Aug 29, 2021 | Uncategorized
Laura Eddy opened Eddy’s Carpet Cleaners on March 1. During March, the following transactions were completed.
Mar. 1 Invested $10,446 cash in the business.
1 Purchased used truck for $6,420, paying $3,210 cash and the balance on account.
3 Purchased cleaning supplies for $1,107 on account.
5 Paid $1,452 cash on one year insurance policy effective March 1.
14 Billed customers $4,887 for cleaning services.
18 Paid $1,599 cash on amount owed on truck and $474 on amount owed on cleaning supplies.
20 Paid $1,840 cash for employee salaries.
21 Collected $1,414 cash from customers billed on March 14.
28 Billed customers $2,612 for cleaning services.
31 Paid gas and oil for month on truck $186.
31 Withdrew $659 cash for personal use.
The chart of accounts for Eddy’s Carpet Cleaners contains the following accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 128 Cleaning Supplies, No. 130 Prepaid Insurance, No. 157 Equipment, No. 158 Accumulated Depreciation Equipment, No. 201 Accounts Payable, No. 212 Salaries Payable, No. 301 L. Eddy, Capital, No. 306, L. Eddy, Drawing, No. 350 Income Summary, No. 400 Service Revenue, No. 633 Gas & Oil Expense, No. 634 Cleaning Supplies Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, and No. 726 Salaries Expense
Journalize the March transactions. Use page J1 for the journal. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2. If amounts are the same, list alphabetically.)
General Journal
J1
Date Account/Description Debit Credit
Mar. 1
Mar. 1
Mar. 3
Mar. 5
Mar. 14
Mar. 18
Mar.20
Mar. 21
Mar. 28
Mar. 31
Mar. 31
Prepare a trial balance at March 31 on a worksheet. Enter the following adjustments on the worksheet and complete the worksheet. (If answer is zero, please enter 0. Do not leave any fields blank.)
Earned but unbilled revenue at March 31 was $706.
Depreciation on equipment for the month was $252.
One twelfth of the insurance expired.
An inventory count shows $378 of cleaning supplies on hand at March 31.
Accrued but unpaid employee salaries were $488.
EDDY’S CARPET CLEANERS
Worksheet
For the Month Ended March 31, 2010
Trial Balance
Adjustments
Adjusted Trial Balance
Income Statement
Balance Sheet
Account Titles Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash
Accounts Receivable
Cleaning Supplies
Prepaid Insurance
Equipment
Accounts Payable
L. Eddy, Capital
L. Eddy, Drawings
Service Revenue
Gas & Oil Expense
Salaries Expense
Totals
Depreciation Expense
Accumulated Depreciation
Insurance Expense
Cleaning Supplies Expense
Salaries Payable
Totals
Net Income
Totals
Aug 29, 2021 | Uncategorized
Laura Eddy opened Eddy’s Carpet Cleaners on March 1. During March, the following transactions were completed
Invested $10,218 cash in the business.
1 Purchased used truck for $5,930, paying $2,965 cash and the balance on account.
3 Purchased cleaning supplies for $1,046 on account.
5 Paid $1,656 cash on one year insurance policy effective March 1.
14 Billed customers $4,928 for cleaning services.
18 Paid $1,622 cash on amount owed on truck and $588 on amount owed on cleaning supplies.
20 Paid $1,565 cash for employee salaries.
21 Collected $1,489 cash from customers billed on March 14.
28 Billed customers $2,443 for cleaning services.
31 Paid gas and oil for month on truck $220.
31 Withdrew $713 cash for personal use.
Aug 29, 2021 | Uncategorized
laura Eddy opened Eddy’s Carpet Cleaners om March 1. During March, the following transaction were completed.
1 invested $10,364 cash in the business
1 purchased used truck for 5,500,paying 2, 750 cash and the balance on account
3 purchased cleanning supplies for 1,140 on account
5 paid1,212 cash on one year insurance policy effective march 1
14 billed customers 4,969 for cleaning services
18 paid 1,680 cash on account owed on trucks and $501 on amount owed on cleaning services.
20 paid 1,534 cash for employee salaries
28 billed customers 2,308 for cleaning services.
31 paid gas and oil for month on truck $ 214
31 withdrew $618 cash for personal use.
Journalize the march transactions. use page 1 for the journal. ( debit/credit entries, list amount from largest to smallest
Aug 29, 2021 | Uncategorized
Lee Wong, CPA, is auditing the financial statements of the Alexandria Corporation, which has a batch processing IT based system for shipping and invoicing that it purchased from a software vendor. The following comments have been extracted from Wong’s notes on IT operations and the processing and control of shipping notices and customer invoices.
Each type of computer run is assigned to a specific employee, who is responsible for making program changes, running the program, and answering questions. This procedure has the advantage of eliminating the need for records of IT operations because each employee is responsible for his or her own computer runs. At least one IT department employee remains in the computer room during office hours, and only IT department employees have keys to the computer room.
System documentation consists of those materials furnished by the software vendor”a set of record formats and program listings. These and the tape library are kept in a corner of the IT department.
The corporation considered the desirability of program controls, but decided to retain the manual controls in place prior to the conversion to software vendor’s system.
Company products are shipped directly from public warehouses, which forward shipping notices to general accounting. There a billing clerk enters the price of the item and accounts for the numerical sequence of shipping notices from each warehouse. The billing clerk also prepares daily adding machine tapes (control tapes) of the units shipped and the unit prices.
Shipping notices and adding machine control tapes are forwarded to the IT department for inputting and processing. Extensions are made on the computer. Output consists of invoices (in six copies) and a daily sales register. The daily sales register shows the aggregate totals of units shipping and unit prices, which the computer operator compares to the control tapes.
All copies of the invoice are returned to the billing clerk. The clerk mails three copies to the customer, forwards one copy to the warehouse, maintains one copy in a numerical file, and retains one copy in an open invoice file that serves as a detailed accounts receivable record.
Required:
Describe weaknesses in internal control over information and data flows and the procedures for processing shipping notices and customer invoices, and recommend improvements in these controls and processing procedures.
Aug 29, 2021 | Uncategorized
Leekee Shipyards has a new barnacle removing product for ocean going vessels. The company invests $1,200,000 in operating assets and plans to produce and sell 400,000 units per year. Leekee wants to make a return on investment of 20% each year. Leekee needs to know what price to charge for this product.
Use the absorption costing approach to determine the markup necessary to make the desired return on investment based on the following information:
Per Unit total
Direct Materials $2.00
Direct Labor $1.50
Variable Manufacturing Overhead $1.00
Fixed Manufacturing Overhead $100,000
Variable Selling and Administrative Expense $0.10
Fixed Selling and Administrative Expense $100,000
Aug 29, 2021 | Uncategorized
Listed below are nine technical accounting terms:
Contribution Margin ratio
Margin of Safety
Cost Volume Profit analysis
Activity Base
Break Even Point
High ‘Low Method
Variable Cost
Contribution Margin
Cost Driver
Each of the following statements may (or may not) describe one of these technical terms. In the space provided below each statement, indicate the accounting term described, or answer “None” if the statement does not correctly describe any of the terms.
(a) The amount by which sales revenue exceeds total variable cost expressed as a percentage of sales.
(b) The amount by which sales volume exceeds the break even point
(c) The study of financial statements by a potential investor or creditor as a means of evaluating the profitability and solvency of a business.
(d) A type of activity that has a causal effect in the occurrence of a particular cost.
(e) The level of sales at which revenue equals operating expenses.
(f) A cost that responds to changes in sales volume by less than a proportionate amount.
Aug 29, 2021 | Uncategorized
Listed below are the unadjusted general ledger account balances of Franklin Co. at December 31, 2010 (amounts are presented at their normal balance):
Cash 10,400
Accounts Receivable 2,500
Office Supplies 950
Prepaid Insurance 2,400
Building 100,000
Accumulated Depreciation ‘ Building60,000
Truck 36,000
Accumulated Depreciation Truck 0
Accounts Payable 8,000
Unearned Rent Revenue 1,600
Note Payable 10,000
Common Stock 25,000
Retained Earnings 26,750
Dividends 2,500
Sales Revenue 43,400
Rent Revenue 4,000
Cost of Goods Sold 12,000
Wage Expense 9,500
Insurance Expense 0
Depreciation Expense ‘ Building 2,500
Depreciation Expense ‘ Truck 0
Supplies Expense 0
Additional information for Franklin Company is available on December 31, 2010, the end of an annual accounting period.
a. Franklin Company purchased a 2 year insurance policy on January 1, 2010 and debited Prepaid Insurance for $2,400.
b. On November 1, 2010, a tenant in a building owned by Franklin Company paid two months rent in advance. The amount received was credited to Unearned Rent Revenue.
c. A physical count of office supplies at December 31 revealed that there was $400 of supplies on hand.
d. The truck was acquired on August 1. Franklin estimates the truck will have a useful life of 5 years and no salvage value. The depreciation on the building has already been recorded.
e. Wages of $2,000 earned by factory employees for the last week of December were not paid until the first pay date in January.
Required: Using the templates provided:
1. Post the unadjusted balances at December 31 to ‘T’ accounts.
2. Prepare the necessary adjusting journal entries in proper format (omit explanations). Reference each adjusting journal entry with the letter corresponding to the information provided above. Accounts may need to be created.
3. Post the adjusting entries to the ‘T’ accounts.
4. Prepare an adjusted trial balance at December 31, 2010.
5. Prepare an income statement, statement of retained earnings and balance sheet in proper format for 2010.
Aug 29, 2021 | Uncategorized
LO.1 (Activity analysis) The Raleigh plant manager of Allentown Corp. has noticed
the plant frequently changes the schedule on its production line. He has gathered the
following information on the activities, estimated times, and average costs required for
a single schedule change.
Activity Est.Time Average Cost
Review impact of orders 30 min.’2 hrs. $ 300
Reschedule orders 15 min.’24 hrs. 800
Reschedule production orders 15 min.’1 hr. 75
Stop production and change over 10 min.’3 hrs. 150
Return and locate material (excess inventory) 20 min.’6 hrs. 1,500
Generate new production paperwork 15 min.’4 hrs. 500
Change purchasing schedule 10 min.’8 hrs. 2,100
Collect paperwork from the fl oor 15 min. 75
Review new line schedule 15 min.’30 min. 100
Overtime premiums 3 hrs.’10 hrs. 1,000
Total $6,600
Aug 29, 2021 | Uncategorized
LO.1 (Activity analysis) The Raleigh plant manager of Allentown Corp. has noticed
the plant frequently changes the schedule on its production line. He has gathered the
following information on the activities, estimated times, and average costs required for
a single schedule change.
Activity Est.Time Average Cost
Review impact of orders 30 min.’2 hrs. $ 300
Reschedule orders 15 min.’24 hrs. 800
Reschedule production orders 15 min.’1 hr. 75
Stop production and change over 10 min.’3 hrs. 150
Return and locate material (excess inventory) 20 min.’6 hrs. 1,500
Generate new production paperwork 15 min.’4 hrs. 500
Change purchasing schedule 10 min.’8 hrs. 2,100
Collect paperwork from the fl oor 15 min. 75
Review new line schedule 15 min.’30 min. 100
Overtime premiums 3 hrs.’10 hrs. 1,000
Total $6,600
a. Which of these, if any, are value added activities?
b. What is the cost driver in this situation?
c. How can the cost driver be controlled and the NVA activities eliminated?
Aug 29, 2021 | Uncategorized
LO.1 (Activity analysis) The Raleigh plant manager of Allentown Corp. has noticed
the plant frequently changes the schedule on its production line. He has gathered the
following information on the activities, estimated times, and average costs required for
a single schedule change.
Activity Est.Time Average Cost
Review impact of orders 30 min.’2 hrs. $ 300
Reschedule orders 15 min.’24 hrs. 800
Reschedule production orders 15 min.’1 hr. 75
Stop production and change over 10 min.’3 hrs. 150
Return and locate material (excess inventory) 20 min.’6 hrs. 1,500
Generate new production paperwork 15 min.’4 hrs. 500
Change purchasing schedule 10 min.’8 hrs. 2,100
Collect paperwork from the fl oor 15 min. 75
Review new line schedule 15 min.’30 min. 100
Overtime premiums 3 hrs.’10 hrs. 1,000
Total $6,600
a. Which of these, if any, are value added activities?
b. What is the cost driver in this situation?
c. How can the cost driver be controlled and the NVA activities eliminated?
Aug 29, 2021 | Uncategorized
LO.1 (Activity analysis) The Raleigh plant manager of Allentown Corp. has noticed
the plant frequently changes the schedule on its production line. He has gathered the
following information on the activities, estimated times, and average costs required for
a single schedule change.
Activity Est.Time Average Cost
Review impact of orders 30 min.’2 hrs. $ 300
Reschedule orders 15 min.’24 hrs. 800
Reschedule production orders 15 min.’1 hr. 75
Stop production and change over 10 min.’3 hrs. 150
Return and locate material (excess inventory) 20 min.’6 hrs. 1,500
Generate new production paperwork 15 min.’4 hrs. 500
Change purchasing schedule 10 min.’8 hrs. 2,100
Collect paperwork from the fl oor 15 min. 75
Review new line schedule 15 min.’30 min. 100
Overtime premiums 3 hrs.’10 hrs. 1,000
Total $6,600
a. Which of these, if any, are value added activities?
b. What is the cost driver in this situation?
c. How can the cost driver be controlled and the NVA activities eliminated?
Aug 29, 2021 | Uncategorized
Q. 01). P1 31A E commerce cost benefit analysis (Learning Objective 5)
Sun Gas wants to move its sales order system to the Web. Under the proposed system, gas stations and other merchants will use a Web browser and, after typing in a password for the Sun Gas Web page, will be able to check the availability and current price of various products and place an order, Currently, customer service representatives take dealers’ orders over the phone: they record the information on a paper form, then manually enter it into the firm’s computer system.
CFO Carrie Smith believes that dealers will not adopt the new Web System unless Sun Gas provides financial assistance to help them purchase or upgrade their PCs. Smith estimates this one time at $750,000. Sun Gas will also have to invest $150,000 in upgrading its own computer hardware. The cost of the software and the consulting fee for installing eh system will be $230,000. The Web System will enable Sun Gas to eliminate 25 clerical positions. Smith estimates’ that the new system’s lower labor costs will have saved the company $1,357,000.
Requirement
- Use a cost benefit analysis to recommend to Smith whether Sun Gas should proceed with the Web based ordering system. Give your reasons, showing supporting calculations.
Q. 02). E2 21A Classify and calculate a manufacturer’s costs (Learning Objectives 3 & 4)
An airline manufacturer incurred the following costs last months (in thousands of dollars) :
| a. |
Air plane seats |
$ 250 |
| b. |
Depreciation on administrative offices |
60 |
| c. |
Assembly worker’s wages |
600 |
| d. |
Plant utilities |
120 |
| e. |
Production supervisors salaries |
100 |
| f. |
Jet engines |
1,000 |
| g. |
Machine Lubricants |
15 |
| h. |
Depreciation on forklifts |
50 |
| i. |
Property tan on corporate marketing office |
25 |
| j. |
Cost of warranty repairs |
225 |
| k. |
Factory janitor’s wages |
30 |
| l. |
Cost of designing new plant layout |
175 |
| m. |
Machine operators health insurance |
40 |
|
TOTAL |
$2,690 |
Requirements
- If the cost object is an airplane, classify each cost as one of the following: direct material (DM), direct labor, (DL), indirect labor (IL), indirect materials (IM), other manufacturing overhead (other MOH), or period cost. (Hint: Set up a column for each type of cost). What is the total for each type of cost?
- Calculate total manufacturing overhead costs.
- Calculate total inventoriable product costs.
- Calculate total prime costs.
- Calculated total conversation costs.
- Calculate total period costs.
Q. 03. E2 25A Compute cost of goods manufactured and cost of goods sold (Learning Objective 5)
Compute the cost of goods manufactured and cost of goods sold for Strike Marine Company for the most recent year using the amounts described below. Assume that raw materials inventory contains only direct materials.
|
Beginning of Year |
End of Year |
|
End of Year |
| Raw materials inventory |
$25,000 |
$28,000 |
Insurance on plant |
$ 9,000 |
| Work in process inventory |
50,000 |
35,000 |
Depreciation plant building and equipment |
13,000 |
| Finished goods inventory |
18,000 |
25,000 |
Repairs and maintenance plant |
4,000 |
| Purchase of direct materials |
|
78,000 |
Marketing expenses |
77,000 |
| Direct Labor |
|
82,000 |
General and administrative expenses |
29,000 |
| Indirect labor |
|
15,000 |
|
|
Q. 04. E2 34B Classify costs along the value chain for a manufacturer (Leaning Objectives 2 & 3)
Suppose the cell phone manufacturer Plum Electronics provides the following information for its costs last month (in hundreds of thousands):
| Salaries of telephone salespeople |
$ 4 |
Transmitters |
$ 58 |
| Depreciation on plant and equipment |
55 |
Rearrange production process to accommodate new robot |
1 |
| Exterior case for phone |
8 |
Assembly line workers’ wages |
9 |
| Salaries of scientists who developed new model |
11 |
Technical customer support hotline |
3 |
| Delivery expense to customers via UPS |
5 |
1 800 (toll free)line for customer orders |
|
Requirements
- Classify each of these costs according to its place in the value chain (Hint : You should have at least one cost in each value chain function)
| Production |
| R & D |
Design of Products or Processes |
Direct Materials |
Direct Labor |
Manufacturing Overhead |
Marketing |
Distribution |
Customer Service |
- Compute the total costs for each value chain category
- How much are the total inventoriable product costs?
- How much are the total prime costs?
- How much are the total conversion costs?
Q. 5. E3 28A Record journal entries (Learning Objectives 2, 3,5 & 6)
The following transactions were incurred by Dutch Fabricators during January, the first month of its fiscal year.
Requirements
- Record the proper journal entry for each transaction.
- $190, 000 of materials were purchased on account.
- $ 174,000 of materials was used in production: of this amount, $152, 000 was used on specific jobs.
- Manufacturing labor and salaries for the month totaled $ 225,000. A total of $ 190,000 of manufacturing labor and salaries was traced to specific jobs, while the remainder was indirect labor used in the factory.
- The company recorded $20,000 of depreciation on the plant and plant equipment. The company also received a plant utility bill for $ 10,000
- $81,000 of manufacturing overhead was allocated to specific jobs.
- By the end of January, was manufacturing overhead over allocated or under allocated? By how much?
Q.6 S4 19 Quality initiative decision (Learning Objective 5)
Wharfedale manufactures high quality speakers. Suppose Wharfedale is considering spending the following amounts on a new quality program:
| Additional 20 minutes of testing for each speaker |
$ 600,000 |
| Negotiation with and training suppliers to obtain higher quality materials and on time delivery |
300,000 |
| Redesigning the speakers to make them easier to manufacture |
1,400,000 |
Wharfedale expects this quality program to save costs as follows:
| Reduced warranty repair costs |
$ 200,000 |
| Avoid inspection of raw materials |
400,000 |
| Rework avoided because of fewer defective units |
650, 000 |
It also expects this program to avoid lost profits from the followings:
| Lost sales due to disappointed customers |
$ 850,000 |
| Lost production time due to rework |
300,000 |
- Classify each of these costs into one of four categories of quality costs (prevention, appraisal, internal failure, external failure)
- Should Whardale implement the quality program? Give your reasons.
Aug 29, 2021 | Uncategorized
Assume all assets are operating assets; all current liabilities are operating liabilities.
8.Return on net operating assets for 2005 is:
A.11.30%
B.12.73%
C.9.93%
D.11.19%
9.Return on equity for 2005 is:
A.20.41%
B.19.75%
C.17.54%
D.18.12%
Aug 29, 2021 | Uncategorized
APPLE TREES AND EXPERIENCE
If market price is the last thing an investor or manager should look at in determining the value of a business or an ownership interest in it, the First thing to consider is its fundamental economic char acteristics. There are so many approaches to appraising those fun damentals that many people use the relatively lazy metric of market price as a guideline in valuation, but that is a mistake. Of all the approaches to appraising business value, just a few do virtually all the hard work, and those are the ones you need. A parable will illustrate the basics, and the rest of this part will rill in the details.’ ttcl FOOLS AND WISDOM oft.sroc,,,( ( 0x/44d 3 zidki Once there was a wise old man who owned an apple tree. It was a Fine tree, and with little care it produced a crop of apples each year which he sold for $100. The man wanted to retire to a new climate, and he decided to sell the tree. He enjoyed teaching a good lesson, and he placed an advertisement in the business opportunities section of The Wall Street Journal in which he said he wanted to sell the tree for “the best offer.”
SON1E RED HERRINGS The first person to respond to the ad offered to pay S50, which, he said, was what he could get for selling the apple tree For firewood after he cut it down. “You don’t know what you are talking about,” the.old man chastised. “You are offering to pay only the salvage value of this tree. That might be a good price for a pine tree or even this tree if it had stopped bearing fruit or if the price of apple wood had gotten so high that the tree was more valuable as a source of wood
91
Aug 29, 2021 | Uncategorized
Garber Company uses a traditional activity based costing system to assign $600,000 of committed resource costs for customer service, based on the following information gathered from interviews with customer service personnel:
|
Activity
|
Time Percentage
|
Estimated Cost Driven Quantity
|
|
Handle customer orders
|
75%
|
8,000 customer orders
|
|
Process customer complaints
|
10%
|
400 customer complaints
|
|
Perform customer credit checks
|
15%
|
450 credit checks
|
|
|
100%
|
|
Required:
(a) Compute the activity cost driver rates using this system.
(b) Suppose instead that Garber uses time driven activity based costing to assign $600,000 of committed resource costs to the three activities. Compute the time driven activity cost driver rates assuming 10,000 hours of useful work and the unit time estimates below.
|
Activity
|
Unit Time (Hours)
|
|
Handle customer orders
|
0.75
|
|
Process customer complaints
|
3.50
|
|
Perform customer credit checks
|
3.00
|
(c) Suppose that the quantities of activities this period are 8,000 customer orders, 400 customer complaints, and 450 credit checks. Using the information and activity cost driver rates developed in part (b), determine the cost assigned to each of the activities and the estimated hours of unused capacity, as well as the associated cost. What actions might managers take upon evaluating such information?
(d) Suppose that in the next time period, the quantities of activities change to 8,500 customer orders, 350 customer complaints, and 500 credit checks. Using the information and activity cost driver
Rates developed in part (b), determine the cost assigned to each of the activities and the estimated hours of unused capacity, as well as the associated cost.
(e) Explain why the activity cost driver rates computed in (a) are different from the rates computed in (b)
Aug 29, 2021 | Uncategorized
Assessment Task to be completed using the company SANTOS’ Annual Report 2012:
Example Assignment provided (Full completed sample assignment) COMPLETE AS SAMPLE ASSIGNMENT!
http://www.santos.com/library/Annual_Report_2012_Final.pdf
Aug 29, 2021 | Uncategorized
Questions
Compare
http://www.raytheon.com
with
http://lockheedmartin.com
Assess the financial position of Raytheon and compare it to of its Lockheed Martin. The emphasis is on cash flow for this analysis.?
- Compute the return on assets, profit margin and asset utilization rate for your company and its competitor.
- Assess your company’s competitive financial position.
- Compute the free cash flow for your company and its competitor.
- Assess your company’s relative cash position and comment on its receipt and use of cash during the year.
Assignment Expectations
Always include the name of the organization(s), time period covered and source of information. It is important to answer the questions as posed.The document should be from 2 to 4 pages and written in a clear and concise manner. Don’t forget to include tables as required. Support your discussion or tables with references in APA format. You are encouraged to use Excel or other compatiblespreadsheet when computations are involved. You can turn in the spreadsheet instead of the Word document. The content should be equivalent to the page length suggested for a word processing document.
Other websites:
http://www.financialpress.com
http://www.finance.yahoo.com
Aug 29, 2021 | Uncategorized
ACT 5733 – Advanced Managerial Accounting Summer 2013 Directions: Answer all the questions. Please submit your work in Word or PDF formats only. You can submit an Excel file to support calculations, but please “cut and paste” your solutions into the Word or PDF file. Be sure to show how you did your calculations. Question #1 (12 points) Consider the following potential investment, which has the same risk as the firm’s other projects: Time Cash Flow 0 $192,000 1 $68,000 2 $70,000 3 $72,000 4 $74,000 The firm’s current weighted average cost of capital is 15%. a) How much value will this investment create for the firm? b) At what discount rate will this project break even? c) Should the firm do this investment? Be sure to justify your recommendation. d) How would your analysis change if this potential investment was more risky than the firm’s other projects? Be specific. Question #2 (16 points) A firm believes it can generate an additional $450,000 per year in revenues for the next 6 years if it replaces existing equipment that is no longer usable with new equipment that costs $500,000. The additional sales will require an initial investment in net working capital of $35,000, which is expected to be recovered at the end of the project (after 6 years). The existing equipment has a book value of $15,000 and a market value of $5,000. The firm expects to be able to sell the new equipment when it is finished using it (after 6 years) for $20,000. The contribution margin is expected to be 40% of revenue. Assume the firm uses straight line depreciation, its marginal tax rate is 35%, and its weighted average cost of capital is 14%. a) How much value will this new equipment create for the firm? b) At what discount rate will this project break even? c) Should the firm purchase the new equipment? Be sure to justify your recommendation. Question #3 (16 points) After a study of its processes, a firm determines it has the following 4 overhead cost pools related to the production of its 2 products: Set up, Shipping, Product design, and Plant utilities and administration. Both products are produced in the same facility using the same equipment. Product XYZ is a higher volume product that takes a relatively small amount of machine time to produce, while Product ABC is a lower volume product that takes a significantly higher amount of machine time. Also, Product XYZ requires very little set up time, while Product ABC requires a more time consuming set up. Both products are shipped in a similar way, with each shipment requiring a similar amount of work. Based on this information, determine the hierarchy level for each cost pool and an appropriate allocation base for each pool. Cost Pool Hierarchy Level Allocation Base Setup Shipping Product design Plant utilities & administration Question #4 (18 points) The Dana Company manufactures a specialized piece of manufacturing equipment. Its machine has always been distinct from its competitors’ machines and is considered to be superior to their products, too. However, its competitors are catching up both in terms of features and quality. Dana has refined its manufacturing to the point that it never produces defective machines, relying on well trained workers and highly complex manufacturing equipment. Without these workers and this equipment, Dana would have a difficult time producing its products without defects. Since a large amount of materials are wasted in production, however, one of its goals is to reduce the amount of direct materials used to produce the machines. Given the unique and specialized nature of the machines, Dana often needs to provide a significant amount of support to its customers. a) Based on this information, what type of strategy do you believe Dana is pursuing? Be sure to back up your claim with specific evidence. b) List and justify eight metrics (2 in each of the Balanced Scorecard perspectives) that you believe Dana should include in its Balanced Scorecard. c) Dana calculates the following figures: 2012 operating income $2,700,000 2013 operating income $3,319,500 Growth component $280,000 Price recovery component $247,500 Productivity component $92,000 In 2013, Dana sold more units and charged a higher price than in 2012. Dana also paid more for raw materials in 2013 than it did in 2012. Based on this information, do you believe Dana’s increase in operating income in 2013 is consistent with its goals and strategy? Be sure to justify your answer with specific information. Question #5 (10 points) Consider the following quality cost report: Q1 Q2 Q3 Q4 Prevention costs $1,020 $1,508 $1,300 $1,140 Appraisal costs $880 $910 $766 $532 Internal failure costs $710 $636 $472 $358 External failure costs $1,470 $1,264 $672 $512 Total quality costs $4,080 $4,318 $3,210 $2,542 Total revenues $16,480 $18,160 $18,600 $18,040 Do you believe this firm’s quality initiatives have been successful? Be sure to justify your opinion with specific information. Question #6 (10 points) a) What is a transfer price? b) How can firms use transfer prices strategically? Question #7 (10 points) a) What is goal incongruence? b) How can using the metric “return on investment” for performance evaluation lead to goal incongruence? c) What can a firm do to reduce goal incongruence caused by using “return on investment” for performance evaluation? Question #8 (8 points) a) List and describe the 4 “levers of control” that a firm can use to motivate behavior that is consistent with its strategy?
ACT 5733 – Advanced Managerial Accounting
Summer 2013
Directions: Answer all the questions.
Please submit your work in Word or PDF formats only.
You can submit an Excel file to support calculations, but please “cut and paste” your solutions into the Word or PDF file. Be sure to show how you did your calculations.
Question #1 (12 points)
Consider the following potential investment, which has the same risk as the firm’s other projects:
| Time |
Cash Flow |
| 0 |
$192,000 |
| 1 |
$68,000 |
| 2 |
$70,000 |
| 3 |
$72,000 |
| 4 |
$74,000 |
The firm’s current weighted average cost of capital is 15%.
a) How much value will this investment create for the firm?
b) At what discount rate will this project break even?
c) Should the firm do this investment?
Be sure to justify your recommendation.
d) How would your analysis change if this potential investment was more risky than the firm’s other projects?
Be specific.
Question #2 (16 points)
A firm believes it can generate an additional $450,000 per year in revenues for the next 6 years if it replaces existing equipment that is no longer usable with new equipment that costs $500,000. The additional sales will require an initial investment in net working capital of $35,000, which is expected to be recovered at the end of the project (after 6 years). The existing equipment has a book value of $15,000 and a market value of $5,000. The firm expects to be able to sell the new equipment when it is finished using it (after 6 years) for $20,000. The contribution margin is expected to be 40% of revenue. Assume the firm uses straight line depreciation, its marginal tax rate is 35%, and its weighted average cost of capital is 14%.
a) How much value will this new equipment create for the firm?
b) At what discount rate will this project break even?
c) Should the firm purchase the new equipment?
Be sure to justify your recommendation.
Question #3 (16 points)
After a study of its processes, a firm determines it has the following 4 overhead cost pools related to the production of its 2 products: Set up, Shipping, Product design, and Plant utilities and administration.
Both products are produced in the same facility using the same equipment. Product XYZ is a higher volume product that takes a relatively small amount of machine time to produce, while Product ABC is a lower volume product that takes a significantly higher amount of machine time. Also, Product XYZ requires very little set up time, while Product ABC requires a more time consuming set up. Both products are shipped in a similar way, with each shipment requiring a similar amount of work.
Based on this information, determine the hierarchy level for each cost pool and an appropriate allocation base for each pool.
| Cost Pool |
Hierarchy Level |
Allocation Base |
| Setup |
|
|
| Shipping |
|
|
| Product design |
|
|
| Plant utilities & administration |
|
|
Question #4 (18 points)
The Dana Company manufactures a specialized piece of manufacturing equipment. Its machine has always been distinct from its competitors’ machines and is considered to be superior to their products, too. However, its competitors are catching up both in terms of features and quality. Dana has refined its manufacturing to the point that it never produces defective machines, relying on well trained workers and highly complex manufacturing equipment. Without these workers and this equipment, Dana would have a difficult time producing its products without defects. Since a large amount of materials are wasted in production, however, one of its goals is to reduce the amount of direct materials used to produce the machines. Given the unique and specialized nature of the machines, Dana often needs to provide a significant amount of support to its customers.
a) Based on this information, what type of strategy do you believe Dana is pursuing?
Be sure to back up your claim with specific evidence.
b)
List and justify eight metrics (2 in each of the Balanced Scorecard perspectives) that you believe Dana should include in its Balanced Scorecard.
c) Dana calculates the following figures:
| 2012 operating income |
$2,700,000 |
| 2013 operating income |
$3,319,500 |
| Growth component |
$280,000 |
| Price recovery component |
$247,500 |
| Productivity component |
$92,000 |
In 2013, Dana sold more units and charged a higher price than in 2012. Dana also paid more for raw materials in 2013 than it did in 2012.
Based on this information, do you believe Dana’s increase in operating income in 2013 is consistent with its goals and strategy?
Be sure to justify your answer with specific information.
Question #5 (10 points)
Consider the following quality cost report:
|
Q1 |
Q2 |
Q3 |
Q4 |
| Prevention costs |
$1,020 |
$1,508 |
$1,300 |
$1,140 |
| Appraisal costs |
$880 |
$910 |
$766 |
$532 |
| Internal failure costs |
$710 |
$636 |
$472 |
$358 |
| External failure costs |
$1,470 |
$1,264 |
$672 |
$512 |
| Total quality costs |
$4,080 |
$4,318 |
$3,210 |
$2,542 |
| Total revenues |
$16,480 |
$18,160 |
$18,600 |
$18,040 |
Do you believe this firm’s quality initiatives have been successful?
Be sure to justify your opinion with specific information.
Question #6 (10 points)
a) What is a transfer price?
b) How can firms use transfer prices strategically?
Question #7 (10 points)
a) What is goal incongruence?
b) How can using the metric “return on investment” for performance evaluation lead to goal incongruence?
c) What can a firm do to reduce goal incongruence caused by using “return on investment” for performance evaluation?
Question #8 (8 points)
a) List and describe the 4 “levers of control” that a firm can use to motivate behavior that is consistent with its strategy?
Aug 29, 2021 | Uncategorized
Jessica plans to invest $150,000 in her own small business. She expects to generate a 12 percent before tax return on her investment the first year. Her marginal tax rate is 35 percent because she has a significant amount of income from other sources. She needs to decide whether to establish her business as a sole proprietorship or a C corporation.
a. Compute the after tax cash flow from a sole proprietorship if she withdraws 50 percent of the profits from the business the first year. (Ignore employment taxes.)
b. Compute the after tax cash flow from a C corporation if she receives a dividend equal to 50 percent of the before tax profits from the business the first year.
c. What nontax factors should Jessica consider in making this decision?
d. What do you recommend?
Aug 29, 2021 | Uncategorized
Richard plans to invest $100,000 for a 50 percent interest in a small business. His friend Jack will also invest $100,000 for the remaining 50 percent interest. They expect to generate a 10 percent before tax return on their investment the first year. Richard’s marginal tax rate is 33 percent and Jack’s marginal tax rate is 35 percent. They need to decide whether to establish the business as a partnership or a C corporation.
a. If they establish a partnership, compute the after tax cash flow for each partner if each of them withdraws $4,000 of the profits from the business the first year. What is the amount of cash that remains in the partnership? (Ignore employment taxes.)
b. If they establish a C corporation, compute the after tax cash flow for each shareholder if each of them receives a dividend of $4,000 from the profits of the business the first year.
What is the amount of cash that remains in the C corporation?
c. What nontax factors should Richard and Jack consider in making this decision?
d. What do you recommend?
e. How would your answers change if you consider the impact of employment taxes in your solutions? (Employment taxes for employees, employers, and self employed partners are discussed in Chapter 4.)
Aug 29, 2021 | Uncategorized
Norman is considering the purchase of some investment land from his neighbor, Robin, a high school math teacher. Robin purchased the land 10 years ago for $6,000. They have agreed on the overall terms of payment of $800 every month for the next three years for a total of $28,800. They have not agreed on how much of each payment is interest and how much is principal. Norman thought that a fair interest rate would be 8 percent with the rest of each payment allocated to principal. Robin, however, said that he wanted to “”give his neighbor a break”” and only have 4 percent designated as interest with the rest of each payment allocated to principal. What difference does it make to Norman and to Robin how much is allocated to interest versus principal if the total of the cash payments will not change? Which interest rate would be better for Norman?
Aug 29, 2021 | Uncategorized
The manager at Striker Corporation can hire only one student for the summer. She can hire Ken, a marketing student, who will do research on a marketing plan, or Lisa, a tax student, who will research tax strategies to reduce corporation taxes. If she hires Ken, his wages and benefits will total $5,600 (all tax deductible expenses). Ken’s marketing plan is expected to generate $6,000 in new revenues with a probability of success estimated at 80 percent. If she hires Lisa, her wages and benefits will be $6,000 (also fully tax deductible). Lisa’s tax plan is expected to save Striker $5,600 in federal income taxes. The probability of success for this plan is estimated to be 75 percent. Striker’s marginal tax rate is 39 percent. Who should the manager hire?
Aug 29, 2021 | Uncategorized
Prepare a multi step income statement for the Appully Company (a clothing retailer) for the year ending December 31, 2003 given the information below:
|
Advertising expenditures
|
68,000
|
|
Beginning inventory
|
256,000
|
|
Depreciation
|
78,000
|
|
Ending inventory
|
248,000
|
|
Gross Sales
|
3,210,000
|
|
Interest expense
|
64,000
|
|
Lease payments
|
52,000
|
|
Management salaries
|
240,000
|
|
Materials purchases
|
2,425,000
|
|
R&D expenditures
|
35,000
|
|
Repairs and maintenance costs
|
22,000
|
|
Returns and allowances
|
48,000
|
|
Taxes
|
51,000
|
Aug 29, 2021 | Uncategorized
Boswell, Inc. is a temporary help service company. All of the company’s services are sold on credit (most customers pay in approximately 60 days). Due to the economy and a lenient credit policy, Boswell’s bad debt (i.e., accounts that are never collected) is relatively large and highly variable from year to year. Boswell had annual gross sales, gross accounts receivable and actual bad debt amounts as follows for the years ending December 31, 1999 through 2003:
|
Year
|
Gross Sales
|
Gross Accounts Receivable
|
Actual Bad Debt
|
|
1999
|
$1,000,000
|
$167,000
|
$ 50,000
|
|
2000
|
$2,000,000
|
$333,000
|
$150,000
|
|
2001
|
$3,000,000
|
$500,000
|
$225,000
|
|
2002
|
$4,000,000
|
$667,000
|
$ 75,000
|
|
2003
|
$5,000,000
|
$833,000
|
$250,000
|
Assume that for financial statement reporting purposes, Boswell estimates an allowance for doubtful accounts of 5 percent of annual sales. Accordingly, what did Boswell report as Net sales and Net accounts receivable on its 1999 through 2003 income statements and balance sheets?
Aug 29, 2021 | Uncategorized
Over its three year history, the Bunker Company has issued common stock on three separate occasions. The company issued 250,000 shares of stock on March 10, 2001 at an issue price of $6.50 per share. Another 400,000 shares were issued on July 18, 2002 at $8.75 per share. Finally, an additional 350,000 shares were issued on October 24, 2003 at $12.25 per share. All common stock is recorded on the company’s balance sheet at a par value of $2.00 per share. Bunker’s fiscal year runs from January 1 through December 31 and Bunker reported net income of $2,420,000 on its 2001 income statement, $3,680,000 on its 2002 income statement and $4,840,000 on its 2003 income statement. Bunker paid dividends of $420,000 in 2001, $680,000 in 2002 and $840,000 in 2003. Using this information, fill in the table below:
The Bunker Company
Equity Section of Balance Sheet
For the Years Ending December 31, 2001, 2002 and 2003
| |
2002
|
2003
|
2004
|
|
Common stock ($2.00 par value)
|
__________
|
__________
|
__________
|
|
Additional paid in capital
|
__________
|
__________
|
__________
|
|
Retained earnings
|
__________
|
__________
|
__________
|
|
Total shareholders equity
|
__________
|
__________
|
__________
|
Aug 29, 2021 | Uncategorized
In January, Susan’s employer transferred her from Chicago to Houston (where she continues to work for the remainder of the year). Her expenses are as follows:
|
Transportation for household goods
|
$2,300
|
|
Airfare from Chicago to Houston
|
200
|
|
Pre move house hunting travel
|
700
|
|
Temporary living expenses in Houston
|
400
|
|
Apartment lease cancellation fee
|
1,200
|
|
Total moving expenses paid
|
$4,800
|
a. If Susan is not reimbursed for any of these expenses, how much of her moving expenses can she deduct?
If Susan’s employer reimburses her $3,600 for all of these moving expenses except for the lease cancellation fee, will she have any taxable income?
Aug 29, 2021 | Uncategorized
Luis received 400 shares of his employer’s stock as a bonus. He must return the stock to the company if he leaves before the 5 year vesting period ends. The fair market value of the stock at the time it was issued was $20,000. After five years, the stock vests when it has a fair market value of $75,000. Two years after vesting, Luis sells the stock for $100,000.
a. If Luis makes no election, how much income or gain does he recognize (1) when the stock is issued, (2) when the stock vests, and (3) when the stock is sold?
b. If Luis makes an election to accelerate the recognition of income, how much income or gain does he recognize (1) when the stock is issued, (2) when the stock vests, and (3) when the stock is sold?
c. If Luis makes an election to accelerate the recognition of income but he leaves the company after three years, is he eligible for a refund of taxes paid?
Aug 29, 2021 | Uncategorized
Evan is setting up a new business. He can operate the business as a sole proprietorship or he can incorporate as a regular C corporation or as an S corporation. He expects that the business will have gross income of $130,000 in the first year with expenses of $25,000 excluding the following. He plans to take $35,000 from the business for living expenses as a salary and will have the business pay $3,000 annually for his health insurance premiums.
a. Compute the total tax cost in 2004 for each alternative if Evan is single and this is his only source of income.
b. Which alternative business form do you recommend based solely on the first year tax costs?
c. What are some of the other factors Evan should consider in deciding between a C corporation and an S corporation for his business?
Aug 29, 2021 | Uncategorized
January 2011 Transactions for Francine’s Fast Deliveries, Inc. (FFD)
1. Owners invest $18,000 of additional cash in the business.
2. Supplies are purchased for $1,200
3. Insurance is paid for 6 months beginning January 1: $2,400 (Record as asset)
4. Rent is paid for 2 months beginning in January: $4,500 (Record as an asset)
5. Two employees are hired. Each employee will be paid $2,400 per month
6. FFD borrows $12,000 from 1st State Bank at 12% annual interest.
7. A delivery van is purchased for cash. Including tax the total cost was $10,800. It will be used for 2 years and will be depreciated monthly using straight line with no salvage value. A full month of depreciation will be charged in January.
7. $1,100 of the receivables from December’s sales are collected.
8. All of the accounts payable from December are paid.
9. Mailed invoices for services performed for customers on account: $9,800.
10. Services are performed for cash customers: $7,200.
11. Wages for the first half of the month are paid on January 16.
12. The company receives $3,600 from a customer for an advance order for services to be provided in January and February.
13. Collections from customers on account (see January 9 transaction): $4,500
14. The last 2 weeks wages earned by employees are $1,200 per employee and will be paid on February 3.
15. A $775 utility bill for January arrived. It is due on February 15.
Aug 29, 2021 | Uncategorized
January 2011 Transactions for Francine’s Fast Deliveries, Inc. (FFD)
Date
1. Owners invest $18,000 of additional cash in the business.
2a. Supplies are purchased for $1,200
2b. Insurance is paid for 6 months beginning January 1: $2,400 (Record as asset)
2c. Rent is paid for 2 months beginning in January: $4,500 (Record as an asset)
2d. Two employees are hired. Each employee will be paid $2,400 per month
3. FFD borrows $12,000 from 1st State Bank at 12% annual interest.
6. A delivery van is purchased for cash. Including tax the total cost was $10,800. It will be used for 2 years and will be depreciated monthly using straight line with no salvage value. A full month of depreciation will be charged in January.
7. $1,100 of the receivables from December’s sales are collected.
8. All of the accounts payable from December are paid.
9. Mailed invoices for services performed for customers on account: $9,800.
10. Services are performed for cash customers: $7,200.
16. Wages for the first half of the month are paid on January 16.
20. The company receives $3,600 from a customer for an advance order for services to be provided in January and February.
25. Collections from customers on account (see January 9 transaction): $4,500
30a. The last 2 weeks wages earned by employees are $1,200 per employee and will be paid on February 3.
30b. A $775 utility bill for January arrived. It is due on February 15.
4 Additional Information for adjusting entries at January 31:
a. Supplies on hand on January 31 total $500.
b. The company completed 45% of the deliveries for the customer who paid in
advance on January 20.
c. Interest is accrued for the bank loan. (Assume a full month for the 1st State
Bank loan.)
d. Adjust the prepaid asset accounts as needed
e. Record January Depreciation
Aug 29, 2021 | Uncategorized
On January 8, the end of the first weekly pay period of the year, Royal Company’s payroll register showed that its employees earned $11380 of office salaries and $32920 of sales salaries. Withholdings from the employees’ salaries include FICA Social Security taxes at the rate of 6.2%, FICA Medicare taxes at the rate of 1.45%, $6,340 of federal income taxes, $670 of medical insurance deductions, and $420 of union dues. No employee earned more than $7000 in this first period.
1.Calculate FICA Social Security taxes payable and FICA Medica taxes payable. Prepare the journal entry to record Royal Company’s January 8 (employee) payroll expenses and liabilities.
2. Prepare the Journal entry to record Royal’s (employer) payroll taxes resulting from the January 8 payroll. Royal’s merit rating reduces its state unemployment tax rate to 4% of the first $7000 paid each employee. The federal unemployment tax rate is 0.8%
Aug 29, 2021 | Uncategorized
Boa Mining Company currently is operating at less than 50% of practical capacity.
The management of the company expects sales to drop below the present level of 10,000 tons of ore per month very soon. The sales price per ton is $3 and the variable cost per ton is $2. Fixed costs per month total $10,000.
Management is concerned that a further drop in sales volume will generate a loss and accordingly is considering temporarily suspending operations until demand in the metals markets rebounds and prices once again rise. Management has implemented a cost reduction program over the past year, but at this point suspension of operations appears to be the only viable alternative. Management estimates that suspension of operations would reduce fixed costs from $10,000 to $4,000 per month.
Required:
a. Why does management believe that the fixed costs will persist at $4,000 even though the mine is temporarily closed?
b. At what sales volume per month will the company be indifferent between continuing to operate the mine and closing it?
Aug 29, 2021 | Uncategorized
Fothergill Company makes 40,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows:
|
Direct materials
|
$23.40
|
|
Direct labor
|
22.30
|
|
Variable manufacturing overhead
|
1.40
|
|
Fixed manufacturing overhead
|
24.60
|
|
Unit product cost
|
$71.70
|
An outside supplier has offered to sell the company all of these parts it needs for $59.20 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $352,000 per year.
If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $21.90 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company’s remaining products.
Required:
a. How much of the unit product cost of $71.70 is relevant in the decision of whether to make or buy the part?
b. What is the net total dollar advantage (disadvantage) of purchasing the part rather than making it?
c. What is the maximum amount the company should be willing to pay an outside supplier per unit for the part if the supplier commits to supplying all 40,000 units required each year?
Aug 29, 2021 | Uncategorized
Bulan Inc. makes a range of products. The company’s predetermined overhead rate is $20 per direct labor hour, which was calculated using the following budgeted data:
|
Variable manufacturing overhead
|
$140,000
|
|
Fixed manufacturing overhead
|
$560,000
|
|
Direct labor hours
|
35,000
|
Component T6 is used in one of the company’s products. The unit product cost of the component according to the company’s cost accounting system is determined as follows:
|
Direct materials
|
$ 45.00
|
|
Direct labor
|
32.00
|
|
Manufacturing overhead applied
|
40.00
|
|
Unit product cost
|
$117.00
|
An outside supplier has offered to supply component T6 for $101 each. The outside supplier is known for quality and reliability. Assume that direct labor is a variable cost, variable manufacturing overhead is really driven by direct labor hours, and total fixed manufacturing overhead would not be affected by this decision. Bulan chronically has idle capacity.
Required
Is the offer from the outside supplier financially attractive? Why?
Aug 29, 2021 | Uncategorized
Jiambalvo Company produces a single product. The cost of producing and selling a single unit of this product at the company’s normal activity level of 40,000 units per month is as follows:
|
Direct materials
|
$38.80
|
|
Direct labor
|
$9.70
|
|
Variable manufacturing overhead
|
$2.30
|
|
Fixed manufacturing overhead
|
$18.10
|
|
Variable selling & administrative expense
|
$1.70
|
|
Fixed selling & administrative expense
|
$8.80
|
The normal selling price of the product is $81.10 per unit.
An order has been received from an overseas customer for 3,000 units to be delivered this month at a special discounted price. This order would have no effect on the company’s normal sales and would not change the total amount of the company’s fixed costs. The variable selling and administrative expense would be $0.20 less per unit on this order than on normal sales.
Direct labor is a variable cost in this company.
Required
a. Suppose the company has ample idle capacity to produce the units required by the overseas customer and the special discounted price on the special order is $75.30 per unit. By how much would this special order increase (decrease) the company’s net operating income for the month?
b. Suppose the company is already operating at capacity when the special order is received from the overseas customer. What would be the opportunity cost of each unit delivered to the overseas customer?
c. Suppose the company does not have enough idle capacity to produce all of the units for the overseas customer and accepting the special order would require cutting back on production of 1,000 units for regular customers. What would be the minimum acceptable price per unit for the special order?
Aug 29, 2021 | Uncategorized
Pilgrim Corporation makes a range of products. The company’s predetermined overhead rate is $23 per direct labor hour, which was calculated using the following budgeted data:
|
Variable manufacturing overhead
|
$200,000
|
|
Fixed manufacturing overhead
|
$375,000
|
|
Direct labor hours
|
25,000
|
Management is considering a special order for 800 units of product N89E at $69 each.
The normal selling price of product N89E is $88 and the unit product cost is determined as follows:
|
Direct materials
|
$28.00
|
|
Direct labor
|
22.50
|
|
Manufacturing overhead applied
|
34.50
|
|
Unit product cost
|
$85.00
|
If the special order were accepted, normal sales of this and other products would not be affected. The company has ample excess capacity to produce the additional units.
Assume that direct labor is a variable cost, variable manufacturing overhead is really driven by direct labor hours, and total fixed manufacturing overhead would not be affected by the special order.
Required:
If the special order were accepted, what would be the impact on the company’s overall profit?
Aug 29, 2021 | Uncategorized
Adamyan Co. manufactures and sells medals for winners of athletic and other events. Its manufacturing plant has the capacity to produce 15,000 medals each month; current monthly production is 12,750 medals. The company normally charges $120 per medal. Cost data for the current level of production are shown below:
|
Variable costs:
|
|
|
Direct materials
|
$624,750
|
|
Direct labor
|
$306,000
|
|
Selling and administrative
|
$15,300
|
|
Fixed costs:
|
|
|
Manufacturing
|
$506,175
|
|
Selling and administrative
|
$123,675
|
The company has just received a special one time order for 700 medals at $83 each.
For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs.
Required
Should the company accept this special order? Why?
Aug 29, 2021 | Uncategorized
Gluth Company makes three products in a single facility. These products have the following unit product costs:
| |
Products
|
| |
A
|
B
|
C
|
|
Direct materials
|
$22.50
|
$22.40
|
$29.20
|
|
Direct labor
|
13.60
|
11.40
|
12.50
|
|
Variable manufacturing overhead
|
3.00
|
3.40
|
4.50
|
|
Fixed manufacturing overhead
|
19.20
|
20.10
|
26.50
|
|
Unit product cost
|
$58.30
|
$57.30
|
$72.70
|
Additional data concerning these products are listed below.
| |
Products
|
| |
A
|
B
|
C
|
|
Mixing minutes per unit
|
3.30
|
1.70
|
1.80
|
|
Selling price per unit
|
$74.70
|
$76.10
|
$87.50
|
|
Variable selling cost per unit
|
$1.80
|
$2.40
|
$2.90
|
|
Monthly demand in units
|
4,000
|
2,000
|
4,000
|
The mixing machines are potentially the constraint in the production facility. A total of 23,200 minutes are available per month on these machines.
Direct labor is a variable cost in this company.
Required:
a. How many minutes of mixing machine time would be required to satisfy demand for all four products?
b. How much of each product should be produced to maximize net operating income? (Round off to the nearest whole unit.)
c. Up to how much should the company be willing to pay for one additional hour of mixing machine time if the company has made the best use of the existing mixing machine capacity? (Round off to the nearest whole cent.)
Aug 29, 2021 | Uncategorized
Holtz Company makes three products in a single facility. Data concerning these products follow:
| |
Products
|
| |
A
|
B
|
C
|
|
Selling price per unit
|
$75.90
|
$71.10
|
$73.40
|
|
Direct materials
|
$29.70
|
$30.20
|
$33.40
|
|
Direct labor
|
$21.20
|
$19.80
|
$19.60
|
|
Variable manufacturing overhead
|
$4.90
|
$5.60
|
$7.60
|
|
Variable selling cost per unit
|
$1.30
|
$3.90
|
$1.80
|
|
Mixing minutes per unit
|
2.10
|
1.70
|
1.30
|
|
Monthly demand in units
|
4,000
|
1,000
|
2,000
|
The mixing machines are potentially the constraint in the production facility. A total of 12,500 minutes are available per month on these machines.
Direct labor is a variable cost in this company.
Required:
a. How many minutes of mixing machine time would be required to satisfy demand for all four products?
b. How much of each product should be produced to maximize net operating income? (Round off to the nearest whole unit.)
c. Up to how much should the company be willing to pay for one additional hour of mixing machine time if the company has made the best use of the existing mixing machine capacity? (Round off to the nearest whole cent.)
Aug 29, 2021 | Uncategorized
Wright, Inc. produces three products. Data concerning the selling prices and unit costs of the three products appear below:
| |
Products
|
| |
C
|
D
|
E
|
|
Selling price
|
$90
|
$30
|
$60
|
|
Variable costs
|
$35
|
$10
|
$20
|
|
Fixed costs
|
$45
|
$15
|
$30
|
|
Tapping machine time (minutes)
|
5
|
4
|
2
|
Fixed costs are applied to the products on the basis of direct labor hours.
Demand for the three products exceeds the company’s productive capacity. The tapping machine is the constraint, with only 2,400 minutes of tapping machine time available this week.
Required:
a. Given the tapping machine constraint, which product should be emphasized?
Support your answer with appropriate calculations.
b. Assuming that there is still unfilled demand for the product that the company should emphasize in part (a) above, up to how much should the company be willing to pay for an additional hour of tapping machine time?
Aug 29, 2021 | Uncategorized
Iden Company makes two products from a common input. Joint processing costs up to the split off point total $64,800 a year. The company allocates these costs to the joint products on the basis of their total sales values at the split off point. Each product may be sold at the split off point or processed further. Data concerning these products appear below:
| |
Product X
|
Product Y
|
Total
|
|
Allocated joint processing costs
|
$32,400
|
$32,400
|
$64,800
|
|
Sales value at split off point
|
$36,000
|
$36,000
|
$72,000
|
|
Costs of further processing
|
$20,300
|
$14,300
|
$34,600
|
|
Sales value after further processing
|
$55,400
|
$53,000
|
$108,400
|
Required:
a. What is the net monetary advantage (disadvantage) of processing Product X beyond the split off point?
b. What is the net monetary advantage (disadvantage) of processing Product Y beyond the split off point?
c. What is the minimum amount the company should accept for Product X if it is to be sold at the split off point?
d. What is the minimum amount the company should accept for Product Y if it is to
be sold at the split off point?
Aug 29, 2021 | Uncategorized
Benjamin Company produces products C, J, and R from a joint production process.
Each product may be sold at the split off point or processed further. Joint production costs of $95,000 per year are allocated to the products based on the relative number of units produced. Data for Benjamin’s operations for last year follow:
| |
|
|
Additional sales values and costs if
processed further
|
|
Product
|
Units
Produced
|
Sales values at
split off
|
Sales values
|
Added costs*
|
|
C
|
6,000
|
$75,000
|
$100,000
|
$20,000
|
|
J
|
9,000
|
$70,000
|
$115,000
|
$36,000
|
|
R
|
4,000
|
$46,500
|
$55,000
|
$10,000
|
*All variable and traceable to the products involved.
Required:
Which products should be processed beyond the split off point?
Aug 29, 2021 | Uncategorized
Burns Company’s net income last year was $91,000. Changes in the company’s balance sheet accounts for the year appear below:
| |
Increases
(Decreases)
|
|
Debit balances:
|
|
|
Cash
|
$19,000
|
|
Accounts receivable
|
$13,000
|
|
Inventory
|
$(16,000)
|
|
Prepaid expenses
|
$4,000
|
|
Long term investments
|
$10,000
|
|
Plant and equipment
|
$70,000
|
|
Credit balances:
|
|
|
Accumulated depreciation
|
$31,000
|
|
Accounts payable
|
$(18,000)
|
|
Accrued liabilities
|
$16,000
|
|
Taxes payable
|
$(4,000)
|
|
Bonds payable
|
$(60,000)
|
|
Deferred taxes
|
$8,000
|
|
Common stock
|
$40,000
|
|
Retained earnings
|
$87,000
|
The company declared and paidcash dividends of $4,000 last year.
Required:
a. Construct in good form the operating activities section ofthe company’s statement of cash flows for the year. (Use the indirect method.)
b. Construct in good form the investing activities section of the company’s statement of cash flows for the year.
c. Construct in good form the financing activities section of the company’s statement of cash flows for the year.
Aug 29, 2021 | Uncategorized
The following information was collected from the most recent Income Statement and comparative Balance Sheet of Dolor Corporation:
|
Increase in cash
|
$36,000
|
|
Decrease in accounts receivable
|
$17,000
|
|
Increase in merchandise inventory
|
$44,000
|
|
Decrease in prepaid rent
|
$3,000
|
|
Increase in equipment
|
$56,000
|
|
Increase in accumulated depreciation
|
$18,000
|
|
Decrease in accounts payable
|
$25,000
|
|
Increase in salaries payable
|
$2,000
|
|
Increase in interest payable
|
$1,000
|
|
Decrease in deferred income taxes
|
$4,000
|
|
Increase in notes payable
|
$12,000
|
Dolor’s net income for the year was $167,000. No direct exchange transactions occurred at Dolor during the year. No equipment was sold during the year. Cash dividends of $30,000 were declared and paid during the year. Dolor uses the indirect method to prepare its statement of cash flows.
Required:
Prepare Dolor’s operating activities section of its statement of cash flows.
Aug 29, 2021 | Uncategorized
ACC5216 Accounting Theory Semester 2, 2013 Case Studies Due Date: Friday , 30th August 2013 Value: 15% Important Information For a student who has undertaken the required study, this assessment should take several hours to complete. The course specification requires that your submission is your own individual work. You are strongly urged to complete this assessment yourself to receive clear feedback about your level of understanding of the course material. You will find information regarding plagiarism and academic misconduct, such as collusion and cheating in the course specification and on the USQ website. The course specification also contains information about: o Assignment late policy o Assignment extension policy Please ensure that any ideas or data that you provide in your answer, other than your own original thoughts are properly referenced using the Harvard referencing style. A link to the university’s Harvard referencing style page is provided here. http://www.usq.edu.au/library/help/referencing/harvard *** Please attach a reference page to your assessment *** You might also find the following book useful: Summers, J. & Smith, B. (2010), Communication Skills Handbook, John Wiley & Sons, Third Edition, Milton Queensland Please refer to the following information in relation to assessment lodgement. Assessment Preparation and Submission Please read the following points carefully. o This assessment must be lodged using USQ’s online submission system EASE. EASE is available from the course homepage (via the Study Desk). o You are required to lodge one (1) Microsoft Word file (limit 2MB), using the correct file naming protocol – see next page. o Your submission must have a header on every page, which includes your student name and student number. o The assessment is due at 11.55 pm on Friday, 30th August 2013 (USQ time – please refer to the USQ Time icon on the course homepage). Submissions will open at least one week prior. How do I name the Word file I have to lodge? When naming the Word file to be submitted as your assessment, the file name should use the following naming convention: course code and case studies (e.g. acc5216CS.docx). There is no need to include your name or full student number in the file name as these are added to the file name by the EASE system on lodgement, however a header or footer within your document should give your name and student number. What is the comment field for? There is no need to insert your student name and number in the Comment field to confirm you have lodged the assignment. Use the comment field if there is a special matter you wish to draw to the attention of the course leader. Do I need to include the electronic version of the USQ assignment folder / cover sheet? You do not need to include a USQ coversheet in your assessment. You will complete the Student Declaration as part of the online submission process in EASE. Do I have to send in a hard copy / lodgement issues? No hard copy is required. The EASE system is easy to use, reliable and is error free. You can rely on the EASE system to submit your assessment online. Technical problems with online submission If you need help with your online submission, please email the Course examiner raymond.leong@usq.edu.au and if necessary, an EASE expert may contact you to provide assistance. If you leave it until after 5pm on the due date, you might have to bear any undesirable consequences (late penalties will not be applied in genuine cases of technical problems but failure to read instructions will be no excuse). In the rare circumstance that the server is down (e.g. due to a storm), email the assessment file. Keep your confirmation email You need to keep the email you receive confirming the lodgement of your files (it contains a unique submission code which might be required later to authenticate your submission). Extensions No extensions will be granted after the due date and time for the assessment has passed. All requests for extension must be addressed to the Course examiner raymond.leong@usq.edu.au at least one day before the due date with supporting documentation (e.g. doctor’s certificate) and a copy of your Word file (even if incomplete) to show that you have attempted the assessment to a reasonable level. Extensions will only be granted in extenuating circumstances. Crashing of computers, too busy with other assignments, heavy workload, and such reasons are not considered extenuating circumstances. Requests for extensions due to work commitments generally will NOT be granted. You must organise your study time around these other commitments. Case Study 1 (12 marks) Read the following newspaper article: Westpac chief admits banks failed in the bush The rush by banks to shut branches in rural areas over the past decade was a ‘mistake’ and broke the ‘social contract’ with the community, a Westpac executive Michael Hawker said yesterday. Mr Hawker, group executive for Business and Consumer Banking, said that in the face of intense competition following deregulation, banks had lost sight of the needs and fears of a number of their customers. He told a National Farmers Federation conference in Longreach that many of the rural closures should have been handled more sensitively. ‘I think what we are saying is what we did was probably not the most appropriate thing to do’, he said. ‘I think everyone in the community would say there’s been a lot of dramatic change and I think we have made a number of mistakes. There is no doubt about that’. Between 1990 and 1998, 1,306 banks shut their doors across Australia – 406 of them in country areas – while 1,345 agencies also shut, 1,071 outside major cities. Mr Hawker said advances in technology meant ‘in store’ banking – which provides basic teller transactions and a phone service at a sponsoring business – could spare rural communities from loss of services. Westpac initiated a $300 million review and refurbishment program last November for its 969 branches, which will see an estimated 150 convert to in store operations. Source: The Australian, 20 May 1999, p.1 Requirements: (a) Explain briefly the notion of a social contract and name the relevant parties and their relationship in the above article. (2 marks) (b) What relevance does the social contract have with respect to the legitimacy of an organisation? What is meant by organisational legitimacy? (3 marks) (c) How would corporate management of Westpac determine the terms of the social contract? What would be the implications for a firm if it breached the terms of the contract? What were the mistakes referred to by Mr Hawker? (4 marks) (d) If Westpac broke the terms of the social contract, what actions would you expect management to undertake in the subsequent periods and why? (3 marks) The word limit for this case study is 1,000 words. Words in excess of this limit will not be marked. Case Study 2 (10 marks) Read the following newspaper article: Big Australian’s $8.5bn bonanza BHP Billiton yesterday delivered the biggest profit in Australian corporate history, a $US6.4 billion ($8.5 billion) bonanza driven by rampant Chinese demand for iron ore, coal and oil. Chief executive Chip Goodyear said the world’s biggest miner was ideally placed to respond to a predicted super cycle in commodity prices if countries such as India and Brazil emulate China’s lift off. The result easily eclipsed the previous record profit of $US3.4 billion, reported by BHP itself this time last year. Combined with the earnings this year from former BHP units BlueScope Steel and Onesteel, the Big Australian has effectively delivered profits of more than $9.6 billion. ‘We are seeing buoyant conditions in the emerging and developing economies around the world and that is, offsetting a slight slowing in industrial production growth in the (developed) nations,’ Mr Goodyear told reporters. ‘We have a full range of … expansion options which will enable us to continue to catch our share of demand, if we, in fact, are in a period of demand growth brought about by the demands of several billion people across the world to participate in the benefits of modern society’. The result underscores a record breaking profit reporting season in Australia, with 75 per cent of companies so far exceeding or meeting stock market expectations. The result from BHP is a new high point in the stark turnaround of the company, which at the end of the 1990s slipped into the red after massive write downs of bungled projects and failed acquisitions. BHP has since been transformed into the world’s biggest miner through its merger in 2001 with Britishbased Billiton. Source: The Australian, 25 August 2005, The Nation p.1. Requirements: (a) BHP Billiton’s announcement of its biggest profit in Australian corporate history is a strong signal of the firm’s earnings prospects. Explain the contents of this announcement in relation to the information perspective and Signalling theory. What could BHP Billiton do in relation to its profits to strengthen the signal even further? (4 marks) (b) What factors might increase the credibility of the signal provided by BHP Billiton’s announcement and media attention? What factors might decrease the credibility of this signal? (3 marks) (c) What do you expect will be the impact of the record earnings on management compensation contracts of BHP Billiton? Explain. (3 marks) The word limit for this case study is 800 words. Words in excess of this limit will not be marked. Case Study 3 (8 marks) View and listen to the YouTube video clip on 40th Anniversary ‘Ball and Brown 1968’ available on the homepage or the link below: http://www.youtube.com/watch?v=_QDBX9KfxHM Requirements: Based on the information contained in the video and your prescribed Module 6 readings ONLY, write an essay on the contributions of Ball and Brown in their research study to capital markets research. This essay should also include the motivations of their study, research questions and a brief summary of their findings. There is no need to do any research in this case study. No marks/credit will be awarded for additional information provided from outside the stipulated resources. The word limit for this case study is 500 words. Words in excess of this limit will not be marked.
Aug 29, 2021 | Uncategorized
The following are independent situations and you should refer to APES (Accounting Professional and Ethical Standards 110 “Code of Ethics for Professional Accountants”) and the Corporations Act 2001 as a minimum for each situation. You need to identify any breaches (under what section) and why. You should also consider any remedy or alternative course of action that should have been considered for each where appropriate.
There is no word limit set for this assignment but it is expected that each question will be well covered and considered.
1) Rodney Brick is completing a Master of Accounting part time and has taken on a role as an auditing assistant with an audit/accounting firm and his first job is to assist with auditing the books of Daffey Jones Ltd, a major retailer. Whilst undertaking the audit, Rodney comes across certain financial information that he believes will assist him in completing one of the auditing assignments he is currently working on so he copies the information and uses it in the assignment, although he is careful by removing all reference to Daffey Jones in order to preserve the client’s confidentiality.
Question: Has Rodney breached any auditing standards/regulations and if so, what and why? (6 marks)
2) Bertha Bigga has been the engagement audit partner on the Wait Alert Limited (“WA”) account for a number of years. Roughly one year ago, WA’s long standing company secretary resigned and the company took almost nine months to find a replacement. At WA’s request, Bertha performed company secretarial duties during this period of time.
Question: Do you have any concerns and are there any breaches that have occurred here? (4 marks)
3) John Bartram is the son of the factory manager of one of your firm’s major audit clients, John Worst Foods Limited. John is studying accounting, with a specialisation in auditing at Holmes Institute. John applied for work during the summer where he could both earn money as well as gain first hand experience in his area of interest. He is assigned to the audit of John Worst’s Foods Limited where part of his audit work consisted of testing the internal controls of the cash payments and cash receipts system.
Q: What is the issue in this situation and what sections of the Act are bought into question? Is there something that should be in place with the audit firm? (4 marks)
(4) Ocean Adventures Limited is a large importer/wholesaler of luxury cruise boats and is currently experiencing financial difficulties. Their audit firm is PVC Partners but they have not paid the audit fees for the past three years. The audit partner recently threatened to resign from the audit if the outstanding fees were not paid. To prevent this occurring, Ocean Adventures offered to supply AUDITRUS with a nine metre cruise boat as payment. The partner accepted this offer in full consideration of the outstanding fees, even though the boat was only worth 75% of the balance.
As a gift, Ocean Adventures also gave the partner a 15% shareholding in an unrelated company. At present these shares are worth $21,500.
Q: What if any, issues exist in this situation? Should PVC have accepted boat and the gift (consider each one separately in your answer). (6 marks)
Aug 29, 2021 | Uncategorized
Try to think of an industry with which you are familiar that has routinely suffered financial losses in recent years. For many people, one of the first to come to mind is the airline industry. Many of the major carriers have not only reported large losses but also have filed for bankruptcy.
Southwest Airlines is one of very few carriers that did not contribute to the dismal record posted by the airline industry as a whole. According to the company’s web site, the Dallas based carrier is the lone profitable airline throughout the worst five year period in the his tory of the industry. In fact, 2006 marked the 34th consecutive year that Southwest Airlines was profitable, a record few companies in any industry can claim. As shown on the accompanying comparative income state ments, bottom line net income reached nearly $500 mil ion in 2006.
How has the company been able to post a record that is the envy of its peers? By now, you know that in its simplest form, earnings (or net income) is the result of deducting expenses from revenues. The first line on the comparative income statements begins to tell the story of the company’s success. The company has historically offered some of the lowest fares in the industry, and customers have responded by regulatory
Aug 29, 2021 | Uncategorized
Based on the journal of accounting, please answer the following questions:
- What is the paper about?
- Why are the issues examined interesting?
- What do we know from prior research on related issues?
- What are the research questions or hypotheses? How do they follow from theory, and how do they advance the body of knowledge?
- What are the details about the sample? (The data are from which years/country/industry etc., as appropriate; what is interesting about the sample)
- What do you find interesting about the descriptive data for the sample?
- What is the main statistical analysis (even if you do not understand it fully)?
- What are the main results, and which results are interesting to you?
- What are the limitations?
- What are the future research issues that you think would be interesting, and why? (Do not just repeat what is presented in the paper by the authors; go beyond that, based on your creativity).
- What insights does this research provide for accounting and auditing professionals?
Aug 29, 2021 | Uncategorized
522 Chapter 11 The Human Resources Management and Payroll Cycle
The system automatically assigns a sequential number to each payroll cheek. The checks are stored in a box next to the printer for easy access. After the checks are printed, the payroll department manager uses an automatic check signing machine to sign the checks. The signature plate is kept locked in a safe. After the checks have been signed, the payroll manager distributes the pay_ checks to all first shift employees. Paychecks for the other two shifts are given to the shift supervisor for distribution. fa The payroll master file is backed up weekly, after payroll processing is finished. Required a. Identify and describe five different areas in Arlington’s payroll processing sys_ tem where controls are inadequate. b. Identify and describe two different areas in Arlington’s payroll processing sys, tem where controls are satisfactory.
(CMA Examination, adapted) 13. The Darwin Department Store pays all of its employees on a salaried basis. Payroll processing is done internally. The payroll master file is maintained on disk. At periodic intervals every month, the HRM department uses online terminals to enter batches of payroll file change transactions. After those changes pass the app 5 ropriate data entry controls, they are posted to the payroll master file. This run produces a printed report listing all file changes processed. The payroll run takes place on the last day of each month. Because all employees are paid a fixed salary, there is no transaction input. This run produces printed employee paychecks, earnings registers, a printed summary report, and a payroll register file recorded on disk. The payroll register file is later processed to print a payroll register. equired 1 What is meant by the term “payroll file change transactions”? Give four exam ples of these types of transactions. 2 Prepare a flowchart or DFD (whichever your instructor chooses) of the processes described. 3 Describe a comprehensive set of internal control procedures and policies for this payroll application. Relate each control procedure to a specific objective. and explain what threats it is designed to mitigate.
134 Excel Problem Objective: Learn how to find and correct errors in complex spreadsheets. Req wed a. Read the article “Ferret Out Spreadsheet Errors” by Mark G. Slinkin, in Journal of Accountancy (February 2004). You can find a copy online by access ing www.aicpa.org and then following the links to the Online Journal 43 Accountancy. b. Download the worksheet referenced in the article. c. Enter the following erroneous data: Change hours worked for Adams to 410). hours worked for Englert to 4, and hours worked for Hartford to —40. Creat°.., chart like that shown in Exhibit 2 of the article. Which of the errors are ca found found by the chart? What are the strengths and limitations of creating SU charts to detect errors? Print out your chart and save your work. d. Create the three data validation rules described in the article (Ex ‘ reo, illustrate how to create the first rule). Print out screen shots of how Y°Ucicc each rule, and save your work. (Note: The article “Block That. SPre„a)) Error” by Theo Callahan, in the Journal of Accountancy (August 20y Exhibit 9 in the article). Print out ,aniich vides additional examples of data validation rules.) e. Follow the instructions for using the formula auditing tool. shot showing use of the tool to circle invalid data (yours should be st
Aug 29, 2021 | Uncategorized
MANCOSA: MBA (GENERAL) YEAR 2
44
ASSIGNMENT 2: ACCOUNTING FOR DECISION MAKING DUE DATE: 30 SEPTEMBER 2013
1.1
QUESTION ONE REQUIRED Study the Income Statementsof Vitajet Limited for three years provided below andanswer the following questions:
(20 MARKS)
Interest expense is calculated at 20% per year on a loan that was obtained at the start of 2010. Repayments of R20 000 per year commenced on 01 January 2011. Calculate the loan balance on 31 December 2012.
1.2 Explain the application of the matching concept in the preparation of an income statement.
(2)
(2)
1.3 Comment on the cost of sales over the three year period. (6)
1.4 Comment on the trends you observe with regard to personnel and rent expenses. (4) 1.5 How would you interpret the operating profit over the three year period? (6) INFORMATION The Income statements of Vitajet Limited for three years are provided below:
_ Vitajet Limited Income statements for the year __ ended 31 December: ________ _i 2010 (R)] 2011(R) 1 2012 (R) Sales I 780 000 1 1_040 000 I 1 300 000 Cost of sales (351 000) I (473 200) I (598 000) Gross profit429 000 1 566_8_00 I 702 000 Operating expenses (318 500) (426 400) (543 400) Personnel 127 400 172 900 2_21000 Marketing _31200_ 40 300 55 900 Administration 71 500 910_00 120 900 Rent 26 000 36 400 42 25? Other ~ ~ 62 400 85 800 103 35? Operating profit 110 500 140 400 158 600 Interest expense (40 000) (36 000) (32 000) Profit before tax 70 500 104 400 126 600 Income tax (21 150) (31 320) 37 980 Net profit 49 350 73 080 88 62?
44
COURSE AND ASSIGNMENT HANDBOOK: JULY 2013 INTAKE
Aug 29, 2021 | Uncategorized
Question 1
(24)
1.1 Calculate liquidity and working capital ratios from the accounts of a manufacturer of products for the
construction industry, and comment on the ratios,
(14)
|
2011 |
2010 |
$million |
| Revenue |
2 065.0 |
1 788.7 |
|
| Cost of sales |
1478.6 |
1304.0 |
|
| Gross profit |
586.4 |
484.7 |
|
| Current assets |
572.3 |
523,2 |
|
| inventory |
119,0 |
109,0 |
|
| Receivables (note 1) |
400,9 |
347,4 |
|
| Cash at bank and in hand |
52,4 |
66,8 |
|
| Creditors falling due within one year |
501,0 |
420,3 |
|
| Bank overdraft |
49,1 |
35,3 |
|
| Taxes |
62,0 |
46,7 |
|
| Payables (note 2) |
389.9 |
338,3 |
|
| Net Current Assets |
71,3 |
102,9 |
|
Notes
- Trade receivables
- Trade payables
|
329,8
236,2 |
285,4
210,8 |
1.2 Seagull can achieve a profit after tax of 20% on the capital employed. At present its capital structure is as follows;
200 000 ordinary shares of $1 each
$200 000
Retained earnings
100 000
300 000
The directors propose to raise an additional $126 000 from a rights issue.
The current share market price is $1, 80.
1.2.1 Calculate the number of shares that must be issued if the rights price is $1,60 $1,50 $1,40 $1,20.
(4)
1.2.2
Calculate the dilution in earnings per share in each case.
(4)
1.2.3 Calculate the price where the rights price is equal to capital employed/share.
(2 )
Question 2
(20)
An entity has the following information in its balance sheet:
|
$’000 |
| Ordinary shares of 50 cents |
2 |
500 |
| 8% preference shares of $1 each |
1 |
500 |
| 12% unsecured bonds |
1 |
000 |
The ordinary shares are currently quoted at 130c each, the bonds are trading at $72 per $100 nominal and the
preference shares at 52c each. The ordinary dividend of 15c has just been paid with an expected growth rate of
10%. Corporation tax is currently 30%.
Calculate the weighted average cost of capital for this entity.
Aug 29, 2021 | Uncategorized
Bledso Supply Corporation manufactures and sells cotton gauze. Expected sales of gauze (in boxes) for upcoming months are as follows:
|
June
|
36,000
|
|
July
|
40,000
|
|
August
|
50,000
|
|
September
|
38,000
|
|
October
|
30,000
|
|
November
|
24,000
|
|
December
|
35,000
|
Management likes to maintain a finished goods inventory equal to 25% of the next month’s estimated sales.
Required:
Prepare the company’s production budget for the third quarter of this year (the months of July, August and September) in good form. Include a column for each month and a total column for the entire quarter.
Aug 29, 2021 | Uncategorized
Weldon Industrial Gas Corporation supplies acetylene and other compressed gases to industry. Data regarding the store’s operations follow:
· Sales are budgeted at $360,000 for November, $380,000 for December, and $350,000 for January.
· Collections are expected to be 75% in the month of sale, 20% in the month following the sale, and 5% uncollectible.
- The cost of goods sold is 65% of sales.
· The company purchases 60% of its merchandise in the month prior to the month of sale and 40% in the month of sale. Payment for merchandise is made in the month following the purchase.
· Other monthly expenses to be paid in cash are $21,900.
- Monthly depreciation is $20,000.
- Ignore taxes.
Statement of Financial Position
October 31
Assets
|
Cash
|
$ 16,000
|
|
Accounts receivable
|
|
|
(net of allowance for uncollectible accounts)
|
74,000
|
|
Inventory
|
140,400
|
|
Property, plant and equipment
|
|
|
(net of $500,000 accumulated depreciation)
|
1,066,000
|
|
Total assets
|
$1,296,400
|
Liabilities and Stockholders’ Equity
|
Accounts payable
|
$ 240,000
|
|
Common stock
|
640,000
|
|
Retained earnings
|
416,400
|
|
Total liabilities and stockholders’ equity
|
$1,296,400
|
Required:
a. Prepare a Schedule of Expected Cash Collections for November and December.
b. Prepare a Merchandise Purchases Budget for November and December.
c. Prepare Cash Budgets for November and December.
d. Prepare Budgeted Income Statements for November and December.
e. Prepare a Budgeted Balance Sheet for the end of December.
Aug 29, 2021 | Uncategorized
Caprice Corporation is a wholesaler of industrial goods. Data regarding the store’s operations follow:
· Sales are budgeted at $350,000 for November, $320,000 for December, and $300,000 for January.
· Collections are expected to be 80% in the month of sale, 16% in the month following the sale, and 4% uncollectible.
- The cost of goods sold is 70% of sales.
· The company purchases 60% of its merchandise in the month prior to the month of sale and 40% in the month of sale. Payment for merchandise is made in the month following the purchase.
· The November beginning balance in the accounts receivable account is $78,000.
· The November beginning balance in the accounts payable account is $254,000.
Required:
a. Prepare a Schedule of Expected Cash Collections for November and December.
b. Prepare a Merchandise Purchases Budget for November and December.
Aug 29, 2021 | Uncategorized
The following standards have been established for a raw material used in the production of product G13:
|
Standard quantity of the material per unit of output
|
2.3 liters
|
|
Standard price of the material
|
$19.00 per liter
|
The following data pertain to a recent month’s operations:
|
Actual material purchased
|
5,100 liters
|
|
Actual cost of material purchased
|
$100,725
|
|
Actual material used in production
|
4,700 liters
|
|
Actual output
|
2,040 units of product G13
|
Required:
a. What is the materials price variance for the month?
b. What is the materials quantity variance for the month?
c. Prepare journal entries to record the purchase and use of the raw material during the month. (All raw materials are purchased on account.)
Aug 29, 2021 | Uncategorized
The following materials standards have been established for a particular product:
|
Standard quantity per unit of output
|
0.2 grams
|
|
Standard price
|
$18.90 per gram
|
The following data pertain to operations concerning the product for the last month:
|
Actual materials purchased
|
4,800 grams
|
|
Actual cost of materials purchased
|
$86,880
|
|
Actual materials used in production
|
4,200 grams
|
|
Actual output
|
21,080 units
|
Required:
a. What is the materials price variance for the month?
b. What is the materials quantity variance for the month?
Aug 29, 2021 | Uncategorized
The following standards have been established for a raw material used to make product I92:
|
Standard quantity of the material per unit of output
|
4.5 pounds
|
|
Standard price of the material
|
$13.90 per pound
|
The following data pertain to a recent month’s operations:
|
Actual material purchased
|
2,000 pounds
|
|
Actual cost of material purchased
|
$26,200
|
|
Actual material used in production
|
1,300 pounds
|
|
Actual output
|
220 units of product I92
|
Required:
a. What is the materials price variance for the month?
b. What is the materials quantity variance for the month?
Aug 29, 2021 | Uncategorized
The following direct labor standards have been established for product N30A:
|
Standard direct labor hours
|
3.3 hours per unit of N30A
|
|
Standard direct labor wage rate
|
$10.50 per hour
|
The following data pertain to the most recent month’s operations during which 400 units of product N30A were made:
|
Actual direct labor hours worked
|
1,100
|
|
Actual direct labor wages paid
|
$11,385
|
Required:
a. What was the labor rate variance for the month?
b. What was the labor efficiency variance for the month?
c. Prepare a journal entry to record direct labor costs during the month, including the direct labor variances.
Aug 29, 2021 | Uncategorized
The following labor standards have been established for a particular product:
|
Standard labor hours per unit of output
|
3.2 hours
|
|
Standard labor rate
|
$19.10 per hour
|
The following data pertain to operations concerning the product for the last month:
|
Actual hours worked
|
5,500 hours
|
|
Actual total labor cost
|
$105,050
|
|
Actual output
|
1,900 units
|
Required:
a. What is the labor rate variance for the month?
b. What is the labor efficiency variance for the month?
Aug 29, 2021 | Uncategorized
The following direct labor standards have been established for product S57S:
|
Standard direct labor hours
|
1.5 hours per unit of S57S
|
|
Standard direct labor wage rate
|
$14.70 per hour
|
The following data pertain to last month’s operations:
|
Actual output of product S57S
|
720 units
|
|
Actual direct labor hours worked
|
1,000
|
|
Actual direct labor wages paid
|
$14,800
|
Required:
a. What was the labor rate variance for the month?
b. What was the labor efficiency variance for the month?
Aug 29, 2021 | Uncategorized
The following standards for variable manufacturing overhead have been established for a company that makes only one product:
|
Standard hours per unit of output
|
0.6 hours
|
|
Standard variable overhead rate
|
$17.55 per hour
|
The following data pertain to operations for the last month:
|
Actual hours
|
6,200 hours
|
|
Actual total variable overhead cost
|
$110,670
|
|
Actual output
|
10,200 units
|
Required:
a. What is the variable overhead spending variance for the month?
b. What is the variable overhead efficiency variance for the month?
Aug 29, 2021 | Uncategorized
Deschamp Corporation’s variable manufacturing overhead is applied on the basis of direct labor hours. The company has established the following variable manufacturing overhead standards for product O28H:
|
Standard direct labor hours
|
2.5 hours per unit of O28H
|
|
Standard variable manufacturing overhead rate
|
$7.70 per hour
|
The following data pertain to the most recent month’s operations during which 2,160 units of product O28H were made:
|
Actual direct labor hours worked
|
5,200
|
|
Actual variable manufacturing overhead incurred
|
$44,980
|
Required:
a. What was the variable overhead spending variance for the month?
b. What was the variable overhead efficiency variance for the month?
Aug 29, 2021 | Uncategorized
Pardun Corporation’s management keeps track of the time it takes to process orders.
During the most recent month, the following average times were recorded per order:
| |
Days
|
|
Wait time
|
15.6
|
|
Inspection time
|
0.8
|
|
Process time
|
1.6
|
|
Move time
|
0.7
|
|
Queue time
|
3.9
|
Required:
a. Compute the throughput time.
b. Compute the manufacturing cycle efficiency (MCE).
c. What percentage of the production time is spent in non value added activities?
d. Compute the delivery cycle time.
Aug 29, 2021 | Uncategorized
Lindon Company’s flexible budget for variable manufacturing overhead is given below:
| |
Cost Formula
|
6,000
|
8,000
|
10,000
|
|
Overhead costs
|
per DLH
|
DLHs
|
DLHs
|
DLHs
|
|
Supplies
|
$0.20
|
$1,200
|
$1,600
|
$2,000
|
|
Indirect labor
|
0.50
|
3,000
|
4,000
|
5,000
|
|
Utilities
|
0.05
|
300
|
400
|
500
|
|
Total overhead cost
|
$0.75
|
$4,500
|
$6,000
|
$7,500
|
During a recent period, the company produced 2,500 units of product using 7,600 direct labor hours (DLHs). The standard allows 3 direct labor hours per unit. Actual variable overhead costs incurred were:
|
Supplies
|
$1,900
|
|
Indirect labor
|
3,040
|
|
Utilities
|
570
|
|
Total overhead cost
|
$5,510
|
The company had originally budgeted to produce 2,600 units during the period using 7,800 direct labor hours.
Required:
Prepare a performance report for the period showing only the spending variances for each overhead cost category.
Aug 29, 2021 | Uncategorized
The following overhead data are for a department in a large company.
| |
Actual Costs
|
Static
|
| |
Incurred
|
Budget
|
|
Activity level (in units)
|
400
|
380
|
|
Variable costs:
|
|
|
|
Indirect materials
|
$9,050
|
$8,132
|
|
Power
|
$2,540
|
$2,394
|
|
Fixed costs:
|
|
|
|
Administration
|
$5,080
|
$5,100
|
|
Rent
|
$8,590
|
$8,600
|
Required:
Prepare a report that would be useful in assessing how well costs were controlled in this department.
Aug 29, 2021 | Uncategorized
Layt Clock Company has developed the following flexible budget for its overhead costs. Manufacturing overhead at Layt is applied to production on the basis of standard machine hours:
| |
Machine Hours
|
| |
21,600
|
24,000
|
26,400
|
|
Clocks produced
|
18,000
|
20,000
|
22,000
|
|
Variable overhead cost
|
$127,440
|
$141,600
|
$155,760
|
|
Fixed overhead cost
|
$171,072
|
$171,072
|
$171,072
|
Layt was expecting to produce 22,000 clocks last year. The actual results for the year were as follows:
|
Number of clocks produced
|
21,500
|
|
Machine hours incurred
|
24,940
|
|
Variable overhead cost
|
$145,899
|
|
Fixed overhead cost
|
$170,540
|
Required:
Compute all four manufacturing overhead variances for Layt.
Aug 29, 2021 | Uncategorized
Parker Company uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of standard direct labor hours. The company’s total budgeted variable and fixed manufacturing overhead costs at the denominator level of activity are $14,000 for variable overhead and $6,000 for fixed overhead. The predetermined overhead rate, including both fixed and variable components, is $4 per direct labor hour. The standards call for 2 direct labor hours per unit of output produced. Last year, the company produced 3,000 units of product and worked 6,200 direct labor hours. Actual costs were$15,500 for variable overhead and $6,300 for fixed overhead.
Required:
a. What is the denominator level of activity?
b. What were the standard hours allowed for the output last year?
c. What was the variable overhead spending variance?
d. What was the variable overhead efficiency variance?
e. What was the fixed overhead budget variance?
f. What was the fixed overhead volume variance?
Aug 29, 2021 | Uncategorized
Cajun Candy Corporation manufactures giant gourmet suckers. The cost standards developed by Cajun appear below. Manufacturing overhead at Cajun is applied to production on the basis of standard direct labor hours:
| |
Standard
quantity
per sucker
|
Standard cost
per ounce or
hour
|
Standard
cost per
sucker
|
|
Direct materials
|
0.75 ounces
|
$20.00
|
$15.00
|
|
Direct labor
|
1.2 hours
|
$12.00
|
14.40
|
|
Variable overhead
|
1.2 hours
|
$3.00
|
3.60
|
|
Fixed overhead
|
1.2 hours
|
$5.00
|
6.00
|
|
Total standard cost per sucker
|
|
|
$39.00
|
The standards above were based on an expected annual volume of 8,000 suckers. The actual results for last year were as follows:
|
Number of suckers produced
|
8,200
|
|
Direct labor hours incurred
|
10,000
|
|
Ounces of direct materials purchased
|
7,900
|
|
Ounces of direct materials used in production
|
6,070
|
|
Total cost of direct materials purchased
|
$156,815
|
|
Total direct labor cost
|
$122,800
|
|
Total variable overhead cost
|
$28,600
|
|
Total fixed overhead cost
|
$47,500
|
Required:
Compute the following variances for Cajun.
a. Materials price variance.
b. Materials quantity variance.
c. Labor rate variance.
d. Variable overhead spending variance.
e. Variable overhead efficiency variance.
f. Fixed overhead budget variance.
Aug 29, 2021 | Uncategorized
Eastern Company uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of standard direct labor hours (DLHs). The denominator activity level is 60,000 direct labor hours, or 300,000 units.
· A standard cost card for the company’s product follows:
| |
Standard
quantity or
hours
|
Standard price or
rate
|
Standard
cost
|
|
Direct materials
|
0.25 kilogram
|
$16 per kilogram
|
$4
|
|
Direct labor
|
0.20 DLH
|
$10 per DLH
|
2
|
|
Variable overhead
|
0.20 DLH
|
$5 per DLH
|
1
|
|
Fixed overhead
|
0.20 DLH
|
$10 per DLH
|
2
|
|
Total standard cost
|
|
|
$9
|
- Actual data for the year follow:
|
Units produced and sold
|
330,000
|
|
Actual direct labor hours worked
|
64,800
|
|
Actual variable manufacturing overhead cost
|
$327,240
|
|
Actual fixed manufacturing overhead cost
|
$612,000
|
Required:
a. Compute the variable manufacturing overhead spending and efficiency variances.
b. Compute the fixed manufacturing overhead budget and volume variances.
Aug 29, 2021 | Uncategorized
Pierce Company uses a standard cost system in which it applies manufacturing overhead to its product on the basis of standard direct labor hours (DLHs). Below is the standard cost card for the product:
|
Direct materials, 4.5 feet at $3.80 per foot
|
$17.10
|
|
Direct labor, 3.0 DLHs at $9.50 per DLH
|
28.50
|
|
Variable overhead, 3.0 DLHs at $2.00 per DLH
|
6.00
|
|
Fixed overhead, 3.0 DLHs at $8.00 per DLH
|
24.00
|
| |
$75.60
|
Last year, the company produced 6,000 units of product using 17,000 direct labor hours. The actual total fixed overhead cost for the year was $140,000 and the volume variance was $12,000, favorable.
Required:
a. Compute the total fixed overhead cost that was originally budgeted.
b. Compute the denominator activity figure that the company used in computing predetermined overhead rates.
Aug 29, 2021 | Uncategorized
Lakeshore Tours Inc., operates a large number of tours throughout the United States.
A study has indicated that some of the tours are not profitable, and consideration is being given to dropping these tours in order to improve the company’s overall operating performance. One such tour is a two day Battlefields of the French and Indian Wars bus tour. An income statement from one of these tours is given below:
|
Ticket revenue
|
|
|
|
|
(100 seats × 45% occupancy × $80 ticket price)
|
|
$3,600
|
100%
|
|
Less variable expenses ($24 per person)
|
|
1,080
|
30%
|
|
Contribution margin
|
|
2,520
|
70%
|
|
Less fixed tour expenses:
|
|
|
|
|
Tour promotion
|
$620
|
|
|
|
Salary of bus driver
|
400
|
|
|
|
Fee, tour guide
|
825
|
|
|
|
Fuel for bus
|
100
|
|
|
|
Depreciation of bus
|
400
|
|
|
|
Liability insurance, bus
|
250
|
|
|
|
Overnight parking fee, bus
|
50
|
|
|
|
Room and meals, bus driver and tour guide
|
75
|
|
|
|
Bus maintenance and preparation
|
325
|
|
|
|
Total fixed tour expenses
|
|
3,045
|
|
|
Net operating loss
|
|
$ (525)
|
|
Dropping this tour would not affect the number of buses in the company’s fleet or the number of bus drivers on the company’s payroll. Buses do not wear out through use; rather, they eventually become obsolete. Bus drivers are paid fixed annual salaries; tour guides are paid for each tour conducted. The “Bus maintenance and preparation” cost above is an allocation of the salaries of mechanics and other service personnel who are responsible for keeping the company’s fleet of buses in good operating condition. There would be no change in the number of mechanics and other service personnel as a result of dropping this tour. The liability insurance depends upon the number of buses in the company’s fleet and not upon how much they are used.
Required:
a. Prepare an analysis showing what the impact will be on company profits if this tour is discontinued.
b. The company’s tour director has been criticized because only about 50% of the seats on the company’s tours are being filled as compared to an average of 60% for the industry. The tour director has explained that the company’s average seat occupancy could be improved considerably by eliminating about 10% of the tours, but that doing so would reduce profits. Do you agree with the tour director’s conclusion? Explain your response.
Aug 29, 2021 | Uncategorized
Parkins Company produces and sells a single product. The company’s income statement for the most recent month is given below:
|
Sales (6,000 units at $40 per unit)
|
$240,000
|
|
Less manufacturing costs:
|
|
|
Direct materials
|
$48,000
|
|
Direct labor (variable)
|
60,000
|
|
Variable factory overhead
|
12,000
|
|
Fixed factory overhead
|
30,000
|
150,000
|
|
Gross margin
|
|
90,000
|
|
Less selling and other expenses:
|
|
|
|
Variable selling and other expenses
|
24,000
|
|
|
Fixed selling and other expenses
|
42,000
|
66,000
|
|
Net operating income
|
|
$ 24,000
|
There are no beginning or ending inventories.
Required:
a. Compute the company’s monthly break even point in units of product.
b. What would the company’s monthly net operating income be if sales increased by 25% and there is no change in total fixed expenses?
c. What dollar sales must the company achieve in order to earn a net operating income of $50,000 per month?
d. The company has decided to automate a portion of its operations. The change will reduce direct labor costs per unit by 40 percent, but it will double the costs for fixed factory overhead. Compute the new break even point in units.
Aug 29, 2021 | Uncategorized
Zoran Corporation manufactures and sellsa single product; cordless telephones. Zoran is considering upgrading its current manufacturing facilities with more modern equipment. Relevant cost data under the current facility and the upgraded facility is provided below:
| |
Current
|
Upgraded
|
|
Manufacturing costs:
|
|
|
|
Direct materials cost per unit
|
$20.00
|
$20.00
|
|
Direct labor cost per unit
|
$18.00
|
$10.00
|
|
Variable overhead cost per unit
|
$34.00
|
$24.00
|
|
Fixed overhead cost in total
|
$43,000
|
$160,000
|
|
Selling and administrative expenses:
|
|
|
|
Variable expense per unit
|
$5.00
|
$5.00
|
|
Fixed expense in total
|
$12,000
|
$12,000
|
Under either system, Zoran will sell the cordless phones for $125 per phone.
Required:
a. What is the break even point (in number of phones) of each option?
b. At what level of sales (in number of phones) will it start being more profitable for Zoran to have the upgraded facilities?
Aug 29, 2021 | Uncategorized
Penury Company offers two products. At present, the following represents the usual results of a month’s operations:
|
Product K
|
Product L
|
| |
Amount
|
Per Unit
|
Amount
|
Per Unit
|
Combined Amount
|
|
Sales revenue
|
$120,000
|
$1.20
|
$80,000
|
$0.80
|
$200,000
|
|
Variable expenses
|
60,000
|
0.60
|
60,000
|
0.60
|
120,000
|
|
Contribution margin
|
$ 60,000
|
$0.60
|
$20,000
|
$0.20
|
80,000
|
|
Fixed expenses
|
|
|
|
|
50,000
|
|
Net operating income
|
|
|
|
|
$ 30,000
|
Required:
a. Find the break even point in terms of dollars.
b. Find the margin of safety in terms of dollars.
c. The company is considering decreasing product K’s unit sales to 80,000 and increasing product L’s unit sales to 180,000, leaving unchanged the selling price per unit, variable expense per unit, and total fixed expenses. Would you advise adopting this plan?
d. Refer to (c) above. Under the new plan, find the break even point in terms of dollars.
e. Under the new plan in (c) above, find the margin of safety in terms of dollars.
Aug 29, 2021 | Uncategorized
Lobo, International has two divisions, Manufacturing and Retail which had the following operating results over the last two years:
| |
Manufacturing
|
Division
|
Retail Division
|
| |
Year 1
|
Year 2
|
Year 1
|
Year 2
|
|
Sales (in units)
|
5,000
|
6,500
|
2,000
|
2,400
|
|
Sales (in dollars)
|
$400,000
|
$520,000
|
$250,000
|
$300,000
|
|
Less cost of goods sold
|
290,000
|
353,000
|
160,000
|
192,000
|
|
Gross margin
|
110,000
|
167,000
|
90,000
|
108,000
|
|
Less selling and administrative expenses
|
50,000
|
59,000
|
52,000
|
56,000
|
|
Net operating income
|
$ 60,000
|
$108,000
|
$ 38,000
|
$ 52,000
|
Assume that the cost structure in each division above did not change over the two years. Use the high low method as needed to estimate variable and fixed expenses.
Required:
a. Calculate the break even point in sales dollars for each division.
b. Calculate the degree of operating leverage for the Manufacturing Division for each year.
Aug 29, 2021 | Uncategorized
1. HJ Turner Corporation produces a single product. Data concerning the company’s operations last year appear below:
|
Units in beginning inventory
|
0
|
|
Units produced
|
10,000
|
|
Units sold
|
9,000
|
|
Selling price per unit
|
$60
|
|
Variable costs per unit:
|
|
|
Direct materials
|
$15
|
|
Direct labor
|
$5
|
|
Variable manufacturing overhead
|
$2
|
|
Variable selling and administrative
|
$4
|
|
Fixed costs in total:
|
|
|
Fixed manufacturing overhead
|
$200,000
|
|
Fixed selling and administrative
|
$70,000
|
Assume direct labor is a variable cost.
Required:
a. Compute the unit product cost under both absorption and variable costing.
b. Prepare an income statement for the year using absorption costing.
c. Prepare an income statement for the year using variable costing.
d. Prepare a report reconciling the difference in net operating income between absorption and variable costing for the year.
Aug 29, 2021 | Uncategorized
Duif Company’s absorption costing income statements for the last two years are presented below:
| |
Year 1
|
Year 2
|
|
Sales
|
$70,000
|
$90,000
|
|
Less cost of goods sold:
|
|
|
|
Beginning inventory
|
0
|
6,000
|
|
Add cost of goods manufactured
|
48,000
|
48,000
|
|
Goods available for sale
|
48,000
|
54,000
|
|
Less ending inventory
|
6,000
|
0
|
|
Cost of goods sold
|
42,000
|
54,000
|
|
Gross margin
|
28,000
|
36,000
|
|
Less selling & admin. expenses
|
25,000
|
31,000
|
|
Net operating income
|
$ 3,000
|
$ 5,000
|
Data on units produced and sold in each of these years are given below:
| |
Year 1
|
Year 2
|
|
Units in beginning inventory
|
0
|
1,000
|
|
Units produced
|
8,000
|
8,000
|
|
Units sold
|
7,000
|
9,000
|
Fixed factory overhead totaled $16,000 in each year. This overhead was applied to products at a rate of $2 per unit. Variable selling and administrative expenses were $3 per unit sold.
Required:
a. Compute the unit product cost in each year under variable costing.
b. Prepare new income statements for each year using variable costing.
c. Reconcile the absorption costing and variable costing net operating income for each year.
Aug 29, 2021 | Uncategorized
Vitamin T Shirts, Inc. budgeted the following costs for its first year of manufacturing operations. These costs are based on a volume of 50,000 T shirts produced and sold:
| |
Total variable
cost per year
|
Total fixed
cost per year
|
|
Direct materials
|
$36,000
|
–
|
|
Direct labor
|
$24,000
|
–
|
|
Manufacturing overhead
|
$60,000
|
$72,000
|
|
Selling and administrative
|
$12,000
|
$48,000
|
During the first year of operations, Vitamin actually produced 50,000 T shirts but only sold 48,000 T shirts. Actual costs did not fluctuate from the cost behavior patterns described above. The 48,000 T shirts were sold for $10 per T shirt.
Required:
Using the variable costing method, prepare Vitamin T Shirts’ income statement for the year.
Aug 29, 2021 | Uncategorized
Swagg Jewelry Corporation manufactures custom jewelry. In the past, Swagg has been using a traditional overhead allocation system based solely on direct labor hours.
Sensing that this system was distorting costs and selling prices, Swagg has decided to switch to an activity based costing system using three activity cost pools. Information on these activity cost pools are as follows:
|
Activity Cost Pool
|
Estimated Activity
|
Estimated Overhead Cost
|
|
Labor related
|
8,000
|
direct labor hours
|
$40,000
|
|
Machine related
|
12,500
|
machine hours
|
$50,000
|
|
Quality control
|
800
|
number of inspections
|
$12,000
|
Job #309 incurred $900 of direct material, 30 hours of direct labor at $40 per hour, 80 machine hours, and 5 inspections.
Required:
a. What is the cost of the job under the activity based costing system?
b. Relative to the activity based costing system, would Job #309 have been overcosted or undercosted under the traditional system and by how much?
Aug 29, 2021 | Uncategorized
Imai Draperies makes custom draperies for homes and businesses. The company uses an activity based costing system for its overhead costs. The company has provided the following data concerning its annual overhead costs and its activity cost pools.
|
Overhead costs:
|
|
|
Production overhead
|
$240,000
|
|
Office expense
|
160,000
|
|
Total
|
$400,000
|
Distribution of resource consumption:
| |
Making
|
Job
|
|
|
|
Activity Cost Pools
|
Drapes
|
Support
|
Other
|
Total
|
|
Production overhead
|
35%
|
45%
|
20%
|
100%
|
|
Office expense
|
15%
|
55%
|
30%
|
100%
|
The “Other” activity cost pool consists of the costs of idle capacity and organization sustaining costs.
The amount of activity for the year is as follows:
|
Activity Cost Pool
|
Annual Activity
|
|
Making drapes
|
4,000 yards
|
|
Job support
|
100 jobs
|
|
Other
|
Not applicable
|
Required:
a. Prepare the first stage allocation of overhead costs to the activity cost pools by filling in the table below:
| |
Making
|
Job
|
|
|
| |
Drapes
|
Support
|
Other
|
Total
|
|
Production overhead
|
|
|
|
|
|
Office expense
|
|
|
|
|
|
Total
|
|
|
|
|
b. Compute the activity rates (i.e., cost per unit of activity) for the Making Drapes and Job Support activity cost pools by filling in the table below:
| |
Making
|
Job
|
| |
Drapes
|
Support
|
|
Production overhead
|
|
|
|
Office expense
|
|
|
|
Total
|
|
|
c. Prepare an action analysis report in good form of a job that involves making 53 yards of drapes and has direct materials and direct labor cost of $1,480. The sales revenue from this job is $5,200. For purposes of this action analysis report, direct materials and direct labor should be classified as a Green cost; production overhead as a Red cost; and office expense as a Yellow cost.
Aug 29, 2021 | Uncategorized
Hastings Hardwood Floors installs oak and other hardwood floors in homes and businesses. The company uses an activity based costing system for its overhead costs. The company has provided the following data concerning its annual overhead costs and its activity based costing system:
|
Overhead costs:
|
|
|
Production overhead
|
$110,000
|
|
Office expense
|
130,000
|
|
Total
|
$240,000
|
Distribution of resource consumption:
|
Activity Cost Pools
|
Installing Floor
|
Job Supports
|
Other
|
Total
|
|
Production overhead
|
50%
|
30%
|
20%
|
100%
|
|
Office expense
|
5%
|
65%
|
30%
|
100%
|
The “Other” activity cost pool consists of the costs of idle capacity and organization sustaining costs.
The amount of activity for the year is as follows:
|
Activity Cost Pool
|
Annual Activity
|
|
Installing floors
|
400 squares
|
|
Job support
|
100 jobs
|
|
Other
|
Not applicable
|
A “”square”” is a measure of area that is roughly equivalent to1,000 square feet.
Required:
a. Prepare the first stage allocation of overhead costs to the activity cost pools by filling in the table below:
| |
Installing
|
Job
|
|
|
| |
Floors
|
Support
|
Other
|
Total
|
|
Production overhead
|
|
|
|
|
|
Office expense
|
|
|
|
|
|
Total
|
|
|
|
|
b. Compute the activity rates (i.e., cost per unit of activity)for the Installing Floors and Job Support activity cost pools by filling in the table below:
| |
Installing
|
Job
|
| |
Floors
|
Support
|
|
Production overhead
|
|
|
|
Office expense
|
|
|
|
Total
|
|
|
c. Compute the overhead cost, according to the activity based costing system, of a job that involves installing 1.8 squares.
Aug 29, 2021 | Uncategorized
Goldbard Company, a wholesale distributor, uses activity based costing for its overhead costs. The company has provided the following data concerning its annual overhead costs and its activity based costing system:
|
Overhead costs:
|
|
|
Wages and salaries
|
$540,000
|
|
Nonwage expenses
|
220,000
|
|
Total
|
$760,000
|
Distribution of resource consumption:
|
Activity Cost Pools
|
Installing Floor
|
Job Supports
|
Other
|
Total
|
|
Wages and salaries
|
55%
|
35%
|
10%
|
100%
|
|
Nonwage expenses
|
15%
|
65%
|
20%
|
100%
|
The “Other” activity cost pool consists of the costs of idle capacity and organization sustaining costs.
The amount of activity for the year is as follows:
|
Activity Cost Pool
|
Annual Activity
|
|
Filling orders
|
3,000 orders
|
|
Product support
|
30 products
|
|
Other
|
Not applicable
|
Required:
Compute the activity rates (i.e., cost per unit of activity) for the Filling Orders and Product Support activity cost pools by filling in the table below:
| |
Filling
|
Product
|
| |
Orders
|
Support
|
|
Wages and salaries
|
|
|
|
Nonwage expenses
|
|
|
|
Total
|
|
|
Aug 29, 2021 | Uncategorized
Fields & Maaner PLC, a consulting firm, uses an activity based costing in which there are three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system:
|
Costs:
|
|
|
Wages and salaries
|
$560,000
|
|
Travel expenses
|
140,000
|
|
Other expenses
|
140,000
|
|
Total
|
$840,000
|
Distribution of resource consumption:
| |
Working On
|
Business
|
|
|
|
Activity Cost Pools
|
Engagements
|
Development
|
Other
|
Total
|
|
Wages and salaries
|
45%
|
25%
|
30%
|
100%
|
|
Travel expenses
|
60%
|
30%
|
10%
|
100%
|
|
Other expenses
|
30%
|
30%
|
40%
|
100%
|
Required:
a. How much cost, in total, would be allocated to the Working On Engagements activity cost pool?
b. How much cost, in total, would be allocated to the Business Development activity cost pool?
c. How much cost, in total, would be allocated to the Other activity cost pool?
Aug 29, 2021 | Uncategorized
Duckhorn Housecleaning provides housecleaning services to its clients. The company uses an activity based costing system for its overhead costs. The company has provided the following data from its activity based costing system.
|
Activity Cost Pool
|
Total Cost
|
Total Activity
|
|
Cleaning
|
$645,576
|
72,700 hours
|
|
Job support
|
$129,546
|
5,400 jobs
|
|
Client support
|
$ 20,900
|
760 clients
|
|
Other
|
$110,000
|
Not applicable
|
|
Total
|
$906,022
|
|
The “”Other”” activity cost pool consists of the costs of idle capacity and organization sustaining costs.
