Barry learned in an online investment course that he should start investing as soon as possible. He had always thought that it would be smart to start investing after he finishes college and when his salary is high enough to pay the bills and to have money left over. He projects that will be $5-10$ years from now. Barry wants to compare the difference between investing now and investing later. A financial advisor who spoke to Barry suggested that a Roth IRA (Individual Retirement Account) would be a good investment for him to start. (Note: When table values do not include the information you need, use the formula $F V=\$ 1(1+R)^N$ where $R$ is the period rate and $N$ is the number of periods.)

If Barry purchases a $\$ 2,000$ Roth IRA when he is $25$ years old and expects to earn an average of $6 \%$ per year compounded annually over $35$ years (until he is $60$), how much will accumulate in the investment?

Dellroy Rentals Company faced the following situations. Journalize the adjusting entry needed at December 31, 2016, for each situation. Consider each fact separately.

a. The business has interest expense of $3,200 that it must pay early in January 2017.
b. Interest revenue of$4,100 has been earned but not yet received.
c. On July 1, 2016, when the business collected $12,000 rent in advance, it debited Cash
and credited Unearned Rent Revenue. The tenant was paying for two years’ rent. d. Salary expense is$6,100 per day—Monday through Friday—and the business pays employees each Friday. This year, December 31 falls on a Thursday.
e. The unadjusted balance of the Supplies account is $3,200. The total cost of supplies on hand is$1,300.
f. Equipment was purchased on January 1 of this year at a cost of $180,000. The equipment’s useful life is five years. There is no residual value. Record depreciation for this year and then determine the equipment’s book value.

The mean salaries S (in thousands of dollars) of public school teachers in the United States from 2005 through 2011 are shown in the table.

$$\begin{matrix} \text{Year} & \text{Mean salary, S}\\ \text{ } & \text{(in thousands of dollars)}\\ \text{2005} & \text{47.5}\\ \text{2006} & \text{49.1}\\ \text{2007} & \text{51.1}\\ \text{2008} & \text{52.8}\\ \text{2009} & \text{54.3}\\ \text{2010} & \text{55.5}\\ \text{2011} & \text{57.2}\\ \end{matrix}$$

(a) Use a graphing utility to create a scatter plot of the data, with t = 5 corresponding to 2005. (b) Use the regression feature of the graphing utility to find a linear model for the data. (c) Use the graphing utility to plot the data and graph the model in the same viewing window. Is the model a good fit? Explain. (d) Use the model to predict the mean salaries in 2020 and 2022. Do the results seem reasonable? Explain.

Here is a small part of a data set that describes Major League Baseball players as of opening day of the 2009 season:

$$\begin{array}{lllccc} \text { Player } & \text { Team } & \text { Position } & \text { Age } & \text { Height } & \text { Weight } & \text { Salary } \\ \hline \text { Rodriguez, } & \text { Yankees } & \text { Infielder } & 33 & 6-3 & 230 & 33,000,000 \\ \text { Alex } & & & & & & \\ \text { Ramirez, } & \text { Dodgers } & \text { Outfielder } & 36 & 6-0 & 200 & 23,854,494 \\ \text { Manny } & & & & & & \\ \text { Santana, } & \text { Mets } & \text { Pitcher } & 30 & 6-0 & 210 & 18,876,139 \\ \text { Johan } & & & & & & \\ \text { Zambrano, } & \text { Cubs } & \text { Pitcher } & 27 & 6-5 & 255 & 18,750,000 \\ \text { Carlos } & & & & & & \\ \text { Suzuki, } & \text { Mariners } & \text { Outfielder } & 35 & 5-11 & 170 & 18,000,000 \\ \text { Ichiro } & & & & & & \\ \hline \end{array}$$

What individuals does this data set describe?

Barry learned in an online investment course that he should start investing as soon as possible. He had always thought that it would be smart to start investing after he finishes college and when his salary is high enough to pay the bills and to have money left over. He projects that will be $5-10$ years from now. Barry wants to compare the difference between investing now and investing later. A financial advisor who spoke to Barry suggested that a Roth IRA (Individual Retirement Account) would be a good investment for him to start. (Note: When table values do not include the information you need, use the formula $F V=\$ 1(1+R)^N$ where $R$ is the period rate and $N$ is the number of periods.)

If Barry doesn't put the money in the IRA until he is $35$ years old, how much money will accumulate in the account by the time he is $60$ years old using the same return of $6 \%$ ? How much less will he earn because he invested $10$ years later?

