000
What is the net realizable value of Stuart’s receivables at December 31, 2010?

3. Shore Co. provides for doubtful accounts based on 3% of credit sales. The following data are available for 2010.
Credit sales during 2010 $2,400,000
Allowance for doubtful accounts 1/1/10 17,000
Collection of accounts written off in prior years (customer credit was reestablished) 8,000
Customer accounts written off as uncollectible during 2010 30,000
What is the balance in the Allowance for Doubtful Accounts at December 31, 2010?

4. At the end of its first year of operations, December 31, 2010, Darden Inc. reported the following information.
Accounts receivable, net of allowance for doubtful accounts $950,000
Customer accounts written off as uncollectible during 2010 24,000
Bad debt expense for 2010 84,000
What should be the balance in accounts receivable at December 31, 2010, before subtracting the allowance for doubtful accounts?

5. The following accounts were taken from Bullock Inc.’s trial balance at December 31, 2010.
Debit Credit
Net credit sales $750,000
Allowance for doubtful accounts $14,000
Accounts receivable 310,000
If doubtful accounts are 3% of accounts receivable, determine the bad debt expense to be reported for 2010.

Instructions
Answer the questions relating to each of the five independent situations are requested.

Click here for the solution: (Bad-Debt Reporting) Presented below are a series of unrelated situations

Eastern Manufacturing is involved with several situations that possibly involve contingencies

P 13-6 Various contingencies

Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern’s fiscal year ends December 31, and the 2011 financial statements are issued on March 15, 2012.

a. Eastern is involved in a lawsuit resulting from a dispute with a supplier. On February 3, 2012, judgment was rendered against Eastern in the amount of $107 million plus interest, a total of $122 million. Eastern plans to appeal the judgment and is unable to predict its outcome though it is not expected to have a material adverse effect on the company.

b. In November 2010, the State of Nevada filed suit against Eastern, seeking civil penalties and injunctive relief for violations of environmental laws regulating hazardous waste. On January 12, 2012, Eastern reached a settlement with state authorities. Based upon discussions with legal counsel, the Company feels it is probable that $140 million will be required to cover the cost of violations. Eastern believes that the ultimate settlement of this claim will not have a material adverse effect on the company.

c. Eastern is the plaintiff in a $200 million lawsuit filed against United Steel for damages due to lost profits from rejected contracts and for unpaid receivables. The case is in final appeal and legal counsel advises that it is probable that Eastern will prevail and be awarded $100 million.

d. At March 15, 2012, the Environmental Protection Agency is in the process of investigating possible soil contamination at various locations of several companies including Eastern. The EPA has not yet proposed a penalty assessment. Management feels an assessment is reasonably possible, and if an assessment is made an unfavorable settlement of up to $33 million is reasonably possible.

Required:
1. Determine the appropriate means of reporting each situation. Explain your reasoning.
2. Prepare any necessary journal entries and disclosure notes.

Click here for the solution: Eastern Manufacturing is involved with several situations that possibly involve contingencies

The following situations are similar, but each represents a variation of a particular crime

7-1A. Types of Cyber Crimes. The following situations are similar, but each represents a variation of a particular crime. Identify the crime and point out the differences in the variations.

(a) Chen, posing fraudulently as Diamond Credit Card Co., e-mails Emily, stating that the company has observed suspicious activity in her account and observed suspicious activity in her account and has frozen the account. The e-mail asks her to re-register her credit-card number and password to reopen the account.
(b) Claiming falsely to be Big Buy Retail Finance Co,. Conner sends an e-mail to Dino, asking him to confirm or update his personal security information to prevent his Big Buy account from being discontinued.
(c) Felicia posts her resume on GoWork.com, an online job-posting site, seeking a position in business and managerial finance and accounting. Hayden, who misrepresents himself as an employment officer with International Bank & Commerce Corp., sends her an e-mail asking for more personal information.


