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Financial Accounting 12th Edition Warren, Reeve, Duchac - Solutions
Several months ago, Reiltz Industries, Inc. experienced a hazardous materials spill at one of its plants. As a result, the Environmental Protection Agency (EPA) fined the company $570,000. The company is contesting the fine. In addition, an employee is seeking $560,000 in damages related to the
CCB Co. had the following current assets and liabilities for two comparative years:a. Determine the quick ratio for December 31, 2012 and 2011.b. Interpret the change in the quick ratio between the two balance sheetdates.
The current assets and current liabilities for Apple Computer, Inc., and Dell Inc. are shown as follows at the end of a recent fiscal period:a. Determine the quick ratio for both companies.b. Interpret the quick ratio difference between the twocompanies.
The following items were selected from among the transactions completed by Isis Co. during the current year:Feb 15. Purchased merchandise on account from Viper Co., $260,000, terms n/30.Mar. 17. Issued a 45-day, 5% note for $260,000 to Viper Co., on account.May 1. Paid Viper Co. the amount owed
The following information about the payroll for the week ended December 30 was obtained from the records of Arnsparger Equipment Co.:Tax rates assumed:Social security, 6%Medicare, 1.5%State unemployment (employer only), 4.5%Federal unemployment (employer only), 0.8%Instructions1. Assuming that the
Courtside Concepts Co. began business on January 2, 2011. Salaries were paid to employees on the last day of each month, and social security tax, Medicare tax, and federal income tax were withheld in the required amounts. An employee who is hired in the middle of the month receives half the monthly
The payroll register for Knapp Co. for the week ended September 14, 2012, is presented in the working papers.Instructions1. Journalize the entry to record the payroll for the week.2. Journalize the entry to record the issuance of the checks to employees.3. Journalize the entry to record the
The following data for Throwback Industries, Inc. relate to the payroll for the week ended December 7, 2012:Employees Marino and Starr are office staff, and all of the other employees are sales personnel. All sales personnel are paid 1½ times the regular rate for all hours in excess of 40 hours
The following accounts, with the balances indicated, appear in the ledger of Quinn Co. on December 1 of the current year:The following transactions relating to payroll, payroll deductions, and payroll taxes occurred during December:Dec. 2. Issued Check No. 210 for $4,200 to Ace Bank to purchase
The following items were selected from among the transactions completed by Javelin, Inc. during the current year:Mar. 1. Borrowed $80,000 from Nova Company, issuing a 30-day, 9% note for that amount.15. Purchased equipment by issuing a $180,000, 180-day note to Shelby Manufacturing Co., which
The following information about the payroll for the week ended December 30 was obtained from the records of Dart Co.:Tax rates assumed:Social security, 6%Medicare, 1.5%State unemployment (employer only), 4.0%Federal unemployment (employer only), 0.8%Instructions1. Assuming that the payroll for the
Diamond Industries, Inc., began business on January 2, 2011. Salaries were paid to employees on the last day of each month, and social security tax, Medicare tax, and federal income tax were withheld in the required amounts. An employee who is hired in the middle of the month receives half the
The payroll register for Ritchie Manufacturing Co. for the week ended September 14, 2012, is presented in the working papers.Instructions1. Journalize the entry to record the payroll for the week.2. Journalize the entry to record the issuance of the checks to employees.3. Journalize the entry to
The following data for Gridiron Industries, Inc., relate to the payroll for the week ended December 7, 2012:Employees Csonka and Motley are office staff, and all of the other employees are sales personnel. All sales personnel are paid 1½ times the regular rate for all hours in excess of 40 hours
The following accounts, with the balances indicated, appear in the ledger of Codigo Co. on December 1 of the current year:The following transactions relating to payroll, payroll deductions, and payroll taxes occurred during December:Dec. 1. Issued Check No. 615 to Canal Insurance Company for
Lisa Deuel is a certified public accountant (CPA) and staff accountant for Bratz and Bratz, a local CPA firm. It had been the policy of the firm to provide a holiday bonus equal to two weeks’ salary to all employees. The firm’s new management team announced on November 15 that a bonus equal to
