Cynthia, a sole proprietor, was engaged in a service business and reported her income on the cash basis. On February 1, 2013, she incorporates her business as Dove Corporation and transfers the assets of the business to the corporation in return for all of the stock in addition to the corporation’s assumption of her proprietorship’s liabilities. All of the receivables and the unpaid trade payables are transferred to the newly formed corporation. The balance sheet of the corporation immediately after its formation is as follows:
Dove Corporation
Balance Sheet
February 1, 2013
Assets
Basis to Dove Fair Market Value
Cash $ 80,000 $ 80,000
Accounts receivable 0 240,000
Equipment (cost $180,000; 120,000 320,000
depreciation previously claimed $60,000)
Building (straight-line depreciation) 160,000 400,000
Land 40,000 160,000
Total $400,000 $1,200,000
Liabilities and Stockholder’s Equity
Liabilities:
Accounts payable—trade $ 120,000
Notes payable—bank 360,000
Stockholder’s equity:
Common stock 720,000
Total $1,200,000
Discuss the tax consequences of the incorporation of the business to Cynthia and to Dove Corporation.

Answer:

Any profits generated by Dove Corporation will be taxed to the corporation and also taxed to Cynthia as a shareholder whenever Dove distributes the profits as dividends. Taxing Dove and Cynthia creates a double taxation burden for both Dove and Cynthia. Dove Corporation does not get a tax deduction when it distributes dividends to Cynthia.  Furthermore, Cynthia cannot deduct any corporation loss when incurred.  These are unlike when the business was only a sole proprietorship.

Explanation:

a) Data and Calculations:

Dove Corporation

Balance Sheet

February 1, 2013

Assets

                                                    Basis to Dove     Fair Market Value

Cash                                                 $ 80,000              $ 80,000

Accounts receivable                         0                           240,000

Equipment (cost $180,000;              120,000               320,000

depreciation previously claimed $60,000)

Building (straight-line depreciation) 160,000              400,000

Land                                                    40,000               160,000

Total                                               $400,000          $1,200,000

Liabilities and Stockholders' Equity

Liabilities:

Accounts payable—trade            $ 120,000

Notes payable—bank                    360,000

Stockholders' equity:

Common stock                              720,000

Total                                          $1,200,000

Assume you gave up a $60,000 per year job at an accounting firm to start your own tax preparation business. To simplify, assume your tax personal obligations are the same whether you run your own firm or work for another firm. If your revenue during the first year of business is $75,000, and you incurred $5,000 in expenses for equipment and supplies, how much is your accounting profit

Apple Inc. just paid a dividend of $3 per share. You expect that Apple's dividend will increase at the rate of 10% per year for the next 10 years. After that, you expect that Apple Inc. will increase its dividend at the rate of 3% per year forever. The required rate of return for Apple is 20%. What is the price of Apple just after the current dividend was paid?

The following note transactions occurred during the year for Towell Company: Nov. 10 Towell issued a 90-day, 9% note payable for $8,000 to Hyatt Company for merchandise. Dec. 1 Towell signed a 120-day, 10% note at the bank for $12,000. Dec. 20 Towell gave Barr, Inc., a 60-day, 10%, $12,000 note for payment of account. Prepare the general journal entries necessary to adjust the interest accounts at December 31. Use 360 days for calculations and round to the nearest dollar.

Which of the following statements about annuities are true? Check all that apply. An ordinary annuity of equal time earns less interest than an annuity due. Annuities are structured to provide fixed payments for a fixed period of time. When equal payments are made at the beginning of each period for a certain time period, they are treated as ordinary annuities. When equal payments are made at the beginning of each period for a certain time period, they are treated as an annuity due.