Click here for the solution: The following situations are similar, but each represents a variation of a particular crime

5-53 For each of the following situations, evaluate the segregation of duties implemented by the company and indicate the following

5-53 (Segregation of Duties) For each of the following situations, evaluate the segregation of duties implemented by the company and indicate the following:
a. Any deficiency in the segregation of duties described. (Indicate none if no deficiency is present.)
b. The potential errors or irregularities that might occur because of the inadequate segregation of duties.
c. Compensation, or other, controls that might be added to mitigate potential misstatements.
d. A specific audit test that ought to be performed to determine whether a misstatement had occurred.

Situations:
1. The company’s payroll is computerized and is handled by one person in charge of payroll who enters all weekly time reports into the system. The payroll system is password so that only the payroll person can change pay rates or add/delete company personnel to the payroll file. Payroll checks are prepared weekly, and the payroll person batches the checks by supervisor or department head for subsequent distribution to employees.
2. XYZ is a relatively small organization but has segregated the duties of cash receipts and cash disbursements. However, the employee responsible for handling cash receipts also reconciles the monthly bank account.
3. Nick’s is a small family-owned restaurant in a northern resort area whose employees are trusted. When the restaurant is very busy, any of the wait staff has the ability to operate the cash register and collect the amounts due from the customer. All orders are tabulated on “tickets.” Although there is a place to indicate the waiter or waitress on each ticket, most d not bothers to do so, nor does management reconcile the ticket numbers and amounts with total cash receipts for the day.
4. A purchasing agent for JC Penney has the responsibility for ordering specific products, e.g., women’s clothes, and setting the prices for those products. The purchasing agent is eligible for a bonus based on the profitability of his or her line of business. The receipt, demonstration, and sale of the goods are handled by individuals who are separate from the purchasing agent.
5. Bass Pro Shops takes customer orders via a toll-free phone number. The order taker sits at a terminal and has complete access to the customer’s previous credit history and a list of inventory available for sale. The order clerk has the ability to input all the customer’s requests and generate a sales invoice and shipment with no additional supervisory review or approval.
6. The purchasing department of Big Dutch is organized around three purchasing agents. the first is responsible for ordering electrical gear and motors, the second orders fabrication material, and the third orders nuts and bolts and other smaller supplies that go into the assembly process. to improve the accountability to vendors, all receiving slips and vendor invoices are sent directly to the purchasing agent placing the order. This allows the purchasing agent to better monitor the performance of vendors. When approved by the purchasing agent for payment, the purchasing agent must forward (a) a copy of the purchase order, (b) a copy of the receiving slip, and (c) a copy of the vendor invoice to accounts payable for payment. Accounts payable will not pay an invoice unless all three items are present and match as to quantities, prices, and so forth. The receiving department reports to the purchasing department.
7. The employees of Americana TV and Appliance-a major electronics retailer-are paid based on their performance in generating profitable sales for the company. Each salesperson has the ability to modify a tagged sales price (within specified but very broad parameters). Once a sales price has been negotiated with the customer, an invoice is prepared. At the close of the day, the salesperson looks up the cost of the merchandise on a master price list. The salesperson then enters the cost of the merchandise on a master price list. The salesperson then enters the cost of the merchandise on the copy of the invoice and submits it to accounting for data entry and processing. The salesperson’s commission is determined by the gross margin realized on sales.


Click here for the solution: For each of the following situations, evaluate the segregation of duties implemented by the company and indicate the following

For the following independent situations, assume that you are the audit partner on the engagement

Auditing P 3-28

For the following independent situations, assume that you are the audit partner on the engagement:

1. During your audit of Debold.com, Inc. you conclude that there is a possibility that inventory is materially overstated. The client refuses to allow you to expand the scope of your audit sufficiently to verify whether the balance is actually misstated.
2. Four weeks after the year-end date, a major customer of Prince Construction Co. declared bankruptcy. Because the customer had confirmed the balance due to Prince at the balance sheet date, management refuses to charge off the account or otherwise disclose the information. The receivable represents approximately 10% of accounts receivable and 20% of net earnings before taxes.
3. You complete the audit of Johnson Department Store, and in your opinion, the financial statements are fairly presented. On the last day of the audit, you discover that one of your supervisors assigned to the audit has a material investment in Johnson.
4. Auto Delivery Company has a fleet of several delivery trucks. In the past, Auto Delivery had followed the policy of purchasing all equipment. In the current year, they decided to lease the trucks. The method of accounting for the trucks is therefore changed to lease capitalization. This change in policy is fully disclosed in footnotes.
5. You are auditing Woodcolst Linen Services for the first time. Woodcolst has been in business for several years but has never had an audit before. After the audit is completed, you conclude that the current year balance sheet is stated correctly in accordance with GAAP. The client did not authorize you to do test work for any of the previous years.
6. You were engaged to audit the Cutter Steel Company's financial statements after the close of the corporation's fiscal year. Because you were not engaged until after the balance sheet date, you were not able to physically observe inventory, which is highly material. On the completion of your audit, you are satisfied that Cutter's financial statements are presented fairly, including inventory about which you were able to satisfy yourself by the use of alternative audit procedures.

For each situation, do the following:
a. Identify which of the conditions requiring a modification of or a deviation from an unqualified standard report is applicable.
b. State the level of materiality as immaterial, material, or highly material. If you cannot decide the level of materiality, state the additional information needed to make a decision.
c. Given your answers in parts a and b, sate the type of audit report that should be issued. If you have not decided on level of materiality in part b, state the appropriate report for each alternative materiality level.


Click here for the solution: For the following independent situations, assume that you are the audit partner on the engagement

P 4-20 The following situations involve the provision of nonaudit services

Auditing P 4-20 The following situations involve the provision of nonaudit services. Indicate whether providing the service is a violation of AICPA rules or SEC rules including Sarbanes-Oxley requirements on independence. Explain your answer as necessary.

a. Providing bookkeeping services to a public company. The services were preapproved by the audit committee of the company.
b. Providing internal audit services to a public company that is not an audit client.
c. Designing and implementing a financial information system for a private company.
d. Recommending a tax shelter to a client that is publicly held. The services were preapproved by the audit committee.
e. Providing internal audit services to a public company audit client with the preapproval of the audit committee.
f. Providing bookkeeping services to an audit client that is a private company.


Click here for the solution: P 4-20 The following situations involve the provision of nonaudit services

Each of the following situations involves a possible violation of the AICPA's Code of Professional Conduct

Auditing P 4-21 Each of the following situations involves a possible violation of the AICPA's Code of Professional Conduct. For each situation, state the applicable section of the rules of conduct and whether it is a violation.

