Devry University

четверг, 25 февраля 2016 г.

ACCT 505 Week 8 Final Exam New

1. (TCO F) Willow Creek Corporation bases its predetermined overhead rate on the estimated labor hours for the upcoming year. At the beginning of the most recently completed year, the company estimated the labor hours for the upcoming year at 38,500 labor hours. The estimated variable manufacturing overhead was $7.37 per labor hour and the estimated total fixed manufacturing overhead was $601,328. The actual labor hours for the year turned out to be 41,721 labor hours.

Required:

Compute the company's predetermined overhead rate for the recently completed year. (Points : 25)

2. (TCO F) Matuseski Corporation is preparing its cash budget for October. The budgeted beginning cash balance is $17,000. Budgeted cash receipts total $187,000 and budgeted cash disbursements total $177,000. The desired ending cash balance is $40,000. The company can borrow up to $120,000 at any time from a local bank, with interest not due until the following month.

Required:

Prepare the company's cash budget for October in good form. (Points : 25)

2. (TCO D) Lindon Company uses 4,500 units of Part X each year as a component in the assembly of one of its products. The company is presently producing Part X internally at a total cost of $69,000 as follows:

Direct materials	$16,000
Direct labor	18,000
Variable manufacturing overhead	10,000
Fixed manufacturing overhead	25,000
Total costs	$69,000

An outside supplier has offered to provide Part X at a price of $11 per unit. If Lindon stops producing the part internally, one third of the manufacturing overhead would be eliminated.

Required: Prepare a make-or-buy analysis showing the annual advantage or disadvantage of accepting the outside supplier's offer. (Points : 30)

Direct materials	$16,000
Direct labor	18,000
Variable manufacturing overhead	10,000
Fixed manufacturing overhead	25,000
Total costs	$69,000

An outside supplier has offered to provide Part X at a price of $11 per unit. If Lindon stops producing the part internally, one third of the manufacturing overhead would be eliminated.

Required: Prepare a make-or-buy analysis showing the annual advantage or disadvantage of accepting the outside supplier's offer. (Points : 30)

3.(TCO E) Topple Company produces a single product. Operating data for the company and its

4. (TCO A) The following data (in thousands of dollars) have been taken from the accounting records of the Maroon Corporation for the just-completed year.Use the above data to prepare (in thousands of dollars) a schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold for the year. In addition, what is the impact on the financial statements if the ending finished goods inventory is overstated or understated? (Points : 25)

1. (TCO F) Carter Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below

Required: Calculate the equivalent units for materials (using the weighted-average method) for the month in the first processing department. (Points : 25)

2. (TCO G) (Ignore income taxes in this problem.) Five years ago, the City of Paranoya spent $30,000 to purchase a computerized radar system called W.A.S.T.E. (Watching Aliens Sent To Earth). Recently, a sales rep from W.A.S.T.E. Radar Company told the city manager about a new and improved radar system that can be purchased for $50,000. The rep also told the manager that the company would give the city $10,000 in trade on the old system. The new system will last 10 years. The old system will also last that long but only if a $4,000 upgrade is done in 5 years. The manager assembled the following information to use in the decision regarding which system is more desirable:

Required:
(a) What is the City of Paranoya's net present value for the decision described above? Use the total cost approach.

(b) Should the City of Paranoya purchase the new system or keep the old system? (Points : 35)

3. (TCO B) Aziz Corporation produces and sells a single product. Data concerning that product appear below.

Required:

Determine the monthly break-even in either unit or total dollar sales. Show your work! (Points : 25)

1. Bingham Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below.

2. 1.(Ignore income taxes in this problem.) Five years ago, the City of Paranoya spent $30,000 to purchase a computerized radar system called W.A.S.T.E. (Watching Aliens Sent To Earth). Recently, a sales rep from W.A.S.T.E. Radar Company told the city manager about a new and improved radar system that can be purchased for $50,000. The rep also told the manager that the company would give the city $10,000 in trade on the old system. The new system will last 10 years. The old system will also last that long but only if a $4,000 upgrade is done in 5 years. The manager assembled the following information to use in the decision regarding which system is more desirable:

3. 1.Topple Company produces a single product. Operating data for the company and its absorption costing income statement for the last year is presented below:

4. (TCO A) The following data (in thousands of dollars) have been taken from the accounting records of the Maroon Corporation for the just-completed year.