The annual examination of Wave Company’s financial statements by its external public accounting firm (auditors) is nearing completion. The following conversation took place between the controller of Wave Company (Tommy) and the audit manager from the public accounting firm (Jaclyn).Jaclyn: You
Gloria Seuss was discussing summer employment with Ella Kitt, president of Hotel California Construction Service:Ella: I’m glad that you’re thinking about joining us for the summer. We could certainly use the help.Gloria: Sounds good. I enjoy outdoor work, and I could use the money to help with
Selected transactions completed by Gampfer Company during its first fiscal year ending December 31 were as follows:Jan. 2. Issued a check to establish a petty cash fund of $3,200.Mar. 14. Replenished the petty cash fund, based on the following summary of petty cash receipts: office supplies,
Brittany Adams contributed a patent, accounts receivable, and $61,000 cash to a partnership. The patent had a book value of $56,000. However, the technology covered by the patent appeared to have significant market potential. Thus, the patent was appraised at $240,000. The accounts receivable
Kevin LaRoche contributed land, inventory, and $28,000 cash to a partnership. The land had a book value of $65,000 and a market value of $135,000. The inventory had a book value of $60,000 and a market value of $51,000. The partnership also assumed a $50,000 note payable owed by LaRoche that was
Cody Paulson and Hannah O’Brien formed a partnership, dividing income as follows:1. Annual salary allowance to Paulson of $26,000.2. Interest of 5% on each partner’s capital balance on January 1.3. Any remaining net income divided to Paulson and O’Brien, 2:1.Paulson and O’Brien had $50,000
Alex Conyers and Shaunika Stevens formed a partnership, dividing income as follows:1. Annual salary allowance to Stevens of $45,000.2. Interest of 8% on each partner’s capital balance on January 1.3. Any remaining net income divided equally.Conyers and Stevens had $50,000 and $160,000,
Antoine Dodd purchased one-half of Kyle Bryan’s interest in the Rich and Bryan partnership for $24,000. Prior to the investment, land was revalued to a market value of $110,000 from a book value of $84,000. Zach Rich and Kyle Bryan share net income equally. Bryan had a capital balance of $25,000
Naseef Asad invested $75,000 in the Lionel and Morehouse partnership for ownership equity of $75,000. Prior to the investment, equipment was revalued to a market value of $57,000 from a book value of $33,000. Justin Lionel and Courtney Morehouse share net income in a 2:1 ratio.a. Provide the
Sharpe has a capital balance of $300,000 after adjusting assets to fair market value. Rojas contributes $250,000 to receive a 60% interest in a new partnership with Sharpe.Determine the amount and recipient of the partner bonus.
Joshi has a capital balance of $80,000 after adjusting assets to fair market value. Costas contributes $40,000 to receive a 40% interest in a new partnership with Joshi.Determine the amount and recipient of the partner bonus.
Prior to liquidating their partnership, Fowler and Ericson had capital accounts of $26,000 and $40,000, respectively. Prior to liquidation, the partnership had no cash assets other than what was realized from the sale of assets. These partnership assets were sold for $86,000. The partnership had
Prior to liquidating their partnership, Quinn and Kestor had capital accounts of $200,000 and $120,000, respectively. Prior to liquidation, the partnership had no cash assets other than what was realized from the sale of assets. These partnership assets were sold for $240,000. The partnership had
Prior to liquidating their partnership, Jolly and Haines had capital accounts of $80,000 and $45,000, respectively. The partnership assets were sold for $30,000. The partnership had no liabilities. Jolly and Haines share income and losses equally. a. Determine the amount of Haines’ deficiency.b.
Prior to liquidating their partnership, Chow and Fuentes had capital accounts of $85,000 and $165,000, respectively. The partnership assets were sold for $45,000. The partnership had no liabilities. Chow and Fuentes share income and losses equally. a. Determine the amount of Chow’s deficiency.b.
Aaron and Rogers, CPAs earned $12,600,000 during 2012 using 90 employees. During 2013, the firm grew revenues to $14,400,000 and expanded the staff to 96 employees.a. Determine the revenue per employee for each year.b. Interpret the results.
TechSystems, Architects earned $3,600,000 during 2012 using 20 employees. During 2013, the firm reduced revenues to $3,200,000 and reduced the staff to 16 employees.a. Determine the revenue per employee for each year.b. Interpret the results.
