MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.1) Preferred stock is similar to common stock in the following way:A) as equity, both are subordinate to bondholders in the event of bankruptcy.B) both preferred stock and common stock provide equal periodic dividends.C) both contain a dividend growth factor.D) both investments have a final maturity value set by the issuing agreement.1)2) ABC Corp. common stock paid $2.50 in dividends last year (D0). Dividends are expected to growat a 12-percent annual rate forever. If ABC?s current market price is $70.00, what is the stock?sexpected rate of return (nearest .01 percent)?A) 16.00% B) 5.50% C) 18.25% D) 19.00%2)3) Yanti Corp. preferred stock has a 5% stated dividend percentage, and a $100 par value. What is thevalue of the stock if your required rate of return is 6% per year?A) $30.00 B) $100.00 C) $94.05 D) $83.333)4) Preferred stock is similar to a bond in the following way:A) both provide interest payments.B) preferred stock always contains a maturity date.C) both investments provide a stated income stream.D) both contain a growth factor similar to common stock.4)5) You observe Golden Flashes Common Stock selling for $40.00 per share. The next dividend isexpected to be $4.00, and is expected to grow at a 2% annual rate forever. If your required rate ofreturn is 14%, should you purchase the stock?A) Yes, because the present value of the expected future cash flows is less than $40.B) No, because the present value of the expected future cash flows is less than $40.C) No, because the present value of the expected future cash flows is greater than $40.D) Yes, because the present value of the expected future cash flows is greater than $40.5)6) Greenland Airlines has net income of $1 million this year. The book value of Greenland Airlinescommon equity is $5 million dollars. The company?s dividend payout ratio is 70% and is expectedto remain this way. What is Greenland Airlines? internal growth rate?A) 15% B) 5.7% C) 6.0% D) 9%6)7) Which of the following statements concerning the required rate of return on stocks is true?A) If risk is reduced, the required return will decrease because more investors are risk-averse.B) The higher an investor?s required rate of return, the higher the value of the stock.C) The required return on preferred stock is generally higher than the required return oncommon stock.D) The higher the risk, the higher the required return, other things being equal.7)18) You are considering the purchase of a common stock that paid a dividend of $2.00 yesterday. Youexpect this stock to have a growth rate of 10 percent for the next 3 years. The long-run normalgrowth rate after year 3 is expected to be 5 percent (that is, a constant growth rate after year 3 of5% per year forever). If you require a 15 percent rate of return, how much should you be willing topay for this stock?A) $26.89 B) $18.65 C) $ 36.24 D) $23.878)9) Nogrowth Corporation expects their dividend to stay at $1.50 per share each year into theforeseeable future. Therefore,A) The stock will be valued at $1.50 times the number of years an investor plans to keep it.B) The value of the stock can be estimated as $1.50 divided by an investor?s required rate ofreturn.C) The value of the stock can not be determined using the dividend valuation model because thegrowth rate is zero.D) The free cash flow model will yield a higher stock value if free cash flow is greater than $1.50per share.9)10) XYZ common stock is currently selling for $8.00. It just paid a dividend of $1.50 and dividends areexpected to grow at a rate of 6% indefinitely. What is the required rate of return on XYZ?s stock?A) 33.00% B) 26.00% C) 20.60% D) 18.00%10)11) A project requires an initial investment of $50,000. The project generates free cash flow of $80,000at the end of year 2. What is the internal rate of return for the project?A) 34.16% B) 44.08% C) 19.66% D) 26.44%11)12) The Kitchen Inc. is considering the following 3 mutually exclusive projects. Projected cash flowsfor these ventures are as follows:Plan A Plan B Plan CInitial Initial InitialOutlay=$4,000,000 Outlay=$5,000,000 Outlay=$1,750,000Cash Flow: Cash Flow: Cash Flow:Yr 1=$ -0- Yr 1=$4,000,000 Yr 1=$1,000,000Yr 2= -0- Yr 2= 3,000,000 Yr 2= -0-Yr 3= -0- Yr 3= 2,000,000 Yr 3=1,000,000Yr 4= -0- Yr 4= -0- Yr 4=1,000,000Yr 5=$7,000,000 Yr 5= -0- Yr 5=1,000,000If the Kitchen has a 12% cost of capital, what decision should be made regarding the projectsabove?A) Accept plan A B) Accept plan BC) Accept plan C D) Accept Plans B and C12)13) Palm, Inc. is considering two mutually exclusive projects, A and B. Project A costs $75,000 and isexpected to generate $48,000 in year one and $45,000 in year two. Project B costs $80,000 and isexpected to generate $34,000 in year one, $37,000 in year two, $26,000 in year three, and $25,000 inyear four. Zellars, Inc.?s required rate of return for these projects is 10%. The modified internal rateof return for Project A and B,respectively, are:A) 16.49% and 15.74%. B) 19.43% and 13.40%.C) 14.19% and 15.74%. D) 14.19% and 13.40%.13)214) You are considering investing in a project with the following year-end after-tax cash flows:Year 1: $57,000Year 2: $72,000Year 3: $78,000Year 4: $20,000If the initial outlay for the project is $185,000, compute the project?s internal rate of return.A) 10.89% B) 5.54% C) 9.61% D) 6.98%14)15) Which of the following methods of evaluating investment projects can properly evaluate projectsof unequal lives?A) The payback. B) The equivalent annual annuity.C) The internal rate of return. D) The net present value.15)16) Your firm is considering an investment that will cost $750,000 today. The investment will producecash flows of $250,000 in year 1, $300,000 in years 2 through 4, and $100,000 in year 5. The discountrate that your firm uses for projects of this type is for year 1 through year 4 is 13.25%. However,you