a. Jose Martinex is a CPA, but not a partner, with 3 years of professional experience with Lyle and Lyle, CPAs. He owns 25 shares of stock in an audit client of the firm, but he does not take part in the audit of the client, and the amount of stock is not material in relation to his total wealth.
b. A nonaudit client requests assistance of J. Bacon, CPA, in the installation of a local area network. Bacon had no experience in this type of work and no knowledge of the consultant is not in the practice of public accounting, but Bacon is confident of his professional skills. Because of the highly technical nature of the work, Bacon is not able to review the consultant's work.
c. In preparing the personal tax returns for a client, Phyllis Allen, CPA, observed that the deductions for contributions and interest were unusually large. When she asked the client for backup information to support the deductions, she was told, "Ask me no questions, and I will tell you no lies." Allen completed the return on the basis of the information acquired from the client.
d. Sally Blanchard, CPA, serves as controller of a U.S. based company that has a significant portion of its operations in several South American countries. Certain government provisions in selected countries require the company to file financial statements based on international standards. Sally oversees the issuance of the company's financial statements and asserts that the statements are based on international financial accounting standards; however the standards she uses are not those issued by the International Accounting Standards Board.
e. Bill Wendal, CPA, set up a casualty and fire insurance agency to complement his auditing and tax services. He does not use his own name on anything pertaining to the insurance agency and has a highly competent manager, Frank Jones, who runs it. Wendal often requests Jones to review the adequacy of a client's insurance with management if it seems underinsured. He believes that he provides a valuable service to clients by informing them when they are underinsured.
f. Five small Chicago CPA firms have become involved in an information project by taking part in an interim working paper review program. Under the program, each firm designates two partners to review the audit files, including the tax returns and the financial statements of another CPA firm taking part in the program. At the end of each review, the auditors who prepared the working papers and the reviewers have a conference to discuss the strengths and weaknesses of the audit. The do not obtain conference to discuss the strengths and weaknesses of the audit. They do not obtain authorization from the audit client before the review takes place.
g. James Thurgood, COA stated longer than he should have at the annual Christmas party of Thurgood and Thrugood, CPAs. On his way home he drove through a red light and was stopped by a police officer, who observed that he was intoxicated. In a jury trial, Thurgood was found guilty of drives under the influence of alcohol. Because this was not his first offense, he was sentenced to 30 days in jail and his driver's license was revoked for 1 year.
h. Rankin, CPA, provides tax services, management advisory services, and bookkeeping services and conducts audits for the same nonpublic client. Because the firm is small, the same person often provides all the services.


Click here for the solution: Each of the following situations involves a possible violation of the AICPA's Code of Professional Conduct

16-41 (Choosing the Type of Opinion) Several independent audit situations are presented here

16-41 (Choosing the Type of Opinion) Several independent audit situations are presented here. Assume that everything other than what is described would have resulted in an unqualified opinion.

Required
Indicate the type of opinion you believe should be expressed in each situation, and explain your choice. If an explanatory paragraph is needed, indicate whether it should precede or follow the opinion paragraph.

a. The auditor was unable to obtain confirmations from two of the client's major customers that were included in the sample. These customers wrote on the confirmation letters that they were unable to confirm the balances because of their accounting systems. The auditor was able to become satisfied by other audit procedures.

b. The client treated a lease as an operating lease, but the auditor believes it should have been accounted for as a capital lease.The effects are material.

c. The client changed from FIFO to LIFO this year.The effect is material. Assume:
1. The change was properly accounted for, justified, and disclosed.
2. The change was properly accounted for and disclosed, but was not properly justified.

d. The client restricted the auditor from observing the physical inventory. Inventory is a material item.

e. The client is engaged in a product liability lawsuit that is properly accounted for and adequately described in the footnotes. The lawsuit does not threaten the going concern assumption, but an adverse decision by the court could create a material obligation for the client.

f. The status of the client as a going concern is extremely doubtful. The problems are properly described in the footnotes.

g. One of your client's subsidiaries was audited by another audit firm, whose opinion was qualified because of a GAAP violation.You do not believe that the GAAP violation is material to the consolidated financial statements on which you are expressing an opinion.

h. You are convinced that your client is violating another company's patent in the process of manufacturing its only product.The client will not disclose this, because it does not want to wave a red flag and bring this violation to the other company's attention.

i. The client, with reasonable justification, has changed its method of accounting for depreciation for all factory and office equipment.The effect of this change is not material to the current year financial statements, but is likely to have a material effect in future years. The client's management will not disclose this change because of the immaterial effect on the current-year statements.You have been unable to persuade management to make the disclosure.


Click here for the solution: 16-41 (Choosing the Type of Opinion) Several independent audit situations are presented here

Indicate, in each of the following situations, the number of exemptions the taxpayers are entitled

Indicate, in each of the following situations, the number of exemptions the taxpayers are entitled to claim on their 2010 income tax returns.