The trial balance of 4AC, Inc., at October 31, 2016, does not balance.

$$\begin{array}{lrlr} \text{Cash}&\$ 3,900&\text{Common stock}&\$24,100\\ \text{Accounts receivable}&7,100&\text{Retained earnings}&1,700\\ \text{Land}&30,100&\text{Service revenue}&9,400\\ \text{Accounts payable }&6,200&\text{Salary expense}&2,900\\ \text{Note payable}&5,900&\text{Advertising expense}&1,400\\ \end{array}$$

1. Prepare a trial balance for the ledger accounts of 4AC, Inc., as of October 31, 2016.

2. Determine the out-of-balance amount. The error lies in the Accounts Receivable account.

Add the out-of-balance amount to, or subtract it from, Accounts Receivable to determine the correct balance of Accounts Receivable. After correcting Accounts Receivable, advise the top management of 4AC, Inc., on the company’s a. total assets.
b. total liabilities.
c. net income or net loss for October.

Rockwell Company faced the following situations. Journalize the adjusting entry needed at December 31, 2016, for each situation. Consider each fact separately.

a. The business has interest expense of $3,300 that it must pay early in January 2017.
b. Interest revenue of$4,500 has been earned but not yet received.
c. On July 1, 2016, when the business collected $13,900 rent in advance, it debited Cash and credited Unearned Rent Revenue. The tenant was paying for two years’ rent.
d. Salary expense is$5,500 per day—Monday through Friday—and the business pays employees each Friday. This year, December 31 falls on a Thursday.
e. The unadjusted balance of the Supplies account is $2,800. The total cost of supplies on hand is$1,600.
f. Equipment was purchased on January 1 of this year at a cost of $60,000. The equipment’s useful life is five years. There is no residual value. Record depreciation for this year and then determine the equipment’s book value.

Following is a list of various costs incurred in producing toy robotic helicopters. With respect to the production and sale of these toy helicopters, classify each cost as either variable, fixed, or mixed.

$1$. Oil used in manufacturing equipment
$2$. Hourly wages of inspectors
$3$. Electricity costs, $\$ 0.20$ per kilowatt-hour
$4$. Property insurance premiums, $\$ 1,500$ per month plus $\$ 0.006$ for each dollar of property over $\$ 2,000,000$
$5$. Janitorial costs, $\$ 4,000$ per month
$6$. Pension cost, $\$ 0.80$ per employee hour on the job
$7$. Computer chip (purchased from a vendor)
$8$. Hourly wages of machine operators
$9$. Straight-line depreciation on the production equipment
$10$. Metal
$11$. Packaging
$12$. Rent on warehouse, $\$ 10,000$ per month plus $\$ 10$ per square foot of storage used
$13$. Plastic
$14$. Property taxes, $\$ 100,000$ per year on factory building and equipment
$15$. Salary of plant manager

Mary Jarvis is a single individual who is working on filing her tax return for the previous year. She has assembled the following relevant information: She received $82,000 in salary. She received$12,000 of dividend income. She received $5,000 of interest income on Home Depot bonds. She received$22,000 from the sale of Disney stock that was purchased 2 years prior to the sale at a cost of $9,000. She received$10,000 from the sale of Google stock that was purchased 6 months prior to the sale at a cost of $7,500. Mary receives one exemption ($4,000), and she has allowable itemized deductions of $7,500. These amounts will be deducted from her gross income to determine her taxable income. Assume that her tax rates are based on the tax tables presented in the chapter. a. What is Mary’s federal tax liability? b. What is her marginal tax rate? c. What is her average tax rate?

In the following descriptions, write an expression in terms of the given variable that represents the indicated quantity.
a. The cost of having a plumber spend h hours at your house if the plumber charges $50 for coming to the house and$ 60 per hour for labor
b. The amount of money in cents in a jar containing d dimes and some nickels and quarters if there are 3 times as many nickels as dimes and 3 times as many quarters as nickels
c. The sum of three consecutive integers if the least integer is x
d. The amount of bacteria after n min if the initial amount of bacteria is q and the amount of bacteria doubles every minute (Hint: The answer should contain q as well as n.)
e. The temperature after t hr if the initial temperature is $40^\circ{F}$ and each hour it drops by $3^\circ{F}$
f. Pawel’s total earnings after 3 yr if the first year his salary was s dollars, the second year it was $5000.00 higher, and the third year it was twice as much as the second year
g. The sum of three consecutive odd natural numbers if the least is x
h. The sum of three consecutive natural numbers if the middle is m