expect that you can reduce the dicount rate to 12.5% for year 5. What is the investment?s netpresent value?A) $147.544 B) $149,525 C) $147,613 D) $132,00016)17) Project A has an internal rate of return (IRR) of 15 percent. Project B has an IRR of 12 percent. Bothprojects have a required return of 14 percent. Which of the following statements is most correct?A) Project B has a higher profitability index than Project A.B) Both projects have a positive net present value (NPV).C) If the required return were less than 14 percent, Project B would have a higher IRR thanProject A.D) Project A must have a higher NPV than project B.17)18) We compute the profitability index of a capital budgeting proposal byA) dividing the present value of the annual after tax cash flows by the cash investment in theproject.B) multiplying the cash inflow by the internal rate of return.C) multiplying the internal rate of return by the cost of capital.D) dividing the present value of the annual after tax cash flows by the cost of capital.18)19) The disadvantage of the IRR method is that:A) the IRR will always give the same project accept/reject decision as the NPV.B) the IRR requires long, detailed cash flow forecasts.C) the IRR gives equal regard to all returns within a project?s life.D) the IRR deals with cash flows.19)20) Rent-to-Own Equipment Co. is considering a new inventory system that will cost $450,000. Thesystem is expected to generate positive cash flows over the next four years in the amounts of$250,000 in year one, $125,000 in year two, $25,000 in year three, and $100,000 in year four.Rent-to-Own?s required rate of return is 10%. What is the payback period of this project?A) 3.50 years B) 4.00 years C) 2.68 years D) 2.50 years20)321) Which of the following statements about the net present value is true?A) It produces a percentage result that is easy to describe.B) It is likely that there will be more than one NPV for a project.C) It has an inadequate reinvestment assumption.D) It may be used to select among projects of different sizes.21)22) The advantages of NPV are all of the following except:A) it allows the comparison of benefits and costs in a logical manner through the use of timevalue of money principles.B) it provides the amount by which positive NPV projects will increase the value of the firm.C) it can be used as a rough screening device to eliminate those projects whose returns do notmaterialize until later years.D) it recognizes the timing of the benefits resulting from the project.22)23) All of the following are sufficient indications to accept a project except (assume that there is nocapital rationing constraint, and no consideration is given to payback as a decision tool):A) The net present value of an independent project is positive.B) The IRR of a mutually exclusive project exceeds the required rate of return.C) The profitability index of an independent project exceeds one.D) The NPV of a mutually exclusive project is positive and exceeds that of all other projects.23)24) Initial Outlay Cash Flow in Period1 234$4,000,000 $1,546,170 $1,546,170 $1,546,170 $1,546,170The Internal Rate of Return (to nearest whole percent) is:A) 24%. B) 20%. C) 18%. D) 10%.24)25) The risk free rate of return is 4% and the expected return on the market portfolio is 12%. A firm hasa beta of 1.8 and a standard deviation of returns of 16%. Its marginal tax rate is 30%. Analystsexpect Starship?s net income to grow by 8% per year for the next 5 years. Using the capital assetpricing model, what is Starship Enterprises? cost of retained earnings?A) 22.2% B) 18.2% C) 18.4% D) 16.6%25)26) The ABC Company is planning a $100 million expansion. The expansion is to be financed byselling $40 million in new debt and $60 million in new common stock. The before -tax required rateof return on debt is 10 percent and the required rate of return on equity is 15 percent. If thecompany is in the 30 percent tax bracket, what is the firm?s cost of capital?A) 12.9% B) 9.7% C) 10.000% D) 11.8%26)27) A company has preferred stock with a current market price of $26.5 per share. The preferred stockpays an annual dividend of 4% based on a par value of $100. Flotation costs associated with thesale of preferred stock equal $1.50 per share. The company?s marginal tax rate is 40%. Therefore,the cost of preferred stock is:A) 15.09%. B) 22.22%. C) 16.00%. D) 4.00%.27)428) Cost of capital is:A) the average cost of the firm?s assets.B) a hurdle rate set by the board of directors.C) the rate of return that must be earned on additional investment if firm value is to remainunchanged.D) the coupon rate of debt.28)29) Which of the following causes a firm?s cost of capital (WACC) to differ from an investor?s requiredrate of return on the company?s common stock?A) The market risk premium exceeds 12%.B) The fact that the risk free rate of interest has increased.C) The incurrence of flotation costs when new securities are issued.D) None of the above â the WACC and required return are the same29)30) Durocorp has a target capital structure of 50% debt and 50% equity. Durocorp is planning to investin a project that will necessitate raising new capital. New debt will be issued at a before-tax yieldof 15%, with a coupon rate of 10%. The equity will be provided by internally generated funds so nonew outside equity will be issued. If the required rate of return on the firm?s stock is 20% and itsmarginal tax rate is 40%, compute the firm?s cost of capital.A) 14.5% B) 17.5% C) 15.00% D) 13.68%30)31) Given the following information on S & G Inc.?s capital structure, compute the company?sweighted average cost of capital.Type of Percent of Before-TaxCapital Capital Structure Component CostBonds 40% 10%Preferred Stock 10% 15%Common Stock (Internal Only) 50% 20%The company?s marginal tax rate is 40%.A) 15.5% B) 10.6% C) 13.9% D) 15%31)32) A Company has a capital structure made up of 