Amber Moss and Latoya Pell decide to form a partnership by combining the assets of their separate businesses. Moss contributes the following assets to the partnership: cash, $15,000; accounts receivable with a face amount of $159,000 and an allowance for doubtful accounts of $9,700; merchandise
Jessica Kimble and Carlos Segura form a partnership by combining assets of their former businesses. The following balance sheet information is provided by Kimble, sole proprietorship:Kimble obtained appraised values for the land and equipment as follows:Land $284,000Equipment 19,000An analysis of
Jennifer Wyatt and Megan Truett formed a partnership, investing $330,000 and $110,000, respectively. Determine their participation in the year’s net income of $420,000 under each of the following independent assumptions:(a) No agreement concerning division of net income;(b) Divided in the ratio
Determine the income participation of Wyatt and Truett, according to each of the five assumptions as to income division listed in Exercise 12-3 if the year’s net income is $160,000.
Ashley Adams and Michael Rovell formed a partnership in which the partnership agreement provided for salary allowances of $45,000 and $35,000, respectively. Determine the division of a $30,000 net loss for the current year.
Sixty-year-old Mary Filmore retired from her computer consulting business in Boston and moved to Florida. There she met 27-year-old Emily Wright, who had just graduated from Eldon Community College with an associate degree in computer science. Mary and Emily formed a partnership called F&W Computer
Joshua Richards and Taylor Clark formed a limited liability company with an operating agreement that provided a salary allowance of $60,000 and $50,000 to each member, respectively. In addition, the operating agreement specified an income-sharing ratio of 3:2. The two members withdrew amounts equal
Macro Media, LLC, has three members: WLKT Partners, Amanda Nelson, and Daily Sentinel Newspaper, LLC. On January 1, 2012, the three members had equity of $250,000, $50,000, and $140,000, respectively. WLKT Partners contributed an additional $50,000 to Macro Media, LLC, on June 1, 2012. Amanda
The notes to the annual report for KPMG LLP (U.K.) indicated the following policies regarding the partners’ capital:The allocation of profits to those who were partners during the financial year occurs following the finalization of the annual financial statements. During the year, partners
Lily Yuan and Kayla Dunn are partners who share in the income equally and have capital balances of $180,000 and $62,500, respectively. Yuan, with the consent of Dunn, sells one-third of her interest to Rachel Burnett. What entry is required by the partnership if the sales price is(a) $40,000?(b)
The capital accounts of Jonathan Faber and Faheem Ahmad have balances of $150,000 and $110,000, respectively. Lauren Wells and Rachel Lee are to be admitted to the partnership. Wells buys one-fifth of Faber’s interest for $35,000 and one-fourth of Ahmad’s interest for $25,000. Lee contributes
After the tangible assets have been adjusted to current market prices, the capital accounts of Brandon Newman and Latrell Osbourne have balances of $75,000 and $125,000, respectively. Juan Rivas is to be admitted to the partnership, contributing $50,000 cash to the partnership, for which he is to
Andrew Hall and Brian Li formed a partnership to provide landscaping services. Hall and Li shared profits and losses equally. After all the tangible assets have been adjusted to current market prices, the capital accounts of Andrew Hall and Brian Li have balances of $54,000 and $71,000,
HealthSource, LLC, consists of two doctors, Drew and Moore, who share in all income and losses according to a 2:3 income-sharing ratio. Dr. Mann has been asked to join the LLC. Prior to admitting Mann, the assets of HealthSource were revalued to reflect their current market values. The revaluation
J. Witt and K. Torres are partners in Whole Earth Consultants. Witt and Torres share income equally. L. Jenkins will be admitted to the partnership. Prior to the admission, equipment was revalued downward by $12,000. The capital balances of each partner are $106,000 and $141,000, respectively,
The partnership of Angel Investor Associates began operations on January 1, 2012, with contributions from two partners as follows:Scott Wilson ... $120,000Michael Goforth .. 80,000The following additional partner transactions took place during the year:1. In early January, Lance McGinnis is
David Winner is to retire from the partnership of Winner and Associates as of March 31, the end of the current fiscal year. After closing the accounts, the capital balances of the partners are as follows: David Winner, $210,000; Alexis Richards, $125,000; and Marcus Williams, $140,000. They have
The statement of members' equity for Bonanza, LLC, is shown below.a. What was the income-sharing ratio in 2012?b. What was the income-sharing ratio in 2013?c. How much cash did Justin Thomas contribute to Bonanza, LLC, for his interest?d. Why do the member equity accounts of Idaho Properties, LLC,
Lyle and Fisher are partners, sharing gains and losses equally. They decide to terminate their partnership. Prior to realization, their capital balances are $15,000 and $7,000, respectively. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $16,000.a. What
Daniel Mason and Srini Kumar, with capital balances of $34,000 and $36,000, respectively, decide to liquidate their partnership. After selling the noncash assets and paying the liabilities, there is $82,000 of cash remaining. If the partners share income and losses equally, how should the cash be
Gifford, Lawrence, and Ma share equally in net income and net losses. After the partnership sells all assets for cash, divides the losses on realization, and pays the liabilities, the balances in the capital accounts are as follows: Gifford, $32,000 Cr.; Lawrence, $62,500 Cr.; Ma, $15,000 Dr.a.