The owners of Whitewater rafting are currently contemplating a manufacturing process (Old Process) that will require an investment of $4,000 and a variable cost of $6 per raft vs. a larger (New Process) initial investment of $20,000 with more automated equipment that would reduce their variable cost of manufacture to $2 per raft. Compare the two manufacturing processes proposed here. For what volume demand should each process be chosen?
A. From 0 to 1000 choose Old Process, From 1000 to infinity choose New Process
B. From 0 to 4000 choose New Process, From 4000 to infinity choose Old Process
C. From 0 to 4000 choose Old Process, From 4000 to infinity choose New Process
D. Always use the Old Process and never use the New Process
E Always use the New Process and never use the Old Process

Organizations face myriad barriers and obstacles to effectively increasing and embracing diversity in their workplaces. Some of these barriers stem from people in the organization who are resistant to changing the organization to make it more diverse. This activity is important because resistance to this type of change is an attitude that managers will come up against frequently, and managers should be able to recognize when this occurs so that they can manage the organization and its employees through this challenging but very important type of change.
The goal of this exercise is to challenge your knowledge of the barriers to diversity.
Stereotypes and Prejudices
Fear of Discrimination Against Majority Group Members
Resistance to Diversity Program Priorities
A Negative Diversity Climate
Lack of Support for Family Demands
A Hostile Work Environment for Diverse Employees
First, hover over the terms to read examples of barriers to diversity in action. Then, click and drag each term to indicate the specific barrier to diversity its example best depicts.

Chen Company's Small Motor Division manufactures a number of small motors used in household and office appliances. The Household Division of Chen then assembles and packages such items as blenders and juicers. Both divisions are free to buy and sell any of their components internally or externally. The following costs relate to small motor LN233 on a per unit basis.
Fixed cost per unit $5.20
Variable cost per unit $10.81
Selling price per unit $34.55
Assuming that the Small Motor Division has excess capacity, compute the minimum acceptable price for the transfer of small motor LN233 to the Household Division. (Round answer to 2 decimal places.)
Minimum transfer price $ per unit
Assuming that the Small Motor Division does not have excess capacity, compute the minimum acceptable price for the transfer of the small motor to the Household Division. (Round answer to 2 decimal places.)

Answer each of the following independent questions. Required: Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: (1) $88,000 cash immediately, (2) $34,000 cash immediately and a six-period annuity of $9,300 beginning one year from today, or (3) a six-period annuity of $18,400 beginning one year from today. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 1.1 Assuming an interest rate of 7%, determine the PV value for the above options.
1.2 Which option should Alex choose? Option (1) Option (2) Option (3)
2. The Weimer Corporation wants to accumulate a sum of money to repay certain debts due on December 31, 2022. Weimer will make annual deposits of $175,000 into a special bank account at the end of each of 10 years beginning December 31, 2013. Assuming that the bank account pays 8% interest compounded annually, what will be the fund balance after the last payment is made on December 31, 2022?
Table of calculation function?
Payment?
N?
I?
Future value?

A publishing house is using 400 printers and 200 printing presses to produce books. The printers' wage rate is $20 and the price of a printing press is $100. The last printer added 20 books to total output, while the last press added 50 books to total output. In order to maximize the number of books published with a budget of $28,000, the publishing house

When Valley Co. acquired 80% of the common stock of Coleman Corp., Coleman owned land with a book value of $75,000 and a fair value of $125,000. What is the amount of excess land allocation attributed to the noncontrolling interest at the acquisition date

An investor thought that market interest rates were going to decline. He paid $19,000 for a corporate bond with a face value of $20,000. The bond has an interest rate of 10% per year payable annually. If the investor plans to sell the bond immediately after receiving the 4th interest payment, how much will he have to receive in order to make a return of 14% per year? Solve using:

a. tabulated factors
b. the GOAL SEEK tool on a spreadsheet.

Henry Ford is known for the introduction of the assembly line and the Model T. As his manufacturing effort expanded, however, he also adopted an attitude that came to be known as Fordism. What was one of the central tenets in his system?

Below are several names of companies and their founders. Explain whether the business creates and sells innovative products or uses innovative methods or both

Paradise Corporation budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for next year.Beginning Inventory Ending InventoryRaw material* 41,000 51,000Finished goods 81,000 51,000* Three pounds of raw material are needed to produce each unit of finished product.If Paradise Corporation plans to sell 485,000 units during next year, the number of units it would have to manufacture during the year would be:

Sage Company began operations at the beginning of 2021. The following information pertains to this company.

