From the perspective of the lessee, how can leases be classified?

The franchise agreement of Domino’s Pizza, L.L.C., sets out operational standards, including safety requirements, for a franchisee to follow but provides that the franchisee is an independent contractor. Each franchisee is free to use its own means and methods. For example, Domino’s does not know whether a franchisee’s delivery drivers are complying with vehicle safety requirements. MAC Pizza Management, Inc., operates a Domino’s franchise. A vehicle driven by Joshua Balka, a MAC delivery driver, hydroplaned due to a bald tire and wet pavement. It struck the vehicle of Devavaram and Ruth Christopher, killing Ruth and injuring Devavaram. Is Domino’s liable for negligence? Explain. [Domino’s Pizza, L.L.C. v. Reddy, 2015 WL 1247349 (Tex.App.—Beaumont 2015)]

Real Estate Commission A real estate agency receives a commission of $\$ 12,250$ for the sale of a $\$ 175,000$ house. What percent commission is this?

Jamel Blanton was a male employee at a Pizza Hut restaurant operated by Newton Associates, Inc., in San Antonio, Texas. Blanton was subjected to sexual and racial harassment by the general manager, who was female. Newton had a clear, straightforward antidiscrimination policy and complaint procedure. The policy provided that in such a situation, an employee should complain to the harasser’s supervisor. Blanton alerted a shift leader and an assistant manager about the harassment, but they were subordinate to the general manager and did not report the harassment to higher-level management. When Blanton finally complained to a manager with authority over the general manager, the employer investigated and fired the general manager within four days. Blanton filed a suit in a federal district court against Newton, seeking to impose liability on the employer for the general manager’s actions. What is Newton’s best defense? Discuss. [Blanton v. Newton Associates, Inc., 593 Fed.Appx. 389 (5th Cir. 2015)]

Carol Garcia and Pedro Salgado were bus drivers for Latino Express, Inc., a transportation company. Garcia and Salgado began soliciting signatures from other drivers to certify the Teamsters Local Union No. 777 as the offcial representative of the employees. Latino Express fired Garcia and Salgado. The two drivers filed a claim with the National Labor Relations Board (NLRB), alleging that the employer had committed an unfair labor practice. Which employer practice defined by the National Labor Relations Act did the plaintiffs most likely charge Latino Express with committing? Is the employer’s discharge of Garcia and Salgado likely to be construed as a legitimate act in opposition to union solicitation? If a violation is found, what can the NLRB do? Discuss. [Ohr v. Latino Express, Inc., 776 F.3d 469 (7th Cir. 2015)]

Data related to the inventories of Costco Medical Supply are presented below:

In applying the lower of cost and net realizable value rule, the inventory of surgical equipment would be valued at:

A. $187
B.$227
C. $253
D.$165

On December 31, 2020, Coolwear, Inc. had a balance in its prepaid insurance account of $48,400. During 2021,$86,000 was paid for insurance. At the end of 2021, after adjusting entries were recorded, the balance in the prepaid insurance account was $42,000. Insurance expense for 2021 was

Listed below are account balances (in $millions) taken from the records of Symphony Stores. All of these are permanent accounts, except the last two that have yet to be closed. The installment receivables are current. Symphony uses a perpetual inventory system.

What would Symphony report as total current assets? Total Assets, Total Liabilities, Total Equity (Hint: Don't forget the contra assets.)

Collection of accounts receivable that previously have been written off results in an increase in cash and an increase in:

a. accounts receivable.
b. allowance for uncollectible accounts.
c. bad debts expense.
d. retained earnings.

For companies that use FIFO, average cost, or any method other than LIFO or retail inventory method inventory is valued at __________.

Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design a marketing strategy to compete with Burger King. The contract spans eight months. Burger Boy promises to pay $60,000 at the beginning of each month. At the end of the contract, Velocity either will give Burger Boy a refund of$20,000 or will be entitled to an additional $20,000 bonus, depending on whether sales at Burger Boy at year-end have increased to a target level. At the inception of the contract, Velocity estimates an 80% chance that it will earn the$20,000 bonus and calculates the contract price based on the expected value of future payments to be received. After four months, circumstances change, and Velocity revises to 60% its estimate of the probability that it will earn the bonus. At the end of the contract, Velocity receives the additional consideration of $20,000. Required: 1. Prepare the journal entry to record revenue each month for the first four months of the contract. 2. Prepare the journal entry that the Velocity Company would record after four months to recognize the change in estimate associated with the reduced likelihood that the$20,000 bonus will be received. 3. Prepare the journal entry to record the revenue each month for the second four months of the contract. 4. Prepare the journal entry after eight months to record receipt of the $20,000 cash bonus.

A net operating loss occurs when tax-deductible expenses exceed taxable revenues. Tax laws permit the net operating loss to be used to reduce taxable income in other, profitable years by either a carryback of the loss to prior years or a carryforward of the loss to later years. How are loss carrybacks and loss carryforwards recognized for financial reporting purposes?