Deacon, Raines, and Francis arranged to import and sell orchid corsages for a university dance. They agreed to share equally the net income or net loss of the venture. Deacon and Raines advanced $300 and $450 of their own respective funds to pay for advertising and other expenses. After collecting
Arnold, Peters, and Suzuki are partners sharing income 3:2:1. After the firm’s loss from liquidation is distributed, the capital account balances were: Arnold, $18,000 Dr.; Peters, $75,000 Cr.; and Suzuki, $55,000 Cr. If Arnold is personally bankrupt and unable to pay any of the $18,000, what
After closing the accounts on July 1, prior to liquidating the partnership, the capital account balances of Jessup, King, and Oliver are $70,000, $43,000, and $22,000, respectively. Cash, noncash assets, and liabilities total $62,000, $108,000, and $35,000, respectively. Between July 1 and July 29,
Hall, Lang, and Das are members of Evergreen Sales, LLC, sharing income and losses in the ratio of 2:2:1, respectively. The members decide to liquidate the limited liability company. The members’ equity prior to liquidation and asset realization on May 1, 2012, are as follows:Hall ......
The capital accounts of Gary Menendez and Melissa Breeden have balances of $75,000 and $55,000, respectively, on January 1, 2012, the beginning of the current fiscal year. On April 10, Menendez invested an additional $12,000. During the year, Menendez and Breeden withdrew $44,000 and $35,000,
The accounting firm of Deloitte & Touche is the largest international accounting firm in the world as ranked by total revenues. For the last two years, Deloitte & Touche reported the following for its U.S. operations:a. For 2009 and 2008, determine the revenue per professional staff. Round to the
Commerical Cleaning Services, LLC, provides cleaning services for office buildings. The firm has 10 members in the LLC, which did not change between 2012 and 2013. During 2013, the business terminated two commercial contracts. The following revenue and employee information is provided:a. For 2013
On August 1, 2012, Wardell Cole and Marva Landers form a partnership. Cole agrees to invest $15,600 in cash and merchandise inventory valued at $62,400. Landers invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring her
Dyer and Salinas have decided to form a partnership. They have agreed that Dyer is to invest $120,000 and that Salinas is to invest $40,000. Dyer is to devote one-half time to the business and Salinas is to devote full time. The following plans for the division of income are being considered:a.