Enter quantity:In stock

ACCT 553 Week 8 Final Exam Set 1

1. (TCO E) Which of the following is not a passive activity? (Points : 5)

2. (TCO D) Tom Tanner traded in a printing press with an adjusted basis of $20,000 for a smaller press valued at $12,000. In addition to the smaller press, Tom received $3,000 in cash and was relieved of the existing liability of $5,000 on the old press. What is Tom's recognized gain? (Points : 5)

3. (TCO H) Bob and Susan file a joint return for the 2010 tax year. Their adjusted gross income is $80,000. They had a net investment income of $9,000. In 2010, they had the following interest expenses.

Personal credit card interest: $5,000
Home mortgage interest: $10,000
Investment interest (on loans used to buy stocks): $10,000

What is the interest deduction for Bob and Susan for the 2010 tax year? (Points : 5)

4. (TCO B) Mike and Mindy Miller paid the following medical expenses during the year (all in excess of reimbursement).

Hospital and doctor bills: $840
Medicine and drugs: $730
Hospitalization insurance premiums: $6,200
Medicine and drugs (for dependent mother, age 71): $1,060

Assuming that the Millers' adjusted gross income was $50,000, how much of a medical expense deduction may the Millers claim on their joint return? (Points : 5)

5. (TCO A) The following taxes were paid by Adam Smith.

Real estate taxes on his home: $3,000
State income taxes: $900
Cigarette taxes: $500
State gasoline tax (personal use of automobile): $150
Social security tax (withheld from wages): $5,500
Penalty on tax underpayment: $800

In itemizing his deductions, what is the amount that Adam may claim as a deduction for taxes? (Points : 5)

6. (TCO E) Josh sold a piece of business equipment that had an adjusted basis to him of $50,000. In return for the equipment, Josh received $60,000 cash and a painting with a fair market value of $20,000 from the buyer. The buyer also assumed Josh's $25,000 loan on the equipment. Josh paid $5,000 in selling expenses. What is the amount of Josh's gain on the sale? (Points : 5)

7. (TCO I) In October of 2011, David and Betty Bennett sold their residence for $400,000. They purchased it in 2000 for $200,000. They made major capital improvements during their 10-year ownership, which totaled $80,000.
What is their recognized gain? (Points : 5)

8. (TCO I) Which of the following entities may select any tax period (calendar or fiscal)? (Points : 5)

9. (TCO D) For 2011, Greg Grammer had a short-term capital loss of $4,000, a short-term capital gain of $1,900, a short-term capital loss carryover from 2010 of $700, a long-term capital gain of $800, and a long-term capital loss of $1,000. What is Greg's deductible loss in 2011? (Points : 5)

10. (TCO A) The term "Practice before the IRS" refers to _____. (Points : 5)

11. (TCO F) To be deductible for tax purposes, a trade or business expenditure must be _____.

12. (TCO A) The art of using existing tax laws to pay the least amount of tax legally possible is known as _____. (Points : 5)

13. (TCO C) Which of the following items is not subject to federal income tax? (Points : 5)

14. (TCO B) Sam owes Bob $8,000. Bob cancels (forgives) the debt. The cancellation is not a gift, and Sam is bankrupt. Which of the following statements is correct concerning the impact of this transaction? (Points : 5)

15. (TCO G) All of the following income items are includible in an employee's gross income except _____. (Points : 5)

16. (TCO F) Which of the following types of taxes is not deductible? (Points : 5)

1. (TCO E) Zelda Zayer has been a widow for over 3 years and files a return as a single taxpayer. Items of income received by Zelda in 2011 were as follows.

Interest on savings account with Bank of America: $50
Interest on state income tax refund: $25
Gambling winnings: $2,400
Dividends from mutual life insurance company on life insurance policy: $500
Dividends from Better Auto Co. received on January 2, 2011: $875
The total dividends received on the life insurance policy do not exceed the aggregate of the premiums paid to the company.

(a) How much should Zelda include in her 2011 taxable income as interest?
(b) How much should Zelda report as dividend income for 2011?
(c) How much should Zelda include in taxable “Other Income” for her state lottery winnings?

(Points : 17)

2. (TCO E) Distinguish between realized gains and losses and recognized gains and losses. (Points : 17)

3. (TCO F) Describe how the exclusion on a sale of residence can be prorated. (Points : 17)

4. (TCO G) Differentiate between the following: active income, passive income, and portfolio income. (Points : 17)

5. (TCO I) Rick, a single individual with a salary of $45,000, incurred and paid the following expenses during the year.