The December 31, 2018, adjusted trial balance for Fightin' Blue Hens Corporation is presented below.

$$\begin{matrix} \text{Accounts} & \text{Debit} & \text{Credit}\\ \hline \text{Cash} & \text{$\$12,000$} & \text{ }\\ \text{Accounts Receivable} & \text{$150,000$} & \text{ }\\ \text{Prepaid Rent} & \text{$6,000$} & \text{ }\\ \text{Supplies} & \text{$30,000$} & \text{ }\\ \text{Equipment} & \text{$400,000$} & \text{ }\\ \text{Accumulated Depreciation} & \text{ } & \text{$\$ 135,000$}\\ \text{Accounts Payable} & \text{ } & \text{$12,000$}\\ \text{Salaries Payable} & \text{ } & \text{$11,000$}\\ \text{Interest Payable} & \text{ } & \text{$5,000$}\\ \text{Notes Payable (due in two years)} & \text{ } & \text{$40,000$}\\ \text{Common Stock} & \text{ } & \text{$300,000$}\\ \text{Retained Earnings} & \text{ } & \text{$60,000$}\\ \text{Service Revenue} & \text{ } & \text{500,000}\\ \text{Salaries Expense} & \text{$400,000$} & \text{ }\\ \text{Rent Expense} & \text{$20,000$} & \text{ }\\ \text{Depreciation Expense} & \text{$40,000$} & \text{ }\\ \text{Interest Expense} & \text{$5,000$} & \text{ }\\ \text{Totals} & \underline{\underline{\$ 1,063,000}} & \underline{\underline{\$ 1,063,000}}\\ \end{matrix}$$

1. Prepare an income statement for the year ended December 31, 2018.
2. Prepare a statement of stockholders' equity for the year ended December 31, 2018, assuming no common stock was issued during 2018.
3. Prepare a classified balance sheet as of December 31, 2018.

Presented below are the 2021 income statement and comparative balance sheets for Santana Industries.

$$\begin{array}{c} \textbf{Santana Industries} \\ \textbf{Statement of Comprehensive Income} \\ \textbf{For the Year Ended December 31, 2021} \\ \end{array}$$

$$\begin{array}{lrr} \text{Sales revenue} &\$18,050,000 \\ \text{Service revenue} &\underline{\hspace{10pt}7,200,000 }\\ \text{\hspace{5pt}Total revenue} & &\$25,250,000\\ \text{Less: Operating expenses} &\\ \text{\hspace{23pt}Cost of goods sold} &\$\hspace{5pt}9,100,000 \\ \text{\hspace{23pt}Selling expense} &4,300,000 \\ \text{\hspace{23pt}General and administrative expense} &\underline{\hspace{10pt}3,400,000} \\ \text{\hspace{5pt}Total operating expenses} & &\underline{\hspace{5pt}16,800,000}\\ \text{Operating income} & &\$\hspace{5pt}8,450,000\\ \text{Interest expense} & &\underline{\hspace{20pt}340,000}\\ \text{Income before income taxes} & &\$\hspace{5pt}8,110,000\\ \text{Income tax expense} & &\underline{\hspace{10pt}3,500,000}\\ \text{Net income} && \underline{\underline{\$\hspace{5pt}4,610,000}} \end{array}$$

$$\begin{array}{c} \textbf{Santana Industries} \\ \textbf{Comparative Balance Sheet} \\ \textbf{As of December 31, 2021} \\ \end{array}$$

$$\begin{array}{lrr} &\text{Dec. 31, 2021} &\text{Dec. 31, 2020}\\ \textbf{Assets:} \\ \text{Cash}& \$10,200,000 & \$\hspace{5pt}3,910,000 \\ \text{Accounts receivable} & 6,300,000 & 4,100,000\\ \text{Inventory}& 7,800,000 & 4,900,000 \\ \text{Prepaid rent} & 340,000 & 680,000\\ \text{Equipment} & 18,300,000 & 15,800,000\\ \text{\hspace{10pt}Less: Accumulated Depreciation} & \underline{\hspace{10pt}7,000,000} & \underline{\hspace{10pt}6,400,000}\\ \text{Totals}& \underline{\underline{\$35,940,000}} & \underline{\underline{\$22,990,000}}\\[15pt] \textbf{Liabilities \& Stockholders' Equity} \\ \text{Accounts payable} &\$\hspace{5pt}5,200,000 & \$3,000,000\\ \text{Interest payable} & 290,000 & 0\\ \text{Deferred revenue} & 1,180,000 & 790,000\\ \text{Income taxes payable}& 740,000 & 1,180,000\\ \text{Notes payable (due 12/31/2023)}& 8,800,000 & 0\\ \text{Common stock} & 11,900,000 & 11,900,000\\ \text{Retained earnings} & \underline{\hspace{10pt}7,830,000} & \underline{\hspace{10pt}6,120,000}\\ \text{Totals}& \underline{\underline{\$35,940,000}} & \underline{\underline{\$22,990,000}} \end{array}$$

Additional information for the 2021 fiscal year.

1. Cash dividends of $2,900,000 were declared and paid.
2. Equipment costing$7,800,000 was purchased with cash.
3. Equipment with a book value of $2,400,000 (Cost of$5,300,000 less accumulated depreciation of $2,900,000) was sold for$2,400,000.
4. Depreciation of $3,500,000 is included in operating expenses.

Required: Prepare Santana Industries' 2021 statement of cash flows, using the indirect method to present cash flows from operating activities.