The contract price will be received in four equal instalments on the last day of the last month of each quarter. The rate of inflation is 2% per annum and the quarterly bank interest rate is 1%. X cleaners will be employed during the first quarter rising to (X+4) in the second, third and fourth quarters. Their rate of pay is £Y.YY per hour during the first quarter rising by £0.25 each quarter (final quarter’s pay is therefore £Y.YY+0.75) Each cleaner will work for 15 hours per week (13 weeks per quarter) and will receive a Christmas bonus of £300 each. In addition to the above, two part-time supervisors will be employed from 1 January on a starting gross annual salary of £15,000 each. They are to receive a 10% salary increase at the start of the final quarter. Ten cleaning machines costing £Z each will be required at the start of the contract. After six months, a further two more machines will be needed. The rate of inflation for the machines is 5% per quarter. Isla is to depreciate the machines at 50% per annum in her accounts. A motor vehicle is to be rented/hired at £275 per month from the start of the contract. Isla wants to make a profit of at least £12,000 per annum on the contract to cover her time. £2,000 is to be introduced into the business at the start of the contract by Isla. Ignore VAT, Income tax and National Insurance. Isla has asked you to use your knowledge and experience (common sense !!) to include estimates for the other overheads expected to be incurred in a contract of this nature e.g. machine maintenance, motor expenses etc. etc.

1. S is an 80% owned subsidiary of P, Inc. P accounts for S using the equity method. The following facts apply: On January 2, 2020, S purchased a machine with a cost of $100,000 and accumulated depreciation of $20,000 from P for $110,000. The machine had a 5-year remaining life on January 2, 2020, and is being depreciated by the straight-line method. In 2023 P reported net income of $150,000 without including income from S. S reported net income of $100,000.

2. S is an 80% owned subsidiary of P, Inc. The following facts apply to 2023: On January 1, 2023, S held $50,000 of merchandise sold to it from P. P made sales to S during 2023 totaling $160,000. On December 31, 2023, S had $60,000 of such goods purchased from P in its ending inventory P always sells to Sat a 20% gross profit. In 2023 P reported net income of $400,000 without including income from S. S reported net income of $300,000. P accounts for S using the equity method.

Assignment #1 - Chapter Review Problem 7-1. Instructions: 1. Manually complete Keith's tax return including all required schedules and forms, using the fillable forms package. 2. As part of this assignment, complete Step 5 Part A for Katie's tax return (for taxable income of $87,321). 3. Save these forms on your computer. 4. Log in to uLearn to answer the questions in your transcript. The assignment asks questions about the completed return and there is a mix of multiple choice and numeric fill in the blank questions (i.e. asking for values from specific lines of the tax return). uLearn Fill in the blank instructions. When entering the numbers, the dollar symbol ($) is never to be used and all entries must be entered as numbers with the correct use of commas (,) and decimal point and need to be entered to exactly two decimal places. All answers need to be correctly rounded to two decimal places get the mark. (i.e. even if an answer is off by only a penny it is wrong.)