Student loan interest: $800
Medical expenses: $5,000
Alimony: $11,000
Mortgage interest on personal residence: $3,000
State income taxes: $4,000
Moving expenses: $1,500
Contribution to a traditional IRA: $2,000

Analyze the above expenses and determine which ones are deductible for AGI. Please support your position. (Points : 17)

6. (TCO I) A review of Bearing's Year 2 records disclosed the following tax information:

Wages	$ 20,000
Taxable interest and qualifying dividends	4,000
Schedule C trucking business net income	32,000
Rental (loss) from residential property	(35,000)
Limited partnership (loss)	(5,000)

Bearing actively participated in the rental property and was a limited partner in the partnership. Bearing had sufficient amounts at risk for the rental property and the partnership. What is Bearing's Year 2 adjusted gross income?

(Points : 17)

7. (TCO F) (Becker CPA Review Course, Reg. 1) Smith has an adjusted gross income (AGI) of $120,000 without taking into consideration $40,000 of losses from rental real estate activities. Smith actively participates in the rental real estate activities. What amount of the rental losses may Smith deduct in determining taxable income? (Points : 17)

8. (TCO B) (Becker CPA Review Course Reg. 3) For the year ended December 31, Year 6, Taylor Corp. had a net operating loss of $200,000. Taxable income for the earlier years of corporate existence, computed without reference to the net operating loss, was as follows:

Taxable Income:

Year 1 $ 5,000
Year 2 10,000
Year 3 20,000
Year 4 50,000
Year 5 50,000

What amount of net operating loss will be available to Taylor for the year ended December 31, Year 7? (Points : 17)

9. (TCO F) (Becker CPA Review Exam Reg. 1) Randolph is a single individual who always claims the standard deduction. Randolph received the following in the current year:

Wages	$ 22,000
Unemployment compensation	6,000
Pension distribution (100% taxable)	4,000
A state tax refund from the previous year	425

What is Randolph’s gross income? (Points : 17)

10. (TCO H) On May 18, 2011, Sara Douglas purchased 30 shares of WXY stock for $210, and on October 29, 2011, she purchased 90 additional shares for $900. On November 28, 2011, she sold 48 shares, which could not be specifically identified, for $480, and on December 8, 2011, she sold another 25 shares for $150. What is her recognized gain or loss? (Points : 17)

ACCT 553 Week 8 Final Exam Set 2

1. (TCO E) Interest, dividends, and annuities income are classified as _____. (Points : 5)

2. (TCO D) Which of the following is an example of a nontaxable; like-kind exchange? (Points : 5)

3. (TCO H) Alex files a tax return for the 2010 tax year. His adjusted gross income is $50,000. He had a net investment income of $9,000. In 2010, he had the following interest expenses.

Personal credit card interest: $4,000
Home mortgage interest: $8,000
Investment interest (on loans used to buy stocks): $15,000

What is the interest deduction for Alex for the 2010 tax year? (Points : 5)

4. (TCO B) Mark Miller paid the following medical expenses during the year (all in excess of reimbursement).

Hospital and doctor bills (for self and wife): $840
Medicine and drugs (for self and wife): $730
Hospitalization insurance premiums: $6,200
Medicine and drugs (for dependent mother, age 71): $1,060

Assuming that Mark's adjusted gross income was $60,000, how much of a medical-expense deduction may Mark claim on his return? (Points : 5)

6. (TCO E) Josh sold a piece of business equipment that had an adjusted basis to him of $50,000. In return for the equipment, Josh received $90,000 cash and a painting with a fair market value of $20,000 from the buyer. The buyer also assumed Josh's $25,000 loan on the equipment. Josh paid $5,000 in selling expenses. What is the amount of Josh's gain on the sale?(Points : 5)

8. (TCO I) Which of the following entities may select any tax period (calendar or fiscal)? (Points : 5)

9. (TCO D) Tom Smith had a short-term capital loss of $3,000 in 2010, a short-term capital gain of $1,900, a short-term capital loss carryover from 2010 of $700, a long-term capital gain of $1,800, and a long-term capital loss of $1,000. What is Tom's deductible loss in 2010? (Points : 5)

10. (TCO A) The term "Practice before the IRS" refers to _____. (Points : 5)

11. (TCO F) To be deductible for tax purposes, a trade or business expenditure must be _____.(Points : 5)

12. (TCO A) Which of the following does not constitute tax evasion? (Points : 5)

13. (TCO C) Which of the following items is not subject to federal income tax? (Points : 5)

15. (TCO G) All of the following income items are includible in an employee's gross income except _____. (Points : 5)

16. (TCO F) Fines and penalties paid to the government for the violation of a law are _____. (Points : 5)

1. 1.(TCO E) Betty Jones files a return as a single taxpayer. Items of income received by

Betty in 2011 were as follows.