One particular client, the Lumbard family, requested 31 jobs during the year that required a total of 62 hours of housecleaning. For this service, the client was charged $1,620
Required:
a. Compute the activity rates (i.e., cost per unit of activity) for the activity cost pools.
Round off all calculations to the nearest whole cent.
b. Using the activity based costing system, compute the customer margin for the Lumbard family. Round off all calculations to the nearest whole cent.
c. Assume the company decides instead to use a traditional costing system in which ALL costs are allocated to customers on the basis of cleaning hours. Compute the margin for the Lumbard family. Round off all calculations to the nearest whole cent.
Aug 29, 2021 | Uncategorized
Jardon Painting paints the interiors and exteriors of homes and commercial buildings.
The company uses an activity based costing system for its overhead costs. The company has provided the following data concerning its activity based costing system.
|
Activity Cost Pool
|
Activity Measure
|
Annual Activity
|
|
Painting overhead
|
Square meters
|
10,000 square meters
|
|
Job support
|
Jobs
|
200 jobs
|
|
Other
|
None
|
Not applicable
|
The “Other” activity cost pool consists of the costs of idle capacity and organization sustaining costs.
The company has already finished the first stage of the allocation process in which costs were allocated to the activity cost centers. The results are listed below:
| |
Painting
|
Job Support
|
Other
|
Total
|
|
Painting overhead
|
$ 99,000
|
$ 77,000
|
$44,000
|
$220,000
|
|
Office expense
|
14,000
|
84,000
|
42,000
|
140,000
|
|
Total
|
$113,000
|
$161,000
|
$86,000
|
$360,000
|
Required:
a. Compute the activity rates (i.e., cost per unit of activity) for the Painting and Job Support activity cost pools by filling in the table below. Round off all calculations to the nearest whole cent.
| |
|
Job
|
| |
Painting
|
Support
|
|
Painting overhead
|
|
|
|
Office expense
|
|
|
|
Total
|
|
|
b. Prepare an action analysis report in good form of a job that involves painting 69 square meters and has direct materials and direct labor cost of $2,190. The sales revenue from this job is $3,400. For purposes of this action analysis report, direct materials and direct labor should be classified as a Green cost; painting overhead as a Red cost; and office expense as a Yellow cost.
Aug 29, 2021 | Uncategorized
Cabalo Company manufactures two products, Product C and Product D. The company estimated it would incur $130,890 in manufacturing overhead costs during the current period. Overhead currently is applied to the products on the basis of direct labor hours. Data concerning the current period’s operations appear below:
| |
Product C
|
Product D
|
|
Estimated unit production
|
400 units
|
1,200 units
|
|
Direct labor hours per unit
|
0.70 hour
|
1.20 hours
|
|
Direct materials cost per unit
|
$10.70
|
$16.70
|
|
Direct labor cost per unit
|
$11.20
|
$19.20
|
Required
a. Compute the predetermined overhead rate under the current method, and determine the unit product cost of each product for the current year.
b. The company is considering using an activity based costing system to compute unit product costs for external financial reports instead of its traditional system based on direct labor hours. The activity based costing system would use three activity cost pools. Data relating to these activities for the current period are given below:
|
Estimated Overhead
|
Expected Activity
|
|
Activity Cost Pool
|
Costs
|
Product C
|
Product C
|
Total
|
|
Machine setups
|
$ 13,570
|
100
|
130
|
230
|
|
Purchase orders
|
91,520
|
810
|
1,270
|
2,080
|
|
General factory
|
25,800
|
280
|
1,440
|
1,720
|
| |
$130,890
|
|
|
|
Determine the unit product cost of each product for the current period using the activity based costing approach.
Aug 29, 2021 | Uncategorized
Danno Company manufactures two products, Product F and Product G. The company expects to produce and sell 600 units of Product F and 6,000 units of Product G during the current year. The company uses activity based costing to compute unit product costs for external reports. Data relating to the company’s three activity cost pools are given below for the current year:
|
Estimated Overhead
|
Expected Activity
|
|
Activity Cost Pool
|
Costs
|
Product F
|
Product G
|
Total
|
|
Machine setups
|
$5,250
|
60
|
150
|
210
|
|
Purchase orders
|
$74,100
|
620
|
1,280
|
1,900
|
|
General factory
|
$89,880
|
840
|
12,000
|
12,840
|
| |
$130,890
|
|
|
|
Required:
Using the activity based costing approach, determine the overhead cost per unit for each product.
Aug 29, 2021 | Uncategorized
Mate Boomerang Corporation manufactures and sells plastic boomerangs. Expected boomerang sales (in units) for the upcoming months are as follows:
| |
July
|
Aug.
|
Sept.
|
Oct.
|
Nov.
|
Dec.
|
|
Expected unit sales
|
12,000
|
15,000
|
10,000
|
8,000
|
7,000
|
11,000
|
Seven ounces of plastic resin are needed to produce every boomerang. Mate likes to have enough plastic resin on hand at the end of the month to cover 25% of the next month’s production requirements. Mate also likes to maintain a finished goods inventory equal to 10% of the next month’s estimated sales.
Required:
How many ounces of plastic resin should Mate plan on purchasing during the month of October?
Aug 29, 2021 | Uncategorized
All sales at Meeks Company, a wholesaler, are made on credit. Experience has shown that 70% of the accounts receivable are collected in the month of the sale, 26% are collected in the month following the sale, and the remaining 4% are uncollectible. Actual sales for March and budgeted sales for the following four months are given below:
|
March (actual sales)
|
$200,000
|
|
April
|
$300,000
|
|
May
|
$500,000
|
|
June
|
$700,000
|
|
July
|
$400,000
|
The company’s cost of goods sold is equal to 60% of sales. All purchases of inventory are made on credit. Meeks Company pays for one half of a month’s purchases in the month of purchase, and the other half in the month following purchase. The company requires that end of month inventories be equal to 25% of the cost of goods sold for the next month.
Required:
a. Compute the amount of cash, in total, which the company can expect to collect in May.
b. Compute the budgeted dollar amount of inventory which the company should have on hand at the end of April.
c. Compute the amount of inventory that the company should purchase during the months of May and June.
d. Compute the amount of cash payments that will be made to suppliers during June for purchases of inventory.
Aug 29, 2021 | Uncategorized
The following information is budgeted for McCracken Plumbing Supply Company for next quarter:
| |
April
|
May
|
June
|
|
Sales
|
$110,000
|
$130,000
|
$180,000
|
|
Merchandise purchases
|
$85,000
|
$92,000
|
$105,000
|
|
Selling and administrative expenses
|
$50,000
|
$50,000
|
$50,000
|
All sales at McCracken are on credit. Forty percent are collected in the month of sale, 58% in the month following the sale, and the remaining 2% are uncollectible. Merchandise purchases are paid in full the month following the month of purchase. The selling and administrative expenses above include $8,000 of depreciation on display fixtures and warehouse equipment. All other selling and administrative expenses are paid as incurred. McCracken wants to maintain a cash balance of $15,000. Any amount below this can be borrowed from a local bank as needed in increments of $1,000. All borrowings are made at month end.
Required:
Prepare McCracken’s cash budget for the month of May. Use good form. McCracken expects to have $24,000 of cash on hand at the beginning of May.
Aug 29, 2021 | Uncategorized
The Fraley Company, a merchandising firm, has planned the following sales for the next four months:
| |
March
|
April
|
May
|
June
|
|
Total budgeted sales
|
$50,000
|
$70,000
|
$90,000
|
$60,000
|
Sales are made 40% for cash and 60% on account. From experience, the company has learned that a month’s sales on account are collected according to the following pattern:
|
Month of sale
|
70%
|
|
First month following month of sale
|
20%
|
|
Second month following month of sale
|
8%
|
|
Uncollectible
|
2%
|
The company requires a minimum cash balance of $4,000 to start a month.
Required:
a. Compute the budgeted cash receipts for June.
b. Assume the following budgeted data for June:
|
Purchases
|
$52,000
|
|
Selling and administrative expenses
|
$10,000
|
|
Depreciation
|
$8,000
|
|
Equipment purchases
|
$15,000
|
|
Cash balance, beginning of June
|
$6,000
|
Using this data, along with your answer to part (1) above, prepare a cash budget in good form for June. Clearly show any borrowing needed during the month. The company can borrow in any dollar amount, but will not pay any interest until the following month.
Aug 29, 2021 | Uncategorized
The Commonwealth Company uses a job order cost system and applies manufacturing overhead cost to jobs using a predetermined overhead rate based on the cost of materials used in production. At the beginning of the year, the following estimates were made as a basis for computing the predetermined overhead rate: manufacturing overhead cost, $186,000; direct materials cost, $155,000. The following transactions took place during the year (all purchases and services were acquired on account):
a. Raw materials purchased, $96,000.
b. Raw materials requisitioned for use in production (all direct materials), $88,000.
c. Utility bills incurred in the factory, $17,000.
d. Costs for salaries and wages incurred as follows:
Direct labor, $174,000
Indirect labor, $70,000
Selling and administrative salaries, $124,000
e. Maintenance costs incurred in the factory, $12,000.
f. Advertising costs incurred, $98,000.
g. Depreciation recorded for the year, $75,000 (75% relates to factory assets and the remainder relates to selling and administrative assets).
h. Rental cost incurred on buildings, $80,000 (80% of the space is occupied by the factory, and 20% is occupiedby sales and administration).
i. Miscellaneous selling and administrative costs incurred, $12,000.
j. Manufacturing overhead cost was applied to jobs.
k. Cost of goods manufactured for the year, $480,000.
l. Sales for the year (all on account) totaled $900,000. These goods cost $550,000 to manufacture
Required:
Prepare journal entries to record the information above. Key your entries to the letters a through l.
Aug 29, 2021 | Uncategorized
Anchor Inc. uses the weighted averagemethod in its process costing system. The following data concern the operations of the company’s first processing department for a recent month.
|
Work in process, beginning:
|
|
|
Units in process
|
800
|
|
Stage of completion with respect to materials
|
60%
|
|
Stage of completion with respect to conversion
|
10%
|
|
Costs in the beginning inventory:
|
|
|
Materials cost
|
$1,296
|
|
Conversion cost
|
$2,416
|
|
Units started into production during the month
|
16,000
|
|
Units completed and transferred out
|
16,500
|
|
Costs added to production during the month:
|
|
|
Materials cost
|
$47,076
|
|
Conversion cost
|
$497,213
|
|
Work in process, ending:
|
|
|
Units in process
|
300
|
|
Stage of completion with respect to materials
|
60%
|
|
Stage of completion with respect to conversion
|
70%
|
Required:
Prepare a production report for the department using the weighted average method.
Aug 29, 2021 | Uncategorized
Cagna Inc. uses the weighted average method in its process costing system. The following data concern the operations of the company’s first processing department for a recent month.
|
Work in process, beginning:
|
|
|
Units in process
|
700
|
|
Stage of completion with respect to materials
|
90%
|
|
Stage of completion with respect to conversion
|
10%
|
|
Units started into production during the month
|
15,000
|
|
Work in process, ending:
|
|
|
Units in process
|
500
|
|
Stage of completion with respect to materials
|
50%
|
|
Stage of completion with respect to conversion
|
40%
|
Required:
Using the weighted average method, determine the equivalent units of production for materials and conversion costs by compiling the “Quantity Schedule and Equivalent Units” portion of the production report.
Aug 29, 2021 | Uncategorized
Candice Corporation has decided to introduce a new product. The product can be manufactured using either a capital intensive or labor intensive method. The manufacturing method will not affect the quality or sales of the product. The estimated manufacturing costs of the two methods are as follows:
| |
Capital
|
Labor
|
| |
intensive
|
intensive
|
|
Variable manufacturing cost per unit
|
$14.00
|
$17.60
|
|
Fixed manufacturing cost per year
|
$2,440,000
|
$1,320,000
|
The company’s market research department has recommended an introductory selling price of $30 per unit for the new product. The annual fixed selling and administrative expenses of the new product are $500,000. The variable selling and administrative expenses are $2 per unit regardless of how the new product is manufactured.
Required:
a. Calculate the break even point in units if Candice Corporation uses the:
1. capital intensive manufacturing method.
2. labor intensive manufacturing method.
b. Determine the unit sales volume at which the net operating income is the same for the two manufacturing methods.
c. Assuming sales of 250,000 units, what is the degree of operating leverage if the company uses the:
1. capital intensive manufacturing method.
2. labor intensive manufacturing method.
d. What is your recommendation to management concerning which manufacturing method should be used?
Aug 29, 2021 | Uncategorized
HA3032 AUDITING AND ASSURANCE SERVICES
TRIMESTER 2, 2013
INDIVIDUAL ASSIGNMENT SOLUTIONS |
|
Assessment Value: 20%
Instructions:
1. This assignment is to be submitted in accordance with assessmentpolicy stated in the Subject Outline and Student Handbook.
2. It is the responsibility of the student who is submitting the work, toensure that the work is in fact her/his own work. Incorporatinganother’s work or ideas into one’s own work without appropriateacknowledgement is an academic offence. Students can submitall assignments for plagiarism checking (self check) on Blackboard before finalsubmission in the subject. For further details, please refer to theSubject Outline and Student Handbook
3. Maximum marks available: 20 marks.
4. Due date of submission: Friday 30th August, 2013. Requires both soft copy (SafeAssign) and hard copy to be submitted
ASSIGNMENT QUESTION
The following are independent situations and you should refer to APES (Accounting Professional and Ethical Standards 110 “Code of Ethics for Professional Accountants”) and the Corporations Act 2001 as a minimum for each situation. You need to identify any breaches (under what section) and why. You should also consider any remedy or alternative course of action that should have been considered for each where appropriate.
There is no word limit set for this assignment but it is expected that each question will be well covered and considered. Guidelines would be that each question should be of between 400 600 words
1) Rodney Brick is completing a Master of Accounting part time and has taken on a role as an auditing assistant with an audit/accounting firm and his first job is to assist with auditing the books of Daffey Jones Ltd, a major retailer. Whilst undertaking the audit, Rodney comes across certain financialinformation that he believes will assist him in completing one of theauditing assignments he is currently working on so he copies the information and uses it in theassignment, although he is careful by removing all reference to Daffey Jones in order topreserve the client’s confidentiality.
Question: Has Rodney breached any auditing standards/regulations and if so, what and why? (6 marks)
2) Bertha Bigga has been the engagement audit partner on the Wait Alert Limited (“WA”) account for a number of years. Roughly one year ago, WA’s long standing company secretary resigned and the company took almost nine months to find a replacement. At WA’s request, Bertha performed company secretarial duties during this period of time.
Question: Do you have any concerns and are there any breaches that have occurred here? (4 marks)
3) John Bartram is the son of the factory manager of one of your firm’s major audit clients, John Worst Foods Limited. John is studying accounting, with a specialisation in auditing at Holmes Institute. John applied for work during the summer where he could both earn money as well as gain first hand experience in his area of interest. He is assigned to the audit of John Worst’s Foods Limited where part of his audit work consisted of testing the internal controls of the cash payments and cash receipts system.
Q: What is the issue in this situation and what sections of the Act are bought into question? Is there something that should be in place with the audit firm? (4 marks)
(4) Ocean Adventures Limited is a large importer/wholesaler of luxury cruise boats and is currentlyexperiencing financial difficulties. Their audit firm is PVC Partners but they have not paid the audit fees for the pastthree years. The audit partner recently threatened to resign from the auditif the outstanding fees were not paid. To prevent this occurring, Ocean Adventures offered to supply AUDITRUS with a nine metre cruise boat as payment. The partner accepted this offer in full consideration of theoutstanding fees, even though the boat was only worth 75% of thebalance.
As a gift, Ocean Adventures also gave the partner a 15%shareholding in an unrelated company. At present these shares are worth $21,500.
Q: What if any, issues exist in this situation? Should PVC have accepted boat and the gift (consider each one separately in your answer). (6 marks)
Aug 29, 2021 | Uncategorized
ASSIGNMENT
Part A: (12 marks)
The last few years have been difficult economically but the owners of Johnsons P/L, a medium sized manufacturer of quality dining furniture is keen to grow the business. They have seen an increase in demand for their products from overseas and feel that they will need to increase their operation in order to continue to meet this demand. They are currently looking at a number of options to finance this expansion such as through debt and through equity raising (meaning they will need to “go public”). They have determined that they need to raise $60 million.
Giving consideration to the various options, you have been requested to advise the owners of Johnsons what the various options are, outlining the positives and negatives of each.
Required: write a report (should be extensive) to the owners detailing ALL the different options and considerations that you feel the owners should consider raising the $60 million.
Part B(8 marks)
Regardless of the advice you have given (Part A), the owners have decided to go “public” and issue an ‘IPO” They issue 30 million shares ($2.00), of which the payment on application is to $0.80 per share (closes 18th April 2013), $0.50 four weeks after allocation (allocation is 13th May 2013) and the remaining amount to be paid on 30th July 2013 (the call will be made on 30th June). The IPO attracts requests for 30.4 million shares. In this case, it exceeds the allowable number of shares and the directors decide to apply the “first come, first served” approach and return the excess back to the unlucky applicants
Required: You are to journalise the events (including dates and notations). You should assume that all monies were received on 18th April (applications). What other option did the directors have with the excess demand, returning the excess?
Aug 29, 2021 | Uncategorized
The Plastechnics Company began operations several years ago. The company purchased a building and, since only half of the space was needed for operations, the remaining space was rented to another firm for rental revenue of $20,000 per year. The success of Plastechnics Company’s product has resulted in the company needing more space. The renter’s lease will expire next month and Plastechnics will not renew the lease in order to use the space to expand operations and meet demand.
The company’s product requires materials that cost $25 per unit. The company employs a production supervisor whose salary is $2,000 per month. Production line workers are paid $15 per hour to manufacture and assemble the product. The company rents the equipment needed to produce the product at a rental cost of $1,500 per month. Additional equipment will be needed as production is expanded and the monthly rental charge for this equipment will be $900 per month. The building is depreciated on the straight line basis at $9,000 per year.
The company spends $40,000 per year to market the product. Shipping costs for each unit are $20 per unit. The company plans to liquidate several investments in order to expand production. These investments currently earn a return of $8,000 per year.
Required:
Complete the answer sheet above by placing an “”X”” under each heading that identifies the cost involved. The “”Xs”” can be placed under more than one heading for a single cost, e.g., a cost might be a sunk cost, an overhead cost, and a product cost. An “”X”” can thus be placed under each of these headings opposite the cost.
| |
Variable
Cost
|
Fixed
Cost
|
Direct
Materials
|
Direct
Labor
|
Manufacturing
Overhead
|
Period
Cost
|
Opportunity
Cost
|
Sunk
Cost
|
|
Rental
Revenue
|
|
|
|
|
|
|
|
|
|
Materials
costs
|
|
|
|
|
|
|
|
|
|
Production
supervisor
salary
|
|
|
|
|
|
|
|
|
|
Production
line workers
wages
|
|
|
|
|
|
|
|
|
|
Equipment
Rental
|
|
|
|
|
|
|
|
|
|
Building
Depreciation
|
|
|
|
|
|
|
|
|
|
Marketing
Costs
|
|
|
|
|
|
|
|
|
|
Shipping
Costs
|
|
|
|
|
|
|
|
|
|
Return on
Present investments
|
|
|
|
|
|
|
|
|
Aug 29, 2021 | Uncategorized
The following data (in thousands of dollars) have been taken from the accounting records of Larder Corporation for the just completed year.
|
Sales
|
$950
|
|
Purchases of raw materials
|
$170
|
|
Direct labor
|
$210
|
|
Manufacturing overhead
|
$200
|
|
Administrative expenses
|
$180
|
|
Selling expenses
|
$140
|
|
Raw materials inventory, beginning
|
$70
|
|
Raw materials inventory, ending
|
$80
|
|
Work in process inventory, beginning
|
$30
|
|
Work in process inventory, ending
|
$20
|
|
Finished goods inventory, beginning
|
$100
|
|
Finished goods inventory, ending
|
$70
|
Required:
a. Prepare a Schedule of Cost of Goods Manufactured in good form.
b. Compute the Cost of Goods Sold.
c. Using data from your answers above as needed, prepare an Income Statement in good form
Aug 29, 2021 | Uncategorized
Gagnon Company’s quality cost report is to be based on the following data:
|
Maintenance of test equipment
|
$18,000
|
|
Test and inspection of incoming materials
|
$73,000
|
|
Systems development
|
$29,000
|
|
Product recalls
|
$91,000
|
|
Quality training
|
$25,000
|
|
Disposal of defective products
|
$55,000
|
|
Supervision of testing and inspection activities
|
$24,000
|
|
Warranty repairs and replacements
|
$58,000
|
|
Net cost of scrap
|
$23,000
|
Required:
Prepare a Quality Cost Report in good form with separate sections for prevention costs, appraisal costs, internal failure costs, and external failure costs.
Aug 29, 2021 | Uncategorized
Gagnet Company’s quality cost report is to be based on the following data:
|
Liability arising from defective products
|
$82,000
|
|
Final product testing and inspection
|
$40,000
|
|
Returns arising from quality problems
|
$24,000
|
|
Technical support provided to suppliers
|
$52,000
|
|
Disposal of defective products
|
$98,000
|
|
Maintenance of test equipment
|
$53,000
|
|
Systems development
|
$67,000
|
|
Depreciation of test equipment
|
$11,000
|
|
Debugging software errors
|
$87,000
|
Required:
Prepare a Quality Cost Report in good form with separate sections for prevention costs, appraisal costs, internal failure costs, and external failure costs.
Aug 29, 2021 | Uncategorized
Gaffney Company’s quality cost report is to be based on the following data:
|
Final product testing and inspection
|
$60,000
|
|
Rework labor and overhead
|
$60,000
|
|
Statistical process control activities
|
$78,000
|
|
Quality data gathering, analysis, and reporting
|
$24,000
|
|
Returns arising from quality problems
|
$77,000
|
|
Liability arising from defective products
|
$89,000
|
|
Depreciation of test equipment
|
$62,000
|
|
Downtime caused by quality problems
|
$80,000
|
|
Supervision of testing and inspection activities
|
$11,000
|
Required:
Prepare a Quality Cost Report in good form with separate sections for prevention costs, appraisal costs, internal failure costs, and external failure costs.
Aug 29, 2021 | Uncategorized
Harvold Company’s quality cost report is to be based on the following data:
|
Test and inspection of incoming materials
|
$71,000
|
|
Supplies used in testing and inspection
|
$51,000
|
|
Re entering data because of keying errors
|
$60,000
|
|
Statistical process control activities
|
$82,000
|
|
Technical support provided to suppliers
|
$91,000
|
|
Disposal of defective products
|
$60,000
|
|
Lost sales due to poor quality
|
$87,000
|
|
Net cost of scrap
|
$85,000
|
|
Warranty repairs and replacements
|
$70,000
|
Required:
Prepare a Quality Cost Report in good form with separate sections for prevention costs, appraisal costs, internal failure costs, and external failure costs.
Aug 29, 2021 | Uncategorized
Hartlie Company’s quality cost report is to be based on the following data:
|
Lost sales due to poor quality
|
$11,000
|
|
Rework labor and overhead
|
$75,000
|
|
Statistical process control activities
|
$26,000
|
|
Depreciation of test equipment
|
$16,000
|
|
Re entering data because of keying errors
|
$86,000
|
|
Debugging software errors
|
$55,000
|
|
Quality data gathering, analysis, and reporting
|
$48,000
|
|
Supervision of testing and inspection activities
|
$12,000
|
|
Warranty repairs and replacements
|
$75,000
|
Required:
Prepare a Quality Cost Report in good form with separate sections for prevention costs, appraisal costs, internal failure costs, and external failure costs.
Aug 29, 2021 | Uncategorized
Hartness Company’s quality cost report is to be based on the following data:
|
Depreciation of test equipment
|
$75,000
|
|
Rework labor and overhead
|
$11,000
|
|
Quality circles
|
$46,000
|
|
Quality training
|
$94,000
|
|
Test and inspection of incoming materials
|
$64,000
|
|
Product recalls
|
$71,000
|
|
Net cost of scrap
|
$12,000
|
|
Re entering data because of keying errors
|
$52,000
|
|
Cost of field servicing and handling complaints
|
$25,000
|
Required:
Prepare a Quality Cost Report in good form with separate sections for prevention costs, appraisal costs, internal failure costs, and external failure costs.
Aug 29, 2021 | Uncategorized
Aladili Company is a manufacturing firm that uses job order costing. At the beginning of the year, the company’s inventory balances were as follows:
|
Raw materials
|
$36,000
|
|
Work in process
|
$41,000
|
|
Finished goods
|
$104,000
|
The company applies overhead to jobs using a predetermined overhead rate based on machine ours. At the beginning of the year, the company estimated that it would work 21,000 machine hours and incur $210,000 in manufacturing overhead cost. The following transactions were recorded for the year:
a. Raw materials were purchased, $346,000.
b. Raw materials were requisitioned for use in production, $338,000 ($302,000 direct and $36,000 indirect).
c. The following employee costs were incurred: direct labor, $360,000; indirect labor, $68,000; and administrative salaries, $111,000.
d. Selling costs, $153,000.
e. Factory utility costs, $29,000.
f. Depreciation for the year was $102,000 of which $93,000 is related to factory operations and $9,000 is related to selling and administrative activities.
g. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 19,000 machine hours.
h. The cost of goods manufactured for the year was $870,000.
i. Sales for the year totaled $1,221,000 and the costs on the job cost sheets of the goods that were sold totaled $855,000.
j. The balance in the Manufacturing Overhead account was closed out to Cost of Goods Sold.
Required:
Prepare the appropriate journal entry for each of the items above (a. through j.). You can assume that all transactions with employees, customers, and suppliers were conducted in cash.
Aug 29, 2021 | Uncategorized
Quark Spy Equipment manufactures espionage equipment. Quark uses a job order cost system and applies overhead to jobs the basis of direct labor hours. For the current year, Quark estimated that it would work 100,000 direct labor hours and incur $20,000,000 of manufacturing overhead cost. The following summarized information relates to January of the current year. The raw materials purchased include both direct and indirect materials.
|
Raw materials purchased on account
|
$1,412,000
|
|
Direct materials requisitioned into production
|
$1,299,500
|
|
Indirect materials requisitioned into production
|
$98,000
|
|
Direct labor cost (7,900 hours @ $40 per hour)
|
$316,000
|
|
Indirect labor cost (10,200 hours @ $16 per hour)
|
$163,200
|
|
Depreciation on the factory building
|
$190,500
|
|
Depreciation on the factory equipment
|
$890,700
|
|
Utilities for the factory
|
$79,600
|
|
Cost of jobs finished
|
$2,494,200
|
|
Cost of jobs sold
|
$2,380,000
|
|
Sales (all on account)
|
$3,570,000
|
Required:
Prepare journal entries to record Quark’s transactions for the month of January. Do not close out the manufacturing overhead account.
Aug 29, 2021 | Uncategorized
Baar Company is a manufacturing firm that uses job order costing. The company’s inventory balances were as follows atthe beginning and end of the year:
| |
Beginning Balance
|
Ending Balance
|
|
Raw materials
|
$26,000
|
$20,000
|
|
Work in process
|
$71,000
|
$53,000
|
|
Finished goods
|
$66,000
|
$81,000
|
The company applies overhead to jobs using a predetermined overhead rate based on machine hours. At the beginning of the year, the company estimated that it would work 44,000 machine hours and incurs $176,000 in manufacturing overhead cost. The following transactions were recorded for the year:
- Raw materials were purchased, $459,000.
· Raw materials were requisitioned for use in production, $465,000 ($431,000 direct and $34,000 indirect).
· The following employee costs were incurred: direct labor, $296,000; indirect labor, $63,000; and administrative salaries, $157,000.
- Selling costs, $134,000.
- Factory utility costs, $14,000.
· Depreciation for the year was $119,000 of which $114,000 is related to factory operations and $5,000 is related to selling and administrative activities.
· Manufacturing overhead was applied to jobs. The actual level of activity for the year was 47,000 machine hours.
- Sales for the year totaled $1,287,000
Required:
a. Prepare a schedule of cost of goods manufactured in good form.
b. Was the overhead under or over applied? By how much?
c. Prepare an income statement for the year in good form. The company closes any under or over applied overhead to Cost of Goods Sold.
Aug 29, 2021 | Uncategorized
Gonzalez, Inc. manufactures stereo speakers in two factories; one in Vandalia, Illinois and another in Modesto, California. The Vandalia factory uses DL$ for its overhead rate and the Modesto factory uses machine hours (MHs) for its overhead rate. Information related to both plants for last year is presented below:
|
Vandalia factory
|
Modesto factory
|
|
Estimated manufacturing overhead
|
$1,000,000
|
$1,600,000
|
|
Estimated amount of allocation base
|
(a)______________
|
200,000 MHs
|
|
Predetermined overhead rate
|
$10 per DL$
|
(d)______________
|
|
Actual amount of allocation base
|
(b)______________
|
190,000 MHs
|
|
Actual manufacturing overhead
|
$1,092,500
|
$1,472,500
|
|
Applied manufacturing overhead
|
$1,010,000
|
(e)_______________
|
|
Under or overapplied overhead
|
(c)______________
|
(f)_______________
|
Required:
Fill in the lettered blanks above. SHOW YOUR CALCULATIONS.
Aug 29, 2021 | Uncategorized
Hacken Company has a job order costing system. The company applies manufacturing overhead to jobs using a predetermined overhead rate based on direct labor cost. The information below has been taken from the cost records of Hacken Company for the past year:
|
Direct materials used in production
|
$1,250
|
|
Total manufacturing costs charged to production during the year (includes direct materials, direct labor, and applied factory overhead)
|
$6,050
|
|
Manufacturing overhead applied
|
$2,800
|
|
Selling and administrative expenses
|
$1,000
|
|
Inventories:
|
|
|
Direct materials, January 1
|
$130
|
|
Direct materials, December 31
|
$80
|
|
Work in process, January 1
|
$250
|
|
Work in process, December 31
|
$400
|
|
Finished goods, January 1
|
$300
|
|
Finished goods, December 31
|
$200
|
Required:
a. Compute the cost of direct materials purchased during the year.
b. Compute the predetermined overhead rate that was used during the past year.
c. Compute the Cost of Goods Manufactured for the past year.
d. Compute the Cost of Goods Sold for the past year.
Aug 29, 2021 | Uncategorized
The Simkins Company uses a job order costing system. The following activities took place during the month of May:
a. Raw materials purchased, $40,000.
b. Raw materials (all direct) used in production, $35,000.
c. Salaries and wages cost incurred:
Direct labor cost, $60,000.
Indirect labor cost, $30,000.
Sales salaries $25,000.
d. Factory utility costs incurred, $15,000.
e. Depreciation on factory equipment, $50,000.
f. Advertising expense incurred, $80,000.
g. Manufacturing overhead is applied at the predetermined rate of 150% of direct labor cost.
h. Cost of Goods Manufactured for the month, $180,000.
i. Cost of Goods Sold for the month, $150,000.
Required:
Prepare journal entries to record the information given above. Key your entries by the letters a through i.
Aug 29, 2021 | Uncategorized
Corporation R, on December 31, 2007, contractually commits itself to issue 2,000 additional common shares on December 31, 2009. For each of the following cases, determine if these potential shares should be included in diluted EPS for 2007:
|
Case I:
|
No condition needs be fulfilled to trigger the issuance in
2009.
|
|
Case II:
|
There is a condition that the 2009 net income be at least
$300,000. Presently, in 2007, Corporation R has earned
$270,000.
|
|
Case III:
|
Same as Case II, except that in 2007, Corporation R earned
$350,000.
|
Aug 29, 2021 | Uncategorized
The following information relates to a long term construction project of the Feldbrand Corporation:
| |
19a
|
19B
|
19C
|
Total
|
|
Construction costs
|
$50,000
|
$70,000
|
$ 80,000
|
$200,000
|
|
Billings
|
40,000
|
90,000
|
120,000
|
250,000
|
|
Cash collections
|
40,000
|
80,000
|
130,000
|
250,000
|
|
Estimated completion costs as of year end
|
140,000
|
80,000
|
—
|
—
|
Assume a contract price of $250,000. Prepare the journal entries and show what a partial balance sheet would look like for each year, under the completed contract method.
Aug 29, 2021 | Uncategorized
The White Company uses the completed contract method of accounting for construction and has the following data relating to a 3 year project:
| |
19A
|
19B
|
19C
|
Total
|
|
Construction costs
|
$50,000
|
$25,000
|
$35,000
|
$110,000
|
|
Billings
|
50,000
|
25,000
|
25,000
|
100,000
|
|
Collections
|
50,000
|
50,000
|
30,000
|
30,000
|
|
Estimated completion
|
|
|
|
|
|
costs as of year end
|
40,000
|
35,000
|
—
|
—
|
The contract price is $100,000.
In 19B the company realized it would incur a $10,000 loss, as follows:
|
Costs so far
|
$ 75,000
|
|
Estimated remaining costs
|
35,000
|
|
Estimated total costs
|
$110,000
|
|
Selling price
|
100,000
|
|
Loss
|
$ 10,000
|
Prepare the journal entries for all 3 years.
Aug 29, 2021 | Uncategorized
The Very Poor Company is involved in making installment sales whose probability of collection is extremely low. Accordingly, it has elected to use the cost recovery method. Information regarding the years 19A and 19B is as follows:
| |
19A
|
19B
|
|
Installment sales
|
$50,000
|
$80,000
|
|
Cost of goods sold
|
35,000
|
60,000
|
|
Gross profit
|
$15,000
|
$20,000
|
|
Collections on 19A sales
|
$25,000
|
$15,000
|
|
Collections on 19B sales
|
—
|
40,000
|
Prepare entries for both years.
Aug 29, 2021 | Uncategorized
Use the following balance sheet information and other data to determine net cash from operating activities:
| |
Dec. 31, 19X1
|
Dec. 31, 19X2
|
|
Accounts Receivable
|
$ 4,000
|
$ 7,000
|
|
Merchandise Inventory
|
10,000
|
8,000
|
|
Prepaid Insurance
|
1,000
|
700
|
|
Accounts Payable
|
12,000
|
6,000
|
|
Rent Payable
|
9,000
|
16,000
|
|
Dividends Payable
|
2,000
|
2,500
|
|
Bonds Payable
|
50,000
|
40,000
|
Other Data:
|
(1)
|
Net income
|
$25,000
|
|
(2)
|
Depreciation expense
|
5,000
|
|
(3)
|
Amortization of Franchise Fee
|
3,000
|
|
(4)
|
Amortization of bond premium
|
900
|
|
(5)
|
Amortization of patent
|
1,400
|
|
(6)
|
Gain on sale of plant
|
4,400
|
Aug 29, 2021 | Uncategorized
29. Classify the following list of items by operating section, investment section, or finance section. Use the letter “O” for operating, the letter “I” for investment, and the letter “F” for finance.
(1) Depreciation expense
(2) Sale of equipment for cash
(3) Issuance of bonds for cash
(4) Payment of cash dividend
(5) Receipt of cash dividend
(6) Payment of interest
(7) Receipt of interest
(8) Decrease in prepaid items
(9) Net income
(10) Issuance of stock for cash
(11) Purchase of treasury stock for cash
(12) Amortization of Franchise Fee
(13) Rent expense
(14) Sales revenue
(15) Retirement of bonds for cash
(16) Receipt of principal on loan made to third party
Aug 29, 2021 | Uncategorized
From the following information prepare the finance section of the statement of cash flows:
|
(1)
|
Issued bonds for
|
$12,000
|
|
(2)
|
Bought treasury stock for
|
9,000
|
|
(3)
|
Purchased land for
|
5,000
|
|
(4)
|
Retired bonds for
|
3,000
|
|
(5)
|
Paid a cash dividend of
|
7,000
|
|
(6)
|
Received a cash dividend of
|
2,500
|
|
(7)
|
Issued stock ($10,000 par)
|
13,000
|
|
(8)
|
Paid interest
|
1,450
|
|
(9)
|
Issued a stock dividend
|
950 (par)
|
Aug 29, 2021 | Uncategorized
From the following information prepare the investment and finance sections:
|
(1)
|
Purchased land
|
$20,000
|
|
(2)
|
Issued stock
|
5,000
|
|
(3)
|
Accounts receivable increase
|
2,500
|
|
(4)
|
Retired bonds
|
4,500
|
|
(5)
|
Paid cash dividend
|
1,000
|
|
(6)
|
Bought Xerox stock
|
9,500
|
|
(7)
|
Sold IBM stock (cost, $3,000; selling price, $2,500)
|
|
|
(8)
|
Accounts Payable decrease
|
1,200
|
|
(9)
|
Bought treasury stock
|
1,300
|
|
(10)
|
Collected on a loan
|
10,000
|
Aug 29, 2021 | Uncategorized
The Bodner Corporation had the following balance sheets for 19A and 19B:
| |
12/31/19A
|
12/31/19B
|
|
Cash
|
$ 48,000
|
$ 77,000
|
|
Accounts Receivable
|
66,000
|
60,000
|
|
Inventory
|
112,000
|
100,000
|
|
Supplies
|
8,000
|
9,000
|
|
Buildings
|
240,000
|
312,000
|
|
Accumulated Depreciation
|
(41,000)
|
(66,000)
|
|
Patent
|
40,000
|
30,000
|
|
Total Assets
|
$473,000
|
$522,000
|
|
Accounts Payable
|
105,000
|
85,000
|
|
Expenses Payable
|
63,000
|
68,000
|
|
Long term Notes Payable
|
70,000
|
—
|
|
Common Stock
|
—
|
100,000
|
|
Paid in Capital in Excess of Par—Common
|
—
|
25,000
|
|
Preferred Stock
|
200,000
|
200,000
|
|
Retained Earnings
|
35,000
|
44,000
|
|
Total Liabilities and Stockholders’ Equity
|
$473,000
|
$522,000
|
The only entries in the Retained Earnings account were for net income and dividends of $29,000 and $20,000, respectively. No buildings were sold during the period and stock was issued for cash.
Prepare a statement of cash flows using the indirect approach.
Aug 29, 2021 | Uncategorized
From the following balance sheet information and other data, prepare a statement of cash flows for Brown Company, using the indirect method:
| |
12/31/19A
|
12/31/19B
|
|
Cash
|
$ 1,800
|
$ 2,830
|
|
Accounts Receivable
|
3,050
|
2,950
|
|
Prepaid Insurance
|
4,310
|
5,490
|
|
Investment in Green Company (equity method)
|
600
|
730
|
|
Investment in Blue Company (cost method)
|
1,000
|
1,000
|
|
Land
|
2,000
|
3,500
|
|
Machinery
|
6,060
|
6,240
|
|
Accumulated Depreciation
|
(1,070)
|
(1,390)
|
|
Patents
|
200
|
160
|
|
Total Assets
|
$17,950
|
$21,510
|
|
Wages Payable
|
$ 5,630
|
$ 6,040
|
|
Note Payable (Long term)
|
—
|
1,500
|
|
Bonds Payable
|
2,100
|
1,600
|
|
Deferred Taxes Payable
|
300
|
410
|
|
Common Stock
|
1,000
|
1,000
|
|
Preferred Stock
|
4,000
|
4,300
|
|
Paid in Capital in Excess of Par—Preferred
|
1,750
|
2,260
|
|
Retained Earnings
|
3,340
|
4,400
|
|
Treasury Stock (cost method)
|
(170)
|
—
|
|
Total Liabilities and Stockholders’ Equity
|
$17,950
|
$21,510
|
Other Data:
|
(1) Net income
|
$1,490
|
|
(2) Depreciation expense
|
530
|
|
(3) Equity in Green Company net income
|
130
|
|
(4) Loss on sale of machinery
|
50
|
|
(5) Amortization of patents
|
40
|
|
(6) Dividends paid (cash)
|
430
|
(7) Machinery with a cost of $450 and a book value of $240 was sold for $190.
(8) Machinery was purchased for $630.
(9) Treasury stock was sold for $250 cash.
(10) Land with a fair market value of $1,500 was purchased by the issuance of a long term note payable.
(11) Preferred stock was issued for $230 cash.
(12) The remaining changes in the Preferred Stock account and in the Paid in Capital in Excess of Par account resulted from the issuance of preferred stock to retire $500 of bonds payable.
Aug 29, 2021 | Uncategorized
The following is a summary of the receipts and payments for the year ended 31 December, 2008 of Shadow Social Club:
|
Receipts:
|
N
|
|
Club subscriptions
|
3,825,000
|
|
Donations
|
337,500
|
|
Christmas dance
|
191,250
|
|
Bar takings
|
6,075,000
|
|
Payments:
|
|
|
Rates
|
202,500
|
|
General expenses
|
5,895,000
|
|
Bar purchases
|
4,162,500
|
|
Christmas dance expenses
|
33,750
|
Other relevant information at the beginning and end of the year are as follows:
| |
01/01/08
|
31/12/08
|
| |
N
|
N
|
|
Subscriptions due
|
200,500
|
135,000
|
|
Subscriptions paid in advance
|
11,250
|
22,500
|
|
Rates owing
|
101,250
|
112,500
|
|
Bar stock
|
450,000
|
562,500
|
|
Club premises (cost N11,250,000)
|
4,500,000
|
4,050,000
|
|
Furniture (cost N2,250,000)
|
675,000
|
450,000
|
|
Bank and cash in hand
|
360,000
|
495,000
|
You are required to prepare the Club’s:
(a) Bar Trading Account for the year ended 31 December 2008.
(b) Income and Expenditure Account for the year ended 31 December 2008 and a Balance Sheet as at that date.
Aug 29, 2021 | Uncategorized
(a) What are Debentures?
(b) Explain the following terms in relation to Limited Liability Company Accounts:
i. Calls in arrears
ii. Shares issued at a discount (4 Marks)
(c) In accordance with the Companies and Allied Matters Act LFN 2004, the share premium may be used in certain circumstances. State TWO of such circumstances.
(d) Bond Plc has an authorized share capital of 240,000,000 shares of N1.00 each and has issued 2,000,000 ordinary shares each payable as follows:
25k per share payable on application
20k per share on allotment
30k per share on first call
25k per share on final call.
Application and all other call monies were received in full on 31 March 2009, 10 May
2009, 30 June 2009 and 2 July 2009.
Prepare the necessary journal entries to record the foregoing transactions.
Aug 29, 2021 | Uncategorized
Ralie and Kadio entered into a joint venture to buy and sell second hand cars.
Profits and losses were to be shared: Ralie three fifths, Kadio two fifths. It was agreed that each party would record his own transactions only.
On 23 September 2008, Ralie purchased two cars for N322,000 and N420,000. He incurred expenditure of N98,000 on repairs and on 4 September 2008 sold one of the cars for N469,000. On 10 September 2008 the other car was sold for N525,000, paying the proceeds in each case into his own bank account.
On 14 September 2008, he purchased another car for N560,000 and sold it on 30 September 2008 for N546,000 the amount he paid over to Kadio who paid it into his bank account.
On 25 September 2008, Kadio purchased a car for N245,000 on which he incurred expenditure of N56,000 and which he sold on 10 October 2008 for N350,000; the amount he paid into his bank account. This car was returned by the purchaser on 20 October 2008 and Kadio paid him N322,000 for it. As this car was still unsold, on 30 November 2008, it was agreed that it should be taken over by Kadio at a valuation of N315,000.
Other expenditure was incurred by the parties as follows:
| |
Ralie
|
Kadio
|
| |
N
|
N
|
|
Insurance
|
17,500
|
3,500
|
|
Garage
|
14,000
|
7,000
|
On 30 November 2008, the sum required in full settlement as between Ralie and Kadio was paid by the party accountable.
(a) The Joint Venture account as it would appear in the books of Kadio recording his transactions for the joint venture.
(b) The memorandum account for the joint venture showing the net profit.
Aug 29, 2021 | Uncategorized
The following balances were extracted from the books of Atlas Enterprises for the year ended 30 September, 2009:
| |
N
|
|
N
|
|
Stock … 1 October 2008
|
|
|
|
|
Raw materials
|
105,500
|
Factory expenses
|
50,000
|
|
Finished goods
|
347,000
|
Sales
|
1,800,000
|
|
Work in progress
|
76,000
|
Wages
|
254,500
|
|
Purchases: Raw materials
|
227,000
|
Rent & rates
|
40,000
|
|
Motor Vehicle expenses
|
11,000
|
Salaries
|
35,000
|
|
Depreciation:
|
|
Selling expenses
|
6,800
|
|
Plant & machinery
|
10,000
|
Market value of goods produced
|
700,000
|
|
Motor Van
|
8,000
|
Administrative expenses
|
65,000
|
Additional information:
25% of Rent and rates is for the office; 30% of Salaries is for the foreman in the factory.
Stocks as at 30 September, 2009: Raw materials N87,700; Finished goods N320,000; Work in Progress N65,000
Prepare the firm’s Manufacturing, Trading, Profit and Loss Accounts for the year ended
30 September, 2009 in vertical form.
Aug 29, 2021 | Uncategorized
Babariga acquired the rights to run a quarry from a parcel of land owned by Ajonibode.
The agreement provided for:
(a) Payment of royalty of N40 per tonne of granite quarried.
(b) A minimum payment of N2 million per annum.
(c) Recoupment rights (for short workings) to be extinguished at the end of the third year.
During the first four years of the contract, the following quantities of granite were produced:
| |
Tonnes
|
|
2005
|
40,000
|
|
2006
|
48,000
|
|
2007
|
54,000
|
|
2008
|
56,000
|
Babariga?s accounting year ends on 31 December and payment to Ajonibode is made on the 1 January following the year end.
You are required to prepare:
(i) The Royalty Accounts.
(ii) Ajonibode Accounts.
(iii) The Short Working Recoverable Account.
Aug 29, 2021 | Uncategorized
Review the attachedworking papers and then respond to the following questions in two essays that address the specific questions posed.
- In the audit plan for the audit of Keystone Computers & Networks, Inc., there is a section on significant accounting and auditing matters. The second matter described involves capitalizing the costs of developing a software program for sale.
- Research this issue and write a brief memorandum for the working papers describing the issue and summering the appropriate method of accounting for the development costs.
- Based on your research, describe the major audit issue that you believe will be involved in auditing the software development costs.
- A partially completed analytical ratios working paper for Keystone Computers & Networks, Inc., is presented on page 241 of the attached case study.
- Complete the working paper by computing the financial ratios for 20X5 and provide these in your paper.
- After completing part a, review the ratios and identify financial statement accounts that should be investigated because the related ratios are not comparable to prior year ratios, industry averages, or your knowledge of the company. Provide these in your paper.
- For each account identified in part b, identify and discuss potential reasons for the unexpected account balances and related ratios.
Your essay should total 4 6 pages in length
Aug 29, 2021 | Uncategorized
ACT 5733 – Advanced Managerial Accounting
Summer 2013
HW #4
Directions: Answer all the questions.
Please submit your work in Word or PDF formats only.
You can submit an Excel file to support calculations, but please “cut and paste” your solutions into the Word or PDF file. Be sure to show how you did your calculations
Question #1
Assume the CFO of your organization approaches you to ask your advice about implementing the Balanced Scorecard at your organization.
a)
List and describe the four perspectives of the Balanced Scorecard.
b) What steps would you encourage him or her to take in order to successfully implement and use the Scorecard?
Question #2
The ABC Company manufactures widgets. It competes and plans to grow by selling high quality widgets at low prices and by delivering them to customers quickly. There are many other companies in the industry producing similar widgets. ABC believes it needs to continuously improve its manufacturing and delivery processes and that having satisfied employees are both critical to its long term success.
a) Based on this information, what type of strategy do you believe ABC is pursuing?
Be sure to back up your claim with specific evidence.
b)
List and justify eight metrics (2 in each of the Balanced Scorecard perspectives) that you believe ABC should include in its Balanced Scorecard.
c) ABC calculates the following figures:
| 2011 operating income |
$1,850,000 |
| 2012 operating income |
$2,013,000 |
| Growth component |
$85,000 |
| Price recovery component |
($72,000) |
| Productivity component |
$150,000 |
In addition, the market for widgets did not grow in 2012, input process did not change in 2012, and ABC reduced its selling price in 2012.
Based on this information, do you believe ABC’s increase in operating income in 2012 is consistent with the strategy you identified in part a?
Be sure to justify your answer with specific information.
Question #3
Consider the following quality cost report:
|
Year 1 |
Year 2 |
Year 3 |
| Prevention |
$950 |
$1,065 |
$995 |
| Appraisal |
$1,250 |
$1,100 |
$900 |
| Internal failure |
$875 |
$925 |
$975 |
| External failure |
$1,400 |
$1,500 |
$1,625 |
| Total quality costs |
$4,475 |
$4,590 |
$4,495 |
| Total revenues |
$25,000 |
$26,500 |
$27,775 |
Do you believe this firm’s quality initiatives have been successful?
Be sure to justify your opinion with specific information from the quality report.
Aug 29, 2021 | Uncategorized
HA2032 CORPORATE ACCOUNTING ASSIGNMENT
This is an individual assignment. It is required to be submitted in both soft and hard copy by the Friday of Week 6. Total marks applied to this assessment are 20%.
Please ensure that you attach an assignment submission sheet to your hard copy only. Late submissions draw a penalty of 5% per day (this includes weekends) of the value of the assessment (1 mark in this case) up to a maximum of fourteen (14) days. After that date, your assessment may not be accepted unless prior and special consideration has been granted.
This is NOT a report but it is expected that your submission will be in an appropriate format. There is no word limit applied but you should ensure that each question is appropriately answered. Where references are used, ensure they are recognised (refer to student handbook or your lecturer if unsure)
ASSIGNMENT
Part A: (12 marks)
The last few years have been difficult economically but the owners of Johnsons P/L, a medium sized manufacturer of quality dining furniture is keen to grow the business. They have seen an increase in demand for their products from overseas and feel that they will need to increase their operation in order to continue to meet this demand. They are currently looking at a number of options to finance this expansion such as through debt and through equity raising (meaning they will need to “go public”). They have determined that they need to raise $60 million.
Giving consideration to the various options, you have been requested to advise the owners of Johnsons what the various options are, outlining the positives and negatives of each.
Required: write a report (should be extensive) to the owners detailing ALL the different options and considerations that you feel the owners should consider raising the $60 million.
Part B (8 marks)
Regardless of the advice you have given (Part A), the owners have decided to go “public” and issue an ‘IPO” They issue 30 million shares ($2.00), of which the payment on application is to $0.80 per share (closes 18
th April 2013), $0.50 four weeks after allocation (allocation is 13
th May 2013) and the remaining amount to be paid on 30
th July 2013 (the call will be made on 30
th June). The IPO attracts requests for 30.4 million shares. In this case, it exceeds the allowable number of shares and the directors decide to apply the “first come, first served” approach and return the excess back to the unlucky applicants
Required: You are to journalise the events (including dates and notations). You should assume that all monies were received on 18
th April (applications). What other option did the directors have with the excess demand, returning the excess?
Aug 29, 2021 | Uncategorized
1
TERM 3
GRADE 11 ASSESSMENT TASK
CASE STUDY/PROJECT
BUDGETS
75 MARKS
Due date: MONDAY 29 AUGUST 2012. Late assignments will be penalised 10% per a school day late.
ADBODYED IN THIS TASK:
11.2.3
Prepare cash budget for sole trader
11.3.5
Identify and analyse ethical behaviour applicable to the financial environment with reference to accountability and transparency.
11.3.6
Demonstrate knowledge of internal audit processes.
BACKGROUD INFORMATION
Hunk Body Shop in Rondebosch, is solely owned by Naed Remlap. He has been satisfied with the results of His business to date. Within the next three months He intends to move premises and the business will be required to make a loan repayment of R100 000. Naed is confident that He will have no problem in meeting these commitments.
His reasons for His confidence are:
? He has R56 000 in the Bank at the moment and profits over the next three months will improve this cash balance.
? His creditors have allowed His 60 days to settle His accounts, but He has made a point of settling them much earlier in order to develop a good reputation for His business.
? He has granted His debtors terms of 30 days but some of them have been slow in paying. He is confident that He can rectify this minor problem.
? He aims to keep between two to three months’ stock on hand at all times in order to attend to the needs of all His customers.
Being an expert in Accounting, you do not share Naed’s confidence about His liquidity situation. Naed has provided you with certain information concerning His business.
INSTRUCTIONS
Study the information provided by Naed to answer the following questions:
1. Is Naed’s Body Shop in a good or bad liquidity position on
28 February 2012? Quote the appropriate liquidity ratios in your answer.
2. Calculate the following at 28 February 2012:
2.1 Period of stock on hand (in days)
2.2 Average payment period by debtors (in days)
2.3 Average creditors payment period (in days).
3
2.4 Comment briefly on the above calculations. Are these appropriate for Naed’s Body Shop?
3. Prepare the Cash Budget for the period 1 March 2012 to
31 May 2012.
4. Quote from the Cash Budget in answering the following questions:
4.1 Is Naed’s Body Shop likely to experience a liquidity problem within the next three months? Explain the main reasons for your answer.
4.2 Naed is hoping to place a full page colour advertisement in the local press for the entire month of March and He is hoping to open a second shop in Newlands in June. In your opinion, should
He continue to pursue these plans? What advise do you offer to solve his cash flow problems?
5. To ensure effective and reliable forecasting Naed must consider the following:
? Past transactions
? External factors
? Management
? Contractual obligations
? Internal control and Ethical business practices
Research and write short notes on the above factors.
INFORMATION
1. The following figures were extracted from the financial statements at the year end 28 February:
2012
2011
Sales (half are on credit)
600 000
Cost of Sales
384 000
Interest on loan (16% p.a.)
18 600
Bad debts
20 000
Overhead expenses
180 000
Inventories (all trading stock)
85 000
75 000
Trade debtors
60 000
76 000
Cash
?
56 000
Trade Creditors
40 000
70 000
Loan from Rand Bank: Current portion
50 000
45 000
Long term portion
55 000
105 000
2. In order to compile His cash budget, Naed has listed His expectations for the next financial year, commencing on 1 March 2012:
4
2.1 The 50% mark up will be maintained. Suppliers have agreed not to increase prices for the next three months.
2.2 Sales volumes for the year ending 28 February 2011 are expected to increase by 10%. Cash sales are expected to comprise half of the total sales.
2.3 One sixth of Naed’s sales take place in March when Rondebosch Boys’ High has its annual dance; the rest of the sales occur evenly throughout the year.
2.4 Half the trade debtors on 28 February 2012 are expected to settle their accounts during March. The other half will settle in April. No further bad debts are expected from this group of debtors.
5
2.5 Naed aims to get His debtors to pay quicker but does not expect to have immediate success in this regard. He will grant 5% cash discount to His future debtors if they settle their accounts in the month following the transaction month. He expects 60% of debtors to take advantage of this offer. 36% of debtors should pay in the second month after their purchase and 4% are expected to be bad debts.
2.6 Trade creditors all relate to the purchase of stock. He intends to pay all the trade creditors in the month following the purchase of stock.
2.7 All stock is purchased on credit. Whenever stock is sold, it is replaced in the same month.
2.8 Naed draws R12 000 per month to cover household expenses.
2.9 In terms of the loan agreement, R50 000 will have to be repaid at the beginning of May. The interest is calculated and paid monthly.
2.10 The shop will be moving to new premises in April 2012. The expected cost of the move,
R30 000, will need to be paid at the time of the move. All other expenses are spread evenly throughout the year. No increases are expected for the next three months.
6
RUBRIC:
CRITERIA
0 2 MARKS
3 MARKS
5 6 MARKS
Liquidity position
Mention of the ratios
At least one ratio calculated correctly
The calculations of both ratios are accurately calculated
CRITERIA
4 MARK
8 MARKS
12 MARKS
Calculation and
Comments
1 calculated correctly:
? Period of stock on hand
? Average payment period by debtors
? Average creditors period
2 calculated correctly:
? Period of stock on hand
? Average payment period by debtors
? Average creditors period
3 calculated correctly:
? Period of stock on hand
? Average payment period by debtors
? Average creditors period
3 MARKS
7 MARKS
Comments
A brief comment made on each ratio
Comments
A brief comment made on each and reasons given for its appropriateness to Naed’s Body Shop. Working out is shown
7
Preparation of Cash Budget
As per Memorandum
TOTAL 50 MARKS
CRITERIA
0 2 MARK
3 4 MARKS
5 8 MARKS
Comments from Cash Budget
Stating whether liquidity problems will be experienced
Explaining in detail the reasons for the answer
Gives solutions to solve liquidity problems.
0 2 MARKS
3 4 MARKS
5 8 MARKS
Giving a reason for opening a second shop
Briefly gives reasons on solving cash flow problems
Explains in details the reasons on solving the cash flow problems
Layout
0 2 MARKS
3 4 MARKS
Poor to average
Good to excellent
CRITERIA
1 MARK
2 MARKS
3 MARKS
4 MARKS
5 MARKS
Effective and reliable forecasting
Comments on this factor show that the learner has little/no understanding of effective and reliable forecasting. No research evident
Comments on this factor show that the learner has some understanding on effective and reliable forecasting. No research evident
Comments on this factor show understanding on effective and reliable forecasting. Little evidence on research
Good comments on this factor and shows understanding on effective and reliable forecasting. Evident that research was done
Excellent comments on this factors and shows understanding on effective and reliable forecasting. Evident that extensive research was done
External factors
Comments on this factor show that the learner has little/no understanding of effective and reliable forecasting. No research evident
Comments on this factor show that the learner has some understanding on effective and reliable forecasting. No research evident.
Comments on this factor show understanding on effective and reliable forecasting. Little evidence on research
Good comments on this factor and shows understanding on effective and reliable forecasting. Evident that research was done
Excellent comments on this factors and shows understanding on effective and reliable forecasting. Evident that extensive research was done
8
Management
Comments on this factor show that the learner has little/no understanding of effective and reliable forecasting. No research evident
Comments on this factor show that the learner has some understanding on effective and reliable `forecasting. No research evident
Comments on this factor show understanding on effective and reliable forecasting. Little evidence on research
Good comments on this factor and shows understanding on effective and reliable forecasting. Evident that research was done
Excellent comments on this factors and shows understanding on effective and reliable forecasting. Evident that extensive research was done
Contractual obligations
Comments on this factor show that the learner has little/no understanding of effective and reliable forecasting. No research evident
Comments on this factor show that the learner has some understanding on effective and reliable
forecasting. No research evident
Comments on this factor show understanding on effective and reliable forecasting. Little evidence on research
Good comments on this factor and shows understanding on effective and reliable forecasting. Evident that research was done
Excellent comments on this factors and shows understanding on effective and reliable forecasting. Evident that extensive research was done
Internal control
Comments on this factor show that the learner has little/no understanding of effective and reliable forecasting. No research evident
Comments on this factor show that the learner has some understanding on effective and reliable
forecasting. No research evident
Comments on this factor show understanding on effective and reliable forecasting. Little evidence on research
Good comments on this factor and shows understanding on effective and reliable forecasting. Evident that research was done
Excellent comments on this factors and shows understanding on effective and reliable forecasting. Evident that extensive research was done
Ethical business practices
Comments on this factor show that the learner has little/no understanding of effective and reliable forecasting. No research evident
Comments on this factor show that the learner has some understanding on effective and reliable
forecasting. No research evident
Comments on this factor show understanding on effective and reliable forecasting. Little evidence on research
Good comments on this factor and shows understanding on effective and reliable forecasting. Evident that research was done
Excellent comments on this factors and shows understanding on effective and reliable forecasting. Evident that extensive research was done
TOTAL
Aug 29, 2021 | Uncategorized
this is the continue assignment. i need the same expert who help me from orderTTs180813_34217_8
Aug 29, 2021 | Uncategorized
You are to research an actual example of IT leveraging business advantage at an operational level.
Discuss strategies, risks, strengths, weaknesses, opportunities and threats of using IT systems in a specific business at an operational level. Consider issues such as automation of business processes and supply chain management. Word limit 2500 .
Advice
You will need to do much better than re state the lecture material.In the lectures, you are given an overview of the impact ICT has had on, for example, the Banks.Supermarkets, hotels airlines, phone companies .
However, in your assignment you must do much more than re hash lecture material.You must research a particular bank, get some data or statistics and report the results of your research into a particular case.
Be very careful to write in your own words.A cut and past from a web site or publicity brochure or an annual report will constitute plagiarism and be dealt with severely.You may, of course, access such material as part of your research but be sure to write a report structured by you and using your own words.
In text referencing is required along with a full set of references at the end of the report.
Aug 29, 2021 | Uncategorized
Success with Transformational Change..
2000 (+ 10%) word short report (see Presentation below) addressing the following topic:
Read the article ‘What successful transforrnations share from the McKinsey & Co {Assessment Tasks folder — Assessment 1 Articla
1. Briefly’ summarise, in your own words, what factors the article’s survey results suggest will increase the chances of successful Vansformational organisational change_ 2. Compare and contrast what the article says with the theory from the text and a minimum of 3 academic journal articles. Journal articles should be relevant and current {written since 2008). !Vlore than 3 journal articles appropriately used (see below), will mean higher marks 3_ Draw some conclusions as to the validity of the a r r.icle’s research conclusions,
Ore of this subject’s Learnrng Outcomes (see Section 2,1) is To: ‘Synthesise grad critique change research literature to con5ider the or blguity ono’ complexity of chorige”
This means students should be able to: • successfully research a range of current academic journal articles related to a topic and focus, • explain clearly what current research literature is saying about a topic, • clearly interpret it to demonstrate understandinE, and be a ble to explain what it means in terms of today’s organisation, • compare and contrast it to other writings on the same topic
Therefore, to pass this assessment, students must demonstrate an abliity to understand, interpret and explain information by using their own words to explain / interpret correctly referenced research literature (academic journal articles). Students who simply copy paste or very closely paraphrase will only gain a maximum of 40% of the available marks.
Presentation • Report format in a Word Doc. • 2000 words 1. 10% (excl, title page, executive summary, table of contents and reference list) • Title page • Executive sumrna ry • Table of Contents • Approprlate headings and subheadings • Harvard referencing and Bibliography (APA or Chicago styles acceptable) • 11pt Cal ibri or 12 pt. Times New Roman (headings and subheadings may be slightly, larger. • Single spacing but a clear line space between paragraphs
Correct as at July 2013 Change Management (MGT301) T312 Page 7
Aug 29, 2021 | Uncategorized
The content of this quiz comes from the following text book;
Cost AccountingA Managerial EmphasisFourteenth Edition
Chapters7, 8, 10, 11; 14 16 are covered.
***This quiz is extremely important. If you cannot guarantee a near perfect paper, please feel free to reject my assignment. I basically need the grade to pass the class. Please let me know as soon as possible.
Aug 29, 2021 | Uncategorized
As a manager, part of your role is to develop strategy, and share this strategy with various stakeholders within the organization. This assignment will allow you to take your findings as a manager and communicate these findings to those who are affected.
Your company has been presented with a decision on replacing a piece of equipment for a new computerized version that promotes efficiency for the upcoming year. As manager you will need to decide whether or not the purchase of the new equipment is a worthwhile investment and to communicate your recommendations to Executive Management for a final decision. To be convincing, sufficient support for your recommendations must be provided in order to be considered valid and accepted.
| Existing Equipment |
| Original Cost |
60,000 |
| Present Book Value |
30,000 |
| Annual Cash Operating Costs |
145,000 |
| Current Market Value |
15,000 |
| Market Value in Ten Years |
0 |
| Remaining useful Life |
10 years |
| Replacement Equipment |
| Cost |
600,000 |
| Annual Cash Operating Costs |
50,000 |
| Market Value in Ten Years |
0 |
| Useful Life |
10 years |
| Other Information |
| Cost of Capital |
10% |
| Payback requirement |
6 years |
In this assignment, use the information above to develop a comprehensive analysis using NPV, Payback Method, and IRR to develop a recommendation on replacing the existing equipment with a new computerized version. Develop an executive summary of your findings in a Microsoft PowerPoint presentation format to present to Executive Management.
Do the following in your presentation:
- Include a statement of the problem or topic, a concise analysis of the findings, and a recapitulation of any main conclusions or recommendations.
- Be sure to incorporate specific details to highlight or support the summary including calculations.
- Using your knowledge of capital budgeting techniques, explain how principles of capital budgeting, such as the payback method, IRR, and NPV, can be used to assess the potential projects and assist in the decision making process.
Develop a 10 slide presentation in PowerPoint format. Apply APA standards to citation of sources.
Aug 29, 2021 | Uncategorized
PARTNERSHIP (DEED) AGREEMENT
A) profit and losses should be didvided in the ratio capital invested.
B) interest will be carged on drawings at a rate of 5%
C)interest will be paid on capital at a rate of 12%
D) the rarte od interest to be paid on loan is 10 %
E) hibiscus should be paid a salary of 36 000 monthly
F) Fern receives a bonus of 5 000 (every 3 months)
G) Capital hibiscus 220 000 Fern : 290 000
Aug 29, 2021 | Uncategorized
| Costa Company |
| 31 Dec 12 |
| Trial Balance (accounts in alphabetical order) |
| Accounts |
Working Trial Balance |
Balance Sheet |
Income Statement |
|
Debit |
Credit |
Debit |
Credit |
Debit |
Credit |
|
Credit |
| Accounts payable |
|
$14,500 |
|
$14,500 |
|
|
|
|
| Accounts receivable |
$18,000 |
|
$18,000 |
|
|
|
|
|
| Cash |
41,500 |
|
41,500 |
|
|
|
|
|
| Common stock |
|
10,000 |
|
10,000 |
|
|
|
|
| Depreciation expense |
18,250 |
|
|
|
18,250 |
|
|
|
| Cost of goods sold |
402,610 |
|
|
|
402,610 |
|
|
|
| Equipment (net of depreciation) |
325,000 |
|
325,000 |
|
|
|
|
|
| Insurance |
1,500 |
|
|
|
1,500 |
|
|
|
| Inventory |
80,500 |
|
80,500 |
|
|
|
|
|
| Long term debt |
|
105,000 |
|
105,000 |
|
|
|
|
| Marketing |
5,600 |
|
|
|
5,600 |
|
|
|
| Misc. expenses |
4,500 |
|
|
|
4,500 |
|
|
|
| Paid in capital |
|
90,000 |
|
90,000 |
|
|
|
|
| Property taxes |
6,500 |
|
|
|
6,500 |
|
|
|
| Rent |
22,000 |
|
|
|
22,000 |
|
|
|
| Retained earnings |
|
156,400 |
|
245,500 |
|
|
|
|
| Revenues |
|
619,400 |
|
|
|
619,400 |
|
619,400 |
| Salaries |
61,940 |
|
|
|
61,940 |
|
|
|
| Utilities |
7,400 |
|
|
|
7,400 |
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
$995,300 |
$995,300 |
$465,000 |
$465,000 |
$530,300 |
|
|
$619,400 |
Net Income $89,100
Aug 29, 2021 | Uncategorized
ACCT231 13B
Essay Sample
Part One:
This article appeared in The Waikato Times on April 20, 2013; click on the link to see the full text
http://www.stuff.co.nz/waikato times/business/8576141/Like one of its handmade breads Waikatos Pumice Food Group is on the rise
Pumice Group
(I) Summary
Pumice Food Group was started in 2006 by two couples Ryan & Jody Ladbrook and David & Lisa Kerr. Both men are qualified chefs and Pumice is now one of the largest restaurant and café businesses in the Waikato. Despite the economic downturn in 2008, Pumice has expanded rapidly and now employs 50 staff and has an annual turnover of $6 million. Pumice owns and operates The Woodbox, The Ferrybank Function Centre, and Coopers Function Centre at Mystery Creek Wines, Hamilton Gardens café in addition to their original business, and highly successful, Pumice café and restaurant in Te Rapa. Pumice has secured the contract for the catering at the forthcoming Avanti Velodrome near Cambridge.
The economic downturn from the global financial crisis caused them to curtail their big expansion plans, and, to get through the tough times, they closed their office in the Hamilton CBD and both men went back to work in the kitchens full time. Now, business is picking up and they have reduced their kitchen work to half time.
The article describes the essential elements of managing the business and identifies purchasing, costing, staff and waste control as being particularly important. They are vigilant about food purchasing which has increased in cost by 10% in past two years, and they use their size to gain advantages from their buying power. Input costs are carefully monitored to ensure they are not out of line with the menu price charged to the customer. A few years ago much of the trimmings off meat in the restaurant were discarded, nowadays they use this in other dishes in the café such as Thai beef salad or pork belly noodle salads. In the hospitality business service is critical and staff training is vital to ensure high quality of service.
(ii) Role of management accounting
There are references to management accounting tools and techniques in the article itself, such as costing, pricing and budgeting and there will be many other uses of management accounting by the business that are not specifically mentioned, such as cash management and financial control. Owner David Kerr is zealous about monitoring the quantities and costs of expensive ingredients such as lamb, fish and beef to ensure they are not out of line with the menu price, because margins in the business are tight. With 50 staff to pay each week, and many suppliers each month, cash flow will be particularly critical to ensure funds are always available to meet these obligations. Although the article mentions that they abandoned their big bold business plan due to the recession it is inevitable that there has been considerable planning and budgeting particularly with the recent acquisition of Coopers and the Velodrome contract. Overall, it is clear that management accounting tools and techniques are essential elements in the management and success of the Pumice Group.
[Total for Part One, 500 words]
Part Two:
A New Zealand based Real World Example
The figures above were extracted from the latest published accounts of Air NZ and The Warehouse and they illustrate the difference in operating gearing between the two organisations. For any airline most of the costs are fixed costs which will not vary with activity in the short term, such as depreciation on aircraft, leasing and staff costs. Fuel costs vary directly with activity and were 32% of operating costs in 2012.
As a trading company, the cost of inventory is the main operating cost for The Warehouse. In 2012 cost of sales amounted to 68% of total operating expenses.
As expected, this shows that operating gearing is much higher in Air NZ than The Warehouse. Note also that the turnover of Air NZ is almost three times that of The Warehouse.
[Total for Part Two, 200 words]
Aug 29, 2021 | Uncategorized
16–3 Private College Transactions. Elizabeth College, a small private college, had the following transactions in fiscal year 2011. 1. Billings for tuition and fees totaled $5,600,000. Tuition waivers and scholarships of $61,500 were granted. Students received tuition refunds of $101,670. 2. During the year the college received $1,891,000 cash in unrestricted private gifts, $575,200 cash in temporarily restricted grants, and $1,000,000 in securities for an endowment. 3. A pledge campaign generated $626,000 in unrestricted pledges, payable in fiscal year 2012. 4. Auxiliary enterprises provided goods and services that generated $94,370 in cash. 5. Collections of tuition receivable totaled $5,380,000. 6. Unrestricted cash of $1,000,000 was invested. 7. The college purchased computer equipment at a cost of $10,580. 8. During the year the following expenses were paid: 9. Instruction provided $450,000 in services related to the temporarily restricted grant recorded in transaction 2. 10. At year end, the allowance for uncollectible tuition and fees was increased by $7,200. The fair value of investments had increased $11,540; of this amount, $3,040 was allocated to permanently restricted net assets, the remainder was allocated to unrestricted net assets. Depreciation on plant and equipment was allocated $34,750 to instruction, $41,000 to auxiliary enterprises, and $12,450 to academic support. 11. All nominal accounts were closed. Required a. Prepare journal entries in good form to record the foregoing transactions for the fiscal year ended June 30, 2011. b. Prepare a statement of activities for the year ended June 30, 2011. Assume beginning net asset amounts of $7,518,000 unrestricted, $200,000 temporarily restricted, and $5,000,000 permanently restricted. 16–4 Public University Transactions. The Statement of Net Assets of Green Tree State University, a governmentally owned university, as of the end of its fiscal year June 30, 2010, follows. The following information pertains to the year ended June 30, 2011: 1. Cash collected from students’ tuition totaled $3,000,000. Of this $3,000,000, $362,000 represented accounts receivable outstanding at June 30, 2010; $2,500,000 was for current year tuition; and $138,000 was for tuition applicable to the semester beginning in August 2011. 2. Deferred revenue at June 30, 2010, was earned during the year ended June 30, 2011. 3. Notification was received from the federal government that up to $50,000 in funds could be received in the current year for costs incurred in developing student performance measures. 4. During the year, the University received an unrestricted appropriation of $60,000 from the state. 5. Equipment for the student computer labs was purchased for cash in the amount of $225,000. 6. During the year, $200,000 in cash contributions was received from alumni. The contributions are to be used for construction of a new library. 7. Interest expense on the bonds payable in the amount of $48,000 was paid. 8. During the year, investments with a carrying value of $25,000 were sold for $31,000. Investments were purchased at a cost of $40,000. Investment income of $18,000 was earned and collected during the year. 9. General expenses of $2,500,000 related to the administration and operation of academic programs, and research expenses of $37,000 related to the development of student performance measures were recorded in the voucher system. At June 30, 2011, the accounts payable balance was $75,000. 10. Accrued liabilities at June 30, 2010, were paid. 11. At year end, adjusting entries were made. Depreciation on capital assets totaled $90,000. Accrued interest on investments was $1,250. The fair value of investments at year end was $262,000. The Allowance for Doubtful Accounts was adjusted to $17,000. 12. Nominal accounts were closed and net asset amounts were reclassified as necessary. Required a. Prepare journal entries in good form to record the foregoing transactions for the year ended June 30, 2011. b. Prepare a statement of net assets for the year ended June 30, 2011. 17–6 Governmental Hospital. During 2011, the following selected events and transactions were recorded by Nichols County Hospital. 1. Gross charges for hospital services, all charged to accounts and notes receivable, were as follows: 2. After recording patient service revenues, it was determined that $52,000 related to charity care. 3. Additional information relating to current year receivables and revenues is as follows: 4. During the year, the hospital received unrestricted cash contributions of $50,000 and unrestricted cash income from endowment investments of $6,500. 5. A federal cost reimbursement research grant of $350,000 was awarded. As of the end of the year, $200,000 in expenses related to the grant had been made. (Hint: See Chapter 4 for eligibility requirements.) 6. New equipment costing $39,000 was acquired from donor restricted cash. An X ray machine that cost $31,000 and had a book value of $2,400 was sold for $500 cash. 7. Vouchers totaling $1,340,200 were issued for the following items: 8. Collections of accounts receivable totaled $1,159,000. Accounts written off as uncollectible amounted to $11,900. 9. Cash payments on vouchers payable (paid to employers and suppliers) during the year were $1,031,200. 10. Supplies of $68,000 were issued to nursing services. 11. On December 31, 2011, accrued interest income on investments was $800. 12. Depreciation of buildings and equipment was as follows: 13. On December 31, 2011, closing entries were made in the general journal. Required a. Show in general journal form the entries that should be made for each of the transactions and the closing entries in accordance with the standards for a governmental health care entity that follows proprietary fund accounting, as discussed in this chapter and Chapter 7. b. Using the available information, calculate the net patient service revenue that would be reported on the statement of revenues, expenses, and changes in net assets. 17–7 Not for Profit Hospital Financial Statement Analysis. Examine the financial statements for Oak Valley Hospital for the years ended December 31, 2010, and 2011. Required Prepare a short answer to address each of the following questions. a. Discuss the relative importance of different classifications of assets to total assets. What additional information would you expect to find in the notes to the financial statements about major classification of assets? b. Describe how net patient service revenue likely differs from gross patient revenue. c. Did this hospital have a profitable year? Why or why not? d. What is the best explanation for the change in cash for the most recent year? For the previous year?
Aug 29, 2021 | Uncategorized
A firm believes it can generate an additional $250,000 per year in revenues for the next 5 years if it replaces existing equipment that is no longer usable with new equipment that costs $240,000. The firm expects to be able to sell the new equipment when it is finished using it (after 5 years) for $10,000. The existing equipment has a book value of $20,000 and a market value of $12,000. Variable costs are expected to total 70% of revenue. The additional sales will require an initial investment in net working capital of $15,000, which is expected to be recovered at the end of the project (after 5 years). Assume the firm uses straight line depreciation, its marginal tax rate is 30%, and its weighted average cost of capital is 10%.
a) How much value will this new equipment create for the firm?
b) At what discount rate will this project break even?
Aug 29, 2021 | Uncategorized
Betty, Alvin and Yong started a Watch trading company, Baywatch Pte. Ltd. with a paid up capital of $150,000 to be subscribed equally by the three. The business agreed to take over from Betty her existing watch retail and servicing equipment based on a valuation of $50,000 in lieu of her cash subscription for her shares. Alvin and Yong contributed cash for their share of the subscription. December 1st, a shop lease was signed for $2,000 per month for two years with an option to extend for an additional year.
Aug 29, 2021 | Uncategorized
Question 1
On 1st December 2011, Betty, Alvin and Yong started a Watch trading company, Baywatch Pte. Ltd. with a paid up capital of $150,000 to be subscribed equally by the three. The business agreed to take over from Betty her existing watch retail and servicing equipment based on a valuation of $50,000 in lieu of her cash subscription for her shares. Alvin and Yong contributed cash for their share of the subscription.
December 1st, a shop lease was signed for $2,000 per month for two years with an option to extend for an additional year. A month’s deposit was required plus three months Rental for December 2011 to 28th February 2012. These were paid immediately.
December 2nd, $50,000 cash purchases were made for Watches from the distributor.
December 5th, Office Equipment worth $5,000 was purchased. $2,000 was paid while the remaining $3,000 will be paid over three installments at each month end, commencing at end of the December. No interests are charged for this installment plan.
December 23rd, $50,000 Sales were made. $30,000 of the Sales were cash Sales while the balance will be paid on 24th January 2012. The cost of the Watches sold is $18,000.
December 24th, a $40,000 bank loan was taken with plans to expand the business. The full amount will be paid only at the end of 24 months.
December 31st, Depreciation for the Office Equipment was estimated at $200 for the month of December.
Salaries for the year due amounted to $3,000, to be paid on the 2nd of January 2012.
General Expenses including utilities, printing costs etc. were paid on 31st December 2011. The bills came up to $1,000.
A phone reminder on December 31 from the Supplier of the Office Equipment purchased on December 5th that payment is due. Full payment was made on the same day.
Rental Expenses for December adjusted.
The bank statement shows a Bank Charge of $100 for December
Required:
- Prepare the Statement of Financial Position as at 31 December.
Explain the following Concepts and conventions used in Accounting. In your explanation, discuss the implications or limitations of these practices when reading Financial statements
- Business Entity concept
- Accrual concept , Revenue Recognition and Matching
- Historical Costs and valuation
Aug 29, 2021 | Uncategorized
Case 7 1 Zorba Company Zorba Company, a U.S. based importer of specialty olive oil, placed an order with a foreign supplier for 500 cases of olive oil at a price of 100 crowns per case. The total purchase price is 50,000 crowns. Relevant exchange rates are as follows:
Date Spot Rate Forward Rate (to January 31, Year 2) Call Option Premium for January 31, (strike price Year 2 S1.00) December 1, Year 1 December 31, Year 1 January 31, Year 2 $1.00 1.10 1.15 S1.013 1.17 1.15 S0.04 0.12 0.15
Zorba Company has an incremental borrowing rate of 12 percent (1 percent per month) and closes the books and prepares financial statements on December 31. Required 1. Assume the olive oil was received on December I, Year I, and payment was made on January 31, Year 2. There was no attempt to hedge the exposure to for eign exchange risk. Prepare journal entries to account for this import purchase. 2. Assume the olive oil was received on December 1, Year 1, and payment was made on January 31, Year 2. On December 1, Zorba Company entered into a two month forward contract to purchase 50,0(10 crowns. The forward contract is properly designated as a fair value hedge of a foreign currency payable. Pre pare journal entries to account for the import purchase and foreign currency forward contract. 3. The olive oil was ordered on December 1, Year 1. It was received and paid for on January 31, Year I. On December 1, Zorba Company entered into a two month forward contract to purchase 50,000 crowns. The forward contract is properly designated as a fair value hedge of a foreign currency firm commit ment. The fair value of the firm commitment is measured through reference to changes in the forward rate. Prepare journal entries to account for the foreign currency forward contract, firm commitment, and import purchase. 4. The olive oil was received on December 1, Year 1, and payment was made on January 31, Year 2. On December 1, Zorba Company purchased a two month call option for 50,000 crowns. The option was properly designated as a cash flow hedge of a foreign currency payable. Prepare journal entries to account for the import purchase and foreign currency option. 5. The olive oil was ordered on December 1, Year 1. It was received and paid for on December 31, Year 2. On December 1, Zorba Company purchased a two month call option for 50,000 crowns. The option was properly designated as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured through reference to changes in the spot rate. Prepare journal entries to account for the foreign currency option, firm commit ment, and import purchase.
Aug 29, 2021 | Uncategorized
List a represents the types of opinions the auditor ordinarily would issue and List B represents the report modifications [if any] that would be necessary. Select as the best answer for each situation [items 1 to 6] the type of opinion and modifications, if any, the auditor would normally select. The types of opinions in List A and the report modifications in List B may be selected once, more than once, or not at all. The paper should be 2 3 pages.
Aug 29, 2021 | Uncategorized
Tom Emory and Jim Morris strolled back to their plant from the administrative offices of Ferguson & Son Manufacturing Company. Tom is manager of the machine shop in the company’s factory; Jim is manager of the equipment maintenance department.
The men had just attended the monthly performance evaluation meeting for plant department heads. These meetings had been held on the third Tuesday of each month since Robert Ferguson, Jr., the president’s son, had become plant manager a year earlier.
As they were walking, Tom Emory spoke: “Boy, I hate those meetings! I never know whether my department’s accounting reports will show good or bad performance. I’m beginning to expect the worst. If the accountants say I saved the company a dollar, I’m called ‘Sir,’ but if I spend even a little too much—boy, do I get in trouble. I don’t know if I can hold on until I retire.”
Tom had just been given the worst evaluation he had ever received in his long career with Ferguson & Son. He was the most respected of the experienced machinists in the company. He had been with the company for many years and was promoted to supervisor of the machine shop when the company expanded and moved to its present location. The president (Robert Ferguson, Sr.) had often stated that the company’s success was due to the high quality work of machinists like Tom. As supervisor, Tom stressed the importance of craftsmanship and told his workers that he wanted no sloppy work coming from his department.
When Robert Ferguson, Jr., became the plant manager, he directed that monthly performance comparisons be made between actual and budgeted costs for each department. The departmental budgets were intended to encourage the supervisors to reduce inefficiencies and to seek cost reduction opportunities. The company controller was instructed to have his staff “tighten” the budget slightly whenever a department attained its budget in a given month; this was done to reinforce the plant manager’s desire to reduce costs. The young plant manager often stressed the importance of continued progress toward attaining the budget; he also made it known that he kept a file of these performance reports for future reference when he succeeded his father.
Tom Emory’s conversation with Jim Morris continued as follows:
Emory: I really don’t understand. We’ve worked so hard to meet the budget, and the minute we do so they tighten it on us. We can’t work any faster and still maintain quality. I think my men are ready to quit trying. Besides, those reports don’t tell the whole story. We always seem to be interrupting the big jobs for all those small rush orders. All that setup and machine adjustment time is killing us. And quite frankly, Jim, you were no help. When our hydraulic press broke down last month, your people were nowhere to be found. We had to take it apart ourselves and got stuck with all that idle time.
Morris: I’m sorry about that, Tom, but you know my department has had trouble making budget, too. We were running well behind at the time of that problem, and if we had spent a day on that old machine, we would never have made it up. Instead, we made the scheduled inspections of the forklift trucks because we knew we could do those in less than the budgeted time.
Emory: Well, Jim, at least you have some options. I’m locked into what the scheduling department assigns to me and you know they’re being harassed by sales for those special orders. Incidentally, why didn’t your report show all the supplies you guys wasted last month when you were working in Bill’s department?
Morris: We’re not out of the woods on that deal yet. We charged the maximum we could to other work and haven’t even reported some of it yet.
Emory: Well, I’m glad you have a way of getting out of the pressure. The accountants seem to know everything that’s happening in my department, sometimes even before I do. I thought all that budget and accounting stuff was supposed to help, but it just gets me into trouble. It’s all a big pain. I’m trying to put out quality work; they’re trying to save pennies.
Review the case. Respond to the following:
- Identify the problems that appear to exist in Ferguson & Son Manufacturing Company’s budgetary control system and explain how the problems are likely to reduce the effectiveness of the system. (approximately 1 page)
- Explain how Ferguson & Son Manufacturing Company’s budgetary control system could be revised to improve its effectiveness. (approximately 1–2 pages)
- Explain how the use of an activity based costing system could change the results of the budget, if utilized. (approximately 1 page)
- As stated in the case, many employees have “quit trying” and have altered behavior on the job. Provide specific ways for how you would use a budget to change employee behavior and align goals in the organization. Explain how goal alignment can improve profitability and overall return to the shareholders of the company. (approximately 1 page)
- Synthesize data to explain the concept of ROI and describe how the use of an activity based costing system can improve the company’s ROI and the potential impact on free cash flow. (approximately 1 page)
Write a 5–6 page report in Word format. Apply APA standards to citation of sources. Use the following file naming convention: Please make sure all sources are listed if online sources are used need websites.
Aug 29, 2021 | Uncategorized
Topic 2 – Corporate Governance
Situation:
Corporate governance has been seen more as a necessity than an option for organizations in recent times due to several large scale corporate collapses both abroad and in Australia.
Task: Answer the below questions
Define corporate governance and its purpose for organizations
The collapse of Enron and HIH insurance were seen as a breakdown in corporate governance. What were the circumstances surrounding their demise?
What are the Australian Stock Exchange Corporate Governance Council’s Corporate governance principles and recommendations?
Are the principles and recommendations mandatory for all organizations to follow?
What does ‘Comply or explain’ mean? Does this restrict the flexibility for organizations to decide whether or not to incorporate corporate governance principles?
Give a brief explanation of principle 7 and it’s recommendations.
What is the function of a risk management committee?
What is an audit committee? An audit committee should contain a majority of independent directors. What classifies a director as independent?
Aug 29, 2021 | Uncategorized
Solin, Ebanks,Thorpe and Co, a professional group of auditors is preparing a proposal for their new client Dabney media Technologies who has requested they audit internal controls of the company. Please address a letter to the board of directors of Dabney Media explaining the 5 components of the COSO internal controls framework, and support each explanation with an example of an element that makes up this control. (10 6 marks for content, 4 for style)
This should be a typed letter, roughly 500 words, double spaced, Times new roman font size 12.
Aug 29, 2021 | Uncategorized
Review the financial statements of Merck and Novartis to learn additional information. The emphasis of this Case is to review the income statement, balance sheet and computation of ratios. Review the financial statements for the companies and answer the following questions for the last reporting year: http://www.merck.com/indexl http://www.us.novartis.com/ Balance Sheet • What components of stockholders’ equity does each of the companies disclose? • Does the companies have preferred stock shares outstanding? If so, what special features do these shares contain? • Does either of the companies report treasury shares? If so, do the companies disclose the reason for reacquiring the shares? Income Statement • What are the basic and diluted earnings per share for each company? • Have the companies reported any discontinued operations? • Do the companies disclose any stock compensation plans? If so, are they reporting such plans under the fair value or intrinsic value methods? What was the value of compensation expense measured for any outstanding stock option plans? Financial Ratios Compute the following ratios. Also, interpret and assess each group of ratios for the company. What type of story are the ratios telling the analyst? • Profitability ratios: ? Gross profit margin ? Net profit margin ? Return on stockholders’ equity • Liquidity ratios: ? Current ratio ? Quick ratio ? Inventory turnover • Leverage ratios: ? Debt to assets ? Debt to equity ? Times covered ratio What type of information do you find in footnotes to the financial statements? Do you find the balance sheet, income statement or other measures such as ratios the most informative? Comment on the advantages and disadvantages of using ratios for analysis. Modular Case Assignment Expectations It is important to answer the questions as posed. The discussion should be from 3 to 5 pages and written in a clear and concise manner. Support your discussion with references in APA format. You are encouraged to use Excel or other compatible spreadsheet when computations are involved.
Aug 29, 2021 | Uncategorized
Q.11). C6 69 Analyze cost behavior using a variety of methods (Learning Objectives 1, 2, 3, 4, & 5). Braunhaus Microbrewery is in the process of analyzing its manufacturing overhead costs. Braunhaus Microbrewery is not sure if the number of cases or the number of processing hours is the best cost driver of manufacturing overhead (MOH) costs. The following information is available : Month Manufacturing Overhead Costs Processing Hours cases MOH Cost per Processing Hour MOH Cost per Case January $29,500 680 8,000 $43.38 $3.69 February 27,800 575 6,750 48.35 4.
Aug 29, 2021 | Uncategorized
Q. 01). P1 31A E commerce cost benefit analysis (Learning Objective 5) Sun Gas wants to move its sales order system to the Web. Under the proposed system, gas stations and other merchants will use a Web browser and, after typing in a password for the Sun Gas Web page, will be able to check the availability and current price of various products and place an order, Currently, customer service representatives take dealers’ orders over the phone: they record the information on a paper form, then manually enter it into the firm’s computer system.
Aug 29, 2021 | Uncategorized
AF301 INDIVIDUAL ASSIGNMENT Weight 15% of course mark Due Date On line submission due 11:59pm Saturday August 24th Print out due 4:00 pm Monday August 26th at the School of Accounting & Finance Office Word Limit 1,000 words. Write 300 400 words for each question. ? Disclose the word count on your final submission. Style Guide Follow the APA referencing system. Use a font size of 12 or larger and line spacing of 1.5. Fully justify text and include page numbers. Learning Objectives This assignment addresses course learning objectives (a), (b) and (c) shown in the Course Outline.
Aug 29, 2021 | Uncategorized
1. The Wessels Corporation is considering installing a new conveyor for materials handling in a warehouse. The conveyor will have an initial cost of $75,000 and an installation cost of $5,000. Expected benefits of the conveyor are: (a)Annual labor cost will be reduced by $16,500, and (b)breakage and other damages from handling will be reduced by $400 per month. Some of the firm’s costs are expected to increase as follows: (a)Electricity cost will rise by $100 per month, and (b)annual repair and maintenance of the conveyor will amount to $900. Assume that the firm uses the MACRS rules for depreciation in the five year property class. No salvage value will be recognized for tax purposes. The conveyor has an expected useful life of eight years and a projected salvage value of $5,000. The tax rate is 40 percent.
1. Estimate future cash inflows for the proposed project.
2. Determine the project’s NPV at 10 percent. Should the firm buy the conveyor?
Aug 29, 2021 | Uncategorized
1. Wisconsin Products Company manufactures several different products. One of the firm’s principal products sells for $20 per unit. The sales manager of Wisconsin Products has stated
repeatedly that he could sell more units of this product if they were available. In an attempt to substantiate his claim, the sales manager conducted a market research study last year at a cost of $44,000 to determine potential demand for this product. The study indicated that Wisconsin Products could sell 18,000 units of this product annually for the next five years.
The equipment currently in use has the capacity to produce 11,000 units annually. The variable production costs are $9 per unit. The equipment has a book value of $60,000 and a
remaining useful life of five years. The salvage value of the equipment is negligible now and will be zero in five years. A maximum of 20,000 units could be produced annually on the new machinery which can be purchased. The new equipment costs $300,000 and has an estimated useful life of five years with no salvage value at the end of five years. Wisconsin Products’ production manager has estimated that the new equipment would provide increased production efficiencies that would reduce the variable production costs to $7 per unit. Wisconsin Products Company uses straight line depreciation on all of its equipment for tax purposes. The firm is subject to a 40 percent tax rate, and its after tax cost of capital is 15 percent. The sales manager felt so strongly about the need for additional capacity that he attempted to prepare an economic justification for the equipment, although this was not one of his responsibilities. His analysis, presented below, disappointed him because it did not justify acquiring the equipment.
|
Required Investment
|
|
Purchase price of new equipment
|
|
$300,000
|
|
Disposal of existing equipment:
|
|
|
|
Loss of disposal
|
$60,000
|
|
|
Less: Tax benefit (40%)
|
24,000
|
36,000
|
|
Cost of market research study
|
|
44,000
|
|
Total investment
|
|
$380,000
|
|
Annual Returns
|
|
Contribution margin from product:
|
|
|
|
Using the new equipment [18,000 X ($20 $7)]
|
$234,000
|
|
|
Using the existing equipment [11,000 X ($20 $9)]
|
121,000
|
|
|
Increase in contribution margin
|
$1 13,000
|
|
|
Less: Depreciation
|
60,000
|
|
|
Increase in before tax income
|
$ 53,000
|
|
|
Income tax (40%)
|
21,200
|
|
|
Increase in income
|
$ 31,800
|
|
|
Less: 15% cost of capital on the additional
|
|
|
|
investment required (0.15 X $380,000)
|
57,000
|
|
|
Net annual return of proposed investment in new equipment
|
$ (25,200)
|
|
1. The controller of Wisconsin Products Company plans to prepare a discounted cash flow analysis for this investment proposal. The controller has asked you to prepare corrected calculations of
(a) The required investment in the new equipment
(b) The recurring annual cash flows
Explain the treatment of each item of your corrected calculations that is treated differently from the original analysis prepared by the sales manager.
2. Calculate the net present value of the proposed investment in the new equipment.
Aug 29, 2021 | Uncategorized
1. The Baxter Company manufactures toys and other short lived fad type items. The research and development department came up with an item that would make a good promotional gift for office equipment dealers. Aggressive and effective effort by Baxter’s sales personnel has resulted in almost firm commitments for this product for the next three years. It is expected that the product’s value will be exhausted by that time. In order to produce the quantity demanded, Baxter will need to buy additional machinery and rent some additional space. It appears that about 25,000 square feet will be needed; 12,500 square feet of presently unused, but leased, space is available now. (Baxter’s present lease with 10 years to run costs $3.00 a foot.) There is another 12,500 square feet adjoining the Baxter facility which Baxter will rent for three years at $4.00 per square foot per year if it decides to make this product. The equipment will be purchased for about $900,000. It will require $30,000 in modifications, $60,000 for installation, and $90,000 for testing; all of these activities will be done by a firm of engineers hired by Baxter. All of the expenditures will be paid for on January 1, 19×1. The equipment should have a salvage value of about $180,000 at the end of the third year. No additional general overhead costs are expected to be incurred. The following estimates of revenues and expenses for this product for the three years have been developed.
| |
19×1
|
19×2
|
19×3
|
|
Sales
|
$1,000,000
|
$1,600,000
|
$800,000
|
|
Material, labor, and incurred overhead
|
$ 400,000
|
$ 750,000
|
$350,000
|
|
Assigned general overhead
|
40,000
|
75,000
|
35,000
|
|
Rent
|
87,500
|
87,500
|
87,500
|
|
Depreciation
|
450,000
|
300,000
|
150,000
|
| |
$977,500
|
$1,212,500
|
$622,500
|
|
Income before tax
|
$ 22,500
|
$ 387,500
|
$177,500
|
|
Income tax (40%)
|
9,000
|
155,000
|
71,000
|
| |
$ 13500
|
$ 232,500
|
$106,500
|
1. Prepare a schedule which shows the incremental after tax cash flows for this project.
2. If the company requires a two year payback period for its investment, would it undertake this project? Show your supporting calculations clearly.
3. Calculate the after tax accounting rate of return for the project.
4. A newly hired business school graduate recommends that the company consider the use of
net present value analysis to study this project. If the company sets a required rate of return of 20 percent after taxes, will this project be accepted? Show your supporting calculations clearly. (Assume all operating revenues and expenses occur at the end of the year.)
(CMA, adapted)
Aug 29, 2021 | Uncategorized
1. The Starr Company manufactures several products. (he of its main products requires an electric motor. The management of Starr Company uses the economic order quantity formula (EOQ) to determine the optimum number of motors to order. Management now wants to determine how much safety stock to order. Starr Company uses 30,000 electric motors annually (300 working days). Using the EOQ formula, the company orders 3,000motors at a time. The lead time for an order is five days. The annual cost of carrying one motor in safety stock is $10. Management has also estimated that the cost of being out of stock is $20 for each motor they are short. Starr Company has analyzed the usage during past reorder periods by examining the inventory records. The records indicate the following usage patterns during the past reorder periods:
|
Usage During Lead Time
|
Number of Times Quantity Was Used
|
|
440
|
6
|
|
460
|
12
|
|
480
|
16
|
|
500
|
130
|
|
520
|
20
|
|
540
|
10
|
|
560
|
6
|
| |
200
|
1. Using an expected value approach, determine the level of safety stock for electric motors that Starr Company should maintain in order to minimize costs.
2. What would be Starr Company’s new reorder point?
3. What factors should Starr Company have considered to estimate the out of stock costs?
(CMA, adapted)
Aug 29, 2021 | Uncategorized
1. Newport Steam Corporation’s balance sheet accounts as of December 31,19X8, and December 31, 19×9, and the information relating to the 19×9 activities, are presented below.
| |
|
December 31
|
| |
19×9
|
19×8
|
|
ASSETS
|
|
|
|
Cash
|
$ 230,000
|
$ 100,000
|
|
Short Term Investments
|
300,000
|
0
|
|
Accounts Receivable (net)
|
550,000
|
550,000
|
|
Inventory
|
680,000
|
600,000
|
|
Long Term Investments
|
200,000
|
300,000
|
|
Plant Assets
|
1,700,000
|
1,000,000
|
|
Accumulated Depreciation
|
(450,000)
|
(450,000)
|
|
Goodwill
|
90,000
|
100,000
|
|
Total Assets
|
$3,300,000
|
$2,200,000
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
Accounts Payable
|
$ 825,000
|
$ 720,000
|
|
Long Term Debt
|
325,000
|
0
|
|
Common Stock, $1 Par
|
800,000
|
700,000
|
|
Additional Paid in Capital
|
370,000
|
250,000
|
|
Retained Earnings
|
980.000
|
530,000
|
|
Total Liabilities and Stockholders’ Equity
|
$3,300,000
|
$2,200,000
|
Information relating to 19×9 activities is as follows:
(1) Net income for 19×9 was $700,000.
(2) Purchase of short term investments for $300,000, which will mature on 30, 20 0.
(3) Cash dividends declared and paid in 19×9 worth $250,000.
(4) Equipment costing $400,000, having accumulated depreciation of $250,000, was sold in 19×9 for $150,000.
(5) Plant assets worth $1,100,000 were purchased for cash.
(6) A long term investment costing $100,000 was sold for $135,000.
(7) 100,000 shares of $1 par value common stock were sold for $2.20 a share.
(8) Amortization of goodwill for 19×9 was $10,000.
Calculate Newport’s net cash inflows or outflows for (a) operating, (b)investing, and (c)
financing activities. Discuss whether or not the short term investments are cash equivalents.
Aug 29, 2021 | Uncategorized
1. Acme Manufacturing has provided the following financial statements:
ACME MANUFACTURING
Comparative Balance Sheets
For the Years Ended December 31, 19×8 and 19×9
|
ASSETS
|
19×8
|
19×9
|
|
Cash
|
$ 112,500
|
$ 350,000
|
|
Accounts Receivable
|
350,000
|
281,250
|
|
Inventories
|
125,000
|
150,000
|
|
Plant and Equipment
|
1,000,000
|
1,025,000*
|
|
Accumulated Depreciation
|
(500,000)
|
(525,000)
|
|
Land
|
500,000
|
718,750
|
|
Total Assets
|
$1.587.500
|
$2.000,000
|
|
LIABILITIES AND EQUITY
|
|
|
|
Accounts Payable
|
$ 300,000
|
$ 237,500
|
|
Mortgage Payable
|
|
250,000
|
|
Common Stock
|
75,000
|
75,000
|
|
Contributed Capital in Excess of Par
|
300,000
|
300,000
|
|
Retained Earnings
|
912,500
|
1,137,500
|
|
Total Liabilities and Equity
|
$1,587,500
|
$2,000,000
|
|
*Beginning Equipment
|
$ 1,000,000
|
|
Purchases
|
250,000
|
|
Less Sales
|
(225,000)
|
|
Ending Equipment
|
$ 1,025,000
|
ACME MANUFACTURING
Income Statement
For the Year Ended December 31, 19×9
|
Revenues
|
$1,200,000
|
|
Gain on Sale of Equipment
|
50,000
|
|
Less: Cost of Goods Sold
|
(640,000)
|
|
Less: Depreciation Expense
|
(125,000)
|
|
Less: Interest Expense
|
(35,000)
|
|
Net Income
|
$ 450,000
|
Other information:
(a) Equipment with a book value of $125,000 was sold for $175,000 (original cost was
$225,000).
(b) Dividends of $225,000 were declared and paid.
Prepare a statement of cash flows.
Aug 29, 2021 | Uncategorized
1. Camp Company uses a job order costing system. The company has two departments through which most jobs pass. Selected budgeted and actual data for the past year follow:
| |
Department A
|
Department B
|
|
Budgeted overhead
|
$100,000
|
$500,000
|
|
Actual overhead
|
$110,000
|
$520,000
|
|
Expected activity (direct labor hours)
|
50,000
|
10,000
|
|
Expected machine hours
|
10,000
|
50,000
|
|
Actual direct labor hours
|
51,000
|
9,000
|
|
Actual machine hours
|
10,500
|
52,000
|
During the year, several jobs were completed. Data pertaining to one such job follows:
Job 310
|
Direct materials
|
$20,000
|
|
Direct labor cost:
|
|
|
Department A (5,000 hours @ $6)
|
$30,000
|
|
Department B (1,000 hours @ $6)
|
$ 6,000
|
|
Machine hours used:
|
|
|
Department A
|
100
|
|
Department B
|
1,200
|
|
Units produced
|
10,000
|
Camp Company uses a plant wide predetermined overhead rate to assign overhead to jobs.
Direct labor hours (DLH) is used to compute the predetermined overhead rate.
(1) Compute the predetermined overhead rate.
(2) Using the predetermined rate, compute the per unit manufacturing cost of Job 310.
(3) Recalculate the unit manufacturing cost for Job :310 using departmental overhead rates.
Use direct labor hours for Department A and machine hours for Department B.
Aug 29, 2021 | Uncategorized
1. Texas Texturizing is a texturizer of polyester yarn. On June 1, 19A, an inventory of 10,000
pounds was complete as to materials, but only three quarters complete as to conversion. During
the period, 160,000 pounds were completed. The inventory at the end of the period consisted
of 40,000 pounds that were complete as to materials but only one quarter complete as to
conversion. Costs for materials and conversion are as follows:
| |
Materials
|
Conversion
|
Total
|
|
Work in process, beginning
|
$ 10,000
|
$ 5,000
|
$ 15,000
|
|
Current costs
|
140,000
|
76,600
|
216,600
|
Prepare a cost of production report for Texas Texturizing using the weighted average method.
Aug 29, 2021 | Uncategorized
1. A toy manufacturer has two departments, forming and finishing. Consider the finishing
department, which processes the formed toys through the addition of hand shaping and metal.
Although various direct materials might be added at various stages of finishing, for simplicity
we will suppose that all additional direct materials are added at the end of the process.
The following is a summary of the April operations in the finishing department:
Units:
Work in process, March 31, 5,000 units, 60% completed for conversion costs
Units transferred in during April, 20,000
Units completed during April, 21,000
Work in process, April 30, 4,000 units, 30% completed for conversion costs
costs:
Work in process, March 31 (transferred in costs, $17,750; conversion costs, $7,250), $25,000
Transferred in costs from forming department during April, $104,000
Direct materials added during April, $23,100
Conversion costs added during April, $38,400
Total costs to account for, $190,500
Using the weighted average method, prepare a cost of production report for the finishing
department for April.
Aug 29, 2021 | Uncategorized
1. Angelo Trucking is divided into two operating divisions: Perishable Foods and Household
Goods. The company allocates personnel and accounting costs to each operating division.
Personnel costs are allocated on the basis of employees. Accounting costs are allocated on the
basis of the number of transactions processed. Allocations for the coming year are based on the
following data:
| |
Service Departments
|
Operating Divisions
|
| |
|
Perishable
|
Household
|
| |
Personnel
|
Accounting
|
Foods
|
Goods
|
|
Overhead costs
|
$100,000
|
$205,000
|
$80,000
|
$50,000
|
|
Number of employees
|
20
|
60
|
60
|
80
|
|
Transactions processed
|
2,000
|
200
|
3,000
|
5,000
|
(a) Allocate the service costs using the direct method.
(6) Allocate the service costs using the step method.
(c) Allocate the service costs using the reciprocal method.
Aug 29, 2021 | Uncategorized
1. Total Mining Company produces two products from ore, copper and zinc. The following events took place in May:
| |
Copper
|
Zinc
|
Total
|
|
Units produced
|
40,000
|
60,000
|
100,000
|
|
Unit selling price
|
$2.00
|
$1.oo
|
|
Joint costs incurred were $110,000.
(a) Allocate the joint costs to the two products using the physical measures method.
(b) Allocate the joint costs to the two products using the relative sales value method.
(c) Explain the difference in unit costs using the two methods.
(d) Which method do you think better allocates joint costs? Why?
Aug 29, 2021 | Uncategorized
1. Hangover Manufacturing has four categories of overhead. The four categories and expected overhead costs for each category for next year are listed below.
|
Maintenance
|
$200,000
|
|
Material handling
|
32,000
|
|
Setups
|
100,000
|
|
Inspection
|
120,000
|
Currently, overhead is applied using a predetermined overhead rate, based on budgeted direct
labor hours. Fifty thousand direct labor hours are budgeted for next year.
The company has been asked to submit a bid for a proposed job. The plant manager feels
that getting this job would result in new business in future years. Bids are based on full
manufacturing cost plus 20 percent.
Estimates for the proposed job are as follows:
|
Direct materials
|
$ 6,000
|
|
Direct labor (1,000 hours)
|
$10,000
|
|
Number of material moves
|
12
|
|
Number of inspections
|
10
|
|
Number of setups
|
2
|
|
Number of machine hours
|
500
|
In the past, full manufacturing cost has been calculated by allocating overhead using a
volume based cost driver, direct labor hours. The plant manager has heard of a new way of
applying overhead that uses cost pools and cost drivers.
Expected activity for the four activity based cost drivers that would be used are:
|
Machine hours
|
20,000
|
|
Material moves
|
1,600
|
|
Setups
|
2,500
|
|
Quality inspections
|
41,000
|
1. (a) Determine the amount of overhead that would be allocated to the proposed job if
direct labor hours is used as the volume based cost driver.
(b) Determine the total cost of the proposed job.
(c) Determine the company’s bid if the bid is based on full manufacturing cost plus 20
percent.
2. (a) Determine the amount of overhead that would be applied to the proposed project if
activity based cost drivers are used.
(b) Determine the total cost of the proposed job if activity based costing is used.
(c) Determine the company’s bid if activity based costing is used and the bid is based on
full manufacturing cost plus 20 percent.
Aug 29, 2021 | Uncategorized
1. At the beginning of the year, Donjuan Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
| |
Preceding Year
|
Current Year
|
|
Sales
|
$4,000,000
|
$4,000,000
|
|
Quality training
|
10,000
|
15,000
|
|
Materials inspection
|
25,000
|
35,000
|
|
Scrap
|
200,000
|
180,000
|
|
Rework
|
250,000
|
200,000
|
|
Product inspection
|
40,000
|
60,000
|
|
Product warranty
|
40,000
|
60,000
|
|
Product warranty
|
300,000
|
250,000
|
1. Classify each of the costs as prevention costs, appraisal costs, internal failure costs, or
external failure costs: (a)quality training; (b)materials inspection; (c)scrap; (d)rework; (e)
product inspection; (f) product warranty.
