Cover

*SHOW YOUR WORK
Problem Title Points Earned
1 Present Value of Minimum Lease Payments 5
2 Lease Determination 5
3 Lease Entries 10
4 Accounting for Leases 20
5 Income Tax Accounting 20
6 Operating Loss Carryforward/back 10
7 Compensated Absences 10
8 Payroll Journal Entries 15
9 Pension Worksheet 15
10 Weighted # Shares Outstanding 20
11 Basic & Diluted EPS 20
Total 150 - 0

1,2,3

1. A lease involves payments of $1,000 per month for two years. The payments are made at the end of each month. The lease also involves a guaranteed residual value of $10,000 to be paid at the end of the 2-year period. The appropriate interest rate is 12% compounded monthly. Compute the present value of the minimum lease payments.
Show your work:
2. The lessor leased equipment to the lessee. The fair value of the equipment is $246,000. Lease payments are $35,000 per year, payable at the end of the year, for 10 years. The interest rate implicit in the lease is 9%. At the end of 10 years, the lessor will repossess the equipment. The lease does not include a bargain purchase option, and the equipment has a total estimated useful life of 15 years. Is the lease an operating lease or a capital lease? Explain.
Determination (show your work)
Explanation:
3. On January 1, the lessee company signed an operating lease contract. The lease contract calls for $3,000 payments at the end of each year for 10 years. The rate implicit in the lease is 10%. Make the journal entries or memorandum necessary on the books of the lessee company (1) on the lease-signing date and (2) to record the first payment.
1 - Lease signing date
2 - Record the first payment

4

4. Pursuit Company leased a machine on July 1, 2013, under a 10-year lease. The economic life of the machine is estimated to be 15 years. Title to the machine passes to Pursuit at the expiration of the lease, and thus, the lease is a capital lease. The lease payments at $97,000 per year, including executory costs of $3,000 per year, all payable in advance annually. The incremental borrowing rate of the company is 9%, and the lessor's implicit interest rate is unknown. Pursuit Company uses the straight-line method of amortization and the calendar year for reporting purposes.
Required: Give all entries on the books of the lessee relating to the lease for 2012. For your convenience, descriptions are provided.
Date Account Description Debit Credit
7/1/13 Dr.
Cr.
To record lease
7/1/13 Dr.
Dr.
Cr.
To record first lease payment
12/31/13 Dr.
Cr.
To accrue interest payable on capital lease at end of year
Dr.
Cr.
To record amortization of the leased asset.
12/31/13 Dr.
Cr.
To record the prepaid executory costs

5

5. Talbert, Inc. computed pretax financial income of $40,000 for the first year of its operations ended December 31, 2013. Included in financial income was $25,000 of nondeductible expenses, $22,000 gross profit on installment sales that was deferred for tax purposes until the installments were collected, and $18,000 in bad debt expense that had been accrued on the books in 2013.
The temporary differences are expected to reverse in the following patterns:
Year Gross Profit on Collections Bad Debt Write-Offs
2014 5,000 6,000
2014 7,000 12,000
2016 4,000 - 0
2017 6,000 - 0
Total 22,000 18,000
The enacted tax rates for this year and the next four years are as follows
2013 40%
2014 35%
2015 32%
2016 30%
2017 32%
Assume that there will be sufficient income in each future year to realize any deductible amounts. For classification purposes, the bad debt write-offs are considered to be associated with a current asset, and the receivable for installment sales is classified as both current and noncurrent, depending on the expected timing of the receipt.
REQUIRED:
A) Complete the chart below.
B) Prepare the journal entries necessary to record income taxes for 2013.
A) Enacted Deductible Asset Taxable Liability
Rate Amount Valuation Amount Valuation
2014
2015
2016
2017
- 0 - 0 - 0 - 0
B)
Account Description Debit Credit
Dr.
Cr.
To record income taxes payable
Dr.
Dr.
Cr.
Cr.
To account for deferred items

6

6. The following information is taken from the financial statements of Neptune Enterprises:
Taxable and Pretax Income Income
Year Financial Income Tax Rate Tax Paid
2009 32,000 40% 12,800
2010 29,300 35% 10,255
2011 33,100 40% 13,240
2012 22,500 34% 7,650
2013 (94,300) 35% - 0
Required:
A) Given the information above, compute the amount of income tax refund due as a result of the operating loss in 2013. (use the following chart)
Amount of Loss Amount of Refund Due from
Year Applied to Income Income Tax Rate Prior Years Income Taxes
B) What is the amount, if any, of the operating loss carryforward?

