Question 2. Pension: The Company provides the following information about its defined benefit pension plan for the year 2023: Plan assets at January 1, 2023 $ 820,000 Projected benefit obligation at January 1, 2023 790,000 Accumulated OCI – PSC at January 1, 2023 116,200 Accumulated OCI – Net Gain at January 1, 2023 93,000 Service cost 72,000 Contributions to the plan 45,000 Benefits paid 31,000 Actual return on plan assets 23,000 Expected rate of return on plan assets 7% Settlement rate 8% Average remaining service life 14 years Assume the Company amortizes its prior service costs straight-line over the average remaining service life, rather than using the years-of-service method. Required: (9 Points) What amount of pension expense will the Company report on its income statement for 2023? If necessary, round your answer to the nearest whole dollar.

Question 2b. What adjustment, if any, would be reported to beginning retained earnings for the earliest period presented within the 2023 comparative financial statements for the effect of the change? If the adjustment decreases beginning retained earnings, present your answer below as a negative amount or in parenthesis. Note: Disregard the fact that this question is labeled as having “0 points” – this question does have points associated and you should answer this question. All parts within this question will be graded together for a combined total of 9 points.

The Jackson 5, Inc. is comprised of the following five profit centers. The following information is available for each profit center for the current year: Profit Centers Sales to Nonaffiliates Intersegment Sales Operating Profit (Loss) Identifiable Assets A $ 1,000 $ 3,000 ($ 5,300) $ 24,000 B 95,000 10,000 4,000 169,000 C 12,000 1,000 (3,100) 18,000 D 9,000 – 2,900 97,000 E 25,000 – 23,200 32,000 Total 142,000 14,000 21,700 340,000   Each profit center represents an individual operating segment, except for B and C, which together represent operating segment BC. Intersegment sales are distributed as follows: All of A’s intersegment sales were to B. 30% of B’s intersegment sales were to D; the remainder was to C. All of C’s intersegment sales were to B. Under the operating profit (loss) test, how many of the five profit centers would be included in a reportable segment? For the purposes of this question, disregard the combined revenue test.

(b) (3 Points) Partner C purchases 15% of the respective interests of Partner A and Partner B by paying $31,000 cash to Partner A and $14,000 to Partner B directly. No goodwill is to be recognized. Account Debit Credit [account1] [debit1] [credit1] [account2] [debit2] [credit2] [account3] [debit3] [credit3] [account4] [debit4] [credit4] [account5] [debit5] [credit5] [account6] [debit6] [credit6]  

Joe (“Partner A”), Rick (“Partner B”), and Steve (“Partner C”) are partners in Def Leppard Partnership, a partnership undergoing an installment liquidation. The partners share profits and losses at 4:4:2 ratio, respectively. An excerpt of the partnership’s trial balance is available below: Liabilities & Capital Liabilities $ 50,000 Partner B, Loan 30,000 Partner A, Capital 75,000 Partner B, Capital 98,000 Partner C, Capital 55,000 If the partnership has $140,000 of cash available prior to paying any creditors, how much would Partner A receive in the distribution under an advance cash distribution plan?

Part 4: Free Response – Leases (22 Points) Jovi Company (“Lessee”) and Sambora Corporation (“Lessor”) sign a non-cancellable lease agreement dated January 1, 2023, in which Lessor leases equipment to Lessee beginning immediately on January 1, 2023. The following information relates to the lease agreement: The term of the lease is two years and requires equal rental payments at the beginning of each year, beginning in 2023. The Lessor sets the annual rental rate to earn a rate of return of 8% per year; the Lessee is unaware of this rate. The lease contains no renewal options; the equipment will revert to the Lessor at the termination of the lease. The equipment has a fair value at the commencement of the lease of $350,000, a cost to the Lessor of $280,000, and an estimated economic life of three years. If relevant, assume that at the end of the equipment’s economic life, the estimated salvage value is $6,400. The Lessor estimates that the equipment will have a residual value of $43,000 at the end of the lease and the residual value is not guaranteed by the Lessee. If relevant, the Lessee anticipates that it is probable that the value of the equipment at the end of the lease term will be only $37,000. If relevant, both parties depreciate similar equipment owned on a straight-line basis. If relevant, the Lessee’s incremental borrowing rate is 6% per year. Important Note regarding Grading: If you would like the opportunity to receive partial credit at the instructor’s discretion (strongly recommended), please email me at cindy.dosch@warrington.ufl.edu a picture or a scan of your work within 15 minutes of submitting your exam. Be sure to clearly label your work. The work must agree to the final answer originally submitted within Canvas to be eligible for partial credit. Required: Record your final answers to the required items in the table immediately below and provide the requested journal entries beginning on the next page. As a general rounding rule, if required, round final answers to the nearest whole dollar. If an amount is zero, write “0” – DO NOT leave blank.   Item Your Answer (a) Amount of annual rental payment $[answer-a] (b) Classification of lease by Lessee [answer-b] (c) Classification of lease by Lessor [answer-c]