2. Compute each category of quality costs as a percentage of sales:
| |
Preceding Year
|
Current Year
|
|
Prevention costs
Appraisal costs
Internal failure costs
External failure costs
|
|
|
3. (a) How much has profit increased as a result of quality improvement?
(b) If quality costs can be reduced to 2.5 percent of sales, how much additional profit will
result?
Aug 29, 2021 | Uncategorized
Situation:
The Australian dollar has continued on a roller coaster ride over the past few months after a period of relative stability above parity against the greenback. While the exporters are cheering the devalued AUD, tourists are cautiously watching the money markets.
Aug 29, 2021 | Uncategorized
Topic 1 – The Economy
Situation:
The Australian dollar has continued on a roller coaster ride over the past few months after a period of relative stability above parity against the greenback. While the exporters are cheering the devalued AUD, tourists are cautiously watching the money markets.
Task: Answer the below questions
- What is monetary policy and what are the objectives of monetary policy for the RBA?
- Market numbers
- What is the current Australian unemployment and inflation rate?
- Have these numbers been stable or volatile over the past few years?
- What is the current RBA cash rate?
- Compare the current RBA cash rate with a major bank’s mortgage interest rate.
- Many Australians who have retired are not happy about low interest rates. Why is this so?
- What is the monthly financial benefit for a household with a $300,000 mortgage over 25 years of a cut in their mortgage rate from 6% p.a. to 5.5% p.a.? (use a loan calculator online from one of the major banks)
- In recent times the four major banks have not followed exactly the RBA’s adjustments to interest rates. Do you believe that this may undermine monetary policy? Justify your opinion with reasons.
- What is the RBA target inflation rate? How does the RBA attempt to achieve this rate? Is the current inflation rate above or below the RBA target?
- What is deflation? What are the negative consequences of an economy trapped in a cycle of deflation?
- Who does and doesn’t benefit from a low Australian dollar? Explain with examples
Aug 29, 2021 | Uncategorized
ASSIGNMENT 5: MANAGERIAL FINANCE
DUE DATE:
Question 1 (24) 1.1 Calculate liquidity and working capital ratios from the accounts of a manufacturer of products for the construction industry, and comment on the ratios, (14)
2011 2010 $mIllion Revenue 2 065.0 1 788.7 Cost of sales 1478.6 1 304.0 Gross profit 586.4 484.7 Current assets 572.3 523,2 Inventory 119,0 109,0 Receivables (note 1) 400,9 347,4 Cash at bank and in hand 52,4 66,8 Creditors falling due within one year 501,0 420,3 Bank overdraft 49,1 35,3 Taxes 62,0 46,7 Payables (note 2) 389.9 338,3 Net Current Assets 71,3 102,9
Notes 1. Trade receivables 1. Trade payables
329,8
236,2
285,4
210,8
1.2 Seagull can achieve a profit after tax of 20% on the capital employed. At present its capital structure is as follows;
200 000 ordinary shares of S1 each Retained earnings
5200 000 100 000
2M nnn
Aug 29, 2021 | Uncategorized
Presentation
Required – a 5 minute presentation on a current item which is relevant to Company law. This is a chance to develop your research skills in a contemporary environment.
You are required to find an interesting issue in contemporary Company Law and research the topic. You are expected to spend at least 4 hours researching and preparing your PowerPoint.
This is an individual assignment. Assignments which are not the work of each student will result in a loss of marks.
A PowerPoint presentation is to be prepared and presented to your Lecture class between week 6 (week commencing 26 August) to week 11 – you will be advised as to the week of your presentation.
You must be available to make your presentation in the week assigned.
The PowerPoint presentation must be lodged on Moodle no later than 5.00pm on Friday 16 August 2013. The mark awarded will be reduced by 10% for each day or part of a day the assignment is late. Failure to do the presentation on the required day unless absence has been formally approved (apply on line at MY GCA) will result in marks being lost.
What can it be about Anything that is relevant to a contemporary Company Law issue.
What are my sources – News, Media, ATO, etc. Also try searching Google with search terms such as;
- Current issues in Australian Company law
- Australian Company law
- Australian Company law reform
Also visit the web pages of the large accounting firms;
- Price Waterhouse Coopers;
- Ernst & Young;
- Deliotte;
- KPMG;
- The second tier firms
Also visit the web pages of Law firms such as;
- Allens Arthur Robinson(Linklaters LLP)
- Blake Dawson Ashurst LLP)
- Clayton Utz
- Herbert Smith Freehills
- Mallesons Stephen Jaques/King & Wood Mallesons
- Minter Ellison
Marks – The presentation will count as 20% of the overall course mark
Aug 29, 2021 | Uncategorized
Presentation
Required – a 5 minute presentation on a current item which is relevant to Company law. This is a chance to develop your research skills in a contemporary environment.
You are required to find an interesting issue in contemporary Company Law and research the topic. You are expected to spend at least 4 hours researching and preparing your PowerPoint.
This is an individual assignment. Assignments which are not the work of each student will result in a loss of marks.
A PowerPoint presentation is to be prepared and presented to your Lecture class between week 6 (week commencing 26 August) to week 11 – you will be advised as to the week of your presentation.
You must be available to make your presentation in the week assigned.
The PowerPoint presentation must be lodged on Moodle no later than 5.00pm on Friday 16 August 2013. The mark awarded will be reduced by 10% for each day or part of a day the assignment is late. Failure to do the presentation on the required day unless absence has been formally approved (apply on line at MY GCA) will result in marks being lost.
What can it be about Anything that is relevant to a contemporary Company Law issue.
What are my sources – News, Media, ATO, etc. Also try searching Google with search terms such as;
• Current issues in Australian Company law
• Australian Company law
• Australian Company law reform
Also visit the web pages of the large accounting firms;
• Price Waterhouse Coopers;
• Ernst & Young;
• Deliotte;
• KPMG;
• The second tier firms
Also visit the web pages of Law firms such as;
• Allens Arthur Robinson (Linklaters LLP)
• Blake Dawson Ashurst LLP)
• Clayton Utz
• Herbert Smith Freehills
• Mallesons Stephen Jaques /King & Wood Mallesons
• Minter Ellison
Marks – The presentation will count as 20% of the overall course mark
Aug 29, 2021 | Uncategorized
Presentation
Required – a 5 minute presentation on a current item which is relevant to Company law. This is a chance to develop your research skills in a contemporary environment.
You are required to find an interesting issue in contemporary Company Law and research the topic. You are expected to spend at least 4 hours researching and preparing your PowerPoint.
This is an individual assignment. Assignments which are not the work of each student will result in a loss of marks.
A PowerPoint presentation is to be prepared and presented to your Lecture class between week 6 (week commencing 26 August) to week 11 – you will be advised as to the week of your presentation.
You must be available to make your presentation in the week assigned.
The PowerPoint presentation must be lodged on Moodle no later than 5.00pm on Friday 16 August 2013. The mark awarded will be reduced by 10% for each day or part of a day the assignment is late. Failure to do the presentation on the required day unless absence has been formally approved (apply on line at MY GCA) will result in marks being lost.
What can it be about Anything that is relevant to a contemporary Company Law issue.
What are my sources – News, Media, ATO, etc. Also try searching Google with search terms such as;
- Current issues in Australian Company law
- Australian Company law
- Australian Company law reform
Also visit the web pages of the large accounting firms;
- Price Waterhouse Coopers;
- Ernst & Young;
- Deliotte;
- KPMG;
- The second tier firms
Also visit the web pages of Law firms such as;
- Allens Arthur Robinson(Linklaters LLP)
- Blake Dawson Ashurst LLP)
- Clayton Utz
- Herbert Smith Freehills
- Mallesons Stephen Jaques/King & Wood Mallesons
- Minter Ellison
Marks – The presentation will count as 20% of the overall course mark
Aug 29, 2021 | Uncategorized
Student ID: 21822007 Exam: 061684RR THE IMPACT OF MANAGEMENT Exam: 061684RR THE IMPACT OF MANAGEMENT When you have completed your exam and reviewed your answers, click Submit Exam. Answers will not be recorded until you hit Submit Exam. If you need to exit before completing the exam, click Cancel Exam. Questions 1 to 20: Select the best answer to each question. Note that a question and its answers may be split across a page break, so be sure that you have seen the entire question and all the answers before choosing an answer.
Aug 29, 2021 | Uncategorized
1. The events and transactions of Dever Corporation for the year ending December 31, 2012, resulted in the following data.
|
Cost of goods sold
|
$2,600,000
|
|
Net sales
|
4,400,000
|
|
Other expenses and losses
|
9,600
|
|
Other revenues and gains
|
5,600
|
|
Selling and administrative expenses
|
1,100,000
|
|
Income from operations of plastics division
|
70,000
|
|
Gain from disposal of plastics division
|
500,000
|
|
Loss from tornado disaster (extraordinary loss)
|
600,000
|
Analysis reveals that:
1. All items are before the applicable income tax rate of 30%.
2. The plastics division was sold on July 1.
All operating data for the plastics division have been segregated.
Aug 29, 2021 | Uncategorized
1. Indicate whether the following statements are true or false.
1. Managerial accountants have a single role within an organization, collecting and reporting costs to management.
2. Financial accounting reports are general purpose and intended for external users.
3. Managerial accounting reports are special purpose and issued as frequently as needed.
4. Managers’ activities and responsibilities can be classified into three broad functions: cost accounting, budgeting, and internal control.
5. As a result of the Sarbanes Oxley Act of 2002, managerial accounting reports must now comply with generally accepted accounting principles (GAAP).
Top managers must certify that a company maintains an adequate system of internal controls.
Aug 29, 2021 | Uncategorized
1. Match the descriptions that follow with the corresponding terms.
|
Descriptions:
1. _______ All activities associated with providing a product or service.
2. _______ A method of allocating overhead based on each product’s use of activities in making the product.
3._______ Systems implemented to reduce defects in finished products with the goal of achieving zero defects.
4._______ A performance measurement approach that uses both financial and nonfinancial measures, tied to company objectives, to evaluate a company’s operations in an integrated fashion.
5._______ Inventory system in which goods are manufactured or purchased just as they are needed for use.
|
Terms:
a. Activity based costing
b. Balanced scorecard
c. Just in time (JIT) inventory
d. Total quality management
(TQM)
e. Value chain
|
Aug 29, 2021 | Uncategorized
1. Classify the following costs as either manufacturing (M), selling (S), or administrative (A) expenses in terms of their functions.
|
(a) Factory supplies
|
(j)Freight in
|
|
(b) Advertising
|
(k)Employer’s payroll taxes –factory
|
|
(c) Auditing expenses
|
(l)Employer’s payroll taxes sales office
|
|
(d) Rent on general office building
|
(m)President’s salary
|
|
(e) Legal expenses
|
(n)Samples
|
|
(f) Cost of idle time
|
(o)Small tools
|
|
(g) Entertainment and travel
|
(p)Sanding materials used in furniture making
|
|
(h) Freight out
|
(q)Cost of machine breakdown
|
Aug 29, 2021 | Uncategorized
1. A budget is being prepared for the first and second quarters of 19B for Aggarwal Retail Stores, Inc. The balance sheet as of December 31, 19A, is given below.
AGGARWAL RETAIL STORES, INC.
Balance Sheet
December 31, 19A
ASSETS
|
Cash
|
$ 65,000
|
|
Accounts Receivable
|
52,000
|
|
Merchandise Inventory
|
75,000
|
|
Total Assets
|
$192,000
|
LIABILITIES AND EQUITIES
|
Accounts Payable
|
$ 83,000
|
|
Income Tax Payable
|
20,000
|
|
Capital Stock
|
70,000
|
|
Retained Earnings
|
19,000
|
|
Total Liabilities and Equities
|
$192,000
|
Actual and projected sales are:
|
19A 3d quarter (actual)
|
$250,000
|
|
19A 4th quarter (actual)
|
300,000
|
|
19B 1st quarter (estimated)
|
200,000
|
|
19B 2d quarter (estimated)
|
230,000
|
|
19B 3d quarter (estimated)
|
220,000
|
Experience has shown that 60 percent of sales will be collected during the quarter of sales and 35 percent of sales will be collected in the following quarter. Gross profit averages 30
percent of sales. There is a basic inventory of $20,000. The policy is to purchase additional
inventory each quarter in the amount necessary to provide for the following quarter’s sales.
Assume that payments are made in the quarter following the quarter of purchase. Selling and
administrative expenses for each quarter are estimated at 4 percent of sales plus $15,000. They
are paid as incurred. Income tax is equal to 40 percent of taxable income. The income tax
liability as of December 31, 19A, is to be paid during the first quarter of 19B. Prepare a
budgeted income statement for the first and second quarters of 19B and a budgeted balance
sheet as of June 30, 19B.
Aug 29, 2021 | Uncategorized
1. At the beginning of 19×4, Beal Company adopted the following standards:
|
Direct material (3 pounds @ $2.50 per pound)
|
$ 7.50
|
|
Direct labor (5 hours 0 $7.50 per hour)
|
37.50
|
|
Factory overhead:
|
|
|
Variable ($3.00 per direct labor hour)
|
15.00
|
|
Fixed ($4.00 per direct labor hour)
|
20.00
|
|
Standard cost per unit
|
$80.00
|
Normal volume per month is 40,000 direct labor hours. Beal’s January 19×4 budget was based
on normal volume. During January, Beal produced 7,800 units, with records indicating the
following:
|
Direct material purchased
|
25,000 pounds @ $2.60
|
|
Direct material used
|
23,100 pounds
|
|
Direct labor
|
40,100hours @ $7.30
|
|
Factory overhead
|
$300,000
|
(a)Prepare a flexible budget for January 19×4 production costs, based on actual production of 7,800 units.
(b)For the month of January 19×4, compute the following variances, indicating whether each
is favorable or unfavorable:
1. Direct materials price variance, based on purchases
2. Direct materials usage variance
3. Direct labor rate variance
4. Direct labor efficiency variance
5. Factory overhead spending variance
6. Variable factory overhead efficiency variance
7. Factory overhead volume variance
(CPA, adapted)
Aug 29, 2021 | Uncategorized
1. Eastern Company manufactures special electrical equipment and p rts. Eastern uses stand d
costs, with separate standards established for each product. A special transformer is manufac
tured in the Transformer Department. Production volume is measured by direct labor hours in
this department, and a flexible budget system is used to plan and control department overhead.
Standard costs for the special transformer are determined annually in September for the coming
year. The standard cost of a transformer for 19×7 was $67.00:
|
Direct materials:
|
|
|
Iron
|
5 sheets @ $2.00 = $10.00
|
|
Copper
|
3 spools @ $3.00 = 9.00
|
|
Direct labor
|
4 hours @ $,7.00 = 28.00
|
|
Variable overhead
|
4 hours @ $3,00 = 12.00
|
|
Fixed overhead
|
4 hours @ $12.00 = 8.00
|
|
Total
|
$67.00
|
Overhead rates were based on normal and expected monthly labor hours for 19×7, both of which
were 4,000 direct labor hours. Practical capacity for this department is 5,000 direct labor hours per
month. Variable overhead costs are expected to vary with the number of direct labor hours actually used.
During October 19×7, 800 transformers were produced. This was below expectations because a
work stoppage occurred during contract negotiations with the labor force. Once the contract was
settled, the department scheduled overtime in an attempt to catch up to expected production levels.
Actual costs incurred in October 19×7 were as follows:
|
Direct materials:
|
Purchased
|
Used
|
|
Iron
|
5,000 sheets @ $2.00 per sheet
|
3,900 sheets
|
|
Copper
|
2,200 spools @ $3.10
|
2,600 spools
|
|
Direct labor:
|
|
|
|
Regular time
|
2,000 hours @ $7.00
|
|
| |
1,400 hours @ $7.20
|
|
|
Overtime
|
600 of the 1,400 hours were subject to overtime premium. The total
overtime premium of $2,160 is included in variable overhead in
accordance with corporate accounting practices.
|
|
|
Variable overhead
|
$10,000
|
|
|
Fixed overhead
|
$ 8,800
|
|
Prepare a complete analysis of all production variances. Use a four way analysis for overhead.
Materials price variances are isolated at the time of purchase.
(CMA, adapted)
Aug 29, 2021 | Uncategorized
1. The following shows factory overhead budget information for Los Alamitos, Inc., for the year:
|
Indirect materials used
|
$0.50 per machine hour plus
|
| |
$6,000 fixed cost
|
|
Indirect labor
|
$92,000 fixed cost
|
|
Repairs and maintenance
|
$1.50 per machine hour plus
|
| |
$2,100 fixed cost
|
|
Depreciation
|
$9,500 fixed cost
|
|
Rent
|
$12,000 fixed cost
|
In 19A, the company operated at 11,000 machine hours and incurred the following
overhead costs:
|
Indirect materials used
|
$11,700
|
|
Indirect labor
|
91,000
|
|
Power
|
10,650
|
|
Repairs and maintenance
|
19,200
|
|
Depreciation
|
9,500
|
|
Rent
|
12,500
|
Compare the flexible budget with the actual overhead, computing a variance for each item and for the total overhead. Indicate whether variances are favorable (F) or unfavorable (U).
Aug 29, 2021 | Uncategorized
1. Ina Machine Company’s flexible budget is given below:
INA MACHINE COMPANY
Flexible Budget
|
Conversion
|
Cost
Volume
|
Number of Units
|
|
Cost
|
Formula
|
5,000
|
6,000
|
7,000
|
|
Direct labor
|
$7.00
|
$35,000
|
$42,000
|
$49,000
|
|
Variable overhead costs:
|
|
|
|
|
|
Supplies
|
0.90
|
4,500
|
5,400
|
6,300
|
|
Utilities
|
0.15
|
750
|
900
|
1,050
|
|
Maintenance
|
1.25
|
6,250
|
7,500
|
8,750
|
|
Total
|
$9.30
|
$46,500
|
$55,800
|
$65,100
|
| |
|
|
|
|
|
|
The production budgeted for September was 6,000 units. During the month, the company
produced 6,200 units. The conversion costs incurred were:
|
Direct labor
|
$44,300
|
|
Supplies
|
6,120
|
|
Utilities
|
965
|
|
Maintenance
|
7,920
|
Aug 29, 2021 | Uncategorized
1. Charles Corporation has three divisions marketing, production, and personnel. There is a
manager in charge of each division. The flexible budgets for each division follow.
| |
Marketing
|
Production
|
Personnel
|
| |
Manager
|
Manager
|
Manager
|
|
Controllable costs:
|
|
|
|
|
Direct material
|
|
$10,000
|
|
|
Direct labor
|
|
25,000
|
|
|
Salaries
|
$40,000
|
|
$35,000
|
|
Supplies
|
10,000
|
3,000
|
2,000
|
|
Maintenance
|
1,000
|
2,000
|
1,000
|
|
Total
|
$5 1,000
|
$40,000
|
$38,000
|
Actual costs by division were:
|
Controllable costs:
|
|
|
|
|
Direct material
|
|
$12,000
|
|
|
Direct labor
|
|
24,000
|
|
|
Salaries
|
$5 1,000
|
|
$34,000
|
|
Supplies
|
800
|
2,000
|
1,500
|
| |
200
|
1,500
|
500
|
|
Total
|
$52,000
|
$39,500
|
$36,000
|
1. Prepare and evaluate a performance report for the production manager.
2. Prepare and evaluate a performance report for the vice president. Other costs for the vice president are assumed to be: budgeted $35,000 and actual $34,400
Aug 29, 2021 | Uncategorized
1. From the following data, prepare a segmental income statement for the Christian Company for 19A.
| |
|
Division
|
| |
Total
|
Alpha
|
Beta
|
|
Sales
|
$500,000
|
$200,000
|
$300,000
|
|
Fixed costs:
|
|
|
|
|
Controllable by division managers
|
$125,000
|
$ 60,000
|
$ 65,000
|
|
Controllable by others
|
60,000
|
25,000
|
35,000
|
|
Variable costs:
|
|
|
|
|
Manufacturing
|
210,000
|
100,000
|
110,000
|
|
Selling and administrative
|
70,000
|
35,000
|
35,000
|
|
Unallocated fixed costs:
|
|
|
|
|
Manufacturing
|
20,000
|
|
|
|
Selling and administrative
|
10,000
|
|
|
Aug 29, 2021 | Uncategorized
1. Compute the unknown amounts for the following segmented income statement (in thousands of dollars).
| |
Company
|
Division
|
| |
Total
|
A
|
B
|
|
Sales
|
$5,000
|
$1,500
|
(i)
|
|
Unallocated fixed costs
|
(a)
|
|
|
|
Fixed costs:
|
|
|
|
|
Controllable by division managers
|
(b)
|
(e)
|
$ 500
|
|
Controllable by others
|
(c)
|
200
|
200
|
|
Contribution margin
|
2,200
|
(f)
|
(j)
|
|
Net income
|
400
|
|
|
|
Variable costs:
|
|
|
|
|
Manufacturing
|
(d)
|
(g)
|
1,000
|
|
Selling and administrative
|
1,200
|
400
|
(k)
|
|
Divisional segment margin
|
900
|
(h)
|
(l)
|
Aug 29, 2021 | Uncategorized
1. Division A normally purchases its parts from Division B of the same company. Division A has
learned that Division B is increasing its price to $110 per unit. As a result, the Division A
manager has decided to purchase the parts from an outside supplier at a unit cost of $100, $10
less than it would cost to purchase the same part from Division B. The Division B manager has
explained that inflation is the cause of the price increase and that the loss of parts normally
transferred to Division A will hurt the division as well as the company profits. The Division B
manager feels that the company as a whole would benefit from the sale of parts to Division A.
The following costs and unit purchases represent the normal annual transaction:
|
Units purchased
|
1,000
|
|
Division B’s variable costs per unit
|
$95
|
|
Division B’s fixed cost per unit
|
$10
|
1. Will the company as a whole benefit if Division A purchases the units from the outside
supplier for $100 per unit? Assume that there are no alternative uses for Division B’s facilities.
2. What would be the effect if the outside selling price decreases by $8.00 per unit, assuming that Division B remains idle?
3. If Division B’s facilities could be put into production for other sales at an annual cost saving of $14,500, should Division A still purchase from the outside?
Aug 29, 2021 | Uncategorized
1. The Caplow Company is a multidivisional company, and its managers have been delegated full
profit responsibility and complex autonomy to accept or reject transfers from other divisions.
Division A produces a subassembly with a ready competitive market. This subassembly is
currently used by Division B for a final product that is sold outside at $1,200.Division A charges Division B market price for the subassembly, which is $700 per unit. Variable costs are $520 and
$600 for Divisions A and B, respectively. The manager of Division B feels that Division A should transfer the subassembly at a lower price than market because at this price, Division B is unable to make a profit.
1. Compute Division B’s profit contribution if transfers are made at the market price, and also the total contribution to profit for the company.
2. Assume that Division A can sell all its production in the open market. Should Division A transfer goods to Division B? If so, at what price?
3. Assume that Division A can sell in the open market only 500 units at $700 per unit out of
the 1,000 units that it can produce every month, and that a 20 percent reduction in price is
necessary to sell full capacity. Should transfers be made? If so, how many units should it transfer and at what price? Submit a schedule showing comparisons of contribution margins under three different alternatives to support your decision.
(SMA, adapted)
Aug 29, 2021 | Uncategorized
1. The shuttle division of the Tandem Corporation produces circuit boards which are sold to the
transistor radio division of the company, as well as to outside buyers. The income statement (in
contribution format) for the past year for the division is given below.
| |
To the Transistor
|
To Outside
|
| |
Radio Divison
|
Buyers
|
|
Sales:
|
|
|
|
20,000 units at $3.00
|
$60,000
|
|
|
30,000 units at $4.00
|
|
$120,000
|
|
Variable expenses:
|
|
|
|
$1.00
|
20,000
|
|
|
$2.00
|
|
60,000
|
|
Contribution margin
|
$40,000
|
$ 60,000
|
|
Fixed costs
|
15,000
|
30,000
|
An outside supplier has just offered the manager of the transistor radio division to supply
the circuit boards at $1.75 each. The manager of the shuttle division would not meet this price,
arguing that it costs him $1.75 to manufacture and sell each unit of a circuit board. Assume that
no additional sales can be made to outside buyers. Answer the following:
1. How did the shuttle division come up with the $1.75 unit cost figure?
2. Is the shuttle division required to meet the outside price of $1.75 for transistor radio sales?
3. Would you meet the $1.75 outside price if you were the manager of the shuttle division?
Aug 29, 2021 | Uncategorized
1. The Safeway division of Amco Products manufactures batteries that it sells primarily to the Alpha Beta division for inclusion with that division’s main product. In 19A, half of the batteries were sold to outside companies at a price of $2 each. The remaining batteries went to the Alpha Beta division. Cost data for 19B for the Safeway division are given below.
|
Production
|
120,000 units
|
|
Variable manufacturing costs
|
$1 20,000
|
|
Fixed overhead
|
$60,000
|
|
Selling expenses (all variable)
|
$30,000
|
|
Administrative expenses (all fixed)
|
$20,000
|
What should be the transfer price for the batteries if the company uses:
(a) Market price?
(b) Variable cost?
(c) A negotiated transfer price that will yield a markup of 20 percent on its product cost
(absorption cost) for Safeway?
2. Prepare a schedule of Safeway division’s contribution margin for each of the transfer
pricing alternatives computed in part 1.
Aug 29, 2021 | Uncategorized
1. A. R. Oma, Inc., manufactures a line of men’s perfumes and after shave lotions. The
manufacturing process is basically a series of mixing operations with the addition of certain
aromatic and coloring ingredients. The finished product is packaged in a company produced
glass bottle and packed in cases containing six bottles.
A. R. Oma feels that the sale of its product is heavily influenced by the appearance and
appeal of the bottle and has, therefore, devoted considerable managerial effort to the bottle
production process. This has resulted in the development of certain unique bottle production
processes in which management takes considerable pride.
The two areas (i.e., perfume production and bottle manufacture) have evolved over the
years in an almost independent manner. In fact, a rivalry has developed between management
personnel as to which division is more important to A. R. Oma. This attitude is probably
intensified because the bottle manufacturing plant was purchased intact 10 years ago and no
real interchange of management personnel or ideas (except at the top corporate level) has
taken place.
Since the acquisition, all bottle production has been absorbed by the perfume manufactur
ing plant. Each area is considered a separate profit center and evaluated as such. As the new
corporate controller, you are responsible for the definition of a proper transfer value to use in
crediting the bottle production profit center and in debiting the packaging profit center.
At your request, the bottle division general manager has asked certain other bottle manufacturers to quote a price for the quantity and sizes (other suppliers) demanded by the
perfume division. These competitive prices are:
|
Volume (Equivalent Cases”)
|
Total Price
|
Price per Case
|
|
2 million
|
$ 4 million
|
$2.00
|
|
4 million
|
$ 7 million
|
$1.75
|
|
6 million
|
$10 million
|
$1.67
|
*An “equivalent case” represents six bottles each.
A cost analysis of the internal bottle plant indicates that they can produce bottles at these costs:
|
Volume (Equivalent Cases)
|
Total Price
|
Price per Case
|
|
2 million
|
$3.2 million
|
$1.60
|
|
4 million
|
$5.2 million
|
$1.30
|
|
6 million
|
$7.2 million
|
$1.20
|
(Your cost analysts point out that these costs represent fixed costs of $1.2 million and variable
costs of $1.00 per equivalent case.)
These figures have given rise to considerable corporate discussion as to the proper value to
use in the transfer of bottles to the perfume division. This interest is heightened because a
significant portion of a division manager’s income is an incentive bonus based on profit center
results. The perfume production division has the following costs in addition to the bottle costs:
|
Volume (Cases)
|
Total Cost
|
Cost per Case
|
|
2 million
|
$16.4 million
|
$8.20
|
|
4 million
|
$32.4 million
|
$8.10
|
|
4 million
|
$32.4 million
|
$8.10
|
|
6 million
|
$48.4 million
|
$8.07
|
After considerable analysis, the marketing research department has furnished you with the
following price demand relationship for the finished product:
|
Sales Volume (Cases)
|
Total Sales Revenue
|
Price per Case
|
|
2 million
|
$25 million
|
$12.50
|
|
4 million
|
$45.6 million
|
$1 1.40
|
|
6 million
|
$63.9 million
|
$10.65
|
1. The A. R. Oma Company has used market price transfer prices in the past. Using the
current market prices and costs, and assuming a volume of 6 million cases, calculate the
income for
(a) The bottle division
(b) The perfume division
(c) The corporation
2.Is this production and sales level the most profitable volume for
(a) The bottle division?
(b) The perfume division?
(c) The corporation?
Explain your answer.
3.The A. R. Oma Company uses the profit center concept for divisional operation.
(a) What conditions should exist for a profit center to be established?
(b) Should the two divisions of the A. R. Oma Company be organized as profit
centers?
(CMA, adapted)
Aug 29, 2021 | Uncategorized
1. Consider an investment which has the following cash flows:
| |
A
|
B
|
C
|
|
Investment (I)
|
$30,000
|
$20,000
|
$50,000
|
|
Useful life
|
10
|
4
|
20
|
|
Annual cash savings
|
$ 6,207
|
$ 7,725
|
$ 9,341
|
Rank the projects according to their attractiveness using the following:
(a) Payback period
(b) IRR
(c) NPV at 14 percent cost of capital
Aug 29, 2021 | Uncategorized
1. Two new machines are being evaluated for possible purchase. Forecasts relating to the two machines are:
| |
Machine 1
|
Machine 2
|
|
Purchase price
|
$50,000
|
$60,000
|
|
Estimated life (straight line depreciation)
|
4 years
|
4 years
|
|
Estimated scrap value
|
None
|
None
|
|
Annual cash benefits before income tax:
|
|
|
|
Year 1
|
$25,000
|
$45,000
|
|
Year 2
|
25,000
|
19,000
|
|
Year 3
|
25,000
|
25,000
|
|
Year 4
|
25,000
|
25,000
|
|
Income tax rate
|
40%
|
40%
|
Compute the net present value of each machine.
(CGA, adapted)
Aug 29, 2021 | Uncategorized
1. The Lon Ki Manufacturing Company must decide between two investments, A and B, which are mutually exclusive. The data on these projects are as follows (in thousands of dollars):
Year
|
Project
|
0
|
1
|
2
|
3
|
4
|
|
A
|
$(100)
|
$120.00
|
|
|
|
|
B
|
(100)
|
|
|
|
$193.80
|
1. For each project, compute:
(a) NPV at 12 percent cost of capital
(b) IRR
2. Why the conflicting ranking? Make a recommendation on which project should be
chosen.
Aug 29, 2021 | Uncategorized
Home Auto Parts is a large retail auto parts store selling the full range of auto parts and supplies for do it yourself auto repair enthusiasts. The store is arranged with three prime displays in the store: front door, checkout counters, and ends of aisles. These display areas receive the most customer traffic and contain special stands that display the merchandise with attractive eye catching designs. Each display area is set up of the beginning of the week and runs for one week. Three items are scheduled next week for special display areas: Texcan Oil, windshield wiper blades, and floor mats. The accompanying table provides information for the three promotional areas scheduled to run next week:
Planned Displays for Next Week
End of Aisles Front Door Checkout Counter
Item Texcan Oil Wiper blades Floor mats
Sales price $.69 can $9.99 $22.99
Projected weekly 5,000 200 70
Unit Cost $ .62 $7.99 $17.49
Home Auto has not yet purchased any of the promotion items for the next week. Should management substitute the Armadillo car wax for one of the three planned promotion displays? If so, which one?
Aug 29, 2021 | Uncategorized
Homework #2 Chapter 5
Your company uses the Perpetual Inventory Method! Using T accounts will make this quiz a little easier!
On 1/1/09, the beginning balance in the Inventory account was $3,000
(1,000 units with a cost of $3 each).
On 1/3/09, your company sold 800 units to AAA Corp. for $6 each; terms were
2/10, n/30.
On 1/6/09, AAA Corp. returned 100 units that they purchased on 1/3.
On 1/12/09, AAA Corp. paid their account, in full.
On 1/20/09, your company purchased an additional 2,000 units from XYZ Distributors
for $3 each.
On 1/25/09, your company returned 500 units that were purchased on 1/20 to XYZ
Distributors.
On 1/29/09, you paid XYZ Distributors, in full.
1. What is the ending balance in the Inventory account?
A. $ 9,300
B. $ 5,400
C. $ 3,900
D. $ 5,100
2. What is the Net Sales amount?
A. $ 4,200
B. $ 4,116
C. $ 4,416
D. $ 4,800
3. What is the Gross Margin amount?
A. $ 2,100
B. $ 2,216
C. $ 2,016
D. $ 2,700
4. Sales Discounts and Sales Returns are what types of accounts?
A. Revenues
B. Expenses
C. Contra revenue
D. Contra asset
5. Sales Discounts and Sales Returns are listed on which financial statement?
A. Balance Sheet
B. Income Statement
C. Statement of Changes in S/E
D. They are not listed on any financial statement.
6. When is the Inventory account debited?
A. Purchases and Purchase Returns
B. Purchases, Sales Returns, and Sales Discounts
C. Purchases, Sales Returns, and Purchase Returns
D. Purchases and Sales Returns
7. When is the Inventory account credited?
A. Purchases and Purchase Returns
B. Purchases, Purchase Returns, and Sales Discounts
C. Purchase Returns and Cost of Goods Sold
D. Purchases and Sales Returns
Aug 29, 2021 | Uncategorized
http://books.google.com/books?id=ge1eOW6 280C&pg=PA124&lpg=PA124&dq=village+of+Denaville.+All+amounts+are+in+millions.+The+village+encumbers+all+outlays&source=bl&ots=i2a6d8cZYu&sig=Ycu2HCqObkpLRZUDtnzwv8Q4ftk&hl=en&sa=X&ei=Jm0xT8PyIMPL0QGfy5HMBw&ved=0CB4Q6AEwAA#v=onepage&q=village%20of%20Denaville.%20All%20amounts%20are%20in%20millions.%20The%20village%20encumbers%20all%20outlays&f=false
i have question 3 8, i solved for it. but professor keeps telling me my journal entries are incorrect. i have them on an excel file but for example: my first J/E is:
DR: esimated revenue (property taxes) 7900
CR: fund balance 7900
DR: cash 7800
CR: revenues 7800
DR: appropriations property taxes 100
CR: fund balance 100
can someone help. thanks!
Aug 29, 2021 | Uncategorized
I am an accounting student and I am stuck on a few problems on my hw how do i get the average issue price per share?
A corporation reports the following stockholder’s equity as of December 31, 2008
Preferred stock, $50 par, 10% cumulative, 100,000
shares authorized and 90,000 shares issued $4,500,000
Paid in capital in excess of par common 945,000
Common stock, $10 par, 200,000 shares authorized
and 200,000 shares issued 2,000,000
Paid in capital in excess of par common 800,000
Total paid in capital 8,245,000
Retained earnings 3,400,000
Total stockholder’s equity $11,645,000
A) What was the average issue price per share of common stock?
B) What was the average issue price per share of preferred stock?
C) The board of directors declares dividends of $1,900,000 in 2008. No dividends were declared in 2007 and there were no dividends in arrears prior to 2007. What is the amount per share each stock will receive?
If you could explain how I could get to my conclusion, because I have a whole packet of the same things to do
Aug 29, 2021 | Uncategorized
I have attempted this problem and my trial balance ended up not balancing so I am sure I made a mistake in my adjusting entries(Debits and Credits). So, here it goes…Business started on June 1, 2010 and the trial balance was prepared for August 31, 2010.
1. Insurance expires at the rate of $400 a month.
2. A count on Aug 31 shows $600 of supplies on hand. (trial balance shows $3300)
3.Annual depreciation is $6000 on cottages and $2400 on furniture.
4. Unearned rent revenue of $4100 was earned prior to Aug 31.
5. Salaries of $400 were unpaid at Aug 31.
6. Rentals of $1000 were due from tenants at August 31. Use accounts receivable.
7. The mortgage interest rate is 9 % per year. The mortgage was taken out on August 1st.
I had a hard time debiting and crediting the right accounts… please help
Aug 29, 2021 | Uncategorized
i need the fomula for common size in come statement I keep messing up sales/sales but i have to enter it right.
Smith Burgers
Income Statements
Jan 1 Dec 31 2010
2010 2009
Sales $2,900,000 $2,350,000
Cost of Goods 2,030,000 1,645,000
Gross Profit 870,000 705,000 2
Depreciation 62,000 58,000
Selling & Admin. Expense 425,000 390,000
Lease Expense 65,000 65,000
Net Operating Income 318,000 192,000 2
Interest Expense 112,000 68,000
Earnings Before Taxes 206,000 124,000 2
Taxes 72,100 43,400
Net Income $133,900 $80,600
Notes:
Tax Rate 35.00% 35.00%
Shares 38,000 30,000
Earnings per Share $3.52 $2.69
Smith Burgers
Common Size Income Statements
Jan 1 Dec 31 2010
2010 2009
Sales
Cost of Goods
Gross Profit
Depreciation
Selling & Admin. Expense
Lease Expense
Net Operating Income
Interest Expense
Earnings Before Taxes
Taxes
Net Income
Aug 29, 2021 | Uncategorized
I need help on creating the journal entries for my class. Im suppose to put them into excell.
1. Using a job order costing system give the entries to record the following transactions:
Job Order transactions for Smith & Kerns Co. Journalize the following entries:
a) Material purchased on account, $71,500.
b) Materials requisitioned for use in production: direct materials, $42,700; indirect materials, $5,750.
c) Manufacturing labor incurred on account, $39,500.
d) Manufacturing labor allocation: 75% direct labor; 25% indirect labor.
e) Depreciation on factory equipment, $4,000.
f) Prepaid expenses expired relating to manufacturing operations, $6,300.
g) Other miscellaneous factory costs incurred on account, $21,000.
h) Manufacturing overhead is allocated at 110% of direct labor cost.
i) Cost of jobs completed is $94,000.
j) Jobs sold to customers on account: cost of jobs, $77,000; sales price, $145,000.
Transactions for the Splatter Paint Co.; Splatter uses the process cost system; journalize the following entries:
a) Materials purchased on account, $340,100.
b) Materials requisitioned for use:
Binders and Solvents ‘ Mixing Dept. $202,500
Resins ‘ Blending Dept. 49,700
Indirect materials ‘ Mixing Dept. 5,200
Indirect materials ‘ Blending Dept. 1,950
c) Labor used:
Direct Labor ‘ Mixing Dept. 142,400
Direct Labor ‘ Blending Dept. 94,000
Indirect Labor ‘ Mixing Dept. 25,300
Indirect Labor Blending Dept. 38,400
d) Depreciation charged on fixed assets:
a. Mixing Dept. 26,500
b. Blending Dept. 14,725
e) Expired prepaid factory insurance:
a. Mixing Dept. 1,300
b. Blending Dept. 1,900
f) Applied factory overhead:
a. Mixing Dept. 58,300
b. Blending Dept. 56,975
g) Production costs transferred from Mixing Dept. to Blending Dept. 476,000
h) Production costs transferred from Blending Dept. to Finished Goods 698,100
i) Cost of goods sold during the period 711,450
j) Sold products to Williams Paint Distributors 769,500
Aug 29, 2021 | Uncategorized
***I need to know know HOW TO SOLVE this. Thanks
The management of Rathburn Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated amount of activity for the year. The company’s controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine ours and the estimated amount of the allocation base for the upcoming year is 43,000 machine hours. In addition, capacity is 47,000 machine hours and the actual activity for the year is 42,600 machine hours. All of the manufacturing overhead is fixed and is $848,820 per year. For simplicity, it is assumed that this is the the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity and the actual amount of manufacturing overhead for the year. Job F31I, which required 310 machine hours, is one of the jobs worked on during the year.
**Determine the UNDERAPPLIED or OVERHEAD overhead for the year if the predetermined overhead rate is based on the estimated amount of the allocation base.
Aug 29, 2021 | Uncategorized
***I need to know know HOW TO SOLVE this. Thanks
The management of Rathburn Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated amount of activity for the year. The company’s controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine ours and the estimated amount of the allocation base for the upcoming year is 43,000 machine hours. In addition, capacity is 47,000 machine hours and the actual activity for the year is 42,600 machine hours. All of the manufacturing overhead is fixed and is $848,820 per year. For simplicity, it is assumed that this is the the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity and the actual amount of manufacturing overhead for the year. Job F31I, which required 310 machine hours, is one of the jobs worked on during the year.
***Determine how much overhead would be applied to job F31I if the predetermined overhead rate is based on the estimated amount of the allocation base.
Aug 29, 2021 | Uncategorized
Impairment of copyrights.
Presented below is information related to copyrights owned by Wamser Corporation at December 31, 2010.
Cost $2,700,000
Carrying amount 2,350,000
Expected future net cash flows 2,100,000
Fair value 1,400,000
Assume Wamser will continue to use this asset in the future. As of December 31, 2010, the copyrights have a remaining useful life of 5 years.
Instructions
(a) Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2010.
(b) Prepare the journal entry to record amortization expense for 2011.
(c) The fair value of the copyright at December 31, 2009 is $1,500,000. Prepare the journal entry (if any) necessary to record this increase in fair value.
Aug 29, 2021 | Uncategorized
Incremental Analysis of Outsourcing Decision [LO 1, 2, 4]
Oakland College is considering outsourcing grounds maintenance. In this regard, Oakland has received a bid from Highline Grounds Maintenance for $300,480 per year. Highline states that its bid will cover all services and planting materials required to “keep Oakland’s grounds in a condition comparable to prior years.” Oakland’s cost for grounds maintenance in the preceding year were $307,780 as follows:
Salary of three full time gardeners $197,940
Plant materials 80,700
Fertilizer 8,070
Fuel 8,900
Depreciation of tractor, mowers, and other
miscellaneous equipment 12,170
Total $307,780
If Oakland College outsources maintenance, it will be able to sell equipment for $31,360, and the three gardeners will be laid off.
Analyze the one year financial impact of outsourcing grounds maintenance.
$
How will savings in the second year differ from those in year 1?
$
Is it a decrease or an increase
Aug 29, 2021 | Uncategorized
Instructions: You must provide your calculations in answering these questions. Just the answer alone is NOT sufficient.
Rockwall Tile Inc. uses the weighted average method in its process costing system. The following data concern the operations of the company’s first processing department for the month of January.
Work in process, beginning:
Units in process Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦ 100
Percent complete with respect to materials Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦.. 70%
Percent complete with respect to conversion Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦.. 40%
Costs in the beginning inventory:
Materials cost Ac€¦Ac€¦.Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦.. $364
Conversion cost Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦. $1,120
Units started into production during the month Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦.. 23,000
Units completed and transferred out Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦ 22,900
Costs added to production during the month:
Materials cost Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦. $124,160
Conversion cost Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦. $637,088
Work in process, ending:
Units in process Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦. 200
Percent complete with respect to materials Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦ 80%
Percent complete with respect to conversion Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦ 70%
Required:
Using the weighted average method:
a. Determine the equivalent units of production for materials and conversion costs.
b. Determine the cost per equivalent unit for materials and conversion costs.
c. Determine the cost of units transferred out of the department during the month.
d. Determine the cost of ending work in process inventory in the department.
Aug 29, 2021 | Uncategorized
The intangible assets section of Redeker Company at December 31, 2011, is presented
below.
Problems: Set A 435
(b) Depreciation Expense”
building $570,000;
equipment $4,772,000
(c) Total plant assets $61,270,000
Patent ($70,000 cost less $7,000 amortization) $63,000
Franchise ($48,000 cost less $19,200 amortization) 28,800
Total $91,800
The patent was acquired in January 2011 and has a useful life of 10 years.The franchise was acquired
in January 2008 and also has a useful life of 10 years.The following cash transactions may
have affected intangible assets during 2012.
Jan. 2 Paid $45,000 legal costs to successfully defend the patent against infringement by
another company.
Jan.’June Developed a new product, incurring $140,000 in research and development costs.A
patent was granted for the product on July 1. Its useful life is equal to its legal life.
Sept. 1 Paid $50,000 to an extremely large defensive lineman to appear in commercials
advertising the company’s products. The commercials will air in September and
October.
Oct. 1 Acquired a franchise for $100,000.The franchise has a useful life of 50 years.
Instructions
(a) Prepare journal entries to record the transactions above.
(b) Prepare journal entries to record the 2012 amortization expense.
(c) Prepare the intangible assets section of the balance sheet at December 31, 2012.
Aug 29, 2021 | Uncategorized
The intangible assets section of Redeker Company at December 31, 2011, is presented
below.
Problems: Set A 435
(b) Depreciation Expense”
building $570,000;
equipment $4,772,000
(c) Total plant assets $61,270,000
Patent ($70,000 cost less $7,000 amortization) $63,000
Franchise ($48,000 cost less $19,200 amortization) 28,800
Total $91,800
The patent was acquired in January 2011 and has a useful life of 10 years.The franchise was acquired
in January 2008 and also has a useful life of 10 years.The following cash transactions may
have affected intangible assets during 2012.
Jan. 2 Paid $45,000 legal costs to successfully defend the patent against infringement by
another company.
Jan.’June Developed a new product, incurring $140,000 in research and development costs.A
patent was granted for the product on July 1. Its useful life is equal to its legal life.
Sept. 1 Paid $50,000 to an extremely large defensive lineman to appear in commercials
advertising the company’s products. The commercials will air in September and
October.
Oct. 1 Acquired a franchise for $100,000.The franchise has a useful life of 50 years.
Instructions
(a) Prepare journal entries to record the transactions above.
(b) Prepare journal entries to record the 2012 amortization expense.
(c) Prepare the intangible assets section of the balance sheet at December 31, 2012.
Aug 29, 2021 | Uncategorized
Jackson Electronics, Inc., manufactures a variety of microelectronic component parts and utilizes a process costing system. The following information was provided by the accounting department as of July 31, 20xx:
a. Units started during the month of July totaled 118,200.
b. Units partially complete as of July 31 equaled 7,400.
c. Ending work in process inventory as of July 31, 20×8, was 70 percent complete.
d. Direct materials are added at the beginning of the process, and conversion costs are incurred uniformly throughout the process.
e. No units were in process on July 1, 20xx.
Using the information provided, compute the equivalent units of production for direct materials and conversion costs for July using the FIFO costing method.
Aug 29, 2021 | Uncategorized
James Hardy recently rejected a $20,000,000, five year contract with the Vancouver Seals. The contract offer called for an immediate signing bonus of $5,000,000 and annual payments of $3,000,000. To sweeten the deal, the president of player personnel for the Seals has now offered a $22,000,000, five year contract. This contract calls for annual increases and a balloon payment at the end of five years.
Year 1 $ 3,000,000
Year 2 3,100,000
Year 3 3,200,000
Year 4 3,300,000
Year 5 3,400,000
Year 5 balloon payment 6,000,000
Total $22,000,000
Required
Suppose you are Hardy’s agent and you wish to evaluate the two contracts using a required rate of return of 12 percent. In present value terms, how much better is the second contract?
Aug 29, 2021 | Uncategorized
Jangyoun is a married taxpayer with a dependant 4 year old daughter. His employer offers a flexible spending account under which he can choose to receive cash or, alternatively, choose from certain fringe benefits. These benefits include health insurance that costs $9,000 and child care that costs $2,600. Assume Jangyoun is in the 28% tax bracket.A) How much income tax will Jangyoun save if he chooses to participate in the employer’s health insurance plan? Assume that he does not have sufficient medical expenses to itemize his deductions. B) would you recommend that Jangyoun participate in the employer’s health insurance plan if his wife’s employer already provides comparable health insurance coverage for the family? C) Would you recommend that Jangyoun participate in the employer provided child care option if he has the alternative option of claiming a child care credit of $480?
Aug 29, 2021 | Uncategorized
first part:
On January 1, 2003, ABC, Inc. purchased equipment for $80,000. The equipment had an estimateduseful life of 10 years and an estimated salvage value of $3,000. ABC, Inc. will depreciatethe equipment using the double declining balance method of depreciation.
Calculate the amount of depreciation expense recorded on the equipment for 2005
second part:
Mason Company purchased a new machine on January 1, 1999, for $64,000. At the time of acquisition,the machine was estimated to have a service life of eight years and a salvage value of $10,000.The company uses the double declining balance method of calculating depreciation. Assume that themachine was sold for $39,000 cash on December 31, 2001.
Calculate the gain recorded on the sale
third part:
Jefferson Cleaners purchased a tract of land, a small office building, and some equipment for $1,500,000. The appraised
value of the land was $850,000, the building $675,000, and the equipment $475,000. What amount is recorded as the
cost of the land?
A) $481,667
B) $637,500
C) $850,000
D) $888,888
E) $925,667
Please make answers clear and bolded, will give lifesaver rating! thank you!
Aug 29, 2021 | Uncategorized
on january 1 2004 a corporation issued 25000 shares of %10 $50 par cumulative preferred stock and 50000 shares of $30 par common stock. Cash dividends declared by the board were as follows. Determing the amount of total dividends and dividends per share for preferred stockholders and common stockholders.
2004 none
2005 $100,000
2006 $275,000
2007 $305,000
2008 $355,000
|
Year
|
Total Preferred
|
Per share Preferred
|
Total common
|
Per share common
|
|
2004
|
|
|
|
|
|
2005
|
|
|
|
|
|
2006
|
|
|
|
|
|
2007
|
|
|
|
|
|
2008
|
|
|
|
|
Aug 29, 2021 | Uncategorized
1. Match each of the following terms with the phrase that it best matches.
|
Comprehensive income
|
Vertical analysis
|
|
Quality of earnings
|
Pro forma income
|
|
Solvency ratio
|
Extraordinary item
|
1._______ Measures the ability of the company to survive over a long period of time.
2._______ Usually excludes items that a company thinks are unusual or non recurring.
3._______ Includes all changes in stockholders’ equity during a period except those resulting from
investments by stockholders and distributions to stockholders.
4._______ Indicates the level of full and transparent information provided to users
of the financial statements.
5._______ Describes events and transactions that are unusual in nature and infrequent in occurrence.
6._______ Expresses each item within a financial statement as a percent of a base
amount.
Quality of Earnings
Aug 29, 2021 | Uncategorized
A firm with a 13% WACC is evaluating two projects for this year’s capital budget. After tax cash flows, including depreciation, are as follows:
Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦.Ac€¦0Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦.1Ac€¦Ac€¦Ac€¦Ac€¦.2Ac€¦Ac€¦Ac€¦….3Ac€¦Ac€¦Ac€¦Ac€¦.4Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦.5
Project AAc€¦. $3,000Ac€¦Ac€¦..$1,000Ac€¦Ac€¦$1,000Ac€¦Ac€¦$1,000Ac€¦Ac€¦.$1,000Ac€¦Ac€¦$1,000
Project BAc€¦. $9,000Ac€¦Ac€¦..$2,800Ac€¦Ac€¦$2,800Ac€¦Ac€¦$2,800Ac€¦Ac€¦.$1,000Ac€¦Ac€¦$2,800
1. Calculate NPV for each project. Round your answers to the nearest cent.
Project A $_________
Project B $_________
Calculate IRR for each project. Round your answers to two decimal places.
Project A 19.86%
Project B 16.80%
Calculate MIRR for each project. Round your answers to two decimal places.
Project A _________%
Project B _________ %
Calculate payback for each project. Round your answers to two decimal places.
Project A 3 years
Project B _________ years
Calculate discounted payback for each project. Round your answers to two decimal places.
Project A 4.02 years
Project B _________ years
Aug 29, 2021 | Uncategorized
Fogelberg Corporation is a regional company which is an SEC registrant. The corporation’s securities are thinly traded through the NASDAQ (National Association of Securities Dealers Quotes). Fogelberg Corp. has issued 10,000 units. Each unit consists of a $500 par, 12% subordinated debenture and 10 shares of $5 par common stock. The investment banker has retained 400 units as the underwriting fee. The other 9,600 units were sold to outside investors for cash at $850 per unit. Prior to this sale the 2 week ask price of common stock was $40 per share. Twelve percent is a reasonable market yield for the debentures, and therefore the par value of the bonds is equal to the fair value.
a)Prepare the journal entry to record Fogelberg’s transaction, under the following conditions.
1.Employing the incremental method.
2.Employing the proportional method, assuming the recent price quote on the common stock reflects fair value.
b) Briefly explain which method is, in your opinion, the better method.
Aug 29, 2021 | Uncategorized
The following account balances were taken from the end of fiscal year financial statements of Birddog, Inc. for December 31, 2011:
Cash in Bank 10,000 Accounts Payable 18,000
Accounts Receivable 20,000 Federal Income Tax Payable 2,200
Merchandise Inventory 17,800 Dividends Payable (due 2 15 06) 4,400
Prepaid Insurance 2,200 Sales Taxes Payable 400
Long Term Notes Payable (due 2 1 10) 150,000
For questions 35 through 37, write the correct amount or ratio on your answer sheet. Ratios must be rounded to the nearest tenth and expressed as in this example: 2 to 1.
35. What is the amount of working capital?
36. What is the quick ratio?
37. What is the current ratio?
Aug 29, 2021 | Uncategorized
The following accounts are taken from the December 31, 2011 financial statements of a company.
Accounts payable
$2,075
Accounts receivable
800
Selling & administrative expenses
2,500
Cash
2,200
Contributed Capital
2,000
Dividends
1,900
Income tax expense
400
Interest expense
75
Other expenses
500
Notes payable
5,000
Other assets
2,500
Other liabilities
3,000
Other operating expenses
2,000
Other revenue
300
Property & equipment
11,000
Retained earnings as of 12/31/10
4,800
Salaries expense
3,000
Supplies
300
Service revenue
10,000
Required:
1. Determine 2011 Net income; Total Assets at 12/31/2011 and Total Liabilities at 12/31/2011.
2. Prepare the 2011 closing journal entries for this company.
3. Determine retained earnings at 12/31/2011.
Aug 29, 2021 | Uncategorized
The following balance sheets at the end of each of the first two years of operations indicate the following:
Total current assets:
2010 $600,000 2009 $560,000
Total investments:
2010 60,000 2009 40,000
Total property, plant, and equipment:
2010 900,000 2009 700,000
Total current liabilities:
2010 125,000 2009 80,000
Total long term liabilities:
2010 350,000 2009 250,000
Preferred 9% stock, $100 par
2010 100,000 2009 100,000
Common stock, $10 par
2010 600,000 2009 600,000
Paid in capital in excess of par common stock:
2010 60,000 2009 60,000
Retained earnings:
2010 325,000 2009 210,000
If net income is $115,000 and interest expense is $30,000 for 2012, and the market price is $30, what is the price earnings ratio on common stock for 2012 (round to one decimal point)?
Aug 29, 2021 | Uncategorized
The following balances were taken from the books of Parnevik Corp. on December 31, 2012.
Interest revenue $88,800 Accumulated depreciation building 28,000
Cash 51,000 Notes receivable 155,000
Sales 1,332,400 Selling expenses 202,500
Accounts receivable 150,000 Accounts payable 170,000
Prepaid insurance 20,000 Bonds payable 100,000
Sales returns and allowances 153,800 Administrative and general expenses 97,300
Allowance for doubtful accounts 7,000 Accrued liabilities 32,000
Sales discounts 48,600 Interest expense 73,300
Land 100,000 Notes payable 100,000
Equipment 200,000 Loss from earthquake damage
Building 140,000 (extraordinary item) 138,000
Cost of goods sold 625,700 Common stock 500,000
Accumulated depreciation equipment 40,000 Retained earnings 21,000
Assume the total effective tax rate on all items is 34%.
Prepare a multiple step income statement; 100,000 shares of common stock were outstanding during the year.
Aug 29, 2021 | Uncategorized
The following balances were taken from the books of Parnevik Corp. on December 31, 2012.
Interest revenue $88,800 Accumulated depreciation building 28,000
Cash 51,000 Notes receivable 155,000
Sales 1,332,400 Selling expenses 202,500
Accounts receivable 150,000 Accounts payable 170,000
Prepaid insurance 20,000 Bonds payable 100,000
Sales returns and allowances 153,800 Administrative and general expenses 97,300
Allowance for doubtful accounts 7,000 Accrued liabilities 32,000
Sales discounts 48,600 Interest expense 73,300
Land 100,000 Notes payable 100,000
Equipment 200,000 Loss from earthquake damage
Building 140,000 (extraordinary item) 138,000
Cost of goods sold 625,700 Common stock 500,000
Accumulated depreciation equipment 40,000 Retained earnings 21,000
Assume the total effective tax rate on all items is 34%.
Prepare a multiple step income statement; 100,000 shares of common stock were outstanding during the year.
Aug 29, 2021 | Uncategorized
The following table lists the stockholders equity accounts appearing on the balance sheet of a corporation on Dec. 31, 2008. Answer the questions below the table.
Account amount
Common stock, $10 par value $300,000
Paid in capital in excess of par common 270,000
Preferred stock, $50 par value 125,000
Paid in capital in excess of par preferred 30,000
Retained Earnings 225,000
a. how many shares of common stock have been issued?
b what was the average issuance price of the comoon stock?
c how many shares of preferred stock have been issued?
d what was the average issuance price of the preferred stock?
e what is total paid in capital
d what is total stockholders’ equity?
Aug 29, 2021 | Uncategorized
( Fouch Company makes 30,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows:
Direct materialAc€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦..$15.70
direct laborAc€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦17.50
variable manufacturing overheadAc€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦ 4.50
Fixed manufacturing overheadAc€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦…14.50
Unit product costAc€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦ 52.30
An outside supplier has offered to sell the company all of these parts it needs for $51.90 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $219,000 per year.
If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $6.20 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company’s remaining products.
Required:
i. How much of the unit product cost of $52.30 is relevant in the decision of whether to make or buy the part?
ii. What is the net total dollar advantage (disadvantage) of purchasing the part rather than making it?
iii. What is the maximum amount the company should be willing to pay an outside supplier per unit for the part if the supplier commits to supplying all 30,000 units required each year?
Aug 29, 2021 | Uncategorized
Under a general partnership, each partner is considered an agent of a general partnership and is liable for:
A) The debts of the business
B) The taxes on their share of the income
C) The acts of the other partners
D) All of the above
2. As a part of the initial investment in forming a partnership, a partner contributes office equipment that had a cost of $20,000, and accumulated depreciation of $12,500. If the partners deem the market value to be $9,000, what amount should be debited to the office equipment account?
A) $7,500
B) $9,000
C) $12,500
D) $20,000
3. Lee and Stills are partners who share income in the ratio of 2:1 and who have capital balances of $65,000 and $35,000 respectively. If Mor, with the consent of Stills, acquired A??1 of Lee’s interest for $40,000 for what amount would Mor’s capital account be credited?
A) $32,500
B) $40,000
C) $50,000
D) $72,500
4. Chip and Dale agree to form a partnership by verbal agreement and a hand shake. Chip is to contribute $50,000 in assets and devote A??1 time in the partnership. Dale is to contribute $20,000 and devote full time to the partnership. How will Chip and Dale split the net income/loss?
A) 5:2
B) 1:2
C) 1:1
D) 2.5:1
5. Henry and Thomas share gains and losses in the ratio of 2:1. They decide to dissolve their partnership and after selling all assets for cash and paying all liabilities, the cash account has $12,000 in it. The capital accounts were as follows: Henry, $10,000; Thomas, $2,000. How much of the $12,000 cash would Henry receive?
A) $2,000
B) $8,000
C) $10,000
D) $12,000
Aug 29, 2021 | Uncategorized
Gerrad Manufacturing has projected sales of its product for the next six months as follows:
January 300 units
February 700 units
March 1,000 units
April 900 units
May 400 units
June 300 units
The finished product requires 3 pounds of raw material and 10 hours of direct labor. Gerrad tries to maintain a Finished Goods ending inventory equal to the next two months of sales and a Raw Material ending inventory equal to one half of the current month’s production needs. January’s beginning inventories are expected to conform to company policy.
a. Prepare a production budget for February, March, and April.
b. Prepare a forecast of the units and cost of raw material that will be required for February, March, and April. The expected cost per pound of raw material is expected to be $2 in February, $2.30 in March, and $2.40 in April.
c. Prepare a direct labor budget (assuming a $12 per hour rate) for February, March, and April.
Aug 29, 2021 | Uncategorized
Ghose Company manufactures basketballs. Materials are added at the beginning of the production process and conversion costs are incurred uniformly. Production and cost data for the month of July 2011 are as follows.
Production Data Basketballs Units Percent
Complete
Work in process units, July 1 500 60%
Units started into production 1,000
Work in process units, July 31 600 30%
Cost Data Basketballs
Work in process, July 1
Materials $750
Conversion costs
600
$1,350
Direct materials 2,400
Direct labor 1,580
Manufacturing overhead 1,060 The equivalent units of production for materials and conversion.
Materials 1,500
Conversion costs 1,080
The unit costs of production for materials and conversion costs.
Unit cost Materials $ 2.10
Unit cost Conversion costs $ 3.00
The assignment of costs to units transferred out and in process at the end of the period.
Costs accounted for
Transferred out $ 4,590
Work in process, July 31
Materials $1,260
Conversion cost $540 $1,800
Total costs $6,390
I am having trouble figuring out the rest of this problem, which is the cost report for this company. Can you help, please???
Aug 29, 2021 | Uncategorized
GIANAUTO CORPORATION
(Plant Closing Decision)
GianAuto Corporation manufactures automobiles, vans and trucks. Among the various GianAuto plants around the United States is the Denver Cover Plant. Coverings made primarily of vinyl and upholstery fabric are sewn at the Denver Cover plant and used to cover interior seating and other surfaces of GianAuto products.
Ted Vosilo is the plant manager for Denver Cover. The Denver Cover Plant was the first GianAuto plant in the region. As other area plants were opened, Vosilo, in recognition of his management ability, was given the responsibility for managing them. Vosilo functions as a regional manager although the budget for him and his staff is charged to the Denver Cover Plant.
Vosilo has just received a report indicating that GianAuto could purchase the entire annual output of Denver Cover from outside suppliers for $30 million. Vosilo was astonished at the low outside price because the budget for Denver Cover’s operating costs for the coming year was set at $52 million. Vosilo believes that GianAuto will have to close down operations at Denver Cover in order to realize the $22 million in annual cost savings.
The budget for Denver Cover’s operating costs for the coming year is presented on the following page. Additional facts regarding plant operations are as follows:
a.
Due to Denver Cover’s commitment to use high quality fabrics in all its products, the purchasing department was instructed to place blanket purchase orders with major suppliers to ensure the receipt of sufficient materials for the coming year. If these orders were canceled as a consequence of the plant closing, termination charges would amount to 20 percent of the cost of direct materials.
b.
Approximately 800 plant employees will lose their jobs if the plant is closed. This includes all of the direct laborers and supervisors as well as the plumbers, electricians, and other skilled workers classified as indirect plant workers. Some would be able to find new jobs while many others would have difficulty. All employees would have difficulty matching Denver Cover’s base pay of $9.40 per hour that is the highest in the area. A clause in Denver Cover’s contract with the union may help some employees; the company must provide employment assistance to its former employees for 12 months after a plant closing. The estimated cost to administer this service would be $1.5 million for the year.
c.
Some employees would probably elect early retirement because GianAuto has an excellent pension plan. In fact, $3 million of the 2005 pension expense would continue whether Denver Cover is open or not.
d.
Vosilo and his staff would not be affected by the closing of Denver Cover. They would still be responsible for administering three other area plants.
e.
Denver Cover considers equipment depreciation to be a variable cost and uses the units of production method to depreciate its equipment; Denver Cover is the only
2
GianAuto plant to use this depreciation method. However, Denver Cover uses the customary straight line method to depreciate its building.
DENVER COVER PLANT
Budget for Operating Costs
For the Year Ending December 31, 2005
Materials $14,000,000
Labor
Direct $13,100,000
Supervision 900,000
Indirect plant 4,000,000 18,000,000
Overhead
Depreciation equipment 3,200,000
Depreciation building 7,000,000
Pension expense 5,000,000
Plant manager and staff 800,000
Corporate allocation 4,000,000 20,000,000
Total budget costs $52,000,000
REQUIRED:
1.
Without regard to costs, identify the advantages to GianAuto Corporation of continuing to obtain covers from its own Denver Cover Plant.
2.
GianAuto Corporation plans to prepare a dollar analysis that will be used in deciding whether or not to close the Denver Cover Plant. Management has asked you to identify:
a.
The recurring annual budgeted costs that are relevant to the decision regarding closing the plant (show the dollar amounts).
b.
The recurring annual budgeted costs that are not relevant to the decision regarding closing the plant, and explain why they are not relevant (again show the dollar amounts).
c.
Any nonrecurring costs that would arise due to the closing of the plant, and explain how they would affect the decision (again show any dollar amounts).
3.
Looking at the data you have prepared in (2), should the plant be closed? Show computations, and explain your answer.
4. Identify any revenues or costs not specifically mentioned in the problem that GianAuto should consider before making a decision.
Aug 29, 2021 | Uncategorized
GIANAUTO CORPORATION
(Plant Closing Decision)
GianAuto Corporation manufactures automobiles, vans and trucks. Among the various GianAuto plants around the United States is the Denver Cover Plant. Coverings made primarily of vinyl and upholstery fabric are sewn at the Denver Cover plant and used to cover interior seating and other surfaces of GianAuto products.
Ted Vosilo is the plant manager for Denver Cover. The Denver Cover Plant was the first GianAuto plant in the region. As other area plants were opened, Vosilo, in recognition of his management ability, was given the responsibility for managing them. Vosilo functions as a regional manager although the budget for him and his staff is charged to the Denver Cover Plant.
Vosilo has just received a report indicating that GianAuto could purchase the entire annual output of Denver Cover from outside suppliers for $30 million. Vosilo was astonished at the low outside price because the budget for Denver Cover’s operating costs for the coming year was set at $52 million. Vosilo believes that GianAuto will have to close down operations at Denver Cover in order to realize the $22 million in annual cost savings.
The budget for Denver Cover’s operating costs for the coming year is presented on the following page. Additional facts regarding plant operations are as follows:
a.
Due to Denver Cover’s commitment to use high quality fabrics in all its products, the purchasing department was instructed to place blanket purchase orders with major suppliers to ensure the receipt of sufficient materials for the coming year. If these orders were canceled as a consequence of the plant closing, termination charges would amount to 20 percent of the cost of direct materials.
b.
Approximately 800 plant employees will lose their jobs if the plant is closed. This includes all of the direct laborers and supervisors as well as the plumbers, electricians, and other skilled workers classified as indirect plant workers. Some would be able to find new jobs while many others would have difficulty. All employees would have difficulty matching Denver Cover’s base pay of $9.40 per hour that is the highest in the area. A clause in Denver Cover’s contract with the union may help some employees; the company must provide employment assistance to its former employees for 12 months after a plant closing. The estimated cost to administer this service would be $1.5 million for the year.
c.
Some employees would probably elect early retirement because GianAuto has an excellent pension plan. In fact, $3 million of the 2005 pension expense would continue whether Denver Cover is open or not.
d.
Vosilo and his staff would not be affected by the closing of Denver Cover. They would still be responsible for administering three other area plants.
e.
Denver Cover considers equipment depreciation to be a variable cost and uses the units of production method to depreciate its equipment; Denver Cover is the only
GianAuto plant to use this depreciation method. However, Denver Cover uses the customary straight line method to depreciate its building.
DENVER COVER PLANT
Budget for Operating Costs
For the Year Ending December 31, 2005
Materials $14,000,000
Labor
Direct $13,100,000
Supervision 900,000
Indirect plant 4,000,000 18,000,000
Overhead
Depreciation equipment 3,200,000
Depreciation building 7,000,000
Pension expense 5,000,000
Plant manager and staff 800,000
Corporate allocation 4,000,000 20,000,000
Total budget costs $52,000,000
REQUIRED:
1.
Without regard to costs, identify the advantages to GianAuto Corporation of continuing to obtain covers from its own Denver Cover Plant.
2.
GianAuto Corporation plans to prepare a dollar analysis that will be used in deciding whether or not to close the Denver Cover Plant. Management has asked you to identify:
a.
The recurring annual budgeted costs that are relevant to the decision regarding closing the plant (show the dollar amounts).
b.
The recurring annual budgeted costs that are not relevant to the decision regarding closing the plant, and explain why they are not relevant (again show the dollar amounts).
c.
Any nonrecurring costs that would arise due to the closing of the plant, and explain how they would affect the decision (again show any dollar amounts).
3.
Looking at the data you have prepared in (2), should the plant be closed? Show computations, and explain your answer.
4. Identify any revenues or costs not specifically mentioned in the problem that GianAuto should consider before making a decision.
Aug 29, 2021 | Uncategorized
Gogean Inc. uses a calendar year for financial reporting. The company is authorized to issue 9,000,000 shares of $10 par common stock. At no time has Gogean issued any potentially dilutive securities. Listed below is a summary of Gogean’s common stock activities.
1. Number of common shares issued and outstanding at December 31, 2011 2,400,000
2. Shares issued as a result of a 10% stock dividend on September 30, 2012 240,000
3. Shares issued for cash on March 31, 2013
2,000,000
Number of common shares issued and outstanding at December31, 2013
4,640,000
4. A 2 for 1 stock split of Gogean’s common stock took place on March 31, 2014
(a) Compute the weighted average number of common shares used in computing earnings per common share for 2012 on the 2013 comparative income statement.
shares
(b) Compute the weighted average number of common shares used in computing earnings per common share for 2013 on the 2013 comparative income statement.
shares
(c) Compute the weighted average number of common shares to be used in computing earnings per common share for 2013 on the 2014 comparative income statement.
shares
(d) Compute the weighted average number of common shares to be used in computing earnings per common share for 2014 on the 2014 comparative income statement.
shares
Aug 29, 2021 | Uncategorized
Golden Flights, Inc., is considering buying some specialized machinery that would enable the company to obtain a six year government contract for the design and engineering of a futuristic plane. The machinery costs $975,000 and must be destroyed for security reasons at the end of the six year contract period. The estimated annual operating results of the project are as follows:
Revenue from sales under the contract $975,000
Expenses other than depreciation $560,000
Depreciation (straight line basis) 162,500 (722,500)
Increase in net income from government contract $252,500
All revenue from the contract and all expenses (except depreciation) will be received or paid in cash in the same period as recognized for accounting purposes. You are to compute the following three factors for this project:
(a) Payback period: __________ years
(b) Return on average investment: __________%
(c) Net present value of the investment in this machinery, discounted at an annual rate of 12% (an annuity table shows that the present value of $1 received annually for six years discounted at 12% is 4.111): $__________
Aug 29, 2021 | Uncategorized
Grassy Fertilizer manufactures two lines of garden grade fertilizer as part of a joint production process: GF10 and GF20. Joint costs up to Grassy’s split off point total $85,000 per batch. These joint costs are allocated to GF10 and GF20 in proportion to their relative sales values at the split off point of $40,000 and $60,000, respectively.
Both lines of garden grade fertilizer can be further processed into commercial grade fertilizer. The following table summarizes the costs and revenue associated with additional processing of GF10 and GF20:
GF10 processing costs 18,000 Final selling price per batch of commercial fertilizer 67,000
GF20 processing costs 38,000 Final selling price per batch of commercial fertilizer 97,000
(a) The $85,000 in joint costs should be allocated to each product as follows:
GF10 $____________, GF20 $____________
(b) Which product (GF10 or GF20) would result in a net decrease in operating income if processed into a commercial grade fertilizer? ____________
(c) Which product (GF10 or GF20) would result in a net increase in operating income if processed into a commercial grade fertilizer? ____________
Aug 29, 2021 | Uncategorized
Hal Marts, Inc., has two sales departments: equipment and clothing. During February, these two departments reported the following operating results:
Equipment Clothing
Sales $490,000 $250,000
Contribution Margin 35% 50%
Traceable Fixed Costs $29,200 $26,800
In addition, fixed costs common to both departments amounted to $54,400.
Complete the following responsibility income statement for Hal Marts, Inc. Follow the contribution margin approach, and show percentages as well as dollar amounts. Conclude your income statement with the company’s income from operations.
HAL MARTS, INC
Income Statement by Product Lines
For the Month Ended February 28, 20__
Segments
HAL Marts, Inc. Equipment Clothing
Dollars % Dollars % Dollars %
Sales $490,000 $250,000
Aug 29, 2021 | Uncategorized
Hernandez Timber Company owns 9,000 acres of timberland purchased in 1999 at a cost of $1,512 per acre. At the time of purchase the land without the timber was valued at $432 per acre. In 2000, Hernandez built fire lanes and roads, with a life of 30 years, at a cost of $90,720. Every year Hernandez sprays to prevent disease at a cost of $3,240 per year and spends $7,560 to maintain the fire lanes and roads. During 2001, Hernandez selectively logged and sold 700,000 board feet of timber, of the estimated 3,500,000 board feet. In 2002, Hernandez planted new seedlings to replace the trees cut at a cost of $108,000.
(a) Determine the depreciation expense and the cost of timber sold related to depletion for 2001.
(b) Hernandez has not logged since 2001. If Hernandez logged and sold 900,000 board feet of timber in 2009, when the timber cruise (appraiser) estimated 5,000,000 board feet, determine the cost of timber sold related to depletion for 2012.
Aug 29, 2021 | Uncategorized
Hira Hardware has four employees who are paid on an hourly basis plus time
and a half for all hours worked in excess of 40 a week. Payroll data for the
week ended March 15, 2012, are presented below.
Hana and Alina are married. They claim 0 and 4 withholding allowances, respectively. The following tax rates are applicable: FICA 8%, state income taxes 3%, state unemployment taxes 5.4%, and federal unemployment 0.8%.
Instructions
(a) Prepare a payroll register for the weekly payroll. (Use the wage bracket withholding table in the text for federal income tax withholdings.)
(b) Journalize the payroll on March 15, 2012, and the accrual of employer payroll taxes.
(c) Journalize the payment of the payroll on March 16, 2012.
(d) Journalize the deposit in a Federal Reserve bank on March 31, 2012, of the FICA and federal income taxes payable to the government.
Aug 29, 2021 | Uncategorized
Computation of taxable income.
The records for Bosch Co. show this data for 2013:
‘ Gross profit on installment sales recorded on the books was $360,000. Gross profit from collections of installment receivables was $270,000.
‘ Life insurance on officers was $3,800.
‘ Machinery was acquired in January for $300,000. Straight line depreciation over a ten year life (no salvage value) is used. For tax purposes, MACRS depreciation is used and Bosch may deduct 14% for 2013.
‘ Interest received on tax exempt Iowa State bonds was $9,000.
‘ The estimated warranty liability related to 2013 sales was $21,600. Repair costs under warranties during 2013 were $13,600. The remainder will be incurred in 2014.
‘ Pretax financial income is $600,000. The tax rate is 30%.
Instructions
(a) Prepare a schedule starting with pretax financial income and compute taxable income.
(b) Prepare the journal entry to record income taxes for 2013.
Aug 29, 2021 | Uncategorized
Context Corporation reports the following components of stockholders’ equity on December 31, 2011.
Common stock”$10 par value, 50,000 shares authorized, 20,000 shares issued and outstanding
$ 200,000
Paid in capital in excess of par value, common stock 30,000
Retained earnings 135,000
Total stockholders’ equity $ 365,000
In year 2012, the following transactions affected its stockholders’ equity accounts.
Jan. 1 Purchased 2,000 shares of its own stock at $20 cash per share.
Jan. 5 Directors declared a $2 per share cash dividend payable on Feb. 28 to the Feb. 5 stockholders of record.
Feb. 28 Paid the dividend declared on January 5.
July 6 Sold 750 of its treasury shares at $24 cash per share.
Aug. 22 Sold 1,250 of its treasury shares at $17 cash per share.
Sept. 5 Directors declared a $2 per share cash dividend payable on October 28 to the September 25 stockholders of record.
Oct. 28 Paid the dividend declared on September 5.
Dec. 31 Closed the $194,000 credit balance (from net income) in the Income Summary account to Retained Earnings.
Prepare journal entries to record each of these transactions for 2012.
Aug 29, 2021 | Uncategorized
Context Corporation reports the following components of stockholders equity on December 31, 2011.
Common stock $10 par value, 50,000 shares authorized,
20,000 shares issued and outstanding $200,000
Paid in capital in excess of par value, common stock 30,000
Retained earnings 135,000
Total stockholders’ equity $365,00
In year 2012, the following transactions affected its stockholders’ equity accounts.
Jan. 1 Purchased 2,000 shares of its own stock at $20 each per share.
Jan. 5 Directors declared a $2 per share cash dividend payable on Feb. 28 to Feb. 5 stockholders of record.
Feb. 28 Paid the dividend declared on January 5.
July 6 Sold 750 of its treasury shares at $24 cash per share.
Aug. 22 Sold 1,250 of its treasury shares at $17 cash per share.
Sept 5 Directors declared a $2 per share cash dividend payable on October 28 to the September 25 stockholders of record.
Oct. 28 Paid the dividend declared on September 5.
Dec 31 Closed the $194,000 credit balance (from net income) in the Income Summary account to Retained Earnings.
Required
1. Prepare journal entries to record each of these transactions for 2012.
2. Prepare a statement of retained earnings for the year ended December 31, 2012.
3. Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 2012.
Aug 29, 2021 | Uncategorized
Contrast just in time processing with conventional manufacturing practices.
Just in time (JIT) processing is not just a method of reducing inventory. It is embraced as a philosophy that emphasizes eliminating waste from all processes. Inventory is simply a buffer that protects a process against unreliability (such as poor supplier delivery or machinery that breaks down frequently). Reducing inventory levels without correcting the problems that create unreliability will stop production. Constructing a reliable system will eliminate the need for an inventory buffer.
Exhibits 9 and 10 on page 918/919 of the text(Accounting/warren/24e) illustrate the production line and flow of products under a traditional and a JIT system. Review these diagrams with your students and emphasize the following points.
1. JIT organizes work cells that perform several manufacturing steps. Workers are cross trained to perform more than one task. This allows manufacturing to be more flexible and gives workers more pride in the final product.
2. Because products do not move between as many departments, the non value added cost of transporting products and parts is reduced.
Employee involvement in a JIT system also implies employee accountability. Employees cannot be either involved or accountable without information. If employees are to be accountable for financial performance, then they will need access to financial information. Therefore, financial information cannot be limited to managers in a JIT organization. All employees must have access and be trained to interpret financial data.
Aug 29, 2021 | Uncategorized
On December 30, a fire destroyed most of the accounting records of the Alcorn Division, a small one product manufacturing division that uses standard costs and flexible budgets. All variances are written off as additions to (or deductions from) income; none are pro rated to inventories. You have the task of reconstructing the records for the year. The general manager informs you that the accountant has been experimenting with both absorption costing and variable costing.
The following information is available for the current year:
a. Cash on hand, December 31 $10
b. Sales $128,000
c. Actual fixed indirect manufacturing costs 21,000
d. Accounts receivable, December 31 20,000
e. Standard variable manufacturing costs per unit 1
f. Variances from standard of all variable manufacturing costs $5,000 U
g. Operating income, absorption costing basis $14,400
h. Accounts payable, December 31 18,000
I. Gross profit, absorption costing at standard (before deducting variances) 22,400
j. Total liabilities 100,000
k. Unfavorable budget variance, fixed manufacturing costs 1,000 U
l. Notes receivable from chief accountant 4,000
m. Contribution margin, at standard (before deducting variances) 48,000
n. Direct material purchases, at standard prices 50,000
o. Actual selling and administrative costs (all fixed) 6,000
Required:
Compute the following items (ignore income tax effects).
1. Operating income on a variable costing basis.
2. Number of units sold.
3. Number of units produced.
4. Number of units used as the denom inator to obtain fixed indirect cost appl ication rate per unit absorption costing basis.
5. Did inventory (in units) increase or decrease? Explain.
6. By how much in dollars did the inventory level change (a) under absorption costing, (b) under variable costing?
7. Variable manufacturing cost of goods sold, at standard prices.
8. Manufacturing cost of goods sold at standard prices, absorption costing.
Aug 29, 2021 | Uncategorized
Department G had 3,600 units, 25% completed at the beginning of the period, 11,000 units were completed during the period, 3,000 units were one fifth completed at the end of the period, and the following manufacturing costs were debited to the departmental work in process account during the period:
Work in process, beginning of period
$40,000
Costs added during the period:
Direct materials (10,400 at $8) $83,200
Direct labor $63,000
Factory overhead $25,000
Assuming that all direct materials are placed in process at the beginning of production and that the first in, first out method of inventory costing is used, what is the total cost of the departmental work in process inventory at the end of the period (round unit cost calculations to four decimal places)?
Aug 29, 2021 | Uncategorized
Designer Rags makes evening dresses. The following information was gathered from the company records for 2010, the first year of company operations. Work in Process Inventory at the end of 2010 was $31,500.
The company’s gross profit rate for the year was 35 percent.
a. Compute the cost of goods sold for 2010.
$
b. What was the total cost of goods manufactured for 2010?
$
c. What is Finished Goods Inventory at December 31, 2010?
$
d. If net income was $250,000, what were total selling and administrative expenses for the year?
$
e. Prepare journal entries to record the flow of costs for the year, assuming the company uses a perpetual inventory system and a single Manufacturing Overhead Control account and that actual overhead is included in WIP Inventory.
How do i go about solving this?
Aug 29, 2021 | Uncategorized
Disney Amusement Park has a fiscal year ending on September 30. Selected data from the September 30 worksheet are presented below.
DISNEY AMUSEMENT PARK
Worksheet
For the Year Ended September 30, 2010
Trial Balance
Adjusted Trial Balance
Dr.
Cr.
Dr.
Cr.
Cash
41,400
41,400
Supplies
18,600
1,200
Prepaid Insurance
31,900
8,900
Land
80,000
80,000
Equipment
120,000
120,000
Accumulated Depreciation
36,200
42,200
Accounts Payable
14,600
14,600
Unearned Admissions Revenue
3,700
2,000
Mortgage Note Payable
50,000
50,000
L. Disney, Capital
109,700
109,700
L. Disney, Drawing
14,000
14,000
Admissions Revenue
277,500
279,200
Salaries Expense
105,000
105,000
Repair Expense
30,500
30,500
Advertising Expense
9,400
9,400
Utilities Expense
16,900
16,900
Property Taxes Expense
18,000
21,000
Interest Expense
6,000
10,000
Totals
491,700
491,700
Insurance Expense
23,000
Supplies Expense
17,400
Interest Payable
4,000
Depreciation Expense
6,000
Property Taxes Payable
3,000
Totals
504,700
504,700
Hint: Complete worksheet; prepare classified balance sheet, entries, and post closing trial balance.
(SO 1, 2, 3, 6)
Instructions
(a)
Prepare a complete worksheet.
Net income $40,000
(b)
Prepare a classified balance sheet. (Note: $10,000 of the mortgage note payable is due for payment in the next fiscal year.)
Total current assets $51,500
(c)
Journalize the adjusting entries using the worksheet as a basis.
(d)
Journalize the closing entries using the worksheet as a basis.
(e)
Prepare a post closing trial balance.
Post closing trial balance $251,500
Aug 29, 2021 | Uncategorized
The Divine Cheesecake Shoppe is a national bakery that is known for its strawberry cheesecake. It also makes 12 different kinds of cheesecake as well as many other types of bakery items. It has recently adopted an activity based costing system to assign manufacturing overhead to products. The following data relate to its strawberry cheesecake and the ABC cost pools:
Strawberry Cheesecake:
Annual production 17,700 units
Direct materials per unit $8
Direct labor per unit $5
Cost Pool Cost Cost Driver
Materials ordering $106,600 Number of purchase orders
Materials inspection 77,366 Number of receiving reports
Equipment setup 144,400 Number of setups
Quality control 91,200 Number of inspections
Other
180,630
Direct labor cost
Total mfg. overhead
$600,196
Annual activity information related to cost drivers:
Cost Pool All Products
Strawberry Cheesecake
Materials ordering 8,200 orders 101
Materials inspection 383 receiving reports 61
Equipment setup 3,800 setups 33
Quality control 3,800 inspections 154
Other $2,007,000 direct labor $88,500
Calculate the overhead rate per unit of activity for each of the five cost pools. (Round other cost to 2 decimal places, e.g. 0.50.)
Cost Pools
Overhead rate
Materials ordering $ per order
Materials inspection $ per receiving report
Equipment setup $ per setup
Quality control $ per inspection
Other $ per direct labor cost
Calculate the total overhead assigned to the production of the strawberry cheesecake. (Use rounded amount from the previous question while calculating answer for this question.)
$
Calculate the overhead cost per unit for the strawberry cheesecake. (Round to 2 decimal places, e.g. 5.25.)
$
Calculate the total unit cost for the strawberry cheesecake. (Round answer to 2 decimal places, e.g. 5.25.)
$
Suppose that the Divine Cheesecake Shoppe allocates overhead by a traditional production volume based method using direct labor dollars as the allocation base and one cost pool. Determine the overhead rate per direct labor dollar and the per unit overhead assigned to the strawberry cheesecake. (Round answer to 4 decimal places, e.g. 0.5525. Use the rounded amount for future calculations.)
Overhead rate per direct labor dollar $
Overhead assigned per unit $
Aug 29, 2021 | Uncategorized
Drysdale Company was established to manufacture components for the auto industry. The components are shipped the same day they are produced. The following events took place during the first year of operations:
A. Issued common stock for a $50,00 cash investment.
B. Purchased delivery truck at the beginning of the year at a cost of $10,000 cash. The truck is expected to last five years and will be worthless at the end of that time.
C. Manufactured and sold 500,000 components the first year. The costs incurred to manufacture the components are: (1) $1,000 monthly rent on a facility that included utilities and insurance, (2) $400,000 of raw materials purchased on account ($100,000 is still unpaid as of year end but all materials were used in manufacturing), and (3) $190,000 paid in salaries and wages to employees and supervisors.
D. Paid $100,000 to sales and office staff for salaries and wages.
E. Sold all compoents on account for $2 each. As of year end, $150,000 is due from customers.
Required
Prepare an income statement under the accrual basis. Ignore income taxes.
Aug 29, 2021 | Uncategorized
E12 1
Dobbs Corporation is considering purchasing a new delivery truck. The truck has many advantages over the company’s current truck (not the least of which is that it runs). The new truck would cost $56,000. Because of the increased capacity, reduced maintenance costs, and increased fuel economy, the new truck is expected to generate cost savings of $8,000. At the end of 8 years the company will sell the truck for an estimated $28,000. Traditionally the company has used a rule of thumb that a proposal should not be accepted unless it has a payback period that is less than 50% of the asset’s estimated useful life. Hal Michaels, a new manager, has suggested that the company should not rely solely on the payback approach, but should also employ the net present value method when evaluating new projects. The company’s cost of capital is 8%.
Compute the cash payback period and net present value of the proposed investment. (If the net present value is negative, use either a negative sign preceding the number eg 45 or parentheses eg (45). Round answers to 0 decimal places, e.g. 125.)
Payback period years
Net present value $
Does the project meet the company’s cash payback criteria?
Does it meet the net present value criteria for acceptance?
Should the project be accepted?
E12 3
TLC Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn’t equipped to do. Estimates regarding each machine are provided below.
Machine A Machine B
Original cost $78,000 $190,000
Estimated life 8 years 8 years
Salvage value 0 0
Estimated annual cash inflows $20,000 $40,000
Estimated annual cash outflows $5,000 $9,000
Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (Round net present value to 0 decimal places, e.g. 125 and profitability index to 2 decimal places, e.g. 10.50. Round computations for 9% Discount Factor to 5 decimal places. If the net present value is negative, use either a negative sign preceding the number eg 45 or parentheses eg 45).)
Machine A
Net present value $
Profitability index
Machine B
Net present value $
Profitability index
Which machine should be purchased?
E12 5
Summer Company is considering three capital expenditure projects. Relevant data for the projects are as follows.
Project Investment Annual Income Life of Project
22A $240,000 $15,000 6 years
23A 270,000 24,400 9 years
24A 280,000 21,000 7 years
Annual income is constant over the life of the project. Each project is expected to have zero salvage value at the end of the project. Summer Company uses the straight line method of depreciation.
Incorrect.
Determine the internal rate of return for each project.
22A %
23A %
24A %
Incorrect.
If Summer Company’s required rate of return is 11%, which projects are acceptable?
E12 8
Morgan Company is considering a capital investment of $180,000 in additional productive facilities. The new machinery is expected to have a useful life of 6 years with no salvage value. Depreciation is by the straight line method. During the life of the investment, annual net income and net annual cash flows are expected to be $20,000 and $50,000 respectively. Morgan has a 15% cost of capital rate which is the required rate of return on the investment.
Compute (1) the cash payback period and (2) the annual rate of return on the proposed capital expenditure. (Round answers to 1 decimal place, e.g. 10.5.)
Cash payback period years
Annual rate of return %
Using the discounted cash flow technique, compute the net present value. (Round computations for 15% Discount Factor to 5 decimal places. Round answer to 0 decimal places e.g. 125.)
$
P12 2A
Tony Siebers is an accounting major at a midwestern state university located approximately 60 miles from a major city. Many of the students attending the university are from the metropolitan area and visit their homes regularly on the weekends. Tony, an entrepreneur at heart, realizes that few good commuting alternatives are available for students doing weekend travel. He believes that a weekend commuting service could be organized and run profitably from several suburban and downtown shopping mall locations. Tony has gathered the following investment information.
1. Five used vans would cost a total of $75,000 to purchase and would have a 3 year useful life with negligible salvage value. Tony plans to use straight line depreciation.
2. Ten drivers would have to be employed at a total payroll expense of $48,000.
3. Other annual out of pocket expenses associated with running the commuter service would include Gasoline $16,000, Maintenance $4,300, Repairs $5,000, Insurance $5,200, Advertising $2,500.
4. Tony has visited several financial institutions to discuss funding. The best interest rate he has been able to negotiate is 8%. Use this rate for cost of capital.
5. Tony expects each van to make 10 round trips weekly and carry an average of 6 students each trip. The service is expected to operate 30 weeks each year, and each student will be charged $12.00 for a round trip ticket.
Determine the annual (1) net income and (2) net annual cash flows for the commuter service.
Net income $
Net cash flow $
Compute (1) the cash payback period and (2) the annual rate of return. (Round answers to 2 decimal places, e.g. 10.50.)
Cash payback period years
Annual rate of return %
Compute the net present value of the commuter service. (Round answers to 0 decimal places, e.g. 125. If the net present value is negative, use either a negative sign preceding the number eg 45 or parentheses eg (45).)
$
What should Tony conclude from these computations? Is the commuter service a wise investment?
P12 5A
Bonita Corp. is thinking about opening a soccer camp in southern California. To start the camp, Bonita would need to purchase land and build four soccer fields and a sleeping and dining facility to house 150 soccer players. Each year the camp would be run for 8 sessions of 1 week each. The company would hire college soccer players as coaches. The camp attendees would be male and female soccer players ages 12 18. Property values in southern California have enjoyed a steady increase in value. It is expected that after using the facility for 20 years, Bonita can sell the property for more than it was originally purchased for. The following amounts have been estimated.
Cost of land $300,000
Cost to build dorm and dining facility $600,000
Annual cash inflows assuming 150 players and 8 weeks $950,000
Annual cash outflows $840,000
Estimated useful life 20 years
Salvage value $1,500,000
Discount rate 8%
Calculate the net present value of the project. (Round computations and final answer to 0 decimal places, e.g. 125. If the net present value is negative, use either a negative sign preceding the number eg 45 or parentheses eg (45).)
$
Should the project be accepted?
To gauge the sensitivity of the project to these estimates, assume that if only 125 campers attend each week, annual cash inflows will be $800,000 and annual cash outflows will be $770,000. What is the net present value using these alternative estimates? (Round computations and final answer to 0 decimal places, e.g. 125. If the net present value is negative, use either a negative sign preceding the number eg 45 or parentheses eg (45).)
$
Should the project be accepted?
Assuming the original facts, what is the net present value if the project is actually riskier than first assumed, and a 11% discount rate is more appropriate? (Round computations and final answer to 0 decimal places, e.g. 125. If the net present value is negative, use either a negative sign preceding the number eg 45 or parentheses eg (45).)
$
Should the project be accepted?
Assume that during the first 5 years the annual net cash flows each year were only $45,000. At the end of the fifth year the company is running low on cash, so management decides to sell the property for $1,300,000. What was the actual internal rate of return on the project?
%
Aug 29, 2021 | Uncategorized
E14 14B (Entries for Retirement and Issuance of Bonds) On June 30, 2006, Einstein Corp. issued 10%
bonds with a par value of $1,000,000 due in 20 years. They were issued at 98 and were callable at 102 at
any date after June 30, 2012. Because of lower interest rates and a significant change in the company’s
credit rating, it was decided to call the entire issue on June 30, 2013, and to issue new bonds. New 6%
bonds were sold in the amount of $1,100,000 at 101; they mature in 20 years. Einstein Corp. uses straightline
amortization. Interest payment dates are December 31 and June 30.
Instructions
(a) Prepare journal entries to record the retirement of the old issue and the sale of the new issue on
June 30, 2013.
(b) Prepare the entry required on December 31, 2013, to record the payment of the first 6 months’ interest
and the amortization of premium on the bonds.
Aug 29, 2021 | Uncategorized
E5 9B(Current Assets and Current Liabilities) The current assets and liabilities sections of the balance sheet of Cooper Company appear as follows.
COOPER COMPANY, BALANCESHEET(PARTIAL), DECEMBER31, 2012.
Cash $100,000, Accounts receivable $222,500, Less: Allowance for doubtful accounts 17,500, 205,000, Inventories 427,500, Prepaid expenses 22,500, $755,000.
Accounts payables $152,500, Notes payables 167,500, $320,000.
The following errors in the corporation’s accounting have been discovered:
1. The inventory included $67,500 of merchandise that had been received at December 31 but for which no purchase invoices had been received or entered. Of this amount, $30,000 had been received on consignment; the remainder was purchased f.o.b. destination, terms 2/10, n/30.
2. January 2013 cash disbursements entered as of December 2012 included payments of accounts payable in the amount of $97,500, on which a cash discount of 2% was taken.
3. Cash, not including cash sales, collected in January 2013 and entered as of December 31, 2012, totaled $88,310. Of this amount, $58,310 was received on account after cash discounts of 2% had been deducted; the remainder represented the proceeds of a bank loan.
4. Sales for the first four days in January 2013 in the amount of $75,000 were entered in the sales book as of December 31, 2012. Of these, $53,750 were sales on account, and the remainder were cash sales.
Instructions:
(a) Restate the current assets and liabilities sections of the balance sheet in accordance with good ac
counting practice. (Assume that both accounts receivable and accounts payable are recorded gross.)
(b) State the net effect of your adjustments on Cooper Company’s retained earnings balance.
Aug 29, 2021 | Uncategorized
E9 9 Presented below are selected transactions at Ingles Company for 2011.
Jan. 1 Retired a piece of machinery that was purchased on January 1, 2001.The machine cost
$62,000 on that date. It had a useful life of 10 years with no salvage value.
June 30 Sold a computer that was purchased on January 1, 2008.The computer cost $40,000. It
had a useful life of 5 years with no salvage value.The computer was sold for $14,000.
Dec. 31 Discarded a delivery truck that was purchased on January 1, 2007. The truck cost
$39,000. It was depreciated based on a 6 year useful life with a $3,000 salvage value.
Instructions
Journalize all entries required on the above dates, including entries to update depreciation,
where applicable, on assets disposed of. Ingles Company uses straight line depreciation. (Assume
depreciation is up to date as of December 31, 2010.)
Aug 29, 2021 | Uncategorized
Ellis Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in batches of 1,000 units. Ellis made 20,000 blankets during the prior accounting period. The cost of producing the blankets is summarized here.
Materials cost ($25 per unit x 20, 0000) $500,000
Labor Cost ($22 per unit x 20,000)440,000
Manufacturing supplies ($2 x 20,000)40,000
Batch level costs (20 batches at $4000 per batch80, 000
Product level costs160, 000
Facility level costs290, 000
Total costs1, 510,000
Cost per unit = $1510, 000 / 20,000= $75.50
Question
Describe the qualitative factors that Ellis Quilting Company should consider before accepting a special order to sell blankets to Kent Motels.
Aug 29, 2021 | Uncategorized
Equivalent Units
Question Details
Builder Products, Inc., manufactures a caulking compound that goes through three processing stages prior to completion. Information on work in the first department, Cooking, is given below for May follows:
Production data:
Pounds in process, May 1; materials 100% complete;
conversion 77% complete
10,400
Pounds started into production during May 111,000
Pounds completed and transferred out ?
Pounds in process, May 31; materials 62% complete; conversion 21% complete
13,100
Cost data:
Work in process inventory, May 1:
Materials cost $2,200
Conversion cost $7,600
Cost added during May:
Materials cost $148,500
Conversion cost $96,800
The company uses the weighted average method.
Requirement 1:
Compute the equivalent units of production for MATERIALS AND CONVERSION.
Aug 29, 2021 | Uncategorized
EXERCISE 13’7 Make or Buy a Component [LO3]
Han Products manufactures 30,000 units of part S 6 each year for use on its production line. At this
level of activity, the cost per unit for part S 6 is as follows:
Direct materials . . . . . . . . . . . . . . . . . . . . $ 3.60
Direct labor. . . . . . . . . . . . . . . . . . . . . . . . 10.00
Variable manufacturing overhead. . . . . . . 2.40
Fixed manufacturing overhead. . . . . . . . . 9.00
Total cost per part . . . . . . . . . . . . . . . . . . $25.00
An outside supplier has offered to sell 30,000 units of part S 6 each year to Han Products for $21
per part. If Han Products accepts this offer, the facilities now being used to manufacture part S 6
could be rented to another company at an annual rental of $80,000. However, Han Products has
determined that two thirds of the fi xed manufacturing overhead being applied to part S 6 would
continue even if part S 6 were purchased from the outside supplier.
Required:
Prepare computations showing how much profi ts will increase or decrease if the outside supplier’s
offer is accepted
Aug 29, 2021 | Uncategorized
Exercises: 13 8
Roaming Bicycle
Manufacturing Company currently produces the handlebars used in manufacturing
its bicycles, which are high quality racing bikes with limited sales. Roaming produces
and sells only 6,000 bikes each year. Due to the low volume of activity,
Roaming is unable to obtain the economies of scale that larger producers
achieve. For example, Roaming could buy the handlebars for $35 each; they cost
$38 each to make. The following is a detailed breakdown of current production
costs.
Item Unit Cost Total Unit level
costs
Materials $ 18
108,000
Labor 12
72,000
Overhead 3
18,000
Allocated facility level
costs 5 Total $ 38
$ 228,000
After seeing the
figures, Roaming’s president remarked that it would be foolish for the company
to continue to produce the handlebars at $38 each when it can buy them for $35
each
Do you agree with the president’s conclusion?
Support your answers with appropriate computations.
Aug 29, 2021 | Uncategorized
A farm company manufactures and sells a pesticide called snare. The following data are avail for preparing budgets for snare for the 1st two quarters of 2013 (I’m stuck on this part).
Direct materials: Each bag of Snare requires 5 pounds of Gumm at a cost of $4 per pound and 8 pounds of Tarr at $1.50 per pound. The direct materials budget for Tarr shows the cost of Tarr purchases to be $298000 in 1st Q, and $427,000 in 2nd Q.
Types of inventory 1st Q 2nd Q 3rd Q
Snare 8400 12200 18200
Gumm (lbs) 9200 10300 13100
Tarr (lbs) 14200 20400 25400
The required production units are: 1st Quarter, 32300 and 2nd Quarter, 49500.
My question is how do i find the direct materials per unit in the direct materials budget?
Aug 29, 2021 | Uncategorized
(Fifo and Lifo Periodic and Perpetual) Inventory information for Part 311 of Seminole Corp. discloses the following information for the month of June.
June 1 Balance 300 Units @ $10 June 10 Sold 200 Units @ $24
11 Purchased 800 Units @ $11 15 Sold 500 Units @$25
20 Purchased 500 Units @ $13 27 Sold 250 Units @ $25
Instructions:
A) Assuming that the periodic inventory method is used, compute the cost of goods sold and ending inventory under (1) LIFO and (2) FIFO.
B) Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the value of the ending inventory at LIFO?
C) Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the gross profit if the inventory is valued at
D) Why is it stated that LIFO usually produces a lower gross profit than FIFO?
Aug 29, 2021 | Uncategorized
Fair value journal entries, trading investments
Acorn Bancorp Inc. purchased a portfolio of trading securities during 2012. The cost and fair value of this portfolio on December 31, 2012, was as follows:
|
Name
|
Number of shares
|
Total cost
|
Total Fair value
|
|
Apex, Inc.
|
1,200
|
$16, 000
|
$17,500
|
|
Evans Company
|
700
|
23,000
|
19,000
|
|
Quaker Company
|
300
|
9,000
|
8,600
|
|
Total
|
|
$48,000
|
$45,100
|
On April 3, 2013, Acorn Bancorp Inc. purchased 500 shares of Luke, Inc., at $36 per share plus a $100 brokerage free.
Provided the journal entries to record the following:
a. The adjustment of the trading security portfolio to fair value on December 31, 2012.
b. The April 3, 2013, purchase of Luke Inc., stock.
Aug 29, 2021 | Uncategorized
Fair value journal entries, trading investments
Fir Guarantee Financial, Inc., purchased the following trading securities during 2012, its first year of operations:
|
Name
|
Number of shares
|
Cost
|
|
B&T Transportation, Inc.
|
3,400
|
$74,200
|
|
Citrus Foods Inc.
|
1,500
|
26,500
|
|
Stuart Housewares, Inc.
|
800
|
45,200
|
|
Total
|
|
$145,900
|
The market price per share for the trading security portfolio on December 31, 2012, was as follows:
|
|
Market Price per share
|
|
|
Dec. 31, 2012
|
|
B & T Transportation, Inc.
|
$26
|
|
Citrus Foods, Inc.
|
19
|
|
Stuart Housewares, Inc.
|
52
|
Assume that as of December 31, 2012, the Starlight Products, Inc., stock had a market value of $55 per share and the Reynokls Co. stock had a market value of $18 per share.
Newton Company had net income of $250,000, and paid no dividends for the year ending December 31, 2012.
a. Prepare the Current Assets section of the balance sheet presentation for the available for sale investments.
Prepare the Stockholder’s Equity section of the balance sheet to reflect the earnings and unrealized gain (loss) for the available for sale investments.
Aug 29, 2021 | Uncategorized
Balance sheet presentation of available for sale investments
During 2012, Norcross Corporation held a portfolio of available for sale securities having a cost of $175,000. There were no purchases or sales of investments during the year.
The market value at the beginning and end of the year were $215,000 and $150,000, respectively. The net income for 2012 was $110,000, and no dividends were paid during the year. The Stockholder’s Equity section of the balance sheet was as follows on December 31, 2011:
Norcross corporation
Stockholder’s Equity
December 31, 2011
|
Common stock
|
$50,000
|
|
Paid in capital excess of par value
|
350,000
|
|
Retained earnings
|
265,000
|
|
Unrealized gain (loss) on available for sale investments
|
40,000
|
|
Total
|
$705,000
|
Prepare the Stockholder’s Equity section of the balance sheet for December 31, 2012.
Aug 29, 2021 | Uncategorized
Comprehensive income
On December 31, 2011, Memphis Co. had the following available for sale investment disclosure within the current Assets section of the balance sheet:
|
Available for sale investments (at cost)
|
$105,000
|
|
Plus valuation allowance for available for sale investments
|
15,000
|
|
Available for sale investments (at fair value)
|
$120,000
|
There were no purchases or sales of available for sale investments during 2012. On December 31, 2012, the fair value of the available for sale investment portfolio was $94,000. The net income of Memphis Co. was $150,000 for 2012.
Compute the comprehensive income for Memphis Co. for the year ended December 31, 2012.
Aug 29, 2021 | Uncategorized
Omncron Inc. reported the following on the company’s flow statement in 2012 and 2011:
|
|
2012
|
2011
|
|
Net cash flow from operating activities
|
$140,000
|
$120,000
|
|
Net cash flow used for investing activities
|
(120,000)
|
(80,000)
|
|
Net cash flow used for financing activities
|
(20,000)
|
(32,000)
|
Seventy five percent of the cash flow used for investing activities was used to replace existing capacity.
a. Determine Omnicron’s free cash flow.
b. Has omnicron’s free cash flow improved or declined from 2011 to 2012?
Aug 29, 2021 | Uncategorized
a.
|
|
2012
|
2011
|
|
Cash flow from operating activities
|
$140,000
|
$120,000
|
|
Less: investments in fixed assets to maintain current production
|
90,000
|
60,000
|
|
Free cash flow
|
$50,000
|
$60,000
|
|
1 $120,000 x 75%
|
|
|
|
2 $80,000 x 75%
|
|
|
b. The change from $60,000 to $50,000 indicates an unfavorable trend.
Aug 29, 2021 | Uncategorized
Changes in current operating assets and liabilities indirect method
Phelps Corporation’s comparative balance sheet for current assets and liabilities were as follows:
|
|
Dec. 31, 2013
|
Dec. 31, 2012
|
|
Accounts receivable
|
$22,500
|
$27,000
|
|
Inventory
|
15,000
|
12,900
|
|
Accounts payable
|
13,500
|
11,850
|
|
Dividends payable
|
41,250
|
44,250
|
Adjust net income of $240,000 for changes in operating assets and liabilities to arrive at net cash flow from operating activities.
Aug 29, 2021 | Uncategorized
Cash flows from operating activities – indirect method
Salem Inc. reported the following data:
|
Net income
|
$168,750
|
|
Depreciation expenses
|
18,750
|
|
Gain on disposal of equipment
|
15,375
|
|
Decrease in accounts receivable
|
10,500
|
|
Decrease in accounts payable
|
2,700
|
Prepare the Cash Flows from operating Activities section of the statement of cash flows using the indirect method.
Aug 29, 2021 | Uncategorized
Cash flows from operating activities indirect method
Malibu Inc. reported the following data:
|
Net income
|
$373,750
|
|
Depreciation expense
|
67,500
|
|
Loss on disposal of equipment
|
27,450
|
|
Increase in accounts receivable
|
24,300
|
|
Increase in accounts payable
|
12,600
|
Prepare the cash flows from operating Activities section of the statement of cash flows using the indirect method.
Aug 29, 2021 | Uncategorized
Free cash flow
Totson Inc., reported the following on the company’s statement of cash flows in 2012 and 2011:
|
|
2012
|
2011
|
|
Net cash flow from operating activities
|
$210,000
|
$200,000
|
|
Net cash flow used for investing activities
|
(160,000)
|
(180,000)
|
|
Net cash flow used for financing activities
|
(45,000)
|
(30,000)
|
Eighty percent of the cash flow used for investing activities was used to replace existing capacity.
a. Determine Totson’s free cash flow.
b. Has Totson’s free cash flow inproved or decline from 2011 to 2012?