40% debt and 60% equity and a tax rate of 30%. Anew issue of $1,000 par bonds maturing in 20 years can be issued with a coupon of 9% at a price of$1,098.18 with no flotation costs. The firm has no internal equity available for investment at thistime, but can issue new common stock at a price of $45. The next expected dividend on the stock is$2.80. The dividend for Mars Co. is expected to grow at a constant annual rate of 5% per yearindefinitely. Flotation costs on new equity will be $5.00 per share. The WACC for the firm is:A) 9.76% B) 9.44% C) 9.20% D) 14%32)33) Which of the following should NOT be considered when calculating a firm?s WACC?A) After-tax cost of accounts payable B) Cost of newly issued preferred stockC) After-tax YTM on a firm?s bonds D) Cost of newly issued common stock33)34) Bell Corp. has a preferred stock that pays a dividend of $2.40. If you are willing to purchase thestock at $11, what is your required rate of return (round your answer to the nearest .1% andassume that there are no transaction costs)?A) 9.1% B) 11.0% C) 20.1% D) 21.8%34)535) The cost of new preferred stock is equal to:A) the preferred stock dividend divided by the market price.B) the preferred stock dividend divided by its par value.C) preferred stock dividend divided by the net selling price of preferred.D) (1 – tax rate) times the preferred stock dividend divided by net price.35)36) Nogrowth Corporation expects their dividend to stay at $0.50 per share each year into theforeseeable future. Therefore,A) The stock will be valued at $0.50 times the number of years an investor plans to keep it.B) The value of the stock can be estimated as $0.50 divided by an investor?s required rate ofreturn.C) The free cash flow model will yield a higher stock value if free cash flow is greater than $0.50per share.D) The value of the stock can not be determined using the dividend valuation model because thegrowth rate is zero.36)TRUE/FALSE. A. True B. False37) Preferred stock and common stock issued by the same firm will have the same required returnbecause the riskiness of the firm?s cash flows is the same for both securities.37)38) Under majority voting a majority (>50%) shareholder will just be able to elect a simple majority ofthe board of directors.38)39) An acceptable project should have a net present value greater than or equal to zero and aprofitability index greater than or equal to one.39)40) Shareholders, as owners of the corporation, face unlimited liability for the corporation?s debts,while bondholders, as creditors, may only lose the value of their investment if the company goesbankrupt.40)41) An opportunity cost is a relevant incremental cost for capital budgeting decisions. 41)42) If the expected growth rate for dividends is zero, then the value of common stock will be equal tothe current dividend.
For this week’s hands-on assignment, we are going to construct a research proposal for our persuasive research paper. You may use the attached template to write your proposal. You may add more supporting and opposing arguments or support points, but you may not subtract from the template, as the template reflects the minimum amount of supporting evidence necessary for our paper.The final paper will eventually be 5.5-6.5 double-spaced pages of text, not including the title page and reference page (In other words, the grand total will be 8 pages). You should plan accordingly to have enough research information and support points to fulfill this page requirement. This research proposal should only be 1-2 pages long.On your proposal, you may use direct quotes, paraphrases and summaries for your support points, but they must include an in-text citation, and quotes must be in quotation marks. You do not have to have full research done at this time and you may, if you like, only include your own rational arguments for which you will find support later.Remember that your supporting arguments will support your thesis. In other words, your supporting arguments will explain why your thesis should be believed. The opposing arguments should represent opposing perspectives or questions that you expect your skeptical audience to have about your thesis. In other words, your opposing arguments are reasons that your thesis should NOT be believed. The replies to those opposing arguments are how you would fend off that skepticism, point by point
6.5- Avis Love, Staff Accountant from the case book.
written case analysis must be 5-7 pages in length, including APA
format and include 6-7 scholarly citations/references.
the case analysis using APA format.
should be complete plagiarism free other wise I will get zero and I want my
This case is based upon an actual series of events. Names and
certain background information have been changed to conceal the identities of
the individuals involved in the case.
CASE 6.5: Avis Love,
âOh no, not Store 51,â Avis Love moaned under her breath. For
the third time, Avis compared the dates listed in the cash receipts journal
with the corresponding dates on the bank deposit slips. Avis shook her head
softly and leaned back in her chair. There was no doubt in her mind now. Mo
Rappelle had definitely held open Store 51’s cash receipts journal at the end
Avis Love was a staff accountant with the
Atlanta office of a large international accounting firm. Several months
earlier, Avis had graduated with an accounting degree from the University of
Alabama at Birmingham. Although she did not plan to pursue a career in public
accounting, Avis had accepted one of the several job offers she received from
major accounting firms. The 22-year-old wanted to take a two- or three-year
âvacationâ from college, while at the same time accumulating a bankroll to
finance three years of law school. Avis intended to practice law with a major
firm for a few years and then return to her hometown in eastern Alabama and set
up her own practice.