1. Pretax financial income for 2021 is $87,000.
2. The tax rate enacted for 2021 and future years is 20%.
3. Differences between the 2021 income statement and tax return are listed below:

a. Warranty expense accrued for financial reporting purposes amounts to $6,600. Warranty deductions per the tax return amount to $1,900.
b. Gross profit on construction contracts using the percentage-of-completion method per books amounts to $84,500. Gross profit on construction contracts for tax purposes amounts to $66,300.
c. Depreciation of property, plant, and equipment for financial reporting purposes amounts to $57,900. Depreciation of these assets amounts to $84,300 for the tax return.
d. A $3,200 fine paid for violation of pollution laws was deducted in computing pretax financial income.
e. Interest revenue recognized on an investment in tax-exempt municipal bonds amounts to $1,500.

4. Taxable income is expected for the next few years. (Assume (a) is short-term in nature; assume (b) and (c) are long-term in nature.)

Required:
a. Compute taxable income for 2021.
b. Compute the deferred taxes at December 31, 2021, that relate to the temporary differences described above.
c. Prepare the journal entry to record income tax expense

Here is the income statement for Teal Mountain Inc.
TEAL MOUNTAIN INC.
Income Statement
For the Year Ended December 31, 2017
Sales revenue $402,900
Cost of goods sold 256,700
Gross profit 146,200
Expenses (including $ 10,200 interest and $29,600 income taxes) 89,200
Net income $57,000
Additional information:
1. Common stock outstanding January 1, 2017, was 30,000 shares, and 39,000 shares were outstanding at December 31, 2017.
2. The market price of Teal Mountain stock was $15 in 2017.
3. Cash dividends of $24,700 were paid, $ 6,500 of which were to preferred stockholders.
Compute the following measures for 2017.
(a) Earnings per share $_____
(b) Price-earnings ratio _____ times
(c) Payout ratio _____ %
(d) Times interest earned _____ times

Multiplication. Phyllis, who is 30 years old, works for We Add for You Accounting. Phyllis has worked there for a number of years and is considering quitting in order to spend more time with her three active triplets, Sunny, Fussy, and Perky. She asks her boss, Bolivar, about the pension plan at We Add for You. Her boss tells her that she is not entitled to that information until she is at least 60 years old. Phyllis also asks about retaining her medical insurance protection if she quits and is told that she would have no right to do so. Bolivar also throws in that he has been monitoring her conversations and that he particularly enjoys the conversations between her and her single female friends involving failed dating experiences. He asks her to keep those up. Phyllis tells him that her personal phone calls are none of his business. Bolivar says that he can listen if he wants because the phones are his. Phyllis ends up starting her own company called We Multiply for You, and makes much, much more money. (In answering the following questions, assume all federal laws apply and that any pension and medical plan qualifies for regulation under federal law.) Which of the following addresses the retention of medical benefits upon leaving a job?

a. The Medical Benefits Retention Act (MBRA)
b. The Comprehensive Medical Benefits Retention Act (CMBRA)
c. The Consolidated Omnibus Budget Reconciliation Act (COBRA)
d. The Health and Maintenance Act (HMA)
e. The Americans with Disabilities Act (ADA)

The cost of direct materials transferred into the Bottling Department of the Mountain Springs Water Company is $327,600. The conversion cost for the period in the Bottling Department is $528,000. The total equivalent units for direct materials and conversion are 25,200 and 8,800 liters, respectively. Determine the direct materials and conversion cost per equivalent unit. Round your answers to the nearest cent. $fill in the blank 1 per equivalent unit of materials $fill in the blank 2 per equivalent unit of conversion costs

A truck was acquired on July 1, 2018, at a cost of $311,850. The truck had a six-year useful life and an estimated salvage value of $34,650. The straight-line method of depreciation was used. On January 1, 2021, the truck was overhauled at a cost of $28,875, which extended the useful life of the truck for an additional two years beyond that originally estimated (salvage value is still estimated at $34,650). In computing depreciation for annual adjustment purposes, expense is calculated for each month the asset is owned.