Aug 29, 2021 | Uncategorized
Free cash flow
Burkenfelt Inc., reported the following on the company’s statement of cash flows in 2012 and 2011:
|
|
2012
|
2011
|
|
Net cash flow from operating activities
|
$340,000
|
$325,000
|
|
Net cash flow used for investing activities
|
(305,000)
|
(270,000)
|
|
Net cash flow used for financing activities
|
(30,000)
|
(42,000)
|
Seventy percent of the cash flow used for investing activities was used to replace existing capacity.
a. Determine Burkenfelt’s free cash flow.
b. Has Burkenfelt’s free cash flow improved or declined from 2011 to 2012?
Aug 29, 2021 | Uncategorized
Effect of transactions on cash flows
State the effect (cash receipt or payment and amount) of each of the following transaction, considered individually, on cash flows:
a. Sold equipment with a book value of $65,000 for $83,000.
b. Sold a new issue of $400,000 of bonds at 98.
c. Retired $550,000 of bonds, on which there was $5,000 of unamortized discount for $560,000.
d. Purchased 2,000 shares of $25 par common stock as treasury stock at $50 per share.
|
|
End of Year
|
Beginning of Year
|
|
Cash
|
$100,800
|
$107,100
|
|
Accounts receivable (net)
|
127,800
|
132,120
|
|
Inventories
|
252,000
|
227,700
|
|
Prepaid expenses
|
14,040
|
15,120
|
|
Accounts payable (merchandise creditors)
|
112,680
|
119,520
|
|
Salaries payable
|
16,200
|
14,850
|
e. Prepare the cash flows from operating Activities section of the statement of cash flows, using the indirect method.
If the direct method had been used, would the net cash flow from operating activities have been same? Explain.
Aug 29, 2021 | Uncategorized
Cash flows from operating activities Indirect method
The income statement disclosed the following items for 2013:
|
Depreciation expense
|
$21,600
|
|
Gain on disposal of equipment
|
12,600
|
|
Net income
|
190,500
|
Balance of the current asset and current liability accounts changed between December 31, 2012, and December 31, 2013, as follows:
|
Accounts receivable
|
$3,360
|
|
Inventory
|
1,920*
|
|
Prepaid Insurance
|
720*
|
|
Accounts payable
|
2,280*
|
|
Income taxes payable
|
720
|
|
Dividends payable
|
$10
|
|
*Decrease
|
|
a. Prepare the cash flows from operating Activities section of the statement of cash flows, using the indirect method.
Briefly explain why cash flows from operating activities is different than net income.
Aug 29, 2021 | Uncategorized
Statement of cash flows indirect method
The comparative balance sheet of Hobson Medical Equipment Inc. for December 31, 2013 and 2012, is as following:
|
|
Dec. 31, 2013
|
Dec. 31, 2012
|
|
Assets
|
$294
|
$96
|
|
Accounts receivable (net)
|
168
|
120
|
|
Inventories
|
105
|
66
|
|
Land
|
240
|
270
|
|
Equipment
|
135
|
105
|
|
Accumulated depreciation equipment
|
(36)
|
(18)
|
|
Total
|
$906
|
$639
|
|
Liabilities and Stockholder’s Equity
|
|
|
|
Accounts payable (merchandise creditors)
|
$105
|
$96
|
|
Dividends payable
|
18
|
|
|
Common Stock $10 par
|
60
|
30
|
|
Paid in capital in excess of par common stock
|
150
|
75
|
|
Retained earnings
|
573
|
438
|
|
Total
|
$906
|
$639
|
The following additional information is taken from the records:
a. Land was sold for $75.
b. Equipment was acquired for cash.
c. There were no disposals of equipment during the year.
d. The common stock was issued for cash.
e. There was a $195 credit to Retained Earnings for net income.
f. There was a $60 debit to retained Earnings for cash dividends declared.
Respond to the following:
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.
Was Hobson Medical Equipment’s cash flow from operations more or less than net income? What is the source of this difference?
Aug 29, 2021 | Uncategorized
Statement of cash flows – indirect method
List the errors you find in the following statement of cash flows. The cash balance at the beginning of the year was $180,576. All other amounts are correct, except the cash balance at the end of the year.
Hough Inc.
Statement of Cash flows
For the Year Ended December 31, 2012
|
Cash flows from operating activities:
|
|
|
Net income
|
$266,544
|
|
Adjustments to reconcile net income to met cash flow from operating activities:
|
|
|
Depreciation
|
75,600
|
|
Gain on sale of investments
|
12,960
|
|
Change in current operating assets and liabilities
|
|
|
Increase in accounts receivable
|
20,520
|
|
Increase in inventories
|
(26,568)
|
|
Increase in accounts payable
|
(7,992)
|
|
Decrease in accrued expenses payable
|
(1,944)
|
|
Net cash flow from operating activities
|
|
$339,120
|
Aug 29, 2021 | Uncategorized
CHARLES SPORTS EQUIPMENT (Dropping a product line) Charles Sports Equipment manufactures round, rectangular, and octagonal trampolines. Data on sales and expenses fro the past month follow:
Trampoline
Total RoundRectangular Octagonal
Sales $1,000,000$ 140,000 $ 500,000 $ 360,000
Less variable expenses 410,000 60,000 200,000 150,000
Contribution margin 590,000 80,000 300,000 210,000
Less fixed expenses
Advertising traceable 216,000 41,000 110,00065,000
Depreciation of special equip%u2019t 95,000 20,000 40,000 35,000
Line supervisors%u2019 salaries 19,000 6,000 7,000 6,000
General factory overhead*200,000 28,000 100,000 72,000
Total fixed expenses 530,000 95,000 257,000 178,000
Net operating income(loss)$ 60,000 $ (15,000) $ 43,000 $ 32,000
*A common fixed cost that is allocated on the basis of sales dollars
Management is concerned about the continued losses shown by the round trampolines and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce the trampolines has no resale value. If the round trampoline model is dropped, the two line supervisors assigned to the model would be discharged.
REQUIRED:
1. Should production and sale of the round trampolines be discontinued? The company has no other use for the capacity now being used to produce the round trampolines. Show computations to support your answer.
2. Recast the above data in a format that would be more useful to management in assessing the long run profitability of the various product lines.
Aug 29, 2021 | Uncategorized
Christine Ewing is a licensed CPA. During the first month of operations of her business (a sole proprietorship), the following events and transactions occurred.
April 2 Invested $36,120 cash and equipment valued at $14,040 in the business.
2 Hired a secretary receptionist at a salary of $290 per week payable monthly.
3 Purchased supplies on account $868. (Debit an asset account.)
7 Paid office rent of $779 for the month.
11 Completed a tax assignment and billed client $1,368 for services rendered. (Use Service Revenue account.)
12 Received $4,103 advance on a management consulting engagement.
17 Received cash of $3,130 for services completed for Ferengi Co.
21 Paid insurance expense $182.
30 Paid secretary receptionist $1,842 for the month.
30 A count of supplies indicated that $171 of supplies had been used.
30 Purchased a new computer for $6,990 with personal funds. (The computer will be used exclusively for business purposes.)
Journalize the transactions in the general journal. (If no entry is required, enter No entry as the account and 0 for the amount. List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Aug 29, 2021 | Uncategorized
Clarke Industries’ balance sheet at December 31, 2011, is presented below.
CLARKE INDUSTRIES
Balance Sheet
December 31, 2011
Assets
Current Assets $ 7,500
Accounts receivable 82,500
Finished good inventory (2,000 units) 30,000
Total current assets $120,000
Property, plant, and equipment
Equipment $40,000
Less: Accumulated depreciation 10,000 30,000
Total Assets $150,000
Liabilities and Stockholders’ Equity
Liabilities
Notes payable $25,000
Accounts payable 45,000
Total liabilities 70,000
Stockholders’ equity
Common stock $50,000
Retained Earnings 30,000
Total stockholders’ equity 80,000
Total liabilities and stockholders’ equity $150,000
Additional information accumulated for the budgeting process is as follows.
Budgeted data for the year 2012 include the following.
4th Quarter 2012 Total Year 2012
Sales budget (8,000 units at $35) $84,000 $280,000
Direct materials used 17,000 69,400
Direct labor 12,500 56,600
Manufacturing overhead applied 10,000 54,000
Selling and administrative expenses 18,000 76,000
To meet sales requirements and to have 3,000 units of finished good on hand at December 31, 2012, the production budget shows 9,000 required units of output. The total unit cost of production is expected to be $20. Clarke Industries uses the first in, first out (FIFO) inventory costing method. Selling and administrative expenses include $4,000 for depreciation on equipment. Interest expense is expected to be $3,500 for the year. Income taxes are expected to be 30% of the income before taxes.
All sales and purchases are on account. It is expected that 60% of quarterly sales are collected in cash within the quarter and the remainder is collected in the following quarter. Direct materials purchased from suppliers are paid 50% in the quarter incurred and the remainder in the following quarter. Purchases in the fourth quarter were the same as the materials used. In 2012, the company expects to purchase additional equipment costing $19,000. It expects to pay $8,000 on notes payable plus all interest due and payable to December 31 (included in interest expense $3,500 above). Accounts payable at December 31, 2012, includes amounts due suppliers (see above) plus other accounts payable of $5,700. In 2012, the company expects to declare and pay a $5,00 cash dividend. Unpaid income taxes at December 31 will be $5,000. The company’s cash budget shows an expected cash balance of $7,950 at December 31, 2012.
Instructions:
Prepare a budgeted income statement for 2012 and a budgeted balance sheet at December 31,2012. In preparing the income statement, you will need to compute cost of goods manufactured (direct materials+direct labor+ manufacturing overhead) and finished goods inventory (December 31, 2012).
Partial Answers: Net Income $35,350
Total Assets $146,550
Aug 29, 2021 | Uncategorized
A company discovered in 2012 that it had overstated the inventory balance for Dec 31, 2010 by $10,000. The company had (incorrectly) reported Net Income to be $300,000 for 2010, and $400,000 for 2011. What should be the corrected Net Incomes for 2010 and 2011?
Answer
A. Corrected 2010 Net Income Corrected 2011 Net Income
$290,000 $410,000
B. Corrected 2010 Net Income Corrected 2011 Net Income
$310,000 $390,000
C. Corrected 2010 Net Income Corrected 2011 Net Income
$290,000 $390,000
D. Corrected 2010 Net Income Corrected 2011 Net Income
$310,000 $410,000
1 points
Question 2
Cheryl Company uses the periodic inventory system. For the current month, the beginning inventory consisted of 1,200 units that cost $12 each. During the month, the company made two purchases: 500 units at $13 each and 2,000 units at $13.50 each. Cheryl Company also sold 2,150 units during the month. Using the periodic FIFO method, what is the cost of ending inventory?
Answer
A. $18,600
B. $20,925
C. $18,950
D. $20,073
1 points
Question 3
Clint Company and Black Company reported the following information in their financial statements, prior to their merger:
Clint Company Black Company
$millions Sales COGS Inventories Sales COGS Inventories
2011 $14,250 $9,650 $3,335 $22,140 $16,050 $8,450
2010 13,750 8,560 4,220 23,050 14,200 7,700
To the closest hundredth, how much is the 2011 inventory turnover for Black Company?
Answer
A. 1.72
B. 1.99
C. 1.80
D. 0.90
1 points
Question 4
Cook Company uses the LIFO inventory costing method for both its tax reporting purposes and its financial reporting purposes. Cook Company’s inventories are reported at $502 million on its balance sheet. In its footnotes, Cook Company is required to report the amount at which inventories would have been reported under FIFO method. The difference between these two numbers is commonly referred to as what?
Answer
A. LIFO holding gain
B. LIFO liquidation
C. LIFO reserve
D. LCM disclosures
1 points
Question 5
Cork Company imports and sells a product produced in Canada. In the summer of 2011, a natural disaster disrupted production, affecting its supply of product. Cork uses the LIFO inventory method. On January 1, 2011, Cork’s inventory records were as follows:
Year purchased Quantity (units) Cost per unit Total cost
2009 2,000 $40 $ 80,000
2010 5,000 $55 275,000
Total 7,000 $355,000
Through mid December of 2011, purchases were limited to 8,000 units, because the cost had increased to $80 per unit. Cork sold 14,200 units during 2011 at a price of $98 per unit, which significantly depleted its inventory.
Assume that Cork purchases 11,400 more of the $80 units on December 31, 2011. Compute Cork’s gross profit for 2011.
Answer
A. $1,036,600
B. $ 255,600
C. $ 912,000
D. $ 428,600
1 points
Question 6
During its first and second years of operations, Roger Company, a corporation using a periodic inventory system, made undiscovered errors in taking its year end inventories that overstated year 1 ending inventory by $70,000 and overstated year 2 ending inventory by $50,000. The combined effect of these errors on reported income is:
Answer
A. Year 1 Year 2 Year 3
Overstated Overstated Understated
$70,000 $120,000 $50,000
B. Year 1 Year 2 Year 3
Overstated Overstated Not affected
$70,000 $50,000
C. Year 1 Year 2 Year 3
Understated Understated Not affected
$70,000 $120,000
D. Year 1 Year 2 Year 3
Overstated Understated Understated
$70,000 $20,000 $50,000
E. None of the above
1 points
Question 7
During its first year of operations, Walker Company, using a periodic inventory system, made undiscovered errors in taking its year end inventory that overstated year 1 ending inventory by $35,000. The effect of these errors on reported income is:
Answer
A. Year 1 Year 2
Understated Overstated
$35,000 $35,000
B. Year 1 Year 2
Overstated Understated
$35,000 $35,000
C. Year 1 Year 2
Overstated Not affected
$35,000
D. Year 1 Year 2
Overstated Overstated
$35,000 $35,000
E. None of the above
1 points
Question 8
For 2011, Bono Company reported sales of $900,000, cost of goods sold of $640,000, and a gross profit of $260,000. Bono’s inventory at January 1, 2011 was $150,000; the inventory at December 31, 2011 was $100,000. Bono’s 2011 inventory turnover is:
Answer
A. 7.20
B. 4.27
C. 5.12
D. 2.08
E. None of the above
Aug 29, 2021 | Uncategorized
A company manufactures two models of speakers; the X200 model and the X99 model. Data regarding two products follow:
Model X20
Direct Labor Hours per Unit=1.8
Annual Production (units)=5,000
Total Direct Labor Hours 9,000
Model X99
Direct Labor Hours per Unit= 0.9
Annual Production (units)=30,000
Total Direct Labor Hours= 27,000
Total Direct Labor Hours=36,000
Additional Info:
a. Model X200 requires $72 in direct materials per unit, and model X99 requires $50
b. Direct labor wage rate is $10 per hour
c. Company always used direct labor hours as base for applying manufacturing overhead cost to products
d.Model X200 is more complex to manufacture than X99 and requires use of special equipment. Consequently, company is considering use of activity based costing to apply manufacturing overhead cost to products. 3 activity cost pools have been identified as follows:
Activity Cost Pool Activity Measure
Machine Setups ………………….# of part types………………………$360,000
Special Processing………………Machine Hours……………………$180,000
General factory…………………….Direct Labor Hours……………….1,260,000
Total: 1,800,000
Activity Measure
# of setups ……………………………(Model X200)=50 (Model X99)=100 (Total)=150
Machine Hours ………………………(Model X200)=12,000 (Model X99)=0 (Total)=12,000
Direct Labor Hours………………..(Model X200)=9,000 (Model X99)=27,000 (Total)=36,000
Required:
1. Assume company continues to use direct labor hours as base for applying overhead cost to products.
a. Computer predetermined overhead rate.
b. Compute unit product cost of each model.
2.Assume company decides to use activity based costing to apply manufacturing overhead cost to products.
a.Compute predetermined overhead rate for each activity cost pool and determine amount of overhead cost that would be applied to each model using activity based costing system.
b.Compute unit product cost of each model.
3. Explain why manufacturing overhead cost shifts from Model X99 to X200 under activity based costing.
Aug 29, 2021 | Uncategorized
Problem 21 22A Preparing a master budget for a retail company with no beginning account balances
Unici Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, 2006. The company president formed a planning committee to prepare a master budget for the first three months of operation. He assigned you, the budget coordinator, the following tasks.
Required
a. October sales are estimated to be $120,000 of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 25 percent per month. Prepare a sales budget.
b. The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale. Prepare a schedule of cash receipts.
c. The cost of goods sold is 60 percent of sales. The company desires to maintain a minimum ending inventory equal to 10 percent of the next month’s cost of goods sold. Ending inventory at December 31 is expected to be $12,000. Assume that all purchases are made on account. Prepare an inventory purchases budget.
d. The company pays 70 percent of accounts payable in the month of purchase and the remaining 30 percent in the following month. Prepare a cash payments budget for inventory purchases.
e. Budgeted selling and administrative expenses per month follow.
Salary expense (fixed) $18,000
Sales commissions 5 percent of Sales
Supplies expense 2 percent of Sales
Utilities (fixed) $1,400
Depreciation on store equipment (fixed)* $4,000
Rent (fixed) $4,800
Miscellaneous (fixed) $1,200
*The capital expenditures budget indicates that Unici will spend
$164,000 on October 1 for store fixtures, which are expected to have a
$20,000 salvage value and a three year (36 month) useful life.
Aug 29, 2021 | Uncategorized
(TCO F) Farmington Corporation uses the weighted average method in its process costing system. Data concerning the first processing department for the most recent month are listed below.
Work in process, beginning:
Units in beginning work in process inventory 400
Materials costs $6,900
Conversion costs $2,500
Percentage complete for materials 80%
Percentage complete for conversion 15%
Units started into production during the month 6,000
Units transferred to the next department during the month 5,200
Materials costs added during the month $112,500
Conversion costs added during the month $210,300
Ending work in process:
Units in ending work in process inventory 1,200
Percentage complete for materials 60%
Percentage complete for conversion 30%
Required:
Calculate the equivalent units for materials (using the weighted average method) for the month in the first processing department.
Aug 29, 2021 | Uncategorized
Accounting Question Please Help? The information below is regarding the next 3 problems.
Coles Company, Inc. makes and sells a single product, Product R. Three yards of Material K are needed to make one unit of Product R. Budgeted production of Product R for the next five months is as follows:
August……14,000 units
September….14,500 units
October……..15,500 units
November……12,600 units
December….11,900 units
The company wants to maintain monthly ending inventories of Material K equal to 20% of the following month’s production needs. On July 31, this requirement was not met since only 2,500 yards of Material K were on hand. The cost of Material K is $0.85 per yard. The company wants to prepare a Direct Materials Purchase Budget for the rest of the year.
Aug 29, 2021 | Uncategorized
A student is interested in whether students who study with music playing devote as much attention to their studies as do students who study under quiet conditions (he believes that studying under quiet conditions leads to better attention). He randomly participates to either the music or non music condition and has them read and study the same passage of information for the same amount of time. Subjects are given the same 10 item test on the material. Their scores appear next. Scores on the test represent interval ratio data and are normally distributed. Music 6, No music 10; Music 5, No music 9; Music 6, No music 7; Music 5, No music 7; Music 6, No music 6; Music 6, No music 6; Music 7, No music 8; Music 8, No music 6; Music 5, No music 9 A) What statisical test should be used to analyze these data?
Aug 29, 2021 | Uncategorized
Assume that Nantucket Nectars reports the following costs to make 17.5 oz. bottles for its Juice
Cocktails:
Nantucket Nectars Company
Cost of Making 17.5 Ounce Bottles
Total Cost for Cost per
1,000,000 Bottles Bottle
Direct materials $ 80,000 $.080
Direct labor 30,000 .030
Variable factory overhead 60,000 .060
Fixed factory overhead 85,000 .085
Total costs $255,000 $.255
Another manufacturer offers to sell Nantucket Nectars the bottles for $.25. The capacity now used to
make bottles will become idle if the company purchases the bottles. Further, one supervisor with a
salary of $60,000, a fixed cost, would be eliminated if the bottles were purchased. Prepare a schedule
that compares the costs to make and buy the 17.5 oz. bottles. Should Nantucket Nectars make or buy
the bottles?
Aug 29, 2021 | Uncategorized
Cole laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows:
Standard Standard Cost
Quantity per Bag
Direct material………………………………….. 20 pounds $8.00
Direct labor……………………………………… 0.1 hours $1.10
Variable overhead……………………………… 0.1 hours $0.40
The company had no beginning inventories of any kind on Jan. 1. Variable overhead is applied to production on the basis of standard direct labor hours. During January, the following activity was recorded by the company:
• Production of Fastgro: 4,000 bags
• Direct materials purchased: 85,000 pounds at a cost of $32,300
• Direct labor worked: 390 hours at a cost of $4,875
• Variable overhead incurred: $1,475
• Inventory of direct materials on Jan. 31: 3,000 pounds
The materials price variance for January is:
Aug 29, 2021 | Uncategorized
During 2011 and 2012, Faulkner Manufacturing used the sum of the years digits (SYD) method of depreciation for its depreciable assets, for both financial reporting and tax purposes. At the beginning of 2013, Faulkner decided to change to the straight line method for both financial reporting and tax purposes. A tax rate of 40% is in effect for all years.
For an asset that cost $21,000 with an estimated residual value of $1,000 and an estimated useful life of 10 years, the depreciation under different methods is as follows:
Year Straight Line SYD Difference
2011 $2,000 $3,636 $1,636
2012 2,000 3,273 1,273
$4,000 $6,909 $2,909
1.Prepare the journal entry that Faulkner will record in 2013 related to the change. (If no entry is required for a particular event, select “”No journal entry required”” in the first account field.)
2.Suppose instead that Faulkner previously used straight line depreciation and changed to sum of the years digits in 2013. Prepare the journal entry that Faulkner will record in 2013 related to the change.(If no entry is required for a particular event, select “”No journal entry required”” in the first account field.)
Additional Requirements
Level of Detail: Show all work
Other Requirements: question is to be answered on connect mcgraw hill.
Aug 29, 2021 | Uncategorized
(TCO F) Farmington Corporation uses the weighted average method in its process costing system. Data concerning the first processing department for the most recent month are listed below.
Work in process, beginning:
|
Units in beginning work in process inventory
|
400
|
|
Materials costs
|
$6,900
|
|
Conversion costs
|
$2,500
|
|
Percentage complete for materials
|
80%
|
|
Percentage complete for conversion
|
15%
|
|
Units started into production during the month
|
6,000
|
|
Units transferred to the next department during the month
|
5,200
|
|
Materials costs added during the month
|
$112,500
|
|
Conversion costs added during the month
|
$210,300
|
Ending work in process:
|
Units in ending work in process inventory
|
1,200
|
|
Percentage complete for materials
|
60%
|
|
Percentage complete for conversion
|
30%
|
Required:
Calculate the equivalent units for materials (using the weighted average method) for the month in the first processing department.
Aug 29, 2021 | Uncategorized
Five years ago, Brian and his brother Boyd formed Stewart Corp., a golf apparel manufacturing corporation. At that time, Brian contributed $300,000 to the corporation in exchange for 50% of its stock. During the current year, Brian needed some cash to purchase a golf course so he sold a third of his interest in Stewart Corp. for $85,000. He also sold stock in the following companies for the amounts indicated: IBM $15,000 $10,000 52 months ago Microsoft 25,000 45,000 18 months ago Tidal Radio 32,000 12,000 7 months ago Wavetable 20,000 26,000 4 months ago During the year Brian hired a collection agency to collect a $14,000 loan he made to an old friend, which was due in full on January 1 of the current year. The agency found no trace of his friend. Also during the year, BTR Corporation, in which he owns stock, went bankrupt. His investment was worth $94,000 on January 1, he purchased it six years ago for $100,000, and he expects to receive only $8,000 in redemption of his stock. Finally, Brian’s salary for the year was $114,000 for his work as an associate professor.
a.What are the net gains and losses from the above items and their character?
b.What is Brian’s AGI for the year assuming he has no other items of income or deduction?
Aug 29, 2021 | Uncategorized
(TCO D) Globe Co. manufactures automatic door openers. The company uses 15,000 electronic hinges per year as a component in the assembly of the openers. You have been engaged by Globe to assist with an evaluation of whether the company should continue producing the hinges or purchase them from an outside vendor.
The Accounting Department provided the following detail regarding the annual cost to produce electronic hinges:
|
Direct materials
|
$54,000
|
|
Direct labor
|
60,000
|
|
Variable manufacturing overhead
|
36,000
|
|
Fixed manufacturing overhead
|
90,000
|
|
Total costs
|
$240,000
|
The Procurement Department provided the following supplier pricing:
Supplier A price per hinge $11.00
Supplier B price per hinge $10.75
Supplier C price per hinge $10.50
The supplier pricing was obtained in response to a formal request for proposal (RFP). Procurement has determined these suppliers meet Globe’s technical specifications and quality requirements.
If Globe stops producing the part internally, 10% of the fixed manufacturing overhead would be eliminated.
Required:
Prepare a make or buy analysis showing the annual advantage or disadvantage (in dollars) of accepting an outside supplier’s offer. Should the company buy the parts? If so, from which supplier?
Aug 29, 2021 | Uncategorized
(TCO E) Hanks Company produces a single product. Operating data for the company and its absorption costing income statement for the last year is presented below:
Units in beginning inventory……………………………..0
Units produced………………………………………..9,000
Units sold………………………………………………8,000
Sales…………………………………………………$80,000
Less cost of goods sold:
Beginning inventory………………………………………. 0
Add cost of goods manufactured………………54,000
Goods available for sale………………………….54,000
Less ending inventory………………………………6,000
Cost of goods sold………………………………..48,000
Gross margin……………………………………….32,000
Less selling & admin. expenses………………..28,000
Net operating income…………………………..$ 4,000
Variable manufacturing costs are $4 per unit. Fixed factory overhead totals $18,000 for the year. This overhead was applied at a rate of $2 per unit. Variable selling and administrative expenses were $1 per unit sold.
Required: Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements.
Aug 29, 2021 | Uncategorized
Hanson, Inc makes 1,000 units per year of a part called a “prositron” for use in one of its products. Data concerning the unit production costs of the prositron follow: Direct materials $342 Direct labor 80 Varible manufacturing OH 48 Fixed manufacturing OH 520 Total $990 An outside supplier has offered to sell Hanson, Inc. all of the prositrons it requires. If Hanson, Inc. decided to discontinue making the prositrons, 10% of the above fixed manufacturing overhead costs could be avoided. required: Assume Hanson, Inc. has no alternative use for the facillities presently devoted to production of the prositrons. If the outside supplier offers to sell the prositrons for $850 each, should Hanson,Inc accept the offer? Fully support your answer with appropriate calculation.
Aug 29, 2021 | Uncategorized
Mad Hatter Enterprises purchased new equipment for $365,000, terms f.o.b. shipping point. Other costs connected with the purchase were as follows:
|
State sales tax
|
$29,200
|
|
Freight costs
|
$5,600
|
|
Insurance while in transit
|
$800
|
|
Insurance after equipment placed in service
|
$1,200
|
|
Installation costs
|
$2,000
|
|
Insurance for the first year of operation
|
$2,400
|
|
Testing
|
$700
|
Required: Determine the capitalized cost of the equipment.
| |
|
$365,000
|
| |
|
$402,500
|
| |
|
$406,900
|
| |
|
$403,300
|
Aug 29, 2021 | Uncategorized
Ruffalo Enterprises Inc. produces aeronautical navigation equipment. The stockholder’s equity accounts of Ruffalo Enterprises Inc. with balances on January 1, 2012, are as follows:
|
Common Stock $8 stated value (250,000 shares authorized, 175,000 shares issued)
|
$1,400,000
|
|
Paid in Capital in Excess of Stated value
|
700,000
|
|
Retained Earnings
|
1,840,000
|
|
Treasury Stock (40,000 shares at cost)
|
400,000
|
The following selected transactions occurred during the year:
|
Jan. 9.
|
Paid cash dividends of $0.10 per share on the common stock. The dividend had been properly recorded when declared on November 30 of the preceding fiscal year for $13,500.
|
|
Mar. 15.
|
Sold all of the treasury stock for $540,000
|
|
May 13.
|
Issued 50,000 shares of common stock for $680,000.
|
|
June 14.
|
Declared a 2% stock dividend on common stock, to be capitalized at the market price of the stock, which is $15 per share.
|
|
July 16.
|
Issued the certificates for the dividend declared on June 11.
|
|
Oct. 30.
|
Purchased 25,000 shares of treasury stock for $320,000.
|
|
Dec. 30.
|
Declare a $0.12 per share dividend on common stock.
|
|
31.
|
Closed the credit balance of the income summary account, $775,000
|
|
31.
|
Closed the two dividends accounts to Retained Earnings.
|
Instructions
1. Enter the January 1 balance in T accounts for the stockholder’s equity accounts listed.
Also prepare T accounts for the following: Paid In Capital from Sale of Treasury Stock:
Stock Dividends Distributable: Stock Dividends: Cash Dividends.
2. Journalize the entries to record the transactions, and post the eight selected accounts.
3. Prepare a retained earnings statement for the year ended December 31, 2012.
4. Prepare the stockholder’s Equity section of the December 31, 2012, balance sheet.
Aug 29, 2021 | Uncategorized
Mauj Outfitters Corporation manufactures and distributes leisure clothing. Selected transactions completed by Mauj Outfitters dui8rng the current fiscal year are as follows:
|
Feb. 19.
|
Split the common stock 4 for 1 and reduced the par from $80 to $20 per share. After the split, there were 600,000 common shares outstanding.
|
|
Mar. 1.
|
Declared semiannual dividends of $1.20 on 75,000 shares of preferred stock and $0.08 on the 600,000 shares of $20 per common stock to stockholders of record on March 31, payable on April 30.
|
|
Apr. 30.
|
Paid the cash dividends.
|
|
June 27.
|
Purchased 90,000 shares of the corporation’s own common stock at $24, recording the stock at cost.
|
|
Aug. 17.
|
Sold 40,000 shares of treasury stock at $30, receiving cash.
|
|
Sept. 1.
|
Declared semiannual dividends of $1.20 on the preferred stock and $0.12 on the common stock (before the stock dividends). In addition, a 1% common stock dividend was declared on the common stock outstanding, to be capitalized at the fair market value of the common stock, which is estimated at $28.
|
|
Oct. 31.
|
Paid the cash dividends and issued the certificate for the common stock dividend.
|
Instructions
Journalize the transactions
On December 31, 2012, $900,000 of the $3,600,000 loan had been disbursed in modernization of the retail stores and in expansion of the product line. Cikan Designs Inc.’s balance sheet as of December 31, 2012, if shown below.
Cikan Designs Inc.
Balance sheet
December 31, 2012
|
assets
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash
|
|
$250,000
|
|
|
Marketable securities
|
|
2,700,000
|
|
|
Accounts receivable
|
$700,000
|
|
|
|
Less allowance for doubtful accounts
|
50,000
|
650,000
|
|
|
Merchandise inventory
|
|
2,680,000
|
|
|
Prepaid expenses
|
|
20,000
|
|
|
Total current assets
|
|
|
$6,300,000
|
|
Property, plant, and equipment:
|
|
|
|
|
Land
|
|
$500,000
|
|
|
Buildings
|
$4,750,000
|
|
|
|
Less accumulated depreciation
|
1,140,000
|
3,610,000
|
|
|
Equipment
|
$2,320,000
|
|
|
|
Less accumulated depreciation
|
730,000
|
1,590,000
|
|
|
Total property, plant, and equipment
|
|
|
5,700,000
|
|
Total assets
|
|
|
$12,000,000
|
|
Liabilities
|
|
|
|
|
Current liabilities:
|
$1,430,000
|
|
|
|
Notes payable (Metro National Bank)
|
360,000
|
|
|
|
Salaries payable
|
10,000
|
|
|
|
Total current liabilities
|
|
$1,800,000
|
|
|
Long-term liabilities:
|
|
|
|
|
Notes payable (Metro National Bank)
|
|
3,240,000
|
|
|
Total liabilities
|
|
|
$5,040,000
|
|
Stockholder’s Equity
|
|
|
|
|
Paid in capital:
|
|
|
|
|
Common stock, $25 per (200,000 shares authorized, 180,000 shares issued)
|
$4,500,000
|
|
|
|
Excess of issue price over par
|
270,000
|
|
|
|
Total paid-in capital
|
|
$4,770,000
|
|
|
Retained earnings
|
|
2,190,000
|
|
|
Total stockholder’s equity
|
|
|
6,960,000
|
|
Total liabilities and stockholder’s equity
|
|
|
$12,000,000
|
The bond of directors is schedule to meet January 8, 2013, to discuss the result of operations for 2012 and to consider the declaration of dividends for the fourth quarter of 2012. The chairman of the board has asked for your advice on the declaration of dividends.
1. What factors should the board consider in deciding whether to declare a cash dividend?
The bond is considering the declaration of a stock dividend instead of a cash dividend. Discuss the issuance of a stock dividend from the point of view of
(a) a stockholder and (b) the board of directors.
Aug 29, 2021 | Uncategorized
The following data relate to a $200,000,000, 5% bond issued for a selected semiannual interest period:
|
Bond carrying amount at beginning of period
|
$216,221,792
|
|
Interest paid during period
|
5,000,000
|
|
Interest expense allocable to the period
|
4,864,990
|
(a) Were the bonds issued at a discount or at a premium? (b) What is the unamortized amount of the discount or premium account at the beginning of the period? (c) What account was debited to amortize the discount or premium?
Aug 29, 2021 | Uncategorized
Effect of financing on earnings per share
Kelton Co., which produces and sells skiing equipment, is financed as follows:
|
Bonds payable, 8% (issued at face amount)
|
$20,000,000
|
|
Preferred $2 stock, $10 par
|
20,000,000
|
|
Common stock, $25 par
|
20,000,000
|
Income tax is estimated at 40% of income:
Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is (a) $10,000,000, (b) $12,000,000 and (c) $14,000,000.
Aug 29, 2021 | Uncategorized
Entries for issuing bonds and amortizing discount by straight line method
On the first day of its fiscal year, Keller Company issued $25,000,000 of five year, 10% bonds to finance its operations of producing and selling home improvement products.
Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 12%, resulting in Keller Company receiving cash of $23,160,113.
a. Journalize the entries to record the following:
1. Sale of the bonds.
2. First semiannual interest payment. (Amortization of discount is to be recorded annually.)
3. Second semiannual interest payment.
4. Amortization of discount at the end of the first year, using the straight line method. (Round to the nearest dollar).
b. Determine the amount of the bond interest expense for the first year.
c. Explain why the company was able to issue the bonds for only $23,160,113 rather than for the face amount of $25,000,000.
Aug 29, 2021 | Uncategorized
Entries for issuing bonds and amortizing premium by straight line method
McCool Corporation wholesales repair products to equipment manufacturers. On April 1, 2010, McCool Corporation issued $30,000,000 of five year, 10% bonds at a market (effective) interest rate of 8%, receiving cash of $32,446,500. Interest is payable semiannually on April 1 and October 1. Journalize the entries to record the following:
a. Sale of bonds on April 1, 2012.
b. First interest payment on October 1, 2012, and amortization of bond premium for six months, using the straight line method. (Round to the nearest dollar).
c. Explain why the company was able to issue the bonds for $32,446,500 rather than for the face amount of $30,000,000.
Aug 29, 2021 | Uncategorized
On January 2, Olson Company acquired 35% of the outstanding stock of Bryant Company for $140,000. for the year ending December 31, Bryant Company earned income of $44,000 and paid dividends of $20,000. Prepare the entries for Olson Company for the purchase of the stock, share of Bryant income, and dividends received from Bryant Company.
|
Jan. 2
|
Investment in Bryant Company Stock
|
140,000
|
|
|
|
Cash
|
|
140,000
|
|
Dec. 31
|
Investment in Bryant Company Stock
|
15,400
|
|
|
|
Income of Bryant Company
|
|
15,400
|
|
|
Record 35% of Bryant income, 35% x $44,000.
|
|
|
|
Dec. 31
|
Cash
|
7,000*
|
|
|
|
Investment in Bryant Company Stock
|
|
7,000
|
|
|
*35% x $20,000
|
|
|
Aug 29, 2021 | Uncategorized
Banner Inc bases its variable overhead performance report on the actual direct labor hours of the period. Data concerning the most recent year that ended on December 31 are as follows:
Budgeted direct labor hours 12,000
Actual direct labor hours 13,500
Standard direct labor hours allowed 13,000
Cost formula (per direct labor hours)
Indirect labor $0.85
Supplies $0.30
Electricity $0.15
Actual costs incurred:
Indirect labor $11,600
Supplies $4,000
Electricity $2,050
Management would like to compute both the spending and the efficiency variances for the variable overhead in the company’s variable overhead performance report. Prepare a variable overhead performance report with both the variable overhead spending and the efficiency variances. Show computations and details
Aug 29, 2021 | Uncategorized
Bartman Co. Reynolds, Inc. Winslow 5000
Year Stock Price Dividend Stock Price Dividend Includes Dividends
2010 17250 1.15 48750 3.00 11663.98
2009 14750 1.06 52300 2.90 8785.70
2008 16500 1.00 48750 2.75 8679.98
2007 10750 .95 57250 2.50 6434.03
2006 11375 .9 60000 2.25 5602.28
2005 7625 .85 55750 2.00 4705.97
Bartman Industries’ and Reynolds Inc.’s stock prices and dividends, along with the Winslow 5000 data are shown above. Winslow 5000 data are adjusted to include dividends.
a. Use the data to calculate annual rates of return for all three. Then calculate each entity’s average return over the 5 year period. (you cannot calculate 2005 due to not have 2004 info).
b. Calculate the standard deviations of the returns for all three.
c. Calculate the coefficients of variation for all three.
e. Estimate Bartman’s and Reynolds’ betas by running regressions of their returns against the index’s returns.
f. Assume that the risk free rate on long term Treasury bonds is 6.04%. Assume also that the average annual return on the Winslow 5000 is not a good estimate of the market’s required return it is too high. So use 11% as the expected return on the market. Use the SML equation to calculate the two companies’ required returns.
g. If you formed a portfolio that consisted of 50% Bartman and 50% Reynolds, what would the portfolios’s beta and required return be?
h. Suppose an investor wants to include Bartman Industries’ stock in his portfolio. Stocks A, B, and C are currently in the portfolio; and their betas are .769, .985, and 1.423, respectively. Calculate the new portfolio’s required return if it consists of 25% of Bartman, 15% of Stock A, 40% of Stock B, and 20% of Stock C.
I’m SO lost…
Aug 29, 2021 | Uncategorized
Battle Creek Storage Systems budgeted the following factory overhead costs for the upcoming year to help variable and fixed predetermined overhead rates.
Indirect material: $2.50 per unit produced
Indirect labor: $3.00 per unit produced
Factory utilities: $3,000 plus $0.02 per unit produced
Factory machine maintenance: $10,000 plus $.50 per unit produced
Material handling charges: $8,000 plus $0.12 per unit produced
Machine depreciation: $0.03 per unit produced
Building rent: $12,000
Supervisors’ salaries: $72,000
Factory insurance: $6000
The company produces only one type of product that has a theoretical capacity of 100,000 units of production during the year. Practical capacity is 80 percent of theoretical, and normal capacity is 90 percent of practical. The company’s expected production for the upcoming year is 70,000 units.
A. prepare a flexible budget for the company using each level of capacity.
B. calculate the predetermined variable and fixed overhead rates for each capacity measure (round to the nearest cent when necessary.)
C. the company decides to apply overhead to products using expected capacity as the budgeted level of activity. the firm actually produces 70,000 units during the year. all actual cost are budgeted.
1. prepare journal entries to record the incurrence of actual overhead costs and to apply overhead to production. assume cash is paid for costs when appropriate.
2.what is the amount of underapplied or overapplied fixed overhead at year end?
D. Which measure of capacity would be of most benefit to management and why?
Aug 29, 2021 | Uncategorized
Berstler Construction company began operations in 2010. Construction activity for the first year is shown below. All contracts are with different customers, and any work remaining at December 31, 2010, is expected to be completed in 2011.
|
Project
|
Total Contract Price
|
Billings through 12/31/10
|
Cash Collections through 12/31/10
|
Contract costs incurred through 12/31/10
|
Estimated Additional Costs to Complete
|
|
1
|
693,840
|
446,040
|
421,260
|
557,550
|
161,070
|
|
2
|
830,130
|
272,580
|
260,190
|
156,114
|
624,456
|
|
3
|
644,280
|
619,500
|
545,160
|
408,870
|
0
|
|
2,168,250
|
1,338,120
|
1,226,610
|
1,122,534
|
785,526
|
Prepare a partial income statement and balance sheet to indicate how the above information would be reported for financial statement purposes. Berstler Construction Company uses the completed contract method.
BERSTLER CONSTRUCTION COMPANY
Partial Income Statement
Year Ended December 31, 2010
_________________________________________$__________________
_________________________________________$__________________
_________________________________________$__________________
Loss recognized in 2010 $_________________
BRESTLER CONSTRUCTION COMPANY
Partial Balance Sheet
December 31, 2010
Current assets:
_____________________________________________________________$______________
________________________________
___________________________________$________________
Less:_______________________________$________________
_____________________________________________________________$_________________
Current liabilities:
_____________________________________________________________$_______________
Aug 29, 2021 | Uncategorized
Best Brew Corporation manufactures two brands of wine: Regular and Extra Rich
Below is the current year production data for the company:
Regular Extra Rich
Direct material in pounds 225,000 110,000
Direct labor hours 45,000 65,000
Machine hours 36,000 24,000
Number of setups 1,450 2,375
Number of gallons produced 450,000 90,000
The 335,000 pounds of material had a total cost of $753,750. Direct labor is $21 per hour.
The company has total overhead production costs of $2,212,125.
a. If Best Brew Corporation applies factory overhead using direct labor hours, compute the total production cost and the unit cost for each brand
b. If Best Brew Corporation applies factory overhead using machine hours, compute the total production cost and the unit cost for each brand.
c. Assume that Best Brew Corporation has established the following activity centers, cost drivers, and costs to apply factory overhead.
Cost Pool Cost Driver Cos Volume
Equipment Maintenance # of machine hours $450,000 60,000
Production Setup # of setups $248,625 3,825
Material Handling ounds of Materials $703,500 335,000
Storage Costs # of gallons produced $810,000 540,000
Compute the total cost and the unit cost for each brand.
d. Explain why the unit cost for each model is different across the three methods of overhead application. How can this information benefit the organization?
Aug 29, 2021 | Uncategorized
Black Forest Clinic contains 340 beds. The average occupancy rate is 85% per month. In other words, an average of 85% of the clinic’s beds are occupied by patients. At this level of occupancy, the clinic’s operating costs are $40 per occupied bed per day, assuming a 30 day month. This $40 cost contains both variable and fixed cost elements.
During November, the clinic’s occupancy rate was only 70%. A total of $339,150 in ioperating cost was incurred during the month.
Required:
1. Using the high low method, estimate:
a. The variable cost per occupied bed on a daily basis.
b. The total fixed operating costs per month.
2. Assume an occupancy rate of 80% per month. What amount of total operating cost would you expect the clinic to incur?
Aug 29, 2021 | Uncategorized
Bolus Computer Parts Inc. is in the process of setting a selling price on a new component it has just designed and developed.The following cost estimates for this new component have been provided by the accounting department for a budgeted volume of 50,000 units.
Per Unit Total
Direct materials $50
Direct labor $25
Variable manufacturing overhead $20
Fixed manufacturing overhead $600,000
Variable selling and administrative expenses $18
Fixed selling and administrative expense $400,000
Bolus Computer Parts management requests that the total cost per unit be used in cost plus pricing its products. On this particular product, management also directs that the target price be set to provide a 25% return on investment (ROI) on invested assets of $1,200,000.
Compute the markup percentage and target selling price that will allow Bolus Computer Parts to earn its desired ROI of 25% on this new component. Assuming that the volume is 40,000 units, compute the markup percentage and target selling price that will allow Bolus Computer Parts to earn its desired ROI of 25% on this new component.Round all calculations to two decimal places
Aug 29, 2021 | Uncategorized
Book value of each class of stock?
A corporation reports the following stockholder’s equity as of December 31, 2008
Preferred stock, $50 par, 10% cumulative, 100,000
shares authorized and 90,000 shares issued $4,500,000
Paid in capital in excess of par common 945,000
Common stock, $10 par, 200,000 shares authorized
and 200,000 shares issued 2,000,000
Paid in capital in excess of par common 800,000
Total paid in capital 8,245,000
Retained earnings 3,400,000
Total stockholder’s equity $11,645,000
No dividends were declared in 2007 and there were no dividends in arrears prior to 2007. What is the book value per share of each class of stock?
Aug 29, 2021 | Uncategorized
Bravo Baking Co is considering replacing an old freezer with a larger unit to freeze some of its bread. The new unit has a larger capacity and Bravo estimates it can produce and sell more bread each year. From these additional sales the after tax cash flow is expected to be $4,000. In addition to more sales, the new freezer will save $1,200 in electricity each year. However, the new freezer will cost and additional $2000 each year for maintenance. The cost of the new unit is $25000 and it is expected to last 10 years. The salvage value at the end of its life is $6,000. The old unit is fully depreciated and can be disposed at cost. Determine the net present value of purchasing the new freezer using a required rate return of 14%. Should Bravo purchase the freezer?
Note: Use PV Tables found in the PV tabs in the workbook. Be sure to enter 4 decial places. Also, be sure to show costs as negative values.
Cash Flow PV Factors PV Amounts
Cost of new registration unit?
After tax cash flow?
Annual electricity savings?
Additional annual maintence costs?
Amount collected from disposal of unit?
Net present value?
Based of your analysis what is your recomendation regarding the new freezer? Explain
Aug 29, 2021 | Uncategorized
Brayden Towing Company is at the end of its accounting year, December 31, 2011. The following data that must be considered were developed from the company’s records and related documents:
a.
On January 1, 2011, the company purchased a new hauling van at a cash cost of $24,600. Depreciation estimated at $4,000 for the year has not been recorded for 2011.
b.
During 2011, office supplies amounting to $1,000 were purchased for cash and debited in full to Supplies. At the end of 2010, the count of supplies remaining on hand was $400. The inventory of supplies counted on hand at December 31, 2011, was $250.
c.
On December 31, 2011, Lanie’s Garage completed repairs on one of the company’s trucks at a cost of $1,200; the amount is not yet recorded and by agreement will be paid during January 2012.
d.
On December 31, 2011, property taxes on land owned during 2011 were estimated at $1,500. The taxes have not been recorded, and will be paid in 2012 when billed.
e.
On December 31, 2011, the company completed a contract for an out of state company for $6,000 payable by the customer within 30 days. No cash has been collected, and no journal entry has been made for this transaction.
f.
On July 1, 2011, a three year insurance premium on equipment in the amount of $1,200 was paid and debited in full to Prepaid Insurance on that date. Coverage began on July 1.
g.
On October 1, 2011, the company borrowed $11,000 from the local bank on a one year, 14 percent note payable. The principal plus interest is payable at the end of 12 months.
h.
The income before any of the adjustments or income taxes was $30,000. The company’s federal income tax rate is 30 percent. (Hint: Compute adjusted income based on (a) through (g) to determine income tax expense.)
Aug 29, 2021 | Uncategorized
Bristol Corporation is a manufacturer of high tech industrial parts that was started in 1999 by two talented engineers with little business training. In 2011, the company was acquired by one of its major customers. As part of an internal audit, the following facts were discovered. The audit occurred during 2011 before any adjusting entries or closing entries were prepared.
a. A five year casualty insurance policy was purchased at the beginning of 2009 for $35,000. The full amount was debited to insurance expense at the time.
prepare any journal entry necessary as a result of the situation described (you may ignore taxes). (If no journal entry is required, please specifically state that.) And also prepare any adjusting entry required for 2011 related to the situation described. (If no adjusting journal entry is required, please specifically state that.)
Aug 29, 2021 | Uncategorized
Bristol Corporation is a manufacturer of high tech industrial parts that was started in 1999 by two talented engineers with little business training. In 2011, the company was acquired by one of its major customers. As part of an internal audit, the following facts were discovered. The audit occurred during 2011 before any adjusting entries or closing entries were prepared.
e. At the end of 2010, the company failed to accrue $15,500 of sales commissions earned by employees during 2010. The expense was recorded when the commissions were paid in early 2011.
prepare any journal entry necessary as a result of the situation described (If no journal entry is required, please specifically state that.) And prepare any adjusting entry required for 2011 related to the situation described. (If no adjusting journal entry is required, please specifically state that.)
Aug 29, 2021 | Uncategorized
Caleb Borke, a former disc golf star, operates Caleb’s Discorama. At the beginning of the current season on April 1, the ledger of Caleb’s Discorama showed Cash $1,800, Merchandise Inventory $2,500, and C. Borke, Capital $4,300. The following transactions were completed during April.
Apr. 5 Purchased golf discs, bags, and other inventory on account from Innova Co. $1,200, FOB shipping point, terms 2/10, n/60.
7 Paid freight on Innovas purchase $50.
9 Received credit from Innova Co. for merchandise returned $100.
10 Sold merchandise on account for $900, terms n/30. The merchandise sold had a cost of $540.
12 Purchased disc golf shirts and other accessories on account from Lightning Sportswear $670, terms 1/10, n/30.
14 Paid Innova Co. in full, less discount.
17 Received credit from Lightning Sportswear for merchandise returned $70.
20 Made sales on account for $560, terms n/30. The cost of the merchandise sold was $340.
21 Paid Lightning Sportswear in full, less discount.
27 Granted an allowance to members for clothing that was flawed $30.
30 Received payments on account from customers $800.
The chart of accounts for the store includes the following: No. 101 Cash, No. 112 Accounts Receivable, No. 120 Merchandise Inventory, No. 201 Accounts Payable, No. 301 C. Borke, Capital, No. 401 Sales, No. 412 Sales Returns and Allowances, No. 505 Cost of Goods Sold.
Hint: Journalize, post, and prepare a trial balance.
(SO 2, 3, 4)
Aug 29, 2021 | Uncategorized
Case 10 1 SolvGen Inc.
Direct Drugs Inc. (Direct) is planning to acquire SolvGen Inc. (SolvGen or the Company), a publicly owned company, during the fourth quarter of fiscal year ending December 31, 2006. Direct has engaged our audit engagement team to perform due diligence procedures, with an emphasis on the review of two separate material agreements: (1) a research and development agreement and (2) a license and distribution agreement, both executed by SolvGen during the first quarter of fiscal year 2006. Direct’s management provided the engagement team with the following memo describing the Company’s revenue recognition policy:
MEMO
To: Audit Engagement Team
From: CFO, SolvGen Inc.
Subject: Revenue Recognition for Research and Development and License and
Distribution Agreements
Date: November 30, 2006
SolvGen Inc. (the Company), an SEC registrant, is a pharmaceutical development company. SolvGen entered into a five year research and development agreement with Careway Pharma Inc. (Careway) on January 1, 2006. The research and development agreement calls for SolvGen to use its best efforts to further develop proprietary instrument systems that have been under development for nearly 18 months and are expected to be ready for commercial launch in the near future. In connection with executing the research and development arrangement, SolvGen and Careway also entered into a five year license and distribution agreement dated January 1, 2006.
Under the terms of the research and development agreement, SolvGen retains all intellectual rights to the results of the research and development agreement (even in the event of default by the Company). In connection with this agreement, SolvGen is entitled to the following nonrefundable milestone payments from Careway:
1. Exclusive negotiation payment ” $1 million (paid December 1, 2005).
2. Contract signing payment ” $2 million (paid January 1, 2006).
3. Commercial launch of instrument system Version 1 ” $5 million (paid March 31, 2006, upon commercial launch of the instrument system).
4. Commercial launch of instrument system Version 2 ” $5 million (not yet paid).
5. Commercial launch of instrument system Version 3 ” $5 million (not yet paid).
Under the five year license and distribution agreement, Careway will have the right to market and distribute the proprietary instrument systems. The license and distribution agreement requires Careway to pay SolvGen for each proprietary instrument system as it is purchased by Careway.
In accounting for the research and development and the license and distribution agreements, SolvGen recognizes the nonrefundable milestone payments when the payments are received over the remaining estimated contractual life of the agreements.
Required:
In deciding how to account for the research and development and the license and distribution agreements, address the following issues:
‘ When should the milestone payments received to date by SolvGen be recognized as revenue?
Aug 29, 2021 | Uncategorized
CASE 13’30 Make or Buy; Utilization of a Constrained Resource [LO1, LO3, LO5]
TufStuff, Inc., sells a wide range of drums, bins, boxes, and other containers that are used in the
chemical industry. One of the company’s products is a heavy duty corrosion resistant metal drum,
called the WVD drum, used to store toxic wastes. Production is constrained by the capacity of an
automated welding machine that is used to make precision welds. A total of 2,000 hours of welding
time is available annually on the machine. Because each drum requires 0.4 hours of welding time,
annual production is limited to 5,000 drums. At present, the welding machine is used exclusively
to make the WVD drums. The accounting department has provided the following fi nancial data
concerning the WVD drums:
Relevant Costs for Decision Making 623
Management believes 6,000 WVD drums could be sold each year if the company had suffi
cient manufacturing capacity. As an alternative to adding another welding machine, management
has considered buying additional drums from an outside supplier. Harcor Industries, Inc., a supplier
of quality products, would be able to provide up to 4,000 WVD type drums per year at a price
of $138 per drum, which TufStuff would resell to its customers at its normal selling price after appropriate
relabeling.
Megan Flores, TufStuff’s production manager, has suggested that the company could make better
use of the welding machine by manufacturing bike frames, which would require only 0.5 hours
of welding time per frame and yet sell for far more than the drums. Megan believes that TufStuff
could sell up to 1,600 bike frames per year to bike manufacturers at a price of $239 each. The accounting
department has provided the following data concerning the proposed new product:
The bike frames could be produced with existing equipment and personnel. Manufacturing
overhead is allocated to products on the basis of direct labor hours. Most of the manufacturing
overhead consists of fi xed common costs such as rent on the factory building, but some of it is variable.
The variable manufacturing overhead has been estimated at $1.35 per WVD drum and $1.90
per bike frame. The variable manufacturing overhead cost would not be incurred on drums acquired
from the outside supplier.
Selling and administrative expenses are allocated to products on the basis of revenues. Almost
all of the selling and administrative expenses are fi xed common costs, but it has been estimated that
variable selling and administrative expenses amount to $0.75 per WVD drum whether made or
purchased and would be $1.30 per bike frame.
All of the company’s employees”direct and indirect”are paid for full 40 hour workweeks
and the company has a policy of laying off workers only in major recessions.
Required:
1. Given the margins of the two products as indicated in the reports submitted by the accounting
department, does it make sense to consider producing the bike frames? Explain.
2. Compute the contribution margin per unit for:
a. Purchased WVD drums.
b. Manufactured WVD drums.
c. Manufactured bike frames.
3. Determine the number of WVD drums (if any) that should be purchased and the number of
WVD drums and/or bike frames (if any) that should be manufactured. What is the increase in
net operating income that would result from this plan over current operations?
As soon as your analysis was shown to the top management team at TufStuff, several managers
got into an argument concerning how direct labor costs should be treated when making
this decision. One manager argued that direct labor is always treated as a variable cost in
Bike Frames
Selling price per frame . . . . . . . . . . . . . $239.00
Cost per frame:
Direct materials . . . . . . . . . . . . . . . . . $99.40
Direct labor ($18 per hour) . . . . . . . . 28.80
Manufacturing overhead . . . . . . . . . . 36.00
Selling and administrative expense . . 47.80 212.00
Margin per frame . . . . . . . . . . . . . . . . . . $ 27.00
WVD Drums
Selling price per drum . . . . . . . . . . . . . . $149.00
Cost per drum:
Direct materials . . . . . . . . . . . . . . . . . $52.10
Direct labor ($18 per hour) . . . . . . . . 3.60
Manufacturing overhead . . . . . . . . . . 4.50
Selling and administrative expense . . 29.80 90.00
Margin per drum . . . . . . . . . . . . . . . . . . $ 59.00
Aug 29, 2021 | Uncategorized
CASE 13’30 Make or Buy; Utilization of a Constrained Resource [LO1, LO3, LO5]
TufStuff, Inc., sells a wide range of drums, bins, boxes, and other containers that are used in the
chemical industry. One of the company’s products is a heavy duty corrosion resistant metal drum,
called the WVD drum, used to store toxic wastes. Production is constrained by the capacity of an
automated welding machine that is used to make precision welds. A total of 2,000 hours of welding
time is available annually on the machine. Because each drum requires 0.4 hours of welding time,
annual production is limited to 5,000 drums. At present, the welding machine is used exclusively
to make the WVD drums. The accounting department has provided the following fi nancial data
concerning the WVD drums:
Relevant Costs for Decision Making 623
Management believes 6,000 WVD drums could be sold each year if the company had suffi
cient manufacturing capacity. As an alternative to adding another welding machine, management
has considered buying additional drums from an outside supplier. Harcor Industries, Inc., a supplier
of quality products, would be able to provide up to 4,000 WVD type drums per year at a price
of $138 per drum, which TufStuff would resell to its customers at its normal selling price after appropriate
relabeling.
Megan Flores, TufStuff’s production manager, has suggested that the company could make better
use of the welding machine by manufacturing bike frames, which would require only 0.5 hours
of welding time per frame and yet sell for far more than the drums. Megan believes that TufStuff
could sell up to 1,600 bike frames per year to bike manufacturers at a price of $239 each. The accounting
department has provided the following data concerning the proposed new product:
The bike frames could be produced with existing equipment and personnel. Manufacturing
overhead is allocated to products on the basis of direct labor hours. Most of the manufacturing
overhead consists of fi xed common costs such as rent on the factory building, but some of it is variable.
The variable manufacturing overhead has been estimated at $1.35 per WVD drum and $1.90
per bike frame. The variable manufacturing overhead cost would not be incurred on drums acquired
from the outside supplier.
Selling and administrative expenses are allocated to products on the basis of revenues. Almost
all of the selling and administrative expenses are fi xed common costs, but it has been estimated that
variable selling and administrative expenses amount to $0.75 per WVD drum whether made or
purchased and would be $1.30 per bike frame.
All of the company’s employees”direct and indirect”are paid for full 40 hour workweeks
and the company has a policy of laying off workers only in major recessions.
Required:
1. Given the margins of the two products as indicated in the reports submitted by the accounting
department, does it make sense to consider producing the bike frames? Explain.
2. Compute the contribution margin per unit for:
a. Purchased WVD drums.
b. Manufactured WVD drums.
c. Manufactured bike frames.
3. Determine the number of WVD drums (if any) that should be purchased and the number of
WVD drums and/or bike frames (if any) that should be manufactured. What is the increase in
net operating income that would result from this plan over current operations?
As soon as your analysis was shown to the top management team at TufStuff, several managers
got into an argument concerning how direct labor costs should be treated when making
this decision. One manager argued that direct labor is always treated as a variable cost in
Bike Frames
Selling price per frame . . . . . . . . . . . . . $239.00
Cost per frame:
Direct materials . . . . . . . . . . . . . . . . . $99.40
Direct labor ($18 per hour) . . . . . . . . 28.80
Manufacturing overhead . . . . . . . . . . 36.00
Selling and administrative expense . . 47.80 212.00
Margin per frame . . . . . . . . . . . . . . . . . . $ 27.00
WVD Drums
Selling price per drum . . . . . . . . . . . . . . $149.00
Cost per drum:
Direct materials . . . . . . . . . . . . . . . . . $52.10
Direct labor ($18 per hour) . . . . . . . . 3.60
Manufacturing overhead . . . . . . . . . . 4.50
Selling and administrative expense . . 29.80 90.00
Margin per drum . . . . . . . . . . . . . . . . . . $ 59.00
Aug 29, 2021 | Uncategorized
CASE 13’30 Make or Buy; Utilization of a Constrained Resource [LO1, LO3, LO5]
TufStuff, Inc., sells a wide range of drums, bins, boxes, and other containers that are used in the
chemical industry. One of the company’s products is a heavy duty corrosion resistant metal drum,
called the WVD drum, used to store toxic wastes. Production is constrained by the capacity of an
automated welding machine that is used to make precision welds. A total of 2,000 hours of welding
time is available annually on the machine. Because each drum requires 0.4 hours of welding time,
annual production is limited to 5,000 drums. At present, the welding machine is used exclusively
to make the WVD drums. The accounting department has provided the following fi nancial data
concerning the WVD drums:
Relevant Costs for Decision Making 623
Management believes 6,000 WVD drums could be sold each year if the company had suffi
cient manufacturing capacity. As an alternative to adding another welding machine, management
has considered buying additional drums from an outside supplier. Harcor Industries, Inc., a supplier
of quality products, would be able to provide up to 4,000 WVD type drums per year at a price
of $138 per drum, which TufStuff would resell to its customers at its normal selling price after appropriate
relabeling.
Megan Flores, TufStuff’s production manager, has suggested that the company could make better
use of the welding machine by manufacturing bike frames, which would require only 0.5 hours
of welding time per frame and yet sell for far more than the drums. Megan believes that TufStuff
could sell up to 1,600 bike frames per year to bike manufacturers at a price of $239 each. The accounting
department has provided the following data concerning the proposed new product:
The bike frames could be produced with existing equipment and personnel. Manufacturing
overhead is allocated to products on the basis of direct labor hours. Most of the manufacturing
overhead consists of fi xed common costs such as rent on the factory building, but some of it is variable.
The variable manufacturing overhead has been estimated at $1.35 per WVD drum and $1.90
per bike frame. The variable manufacturing overhead cost would not be incurred on drums acquired
from the outside supplier.
Selling and administrative expenses are allocated to products on the basis of revenues. Almost
all of the selling and administrative expenses are fi xed common costs, but it has been estimated that
variable selling and administrative expenses amount to $0.75 per WVD drum whether made or
purchased and would be $1.30 per bike frame.
All of the company’s employees”direct and indirect”are paid for full 40 hour workweeks
and the company has a policy of laying off workers only in major recessions.
Required:
1. Given the margins of the two products as indicated in the reports submitted by the accounting
department, does it make sense to consider producing the bike frames? Explain.
2. Compute the contribution margin per unit for:
a. Purchased WVD drums.
b. Manufactured WVD drums.
c. Manufactured bike frames.
3. Determine the number of WVD drums (if any) that should be purchased and the number of
WVD drums and/or bike frames (if any) that should be manufactured. What is the increase in
net operating income that would result from this plan over current operations?
As soon as your analysis was shown to the top management team at TufStuff, several managers
got into an argument concerning how direct labor costs should be treated when making
this decision. One manager argued that direct labor is always treated as a variable cost in
Bike Frames
Selling price per frame . . . . . . . . . . . . . $239.00
Cost per frame:
Direct materials . . . . . . . . . . . . . . . . . $99.40
Direct labor ($18 per hour) . . . . . . . . 28.80
Manufacturing overhead . . . . . . . . . . 36.00
Selling and administrative expense . . 47.80 212.00
Margin per frame . . . . . . . . . . . . . . . . . . $ 27.00
WVD Drums
Selling price per drum . . . . . . . . . . . . . . $149.00
Cost per drum:
Direct materials . . . . . . . . . . . . . . . . . $52.10
Direct labor ($18 per hour) . . . . . . . . 3.60
Manufacturing overhead . . . . . . . . . . 4.50
Selling and administrative expense . . 29.80 90.00
Margin per drum . . . . . . . . . . . . . . . . . . $ 59.00
Aug 29, 2021 | Uncategorized
CASE 13’30 Make or Buy; Utilization of a Constrained Resource [LO1, LO3, LO5]
TufStuff, Inc., sells a wide range of drums, bins, boxes, and other containers that are used in the
chemical industry. One of the company’s products is a heavy duty corrosion resistant metal drum,
called the WVD drum, used to store toxic wastes. Production is constrained by the capacity of an
automated welding machine that is used to make precision welds. A total of 2,000 hours of welding
time is available annually on the machine. Because each drum requires 0.4 hours of welding time,
annual production is limited to 5,000 drums. At present, the welding machine is used exclusively
to make the WVD drums. The accounting department has provided the following fi nancial data
concerning the WVD drums:
Relevant Costs for Decision Making 623
Management believes 6,000 WVD drums could be sold each year if the company had suffi
cient manufacturing capacity. As an alternative to adding another welding machine, management
has considered buying additional drums from an outside supplier. Harcor Industries, Inc., a supplier
of quality products, would be able to provide up to 4,000 WVD type drums per year at a price
of $138 per drum, which TufStuff would resell to its customers at its normal selling price after appropriate
relabeling.
Megan Flores, TufStuff’s production manager, has suggested that the company could make better
use of the welding machine by manufacturing bike frames, which would require only 0.5 hours
of welding time per frame and yet sell for far more than the drums. Megan believes that TufStuff
could sell up to 1,600 bike frames per year to bike manufacturers at a price of $239 each. The accounting
department has provided the following data concerning the proposed new product:
The bike frames could be produced with existing equipment and personnel. Manufacturing
overhead is allocated to products on the basis of direct labor hours. Most of the manufacturing
overhead consists of fi xed common costs such as rent on the factory building, but some of it is variable.
The variable manufacturing overhead has been estimated at $1.35 per WVD drum and $1.90
per bike frame. The variable manufacturing overhead cost would not be incurred on drums acquired
from the outside supplier.
Selling and administrative expenses are allocated to products on the basis of revenues. Almost
all of the selling and administrative expenses are fi xed common costs, but it has been estimated that
variable selling and administrative expenses amount to $0.75 per WVD drum whether made or
purchased and would be $1.30 per bike frame.
All of the company’s employees”direct and indirect”are paid for full 40 hour workweeks
and the company has a policy of laying off workers only in major recessions.
Required:
1. Given the margins of the two products as indicated in the reports submitted by the accounting
department, does it make sense to consider producing the bike frames? Explain.
2. Compute the contribution margin per unit for:
a. Purchased WVD drums.
b. Manufactured WVD drums.
c. Manufactured bike frames.
3. Determine the number of WVD drums (if any) that should be purchased and the number of
WVD drums and/or bike frames (if any) that should be manufactured. What is the increase in
net operating income that would result from this plan over current operations?
As soon as your analysis was shown to the top management team at TufStuff, several managers
got into an argument concerning how direct labor costs should be treated when making
this decision. One manager argued that direct labor is always treated as a variable cost in
Bike Frames
Selling price per frame . . . . . . . . . . . . . $239.00
Cost per frame:
Direct materials . . . . . . . . . . . . . . . . . $99.40
Direct labor ($18 per hour) . . . . . . . . 28.80
Manufacturing overhead . . . . . . . . . . 36.00
Selling and administrative expense . . 47.80 212.00
Margin per frame . . . . . . . . . . . . . . . . . . $ 27.00
WVD Drums
Selling price per drum . . . . . . . . . . . . . . $149.00
Cost per drum:
Direct materials . . . . . . . . . . . . . . . . . $52.10
Direct labor ($18 per hour) . . . . . . . . 3.60
Manufacturing overhead . . . . . . . . . . 4.50
Selling and administrative expense . . 29.80 90.00
Margin per drum . . . . . . . . . . . . . . . . . . $ 59.00
Aug 29, 2021 | Uncategorized
CASE 13’30 Make or Buy; Utilization of a Constrained Resource [LO1, LO3, LO5]
TufStuff, Inc., sells a wide range of drums, bins, boxes, and other containers that are used in the
chemical industry. One of the company’s products is a heavy duty corrosion resistant metal drum,
called the WVD drum, used to store toxic wastes. Production is constrained by the capacity of an
automated welding machine that is used to make precision welds. A total of 2,000 hours of welding
time is available annually on the machine. Because each drum requires 0.4 hours of welding time,
annual production is limited to 5,000 drums. At present, the welding machine is used exclusively
to make the WVD drums. The accounting department has provided the following fi nancial data
concerning the WVD drums:
Relevant Costs for Decision Making 623
Management believes 6,000 WVD drums could be sold each year if the company had suffi
cient manufacturing capacity. As an alternative to adding another welding machine, management
has considered buying additional drums from an outside supplier. Harcor Industries, Inc., a supplier
of quality products, would be able to provide up to 4,000 WVD type drums per year at a price
of $138 per drum, which TufStuff would resell to its customers at its normal selling price after appropriate
relabeling.
Megan Flores, TufStuff’s production manager, has suggested that the company could make better
use of the welding machine by manufacturing bike frames, which would require only 0.5 hours
of welding time per frame and yet sell for far more than the drums. Megan believes that TufStuff
could sell up to 1,600 bike frames per year to bike manufacturers at a price of $239 each. The accounting
department has provided the following data concerning the proposed new product:
The bike frames could be produced with existing equipment and personnel. Manufacturing
overhead is allocated to products on the basis of direct labor hours. Most of the manufacturing
overhead consists of fi xed common costs such as rent on the factory building, but some of it is variable.
The variable manufacturing overhead has been estimated at $1.35 per WVD drum and $1.90
per bike frame. The variable manufacturing overhead cost would not be incurred on drums acquired
from the outside supplier.
Selling and administrative expenses are allocated to products on the basis of revenues. Almost
all of the selling and administrative expenses are fi xed common costs, but it has been estimated that
variable selling and administrative expenses amount to $0.75 per WVD drum whether made or
purchased and would be $1.30 per bike frame.
All of the company’s employees”direct and indirect”are paid for full 40 hour workweeks
and the company has a policy of laying off workers only in major recessions.
Required:
1. Given the margins of the two products as indicated in the reports submitted by the accounting
department, does it make sense to consider producing the bike frames? Explain.
2. Compute the contribution margin per unit for:
a. Purchased WVD drums.
b. Manufactured WVD drums.
c. Manufactured bike frames.
3. Determine the number of WVD drums (if any) that should be purchased and the number of
WVD drums and/or bike frames (if any) that should be manufactured. What is the increase in
net operating income that would result from this plan over current operations?
As soon as your analysis was shown to the top management team at TufStuff, several managers
got into an argument concerning how direct labor costs should be treated when making
this decision. One manager argued that direct labor is always treated as a variable cost in
Bike Frames
Selling price per frame . . . . . . . . . . . . . $239.00
Cost per frame:
Direct materials . . . . . . . . . . . . . . . . . $99.40
Direct labor ($18 per hour) . . . . . . . . 28.80
Manufacturing overhead . . . . . . . . . . 36.00
Selling and administrative expense . . 47.80 212.00
Margin per frame . . . . . . . . . . . . . . . . . . $ 27.00
WVD Drums
Selling price per drum . . . . . . . . . . . . . . $149.00
Cost per drum:
Direct materials . . . . . . . . . . . . . . . . . $52.10
Direct labor ($18 per hour) . . . . . . . . 3.60
Manufacturing overhead . . . . . . . . . . 4.50
Selling and administrative expense . . 29.80 90.00
Margin per drum . . . . . . . . . . . . . . . . . . $ 59.00
Aug 29, 2021 | Uncategorized
CASE 13’30 Make or Buy; Utilization of a Constrained Resource [LO1, LO3, LO5]
TufStuff, Inc., sells a wide range of drums, bins, boxes, and other containers that are used in the
chemical industry. One of the company’s products is a heavy duty corrosion resistant metal drum,
called the WVD drum, used to store toxic wastes. Production is constrained by the capacity of an
automated welding machine that is used to make precision welds. A total of 2,000 hours of welding
time is available annually on the machine. Because each drum requires 0.4 hours of welding time,
annual production is limited to 5,000 drums. At present, the welding machine is used exclusively
to make the WVD drums. The accounting department has provided the following fi nancial data
concerning the WVD drums:
Relevant Costs for Decision Making 623
Management believes 6,000 WVD drums could be sold each year if the company had suffi
cient manufacturing capacity. As an alternative to adding another welding machine, management
has considered buying additional drums from an outside supplier. Harcor Industries, Inc., a supplier
of quality products, would be able to provide up to 4,000 WVD type drums per year at a price
of $138 per drum, which TufStuff would resell to its customers at its normal selling price after appropriate
relabeling.
Megan Flores, TufStuff’s production manager, has suggested that the company could make better
use of the welding machine by manufacturing bike frames, which would require only 0.5 hours
of welding time per frame and yet sell for far more than the drums. Megan believes that TufStuff
could sell up to 1,600 bike frames per year to bike manufacturers at a price of $239 each. The accounting
department has provided the following data concerning the proposed new product:
The bike frames could be produced with existing equipment and personnel. Manufacturing
overhead is allocated to products on the basis of direct labor hours. Most of the manufacturing
overhead consists of fi xed common costs such as rent on the factory building, but some of it is variable.
The variable manufacturing overhead has been estimated at $1.35 per WVD drum and $1.90
per bike frame. The variable manufacturing overhead cost would not be incurred on drums acquired
from the outside supplier.
Selling and administrative expenses are allocated to products on the basis of revenues. Almost
all of the selling and administrative expenses are fi xed common costs, but it has been estimated that
variable selling and administrative expenses amount to $0.75 per WVD drum whether made or
purchased and would be $1.30 per bike frame.
All of the company’s employees”direct and indirect”are paid for full 40 hour workweeks
and the company has a policy of laying off workers only in major recessions.
Required:
1. Given the margins of the two products as indicated in the reports submitted by the accounting
department, does it make sense to consider producing the bike frames? Explain.
2. Compute the contribution margin per unit for:
a. Purchased WVD drums.
b. Manufactured WVD drums.
c. Manufactured bike frames.
3. Determine the number of WVD drums (if any) that should be purchased and the number of
WVD drums and/or bike frames (if any) that should be manufactured. What is the increase in
net operating income that would result from this plan over current operations?
As soon as your analysis was shown to the top management team at TufStuff, several managers
got into an argument concerning how direct labor costs should be treated when making
this decision. One manager argued that direct labor is always treated as a variable cost in
Bike Frames
Selling price per frame . . . . . . . . . . . . . $239.00
Cost per frame:
Direct materials . . . . . . . . . . . . . . . . . $99.40
Direct labor ($18 per hour) . . . . . . . . 28.80
Manufacturing overhead . . . . . . . . . . 36.00
Selling and administrative expense . . 47.80 212.00
Margin per frame . . . . . . . . . . . . . . . . . . $ 27.00
WVD Drums
Selling price per drum . . . . . . . . . . . . . . $149.00
Cost per drum:
Direct materials . . . . . . . . . . . . . . . . . $52.10
Direct labor ($18 per hour) . . . . . . . . 3.60
Manufacturing overhead . . . . . . . . . . 4.50
Selling and administrative expense . . 29.80 90.00
Margin per drum . . . . . . . . . . . . . . . . . . $ 59.00
Aug 29, 2021 | Uncategorized
4. (TCO D) Part F77 is used in one of Wilcutt Corporation’s products. The company’s Accounting Department reports the following costs of producing the 7,000 units of the part that are needed every year.
Per unit
* direct materialsAc€¦Ac€¦ $7.00
*direct laborAc€¦Ac€¦Ac€¦Ac€¦..$6.00
Variable overheadAc€¦Ac€¦.$5.60
*supervisors salaryAc€¦Ac€¦.$4.70
*depreciation of special equipmentAc€¦Ac€¦$1.50
Allocated general overhead Ac€¦Ac€¦$ 5.40
An outside supplier has offered to make the part and sell it to the company for $28.30 each. If this offer is accepted, the supervisor’s salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier’s offer were accepted, only $9,000 of these allocated general overhead costs would be avoided.
Aug 29, 2021 | Uncategorized
5. Rice Corporation currently operates two divisions which had operating results last year as follows:
West Division Troy Division
Sales $600,000 $300,000
Variable costs 310,000 200,000
Contribution margin 290,000 100,000
Traceable fixed costs 110,000 70,000
Allocated common corporate costs 90,000 45,000
Net operating income (loss) $ 90,000 ($15,000)
Since the Troy Division also sustained an operating loss in the prior year, Rice’s president is considering the elimination of this division. Troy Division’s traceable fixed costs could be avoided if the division were eliminated. The total common corporate costs would be unaffected by the decision. If the Troy Division had been eliminated at the beginning of last year, Rice Corporation’s operating income for last year would have been:
a. $15,000 higher
b. $45,000 lower
c. $30,000 lower
d. $60,000 higher
Aug 29, 2021 | Uncategorized
5.2 TCO D) Manning Co. manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has the capacity to produce 18,000 trophies each month; current monthly production is 15,300 trophies. The company normally charges $141 per trophy. Cost data for the current level of production are shown below:
Variable costs:
Direct materialsAc€¦..$ 948,600
Direct laborAc€¦Ac€¦.$ 290,700
Selling and administrative,Ac€¦.$ 41,310
Fixed coasts:
Manufacturing Ac€¦Ac€¦$579,870
Selling and administrativeAc€¦. $134,640
The company has just received a special one time order for 900 trophies at $73 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs.
Required:
Should the company accept this special order? Why
Aug 29, 2021 | Uncategorized
Abigail Corporation produces widgets. In 2008, its first year of operations, the company produced 100,000 widgets and sold 90,000 widgets. The selling price is $70 per widget.
The production costs are
Direct Materials $10 per widget
Direct Labor $5 per widget
Variable Manufacturing Overhead $12 per widget
Fixed Manufacturing Overhead $600,000 in total
The company also had fixed selling costs of $100,000 and fixed administration costs of $150,000
Answer the following questions:
1. How many widgets are in the inventory at the end of the year?
2. Under the variable costing method, are fixed overhead costs a product or period cost?
3. Under the full costing method, are fixed overhead costs a product or period cost?
4. Under the full costing method, are fixed selling costs a product or period cost?
5. What is the product cost of one widget using the full costing method?
6. What is the product cost of one widget using the variable costing method?
7. What is the cost of goods sold using the full costing method?
8. What is the variable cost of goods sold?
9. What is the dollar value of the widget inventory at the end of the year using full costing?
10. What is the dollar value of the widget inventory at the end of the year using variable costing?
Aug 29, 2021 | Uncategorized
Two accountants for the firm of Allen and Wright are arguing about the merits of presenting an income statement in a multiple step versus a single step format. The discussion involves the following 2012 information related to Webster Company ($000 omitted).
Administrative expense
Officer’s salaries $ 5,320
Depreciation of office furniture and equipment 4,460
Cost of goods sold 60,950
Rental revenue 18,060
Selling expense
Transportation out 2,690
Sales commissions 7,980
Depreciation of sales equipment 6,480
Sales 97,620
Income tax 9,070
Interest expense 1,860
(a) Prepare an income statement for the year 2012 using the multiple step form. Common shares outstanding for 2012 total 40,550 (000 omitted)
Aug 29, 2021 | Uncategorized
Two accounting principles that are relied on in the adjusting process are:
a.Revenue recognition and monetary unit.
b.Matching and cost.
c.Revenue recognition and matching.
d.Revenue recognition and going concern.
e.Matching and business entity.
Incurred but unpaid expenses that are recorded during the adjusting process with a debit to an expense and a credit to a liability are:
a.Intangible expenses.
b.Unearned expenses.
c.Prepaid expenses.
d.Net expenses.
e.Accrued expenses.
The time period assumption assumes that an organization’s activities can be divided into specific time periods including all of the following except:
a.Quarters.
b.Fiscal years.
c.Days.
d.Calendar years.
e.Months.
Aug 29, 2021 | Uncategorized
AE14 9
Incorrect.
The income statement for Christensen, Inc., appears below.
CHRISTENSEN, INC.
Income Statement
For the Year Ended December 31, 2011
Sales $399,400
Cost of goods sold 225,500
Gross profit 173,900
Expenses (including $14,000 interest and $22,720 income taxes) 100,900
Net income $73,000
Additional information:
The weighted average common shares outstanding in 2011 were 32,000 shares.
The market price of Christensen, Inc. stock was $15 in 2011.
Cash dividends of $28,000 were paid, $4,770 of which were to preferred stockholders.
Compute the following ratios for 2011.
(a) Earnings per share. (Round answer to 2 decimal places, e.g. 10.50 and use the rounded the amount for future calculations.)
(b) Price earnings. (Round answer to 1 decimal place, e.g. 10.5.)
(c) Payout. (Round answer to 0 decimal places, e.g. 25%.)
(d) Times interest earned. (Round answer to 1 decimal place, e.g. 10.5.)
(a) Earnings per share $
(b) Price earnings times
(c) Payout %
(d) Times interest earned times
Click here if you would like to Show Work for this question
Aug 29, 2021 | Uncategorized
Albertson Co. uses a standard costing system to account for its production of toys. Plastic is added at the start of production; labor and overhead are incurred at equal rtes throughout the process. The standard cost of one toy is as follows:
Direct material $0.10
Direct Labor 0.02
Overhead 0.07
Total Cost $0.19
The following production and cost data are applicable to April 2010:
Beginning WIP inventory (45% complete) 180,000 units
Units started in April 1,300,000 units
Ending WIP inventory (65% complete) 144,000 units
Current cost of direct material $ 184,000
Current cost of direct labor 27,126
Current cost of overhead 93,000
a. What amount is carried as the April beginning balance of WIP inventory?
b. What amount is carried as the April ending balance of WIP inventory?
c. What amount is transferred to Finished Goods Inventory for April?
d. What are the total direct material, direct labor, and overhead variances for April?
e. Record the journal entries to recognize the direct material, direct labor, and overhead variances.
Aug 29, 2021 | Uncategorized
Alice J. and Bruce M. Byrd are married taxpayers who file a joint return. Their Social Security numbers are 123 45 6789 and 111 11 1111, respectively. Alice’s birthday is September 21, 1963, and Bruce’s is June 27, 1962. They live at 473 Revere Avenue. Ames, MA 01850. Alice is the office manager for Ames Dental Clinic, 433 Broad Street, Ames, Ma 01850(employer identification number 98 765432). Bruce is the manager of a Super Burger fast food outlet owned and operated by Plymouth Corporation, 1247 Central Avenue, Hauppauge, NY 11788 (employer identification number 11 1111111).
The following information is shown on their Wage and Tax Statements ( Form W 2) for 2010.
Line Description Alice Bruce
1 Wages, tips, other compensation $52,600 $61,500
2 Federal income tax withheld 4,180 5,990
3 Social Security wages 52,600 61,500
4 Social Security tax withheld 3,261 3,813
5 Medicare wages and tips 52,600 61,500
6 Medicare tax withheld 763 892
15 State Massachusetts Massachusetts
16 State wages, tips, etc. 52,600 61,500
17 State income tax withheld 2,280 2,990
The Byrds provide over half of the support of their two children, Cynthia (born January 25, 1986, Social Security number 123 45 6788) and John (born February 7, 1990, social Security number 123 45 6786. Both children are full time students and live with the Byrds except when they are away at college. Cynthia earned $3,700 from a summer internship in 2010, and John earned $3,400 from a part time job.
During 2010, the Byrds furnished 60% of the total support of Bruce’s widower father, Sam Byrds ( born March 6, 1934, Social Security number 123 45 6787). Sam lived alone and covered the rest of his support with Social Security benefits. Sam died in November, and Bruce, the beneficiary of a policy on Sam’s life, received life insurance proceeds of $600,000 on December 28.
The Byrds had the following expenses relating to their personal residence during 2010:
Property taxes $4,720
Qualified interest on home mortgage 9,130
Repairs of roof 4,780
Utilities 3,810
Fire and theft insurance 2,290
The following facts relate to medical expenses for 2010:
Medical insurance premiums $4,380
Doctor bill for Sam incurred in 2009 and not paid until 2010 7,760
Operation for Sam 7,310
Prescription medicines for Sam 860
Hospital expenses for Sam 2,850
Reimbursement from insurance company, received in 2010 3,000
The medical expenses for Sam represent most of the 60% Bruce contributed toward his father’s support.
Other relevant information follows:
‘ When they filed their 2009 state return in 2010, the Byrds paid additional state income tax of $950.
‘ During 2010, Alice and Bruce attended a dinner dance sponsored by the Ames police Disability Association ( a qualified charitable organization). The Byrds paid $400 for the tickets. The cost of comparable entertainment would normally be $160.
‘ The Byrds contributed $4,800 to Ames Presbyterian Church and gave used clothing (cost of $1,100 and fair market value of $450) to the Salvation Army. All donations are supported by receipts and are in very good condition.
‘ In 2010, the Byrds received interest income of $2,695, which was reported on a Form 1099 INT from Second National Bank.
‘ Alice’s employer requires that all employees wear uniforms to work. During 2010, Alice spent $482 on new uniforms and $211 on laundry charges.
‘ Bruce paid $320 for an annual subscription to the Journal of Franchise Management.
‘ Neither Alice’s nor Bruce’s employer reimburses for employee expenses.
‘ The Byrds do not keep the receipts for the sales taxes they paid and had no major purchases subject to sales tax.
‘ Alice and Bruce paid no estimated Federal income tax. Neither Alice nor Bruce wishes to designate $3 to the Presidential Election Campaign Fund.
In the interest of privacy and to protect against taxpayer identification misuse, Social Security numbers used throughout the textbook have been replaced with fictitious numbers.
Part 1 Tax Computation
Compute net tax payable or refund due for Alice and Bruce Byrd for 2010. If they have overpaid, they want the amount to be refunded to them. If you use tax forms for your computations, you will need Forms 1040 and 2106 and Schedules A, B and M. Suggested software: H&R BLOCK At Home.
Aug 29, 2021 | Uncategorized
Allied Company’s Small Motor Division manufactures a number of small motors used in household and office appliances. The Household Division of Allied then assembles and packages such items as blenders and juicers.Both divisions are free to buy and sell any of their components internally or externally. The following costs relate to small motor LN233 on a per unit basis.
Fixed cost per unit $ 5
Variable cost per unit 8
Selling price per unit 30
Assuming that the Small Motor Division has excess capacity, compute the minimum acceptable price for the transfer of small motor LN233 to the Household Division.
Assuming that the Small Motor Division does not have excess capacity, compute the minimum acceptable price for the transfer of the small motor to the Household Division
Explain why the level of capacity in the Small Motor Division has an effect on the transfer price.
Aug 29, 2021 | Uncategorized
ANDRETTI COMPANY
(Relevant Costs)
Andretti Company has a single product called a Dak. The company normally produces and sells 60,000 Daks each year at a selling price of $32 per unit. The company’s unit costs at this level of activity are given below:
Direct materials $10.00
Direct labor 4.50
Variable overhead 2.30
Fixed overhead 5.00 ($300,000)
Variable selling expenses 1.20
Fixed selling expenses 3.50 ($210,000)
A number of questions relating to the production and sale of Daks are given below. Each question is independent.
REQUIRED:
1.
Assume that Andretti Company has sufficient capacity to produce 90,000 Daks each year. The company could increase its sales by 25 percent above the present 60,000 units each year if it were willing to increase the fixed selling expenses by $80,000. Would the increased fixed expenses be justified?
2.
Assume again that Andretti Company has sufficient capacity to produce 90,000 Daks each year. A customer in a foreign market wants to purchase 20,000 Daks. Import duties on the Daks would be $1.70 per unit, and costs for permits and licenses would be $9,000. The only selling costs that would be associated with the order would be $3.20 per unit shipping cost. You have been asked by the president to compute the per unit break even price on this order.
3.
The company has 1,000 Daks on hand that have some irregularities and are therefore considered to be “seconds”. Due to the irregularities, it will be impossible to sell these units at the regular price. If the company wishes to sell them through regular distribution channels, what unit cost figure is relevant for setting a minimum selling price?
2
4.
Due to a strike in its supplier’s plant, Andretti Company is unable to purchase more material for the production of Daks. The strike is expected to last for two months. Andretti Company has enough material on hand to continue to operate at 30 percent of normal levels for the two month period. As an alternative, Andretti could close its plant down entirely for the two months. If the plant were closed, fixed overhead costs would continue at 60 percent of their normal level during the two month period; the fixed selling costs would be reduced by 20 percent while the plant was closed. What would be the dollar advantage or disadvantage of closing the plant for the two month period?
5.
An outside manufacturer has offered to produce Daks for Andretti Company and to ship them directly to Andretti’s customers. If Andretti Company accepts this offer, the facilities that it uses to produce Daks would be idle; however, fixed overhead costs would be reduced by 75 percent of their present level. Since the outside manufacturer would pay for all the costs of shipping, the variable selling costs would be only two thirds of their present amount. Compute the unit cost figure that is relevant for comparison against whatever quoted price is received from the outside manufacturer.
Aug 29, 2021 | Uncategorized
Annie is a 30 percent partner in the Sunny Partnership and has decided to terminate her partnership interest. Annie is considering two options as potential exit strategies.
1. The first is to have Sunny liquidate Annie’s partnership interest with a proportionate distribution of $374,000 worth of the following assets: cash of $242,000, accounts receivable (basis $0, FMV $12,000) and inventory (basis $74,000, FMV $120,000). Annie will also have debt relief equal to $66,000, her share of the partnership liabilities.
2. The second option is for Annie to sell her partnership interest to the two remaining partners, Gail and Bart for $374,000 cash.
Immediately before either option, Annie’s basis in her partnership interest is $334,000, including her share of partnership liabilities of $66,000. Sunny reports the following assets as of the termination date:
Tax Basis FMV
Assets:
Cash $ 390,000 $ 390,000
Accounts Receivable 0 40,000
Inventory 240,000 400,000
Investments 60,000 105,000
Building 90,000 100,000
Land used in business 160,000 430,000
Total $ 940,000 $1,465,000
Required:
a. What are the tax consequences (amount and character of recognized gain or loss, basis in assets) for Annie under each option?
b. If Annie chooses option 1, what is the amount and character of her gain when she eventually sells the accounts receivable and inventory she receives in the distribution (assume she sells them for fair market value).
c. Which option would you choose and why?
Aug 29, 2021 | Uncategorized
Get an answer from tutors to this homework question now:
The current assets and liabilities sections of the balance sheet of Agincourt Company appear as follows.
AGINCOURT COMPANY
Balance Sheet (Partial)
December 31, 2010
Cash $40,000 Accounts payable $61,000
Accounts receivable $89,000 Notes payable 67,000
Less: Allowance for doubtful accounts 7,000
82,000 $128,000
Inventories 171,000
Prepaid expenses 9,000
$302,000
The following errors in the corporation’s accounting have been discovered:
January 2011 cash disbursements entered as of December 2010 included payments of accounts payable in the amount of $35,000, on which a cash discount of 2% was taken.
The inventory included $27,000 of merchandise that had been received at December 31 but for which no purchase invoices had been received or entered. Of this amount, $10,000 had been received on consignment; the remainder was purchased f.o.b. destination, terms 2/10, n/30.
Sales for the first four days in January 2011 in the amount of $30,000 were entered in the sales book as of December 31, 2010. Of these, $21,500 were sales on account and the remainder were cash sales.
Cash, not including cash sales, collected in January 2011 and entered as of December 31, 2010, totaled $35,324. Of this amount, $23,324 was received on account after cash discounts of 2% had been deducted; the remainder represented the proceeds of a bank loan.
Aug 29, 2021 | Uncategorized
Assets Claims
Cash $61,000 Accounts Payable $25,000
Accounts Receivable 45,000 Common Stock 90,000
Land 27,000 Retained Earnings 18,000
Totals $133,000 $133,000
The following accounting events apply to Oaks’s 2011 fiscal year:
Jan. 1 Acquired an additional $70,000 cash from the issue of common stock.
April 1 Paid $6,600 cash in advance for a one year lease for office space.
June 1 Paid a $3,000 cash dividend to the stockholders.
July 1 Purchased additional land that cost $25,000 cash.
Aug. 1 Made a cash payment on accounts payable of $13,000.
Sept. 1
Received $8,400 cash in advance as a retainer for services to be
performed monthly during the next eight months.
Sept. 30 Sold land for $15,000 cash that had originally cost $15,000.
Oct. 1 Purchased $900 of supplies on account.
Dec. 31 Earned $80,000 of service revenue on account during the year.
31 Received $66,000 cash collections from accounts receivable.
31 Incurred $16,000 other operating expenses on account during the year.
31 Recognized accrued salaries expense of $5,000.
31 Had $250 of supplies on hand at the end of the period.
31 The land purchased on July 1 had a market value of $28,000.
Net cash flows from operating activities:
What amount of total expenses would Oaks report on the income statement?
What total amount of service revenues would Oaks report on the income statement?
Aug 29, 2021 | Uncategorized
Assume that you are the managerial accountant at Infostore, a manufacturer of hard drives, CDs, and DVDs. Its reporting year end is December 31. The chief financial officer is concerned about having enough cash to pay the expected income tax bill because of poor cash flow management. On November 15, the purchasing department purchased excess inventory of CD raw materials in anticipation of rapid growth of this product beginning in January. To decrease the company’s tax liability, the chief financial officer tells you to record the purchase of this inventory as part of supplies and expense it in the current year; this would decrease the company’s tax liability by increasing expenses.
1. In which account should the purchase of CD raw materials be recorded?
2. How should you respond to this request by the chief financial officer?
Aug 29, 2021 | Uncategorized
Atlarge Inc. owns 30% of the outstanding voting common stock of Ticker Co. and has the ability to significantly influence the investee’s operations and decision making. On January 1, 2011, the balance in the Investment in Ticker Co. account was $402,000. Amortization associated with the purchase of this investment is $8,000 per year. During 2011, Ticker earned an income of $108,000 and paid cash dividends of $36,000. Previously in 2010, Ticker had sold inventory costing $28,800 to Atlarge for $48,000. All but 25% of this merchandise was consumed by Atlarge during 2010. The remainder was used during the first few weeks of 2011. Additional sales were made to Atlarge in 2011; inventory costing $33,600 was transferred at a price of $60,000. Of this total, 40% was not consumed until 2012.
What amount of equity income would Atlarge have recognized in 2011 from its ownership
interest in Ticker?
A. $19,792.
B. $27,640.
C. $22,672.
D. $24,400.
E. $21,748.
What was the balance in the Investment in Ticker Co. account at the end of 2011?
A. $401,136.
B. $413,872.
C. $418,840.
D. $412,432.
E. $410,148.
Aug 29, 2021 | Uncategorized
Aug. 1 Purchased merchandise from Abilene Company for $6,000 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1.
4 At Abilene’s request, Stone paid $100 cash for freight charges on the August 1 purchase, reducing the amount owed to Abilene.
5 Sold merchandise to Lux Corp. for $4,200 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $3,000.
8 Purchased merchandise from Welch Corporation for $5,300 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8. The invoice showed that at Stone’s request, Welch paid the $240 shipping charges and added that amount to the bill. (Hint: Discounts are not applied to freight and shipping charges.)
9 Paid $120 cash for shipping charges related to the August 5 sale to Lux Corp.
10 Lux returned merchandise from the August 5 sale that had cost Stone $500 and been sold for $700. The merchandise was restored to inventory.
12 After negotiations with Welch Corporation concerning problems with the merchandise purchased on August 8, Stone received a credit memorandum from Welch granting a price reduction of $800.
15 Received balance due from Lux Corp. for the August 5 sale less the return on August 10.
18 Paid the amount due to Welch Corporation for the August 8 purchase less the price reduction granted.
19 Sold merchandise to Trax Co. for $3,600 under credit terms of 1/10, n/30, FOB shipping point, invoice dated August 19. The merchandise had cost $2,500.
22 Trax requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Stone sent Trax a $600 credit memorandum to resolve the issue.
29 Received Trax’s cash payment for the amount due from the August 19 sale.
30 Paid Abilene Company the amount due from the August 1 purchase.
Prepare journal entries to record the above merchandising transactions of Stone Company, which applies the perpetual inventory system. (Identify each receivable and payable; for example, record the purchase on August 1 in Accounts Payable”Abilene.)
Aug 29, 2021 | Uncategorized
Awesome Athletics, Inc. has developed a new design to produce hurdles that are used in track and field competition. The company’s hurdle design is innovative in that the hurdle yields when hit by a runner and its height is extraordinarily easy to adjust. Management estimates expected annual capacity to be 90,000 units; overhead is applied using expected annual capacity. The company’s cost accountant predicts the following current activities and related costs:
Standard unit variable manufacturing costs 12
Variable unit selling expense 5
Fixed manufacturing overhead 495,000
Fixed selling and administrative expenses 136,000
Selling price per unit 35
Units of sales 80,000
Units of production 85,00
Units in beginning inventory 10,000
Other than any possible under or overapplied fixed overhead, management expects no variances from the previous manufacturing costs. Under or overapplied fixed overhead is to written off to Cost of Goods Sold.
Required:
I. Determine the amount of under or overapplied fixed overhead using (a) variable costing and
(b) absorption costing.
2. Prepare projected income statements using (a) variable costing and (b) absorption costing.
3. Reconci Ie the incomes derived in part 2.
Aug 29, 2021 | Uncategorized
(b) Activity based costing (8 marks)
K Tel manufactures knife sharpeners. Traditionally, a plant wide rate of $200 per direct labour hour has been used to allocate overhead to its products. The accountant believes it is time to find a better method of cost allocation and has established the following relationships between activities and overhead:
Activity Cost Driver Allocation Rate
Material handling Number of parts $2 per part
Assembly Labour hours $20 per hour
Inspection Inspection time $3 per minute
(i) What is the overhead cost per unit from a batch of 1,000 sharpeners using the traditional method? The batch requires 2,000 parts, 20 direct labour hours and 30 minutes of inspection time (2 marks) (Show all workings).
(ii) What is the overhead cost per unit from a batch of 1,000 sharpeners using the ABC method? (3 marks) (Show all workings)
(iii) Many companies that have previously applied overhead costs to final products using Direct Labour hours as the cost driver have changed to other cost drivers, such as machine hours. Why? (3 marks)
Aug 29, 2021 | Uncategorized
Babineaux Company incurred the following costs in May 2010:
‘Paid a six month (May through October) premium for insurance of company headquarters, $18,600.
‘Paid $1,000 fee for a salesperson to attend a seminar in July.
‘Paid three months (May through July) of property taxes on its factory building, $15,000.
‘Paid a $10,000 bonus to the company president for his performance during May 2010.
‘Accrued $20,000 of utility costs, of which 40 percent was for the headquarters and the remainder was for the factory.
a. What expired period costs are associated with the May information?
$
b. What unexpired period costs are associated with the May information?
$
c. What product costs are associated with the May information?
$
d. Discuss why the product cost cannot be described specifically as expired or unexpired in this situation.
Aug 29, 2021 | Uncategorized
1. Skolnick Co. was organized on April 1, 2010.The company prepares quarterly financial statements. The adjusted trial balance amounts at June 30 are shown below.
|
Debits
|
Credits
|
|
Cash
|
$ 6,700
|
Accumulated Depreciation—
|
$ 850
|
|
Accounts Receivable
|
600
|
Equipment
|
|
|
Prepaid Rent
|
900
|
Notes Payable
|
5,000
|
|
Supplies
|
1,000
|
Accounts Payable
|
1,510
|
|
Equipment
|
15,000
|
Salaries Payable
|
400
|
|
Bob Skolnick, Drawing
|
600
|
Interest Payable
|
50
|
|
Salaries Expense
|
9,400
|
Unearned Rent
|
500
|
|
Rent Expense
|
1,500
|
Bob Skolnick, Capital
|
14,000
|
|
Depreciation Expense
|
850
|
Commission Revenue
|
14,200
|
|
Supplies Expense
|
200
|
Rent Revenue
|
800
|
|
Utilities Expense
|
510
|
|
|
|
Interest Expense
|
50
|
|
|
|
Total debits
|
$37,310
|
Total credits
|
$37,310
|
Aug 29, 2021 | Uncategorized
1. Terry Thomas opens the Green Thumb Lawn Care Company on April 1.At April 30, thetrial balance shows the following balances for selected accounts.
|
Prepaid Insurance
|
$ 3,600
|
|
Equipment
|
28,000
|
|
Notes Payable
|
20,000
|
|
Unearned Revenue
|
4,200
|
|
Service Revenue
|
1,800
|
Analysis reveals the following additional data.
1. Prepaid insurance is the cost of a 2 year insurance policy, effective April 1.
2. Depreciation on the equipment is $500 per month.
3.The note payable is dated April 1. It is a 6 month, 12% note.
4. Seven customers paid for the company’s 6 months’ lawn service package of $600
beginning in April.The company performed services for these customers in April.
5. Lawn services provided other customers but not recorded at April 30 totaled $1,500.
Aug 29, 2021 | Uncategorized
1. Baxter Hoffman recently received the following information related to Hoffman Company’s December 31, 2010, balance sheet.
|
Prepaid expenses
|
$ 2,300
|
Inventory
|
$3,400
|
|
Cash
|
800
|
Accumulated depreciation
|
2,700
|
|
Property, plant, and equipment
|
10,700
|
Accounts receivable
|
1,100
|
|
Prepare the assets section of Hoffman Company’s balance sheet.
|
|
|
|
Aug 29, 2021 | Uncategorized
1. The following accounts were taken from the financial statements of Callahan Company.
|
Salaries payable
|
Investment in real estate
|
|
Service revenue
|
Delivery truck
|
|
Interest payable
|
Accumulated depreciation
|
|
Goodwill
|
Depreciation expense
|
|
Short term investments
|
R. Callahan, Capital
|
|
Mortgage note payable due in 3 years
|
Unearned revenue
|
Match each of the following accounts to its proper balance sheet classification,
shown below. If the item would not appear on a balance sheet, use “NA.”
Current assets (CA) Current liabilities (CL)
Long term investments (LTI) Long term liabilities (LTL)
Property, plant, and equipment (PPE) Owner’s equity (OE)
Intangible assets (IA)
Aug 29, 2021 | Uncategorized
1. You are presented with the following list of accounts from the adjusted trial balance for merchandiser Gorman Company. Indicate in which financial statement and under what classification each of the following would be reported.
|
Accounts Payable
Accounts Receivable
Accumulated Depreciation—Office Building
Accumulated Depreciation—Store Equipment
Advertising Expense
Depreciation Expense
B. Gorman, Capital
B. Gorman, Drawing
Cash
Freight out
Gain on Sale of Equipment
Insurance Expense
Interest Expense
|
Interest Payable
Land
Merchandise Inventory
Notes Payable (due in 3 years)
Office Building
Property Tax Payable
Salaries Expense
Salaries Payable
Sales Returns and Allowances
Store Equipment
Sales Revenue
Utilities Expense
|
`
Aug 29, 2021 | Uncategorized
Presented below is information related to Sims Company for its first month of operations. Determine the balances that appear in the accounts payable subsidiary ledger. What Accounts Payable balance appears in the general ledger at the end of January?
Credit Purchases Cash Paid
|
Jan. 5
|
Devon Co.
|
$11,000
|
Jan. 9
|
Devon Co.
|
$7,000
|
|
11
|
Shelby Co.
|
7,000
|
14
|
Shelby Co.
|
2,000
|
|
22
|
Taylor Co.
|
14,000
|
27
|
Taylor Co.
|
9,000
|
Aug 29, 2021 | Uncategorized
1. Cassandra Wilson Company uses a six column cash receipts journal with the following columns.
|
Cash (Dr.)
|
Other Accounts (Cr.)
|
|
Sales Discounts (Dr.)
|
Cost of Goods Sold (Dr.) and
|
|
Accounts Receivable (Cr.)
|
Inventory (Cr.)
|
|
Sales Revenue (Cr.)
|
|
Cash receipts transactions for the month of July 2012 are as follows.
July 3 Cash sales total $5,800 (cost, $3,480).
5 Received a check for $6,370 from Jeltz Company in payment of an invoice dated June 26 for $6,500, terms 2/10, n/30.
9 Cassandra Wilson, the proprietor, made an additional investment of $5,000 in cash in the business.
10 Cash sales total $12,519 (cost, $7,511).
12 Received a check for $7,275 from R. Eliot & Co. in payment of a $7,500 invoice dated
July 3, terms 3/10, n/30.
15 Received an advance of $700 cash for future services.
20 Cash sales total $15,472 (cost, $9,283).
22 Received a check for $5,880 from Beck Company in payment of $6,000 invoice dated
July 13, terms 2/10, n/30.
29 Cash sales total $17,660 (cost, $10,596).
31 Received cash of $200 on interest earned for July.
Instructions
(a) Journalize the transactions in the cash receipts journal.
(b)Contrast the posting of the Accounts Receivable and Other Accounts
columns.
Aug 29, 2021 | Uncategorized
1. Match the statement with the term most directly associated with it.
|
Copyrights
|
Depletion
|
|
Intangible assets
|
Franchises
|
|
Research and development costs
|
|
1. The allocation of the cost of a natural resource to expense in a rational and systematic manner.
2. Rights, privileges, and competitive advantages that result from the ownership of long lived assets that do not possess physical substance.
3. An exclusive right granted by the federal government to reproduce and sell an artistic or published work.
4. A right to sell certain products or services or to use certain trademarks or trade names within a designated geographic area.
5. Costs incurred by a company that often lead to patents or new products.
These costs must be expensed as incurred.
Aug 29, 2021 | Uncategorized
1. Lepid Company has the following account balances at December 31, 2012.
|
Notes payable ($80,000 due after 12/31/13)
|
$200,000
|
|
Unearned service revenue
|
75,000
|
|
Other long term debt ($30,000 due in 2013)
|
150,000
|
|
Salaries and wages payable
|
22,000
|
|
Other accrued expenses
|
15,000
|
|
Accounts payable
|
100,000
|
In addition, Lepid is involved in a lawsuit. Legal counsel feels it is probable Lepid will pay damages of $38,000 in 2011.
(a) Prepare the current liability section of Lepid’s December 31, 2012, balance sheet.
(b) Lepid’s current assets are $504,000. Compute Lepid’s working capital and current ratio.
Aug 29, 2021 | Uncategorized
1. The Rolman Corporation is authorized to issue 1,000,000 shares of $5 par value common stock. In its first year, the company has the following stock transactions.
Jan. 10 Issued 400,000 shares of stock at $8 per share.
July 1 Issued 100,000 shares of stock for land. The land had an asking price of $900,000. The
stock is currently selling on a national exchange at $8.25 per share.
Sept. 1 Purchased 10,000 shares of common stock for the treasury at $9 per share.
Dec. 1 Sold 4,000 shares of the treasury stock at $10 per share.
Instructions
(a) Journalize the transactions.
(b) Prepare the stockholders’ equity section assuming the company had retained earnings of $200,000 at December 31.
Aug 29, 2021 | Uncategorized
1.At the beginning of the year, Peters Corporation’s assets were $150,000 and its stockholders’ equity was $100,000. During the year, assets decreased $30,000 and liabilities increased $15,000. What was the stockholders’ equity at the end of the year
2. The following lettered items represent a classification scheme for a balance sheet, and the numbered items represent accounts. Type the number and the letter indicating to which category the account belongs in the textbox below.
a. Current assets
e. Current liabilities
b. Investments
f. Long term liabilities
c. Property, plant, and equipment
g. Stockholders’ equity
d. Intangible assets
h. Not on balance sheet
_____ 1. Accumulated Depreciation
_____ 6. Trademark
_____ 2. Revenues Received in Advance
_____ 7. Notes Payable (in five years)
_____ 3. Interest Expense
_____ 8. Depreciation Expense
_____ 4. Wages Payable
_____ 9. Prepaid Interest
_____ 5. Retained Earnings
_____ 10. Inventory
3 Prepare journal entries for the following transactions:
March 1, 2010: Opened business by issuing common stock for $20,000.
March 4, 2010: Purchased $7,000 equipment for cash.
March 7, 2010: Billed customers for services rendered, $4,000.
March 12, 2010: Received and paid advertising bill for $200.
March 20, 2010: Received $4,000 from customer billed on March 7, 2010
Important Information: Often the formatting will be lost when problem are submitted. Therefore, do not worry if you have indenting problems with the journal entries. List the date, account name, and amount for each line of the journal entry. Then add the word debit or credit after the amount.
4 .Prepare the required ADJUSTING entries using the information below.