January 1, 2025: Account Debit Credit [account1] [debit1] [credit1] [account2] [debit2] [credit2] [account3] [debit3] [credit3] [account4] [debit4] [credit4] [account5] [debit5] [credit5] [account6] [debit6] [credit6] [account7] [debit7] [credit7] [account8] [debit8] [credit8] [account9] [debit9] [credit9] [account10] [debit10] [credit10] Note: Disregard the fact that this question is labeled as having “0 points” – this question does have points associated and you should answer this question. Both journal entries will be graded together for a combined total of 11 points.

(d) Record any required journal entries on January 1, 2023 and December 31, 2023 for the Lessee in the provided spaces below. If no journal entry is required on any date, write “no journal entry is required” – DO NOT LEAVE BLANK.

Part 2: Free Response – Income Taxes (20 Points) Willie Nelson Co. had the following cumulative temporary differences as of December 31, 2022: Taxable temporary differences – Installment sales: $86,000 Deductible temporary difference – Bad debts:   $63,000 Additionally, as of 2022, the enacted tax rate was 20% for 2022 and all future periods. In 2023, the Company reported pre-tax financial accounting income of $610,000. During 2023, legislation was passed that changed the enacted tax rate from 20% to 28% for all future years, beginning in 2024. The following additional information is available: During the prior year, on January 1, 2022, the Company completed a contract and recognized $129,000 in gross profit on an accrual basis. For tax purposes, the Company will recognize the gross profit on an installment basis evenly over three years, beginning in 2022. During 2023, the Company received $29,000 in municipal bond interest income. In 2023, bad debt expense was estimated to be $2,000. Write-offs of uncollectible accounts in 2023 totaled to $8,000. For 2023, depreciation for financial accounting purposes is $74,000, whereas depreciation under MACRS is $82,000. During 2023, the Company incurred fines for pollution violations of $8,000. Finally, assume that there was no beginning balance in the income taxes payable account as of January 1, 2023. Important Note regarding Grading: If you would like the opportunity to receive partial credit at the instructor’s discretion (strongly recommended), please email me at cindy.dosch@warrington.ufl.edu a picture or a scan of your work within 15 minutes of submitting your exam. Be sure to clearly label your work. The work must agree to the final answer originally submitted within Canvas to be eligible for partial credit. Required: (20 Points) Record your final answers to the required items in the table immediately below. As a general rounding rule, if required, round final answers to the nearest whole dollar. If an amount is zero, write “0” – DO NOT leave blank.   Item as of December 31, 2023 Your Answer (a) Income tax expense (benefit) – Current [answer-a] (b) Income tax expense (benefit) – Deferred [answer-b] (c) Income taxes payable [answer-c] (d) Net DTA per balance sheet [answer-d] (e) Net DTL per balance sheet [answer-e]

On January 1, 2023, R.E.M. Company had 180,000 shares of common stock outstanding. During 2023, the Company had the following common stock transactions: ·       February 1: Issued a 9% stock dividend. ·       May 31: Acquired 40,000 shares of treasury stock. ·       September 1: Issued a 3-for-1 split. ·       December 31: Reissued 20,000 shares of treasury stock. What is the weighted number of shares outstanding for EPS purposes as of December 31, 2023