For the past few weeks, Avis had been assigned
to the audit engagement for Lowell, Inc., a public company that operated nearly
100 retail sporting goods stores scattered across the South. Avis was nearing
completion of a year-end cash receipts cutoff test for a sample of 20 Lowell
stores. The audit procedures she had performed included preparing a list of the
cash receipts reported in each of those stores’ accounting records during the
last five days of Lowell’s fiscal year, which ended 31 October. She had then
obtained the relevant bank statements for each of the stores to determine whether
the cash receipts had been deposited on a timely basis. For three of the stores
in her sample, the deposit dates for the cash receipts ranged from three to
seven days following the dates the receipts had been entered in the cash
receipts journal. The individual store managers had apparently backdated cash
receipts for the first several days of the new fiscal year, making it appear
that the receipts had occurred in the fiscal year under audit by Avis’s firm.
Avis had quickly realized that the objective
of the store managers was not to overstate their units’ year-end cash balances.
Instead, the managers intended to inflate their recorded sales. Before Avis
began the cutoff test, Teddy Tankersley, the senior assigned to the Lowell
audit and Avis’s immediate superior, had advised her that there was a
higher-than-normal risk of cash receipts and sales cutoff errors for Lowell
this year. The end of Lowell’s fiscal year coincided with the end of a
three-month sales promotion. This campaign to boost Lowell’s sagging sales
included bonuses for store managers who exceeded their quarterly sales quota.
This was the first time that Lowell had run such a campaign and it was a modest
success. Fourth-quarter sales for the fiscal year just ended topped the
corresponding sales for the previous fiscal year by 6 percent.
When Avis uncovered the first instance of
backdated cash receipts, she had felt a noticeable surge of excitement. In
several months of tracing down invoices and receiving reports, ticking and
tying, and performing other mundane tests, the young accountant had
occasionally found isolated errors in client accounting records. But this was
different. This was fraud.
Avis had a much different reaction when she
uncovered the second case of backdated cash receipts. She had suddenly realized
that the results of her cutoff test would have âreal worldâ implications for
several parties, principally the store managers involved in the scheme. During
the past few months, Avis had visited six of Lowell’s retail stores to perform
various interim tests of controls and to observe physical inventory procedures.
The typical store manager was in his or her early 30s, married, with one or two
small children. Because of Lowell’s miserly pay scale, the stores were
chronically understaffed, meaning that the store managers worked extremely long
hours to earn their modest salaries.
No doubt, the store managers who backdated
sales to increase their bonuses would be fired immediately. Clay Shamblin,
Lowell’s chief executive officer (CEO), was a hard-nosed businessman known for
his punctuality, honesty, and work ethic. Shamblin exhibited little patience
with subordinates who did not display those same traits.
When Avis came to the last store in her
sample, she had hesitated. She realized that Mo Rappelle managed Store 51.
Three weeks earlier, Avis had spent a long Saturday afternoon observing the
physical inventory at Store 51 on the outskirts of Atlanta. Although the Lowell
store managers were generally courteous and accommodating, Mo had gone out of
his way to help Avis complete her tasks. Mo allowed Avis to use his own desk in
the store’s cramped office, shared a pizza with her during an afternoon break,
and introduced her to his wife and two small children who dropped by the store
during the afternoon.
âMo, what a stupid thing to do,â Avis thought
after reviewing the workpapers for the cutoff tests a final time. âAnd for just
a few extra dollars.â Mo had apparently backdated cash receipts for only the
first two days of the new year. According to Avis’s calculations, the backdated
sales had increased Mo’s year-end bonus by slightly more than $100. From the
standpoint of Lowell, Inc., the backdated sales for Mo’s store clearly had an
immaterial impact on the company’s operating results for the year just ended.
After putting away the workpapers for the
cutoff test, a thought dawned on Avis. The Lowell audit program required her to
perform cash receipts cutoff tests for 20 stores â¦ any 20 stores she selected.
Why not just drop Store 51 from her sample and replace it with Store 52 or 53
Avis brooded over the
results of her cutoff test the remainder of that day at work and most of that
evening. The following day, she gave the workpaper file to Teddy Tankersley.
Avis reluctantly told Teddy about the backdated cash receipts and sales she had
discovered in three stores: Store 12, Store 24, and Store 51. Teddy
congratulated Avis on her thorough work and told her that Clay Shamblin would
be very interested in her findings.
days later, Shamblin called Avis into his office and thanked her for uncovering
the backdated transactions. The CEO told her that the company’s internal
auditors had tested the year-end cash receipts and sales cutoff for the remaining
72 stores and identified seven additional store managers who had tampered with
their accounting records. As Avis was leaving the CEO’s office, he thanked her
once more and assured her that the store managers involved in the scam âwould
soon be looking for a new line of work â¦ in another part of the country.â
1. Would it have
been appropriate for Avis to substitute another store for Store 51 after she
discovered the cutoff errors in that store’s accounting records? Defend your
2. Identify the parties
potentially affected by the outcome of the ethical dilemma faced by Avis Love.
What obligation, if any, did Avis have to each of these parties?