Rex Construction uses December 31, 2010 as its year end. Below is information needed to prepare the adjusting entries for Rex Construction. The company prepares adjusting entries only at year end. This is the first year of operation for Rex Construction.
1. Rex Construction purchased $1,000 of supplies during the year. At the end of the year, $200 of supplies remained.
2. A crane was purchased to use in the contruction activies. The depreciation expense for the year is $10,000.
3. A client prepaid $900,000 for several projects. At the end of the year, one $300,000 project was completed.
Important Information: Often the formatting will be lost when problem are submitted. Therefore, do not worry if you have indenting problems with the journal entries. List the date, account name, and amount for each line of the journal entry. Then add the word debit or credit after the amount.
5 Save
Using the following data, prepare a multistep income statement for Matthew’s Dry Goods for the month ended February 28, 2010.
Cost of Goods Sold
$15,000
General and Administrative Expenses
4,000
Net Sales
25,000
Selling Expenses
3,500
Income Taxes
475
Important Information: Indentation and column formating is often lost when the problems are submitted. Please do not spend time correcting indents or column problems.
Aug 29, 2021 | Uncategorized
1. A firm is considering two mutually exclusive investments, each with an initial outlay of $10,000 and an expected life of 3 years. Assume that the firm has a cost of capital of
12 percent for each project. The two investments are of equal risk and have the following cash flows:
Investment A Investment B
Cash Flow Cash Flow
Year 0 $10,000 $10,000
Year 1 $4,000 $6,000
Year 2 $5,000 $6,000
Year 3 $11,000 $6,000
Calculate the payback period and the net present value for each investment. Show your calculations.
2. Based on the NPV and payback period calculations, which investment should the firm choose? Why? (20 points)
3. When calculating a firm’s cost of capital, why is there a cost associated with retained earnings? (6 points)
Aug 29, 2021 | Uncategorized
1) Prepare journal enries for Super Co.
Accounts receivable in the amount of $700,000 were assigned to Big Finance by Super Co. as security for a loan of $580,000, Big finance charged a four precent commission on the accounts; the interest rate on the note is 11% per year.
During the first month, Super co. collected $300,000 on assigned accounts after deduction $1,500 of cash discounts. Super Co. wrote off a $1,000 assigned account.
Super Co. paid to Big Finance the amount collected plus one month’s interest on the note.
2)On January 1, 2011 Front Corporation recives a four year $100,000 zero interest bearing note in payment of goods sold. The present value of the note equals the agreed upon sales price of $65,873. Fron is a privately held company and follows private entity GAAP.
Assuming Front uses the straight line method to amortize the note;s discount, prepare the journl entry to record the sale on January 1, and the interest accrual on Dec. 31, 2011
Effective interest methof to amortize the note’s discount. prepare the same two entries as previously stated under this method.
Aug 29, 2021 | Uncategorized
1. Suppose Roger has receivables of $63,000, furniture totaling $198,000, and cash of $45,000. The business has a $108,000 note payable and owes $84,000 on account. How much is Roger’s owner’s equity?
Answer:
a) $114,000
b) $192,000
c) $24,000
d) $306,000
2. GB Copies record a cash collection on account by debiting Cash and crediting Accounts payable. What will the trial balance show for this error?
Answer:
a) Too much liabilities
b) Too much for expenses
c) The trial balance will not balance
d) Too much for cash
3. Match the accounting terms on the left with the corresponding definitions on the right.
Answer:
a) Equity a) An asset
b) Debit b) Side of an account where increases are recorded
c) Expenses c) Left side of an account
d) Net Income d) Coping data from the journal to the ledger
e) Ledger e) Using up assets in the course of operating a business
f) Posting f) Always a liability
g) Normal balance g) Revenue expenses
h) Payable h) Book of accounts
i) Journal i) Asset Liabilities
j) Receivable
4. Which account types have a normal debit balance?
Answer:
a) Assets, expenses and withdraws
b) Assets, liabilities and revenues
c) Expense, assets and capital
d) Withdrawals, liabilities and capital
%. You paid $500 for supplies and purchased additional supplies on account for $700. Later you paid$400 of the accounts payable. What is the balance in your supplies account?
Answer:
a) $1,600
b) $1,200
c) $500
d) $800
6. The left side of an account is used to record
Answer
a.) Increases
b) Debit
c) Credit
d) $800
7. Which sequence correctly summaries the accounting process?
Answer:
a) Post to the accounts, journalize transactions, prepare a trial balance,
b) Journalize transactions, post to the accounts, prepare a trial balance
c) Prepare a trial balance, journalize transactions, post to the accounts
d) Journalize transactions, prepare a trail balance, post to the accounts
8. Rita is describing the accounting process for a friend who is a who is a philosophy major. Rita states, “The basic summary device in accounting is the __________ The left side is called the _______ and the right is called __________ .We record transactions first in a _________The we post(copy the data) to the .It is help to the list all the accounts with their balances on a _________
,
Aug 29, 2021 | Uncategorized
1. (TCO D) Seebach Corporation has two major business segments Apparel and Accessories. Data concerning those segments for June appear below:
‘ Sales revenues, apparelAc€¦Ac€¦Ac€¦. $ 7000,000
‘ Variable expense, apparelAc€¦. Ac€¦..$ 406,000
‘ Traceable fixed expanses apparelAc€¦Ac€¦$ 98,000
‘ Sales revenues, accessoriesAc€¦.. $710,000
‘ Variable expenses, accessoriesAc€¦Ac€¦ $ 312,000
‘ Traceable fixed expenses accessories Ac€¦..$107,000
Common fixed expenses totaled $292,000 and were allocated as follows: $155,000 to the Apparel business segment and $137,000 to the Accessories business segment.
Required:
Prepare a segmented income statement in the contribution format for the company. Omit percentages; show only dollar amounts
Aug 29, 2021 | Uncategorized
2. Projects A and B have identical expected lives and identical initial cash outflows (costs). However, most of one project’s cash flows come in the early years, while most of the other project’s cash flows occur in the later years. The two NPV profiles are given below:
Which of the following statements is CORRECT?
a. More of Project A’s cash flows occur in the later years.
b. More of Project B’s cash flows occur in the later years.
c. We must have information on the cost of capital in order to determine which project has the larger early cash flows.
d. The NPV profile graph is inconsistent with the statement made in the problem.
e. The crossover rate, i.e., the rate at which Projects A and B have the same NPV, is greater than either project’s
Aug 29, 2021 | Uncategorized
2. Projects A and B have identical expected lives and identical initial cash outflows (costs). However, most of one project’s cash flows come in the early years, while most of the other project’s cash flows occur in the later years. The two NPV profiles are given below:
Which of the following statements is CORRECT?
a. More of Project A’s cash flows occur in the later years.
b. More of Project B’s cash flows occur in the later years.
c. We must have information on the cost of capital in order to determine which project has the larger early cash flows.
d. The NPV profile graph is inconsistent with the statement made in the problem.
e. The crossover rate, i.e., the rate at which Projects A and B have the same NPV, is greater than either project’s
Aug 29, 2021 | Uncategorized
3 Prepare journal entries for the following transactions:
March 1, 2010: Opened business by issuing common stock for $20,000.
March 4, 2010: Purchased $7,000 equipment for cash.
March 7, 2010: Billed customers for services rendered, $4,000.
March 12, 2010: Received and paid advertising bill for $200.
March 20, 2010: Received $4,000 from customer billed on March 7, 2010
Important Information: Often the formatting will be lost when problem are submitted. Therefore, do not worry if you have indenting problems with the journal entries. List the date, account name, and amount for each line of the journal entry. Then add the word debit or credit after the amount.
4 .Prepare the required ADJUSTING entries using the information below.
Rex Construction uses December 31, 2010 as its year end. Below is information needed to prepare the adjusting entries for Rex Construction. The company prepares adjusting entries only at year end. This is the first year of operation for Rex Construction.
1. Rex Construction purchased $1,000 of supplies during the year. At the end of the year, $200 of supplies remained.
2. A crane was purchased to use in the contruction activies. The depreciation expense for the year is $10,000.
3. A client prepaid $900,000 for several projects. At the end of the year, one $300,000 project was completed.
Important Information: Often the formatting will be lost when problem are submitted. Therefore, do not worry if you have indenting problems with the journal entries. List the date, account name, and amount for each line of the journal entry. Then add the word debit or credit after the amount.
5 Save
Using the following data, prepare a multistep income statement for Matthew’s Dry Goods for the month ended February 28, 2010.
Cost of Goods Sold
$15,000
General and Administrative Expenses
4,000
Net Sales
25,000
Selling Expenses
3,500
Income Taxes
475
Important Information: Indentation and column formating is often lost when the problems are submitted. Please do not spend time correcting indents or column problems.
Aug 29, 2021 | Uncategorized
3. TCOD) The management of Thews Corporation is considering dropping product E28I. Data from the company’s accounting system appear below:
All fixed expenses of the company are fully allocated to products in the company’s accounting system. Further investigation has revealed that $86,000 of the fixed manufacturing expenses and $67,000 of the fixed selling and administrative expenses are avoidable if product E28I is discontinued.
‘ Sales Ac€¦Ac€¦Ac€¦$ 480,000
‘ Variable expensesAc€¦..$ 202,000
‘ Fixed manufacturing expensesAc€¦..$ 158,000
‘ Fixed selling and administrative expensesAc€¦ $ 130,000
Required:
i. What is the net operating income earned by product E28I according to the company’s accounting system? Show your work!
ii. What would be the effect on the company’s overall net operating income of dropping product E28I? Should the product be dropped? Show your work!
Aug 29, 2021 | Uncategorized
33. In June of this year, Dr. and Mrs. Bret Spencer travel to Denver to attend a three day conference sponsored by the American Society of Implant Dentistry. Bret, a practicing oral surgeon, participated in scheduled technical sessions dealing with the latest developments in surgical procedures. On two days, Mrs. Spencer attended group meetings where various aspects of family tax planning were discussed. On the other day, she went sightseeing. Mrs. Spencer does not work for her husband, but she does their tax returns and handles the family investments. Expenses incurred in connection with the conference are summarized below:
Airfare(two tickets) $2000
Lodging(single and double occupancy are the same arte $250) $750
Meals($200x3days) $600
Conference registration fee (includes $120 for Family Tax Planning sessions) $620
Car rental $300
*split equally between Dr. and Mrs. Spencer
How much, if any, of these expenses can the Spencer’s deduct?
Aug 29, 2021 | Uncategorized
WPC has excess production capacity and is considering the possibility of making and selling paging equipment. The following estimates are based on a production and sales volume of 1,000 pagers. Unit level manufacturing costs are expected to be $20. Sales commissions will be established at $1 per unit. The current facility level costs, including depreciation on manufacturing equipment ($80,000), rent on the manufacturing facility ($60,000), depreciation on the administrative equipment ($9,375), and other fided administrative expenses ($65,750), will not be affected by the production of the pagers. The chief accountant has decided to allocate the facility level costs to the existing product and to the new product (pagers) on the basis of the number of units of product made (10,000 components and 1,000 pagers).
A) Assuming the pagers could be sold at a price of $40 each, should WPC make the pagers?
B) One of WPC’s sales representatives receives a special offer to sell 1,500 components at a price of $65. should the offer be accepted?
C) WPC has the opportunity to purchase the component that it currently makes. The components can be purchased at a price of $76 each. Assuming the manufacturing equipment has a zero market value, should WPC buy the components?
Aug 29, 2021 | Uncategorized
Write Company has a maximum capacity of 200,000 units per year. Variable manufacturing costs are $12 per unit. Fixed overhead is $600,000 per year. Variable selling and administrative costs are $5 per unit, and fixed selling and administrative costs are $300,000 per year. The current sales price is $23 per unit.
(a) sales units 150000 and (b) sales dollars 3450000
2.How many units must Write Company sell to earn a profit of $240,000 per year?
3.A strike at one of the company’s major suppliers has caused a shortage of materials, so the current year’s production and sales are limited to 160,000 units.
To partially offset the effect of the reduced sales on profit, management is planning to reduce fixed costs to $841,000. Variable cost per unit is the same as last year. The company has already sold 30,000 units at the regular selling price of $23 per unit.
a)What amount of fixed costs was covered by the total contribution margin of the first 30,000 units sold?
b)What contribution margin per unit will be needed on the remaining 130,000 units to cover the remaining fixed costs and to earn a profit of $210,000 this year?
Aug 29, 2021 | Uncategorized
Wyco Company manufactures toasters. For the first 8 months of 2011, the company reported the following operating results while operating at 75% of plant capacity.
Sales (401,630 units) $4,016,300
Cost of goods sold
2,398,560
Gross profit 1,617,740
Operating expenses
895,590
Net income
$722,150
Cost of goods sold was 66% variable and 34% fixed. Operating expenses were also 66% variable and 34% fixed.
In September, Wyco Company receives a special order for 41,000 toasters at $6.60 each from Ortiz Company of Mexico City. Acceptance of the order would result in $8,050 of shipping costs but no increase in fixed operating expenses.
Complete the incremental analysis for the special order. (If an amount is blank enter 0, all boxes must be filled to be correct. If the impact on net income is a decrease use either a negative sign in front of the number, e.g. 45 or parenthesis, e.g. (45). Enter all other amounts as positive amounts and subtract where necessary. Round your answers to 0 decimal places, e.g. 5,210, round your computations of unit costs to 3 decimal places, e.g. 5.525.)
Reject Order Accept Order Net Income
Increase
(Decrease)
Revenues
Cost of goods sold
Operating expense
Net income
Wyco Company should reject/accept the special order.
Aug 29, 2021 | Uncategorized
Wyco Company manufactures toasters. For the first 8 months of 2011, the company reported the following operating results while operating at 75% of plant capacity.
SALES (401,630 UNITS) $4,016,300
COST OF GOODS SOLD 2,398,560
GROSS PROFIT 1,617,740
OPERATING EXPENSES 895,590
NET INCOME 722,150
Cost of goods sold was 66% variable and 34% fixed. Operating expenses were also 66% variable and 34% fixed.
In September, Wyco Company receives a special order for 41,000 toasters at $6.60 each from Ortiz Company of Mexico City. Acceptance of the order would result in $8,050 of shipping costs but no increase in fixed operating expenses.
Complete the incremental analysis for the special order. (If an amount is blank enter 0, all boxes must be filled to be correct. If the impact on net income is a decrease use either a negative sign in front of the number, e.g. 45 or parenthesis, e.g. (45). Enter all other amounts as positive amounts and subtract where necessary. Round your answers to 0 decimal places, e.g. 5,210, round your computations of unit costs to 3 decimal places, e.g. 5.525.)
REJECT ORDER ACCEPT ORDER NET INCOME INCREASE (DECREASE)
REVENUES ??? ??? ???
COST OF GOODS SOLD ??? ??? ????
OPERATING EXPENSE ?????? ??? ???
NET INCOME ??? ???? ???
WYCO COMPANY SHOULD ACCEPT/REJECT???? THE ORDER.
Aug 29, 2021 | Uncategorized
XYZ Technologies, Inc. designs, manufactures, and markets an extensive line of PC cards. The company sells its PC cards primarily to original equipment manufacturers (OEMs) for industrial and commercial applications. The OEM market served by the company has intensive competition. Many OEM companies ran into financial difficulties in 2010. The following are part of the company’s financial statements. Look at them carefully.
1. Identify the red flags.
2. Determine what kind of financial statement fraud the company may be involved in.
XYZ Technologies, Inc.
Consolidated Balance Sheet (partial)
Assets
Unaudited
Dec. 31, 2011 Dec. 31, 2010
Current assets
Cash and cash equivalents $6,181,520 $ 970,446
Available for sale securities 4,932,763 0
Accounts receivable, net of
allowance for doubtful
accounts of $148,300 and
$139,200 at Dec. 31, 2011
and 2010, respectively 12,592,231 3,932,170
Inventories 18,229,317 8,609,492
Other current assets 18,229,317 8,609,492
Total current assets 60,165,148 22,121,600
XYZ Technologies, Inc.
Consolidated Income Statement (partial)
Year ended December 31
Unaudited
2011 2010 2009
Sales $37,847,681 $12,445,015 $8,213,236
Cost of goods sold 15,895,741 6,832,927 4,523,186
Gross margin 21,951,940 5,612,088 3,690,050
Aug 29, 2021 | Uncategorized
Barrett Company has completed all operating budgets other than the income statement for 2010. Selected data from these budgets follow.
Sales: $300,000
Purchases of raw materials: $145,000
Ending inventory of raw materials: $15,000
Direct labor: $40,000
Manufacturing overhead: $73,000, including $3,000 of depreciation expense
Selling and administrative expenses: $36,000 including depreciation expense of $1,000
Interest expense: $1,000
Principal payment on note: $2,000
Dividends declared: $2,000
Income tax rate: 30%
Other information:
Year end accounts receivable: 4% of 2010 sales
Year end accounts payable: 50% of ending inventory of raw materials
Interest, direct labor, manufacturing overhead, and selling and administrative expenses other than depreciation are paid as incurred.
Dividends declared and income taxes for 2010 will not be paid until 2011.
BARRETT COMP ANY
Balance Sheet
December 31, 2009
Assets
|
Cash
|
|
$20,000
|
|
Raw materials inventory
|
|
10,000
|
|
Equipment
|
$40,000
|
|
|
Less: Accumulated depreciation
|
4,000
|
36,000
|
|
Total assets
|
|
$66,000
|
Liabilities and Stockholders’ Equity
|
Accounts payable
|
$ 5,000
|
|
|
Notes payable
|
22,000
|
|
|
Total liabilities
|
|
$27,000
|
|
Common stock
|
25,000
|
|
|
Retained earnings
|
14,000
|
39,000
|
|
Total liabilities and stockholders’ equity
|
|
$66,000
|
Instructions
(a) Calculate budgeted cost of goods sold.
(b) Prepare a budgeted income statement for the year ending December 31, 2010.
(c) Prepare a budgeted balance sheet as of December 31, 2010.
Aug 29, 2021 | Uncategorized
1. Midwest Division operates as a profit center. It reports the following for the year.
| |
Budgeted
|
Actual
|
|
Sales
|
$1,500,000
|
$1,700,000
|
|
Variable costs
|
700,000
|
800,000
|
|
Controllable fixed costs
|
400,000
|
400,000
|
|
Noncontrollable fixed costs
|
200,000
|
200,000
|
Prepare a responsibility report for the Midwest Division for December 31, 2010.
Aug 29, 2021 | Uncategorized
1. The service division of Metro Industries reported the following results for 2010.
|
Sales
|
$400,000
|
|
Variable costs
|
320,000
|
|
Controllable fixed costs
|
40,800
|
|
Average operating assets
|
280,000
|
Management is considering the following independent courses of action in 2011 in
order to maximize the return on investment for this division.
1. Reduce average operating assets by $80,000, with no change in controllable margin.
2. Increase sales $80,000, with no change in the contribution margin percentage.
(a) Compute the controllable margin and the return on investment for 2010.
(b) Compute the controllable margin and the expected return on investment for each proposed alternative.
Aug 29, 2021 | Uncategorized
1. During February , Cardella Manufacturing works on two jobs: A16 and B17. Summary data concerning these jobs are as follows.
Manufacturing Overhead
Cardella Manufacturing uses a predetermined overhead rate with direct labor costs as the activity base. It expects annual overhead costs to be $760,000 and direct labor costs for the year to be $950,000.
Manufacturing Costs Incurred
Purchased $54,000 of raw materials on account.
F actory labor $76,000, plus $4,000 employer payroll taxes.
Manufacturing overhead exclusive of indirect materials and indirect labor $59,800.
Assignment of Costs
|
Direct materials:
|
Job A16 $27,000, Job B17 $21,000
|
|
Indirect materials:
|
$3,000
|
|
Direct labor:
|
Job A16 $52,000, Job B17 $26,000
|
|
Indirect labor:
|
$2,000
|
Job A16 was completed and sold on account for $150,000. Job B17 was only partially
completed.
Instructions
(a) Compute the predetermined overhead rate.
(b) Journalize the February transactions in the sequence followed in the chapter.
(c) What was the amount of under or overapplied manufacturing overhead?
Aug 29, 2021 | Uncategorized
1. The income statement for Kosinski Manufacturing Company contains the following condensed information.
KOSINSKI MANUFACTURING COMPANY
Income Statement
For the Year Ended December 31, 2012
|
Sales revenue
|
|
$6,583,000
|
|
Operating expenses, excluding depreciation
|
$4,920,000
|
|
|
Depreciation expense
|
880,000
|
5,800,000
|
|
Income before income taxes
|
|
783,000
|
|
Income tax expense
|
|
353,000
|
|
Net income
|
|
$ 430,000
|
Included in operating expenses is a $24,000 loss resulting from the sale of machinery for $270,000 cash. Machinery was purchased at a cost of $750,000. The following balances are reported on Kosinski’s comparative balance sheet at December 31.
KOSINSKI MANUFACTURING COMPANY
Comparative Balance Sheets (partial)
| |
2012
|
2011
|
|
Cash
|
$672,000
|
$130,000
|
|
Accounts receivable
|
775,000
|
610,000
|
|
Inventory
|
834,000
|
867,000
|
|
Accounts payable
|
521,000
|
501,000
|
Income tax expense of $353,000 represents the amount paid in 2012. Dividends declared and paid in 2012 totaled $200,000.
Instructions
Prepare the statement of cash flows using the direct method.
Aug 29, 2021 | Uncategorized
1. Use the information below and on page 777 to prepare a statement of cash flows using the indirect method.
Reynolds Company
Comparative Balance Sheets
December 31
| |
|
|
Change
|
|
Assets
|
2012
|
2011
|
Increase/Decrease
|
|
Cash
|
$ 54,000
|
$ 37,000
|
$ 17,000 Increase
|
|
Accounts receivable
|
68,000
|
26,000
|
42,000 Increase
|
|
Inventory
|
54,000
|
–0–
|
54,000 Increase
|
|
Prepaid expenses
|
4,000
|
6,000
|
2,000 Decrease
|
|
Land
|
45,000
|
70,000
|
25,000 Decrease
|
|
Buildings
|
200,000
|
200,000
|
–0–
|
|
Accumulated depreciation—buildings
|
(21,000)
|
(11,000)
|
10,000 Increase
|
|
Equipment
|
193,000
|
68,000
|
125,000 Increase
|
|
Accumulated depreciation—equipment
|
(28,000)
|
(10,000)
|
18,000 Increase
|
|
Totals
|
$569,000
|
$386,000
|
|
Liabilities and Stockholders’ Equity
|
Accounts payable
|
$ 23,000
|
$ 40,000
|
$ 17,000 Decrease
|
|
Accrued expenses payable
|
10,000
|
0
|
10,000 Increase
|
|
Bonds payable
|
110,000
|
150,000
|
40,000 Decrease
|
|
Common stock ($1 par)
|
220,000
|
60,000
|
160,000 Increase
|
|
Retained earnings
|
206,000
|
136,000
|
70,000 Increase
|
|
Totals
|
$569,000
|
$386,000
|
|
Reynolds Company
Income Statement
For the Year Ended December 31, 2012
|
Sales revenue
|
|
$890,000
|
|
Cost of goods sold
|
$465,000
|
|
|
Operating expenses
|
221,000
|
|
|
Interest expense
|
12,000
|
|
|
Loss on sale of equipment
|
2,000
|
700,000
|
|
Income before income taxes
|
|
190,000
|
|
Income tax expense
|
|
65,000
|
|
Net income
|
|
$125,000
|
Additional information:
1. Operating expenses include depreciation expense of $33,000 and charges from prepaid expenses of $2,000.
2. Land was sold at its book value for cash.
3. Cash dividends of $55,000 were declared and paid in 2012.
4. Interest expense of $12,000 was paid in cash.
5. Equipment with a cost of $166,000 was purchased for cash. Equipment with a cost of $41,000 and a book value of $36,000 was sold for $34,000 cash.
6. Bonds of $10,000 were redeemed at their face value for cash. Bonds of $30,000 were converted into common stock.
7. Common stock ($1 par) of $130,000 was issued for cash.
8. Accounts payable pertain to merchandise suppliers.
Aug 29, 2021 | Uncategorized
1. Chicago Corporation issued the following statement of cash flows for 2012.
|
Cash flows from operating activities
|
|
|
|
Net income
|
|
$19,000
|
|
Adjustments to reconcile net income to net cash
|
|
|
|
provided by operating activities:
|
|
|
|
Depreciation expense
|
$ 8,100
|
|
|
Loss on disposal of plant assets
|
1,300
|
|
|
Decrease in accounts receivable
|
6,900
|
|
|
Increase in inventory
|
(4,000)
|
|
|
Decrease in accounts payable
|
(2,000)
|
10,300
|
|
Net cash provided by operating activities
|
|
29,300
|
|
Cash flows from investing activities
|
|
|
|
Sale of investments
|
1,100
|
|
|
Purchase of equipment
|
(19,000)
|
|
|
Net cash used by investing activities
|
|
(17,900)
|
|
Cash flows from financing activities
|
|
|
|
Issuance of stock
|
10,000
|
|
|
Payment on long term note payable
|
(5,000)
|
|
|
Payment for dividends
|
(9,000)
|
|
|
Net cash used by financing activities
|
|
(4,000)
|
|
Net increase in cash
|
|
7,400
|
|
Cash at beginning of year
|
|
10,000
|
|
Cash at end of year
|
|
$ 17,400
|
(a) Compute free cash flow for Chicago Corporation. (b) Explain why free cash flow
often provides better information than “Net cash provided by operating activities.”
Aug 29, 2021 | Uncategorized
1. Superior Manufacturing Company has the following cost and expense data for the year ending December 31, 2012.
|
Raw materials, 1/1/12
|
$ 30,000
|
Insurance, factory
|
$ 14,000
|
|
Raw materials, 12/31/12
|
20,000
|
Property taxes, factory building
|
6,000
|
|
Raw materials purchases
|
205,000
|
Sales (net)
|
1,500,000
|
|
Indirect materials
|
15,000
|
Delivery expenses
|
100,000
|
|
Work in process, 1/1/12
|
80,000
|
Sales commissions
|
150,000
|
|
Work in process, 12/31/12
|
50,000
|
Indirect labor
|
90,000
|
|
Finished goods, 1/1/12
|
110,000
|
Factory machinery rent
|
40,000
|
|
Finished goods, 12/31/12
|
120,000
|
Factory utilities
|
65,000
|
|
Direct labor
|
350,000
|
Depreciation, factory building
|
24,000
|
|
Factory manager’s salary
|
35,000
|
Administrative expenses
|
300,000
|
Instructions
(a)Prepare a cost of goods manufactured schedule for Superior Company for 2012.
(b) Prepare an income statement for Superior Company for 2012.
(c) Assume that Superior Company’s ledgers show the balances of the following current asset accounts: Cash $17,000, Accounts Receivable (net) $120,000, Prepaid Expenses $13,000, and Short term Investments $26,000. Prepare the current assets section of the balance sheet for Superior Company as of December 31, 2012.
Aug 29, 2021 | Uncategorized
1. Indicate whether each of the five statements presented below is true or false.
1. The three steps in the accounting process are identification, recording, and communication.
2. The two most common types of external users are investors and company
officers.
3. Congress passed the Sarbanes Oxley Act of 2002 to reduce unethical
behavior and decrease the likelihood of future corporate scandals.
4. The primary accounting standard setting body in the United States is the
Financial Accounting Standards Board (FASB).
5. The cost principle dictates that companies record assets at their cost. In later
periods, however, the market value of the asset must be used if market value
is higher than its cost.
Aug 29, 2021 | Uncategorized
1. Presented below is selected information related to Flanagan Company at December 31, 2010. Flanagan reports financial information monthly.
|
Office Equipment
|
$10,000
|
Utilities Expense
|
$ 4,000
|
|
Cash
|
8,000
|
Accounts Receivable
|
9,000
|
|
Service Revenue
|
36,000
|
Wages Expense
|
7,000
|
|
Rent Expense
|
11,000
|
Notes Payable
|
16,500
|
|
Accounts Payable
|
2,000
|
Drawings
|
5,000
|
(a) Determine the total assets of Flanagan Company at December 31, 2010.
(b) Determine the net income that Flanagan Company reported for December 2010.
(c)
Determine the owner’s equity of Flanagan Company at December 31, 2010.
Aug 29, 2021 | Uncategorized
1. Kate Brown recorded the following transactions in a general journal during the month of March.
|
Mar. 4
|
Cash
|
2,280
|
|
| |
Service Revenue
|
|
2,280
|
|
15
|
Wages Expense
|
400
|
|
| |
Cash
|
|
400
|
|
19
|
Utilities Expense
|
92
|
|
| |
Cash
|
|
92
|
Post these entries to the Cash account of the general ledger to determine the ending balance in cash. The beginning balance of cash on March 1 was $600.
Aug 29, 2021 | Uncategorized
1. The following accounts come from the ledger of Snow Go Company at December31, 2010.
|
157
|
Equipment
|
$88,000
|
301
|
Roberts, Capital
|
$20,000
|
|
306
|
Roberts, Drawing
|
8,000
|
212
|
Salaries Payable
|
2,000
|
|
201
|
Accounts Payable
|
22,000
|
200
|
Notes Payable
|
19,000
|
|
726
|
Salaries Expense
|
42,000
|
722
|
Insurance Expense
|
3,000
|
|
112
|
Accounts Receivable
|
4,000
|
130
|
Prepaid Insurance
|
6,000
|
|
400
|
Service Revenue
|
95,000
|
101
|
Cash
|
7,000
|
Prepare a trial balance in good form.
Aug 29, 2021 | Uncategorized
1. Bob Sample opened the Campus Laundromat on September 1, 2010. During the first month of operations the following transactions occurred. Sept. 1 Bob invested $20,000 cash in the business.
2 The company paid $1,000 cash for store rent for September.
3 Purchased washers and dryers for $25,000, paying $10,000 in cash and
signing a $15,000, 6 month, 12% note payable.
4 Paid $1,200 for a one year accident insurance policy.
10 Received a bill from the Daily Newsfor advertising the opening of the
laundromat $200.
20 Bob withdrew $700 cash for personal use.
30 The company determined that cash receipts for laundry services for the
month were $6,200.
The chart of accounts for the company is the same as that for Pioneer Advertising Agency
plus the following: No. 154 Laundry Equipment, No. 610 Advertising Expense, No. 301 Bob
Sample, Capital; and No. 306 Bob Sample, Drawing.
Instructions
(a) Journalize the September transactions. (Use J1 for the journal page number.)
(b) Open ledger accounts and post the September transactions.
(c)
Prepare a trial balance at September 30, 2010.
Aug 29, 2021 | Uncategorized
1. Numerous timing concepts are discussed on pages 96 to 97. A list of concepts is provided on page 99, on the left, with a description of the concept on the right. There are more descriptions provided than concepts. Match the description of the concept to the concept.
|
1. ____ Accrual basis accounting.
2. ____Calendar year.
3. ____Time period assumption.
4. ____Matching principle.
|
(a) Monthly and quarterly time periods.
(b) Efforts (expenses) should be matched
with accomplishments (revenues).
(c) Accountants divide the economic life of
a business into artificial time periods.
(d) Companies record revenues when they
receive cash and record expenses when
they pay out cash.
(e) An accounting time period that is one
year in length.
(f) An accounting time period that starts
on January 1 and ends on December 31.
(g) Companies record transactions in the
period in which the events occur.
|
Aug 29, 2021 | Uncategorized
1. The ledger of Hammond, Inc. on March 31, 2010, includes the following selected accounts before adjusting entries.
| |
Debit
|
Credit
|
|
Prepaid Insurance
|
3,600
|
Office Supplies
|
|
Office Equipment
|
25,000
|
|
|
Accumulated Depreciation—Office Equipment
|
|
5,000
|
|
Unearned Revenue
|
|
9,200
|
An analysis of the accounts shows the following.
1. Insurance expires at the rate of $100 per month.
2. Supplies on hand total $800.
3. The office equipment depreciates $200 a month.
4. One half of the unearned revenue was earned in March.
Prepare the adjusting entries for the month of March
Aug 29, 2021 | Uncategorized
Use the following to answer questions 53 56:
Appendix) The Dexon Company makes and sells a single product called a Mip and employs a standard costing system. The following standards have been established for one unit of Mip:
Standard Quantity
or Hours Standard Cost
per Mip
Direct materials 6 board feet $9.00
Direct labor 0.8 hours $9.60
There were no inventories of any kind on August 1. During August, the following events occurred:
Purchased 15,000 board feet at the total cost of $24,000.
Used 12,000 board feet to produce 2,100 Mips.
Used 1,700 hours of direct labor time at a total cost of $20,060.
To record the purchase of direct materials, the general ledger would include what entry to the Materials Price Variance Account?
$1,500 credit
$1,500 debit
$6,000 credit
$6,000 debit
Question 54: 1 pts To record the use of direct materials in production, the general ledger would include what entry to the Materials Quantity Variance account?
To record the use of direct materials in production, the general ledger would include what entry to the Materials Quantity Variance account?
$3,600 debit
$3,600 credit.
$900 debit
$900 credit
Question 55: 1 pts To record the incurrence of direct labor cost and its use in production, the general ledger would include what entry to the Labor Rate Variance account?
To record the incurrence of direct labor cost and its use in production, the general ledger would include what entry to the Labor Rate Variance account?
$240 credit
$240 debit
$340 debit
$340 credit
Question 56: 1 pts To record the incurrence of direct labor costs and its use in production, the general ledger would include what entry to the Labor Efficiency Variance account?
To record the incurrence of direct labor costs and its use in production, the general ledger would include what entry to the Labor Efficiency Variance account?
$480 credit
$240 debit
$1,200 debit
$1,200 credit
Aug 29, 2021 | Uncategorized
Use the following to answer questions 53 56:
Appendix) The Dexon Company makes and sells a single product called a Mip and employs a standard costing system. The following standards have been established for one unit of Mip:
Standard Quantity
or Hours Standard Cost
per Mip
Direct materials 6 board feet $9.00
Direct labor 0.8 hours $9.60
There were no inventories of any kind on August 1. During August, the following events occurred:
Purchased 15,000 board feet at the total cost of $24,000.
Used 12,000 board feet to produce 2,100 Mips.
Used 1,700 hours of direct labor time at a total cost of $20,060.
To record the purchase of direct materials, the general ledger would include what entry to the Materials Price Variance Account?
a $1,500 credit
b $1,500 debit
c $6,000 credit
d $6,000 debit
Question 54: 1 pts To record the use of direct materials in production, the general ledger would include what entry to the Materials Quantity Variance account?
To record the use of direct materials in production, the general ledger would include what entry to the Materials Quantity Variance account?
a $3,600 debit
b $3,600 credit.
c $900 debit
d $900 credit
Question 55: 1 pts To record the incurrence of direct labor cost and its use in production, the general ledger would include what entry to the Labor Rate Variance account?
To record the incurrence of direct labor cost and its use in production, the general ledger would include what entry to the Labor Rate Variance account?
a $240 credit
b $240 debit
c $340 debit
d $340 credit
Question 56: 1 pts To record the incurrence of direct labor costs and its use in production, the general ledger would include what entry to the Labor Efficiency Variance account?
To record the incurrence of direct labor costs and its use in production, the general ledger would include what entry to the Labor Efficiency Variance account?
a $480 credit
b $240 debit
c $1,200 debit
d $1,200 credit
Aug 29, 2021 | Uncategorized
Use the following to answer questions 53 56:
Appendix) The Dexon Company makes and sells a single product called a Mip and employs a standard costing system. The following standards have been established for one unit of Mip:
Standard Quantity
or Hours Standard Cost
per Mip
Direct materials 6 board feet $9.00
Direct labor 0.8 hours $9.60
There were no inventories of any kind on August 1. During August, the following events occurred:
Purchased 15,000 board feet at the total cost of $24,000.
Used 12,000 board feet to produce 2,100 Mips.
Used 1,700 hours of direct labor time at a total cost of $20,060.
To record the purchase of direct materials, the general ledger would include what entry to the Materials Price Variance Account?
a $1,500 credit
b $1,500 debit
c $6,000 credit
d $6,000 debit
Question 54: 1 pts To record the use of direct materials in production, the general ledger would include what entry to the Materials Quantity Variance account?
To record the use of direct materials in production, the general ledger would include what entry to the Materials Quantity Variance account?
a $3,600 debit
b $3,600 credit.
c $900 debit
d $900 credit
Question 55: 1 pts To record the incurrence of direct labor cost and its use in production, the general ledger would include what entry to the Labor Rate Variance account?
To record the incurrence of direct labor cost and its use in production, the general ledger would include what entry to the Labor Rate Variance account?
a $240 credit
b $240 debit
c $340 debit
d $340 credit
Question 56: 1 pts To record the incurrence of direct labor costs and its use in production, the general ledger would include what entry to the Labor Efficiency Variance account?
To record the incurrence of direct labor costs and its use in production, the general ledger would include what entry to the Labor Efficiency Variance account?
a $480 credit
b $240 debit
c $1,200 debit
d $1,200 credit
Aug 29, 2021 | Uncategorized
Use the following to answer questions 63 66:
The Alpha Company produces toys for national distribution. Standards for a particular toy are:
Materials: 12 ounces per unit at 56A??c per ounce.
Labor: 2 hours per unit at $2.75 per hour.
During the month of December, the company produced 1,000 units. Information for the month follows:
Materials: 14,000 ounces were purchased and used at a total cost of $7,140.
Labor: 2,500 hours worked at a total cost of $8,000.
The materials price variance is:
$700 U.
$420 U.
$420 F.
$700 F.
Question 64: 1 pts The materials quantity variance is:
The materials quantity variance is:
$1,120 U.
$1,820 F.
$1,820 U.
$1,120 F.
Question 65: 1 pts The labor rate variance is:
The labor rate variance is:
$2,500 F.
$1,125 F.
$1,125 U.
$2,500 U.
Question 66: 1 pts The labor efficiency variance is:
The labor efficiency variance is:
$1,600 U.
$1,375 U.
$1,375 F.
$1,600 F.
Aug 29, 2021 | Uncategorized
Use the following to answer questions 67 70:
The Clark Company makes a single product and uses standard costing. Some data concerning this product for the month of May follow:
Labor rate variance: $ 7,000 F
Labor efficiency variance: $12,000 F
Variable overhead efficiency variance: $ 4,000 F
Number of units produced: 10,000
Standard labor rate per direct labor hour: $ 12
Standard variable overhead rate per direct labor hour: $ 4
Actual labor hours used: 14,000
Actual variable manufacturing overhead costs: $58,290
The standard hours allowed to make one unit of finished product are:
1.0.
1.2.
1.5.
2.0.
Question 68: 1 pts The total standard cost for variable overhead for May was:
The total standard cost for variable overhead for May was:
$56,000.
$40,000.
$60,000.
$50,000.
Question 69: 1 pts The total standard cost for direct labor for May was:
The total standard cost for direct labor for May was:
$168,000.
$180,000.
$120,000.
$161,000.
Question 70: 1 pts The actual direct labor rate for May in dollars per hour was:
The actual direct labor rate for May in dollars per hour was:
$12.50.
$12.00.
$11.75.
$11.50.
Aug 29, 2021 | Uncategorized
Use the following to answer questions 67 70:
The Clark Company makes a single product and uses standard costing. Some data concerning this product for the month of May follow:
Labor rate variance: $ 7,000 F
Labor efficiency variance: $12,000 F
Variable overhead efficiency variance: $ 4,000 F
Number of units produced: 10,000
Standard labor rate per direct labor hour: $ 12
Standard variable overhead rate per direct labor hour: $ 4
Actual labor hours used: 14,000
Actual variable manufacturing overhead costs: $58,290
The standard hours allowed to make one unit of finished product are:
1.0.
1.2.
1.5.
2.0.
Question 68: 1 pts The total standard cost for variable overhead for May was:
The total standard cost for variable overhead for May was:
$56,000.
$40,000.
$60,000.
$50,000.
Question 69: 1 pts The total standard cost for direct labor for May was:
The total standard cost for direct labor for May was:
$168,000.
$180,000.
$120,000.
$161,000.
Question 70: 1 pts The actual direct labor rate for May in dollars per hour was:
The actual direct labor rate for May in dollars per hour was:
$12.50.
$12.00.
$11.75.
$11.50.
Aug 29, 2021 | Uncategorized
Use the following data for Apple and Dell for year 2008 (real data, in $ million):
Apple Dell
Profit (operating income) $6,275 $3,190
Sales revenue $32,479 $61,101
Investment (total assets) $32,460 $27,031
Required:
a) compute the ROI for each company.
Apple ROI= _____________ % (if you get say 12.5%, enter 12.5, not 12.5% or 0.125)
Dell ROI= _______________%
b) use the DuPont method to decompose ROI into ROI = profit margin * asset turnover.
In other words, compute profit margin and asset turnover for each company:
Apple profit margin= __________ , asset turnover= ____________ (Enter both as a fraction of 1, not as percentage. I.e., if the profit margin is 0.045 (4.5%) and asset turnover is 3.42 (342%), enter 0.045 and 3.42)
Dell profit margin= ____________ , asset turnover= _____________
If you multiply profit margin * asset turnover, you should get the ROI from part (a)
c) Which company has higher profit margin? Does it make sense, based on what you know about Apple and Dell?
Aug 29, 2021 | Uncategorized
Use the following information for Hayes, Inc., as of December 31 to answer the next questions:
Administrative salaries $ 32,000
Depreciation of factory equipment 25,000
Depreciation of delivery vehicles 8,000
Direct Labor 68,000
Factory supplies used 12,000
Finished goods inventory, January 1 57,000
Finished goods inventory, December 31 68,000
Factory insurance15,500
Interest expense 12,000
Factory utilities 14,000
Factory maintenance 7,500
Raw materials inventory, January 1 8,000
Raw materials inventory, December 314,000
Raw material purchases 125,000
Rent on factory building25,000
Repairs of factory equipment11,500
Sales commissions 37,500
Goods in process inventory, January 1 3,500
Goods in process inventory, December 312,000
1. What is the correct amount of Cost of Goods Manufactured based on the Hayes, Inc. information?
$398,500
$386,000
$309,000
$306,000
$296,500
2. What is the total amount of manufacturing costs added to Goods In Process during the period?
$393,000
$325,000
$389,500
$397,000
$307,500
3. What is the correct amount of overhead based on the Hayes Inc. information?
$192,000
$110,500
$200,000
$150,000
$77,500
Aug 29, 2021 | Uncategorized
Use the following information for questions 80through 84.The following information relates to the pension plan for the employees of TurnerCo.:1/1/10 12/31/10 12/31/11Accum. benefit obligation$5,280,000$5,520,000$7,200,000Projected benefit obligation5,580,0005,976,0008,004,000Fair value of plan assets5,100,0006,240,0006,888,000AOCI’net (gain) or loss 0 (864,000)(960,000)Settlement rate (for year)11%11%Expected rate of return (for year)8%7%Turnerestimates that the average remaining service life is 16 years. Turner’s contribution was$756,000in 2011and benefits paid were $564,000.80.The interest cost for 2011isa.$537,840.b.$607,200.c.$657,360.d.$880,440.81.The actual return on plan assets in 2011isa.$408,000.b.$456,000.c.$588,000.d.$648,000.
Accounting for Pensions and Postretirement Benefits
20 1982.The unexpected gain or loss on plan assets in 2011isa.$39,360 loss.b.$22,560 gain.c.$19,200gain.d.$214,560 gain.83.The corridor for 2011isa.$619,200.b.$624,000.c.$678,000.d.$800,400.84.The amount of AOCI(net gain)amortized in 2011isa.$15,300.b.$15,000.c.$11,626.d.$9,977
Aug 29, 2021 | Uncategorized
VampiresRUs was the world’s leading company in extracting blood. It had a number of charity and paid blood drives, which gave it the largest blood supply in the world. VampiresRUs was based on a profitable model, but in the last few decades, it had been focusing more on non for profit transactions because the demand for blood was increasing, but the ability to pay for the blood was decreasing. VampiresRUs was doing well for a blood extraction company unless you compared it to the companies only in the business to make a profit. Slowly, employees and outsiders alike realized that VampiresRUs was declining in profits and could soon become a not for profit blood extraction company. The auditors realized the direction the company was going and resigned after not being paid for the previous year’s audit. The internal auditors started performing most of the financial statement audit functions and found company records to be in perfect order. However, after a short time period, the auditors noticed that Jack, the company’s CEO, was showing up to work in a new car each day. He claimed that he had saved a fortune and finally decided to spend the money on his passion”cars. The internal auditors, after seeing the sudden change, decided to analyze the company to ensure that fraud wasn’t being committed by the CEO. To analyze the company, the internal auditors knew only to compute the following ratios:
Gross profit margin
Accounts Receivable Turnover
Number of days in receivables
Earnings per share
2011 2010
Sales 1,000,000 1,200,000
COGS 800,000 960,000
Accounts Receivable 500,000 600,000
Net Income 52,000 103,000
# of shares outstanding 100,000 100,000
Upon computing the above ratios, the internal auditors found nothing suspicious and concluded that fraud didn’t exist.
Required
A. Compute the ratios listed above. Is there anything specific you see in the ratios that would indicate fraud?
Problem 3 continued
B. How else could the internal auditors have searched/found fraud?
Aug 29, 2021 | Uncategorized
Wall Nuts, Inc. produces paneling which requires two processes, A and B, to complete. Oak is the best selling of all the many types of paneling produced. Information related to the 40,000 units of oak paneling produced annually is shown below.
Direct materials $380,000
Direct Labor
Department A (6,000 DLH x $25 per DLH) $150,000
Department B (35,125 DLH x $16 per DLH) $562,000
Machine Hours
Department A 24,000 MH
Department B 32,000 MH
Wall Nuts’ total expected overhead costs and related overhead data are shown below.
Departments. Department A. Department B.
Direct labor hours 67,000 DLH 170,000 DLH
Machine hours 100,000 MH 80,000 MH
Manufacturing overhead costs $450,000 $600,000
Use the data for Wall Nuts, Inc. to compute departmental overhead rates based on machine hours in Department A and machine hours in Department B.
$4.50 per MH in Dept A; $4.50 per MH in Dept B.
$7.50 per MH in Dept A; $7.50 per MH in Dept. B.
$4.50 per MH in Dept A; $7.50 per MH in Dept B.
$2.70 per MH in Dept A; $6.00 per MH in Dept B.
$0.60 per MH in Dept A; $0.80 per MH in Dept B.
Aug 29, 2021 | Uncategorized
The Walter Jewelry Company produces a bracelet which normally sells for $79.95. The company produces 1,500 units annually but has the capacity to produce 2,000 units. A special order for manufacturing and selling 200 bracelets at $49.95 has been received which would not disrupt current operations. Current costs for the bracelet are as follows:
Direct materials $17.00
Direct labor 14.50
Variable overhead 4.00
Fixed overhead 5.00
Total $40.50
In addition, the customer would like to add a monogram to each bracelet which would require an additional $2 per unit in additional labor costs and Walter Company would also have to purchase a piece of equipment to create the monogram which would cost $1,600. This equipment would not have any other uses.
With regard to this special order only:
Answer
incremental revenues will exceed incremental costs by $2,490.
incremental revenues will exceed incremental costs by $890.
incremental revenues will exceed incremental costs by $2,890
incremental revenues will exceed incremental costs by $1,290
Aug 29, 2021 | Uncategorized
Wendell’s Donut Shoppe is investigating the purchase of a new $18,600 donut making machine. The new machine would permit the company to reduce the amount of part time help needed, at a cost savings of $3,800 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 1,000 dozen more donuts each year. The company realizes a contribution margin of $1.20 per dozen donuts sold. The new machine would have a six year useful life. (Ignore income taxes.)
What would be the total annual cash inflows associated with the new machine for capital budgeting purposes?
Find the internal rate of return promised by the new machine
In addition to the data given previously, assume that the machine will have a $4,125 salvage value at the end of six years. Under these conditions, compute the internal rate of return
Aug 29, 2021 | Uncategorized
Werth Company asks you to review its December 31, 2010, inventory values and prepare the necessary adjustments to the books. The following information is given to you.
Werth uses the periodic method of recording inventory. A physical count reveals $234,890 of inventory on hand at December 31, 2010.
Not included in the physical count of inventory is $10,420 of merchandise purchased on December 15 from Browser. This merchandise was shipped f.o.b. shipping point on December 29 and arrived in January. The invoice arrived and was recorded on December 31.
Included in inventory is merchandise sold to Bubbey on December 30, f.o.b. destination. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale on account for $12,800 on December 31. The merchandise cost $7,350, and Bubbey received it on January 3.
Included in inventory was merchandise received from Dudley on December 31 with an invoice price of $15,630. The merchandise was shipped f.o.b. destination. The invoice, which has not yet arrived, has not been recorded.
Not included in inventory is $8,540 of merchandise purchased from Minsky Industries. This merchandise was received on December 31 after the inventory had been counted. The invoice was received and recorded on December 30.
Included in inventory was $10,438 of inventory held by Werth on consignment from Jackel Industries.
Included in inventory is merchandise sold to Sims f.o.b. shipping point. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale for $18,900 on December 31. The cost of this merchandise was $11,520, and Sims received the merchandise on January 5.
Excluded from inventory was a carton labeled “Please accept for credit.” This carton contains merchandise costing $1,500 which had been sold to a customer for $2,600. No entry had been made to the books to reflect the return, but none of the returned merchandise seemed damaged.
(a) Determine the proper inventory balance for Werth Company at December 31, 2010.
$
(b) Prepare any correcting entries to adjust inventory to its proper amount at December 31, 2010. Assume the books have not been closed.
Description/Account Debit Credit
Sales returns and allowancesSalesAccounts receivablePurchases (inventory)Accounts payable
Accounts receivableSales returns and allowancesSalesPurchases (inventory)Accounts payable
(To reverse sale entry in 2010.)
SalesAccounts receivableAccounts payableSales returns and allowancesPurchases (inventory)
Accounts payableAccounts receivableSales returns and allowancesPurchases (inventory)Sales
(To record purchase of merchandise in 2010.)
Purchases (inventory)Accounts payableSales returns and allowancesSalesAccounts receivable
SalesSales returns and allowancesPurchases (inventory)Accounts receivableAccounts payable
(To record merchandise returned.)
Aug 29, 2021 | Uncategorized
Werth uses the periodic method of recording inventory. A physical count reveals $234,890 of inventory on hand at December 31, 2010.
Not included in the physical count of inventory is $10,420 of merchandise purchased on December 15 from Browser. This merchandise was shipped f.o.b. shipping point on December 29 and arrived in January. The invoice arrived and was recorded on December 31.
Included in inventory is merchandise sold to Bubbey on December 30, f.o.b. destination. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale on account for $12,800 on December 31. The merchandise cost $7,350, and Bubbey received it on January 3.
Included in inventory was merchandise received from Dudley on December 31 with an invoice price of $15,630. The merchandise was shipped f.o.b. destination. The invoice, which has not yet arrived, has not been recorded.
Not included in inventory is $8,540 of merchandise purchased from Minsky Industries. This merchandise was received on December 31 after the inventory had been counted. The invoice was received and recorded on December 30.
Included in inventory was $10,438 of inventory held by Werth on consignment from Jackel Industries.
Included in inventory is merchandise sold to Sims f.o.b. shipping point. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale for $18,900 on December 31. The cost of this merchandise was $11,520, and Sims received the merchandise on January 5.
Excluded from inventory was a carton labeled “Please accept for credit.” This carton contains merchandise costing $1,500 which had been sold to a customer for $2,600. No entry had been made to the books to reflect the return, but none of the returned merchandise seemed damaged.
(a) Determine the proper inventory balance for Werth Company at December 31, 2010.
$
(b) Prepare any correcting entries to adjust inventory to its proper amount at December 31, 2010. Assume the books have not been closed.
Description/Account Debit Credit
Sales returns and allowancesSalesAccounts receivablePurchases (inventory)Accounts payable
Accounts receivableSales returns and allowancesSalesPurchases (inventory)Accounts payable
(To reverse sale entry in 2010.)
SalesAccounts receivableAccounts payableSales returns and allowancesPurchases (inventory)
Accounts payableAccounts receivableSales returns and allowancesPurchases (inventory)Sales
(To record purchase of merchandise in 2010.)
Purchases (inventory)Accounts payableSales returns and allowancesSalesAccounts receivable
SalesSales returns and allowancesPurchases (inventory)Accounts receivableAccounts payable
(To record merchandise returned.)
Aug 29, 2021 | Uncategorized
Westile Company buys plain ceramic tiles and prints different designs on them for souvenir and gift stores. It buys the tiles from a small company in Europe, so at all times it keeps on hand a stock equal to the tiles needed for three months’ sales. The tiles cost $2 each and must be paid for in cash. The company has 56,000 tiles in stock. Sales estimates, based on contracts received, are as follows for the next six months:
January 24,800
February 35,600
March 26,400
April 28,400
May 19,200
June 14,400
Required:
Estimate purchases (in units) and cash required to make purchases in January, February, and March.
Westile Company
Merchandise Purchases Budget
For the Period Ended March 31
(in units)
January February March
Units to be purchased ? ? ?
Estimated cost $ ? $ ? $ ?
Aug 29, 2021 | Uncategorized
Wetland Corporation was organized on June 1, 2009. It is authorized to issue an unlimited number of no par value $4 cumulative preferred shares and an unlimited number of no par value common shares. The following share transactions were completed during the company’s first year of operations:
June 5 Issued 80,000 common shares for $5.20 per share.
Aug. 21 Issued 5,000 preferred shares for $55 per share.
Sept. 15 Issued 22,000 common shares in exchange for land. The asking price of the land was $100,000. The common shares were trading for $5.45 per share on this date.
Nov. 20 Issued 78,000 common shares for $5.70 per share.
Jan. 12 Repurchased 80,000 common shares for $5.20 per share.
Mar. 9 Issued 10,000 common shares for $6.20 per share.
Apr. 16 Issued 2,000 preferred shares for $66 per share.
May 15 Declared the annual preferred dividend to the preferred shareholders, to shareholders of record on May 30, payable on June 10.
31 Reported net earnings of $515,000 for the year.
please find the entry for jan 12.
Aug 29, 2021 | Uncategorized
Wind Fall, a manufacturer of leaf blowers, began operations this year. During this year, the company produced 10,000 leaf blowers and sold 8,500. At year end the company reported the following income statement using absorption costing.
Sales (8,500 x $45) 382,500
cost of goods sold (8,500 x $20) 170,000
gross margin $212,500
selling and administrative expenses 60,000
net income $152,500
Production costs per leaf blower total $20, which consists of $16 in variable production costs and $4 in fixed production costs (based on the 10,000 units produced). Fifteen percent of total selling and administrative expenses are variable.
Compute net income under variable costing.
$146,500
$158,500
$237,500
$206,500
$246,500
Aug 29, 2021 | Uncategorized
In his own words, Daniel Feussner was “The Dude”. With his waist long dreadlocks, part time rock band, and well paid job managing Microsoft’s online search directory”he seemed to have it all. Originally from Germany, Feussner, now age 32, earned his doctorate and taught at the University of Munich before coming to the U.S. where he started his career in computers. In 1996, Feussner started working with Microsoft as a director of operations for US Speech Engineering Services and Retrieval Technology”working on a new, closely guarded search engine tied to the company’s .NET concept.
Microsoft allows employees to order an unlimited amount of software and hardware, at no cost, for business purposes only. Between December year 1 and November year 2, Feussner ordered or used his assistant and other employees (including a high school intern) to order nearly 1700 pieces of software. He then resold them on the street for reduced prices”reaping more than $9 million. When items with a cost of goods sold of more than $1,000 are ordered, an e mail is sent to the employee’s direct supervisor, who must click on an “Approve” button before the order is filled. The loosely controlled internal ordering system reflects the trust the company has in its employees.
In June, FBI agents said they saw Feussner exchanging a large box of software for cash in a parking lot in Bellevue. The FBI contacted Microsoft security and began monitoring Feussner’s bank accounts. Previously, one account with a major bank had an average balance of $2,159. In a short time, the average balance ballooned to $129,775. Another account showed irregular deposits totaling $500,000″none of which appeared to be from any legitimate income.
Investigators also noted that Feussner purchased a $95,000 Ferrari F355 Berlinetta, a $36,000 Jaguar XJ6 and traded in lesser vehicles for a $37,000 black 1995 Hummer, a Mercedes 500SEL, and a $21,900 Harley Davidson. He also bought an $8,000 platinum diamond ring, a $2,230 Rolex wristwatch, and a $4,000 bracelet. For a relatively low level manager Fuessner’s lifestyle is impressive.
Steve Schnase, who lived across the street from Feussner, said his neighbor was clearly wealthy, but not flamboyant with his money. He described Feussner as an intelligent man who didn’t flaunt his education, would loan neighbors tools and was always friendly. Schnase was surprised when he heard the accusations.
“The Dude” was fired from Microsoft in December year 2, shortly after the fraud was discovered. He has been charged with 15 counts of wire, mail and computer fraud”with each count carrying a maximum of five years in prison. He is expected to remain in custody until a preliminary hearing set for Dec. 20, year 2.
Requirements
1. Describe the symptoms of fraud that might be evident to a fellow Microsoft employee.
2. Recently, Microsoft has been putting more emphasis on controlling costs. With the slowing of overall technology spending, executives have ordered managers to closely monitor expenses and have given vice presidents greater responsibility for balance sheets. What positive or negative consequences might this pose to Microsoft in future fraud prevention?
3. All frauds contain the following key elements: perceived pressure, perceived opportunity, and a way to rationalize the fraud. Describe how pressure and opportunity contributed to the Feussner fraud.
4. From the scenario, what are some of the methods Microsoft uses to prevent future frauds?
Aug 29, 2021 | Uncategorized
The Worldwide Credit Card Company uses standards to control the labor time involved in opening mail from card holders and recording the enclosed remittances. Incoming mail is gathered into batches, and a standard time is set of opening and recording each batch. The labor standards relating to one batch are given below:
Standard Standard Standard
Hours Rate Cost
Per Batch 2.5 $6 $15
The record showing the time spend last week in opening batches of mail has been misplaced. However, the batch supervisor recalls that 168 batches were received and opened during the week, and the controller recalls the following variance data relating to these batches:
Total labor variance…………….$330 Unfavorable
Labor price variance……………..$150 Favorable
Required:
1. Determine the number of actual labor hours spent opening batches during the week.
2. Determine the actual hourly rate paid to employees for opening batches last week.
Aug 29, 2021 | Uncategorized
Sycamore Candy Company offers a CD single as a premium for every five candy bar wrappers presented by customers together with $2.50. The candy bars are sold by the company to distributors for 30 cents each. The purchase price of each CD to the company is $2.25; in addition it costs 50 cents to mail each CD. The results of the premium plan for the years 2010 and 2011 are as follows. (All purchases and sales are for cash.)
2010 2011
CDs purchased 250,000 330,000
Candy bars sold 2,895,400 2,743,600
Wrappers redeemed 1,200,000 1,500,000
2010 wrappers expected to be redeemed in 2011 290,000
2011 wrappers expected to be redeemed in 2012 350,000
Prepare the journal entries that should be made in 2010 and 2011 to record the transactions related to the premium plan of the Sycamore Candy Company. (For multiple debit/credit entries, list amounts from largest to smallest, e.g. 10, 8, 6.)
Description/Account Debit Credit
2010
SalesPremium expenseLiability for premiumsInventory of premium CD’sCash
Premium expenseSalesLiability for premiumsInventory of premium CD’sCash
(To record the purchase of CD’s.)
Premium expenseCashSalesLiability for premiumsInventory of premium CD’s
Inventory of premium CD’sLiability for premiumsPremium expenseSalesCash
(To record the sale of candy bars.)
Premium expenseCashLiability for premiumsInventory of premium CD’sSales
Liability for premiumsPremium expenseInventory of premium CD’sCashSales
Liability for premiumsCashInventory of premium CD’sPremium expenseSales
(To record the redemption of wrappers, the receipt of cash & the mailing of CD’s.)
CashInventory of premium CD’sSalesLiability for premiumsPremium expense
SalesPremium expenseLiability for premiumsCashInventory of premium CD’s
(To record the estimated liability for premium claims outstanding.)
2011
Liability for premiumsInventory of premium CD’sCashSalesPremium expense
SalesLiability for premiumsPremium expenseInventory of premium CD’sCash
(To record the purchase of CD’s.)
Liability for premiumsInventory of premium CD’sSalesCashPremium expense
SalesLiability for premiumsInventory of premium CD’sCashPremium expense
(To record the sale of candy bars.)
SalesLiability for premiumsCashInventory of premium CD’sPremium expense
Premium expenseInventory of premium CD’sCashSalesLiability for premiums
SalesPremium expenseCashLiability for premiumsInventory of premium CD’s
Liability for premiumsInventory of premium CD’sCashPremium expenseSales
(To record the redemption of wrappers, the receipt of cash & the mailing of CD’s.)
CashSalesLiability for premiumsPremium expenseInventory of premium CD’s
CashSalesInventory of premium CD’sLiability for premiumsPremium expense
(To record the estimated liability for premium claims outstanding.)
Aug 29, 2021 | Uncategorized
The T accounts for equipment and accumulated depreciation for Trevis Ltd. are shown here:
|
|
|
|
|
Equipment
|
| Beg. Bal |
80,000 |
|
Disposals |
23,000 |
| Acquisitions |
41,600 |
|
|
|
|
| End Bal. |
98,600 |
|
|
|
|
|
|
|
|
|
|
Accumulated Depreciation Equipment
|
| Disposals |
5,500 |
|
Beg. Bal. |
44,500 |
|
|
|
Depreciation |
12,000 |
|
|
|
|
End Bal. |
51,000 |
|
In addition, Trevis’ statement of earnings reported a $2,300 loss on the sale of equipment.
What amount was reported on the cash flow statement as “cash provided by sale of equipment”? $
Aug 29, 2021 | Uncategorized
The T accounts below summarize the ledger of Simon Landscaping Company at the end of the first month of operations.
Cash No. 101
4/1 15,000 4/15 600
4/12 900 4/25 1,500
4/29 400
4/30 1,000
Accounts Receivable No. 112
4/7 3,200 4/29 400
Supplies No. 126
4/4 1,800
Accounts Payable No. 201
4/25 1,500 4/4 1,800
Unearned Revenue No. 205
4/30 1,000
Common Stock No. 311
4/1 15,000
Service Revenue No. 400
4/7 3,200
4/12 900
Salaries Expense No. 726
4/15 600
Instructions
(a) Prepare the complete general journal from which the postings to Cash were made.
Date Description/Account Debit Credit
Apr. 1
(Owner’s investment of cash in business.)
Apr. 12
(Received cash for services provided.)
Apr. 15
(Paid salaries to date.)
Apr. 25
(Paid creditors on account.)
Apr. 29
(Received cash in payment of account.)
Apr. 30
(Received cash for future services.)
(b) Prepare a trial balance at April 30, 2008. (If answer is zero, please enter 0. Do not leave any fields blank.)
SIMON LANDSCAPING COMPANY
Trial Balance
April 30, 2008
Debit Credit
Cash
P2 3A
Jack Shellenkamp owns and manages a computer repair service, which had the following trial balance on December 31, 2007 (the end of its fiscal year).
BYTE REPAIR SERVICE, INC.
Trial Balance
December 31, 2007
Cash $8,000
Accounts Receivable 15,000
Parts Inventory 13,000
Prepaid Rent 3,000
Shop Equipment 21,000
Accounts Payable $19,000
Common Stock 30,000
Retained Earnings 11,000
$60,000 $60,000
Summarized transactions for January 2008 were as follows:
1. Advertising costs, paid in cash, $1,000.
2. Additional repair parts inventory acquired on account $4,000.
3. Miscellaneous expenses, paid in cash, $2,000.
4. Cash collected from customers in payment of accounts receivable $14,000.
5. Cash paid to creditors for accounts payable due $15,000.
6. Repair parts used during January $4,000. (Hint: Debit this to Repair Parts Expense.)
7. Repair services performed during January: for cash $6,000; on account $9,000.
8. Wages for January, paid in cash, $3,000.
9. Dividends paid in January were $3,000.
Instructions
(a) Prepare journal entries to record each of the January transactions. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.)
Description/Account Debit Credit
1.
2.
3.
4.
5.
6.
7.
8.
9.
(b) Open T accounts for each of the accounts listed in the trial balance, and enter the opening balances for 2008. Post the journal entries to the accounts in the ledger.
Cash Common Stock
Bal.
Bal.
(1)
(3)
(4)
Retained Earnings
(5)
Bal.
(7)
(8)
(9)
Dividends
(9)
Accounts Receivable
Bal.
Repair Services Revenue
(4)
(7)
(7)
Advertising Expense
Parts Inventory (1)
Bal.
(2)
(6)
Miscellaneous Expense
(3)
Prepaid Rent
Bal.
Repairs Parts Expense
(6)
Shop Equipment
Bal.
Wage Expense
(8)
Accounts Payable
Bal.
(2)
(5)
(c) Prepare a trial balance as of January 31, 2008. (If answer is zero, please enter 0. Do not leave any fields blank.)
BYTE REPAIR SERVICE, INC.
Trial Balance
January 31, 2008
Cash $
$
Accounts Receivable
Parts Inventory
Prepaid Rent
Shop Equipment
Accounts Payable
Common Stock
Retained Earnings
Dividends
Repair Services Revenue
Advertising Expense
Miscellaneous Expense
Repair Parts Expense
Wage Expense
$
$
Click here if you would like to Show Work for this question
The T accounts below summarize the ledger of Simon Landscaping Company at the end of the first month of operations.
Cash No. 101
4/1 15,000 4/15 600
4/12 900 4/25 1,500
4/29 400
4/30 1,000
Accounts Receivable No. 112
4/7 3,200 4/29 400
Supplies No. 126
4/4 1,800
Accounts Payable No. 201
4/25 1,500 4/4 1,800
Unearned Revenue No. 205
4/30 1,000
Common Stock No. 311
4/1 15,000
Service Revenue No. 400
4/7 3,200
4/12 900
Salaries Expense No. 726
4/15 600
Instructions
(a) Prepare the complete general journal from which the postings to Cash were made.
Date Description/Account Debit Credit
Apr. 1
(Owner’s investment of cash in business.)
Apr. 12
(Received cash for services provided.)
Apr. 15
(Paid salaries to date.)
Apr. 25
(Paid creditors on account.)
Apr. 29
(Received cash in payment of account.)
Apr. 30
(Received cash for future services.)
(b) Prepare a trial balance at April 30, 2008. (If answer is zero, please enter 0. Do not leave any fields blank.)
SIMON LANDSCAPING COMPANY
Trial Balance
April 30, 2008
Debit Credit
Cash
P2 3A
Jack Shellenkamp owns and manages a computer repair service, which had the following trial balance on December 31, 2007 (the end of its fiscal year).
BYTE REPAIR SERVICE, INC.
Trial Balance
December 31, 2007
Cash $8,000
Accounts Receivable 15,000
Parts Inventory 13,000
Prepaid Rent 3,000
Shop Equipment 21,000
Accounts Payable $19,000
Common Stock 30,000
Retained Earnings 11,000
$60,000 $60,000
Summarized transactions for January 2008 were as follows:
1. Advertising costs, paid in cash, $1,000.
2. Additional repair parts inventory acquired on account $4,000.
3. Miscellaneous expenses, paid in cash, $2,000.
4. Cash collected from customers in payment of accounts receivable $14,000.
5. Cash paid to creditors for accounts payable due $15,000.
6. Repair parts used during January $4,000. (Hint: Debit this to Repair Parts Expense.)
7. Repair services performed during January: for cash $6,000; on account $9,000.
8. Wages for January, paid in cash, $3,000.
9. Dividends paid in January were $3,000.
Instructions
(a) Prepare journal entries to record each of the January transactions. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.)
Description/Account Debit Credit
1.
2.
3.
4.
5.
6.
7.
8.
9.
(b) Open T accounts for each of the accounts listed in the trial balance, and enter the opening balances for 2008. Post the journal entries to the accounts in the ledger.
Cash Common Stock
Bal.
Bal.
(1)
(3)
(4)
Retained Earnings
(5)
Bal.
(7)
(8)
(9)
Dividends
(9)
Accounts Receivable
Bal.
Repair Services Revenue
(4)
(7)
(7)
Advertising Expense
Parts Inventory (1)
Bal.
(2)
(6)
Miscellaneous Expense
(3)
Prepaid Rent
Bal.
Repairs Parts Expense
(6)
Shop Equipment
Bal.
Wage Expense
(8)
Accounts Payable
Bal.
(2)
(5)
(c) Prepare a trial balance as of January 31, 2008. (If answer is zero, please enter 0. Do not leave any fields blank.)
BYTE REPAIR SERVICE, INC.
Trial Balance
January 31, 2008
Cash $
$
Accounts Receivable
Parts Inventory
Prepaid Rent
Shop Equipment
Accounts Payable
Common Stock
Retained Earnings
Dividends
Repair Services Revenue
Advertising Expense
Miscellaneous Expense
Repair Parts Expense
Wage Expense
$
$
Aug 29, 2021 | Uncategorized
Target Systems, Inc., makes heat seeking missiles. It has recently been offered a government contract from which it may realize a profit. The contract purchase price is $130,000 per missile, but the number of units to be purchased has not yet been decided. The company’s fixed costs are budgeted at $3,973,500, and variable costs are $68,500 per unit.
1. Compute the number of units the company should agree to make at the stated contract price to earn a profit of $1,500,000.
2. Using a lighter material, the variable unit cost can be reduced by $1,730, but total fixed overhead will increase by $27,500. How many units must be produced to make $1,500,000 in profit?
3. Given the figures in 2, how many additional units must be produced to increase profit by $1,264,600?
Aug 29, 2021 | Uncategorized
(TCO 9) Thurman Munster, the owner of Adams Family RVs, is considering the addition of a service center his lot. The building and equipment are estimated to cost $1,100,000 and both the building and equipment will be depreciated over 10 years using the straight line method. The building and equipment have zero estimated residual value at the end of 10 years. Munster’s required rate of return for this project is 12 percent. Net income related to each year of the investment is as follows:
Revenue $450,000
Less:
Material cost $ 60,000
Labor 100,000
Depreciation 110,000
Other 10,000 280,000
Income before taxes 170,000
Taxes at 40% 68,000
Net income $102,000
(a) Determine the net present value of the investment in the service center. Should Munster invest in the service center?
(b) Calculate the internal rate of return of the investment to the nearest A??1 percent.
(c) Calculate the payback period of the investment.
(d) Calculate the accounting rate of return.
Aug 29, 2021 | Uncategorized
Termus Industries is operating at 85% of its manufacturing capacity of 50,000 product units per year. A customer has offered to buy an additional 4,000 units at $25 each and sell them outside the country so as not to compete with Termus. The following data are available:
Costs at 85% Capacity. Per Unit. Total
Direct materials $10.00 $425,000
Direct labor 8.00 340,000
Overhead (fixed and variable) 13.00 552.500
Totals $31.00 $1,317,500
In producing 4,000 additional units, fixed overhead costs would remain at their current level but incremental variable overhead costs of $4 per unit would be incurred. What is the effect on income if Termus accepts this order?
Income will decrease by $6 per unit.
Income will increase by $6 per unit.
Income will increase by $7 per unit.
Income will decrease by $3 per unit.
Income will increase by $3 per unit.
Aug 29, 2021 | Uncategorized
Terry Co. manufactures a commercial solvent that is used for industrial maintenance. This solvent is sold by the drum and generally has a stable selling price. Due to a decrease in demand for this product, Terry produced and sold 60,000 drums in December. The following information is available regarding Terry’s operations for December:
Standard costs per drum of product manufactured were as follows:
Materials
10 gallons of raw materials $20
1 empty drum $1
Total Materials Costs $21
Direct labor (1 hour) $7
Fixed factory overhead (per direct
labor hour) $4
Variable factory overhead (per
direct labor hour) $6
Costs incurred during December were as follows:
Raw materials: 600,000 gallons were purchased at a cost of $1,150,000
700,000 gallons were used
Empty drums: 85,000 drums were purchased at a cost of $85,000
60,000 drums were used
Direct Labor: 65,000 hours were worked at a cost of $470,000
Factory overhead:
Depreciation of building and machinery: $230,000
Supervision and indirect labor: $360,000
Other factory overhead; $76,500
Total factory overhead: $666,500
The fixed overhead budget for the December level of production was $275,000
Normal capacity is $68,750 direct labor hours
Prepare a schedule computing the following variances for December:
(1) Materials price variance (computed at the time of purchase)
(2) Materials usage variance (quantity)
(3) Labor rate variance
(4) Labor usuage (efficiency) variance
(5) Factory overhead,using the three way method
Indicate whether each variance is favorable or unfavorable
Aug 29, 2021 | Uncategorized
Textel is thinking about having one of its products manufactured by a subcontractor. Currently, the cost of manufacturing 1,000 units follows:
Direct Material $45,000
Direct Labor 30,000
Factory overhead (1/3 is variable) 98,000
If Textel can buy 1,000 units from a subcontractor for $100,000, it should:
Make the product because current factory overhead is less than $100,000.
Make the product because the cost of direct material plus direct labor of manufacturing is less than $100,000.
Buy the product because the total incremental costs of manufacturing are greater than $100,000.
Buy the product because total fixed and variable manufacturing costs are greater than $100,000.
Make the product because factory overhead is a sunk cost.
Aug 29, 2021 | Uncategorized
Tim and Monica Nelson are married, file a joint return, and are your newest tax clients.
They provide you with the following information relating to their 2011 tax return:
1. Tim works as a pediatrician for the county hospital. The W 2 form he received from the hospital shows wages of $150,000 and state income tax withheld of $8,500.
2. Monica spends much of her time volunteering, but also works as a substitute teacher for the local schools. During the year, she spent 900 hours volunteering. When she does not volunteer, she earns $8.00 per hour working as a substitute. The W 2 form she received from the school district shows total wages of $3,888 and state income tax withheld of $85.
3. On April 13, the couple paid $250 in state taxes with their 2010 state income tax return. The Nelsons’ state and local sales taxes in 2011 were $5,500.
4. On December 18, the Nelsons donated a small building to the Boy Scouts of America.
5. They purchased the building three years ago for $80,000. A professional appraiser determined that the fair market value of the home was $96,000 on December 12.
6. Tim and Monica both received corrective eye surgery, at a total cost of $3,000. They also paid $1,900 in health insurance premiums.
7. On June 1, the couple bought a car for $16,000, paying $4,000 down and borrowing $12,000. They paid $750 total interest on the loan in 2011.
8. On June 10, the Nelsons took out a home equity loan of $20,000 to expand their home. They paid a total of $850 interest with their monthly payments on the loan.
9. The Nelsons paid a total of $2,300 interest on their original home loan. They sold stock in Cabinets, Inc. for $5,200, which they purchased for $7,900 in March of the current year. They also sold stock in The Outdoor Corporation for $12,500, which they purchased several years ago for $8,600.
10. Tim incurred the following expenses related to his profession, none of which were reimbursed by his employer:
‘ Subscriptions to medical journals $400
‘ American Medical Association (AMA) annual membership fee $250
11. During the year, the couple paid their former tax advisor $700 to prepare their prior year tax return.
12. The Nelsons do not have children, and they do not provide significant financial support to any family members.
Task:
Compute the Nelson’s taxable income for 2011.
Aug 29, 2021 | Uncategorized
Below is Tim’s Coffee Shop Income Statement for the year for 2008. This is the most recent record Tim has. This year, several large businesses are moving in around his coffee shop and he expects business to increase. Tim needs to create a pro forma profit and loss (income) statement for this year.
Income Earned…………………………. $400,527
Expenses:
Salaries Expenses………………………..$101,600
Rent Expense…………………………….$14,400
Depreciation Expense……………………$12,116
Supplies Expense…………………………$135,827
Lease Expense……………………………$11,987
Tax Expense…………………………….. $40,515
Interest Expense………………………… $615
Insurance Expense………………………..$8,956
Total Expenses $326,016
Net Income $74,511
====================================================================
I need to know if in each area in the pro forma income statement will increase, decrease or stay the same due to large businesses moving into the neighboring buildings into his area and explain the rationale why that line item will increase, decrease or stay the same. Tim serves coffee to many people who work in the area, so he would certainly expect a major increase in his business volume.
This is not looking for dollar figures, primarily your justification on why the line items will change and what direction they will change, if any. You may make assumptions based on the increased sales volume and how it will affect income and expenses, if/when you do make these assumptions, please describe them and their affects on each line item. These are the line items:
Income Earned
Expenses include:
Salaries
Rent
Depreciation
Supplies
Lease (on your refrigerator)
Tax
Interest (on loans currently held)
Insurance
Given what you have assumed and projected, will the total expenses increase or decrease? Why?
Given what you have assumed and projected, will the net profit increase or decrease? Why?
All your help on this will truly be appreciated and valued, as I truly am struggling to understand Accounting.
Aug 29, 2021 | Uncategorized
Titan Corp. has identified the following information:
Cost pools
Material handling $41,040
Machine maintenance 24,600
Cost drivers
Number of material moves 720
Number of machine hours 82,000
1. Calculate Titan’s activity rate for each cost pool. (Round your answers to 2 decimal places. Omit the “$” sign in your response.)
Activity rate
Materials Handling: $__________per material move
Machine Maintenance:$_________per machine hour
2. Determine the total amount of overhead assigned to Titan’s products if they have the following requirements: (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount. Omit the “$” sign in your response.)
Product A Product B
Number of material moves 470 250
Number of machine hours 42,000 40,000
Total overhead assigned
Product A: $___________
Product B: $___________
Aug 29, 2021 | Uncategorized
Titan Corp. has identified the following information:
Cost pools
Material handling $41,040
Machine maintenance 24,600
Cost drivers
Number of material moves 720
Number of machine hours 82,000
2. Determine the total amount of overhead assigned to Titan’s products if they have the following requirements: (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount. Omit the “$” sign in your response.)
Product A Product B
Number of material moves 470 250
Number of machine hours 42,000 40,000
Total overhead assigned
Product A: $___________
Product B: $___________
Aug 29, 2021 | Uncategorized
Tom Loper is an accounting major at a midwestern state university located approximately 60 miles from a major city. Many of the students attending the university are from the metropolitan area and visit their homes regularly on the weekends. Tom, an entrepreneur at heart, realizes that few good commuting alternatives are available for students doing weekend travel. He believes that a weekend commuting service could be organized and run profitably from several suburban and downtown shopping mall locations. Tom has gathered the following investment information.
1. Five used vans would cost a total of $74,300 to purchase and would have a 3 year useful life with negligible salvage value. Tom plans to use straight line depreciation.
2. Ten drivers would have to be employed at a total payroll expense of $47,996.
3. Other annual out of pocket expenses associated with running the commuter service would include Gasoline $16,002, Maintenance $4,306, Repairs $5,006, Insurance $5,201, Advertising $2,496.
4. Tom has visited several financial institutions to discuss funding. The best interest rate he has been able to negotiate is 8%. Use this rate for cost of capital.
5. Tom expects each van to make 10 round trips weekly and carry an average of 6 students each trip. The service is expected to operate 30 weeks each year, and each student will be charged $11.97 for a round trip ticket.
A) Determine the annual (1) net income and (2) net annual cash flows for the commuter service.
Net income= $
Net cash flow= $
B) Compute (1) the cash payback period and (2) the annual rate of return. (Round answers to 2 decimal places, e.g. 10.50.)
Cash payback period= years
Annual rate of return= %
C) What should Tom conclude from these computations? Is the commuter service a wise investment?
Aug 29, 2021 | Uncategorized
The trail balance of Pacilo Security Services Inc. as of January 1, 2016 had the following normal balances
cash 74,210
accounts receivable 13,500
supplies 200
prepaid rent 3,200
merchandise inventory(24@ $265; 1 @$260) 6,620
land 4000
accounts payable 1,950
unearned revenue 900
salaries payable 1,000
common stock 50,000
retained earnings 47,800
During 2016 Pacilio Security Services experienced the following transactions:
1. Paid the salaries payable from 2015.
2. On March 1, 2016, Pacilio established a $100 petty cash fund to handle small expenditures.
3. Paid $4,800 on May 1, 2016, for one year’s lease on the company van in advance.
4. Paid $7,200 on May 2,2016 for one year’s office rent in advance.
5. Purchased $ 400 of supplies on account.
6. Purchased 100 alarm systems for $28,000 cash during the year.
7. Sold 102 alarm systems for $57,120. All sales were on account. (Compute cost of goods sold using the FIFO cost flow method)
8. Paid $2,100 on accounts payable during the year.
9. Replenished the petty cash fund on august 1. At this time, the petty cash fund had only $7 of currency left. It contained the following receipts:office supplies expense$23, cutting grass $55, and miscellaneous $14.
10. Billed $52,000 of monitoring services for the year.
11. Paid installers and other employees a total of $25,000 cash for salaries.
12. Collected $89,300 of accounts receivable during the year.
13. Paid $3,600 of advertising expense during the year.
14. Paid $2,500 of utilities expense for the year.
15. Paid a dividend of $10,000 to the shareholders.
Aug 29, 2021 | Uncategorized
Below are transactions related to Impala Company.
(a) The City of Pebble Beach gives the company 5 acres of land as a plant site. The market value of this land is determined to be $81,000.
(b) 14,000 shares of common stock with a par value of $50 per share are issued in exchange for land and buildings. The property has been appraised at a fair market value of $810,000, of which $180,000 has been allocated to land and $630,000 to buildings. The stock of Impala Company is not listed on any exchange, but a block of 100 shares was sold by a stockholder 12 months ago at $65 per share, and a block of 200 shares was sold by another stockholder 18 months ago at $58 per share.
(c) No entry has been made to remove from the accounts for Materials, Direct Labor, and Overhead the amounts properly chargeable to plant asset accounts for machinery constructed during the year. The following information is given relative to costs of the machinery constructed.
Materials used $12,500
Factory supplies used 900
Direct labor incurred 16,000
Additional overhead (over regular) caused by construction
of machinery, excluding factory supplies used 2,700
Fixed overhead rate applied to regular manufacturing operations 60% of direct labor cost
Cost of similar machinery if it had been purchased from outside suppliers 44,000
Prepare journal entries on the books of Impala Company to record these transactions. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Description/Account Debit Credit
(a) Direct laborMaterialsFactory overheadLandContribution revenueBuildingsCommon stockPaid in capital in excess of parMachinery
Common stockDirect laborMaterialsFactory overheadContribution revenuePaid in capital in excess of parLandBuildingsMachinery
(b) MaterialsDirect laborFactory overheadCommon stockPaid in capital in excess of parMachineryBuildingsLandContribution revenue
Contribution revenueMaterialsCommon stockFactory overheadPaid in capital in excess of parBuildingsMachineryLandDirect labor
LandContribution revenueDirect laborFactory overheadCommon stockBuildingsMachineryPaid in capital in excess of parMaterials
Common stockMachineryBuildingsMaterialsDirect laborFactory overheadPaid in capital in excess of parLandContribution revenue
(c) Paid in capital in excess of parMaterialsContribution revenueDirect laborBuildingsCommon stockFactory overheadMachineryLand
BuildingsCommon stockPaid in capital in excess of parMaterialsContribution revenueFactory overheadDirect laborLandMachinery
Paid in capital in excess of parLandBuildingsFactory overheadContribution revenueCommon stockMaterialsDirect laborMachinery
Factory overheadCommon stockMaterialsBuildingsLandPaid in capital in excess of parMachineryDirect laborContribution revenue
Aug 29, 2021 | Uncategorized
(Treatment of Various Costs)
Allegro Supply Company, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and to Machinery and Equipment.
Abstract company’s fee for title search $ 520
Architect’s fees 3,170
Cash paid for land and dilapidated building thereon 92,000
Removal of old building $20,000
Less: Salvage 5,500
14,500
Interest on short term loans during construction 7,400
Excavation before construction for basement 19,000
Machinery purchased (subject to 2% cash discount,
which was not taken) 65,000
Freight on machinery purchased 1,340
Storage charges on machinery, necessitated by
noncompletion of building when machinery was 2,180
delivered
New building constructed (building construction took 6
months from date of purchase of land and old building) 485,000
Assessment by city for drainage project 1,600
Hauling charges for delivery of machinery from storage to
new building 620
Installation of machinery 2,000
Trees, shrubs, and other landscaping after completion of
building (permanent in nature) 5,400
Determine the amounts that should be debited to Land, to Buildings, and to Machinery and Equipment. Assume the benefits of capitalizing interest during construction exceed the cost of implementation. (If answer is zero, please enter 0, do not leave any fields blank.)
Land Buildings Machinery & Equipment Other
Abstract fee $ $ $ $
Architect’s fees
Cash paid for land and old building
Removal of old building
Interest on loans during construction
Excavation before construction
Machinery purchased
Freight on machinery
Storage charges caused by noncompletion of building
New building
Assessment by city
Hauling charges machinery
Installation machinery
Landscaping
$
$
$
$
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Aug 29, 2021 | Uncategorized
Tyler’s Consulting Company has purchased a new $15,000 copier. This overhead cost will be shared by the purchasing, accounting, and information technology departments since those are the only departments which will be able to access the machine. The company has decided to allocate the cost based on the number of copies made by each department. The copier is estimated to provide 1 million copies over its life. Each division has estimated the number of copies which will be made over the life of the copier.
Purchasing $350,000
Accounting $200,000
Information Tech $400,000
Note: cost allocation is are computed to 4 significant digits.
How much overhead will be allocated each time a copy is made?
a) 63.3333
b).0158
c)66.6657
d).0150
Aug 29, 2021 | Uncategorized
Tytus Co. entered into the following transactions involving short term liabilities in 2010 and 2011.
2010
Apr. 20 Purchased $38,500 of merchandise on credit from Frier, terms are 1y10, ny30. Tytus uses the
perpetual inventory system.
May 19 Replaced the April 20 account payable to Frier with a 90 day, $30,000 note bearing 9% annual
interest along with paying $8,500 in cash.
July 8 Borrowed $60,000 cash from Community Bank by signing a 120 day, 10% interest bearing
note with a face value of $60,000.
___? ____ Paid the amount due on the note to Frier at the maturity date.
___? ____ Paid the amount due on the note to Community Bank at the maturity date.
Nov. 28 Borrowed $21,000 cash from UMB Bank by signing a 60 day, 8% interest bearing note with a
face value of $21,000.
Dec. 31 Recorded an adjusting entry for accrued interest on the note to UMB Bank.
2011
___? ____ Paid the amount due on the note to UMB Bank at the maturity date.
Required
1. Determine the maturity date for each of the three notes described.
2. Determine the interest due at maturity for each of the three notes. (Assume a 360 day year.)
3. Determine the interest expense to be recorded in the adjusting entry at the end of 2010.
4. Determine the interest expense to be recorded in 2011.
5. Prepare journal entries for all the preceding transactions and events for years 2010 and 2011.
Aug 29, 2021 | Uncategorized
Use the following to answer questions 47 49:
Selected financial data for Barnstable Company appear below:
19×9 19×8
(in thousands)
Sales $1,500 $1,200
Operating Expenses 450 400
Interest Expense 75 30
Cost of Goods Sold 900 720
Dividends Declared and Paid 30 0
Question 47: For 19×9, the gross margin as a percentage of sales was:
a 5%.
b 60%.
c 10%.
d 40%.
Question 48: 1 pts For 19×9, the net income before taxes as a percentage of sales was:
For 19×9, the net income before taxes as a percentage of sales was:
a 10%.
b 3%.
c 8%.
d 5%.
Question 49: 1 pts For 19×9, the net operating income as a percentage of sales was:
For 19×9, the net operating income as a percentage of sales was:
a 70%.
b 8%.
c 10%.
d 40%.
Aug 29, 2021 | Uncategorized
Use the following to answer questions 47 49:
Selected financial data for Barnstable Company appear below:
19×9 19×8
(in thousands)
Sales $1,500 $1,200
Operating Expenses 450 400
Interest Expense 75 30
Cost of Goods Sold 900 720
Dividends Declared and Paid 30 0
For 19×9, the gross margin as a percentage of sales was:
a 5%.
b 60%.
c 10%.
d 40%.
Question 48: 1 pts For 19×9, the net income before taxes as a percentage of sales was:
For 19×9, the net income before taxes as a percentage of sales was:
a 10%.
b 3%.
c 8%.
d 5%.
Question 49: 1 pts For 19×9, the net operating income as a percentage of sales was:
For 19×9, the net operating income as a percentage of sales was:
a 70%.
b 8%.
c 10%.
d 40%.
Aug 29, 2021 | Uncategorized
Assume that a plant has two categories of overhead: material handling and quality inspection. The costs expected for these categories for the coming year are as follows.
|
Material handling
|
$100,000
|
|
Quality inspection
|
300,000
|
The plant currently applies overhead using direct labor hours and expected actual capacity.
This figure is 50,000 direct labor hours.
The plant manager has been asked to submit a bid and has assembled the following data
on the proposed job:
| |
Potential Job
|
|
Direct materials
|
$3,700
|
|
Direct labor (1,000 hours)
|
$7,000
|
|
Overhead
|
$?
|
|
Number of material moves
|
10
|
|
Number of inspections
|
5
|
The manager has been told that many competitors use an ABC approach to assign
overhead to jobs. Before submitting his bid, he wants to assess the effects of this alternative
approach. He estimates that the expected number of material moves for all jobs during the year
is 1,OOO; he also expects 5,000 quality inspections to be performed.
(a) Compute the total cost of the potential job using direct labor hours to assign overhead.
Assuming the bid price is full manufacturing cost plus 25 percent, what would be the
manager’s bid?
(b) Compute the total cost of the job using the number of material moves to allocate
material handling costs and the number of inspections to allocate the quality inspection
costs. Assuming a bid price of full manufacturing cost plus 25 percent, what should be his
bid using this approach?
(c) Which approach do you think best reflects the actual cost of the job? Explain.
Aug 29, 2021 | Uncategorized
Alfred Autoparts, Inc., previously used a cost system that allocated all factory overhead costs
to products based on 350 percent of direct labor cost. The company has just implemented an
ABC system that traces indirect costs to products based on consumption of major activities as
indicated below. Compare the total annual costs of Product X using both the traditional
volume based and the new ABC systems.
| |
Annual Cost Driver
|
|
Product X Cost
|
|
Activity
|
Quantity
|
cost
|
Driver Consumption
|
|
Labor
Machining
Setup
Production order
Material handling
Parts administration
|
$300,000
20,000 hours
10,000 hours
2,000 orders
1,000 requisitions
12,000 parts
|
$ 30,000
$500,000
$100,000
$200,000
$ 20,000
$480,000
|
$10,000
800 hours
100 hours
12 orders
5 requisitions
18 parts
|
Aug 29, 2021 | Uncategorized
The following information pertains to Omni, Inc., for 19×8:
|
Sales
|
$30,000,000
|
|
External failure costs
|
900,000
|
|
Internal failure costs
|
1,800,000
|
|
Prevention costs
|
400,000
|
|
Appraisal costs
|
600,000
|
1. Calculate each category of quality costs as a percentage of sales.
2. Calculate total quality costs as a percentage of sales.
3. If quality costs were reduced to 2.5 percent of sales, determine the increase in profit that
would result.
Aug 29, 2021 | Uncategorized
In 19×9, Allison Foods Company instituted a quality improvement program. At the end of
19×9, the management of the corporation requested a report to show the amount saved by the
measures taken during the year. The actual sales and (actual quality costs for 19×8 and 19×9 were:
| |
19×8
|
19×9
|
|
Sales
|
$500,000
|
$600,000
|
|
Scrap
|
15,000
|
15,000
|
|
Rework
|
20,000
|
10,000
|
|
Training program
|
5,000
|
6,000
|
|
Consumer complaints
|
10,000
|
5,000
|
|
Lost sales, incorrect labeling
|
8,000
|
|
|
Test labor
|
12,000
|
8,000
|
|
Inspection labor
|
25,000
|
24,000
|
|
Supplier evaluation
|
15,000
|
13,000
|
Prepare the one year trend report that corporate management requested. How much did profits increase because of quality improvements made in 19×9 (assuming that all reductions in quality costs are attributable to quality improvements)?
Aug 29, 2021 | Uncategorized
Eastmark Stores wants to estimate cash disbursements for cash budgeting purposes for the first three months of 19B from the data given below.
(a)Cost of merchandise sold, estimated:
|
19A, December
|
$225,000
|
|
|
19B, January
|
250,000
|
|
|
February
|
280,000
|
|
|
March
|
210,000
|
|
Thirty five percent of the cost of merchandise is to be paid for in the month of sale, and
65 percent of the cost is to be paid for in the month following the month of sale.
(b) Wages for each month are estimated as follows:
|
19A, December
|
$23,000
|
|
|
19B, January
|
26,000
|
|
|
February
|
31,000
|
|
|
March
|
210,000
|
|
Wages are all paid as incurred.
(c) Utilities are to be paid every other month at the amount of $320 per month. The first payment is to be made in February.
(d)Six months’rent and insurance amounting to a total of $9,700 is to be paid in January.
(e)An income tax of $12,500 is to be paid in March.
(f)Depreciation on office equipment has been estimated at $7,500 for the year.
(g)New equipment costing $50,000 is to be acquired in February with a down payment of
$4,000 required at date of purchase.
(h)Other operating expenses have been estimated at $2,250 per month, which is to be paid each month.
Prepare a cash disbursement budget for each of the first three months of 19B.
Aug 29, 2021 | Uncategorized
Kinsman, a retailer, provides the following data for 19A and 19B:
| |
December 31, 19A
|
December 31, 19B
|
|
Cash
|
$200,000
|
|
|
Trade accounts receivable
|
84,000
|
$ 78,000
|
|
Merchandise inventory
|
150,000
|
140,000
|
|
Accounts payable merchandise
|
(95,000)
|
(98,000)
|
Budgeted sales for 19B are $1,200,000; sales for 19A were $1,100,000. Cash sales average 20 percent of total sales each year. Cost of goods sold for 19B is estimated to be $840,000. Budgeted 19B variable operating expenses are $120,000. They vary in proportion to sales and are paid 50 percent in the year incurred and 50 percent the following year. Unpaid variable expenses are not included in accounts payable above. Fixed operating expenses, including $35,000 depreciation and $5,000 uncollectible accounts expense, total $100,000 per year. Such expenses involving cash payments are paid 80 percent in the year incurred and 20 percent the following year. Unpaid fixed expenses are not included in
accounts payable above. Prepare a cash budget for 19B with supporting computations on cash collections from credit sales and cash disbursements for purchases of merchandise and operating expenses.
Aug 29, 2021 | Uncategorized
Cho 6 6 usa9A INTERNATIONAL COLLEGE OF THE CAYMAN ISLANDS
BE440 — ADVANCED ACCOUNTING — Assignment I
Pollek Corporation paid $16,200 for a 90% interest in Swamp Corporation on January 1, 2011, when Swamp stockholders’ equity consisted of $10,000 Capital Stock and $3,000 of Retained Earnings. The excess cost over book value was attributable to goodwill.
Additional information:
1. Pollek sells merchandise to Swamp at 120% of Pollek’s cost. During 2011, Pollek’s sales to Swamp were $4,800, of which half of the merchandise remained in Swamp’s inventory at December 31, 2011. (The 2011 ending inventory was sold in 2012.) During 2012, Pollek’s sales to Swamp were $6,000 of which 60% remained in Swamp’s inventory at December 31, 2012. At year end 2012, Swamp owed Pollek $1,500 for the inventory purchased during 2012.
2. Pollek Corporation sold equipment with a book value of $2,000 and a remaining useful life of four years and no salvage value to Swamp Corporation on January 1, 2012 for $2,800. Straight line depreciation is used.
3. Separate company financial statements for Pollek Corporation and Subsidiary at December 31, 2012 are summarized in the first two columns of the consolidation working papers.
4. The following information is available for 2011:
Swamp’s income Swamp’s dividends received by Pollek
$4,000 $1,800
Aug 29, 2021 | Uncategorized
Go to each company’s website and review the most recent financial statements for each company and answer the following questions.
- What accounting standards are used?
- What auditing standards are used by the external auditors?
- Analyze and comment on the differences in the annual statements found on the companies’ websites. Provide a few specific differences in content and format.
- How comparable are these financial statements?
- Prepare a table for a period of three years showing some key financial information for the two companies. Include at least four items from the balance sheet, four items from the income statement, and four items from the statement of cash flow. Having reviewed and analyzed the financial information, please elaborate on the following three questions.
- Which one of the two companies is the most profitable?
- Compare growth of revenues versus income over time and between the two companies
- How can you explain the difference in profitability between the two companies?
- Indicate in detail the information you used to answer the above questions.
Modular Case Assignment Expectations
It is important to answer the questions as posed.The discussion should be from 3 to 5 pages and written in a clear and concise manner. Support your discussion with references in APA format. You are encouraged to use Excel or other compatible spreadsheet when computations are involved.
Aug 29, 2021 | Uncategorized
Indiana Jones Company had the following selected transactions.
Feb. 1 Signs a $50,000, 6 month, 9% interest bearing note payable to CitiBank and receives $50,000 in cash.
10 Cash register sales total $43,200, which includes an 8% sales tax.
28 The payroll for the month consists of salaries and wages of $50,000. All wages are subject to 8% FICA taxes. A total of $8,900 federal income taxes are withheld. The salaries are paid on March 1.
28 The company develops the following adjustment data.
1. Interest expense of $375 has been incurred on the note. 2. Employer payroll taxes include 8% FICA taxes, a 5.4% state unemployment tax, and a 0.8% federal unemployment tax.
3. Some sales were made under warranty. Of the units sold under warranty, 350 are expected to become defective. Repair costs are estimated to be $40 per unit.
Instructions
(a) Journalize the February transactions.
(b) Journalize the adjusting entries at February 28.
Aug 29, 2021 | Uncategorized
The partners of Grafton Company have decided to liquidate their business. Noncash assets were sold for $115,000. The income ratios of the partners Kale D., Croix D., and Marais K. are 2:3:3, respectively. Complete the following schedule of cash payments for Grafton Company.
GRAFTON Company
| |
A
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B
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C
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D
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E
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F
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G
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H
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I
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J
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K
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L
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1
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Item
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Cash
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+
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Noncash assets
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=
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Liabilities
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+
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Kale D.,
Capital
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+
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Croix D.,
Capital
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+
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Marais K.,
Capital
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2
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Balances before liquidation
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10,000
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85,000
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40,000
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15,000
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35,000
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5,000
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3
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Sale of noncash assets
and allocation of gain
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4
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New balances
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5
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Pay liabilities
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6
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New balance
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7
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Cash distribution to
Partners
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8
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Final balances
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Aug 29, 2021 | Uncategorized
On January 1, 2012, Siena Corporation purchased 2,000 shares of treasury stock. Other information regarding Siena Corporation is provided below.
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2011
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2012
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Net income
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$110,000
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$110,000
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Dividends on preferred stock
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$10,000
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$10,000
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Dividends on common stock
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$2,000
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$1,600
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Weighted average number of shares outstanding
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10,000
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8,000*
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Common stockholders’ equity, beginning of year
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$500,000
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$400,000*
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Common stockholders’ equity, end of year
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$500,000
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$400,000
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*Adjusted for purchase of treasury stock.
Compute (a) return on common stockholders’ equity for each year and (b) earnings
per share for each year, and (c) discuss the changes in each.
Aug 29, 2021 | Uncategorized
1. The following information is available for Keystone Manufacturing Company.
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March 1
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March 31
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Raw material inventory
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$12,000
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$10,000
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Work in process inventory
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2,500
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4,000
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Materials purchased in March
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$ 90,000
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Direct labor in March
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75,000
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|
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Manufacturing overhead in March
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220,000
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Prepare the cost of goods manufactured schedule for the month of March.
Aug 29, 2021 | Uncategorized
The fabricating department has the following production and cost data for the current month.
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Beginning
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Units
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Ending
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Work in Process
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Transferred Out
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Work in Process
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–0–
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15,000
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10,000
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Materials are entered at the beginning of the process.The ending work in process units are 30% complete as to conversion costs. Compute the equivalent units of production for (a) materials and (b) conversion costs.
Aug 29, 2021 | Uncategorized
1. Indicate whether each of the following statements is true or false. JIT AND ABC
1. Continuous process manufacturing often results in a reduction of inventory.
2. Companies that use just in time processing complete and store finished goods all the time to meet rush orders from customers.
3. A major benefit of just in time processing is production cost savings from the improved flow of goods through the processes.
4. An ABC system is similar to traditional costing systems in accounting for manufacturing costs but differs in regard to period costs.
5. The primary benefit of ABC is more accurate and meaningful costs.
6.
In recent years, the amount of direct labor used in many industries has greatly increased and total overhead costs have significantly decreased.
Aug 29, 2021 | Uncategorized
Helena Company reports the following total costs at two levels of production.
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10,000 Units
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20,000 Units
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Direct materials
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$20,000
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$40,000
|
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Maintenance
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8,000
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10,000
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Direct labor
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17,000
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34,000
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Indirect materials
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1,000
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2,000
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Depreciation
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4,000
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4,000
|
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Utilities
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3,000
|
5,000
|
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Rent
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6,000
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6,000
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Classify each cost as variable, fixed, or mixed.
Aug 29, 2021 | Uncategorized
Byrnes Company accumulates the following data concerning a mixed cost, using units produced as the activity level.
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Units Produced
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Total Cost
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March
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9,800
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$14,740
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April
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8,500
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13,250
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May
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7,000
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11,100
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June
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7,600
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12,000
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July
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8,100
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12,460
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(a) Compute the variable and fixed cost elements using the high low method.
(b)
Estimate the total cost if the company produces 6,000 units.
Aug 29, 2021 | Uncategorized
B.T. Hernandez Company, maker of high quality flashlights, has experienced steady growth over the last 6 years. However, increased competition has led Mr. Hernandez, the president, to believe that an aggressive campaign is needed next year to maintain the company’s present growth.The company’s accountant has presented Mr. Hernandez with the following data for the current year, 2010, for use in preparing next year’s advertising campaign. Cost Schedules Variable costs Direct labor per flashlight $ 8.00 Direct materials 4.00 V ariable overhead 3.00 V ariable cost per flashlight $15.00 Fixed costs Manufacturing $ 25,000 Selling 40,000 Administrative 70,000 Total fixed costs $135,000 Selling price per flashlight $25.00 Expected sales, 2010 (20,000 flashlights) $500,000 Mr. Hernandez has set the sales target for the year 2011 at a level of $550,000 (22,000 flashlights). Instructions (Ignore any income tax considerations .) (a) What is the projected operating income for 2010? (b) What is the contribution margin per unit for 2010? (c) What is the break even point in units for 2010? (d) Mr. Hernandez believes that to attain the sales target in the year 2011, the company must incur an additional selling expense of $10,000 for advertising in 2011, with all other costs remaining constant. What will be the break even point in dollar sales for 2011 if the company spends the additional $10,000? (e) If the company spends the additional $10,000 for advertising in 2011, what is the sales level in dollars required to equal 2010 operating income?
Aug 29, 2021 | Uncategorized
1. Use this list of terms to complete the sentences that follow .
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Long range planning
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Participative budgeting
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Sales forecast
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Operating budgets
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Master budget
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Financial budgets
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1. A ________________ shows potential sales for the industry and a company’s expected share of such sales .
2. __________________ are used as the basis for the preparation of the budgeted income statement.
3. The _______________ is a set of interrelated budgets that constitutes a plan of action for a specified time period.
4. ___________________ identifies long term goals, selects strategies to achieve these goals , and develops policies and plans to implement the strategies .
5. Lower level managers are more likely to perceive results as fair and achievable under a ________________ approach.
6. ___________________ focus primarily on the cash resources needed to fund expected operations and planned capital expenditures.
Aug 29, 2021 | Uncategorized
The Sweetwater Candy Company would like to buy a new machine that would automatically “dip” chocolates. The dipping operation is currently done largely by hand. The machine the company is considering costs $125,000. The manufacturer estimates that the machine would be usable for 10 years. After 10 years, the machine could be sold for $7,500.
The company estimates that the cost to operate the machine will be $7,000 per year. The present method of dipping chocolates costs $30,000 per year. In addition to reducing costs, the new machine will increase production by 6,000 boxes of chocolates per year. The company realizes a contribution margin of $1.50 per box. A 20% rate of return is required on all investments. (Ignore income taxes.)
What are the annual net cash inflows that will be provided by the new dipping machine?
Compute the new machine’s net present value
Aug 29, 2021 | Uncategorized
Swift Corp., a capital goods manufacturing business that started on January 4, 2012, and operates on a calendar year basis, uses the installment sales method of profit recognition in accounting for all its sales. The following data were taken from the 2012 and 2013 records.
2012 2013
Installment sales $480,000 $620,000
Gross profit as a percent of costs 25% 28%
Cash collections on sales of 2012 $130,000 $240,000
Cash collections on sales of 2013 ‘0’ $ 160,000
The amounts given for cash collections exclude amounts collected for interest charges.
Instructions
(a)
Compute the amount of realized gross profit to be recognized on the 2013 income statement, prepared using the installment sales method. (Round percentages to three decimal places.)
(b)
State where the balance of Deferred Gross Profit would be reported on the financial statements for 2013.
(c)
Compute the amount of realized gross profit to be recognized on the income statement, prepared using the cost recovery method.
(CIA adapted)
Aug 29, 2021 | Uncategorized
The Barker Company manufactures two models of adding machines, A and B. The following production and sales data for the month of June are given for 19A:
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A
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B
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Estimated inventory (units) June 1
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4,500
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2,250
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Desired inventory (units) June 30
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4,000
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2,500
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Expected sales volume (units)
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7,500
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5,000
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Unit sales price
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$75
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$120
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Prepare a sales budget and a production budget for June 19A.
Aug 29, 2021 | Uncategorized
The following data on production, materials required for products X and Y, and inventory pertain to the budget of LMN Company:
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Product X
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Product Y
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Production (units)
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2,000
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3,000
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Materials (units)
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A
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3.0
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3,000
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B
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4.0
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6.5
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Beginning
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Desired Ending
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Price/Unit
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Materials inventory:
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|
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A
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2,000
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3,000
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$2
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B
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6,000
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6,000
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1.20
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(a) Determine the number of material units needed to produce products X and Y.
(b) Calculate the cost of materials used for production.
(c) Determine the number of material units to be purchased.
(d) Calculate the cost of materials to be purchased.
Aug 29, 2021 | Uncategorized
A sales budget for the first five months of 19A is given for a particular product line manufactured by Kaehler Co. Ltd.:
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Sales Budget
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in Units
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January
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10,800
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February
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15,600
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March
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12,2!00
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April
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10,400
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May
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9,800
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The inventory of finished products at the end of each month is to be equal to 25 percent of the sales estimate for the next month. On January I , there were 2,700 units of product on hand. No work is in process at the end of any month.
Each unit of product requires two types of materials in the following quantities:
Material A: 4 units
Material B: 5 units
Materials equal to one half of the next month’s requirements are to be on hand at the end of each month. This requirement was met on January 1, 19A. Prepare a budget showing the quantities of each type of material to be purchased each month for the first quarter of 19A.
Aug 29, 2021 | Uncategorized
Long Beach Tools Corporation has the following direct labor requirements for the production of a machine tool set:
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Direct Labor
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Required Time
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Hourly Rate
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Machining
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6
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10
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Assembly
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10
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8
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Forecasted sales for June, July, August, and September are 6,000, 5,000, 8,000, and 7,000 units, respectively. June 1 beginning inventory of the tool set was 1,500. The desired ending inventory each month is one half of the forecasted sales for the following month.