The following selected accounts and account balances were taken from the records of Wages Company. Except as otherwise indicated, all balances are as of December 31, 2016, before the closing entries were recorded.

$$\begin{array}{lrr} \text{Cash received from common stock issued during 2016}&&\$ \hspace{3pt}4,500\\ \text{Cash}&&\text{10,500}\\ \text{Revenue}&&\text{18,000}\\ \text{Salary expense}&&\text{13,000}\\ \text{Cash flow from operating activities}&&\text{4,500}\\ \text{Notes payable}&&\text{6,000}\\ \text{Utility expense}&&\text{1,800}\\ \text{Dividends}&&\text{1,000}\\ \text{Cash flow from financing activities}&&\text{5,000}\\ \text{Rent expense}&&\text{1,600}\\ \text{Land}&&\text{25,000}\\ \text{Retained earnings, January 1, 2016}&&\text{19,700}\\ \text{Common Stock, December 31, 2016}&&\text{20,000}\\ \end{array}$$

Required

Prepare the income statement Wages would include in its 2016 annual report.

Identify each cost below as variable (V), fixed (F), or mixed (M), relative to units sold. Explain your reason.

$$\begin{array}{lrrrrrrr} \hline \textbf{\hspace{30pt}Units Sold}&\textbf{25}\hspace{10pt}&&\textbf{50}\hspace{10pt}&&\textbf{75}\hspace{10pt}&&\textbf{100}\hspace{8pt}\\ \hline\\ \text{a. Total phone cost}&\text{\$\hspace{12pt}150}&&\text{\$\hspace{12pt}200}&&\text{\$\hspace{12pt}250}&&\text{\$\hspace{12pt}300}\\ \text{b. Materials cost per unit}&\text{35}&&\text{35}&&\text{35}&&\text{35}\\ \text{c. Manager's salary}&\text{3,000}&&\text{3,000}&&\text{3,000}&&\text{3,000}\\ \text{d. Depreciation cost per unit}&\text{60}&&\text{30}&&\text{20}&&\text{15}\\ \text{e. Total utility cost}&\text{400}&&\text{650}&&\text{900}&&\text{1,150}\\ \text{f. Total cost of goods sold}&\text{3,125}&&\text{6,250}&&\text{9,375}&&\text{12,500}\\ \\\hline \end{array}$$

This activity needs teamwork to reinforce understanding of accounting for partnerships.

Required
1. Assume that Baker, Warner, and Rice form the BWR Partnership by making capital contributions of $200,000,$300,000, and $500,000, respectively. BWR predicts annual partnership net income of$600,000. The partners are considering various plans for sharing income and loss. Assign a different team member to compute how the projected $600,000 income would be shared under each of the following separate plans:
 a. Shared equally.
 b. In the ratio of the partners’ initial capital investments.
 c. Salary allowances of$50,000 to Baker, $60,000 to Warner, and$70,000 to Rice, with the remaining balance shared equally.
 d. Interest allowances of 10% on the partners’ initial capital investments, with the remaining balance shared equally.

2. In sequence, each member is to present his or her income-sharing calculations with the team.
3. As a team, identify and discuss at least one other possible way that income could be shared.

Amounts of the assets and liabilities of David Austin Realty Company, as of January 31, 2016, are as follows. Also included are revenue, expense, and selected stockholders’ equity figures for the year ended on that date (amounts in millions):

$$\begin{array}{lrlr} \text{Total revenue}&\$37.2&\text{Investment assets (long-term)}&\$135.6\\ \text{Receivables}&0.7&\text{Property and equipment, net}&1.8\\ \text{Current liabilities}&2.1&\text{Other expenses}&5.6\\ \text{Common stock}&25.1&\text{Retained earnings, beginning}&16.9\\ \text{Interest expense}&0.5&\text{Retained earnings, ending}&?\\ \text{Salary and other employee expenses}&13.5&\text{Cash}&1.3\\ \text{Long-term liabilities}&102.1&\text{Other assets (long-term)}&9.9\\ \end{array}$$

1. Prepare the income statement of David Austin Realty Company for the year ended January 31, 2016.

2. What amount of dividends did David Austin Realty Company declare during the year ended January 31, 2016? (Hint: Prepare a statement of retained earnings.)