3. Does the
AICPA’s Code of Professional Conduct prohibit auditors from
developing friendships with client personnel? If not, what measures can
auditors take to prevent such friendships from interfering with the performance
of their professional responsibilities?
4. Identify the key
audit objectives associated with year-end cash receipts and sales cutoff tests.
5. What method would
you have recommended that Avis or her colleagues use in deciding whether the
cutoff errors she discovered had a material impact on Lowell’s year-end
financial statements? Identify the factors or benchmarks that should have been
considered in making this decision.
Describe Tim Costello approach to leadership, drawing on at least one leadership theory from the academic literature. Provide evidence to support your assessment of their leadership approach. That is, describe two or three specific examples of actions they have taken that demonstrate this particular leadership approach you have described.What are two key challenges they have faced as a leader? How have they managed this challenge? What could they do differently to be even more effective?refer to at least 10 references, 8 of which need to be academic references. These could be references about the leadership theory, references about important leadership capabilities that this person has had to demonstrate (such as creating a strong organisational culture, creating a motivating environment, influencing others or managing change).must acknowledge the source of all articles used using the Harvard System. You must reference any material you use which is not your own.What have you learned about leadership from studying this particular leader?
I Plato (Exam I)
1. What do Socrates and the Sophists teach on virtue? Is Socrates against relativism? What is relativism and objective realism?
2. Name cardinal virtues by Plato. What is Justice?
3. Reconstruct all definitions of virtue given by Socrates and Meno.
4. What is the final definition of virtue in the Platonic dialogue Meno?
5. According to Plato, there is a difference between knowledge and opinion. What does create this difference? How is it connected with Platoâs ethical issues?
6. What is the major distinction between âa virtueâ and âvirtueâ? Give some examples.
7. What is the âbee and swarmâ analogy in Meno? What does Socrates try to explain using this analogy?
8. Explain the following terms: rationalism, ethics, virtue, rhetoric, intrinsic value, relativism, and aporia.
1. What type of ethics does Noddings represent?
2. What is the relationship between reason and emotions according to Noddings?
3. What is the “one-caring”?
4. What is the “care-for” attitude and its effects?
5. What is the ethics of being cared for?
6. What is the ethics of caring? (conclusions)
III Kant (Exam II)
1. Point out differences between deontology and consequential ethics.
2. Name differences between the categorical and hypothetical imperative by Kant.
3. Give at least two formulations of the categorical imperative by Kant.
4. How does Kant define freedom?
5. What does constitute moral worth according to for Kant?
6. Why is Kantâs good will always good? What does âvolitionâ mean for Kant?
7. What is the Kingdom of Ends? Who belongs to the Kingdom of Ends?
8. What is a maxim? What is the universal moral law according to Kant?
1. What is the âHarm-to-Others Principleâ by Mill?
2. Find differences between individuality and a uniform-oriented personality. What conditions are necessary to develop individuality?
3. What is a necessary connection among individuality, diversity, originality, development, and freedom?
4. How does Mill define liberty? How does he perceive human happiness?
5. What is virtue by Mill? What is the main function of reason and emotions in moral life?
6. What is liberalism and authoritarianism? What is Millâs political tradition?
7. What forms of tyranny does Mill recognize in our social life?
8. What power does authority have upon the individual?
9. What is Millâs idea of democracy?
1. Reconstruct the main ideas of satyagraha, swaraj, and sarvodaya by Gandhi.
2. What religious and philosophical influences are visible in Gandhiâs theory of non-violence? What is the Bhagavad-Gita?
3. Explain the following statement: âduties create rights.â What is Gandhiâs idea of democracy? Why does he criticize Western democracy?
P7-5A â Prepare incremental analysis concerning elimination of divisions.P8-1A â Use cost-plus pricing to determine various amountsProblem P7-5A Gutierrez Company has four operating divisions. During the first quarter of 2014, the company reported aggregate income from operations of $2,13,000 and the following divisional results. Division I II III IV Sales $2,50,000 $2,00,000 $5,00,000 $4,50,000 Cost of goods sold Direct labor costs 2,00,000 1,92,000 3,00,000 2,50,000 Selling and administrative expenses Machine hours 75,000 60,000 60,000 50,000 Income (loss) from operations Setup hours ($25,000) ($52,000) $1,40,000 $1,50,000 Analysis reveals the following percentages of variable costs in each division. I II III IV Cost of goods sold 75% 90% 80% 75% Selling and administrative expenses Machine hours 40% 70% 50% 60% Discontinuance of any division would save 50% of the fixed costs and expenses for that division. Top management is very concerned about the unprofitable divisions (I and II). Consensus is that one or both of the divisions should be continued. Instructions: (a) Compute the contribution margin for Divisions I and II. Division I Division II Sales Amount Amount Variable costs Cost of goods sold Formula Amount Selling and administrative Formula Amount Total variable expenses Formula Formula Contribution margin Formula Formula (b)(1) Prepare an incremental analysis concerning the possible discontinuance of Division I. Division I Continue Eliminate Net Income Increase (Decrease) Contribution margin (above) Formula Formula Formula Fixed costs Cost of goods sold Formula Formula Formula Selling and administrative Formula Formula Formula Total fixed expenses Formula Formula