1. Prepare a production budget for the months of June, July, and August.
2. Develop a direct labor budget for the months of June, July, and August and for each type of direct labor.
Aug 29, 2021 | Uncategorized
The following data are given for Erich From Stores:
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September
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October
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November
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December
|
| |
Actual
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Actual
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Estimated
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Estimated
|
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Cash sales
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$ 7,000
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$ 6,000
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$ 8,000
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$ 6,000
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Credit sales
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50,000
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48,000
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62,000
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80,000
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Total sales
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57,000
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54,000
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70,000
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86,000
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Past experience indicates that net collections normally occur in the following pattern:
No collections are made in the month of sale.
Eighty percent of the sales of any month are collected in the following month.
Nineteen percent of sales are collected in the second following month.
One percent of sales are uncollectible.
1. Calculate the total cash receipts for November and December.
2. Compute the accounts receivable balance at November 30 if the October 31 balance is
$50,000
Aug 29, 2021 | Uncategorized
The treasurer of John Loyde Company plans for the company to have a cash balance of $91,000 on March 1. Sales during March are estimated at $900,000. February sales amounted to $600,000, and January sales amounted to $500,000. Cash payments for March have been budgeted at $580,000. Cash collections have been estimated as follows:
Sixty percent of the sales for the month to be collected during the month.
Thirty percent of the sales for the preceding month to be collected during the month.
Eight percent of the sales for the second preceding month to be collected during the
month.
The treasurer plans to accelerate collections by allowing a 2 percent discount for prompt payment. With the discount policy, she expects to collect 70 percent of the current sales and will permit the discount reduction on these collections. Sales of the preceding month will be collected to the extent of 15 percent with no discount allowed, and 10 percent of the sales of the second preceding month will be collected with no discount allowed. This pattern of collection can be expected in subsequent months. During the transitional month of March, collections may run somewhat higher. However, the treasurer prefers to estimate collections on the basis of the new pattern so that the estimates will be somewhat conservative.
1. Estimate cash collections for March and the cash balance at March 31 under the present policy and under the discount policy.
2. Is the discount policy desirable?
1.
| |
Under the present policy
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Under the discount policy
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Balance, March 1
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$ 91,000
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$ 91,000
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|
Collections:
|
|
|
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From March sales
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540,000 ($900,000 X 60%:
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617,400″”
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From Feb. sales
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180,000 ($600,000 X 30%;
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90,000 ($600,000 X 15%)
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From Jan. sales
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40,000 ($500,000X 8%)
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50,000 ($500,000 X 10%)
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Total cash available
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$85 1,000
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$848,400
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Less: Disbursements
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580,000
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580,000
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Balance, March 31
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$271,000
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$268,400
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*$900,000 X 70% X 98% $617,400
2.No, &cause under the discount policy, the March 31 cash balance will be smaller.
The following information pertains to merchandise purchased by Westwood Plumbing Company
for July, August, September, and October. During the month, 60 percent of the merchandise to
be sold during the following month is purchased. The balance of the merchandise is purchased
during the month. Gross margin averages 20 percent of sales.
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|
Purchases
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|
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For the following
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For the current month
|
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July
|
$ 87,000
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$ 92,000
|
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August
|
96,000
|
100,000
|
|
September
|
120,000
|
89,000
|
|
October
|
110,000
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92,000
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Estimate the sales revenue for August, September, and October.
Aug 29, 2021 | Uncategorized
The Moore Distributor Company, Inc., has just received a franchise to distribute dishwashers. The company started business on January 1, 19A, with the following assets:
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Cash
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$45,000
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|
Inventory
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94,000
|
|
Warehouse, office, and delivery facilities and equipment
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80,000
|
All facilities and equipment have a useful life of 20 years and no residual value. First quarter sales are expected to be $360,000 and should be doubled in the second quarter. Third quarter sales are expected to be $1,080,000. One percent of sales are considered to be uncollectible. The gross profit margin should be 30 percent. Variable selling expenses (except uncollectible accounts) are budgeted at 12 percent of sales and fixed selling expenses at $48,000
per quarter, exclusive of depreciation. Variable administrative expenses are expected to be 3
percent of sales, and fixed administrative expenses should total $34,200 per quarter, exclusive
of depreciation. Prepare a budgeted income statement for the second quarter of 19A.
(CGA, adapted)
Aug 29, 2021 | Uncategorized
Over the past several years the Programme Corporation has encountered difficulties estimating
its cash flows. The result has been a rather strained relationship with its banker. Programme’s controller would like to develop a means by which he can forecast the firm’s monthly operating cash flows. The following data were gathered to facilitate the development of such a forecast.
1. Sales have been increased and are expected to increase at 0.5 percent each month.
2. Thirty percent of each month’s sales are for cash; the other 70 percent are on open account.
3. Of the credit sales, 80 percent are collected in the first month following the sale and the remaining 20 percent are collected in the second month. There are no bad debts.
4. Gross margin on sales averages 25 percent.
5. Programme purchases enough inventory each month to cover the following month’s sales.
6. All inventory purchases are paid for in the month of purchase at a 2 percent cash discount.
7. Monthly expenses are: payroll, $1,500; rent, $400; depreciation, $120; other cash expenses, 1percent of that month’s sales. There are no accruals.
8. Ignore the effects of corporate income taxes, dividends, and equipment acquisitions. Using the data above, develop a mathematical model the controller can use for his calculations. Your model should be capable of calculating the monthly operating cash inflows and outflows for any specified month.
(CMA, adapted)
Aug 29, 2021 | Uncategorized
1. Consider the following:
| |
000s omitted
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|
| |
Division A
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Division B
|
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Operating assets
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$5,000
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$12,500
|
|
Operating income
|
$1,000
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$ 2,250
|
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ROI
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20%
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18%
|
1. Which is the more successful division in terms of KOI?
2. Using 16 percent as the minimum required rate of return, compute the residual income for
each division. Which division is more successful under this rate?
Aug 29, 2021 | Uncategorized
Consider the following sales and operating data for the three divisions of a conglomerate:
| |
Division A
|
Division C
|
Division C
|
|
Sales
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$140,000
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$180,000
|
$250,000
|
|
Operating income
|
$ 5,000
|
$ 6,300
|
$ 14,400
|
|
Operating assets
|
$ 20,000
|
$ 35,000
|
$ 90,000
|
|
Minimum required rate of return
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10%
|
19%
|
20%
|
(a) Compute the return on investment (ROI) for each division.
(b) Assume that each division is provided with an investment opportunity that could produce
20 percent return on investment. Which divisions would accept or reject it?
Aug 29, 2021 | Uncategorized
The Domino Company has two decentralized divisions, A and B. Division A has always
purchased certain units from Division B at $75 per unit. Because Division B plans to raise the
price to $100 per unit, Division A desires to purchase these units from outside suppliers for $75
per unit. Ilivision B’s costs follow:
|
Division B’s variable costs per unit
|
$70
|
|
Division B’s annual fixed costs
|
$15,000
|
|
Division A’s purchase
|
1,000 units
|
If Division A buys from an outside supplier, the facilities Division B uses to manufacture these
units will remain idle. Would it be more profitable for the company to enforce the $100 transfer price
than to allow Division A to buy from outside suppliers at $75 per unit?
Aug 29, 2021 | Uncategorized
The Sattle Automobile Company has just acquired a battery division. The company’s motor
division is presently purchasing 100,000 batteries each year from Bendox Corporation at the
price of $24 per battery. Through the acquisition of the battery division top management now feels that the company’s motor division should begin to purchase its batteries from the newly
acquired battery division. The battery division’s cost per battery is as follows:
|
Direct materials
|
$12
|
|
Direct labor
|
4
|
|
Variable overhead
|
2
|
|
Fixed overhead
|
2*
|
|
Total unit cost
|
$20
|
Top management wishes to decide on the transfer price to be charged on the intracompany
transfers.
1.Explain why each of the following would or would riot be an appropriate transfer price:
(a) $24
(b) $20
(c) $21
(d) $18
2. Assuming that the battery division is operating at full capacity, explain why each of the
transfer prices given in parts l(a) through l(d) would or would not be an appropriate
price.
Aug 29, 2021 | Uncategorized
The Ajax division of Gunnco Corporation, operating at capacity, has been asked by the Defco
division of Gunnco to supply it with electrical fitting no. 1726. Ajax sells this part to its regular
customers for $7.50 each. Defco, which is operating at 50 percent capacity, is willing to pay $5
each for the fitting. Defco will put the fitting into a brake unit that it is manufacturing on
essentially a cost plus basis for a commercial airplane manufacturer.
Ajax has a variable cost of producing fitting no. 1726 of $4.25. The cost of the brake unit
as being built by Defco follows:
|
Purchased parts (outside vendors)
|
$22.50
|
|
Ajax fitting no. 1726
|
5.00
|
|
Other variable costs
|
14.00
|
|
Fixed overhead and administration
|
8.00
|
| |
$49.50
|
Defco believes the price concession is necessary to get the job.
The company uses return on investment and dollar profits in the measurement of division
and division manager performance.
1. Assume that you are the division controller of Ajax. Would you recommend that Ajax
supply fitting no. 1726 to Defco? Why or why not? (Ignore any tax issues.)
2. Would it be to the short run economic advantage of the Gunnco Corporation for the Ajax
division to supply the Defco division with fitting no. 1726 at $5 each? (Ignore any tax
issues.)
3. Discuss the organizational and manager behavior difficulties, if any, inherent in this
situation.
As the Gunnco controller, what would you advise the Gunnco Corporation president do in
this situation?
(CMA, adapted)
Aug 29, 2021 | Uncategorized
The purchasing agent responsible for ordering cotton underwear for Ace Retail Stores has come up with the following information:
Sol:
|
Maximum daily usage
|
100 packages
|
|
Average daily usage
|
80 packages
|
|
Lead time
|
9 days
|
|
Economic order quantity
|
3,500 packages
|
1. Compute the safety stock.
2. Calculate the reorder point.
|
Maximum daily usage
|
100 packages
|
|
Average daily usage
|
80
|
|
Excess
|
20
|
|
Lead time
|
X9 days
|
|
Safety stock
|
180 packages
|
2. Reorder point = Average usage during lead time + Safety stock
= 80 packages X 9 days + 180 packages = 720 + 180 = 900 packages
Harrington &Sons, Inc., would like to determine the safety stock to maintain for a product so
that the lowest combination of stockout cost and carrying cost will result. Each stockout will
cost $75; the carrying cost for each safety stock unit will be $1;the product will be ordered five
times a year. The following probabilities of running out of stock during an order period are
associated with various safety stock levels:
|
Safety Stock Level
|
Probability of Stock out
|
|
10 units
|
40%
|
|
20
|
20
|
|
40
|
10
|
|
80
|
5
|
Using the expected value approach, determine the safety stock level.
Aug 29, 2021 | Uncategorized
The Polly Company wishes to determine the amount of safety stock that it should maintain for product D that will result in the lowest cost. The following information is available:
|
Stockout cost
|
$80 per occurrence
|
|
Carrying cost of safety stock
|
$2 per unit
|
|
Number of purchase orders
|
5 per year
|
The available options open to Polly are as follows:
|
Units of Safety Stock
|
Probability of Running Out of Safety Stock
|
|
1. 20
|
40%
|
|
2. 40
|
20
|
|
3. 50
|
10
|
|
4. 55
|
5
|
What is the optimal amount of safety stock?
Aug 29, 2021 | Uncategorized
Stanley Electronics Products, Inc., finds that new product production is affected by an 80 percent learning effect. The company has just produced SO units of output at 100 hours per unit. Costs were as follows:
|
Materials @ $20
|
$1,000
|
|
Labor and labor related costs:
|
|
|
Direct labor 100 hours @ $8
|
800
|
|
Variable overhead 100 hours 0 $2
|
200
|
| |
$2,000
|
The company has just received a contract calling for another SO units of production. It wants
to add a 50 percent markup to the cost of materials and labor and labor related costs. Determine the price for this job.
Aug 29, 2021 | Uncategorized
The Carson Company makes two products, X and Y. Their contribution margins are $50 and
$90, respectively. Each product goes through three processes: cutting, finishing, and painting.
The number of hours required by each process for each product and capacities available are
given below:
| |
|
Hours Rewired in Each Process
|
|
|
Product
|
Cutting
|
Finishing
|
Painting
|
|
X
|
2
|
4
|
3
|
|
Y
|
1
|
6
|
2
|
|
Capacities in hours
|
300
|
500
|
250
|
Formulate the objective function and constraints to determine the optimal product mix.
Aug 29, 2021 | Uncategorized
The Oriental Quality Company produces either of two products as follows:
| |
Daily Capacity in Units
|
|
|
|
Product
|
Dept. X
|
Dept. Y
|
unit Contribution Margin
|
|
A
|
400
|
150
|
$12
|
| |
or
|
Or
|
|
|
B
|
200
|
450
|
21
|
There is a maximum demand of 175 units per day for product A. Develop the objective function and constraints:
(a) Maximum total contribution margin .
(b) Dept. X constraint
(c) Dept. Y constraint
(d) Market demand constraint
(e) Non negative constraint
Aug 29, 2021 | Uncategorized
Thunderbird uses a job order cost system and applies factory overhead to production orders on the basis of direct labor costs. The overhead rates for ‘19×9 are 200 percent for Department A and 50 percent for Department B. Job 123, started and completed during 19×9, was charged with the following costs:
| |
Department
|
|
| |
A
|
B
|
|
Direct materials
|
$25,000
|
$ 5,000
|
|
Direct labor
|
?
|
30,000
|
|
Factory overhead
|
40,000
|
?
|
Determine the total manufacturing costs assigned to Job 123.
Aug 29, 2021 | Uncategorized
The quantity schedule for Department 2 at the Jelenick Transport Company for the month of June 19x2is shown below.
| |
Quantities
|
|
Units in process at beginning (all materials; conversion)
|
8,000
|
|
Units started
|
76,000
|
|
Units transferred to next department
|
78,000
|
|
Units still in process (all materials; V3 conversion)
|
6,000
|
Compute the equivalent production units for material and conversion costs (labor and factory overheadj for the month, under (a) FIFO, and (b) weighted average cost.
Aug 29, 2021 | Uncategorized
1. The controller of the Connecticut Electronics Company believes that the identification of the variable and fixed components of the firm’s costs will enable the firm to make better planning and control decisions. Among the costs the controller is concerned about is the behavior of indirect supplies expense. He believes that there is some correlation between the machine hours worked and the amount of indirect supplies used. A member of the controller’s staff has suggested that a simple linear regression model be used to determine the cost behavior of indirect supplies. The regression equation shown below was developed from 40 pairs of observations using the method of least squares. The regression equation and related measures are
S = $200 + $4H
where S = total monthly costs of indirect supplies
H = machine hours per month
Standard error of the estimate (s,) = 100
Coefficient of determination (r2)= 0.7569
1. When a simple linear regression model is used to make inferences about a population
relationship from sample data, what assumptions must be made before the inferences can
be accepted as valid?
2. Assume the assumptions identified in part 1are satisfied for the indirect supplies expense
of the company.
(a) Explain the meaning of “200” and “4” in the equation S = $200 + $4H.
(b) Calculate the estimated cost of indirect supplies if 900 machine hours are to be used
during a month.
(c)
In addition to the estimate for the cost of indirect supplies, the controller would like
the range of values for the estimate if a 95 percent confidence interval is specified. He
would use this range to judge whether the estimated costs indicated by the regression
analysis were good enough for planning purposes. Calculate, for 900 machine hours,
the range of the estimate for the cost of indirect supplies with a 95 percent confidence
interval.
3. Explain briefly what the value of the coefficient of determination (r2)indicates in this case
if the company wishes to predict the total cost of indirect supplies on the basis of estimated
machine hours.
(CMA, adapted)
Aug 29, 2021 | Uncategorized
For the month of August 19A, Updike Co. presented the following income statement:
UPDIKE CO.
Income Statement
For the Month Ended August 31, 19A
|
Sales (1,000 units @ $50)
|
$50,000
|
|
Less: Cost of Goods Sold (60% variable)
|
20,000
|
|
Gross Margin
|
$30,000
|
|
Less: Operating Expenses
|
|
|
Selling and Administrative (30% variable)
|
25,000
|
|
Net Income
|
$ 5,000
|
Recast the income statement in contribution format.
Aug 29, 2021 | Uncategorized
1. Assume the following data concerning the operation of the Mambo Company for the month of September:
|
Number of units sold
|
100
|
|
Selling price per unit
|
$20
|
|
Variable manufacturing costs/unit
|
$5
|
|
Fixed manufacturing costs
|
$300
|
|
Variable selling and administrative cost/unit
|
$4
|
|
Fixed selling and administrative cost
|
$110
|
Prepare an income statement for the month of September, using the traditional and contribution formats.
Aug 29, 2021 | Uncategorized
The following information pertains to the budget of Quality Products, Inc., for the next year:
|
Sales
|
$50,000,000
|
|
Variable expenses
|
45,000,000
|
|
Fixed costs
|
3,000,000
|
|
(a) 10 percent increase in sales volume
|
(d) 10 percent increase in variable expenses
|
|
(b) 10 percent increase in fixed costs
|
(e) 15 percent increase in fixed costs and 15 percent decrease in variable expenses
|
|
(c) 10 percent decrease in sales volume
|
|
Aug 29, 2021 | Uncategorized
For each of the following cases, find the missing amounts:
| |
Sales in Units
|
Sales in Dollars
|
Variable Expenses
|
Contribution Margin per unit
|
Fixed Cost
|
Net Income
|
|
Case 1
|
5,000
|
$90,000
|
$40,000
|
$(a)
|
$15,000
|
$(b)
|
|
Case 2
|
3,000
|
(c)
|
4,000
|
3
|
(d)
|
2,000
|
|
10,000
|
50,000
|
(e)
|
(f)
|
20,000
|
5,000
|
|
Aug 29, 2021 | Uncategorized
John Jay Company is selling a hardware product with a contribution margin of 40 percent on sales of $500,000 per year (50,000 units at $10). The fixed costs are $80,000 per year.
(a) How much increase in net income is expected in the coming year if sales increase by 10,000 units?
(b) How much increase in net income is expected in the coming year if sales are increased by $70,000?
(c) The sales manager feels that a $20,000 increase in the yearly advertising budget would increase annual sales by $60,000. Should the advertising budget be increased?
(d) The sales manager suggests cutting the present selling price by 10 percent and increasing the advertising budget by $25,000. If these two decisions are made, it is projected that unit sales will go up by 40 percent. Should this policy be approved?
Aug 29, 2021 | Uncategorized
1. The following data relate to Flores Company for the year ended December 31, 19×8:
|
Cost of production:
|
|
|
Direct materials
|
$168,000
|
|
Direct labor
|
252,000
|
|
Factory overhead:
|
|
|
Variable
|
90,000
|
|
Fixed
|
180,000
|
|
Sales commission (variable)
|
44,000
|
|
Sales salaries (fixed)
|
46,000
|
|
General and administrative expenses (fixed)
|
62,000
|
|
Units produced
|
75,000 units
|
|
Units sold (@$18)
|
60,000
|
(a) Compute the amount of income before income taxes and ending inventory under (1) absorption costing and (2) direct costing.
(b) Reconcile the difference in income before taxes between the two methods.
Aug 29, 2021 | Uncategorized
The Spartan Company has an annual plant capacity of 25,000 units. Predicted data on sales and costs are given below.
|
Sales (20,000 units @ $50)
|
$1,000,000
|
|
Manufacturing costs:
|
|
|
Variable (materials, labor, and overhead)
|
$40 per unit
|
|
Fixed overhead
|
$30,000
|
|
Selling and administrative expenses:
|
|
|
Variable (sales commission $1 per unit)
|
$2 per unit
|
|
Fixed
|
$7,000
|
A special order has been received from outside for 4,000 units at a selling price of $45 each.
This order will have no effect on regular sales. The usual sales commission on this order will be reduced by one half. Should the company accept the order? Show supporting computations.
Aug 29, 2021 | Uncategorized
1. Although the Missouri Company has the capacity to produce 16,000 units per month, current plans call for monthly production and sales of only 10,000 units at $15 each. Costs per unit are as follows:
|
Direct materials
|
$5.00
|
|
Direct labor
|
3.00
|
|
Variable factory overhead
|
0.75
|
|
Fixed Factory overhead
|
1.50
|
|
Variable selling expense
|
0.25
|
|
Fixed administrative expenses
|
1.00
|
1. Should the company accept a special order for 4,000 units @ $10?
2. What is the maximum price the Missouri Company should be willing to pay an outside supplier who is interested in manufacturing this product?
3. What would be the effect on the monthly contribution margin if the sales price was reduced to $14, resulting in a 10 percent increase in sales volume?
Aug 29, 2021 | Uncategorized
George Jackson operates a small machine shop. He manufactures one standard product which is available from many other similar businesses and also manufactures custom made products. His accountant prepared the annual income statement shown below.
| |
Custom
|
Standard
|
|
| |
Sales
|
Sales
|
Total
|
|
Sales
|
$50,000
|
$75,000
|
$75,000
|
|
Material
|
$10,000
|
$ 8,000
|
$18,000
|
|
Labor
|
20,000
|
9,000
|
29,000
|
|
Depreciation
|
6,300
|
3,600
|
9,900
|
|
Power
|
700
|
400
|
1,100
|
|
Rent
|
6,000
|
1,000
|
7,000
|
|
Heat and light
|
600
|
100
|
100
|
|
Other
|
400
|
900
|
1,300
|
| |
$44,000
|
$23,000
|
$67.000
|
| |
$ 6.000
|
$ 2,000
|
$ 8,000
|
The depreciation charges are for machines used in the respective product lines. The power charge is apportioned on the estimate of power consumed. The rent is for the building pace, which has been leased for 10 years at $7,000 per year. The rent and heat and light are apportioned to the product lines based on amount of floor space occupied. All other costs are current expenses and are identified with the product line causing them.
A valued custom parts customer has asked Mr. Jackson if he would manufacture 5,000 special units for him. Mr. Jackson is working at capacity and would have to give up some other business in order to take this special order. Though he cannot renege on custom orders already agreed to, he could reduce the output of his standard product by about one half for one year while producing the specially requested custom part. The customer is willing to pay $7 for each part. The material cost will be about $2 per unit and the labor will be $3.60 per unit. Mr. Jackson will have to spend $2,000 for a special device which will be discarded when the job is done.
1. Calculate and present the following costs related to the 5,000 unit custom order:
(a) The incremental cost of the order
(b) The full cost of the order
(c) The opportunity costs of accepting the order
(d) The sunk costs related to the order
2. Should Mr. Jackson accept the special order? Explain your answer.
(CMA, adapted)
Aug 29, 2021 | Uncategorized
E. Berg and Sons build custom made pleasure boats that range in price from $10,000 to $250,000. For the past 30 years, Mr. Berg, Sr., has determined the selling price of each boat by estimating the cost of material, labor, and a pro rated portion of overhead, and adding 20 percent to their estimated costs. For example, a recent price quotation was determined as follows:
|
Direct materials
|
$ 5,000
|
|
Direct labor
|
8,000
|
|
Overhead
|
2.000
|
| |
$15,000
|
|
Plus 20%
|
3,000
|
|
Selling price
|
$18,000
|
The overhead figure was determined by estimating total overhead costs for the year and
allocating them at 25 percent of direct labor. If a customer rejected the price and business was slack, Mr. Berg, Sr., would often be willing to reduce his markup to as little as 5 percent over estimated costs. Thus, average markup for the year is estimated at 15 percent.
Mr. Ed Berg, Jr., has just completed a course on pricing, and believes the firm could use
some of the techniques discussed in the course. The course emphasized the contribution margin
approach to pricing, and Mr. Berg, Jr., feels that such an approach would be helpful in
determining the selling prices of their custom made pleasure boats. Total overhead, which includes selling and administrative expenses for the year, has been estimated at $150,000, of which $90,000 is fixed arid the remainder is variable in direct
proportion to direct labor.
1. Assume that the customer in the example rejected the $18,000 quotation and also rejected
a $15,750 quotation (5 percent markup) during a slack period. The customer countered with
a $15,000 offer.
(a) What is the minimum selling price Mr. Berg, Jr., could have quoted without reducing
or increasing company net income?
(b) What is the difference in company net income for the year between accepting and rejecting the customer’s offer?
2. What advantages does the contribution margin approach to pricing have over the approach used by Mr. Berg, Sr.?
3. What pitfalls are there, if any, to contribution margin pricing?
(CMA, adapted)
Aug 29, 2021 | Uncategorized
JFK Manufacturing Corp. is using 10,000 units of part no. 300 as a component to assemble one of its products. It costs the company $18 per unit to produce it internally, computed as follows:
|
Direct materials
|
$ 45,000
|
|
Direct labor
|
50,000
|
|
Variable overhead
|
40,000
|
|
Fixed overhead
|
45,000
|
|
Total cost
|
$180.000
|
An outside vendor has just offered to supply the part for $16 per unit. If the company stops producing this part, one third of the fixed overhead would be avoided. Should the company make or buy?
Aug 29, 2021 | Uncategorized
The Vernom Corporation, which produces and sells to wholesalers a highly successful line of
summer lotions and insect repellents, has decided to diversify in order to stabilize sales
throughout the year. A natural area for the company to consider is the production of winter
lotions and creams to prevent dry and chapped skin. After considerable research, a winter products line has been developed. However, because of the conservative nature of the company management, Vernom’s president has decided to introduce only one of the new products for this coming winter. If the product is a success, further expansion in future years will be initiated. The product selected (called “Chap off”) is a lip balm that will be sold in a lipstick type tube. The product will be sold to wholesalers in boxes of 24 tubes for $8 per box. Because of available capacity, no additional fixed charges will be incurred to produce the product. However, a $100,000 fixed charge will be absorbed by the product to allocate a fair share of the company’s present fixed costs to the new product. Using the estimated sales and production of 100,000 boxes of Chap off as the standard volume, the accounting department has developed the following costs:
|
Direct labor
|
$2.00 per box
|
|
Direct materials
|
3.00 per box
|
|
Total overhead
|
1.50 per box
|
|
Total
|
$6.50 per box
|
Vernom has approached a cosmetics manufacturer to discuss the possibility of purchasing
the tubes for Chap off. The purchase price of the empty tubes from the cosmetics manufacturer
would be $0.90 per 24 tubes. If the Vernom Corporation accepts the purchase proposal, it is
estimated that direct labor and variable overhead costs would be reduced by 10 percent and
direct material costs would be reduced by 20 percent.
1. Should the Vernom Corporation make or buy the tubes? Show calculations to support your
answer.
2. What would be the minimum purchase price acceptable to the Vernom Corporation for the
tubes? Support your answer with an appropriate explanation.
3. Instead of sales of 100,000boxes, revised estimates show sales volume at 125,000boxes. At
this new volume, additional equipment, at an annual rental of $lO,OOO, must be acquired to
manufacture the tubes. However, this incremental cost would be the only additional fixed
cost required even if sales increased to 300,000 boxes. (The 300,000 level is the goal for the
third year of production.) Under these circumstances, should the Vernom Corporation
make or buy the tubes? Show calculations to support your answer.
4. The company has the option of making and buying at the same time. What would be your
answer to question 3 if this alternative was considered? Show calculations to support your
answer.
5. What nonquantifiable factors should the Vernom Corporation consider in determining
whether they should make or buy the lipstick tubes?
Aug 29, 2021 | Uncategorized
Answer the following four multiple choice questions:
1. Buck Company manufactures part no. 1700 for use in its production cycle. The costs per unit
for a 5,000 unit quantity follows:
|
Direct materials
|
$2
|
|
Direct labor
|
12
|
|
Variable overhead
|
5
|
|
Fixed overhead applied
|
7
|
| |
$26
|
Hollow Company has offered to sell Buck 5,000 units of part no. 1700 for $27 per unit.
If Buck accepts the offer, some of the facilities presently used to manufacture part no. 1700
could be used to help with the manufacture of part no. 1211. This would save $40,000 in
relevant costs in the manufacture of part no. 1211, and $3 per unit of the fixed overhead
applied to part no. 1700 would be totally eliminated. By what amount would net relevant
costs be increased or decreased if Buck accepts Hollow’s offer?
(a) $35,000 decrease
(b) $20,000 decrease
(c) $15,000 decrease
(d) $5,000 increase
2. Relay Corporation manufactures batons. Relay can manufacture 300,000 batons a year at
a variable cost of $750,000 and a fixed cost of $450,000. Based on Relay’s predictions,
240,000 batons will be sold at the regular price of $5 each. In addition, a special order was
placed for 60,000 batons to be sold at a 40 percent discount off the regular price. By what
amount would income be increased or decreased as a result of the special order?
(a) $60,000 decrease
(b) $30,000 increase
(c) $36,000 increase
(d) $180,000 increase
3. Cardinal Company needs 20,000 units of a certain part to use in its production cycle. The
following information is available:
|
Cost to Cardinal to make the part:
|
|
|
Direct materials
|
$ 4
|
|
Direct labor
|
16
|
|
Variable overhead
|
8
|
|
Fixed overhead applied
|
10
|
| |
$38
|
|
Cost to buy the part from the Oriole Company
|
$36
|
If Cardinal buys the part from Oriole instead of making it, Cardinal could not use the
released facilities in another manufacturing activj ty. Sixty percent of the fixed overhead
applied will continue, regardless of what decision is made.
In deciding whether to make or buy the part, the total relevant costs to make the
part are
(a) $560,000
(b) $640,000
(c) $720,000
(d) $760,000
4.The Reno Company manufactures part no. 498 for use in its production cycle. The cost per
unit for 20,000 units of part no. 498 is as follows:
|
Direct materials
|
$ 6
|
|
Direct labor
|
30
|
|
Variable overhead
|
12
|
|
Fixed overhead applied
|
16
|
| |
$64
|
The Tray Company has offered to sell 20,000 units of part no. 498 to Reno for $60 per unit.
Reno will make the decision to buy the part from Tray if there is a savings of $25,000 for
Reno. If Reno accepts Tray’s offer, $9 per unit of the fixed overhead applied would be
totally eliminated. Furthermore, Reno has determined that the released facilities could be
used to save relevant costs in the manufacture of part no. 575. In order to have a savings
of $25,000, the amount of relevant costs that would be saved by using the released facilities
in the manufacture of part no. 575 would have to be
(a)$80,000
(b)$85,000
(c)$125,000
(d)$140,000
Aug 29, 2021 | Uncategorized
From a particular joint process, Watkins Company produces three products, X, Y, and Z.Each product may be sold at the point of split off or processed further. Additional processing
requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. In 19×1, all three products were processed beyond split off. Joint production costs for the year were $60,000. Sales values and costs needed to evaluate Watkins’s 19×1 production policy follow:
| |
|
|
Additional Costs and Sales Values
|
| |
|
|
If Processed Further
|
| |
Units
|
Sales Values
|
Sales
|
Added
|
|
Product
|
Produced
|
at Split Off
|
Values
|
Costs
|
|
X
|
6,000
|
$25,000
|
$42,000
|
$9,000
|
|
Y
|
4,000
|
41,000
|
45,000
|
7,000
|
|
Z
|
2,000
|
24,000
|
32,000
|
8,000
|
Joint costs are allocated to the products in proportion to the relative physical volume of
output. Which of the products X, Y, and Z should Watkins subject to additional processing in
order to maximize profits?
Aug 29, 2021 | Uncategorized
The Discount Drug Company has three major product lines: drugs, cosmetics, and housewares. The company provides the following sales and cost information for the month of May for the store in total and for each separate product line (000 omitted):
| |
Drugs
|
Cosmetics
|
Housewares
|
Total
|
|
Sales
|
$240
|
$300
|
$360
|
$900
|
|
Less: Variable expenses
|
160
|
180
|
200
|
540
|
|
CM
|
$80
|
$120
|
$160
|
$360
|
|
Less: Fixed costs
|
|
|
|
|
|
Salaries
|
$34
|
$40
|
$46
|
$120
|
|
Advertising
|
30
|
50
|
40
|
120
|
|
Other fixed costs
|
40
|
20
|
40
|
100
|
|
Total
|
$104
|
$110
|
$126
|
$340
|
|
Net income
|
$(24)
|
$10
|
$34
|
$20
|
The salaries represent wages paid to employees engaged directly in each product line area.
The advertising represents direct advertising of each product line, and is avoidable if the line
is dropped. Other fixed costs, which are all committed costs, will continue and will split equally
between cosmetics and housewares.
1. Prepare a combined income statement for cosmetics and housewares on the assumption
that drugs are discontinued with no effects on sales of the other product lines.
2. On the basis of the analysis in question 1,would you advise dropping the drugs line?
Aug 29, 2021 | Uncategorized
The Usery Company is considering discontinuing Department B, one of the three departments it currently maintains. The following information has been gathered for the three depart ments:
(000 omitted)
| |
Dept. A
|
Dept. b
|
Dept. C
|
|
Sales
|
$60,000
|
$50,000
|
$80,000
|
|
Cost of goods sold
|
$40,000
|
$42,000
|
$60,000
|
|
Operating expenses:
|
|
|
|
|
Salaries
|
8,000
|
6,400
|
12,000
|
|
Rent
|
2,000
|
2,000
|
3,000
|
|
Utilities
|
1,000
|
2,700
|
2,000
|
|
Total costs
|
$51,000
|
$53,100
|
$77,000
|
|
Net income
|
$ 9,000
|
$(3,100)
|
$3,000
|
If Department B is eliminated, the space it occupies will be divided equally among
Departments A and C. Utilities are allocated on the basis of floor space occupied. 70 percent
of the salaries in Department B would be eliminated; the other 30 percent would be split
equally between Departments A and C.
1. Prepare a combined income statement for Departments A and C on the assumption that
Department B is dropped.
2. Based on your analysis in question 1, should Department B be eliminated?
3. What qualitative factors should the Usery Company consider in making the decision as to
whether or not Department B should be discontinued?
Aug 29, 2021 | Uncategorized
As a result of an expansion program, Whitworth Enterprises, Inc., has excess capacity of 20,000 machine hours, which is expected to be absorbed by the domestic market in a few years. The company has received inquiries from two companies located in another country. One offers to buy 210,000 units of product F at $0.60 per unit; the second offers to buy 300,000 units of product D at $0.70 per unit. Whitworth Enterprises can accept only one of these two offers. The estimated costs for these products are as follows:
| |
F
|
D
|
|
Materials
|
$0.25
|
$0.35
|
|
Direct labor
|
0.10
|
0.12
|
|
Factory overhead
|
0.20
|
0.28
|
|
Total estimated cost
|
$0.55
|
$0.75
|
Factory overhead is applied on a machine hour basis at $5.60 per hour; 75 percent of the
factory overhead is estimated to be fixed. No selling and administrative expenses would be
applicable to either order; transportation charges are to be paid by the buyer. Which order should the company accept?
Aug 29, 2021 | Uncategorized
Mifflin Products, Inc., has 3,200 machine hours of plant capacity available for anufacturing two products with the following characteristics:
| |
X
|
Y
|
|
Selling price
|
$200
|
$165
|
|
costs:
|
|
|
|
Direct materials
|
$80
|
$40
|
|
Direct labor
|
40
|
35
|
|
Variable overhead*
|
15
|
30
|
|
Fixed overhead*
|
10
|
20
|
|
Operating expenses (all variable)
|
40
|
20
|
| |
$185
|
$145
|
|
Net income
|
$15
|
$20
|
*Applied on the basis of machine hours.
Compute the number of available machine hours that Mifflin Products, Inc., should devote to the manufacture of each product.
Aug 29, 2021 | Uncategorized
North Star Guns is a high technology enterprise making sophisticated products for the armaments market. One of the two profit centers, North Star Engineering, manufactures two types of electronic guidance units: “Standard” and “Deluxe.” These units require a high degree of skill in manufacturing. However, because of a shortage of trained engineers, North Star Engineering has only 100 skilled employees, whose total labor capacity (allowing for sickness, leaves, and so on) is expected to be 100,000 hours per year. The data for North Star Engineering follow.
| |
Standard
|
Deluxe
|
|
Materials (parts)
|
$1,000
|
$4,000
|
|
Labor
|
10 hours 0 $20
|
100 hours 0 $20
|
|
Variable overhead per labor hour
|
$10
|
$10
|
|
Market price
|
$1,500
|
$10,000
|
|
Fixed overhead
|
$1,000,000
|
|
Standard has a potentially unlimited market, but Deluxe has only the Army as a customer.
North Star Engineering has a standing order for 500 Deluxe units per year from the Army.
1. What is the total amount of labor hours used now for each product?
2. Which product should be produced in order to maximize total contribution margin of North Star Engineering?
(SMA, adapted)
Aug 29, 2021 | Uncategorized
Classify the following costs as either manufacturing (M), selling (S), or administrative (A) expenses in terms of their functions.
|
(a) Factory supplies
|
(j)Freight in
|
|
(b) Advertising
|
(k)Employer’s payroll taxes –factory
|
|
(c) Auditing expenses
|
(l)Employer’s payroll taxes sales office
|
|
(d) Rent on general office building
|
(m)President’s salary
|
|
(e) Legal expenses
|
(n)Samples
|
|
(f) Cost of idle time
|
(o)Small tools
|
|
(g) Entertainment and travel
|
(p)Sanding materials used in furniture making
|
|
(h) Freight out
|
(q)Cost of machine breakdown
|
Aug 29, 2021 | Uncategorized
Which of the following costs are likely to be fully controllable, partially controllable, or not controllable by the chief of the production department?
|
(a) Wages paid to direct labor
|
(f) Supplies
|
|
(b) Rent on factory building
|
(g) Insurance on factory equipment
|
|
(c) Chiefs salary
|
(h) Advertising
|
|
(d) Utilities
|
(i) Price paid for materials and supplies
|
|
(e) Direct materials used
|
(j) Idle time due to machine breakdown
|
|
(a) Wages paid to direct labor
|
(f) Supplies
|
Aug 29, 2021 | Uncategorized
The Ellis Machine Tool Company is considering production for a special order for 10,000pieces at $0.65 apiece, which is below the regular price. The current operating level, which is below full capacity of 70,000 pieces, shows the operating results as contained in the following report.
The regular production during the year was 50,000 pieces.
|
Sales @ $1
|
|
|
$50,000
|
|
Direct materials
|
|
$20,000
|
|
|
Direct labor
|
|
10,000
|
|
|
Factory overhead:
|
|
|
|
|
Supervision
|
$3,500
|
|
|
|
Depreciation
|
1,500
|
|
|
|
Insurance
|
100
|
|
|
|
Rental
|
400
|
5,500
|
35,500
|
| |
|
|
$14,500
|
Factory overhead costs will continue regardless of the decision.
(a) What are the incremental costs, if any, in this decision problem? Prepare a schedule showing the incremental cost. (b) Which costs, if any, represent sunk costs? (c) What would be the opportunity cost, if any, associated with the special order?
Aug 29, 2021 | Uncategorized
Some selected sales and cost data for job order 515 are given below.
|
Direct materials used
|
$100,000
|
|
Direct labor
|
150,000
|
|
Factory overhead
|
|
|
(all indirect, 40% variable)
|
75,000
|
|
Selling and administrative expenses
|
|
|
(50% direct, 60% variable)
|
120,000
|
Compute the following: (a)prime cost, (b)conversion cost, (c) direct cost, (d)indirect cost, (e)
product cost, (f)period expense, (g) variable cost, and (h)fixed cost.
Aug 29, 2021 | Uncategorized
Selected data concerning the past fiscal year’s operations (000 omitted) of the Televans
Manufacturing Company are presented below.
Inventories
| |
Beginning
|
Ending
|
|
Direct materials
|
$75
|
$ 85
|
|
Work in process
|
80
|
30
|
|
Finished goods
|
90
|
110
|
|
Other data:
|
|
|
|
Direct materials used
|
|
|
|
Total manufacturing costs charged to production during the year
(includes direct materials, direct
labor, and factory overhead applied
at a rate of 60% of direct labor cost)
|
|
326
686
|
|
Cost of goods available for sale
|
|
826
|
|
Selling and general expenses
|
|
25
|
1. The cost of direct materials purchased during the year amounted to
(a) $411 (d) $336
(b) $360 (e) Some amount other than those shown above
(c) $316
2. Direct labor costs charged to production during the year amounted to
(a) $135 (d) $216
(b) $225 (e) Some amount other than those shown above
(c) $360
3. The cost of goods manufactured during the year was
(a) $636 (d) $716
(b) $766 (e) Some amount other than those shown above
(c) $736
4. The cost of goods sold during the year was
(a) $736 (d) $805
(b) $716 (e) Some amount other than those shown above
(c) $691
Aug 29, 2021 | Uncategorized
A manufacturing company shows the following amounts in the income statement for 19B:
|
Materials Used
|
$590,000
|
|
Cost of Goods Sold
|
750,000
|
|
Cost of Goods Manufactured
|
800,000
|
|
Total Manufacturing Costs
|
790,000
|
1. Determine the amounts of (a) and (b)in the balance sheets of 12/31/19Aand 12/31/19B
Inventories
| |
12/31/19A
|
1213 111 9B
|
|
Materials
|
$100,000
|
$150,000
|
|
Work in process
|
(a)
|
87,000
|
|
Finished goods
|
80,000
|
(b)
|
2. Compute the amount of materials purchased in 19B.
Aug 29, 2021 | Uncategorized
For each of the following cases, find the missing data. Each case is independent of the others.
| |
Case 1
|
Case 2
|
Case 3
|
|
Beginning direct materials
|
$5,000
|
$3,000
|
$3,000
|
|
Purchases of direct materials
|
17,000
|
45,000
|
10,000
|
|
Ending direct materials
|
(a)
|
7,000
|
(m)
|
|
Direct materials used
|
(b)
|
(f)
|
6,000
|
|
Direct labor
|
16,000
|
(g)
|
4,000
|
|
Factory overhead
|
3,000
|
20,000
|
6,000
|
|
Total manufacturing costs
|
(c)
|
85,000
|
(n)
|
|
Beginning work in process
|
6,000
|
6,000
|
5,000
|
|
Ending work in process
|
6,000
|
4,000
|
(o)
|
|
Cost of goods manufactured
|
23,000
|
(h)
|
10,000
|
| |
Case 1
|
Case 2
|
Case 3
|
|
Sales
|
52,000
|
125,000
|
23,000
|
|
Beginning finished goods
|
8,000
|
7,000
|
7,000
|
|
Cost of goods manufactured
|
23,000
|
(i)
|
10,000
|
|
Ending finished goods
|
(d)
|
(j)
|
6,000
|
|
Cost of goods sold
|
27,000
|
(k)
|
(p)
|
|
Gross profit
|
(e)
|
60,000
|
(q)
|
|
Selling and administrative expenses
|
5,000
|
8,500
|
4,000
|
|
Net income
|
20,000
|
(l)
|
8,000
|
Aug 29, 2021 | Uncategorized
Jung Stores, Inc., shows the following accounting records for 19×2:
|
Sales commissions
|
$ 15,000
|
|
Beginning merchandise inventory
|
16,000
|
|
Ending merchandise inventory
|
9,000
|
|
Sales
|
185,000
|
|
Advertising
|
10,000
|
|
Purchases of merchandise
|
85,000
|
|
Employees’salaries
|
20,000
|
|
Other operating expenses
|
30,000
|
Aug 29, 2021 | Uncategorized
In April, Steinhardt, Inc., sold 50 air conditioners for $200 each. Costs included material of $50 per unit, direct labor of $30 per unit, and factory overhead at 100 percent of direct labor cost.
Effective May 1, material costs decreased 5 percent per unit and direct labor costs increased 20 percent per unit. Assume that the expected May sales volume is 50 units, the same as for April.
(a) Calculate the sales price per unit that will produce the same ratio of gross profit, assuming
no change in the rate of factory overhead in relation to direct labor costs. (b) Calculate the sales price per unit that will produce the same ratio of gross profit, assuming that $10 of the April factory overhead consists of fixed costs and that the variable factory overhead ratio to direct costs is unchanged from April.
Aug 29, 2021 | Uncategorized
The Shim Refrigerator Co. shows the following records for the period ended December 31, 19A:
|
Materials purchased
|
$ 550,000
|
|
Inventories, Jan. 1, 19A:
|
|
|
Materials
|
$ 20,000
|
|
Work in process
|
$ 200,000
|
|
Finished goods
|
1,000 units
|
|
Direct labor
|
$1,050,000
|
|
Factory overhead (40% variable)
|
$ 750,000
|
|
Selling expenses (all fixed)
|
$ 500,750
|
|
General and administrative (all fixed)
|
$ 385,230
|
|
Sales (7,500 units at $535)
|
|
|
Inventories, Dec. 31, 19A:
|
|
|
Materials
|
$ 50,000
|
|
Work in process
|
$ 100,000
|
|
Finished goods
|
1,000 units
|
Assume that finished goods inventories are valued at the current unit manufacturing cost.
1. Prepare a schedule of cost of goods manufactured.
2. Find the number of units manufactured and unit manufacturing cost.
3. Prepare an income statement for the period.
4. Find the total variable and fixed costs.
Aug 29, 2021 | Uncategorized
The Montreal Manufacturing Company incurred the following costs for the month of June:
|
Materials used:
|
|
|
Direct materials
|
$6,600
|
|
Indirect materials
|
1,200
|
|
Payroll costs incurred:
|
|
|
Direct labor
|
6,000
|
|
Indirect labor
|
1,700
|
|
Salaries:
|
|
|
Production
|
2,400
|
|
Administration
|
5,100
|
|
Sales
|
3,200
|
|
Other costs:
|
|
|
Building rent (production uses one half of the building space)
|
1,400
|
|
Rent for molding machine (*per month, plus $0.50 per unit produced)
|
400*
|
|
Royalty paid for the use of production patents
(calculation based on units produced, $0.80 per unit) Indirect miscellaneous costs:
|
|
|
Production
|
2,700
|
|
Sales and administration
|
1,800
|
The beginning work in process inventory was $6,000; the ending work in process inventory was $5,000. Assume that 1,000 units were produced during the month.
1. Prepare a statement of cost of goods manufactured for the month.
2. Compute the cost to manufacture one unit of product.
(CMA, adapted)
Aug 29, 2021 | Uncategorized
Heaven Consumer Products, Inc., has the following sales and cost data for 19A
|
Selling and administrative expenses
|
$25,000
|
|
Direct materials purchased
|
12,000
|
|
Direct labor
|
18,000
|
|
Sales
|
160,000
|
|
Direct materials inventory, beginning
|
3,000
|
|
Direct materials inventory, ending
|
2,000
|
|
Work in process, beginning
|
14,000
|
|
Work in process, ending
|
13,500
|
|
Factory depreciation
|
27,000
|
|
Indirect materials
|
4,000
|
|
Factory utilities
|
2,000
|
|
Indirect labor
|
5,500
|
|
Maintenance
|
2,000
|
|
Insurance
|
1,000
|
|
Finished goods inventory, beginning
|
6,000
|
|
Finished goods inventory, ending
|
4,000
|
1. Prepare a schedule of cost of goods manufactured for 19A.
2. Prepare an income statement for 19A.
3. Assume that the company manufactured 5,000units during the year. What was the unit cost of direct materials? What was the unit cost of factory depreciation? (Assume that depreciation is computed by the straight line method.)
4. Repeat the computation done in part 3 for 10,000 units of output. How would the total costs of direct materials and factory overhead be affected?
5. Comment on the results you obtained in parts 3 and 4 in terms of how they affect the possible sales price.
Aug 29, 2021 | Uncategorized
Some cost data for producing four different products are given below. Fill in the missing data in the blanks for each product.
|
Product
|
Total
Variable Cost
(TVC)
|
Total
Fixed Cost (TFC)
|
Total
Cost
(TC)
|
Unit
Variable Cost (UVC)
|
Unit
Fixed Cost
|
Volume
In units
(V)
|
|
1.
2.
3.
|
(a)________
$100,000
$ 15,000
(j)________
|
$ 50,000 (d)_______
(g) ______
$100,000
|
$120,000
(e)_______
$165,000
$~00,00
|
(b)_______
(f)________
$15
(k)________
|
$5
$5
(h)______
(l)_______
|
(c)______
50,000
(i)_______
20,000
|
Aug 29, 2021 | Uncategorized
In an effort to control selling expenses, the Sell Big Corporation wants to develop a cost volume formula for its selling expenses. An investigation of individual expense items shows
|
Sales commissions
|
Fixed
|
Variable
30% of sales
|
|
Advertising
|
$50,000
|
|
|
Travel and entertainment
|
30,000
|
5% of sales
|
|
Sales staff salaries
|
12,000
|
|
|
Depreciation, rent, and insurance sales office
|
5,000
|
|
Determine the cost volume formula in the form of y‘ = a + bx.
Aug 29, 2021 | Uncategorized
The XYZ Tool Manufacturing Co. shows the following factory overhead costs at various levels of direct labor hours for the last four months:
| |
Direct Labor
|
Factory
|
|
Month
|
Hours x
|
Overhead y
|
|
July
|
2,500 hours
|
$ 7,000
|
|
August
|
1,500
|
5,000
|
|
September
|
2,000
|
6,000
|
|
October
|
3,000
|
8,000
|
| |
9,000 hours
|
$26,000
|
Determine the monthly fixed overhead and the variable overhead rate per direct labor hour (DLH) using (a) the scattergraph method and (b)the high low method.
Aug 29, 2021 | Uncategorized
Labor hours and production costs for the last four months of 19A, which you believe are representative for the year, were
|
Month
|
Labor Hours
|
Total Production Cost
|
|
September
|
2,500
|
$ 20,000
|
|
October
|
3,500
|
25,000
|
|
November
|
4,500
|
30,000
|
|
December
|
3,500
|
25,000
|
| |
14,000
|
$100,000
|
Based on the above information, select the best answer for questions 1 through 6.
Let a = fixed production costs per month
b = variable production costs per labor hour
n = number of months
x = labor hours per month
y = total monthly production costs
C = summation
1. The equation(s) required for applying the least squares method of computation of fixed and
variable production costs could be expressed as:
(a) Cxy = aCx + bCx2
(b) Cy = na + bCx I_y=na+bI:x
(c) y = a+bx2
(d) Cxy = aCx+ bCx2
C y = na + bC x
2. The cost function derived by the least squares method:
(a) Is linear
(b) Must be tested for minima and maxima
(c) Is parabolic
(d) Indicates maximum costs at the point of the function’s inflection
3. Monthly production costs are expressed as:
(a) y = ax+b (c) y=b+ax
(b) .y =a+bx (d) y=Ca+bx
4.The fixed monthly production cost in total is: (a) $10,000; (6) $9,500; (c) $7,500; (d)
$5,000.
5. The variable production cost per labor hour is: (a) $6; (b)$5; (c)$3; (d)$2.
6. The least squares method of cost analysis must be used in those situations where:
(a) The mixed costs being analyzed consist of more than 50 percent fixed costs.
(b) The variable portion of the mixed cost is constant per unit of activity.
(c) The fixed costs being analyzed are discretionary rather than committed.
(d) The variable portion of the mixed cost being analyzed must be determined in terms
of some average amount per unit of activity.
Aug 29, 2021 | Uncategorized
Following are the direct labor hours and the repair costs of Jason Corporation over a seven week period.
|
Direct Labor Hours
|
Repair Costs
|
|
(00 omitted)
|
(00 omitted)
|
|
40 hours
|
$60
|
|
45
|
80
|
|
30
|
60
|
|
50
|
80
|
|
60
|
100
|
|
40
|
70
|
|
20
|
50
|
|
285 hours
|
$500
|
1. Separate the repair costs into the fixed and variable components by using (a)the high low
method and (b)the method of least squares.
2. Compute the coefficient of determination.
3. Comment on the choice of direct labor hours in explaining the repair costs.
Aug 29, 2021 | Uncategorized
Data for total power costs and machine hours are given below.
|
Power Costs
|
Machine Hours
|
|
(000 omitted)
|
(000 omitted)
|
|
$ 7
|
9 hours
|
|
6
|
8
|
|
8
|
8
|
|
3
|
4
|
|
4
|
6
|
|
8
|
7
|
|
8
|
9
|
|
6
|
5
|
|
7
|
8
|
|
5
|
6
|
|
$62
|
70 hours
|
1. Separate the power costs into the fixed and variable components using the method of least
squares. Estimate the power costs when 6.5 machine hours are used.
2. Compute the coefficient of determination.
3. Does the regression equation need to be improved?
Aug 29, 2021 | Uncategorized
The GH Manufacturing Company makes a product called Z. Some of the manufacturing expenses are easily identified as fixed or variable directly with production. The cost accountant of the company is confronted with the problem of preparing a flexible budget for the coming year and wishes to determine the fixed and variable elements of the mixed factory overhead. The following details are provided for the first 10 months of the past year:
Number of Units Mixed Factory
|
Month
|
Number of Units Produced x Overhead y
|
Mixed Factory
Overhead y
|
|
1
|
1,500
|
$ 800
|
|
2
|
2,000
|
1,000
|
|
3
|
3,000
|
1,350
|
|
4
|
2,500
|
1,250
|
|
5
|
3,000
|
1,300
|
|
6
|
2,500
|
1,200
|
|
7
|
3,500
|
1,400
|
|
8
|
3,000
|
1,250
|
|
9
|
2,500
|
1,150
|
|
10
|
1,500
|
800
|
| |
25,000
|
$11,500
|
Determine the fixed and variable elements of the mixed factory overhead using the high low
method.
(SMA, adapted)
Aug 29, 2021 | Uncategorized
The Ramon Company manufactures a wide range of products at several different plant locations. The Franklin plant, which manufactures electrical components, has been experiencing some difficulties with fluctuating monthly overhead costs. The fluctuations have made it difficult to estimate the level of overhead that will be incurred for any one month. Management wants to be better able to estimate overhead costs accurately in order to plan its operations and financial needs. A trade association publication to which Ramon Company subscribes indicates that for companies that manufacture electrical components, overhead tends to vary with direct labor hours. One member of the accounting staff proposes that the cost behavior pattern for overhead costs be determined. Then, overhead costs could be predicted from the budgeted direct labor hours. Another member of the accounting staff suggests that a good starting point for determining the cost behavior patterns of overhead costs would be an analysis of historical data. The historical cost behavior pattern would provide a basis for determining the cost behavior pattern. The methods proposed for this purpose are the high low method and simple linear regression. Data on direct labor hours and the respective overhead costs incurred were collected for the past two years. The raw data follow:
|
19a
|
Direct Labor Hours x
|
Overhead Costs y
|
|
January
|
20,000 hours
|
$84,000
|
|
February
|
25,000
|
99,000
|
|
March
|
22,000
|
89,000
|
|
April
|
23,000
|
90,000
|
|
May
June
July
August
September
October
November
December
|
20,000
19,000
14,000
10,000
12,000
17,000
16,000
19,000
|
81,000
75,000
70,000
64,000
69,000
75,000
71,000
78,000
|
|
19b
|
Direct Labor Hours x
|
Overhead Costs y
|
|
January
|
21,000 hours
|
$86,000
|
|
February
|
24,000
|
93,000
|
|
March
|
23,000
|
87,000
|
|
April
|
22,000
|
80,000
|
|
May
June
July
August
September
October
November
December
|
20,000
18,000
12,000
13,000
15,000
17,000
15,000
18,000
|
76,000
67,000
71,000
73,000
72,000
71,000
75,000
78,000
|
Using linear regression, the following data were obtained:
Coefficient of determination (r2) 0.9109
Coefficient of regression equation
Constant 39,859
Independent variable 2.1549
Standard error of the estimate (s,) 2,840
Standard error of the regression coefficient for the independent variable (sb) 0.1437
Table t statistic for a 95% confidence interval (when n 2 = 24 2 = 22) 2.074
(a) Using the high low method, determine the cost behavior pattern of the overhead costs for the Franklin plant.
(b) Using the results of the regression analysis, calculate the estimate of overhead costs for
22,500 direct labor hours.
(c)Of the two proposed methods, which one should Ramon Company employ to determine the historical cost behavior pattern of the Frankliin plant’s overhead costs? Explain your answer completely, indicating the reasons why the other method should not be used.
(CMA, adapted)
Enrollment in local colleges, 2005
Aug 29, 2021 | Uncategorized
Stealth Software Inc. has the following information available from last year for one of its software products:
Sales revenue
$30,000
Variable costs
4,950
Fixed costs
4,000
Net income
$21,050
If the software had a sales price of $30 per unit, what is the variable cost per unit?
Answer
a. $164.00
b. $0.20
c. $4.95
d. $25.05
Question 50
Refer to the Stealth Software Inc. information above. If the software had a sales price of $30 per unit, what is the contribution margin per unit?
Answer
a. $34.95
b. $21.05
c. $25.05
d. can not be determined
2 points
Question 51
Refer to the Stealth Software Inc. information above. If the sales price per unit is $30 and the company expects a 30% increase in sales volume this year along with a 20% decrease in fixed costs. What will be expected net income this year?
Answer
a. $30,850
b. $41, 065
c. $23,155
d. $29,365
Aug 29, 2021 | Uncategorized
The stockholders’ equity accounts of Sigma Corporation on January 1, 2010, were as follows.
Preferred Stock (8%, $100 par noncumulative, 5,400 shares authorized) $324,000
Common Stock ($5 stated value, 303,000 shares authorized) 1,090,000
Paid in Capital in Excess of Par Value Preferred Stock 18,570
Paid in Capital in Excess of Stated Value Common Stock 482,820
Retained Earnings 692,430
Treasury Stock Common (5,400 shares) 43,200
During 2010 the corporation had these transactions and events pertaining to its stockholders’ equity.
Feb. 1 Issued 5,400 shares of common stock for $32,400.
Mar. 20 Purchased 1,130 additional shares of common treasury stock at $10 per share.
Oct. 1 Declared a 8% cash dividend on preferred stock, payable November 1.
Nov. 1 Paid the dividend declared on October 1.
Dec. 1 Declared a $0.80 per share cash dividend to common stockholders of record on December 15, payable December 31, 2010.
Dec. 31 Determined that net income for the year was $281,483. Paid the dividend declared on December 1.
Journalize the transactions. (Include entries to close net income to Retained Earnings. List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Aug 29, 2021 | Uncategorized
Straight Line Method
E 9. DNA Corporation issued $4,000,000 in 8 percent, 10 year bonds on
February 1, 2010, at 115. Semiannual interest payment dates are January 31 and
July 31. Use the straight line method and ignore year end accruals.
1. With regard to the bond issue on February 1, 2010:
a. How much cash is received? 4,600,000
b. How much is Bonds Payable? 4,000,000
c. What is the difference between a and b called and how much is it? Unamortized Bonds Premium = 600,000
2. With regard to the bond interest payment on July 31, 2010:
a. How much cash is paid in interest? 160,000
b. How much is the amortization? 30,000
c. How much is interest expense? 130,000
3. With regard to the bond interest payment on January 31, 2011:
a. How much cash is paid in interest? 160,000
b. How much is the amortization? 30,000
c. How much is interest expense? 130,000
Aug 29, 2021 | Uncategorized
Stromski Corporation manufactures a single product. The standard cost per unit of product is shown below.
Direct materials 1 pound plastic at $7.00 per pound $ 7.00
Direct labor 1.5 hours at $12.00 per hour 18.00
Variable manufacturing overhead 11.25
Fixed manufacturing overhead 3.75
Total standard cost per unit $40.00
The predetermined manufacturing overhead rate is $10 per direct labor hour ($15.00 Af· 1.5). It was computed from a master manufacturing overhead budget based on normal production of 7,500 direct labor hours (5,000 units) for the month. The master budget showed total variable costs of $56,250 ($7.50 per hour) and total fixed overhead costs of $18,750 ($2.50 per hour). Actual costs for October in producing 4,900 units were as follows.
Direct materials (5,100 pounds) $ 37,230
Direct labor (7,000 hours) 87,500
Variable overhead 56,170
Fixed overhead 19,680
Total manufacturing costs $200,580
The purchasing department buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories, therefore, can be ignored.
Aug 29, 2021 | Uncategorized
Stromski Corporation manufactures a single product. The standard cost per unit of product is shown below.
Direct materials 1 pound plastic at $7.00 per pound $ 7.00
Direct labor 1.5 hours at $12.00 per hour 18.00
Variable manufacturing overhead 11.25
Fixed manufacturing overhead 3.75
Total standard cost per unit $40.00
The predetermined manufacturing overhead rate is $10 per direct labor hour ($15.00 Af· 1.5). It was computed from a master manufacturing overhead budget based on normal production of 7,500 direct labor hours (5,000 units) for the month. The master budget showed total variable costs of $56,250 ($7.50 per hour) and total fixed overhead costs of $18,750 ($2.50 per hour). Actual costs for October in producing 4,900 units were as follows.
Direct materials (5,100 pounds) $ 37,230
Direct labor (7,000 hours) 87,500
Variable overhead 56,170
Fixed overhead 19,680
Total manufacturing costs $200,580
The purchasing department buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories, therefore, can be ignored.
Compute all of the materials and labor variances. (Round intermediate calculations to 2 decimal places, e.g. 12.50 and final answers to 0 decimal places, e.g. 125.)
Total materials variance $
Materials price variance $
Materials quantity variance $
Total labor variance $
Labor price variance $
Labor quantity variance $
Compute the total overhead variance.
Aug 29, 2021 | Uncategorized
Student Name
Bravo Baking Co is considering replacing an older freezer with a larger unit to freeze some of its bread.
The new unit has a larger capacity and Bravo estimates it can produce and sell an more bread each year. From these additional sales
the after tax cash flow is expected to be $4,000. In addition to more sales, the new freezer will save $1,200 in electricity each year.
However, the new freezer will cost an additional $2,000 each year for maintenance. The cost of the new unit is $25,000 and it is
expected to last 10 years. The salvage value at the end of its life is $6,000. The old unit is fully depreciated and can be disposed at cost.
Determine the Net Present Value of purchasing the new freezer using a required rate of return of 14%. Should Bravo purchase the freezer?
I got 3220.31 but it was wrong..
Aug 29, 2021 | Uncategorized
Typed paper: 2 pages. Use APA to cite all the resources.
- Identify one or more control procedures for each of the situations below.
- Controls can include general controls and application controls; any control you’ve studied to date
- Be very specific; citing segregation of duties is not sufficient. You must identify which specific duties should be segregated
- Remember preventive controls are better than detective controls
- Identify the best control first
- Identify as many relevant controls as possible
- Be creative—the controls do not necessarily have to be ones we have studied in class
- I have identified the number of controls I identified in parentheses at the end of each scenario
- I have completed the first scenario for you as an example.
a. A Purchasing agent orders materials from a supplier that he partially owns. (6)
- Company policy that requires purchasing agents to disclose any financial interest or position which they hold in supplier companies
- Only place orders with approved vendors
- Logical access controls to vendor master file
- Check to ensure that purchasing agents do not have investments in vendors on the approved vendor list
- Ask vendors to verify
- Dun & Bradstreet report
- Purchasing agents with real or potential conflicts of interest should not process purchase orders for the vendor with whom they have a relationship
- The purchasing manager should review purchase requisitions before approving a purchase order
b. Receiving dept. employees steal inventory, and then claim the inventory was sent to the warehouse. (6)
c. An unordered supply of copier paper delivered to the office is accepted and paid for because the “price is right.” However, when all of the copiers are jammed, it becomes obvious that the ‘bargain’ paper is of inferior quality. (3)
d. Removed
e. A company is late in paying a particular invoice. Consequently, a second invoice is sent, which crosses the first invoice’s payment in the mail. The second invoice is submitted for processing and also paid. (8)
f. Inventory records show that an adequate supply of copy paper should be in stock, but none is available on the supply shelf. (3)
g. The inventory records are incorrectly updated when a receiving dock employee enters the wrong product number at the terminal. (4)
h. A clerical employee obtains a blank check and writes a large amount payable to a fictitious company. The employee then forges the CFOs name and cashes the check. (3)
- Removed
- The petty cash custodian confesses to having “borrowed” $12,000 over the last five years. (3)
- A purchasing agent adds a new company to the supplier master file. However, the company does not exist. Subsequently, the purchasing agent submits invoices from the fake company for various cleaning services. The invoices are paid. (4)
Aug 29, 2021 | Uncategorized
Consider the following information, prepared based on a capacity of 60,000 units:
|
Category
|
Cost per Unit
|
|
Variable manufacturing costs
|
$12.00
|
|
Fixed manufacturing costs
|
$3.50
|
|
Variable marketing costs
|
$4.00
|
|
Fixed marketing costs
|
$2.50
|
Capacity cannot be added and the firm currently sells the product for $25 per unit.
Consider each of these scenarios independent of each other.
a) The company is currently producing 60,000 units per month. A potential customer has contacted the firm and offered to purchase 10,000 units this month only. The customer is willing to pay $23 per unit. Since the potential customer approached the firm, there will be no variable marketing costs incurred. Should the company accept the special order? Why or why not? Be specific.
b) The company is currently producing 45,000 units per month. A potential customer has contacted the firm and offered to purchase 10,000 units this month only. Since the potential customer approached the firm, there will be no variable marketing costs incurred. What is the minimum amount that the firm should be willing to accept for this order?
Question #3 (12 points)
List and describe three ways a firm can determine long run prices. As part of your answers, be sure to describe when each method would be most appropriate and the strengths and weaknesses of each method.
Question #4 (44 points)
Consider the following information:
|
|
Q1
|
Q2
|
Q3
|
|
Beginning inventory (units)
|
0
|
J
|
300
|
|
Actual units produced
|
4,700
|
5,200
|
5,100
|
|
Budgeted units to be produced
|
5,000
|
5,000
|
Q
|
|
Units sold
|
A
|
5,100
|
R
|
|
Variable manufacturing costs per unit produced
|
$150
|
$150
|
$150
|
|
Variable marketing costs per unit sold
|
$50
|
$50
|
$50
|
|
Fixed manufacturing costs
|
$800,000
|
$800,000
|
$800,000
|
|
Fixed marketing costs
|
$200,000
|
$200,000
|
$200,000
|
|
Selling price per unit
|
$500
|
$500
|
$500
|
|
Variable costing operating income
|
B
|
$530,000
|
S
|
|
Absorption costing operating income
|
C
|
K
|
$544,000
|
|
Variable costing beginning inventory
|
D
|
$30,000
|
T
|
|
Absorption costing beginning inventory
|
E
|
L
|
U
|
|
Variable costing ending inventory
|
F
|
M
|
$30,000
|
|
Absorption costing ending inventory
|
G
|
N
|
$62,000
|
|
PVV
|
H
|
O
|
V
|
|
Allocated fixed manufacturing costs
|
I
|
P
|
$816,000
|
There are no price, efficiency, or spending variances, and any production volume variance is directly written off to cost of goods in the quarter in which it occurs.
Complete the missing figures from the above Table.
|
Q1
|
Q2
|
Q3
|
|
A
|
J
|
Q
|
|
B
|
K
|
R
|
|
C
|
L
|
S
|
|
D
|
M
|
T
|
|
E
|
N
|
U
|
|
F
|
O
|
V
|
|
G
|
P
|
|
|
H
|
|
|
|
I
|
|
|
Aug 29, 2021 | Uncategorized
BE2 1 Knox Company begins operations on January 1. Because all work is done to customer specifications, the company decides to use a job order cost system. Prepare a flowchart of a typical job order system with arrows showing the flow of costs. Identify the eight transactions.
BE2 2 During January, its first month of operations, Knox company accumulated the following manufacturing costs: raw materials $4,000 on account, the factory labor $6000 of which $5,200 relates to factory wages payable and $800 relates to payroll taxes payable, and utilities payable $2,000. Prepare separate journal entries for each type of manufacturing coat.
BE2 3 In January, Knox Company requisitions raw materials for production as follows: Job 1 $900, Job 2 $1,400, Job 3 $700, and general factory use $600. Prepare a summary journal entry to record raw material used.
E2 1 The gross earnings of the factory workers for Vargas Company during the month of January are $66,000. The employer’s payroll taxes for the factory payroll are $8,000. The fringe benefits to be paid by the employer on this payroll are $6,000. Of the total accumulated cost of factory labor, 85% is related to direct labor and 15% is attributable to indirect labor.
Instructions:
- Prepare the entry to record the factory labor costs for the month of January.
- Prepare the entry to assign factory labor to production.
E2 2 Stine Company uses a job order cost system. On May 1, the company has a balance in Work in Process Inventory of $3,500 and two jobs in process: Job No. 429 $2,000 and Job No. 430 $1,500. During May, a summary of source documents revels the following.
JOB NUMBERMATERIALS REQUISITION SLIPSLABOR TIME TICKETS
429 $2,500 $1,900
430 3,500 3,000
431 4,400 $10,400 7,600$12,500
General Use 800 1,200
$11,200$13,700
Aug 29, 2021 | Uncategorized
Shun Electronics Company
1. Where did the figures in the case Exhibits 1, 2 and 3 come from and how were they computed? 2. Explain why the shelf shower radio cost has changed from M$61.00 under the old allocation system to M$67.56 under the new allocation system. 3. What do you think prompted Manjit’s redesign of the product costing system? 4. Manjit has revised the definition of overhead cost pools. Has this improved the radio product costs? 5. Has Manjit improved the radio product costs through his choice of allocation base? 6. How would you recommend Shun Electronics calculate the product cost of their radios? 7. What are the “true” product costs of the radios? 8. If plant capacity was limited to 6000 units, what combination of radios should Shun Electronics produce and why?
Aug 29, 2021 | Uncategorized
Given any two known elements, the third can easily be computed. Determine the missing amount in each of the accounting equations below.
| |
Assets
|
=
|
Liabilities
|
+
|
Capital
|
|
(a)
|
$7,200
|
=
|
$2,800
|
+
|
?
|
|
(b)
|
7,000
|
=
|
?
|
+
|
$4,400
|
|
(c)
|
?
|
=
|
2,000
|
+
|
4,400
|
|
(d)
|
20,000
|
=
|
5,600
|
+
|
?
|
Aug 29, 2021 | Uncategorized
Cambruzzi Company was established in December of the current year. Its sales of merchandise on account and related returns and allowances during the remainder of the month are described below.
Dec. 15 Sold merchandise on account to A Co., $850
19 Sold merchandise on account to B Co., $800
20 Sold merchandise on account to C Co., $1,200
22 Issued Credit memo for $40 to B Co. for merchandise return
24 Sold merchandise on account to B Co., $1,650
25 Sold additional merchandise on account to B. Co, $900
26 Issued Credit memo for $25 to A Co. for merchandise return
27 Sold additional merchandise on account to C Co., $1,600
Record the transactions for December in the sales journal and/or general journal.
Aug 29, 2021 | Uncategorized
Record the following transactions in the cash receipts journal:
|
3/2
|
Received $600 from J. Kappala in settlement of her account
|
|
3/10
|
Received $615 from B. Elder in settlement of his account
|
|
3/14
|
Cash sales for a 2 week period, $4,400
|
|
3/28
|
Sold $200 of office supplies to Smith Company (not a merchandise item)
|
|
3/30
|
Owner made additional investment, $1,500
|
|
3/30
|
Cash sales for the last two weeks, $2,600
|
Aug 29, 2021 | Uncategorized
Joe Hurt owns and operates Rent a Wreck Company, a used car rental business. The following is a trial balance before the end of the month adjustments.
Dr. Cr.
Cash 1,940
Accounts Receivable 1,575
Supplies 1,740
Prepaid Rent 2,900
Equipment 16,500
Accounts Payable 1,000
Joe Hurt, Capital 21,650
Joe Hurt, Drawing 2,500
Rental Income 7,125
Salaries Expense 1,800
Utilities Expense 540
Miscellaneous Expense 280
29,775 29,775
Listed below are the end of the month adjustments:
(a) Inventory of supplies at end of month, $975
(b) Rent for the month, $900
(c) Depreciation expense for month, $500
(d) Salaries Payable, $200
Prepare an adjusted trial balance and make the necessary adjusting entries.
Aug 29, 2021 | Uncategorized
The inventory information of a product is given below:
|
Jan. 1
|
Inventory
|
12 units
|
$15
|
|
Feb. 16
|
Purchase
|
8 units
|
16
|
|
Mar. 4
|
Purchase
|
15 units
|
18
|
|
Oct. 15
|
Purchase
|
10 units
|
20
|
After taking a physical count, we find that we have 14 units on hand. Determine the ending inventory cost by the (a) FIFO method, (b) LIFO method and (c) weighted average.
Aug 29, 2021 | Uncategorized
Determine the last day allowable for a company to take advantage of the full discount.
| |
Term
|
Date of Order
|
Delivery Date
|
|
(a)
|
2/10, n/30
|
June 4
|
June 8
|
|
(b)
|
2/10, 1/15, n/30
|
June 4
|
June 8
|
|
(c)
|
2/10, n/30, ROG
|
June 4
|
June 8
|
|
(d)
|
2/10, n/30, EOM
|
June 4
|
June 8
|
Aug 29, 2021 | Uncategorized
In order to produce equal adjusted balances for A&J Company, indicate whether each of items 1–8 below should be:
(a) Added to the bank statement balance
(b) Deducted from the bank statement balance
(c) Added to the depositor’s balance
(d) Deducted from the depositor’s balance
(e) Exempted from the bank reconciliation statement
1. Statement includes a credit memo, representing the collection of the proceeds of a note left at the bank.
2. A credit memo representing the proceeds of a loan made to A&J Company by the bank.
3. Deposits in transit.
4. Seven outstanding checks were not recorded on the statement.
5. A customer’s check that A&J Company had deposited was returned with “nonsufficient funds” stamped across the face.
6. The bank erroneously charged someone else’s check against A&J’s account.
7. A&J Company was credited on the bank statement with the receipt from another depositor.
A $96 check was erroneously recorded in A&J’s check stubs as $69.
Aug 29, 2021 | Uncategorized
Henderson and Erin have decided to form a partnership. Henderson invests the following assets (shown at their agreed upon value) and he also transfers liabilities to the new firm.
|
Henderson’s Accounts
|
Value
|
|
Cash
|
$17,500
|
|
Accounts Receivable
|
7,000
|
|
Merchandise Inventory
|
10,000
|
|
Equipment
|
4,200
|
|
Accounts Payable
|
3,500
|
|
Notes Payable
|
3,600
|
Erin agrees to invest $26,000 in cash. Record (a) Henderson’s investment; (b) Erin’s investment.
Aug 29, 2021 | Uncategorized
1. For each of the following pairs, indicate how the first individual is related to the second by riting (L) line authority, (S) staff authority, or (N) no authority.
|
(a) Controller; internal auditor
|
(g) Controller; assistant controller
|
|
(b) VP, production; accounts receivable bookkeeper
|
(h) Controller; shipping clerk
|
|
(c) VP, finance; personnel director
|
(i) Assistant controller, computer; data processing clerk
|
|
(d) Controller; budget analyst
|
(j) Production supervisor; foreman
|
|
(e) VP, finance; treasurer
|
(k) VP, manufacturing; payroll clerk
|
|
(f) Treasurer; controller
|
(I) Controller; VP, production
|
Aug 29, 2021 | Uncategorized
Prepare an organization chart (highlighting the accounting functions) of J. Company, which has the following positions:
|
Special reports and studies manager
|
VP, sales
|
|
Billing clerk
|
Cost systems analyst
|
|
VP, finance
|
Assist ant controller
|
|
Assist ant treasurer
|
Systems and data processing manager
|
|
Accounts receivable clerk
|
General accounting manager
|
|
Budget and standard cost analyst
|
Treasurer
|
|
Controller
|
Payroll clerk
|
|
VP, production
|
Internal audit manager
|
|
Tax manager
|
Performance analyst
|
|
Cost accounting manager
|
General ledger bookkeeper
|
|
Cost clerk
|
Accounts payable clerk
|
Aug 29, 2021 | Uncategorized
Rondello Corporation manufactures a single product. The standard cost per unit of product is shown below.
Direct materials”1 pound plastic at $7.70 per pound Ac€¦Ac€¦Ac€¦Ac€¦.. $ 7.70
Direct labor”1.5 hours at $13.20 per hour Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦ 19.80
Variable manufacturing overhead Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦.. 12.38
Fixed manufacturing overhead Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦.. 4.13
Total standard cost per unit Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦ $44.01
The predetermined manufacturing overhead rate is $10 per direct labor hour ($15.00 Af· 1.5). It was computed from a master manufacturing overhead budget based on normal production of 7,500 direct labor hours (5,000 units) for the month. The master budget showed total variable costs of $56,250 ($7.50 per hour) and total fixed overhead costs of $18,750 ($2.50 per hour). Actual costs for October in producing 4,900 units were as follows.
Direct materials (5,120 pounds) Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦.. $ 41,114
Direct labor (7,000 hours) Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦ 96,250
Variable overhead Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦ 61,787
Fixed overhead Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦. 21,648
Total manufacturing costs Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦Ac€¦ $220,799
The purchasing department buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories, therefore, can be ignored.
Instructions
(a) Compute all of the materials and labor variances.
(b) Compute the total overhead variance.
Total materials variance $ _____ UnfavorableFavorable
Materials price variance $________ FavorableUnfavorable
Materials quantity variance $_______ UnfavorableFavorable
Total labor variance $________ UnfavorableFavorable
Labor price variance $______ UnfavorableFavorable
Labor quantity variance $ ______ UnfavorableFavorable
Aug 29, 2021 | Uncategorized
Roxie Company has 17,500 units of its sole product that it produced last year at a cost of $45 each. This year’s model is superior to last year’s and the 17,500 units cannot be sold for their regular selling price of $80 each. Roxie has two alternatives for these items: (1) they can be sold to a wholesaler for $35 each, or (2) they can be reworked at a total cost of $450,000 and then sold for $60 each. The company has enough idle capacity to rework these items without affecting any new production. Which choice would increase the company’s profits the most?
Reworking, because profit will increase by $600,000 more than scrapping.
Scrapping, because profit will increase by $612,500 more than reworking.
Reworking, because profit will increase by $12,500 more than scrapping.
Scrapping, because profit will increase by $12,500 more than reworking.
Reworking because profit will increase by $450,000 more than scrapping.
Aug 29, 2021 | Uncategorized
Royal Company manufactures 20,000 units of part R 3 each year for use on its production line. At this level of activity, the cost per unit for part R 3 is:
Direct materials $ 5.70
Direct labor 7.00
Variable manufacturing overhead 3.60
Fixed manufacturing overhead 9.00
Total cost per part $ 25.30
An outside supplier has offered to sell 20,000 units of part R 3 each year to Royal Company for $41.00 per part. If Royal Company accepts this offer, the facilities now being used to manufacture part R 3 could be rented to another company at an annual rental of $423,000. However, Royal Company has determined that $6 of the fixed manufacturing overhead being applied to part R 3 would continue even if part R 3 were purchased from the outside supplier.
Required:
b. What is the total relevant cost of buying the product? (Omit the “$” sign in your response.)
Total relevant cost of buying the product (20,000 units) $____________
Aug 29, 2021 | Uncategorized
Of all sales 35% are cash sales
Of all sales 60% are collected with the month of sale. Half of the credit sales collected within the month receive a 2% cash discount (if paid in 10 days). 20% credit sales collected following month; remaining credit sales collected the month thereafter. There is virtually no bad debt.
Sales for 2nd quarter (1st 3 months actual sales 2nd 3 months estimated sales):
April 450,000
May 580,000
June 900,000
July 1,140,000
August 1,200,000
September 1,134,000
Company sell all it produces each month. Cost of raw materials 22% of each sales dollar. The co. requires a monthly ending inventory equal to the coming month’s production requirements. Of raw purchases, 50% are paid in the month of purchases. The remaining 50% is paid for in the following month.
Wages $105,000 each month and are paid in the month incurred.
Budgeted monthly operating exp. Total $336,000 (45,000 depreciation, 6,000 expiration of prepaid insurance (annual premium of $72,000 is paid in Jan)
Dividends of $130,000, declared on June 30, will be paid on July 15
Old equipment will be sold for $25,200 on July 4
One July 13, new equip. will be purchased for $173,000
Company maintains a minimum cash balance of $20,000
The cash bal. on July 1 is $27,000
1. Prepare a case budget for July.
2. Give a supporting schedule that details the cash collections from sales.
Aug 29, 2021 | Uncategorized
Santana Rey, owner of Business Solutions, realizes that she needs to begin accounting for bad
debts expense. Assume that Business Solutions has total revenues of $44,000 during the first three months
of 2012, and that the Accounts Receivable balance on March 31, 2012, is $22,867.
Required
1. Prepare the adjusting entry needed for Business Solutions to recognize bad debts expense on March
31, 2012, under each of the following independent assumptions (assume a zero unadjusted balance in
the Allowance for Doubtful Accounts at March 31).
a. Bad debts are estimated to be 1% of total revenues. (Round amounts to the dollar.)
b. Bad debts are estimated to be 2% of accounts receivable. (Round amounts to the dollar.)
2. Assume that Business Solutions’ Accounts Receivable balance at June 30, 2012, is $20,250 and that
one account of $100 has been written off against the Allowance for Doubtful Accounts since March
31, 2012. If S. Rey uses the method prescribed in Part 1b, what adjusting journal entry must be made
to recognize bad debts expense on June 30, 2012?
3. Should S. Rey consider adopting the direct write off method of accounting for bad debts expense
rather than one of the allowance methods considered in part 1? Explain.
Aug 29, 2021 | Uncategorized
Sears Corporation prepares quarterly financial statements. The balance sheet at 12/31/11 is presented below.
Balance Sheet
12/31/2011
Cash $24,300 Accounts payable $22,370
Accounts receivable 22,400 Common stock 85,000
Allowance for doubtful accounts (1,200) Retained earnings 23,130
Land 20,000
Equipment 30,000
Accumulated depreciation
equipment (20,000)
Building 70,000
Accumulated depreciation
building (15,000)
$130,500 $130,500
During the first quarter of 2012 the following transactions occurred:
1. Performed services for $140,000 on account.
2. On 2/1/12, collected fees of $12,000 in advance. $1,000 worth of services are to be performed each month from 2/1/12 to 1/30/13.
3. On 2/1/12, purchased equipment for $15,000 plus sales taxes of $750. $3,000 cash was paid with the remaining balance on account. Check #455 was used.
4. Collected $133,000 on 3/5/12 from customers on account.
5. Paid $16,370 on accounts payable. Check #456 was used.
6. Paid operating expenses of $97,500. Check #457 was used.
7. Acquired a patent with a 10 year life for $9,600 cash on 3/1/12. Check #458 was used.
8. Wrote off a receivable of $200 for a customer who went bankrupt.
9. On 3/31/12, Sears Corp sold for $2,620 cash equipment which originally cost $13,000. It had an estimated life of 5 years and salvage of $2,000. It had an estimated life of 5 years and a salvage of $2,000. Accumulated depreciation as of 12/31/2011 was $8,000 using the straight line method. (1) Record depreciation on the equipment sold, then (2) record the sale.
10. AJE 3/31/2012: Record revenue earned from item 2 above.
11. AJE: At 3/31/2012, $26,000 of Accounts Receivable is not yet due. The bad debt percentage for these current receivables is 4%. The remaining balance in Accounts Receivable is past due. The bad debt percentage for these receivables is 23.75%. Record bad debt expense.
HINT: You will need to calculate the balance in accounts receivable before calculating bad debt expense.
12. AJE: Record depreciation as of 3/31/12. The new equipment purchased in February is being depreciated using the double declining balance method over 5 years. The equipment has an estimated salvage value of $1,000. The equipment that was on the books on 12/31 that is still owned by Sears is being depreciated over a 10 year life using straight line with no salvage value.
13. AJE: Depreciation is recorded on the building on a straight line basis using a 30 year life and a salvage value of $10,000.
14. AJE: Amortization is recorded on the patent.
15. The company reconciles its bank statement every quarter. Information from the 12/31/11 Bank Reconciliation is provided below:
Deposit in transit 12/30/11 $5,000
Outstanding Checks #440 $3,444
#452 333
#453 865
#454 5,845
The Bank statement received for the quarter ended 3/31/10 was:
Beginning balance per bank $ 29,787
Deposits: 1/2/12 $5,000; 2/2/12 $12,000; 3/6/12 $133,000 150,000
Checks: #452 $333; #453 $865; #456 $16,370; #457 $97,500 ( 115,068)
Debit memo: Bank service charge (Record as operating expense) (100)
Ending bank balance $ 64,619
16. AJE: Sears Corp’s income tax rate is 40%. The tax will be paid when the tax return is due in April.
Hint: Prepare the income statement up to income before taxes and multiply by 40% to compute the amount of income tax expense.
a. Enter the transactions numbered 1 9 in the general journal.
b. Enter the 12/31/11 balances in ledger accounts. Use the ledger account running balance format accounts provided on the following pages.
c. Post the journal entries to the ledger accounts for items 1 9.
d. Prepare an unadjusted trial balance at March 31st and enter on the worksheet.
Using your unadjusted trial balance above and the data for adjusting entries, prepare a 10 column worksheet.
e. Prepare a bank reconciliation in good form. (Item 15 above.) Use your own paper. Record the necessary AJE.
f. Journalize and post all other adjusting entries. (Items 10 16)
g. Prepare an income statement and a retained earnings statement for the quarter ended 3/31/12 and a classified balance sheet at 3/31/12. Use your own paper. (No formatted sheets are supplied as for the other items.)
Parts: a, e and f
Extra Credit 2 ‘ General Journal Debit Credit
a.1.
a.2.
a.3.
a.4.
a.5.
a.6.
a.7.
a.8.
a.9.
a.10.
a.11.
a.12.
a.13.
a.14.
a.15.
a.16.
General Ledger Parts: b, c and d
CASH DR CR BALANCE
Beginning
Item 2
Item 3
Item 4
Item 5
Item 6
Item 7
Item 9
Item 15
ACCOUNTS RECEIVABLE DR CR BALANCE
Beginning
Item 1
Item 4
Item 8
ALLOWANCE FOR DOUBTFUL ACCTS DR CR BALANCE
Beginning
Item 8
Item 11
LAND DR CR BALANCE
Beginning
EQUIPMENT DR CR BALANCE
Beginning
Item 3
Item 9
ACCUM DEPR EQUIPMENT DR CR BALANCE
Beginning
Item 9
Item 9
Item 12
General Ledger continued
BUILDING DR CR BALANCE
Beginning
ACCUM DEPR BUILDING DR CR BALANCE
Beginning
Item 13
PATENTS DR CR BALANCE
Item 7
Item 14
ACCOUNTS PAYABLE DR CR BALANCE
Beginning
Item 3
Item 5
UNEARNED REVENUE DR CR BALANCE
Item 2
Item 10
INCOME TAXES PAYABLE DR CR BALANCE
Item 16
COMMON STOCK DR CR BALANCE
Beginning
RETAINED EARNINGS DR CR BALANCE
Beginning
SERVICE REVENUE DR CR BALANCE
Item 1
Item 10
OPERATING EXPENSES DR CR BALANCE
Item 6
Item 15
General Ledger continued
DEPRECIATION EXPENSE DR CR BALANCE
Item 9
Item 12
Item 13
AMORTIZATION EXPENSE DR CR BALANCE
Item 14
LOSS ON DISPOSAL DR CR BALANCE
Item 9
BAD DEBT EXPENSE DR CR BALANCE
Item 11
INCOME TAX EXPENSE DR CR BALANCE
Item 16
Aug 29, 2021 | Uncategorized
Selected transactions for D. Reyes, Inc., an interior decorating firm, in its first month of business, are as follows.
Jan.
2
Invested $10,000 cash in business in exchange for common stock.
3
Purchased used car for $4,000 cash for use in business.
9
Purchased supplies on account for $500.
11
Billed customers $1,800 for services performed.
16
Paid $200 cash for advertising.
20
Received $700 cash from customers billed on January 11.
23
Paid creditor $300 cash on balance owed.
28
Declared and paid a $1,000 cash dividend.
Instructions
For each transaction indicate the following.
(a) The basic type of account debited and credited (asset, liability, owner’s equity).
(b) The specific account debited and credited (cash, rent expense, service revenue, etc.).
(c) Whether the specific account is increased or decreased.
(d) The normal balance of the specific account.
Account Debited Account Credited
(a) (b) (c) (d) (a) (b) (c) (d)
Date Basic Type Specific Account Effect Normal Balance Basic Type Specific Account Effect Normal Balance
Jan. 2 Asset Cash Increase Debit Stockholder’s Equity Common Stock Increase Credit
3
9
11
16
20
23
28
Aug 29, 2021 | Uncategorized
Selected year end financial statements of McCord Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2010, were inventory, $53,900; total assets, $219,400; common stock, $85,000; and retained earnings, $52,148.)
McCORD CORPORATION
Income Statement
For Year Ended December 31, 2011 |
| Sales |
$ |
455,600 |
| Cost of goods sold |
|
297,850 |
|
|
|
| Gross profit |
|
157,750 |
| Operating expenses |
|
99,300 |
| Interest expense |
|
4,100 |
|
|
|
| Income before taxes |
|
54,350 |
| Income taxes |
|
21,894 |
|
|
|
| Net income |
$ |
32,456 |
|
|
|
|
McCORD CORPORATION
Balance Sheet
December 31, 2011 |
| Assets |
|
|
|
Liabilities and Equity |
|
|
| Cash |
$ |
8,000 |
|
Accounts payable |
$ |
18,500 |
| Short term investments |
|
9,400 |
|
Accrued wages payable |
|
3,800 |
| Accounts receivable, net |
|
33,400 |
|
Income taxes payable |
|
4,700 |
| Notes receivable (trade)* |
|
4,000 |
|
Long term note payable, secured |
|
|
| Merchandise inventory |
|
34,150 |
|
by mortgage on plant assets |
|
72,400 |
| Prepaid expenses |
|
2,800 |
|
Common stock |
|
85,000 |
| Plant assets, net |
|
150,300 |
|
Retained earnings |
|
57,650 |
|
|
|
|
|
|
|
| Total assets |
$ |
242,050 |
|
Total liabilities and equity |
$ |
242,050 |
|
|
|
|
|
|
|
|
| * These are short term notes receivable arising from customer (trade) sales. |
| Required: |
| Compute the following. (Use 365 days a year. Do not round intermediate calculations and round your final answers to 1 decimal place. Omit the “%” sign in your response):
| (6) |
Debt to equity ratio |
|
to |
|
| (7) |
Times interest earned |
|
times |
|
| (8) |
Profit margin ratio |
|
% |
|
| (9) |
Total asset turnover |
|
times |
|
| (10) |
Return on total assets |
|
% |
|
Aug 29, 2021 | Uncategorized
Sergo Games produces a variety of action games including a flight simulation game, Airport 10, which sold more than 800,000 copies in the past year. The programs are run on computers, and the company operates an in house production facility that manufactures and packages CDs for shipment to customers. In 2011, the production plant prepared 3,000,000 CDs and incurred the following costs:
Units processed 3,000,000
Labor $1,000,000
Material 5,400,000
Supervisory salaries 300,000
Depreciation of equipment 400,000
Heat, light, phone, etc. 200,000
Total $7,300,000
Leslie Eastman, an accounting manager, has been given the responsibility to analyze outsourcing the production of CDs. Her report is provided below:
Sergo Games
April 19, 2012
TO: Shane Santiago, CFO
FROM: Leslie Eastman
SUBJECT: Outsourcing CD production
In 2011, total production and packaging costs were $7,300,000 or $2.43 per CD. The low cost outside bidder for this business was XLS. They are a highly respected firm, and their offer is $2.33 per CD. Although the savings related to outsourcing is only $0.10 per CD, with annual production of 3,000,000 units, this amounts to $300,000 per year. The present value with a five year horizon and a 12 percent cost of capital is $1,081,440. Thus, I recommend that we outsource CD production. You asked me to determine the selling price of the production equipment. I had a representative of XLS walk through the facility. In his opinion, the equipment is dated, and he believes that the market value is essentially zero. At any rate, his company is not interested in purchasing the equipment even if we select them as a supplier. If we outsource, I do not believe that we can use the production facility for another purpose. As you know, the building is run down, and it’s not a suitable space even for programmers!
Finally, I want to mention another aspect of the problem that enhances the appeal of outsourcing. We currently have equipment with a book value of $2,000,000 and an average remaining life of five years. This generates approximately $400,000 per year of depreciation. If we outsource, we’ll have a $2,000,000 tax loss, which will save us approximately $700,000 (assuming a 35 percent tax rate). Thus, the total value of outsourcing is $1,781,440 (i.e., $1,081,440 + $700,000). Please call me if you have any questions regarding my analysis.
Required:
Should production of CDs be outsourced? Unlike Leslie, support your answer with appropriate calculations.
Aug 29, 2021 | Uncategorized
Sevilla Consulting offers environmental consulting services worldwide. The managers of branch offices are rewarded for superior performance with bonuses based on the economic value that the office adds to the company. Last year’s operating results for the results for the entire company and for its three officers, expressed in millions of U.S. dollars as are follows:
Worldwide Europe Americas Asia
Cost of Capital 9% 10% 8% 12%
Total Assets $210 $70 $70 $70
Current Liabilities $80 $10 $40 $30
After tax operating income $15 $5 $5 $5
1. Compute the economic value for each office worldwide. What factors affect each office’s economic value added? How can an office improve its economic value added?
2. If manager’s bonuses are based on economic value added to office performance, what specific action will managers be movitated to take?
3. Is economic value added the only performance measure needed to evaluate investment centers adequately? Explain your response.
Aug 29, 2021 | Uncategorized
Shannon Inc. has been manufacturing its own shades for its table lamps. The company is currently operating at 100% of capacity. Variable manufacturing overhead is charged to production at the rate of 50% of direct labor cost. The direct materials and direct labor cost per unit to make the lamp shades are $4.00 and $6.00, respectively. Normal production is 40,000 table lamps per year.
A supplier offers to make the lamp shades at a price of $13.50 per unit. If Shannon Inc. accepts the supplier’s offer, all variable manufacturing costs will be eliminated, but the $40,000 of fixed manufacturing overhead currently being charged to the lamp shades will have to be absorbed by other products.
Instructions
Complete the incremental analysis for the decision to make or buy the lamp shades. (If an amount should be blank, enter a zero. All boxes must be filled to be correct. If amount decreases net income, use either a negative sign preceding the number eg 45 or parentheses eg (45).)
Make Buy Net Income
Increase
(Decrease)
Direct materials $ $ $
Direct labor
Variable manufacturing costs
Fixed manufacturing costs
Purchase price
Total annual cost $
$
$
Should Shannon Inc. buy the lamp shades?
Yes/No
Would your answer be different if the productive capacity released by not making the lamp shades could be used to produce income of $35,000?
Aug 29, 2021 | Uncategorized
Smithton, Inc. produces four types of computer chips. Two of these (W and X) are sold by the business. The others (Y and Z) are incorporated, as components, into another of the company’s products. Computer chips Y and Z are not incorporated into either computer chip W or X. The four types of computer chips have the following costing (per unit):
W X Y Z
Variable materials 100 90 80 92
Variable labour 50 30 45 57
Other variable costs 34 10 12 17
Fixed costs 25 18 34 13
Total Cost per unit 209 149 171 179
Selling price per unit 250 220
An outside supplier is willing and able to supply unlimited quantities of products Y and Z to the business at a cost of A??L209 per unit of computer chip Y and A??L196 per unit of computer chip Z.
Smithton, Inc. has estimated the demand for its computer chips for the upcoming year. For chips W and X, the following is the market demand; for chips Y and Z, the following represents demand from estimated production requirements:
Units
W 6,500
X 5,500
Y 3,700
Z 3,400
Also, production of the computer chips is completed with a specialized machine. Each chip requires the following time:
Hours per unit
W 0.6
X 0.5
Y 0.6
Z 0.2
The machine is expected to be available for a maximum of 6,000 hours. No other shortages of any other production factor are expected.
Question:
1. Complete the necessary calculations in order to determine which products the business should plan to make next year. You will need to state your suggestions and support them with the calculations and assumptions presented.
Aug 29, 2021 | Uncategorized
Special Project on Budgeting and Variances
Spring 2012
The following information relates to Sanchez Company, which sells wooden podiums.
A?· Beginning cash balance on July 1: $30,000.
A?· Cash receipts from sales: 30% is collected in the month of sale, 50% in the next month, and 20% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual), $1,032,000; June (actual), $720,000; and July (budgeted), $840,000.
A?· Payments on merchandise purchases: 60% in the month of purchase and 40% in the month following purchase. Purchases amounts are: June (actual), $258,000; and July (budgeted), $600,000.
A?· Budgeted cash disbursements for salaries in July: $126,600.
A?· Budgeted depreciation expense for July: $7,200.
A?· Other cash expenses budgeted for July: $90,000.
A?· Accrued income taxes due in July: $80,000 (related to June).
A?· Bank loan interest due in July: $3,960.
A?· Budgeted cost of goods sold is 44% of sales.
A?· Budgeted sales price is $25 per podium.
Required:
1. Prepare a cash budget for the month of July. Show all of your calculations.
2. Prepare a budgeted income statement for the month of July at the current budgeted sales level.
Assume that at the end of July, Sanchez Company reported the following actual results:
|
Sanchez Company
Statement of Income
For month ended 7/31/2012
|
|
Sales (34,000 podiums)
|
|
$ 884,000
|
|
Cost of goods sold
|
|
(388,960)
|
|
Gross profit
|
|
$ 495040
|
|
Salaries expense
|
$ 138,600
|
|
|
Depreciation expense
|
7,200
|
|
|
Other operating expenses
|
92,000
|
|
|
Interest expense
|
3,960
|
|
|
Tax expense
|
80,000
|
321,760
|
|
Net Income
|
|
$ 154,240
|
3. Prepare a flexible budget for the month of July for an actual sales level of 34,000 podiums.
Assume now that Sanchez Company is a manufacturing company. For August, they have established the following standard costs:
Direct Materials (wood):
2.5 feet per podium x $1.40 per foot
Direct Labor:
.53 hours per podium x $10.00 per hour
During August, the company made 28,800 podiums. Actual results showed:
Direct Materials:
$120,960 paid for 80,640 feet of wood
Direct Labor:
$151,200 paid for 14,400 hours
4. Determine the two direct material variances and the two direct labor variances. Then, explain what may have caused these variances.
I am not sure how to start this…any suggestions on how to do this?
Aug 29, 2021 | Uncategorized
For Specific Date (in millions) For Year 2011
work in process inventory 1/1/11 $18 plant utilities $9
direct materials inventory 12/31/11 $8 indirect manufacturing labor $27
finished good inventory 12/31/11 11 depreciation plant and equipment 6
accounts payable 12/31/11 24 revenues 355
accounts receivable 1/1/11 52 miscellaneous manufacturing overhead 15
work in process inventory 12/31/11 3 marketing distribution and customer
service costs 94
finished goods inventory 1/1/11 47 direct materials purchased 84
accounts receivable 12/31/11 38 direct manufacturing labor 42
accounts payable 1/1/11 49 plant supplies used 4
direct materials inventory 1/1/11 32 property taxes on plant 2
1. Calculate total prime costs and total conversion costs.
2. Calculate total inventoriable costs and period costs
3. Design costs and R&D costs are not considered product costs for financial statement purposes. When might some of these costs be regarded as product costs?
4. Suppose that both the direct materials used and the depreciation on plant and equipment are related to the manufacture of 2 million units. Determine the unit cost for the direct materials assigned to those units and the unit cost for depreciation on plant and equipment. assume that yearly deprecitaion is computed on a staight line basis.
5. Assume that the implied cost behavior patterns in requirement 4 persist. That is direct material costs behave as a variable cost and depreciation on plant and equipment behaves as a fixed cost. Repeat the computations in requirement 4 assuming that the costs are being predicted for the manufacture of 3 million units. Determine the effects on total costs.
6. Assume that deprecitaion on equipment not plant is computed based on number of units produced. The depreciation rate on equipment is $1 per unit. Calculate depreciation assuming 2 million produced and 3 million produced.
Aug 29, 2021 | Uncategorized
Springs Company produces two types of calculators, scientific and business. Both products pass through producing departments. The business calculator is by far the most popular. The following data have been gathered for these two products:
Product Related Data
Scientific Business Total
Units produced per year 30,000 300,000
Prime Costs $100,000 $1,000,000 1,100,000
Direct Labor hours 40,000 400,000 440,000
Machine hours 20,000 200,000 220,000
Production runs 40 60 100
Inspection Hours 800 1,200 2,000
Maintenance hours 900 3,600 4,500
Department Data
Department 1 Department 2 Total
Direct labor Hours:
Scientific calculator 30,000 10,000 40,000
Business calculator 45,000 355,000 400,000
Total 75,000 365,000 440,000
Machine Hours:
Scientific calculator 10,000 10,000 20,000
Business calculator 160,000 40,000 200,000
Total 170,000 50,000 220,000
Overhead costs:
Setup costs $90,000 $90,000 180,000
Inspection costs 70,000 70,000 140,000
Power 100,000 60,000 160,000
Maintenance 80,000 100,000 180,000
Total $340,000 320,000 660,000
1) Compute the overhead cost per unit for each product using a plantwide, unit based rate.
Scientific calculator
Business calculator
2) Compute the overhead cost per unit for each product using departmental rates. In calculating
department rates use machine hours for department 1 and direct labor hours for department 2.
Scientific calculator
Business calculator
Repeat using direct labor hours for department 1 and machine hours for department 2.
Scientific calculator
Business calculator ,
3) Compute the overhead cost per unit for each product using activity based costing.
Scientific calculator
Business calculator
Aug 29, 2021 | Uncategorized
Stanco, Inc., is a decentralized organization with five divisions. The company’s Electronics Division produces a variety of electronics items, including an XL5 circuit board. The division (which is operating at capacity) sells the XL5 circuit board to regular customers for $14.70 each. The circuit boards have a variable production cost of $8.85 each.
The company’s Clock Division has asked the Electronics Division to supply it with a large quantity of XL5 circuit boards for only $8.90 each. The Clock Division, which is operating at only 60% of capacity, will put the circuit boards into a timing device that it will produce and sell to a large oven manufacturer. The cost of the timing device being manufactured by the Clock Division follows:
XL5 circuit board (desired cost) $ 8.90
Other purchased parts (from outside vendors) 40.00
Other variable costs 20.70
Fixed overhead and administrative costs 10.00
Total cost per timing device $ 79.60
The manager of the Clock Division feels that she can’t quote a price greater than $79.85 per timing device to the oven manufacturer if her division is to get the job. As shown above, in order to keep the price at $79.85 or less, she can’t pay more than $8.90 per unit to the Electronics Division for the XL5 circuit boards. Although the $8.90 price for the XL5 circuit boards represents a substantial discount from the normal $14.70 price, she feels that the price concession is necessary for her division to get the oven manufacturer contract and thereby keep its core of highly trained people.
The company uses return on investment (ROI) to measure divisional performance.
Required:
2.
Calculate the net positive effect on the company’s profit per device if the Electronics Division is required to supply the Clock Division with the circuit boards for $8.90 each? (Round your answer to 2 decimal places. Omit the “$” sign in your response.)
Net positive effect $________________ per device
3.
In principle, within what range would that transfer price lie? (Round your answers to 2 decimal places. Omit the “$” sign in your response.)
The transfer price can be a lowest of $_____________ and a highest of $_____________ .
Aug 29, 2021 | Uncategorized
Stanco, Inc., is a decentralized organization with five divisions. The company’s Electronics Division produces a variety of electronics items, including an XL5 circuit board. The division (which is operating at capacity) sells the XL5 circuit board to regular customers for $15.00 each. The circuit boards have a variable production cost of $8.65 each.
The company’s Clock Division has asked the Electronics Division to supply it with a large quantity of XL5 circuit boards for only $8.90 each. The Clock Division, which is operating at only 60% of capacity, will put the circuit boards into a timing device that it will produce and sell to a large oven manufacturer. The cost of the timing device being manufactured by the Clock Division follows
XL5 circuit board (desired cost) $8.9
other purchased parts (from outside vendors) $36
Other variable costs $21
Fixed overhead and administrative costs $10
total cost per timing device $75
The manager of the Clock Division feels that she can’t quote a price greater than $76.15 per timing device to the oven manufacturer if her division is to get the job. As shown above, in order to keep the price at $76.15 or less, she can’t pay more than $8.90 per unit to the Electronics Division for the XL5 circuit boards. Although the $8.90 price for the XL5 circuit boards represents a substantial discount from the normal $15.00 price, she feels that the price concession is necessary for her division to get the oven manufacturer contract and thereby keep its core of highly trained people.
The company uses return on investment (ROI) to measure divisional performance.
Required:
1. Assume that you are the manager of the Electronics Division.
a.What is the minimum transfer price you will charge to supply the XL5 circuit boards to the Clock Division? (Round your answer to 2 decimal places. Omit the “$” sign in your response.)
Minimum Transfer Price = ??????????
2. Calculate the net positive effect on the company’s profit per device if the Electronics Division is required to supply the Clock Division with the circuit boards for $8.90 each? (Round your answer to 2 decimal places. Omit the “$” sign in your response.)
Net positive effect = ???????? per device
3. In principle, within what range would that transfer price lie? (Round your answers to 2 decimal places. Omit the “$” sign in your response.)
The transfer price can be lowest of $ ??????? and a highest of $ ????????
Aug 29, 2021 | Uncategorized
State of economy is Boom Probability of state of econmy is.15 Rate of Return if state occurrs for
Stock A is .30, Stock B .45 and Stock C is .33.
State of economy is Good the Probability of state of econmy is.12 Rate of Return if state occurrs for
Stock A is ..12, Stock B .10 and Stock C is .15.
State of economy is Poor the probability of state of econmy is..35 Rate of Return if state occurrs for
Stock A is ..01, Stock B .15 and Stock C is .05.
State of economy is Bust theProbability of state of econmy is.05 Rate of Return if state occurrs for
Stock A is .06, Stock B .30 and Stock C is .09
Your portfolio is invested 30% each in A and C, and 40% in B. What is the expected return of the portfolio? What is the variance of this portfolio, The standard deviation of the portfolio?
Aug 29, 2021 | Uncategorized
he state of Ohio needs to raise $25,000,000 for highway repairs. Officials are considering issuing zero coupon bonds, which do not require periodic interest payments. The current market interest rate for the bonds is 8 percent.
What face value of bonds must be issued to raise the needed funds, assuming the bonds will be due in 30 years and compounded annually? Round your answer to nearest million.
a. face value of 30 year, 8% zero coupon bonds, compounded annually:
b. How would your answer change if the bonds were due in 50 years? Round your answer to two decimal places.
Face value of 50 year, 8% zero coupon bonds, compounded annually:
How would both answers change if the market interest rate were 6 percent instead of 8 percent?
c. Face value of 50 year, 6% zero coupon bonds, compounded annually:
Round your answer to the nearest million.
Aug 29, 2021 | Uncategorized
Statement and Note Disclosure, LCM, and Purchase Commitment)
Maddox Specialty Company, a division of Lost World Inc., manufactures three models of gear shift components for bicycles that are sold to bicycle manufacturers, retailers, and catalog outlets. Since beginning operations in 1978, Maddox has used normal absorption costing and has assumed a first in, first out cost flow in its perpetual inventory system. The balances of the inventory accounts at the end of Maddox’s fiscal year, November 30, 2010, are shown below. The inventories are stated at cost before any year end adjustments.