Number of Exemptions
a. Donna, a 20-year-old single taxpayer, supports her mother, who lives in her own home. Her mother has income of $1,350. ___________________
b. William, age 43, and Mary, age 45, are married and support William’s 19-year-old sister, who is not a student. The sister’s income from a part-time job is $3,500. ___________________
c. Devi was divorced in 2010 and receives child support of $250 per month from her ex-husband for the support of their 8-year-old son, John, who lives with her. Devi is 45 and provides more than half of her son’s support. ___________________
d. Wendell, an 89-year-old single taxpayer, supports his son, who is 67 years old and earns no income. ___________________
e. Wilma, age 65, and Morris, age 66, are married. They file a joint return.


Click here for the solution: Indicate, in each of the following situations, the number of exemptions the taxpayers are entitled

Incomplete manufacturing cost data for Ikerd Company for 2010 are presented as follows for four different situations

E19-11 Incomplete manufacturing cost data for Ikerd Company for 2010 are presented as follows for four different situations.

Indicate the missing amount for each letter.

Direct Materials Used Direct Labor Used Manufacturing Overhead total manufacturing costs work in process 1/1 work in process 12/31 cost of goods manufactured

1. $127,000 140,000 77,000 a: $ $33,000 b:$ $360,000
2. c: $ $200,000 132,000 450,000 d: $ 40,000 $470,000
3. $80,000 $100,000 e: $ $245,000 $60,000 $80,000 f:$
4. 70,000 g:$ 75,000 288,000 $45,000 h: $ $270,000

Instructions
(a) Indicate the missing amount for each letter.
(b) Prepare a condensed cost of goods manufactured schedule for situation (1) for the year ended December 31,2010.


Click here for the solution: Incomplete manufacturing cost data for Ikerd Company for 2010 are presented as follows for four different situations

Described below are three independent and unrelated situations involving accounting changes

P11-10 Accounting changes; three accounting situations

Described below are three independent and unrelated situations involving accounting changes. Each change occurs during 2011 before any adjusting entries or closing entries are prepared.

a. On December 30, 2007, Rival Industries acquired its office building at a cost of $10,000,000. It has been depreciated on a straight-line basis assuming a useful life of 40 years and no residual value. Early in 2011, the estimate of useful life was revised to 28 years in total with no change in residual value.

b. At the beginning of 2007, the Hoffman Group purchased office equipment at a cost of $330,000. Its useful life was estimated to be 10 years with no residual value. The equipment has been depreciated by the sum-of-the-years'-digits method. On January 1, 2011, the company changed to the straight-line method.

c. At the beginning of 2011, Jantzen Specialties, which uses the sum-of-the-years'-digits method, changed to the straight-line method for newly acquired buildings and equipment. The change increased current year net income by $445,000.


Click here for the solution: Described below are three independent and unrelated situations involving accounting changes

Several independent audit situations are presented here

16-41: Several independent audit situations are presented here. Assume that everything other than what is described would have resulted in an unqualified opinion on the company’s financial statements.

Required
Indicate the type of opinion you believe should be expressed in each situation and explain your choice. If an explanatory paragraph is needed, indicate whether it should precede or follow the opinion paragraph.
a. The auditor was unable to obtain confirmations from two of the client’s major customers that were included in the sample. These customers wrote on the confirmation letters that they were unable to confirm the balances because of their accounting systems. The auditor was able to achieve satisfaction through other audit procedures.
b. The client treated a lease as an operating lease, but the auditor believes it should have been accounted for as a capital lease. The effects are material.
c. The client changed from FIFO to LIFO this year. The effect is material. Address each of the following situations:
(i) The change was properly accounted for, justified, and disclosed.
(ii) The change was properly accounted for and disclosed but was not properly justified.
d. The client restricted the auditor from observing the physical inventory. Inventory is a material item.
e. The client is engaged in a product liability lawsuit that is properly accounted for and adequately described in the footnotes. The lawsuit does not threaten the going-concern assumption, but an adverse decision by the court could create a material obligation for the client.
f. The status of the client as a going concern is extremely doubtful. The problems are properly described in the footnotes.
g. One of your client’s subsidiaries was audited by another audit firm, whose opinion was qualified because of a GAAP violation. You do not believe that the GAAP violation is material to the consolidated financial statements on which you are expressing an opinion.
h. You are convinced that your client is violating another company’s patent in the process of manufacturing its only product. The client will not disclose this because it does not want to wave a red flag and bring this violation to the other company’s attention. A preliminary estimate is that the royalty payments required would be material to the financial statements.
i. The client, with reasonable justification, has changed its method of accounting for depreciation for all factory and office equipment. The effect of this change is not material to the current
year financial statements, but is likely to have a material effect in future years. The client’s management will not disclose this change because of the immaterial effect on the current-year
statements. You have been unable to persuade management to make the disclosure.