You want to have $3 million in real dollars in an account when you retire in 40 years. The nominal return on your investment is 10 percent and the inflation rate is 4.8 percent. What real amount must you deposit each year to achieve your goal

Both __________ and __________ affect the awareness and motivation of a firm to undertake actions and responses. a. first-mover advantages; corporate size b. market commonality; resource similarity c. management capabilities; competitive analysis d. speed of management decisions; management actions

Setrakian Industries needs to raise $48.5 million to fund a new project. The company will sell bonds that have a coupon rate of 5.56 percent paid semiannually and that mature in 10 years. The bonds will be sold at an initial YTM of 6.13 percent and have a par value of $2,000. How many bonds must be sold to raise the necessary funds

g Sunk costs are: Please choose the correct answer from the following choices, and then select the submit answer button. Answer choices extra costs associated with one more unit of something. financial costs any costs associated with making the decision to do something instead of doing the next best alternative. costs that have been incurred and cannot be reversed

Information from the records of the Abel Corporation for July 2018 was as follows:
Sales $1,230,000
Selling and administrative expenses 210,000
Direct materials used 264,000
Direct labor 300,000
Factory overhead * 405,000
*variable overhead is $205,000, fixed overhead is $200,000
Inventories
July 1, 2018 July 31, 2018
Direct materials $36,000 $42,000
Work in process 75,000 84,000
Finished goods 69,000 57,000
The total product cost is:_______.
a. $969,000
b. $1,179,000
c. $764,000
d. $615,000

Approach Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended: Actual units produced: 14,800 Actual fixed overhead incurred: $791,000 Standard fixed overhead rate: $13 per hour Budgeted fixed overhead: $780,000 Planned level of machine-hour activity: 60,000 If Approach estimates four hours to manufacture a completed unit, the company's fixed-overhead volume variance would be: Multiple Choice $10,400 negative. $10,400 positive. $11,000 negative. $11,000 positive. None of the answers is correct.

The Bassos contracted with Dierberg to purchase her property for $1,310,000. One term of the contract stated, "[t]he sale under this contract shall be closed . . . at the office of Community Title Company. . . on May 16, 1988 at 10:00 am. . . . Time is of the essence of this contract." After forming the contract, the Bassos assigned their right to purchase Dierberg’s property to Miceli and Slonim Development Corp. At 10:00 am on May 16, 1988, Dierberg appeared at Community Title for closing. No representative of Miceli and Slonim was there, nor did anyone from Miceli and Slonim inform Dierberg that there would be any delay in the closing. At 10:20 am, Dierberg declared the contract null and void because the closing did not take place as agreed, and she left the title company office shortly thereafter. Dierberg had intended to use the purchase money to close another contract to purchase real estate later in the day. At about 10:30 AM, a representative of Miceli and Slonim appeared at Community Title to begin the closing, but the representative did not have the funds for payment until 1 :30 PM. Dierberg refused to return to the title company, stating that Miceli and Slonim had breached the contract by failing to tender payment on time. She had already made alternative arrangements to finance her purchase of other real estate to meet her obligation under that contract. Miceli and Slonim sued Dierberg, claiming that the contract did not require closing exactly at 10:00 AM, but rather some time on the day of May 16. Will they prevail?

Your job pays you only once a year for all the work you did over the previous 12 months. Today, December 31, you just received your salary of $58,000 and you plan to spend all of it. However, you want to start saving for retirement beginning next year. You have decided that one year from today you will begin depositing 3 percent of your annual salary in an account that will earn 11 percent per year. Your salary will increase at 6 percent per year throughout your career.
Required: How much money will you have on the date of your retirement 40 years from today?

If The Wall Street Journal lists a stock's dividend as $1, then it is most likely the case that the stock: Multiple Choice pays $1 per share per quarter. paid $.25 per share per quarter for the past year. paid $1 during the past quarter, with no future dividends forecast. is expected to pay a dividend of $1 per share at the end of next year.

Imagine a hypothetical economy with a population of 100 people, 80 of which over sixteen. Forty eight of these people who are working and twelve people who are willing, able and looking for work cannot find jobs. The unemployment rate in this economy is____________ % (enter percentage as a whole number, not a decimal, no percentage sign). S

Suppose that 10 of those unemployed people get discouraged and give up looking for work. Now, the unemployment rate is __________% (enter percentage as a whole number, not a decimal, no percentage sign).

Which of the following statements is CORRECT? a. More of Project A's cash flows occur in the later years. b. We must have information on the cost of capital in order to determine which project has the larger early cash flows. c. The crossover rate, i.e., the rate at which Projects A and B have the same NPV, is greater than either project's IRR. d. The NPV profile graph is inconsistent with the statement made in the problem. e. More of Project B's cash flows occur in the later years.