Finished goods $647,000
Work in process 112,500
Raw materials 264,000
Factory supplies 69,000
The following information relates to Maddox’s inventory and operations.
The finished goods inventory consists of the items analyzed below. Cost
Market
Down the tube shifter
Standard model $67,500 $67,000
Click adjustment model 94,500 89,000
Deluxe model 108,000
110,000
Total down the tube shifters 270,000
266,000
Bar end shifter
Standard model 83,000 90,050
Click adjustment model 99,000
97,550
Total bar end shifters 182,000
187,600
Head tube shifter
Standard model 78,000 77,650
Click adjustment model 117,000
119,300
Total head tube shifters 195,000
196,950
Total finished goods $647,000
$650,550
One half of the head tube shifter finished goods inventory is held by catalog outlets on consignment.
Three quarters of the bar end shifter finished goods inventory has been pledged as collateral for a bank loan.
One half of the raw materials balance represents derailleurs acquired at a contracted price 20 percent above the current market price. The market value of the rest of the raw materials is $127,400.
The total market value of the work in process inventory is $108,700.
Included in the cost of factory supplies are obsolete items with an historical cost of $4,200. The market value of the remaining factory supplies is $65,900.
Maddox applies the lower of cost or market method to each of the three types of shifters in finished goods inventory. For each of the other three inventory accounts, Maddox applies the lower of cost or market method to the total of each inventory account.
Consider all amounts presented above to be material in relation to Maddox’ financial statements taken as a whole.
Prepare the inventory section of Maddox’s balance sheet as of November 30, 2010. (List multiple entries from the largest positive to the smallest positive amount, e.g. 10, 5, 2.)
Current Assets
Inventory Section
PurchasesInventorySalesWork in processFinished goodsFactory suppliesRaw materials $
Finished goodsWork in processPurchasesSalesRaw materialsFactory suppliesInventory
Work in processPurchasesFinished goodsRaw materialsFactory suppliesInventorySales
Work in processFinished goodsRaw materialsInventoryFactory suppliesPurchasesSales
Total inventories $
Aug 29, 2021 | Uncategorized
Hello my friends, please make sure you find me the best tutor to help score a better grade this time..Thanks
Aug 29, 2021 | Uncategorized
- Identify at least two control procedures for each of the situations below.
- Controls can include physical controls, general controls, application controls, data input controls, output controls, processing controls
- Any control you’ve studied to date
- Be creative—if you owned the business, what would you do?
- Be very specific; citing segregation of duties is not sufficient. You must identify which specific duties should be segregated
- Remember preventive controls are better than detective controls
- Identify the best control first
- Identify as many relevant controls as possible
- I have identified the number of controls I identified in parentheses at the end of each scenario
- I have completed letter a as an example
a. Shipping department employees steal inventory, claiming that the inventory shortages reflect errors in the perpetual inventory records. (7)
- Segregation of duties between Warehouse, Shipping, Inventory Control, and Sales
- Bar codes or RFID tags to eliminate errors in data entry of item numbers
- Move document—Warehouse employees and Shipping employees should sign picking ticket to document transfer of inventory from the Warehouse to the Shipping department
- Logical access controls—neither Warehouse nor Shipping employees should have access to inventory subsidiary ledgers or general ledger control accounts
- Video surveillance of shipping dock
- Physical access controls—only authorized employees should have physical access to the Warehouse and Shipping areas
- Prompt investigation of customer complaints about shorted shipments
b. An employee posts a sale to the wrong customer account because he incorrectly keys the customer account number into the system. (5)
c. An employee makes a credit sale to a customer who is already four months behind in making payments on his account. (4)
d. An employee authorizes a credit memo for a sales return, when the goods were never actually returned. (2)
e. An employee writes off a customer’s accounts receivable balance as uncollectible to conceal the theft of subsequent cash payments from that customer. (9)
f. Customers are billed for the quantity ordered, but the quantity shipped is actually less, because some items have been backordered. (2)
g. The mailroom clerk steals checks and then endorses them for deposit into the clerk’s personal bank account. (7)
h. A retail store cashier steals money from the cash register. (5)
- A restaurant server steals cash from customers who paid cash, and alters sales tickets to hide the theft. (5)
- Inventory is shipped to a customer, but the customer is not billed. (6)
- A business loses sales because of stockouts of several products for which the computer records indicated there was adequate quantity on hand. (8)
- A business experiences unauthorized disclosure of the buying habits of several well known customers. (7)
- A business loses all information about amounts owed by customers in New York City because the master database for that office was destroyed in a fire. (4)
- The company’s Web processing site is unavailable for seven hours because of a power outage. (3)
- A sales clerk sells a $7,000 wide screen TV to a friend and alters the price to $700. (5)
- A fire in the office next door damages the company’s servers and all optical and magnetic media in the server room. The company immediately implements its disaster recovery procedures and shifts to a hot site several miles away. The company has made full daily backups of all files and has stored a copy at the hot site. However, none of the backup copies are readable. (3)
Aug 29, 2021 | Uncategorized
Here are more questions i would like you to review for me and please can i have the explanation behind them so i can study them , thank you 🙂
(Ignore income taxes in this problem.) Pare Long Haul, Inc. is considering the purchase of a tractor trailer that would cost $104,520, would have a useful life of 6 years, and would have no salvage value. The tractor trailer would be used in the company’s hauling business, resulting in additional net cash inflows of $24,000 per year. The internal rate of return on the investment in the tractor trailer is closest to:
a. 10%
b. 8%
c. 13%
d. 11%
(Ignore income taxes in this problem.) The management of Crail Corporation is considering a project that would require an initial investment of $51,000. No other cash outflows would be required. The present value of the cash inflows would be $60,180. The profitability index of the project is closest to:
a. 0.18
b. 0.82
c. 1.18
d. 0.15
A project profitability index greater than zero for a project indicates that:
a. the discount rate is less than the internal rate of return.
b. there has been a calculation error.
c. the project is unattractive and should not be pursued.
d. the company should reevaluate its discount rate.
Venanzi Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $40,720 per month plus $2,646 per flight plus $11 per passenger. The company expected its activity in September to be 62 flights and 288 passengers, but the actual activity was 64 flights and 289 passengers. The actual cost for plane operating costs in September was $214,430. The activity variance for plane operating costs in September would be closest to:
a. $6,490 U
b. $5,303 F
c. $6,490 F
d. $5,303 U
Aug 29, 2021 | Uncategorized
Rahul Corporation
Comparative Income Statement and Reconciliation of Retained Earnings
For the Year Ended December 31, 2012 and 2011 2012 2011
Sales $ 84,500 $ 83,000
Cost of goods sold 56,900 56,600
Gross margin 27,600 26,400
Operating expenses:
Selling expenses 14,400 13,500
Administrative expenses 8,800 8,400
Total operating expenses 23,200 21,900
Income from operations 4,400 4,500
Interest expense 1,200 1,000
Income before taxes 3,200 3,500
Less income taxes 1,280 1,400
Net income 1,920 2,100
Dividends to preferred shareholders 440 520
Net income remaining for common stockholders 1,480 1,580
Dividends to common stockholders 580 580
Net income added to retained earnings 900 1,000
Retained earnings, beginning of the year 32,220 31,220
Retained earnings, end of the year $ 33,120 $ 32,220
Required: Compute the following financial ratios for the year 2012:
a. Current ratio.
b. Acid test ratio ( quick ratio).
c. Debt to equity ratio.
d. Times interest earned. Comment on the results.
Aug 29, 2021 | Uncategorized
Randy’s Kayaks, Inc. manufactures and sells one person fiberglass kayaks. Randy’s balance sheet at the end of 2011was as follows:
RANDY’S KAYAKS, INC.
Balance Sheet
December 31, 2011
ASSETS
Cash $ 52,000
Accounts receivable 1,200,000
Raw materials inventory* 120,000
Finished goods inventory** 287,500
Plant assets, net of accumulated
Depreciation 2,135,000
Total Assets $ 3,794,500
LIABILITIES
Accounts payable $ 131,000
STOCKHOLDERS’EQUITY Common Stock 1,600,000
Retained Earnings 2,063,500
Total Liabilities & SE $ 3,794,500
use in preparing the budget for 2012:
*40,000 pounds **1,000 kayaks
The following additional data is available for use in preparing the budget for 2012:
Cash collections (all sales are on account):
Collected in the quarter of sale 40%
Collected in the quarter after sale 60%
(Bad debts are negligible and can be ignored)
Cash disbursements for raw materials (all purchases are on account):
Cash paid in the quarter of purchase 70%
Cash paid in the quarter after purchase 30%
Desired quarterly ending Raw materials inventory 40% of next quarter’s production needs.
Desired quarterly ending Finished goods inventory 10% of next quarter’s sales
Budgeted sales:
1st quarter 2012 10,000 kayaks
2nd quarter 2012 15,000 kayaks
3rd quarter 2012 16,000 kayaks
4th quarter 2012 14,000 kayaks
1st quarter 2013 10,000 kayaks
2nd quarter 2013 12,000 kayaks
Anticipated equipment purchases:
1st quarter 2012 $30,000
2nd quarter 2012 $0
3rd quarter 2012 $0
4th quarter 2012 $150,000
Quarterly dividends to be paid each quarter in 2012 $4,000
Expected sales price per unit $400
Standard cost data:
Direct materials 10 pounds per kayak @ $3 per pound
Direct labor 10 hours per kayak @ $20 per hour
Variable manufacturing overhead $5 per direct labor hour
Fixed manufacturing overhead (includes $9,000 depreciation) $103,125 per quarter
Variable selling expenses $25 per kayak
Fixed selling and administrative expenses:
Insurance $45,000 per quarter
Sales salaries $30,000 per quarter
Depreciation $6,000 per quarter
Income tax rate 30%
Estimated income tax payments planned in 2012:
1st quarter $0
2nd quarter $50,000
3rd quarter $400,000
4th quarter $500,000
Randy’s desires to have a minimum cash balance at the end of each quarter of $50,000. In order to maintain this minimum balance, Randy’s may borrow from its bank in $10,000 increments with an interest rate of 6%. Money is borrowed at the beginning of the quarter in which a shortage is expected. Repayments of all or a portion of the principle (plus accrued interest on the amount being repaid) are made at the end of any quarter in which the cash balance exceeds the required minimum.
Requirements:
1.Use the above information to prepare the following components of the master budget:
a. Sales budget with a schedule of expected cash collections for each quarter and the year as a whole
b. Production budget for each quarter and the year as a whole
c. Direct materials purchases budget with a schedule of expected cash disbursements for materials for
i. each quarter and the year as a whole
d. Direct labor budget for each quarter and the year as a whole
e. Manufacturing overhead budget with expected cash disbursements for each quarter and the year as
i. a whole
f. Ending finished goods inventory budget for the year
g. Selling and administrative expense budget with expected cash disbursements for each quarter and
i. the year as a whole
h. Cash budget for each quarter and the year as a whole
i. Budgeted income statement for the year
j. Budgeted balance sheet for the end of the year
2.Prepare a brief memo to management with specific comments and/or recommendations relating to the budget.
Aug 29, 2021 | Uncategorized
Rawlings Corp. has two product lines, A and B. Rawlings has identified the following information about its overhead and potential cost drivers.
Total overhead $76,360
Cost drivers
Number of labor hours 3,300
Number of machine hours 46,000
1. Suppose the Rawlings Corp. uses a traditional costing system with number of labor hours as the cost driver. Determine the amount of overhead assigned to each product line if Product A requires 65% of the labor hours and Product B requires 35%. (Round your answers to the nearest dollar amount. Omit the “$” sign in your response.)
Overhead assigned
Product A:$____________
Product B:$____________
2. Suppose Rawlings uses a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line if Product A consumes 16,900 machine hours and Product B consumes 29,100. (Round intermediate calculations to 2 decimal places and your final answers to the nearest whole dollar amount. Omit the “$” sign in your response.)
Overhead assigned
Product A:$____________
Product B:$____________
Aug 29, 2021 | Uncategorized
A recent annual report for Target contained the following info at the end of the fiscal year:
A/R year 2 = $9,094,000 Allowance for doubtful accounts year 2 = $(1,010,000)
A/R year 1 = $8,624,000 Allowance for doubtful accounts year 1 = $(570,000)
A footnote to the financial statements disclosed that uncollectible accounts amounting to $811,000 and $428,000 were written off as bad debts during year 2 and year 1, respectively. Assume that the tax rate for the company is 30%.
1. Determine the bad debt expense for the year 2 based on the preceding facts. (hint: use the allowance for doubtful accounts t account to solve for the missing value).
2. How was the company’s working capital affected by the write off of 811,000 in year 2. What impact did the recording of bad debt expense have on working capital in year 2?
3. How was the net income affected by the 811,000 write off during year 2? What impact did recording the bad debt expense have on net income for year 2?
Aug 29, 2021 | Uncategorized
Record each of the following transaction in the journal and prepare a trial balance.
Dec 1. Received a check for $2352 from Bayview Realtors in payment of our invoice of Nov 22 for $2400.
Dec 1. Sold merchandise on account to South Florida Dental Group, invoice #707: computer $561.75: peripherals $506.25; total$1068.
Dec 1. Issued check # 1102 for $1492.05 to SF Computers in payments of its NOv invoice of $1522.5 fpr computers, less discount.
Dec 2. Purchased store supplies on account form Zack Store Supplies and Equipment for $296.25.
Dec 2. Issued check # 1103 for $2270 to Miami Insureance Agency for he premium on a $30000 policy for one year beginning Dec 1.
Dec 2. Issued check # 1104 for $1047.75 to One Stop Advertising for store advertsising materials.
Dec 2. Issued check # 1105 for $2456.25 to the South Miami Tabloid for newspaper advertising for the month of Dec.
Dec 3. Sold computers on account to Blue Water Enterpises, Invoice #708 for $4106.25.
Dec 3. Issued check # 1106 for $7011.75 tp Sam Furniture foe the purchase of new office equipment for the office.
Dec 3. Received an invoice for $560.25 from Lopez, Attorney for legal services.
Dec 3. Purchased computers on account for $5586.75 from SF Computers.
Dec 3. Purchased peripherals on account form Link Compugter for $2601.
Dec 3. Cash sales for Dec 1 3 were as follows: peripherals, $7824; computers, $5517.75.
Dec 10. Record the biweekly payroll in the general journal details as follows: Sales salaries, $2692.5; Office salaries, $438.75; officers salaries, $1500; Federal Income Tax withheld, $1387.5; FICA tax withheld, $347.34.
Dec 10. Issued check #1111 for $2896.41to Payroll Bank Account in payment of the net payroll.
Aug 29, 2021 | Uncategorized
The records of Simon Company show the following for February:
Standard labor hours allowed per unit of output 1.5
Standard variable overhead rate per standard direct labor hour $ 30
Good units produced 60,000
Actual direct labor hours worked 92,000
Actual total direct labor $ 1,975,000
Direct labor efficiency variance $ 40,000 U
Actual variable overhead $ 2,560,000
Required:
Compute the direct labor and variable overhead price and efficiency variances. (Input all amounts as positive values. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Do not round your intermediate calculations. Omit the “$” sign in your response.)
Price Variance Efficiency Variance
Direct labor $ $
Variable overhead $ $
Aug 29, 2021 | Uncategorized
Red Pine, Inc. established a $400 petty cash fund several months ago and replenishes it at the end of each month. During the first two weeks of March, $185 was disbursed from the petty cash box for miscellaneous items. If a surprise count of the fund is made on March 15, the petty cash box should contain:
A) $215 cash and receipts for $185 in expenditures.
B) $215 cash left for March plus $400 cash for each month since creation of the petty cash fund.
C) $400 cash.
D) $215 cash.
Harvard Company purchased equipment having an invoice price of $11,500. The terms of sale were 2/10, n/30, and Harvard paid within the discount period. In addition, Harvard paid a $160 delivery charge, $185 installation charge, and $931 sales tax. The amount recorded as the cost of this equipment is:
A) $11,615.
B) $12,546.
C) $12,776.
D) $11,845.
Aug 29, 2021 | Uncategorized
Reichenbach Co., organized in 2009, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2009 and 2010.
Intangible Assets
7/1/09 8 year franchise; expiration date 6/30/17 $ 48,000
10/1/09 Advance payment on laboratory space (2 year lease) 24,000
12/31/09 Net loss for 2009 including state incorporation fee, $1,000,
and related legal fees of organizing, $5,000 (all fees
incurred in 2009) 16,000
1/2/10 Patent purchased (10 year life) 84,000
3/1/10 Cost of developing a secret formula (indefinite life) 75,000
4/1/10 Goodwill purchased (indefinite life) 278,400
6/1/10 Legal fee for successful defense of patent purchased above 12,650
9/1/10 Research and development costs 160,000
Prepare the necessary entries to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles. Make the entries as of December 31, 2010, recording any necessary amortization and reflecting all balances accurately as of that date. (Ignore income tax effects.) (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Account/Description Debit Credit
GoodwillRent expensePrepaid rentRetained earnings(Organization costs)Research & development expenseFranchise amortization expensePatent amortization expenseRetained earningsIntangible assetsPatentsFranchises
Retained earningsPrepaid rentGoodwillPatent amortization expenseRetained earnings(Organization costs)PatentsIntangible assetsFranchise amortization expenseResearch & development expenseRent expenseFranchises
Rent expensePatentsResearch & development expenseFranchisesRetained earnings(Organization costs)GoodwillPatent amortization expensePrepaid rentIntangible assetsFranchise amortization expenseRetained earnings
Retained earnings(Organization costs)Franchise amortization expenseFranchisesPatentsIntangible assetsRent expenseResearch & development expenseGoodwillPrepaid rentPatent amortization expenseRetained earnings
Prepaid rentGoodwillRetained earningsRetained earnings(Organization costs)Franchise amortization expenseRent expensePatent amortization expenseIntangible assetsResearch & development expenseFranchisesPatents
FranchisesRent expenseRetained earningsFranchise amortization expensePatentsGoodwillRetained earnings(Organization costs)Intangible assetsPatent amortization expenseResearch & development expensePrepaid rent
Prepaid rentRetained earnings(Organization costs)Franchise amortization expenseRetained earningsGoodwillFranchisesPatentsRent expensePatent amortization expenseIntangible assetsResearch & development expense
Intangible assetsRetained earningsPatentsResearch & development expenseGoodwillRent expenseFranchise amortization expenseRetained earnings(Organization costs)Prepaid rentFranchisesPatent amortization expense
(To clear out the intangible asset account)
Prepaid rentPatentsFranchisesPatent amortization expenseGoodwillFranchise amortization expenseRetained earningsRent expenseIntangible assetsResearch & development expenseRetained earnings(Organization costs)
PatentsRetained earningsRent expensePatent amortization expenseFranchise amortization expenseIntangible assetsGoodwillResearch & development expenseRetained earnings(Organization costs)Prepaid rentFranchises
FranchisesRetained earningsPrepaid rentRetained earnings(Organization costs)PatentsGoodwillRent expensePatent amortization expenseFranchise amortization expenseIntangible assetsResearch & development expense
(To establish accounts associated with franchises)
Intangible assetsFranchisesGoodwillFranchise amortization expenseRetained earningsResearch & development expensePatent amortization expensePatentsRent expensePrepaid rentRetained earnings(Organization costs)
Patent amortization expenseIntangible assetsRetained earningsRent expenseFranchise amortization expenseRetained earnings(Organization costs)GoodwillPrepaid rentResearch & development expenseFranchisesPatents
PatentsGoodwillRetained earningsFranchise amortization expensePatent amortization expenseRetained earnings(Organization costs)FranchisesRent expenseIntangible assetsResearch & development expensePrepaid rent
(To establish accounts associated with rent)
Patent amortization expenseResearch & development expensePrepaid rentFranchisesPatentsRent expenseFranchise amortization expenseGoodwillIntangible assetsRetained earnings(Organization costs)Retained earnings
Patent amortization expenseIntangible assetsPatentsPrepaid rentResearch & development expenseRetained earnings(Organization costs)Retained earningsFranchise amortization expenseFranchisesGoodwillRent expense
(To establish accounts associated with patents)
Aug 29, 2021 | Uncategorized
Research and development
Panorama Ltd manufactures and distributes a wide range of general pharmaceutical products. Selected audited data for the reporting period ended 31 December 2011 are as follows:
Gross profit 17,600,000
Profit before tax 1,700,000
Income tax expense 500,000
Profit for the period 1,200,000
Total assets:
Current 7,300,000
Non current 11,500,000
The company uses a standard mark up on cost.
From your audit files, you ascertain that total research and development expenditure for the year amounted to $4,700,000. This amount is substantially higher than in previous years and has eroded the profitability of the company. Mr Paniq, the company’s finance director, has asked for your firm’s advice on whether it is acceptable accounting practice for the company to carry forward any of this expenditure to a future accounting period.
Your audit files disclose that the main reason for the significant increase in research and development costs was the introduction of a planned 5 year laboratory program to attempt to find an antidote for the common cold. The following items were included in research and development costs for the year.
(a) Costs to test a new tamper proof dispenser pack for the company’s major selling line (20% of sales) of antibiotic capsules $760,000. The new packs are to be introduced in the 2012 financial year.
(b) Experimental costs to convert a line of headache powders to liquid form $590,000. The company hopes to phase out the powder form if the tests to convert to the stronger and better handling liquid form prove successful.
(c) Quality control required by stringent company policy and by law on all items of production for the year $750,000.
(d) Costs of a time and motion study aimed at improving production efficiency by redesigning plant layout of existing equipment $50,000.
(e) Construction and testing of a new prototype machine for producing hypodermic needles $200,000. Testing has been successful to date and is nearing completion. Hypodermic needles accounted for 1% of the company’s sales in the current year, but it is expected that the company’s market share will increase following introduction of this new machine.
Required:Respond to Mr Paniq’s question for each item above.
Aug 29, 2021 | Uncategorized
Rhodes, Inc., is a fast growing start up firm that manufactures bicycles. The following income statement is available for July:
Revenues (200 units @ $750 per unit) $ 150,000
Less
Manufacturing costs
Variable costs 21,840
Depreciation (fixed) 22,950
Marketing and administrative costs
Fixed costs (cash) 56,340
Depreciation (fixed) 19,050
Total costs $ 120,180
Operating profits $ 29,820
Sales volume is expected to increase by 20 percent in August, but the sales price is expected to fall 10 percent. Variable manufacturing costs are expected to increase by 3 percent per unit in August. In addition to these cost changes, variable manufacturing costs also will change with sales volume. Marketing and administrative cash costs are expected to increase by 10 percent.
Rhodes operates on a cash basis and maintains no inventories. Depreciation is fixed and should remain unchanged over the next three years.
Required:
Prepare a budgeted income statement for August.
Aug 29, 2021 | Uncategorized
Ries Corporation has received a request for a special order of 8,000 units of product R34 for $34.60 each. The normal selling price of this product is $36.60 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product R34 is computed as follows:
Direct materials $10.80
Direct labor 2.00
Variable manufacturing overhead 6.80
Fixed manufacturing overhead 2.70
Unit product cost $22.30
Direct labor is a variable cost. The special order would have no effect on the company’s total fixed manufacturing overhead costs. The customer would like some modifications made to product R34 that would increase the variable costs by $5.80 per unit and that would require a one time investment of $39,000 in special molds that would have no salvage value. This special order would have no effect on the company’s other sales. The company has ample spare capacity for producing the special order.
Required:
Determine the effect on the company’s total net operating income of accepting the special order. (Do not round intermediate calculations. Round your answer to the nearest dollar amount.
Incremental net operating income $
Aug 29, 2021 | Uncategorized
Riff CD Company has had 4 years of record earnings. Due to this success, the market price of its 400,000 shares of $3 par value common stock has increased from $12 per share to $51. During this period, paid in capital remained the same at $2,400,000. Retained earnings increased from $1,800,000 to $12,000,000. CEO Josh Borke is considering either (1) a 15% stock dividend or (2) a 2 for 1 stock split. He asks you to show the before and after effects of each option on (a) retained earnings and (b) total stockholders’ equity.
Paid in Capital: Original Balance? After dividend? After Split?
Retained Earnings: Original Balance? After dividend? After Split?
Total Stockholders Equity: Originical Balance? After dividend? After Split?
Shares Outstanding: Original Balance? After dividend? After Split?
Aug 29, 2021 | Uncategorized
Riff CD Company has had 4 years of record earnings.
Due to this success, the market price of its 400,000 shares of $3 par value common stock has increased from $12 per share to $51.
During this period, paid in capital remained the same at $2,400,000. Retained earnings increased from $1,800,000 to $12,000,000.
CEO Josh Borke is considering either (1) a 15% stock dividend or (2) a 2 for 1 stock split.
He asks you to show the before and after effects of each option on (a) retained earnings and (b) total stockholders’ equity.
PAID IN CAPITAL: Original Balance: ______ After dividend: _____ After Split: _____
RETAINED EARNINGS: Original Balance: _____ After dividend: _____ After Split: _____
TOTAL STOCKHOLDERS EQUITY: Originical Balance: _____ After dividend: _____ After Split: _____
SHARES OUTSTANDING: Original Balance: _____ After dividend: _____ After Split: ______
Aug 29, 2021 | Uncategorized
Roland Andersson is the manager of the Ekland Division of Ystad Industries. He is one of several managers being considered for position of CEO, as the current CEO is retiring in a year.
All divisions use standard absorption costing. The division has the capacity to produce 50,000 units a quater and quarterly fixed overhead amounts to $500,000. Variable production cost is $50 per unit. Ralph has been looking at the report for the first three months of the year and is not happy with the results.
Ekland Division
Income Statement
For the Quarter Ending March 31, 2011
Production: 25,000 units
Sales (25,000 units)
$2,500,000
Cost of goods sold
Beginning inventory (10,000 units)
$625,000
Production costs applied
1,562,000
Total
$2,187,000
Less ending inventory
625,000
1,562,000
Gross profit
938,000
Selling & general expenses
500,000
Net income
$438,000
The sales forecast for the second quarter is 25,000 units. Roland had budgeted second quarter production at 25,000 units but changes it to 50,000 units, which is total capacity for a quarter. The sales forecasts for each of the last two quarters of the year are also 25,000 units. Costs incurred in the second quarter are the same as budgeted, based on 50,000 units of production.
Required:
Computations:
Convert the above absorption income statement to a contribution margin income statement for the first quarter. Click here for an example.
Prepare absorption and contribution margin income statements for the second quarter.
Compute production costs per unit for both approaches and for both years.
Discussion:
Did Roland improve his performance for the second quarter? Indicate the information you used for your assessment.
Can you make any suggestions for reporting in the future?
Do you think Roland should be seriously considered for the CEO position? Why or why not?
Discuss three shortcomings of the absorption approach for internal decision making.
Aug 29, 2021 | Uncategorized
Ron works for the local supermarket. Ron’s pay is $10 per hour for the first forty hours each week. He receives time and a half for any hours he works over fourty. Ron’s income tax withholding is 18% of gross pay for the federal government and 6% for the state. He also pays the FICA tax of 7.65% of his gross pay. Ron’s employer pays mandatory union dues of $32, his share of the company supllemented health insurance premium of $66, and a voluntary donation to a local charity of $24 directly from Ron’s pay. Ron was looking forward to his paycheck this week since he worked a total of 44 hours. He was excited about having some cash left over after making his car and rent payments.
1)Calculate Ron’s gross and net pay. How excited should Ron be? Show the entry necessary for Ron’s employer to record wage expense.
2.)Show Ron’s firm’s entires necessary to record its payroll tax expense (assume normal employer FICA and federal and state unemployment taxes)
3.)Ron’s firm pays $78 toward his health insurance premium as a finge benefit. They also contribute $37 per week to a pension plan. Show Ron’s firm’s entries necessary to record its employee fringe benefit expense.
4.)How much total money does Ron’s company pay him for his work?
Aug 29, 2021 | Uncategorized
Rondello Company is considering a capital investment of $150,000 in additional productive facilities. The new machinery is expected to have a useful life of 5 years with no salvage value. Depreciation is by the straight line method. During the life of the investment, annual net income and cash inflows are expected to be $18,000 and $48,000, respectively. Rondello has a 12% cost of capital rate, which is the minimum acceptable rate of return on the investment. (Round answers to 0 decimals places, e.g. 2,510 except round payback to 2 decimal places, e.g. 5.25.)
Compute the following:
Annual rate of return _____%
Cash payback period on the proposed capital expenditure ____years
Using the discounted cash flow technique, compute the net present value ____$
Aug 29, 2021 | Uncategorized
Rondello Company is considering a capital investment of $152,200 in additional productive facilities. The new machinery is expected to have a useful life of 5 years with no salvage value. Depreciation is by the straight line method. During the life of the investment, annual net income and cash inflows are expected to be $16,570 and $45,900, respectively. Rondello has a 12% cost of capital rate, which is the minimum acceptable rate of return on the investment. (Round answers to 0 decimals places, e.g. 2,410 except round payback to 2 decimal places, e.g. 5.25.)
Compute the following:
Annual rate of return %?????
Cash payback period on the proposed capital expenditure ??? years
Using the discounted cash flow technique, compute the net present value $
Aug 29, 2021 | Uncategorized
Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 100,000 units of each product. Its unit costs for each product at this level of activity are given below:
| Direct materials |
|
$ |
30 |
|
|
$ |
12 |
|
| Direct labor |
|
|
20 |
|
|
|
15 |
|
| Variable manufacturing overhead |
|
|
7 |
|
|
|
5 |
|
| Traceable fixed manufacturing overhead |
|
|
16 |
|
|
|
18 |
|
| Variable selling expenses |
|
|
12 |
|
|
|
8 |
|
| Common fixed expenses |
|
|
15 |
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
| Total cost per unit |
|
$ |
100 |
|
|
$ |
68 |
|
|
|
|
|
|
|
|
|
|
|
|
The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars.
|
| Required: |
|
Assume that Cane expects to produce and sell 50,000 Alphas during the current year. A supplier has offered to manufacture and deliver 50,000 Alphas to Cane for a price of $80 per unit. If Cane buys 50,000 units from the supplier instead of making those units, how much will profits increase or decrease?(Input the amount as positive value.)
|
Aug 29, 2021 | Uncategorized
A company should choose a depreciation method that Answer best allocates the original cost of the asset to the periods benefited by the use of the asset. saves the most taxes. minimizes net income. shows the highest amount of net income. Goodwill can be recorded as an asset when a(n) Answer business has above normal profitability compared to other businesses in its industry. business can determine that it has created customer goodwill and name recognition. offer is received to purchase the business at a price in excess of the value of the assets.
Aug 29, 2021 | Uncategorized
1. Write a business report, as for a managerusing business writing, on Bernard Madoff Corporate Fraud Scandal.
2. Use proper APA citation methods.
3. The report must include an introduction, body, and conclusion. In the conclusion.
4. Report must be on who committed the fraud, how they did it, how did they get caught; what penalty happened to them and if known, where are they today.
5. Two (2) pages length single spaced
Here is a link that will help familiarize with the case:
http://en.wikipedia.org/wiki/Madoff_investment_scandal
Aug 29, 2021 | Uncategorized
Moran Enterprises, Inc., has the following account balances and other information in alphabetical order at Dec. 31, 2012. All balances are as of the end of the year except Retained Earnings.
Aug 29, 2021 | Uncategorized
Selected financial statement information is reported below for Cameron Corporation for the year ended December 31, 2012. Sales 400,000 Cost of goods sold 220,00 Depreciation expense 30,000 Wages expense 34,000 Other operating expenses 26,000 Net income 90,000 Dividends paid 20,000 Account balances Dec 31, 2012 Dec 31, 2011 Cash 25,000 37,000 Account recevable 30,000 40,000 Inventory 35,000 26,000 Wages 10,000 8,000 Using the above data, determine the cash flow from operating activities for the year using the direct method. Show your work.
Aug 29, 2021 | Uncategorized
Week 9 Application Assignment (2–3 pages) and Scenarios
Time Value Formulas and Cost Benefit Analysis
Scenario 1: Present Value Calculation
The following simple present value formula shows the effect of discounting on the cost of a public policy. In the formula, the discount rate will be set at
(1 + r)
time where:
1= a constant
r = a selected interest rate
time= a period of time, usually a year
The formula is
Cost or Benefit
(1+r)
time
The calculation occurs like this example of $1,000 over 2 years discounted at 10%:
$1,000 = $1,000 = $1,000 = $826.44
(1+10 percent)
2 (1.1)
2 1.21
Let’s say a city wants to open a recycling center aimed at reducing waste. The total benefits of the program are valued at $1,000,000. Three different discount rates are estimated at 5%, 6%, and 7%. The time period for receiving the benefits of the program is two years.
Scenario 2
In doing the following exercise, please refer to the discussion in the designated pages of Chapter of
Fiscal Administration on cost benefit and cost effectiveness analysis. Cost benefit analysis is a technique that assumes all costs and benefits can have a dollar value attached to them. It is a tool and should not be used as the sole basis for decision making. The result of a calculation is a ratio between costs and benefits. After all other calculations have been made the analysis needs to conclude with the calculation the ratio between costs and benefits. If in the ratio costs exceed benefits the project advice is to not accept the project and to consider accepting the project if benefits exceed costs. Consider the following example from the fictitious Swobodaville to build a Community Windmill Renewable Energy Project. The following has been agreed upon.
1. Land is already owned. The price of a new is windmill is $150,000. A minimum of fifty windmills are needed to achieve desired efficiency compared to the current coal burning method.
2. Staff training costs over three years when considering direct costs including loss of productive hours while in training will be $55,000 for each of the ten specialists to be hired.
3. The annual operating and maintenance costs of the machine in the three year period will be $35,000 per windmill.
4. The cost of shutting down a portion of the coal plant to achieve the same energy production as the windmills is $1,000,000.
5. There will be a decrease in staff productivity compared to coal burning operations. It was calculated on the average hourly rate of the ten specialized staff of $55 and the number of hours added over the three year period, 450. Three current coal plant workers who will lose their jobs is three at a wage of $35 per hour.
6. As a widely supported community project with an investment in every aspect of the community’s well being, quality of life expected from reductions in pollution is considered in the cost calculation. The medical center conducted an analysis has concluded that the value of increased life expectancy should be included as a benefit to the community. The quality of life of 5,000 residents is expected to be increased by an average of dollars over three years. The average benefit of a resident (including all men, women and children) over a three year period is estimated to be $1500.
7. The three year savings on other pollution damage to buildings and grounds calculated by the Sierra Club is $7,000,000.
Scenario 1:
- Calculate the present value at each interest rate.
- Note and discuss what happens to the present value at each interest rate.
Scenario 2:
- Calculate the cost benefit ratio.
- Determine whether the ratio is positive or negative.
- If positive, would you go ahead and replace a portion of thecoal burning operationor the whole operation? Why or why not?
Resources ..Please Make sure to include and cite material from the resources
- Inflation Calculator
http://www.westegg.com/inflation/
Supplementary Learning Resources
- Article: Stephens, D. (2008). Automating procurement processes puts states at the head of the class.Government Procurement, 16(3), 30–32.
Use the Business Source Premier database, and search using the article’s title.
Aug 29, 2021 | Uncategorized
Polk Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2012, the company incurred the following costs.
| Variable Cost per Unit |
|
|
| Direct materials |
|
$8.03 |
| Direct labor |
|
$2.62 |
| Variable manufacturing overhead |
|
$6.15 |
| Variable selling and administrative expenses |
|
$4.17 |
|
|
|
| Fixed Costs per Year |
|
|
| Fixed manufacturing overhead |
|
$253,968 |
| Fixed selling and administrative expenses |
|
$256,907 |
Polk Company sells the fishing lures for $26.75. During 2012, the company sold81,200lures and produced96,200lures.
Aug 29, 2021 | Uncategorized
Please use the following textbook in answering the questions: Palepu, K.G. & Healy, P.M. (2008). Business Analysis and Valuation: Using Financial Statements: Using Financial Statement; Text and Cases (4th ed.). Cengage Learning. The following questions pertain to the Anacomp case in the Palepu text (Additional Cases section), pages 27 49 2. (25 points) Evaluate Anacomp’s business new product development strategy. What are the risks and benefits of this strategy for Anacomp’s shareholders?? 3.
Aug 29, 2021 | Uncategorized
After closing the books at month end on August 31, 2010, XYZ Corporation’s shareholders’ equity section shows the following balances: Share Capital Common shares, unlimited authorized 33,000 shares issued and outstanding $370,000 Retained Earnings $730,000 Total Shareholders’ Equity $1,100,000 Do not enter dollar signs or commas in the input boxes. Scenario 1 The company declared and immediately distributed a 96% share dividend. Current market price was $15. The company recorded the share dividends by debiting Retained Earnings. a) Prepare the statement of retained earnings after the share dividend. XYZ Corporation Statement of Retained Earnings For the Month Ended August 31, 2010 Opening Balance Less: Share Dividend Balance – August 31, 2010 b) Prepare the shareholders’ equity section of balance sheet as at August 31, 2010 (after the share dividend has been distributed). XYZ Corporation Shareholders’ Equity As at August 31, 2010 Share Capital Common shares, unlimited authorized 64,680 shares issued and outstanding Retained Earnings Total Shareholders’ Equity Scenario 2 As a separate scenario from Scenario 1, the company implemented a 3 for 1 share split. a) Calculate the number of outstanding shares. Outstanding shares: shares b) Prepare the shareholders’ equity section of the balance sheet as at August 31, 2010 (after the share split has been completed). XYZ Corporation Shareholders’ Equity As at August 31, 2010 Share Capital Common shares, unlimited authorized, xxx shares issued and outstanding Retained Earnings Total Shareholders’ Equity
Aug 29, 2021 | Uncategorized
On page 119, the text lists examples of companies and industries that use the balance forward method of tracking accounts receivable. Review an example of a balance forward monthly statement that you or a relative or friend receives each month. If possible, review statements for two consecutive months. The Monthly Statement (Figure 16) on page 119 is prepared for a business using open invoice method of tracking accounts receivable.
Aug 29, 2021 | Uncategorized
| Excel spreadsheet; 1,200 words |
| Details: |
Weekly tasks or assignments (Individual or Group Projects) will be due by Monday and late submissions will be assigned a late penalty in accordance with the late penalty policy found in the syllabus. NOTE: All submission posting times are based on midnight Central Time.
The President of EEC recently called a meeting to announce that one of the firm’s largest suppliers of component parts has approached EEC about a possible purchase of the supplier. The President has requested that you and your staff analyze the feasibility of acquiring this supplier. Based on the following information, calculate net present value (NPV), internal rate of return (IRR), and payback for the investment opportunity:
- EEC expects to save $500,000 per year for the next 10 years by purchasing the supplier.
- EEC’s cost of capital is 14%.
- EEC believes it can purchase the supplier for $2 million.
Answer the following:
- Based on your calculations, should EEC acquire the supplier? Why or why not?
- Which of the techniques (NPV, IRR, payback period) is the most useful tool to use? Why?
- Which of the techniques (NPV, IRR, payback period) is the least useful tool to use? Why?
- Would your answer be the same if EEC’s cost of capital were 25%? Why? Why not?
- Would your answer be the same if EEC did not save $500,000 per year as anticipated?
- What would be the least amount of savings that would make this investment attractive to EEC?
- Given this scenario, what is the most EEC would be willing to pay for the supplier?
Prepare a memo to the President of EEC detailing your findings and showing the effects if:
(a) EEC’s cost of capital increases
(b) the expected savings are less than $500,000 per year
(c) EEC must pay more than $2 million for the supplier
|
Aug 29, 2021 | Uncategorized
Question 1 B
i. On 1st November 2012, Barry Bean, a service manager received $60,000 of fees for a plant and equipment maintenance program to be completed for a clients factory equipment over the next three months. Barry Bean’s balance date is 31st December 2012. At balance date how much would be shown under each relevant element of the financial statements? Using concepts from the conceptual framework for financial reporting, explain the initial treatment of the fees received and their treatment over the next 3 months. For each part of this question you may assume that the services are being provided evenly over the three month period. [6 marks]
ii. The framework for preparation and presentation of financial statements gives definitions of assets, liabilities, equity, income and expenses. List the three parts of the accounting definition of income and give the reasons why some items that fit the definition are not recognised in the Income Statement. [4 marks]
Question 1 C
Your friend works for a bookshop that uses an electronic scanning device at the checkout. Your friend has said that at any time they can look up the number of books in stock and how many have been sold so far during the accounting period. When the bookshop does a stocktake they compare the actual number of books for each title to the number that the computer says they should have.
You work at the market in a fruit and vegetable stall and the owner has told you that they just keep track of what they have paid to purchase fruit during the year and at the end of the year they do a stocktake so that the accountant can prepare the financial reports.
1. What are the two approaches to accounting for inventory that were covered in the course? [1 mark] 2. Which inventory method is the bookshop using and which method is the fruit and vegetable stall using? [1 mark] 3. When inventory is describe how it is treated under e of the inventory methods an• en explain how it is treated when it i sold. [ marks] 4. Why is a stocktake done under each of the methods of accounting for inventory? [2 marks] 5. Explain why the inventory method used for the bookshop and the one used for the fruit and vegetable stall are the most appropriate for each. [4 marks] (answer on the following pages please) TOTAL FOR QUESTION: 20 marks
Aug 29, 2021 | Uncategorized
4.5The Carbondale Hospital is considering the purchase
of a new ambulance. Thedecision will rest partlyon the anticipated
mileage to bedriven nextyear. Themiles drivenduring the past5
yearsare asfollows:
Year Mileage
13,000
2 4,000
3 3,400
43,800
5 3,700
a)Forecast themileage for nextyearusing a 2 yearmoving average.
b)Findthe MAD basedon the 2 yearmoving average forecast in
part (a). (Hint:Youwill have only 3 yearsofmatched data.)
c) Use a weighted2 yearmoving average with weightsof .4 and.6
to forecast nextyear’s mileage. (The weight of .6 isfor themost
recentyear.) What MAD resultsfrom using thisapproach to
forecasting? (Hint:Youwill have only 3 yearsofmatched data.)
d) Compute the forecast foryear 6using exponentialsmoothing, an
initial forecast foryear 1 of3,000miles, anda= .5.
Aug 29, 2021 | Uncategorized
Determine the most important six (6) skills that a forensic accountant needs to possess and evaluate the need for each skill. Be sure to include discussion regarding the relationship between the skill and its application to business operations.
- Describe the role of a forensic accountant within a courtroom environment.
- Analyze the legal responsibility a forensic accountant has while providing service to a business.
- Research three (3) cases where forensics accountants have provided vital evidence in a case. Summarize the cases and the importance of the forensic accountants’ role during each case.
- Use at least seven (7) quality academic resources in this assignment. Note: Wikipedia and other Websites do not quality as academic resources.
-
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one inch margins on all sides; citations and references must follow APA or school specific format.
- The reference page is not included in the required assignment page length.
Aug 29, 2021 | Uncategorized
For this assignment, research the Internet or Strayer databases to locate a firm that was involved in a fraud and / or embezzlement case.
Explain how the firm’s accounting information system (i.e., components and functions) contributed to the fraud and / or embezzlement. You will need to focus on how each component / function of the accounting information system failed, which resulted in the scandal / case.
Write a ten to twelve (10 12) page paper in which you:
1. Based on the information you researched, assess the failure of the firm’s accounting information system to prevent the related fraud / embezzlement.
2. Imagine that the company that you researched uses a third party accounting system. Evaluate the effectiveness of the firm’s stakeholder in the event that a third party accounting system suffers a breach. Include an assessment of the level of responsibility of the software provider to the business and its clients. Provide support for your rationale.
3. Determine what advances in accounting and / or information technology could have prevented the event from occurring. Provide support for your argument.
4. Evaluate what changes should be made to both the Sarbanes Oxley Act of 2002 and other current laws in order to make them more effective in deterring companies from committing crimes.
5. Recommend a strategy that the company you indicated may use to prevent future business information failures. Indicate how the company should approach the implementation of your recommended strategy. Provide support for your recommendation.
6. Use at least three (3) quality resources in this assignment. Note:Wikipedia and similar Websites do not qualify as quality resources.
Your assignment must follow these formatting requirements:
? Be typed, double spaced, using Times New Roman font (size 12), with one inch margins on all sides; citations and references must follow APA or school specific format. Check with your professor for any additional instructions.
? Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
Aug 29, 2021 | Uncategorized
Please give a recent example of team work you have been involved in. What was your role? What was important for the efficient working of the team? (no more than 150 words)
Please detail your extra curricular activities, positions you have held and all of your awards and achievements over the last 4 years. This may include accomplishments in sports, societies, clubs, charities, academic awards or prizes. Please detail your level of involvement in the activities (1000 character limit).
Why can other people rely on you? Give specific examples to illustrate. (max 1000 characters)
Can you please outline why you are interested in Ernst & Young and how the skills that you have gained from university and extra curricular roles will enable you to contribute to the success of our business. (max 1000 characters)
Can you describe a time when you set out to acheive a goal and you needed to work with a group of people to achieve that goal? What do you think makes a good team member?
?thinking globally is a key component of our people culture. Drawing on your past experiences, explain how you have demonstrated a global mindset.
Aug 29, 2021 | Uncategorized
1 8 3 7. For each of the following independent cases, state the highest level of deficiency that you believe the circumstances represent—a control deficiency, a significant deficiency, or a mate rial weakness. Explain your decision in each case. The company processes a significant number of routine intercompany transactions. Individual intercompany transactions are not material and primarily relate to balance sheet activity—for example, cash transfers between business units to finance normal operations. A formal man agement policy requires monthly reconciliation of intercompany accounts and confirmation of balances between business units. However, there is not a process in place to ensure performance of these procedures. As a result, detailed reconciliations of intercompany accounts are not performed on a timely basis. Management does perform monthly procedures to investigate selected large dollar intercompany account differences. In addition, management prepares a detailed monthly variance analysis of operating expenses to assess their reasonableness. During its assessment of internal control over financial reporting, management identified the following deficiencies. Based on the context in which the deficiencies occur, management and the auditors agree that these deficiencies individually represent significant deficiencies: Inadequate segregation of duties over certain information system access controls. • Several instances of transactions that were not properly recorded in the subsidiary ledgers; the transactions involved were not material, either individually or in the aggregate. No timely reconciliation of the account balances affected by the improperly recorded transactions. Case 3: The company uses a standard sales contract for most transactions, although sales personnel are allowed to modify sales contract terms as necessary to make a profitable sale. Individual sales transactions are not material to the entity. The company’s accounting personnel review sig nificant or unusual modifications to the sales contract terms, but they do not review changes in the standard shipping terms. The changes in the standard shipping terms could require a delay in the timing of revenue recognition. Management reviews gross margins on a monthly basis and investigates any significant or unusual relationships. In addition, management reviews the reasonableness of inventory levels at the end of each accounting period. The company has experienced limited situations in which revenue has been inappropriately recorded in advance of shipment, but amounts have not been material. Case 4: The company has a standard sales contract, but sales personnel frequently modify the terms of the contract. Sales personnel frequently grant unauthorized and unrecorded sales dis counts to customers without the knowledge of the accounting department. These amounts are deducted by customers in paying their invoices and are recorded as outstanding balances on the accounts receivable aging. Although these amounts are individually insignificant, they are material in the aggregate and have occuri ed consistently over the past few years. Case 5: The company has found it necessary to restate its financial statements for the past two years due to a material overstatement of revenues two years ago (and an equal understatement last year). The errors are due to sales of certain software that allowed the purchasers extremely lenient rights of return. The errors were discovered shortly following the end of the current accounting year. Members of management indicated that the misstatements occurred because they simply didn’t know the accounting rules. Now they know the rules and they won’t let it happen again. Case 6: Assume the same facts exist as in Case (5) except that you, the auditor, have identified the misstatements at the end of June of the year currently under audit. Members of management acknowledged that the misstatements occurred because they simply didn’t know the rules at the time, and now they know the rules. Management, within the last six months of the year under audit, hired a new financial accounting expert and believes that the control weakness has been corrected as of year end. Management believes that it is extremely unlikely that such a misstatement could occur again with the new expert reviewing these matters. Case 7: Assume the same facts exist as in Case (6), except that management has informed the chief financial officer that she must watch over these matters much more carefully. She has attended several CPE courses on accounting and seems to be caught up in the area in which the mis statements occurred.
Case 2:
Case 8:
Subsequent to year end, the auditors have determined that they believe that management has understated its warranty obligations. The auditors know that, according to the Professional Standards, they should consider the difference between management’s estimate and the clos est reasonable estimate as “likely misstatement.” The chief financial officer (CFO) has argued that this amount is reasonable. Yet, in fact, neither the auditors nor the CFO knows which amount is right. The CFO is under no particular pressure to meet an earnings forecast; he just thinks that the warranty obligations for many of the products will expire and will not be exer cised. Still, the CFO can’t convince the auditors. Likewise, the auditors can’t convince the CFO of their position. The CFO finally agrees to a material adjustment to get to the auditors’ amount and “keep the peace.” (Adapted from PCAOB Standard No. 5)
Aug 29, 2021 | Uncategorized
I am going to upload this assignment. It would be 1500 words and I want you please make sure this time I am not getting in trouble and secondly make it very clear to your expert I need them to make sure assignment is Plagirism free, Harvard Reference System for referencing and citition is followed. Because last they did not make proper referening.
Aug 29, 2021 | Uncategorized
While vacationing in Thailand, Steve and Linda fell in love with Thai food. Their hometown does not have a Thai restaurant, so Steve and Linda planned to open one. Linda is a chef and Steve would quit his job to run the “business” side of the restaurant.
Steve found an empty restaurant for lease with seven tables that would seat four each. The restaurant would serve dinner only (no lunch) Tuesday – Saturday, and Linda is planning on having two seatings per evening. They will close two weeks a year for vacation.
The Thai loving couple have come up with the following estimates:
Average Revenue, including beverages and dessert $ 45 per meal
Average cost of food $ 15 per meal
Chef’s (Linda) and dishwasher’s salaries $ 61,200 per year
Rent for building and equipment $ 4,000 per month
Cleaning costs $ 800 per month
Replacement of dishes, glasses, etc. $ 300 per month
Utilities, advertising, telephone $ 2,300 per month
Requirements:
- Compute the annual breakeven number of meals and Sales Revenue for the restaurant:
- Compute the number of meals needed to earn operating income of $75,600 to replace Steve’s salary from his
- How many meals must Steve and Linda serve each night to earn the target income of $75,600?
- Should Steve and Linda open the restaurant? Explain why or why not.
Problem #2:
Sharp Image Company makes a part used in the manufacture of video cameras. Management is considering whether to continue manufacturing the part, or to buy the part from an outside source at a cost of $21.30 per part. Sharp Image needs 100,000 parts per year. The cost of manufacturing 100,000 parts is computed as follows:
| Direct materials |
$ 765,000 |
| Direct labor |
612,000 |
| Variable manufacturing overhead |
510,000 |
| Fixed manufacturing overhead |
663,000 |
| Total manufacturing costs |
$2,550,000 |
|
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If Sharp Image buys the part, it would pay $.30 per unit to transport the parts to its manufacturing plant. Purchasing the part from an outside source would enable the company to avoid 35% of fixed manufacturing overhead costs. Sharp Image’s factory space freed up by purchasing the part from an outside supplier could be used to manufacture another product with a contribution margin of $75,000.
Prepare an analysis to show which alternative makes the best use of Sharp Image’s factory space:
1) make the part
2) buy the part and leave facilities idle
3) buy the part and use facilities to make another product
Answer:
|
Make the Part |
Buy part and leave facilities idle |
Buy part and use facilities to make another product |
| Direct materials |
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| Direct labor |
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| Variable manufacturing overhead |
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| Variable transportation |
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| Fixed manufacturing overhead |
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| Purchase price |
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| Profit contribution from another product |
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| Total cost |
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State decision and reason:
Aug 29, 2021 | Uncategorized
Student ID: 21822007Exam: 061681RR THE COSTING OF PRODUCTSWhen you have completed your exam and reviewed your answers, click Submit Exam. Answers will not be recorded until you hit Submit Exam. If you need to exit before completing the exam, click Cancel Exam.Questions 1 to 20: Select the best answer to each question. Note that a question and its answers may be split across a page break, so be sure that you have seen the entire question and all the answers before choosing an answer.Use the following information to answer this question.Abis Corporation uses the weighted average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 800 units. The costs and percentage completion of these units in beginning inventory wereA total of 9,200 units were started, and 8,200 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:The ending inventory was 80% complete with respect to materials and 20% complete with respect to conversion costs.Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that’s the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.CostPercent CompleteMaterial costs$6,00050%Conversion costs$9,90030%CostMaterial costs$113,900Conversion costs$322,5001. The total cost transferred from the first processing department to the next processing department during the month is closest toA. $436,400.B. $420,414.C. $452,300.D. $512,700.2. Freeman Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. At the beginning of the year, the company estimated manufacturing overhead would be $150,000 and direct labor hours would be 10,000. The actual figures for the year were $186,000 for manufacturing overhead and 12,000 direct labor hours. The cost records for the year will show
A. overapplied overhead of $30,000.B. underapplied overhead of $30,000.C. underapplied overhead of $6,000.D. overapplied overhead of $6,000.Use the following information to answer this question.The following data (in thousands of dollars) have been taken from the accounting records of Karlana Corporation for the just completed year.Sales$910Raw materials, inventory, beginning$80Raw materials, inventory, ending$20Purchases of raw materials$100Direct labor$130Manufacturing overhead$200Administrative expenses$160Selling expenses$140Work in process inventory, beginning$40Work in process inventory, ending$10Finished goods inventory, beginning$130Finished goods inventory, ending$1503. The cost of goods manufactured (finished) for the year (in thousands of dollars) wasA. $530.B. $500.C. $520.D. $460.Use the following information to answer this question.Abis Corporation uses the weighted average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 800 units. The costs and percentage completion of these units in beginning inventory wereA total of 9,200 units were started, and 8,200 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:CostPercent CompleteMaterial costs$6,00050%Conversion costs$9,90030%CostMaterial costs$113,900
Aug 29, 2021 | Uncategorized
BIRMINGHAM GREEN ADULT DISABILITY SERVICES INC
Physical Address: 8605 Centreville Rd, Manassas, VA 20110
EIN: 06 1716448
Telephone: 703 257 6213
NTEE Category: L Housing, Shelter L21 (Public Housing)
Web URL:www.birminghamgreen.org
Year Founded: 2004
Ruling Year: 2004
1.Background on the charity:
a.Charity purpose?
b.Founded when?
c.Based where?
d.No. of employees?
e.Website is?
2.What classification of the tax code does the entity claim its tax exemption?
3.Who performed the audit of the financial statements? What type of audit opinion was received? If other than unqualified, please provide explanation.
4.Identify each of the financial statements prepared and audited and which years are included?
5.Does the entity have any affiliated entities, particularly any for profit entities, with which it engages in business transactions? Are there any concerns about these arrangements?
6.Using the financial statements, what amount was received as revenue? In what form was this revenue provided list the two highest types and the associated dollar amounts?
7.Using the financial statements, what amount was presented for unrestricted net assets? What percentage of total net assets does this figure represent?
8.Using the financial statements, what amount was presented for investments? What percentage of total assets does this figure represent?
9.Using the financial statements, what types of program services are provided and list the total expenses associated with each?
10.Using the financial statements, what types of support services are provided and list the total expenses associated with each?
11.Describe the executive management structure. What are the corporate governance processes how big is the board of directors and how often do they meet? Do they have an audit committee? Do they have an internal audit function? To whom does it report?
12.Calculate and explain the purpose of each of the 4 ratios below:
a.Total Net Assets – Restricted Net Assets – Fixed Assets / Average Monthly Expenses
b.Contributions / Fundraising Expense
c.Total fundraising, general & admin expense / Total Expenses
d. Revenue Source / Total Revenue
13.What conclusions do you draw from the ratio analysis that you performed?This should be an in depth discussion that may draw on other resources.
14.Using Charity Navigator, determine its rating. What is the rating of the entity? What could be done to improve this ratings?
15.Provide comments regarding the effectiveness of this charity (what difference has it made in terms of outcomes).This should be an in depth discussion that draws on other resources about the organization and how to evaluate charities.
16.Do you recommend that it receive tax deductible donations and is deserving of its tax exemption? Why or why not?
Aug 29, 2021 | Uncategorized
asaallIhrd 11/ llitn II/1111g oscnccml hall herll I//kirf ¦ %.1
old I” I n. j1.11 I ink 1J1,11 herbead Rates r 221 mI, 1,r I „ mink. Coning and Finwhing. MI company u.e• jib °Mel L4.4 •vgerti 0 hr.( in cdclei JJII1W11 I 1% el head late Ill cad) department The Culling Depanment twit% II. ;nit on NA °Mr’ rniktIntil…….riy wade ffillt CSIilhate.: lajobiol:’,4u1s. and ihr I illl•.11111)! kparlineill bases Its rate on direct labour cilltd Al the beginning of the
Direr, labour hours …… ….. 11.timie hours …………….. 1.Intitticrur mg. overhead cost …… Dart 14hour cod …… . ……
5010 33.000 45.000 3,000 S382.500 3499.500 $ 50.000 5270.000
Mt qiiind. picliclermined overhead rate to be used in each depanment. mnrcl licad rates that you computed in pan I I are effect. The job cog sheet For WI/ I` h:CI: •!.11 I :A and completed during the year, showed the following.
Deportment
Cutting FInbildng .. 1.:L.mr hours r • lieurN. ..!. gal. requisitioned ; labour cost 6 SU S500 S 70 20 4 5310 S ISO
1.11 overhead cast applied mph 203. substantially different amounts of overhead cast to be assigned to some lobs if the plantoide overhead rate based on direst labour cost. rather than using depaninenial n computations are necessary.
Problems
Aug 29, 2021 | Uncategorized
Nova Southeastern University
Wayne Huizenga Graduate School
Of Business & Entrepreneurship
Assignment for Course: Accounting ACT 5060
Submitted to: Dr. Pendarvis
Submitted by: Michelle Martinez Reyes
Date of Submission: 07/28/2013
Title of Assignment: Assignment 2
CERTIFICATION OF AUTHORSHIP: I certify that I am the author of this paper and that any assistance I received in its preparation is fully acknowledge and disclosed in the paper. I have also cited any sources from which I used data, ideas of words, whether quoted directly or paraphrased. I also certify that this paper was prepared by me specifically for this course.
Student Signature: Michelle Martinez Reyes
******************************************
Instructor’s Grade on Assignment:
Instructor’s Comments:
Textbook: Management Accounting: Information for Decision Making and Strategy Execution 6.Edition – 2012; Anthony A. Atkinson, Robert S. Kaplan; Pearson; ISBN: 9780132567459
Chapter 3 – Exercises.
Exercise 3 28 (page 99).
Breakeven analysis and target profit, taxes Patterson Parkas Company’s sales revenue is $30 per unit, variable costs are $19.50 per unit, and fixed costs are $147,000.
- Compute Patterson’s contribution margin per unit and contribution margin ratio.
- Determine the number of units Patterson must sell to break even.
- Determine the sales revenue required to earn (pretax) income equal to 20% of revenue.
- How many units must Patterson sell to generate an after tax profit of $109,200 if the tax rate is 35%?
- Patterson is considering increasing its advertising expenses by $38,500. How much of an increase in sales units is necessary from expanded advertising to justify this expenditure (generate an incremental contribution margin of $38,500)?
Exercise 3 38 (page 102).
Make or buy and relevant costs – The assembly division of Davenport, Inc., is bidding on an order of 50,000 smart phones.The division is eager to get this order because it has a substantial amount of unused plant capacity.The variable cost for each smart phone if $140 in addition to the cost of the display and touchscreen component.The divisional purchasing manager has received two bids for the component.One is from Davenport’s electronics division.This bid if for $35 per unit, although its variable cost if only $30 per unit.The other is from an outside vendor for $34 per unit.Davenport’s electronics division has sufficient unused capacity for this order.
- Determine the relevant costs for this order for the assembly division under both internal and outsourcing arrangements.
- Determine the relevant costs for this order for Davenport as a company under each of the sourcing arrangements.
Exercise 3 42 (page 103).
Dropping a segment – George’s Grill analyzes profitability of three operating units: restaurant, bar, and billiards room.Revenues, variable costs, and attributable fixed costs (which can be avoided if the unit is eliminated) for each unit are as follows:
Variable costs120,00035,00010,000
Attributable fixed costs80,00025,00015,000
George the owner, is considering converting the billiards area into an expanded bar area.
- Ignoring remodeling costs, by how much will the bar segment margin have to increase for the grill’s income to be at least as high as it is now?
- What other considerations will George want to consider before making the decision to eliminate the billiards unit to expand the bar area?
Exercise 3 44 (page 104).
Special order pricing – Shorewood Shoes Company makes and sells a variety of leather shoes for children.For its current mix of different models and seizes, the average selling price and costs per pair of shoes are as follows:
Direct materials$6
Direct labor$4
Variable manufacturing overhead$2
Variable selling costs$1
Fixed overhead$3
Total Costs$16
Shoes are manufacture in batch sizes of 100 pairs.Each bath required 5 machine hours to manufacture.The plant has a total capacity of 4,000 machine hours per month, but current monthly production consumes only about 80% of the capacity.
A discount store has approached Shorewood to buy 10,000 pairs of shoes next month.It has requested that the shoes bear its own private label.Embossing the private label will cost Shorewood an additional $0.50 per pair.However, no variable selling costs will be incurred for fulfilling this special order.
Determine the minimum (floor) price that Shorewood Shoes should charge for this order. What other considerations are relevant in this decision?
Aug 29, 2021 | Uncategorized
Assignment
- Read “Controls over Information Systems” pages 64 66 in the COSO Enterprise Risk Management—Integrated Framework.
- Read “Availability” pages 78 82 in the Pearson custom text.
- There are several references to COBIT in the reading on Availability. Refer to Wikipedia for questions 4 through 6. You may also need to utilize other sites to fully answer question 5.
- For what is COBIT an acronym?
- How are COBIT and COSO related?
- What are the four “domains” of COBIT?
- Back to COSO. How are logical access controls different from physical access controls discussed in homework 11?
- Read “Change Control” page 83 in the Pearson custom text.
- Read and respond to the questions regarding Hall Corporation, described in a separate Word document.
Aug 29, 2021 | Uncategorized
2012 2011 2010 3 22462.7 20343.099999999999 19495.8 6587.7 5851.5 5696.5 15875 14491.6 13799.3 790.5 720.5 664.7 6776.3 6291.6 6029.1 4610.8999999999996 4186.8999999999996 4048.6 3 3697.3 3292.6 3056.9 7 123.8 96.3 153.19999999999999 3573.5 3196.3 2903.7 34.5 48.1 43.8 31.3 28.5 17.2 3.2 19.600000000000001 26.6 8 7.8 5.6 9 313.39999999999998 295.60000000000002 283.8 3875.9 3466.7 3151.9 9 1005.5 1025.8 909.9 2870.4 2440.9 2242 2867.7 2438.4 2239.6999999999998 2.7 2.5 2.2999999999999998 10 4.79 4.1100000000000003 3.82 10 4.
Aug 29, 2021 | Uncategorized
Daily andJohnson, CPAs were conducting the audit of GarnerTool Supply forthe year ended December 31. Cindy Steward, senior in charge of the audit, plans to use MUS to audit Garner’s inventory account. The balance in the inventory account at December 31 was $8,000,000.
Requirements: a) Based on the information in the spreadsheet, calculate the required MUS sample size
b) Steve Brents, staff accountant, used the sample items selected in part (a) and performed the audit procedures listed in the inventory audit program. He noted the misstatements show in the spreadsheet in part (b). Using the information, calculatethe upper misstatement limit.
c) Based on the results in part (b) What is the conclusion that Steve Brents should make concerning the inventory account balance?
NOTE THAT ALL CALCULATIONS SHOULD BE ACCOMPLISHED USING THE SPREADSHEET! I WILL CHECK THE FORMULAS AND THEY WILL ACCOUNT FOR 50% OF THE POINTS.
Aug 29, 2021 | Uncategorized
John Clinton, owner of Clinton Company, applied for a bank loan and was informed by the banker that audited financial statements of the business had to be submitted before the bank could consider the loan application. Clinton then retained Arthur Jones, CPA, to perform an audit. Clinton informed Jones that audited financial statements were required by the bank and that the audit must be completed within three weeks. Clinton also promised to pay Jones a fixed fee plus a bonus if the bank approved the loan. Jones agreed and accepted the engagement.
The first step taken by Jones was to hire two accounting students to conduct the audit. He spent several hours telling them exactly what to do. Jones told the students not to spend time reviewing controls but instead to concentrate on proving the mathematical accuracy of the ledger accounts and summarizing the data in the accounting records that support Clinton Company’s financial statements. The students followed Jone’s instructions and after two weeks gave Jones the financial statements, which did not include any notes. Jones reviewed the statements and prepared an unqualified audit report. The report, however, did not refer to generally accepted accounting principles.
Required:
List on the left side of a sheet of paper the generally accepted auditing standards that were violated by Jones, and indicate how the actions of Jones resulted in a failure to comply with each standard. Organize your answers as follows:
Aug 29, 2021 | Uncategorized
A company allocates indirect manufacturing costs based on direct labour hours. Recently, management has decided to pilot a system of time driven activity based costing to allocate these costs. The division produces two small engine models: Basic and Heavy Duty. The following information has been obtained from the company’s records over the past year: Basic Heavy Duty Units produced 500,000 50,000 Direct material cost per engine $40 $60 Direct labour cost per hour $30 $30 Direct labour hours incurred 200,000 40,000 Inspections per engine 2 4 Inspection time per engine (hrs.) .1 .3 Engines packed and shipped per batch 2,000 500 Individual engine packing time (hrs.) .25 .4 Additional preparation time per batch (hrs.) 30 15 They employ 245 employees to perform indirect labour functions, rotating among machine setups, engine inspections, and shipping. Each employee is paid $50,000 per year on average, including benefits. On average, each employee works 1,600 hours per year. 200 automated production machines are leased for $14,000,000 in total each year. Each machine is available for 1,600 hours per year, including set up time. Once a machine is set up, no labour is necessary to oversee it. Machine related information for the year is as follows: Basic Heavy Duty Machining hours per engine .4 .6 Set up time per run (hrs.) 300 600 Number of production runs 100 50 Required a. Determine the amount of indirect manufacturing costs allocated to one engine of each type (Basic, Heavy Duty) based on the existing cost allocation basis (direct labour hours). b. Determine the total cost (direct material, direct labour, indirect manufacturing overhead) of producing one engine of each type using the existing cost allocation basis. c. Determine the indirect manufacturing support costs for one engine of each type using time driven activity based costing.
Aug 29, 2021 | Uncategorized
Read Information and Communication, pages 67 74, in the COSO ERM Integrated Framework.
- Identify and explain the elements that determine quality of information, as listed in the COSO ERM Integrated Framework.
- In your opinion, can and must all elements of quality information be simultaneously achieved for information to be useful? Are compromises ever necessary or acceptable? Explain why or why not.
- You are the corporate controller, and must prepare a report for each of the positions identified below.
- Vice President of Sales
- Sales Department manager
- President of the Company
Review the “Budget Example” Excel workbook..I want you to actually prepare the reports;
The reports do not need to be long and tedious. Begin by identifying what information is relevant and useful for each person, in their respective official positions.
You may prepare the reports in Excel or Word.You may invent any details or make any assumptions you choose.There is no right or wrong regarding the story you choose to tell with the data.The numbers are not the important part of this assignment.
References below may help you determine how to prepare the reports. You may also find your own sources.
Aug 29, 2021 | Uncategorized
Part 5. Footnote Review. Please answer the following question based on Footnote 1 (Summary of Significant Accounting Policies) in your company’s 10 K. If specific questions do not apply to your company please include an explanation. A. When does your company record revenue from the sale of merchandise or services? B. How does your company account for sales returns? C. What cost flow assumption (e.g., FIFO, LIFO, or average cost) does your company use to measure and report its merchandise inventories? D. What method of depreciation does your company use for its property and equipment?
Aug 29, 2021 | Uncategorized
During the current year, Angela sustains serious injuries from a snow skiing accident. She incurs the following expenses:
Item Amount
Doctor bills $11,700
Hospital bills 9,400
Hot and Warm Sauna 15,000
Legal fees in suit against ski resort 3,000
Angela is single and has no dependents. During the current year, her salary is $58,000 she pays $600 in medical and dental insurance premiums, which are withheld from her paycheck on an after tax basis, $2,750 in mortgage interest on her home, and $1,200 in interest on her car loan. Her health insurance provider reimburses her for $10,000 of the medical expenses. Based on her doctor’s recommendation and prescription, Emily had a contractor install a certified hot and warm sauna at a cost of $15,000 in the year. She paid all of it with her savings in 2011. The Fair Market Value of the property improved by $7,500. Emily had real estate taxes of $4,000 on her property. Emily had no other personal exemptions. Based on this case study information, determine Emily’s itemized deductions. Which of these items can and cannot be listed as medical deductions? What is her 2011 taxable income?
Aug 29, 2021 | Uncategorized
Huggables Ltd.
Huggables Ltd. produces a line of plush animals for small children. The primary raw materials are fleece and down feathers. Other raw materials, such as thread, are insignificant in cost and are included in variable manufacturing overhead. Jan McGarry, Huggables controller, is currently preparing a master budget for 2013. She has gathered the following information:
1. Huggables’ projected Balance Sheet as at December 31, 2012 is as follows:
Huggables Ltd.
Projected Balance Sheet
As at December 31, 2012
Assets
Current Assets
Cash $ 10,000
Accounts Receivable 18,000
Finished Goods Inventory (1,575 units) 25,200
Total Current Assets 53,200
Non Current Assets
Plant & Equipment (net of Accumulated Amortization) 298,000
Total Assets $ 351,200
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable($6,000 for fleece: $4,800 for down) $ 10,800
Shareholders’ Equity
Common Stock 152,000
Retained Earnings 188,400
340,400
Total Liabilities and Shareholders’ Equity $351,200
2. Sales in the 4th quarter of 2012 are projected to be 6,000 units. The sales manager predicts that over the next two years, sales will grow by 320 units each quarter over the previous quarter. For example, sales in the first quarter of 2013 are expected to be 6,320 units.
3. Huggables sales history indicates that 75 percent of all sales are on credit with the remainder of sales in cash. The company’s collection experience shows that 80 percent of the credit sales are collected during the quarter in which the sale is made, while the remaining 20 percent are collected in the following quarter. (For simplicity, assume the company is able to collect 100 percent of its accounts receivable.)
4. The plush animals sell for $20 and this price is expected to hold constant through 2013.
5. Huggables production manager attempts to end each quarter with enough finished goods inventory to cover 25 percent of the following quarter’s sales. Huggables purchases raw materials on a just in time basis, therefore, period end raw material inventory is negligible. In addition, Work in Process is considered to be negligible.
6. All of Huggables direct material purchases are made on account, and 75 percent of each quarter’s purchases are paid in cash during the same quarter as the purchase. The other 25 percent is paid in the next quarter.
7. Budgeted variable manufacturing costs, per unit, are as follows:
Direct Material:
Fleece: .5 metres @ $8 per metre $ 4.00
Down: 50g @ $.064/gram 3.20
Direct Labour: 15 minutes @ $18 per hour 4.50
Variable overhead: 15 direct labour minutes x $4.20 per hour 1.05
8. Fixed manufacturing overhead is incurred evenly throughout the year and is budgeted at $84,000 for the year. Budgeted fixed manufacturing overhead of $84,000 includes $16,000 for amortization on machinery and equipment.
9. Variable manufacturing costs and fixed manufacturing costs are paid for as incurred.
10. Huggables’ quarterly selling and administrative expenses are $20,000, all of which are paid in cash.
11 McGarry anticipates that dividends of $4,500 will be declared and paid each quarter.
12. Huggables’ management has made a decision to purchase several state of the art sewing machines as part of a plan to modernize the company’s operations. It is anticipated that the machines will be purchased at the beginning of December in 2013 and will cost $140,000. It will take approximately six weeks to train personnel on the new machines, therefore, it is not anticipated that they will be used in production until 2014. The purchase will be financed with a one year $140,000 term bank loan with a 6 percent interest rate.
13. Huggables wishes to maintain a minimum cash balance of $4,000. Management has negotiated an operating line of credit with its bank. The line of credit is for a maximum of $50,000 and bears an interest rate of 8% per annum. Assume that borrowings are made at the beginning of the quarter in which there is a cash shortage and all repayments are made at the end of the quarter of repayment. Interest is paid only at the time principal is repaid and repayments of principal are to be made in multiples of one thousand dollars.
Required:
Prepare a Master Budget for Huggables Ltd. for the year ending December 31, 2013. The cash budget
must be quarterly. Only a period end Balance Sheet and Income Statement for the year ended December 31, 2013 are required. Round all numbers to the nearest dollar.
1. At least the following budget schedules and statements must be included and a hard copy submitted: a. Sales budget
b. Production budget
c. Direct materials purchases budget
d. Direct labour budget
e. Manufacturing overhead budget
f. Cost of goods sold budget
g. Selling and administrative expenses budget
h. Cash budget
i. Budgeted Income Statement j. Budgeted Balance Sheet In addition to the hardcopy of the master budget, you are required to submit an electronic version of your master budget (make sure you put group member names on it) to me via email. The electronic version of the master budget is due at the same time as the hardcopy and if not submitted zero marks will be assigned for the spreadsheet portion
Aug 29, 2021 | Uncategorized
On January 1, 2012, Richards Inc. had cash and common stock of $64,330. At that date the company had no other asset, liability or equity balances. On January 2, 2012, it purchased for cash $23,010 of equity securities that it classified as available for sale. It received cash dividends of $4,800 net of tax during the year on these securities. In addition, it has an unrealized holding gain on these securities of $6,240 net of tax. Determine the following amounts for 2012: (a) net income; (b) comprehensive income; (c) other comprehensive income; and (d) accumulated other comprehensive income (end of 2012).
| (a) |
Net income |
$ |
| (b) |
Comprehensive income |
$ |
| (c) |
Other comprehensive income |
$ |
| (d) |
Accumulated other comprehensive income |
$ |
Aug 29, 2021 | Uncategorized
Assignment 1: Excel Project
Due Week 4 and worth 150 points
This assignment is based upon O’Leary Lab 4: Stock Portfolio Analysis and consists of two (2) parts – an Excel based assignment and a paper.
You have been assigned to evaluate the stock market performance of firms who manufacture accounting software products. Your evaluation will be based upon large and medium market firms. The firms are as follows:
Large Market Stocks:
- Oracle Software (Oracle Corp: NASDAQ)
- SAP (SAP AG: NYSE)
Medium Market Stocks:
- Microsoft Great Plains (Microsoft: NASDAQ)
Small Market Stocks:
- QuickBooks (Intuit: NASDAQ)
- Peachtree (Sage Grp: LSE)
Part 1: Excel Spreadsheet Assignment
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Scenario 1
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You have been given $1,000,000 to invest the five (5) stocks. You must invest the $1,000,000 accordingly
- No more than 35% of your investment will be in the Large Market stocks, with a minimum of 15% investment in any given stock
- No more than 30% of your investments will be in the Medium Market stock, with a minimum of 15% investment in the stock
- No more than 35% of your investment will be in the Small Market stocks , with a minimum of 15% investment in any given stock
The purchase date of the stock will be 6 months ago. Track your stocks’ daily performance for the 90 trading days following the purchase date. During this time, you will note the gains and losses each day. At the end of the 90 days’ tracking period, calculate your net gain (or loss) for each stock and your total investment at the end of the 90 days. Develop the appropriate charts that highlight your performance. You will create a minimum of two charts.
Note: Your purchase must be in whole shares. For example, you cannot purchase 100.5 shares. You must purchase either 100 or 101 shares. For this reason, you may not total to exactly $1,000,000, but you will come close.
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Scenario 2
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You are now skeptical of the Medium Market stock. With that, you will now invest your $1,000,000 accordingly
- No more than 50% of your investment will be in the Large Market Stocks, with a minimum of 20% investment in any given stock
- No more than 50% of your investment will be in the Small Market Stocks, with a minimum of 20% investment in any given stock
The purchase date of the stock will be six (6) months ago. Track your stocks’ daily performance for the 90 trading days following the purchase date. During this time, you will note the gains and losses each day. At the end of the 90 days’ tracking period, calculate your net gain (or loss) for each stock and your total investment at the end of the 90 days. Develop the appropriate charts that highlight your performance. You will create a minimum of two (2) charts.
Note: Your purchase must be in whole shares. For example, you cannot purchase 100.5 shares. You must purchase either 100 or 101 shares. For this reason, you may not total to exactly $1,000,000, but you will come close.
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Scenario 3
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You are now skeptical of the Large Market stock. With that, you will now invest your $1,000,000 accordingly
- No more than 50% of your investment will be in the Medium Market stock, with a minimum 20% investment here
- No more than 50% of your investment will be in the Small Market Stocks, with a minimum 20% investment here
The purchase date of the stock will be six (6) months ago. Track your stocks’ daily performance for the 90 trading days following the purchase date. During this time, you will note the gains and losses each day. At the end of the 90 days’ tracking period, calculate your net gain (or loss) for each stock and your total investment at the end of the 90 days. Develop the appropriate charts that highlight your performance. You will create a minimum of two (2) charts.
Note: Your purchase must be in whole shares. For example, you cannot purchase 100.5 shares. You must purchase either 100 or 101 shares. For this reason, you may not total to exactly $1,000,000, but you will come close.
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Scenario 4
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You are now a believer of only the Medium Market stock. With that, you will now invest your $1,000,000 into that stock.
The purchase date of the stock will be six (6) months ago. Track your stocks’ daily performance for the 90 trading days following the purchase date. During this time, you will note the gains and losses each day. At the end of the 90 days’ tracking period, calculate your net gain (or loss) for the stock and your total investment at the end of the 90 days. Develop the appropriate charts that highlight your performance. You will create a minimum of two (2) charts.
Note: Your purchase must be in whole shares. For example, you cannot purchase 100.5 shares. You must purchase either 100 or 101 shares. For this reason, you may not total to exactly $1,000,000, but you will come close.
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Note
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Do not worry about any commission fees or miscellaneous charges.
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Assignment
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Determine how much money you earned or lost with each stock on a daily basis.
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Instructions on how to complete
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There is no sample Excel workbook to use as part of the project, therefore you will create your own workbook. In creating your workbook, be sure to include the following data (however, other data will be stored in your scenario) in a columnar format.
- Stock name
- Stock symbol
- Number of shares purchased / acquired
- Stock price
- Date of stock transaction
Start your scenario using the opening day price for each stock as your purchase price and use the closing stock price to calculate how much money you earned or lost each day.
At the end of your scenario, calculate the following for each stock in question.
- The highest stock price for the period
- The lowest stock price for the period
- The average stock price for the period
- The largest amount of profit (loss) earned for the period
- The lowest amount of profit (loss) earned for the period
Track the stock for 90 consecutive days that the market is open.
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Submit
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One Excel workbook that contains each of the four (4) scenarios. You will need to use the appropriate Excel formulas and functions which will show the instructor how you derived your results.
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Part II: Paper
Write a three to four (3 4) page paper that summarizes your findings from the four (4) scenarios as well as how using Microsoft Excel helped you with this process. Use the following outline:
1. Summarize the various accounting systems that each firm provides. Be sure to address the following for each firm: a. The various types of accounting systems it sells (e.g., Oracle sells Oracle Financials as well as PeopleSoft financials)
b. The industries that it markets itself to (e.g., most firms sell their products to banking firms, construction firms)
c. Explain how Wall Street views the firm. Is it positive? Negative? Why?
2. Analyze the results from the four (4) scenarios to determine how creditable your sources were and how your selection of sources
may have been improved.
3. Develop one (1) additional scenario that would have exceeded the results from your best scenario.
4. Determine how your findings could be used to better drive management decisions.
Your assignment must follow these formatting requirements:
- Be typed, double spaced, using Times New Roman font (size 12), with one inch margins on all sides; citations and references must follow APA or school specific format. Check with your professor for any additional instructions.
- Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
The specific course learning outcomes associated with this assignment are:
- Discuss how automated accounting software can help management make better informed business decisions.
- Organize information between Word and Excel to communicate to internal and external users.
- Use technology and information resources to research issues in microcomputer applications for accountants.
- Write clearly and concisely about microcomputer applications for accountants using proper writing mechanics.
Grading for this assignment will be based on answer quality, logic / organization of the paper, and language and writing skills. Click here to access the rubric for this assignment.
Aug 29, 2021 | Uncategorized
the equity method of accounting for investments Chapter Outline
- Three methods are principally used to account for an investment in equity securities along with a fair value option.
- Fair value method: applied by an investor when only a small percentage of a company’s voting stock is held.
- Income is recognized when dividends are declared.
- Portfolios are reported at fair value. If fair values are unavailable, investment is reported at cost.
- Consolidation: when one firm controls another (e.g., when a parent has a majority interest in the voting stock of a subsidiary or control through variable interests, their financial statements are consolidated and reported for the combined entity.
- Equity method: applied when the investor has the ability to exercise significant influence over operating and financial policies of the investee.
- Ability to significantly influence investee is indicated by several factors including representation on the board of directors, participation in policy making, etc.
- According to GAAP guidelines, the equity method is presumed to be applicable if 20 to 50 percent of the outstanding voting stock of the investee is held by the investor.
Current financial reporting standards allow firms to elect to use fair value for any investment in equity shares including those where the equity method would otherwise apply. However, the option, once taken, is irrevocable. After 2008, an entity can make the election for fair value treatment only upon acquisition of the equity shares. Dividends received and changes in fair value over time are recognized as income.
- Accounting for an investment: the equity method
- The investment account is adjusted by the investor to reflect all changes in the equity of the investee company.
- Income is accrued by the investor as soon as it is earned by the investee.
- Dividends declared by the investee create a reduction in the carrying amount of the Investment account.
- Special accounting procedures used in the application of the equity method
- Reporting a change to the equity method when the ability to significantly influence an investee is achieved through a series of acquisitions.
- Initial purchase(s) will be accounted for by means of the fair value method (or at cost) until the ability to significantly influence is attained.
- At the point in time that the equity method becomes applicable, a retrospective adjustment is made by the investor to convert all previously reported figures to the equity method based on percentage of shares owned in those periods.
- This restatement establishes comparability between the financial statements of all years.
- Investee income from other than continuing operations
- Income items such as extraordinary gains and losses and discontinued operations that are reported separately by the investee should be shown in the same manner by the investor. The materiality of these other investee income elements (as it affects the investor) continues to be a criterion for separate disclosure.
- The investor recognizes its share of investee reported other comprehensive income (OCI) through the investment account and the investor’s own OCI.
- Investee losses
- Losses reported by the investee create corresponding losses for the investor.
- A permanent decline in the fair value of an investee’s stock should be recognized immediately by the investor.
- Investee losses can possibly reduce the carrying value of the investment account to a zero balance. At that point, the equity method ceases to be applicable and the fair value method is subsequently used.
- Reporting the sale of an equity investment
- The equity method is consistently applied until the date of disposal to establish the proper book value.
- Following the sale, the equity method continues to be appropriate if enough shares are still held to maintain the investor’s ability to significantly influence the investee. If that ability has been lost, the fair value method is subsequently used.
- Excess investment cost over book value acquired
A. The price paid by an investor for equity securities can vary significantly from the underlying book value of the investee company primarily because the historical cost based accounting model does not keep track of changes in a firm’s fair value.
B. Payments made in excess of underlying book value can sometimes be identified with specific investee accounts such as inventory or equipment.
C. An extra acquisition price can also be assigned to anticipated benefits that are expected to be derived from the investment. For accounting purposes, these amounts are presumed to reflect an intangible asset referred to as goodwill. Goodwill is calculated as any excess payment that is not attributable to specific assets and liabilities of the investee. Because goodwill is an indefinite lived asset, it is not amortized.
- Deferral of unrealized gross profit in inventory
- Profits derived from intra entity transactions are not considered completely earned until the transferred goods are either consumed or resold to unrelated parties.
- Downstream sales of inventory
- “Downstream” refers to transfers made by the investor to the investee.
- Intra entity gross profits from sales are initially deferred under the equity method and then recognized as income at the time of the inventory’s eventual disposal.
- The amount of gross profit to be deferred is the investor’s ownership percentage multiplied by the markup on the merchandise remaining at the end of the year.
- Upstream sales of inventory
- “Upstream” refers to transfers made by the investee to the investor.
- Under the equity method, the deferral process for unrealized profits is identical for upstream and downstream transfers. The procedures are separately identified in Chapter One because the handling does vary within the consolidation process.
Aug 29, 2021 | Uncategorized
Arab Open University
BE310: TMA – Summer 2013
Cut Off Date: 27
th of July 2013
About TMA:
The TMA covers the cost accounting concepts and practices in the businesses. It is marked out of 100 and is worth 20% of the overall assessment component. It is intended to assess students’ understanding of some of the learning points within chapters
1 to 3. This TMA requires you to apply the course concepts. The TMA is intended to:
- Assess students’ understanding of key learning points within chapters 1 to 3.
- Increase the students’ knowledge about the reality of the cost and management accounting as a profession.
- Develop students’ communication skills, such as memo writing, essay writing, analysis and presentation of material.
- Develop the ability to understand and interact with the nature of the managerial accounting tools in reality.
- Develop basic ICT skills such as using the internet.
The TMA:
The TMA requires you to:
- Review various study chapters of ‘Cost Accounting’ Book and apply some of the concepts within it.
- Conduct a simple information search using the internet.
- Present your findings in not more than 1,200 words. The word count excludes headings, references, title page, and diagrams.
- You should use a Microsoft Office Word and Times New Roman Font of 14 points.
- You should read and follow the instructions below carefully. Each part of the process will carry marks for the assignment.
Criteria for Grade Distribution:
| Criteria |
Content |
Referencing |
Structure and Presentation of ideas |
Total marks |
Financial Reporting on the Internet
(Simpson Manufacturing Inc.) |
| Marks |
100 |
(5) |
(5) |
100 |
The TMA Questions
Financial Reporting on the Internet
(Simpson Manufacturing Co.)
Simpson Manufacturing Co., Inc., a Delaware corporation, (the “Company”), through its subsidiary, Simpson Strong Tie Company Inc. (“Simpson Strong Tie” or “SST”), designs, engineers and is a leading manufacturer of wood construction products, including connectors, truss plates, fastening systems, fasteners and pre fabricated shearwalls, and concrete construction products used for concrete, masonry and steel, including adhesives, chemicals, mechanical anchors, carbide drill bits, powder actuated tools and fiber reinforcing materials. SST markets its products to the residential construction, light industrial and commercial construction, remodeling and do it yourself (“DIY”) markets. The Company believes that SST benefits from strong brand name recognition among architects and engineers who frequently specify in building plans the use of SST products. SST has continuously manufactured structural connectors since 1956.
Access the Analog Devices Inc. web page at:
www.simpsonmfg.com From Simpson’s home page, choose “FINANCIALS & MEDIA”, and then “Financial Reporting”, followed by clicking on “Annual Report” to download 2012 annual report on Form 10 K (PDF).
Instructions:
Use the annual report to answer the following questions:
- A schedule of the cost of finished goods manufactured is a helpful tool in determining the per unit cost of manufactured products. Explain several ways in which information about per unit manufacturing costs is used by:
- Simpson Manufacturing Company’s financial accountants, and
- Simpson Manufacturing Company’s management accountants.
[Marks: 6 marks for each point = 12]
- Describe how Simpson Manufacturing Company’s strategy stands up against industry rivalry.
[
10 Marks
]
- Can you use Simpson Manufacturing Company’s financial statements to calculate contribution margin? Explain and support your answer with suitable figures from the Simpson Manufacturing Company’s 2012 annual report.
[8 Marks]
- Write a report in no more than 400 words about Simpson Manufacturing Company. This report should cover the following points:
- Is it a service, merchandising, or manufacturing company? How can you tell? What is its primary product or service?
- SMG&A.
- Gross profit margin for each activity during the most three recent years (2012, 2011, and 2010) and comment on its trend.
- What is the amount of CoGS for the most three recent years (2012, 2011, and 2010)? What kinds of costs are included in the Cost of Sales account?
[Marks:
6 marks for each point = 24
]
- What categories of inventory Simpson Manufacturing Company shows on the balance sheet for the most two recent years (2012 and 2011)? Support your answer by suitable figures from the Simpson Manufacturing Company’ annual report.
[8 Marks]
- Using the income statement (Consolidated Statements of Operations, p. 66 of the 2012 annual report) and inventory information from the Consolidated Balance Sheets and notes, calculate the cost of finished goods manufactured for 2012 annual year.
[8 Marks]
- “Value chain refers to the sequence of business functions in which customer usefulness is added to products or services of a company”. Provide evidence from the annual report of Simpson Manufacturing Company concerns about its value chain.
[18 Marks]
- Recast the “Consolidated Statements of Operations”, p. 66, in the contribution margin format using amounts from the 2012 year (Ignore tax). For this computation assume that 40% of cost of sales and operating expenses are fixed.
[
12 Marks
]
In your answer, you should explain each point or inquire separately. Use the following headings (below) to make up the different sections of your answer:
| PT3 form (Cover) |
Available on LMS |
| Contents |
Title and contents page |
| TMA |
Financial Reporting on the Internet (The case of Simpson Manufacturing Company) |
| Reference list |
Recorded according to the Harvard style Available on LMS |
|
|
Good Luck!
Dr. Helal Afify |
|
Aug 29, 2021 | Uncategorized
Kumar Company has two Producing Departments and two Support Centers. The following budgeted data pertain to these four departments:
|
Support Departments |
Producing Departments |
|
Maintenance |
Personnel |
Assembly |
Painting |
| Overhead |
$2,00,000 |
$60,000 |
$43,000 |
$74,000 |
| Square Footage |
|
2,700 |
5,400 |
5,400 |
| No. of employees |
30 |
|
72 |
198 |
| Direct labour hours |
|
|
25,000 |
40,000 |
Required:
- Allocate the Overhead Costs of the Support Departments to the Producing Departments using the Direct Method. Explain with reasoning the basis on which allocation has been done.
- Using Direct labour Hours compute departmental Overhead rates for the two Producing Departments.
Aug 29, 2021 | Uncategorized
Prepare journal entries to record each of the following transactions.
You do not need to write explanations below the journal entries.
- Create general ledger accounts for each account and post each of the journal entries to an existing general ledger account.
- Prepare adjusting journal entries as you deem necessary. Besides the information provided for adjusting journal entries, review the transactions and review your unadjusted trial balance for any other adjusting journal entries you may need to prepare.
- Post each of the adjusting journal entries to the general ledger accounts.
- Prepare closing entries and post the entries to the general ledger accounts.
- Prepare trial balances as you deem necessary.
- Prepare the following financial statements, in their proper format, for the month of January
- Income statement
- Statement of retained earnings
- Balance sheet
- Statement of Cash Flow
Shocker Electronics is a new company that distributes computer equipment to retail outlets. The following information pertains to Shocker Electronics during their first month of operations:
Suppliers
sales
price cost terms
Xtreme game systems $ 3,000.00 2,400.00 1% 15, net 30
HP office systems 2,000.00 1,700.00 1%/20, net/30
Gateway home systems 900.00 720.00 2%/10, net/30
Customers
Cuesta Computer terms 2%/10 net 30
Mustang Computer terms 2%/10 net 30
SLO CPU terms 2%/10 net 30
walk in customers cash only no discount
Jan 1 Issued 10,000 shares of $1 par value common stock for $15 per share.
Jan 1 Made a $50,000 down payment and signed a $600,000 mortgage to purchase land and building, which will be used as the distribution center. The land comprised of three (3) lots which appraised at $132,000 each ($396,000 total) and the building appraised for $264,000. The building occupies one (1) lot, one (1) lot will serve as parking and WCD intends to sell the third lot.
The loan is a ten (10) year, 8.0% mortgage requiring monthly payments consisting of principle and interest. The first payment is due Feb. 1
st.
Please attach a loan amortization schedule.
Jan 1 Issued 100 bonds with $1,000 face value and 6% coupon rate. The bonds mature in ten (10) years and pay interest semi annually on July 1
st and January 1st. The bonds sell at a price to yield an 8% effective interest rate. The effective interest method will be used to amortize the bond premium or discount.
Please attach a bond amortization schedule.
Jan 1 Borrowed $100,000 from First Bank to purchase shelving for the warehouse. The shelving cost $100,000 and is expected to last five (5) years. The note is a three (3) year, 9% note that requires principle and interest payments on the last day of each month.
Please attach a loan amortization schedule
Jan 1 Purchase inventory
150 systems from Gateway at $720 per system terms 2%/10, net/30
100 systems from HP at $1,700 per system terms 1%/20, net/30
40 systems from Xtreme at $2,400 per system terms 1% 15, net 30
Jan 1 Paid $1,000 for supplies.
Jan 5 Sold Cuesta Computer sixty (60) Gateway sytstems and forty (40) HP
systems, on account.
Jan 6 Paid Gateway bill in full (in the discount period)
Jan 10 Sold SLO CPU twenty five (25) Xtreme systems.
Jan 14 Received payment in full from Cuesta Computer (in the discount period).
Jan 14 Sold Mustang Computer fifty (50) Gateway sytstems and fifty (50) HP systems.
Jan 14 Paid HP bill in full (in the discount period)
Jan 15 Purchase inventory
75 systems from Gateway at $720 per system terms 2%/10, net/30
50 systems from HP at $1,700 per system terms 1%/20, net/30
25 systems from Xtreme at $2,400 per system terms 1%/15, net 30
Jan 16 Paid salaries totaling $5,000 for the first half of the month. In order to make this entry you must know that 15% was withheld for federal income tax, 5% was withheld for state income tax, 7.65% (6.2% social security and 1.45% medicare) was withheld for FICA. Don’t forget that the employer is also responsible for matching the employee’s contribution to FICA. All taxes, both the employee’s and employer’s, are paid quarterly throughout the year.
Jan 20 Sold Cuesta Computer forty (40) Gateway systems and forty (40) HP systems, on account.
Jan 22 Sold SLO CPU twenty five (25) Xtreme systems.
Jan 23 Received payment in full from Mustang Computers (in discount period).
Jan 24 Paid Gateway bill in full (in the discount period)
Jan 25 Received payment in full from SLO CPU. The first invoice was out of discount period and the second invoice was in the discount period.
Jan 27 Sold the extra parcel of land, which was held as an investment, for $125,000.
Jan 28 Paid Xtreme bill in full (first invoice out of the discount period)
Paid Xtreme bill in full (second invoice in the discount period)
Jan 29 Paid HP bill in full (in the discount period)
Jan 29 Received payment in full from Cuesta Computer (in the discount period).
Jan 30 Sold Mustang Computer fifty (50) Gateway systems and ten (10) HP systems.
Additional information
Accounts Receivable: Accounts receivable are evaluated at the end of each month. It is estimated that 2% of all accounts receivable will not be collected.
Inventory: The weighted average cost method is used to value product purchased
from each supplier. By that I mean that the purchase price does not change by supplier, but you need to factor in any discounts that are taken. Therefore, you will have to calculate inventory values and cost of goods on a weighted average basis by items purchased from supplier. A periodic inventory system is utilized.
Depreciation on: building 20 years, straight line, no salvage value.
shelving 5 years, double declining balance, no
salvage value
Supplies worth $175 are on hand at the end of the month
Accrue salaries for the second half of the month (same amount as Jan. 16
th salaries). These salaries will be paid on February 1
st.
Aug 29, 2021 | Uncategorized
MKTG205 1203D 01 Principles of Marketing AssignmentName: Unit 1 Individual Project Deliverable Length: The body of the paper should be 3 pages Details: To correctly identify opportunities and threats to their product, Marketing Managers need to understand the marketing environment in which the products operate. Industry Research Using the AIU Library’s First Research web resource conduct secondary research on the industry in which your product/service operates. Clickherefor the research requirements and guide for this assignment.
Aug 29, 2021 | Uncategorized
Chapter 11 Tundra Services Company Tundra Services Company, a division of a major oil company, provides various services to the operators of the North Slope oil field in Alaska. Data concerning the most recent year appear below: Sales 18500000 Net operating income 4700000 Average operating assets 35700000 Required: Compute the margin for Tundra Services Company.(Round your answer to 2 decimal places. Omit the “%” sign in your response.) Margin ? Compute the turnover for Tundra Services Company. (Round your answer to 2 decimal place.) Turnover ? Compute the return on investment (ROI) for Tundra Services Company. (Round your intermediate calculations and final answer to 2 decimal places. Omit the “%” sign in your response.) ROI ? Selected sales and operating data for 3 divisions of 3 different companies are given below: Division A Division B Division C Sales 58000000 9800000 8900000 Average operating assets 1450000 4900000 2225000 Net operating income 284200 872200 191350 Minimum required rate of return 0.18 17.8 15 % Required Compute the return on investment (ROI) for each division, using the formulas stated in terms of margin and turnover (Do not round intermediate calculations. Round your answer to 2 decimal places.) ROI Division A ? % Division B ? % Division C ? % Computer the residual income for each division. (Negative amounts should be indicated by a minus sign. Leave no cells blank be certain to enter “0” wherever required.) Division A Division B Division C Residual income ? ? ? Assume that each division is presented with an investment opportunity that would yield a rate of return of 20%. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? Division A accept or reject ? Division B accept or reject ? Division C accept or reject ? If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? Division A accept or reject ? Division B accept or reject ? Division C accept or reject ? Kirsi Products’ East Division “I know headquarters wants us to add that new product line,” said Fred Halloway, manager of Kirsi Products’ East Division. “But I want to see the numbers before I make a move. Our division’s return on investment (ROI) has led the company for three years, and I don’t want any letdown.” Kirsi Products is a decentralized wholesaler with four autonomous divisions. The divisions are evaluated on the basis of ROI, with year end bonuses given to divisional managers who have the highest ROI. Operating results for the company’s East Division for last year are given below: Sales $ 25,500,000 Variable expenses 14,000,000 Contribution margin 11500000 Fixed expenses 9358000 Net operating expenses 2142000 Divisional operating assets 5100000 The company had an overall ROI of 18% last year (considering all divisions). The company’s East Division has an opportunity to add a new product line that would require an investment of $3,200,000. The cost and revenue characteristics of the new product line per year would be as follows: Sales 9280000 Variable expenses 65% Fixed expenses 2607680 Required Compute the East Division’s ROI for last year; also compute the ROI as it would appear if the new product line is added. (Round your intermediate calculations and final answers to 2 decimal places. ROI Present ? % New product line alone ? % Total ? % If you were in Fred Halloway’s position, would you accept or reject the new product line? accept or reject ? Why do you suppose headquarters is anxious for the East Division to add the new product line? Adding the new line would increase the company’s overall ROI. OR Adding the new line would decrease the company’s overall ROI. Suppose that the company’s minimum required rate of return on operating assets is 15% and that performance is evaluated using residual income. Compute the East Division’s residual income for last year; also compute the residual income as it would appear if the new product line is added. Residual income Present ? New product line alone ? Total ? Under these circumstances, if you were in Fred Halloway’s position would you accept or reject the new product line? accept or reject? Bridger, Inc. Financial data for Bridger, Inc., for last year are as follows: The company paid dividends of $285,920 last year. The “Investment in Brier Company” on the balance sheet represents an investment in the stock of another company. Required Compute the company’s margin, turnover, and return on investment (ROI) for last year. (Do not round intermediate calculations. Round your final answers to 2 decimal places. Margin ? % Turnover ? ROI ? % The board of directors of Bridger, Inc., has set a minimum required return of 15%. What was the company’s residual income last year? Residual income ? Chapter 12 Jackson County Senior Services Jackson County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their own homes within the Jackson County area. Three services are provided for seniors—home nursing, Meals On Wheels, and housekeeping. In the home nursing program, nurses visit seniors on a regular basis to check on their general health and to perform tests ordered by their physicians. The Meals On Wheels program delivers a hot meal once a day to each senior enrolled in the program. The housekeeping service provides weekly housecleaning and maintenance services. Data on revenue and expenses for the past year follow Total Home Nursing Meals On Wheels House keeping Revenues 924,000 $ 265,000 $ 402,000 $ 257,000 Variable expenses 470,000 115,000 196,000 159,000 Contribution margin 454,000 150,000 206,000 98,000 Fixed expenses: Depreciation 69,600 8,600 40,600 20,400 Liability insurance 43,400 20,700 7,600 15,100 Program administrators’ salaries 115,000 40,900 38,900 35,200 General administrative overhead* 184,800 53,000 80,400 51,400 Total fixed expenses 412,800 123,200 167,500 122,100 Net operating income (loss) 41,200 $ 26,800 $ 38,500 $ 24,100 *Allocated on the basis of program revenues. The head administrator of Jackson County Senior Services, Judith Miyama, is concerned about the organization’s finances and considers the net operating income of $41,200 last year to be too small. (Last year’s results were very similar to the results for previous years and are representative of what would be expected in the future.) She feels that the organization should be building its financial reserves at a more rapid rate in order to prepare for the next inevitable recession. After seeing the above report, Ms. Miyama asked for more information about the financial advisability of discontinuing the housekeeping program The depreciation in housekeeping is for a small van that is used to carry the housekeepers and their equipment from job to job. If the program were discontinued, the van would be donated to a charitable organization. Depreciation charges assume zero salvage value. None of the general administrative overhead would be avoided if the housekeeping program were dropped, but the liability insurance and the salary of the program administrator would be avoided Required: What is the impact on net operating income by discontinuing housekeeping program? (Input the amount as a positive value. Increase or decrease? in net operating income by ? Should the housekeeping program be discontinued? Yes or No? Would a segmented income statement format be more useful to management in assessing the long run financial viability of the various services. Yes or No? Climate Control, Inc. Climate Control, Inc., manufactures a variety of heating and air conditioning units. The company is currently manufacturing all of its own component parts. An outside supplier has offered to sell a thermostat to Climate Control for $43 per unit. To evaluate this offer, Climate Control, Inc., has gathered the following information relating to its own cost of producing the thermostat internally Per Unit 14,500 Units per year Direct materials $ 13 $ 188,500 Direct labor 15 217,500 Variable manufacturing overhead 2 29,000 Fixed manufacturing overhead, traceable 6* 87,000 Fixed manufacturing overhead, common, but allocated 17 246,500 Total cost $ 53 $ 768,500 *40% supervisory salaries; 60% depreciation of special equipment (no resale value). Required: Assuming that the company has no alternative use for the facilities now being used to produce the thermostat, compute the total cost of making and buying the parts. (Round your Fixed manufacturing overhead per unit rate to two decimals and your final answers to the nearest dollar amount. Make Buy Total relevant cost (14,500 units) ? ? Should the outside supplier’s offer be accepted? accept or reject ? Suppose that if the thermostats were purchased, Climate Control, Inc., could use the freed capacity to launch a new product. The segment margin of the new product would be $159,700 per year. Compute the total cost of making and buying the parts. (Round your Fixed manufacturing overhead per unit rate to two decimals and your final answers to the nearest dollar amount. Make Buy Total relevant cost (14,500 units) ? ? Should Climate Control, Inc., accept the offer to buy the thermostats from the outside supplier for $43 each? accept or reject ? Solex Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split off point total $99,000 per year. The company allocates these costs to the joint products on the basis of their total sales value at the split off point. These sales values are as follows: product X, $55,000; product Y, $91,000; and product Z, $65,000 Each product may be sold at the split off point or processed further. Additional processing requires no special facilities. The additional processing costs and the sales value after further processing for each product (on an annual basis) are shown below Product Additional Sales Value after Processing Costs Further Processing X 38,000 82,000 Y 37,000 159,000 Z 10,000 84,000 Required Compute the incremental profit (loss) for each product. (Loss amounts should be indicated with a minus sign. Product X Product Y Product Z Incremental profit (loss) ? ? ? Which product or products should be sold at the split off point? Product X Product Y Product Z Which product or products should be processed further? Product X Product Y Product Z Blueline Tours, Inc. Blueline Tours, Inc., operates tours throughout the United States. A study has indicated that some of the tours are not profitable, and consideration is being given to dropping these tours to improve the company’s overall operating performance. One such tour is a two day Historic Mansions bus tour conducted in the southern states. An income statement from a typical Historic Mansions tour is given below Ticket revenue (120 seat capacity × 40% 3,360 100 % occupancy × $70 ticket price per person) Variable expenses ($10.00 per person) 480 14.3 Contribution margin 2,880 85.7 % Tour expenses: Tour promotion 690 Salary of bus driver 360 Fee, tour guide 720 Fuel for bus 185 Depreciation of bus 390 Liability insurance, bus 210 Overnight parking fee, bus 70 Room and meals, bus driver and tour guide 200 Bus maintenance and preparation 290 Total tour expenses 3,115 Net operating loss (235) Required: By how much will the profits increase or decrease if this tour is discontinued? (Input the amount as a positive value. Profits would increase or decrease? by ? Thrify Markets, Inc. Thrifty Markets, Inc., operates three stores in a large metropolitan area. The company’s segmented absorption costing income statement for the last quarter is given below: Thrifty Markets, Inc. Income Statement For the Quarter Ended March 31 Uptown Downtown Westpark Total Store Store Store Sales $ 2,900,000 $ 1,100,000 $ 600,000 $ 1,200,000 Cost of goods sold 1,510,000 594,000 355,000 561,000 Gross margin 1,390,000 506,000 245,000 639,000 Selling and administrative expenses: Selling expenses: Direct advertising 116,400 34,000 40,000 42,400 General advertising* 12,000 4,552 2,483 4,965 Sales salaries 154,000 47,000 42,000 65,000 Delivery salaries 39,000 13,000 13,000 13,000 Store rent 204,000 69,000 62,000 73,000 Depreciation of store fixtures 46,830 18,200 8,800 19,830 Depreciation of delivery equipment 27,000 9,000 9,000 9,000 Total selling expenses 599,230 194,752 177,283 227,195 Administrative expenses: Store management salaries 75,000 23,000 24,000 28,000 General office salaries* 40,000 15,172 8,276 16,552 Utilities 92,600 30,000 32,000 30,600 Insurance on fixtures and inventory 24,900 7,800 8,800 8,300 Employment taxes 38,000 11,900 12,600 13,500 General office expenses—other* 23,000 8,724 4,759 9,517 Total administrative expenses 293,500 96,596 90,435 106,469 Total operating expenses 892,730 291,348 267,718 333,664 Net operating income (loss) 497,270 $ 214,652 $ (22,718 ) $ 305,336 *Allocated on the basis of sales dollars. Required: Prepare a schedule showing the change in revenues and expenses and the impact on the overall company net operating income that would result if the Downtown Store were closed. (Input all amounts as positive values. Do not round intermediate calculations. Round your intermediate and final answers to the nearest dollar amount. Gross margin lost OR gained if closed? ? Less costs that can be avoided: ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Increase or decrease in net operating income? ? Based on your computations in (1) above, what recommendation would you make to the management of Thrifty Markets, Inc.? The Downtown Store should not be closed. OR The Downtown Store should be closed. Assume that if the Downtown Store were closed, sales in the Uptown Store would increase by $400,000 per quarter due to loyal customers shifting their buying to the Uptown Store. The Uptown Store has ample capacity to handle the increased sales, and its gross margin is 46% of sales Calculate the Net advantage of closing the Downtown Store. (Negative amount should be indicated with a minus sign. Do not round intermediate calculations. Round your intermediate and final answers to the nearest dollar amount. Net advantage of closing the Downtown Store ? What recommendation would you make to the management of Thrifty Markets, Inc.? The Downtown Store should not be closed. OR The Downtown Store should be closed. Chapter 13 Opry Company The management of Opry Company, a wholesale distributor of suntan products, is considering the purchase of a $40,000 machine that would reduce operating costs in its warehouse by $5,500 per year. At the end of the machine’s 10 year useful life, it will have no scrap value. The company’s required rate of return is 9%. (Ignore income taxes.) *Determine the appropriate discount factor(s) using table. Required: Determine the net present value of the investment in the machine. (Negative amount should be indicated by a minus sign. Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount. Net present value ? What is the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the machine? Net cash flow ? Pisa Pizza Parlor Pisa Pizza Parlor is investigating the purchase of a new $44,000 delivery truck that would contain specially designed warming racks. The new truck would have a eight year useful life. It would save $5,900 per year over the present method of delivering pizzas. In addition, it would result in the sale of 1,900 more pizzas each year. The company realizes a contribution margin of $1 per pizza. (Ignore income taxes.) *Determine the appropriate discount factor(s) using tables. What would be the total annual cash inflows associated with the new truck for capital budgeting purposes? Total annual cash inflows ? Find the internal rate of return promised by the new truck. (Round discount factor(s) to 3 decimal places and final answer to the closest interest rate. Internal rate of return ? % In addition to the data already provided, assume that due to the unique warming racks, the truck will have a $19,000 salvage value at the end of eight years. Under these conditions, compute the internal rate of return. (Round discount factor(s) to 3 decimal places and final answer to the closest interest rate. Internal rate of return ? % Wallingford MicroBrew The management of Wallingford MicroBrew is considering the purchase of an automated bottling machine for $96,800. The machine would replace an old piece of equipment that costs $34,000 per year to operate. The new machine would cost $18,000 per year to operate. The old machine currently in use could be sold now for a scrap value of $10,000. The new machine would have a useful life of 11 years with no salvage value. Required: Compute the simple rate of return on the new automated bottling machine. Use straight line depreciation method. (Round your percentage answer to one decimal place. Simple rate of return ? % Lugano’s Pizza Parlor Lugano’s Pizza Parlor is considering the purchase of a large oven and related equipment for mixing and baking “crazy bread.” The oven and equipment would cost $170,000 delivered and installed. It would be usable for about 10 years, after which it would have a 10% scrap value. The following additional information is available: Required: Prepare a contribution format income statement showing the net operating income each year from production and sale of the crazy bread. (Input all amounts as positive values. ? ? Variable expenses: add or deduct? ? ? ? ? Selling and administrative expenses: ? ? ? ? ? ? ? ? ? ? ? Compute the simple rate of return for the new oven and equipment. (Round your answer to 1 decimal place. Simple rate of return ? % If Mr. Lugano accepts any project with a simple rate of return greater than 10%, will he acquire the oven? Yes or No? Compute the payback period on the oven and equipment Payback period ? years If Mr. Lugano accepts any investment with a payback period of less than seven years, will he acquire the oven? Yes or No? Doughboy Bakery Doughboy Bakery would like to buy a new machine for putting icing and other toppings on pastries. These are now put on by hand. The machine that the bakery is considering costs $96,000 new. It would last the bakery for nine years but would require a $6,000 overhaul at the end of the sixth year. After nine years, the machine could be sold for $5,000 The bakery estimates that it will cost $15,500 per year to operate the new machine. The present manual method of putting toppings on the pastries costs $35,000 per year. In addition to reducing operating costs, the new machine will allow the bakery to increase its production of pastries by 4,000 packages per year. The bakery realizes a contribution margin of $0.30 per package. The bakery requires a 8% return on all investments in equipment. (Ignore income taxes.) What are the annual net cash inflows that will be provided by the new machine? Annual net cash inflows ? Compute the new machine’s net present value. Use the incremental cost approach. (Negative amount should be indicated by a minus sign. Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount. Net present value ? ************************************************************************** Johnson Cleaners Data Sales $25,000,000 Net operating income $3,000,000 Average operating assets $10,000,000 Minimum required rate of return 25% Enter a formula into each of the cells marked with a ? below Review Problem: Return on Investment (ROI) and Residual Income Compute the ROI Margin ? Turnover ? ROI ? Compute the residual income Average operating assets ? Net operating income ? Minimum required return ? Residual income ? ***Check your worksheet by changing the average operating assets in cell B6 to $9,000,000. The ROI should now be 33% and the residual income should now be $750,000. If you do not get these answers, find the errors in your worksheet and correct them Requirement: Revise the data in your worksheet as follows: If your formulas are correct, you should get the correct answers to the following questions. What is the ROI? (Leave no cells blank be certain to enter “0” wherever required. ROI ? % What is the residual income? (Negative amount should be indicated by a minus sign. Residual income ? Why is the residual income positive? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.) Average operating assets exceed net operating income The ROI is less than the minimum required rate of return Sales exceed net operating income Sales exceed average operating assets The ROI exceeds the minimum required rate of return The ROI equals the minimum required rate of return Santa Maria Wool Cooperative Data Exhibit 12 6 Santa Maria Wool Cooperative Cost of wool $200,000 Cost of separation process $40,000 Sales value of intermediate products at split off point: Undyed coarse wool $120,000 Undyed fine wool $150,000 Undyed superfine wool $60,000 Costs of further processing (dyeing) intermediate products: Undyed coarse wool $50,000 Undyed fine wool $60,000 Undyed superfine wool $10,000 Sales value of end products: Dyed coarse wool $160,000 Dyed fine wool $240,000 Dyed superfine wool $90,000 Enter a formula into each of the cells marked with a ? below Example: Joint Product Costs and the Contribution Approach Analysis of the profitability of the overall operation: Combined final sales value ? Less costs of producing the end products: Cost of wool ? Cost of separation process ? Combined costs of dyeing ? ? Profit ? Analysis of sell or process further: Coarse Fine Superfine Wool Wool Wool Final sales value after further processing ? ? ? Less sales value at the split off point ? ? ? Incremental revenue from further processing ? ? ? Less cost of further processing (dyeing) ? ? ? Profit (loss) from further processing ? ? ? ***Check your worksheet by changing the cost of further processing undyed coarse wool in cell B12 to $30,000. The overall profit from processing all intermediate products into final products should now be $150,000 and the profit from further processing undyed coarse wool should now be $10,000. If you do not get these answers, find the errors in your worksheet and correct them Requirement: In industries that process joint products, the costs of the raw materials inputs and the sales values of intermediate and final products are often volatile. Change the data area of your worksheet to match the following: If your formulas are correct, you should get the correct answers to the following questions. What is the overall profit if all intermediate products are processed into final products? Overall profit from processing all intermediate products ? What is the residual income? (Input all amounts as positive values. Loss or profit? from further processing undyed coarse wool ? Loss or profit? from further processing undyed fine wool ? Loss or profit? from further processing undyed superfine wool ? With these new costs and selling prices, what recommendations would you make concerning the company’s operations? Sell as is or process further the intermediate product undyed coarse wool? Sell as is or profit further? Sell as is or process further the intermediate product undyed fine wool? Sell as is or profit further? Sell as is or process further the intermediate product undyed superfine wool? Sell as is or profit further? If your recommendation in part (c) is followed, what would be the company’s overall profit? Overall profit from following the plan in part (c) ? Ohio Computers Data Example C Cost of equipment needed $60,000 Working capital needed $100,000 Overhaul of equipment in 4 years $5,000 Salvage value of the equipment in 5 years $10,000 Annual revenues and costs: Sales revenues $200,000 Cost of goods sold $125,000 Out of pocket operating costs $35,000 Discount rate 14% Enter a formula into each of the cells marked with a ? below Exhibit 13 4 Sales revenues ? Less cost of goods sold ? Less out of pocket costs ? Annual net cash inflows ? Amount of ? Present Value Year(s) Cash Flow Factor* of Cash Flows Purchase of equipment Now ? 1.000 ? Working capital needed Now ? 1.000 ? Overhaul of equipment ? ? ? ? Annual net cash inflows from sales of the product line 1 ? ? ? ? Salvage value of equipment ? ? ? ? Working capital released ? ? ? ? Net present value ? *Use the formulas from Appendix 13B: Present value of $1 = 1/(1+r)^n Present value of an annuity of $1 = (1/r)*(1 (1/(1+r)^n)) where n is the number of years and r is the discount rate ***Check your worksheet by changing the discount rate to 10%. The net present value should now be between $56,518 and $56,535—depending on the precision of the calculations. If you do not get an answer in this range, find the errors in your worksheet and correct them **Determine the appropriate discount factor(s) using tables. Requirement: The company is considering a project involving the purchase of new equipment. Change the data area of your worksheet to match the following: What is the net present value of the project? (Negative amount should be indicated by a minus sign. Calculate the discount factor(s) using formula and do not round the discount factor(s). Round all other intermediate calculations and final answer to the nearest dollar amount. Net present value ? The internal rate of return is between what two whole discount rates (e.g., between 10% and 11%, between 11% and 12%, between 12% and 13%, between 13% and 14%, etc.)? The internal rate of return is between ?% and ?% Reset the discount rate to 13%. Suppose the salvage value is uncertain. How large would the salvage value have to be to result in a positive present value? (Round final answer to the closest thousand. Minimum salvage value required to generate a positive present value ?