7

7. Young Fashions, Inc's employees are paid on the 6th and 22nd of each month for the period ending the last day of the previous moth and the 15th of the current month, respectively. An analysis of the payroll on Monday, October 6, 2013 revealed the following data:
Gross Federal State
Pay FICA Income Tax Income Tax Insurance Net Pay
Office staff salaries 15,450 810 2,400 450 410 11,380
Officer salaries 31,000 286 6,300 1,000 500 22,914
Sales salaries 20,000 834 4,200 690 480 13,796
Totals 66,450 1,930 12,900 2,140 1,390 48,090
It is determined that for the September 30 pay period, no additional employees exceeded the wage base for FICA purposes than had done so in prior pay periods. All of the officer salaries, 75% of the office staff salaries, and 40% of the sales salaries for the payroll period ending September 30 were paid to employees who had exceeded the wage base for unemployment taxes. Assume the unemployment tax rates in force are as follows: federal unemployment tax, .8%, state unemployment tax, 5.4%
Prepare the adjusting entries that would be required at September 30, the end of Young Fashion's fiscal year, to reflect the accrual of the payroll and any related payroll taxes. Separate salaries and payroll tax expense accounts are used for each of the three employee categories: office staff, officer, and sales salaries. The schedule of employer's payroll taxes can assist you (complete the shaded cells). Don't forget the limits for unemployment taxes
Total FICA FUTA SUTA
Office Staff Salaries:
FICA (given) - 0
FUTA (calculate) - 0
SUTA (calculate) - 0
- 0
Officer Salaries
FICA (given) - 0
FUTA (calculate) - 0
SUTA (calculate) - 0
- 0
Sales Salaries
FICA (given) - 0
FUTA (calculate) - 0
SUTA (calculate) - 0
- 0
Total taxes - 0 - 0 - 0 - 0
Record the journal entries:
Account Description Debit Credit

8

8. During Year 1 (the first year of the company's existence), employees of the company earned vacation days as follows:
Average Wage Vacations Days Vacation Days
Employee Per Day Earned this Year Taken this Year
1 $ 160 10 10
2 $ 200 15 10
3 $ 250 20 5
Required:
A) Make the journal entry necessary at the end of Year 1 to record the unused vacation days earned during the year.
Account Description Debit Credit
B) Make the journal entry necessary in Year 2 to record the use of all of these vacation days. Assume that all employees received at 10% pay raise in Year 2.
Account Description Debit Credit

9

9. On January 1 of Year 1, the company had a projected benefit obligation (PBO) of $10,000 and a pension fund with a fair value of $9,200. Unrecognized prior service cost was $2,000; it was being amortized on a straight-line basis over the 5-year average remaining life of the affected employees. The balance in the unrecognized (or deferred) pension gain was $700. The following information relates to the pension plan during the year:
Service cost 1,200
Actual return on the pension fund 1,550
Benefits paid to retirees 300
Contribution to the pension fund 1,050
Discount rate for PBO 8%
Expected return on pension fund 11%
Enter all of the pension information, including the beginning balances, in a pension worksheet. Use the worksheet to display the computation of pension expense for the year as well as the ending balances for all pension related items. THE BLUE CELLS ARE THE ONES THAT REQUIRE YOUR INPUT.
Company
Pension Worksheet
Financial Statement Accounts Memorandum Accounts
Prepaid/ Accumulated Pension Asset/Liability AOCI
Net Accrued Other Projected Fair Value of Prior Deferred
Pension Pension Comprehensive Benefit Pension Service Pension
Expense Cash Cost Income Obligation Items Cost (Gain)/Loss
Balance, January 1
(a) Service Cost
(b) Interest Cost
(c) Actual Return on Assets
(d) Benefits Paid
(e) PSC amorization
(f) Deferred gain
(f) Pension contribution
Balance, December 31 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0

10

10. Transactions involving the common stock of Par-More Company during the 2-year period 2013 and 2014 were as follows:
2013
Jan 1 Had a balance of 200,000 shares of $10 par common stock
Apr 1 Converted $2,500,000 of convertible bonds with 50 shares issued for each $1,000 bond.
July 1 Declared a 10% stock dividend
Oct 1 Employees exercised options to purchase 7,000 shares for $20 a share
2014
Apr 1 Declared a 2-for-1 stock split
Oct 1 Sold 170,000 shares for $30 a share
From the information given, compute the comparative number of weighted-average shares outstanding for 2011 and 2012 to be used for basic EPS computations at the end of 2012.
Weighted average shares - 2013
Weighted average shares - 2014
Show your work:

11

11. Marcina Shoes reports long-term liabilities and stockholders' equity balances at December 31, 2013, as follows:
Convertible 5% bonds (par) $ 800,000
Common stock, $25 par, 100,000 shares issued and outstanding $ 2,500,000
Additional information is determined as follows:
Conversion term of bonds - 50 shares for each $1,000 bond
Income before extraordinary items - 2013 $ 199,800
Extraordinary gain (net of tax) $ 43,520
Net income - 2013 $ 243,320
Required:
Compute the basic and diluted EPS for the company for 2013 (using the schedule below), assuming that the income tax rate is 30%. No changes occurred in the debt and equity balances during 2013.
BASIC EPS
Income before extraordinary gain Show per share
Extraordinary gain Show per share
Net income $ - 0 Show per share
DILUTED EPS (in dollars)
Income before extraordinary gain
Add interest on convertible bonds, net of taxes
Interest
Less income taxes at 30% $ - 0
Adjusted income before extraordinary gain $ - 0
Actual number of shares outstanding
Additional shares assumed issued on conversion
Total shares for computing diluted EPS - 0
Diluted EPS (in PER SHARE)
Income before extraordinary gain Show per share
Extraordinary gain Show per share
Net Income $ - 0 Show per share

10/8/13 MAT222: Intermediate Algebra (ADQ1340A)

classroom.ashford.edu/re/DotNextLaunch.asp?courseid=8949791&userid=9805908&sessionid=645e4c1be4&tabid=wL0eLNerRudI41EMUBmhciS6P5VCJcL+G… 1/1

MAT222: Intermediate Algebra (ADQ1340A)

responses.

In this discussion, you will be demonstrating your understanding of compound inequalities and the effect that dividing by a negative has on an inequality. Read the following instructions in order and view the to complete this discussion:

According to the first letter of your last name, find the pair of compound inequalities assigned to you in the table below.

If the first letter of your last name is

Your “and” compound inequality is

Your “or” compound inequality is

A or L -4 ≤ 3 + 7x < 24 5 – x ≥ 7 or 8x – 3 > 29

B or K -16 ≤ 2 + 9x ≤ 11 12 – x > 15 or 4x – 13 > 7

C or J -10 < -2 + 8x < 22 4x + 7 < 11 or 1 – x ≤ -2

D or I -17 < 3 + 10x ≤ 33 5x + 3 ≤ -2 or 13 – x ≤ 6

E or H -1 ≤ -3 + 2x < 17 7 – x ≥ 6 or 7x – 1 > 27

F or G -12 < 12 + 4x < 0 12 – x > 15 or 7x – 13 > 1

M or Z -1 ≤ 3 + 2x < 11 1 – x ≥ -3 or 5x – 1 > 19

N or Y -1 < 4 + 5x ≤ 19 2x + 3 ≤ -1 or 10 – x ≤ 5

O or X -4 ≤ 5 + 3x ≤ 11 2x + 2 < 2 or 3 – x ≤ 0

P or W -9 < -1 + 4x < 15 8 – x > 15 or 6x – 13 > 11

Q or V -10 < -3 + x ≤ 21 2 – x ≥ 1 or 6x – 1 > 17

R or U -11 ≤ -5 + 6x < 13 3x + 2 ≤ -1 or 11 – x ≤ 4

S or T 0 ≤ 4 + 2x ≤ 22 3x + 6 < -3 or 5 – x ≤ 1

Solve the compound inequalities as demonstrated in Elementary and Intermediate Algebra and the Instructor Guidance in the left navigation toolbar, being careful of how a negative x-term is handled in the solving process. Show all math work arriving at the solutions.

Show the solution sets written algebraically and as a union or intersection of intervals. Describe in words what the solution sets mean, and then display a simple line graph for each solution set as demonstrated in the Instructor Guidance in the left navigation toolbar.

Incorporate the following five math vocabulary words into your discussion. Use bold font to emphasize the words in your writing (Do not write definitions for the words; use them appropriately in sentences describing your math work.):

Compound inequalities And

One-Variable Compound Inequalities

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