Click here for the solution: Several independent audit situations are presented here

(Future Value and Present Value Problems) Presented below are three unrelated situations

E6-6 (Future Value and Present Value Problems) Presented below are three unrelated situations.

(a) Ron Stein Company recently signed a lease for a new office building, for a lease period of 10 years.
Under the lease agreement, a security deposit of $12,000 is made, with the deposit to be returned at the expiration of the lease, with interest compounded at 10% per year. What amount will the company receive at the time the lease expires?

(b) Kate Greenway Corporation, having recently issued a $20 million, 15-year bond issue, is committed to make annual sinking fund deposits of $620,000. The deposits are made on the last day of each year and yield a return of 10%. Will the fund at the end of 15 years be sufficient to retire the bonds? If not, what will the deficiency be?

(c) Under the terms of his salary agreement, president XXXXX XXXXX has an option of receiving either an immediate bonus of $40,000, or a deferred bonus of $75,000 payable in 10 years. Ignoring tax considerations, and assuming a relevant interest rate of 8%, which form of settlement should Rivera accept?

Click here for the solution: (Future Value and Present Value Problems) Presented below are three unrelated situations

Consider the following independent situations

E6-10 (Unknown Periods and Unknown Interest Rate) Consider the following independent situations.
(a) Mark Yoders wishes to become a millionaire. His money market fund has a balance of $148,644 and has a guaranteed interest rate of 10%. How many years must Mark leave that balance in the fund in order to get his desired $1,000,000?
(b) Assume that Elvira Lehman desires to accumulate $1 million in 15 years using her money market fund balance of $239,392. At what interest rate must Elvira’s investment compound annually?

Click here for the solution: Consider the following independent situations

In each of the following independent situations, determine the gift tax that was due and the decedent’s final estate tax liability

In each of the following independent situations, determine the gift tax that was due and the decedent’s final estate tax liability (net of any unified tax credit). Decedent
Dana Alice Ken
Year of death 2003 2004 2012
Taxable estate $900,000 $1,700,000 $1,400,000
Post-1976 taxable gifts -
Made in 2000 900,000 - -
Made in 2001 - 800,00 -
Made in 2011 - - 5,200,000

Click here for the solution: In each of the following independent situations, determine the gift tax that was due and the decedent’s final estate tax liability

(Computation of Operating Activities—Direct Method) Presented below are two independent situations

E23-7 (Computation of Operating Activities—Direct Method) Presented below are two independent situations.

Situation A:
Chenowith Co. reports revenues of $200,000 and operating expenses of $110,000 in its first year of operations, 2010. Accounts receivable and accounts payable at year-end were $71,000 and $39,000, respectively. Assume that the accounts payable related to operating expenses. Ignore income taxes.

Instructions
Using the direct method, compute net cash provided (used) by operating activities.

Situation B:
The income statement for Edgebrook Company shows cost of goods sold $310,000 and operating expenses (exclusive of depreciation) $230,000. The comparative balance sheet for the year shows that inventory increased $21,000, prepaid expenses decreased $8,000, accounts payable (related to merchandise) decreased $17,000, and accrued expenses payable increased $11,000.

Instructions
Compute (a) cash payments to suppliers and (b) cash payments for operating expenses.

Click here for the solution: (Computation of Operating Activities—Direct Method) Presented below are two independent situations