Interest on savings account with Bank of America: $100
Interest on state income tax refund: $50
Gambling winnings: $4,800
Dividends from mutual life insurance company on life insurance policy: $1,000
Dividends from Better Auto Co. received on January 2, 2011: $875
The total dividends received on the life insurance policy do not exceed the aggregate of the premiums paid to the company.

(a) How much should Betty include in her 2011 taxable income as interest?
(b) How much should Betty report as dividend income for 2011?
(c) How much should Betty include in taxable “Other Income” for her state lottery winnings?(Points : 17)

2. (TCO E) Distinguish between realized gains and losses and recognized gains and losses. (Points : 17)

3. (TCO F) When might a taxpayer prefer a sale over a like-kind exchange that would result in the nonrecognition of gain under Section 1031?(Points : 17)

4. (TCO G) What is "significant participation," and why is it noteworthy?(Points : 17)

5. (TCO I) Amos, a single individual with a salary of $50,000, incurred and paid the following expenses during the year.

Medical expenses: $5,000
Alimony: $14,000
Casualty loss (after $100 floor): $1,000
State income taxes: $4,000
Moving expenses: $1,500
Contribution to a traditional IRA: $2,000
Student loan interest: $1,200

Analyze the above expenses and determine which ones are deductible for AGI. Please support your position. (Points : 17)

6. (TCO I) Kim had the following transactions for 2010.

Salary: $48,000
Damage award (compensatory) for city bus accident: $18,000
Loss on sale of stock investment: $5,600
Loan from father to purchase auto: $14,000
Alimony paid to former husband: $8,000

What is Kim's AGI for 2010? (Points : 17)

7. (TCO F) Pam owns a sole proprietorship, and Kevin is the sole shareholder of a C (regular) corporation. Each business sustained a $16,000 operating loss and a $2,500 capital loss for the year. Evaluate how these losses will affect the taxable income of the two owners. (Points : 17)

8. (TCO B) Dave forms a corporation and transfers property having a basis to him of $22,000 and a fair market value of $29,000 to the corporation for 1,000 shares of $11 par stock. One year later, Hank transfers property having a basis to him of $3,500 and a fair market value of $4,500 for 100 shares of the stock. Hank is not related to Dave. The corporation issued no other stock.

(a) How much gain does Dave recognize on his exchange? What is the basis to Dave of his 1,000 shares?
(b) What gain or loss is recognized by the corporation when it issues its shares to Dave? What is the basis to the corporation of the property it received from Dave?
(c) What is the gain or loss that Hank recognizes on this transaction, and what is his basis in his 100 shares?(Points : 17)

9. (TCO F) XYZ Company had a net loss of $90,000 from operations in 2007. Tina owns XYZ and works 20 hours a week in the business. She has a large amount of income from other sources and is in the 33% marginal tax bracket. Would Tina's tax situation be better if XYZ were a proprietorship or a C corporation? Explain why. (Points : 17)

10. (TCO H) Alex Smith purchased 30 shares of XYZ stock on April 30, 2010 for $210, and on September 1, 2010, he purchased 90 additional shares for $900. On November 8, 2010, he sold 48 shares, which could not be specifically identified, for $528, and on December 15, 2010, he sold another 25 shares for $50. What is his recognized gain or loss? (Points : 17)

ACCT 553 Week 8 Final Exam Set 3

1. (TCO E) Interest, dividends, and annuities income are classified as _____. (Points : 5)

Personal credit card interest: $5,000
Home mortgage interest: $10,000
Investment interest (on loans used to buy stocks): $10,000

What is the interest deduction for Bob and Susan for the 2010 tax year? (Points : 5)

4. (TCO B) Bob and Cindy Smith paid the following medical expenses during the year (all in excess of reimbursement).

Hospital and doctor bills: $800
Medicine and drugs: $700
Hospitalization insurance premiums: $6,000
Medicine and drugs (for dependent mother, age 71): $1,000

Assuming that the Smiths' adjusted gross income was $60,000, how much of a medical expense deduction may Bob and Cindy claim on their joint return? (Points : 5)

5. (TCO A) ***** *****, a cash-basis, calendar-year taxpayer, paid the following during the year.