The ledger of Aiden Durant and Jasmine Adkins, attorneys-at-law, contains the following accounts and balances after adjustments have been recorded on December 31, 2012:The balance in Adkins' capital account includes an additional investment of $10,000 made on August 10, 2012.Instructions1. Prepare
Tosio Kato and Angela Gordon have operated a successful firm for many years, sharing net income and net losses equally. Tricia McCay is to be admitted to the partnership on May 1 of the current year, in accordance with the following agreement:a. Assets and liabilities of the old partnership are to
After the accounts are closed on July 3, 2012, prior to liquidating the partnership, the capital accounts of Rebecca Adams, Austin Cooper, and Ricardo Ruiz are $22,400, $5,300, and $31,900, respectively. Cash and noncash assets total $8,800 and $68,800, respectively.Amounts owed to creditors total
On October 1, 2012, the firm of Sams, Price, and Ladd decided to liquidate their partnership. The partners have capital balances of $54,000, $77,000, and $12,000, respectively. The cash balance is $26,000, the book values of noncash assets total $155,000, and liabilities total $38,000. The partners
On June 1, 2011, Anne Harber and Heather Lamb form a partnership. Harber agrees to invest $16,000 cash and merchandise inventory valued at $42,000. Lamb invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring her total
Tim Snyder and Jay Wise have decided to form a partnership. They have agreed that Snyder is to invest $30,000 and that Wise is to invest $40,000. Snyder is to devote full time to the business, and Wise is to devote one-half time. The following plans for the division of income are being
The ledger of Jin Ding and Paul Hoffman, attorneys-at-law, contains the following accounts and balances after adjustments have been recorded on December 31, 2012:The balance in Hoffman's capital account includes an additional investment of $20,000 made on April 5, 2012.Instructions1. Prepare an
Anthony Simpson and Shawna Ryder have operated a successful firm for many years, sharing net income and net losses equally. Blaine Evans is to be admitted to the partnership on June 1 of the current year, in accordance with the following agreement:a. Assets and liabilities of the old partnership
After the accounts are closed on September 10, 2012, prior to liquidating the partnership, the capital accounts of Randy Campbell, Ken Thayer, and Linda Tipton are $38,000, $6,400, and $28,500, respectively. Cash and noncash assets total $17,700 and $64,200, respectively. Amounts owed to creditors
On June 3, 2012, the firm of Lyon, Malone, and Chen decided to liquidate their partnership.The partners have capital balances of $12,000, $76,000, and $104,000, respectively. The cash balance is $19,000, the book values of noncash assets total $218,000, and liabilities total $45,000. The partners
Colin Maples, M.D., and Daniel Graham, M.D., are sole owners of two medical practices that operate in the same medical building. The two doctors agree to combine assets and liabilities of the two businesses to form a partnership. The partnership agreement calls for dividing income equally between
Jerry Graves and Bonnie Moss decide to form a partnership. Graves will contribute $300,000 to the partnership, while Moss will contribute only $30,000. However, Moss will be responsible for running the day-to-day operations of the partnership, which are anticipated to require about 45 hours per
The following table shows key operating statistics for the four largest public accounting firms:a. Determine the revenue per partner and revenue per professional staff for each firm. Round to the nearest dollar.b. Interpret the differences between the firms in terms of your answer in (a) and the
Karen Pratt has agreed to invest $200,000 into an LLC with Jennifer Stahl and Don Keene. Stahl and Keene will not invest any money, but will provide effort and expertise to the LLC. Stahl and Keene have agreed that the net income of the LLC should be divided so that Pratt is to receive a 10%
Of two corporations organized at approximately the same time and engaged in competing businesses, one issued $150 par common stock, and the other issued $1.00 par common stock. Do the par designations provide any indication as to which stock is preferable as an investment? Explain.
A corporation with both preferred stock and common stock outstanding has a substantial credit balance in its retained earnings account at the beginning of the current fiscal year. Although net income for the current year is sufficient to pay the preferred dividend of $90,000 each quarter and a
An owner of 1,000 shares of Simmons Company common stock receives a stock dividend of 6 shares.a. What is the effect of the stock dividend on the stockholder’s proportionate interest (equity) in the corporation?b. How does the total equity of 1,006 shares compare with the total equity of 1,000
A corporation reacquires 25,000 shares of its own $10 par common stock for $1,000,000, recording it at cost.a. What effect does this transaction have on revenue or expense of the period?b. What effect does it have on stockholders’ equity?
The treasury stock in Discussion Question 6 is resold for $1,200,000.a. What is the effect on the corporation’s revenue of the period?b. What is the effect on stockholders’ equity?
Hays-Smith Company has 18,000 shares of 4% cumulative preferred stock of $125 par and 50,000 shares of $40 par common stock. The following amounts were distributed as dividends:Year 1 ......$ 72,000Year 2 ...... 125,000Year 3 ...... 160,000Determine the dividends per share for preferred and common
Lasers4U Company has 10,000 shares of 2% cumulative preferred stock of $50 par and 25,000 shares of $100 par common stock. The following amounts were distributed as dividends:Year 1 ......$18,000Year 2 .......7,500Year 3 ........35,000Determine the dividends per share for preferred and common stock
On February 23, Muir Corporation issued for cash 75,000 shares of no-par common stock (with a stated value of $80) at $125. On October 6, Muir issued 20,000 shares of 1%, $50 preferred stock at par for cash. On November 4, Muir issued for cash 12,000 shares of 1%, $50 par preferred stock at $59.
