PLEASE SHOW HOW YOU ARRIVE AT ANSWER, PLEASE: Assume that at the end of 2012, Clampett, Inc. (an S corporation) distributes long term capital gain property (fair market value of $40,000, basis of $25,000) to each of its four equal shareholders (aggregate distribution of $160,000). At the time of the distribution, Clampett, Inc. has no corporate E&P and J.D. has a basis of $15,000 in […]

PLEASE SHOW HOW YOU ARRIVE AT YOUR ANSWER. THANKS! John, a limited partner of Candy Apple, LP, is allocated $30,000 of ordinary business loss from the partnership. Before the loss allocation, his tax basis is $20,000 and at risk amount is $10,000. John also has ordinary business income of $20,000 from Sweet Pea, LP as a general partner and ordinary business income of $5,000 from […]

Arrow Products typically earns a contribution margin ratio of 25 percent and has current fixed costs of $80,000. Arrow’s general manager is considering spending an additional $20,000 to do one of the following: 1. Start a new ad campaign that is expected to increase sales revenue by 5 percent. 2. License a new computerized ordering system that is expected to increase Arrow’s contribution margin ratio […]

Assume that Ali Perry, Byron Myers, and Brenton Taylor of Inogen to launch a new retail chain to market their portable oxygen systems. This chain, named O to Go, requires $500,000 of start up capital. The three contribute $375,000 of personal assets in return for 15,000 shares of common stock, but they need to raise another $125,000 in cash. There are two alternative plans for […]

Assume that a company buys land with a building on it for $1,500,000. At the time of purchase the company planned to tear the old building down and build a new building. The cost to tear down and dispose of the old building was $150,000 and they sold some material for $25,000. The cost to build the new building was $5,500,000 and the cost to […]

Assume that the following cases are independent and rely on the following data. Make entries on the books of both companies. Jensen Co. Merton Co. Equipment (cost) $900,000 $1,650,000 Accumulated depreciation 290,000 900,000 Fair value of equipment 700,000 700,000 1. Jensen Co. and Merton Co. traded the above equipment. The exchange has commercial substance. Jensen Co.’s Books: Merton Co.’s Books: 2. Jensen Co. and Merton […]

Orton Industries has manufactured prefabricated houses for over 20 years. The houses are constructed in sections to be assembled on customers’ lots. Orton expanded into the precut housing market when it acquired Urbina Company, one of its suppliers. In this market, various types of lumber are precut into the appropriate lengths, banded into packages, and shipped to customers’ lots for assembly. Orton designated the Urbina […]

Accu Weight, Inc. produces a small and large version of its popular electronic scale. The anticipated unit sales for the scales by sales region are as follows: Small Scale Large Scale North Region unit sales 20,500 39,700 South Region unit sales 22,100 23,200 Total 42,600 62,900 The finished goods inventory estimated for May 1, 2013, for the small and large scale models is 1,500 and […]

You have just been promoted to the position of Customer Service Manager of Passport Music Designs, Inc., a manufacturer of computer music supplies in Akron, Ohio. Your predecessor just lost this position because of poor communication skills. Revise the following letters and memoranda (which were drafted by the previous manager) and provide appropriate dates, inside addresses, and salutations where necessary. Be sure to follow the […]

Activity based product costing Alabama Paper Company manufactures three products (computer paper, newsprint, and specialty paper) in a continuous production process. Senior management has asked the controller to conduct an activity based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows: Activity Activity Cost Pool Production $451,400 Setup 263,200 Moving 72,000 Shipping 152,000 Product […]