Social security tax (withheld from wages): $4,500
Real estate taxes: $3,200
State income tax: $3,400
Special assessment for installation of sidewalks: $1,140
Penalty on tax underpayment: $300
Flat fee for automobile registration: $90

What itemized deduction may John claim for taxes on his return? (Points : 5)

6. (TCO E) Bob sold a piece of business equipment that had an adjusted basis to him of $50,000. In return for the equipment, Josh received $80,000 cash and a painting with a fair market value of $20,000 from the buyer. The buyer also assumed Josh's $25,000 loan on the equipment. Josh paid $5,000 in selling expenses. What is the amount of Josh's gain on the sale? (Points : 5)

7. (TCO I) In October of 2011, Bobby and ***** ***** sold their residence for $450,000. They purchased it in 2000 for $200,000. They made major capital improvements during their 10-year ownership, which totaled $40,000.

What is their recognized gain? (Points : 5)

8. (TCO I) Which of the following entities may select any tax period (calendar or fiscal)? (Points : 5)

10. (TCO A) The term "Practice before the IRS" refers to _____. (Points : 5)

11. (TCO F) To be deductible for tax purposes, a trade or business expenditure must be _____.

12. (TCO A) The art of using existing tax laws to pay the least amount of tax legally possible is known as _____. (Points : 5)

13. (TCO C) Which of the following items is not subject to federal income tax? (Points : 5)

14. (TCO B) Sam owes Bob $8,000. Bob cancels (forgives) the debt. The cancellation is not a gift, and Sam is neither insolvent nor bankrupt. Which of the following statements is correct concerning the impact of this transaction? (Points : 5)

15. (TCO G) All of the following income items are includible in an employee's gross income except _____. (Points : 5)

16. (TCO F) Fines and penalties paid to the government for the violation of a law are _____. (Points : 5)

1. (TCO E) Zelda Zayer has been a widow for over 3 years and files a return as a single taxpayer. Items of income received by Zelda in 2011 were as follows.

Interest on savings account with Bank of America: $50
Interest on state income tax refund: $25
Gambling winnings: $2,400
Dividends from mutual life insurance company on life insurance policy: $500
Dividends from Better Auto Co. received on January 2, 2011: $875
The total dividends received on the life insurance policy do not exceed the aggregate of the premiums paid to the company.

(a)How much should Zelda include in her 2011 taxable income as interest?
(b) How much should Zelda report as dividend income for 2011?
(c) How much should Zelda include in taxable “Other Income” for her state lottery winnings?

(Points : 17)

2. (TCO E) Distinguish between realized gains and losses and recognized gains and losses. (Points : 17)

3. (TCO F) Describe the current tax law for sale of residence. (Points : 17)

4. (TCO G) Differentiate between the following: active income, passive income, and portfolio income. (Points : 17)

5. (TCO I) Jake, a single individual with a salary of $40,000, paid the following expenses during the year.

Alimony: $8,000
Charitable contributions: $2,000
Casualty loss (after $100 floor): $1,000
Mortgage interest on personal residence: $3,000
Moving expenses: $1,500
Student loan interest: $1,000
Contribution to a traditional IRA: $2,000

Analyze the above expenses and determine which ones are deductible for AGI. Please support your position. (Points : 17)

6. (TCO I) Carl had the following transactions for 2010.

Salary: $55,000
Damage award (compensatory) for city bus accident: $20,000
Loss on sale of stock investment: $4,500
Loan from father to purchase auto: $10,000
Alimony paid to former wife: $11,000

What is Carl's AGI for 2010? (Points : 17)

8. (TCO B) Kyle forms a corporation and transfers property having a basis to him of $20,000 and a fair market value of $30,000 to the corporation for 1,000 shares of $9 par stock. One year later, Bob transfers property having a basis to him of $2,000 and a fair market value of $4,000 for 100 shares of the stock. Bob is not related to Kyle. The corporation issued no other stock.

(a) How much gain does Kyle recognize on his exchange? What is the basis to Kyle of his 1,000 shares?
(b) How much gain does Bob recognize on his exchange? What is the basis to Bob of his 100 shares?

(c) What gain or loss is recognized by the corporation when it issues its shares to Kyle? What is the basis to the corporation of the property it received from Kyle? (Points : 17)

9. (TCO F) Good Co. had a net loss of $75,000 from merchandising operations in 2007. Jane owns Good Co. and works 20 hours a week in the business. She has a large amount of income from other sources and is in the 35% marginal tax bracket. Would Jane's tax situation be better if Good Co. were a proprietorship or a C corporation? Explain why. (Points : 17)

10. (TCO H) On May 18, 2011, Sara Douglas purchased 30 shares of WXY stock for $210, and on October 29, 2011, she purchased 90 additional shares for $900. On November 28, 2011, she sold 48 shares, which could not be specifically identified, for $480, and on December 8, 2011, she sold another 25 shares for $150. What is her recognized gain or loss? (Points : 17)

ACCT 553 Week 8 Final Exam Set 4