Formula Income (loss) from operations Formula Formula Formula (b)(2) Prepare an incremental analysis concerning the possible discontinuance of Division II. Division II Continue Eliminate Net Income Increase (Decrease) Contribution margin (above) Amount Amount Formula Fixed costs Title Formula Formula Formula Title Formula Formula Formula Title Formula Formula Formula Title Formula Formula Formula (b)(3) What course of action do you recommend for each division? Enter text answer here. Enter text answer here. (c) Prepare a columnar condensed income statement for Moreno Manufacturing, assuming Division II is eliminated. Use the CVP format. Division II’s unavoidable fixed costs are allocated equally to the continuing divisions. GUTIERREZ MANUFACTURING COMPANY CVP Income Statement For the Quarter Ended March 31, 2014 Divisions I III IV Total Sales Amount Amount Amount Formula Variable costs Title Formula Formula Formula Formula Title Formula Formula Formula Formula Title Formula Formula Formula Formula Contribution margin Formula Formula Formula Formula Fixed costs Title Formula Formula Formula Formula Title Formula Formula Formula Formula Title Formula Formula Formula Formula Income (loss) from operations Formula Formula Formula Formula Enter text answer here. Enter text answer here. (d) Reconcile the total income from operations, $2,13,000 with the total income from operations without Division II. P8-1A â Use cost-plus pricing to determine various amounts Managerial Accounting, 6th Edition, by Weygandt, Kieso, and Kimmel Primer on Using Microsoft Excel in Accounting by Rex A Schildhouse Problem P8-1A Dewitt Corporation needs to set a target price for its newly designed product M14-M16. The following data relate to this new product. Per unit Total Direct materials $20.00 Direct labor 40.00 Variable manufacturing overhead 10.00 Fixed manufacturing overhead $14,40,000 Variable selling and administrative expenses 5.00 Fixed selling and administrative expenses 9,60,000 These costs are based on a budgeted volume of 80,000 units produced and sold each year.Dewitt uses cost-plus pricing methods to set its target selling price. The markup on total unit cost is 30% Instructions: (a)(1) Compute the total variable cost per unit for M14-M16. Title Amount Title Amount Title Amount Title Amount Title Formula (a)(2) Compute the total fixed cost per unit for M14-M16. Total Costs Ã· Budgeted Volume = Cost per Unit Title Amount Ã· Quantity = Formula Title Amount Ã· Quantity = Formula Title Amount Ã· Quantity = Formula (a)(3) Compute the total cost per unit for M14-M16. Title Amount Title Amount Title Formula (b) Compute the desired ROI per unit for M14-M16. Title Amount Title Percentage Title Formula (c) Compute the target selling price for M14-M16. Title Amount Title Amount Title Formula (d) Compute variable cost per unit, fixed cost per unit, and total cost per unit assuming that 60,000 M14-M16s are sold during the year. (Round to two decimal places.)
answer these question for me
1. Why was Gandhi never awarded the Nobel Peace Prize?
2. Should he have won the Nobel Peace Prize, according o you? Why/why not?
3. What would you point out as Gandhi’s essential quality of character? What do you admire in Gandhi (if any)?
On June 15, 2013,
Marianne Wise and Dory Holland came to your office for an initial meeting. The primary purpose of the meeting was to
discuss Wise-Holland Corporation’s tax situation. Marianne and Dory each own 50% of
Wise-Holland Corporation, an S corporation.
Dory and her husband Phil will continue to use another tax accountant for
their on-going personal tax work, but Marianne wants to engage your services
for her personal tax return. Marianne is
Wise-Holland is a calendar year corporation established
in Naples, Florida on January 1, 2001.
The corporation’s principal business is locating and selling unique
interior design items. Marianne and Dory
have been friends since college, where they were both art majors. After graduation, they each held various
positions where they gained experience in interior design before joining
together to start this business. They
are pleased but stunned by the financial success of their business, because the
initial business plan was crafted simply to focus on what they liked to do and
have more flexible schedules than they had as employees of others. They feel very dependent on their accountants
and other financial advisers, because they have no experience or training in
Marianne is unhappy with the tax accountant (Amanda
Klinger) who prepared her individual tax return and has advised her on tax
issues for the past ten years.
Specifically, Marianne is dissatisfied because she had received a notice
of deficiency from the IRS disallowing deductions on her 2009 tax return. The disallowance related to an investment that
Marianne had made in that year in the Lucky Partnership, a venture that
operates medical clinics throughout the state.
Lucky was a small partnership and not subject to the unified audit and
litigation procedures. Because Lucky also
was under audit, Marianne signed a waiver extending the statute of limitations
for her 2009 individual return for three more years. Now, she and Dory just received an audit
notice for Wise-Holland’s 2008 S corporation tax return.
You have never prepared or reviewed Marianne’s
individual return or Wise-Holland’s corporate return. After your initial meeting with Marianne and
Dory, you gathered all essential information to begin your engagement. You have obtained the following documents.
Marianne’s individual tax returns for tax years 2007 through 2011. These returns were timely extended and filed
on October 15 of the appropriate year.
Marianne’s filing status was Single for all of these returns. Her annual taxable income during these years
was approximately $150,000 – $200,000.
S corporation tax returns for tax years 2007 through 2012. These returns were timely filed on March 15
of the appropriate year.
An installment note for the sale of land, building, and equipment by
Marianne in 2010.