On August 7, Asian Artifacts Corporation issued for cash 300,000 shares of no-par common stock at $1.75. On September 1, Asian Artifacts issued 25,000 shares of 2%, $40 preferred stock at par for cash. On November 2, Asian Artifacts issued for cash 10,000 shares of 2%, $40 par preferred stock at
The declaration, record, and payment dates in connection with a cash dividend of $115,000 on a corporation’s common stock are October 15, November 14, and December 14. Journalize the entries required on each date.
The declaration, record, and payment dates in connection with a cash dividend of $275,000 on a corporation’s common stock are March 3, April 2, and May 2. Journalize the entries required on each date.
Arroyo Corporation has 100,000 shares of $60 par common stock outstanding. On February 8, Arroyo Corporation declared a 6% stock dividend to be issued April 11 to stockholders of record on March 10. The market price of the stock was $94 per share on February 8. Journalize the entries required on
U-Store Corporation has 250,000 shares of $15 par common stock outstanding. On July 20, U-Store Corporation declared a 3% stock dividend to be issued September 18 to stockholders of record on August 19. The market price of the stock was $54 per share on July 20. Journalize the entries required on
On March 8, Golf Resorts Inc. reacquired 13,000 shares of its common stock at $42 per share. On May 16, Golf Resorts sold 9,500 of the reacquired shares at $50 per share. On August 30, Golf Resorts sold the remaining shares at $40 per share. Journalize the transactions of March 8, May 16, and
On September 9, Palin Clothing Inc. reacquired 9,000 shares of its common stock at $24 per share. On October 7, Palin Clothing sold 4,800 of the reacquired shares at $29 per share. On December 20, Palin Clothing sold the remaining shares at $22 per share. Journalize the transactions of September 9,
Using the following accounts and balances, prepare the Stockholders’ Equity section of the balance sheet. Fifty thousand shares of common stock are authorized, and 2,500 shares have been reacquired.Common Stock, $120 par ............$4,800,000Paid-In Capital in Excess of Par
Using the following accounts and balances, prepare the Stockholders’ Equity section of the balance sheet. Two-hundred thousand shares of common stock are authorized, and 24,000 shares have been reacquired.Common Stock, $15 par .............$2,400,000Paid-In Capital in Excess of Par ...........
Emmy Leaders Inc. reported the following results for the year ending August 31, 2012:Retained earnings, September 1, 2011 ....$740,000Net income ...............145,000Cash dividends declared ..........5,000Stock dividends declared .........30,000Prepare a retained earnings statement for the fiscal
Auckland Cruises Inc. reported the following results for the year ending April 30, 2012:Retained earnings, May 1, 2011 .......$3,180,000Net income .................515,000Cash dividends declared ...........100,000Stock dividends declared ..........125,000Prepare a retained earnings statement for
Gino’s Restaurant Corporation wholesales ovens and ranges to restaurants throughout the Midwest. Gino’s Restaurant Corporation, which had 100,000 shares of common stock outstanding, declared a 5-for-1 stock split (4 additional shares for each share issued).a. What will be the number of shares
Selected transactions completed by Gene’s Boating Corporation during the current fiscal year are as follows:Feb. 10. Split the common stock 3 for 1 and reduced the par from $60 to $20 per share. After the split, there were 300,000 common shares outstanding.May 1. Declared semiannual dividends
Malen Arts, Inc., had earnings of $133,750 for 2012. The company had 25,000 shares of common stock outstanding during the year. In addition, the company issued 10,000 shares of $100 par value preferred stock on January 3, 2012. The preferred stock has a dividend of $4 per share. There were no
Procter & Gamble (P&G) is one of the largest consumer products companies in the world, famous for such brands as Crest® and Tide®. Financial information for the company for three recent years is as follows:a. Determine the earnings per share for fiscal years 2009, 2008, and 2007. Round to the
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