Question 2 Jacobsen is a new employee at the accounting firm of North Island LLP. Jacobsen has been hired as a junior human resources associate who will assist with recruitment of new accountants to the firm. Part of Jacobsen's contract reads as follows: "As a new member of the firm, we want to advise you of a few obligations which all employees are expected to follow. While you will be employed on a full-time basis (minimum 40 hours per week), your hours of work will vary higher from time-to-time; as such, you consent to working greater hours than those normally required without receiving extra compensation. As compensation for all time worked, you will receive a total of $15.50 per hour. For the duration of your employment, you will receive your vacation pay at a rate of 4% and be entitled to four weeks of vacation time. Further, you are entitled to all ten statutory holidays as well as paid holidays for Boxing Day and your birthday. As part of your normal duties, you be entitled to an unpaid me

AP#5 Issue:  Over the past two years, Kermit Stone, the controller of Hilton Company, has been concerned that the company has been paying a large amount of money for state unemployment taxes. On reviewing the “unemployment file” with the head accountant, Deborah Murtha, he learns that the company’s tax rate is near the top of the range of the state’s experience-rating system.  After calling the local unemployment office, Stone realizes that the turnover of employees at Hilton Company has had an adverse effect on the company’s tax rates. In addition, after consulting with Murtha, he discovers that the eligibility reports that come from the state unemployment office are just signed and sent back to the state without any review.  The eligibility reports are notices that an ex-employee has filed a claim for unemployment benefits. By signing these reports “blindly,” the company, in effect, tells the state that the employee is eligible for the benefits. Any benefits paid are charged by the…

Suppose it is a policy in your company that employees that arrive late more than three times in one week are put on probation for one month. If they are late without a valid excuse over that probationary month, they can be fired. You have been late twice already this week and you correctly and ethically recorded your arrival time the previous two days you came to work late. If you record today's late arrival, you will be put on probation. Discuss different reasonings someone may use in making their decision about recording their time. The correct ethical action is obvious--record the late arrival--but how do we rationalize doing that or not doing that?

Pinnacle Consulting employs two CPAs, each having a different area of specialization. Judy specializes in tax consulting and Steve specializes in management consulting. Pinnacle expects to incur total overhead costs of $419,400 during the year and applies overhead based on annual salary costs. Judy is a senior partner, her annual salary is $225,000, and she is expected to bill 2,200 hours during the year. Steve is a senior associate, his annual salary is $124,500, and he is expected to bill 1,500 hours during the year. Required: Calculate the predetermined overhead rate. Assuming that the hourly billing rate should be set to cover the total cost of services plus a 25% markup, compute the hourly billing rates for Judy and Steve.