A notice of tax deficiency from the IRS for Marianne’s 2009 tax return.
An audit notice dated June 1, 2013, for Wise-Holland’s 2008 tax return.
Various information and financial records necessary to compute 2012
taxable income for Marianne Wise.
A review of these documents and discussions with
Marianne and Dory provided the following additional information. None of the taxpayers has engaged in a tax
shelter or other reportable transaction.
Notice of Deficiency â Marianneâs 2009 tax return
The deficiency notice for the 2009 return shows $20,000 federal
income tax due resulting from the disallowance of loss flow-throughs from Lucky. The stated reason for the disallowance was
that there was no profit motive supporting the partnership. In addition to the tax deficiency, the notice
reflects interest and a 20 percent penalty for substantial understatement of
Marianne relied on Amanda Klinger to make a good faith
effort to evaluate the legitimacy of the losses from Lucky; Marianne was not
negligent in claiming the Lucky losses on her individual return. Marianne is perturbed because Amanda assured
her that the tax return positions were reasonable and there was little risk the
IRS would disallow the deductions.
Marianne also disagrees with the penalty because she
maintains that she did not intentionally understate her tax liability. When she discussed the penalty with Amanda in
January 2013, Amanda told her to pay the tax deficiency, including the interest
and penalties, as there was no defense available for her benefit. Marianne and Phil immediately made that
payment. The IRS disallowance affects only
the 2009 tax year.
Sale â 2010
In early 2010, Marianne sold land, building, and
equipment for $300,000 to an unrelated third party, June Lockmann. Marianne received an installment note payable
at the rate of $60,000 per year for five years,i.e. payments would be received from 2010 through 2014. The installment sale was reported in
Marianne’s 2010 tax return. The basis of
the property was $150,000. The total gain and character of the gain is as
Marianne brought a $75,000 capital loss carryover into 2010. Therefore, Amanda decided to prepare
Marianne’s returns reporting $30,000 of Â§1231 gain in 2010 and $20,000 in 2011,
to utilize the capital loss carryover as quickly as possible. Amanda reported the transaction in this way.
RETURNS AS FILED–EFFECT ON GROSS INCOME
/ 5 tax years
Effect on Gross Income
Audit Notice â Wise-Hollandâs 2008
The audit notice for Wise-Holland questions certain
deductions claimed on the return on the basis that they are nondeductible
personal items. Based on your review of
the detail and discussions with Marianne and Dory, you conclude that certain
deductions for materials and supplies should have been characterized as
personal expenditures and are not deductible by the S corporation.
When Wise-Holland’s return originally was prepared,
Marianne and Dory believed that these deductions were valid business
expenditures, and they made a good-faith effort to segregate their personal
expenditures from their business expenditures.
You do not believe the IRS can make any adjustment at this time, because
it has been more than three years since Wise-Holland filed its 2008 tax return.
Ambiguous Tax Issue â Wise-Hollandâs 2011
In your review, you identified an expense in the
financial statement that presents an ambiguous tax issue for the S
corporation’s 2011 tax return â the corporation deducted an item that might be
interpreted as being capitalizable. The
amount of tax relating to this issue is approximately $10,000, and you estimate
that it will exceed 10% of the total tax liabilities for Marianne and Dory for the
In reviewing the relevant facts and law, you found six
trial court cases that support the IRS position (to capitalize). One old District Court decision in Florida
supports the taxpayer’s position (to deduct in full in the current year). The only appellate court decision (10th
Circuit) supports the IRS position (reversing a Tax Court decision). The Wise-Holland expenditure is quite similar
to those discussed in the court cases, although none of the court cases
represent a fact pattern identical to Wise-Hollandâs.In your view, there is a meaningful
distinction between the Wise-Holland expenditure and that presented in the 10th
You have assessed that Wise-Holland’s chances of
prevailing on the issue would be very small if the matter were litigated. After you explained your preliminary
evaluation of the weakness of their position, Marianne and Dory stated that
they want you to prepare the return taking the immediate deduction, which will
require disclosing the position on the return.
Your discussion with them included only an analysis of the tax issue,
and not other matters like the low probability of the return being audited by
In considering whether to take on Wise-Holland and
Marianne Wise as tax clients, you have done some research that indicates that
in certain circumstances, the preparer of a passthrough entity’s tax return and
Schedules K-1 can be deemed to be the preparer of an individual’s Form 1040 on
which the data from the passthrough entity’s return was entered. Tax
return preparer includes any person who prepares a substantial portion of a
return for compensation..doc#_ftn1″> Whether a schedule, entry, or other portion
of a return is asubstantial portion
is determined by:
whether the preparer
knew or should have known that the resulting tax result is a substantial
portion of the tax to be shown on the return.
the size and
complexity of the item relative to the taxpayerâs gross income.
the size of the
attributable understatement relative to the taxpayerâs reported tax liability..doc#_ftn2″>
The question then is whether the K-1 numbers constitute
a “substantial portion” of the return.
Today it is September 1, 2013. You hold a valid CPA license in your state,
and you are classified by the IRS as a tax return preparer.
REQUIRED: Determine your general responsibilities concerning
all of these matters, as a CPA under the AICPA’s Statements on Standards for
Tax Services (.aicpa.org/InterestAreas/Tax/Resources/StandardsEthics/StatementsonStandardsforTaxServices/DownloadableDocuments/SSTS,%20Effective%20January%201,%202010.pdf”>SSTSs, latest version effective 2010) and under Treasury
Department.irs.gov/pub/irs-pdf/pcir230.pdf”>Circular 230. Prepare a chart,
table, or graphic summarizing taxpayer and tax practitioner reporting
standards. Also evaluate the potential
penalties applicable to practitioners and taxpayers under the Internal Revenue
REQUIRED: Identify all procedural and reporting issues
that exist in the Wise-Holland facts. In
particular, you should address the following issues.
statutes of limitations
REQUIRED: Evaluate the first three
issues (Notice of Deficiency, Installment Sale, and Audit Notice) from the
perspective of the taxpayer, taking into account the pertinent tax practitioner
responsibilities and penalties.
REQUIRED: For the
deduct-or-capitalize issue, analyze the conclusions that a CPA must draw in
deciding how to advise a client regarding an ambiguous tax position, and in
determining whether he or she can sign a tax return and comply with statutory
standards, the SSTSs, and Circular 230.
Analyze all possible results, from a conclusion that a position has substantial
authority to a conclusion that a position is frivolous.
Preparer penalties that are
pertinent here are found in Â§6694, taxpayer penalties start with Â§6662. They
are similar but not identical to the rules of .irs.gov/pub/irs-pdf/pcir230.pdf”>Circular 230,
nor to the AICPAâs .aicpa.org/InterestAreas/Tax/Resources/StandardsEthics/StatementsonStandardsforTaxServices/DownloadableDocuments/SSTS,%20Effective%20January%201,%202010.pdf”>SSTSs.
Special sanctions relate to the filing of frivolous returns.
Taxpayer and tax preparer penalties
under the Code are not always identical.
Can a taxpayer avoid an
understatement penalty because of reliance on the advice of a tax professional?
When do interest payments begin to
accumulate? Can the IRS waive penalties? Interest liabilities?
When a tax understatement is
discovered, is the CPA obligated to inform the client? The IRS?
Was there an error on Marianneâs
return concerning the installment sale? What are the proper responses to the
discovery of an error on a tax return?
Recompute the 2010 â 2012 taxable
income amounts regarding the installment note, by correcting the error. What
now is Marianneâs capital loss carryover into 2013?
Does the audit notice fall within
the statute of limitations period?
Review the use of Form 8275
in dealing with an ambiguous tax filing position.
Question:Submit a latest technical article review or a paper summary with reference listed!Should include a paragraph of how the article is relevant to your week’s chapters.*Must be an article updated to year 2015 or later.This weeks chapter is -Accounting Information systems and the accountants.Upload Assignment: Week 1 – Homework – ACC300 Applied …**Summary of the article must be in your own words, not copy and paste / using tools and converting audio to text information from the paper.*Include reference(s) of the article(s).
George Large (SSN 414-33-5688, age 45), and his wife Marge Large (SSN 555-81-9495, age43), who live at 2000 Lakeview Drive, Cleveland, OH 49004, want you to prepare their 2015income tax return based on the information below.George Large worked as a salesman for Toys, Inc. He received a salary of $80,000 ($8,500 offederal income taxes withheld and $1,800 of state income taxes withheld) plus an expensereimbursement from Toys of $5,000 to cover his employee business expenses. George mustmake an adequate accounting to his employer and return any excess reimbursement.Additionally, Toys provides George with medical insurance worth $7,200 per year. Marge iscovered by this insurance as a spouse. George drove his car 24,000 miles during the year. Hislog indicates that 18,000 miles were for sales calls to customers at the customerâs offices andthe remainder was personal mileage. George uses the standard mileage rate method. Assumehis business miles were driven equally during the year. George is a professional basketballfan. He purchased two season tickets for a total of $4,000. He takes a customer to every game,and they discuss a little business at the games. George takes clients to business lunches. Hislog indicates that he spent $1,500 on these business meals. George also took a five-day trip toToys headquarters in Musty, Ohio. He was so well-prepared that he finished his business inthree days, so he spent the other two days sightseeing. He had the following expenses duringthe five days of his trip:Airfare $200Lodging $85/dayMeals $50/dayTaxicab $20/dayMarge Large is self-employed. She makes custom quilts in the basement of their home, whichis 25% of the houseâs square footage (2,000). She started using the basement for this quiltingbusiness when they moved in. She had the following income and expenses in 2015:Income from quilt making $12,000Cost of materials & supplies $5,000Contract labor $3,500Long distance phone calls (business) $500The Largeâs home cost a total of $150,000, of which the cost of the land was $20,000. TheFMV of the house is $225,000. They have owned their house for 10 years. The house is adepreciable over a 39 year recovery period. The Larges incurred other expenses in 2015:Utility bills for the house $2,000Real estate taxes $2,500Mortgage interest $4,500Cash charitable contributions $3,500Prepare Form 1040, Schedules A and C for Form 1040, and Forms 2106 and 8829 for the2015 tax year. Assume that no estimated taxes were paid by the Larges.”Prepare Form 1040, Schedules A and C for Form 1040, and Forms 2106 and 8829 for the 2015 tax year. Assume that no estimated taxes were paid by the Larges.”