Aug 29, 2021 | Uncategorized
Question 1
1.
For small stock dividends, by what amount are retained earnings reduced?
Answer
A. Par value of the stock
B. Par value of the dividend
C. Book value of the dividend
D. Market value of the dividend
1 points
Question 2
1.
Which one of the following selections is a not component of paid In capital?
Answer
A. Retained earnings
B. Common stock
C. Additional paid In capital
D. All of the above
1 points
Question 3
1.
In October, 2011, Bandar Corporation distributed profits to its preferred shareholders before its common shareholders. What is the name of the preference that allows this?
Answer
A. Asset distribution preference
B. Dividend preference
C. Profits preference
D. Treasury preference
1 points
Question 4
1.
Aaron Company plans to issue a large stock dividend. In accounting for this transaction, what effects occur to the contributed capital section of stockholders’ equity?
Answer
A. Common stock increases by the number of dividend shares x par value per share, and retained earnings decreases for the same amount
B. Retained earnings increases by the number of dividend shares x par value per share, and additional paid in capital increases for the balance
C. Common stock increases by the number of dividend shares x par value per share, and retained earnings increases for the balance
D. Common stock increases by the total market value of the dividend
1 points
Question 5
1.
As a preferred stockholder, you are entitled to numerous preferences and privileges over common stockholders. If you are a preferred stockholder of a company that has fallen on economic hardship and is likely to go bankrupt, which preference or privilege of preferred stock is going to be most useful to you?
Answer
A. Dividend preference
B. Asset distribution preference
C. Conversion privileges
D. Participation privilege
1 points
Question 6
1.
On September 1, 2011, Core Company’s balance sheet indicates there are 600,000 shares of $30 par value common shares in the Common Stock account and $4,500,000 in the Additional Paid in Capital account. There are 2,000,000 shares authorized. On September 2, Core splits its stock 2 for 1. How many Core’s shares of common stock are issued and outstanding immediately after the stock split?
Answer
A. 4,000,000
B. 300,000
C. 1,400,000
D. 1,200,000
1 points
Question 7
1.
Jasper Company has 30,000 shares of $80 par value, 5% cumulative preferred stock and 140,000 shares of $20 par value common stock. Jasper declares and pays cash dividends amounting to $225,000. If no arrearage on the preferred stock exits, how much in dividends per share is paid to the common stockholders?
Answer
A. $0.75
B. $4.00
C. $1.00
D. $1.61
1 points
Question 8
1.
Which of the following is an organizational advantage of a corporation?
Answer
A. Nontaxable entity
B. Legal entity separate from the owners
C. Unlimited liability of owners
D. Limited ability to raise capital
E. None of the above
1 points
Question 9
1.
A corporation:
Answer
A. Maintains separate capital and drawing accounts for each owner
B. May acquire assets, incur debt, and enter into contracts in its own name
C. Issues articles of incorporation as evidence of ownership in the corporation
D. Pays state income taxes but is not subject to the federal income tax
E. None of the above
1 points
Question 10
1.
The face value for a share of stock, printed on the stock certificate, is the stock’s:
Answer
A. Liquidation value
B. Stated value
C. Par value
D. Book value
E. None of the above
1 points
Question 11
1.
When only one class of stock is issued by a corporation, it should be termed:
Answer
A. Treasury stock
B. Authorized stock
C. Common stock
D. Class B stock
E. Preferred stock
1 points
Question 12
1.
Which of the following rights allows a shareholder of a corporation to maintain his or her proportionate interest in the corporation?
Answer
A. Preemptive right
B. Participation right
C. Preferred right
D. Cumulative right
E. None of the above
1 points
Question 13
1.
Squire, Inc., has outstanding 9,000 shares of $25 par value, 6% nonparticipating, cumulative preferred stock and 16,000 shares of $5 par value common stock. If the dividend on preferred stock is two years in arrears, and the total cash dividend declared this year is $85,000, then the total amounts distributed to preferred and common stockholders, respectively, are:
Answer
A. $40,500 and $44,500
B. $13,500 and $71,500
C. $31,875 and $53,125
D. $27,000 and $58,000
E. None of the above
1 points
Question 14
1.
Noble, Inc. has outstanding 10,000 shares of $40 par value, 6% nonparticipating, cumulative preferred stock, and 30,000 shares of $10 par value common stock. If the dividend on preferred stock is two years in arrears, and the total cash dividend declared this year is $207,000, the total amounts distributed to preferred and common stockholders are, respectively:
Answer
A. $48,000 and $159,000
B. $51,750 and $155,250
C. $24,000 and $183,000
D. $72,000 and $135,000
E. None of the above
1 points
Question 15
1.
Assume that a corporation’s dividends are two years in arrears for its outstanding preferred stock. In the corporation’s financial statements, these arrearages are:
Answer
A. Disclosed as a current liability in the balance sheet
B. Disclosed as a long term liability in the balance sheet
C. Disclosed in the notes to the financial statements
D. Disclosed as a current liability (for the most recent arrearage) and a long term liability (for the oldest arrearage) in the balance sheet
E. Not disclosed
1 points
Question 16
1.
Riepen, Inc., issued for $20 per share 3,000 shares of $15 par value common stock. The journal entry to record this transaction is:
Answer
A. Cash 60,000
Common Stock 60,000
B. Cash 60,000
Common Stock 45,000
Paid in Capital in Excess of Par Value 15,000
C. Cash 60,000
Common Stock 45,000
Retained Earnings 15,000
D. Cash 60,000
Common Stock 45,000
Gain on Sale of Stock 15,000
E. None of the above
1 points
Question 17
1.
Spartan Corporation was organized on January 1, 2011, with an authorization of 1,000,000 shares of $5 par value common stock. During 2011, Spartan had the following common stock transactions:
Jan. 4: Issued 100,000 shares @ $6 per share.
Apr. 8: Issued 200,000 shares @ $7 per share.
June 9: Issued 60,000 shares @ $10 per share.
July 29: Purchased 40,000 shares (treasury) @ $9 per share.
Dec. 31: Sold 40,000 shares held in treasury @ $12 per share.
Spartan had no other transactions affecting paid in capital. At December 31, 2011, what is the total amount of paid in capital?
Answer
A. $2,720,000
B. $1,800,000
C. $ 920,000
D. $ 800,000
E. None of the above
1 points
Question 18
1.
At December 31, 2011, Riley Corporation had 40,000 shares outstanding of $15 par value common stock. The shares were originally issued for $42 per share. On January 1, 2012, Riley split its common stock 3 for 1 with a corresponding reduction in the stock’s par value. The market price of the stock just before the split was $75 per share. After the split, the balance in the common stock account is:
Answer
A. $ 600,000
B. $3,000,000
C. $1,800,000
D. $1,680,000
E. None of the above
1 points
Question 19
1.
The excess of the sales price of treasury stock over its cost should be credited to:
Answer
A. Retained Earnings
B. Paid in Capital from Treasury Stock
C. Treasury Stock
D. Extraordinary Gain
E. None of the above
1 points
Question 20
1.
Larkspur Corporation purchased 300 shares of its own $10 par value common stock for $7,500. Later, these shares are sold for $7,800 cash. The journal entry to record the sale includes a:
Answer
A. $ 300 credit to Paid in Capital from Treasury Stock
B. $4,800 credit to Paid in Capital from Treasury Stock
C. $ 300 credit to Gain on Sale of Treasury Stock
D. $7,800 credit to Treasury Stock
E. None of the above
1 points
Question 21
1.
During 2011, Crockett, Inc.’s net income was $100,000. Its common stockholders’ equity was $700,000 at January 1, 2011 and $800,000 at December 31, 2011. During December, 2011, Crockett’s board of directors declared a $25,000 preferred stock dividend and a $60,000 common stock dividend. What is Crockett’s 2011 return on common stockholders’ equity?
Answer
A. 15.6%
B. 10.0%
C. 2.0%
D. 16.7%
E. None of the above
1 points
Question 22
1.
Draper Company is authorized to issue 600,000 shares of $5 par value common stock. By March 15, 2011, the company had issued 180,000 shares at $17 per share. On March 15, 2011, the company declared a 10% stock dividend when the market price was $20 per share. What amount is transferred from retained earnings to paid in capital as a result of the stock dividend?
Answer
A. $ 300,000
B. $ 90,000
C. $ 360,000
D. $1,200,000
E. None of the above
1 points
Question 23
1.
Haven Company is authorized to issue 200,000 shares of $20 par value common stock. By November 15, 2011, the company had issued 30,000 shares at $25 per share. On November 15, 2011, the company declared a 30% stock dividend when the market price was $26 per share. What amount is transferred from retained earnings to paid in capital as a result of the stock dividend?
Answer
A. $ 180,000
B. $ 234,000
C. $1,200,000
D. $1,560,000
E. None of the above
1 points
Question 24
1.
Which of the following items is disclosed in a statement of retained earnings?
Answer
A. Retained earnings balance at the beginning of the period
B. Common stock issued during the period
C. Treasury shares sold during the period
D. Paid in capital balance at the beginning of the period
E. None of the above
1 points
Question 25
1.
The following selected list of accounts with their normal balances was taken from the general ledger of Tudor Company as of December 31, 2011:
Common stock, $1 par $ 190,000
Retained earnings 131,000
Paid in capital in excess of par preferred 35,000
Treasury Stock 165,000
Preferred stock, $100 par 300,000
Paid in capital in excess of par common 380,000
Given above information, at the end of 2011:
Answer
A. Total Paid in Capital is $1,070,000, and Total Stockholders’ equity is $1,201,000
B. Total Paid in Capital is $905,000, and Total Stockholders’ equity is $871,000
C. Total Paid in Capital is $740,000, and Total Stockholders’ equity is $871,000
D. Total Paid in Capital is $740,000, and Total Stockholders’ equity is $609,000
1 points
Question 26
1.
Dennis Company issued 25,000 shares of $10 par value common stock at $15 per share. As a result of this transaction, Dennis Company’s:
Answer
A. Paid in Capital increased by $125,000
B. Common Stock increased by $125,000
C. Common Stock increased by $375,000
D. Paid in Capital increased by $375,000
1 points
Question 27
1.
Using the following information, the journal entry to record the January 1 transaction will be:
January 1: Atlantic Corporation reacquires 2,000 shares of its $5 par common stock for $22 per share.
March 5: Atlantic reissues 1,000 of the above mentioned shares for $25 per share.
Answer
A. Treasury Stock, Common 44,000
Cash 44,000
B. Investment in Treasury Stock 44,000
Cash 44,000
C. Cash 44,000
Treasury Stock, Common 44,000
D. Treasury Stock, Common 10,000
Paid in capital, Treasury Stock 34,000
Cash 44,000
1 points
Question 28
1.
Jones Company has never had any treasury stock transactions. On June 1 of the current year, they purchased 100 shares of its common stock (which has a par value of $10) for $5,000. On July 1, they reissued 50 of these shares at $52 per share. What is the balance in the Paid in Capital, Treasury Stock account on July 1?
Answer
A. $ 200
B. $ 100
C. $1,350
D. $ 150
1 points
Question 29
1.
Hampton Company has 200,000 shares of $10 par value common stock outstanding. On April 15, the company declared a 40% stock dividend. The current market value of the stock was $15 per common share. The journal entry on April 15 will include:
Answer
A. A credit to Paid in Capital in excess of par value, Common Stock for $400,000
B. A debit to Retained Earnings for $1,200,000
C. A credit to Common Stock Dividend Distributable for $800,000
D. A credit to Common Stock Dividends Distributable for $1,200,000
1 points
Question 30
1.
Hudson Company had 50,000 shares of $20 par value common stock outstanding on June 30. On July 1, the board of directors declared a 10% stock dividend when the market value of each share was $27. The journal entry on July 1 will include:
Answer
A. A credit to Common Stock Dividend Distributable for $135,000
B. A credit to Common Stock Dividend Distributable for $100,000
C. A debit to Retained Earnings for $100,000
D. A credit to Paid in capital in excess of par value $135,000.
1 points
Question 31
1.
Pamela Company has the following stock outstanding on December 31, 2011:
(a) Preferred Stock (8 percent cumulative, $10 par, 25,000 shares authorized; 10,000 shares issued and outstanding) $100,000
(b) Common Stock ($7 par, 250,000 shares authorized, 120,000 shares issued and outstanding) 840,000
Pamela did not pay any dividends in 2009. In 2010, they paid total dividends of $10,000, and in 2011, they paid total dividends of $20,000. How much dividends will be paid to common stockholders in 2011?
Answer
A. $10,000
B. $ 6,000
C. $ 8,000
D. $14,000
Aug 29, 2021 | Uncategorized
Question 1
Which of the following corporate bond ratings are listed in an increasing level of risk?
Answer
A. BB, C, A, AAA
B. C, BB, A, AAA
C. AAA, A, BB, C
D. A, AAA, BB, C
1 points
Question 2
Which of the following transactions that impact current liabilities has a corresponding entry on the income statement?
Answer
A. Interest accrued on a note payable
B. Purchase inventory on credit from company XYZ on January 1
C. Payment to XYZ on February 1 for a January 1 purchase
D. Payment to employees in March for wages earned in February
1 points
Question 3
Which of the following does not represent a current liability?
Answer
A. Bond issue
B. Accrual of taxes payable
C. Advance payments received from customers
D. Short term loan
1 points
Question 4
1.
What effects would the accrual of $50 of interest on a note payable have on financial statements?
I. Balance sheet: Liabilities are decreased by $50
II. Income statement: Expenses are increased by $50
III. Balance sheet: Retained earnings are decreased by $50
IV. Balance sheet: Cash assets are decreased by $50
V. Balance sheet: Liabilities are increased by $50
Answer
A. II, III and IV
B. II, IV and V
C. I, II and III
D. II, III and V
E. IV and V
1 points
Question 5
The price of a bond is equivalent to:
I. Face value
II. Projected interest payments discounted to the present
III. The amortization amount of a bond
IV. The present value of the principal payment
Answer
A. I + II
B. I ‘ III
C. I + III
D. II + IV
1 points
Question 6
On April 30, 2012, one year before maturity, Red Products, Inc. retired $150,000 of 8% bonds payable at 103. The book value of the bonds on April 30 was $144,600. Bond interest was last paid on April 30, 2012. What is the gain or loss on the retirement of the bonds?
Answer
A. $12,000
B. $ 9,900
C. $ 5,400
D. $15,300
1 points
Question 7
Copper Industries plans to issue 8 year, 8%, $100,000 bonds paying interest on an annual basis, at a $1,440 premium. Which one of the following statements is true?
Answer
A. Copper’s annual interest expense on the bonds will be less than the amount of interest payments to bondholders each year.
B. The cash paid to bondholders will be $1,440 each interest period.
C. Copper will receive $98,560 as the issue price.
D. Copper’s annual interest expense on the bonds will be greater than the amount of interest payments to bondholders each year.
1 points
Question 8
Which of the following is not a contingent liability?
Answer
A. Environmental cleanup costs
B. Lawsuits
C. Discount on notes payable
D. Credit guarantees
E. All of these are contingent liabilities
1 points
Question 9
A contingent liability is an obligation that depends on the occurrence of a future event and that should be recorded in the accounts:
Answer
A. If the related future event will probably occur
B. If the amount is due in cash within one year
C. If the amount is reasonably estimated
D. Both A and C
E. None of the above
1 points
Question 10
A contingent liability is an obligation that should be:
Answer
A. Disclosed in a footnote to the balance sheet when the contingency is not significant
B. Recorded in the accounts if the amount may be reasonably estimated and it is probable that the future event creating the obligation will occur
C. Classified in the owners’ equity section of the balance sheet when the future event creating the liability is not likely to occur
D. Recorded in the accounts and classified in a contingent liabilities section of the balance sheet between current liabilities and long term liabilities
E. None of the above
1 points
Question 11
Becker, Inc. sells a single product for $450 per unit, including a 90 day warranty against defects. It is estimated that 3% of the units sold will prove defective and require an average repair cost of $35 per unit. During July, 700 units were sold. Five units were reported defective and repaired in July. What amount should be added to the Estimated Liability for Product Warranties for July?
Answer
A. $2,250
B. $ 735
C. $9,450
D. $ 560
E. None of the above
1 points
Question 12
Video Technical, Inc. was organized to sell a single product for $600 per unit, including a 60 day warranty against defects. Engineering estimates indicate that 5% of the units sold will prove defective and require an average repair cost of $50 per unit. During the first month of operations, total sales were $192,000; by the end of the month, nine units had been reported defective and repaired. The accrued liability for product warranties at month end should be:
Answer
A. $ 800
B. $ 350
C. $ 450
D. $1,150
E. None of the above
1 points
Question 13
Weiss Company sold merchandise for which it received total cash payments of $642,000. A 7% sales tax was included in the total cash payments. The proper amount to record as sales would be:
Answer
A. $684,000
B. $686,940
C. $642,000
D. $600,000
E. None of the above
1 points
Question 14
Smith, Inc. records sales at amounts that include sales tax. During June, total sales of $89,570, including 6% sales tax, were recorded. The sales tax liability for June (rounded to the nearest dollar) is:
Answer
A. $ 5,374
B. $84,500
C. $ 5,070
D. $89,570
E. None of the above
1 points
Question 15
Landon Company paid Washington Company for merchandise with a $3,200, 90 day, 8% note dated May 10. If Landon Company pays the note at maturity, what entry should be made at that time?
Answer
A. Notes Payable 3,264
Interest Payable 64
Cash 3,200
B. Cash 3,264
Notes Payable 64
Interest Payable 3,200
C. Notes Payable 3,200
Interest Expense 64
Cash 3,264
D. Notes Payable 3,200
Interest Expense 64
Cash 3,136
E. None of the above
1 points
Question 16
On December 1, Dobson Company borrowed $10,000 from Gordon Company, giving a 60 day, 12% note. If the correct adjusting entry is made on December 31, Gordon’s entry at maturity is:
Answer
A. Notes Payable 10,000
Cash 10,000
B. Notes Payable 10,000
Interest Payable 100
Interest Expense 100
Cash 10,200
C. Notes Payable 10,000
Interest Expense 200
Cash 10,200
D. Notes Payable 10,000
Interest Payable 200
Cash 10,200
E. None of the above
1 points
Question 17
On September 1, 2011, Donna Equipment signed a one year, 8% interest bearing note payable for $50,000. Assuming Donna maintains its books on a calendar year basis, the amount of interest expense that should be reported in the 2012 income statement for this note would be (assume each month has 30 days):
Answer
A. $1,333
B. $4,000
C. $3,000
D. $2,667
1 points
Question 18
On December 1, 2011, UMD Company purchased $15,000 of equipment by issuing a 120 day, 10% note payable to Bank of Maryland. Assuming the company’s accounting period ends on December 31, the journal entry recorded by UMD Company on the note maturity date will include:
Answer
A. Debit to Interest Expense for $125
B. Debit to Interest Payable for $250
C. Debit to Interest Expense for $375
D. Debit to Interest Payable for $375
1 points
Question 19
Justin Company signed a $45,000, 90 day, 9% note payable, on December 1, 2011. If the accounting period ends on December 31, 2011, the entry made on the note’s maturity (March 1, 2012) will include
Answer
A. A debit to Interest Expense for $675
B. A debit to Interest Payable for $675
C. A debit to Interest Expense for $1,012.50
D. A debit to Interest Expense for $337.50
1 points
Question 20
Kristin Company sells computers with a 6 month warranty. It is estimated that 2% of all units sold will need repairs under warranty at an estimated cost of $200 per unit. During January, the company sold 100,000 computers at $1,750 each, and 1,500 computers were turned in for repairs during that same month. The total actual repairs costs amounted to $185,000 from the computer parts inventory. The balance in the Estimated Warranty Liability Account on January 1 was $15,000. What is the balance in the Estimated Warranty Liability Account at the end of January?
Answer
A. $215,000
B. $600,000
C. $415,000
D. $230,000
1 points
Question 21
Chen Company issues bonds with a par value of $800,000 on their issue date. The bonds mature in 5 years and pay 6% annual interest in semiannual payments. On the issue date, the market rate of interest (annual) is 8%. Compute the price of the bonds on their issue date (rounded to the nearest dollar).
Answer
A. $698,938
B. $736,130
C. $735,464
D. $640,305
1 points
Question 22
When the market rate of interest was 10%, Waverly Corporation issued $1,000,000, 12%, 8 year bonds that pay interest semiannually. The selling price of this bond issue was:
Answer
A. $ 898,895
B. $1,261,410
C. $ 900,600
D. $1,108,280
1 points
Question 23
ETrade Associates has outstanding Bonds Payable, with a par value of $70,000, and carrying value of $68,075. If ETrade purchases the bonds in the open market at a price of 98.5 and retires them, which of the following is true?
Answer
A. ETrade will recognize a loss of $875
B. ETrade will recognize a gain of $875
C. ETrade will recognize a gain of $1,925
D. ETrade will recognize a loss of $1,925
1 points
Question 24
A company’s Bonds Payable has a balance of $1,000,000 and Discount on Bonds Payable has a balance of $12,500. If the issuing corporation retires the bonds at a market price of 98, what is the amount of gain or loss on retirement?
Answer
A. $32,500 loss
B. $ 7,500 gain
C. $ 7,500 loss
D. $32,500 gain
1 points
Question 25
On January 1, Tracey Company borrowed $25,000 cash by signing an 8 year, 7% mortgage note that requires equal total payments on December 31 of each year. The balance in the Note Payable account after the first payment is made is:
Answer
A. $21,949
B. $23,250
C. $21,875
D. $22,563
Aug 29, 2021 | Uncategorized
Question 1
Which of the following corporate bond ratings are listed in an increasing level of risk?
Answer
A. BB, C, A, AAA
B. C, BB, A, AAA
C. AAA, A, BB, C
D. A, AAA, BB, C
1 points
Question 2
Which of the following transactions that impact current liabilities has a corresponding entry on the income statement?
Answer
A. Interest accrued on a note payable
B. Purchase inventory on credit from company XYZ on January 1
C. Payment to XYZ on February 1 for a January 1 purchase
D. Payment to employees in March for wages earned in February
1 points
Question 3
Which of the following does not represent a current liability?
Answer
A. Bond issue
B. Accrual of taxes payable
C. Advance payments received from customers
D. Short term loan
1 points
Question 4
1.
What effects would the accrual of $50 of interest on a note payable have on financial statements?
I. Balance sheet: Liabilities are decreased by $50
II. Income statement: Expenses are increased by $50
III. Balance sheet: Retained earnings are decreased by $50
IV. Balance sheet: Cash assets are decreased by $50
V. Balance sheet: Liabilities are increased by $50
Answer
A. II, III and IV
B. II, IV and V
C. I, II and III
D. II, III and V
E. IV and V
1 points
Question 5
The price of a bond is equivalent to:
I. Face value
II. Projected interest payments discounted to the present
III. The amortization amount of a bond
IV. The present value of the principal payment
Answer
A. I + II
B. I ‘ III
C. I + III
D. II + IV
1 points
Question 6
On April 30, 2012, one year before maturity, Red Products, Inc. retired $150,000 of 8% bonds payable at 103. The book value of the bonds on April 30 was $144,600. Bond interest was last paid on April 30, 2012. What is the gain or loss on the retirement of the bonds?
Answer
A. $12,000
B. $ 9,900
C. $ 5,400
D. $15,300
1 points
Question 7
Copper Industries plans to issue 8 year, 8%, $100,000 bonds paying interest on an annual basis, at a $1,440 premium. Which one of the following statements is true?
Answer
A. Copper’s annual interest expense on the bonds will be less than the amount of interest payments to bondholders each year.
B. The cash paid to bondholders will be $1,440 each interest period.
C. Copper will receive $98,560 as the issue price.
D. Copper’s annual interest expense on the bonds will be greater than the amount of interest payments to bondholders each year.
1 points
Question 8
Which of the following is not a contingent liability?
Answer
A. Environmental cleanup costs
B. Lawsuits
C. Discount on notes payable
D. Credit guarantees
E. All of these are contingent liabilities
1 points
Question 9
A contingent liability is an obligation that depends on the occurrence of a future event and that should be recorded in the accounts:
Answer
A. If the related future event will probably occur
B. If the amount is due in cash within one year
C. If the amount is reasonably estimated
D. Both A and C
E. None of the above
1 points
Question 10
A contingent liability is an obligation that should be:
Answer
A. Disclosed in a footnote to the balance sheet when the contingency is not significant
B. Recorded in the accounts if the amount may be reasonably estimated and it is probable that the future event creating the obligation will occur
C. Classified in the owners’ equity section of the balance sheet when the future event creating the liability is not likely to occur
D. Recorded in the accounts and classified in a contingent liabilities section of the balance sheet between current liabilities and long term liabilities
E. None of the above
1 points
Question 11
Becker, Inc. sells a single product for $450 per unit, including a 90 day warranty against defects. It is estimated that 3% of the units sold will prove defective and require an average repair cost of $35 per unit. During July, 700 units were sold. Five units were reported defective and repaired in July. What amount should be added to the Estimated Liability for Product Warranties for July?
Answer
A. $2,250
B. $ 735
C. $9,450
D. $ 560
E. None of the above
1 points
Question 12
Video Technical, Inc. was organized to sell a single product for $600 per unit, including a 60 day warranty against defects. Engineering estimates indicate that 5% of the units sold will prove defective and require an average repair cost of $50 per unit. During the first month of operations, total sales were $192,000; by the end of the month, nine units had been reported defective and repaired. The accrued liability for product warranties at month end should be:
Answer
A. $ 800
B. $ 350
C. $ 450
D. $1,150
E. None of the above
1 points
Question 13
Weiss Company sold merchandise for which it received total cash payments of $642,000. A 7% sales tax was included in the total cash payments. The proper amount to record as sales would be:
Answer
A. $684,000
B. $686,940
C. $642,000
D. $600,000
E. None of the above
1 points
Question 14
Smith, Inc. records sales at amounts that include sales tax. During June, total sales of $89,570, including 6% sales tax, were recorded. The sales tax liability for June (rounded to the nearest dollar) is:
Answer
A. $ 5,374
B. $84,500
C. $ 5,070
D. $89,570
E. None of the above
1 points
Question 15
Landon Company paid Washington Company for merchandise with a $3,200, 90 day, 8% note dated May 10. If Landon Company pays the note at maturity, what entry should be made at that time?
Answer
A. Notes Payable 3,264
Interest Payable 64
Cash 3,200
B. Cash 3,264
Notes Payable 64
Interest Payable 3,200
C. Notes Payable 3,200
Interest Expense 64
Cash 3,264
D. Notes Payable 3,200
Interest Expense 64
Cash 3,136
E. None of the above
1 points
Question 16
On December 1, Dobson Company borrowed $10,000 from Gordon Company, giving a 60 day, 12% note. If the correct adjusting entry is made on December 31, Gordon’s entry at maturity is:
Answer
A. Notes Payable 10,000
Cash 10,000
B. Notes Payable 10,000
Interest Payable 100
Interest Expense 100
Cash 10,200
C. Notes Payable 10,000
Interest Expense 200
Cash 10,200
D. Notes Payable 10,000
Interest Payable 200
Cash 10,200
E. None of the above
1 points
Question 17
On September 1, 2011, Donna Equipment signed a one year, 8% interest bearing note payable for $50,000. Assuming Donna maintains its books on a calendar year basis, the amount of interest expense that should be reported in the 2012 income statement for this note would be (assume each month has 30 days):
Answer
A. $1,333
B. $4,000
C. $3,000
D. $2,667
1 points
Question 18
On December 1, 2011, UMD Company purchased $15,000 of equipment by issuing a 120 day, 10% note payable to Bank of Maryland. Assuming the company’s accounting period ends on December 31, the journal entry recorded by UMD Company on the note maturity date will include:
Answer
A. Debit to Interest Expense for $125
B. Debit to Interest Payable for $250
C. Debit to Interest Expense for $375
D. Debit to Interest Payable for $375
1 points
Question 19
Justin Company signed a $45,000, 90 day, 9% note payable, on December 1, 2011. If the accounting period ends on December 31, 2011, the entry made on the note’s maturity (March 1, 2012) will include
Answer
A. A debit to Interest Expense for $675
B. A debit to Interest Payable for $675
C. A debit to Interest Expense for $1,012.50
D. A debit to Interest Expense for $337.50
1 points
Question 20
Kristin Company sells computers with a 6 month warranty. It is estimated that 2% of all units sold will need repairs under warranty at an estimated cost of $200 per unit. During January, the company sold 100,000 computers at $1,750 each, and 1,500 computers were turned in for repairs during that same month. The total actual repairs costs amounted to $185,000 from the computer parts inventory. The balance in the Estimated Warranty Liability Account on January 1 was $15,000. What is the balance in the Estimated Warranty Liability Account at the end of January?
Answer
A. $215,000
B. $600,000
C. $415,000
D. $230,000
1 points
Question 21
Chen Company issues bonds with a par value of $800,000 on their issue date. The bonds mature in 5 years and pay 6% annual interest in semiannual payments. On the issue date, the market rate of interest (annual) is 8%. Compute the price of the bonds on their issue date (rounded to the nearest dollar).
Answer
A. $698,938
B. $736,130
C. $735,464
D. $640,305
1 points
Question 22
When the market rate of interest was 10%, Waverly Corporation issued $1,000,000, 12%, 8 year bonds that pay interest semiannually. The selling price of this bond issue was:
Answer
A. $ 898,895
B. $1,261,410
C. $ 900,600
D. $1,108,280
1 points
Question 23
ETrade Associates has outstanding Bonds Payable, with a par value of $70,000, and carrying value of $68,075. If ETrade purchases the bonds in the open market at a price of 98.5 and retires them, which of the following is true?
Answer
A. ETrade will recognize a loss of $875
B. ETrade will recognize a gain of $875
C. ETrade will recognize a gain of $1,925
D. ETrade will recognize a loss of $1,925
1 points
Question 24
A company’s Bonds Payable has a balance of $1,000,000 and Discount on Bonds Payable has a balance of $12,500. If the issuing corporation retires the bonds at a market price of 98, what is the amount of gain or loss on retirement?
Answer
A. $32,500 loss
B. $ 7,500 gain
C. $ 7,500 loss
D. $32,500 gain
1 points
Question 25
On January 1, Tracey Company borrowed $25,000 cash by signing an 8 year, 7% mortgage note that requires equal total payments on December 31 of each year. The balance in the Note Payable account after the first payment is made is:
Answer
A. $21,949
B. $23,250
C. $21,875
D. $22,563
Aug 29, 2021 | Uncategorized
Question 1
Which of the following estimates are required when calculating depreciation expense?
1.
Depreciation rate
2.
Useful life
3.
Expected maintenance costs
4.
Salvage value
Answer
A.
1, 2, 3, and 4
B.
2 and 4
C.
2, 3, and 4
D.
1, 2, and 4
1 points
Question 2
Which of the following is not necessary in calculating the depreciation expense for the first year for a newly purchased factory forklift?
Answer
A.
Total cost of the forklift at acquisition
B.
Market value of the forklift during its useful life
C.
Estimated salvage value
D.
Depreciation rate
E.
Estimated useful life
1 points
Question 3
At what point is an asset considered to be impaired?
Answer
A.
When the net book value is less than the sum of expected cash flows
B.
When the net book value is less than the market value
C.
When the net book value is greater than the sum of expected cash flows
D.
When the net book value is greater than the market value
1 points
Question 4
AT Company purchased a tractor at a cost of $60,000. The tractor has an estimated salvage value of $10,000 and an estimated life of 8 years, or 12,000 hours of operation. The tractor was purchased on January 1, 2012 and was used 2,400 hours in 2012 and 2,100 hours in 2013. What method of depreciation will produce the maximum depreciation expense in 2013?
Answer
A.
Double declining balance
B.
Straight line
C.
All methods produce the same expense in 2013
D.
Units of production
1 points
Question 5
AT Company purchased a tractor at a cost of $60,000 on January 1, 2012. The tractor has an estimated salvage value of $10,000 and an estimated life of 8 years. If AT uses the straight line method, what is the book value at January 1, 2016?
Answer
A.
$35,000
B.
$25,000
C.
$41,250
D.
Some other answer
1 points
Question 6
Goodwill can be recorded as an asset when:
Answer
A.
An offer is received to purchase the business at a price in excess of the value of the assets
B.
A business has above normal profitability compared to other businesses in its industry
C.
A business can determine that it has created customer goodwill and name recognition
D.
A business is purchased and payment is made in excess if the fair value of the identifiable net assets
1 points
Question 7
How should intangible assets be disclosed on the balance sheet?
Answer
A.
At cost in the current assets section
B.
As a reduction of stockholders’ equity
C.
At the estimated market value at the balance sheet date
D.
Net of the costs already amortized
1 points
Question 8
Which of the following is not a balance sheet category for long lived assets?
Answer
A.
Plant assets
B.
Revenue expenditures
C.
Intangible assets
D.
None of the above
1 points
Question 9
Which of the following plant assets is not depreciated?
Answer
A.
Leasehold improvements
B.
Equipment
C.
Land for site use
D.
Furniture
E.
All of these are depreciated
1 points
Question 10
Swain, Inc., acquired a machine that involved the following expenditures and related factors:
Gross invoice price
$28,500
Sales tax
1,425
Cash discount taken
570
Freight
675
Assembly of machine
900
Installation of machine
1,350
Assorted spare parts for future use
2,700
Tuning and adjusting machine before use
450
The initial accounting cost of the machine should be:
Answer
A.
$33,870
B.
$32,280
C.
$30,030
D.
$32,730
E.
None of the above
1 points
Question 11
A land site for a new office building is purchased for $180,000. A barn on the site will be razed at a net cost of $10,000. The $10,000 razing expenditure is properly debited to:
Answer
A.
Office Building
B.
Land
C.
Razing Expense
D.
Land Improvements
E.
None of the above
1 points
Question 12
For $5,550,000, Bale, Inc., purchased another company’s land, building, and equipment. Independent appraisals indicate the values of these assets as follows: land, $600,000; building, $3,600,000; and equipment, $1,800,000. How much should be recorded as the acquisition cost of each asset?
Answer
A.
Land, $600,000; building, $3,600,000; equipment, $1,800,000
B.
Land, $555,000; building, $3,330,000; equipment, $1,665,000
C.
Land, $525,000; building, $3,375,000; equipment, $1,650,000
D.
Land, $550,000; building, $3,200,000; equipment, $1,800,000
E.
None of the above
1 points
Question 13
What is the term identifying the expected net recovery from the disposal of a plant asset at the end of its useful life?
Answer
A.
Accumulated depreciation
B.
Salvage value
C.
Depreciation expense
D.
Market value
E.
None of the above
1 points
Question 14
On April 1, 2012, Flyer, Inc., acquired a new machine for $80,000. Its estimated useful life is eight years with an expected salvage value of $8,000. Assuming straight line depreciation, 2012 depreciation expense is:
Answer
A.
$ 9,000
B.
$ 6,750
C.
$ 7,500
D.
$10,000
E.
None of the above
1 points
Question 15
On January 1, 2012, Casler Company purchased a bottle capping machine for $80,000. During its useful life, the company expects that the machine will cap 1,500,000 bottles. The machine’s expected salvage value is $5,000. During 2012, the machine capped 250,000 bottles and during 2013, the machine capped 300,000 bottles. Assuming units of production depreciation, 2013 depreciation expense is:
Answer
A.
$12,500
B.
$13,333
C.
$15,000
D.
$16,000
E.
None of the above
1 points
Question 16
On January 1, 2012, Global, Inc., purchased a new machine for $60,000. Its estimated useful life is eight years with an expected salvage value of $6,000. Assuming double declining balance depreciation, 2012 depreciation expense is:
Answer
A.
$ 7,500
B.
$ 6,750
C.
$13,500
D.
$15,000
E.
None of the above
1 points
Question 17
On January 1, 2012, Vandell, Inc., purchased a new machine for $96,000. Its estimated useful life is 16 years with an expected salvage value of $16,000. Assuming double declining balance depreciation, 2012 depreciation expense is:
Answer
A.
$10,000
B.
$ 6,000
C.
$12,000
D.
$13,500
E.
None of the above
1 points
Question 18
At the end of the expected useful life of a depreciable asset with an estimated 15% salvage value, the accumulated depreciation would equal the original cost of the asset under which of the following depreciation methods?
Answer
A.
Straight Line
Units of Production
Double Declining Balance
No
Yes
Yes
B.
Straight Line
Units of Production
Double Declining Balance
Yes
Yes
Yes
C.
Straight Line
Units of Production
Double Declining Balance
No
No
No
D.
Straight Line
Units of Production
Double Declining Balance
No
Yes
No
E.
Straight Line
Units of Production
Double Declining Balance
Yes
No
Yes
1 points
Question 19
Barber, Inc., purchased a truck on January 1, 2010, for $36,000. At that time, the truck’s useful life was an estimated four years with no salvage value. Before the entry to record 2013 depreciation was made, the truck’s estimated useful life was changed to six years with a $900 salvage value. Using straight line deprecation, what is the 2013 depreciation expense?
Answer
A.
$2,700
B.
$6,000
C.
$3,000
D.
$1,350
E.
None of the above
1 points
Question 20
The book value of a depreciable asset is:
Answer
A.
The original cost of the asset
B.
The original cost of the asset less its accumulated depreciation
C.
The original cost of the asset less its salvage value
D.
The accumulated depreciation on the asset
E.
None of the above
Aug 29, 2021 | Uncategorized
Question 17
1.
Spartan Corporation was organized on January 1, 2011, with an authorization of 1,000,000 shares of $5 par value common stock. During 2011, Spartan had the following common stock transactions:
Jan. 4: Issued 100,000 shares @ $6 per share.
Apr. 8: Issued 200,000 shares @ $7 per share.
June 9: Issued 60,000 shares @ $10 per share.
July 29: Purchased 40,000 shares (treasury) @ $9 per share.
Dec. 31: Sold 40,000 shares held in treasury @ $12 per share.
Spartan had no other transactions affecting paid in capital. At December 31, 2011, what is the total amount of paid in capital?
Answer
A. $2,720,000
B. $1,800,000
C. $ 920,000
D. $ 800,000
E. None of the above
Aug 29, 2021 | Uncategorized
This question is not contained in the solutions. This is what I came up with and I was wondering if I am on the right track.
Advantages:
The higher the total dollar amount of tax refunds generated, the more money customers save
By saving customers more money, employees increase customer satisfaction levels
This increased customer satisfaction will enable new customers to be acquired through word of mouth of repeat satisfied customers
Company sales growth will also increase as the total dollar amount of tax refunds generated increases
Disadvantages
If employees focus only on increasing the total dollar amount of tax refunds, they may not be as concerned with satisfying the customer
Decreased customer satisfaction ? bad word of mouth ? bad reputation, loss of current (and potential) customers
If the employees are only driven by numbers, they may become complacent in completing the tax returns, which leads to ineffective and erroneous returns
Conclusion:
I would not recommend using this internal business process measure
The focus on the total dollar amount may lead to employees falsifying numbers to get to a target total, leading to erroneous returns
Also, I was wondering if there is anyway to view the book solution on this problem. Thanks for the help!
Aug 29, 2021 | Uncategorized
Week 7 Application Assignment (1–2 pages)
Auditing and Assessing Financial Condition
Swobodaville is a hypothetical town that provides the context for this Application Assignment. What follows is a table that presents 5 years of data.
Evaluate Swobodaville’s financial condition based on the partial list of factors given. That is, consider any observable trends in the data and what they could potentially mean. To compare the data, in some cases it is best to convert dollar figures to percentages. The best approach to analyzing this table is to look at changes from year to year. Then explain what types of recommendations you would make to the city.
YEAR
| FACTOR |
1 |
2 |
3 |
4 |
5 |
| Revenue per household |
$321 |
$318 |
$329 |
$329 |
$328 |
| Sales tax as a percent of total revenue |
.938 |
.936 |
.935 |
.935 |
.933 |
| Expenditures per household |
$321 |
$321 |
$333 |
$334 |
$334 |
| Low income, sales tax exempt households as a percent of population |
.139 |
.139 |
.142 |
.155 |
.156 |
Consider the following:
Analyzing revenue structure will help identify the following types of problems.
- Deterioration of revenue base
- Internal procedures or legislative/board policies that may adversely affect revenue yields
- Over dependence on obsolete or external revenue sources
- User fees that do not cover the cost of services
- Changes in tax burden
- Lack of cost controls and poor revenue estimating practices
- Inefficiency in the collection and administration of revenues
Analyzing an expenditure profile can reveal the following:
- Excessive growth of overall expenditures as compared to revenue growth or growth in wealth (personal and business income)
- Undesirable increases in fixed costs
- Ineffective budgetary controls
- A decline in personnel productivity
- Excessive growth in programs, which create future expenditures
Community needs and resources encompass economic and demographic characteristics, including population, employment, personal income property value, and business activity. An examination of demographic and economic characteristics can identify the following:
- A decline in the tax or revenue base
- A need to shift public or customer service priorities
- A need to shift policies because of a loss of competitive position
- Course Media:Finance and Budgeting for the Public Sector
- “Budget Management Functions: Financial Evaluation” with Jacqueline Byers (approximately 2 minutes)
Web Sites
- Association of Local Government Auditors: 2006 presentation on Audit Committee and Auditor Independence
http://algaonline.org/DocumentCenter/Home/View/13
- Association of Local Government Auditors: 2005 Financial Management Seminar: City Audits The Benefits and the Barriers Establishing Independent Audit Committees and Supporting Independent Performance Auditors
http://algaonline.org/DocumentCenter/Home/View/12
Aug 29, 2021 | Uncategorized
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation:
a. The Marketing Department has estimated sales as follows for the remainder of the year (in units):
July 6,000 October 4,000
August 7,000 November 3,000
September 5,000 December 3,000
The selling price of the beach umbrellas is $17 per unit.
b. All sales are on account. Based on past experience, sales are collected in the following pattern:
43% in the month of sale
48% in the month following sale
9% uncollectible
Sales for June totaled $129,000.
c. The company maintains finished goods inventories equal to 12% of the following months sales. This requirement will be met at the end of June.
d. Each beach umbrella requires 5 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory of Gilden be equal to 20% of the following months production needs. The inventory of Gilden on hand at the beginning and end of the quarter will be:
June 30 6,120 feet
September 30 ? feet
e. Gilden costs $3.00 per foot. 57% of a months purchases of Gilden is paid for in the month of purchase; the remainder is paid for in the following month. The accounts payable on July 1 for purchases of Gilden during June will be $10,500.
Requirement 1:
(a) Prepare a sales budget, by month and in total, for the third quarter.
(b) Prepare a schedule of expected cash collections, by month and in total, for the third quarter.
Requirement 2:
Prepare a production budget for each of the months July October.
Requirement 3:
(a) Prepare a direct materials budget for Gilden, by month and in total, for the third quarter.
(b) Prepare a schedule of expected cash disbursements for Gilden, by month and in total, for the third quarter.
Aug 29, 2021 | Uncategorized
Tyrene Products
Tyrene Products manufactures recreational equipment.
One of the company’s products, a skateboard, sells for $32. The skateboards are manufactured in an antiquated plant that relies heavily on direct labor workers.
Thus, variable costs are high, totaling $22.40 per skateboard of which 70% is direct labor cost.
Over the past year the company sold 52,000 skateboards, with the following operating results:
Sales (52,000 skateboards) $16,64,000.00
Variable expenses $11,64,800.00
Contribution margin $4,99,200.00
Fixed expenses $4,22,400.00
Net operating income $76,800.00
Management is anxious to maintain and perhaps even improve its present level of income from the skateboards.
Compute the CM ratio and the break even point in skateboards. (Do not round intermediate calculations. Round your answer to the nearest whole number.)
Solution:
Selling price $32.00 100%
Variable expenses $22.40 70%
Contribution margin $9.60 30%
Sales = Variable expenses + Fixed expenses + Profits
$32.00Q = $22.40Q + $422,400 + $0
$9.60Q = $4,22,400
Q = 422,400 ÷ $9.60 per skateboard
Q = 44000 skateboard
The degree of operating leverage would be
Degree of operating leverage (DOL) = Total Contribution Margin
Net Operating Income
Degree of operating leverage (DOL) = $4,99,200
$76,800
Degree of operating leverage (DOL) = 6.50
Contribution margin 30%
Unit sales to break even 44000 skateboards
Compute the degree of operating leverage at last year’s level of sales.
Degree of operating leverage 6.50
Due to an increase in labor rates, the company estimates that variable costs will increase by $1.60 per skateboard next year.
If this change takes place and the selling price per skateboard remains constant at $32.00, what will be the new CM ratio and the new break even point in skateboards?
Solution:
Selling price $32.00 100%
Variable expenses $24.00 75%
Contribution margin $8.00 25%
Sales = Variable expenses + Fixed expenses + Profits
$32.00Q = $24.00Q + $422,400 + $0
$8.00Q = $4,22,400
Q = 422,400 ÷ $8.00 per skateboard
Q = 52800 skateboard
Contribution margin 25%
Unit sales to break even 52800 skateboards
Refer to the data in (2) above.
If the expected change in variable costs takes place, how many skateboards will have to be sold next year to earn the same net operating income, $76,800, as last year?
(Do not round intermediate calculations. Round your answer to the nearest whole number.)
Solution:
Sales = Variable expenses + Fixed expenses + Profits
$32.00Q = $24.00Q + $422,400 + $76,800
$12.00Q = 499200
Q = $499,200 ÷ $12.00 per skateboard
Q = 41,600 skateboards
Number of skateboards 41,600
Refer again to the data in (2) above. The president has decided that the company may have to raise the selling price of its skateboards.
If Tyrene Products wants to maintain the same CM ratio as last year, what selling price per skateboard must it charge next year to cover the increased labor costs?
(Do not round intermediate calculations. Round your answer to 2 decimal places.)
Solution:
The contribution margin ratio last year was 30%. If we let P equal the new selling price, then
P = $24.00 + 0.30P
0.70P = $24.00
P = $24.00 ÷ 0.70
P = $34.29
Selling price $34.29 100%
Variable expenses $24.00 70%
Contribution margin $10.29 30%
Selling price $34.29
Refer to the original data.
The company is considering the construction of a new, automated plant. The new plant would slash variable costs by 20%, but it would cause fixed costs to increase by 70%.
If the new plant is built, what would be the company’s new CM ratio and new break even point in skateboards?
(Round your intermediate calculations and the “Contribution margin” answer to 2 decimal places and other answer to the nearest whole number.)
Solution:
The new CM ratio would be
Selling price $32.00 100.00%
Variable expenses $17.92 56.00%
Contribution margin $14.08 44.00%
Sales = Variable expenses + Fixed expenses
$32.00Q = $17.92Q + ($422,400 + (422400*0.70))
$14.08Q = 718080
Q = $718,080 ÷ $14.08 per skateboard
Q = 51,000 skateboards
Contribution margin 44.00%
Unit sales to break even 51,000 skateboards
If the new plant is built, how many skateboards will have to be sold next year to earn the same net operating income, $76,800, as last year?
(Do not round intermediate calculations. Round your answer to the nearest whole number.)
Solution:
Sales = Variable expenses + Fixed expenses + Profits
$32.00Q = $17.92Q + $718,080 + $76,800
$14.08Q = 794880
Q = $794,880 ÷ $14.08 per skateboard
Q = 56,455 skateboards
Number of skateboards 56,455
Assume that the new plant is constructed and that next year the company manufactures and sells 52,000 skateboards (the same number as sold last year).
Prepare a contribution format income statement. (Input all amounts as positive values except losses which should be indicated by a minus sign.)
Solution:
Contribution Income Statement
Sales $16,64,000
Variable expenses $7,32,160
Contribution margin $9,31,840
Fixed expenses $7,18,080
Net operating income $2,13,760
The degree of operating leverage would be
Degree of operating leverage (DOL) = Total Contribution Margin
Net Operating Income
Degree of operating leverage (DOL) = $9,31,840
$2,13,760
Degree of operating leverage (DOL) = 4.36
Degree of operating leverage 4.36
Denton Company
During Denton Company’s first two years of operations, the company reported absorption costing net operating income as follows:
Year 1 Year 2
Sales (@ $62 per unit) $12,40,000.00 $18,60,000.00
Cost of good sold (@ $42 per unit) $8,40,000.00 $12,60,000.00
Gross margin $4,00,000.00 $6,00,000.00
Selling and administrative expense* $3,08,000.00 $3,38,000.00
Net operating income $92,000.00 $2,62,000.00
* $3 per unit variable; $248,000 fixed each year.
The company’s $42 unit product cost is computed as follows:
Direct materials 9
Direct labor 13
Variable manufact. Overhead 1
Fixed manufact. Overhead ($475,000/25,000 units) 19
Absorption costing unit product cost 42
Production and cost data for the two years are given below:
Year 1 Year 2
Units produced 25,000 25,000
Units sold 20,000 30,000
Prepare a variable costing contribution format income statement for each year.
Solution:
Absorption costing income statement:
per unit Year 1 Year 2
Sales $62.00 $12,40,000 $18,60,000
COGS $42.00 $8,40,000 $12,60,000
Gross profit $4,00,000 $6,00,000
SG&A $3,08,000 $3,38,000
Operating profit $92,000 $2,62,000
Variable costing: per unit 20,000 30,000
Sales $62.00 $12,40,000 $18,60,000
variable COGS $23.00 $4,60,000 $6,90,000
variable SG&A $3.00 $60,000 $90,000
total variable $26.00 $5,20,000 $7,80,000
contribution margin $36.00 $7,20,000 $10,80,000
fixed COGS $4,75,000 $4,75,000
fixed SG&A $2,48,000 $2,48,000
total fixed $7,23,000 $7,23,000
operating profit $(3,000) $3,57,000
Variable Costing Income Statement
Year 1 Year 2
Sales $12,40,000 $18,60,000
Variable expenses:
variable COGS $4,60,000 $6,90,000
variable SG&A $60,000 $90,000
Total variable expenses: $5,20,000 $7,80,000
? $7,20,000 $10,80,000
Fixed expenses:
fixed COGS $4,75,000 $4,75,000
fixed SG&A $2,48,000 $2,48,000
Total fixed expenses: $7,23,000 $7,23,000
operating profit $(3,000) $3,57,000
Reconcile the absorption costing and variable costing net operating income figures for each year.
(Loss amounts and amounts to be deducted should be indicated with a minus sign.)
Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes
Year 1 Year 2
Variable costing net operating income (loss) $(3,000) $3,57,000
Add (deduct) fixed manufact. Overhead
deferred in (released from) inventory under absorption costing $92,000 $2,62,000
Absorption costing net operating income (loss) $(95,000) $95,000
Scott Products Inc
Sandi Scott obtained a patent on a small electronic device and organized Scott Products, Inc., to produce and sell the device.
During the first month of operations, the device was very well received on the market, so Ms. Scott looked forward to a healthy profit.
For this reason, she was surprised to see a loss for the month on her income statement.
This statement was prepared by her accounting service, which takes great pride in providing its clients with timely financial data. The statement follows:
Scott Products, Inc.
Income Statement
Sales (25,000 units) $9,07,500.00 36.3
Variable expenses:
Variable cost of goods sold $2,95,000.00
Variable selling and administrative expenses $1,96,250.00 $4,91,250.00
Contribution margin $4,16,250.00
Fixed expenses:
Fixed manufacturing overhead $2,26,800.00
Fixed selling and administrative expenses $2,18,000.00 $4,44,800.00
Net operating loss ($28,550.00)
Ms. Scott is discouraged over the loss shown for the month, particularly because she had planned to use the statement to encourage investors to purchase stock in the new company.
A friend, who is a CPA, insists that the company should be using absorption costing rather than variable costing.
He argues that if absorption costing had been used, the company would probably have reported a profit for the month.
Selected cost data relating to the product and to the first month of operations follow:
Units produced 28,000
Units sold 25,000
Variable costs per unit:
Direct materials 7.5
Direct labor 2.7
Variable manufact. Overhead 1.6
Variable selling and administrative expenses 7.85
Complete the following:
Compute the unit product cost under absorption costing. (Round your intermediate and final answers to 2 decimal places.)
Solution:
Absorption costing
Direct materials $7.50
Direct labor $2.70
Variable manufacturing overhead $1.60
Fixed manufacturing overhead $8.10 226800/28000
Unit product cost $19.90
The total fixed manufacturing overhead is $226,800. Total units produced is 28,000. Per unit it is 226,800/28,000=$1.5
Unit product cost $19.90
Redo the company’s income statement for the month using absorption costing.
(Input all amounts as positive values except losses which should be indicated by a minus sign. Round your intermediate calculations to 2 decimal places. Round your final answers to the nearest whole number.)
Absorption Costing Income Statement
Sales $9,07,500.00
Cost of goods sold $4,97,500.00
Gross margin $4,10,000.00
Less selling expenses $4,14,250.00
Net operating income $ 4,250.00
Reconcile the variable and absorption costing net operating income (loss) figures.
(Loss amounts and amounts to be deducted should be indicated with a minus sign. Round your intermediate calculations to 2 decimal places. Round your final answers to the nearest whole number.)
Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes
Variable costing net operating income (loss) $ 28,550.00
add fixed manufacturing overhead costs deferred in inventory under absorption costing 8.10*3000 $24,300.00
Absorption costing net operating income (loss) $ 4,250.00
Rocky Mountain Corporation
Rocky Mountain Corporation makes two types of hiking boots—Xactive and the Pathbreaker. Data concerning these two product lines appear below:
Xactive Pathbreaker
Selling price per unit $132.00 $94.00
Direct materials per unit $64.60 $53.00
Direct labor per unit $9.60 $8.00
Direct labor hours per unit 1.2 DLHs 1 DLHs
Estimated annual production and sales 24,000 units 70,000 units
The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor hours.
Data concerning manufacturing overhead and direct labor hours for the upcoming year appear below:
Estimated total manufacturing overhead $24,70,000.00
Estimated total direct labor hours 98,800 DLHs
Compute the product margins for the Xactive and the Pathbreaker products under the company’s traditional costing system. (Loss amounts should be indicated with a minus sign.)
Solution:
Xactive Pathbreaker Total
sales price $132.00 $94.00
DM $64.60 $53.00
DL $9.60 $8.00
DLHrs 1.2 1
produce/sold units 24,000 70,000
total DL hours 28,800 70,000 98,800
traditional OH rate:
overhead $24,70,000 $25.00
DL hours 98,800
Product margin: Xactive Pathbreaker Total
sales price $31,68,000 $65,80,000 $97,48,000
DM $15,50,400 $37,10,000 $52,60,400
DL $2,30,400 $5,60,000 $7,90,400
MOH $7,20,000 $17,50,000 $24,70,000
profit margin $6,67,200 $5,60,000 $12,27,200
Xactive Pathbreaker Total
Product margin $6,67,200.00 $5,60,000.00 $12,27,200.00
The company is considering replacing its traditional costing system with an activity based costing system that would assign its manufacturing overhead to the following four activity cost pools
(the Other cost pool includes organization sustaining costs and idle capacity costs):
Estimated Expected Activity
Overhead
Activities and Activity Measures Cost Xactive Pathbreaker Total
Supporting direct labor (direct labor hours) 6,42,200.00 28,800 70,000 98,800
Batch setups (setups) 9,15,000.00 350 260 610
Product sustaining (number of products) 8,40,000.00 1 1 2
Other 72,800.00 NA NA NA
Total manufacturing overhead cost 24,70,000.00
Compute the product margins for the Xactive and the Pathbreaker products under the activity based costing system.
(Loss amounts should be indicated with a minus sign. Round your intermediate calculations to 2 decimal places and final answers to the nearest dollar amount.)
Solution:
activity based costing rates: pool amount activity rate
labor support $6,42,200 98800 $6.50
setups $9,15,000 610 $1,500.00
product $8,40,000 2 $4,20,000.00
other $72,800
$24,70,000
Product margin: Xactive Pathbreaker Total
sales price $31,68,000 $65,80,000 $97,48,000
DM $15,50,400 $37,10,000 $52,60,400
DL $2,30,400 $5,60,000 $7,90,400
MOH: labor support $1,87,200 $4,55,000 $6,42,200
MOH: setups $5,25,000 $3,90,000 $9,15,000
MOH: product $4,20,000 $4,20,000 $8,40,000
profit margin $2,55,000 $10,45,000 $13,00,000
Xactive Pathbreaker Total
Product margin $2,55,000 $10,45,000 $13,00,000
Prepare a quantitative comparison of the traditional and activity based cost assignments.
(Do not round intermediate calculations. Round your percentage answers to one decimal place and other answers to the nearest dollar amount.)
Xactive Pathbreaker Total
% of % of
Amount Total Amount Amount Total Amount Amount
Traditional Cost System
Direct materials $15,50,400.00 29.47% % $37,10,000.00 70.53% % $52,60,400.00
Direct Labor $2,30,400.00 29.15% % $5,60,000.00 70.85% % $7,90,400.00
Manufacturing over heads $7,20,000.00 29.15% % $17,50,000.00 70.85% % $24,70,000.00
Total cost assigned to products $25,00,800.00 $60,20,000.00 $85,20,800.00
Activity Based Costing System
Direct costs:
Direct Materials $15,50,400.00 29.47% % $37,10,000.00 70.53% % $52,60,400.00
Direct Labor $2,30,400.00 29.15% % $5,60,000.00 70.85% % $7,90,400.00
Indirect costs:
support DL $1,87,200.00 29.15% % $4,55,000.00 70.85% % $6,42,200.00
setups $5,25,000.00 57.38% % $3,90,000.00 42.62% % $9,15,000.00
product $4,20,000.00 50.00% % $4,20,000.00 50.00% % $8,40,000.00
Total cost assigned to products $29,13,000.00 $55,35,000.00 $84,48,000.00
Costs not assigned to products $72,800.00
costs not assigned $85,20,800.00
Total cost
*Which selection in the dropdown is this one?
Gore Range Carpet Cleaning
Gore Range Carpet Cleaning is a family owned business in Eagle Vail, Colorado. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned.
The current fee is $23.05 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—
particularly those located on more remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity based costing.
After some discussion, a simple system consisting of four activity cost pools seemed to be adequate. The activity cost pools and their activity measures appear below:
Activity Cost Pool Activity Measure Acitivity for the Year
Cleaning carpets square feet cleaned (00) 13,500 hundred sq ft
Travel to jobs miles driven 268,500 mi
Job support number of jobs 1,800 jobs
Other (organization sustaining)
and idle capacity costs) none N/A
The total cost of operating the company for the year is $365,000, which includes the following costs:
Wages $1,43,000.00
Cleaning supplies $32,000.00
Cleaning equipment depreciation $15,000.00
Vehicle expenses $36,000.00
Office expenses $66,000.00
President’s compensation $73,000.00
Total cost $3,65,000.00
Resource consumption is distributed across the activities as follows:
Distribution of Resource Consumption Across Activities
Cleaning Travel to Job
Carpets Jobs Support Other Total
Wages 74% 10% 0% 16% 100%
Cleaning supplies 100% 0% 0% 0% 100%
Cleaning equipment depreciation 68% 0% 0% 32% 100%
Vehicle expenses 0% 81% 0% 19% 100%
Office expenses 0% 0% 59% 41% 100%
President’s compensation 0% 0% 34% 66% 100%
Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on.
Prepare the first stage allocation of costs to the activity cost pools. (Leave no cells blank be certain to enter “0” wherever required.
Cleaning Travel to Job
Carpets Jobs Support Other Total
Wages $1,05,820.00 $14,300.00 $ $22,880.00 $1,43,000.00
Cleaning supplies $32,000.00 $ $ $ $32,000.00
Cleaning equipment depreciation $10,200.00 $ $ $4,800.00 $15,000.00
Vehicle expenses $ $29,160.00 $ $6,840.00 $36,000.00
Office expenses $ $ $38,940.00 $27,060.00 $66,000.00
President’s compensation $ $ $24,820.00 $48,180.00 $73,000.00
Total cost $1,48,020.00 $43,460.00 $63,760.00 $1,09,760.00 $3,65,000.00
Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.)
Activity Cost Pool Activity Rate
Cleaning carpets $10.96 per hundred sq ft
Travel to jobs $0.16 per mile
Job support $35.42 per job
The company recently completed a 4 hundred square foot carpet cleaning job at the Lazy Bee Ranch—a 58.00 mile round trip from the company’s offices in Eagle Vail.
Compute the cost of this job using the activity based costing system. (Round your intermediate and final answers to 2 decimal places.
hundred sq feet 4 $10.96 $43.86
miles 58 $0.16 $9.39
job 1 $35.42 $35.42
Cost $88.67
The revenue from the Lazy Bee Ranch was $92.20 (4 hundred square feet at $23.05 per hundred square feet). Prepare a report showing the margin from this job.
(Input all amounts as positive values except losses which should be indicated by a minus sign. Round your intermediate and final answers to 2 decimal places.)
Gore Range Carpet Cleaning
Customer Margin Activity Based Costing
Sales $92.20
Costs:
cleaning costs $43.86
travel to jobs $9.39
job supoprt $35.42 $88.67
Customer margin $3.53
Aug 29, 2021 | Uncategorized
- Introduction to Accounting Assessment Task You are required to: 1. Obtain the last five year’s published Income Statements and Balance Sheets for a company. 2. Identify 4 groups who would be interested in utilizing these financial statements and critically discuss the purposes for which they would use them. 3. Identify the accounting ratios that would best enable the chosen user groups to achieve their purpose and calculate these ratios for your chosen company (two for each user group). And state it in table format. 4. Draw a chart for each ratio calculated. Analyse the ratios calculated and discuss in relation to the user groups identified and their purpose of use. 5. Appendix of your calculations must be attached at the end. Your assessment must contain an Introduction and Conclusion. Assessment Format You are required to submit a report detailing your analysis and the results of your calculations. The actual calculations must be shown as a part of the appendix. Word Limit 1,500 Learning outcomes to be examined in this assessment The ability to analyse, syntheses and evaluate financial statements in order to make decision. Assessment criteria Explanatory comments on the assessment criteria Content, style, relevance, critical, constructive analysis The ability to relate theory to the real world. Demonstration of a clear understanding of the issues. Evidence of wide research Clear, professional and properly referenced using Harvard Style Introduction Conclusion The ability to introduce and clearly sum up the arguments and reach a conclusion.
Aug 29, 2021 | Uncategorized
Final Examination BookletFinancial Accounting
1Financial AccountingComplete the following exam by answering the questions andcompiling your answers into a word processing document. Whenyou’re ready to submit your answers, refer to the instructions atthe end of your exam booklet. Be certain to indicate the properquestion number before each of your answers. Remember toshow your work if an answer requires a mathematical solution.Part A: Answer each of the following questions. Each answer isworth 20 points.EXAMINATION NUMBER:061693001. The following information was made available from theincome statement and balance sheet of Lauren Company.Item12/31/1012/31/09Accounts Receivable$53,40058,600Accounts Payable35,60032,700Merchandise Inventory85,00079,000Sales (2010)243,000Interest Revenue (2010)5,600Dividend Revenue (2010)1,200Tax Expense (2010)12,300Salaries Expense (2010)28,000COGS (2010)65,000Interest Expense (2010)3,600Operating Expenses28,500Complete the cash flow from operating activities section forLauren Company using the direct method for the year endedDecember 31, 2010.ExaminationExamination
Financial Accounting2. Given the following balance sheet, complete a horizontalanalysis. Compute the percentage to the nearest tenth of apercent. 2Jill’s BikesComparative Balance SheetFor Years Ended December 31, 2011 and 2010(in thousands)20112010DifferencePercentageAssetsCurrent AssetsCash and Equivalents$72$94Accounts Receivable, net122104Inventory288232Total Current Assets482430Property, Plant and Equipment638358Total Assets$1,120$788LiabilitiesCurrent LiabilitiesAccounts Payable$242$148Accrued Liabilities4866Total Current Liabilities290214Long Term Liabilities346208Total Liabilities636422Stockholders’ EquityCommon Stock7060Retained Earnings414306Total Stockholders’ Equity484366Total Liabilities and Stockholders’ Equity$1,120$788
Aug 29, 2021 | Uncategorized
Whitney Richards Accounting 2120: Managerial Accounting (Summer 2013): Acct 2120: Managerial Accounting (Summer 2013)
| Chapter 07 Homework Problems |
instructions | help |
4.value:
2.00 points
|
Rocky Mountain Corporation makes two types of hiking boots—Xactive and the Pathbreaker. Data concerning these two product lines appear below:
|
|
Xactive |
Pathbreaker |
| Selling price per unit |
$ |
115.00 |
|
$ |
84.00 |
|
| Direct materials per unit |
$ |
65.50 |
|
$ |
54.00 |
|
| Direct labor per unit |
$ |
13.60 |
|
$ |
8.00 |
|
| Direct labor hours per unit |
|
1.7 |
DLHs |
|
1.0 |
DLHs |
| Estimated annual production and sales |
|
33,000 |
units |
|
61,000 |
units |
|
|
The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor hours. Data concerning manufacturing overhead and direct labor hours for the upcoming year appear below:
|
|
|
|
|
| Estimated total manufacturing overhead |
$1,756,500 |
| Estimated total direct labor hours |
117,100DLHs |
|
| Required: |
| 1. |
Compute the product margins for the Xactive and the Pathbreaker products under the company’s traditional costing system. (Loss amounts should be indicated with a minus sign. Omit the “$” sign in your response.)
|
|
Xactive |
Pathbreaker |
Total |
| Product margin |
$ |
$ |
$ |
|
| 2. |
The company is considering replacing its traditional costing system with an activity based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization sustaining costs and idle capacity costs):
|
|
Estimated |
Expected Activity
|
| Activities and Activity Measures |
Overhead Cost |
Xactive |
Pathbreaker |
Total |
| Supporting direct labor (direct labor hours) |
$ |
526,950 |
56,100 |
61,000 |
117,100 |
| Batch setups (setups) |
|
790,000 |
440 |
350 |
790 |
| Product sustaining (number of products) |
|
400,000 |
1 |
1 |
2 |
| Other |
|
39,550 |
NA |
NA |
NA |
|
|
|
|
|
|
| Total manufacturing overhead cost |
$ |
1,756,500 |
|
|
|
|
|
|
|
|
|
|
|
Compute the product margins for the Xactive and the Pathbreaker products under the activity based costing system. (Loss amounts should be indicated with a minus sign. Round your intermediate calculations to 2 decimal places and final answers to the nearest dollar amount. Omit the “$” sign in your response.)
|
|
Xactive |
Pathbreaker |
Total |
| Product margin |
$ |
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check my workeBook Links (4)references
©
2013 The McGraw Hill Companies. All rights reserved.Requires a modern browser e.g. Safari 1, Netscape 6 or IE 5
Aug 29, 2021 | Uncategorized
All page numbers refer to the COSO Enterprise Risk Management—Integrated Framework. You may print the relevant pages or may save the book to a storage device. No citation or bibliography is necessary unless you utilize a resource other than the Integrated Framework.
- Read Objective Setting pages 35 38.
- Read Event Identification pages 41 43 (stop at Event Identification Techniques) and Exhibit 4.2 pages 46 47.
- Read Risk Assessment pages 49 50 (stop at Data Sources.)
- Read Risk Response pages 55 58 (stop at Portfolio View.)
- Read Control Activities pages 61 64 (stop at Controls over Information Systems.)
Control activities relate primarily to which risk response?
- Identify and explain examples of performance indicators, financial analysis tools, and operational metrics that could be used to detect irregularities and unexpected results.
- Identify and explain three basic duties that must be “segregated” (completed by different people) in order to maintain adequate internal control.
- The owner of Gardner Company, a small manufacturing client, has asked your advice on how to best segregate duties given that there are only 3 clerical employees. Assign the following eight functions between employees 1, 2 and 3.
- Maintain the general ledger
- Maintain the accounts payable subsidiary ledger
- Maintain the accounts receivable subsidiary ledger
- Prepare checks for signature
- Maintain the cash disbursements journal
- Issue credits on returns and allowances
- Reconcile the bank account
- Receive and deposit cash receipts
Employee 1
Employee 2
Employee 3
- In a small company, complete segregation of duties may not be possible. Explain the best “compensating” control?
- When designing a control for a specific identified risk, do you feel a company should focus on preventive or detective controls?
Aug 29, 2021 | Uncategorized
It is important that the writer take time and understand the requirements listed below. The brief narrative should be in a word document, and it is important to use in text citation and a reference page at the end of the narrative. APA must be use throughout the entire assignment. The narrative should be written in a one page document. The template will also be attached.
Aug 29, 2021 | Uncategorized
Intermediate Accounting II ACCT311, Section 4082 Exam #1 (Take Home) Chapters 13, 14, 15 & 16 Due July 17th, 2013 AT THE BEGINNING OF CLASS #1 Merkley Company’s balance sheet shows: Common stock, $20 par $3,000,000 Paid in capital in excess of par 1,050,000 Retained earnings 750,000 Instructions Record the following transactions by the cost method. (a) Bought 6,000 shares of its common stock at $29 a share. (b) Sold 3,000 treasury shares at $30 a share. (c) Sold 1,500 shares of treasury stock at $26 a share.
#2 On June 1, 2011, Moses Bottle Company sold $1,000,000 in long term bonds for $877,600. The bonds will mature in 10 years and have a stated interest rate of 8% and a yield rate of 10%. The bonds pay interest annually on May 31 of each year. The bonds are to be accounted for under the effective interest method.
Instructions (a) Construct a bond amortization table for this problem to indicate the amount of interest expense and discount amortization at each May 31. Include only the first four years. Make sure all columns and rows are properly labeled. (Round to the nearest dollar.) (b) The sales price of $877,600 was determined from present value tables. Specifically explain how one would determine the price using present value tables. (c) Assuming that interest and discount amortization are recorded each May 31, prepare the adjusting entry to be made on December 31, 2013. (Round to the nearest dollar.)
Aug 29, 2021 | Uncategorized
THE CITY OF NIXA FAILS TO NIX A FRAUD CONSPIRACY
INTRODUCTION
Nixa City Administrator, Brian Bingle, was on the hot seat at the Nixa Board of Aldermen meeting. The city was facing a cash shortage of an estimated $750,000 – the result of a massive fraud; and the aldermen and the townspeople in attendance were looking for something to cool their anger. Although the alleged perpetrators of the fraud had been arrested, the Board and city residents wondered how this could have occurred and who else should be held responsible for this case of fraud. Furthermore, everyone had just learned that a whistleblower had singled out the main perpetrator of the fraud back in 2006 (which would have reduced the fraud by hundreds of thousands of dollars if the supervisors had acted upon the information). One of the alderman asked Bingle if he felt responsible. “Absolutely,” stated Bingle. “I put a lot of reliance on city and staff, as well as the supervisors working for the city. Their actions reflect solely on me, and I accept full responsibility for them.” Nixa resident Chris Pedersen walked up to the microphone. He told the board that “the buck stops with the city administrator” and asked the board to terminate Brian Bingle.[1] Given that it was an election year, everyone knew that in addition to the perpetrators of the crime, someone else was going to be punished. But who was it going to be? Bingle was mortified. Why did the system fail? Up until now, there had never been a problem of this magnitude within the city administration. Why and how did this happen?
BACKGROUND OF THE CITY OF NIXA
The area surrounding the City of Nixa began to be occupied by settlers in the 1830’s.[2] As more farmers and tradesman located to southwestern Missouri and northern Arkansas, a crossroads site on the Wilderness Road became a resting spot for teamsters hauling supplies between Springfield, Missouri and locations on the James River or sites in Arkansas. Over time, a community formed at the crossroads location, including a few trade establishments and a post office. In 1881, a town meeting was held to determine a name for the community, but exactly how the group arrived at the name of Nixa is uncertain. Local legend has two sources for the city name; one version suggests that Nixa was selected as a means to honor a local man named Nicholas A. Inman. The other version asserts that some citizens felt the naming process for the town was not important because the community was so small, thus the idea for a town name should be “nixed.” Regardless of whatever happened at the meeting, the town became known as Nixa thereafter, and the community officially incorporated as a village in 1902.[3]
Early businesses in Nixa focused upon the local agriculture economy. As those businesses began to close, the increasing use of the automobile allowed Nixa to evolve as a bedroom community of Springfield, supplying workers to various companies in the larger city. Today, Nixa finds itself as a midpoint location between Springfield and the tourist destination of Branson. The city’s location and excellent school system has propelled the city’s explosive growth over the last few decades.
According to data provided by the City of Nixa, the 1970 population of Nixa was 1,636. In 2005, the population had grown to 16,466, and the current population of Nixa is estimated to be over 20,000 people.[4] Along with the population growth, the city has also seen growth in its economic base. Several retail, service, and a few manufacturing companies are located in Nixa, providing jobs to approximately 5,460 people. The Nixa Chamber of Commerce Directory lists approximately 550 members. Recently, the two major hospital systems in Springfield have opened medical facilities in Nixa, in response to the growing population.
Although the average household income in Nixa is reported to be $45,552 per year, new residents to the city are bringing higher incomes, along with a higher level of education, and more children. Besides the award winning school system in Nixa, prospective residents are attracted by the several institutions of higher education in the area, including Missouri State University. Because Nixa is located in the Ozark Mountains and near Branson, Missouri, several outdoor recreational and entertainment activities are available within a short driving distance. Another attractive feature of Nixa is the small town feeling of safety. Although Missouri has a slightly higher average crime rate than the U.S. average, Nixa boasts of a much lower crime rate. Nixa has a violent crime rate (property crime rate) of 57 (1,685.6) incidents per 100,000 people, compared to the national rate of 676 (4,296) per 100,000 people.[5]
The Structure of Government and Administration in the City of Nixa
At the time of the fraud, the government of Nixa consisted of seven elected officials: the mayor and the six aldermen that formed the Board of Aldermen. (Note: Recently, the city changed its classification within the state, so now the “Alderman” positions are referred to as “Councilmen”.) The Board hires a City Administrator who directs the administrative departments of the city in their day to day operations. Obviously, the City Administrator reports to the Mayor and the Board. The City Administrator is allowed by city ordinances to delegate some of his/her responsibilities to the city departments (e.g., the Utilities Department).
The two city departments that are embroiled in this case of fraud are the Finance Department and the Public Works Department. The Finance Department is managed by the Finance Director, who is responsible for the city’s purchasing and accounts payable functions. Thus, the Finance Director oversees the purchasing clerk and the accounts payable clerk. The Public Works Department is supervised by the Director of Public Works, who is responsible for utilities offered by the city, the city recycling center, and the Street Department. Both the Finance Director and the Director of Public Works report to the City Administrator.
The Street Department is managed by the Superintendent of the Street Department, who is responsible for street maintenance and street construction in the city. The Superintendent of the Street Department leads a workforce that maintains more than 160 streets within Nixa (or more than 110 miles of roads), handles some of the city’s odd jobs (e.g., sprays for mosquitoes), and helps with new construction projects within the city. Some of the duties of the Street Department include filling pot holes, repairing curbs, mowing grass along roadways and on city properties, removing snow from the streets, painting road lines such as crosswalks, and installing street signs. The Superintendent of the Street Department reports to the Director of Public Works.
Prior to 2007, either the City Administrator or someone appointed by him (i.e., a purchasing clerk) were approved by the Board to be the purchasing agent for the city. All city departments filed purchase requests with the purchasing agent. After April 2007, the city amended their laws to require the following process:
- Any purchase that was expected to be over $20,000 was placed into the formal budget. Later, the requested project/goods/services would be written into formal specifications and undergo a written bid process. Next, a purchase order would be created by the Purchasing Clerk based on the lowest bid that met the contract specifications. Finally, the purchase order would have to be authorized by either the City Administrator or the Board.
- For any purchases ranging in cost from $2,000 to $20,000, bids were solicited using either a mail and/or telephone process. The bids were required to be confirmed in writing. Again, the lowest qualified bid was expected to be accepted, and a purchase order was created by the Purchasing Clerk. The City Administrator was required to approve any purchase order between $10,000 and $20,000, but if the amount was less than $10,000, the department head could authorize the purchase.
- Nixa required a purchase order and the department supervisor’s authorization for any purchase ranging between $200 and $2,000. If the purchase cost was less than $200, then only the approval of the department head was required by the City of Nixa.
Once a purchase order was approved, the Purchasing Clerk would place the order for the goods or services with the appropriate vendor. Later, the Purchasing Clerk would send the purchase order and the associated invoice to the Accounts Payable Clerk. The Accounts Payable Clerk would prepare and mail a check to the vendor, once she/he received notification from a department that the goods or services had been received/verified.
FORENSIC INFORMATION
Larry Covington was hired by the Nixa street department on March 6, 2000. He was promoted to the position of superintendent on May 6, 2004. Superintendent positions in Nixa typically pay between $44,000 and $65,000 per year. David Griggs was hired by the City of Nixa to work in the street department as a utility worker in November of 2003. In August of 2004, Griggs was promoted by Covington to the position of lead utility worker.[6] Thus, a description of their professional relationship could be that Covington was a city supervisor – in charge of streets and sanitation, while Griggs was his underling. However, their work relationship changed in 2006, because Griggs pleaded guilty to forgery in Christian County, Missouri, he was sentenced to five years probation, and he was fired from his job by the City of Nixa.[7]
In April of 2006, an anonymous caller used a pay phone to call Nixa officials and encouraged the city to investigate Larry Covington.[8] The caller noted that Covington was a “sophisticated, professional thief,” and that a comprehensive investigation would be required. The caller noted that Public Works Director Doug Colvin would not listen to any information about stolen goods and refused to investigate Covington. Instead, the caller believed that supervisors were only performing minimal investigations, while reporting extensive investigations and no major losses by the department. The caller noted that Covington and another street department employee were frequently seen on Sundays in Clever, Missouri in a City of Nixa flat bed truck. The two were also seen in the same truck in Sparta, Missouri. The caller suspected that Covington had a shed where he hid goods that he stole from Nixa. The caller then gave some alleged instances of Larry Covington committing various acts of crime:
- In 2004, Covington stole several street signs and sold them on Ebay using an alias. The city did not uncover this theft because they searched Ebay only using Covington’s name.
- When Larry Covington needed a large down payment to purchase a day care center, he raised the money by stealing city equipment and then selling the equipment (including a large city lawn mower);
- Covington stole dirt from the city and then sold the dirt to residents (Larry Covington claimed he gave the dirt to the residents);
- Covington used city funds to buy tools at a local Nixa hardware store, and then he either kept the tools for personal use or the tools were sold. Larry Covington usually reported the tools as lost or stolen.
- The caller noted that employees in the street department were aware of Covington’s thefts, but they were intimidated (because they were afraid they would lose their jobs) from reporting the thefts to the city administration. They were also bullied by Covington in the workplace and did not want to deal with Covington’s aggressive behavior.
The caller also noted that Covington allegedly committed insurance fraud and arson in California by burning down his own home and receiving the insurance proceeds.
According to the probable cause statements created by the police department of Nixa, an employee (whistleblower) of Nixa became concerned about suspicious purchase orders that were being prepared by Covington and issued to the “Ward and Spooner” Company over a period of three months.[9] The employee was concerned that the city was paying for products that were ordered but not received. The employee reported these suspicions to the City Administrator Brian Bingle on February 13, 2009. The Nixa Finance Director found that 54 checks had been written to Ward and Spooner between 1/9/07 and 2/4/09 for invoices totaling $277,446.78. Then, the Public Works Director Doug Colvin was asked if he could locate any of the inventory items ordered from Ward and Spooner. He was unable to locate any inventory. The city was able to ascertain that the post office box where the purchase orders and checks were delivered was registered to Covington. The city checked with the Secretary of State office and found that Covington had registered Ward and Spooner as a business on 12/04/04. The address listed on the business application was Covington’s home address in 2004. Based upon the same whistleblower tip, a similar investigation was initiated for another suspicious company, Tri State Supply. The investigation revealed that on 12/22/04, David Griggs applied and paid for the business registration of a company called Tri State Supply, using his home address as the business location. Based on this information, David Griggs and Larry Covington were arrested by the Nixa Police Department.
Further investigation would lead to Covington and Griggs being charged with conspiring to setting up three phony companies – TriState Supply, Airborne Specialist(s), and Ward and Spooner – to do business with the City of Nixa. Interestingly, Griggs registered the Airborne Specialist(s) business with the state on March 6, 2002, well before he started working for the City of Nixa. Purchase orders to these companies were produced by Covington in his role as a supervisor, and then phony invoices were prepared by either Covington or Griggs and sent from these companies to Nixa. A check from the city would then be sent to the post office box of the invoicing company, but no goods (or services) would ever be shipped to Nixa. Because one of Covington’s responsibilities was to receive goods for the department, he was able to conceal that the goods (or services) were not really received by the city. The acts of fraud were committed between October 18, 2004 and February 25, 2009. The estimated final total that Covington and Griggs stole from Nixa is $756,009 based upon the following breakdown of invoices:
- 83 fraudulent invoices from Airborne Specialist(s) totaling $183,435,
- 39 fraudulent invoices from Tri State Supply totaling $90,209, and
- 150 fraudulent invoices from Ward & Spooner totaling $482,365.
In addition to the fraud charges, a search of Larry Covington’s residence revealed several hardware items and other materials belonging to Nixa. Therefore, Covington was also charged with Class C felony stealing.[10]
Since the fraud began, Covington had made the following purchases: a new home in Ash Grove, Missouri, a 2004 Bombadier Outlander ATV, a 2007 Mahindra tractor, a 2008 Ford Explorer, a 2008 Ford F350 truck, and a 2007 Agri Cutter (for cutting grass). Griggs, however, had a large amount of debt (around $200,000) from credit cards, medical expenses, student loans, and home loans – and he only had about $450 in various checking accounts. In December of 2007, Griggs filed for Chapter 7 bankruptcy protection.[11] Unfortunately, Griggs and his wife had also filed for bankruptcy in 1995 as well.
FINAL THOUGHTS ABOUT KEY DECISION MAKERS
After the Board meeting, Brian Bingle thought, “What could I have done to prevent or detect this million dollar fraud?” Bingle was well aware that had proper controls been put in place, there was a good probability that this fraud could have been avoided. This fraud was now his responsibility.
Each question below (1 through 7) is worth equal value:
- Discuss the internal environment within the Nixa Street Department and the City of Nixa using the Enterprise Risk Management Model.[12] (see Romney text – chapter 6)
- Prepare organizational charts for the Finance department and City Works department. Use Word, Powerpoint, or Visio.
- Based on the information in the case, diagram the internal control system for Nixa’s purchasing and payables functions. Use either a data flow diagram or a document flowchart (use Word, Powerpoint, or Visio)
- Larry Covington was promoted to Supervisor in 2004. Does the scope and organization of his position seem appropriate? Why or why not?
- List and discuss some controls that should have been in place over purchasing in the City of Nixa administration.
- List and discuss some controls that should have been in place over accounts payable.
- On a 1 to 5 scale where 1 is strongly disagree and 5 is strongly agree, answer the following:
a. This case helped me understand the application of internal controls for a governmental unit: 1 2 3 4 5
b. This case helped me understand the application of the Enterprise Risk Model: 1 2 3 4 5
c. This case helped me understand controls over accounts payable:
1 2 3 4 5
d. This case helped me understand controls over purchasing:
1 2 3 4 5
[1] Muck, T; and Baxter, D. (2009, March 11). Administrator Takes Share of the Blame.
Springfield News Leader, 9A. [2] Glenn, W. (2003)
Down the Road from Nixa. Litho Printers: Cassville, MO. [3] http://www.nixa.com/About%20Nixa/welcome.htm [4] http://www.nixa.com/pdfs/EcDev/Demographics.pdf [5] http://www.homesurfer.com/crimereports/view/crime_report.cfm?state=MO&area=Nixa [6] United States District Court. (2009)
United States v. Larry Covington, Paula Covington, and David Griggs. Case No.09 03040 01/03 CR S RED [7] http://crimesceneinvestigations.blogspot.com/2009/02/nixa public works supervisor and former.html [8] Nixa Tip, (May 27, 2009) Retrieved from http://Commpub.smugmug.com/gallery/7504234_ks5X3/1/ [9] Probable Cause Statement for a felony, State of Missouri v. Larry Covington, February 24, 2009 and Probable Cause Statement for a felony, State of Missouri v. David Griggs, February 25, 2009. [10] Baxter, D. (2009, March 6
) Another Theft Charge Filed Against Former Nixa Employee.
Springfield News Leader [11] Vanderhart, D. (2009, April 23
) Nixa Fraud Suspect Deep in Debt.
Springfield News Leader [12] Gelinas and Dull, Accounting Information Systems, Cengage, 2010, p. 217.
Aug 29, 2021 | Uncategorized
Q1.
Project Alpha requires an outlay of $10,000 immediately. Project Alpha has a 1 year life and is
expected to produce a net cash flow at the end of one year of $20,000. Project Beta, a mutually
exclusive alternative to Alpha, requires an outlay of $20,000 immediately. It, too, is expected to
have a 1 year life and to produce a net cash flow at the end of one year of $35,000.
Compare the internal rate of return for both projects. Compute the NPV for both projects, using a
cost of capital of 10 percent. Which projects should be undertaken?.
Q2
Consider the following projects X and Y where the firm can choose only once. Project X costs $600
and has cash flows of $400 in each of the next two years. Project B also costs $ 600 and generates
cash flows $500 and $275 for the next two years, respectively. Sketch a net present value profile
(graphs) for each of these projects. For graphs you may use approximation
Which project should the firm choose if the cost of capital is 10 percent? What if the cost of capital
is 25 percent?
Aug 29, 2021 | Uncategorized
Question 1
1.
Which of the following is a cash equivalent for purposes of preparing a statement of cash flows?
Answer
A. Accounts receivable
B. Investment in a money market fund
C. Inventory
D. Investment in subsidiary company common stock
1 points
Question 2
1.
A typical example of a cash equivalent is an investment in:
Answer
A. Treasury stock
B. Commercial paper
C. Stock of other companies selling on an exchange
D. All of the above
1 points
Question 3
1.
A firm’s net cash flow from operating activities includes:
Answer
A. Cash received from issuance of common stock
B. Cash received from sale of equipment
C. Cash received as payment of loan from a borrower
D. Cash received from sale of merchandise
1 points
Question 4
1.
A firm’s cash flow from financing activities includes:
Answer
A. Cash received as interest income
B. Cash received from sale of investment in bonds
C. Cash paid to reacquire treasury stock
D. Cash paid for merchandise purchased
1 points
Question 5
1.
Which of the following is disclosed separately in a statement of cash flows using the indirect method?
Answer
A. Cash received from customers
B. Cash paid to employees and other suppliers
C. Increase in retained earnings for the period
D. Net income
1 points
Question 6
1.
Laborto Inc. has an accrual basis net loss of $14,000 and the following related items:
Depreciation expense $11,000
Accounts receivable decrease 8,000
Inventory increase 6,000
Accounts payable increase 3,000
Accrued liabilities increase 5,000
How much is Laborto’s net cash flow from operating activities?
Answer
A. $35,000
B. $ 7,000
C. ($ 4,000)
D. ($13,000)
1 points
Question 7
1.
A company reported annual sales revenue of $450,000. During the year, accounts receivable decreased from a $14,000 beginning balance to a $12,000 ending balance. Accounts payable decreased from a $11,000 beginning balance to a $8,000 ending balance. How much is cash received from customers for the year?
Answer
A. $448,000
B. $462,000
C. $449,000
D. $452,000
1 points
Question 8
1.
A company reported cost of goods sold of $440,000 for the year. During the year, inventory increased from a $23,000 beginning balance to a $35,000 ending balance, and accounts payable increased from a $12,000 beginning balance to a $14,000 ending balance. How much is the cash paid for merchandise purchased during the year?
Answer
A. $450,000
B. $426,000
C. $452,000
D. $430,000
1 points
Question 9
1.
With reference to the reporting of net cash flow from operating activities, which method do most companies use and why?
Answer
A. Direct method because it requires a supplemental indirect method section
B. Indirect method because it provides better information for decision making
C. Direct method because it is based on the accrual basis of accounting
D. Indirect method because it is less expensive to prepare
1 points
Question 10
1.
Consider the following events. Compute the net cash flow from investing activities (parentheses indicate an outflow).
‘ Cash of $46,000 was used to purchase a used truck.
‘ Cash of $40,000 was used to retire bonds.
‘ Cash of $25,000 was received from the sale of an investment at a loss.
‘ Cash dividends of $14,000 were received from an investment.
‘ Plant assets were depreciated $6,000, under the straight line method
Answer
A. ($47,000)
B. ($21,000)
C. $25,000
D. ($ 7,000)
1 points
Question 11
1.
Consider the following. Using the Indirect Method, the Net Cash provided by Operating Activities was:
‘ Net income, $90,000
‘ Depreciation Expense $11,000
‘ Increase in accounts receivable, $4,000
‘ Decrease in merchandise inventory, $20,000
‘ Decrease in accounts payable, $8,000
‘ Increase in income taxes payable, $3,000
Answer
A. $106,000
B. $ 90,000
C. $101,000
D. $112,000
1 points
Question 12
1.
Chen Company’s financial statements show a net income of $184,000. The following items also appear on Chen’s balance sheet:
Depreciation expense $40,000
Accounts receivable decrease 12,000
Inventory increase 28,000
Accounts payable increase 8,000
Using the indirect method, what is Chen’s net cash flow from operating activities?
Answer
A. $232,000
B. $272,000
C. $216,000
D. $136,000
1 points
Question 13
1.
Consider the following. Calculate the net cash provided (or used) by operating activities using the indirect method.
Net Income $12,300
Depreciation Expense 12,000
Gain on Sale of Land 7,500
Increase in Inventory 2,050
Increase in Wages Payable 6,150
Payment of Dividends 2,000
Answer
A. $18,900
B. $20,900
C. $12,700
D. $35,900
1 points
Question 14
1.
The beginning balance of Prepaid Interest was $1,800 and the ending balance was $2,100. The Interest Expense account for the year was $8,600. How much cash was paid for interest?
Answer
A. $8,600
B. $8,100
C. $8,300
D. $8,900
1 points
Question 15
1.
Boyer Corporation shows income tax expense of $60,000. There has been a $5,000 decrease in federal income taxes payable and a $7,000 increase in state income taxes payable during the year. What was Boyer’s cash payment for income taxes?
Answer
A. $55,000
B. $58,000
C. $62,000
D. $60,000
Aug 29, 2021 | Uncategorized
Question 1
1.
The following journal entry is necessary upon discovery of a “NSF” check during a bank reconciliation:
Answer
A. Accounts Receivable
Cash
B. Not Sufficient Funds Expense
Cash
C. Miscellaneous Expense
Cash
D. No entry is necessary because the bank makes the entry.
E. None of the above
1 points
Question 2
1.
State Bank collected a note for Meadow Company. This collection, not yet recorded in Meadow’s books, appears on the bank reconciliation as a(n):
Answer
A. Addition to balance per general ledger
B. Deduction from balance per bank statement
C. Addition to balance per bank statement
D. Deduction from balance per general ledger
E. None of the above
1 points
Question 3
1.
Which of the following items would you add to the bank statement balance to arrive at the reconciled cash balance in a bank reconciliation:
Answer
A. Bank service charges
B. Outstanding checks
C. “NSF’ checks
D. Bank collection charges
E. None of the above
1 points
Question 4
1.
Which of the following would you deduct from the bank statement balance to arrive at the reconciled cash balance in a bank reconciliation:
Answer
A. Bank service charges
B. Deposits in transit
C. “NSF” checks
D. Outstanding checks
E. None of the above
1 points
Question 5
1.
In reconciling the May bank statement, the vice president discovered that the bookkeeper had recorded a check written for $418 as $481 in the cash disbursements journal. For the bank reconciliation, the $63 error should be:
Answer
A. Added to balance per bank statement
B. Added to balance per general ledger
C. Deducted from balance per bank statement
D. Deducted from balance per general ledger
E. None of the above
1 points
Question 6
1.
The following information pertains to Guadalupe Company:
Cash balance per bank statement $7,150
Cash balance per general ledger 7,540
Bank service charge 20
Deposits in transit to bank 925
Outstanding checks 655
NSF check returned by bank 100
Guadalupe should show the following reconciled cash balance from the bank reconciliation on its balance sheet:
Answer
A. $6,770
B. $8,445
C. $7,420
D. $8,055
E. None of the above
1 points
Question 7
1.
Zetor, Inc.’s June bank statement shows a June 30 balance of $9,050. Prior to reconciliation, its books show a cash balance of $8,710. The information below pertains to Zetor, Inc.
Deposits in transit $700
Checks outstanding 480
Bank service charges 20
Error in Zetor’s records overstating cash disbursement 90
Check of another company charged erroneously against
Zetor’s bank account 250
Bank statement shows bank collected a note receivable
and interest income for Zetor 740
The reconciled cash balance at June 30 on the bank reconciliation should be:
Answer
A. $10,100
B. $ 9,520
C. $ 9,340
D. $ 9,270
E. None of the above
1 points
Question 8
1.
In preparing its bank reconciliation at March 31, Clark Company has the following information:
Cash balance per bank statement $37,550
Cash balance per general ledger 38,000
Deposits in transit 5,250
Outstanding checks 5,750
Deposit erroneously recorded by bank in Clark’s account
on March 12 250
Bank service charges for March 50
NSF check returned by bank 1,150
What is the proper cash balance at March 31 for balance sheet purposes?
Answer
A. $35,750
B. $36,750
C. $36,800
D. $37,050
E. None of the above
1 points
Question 9
1.
After completing a bank reconciliation, you are preparing journal entries to agree the firm’s Cash account balance with the reconciled balance shown on the reconciliation. Which of the following requires a journal entry?
Answer
A. Service charges for the period
B. Outstanding checks at the end of the period
C. Deposits in transit at the end of the period
D. An error by the bank in recording one of the firm’s deposits
E. None of the above
1 points
Question 10
1.
In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that check number 4239 for November’s rent was correctly written and drawn for $7,390 but was erroneously entered in the accounting records as $3,790. When preparing the November bank reconciliation, the company should:
Answer
A. Deduct $3,600 from the bank statement balance
B. Add $3,600 to the bank statement balance
C. Add 3,600 to the book balance of cash
D. Deduct $3,600 from the book balance of cash
1 points
Question 11
1.
If the company’s accountant mistakenly records a deposit of $630 as $360, the error would be shown on the bank reconciliation statement as a:
Answer
A. $270 addition to the book balance
B. $270 deduction from the bank balance
C. $270 deduction from the book balance
D. $270 addition to the bank balance
1 points
Question 12
1.
Larry Company prepares bank reconciliations that adjust to the correct balance of cash, based on the following:
Outstanding checks $ 177
Note collected for Larry by bank 550
Bank service charges 27
Check written for $98 incorrectly recorded in books at $89;
check cleared the bank for $98 9
NSF check 82
Unadjusted book balance 3,299
Deposits in transit 192
Determine the adjusted cash balance.
Answer
A. $3,749
B. $3,908
C. $3,731
D. $3,554
1 points
Question 13
1.
On September 30, the books of Allen Company indicates a balance in the Cash account of $3,675. Determine the adjusted balance on the basis of the following reconciling items:
(a) Deposits of cash sales of $342 had been erroneously recorded in the cash receipts journal as $324.
(b) Deposits in transit not recorded by bank, $500.00.
(c) Bank debit memorandum for service charges, $25.00.
(d) Bank credit memorandum for note collected by bank, $2,850, including $50 interest.
(e) Bank debit memorandum for $218.00 NSF (not sufficient funds) check from Alice Bell, a customer.
(f) Checks outstanding, $2,200.00.
Answer
A. $6,800
B. $4,600
C. $6,264
D. $6,300
Aug 29, 2021 | Uncategorized
Question 1
1.
For small stock dividends, by what amount are retained earnings reduced?
Answer
A. Par value of the stock
B. Par value of the dividend
C. Book value of the dividend
D. Market value of the dividend
1 points
Question 2
1.
Which one of the following selections is a not component of paid In capital?
Answer
A. Retained earnings
B. Common stock
C. Additional paid In capital
D. All of the above
1 points
Question 3
1.
In October, 2011, Bandar Corporation distributed profits to its preferred shareholders before its common shareholders. What is the name of the preference that allows this?
Answer
A. Asset distribution preference
B. Dividend preference
C. Profits preference
D. Treasury preference
1 points
Question 4
1.
Aaron Company plans to issue a large stock dividend. In accounting for this transaction, what effects occur to the contributed capital section of stockholders’ equity?
Answer
A. Common stock increases by the number of dividend shares x par value per share, and retained earnings decreases for the same amount
B. Retained earnings increases by the number of dividend shares x par value per share, and additional paid in capital increases for the balance
C. Common stock increases by the number of dividend shares x par value per share, and retained earnings increases for the balance
D. Common stock increases by the total market value of the dividend
1 points
Question 5
1.
As a preferred stockholder, you are entitled to numerous preferences and privileges over common stockholders. If you are a preferred stockholder of a company that has fallen on economic hardship and is likely to go bankrupt, which preference or privilege of preferred stock is going to be most useful to you?
Answer
A. Dividend preference
B. Asset distribution preference
C. Conversion privileges
D. Participation privilege
1 points
Question 6
1.
On September 1, 2011, Core Company’s balance sheet indicates there are 600,000 shares of $30 par value common shares in the Common Stock account and $4,500,000 in the Additional Paid in Capital account. There are 2,000,000 shares authorized. On September 2, Core splits its stock 2 for 1. How many Core’s shares of common stock are issued and outstanding immediately after the stock split?
Answer
A. 4,000,000
B. 300,000
C. 1,400,000
D. 1,200,000
1 points
Question 7
1.
Jasper Company has 30,000 shares of $80 par value, 5% cumulative preferred stock and 140,000 shares of $20 par value common stock. Jasper declares and pays cash dividends amounting to $225,000. If no arrearage on the preferred stock exits, how much in dividends per share is paid to the common stockholders?
Answer
A. $0.75
B. $4.00
C. $1.00
D. $1.61
1 points
Question 8
1.
Which of the following is an organizational advantage of a corporation?
Answer
A. Nontaxable entity
B. Legal entity separate from the owners
C. Unlimited liability of owners
D. Limited ability to raise capital
E. None of the above
1 points
Question 9
1.
A corporation:
Answer
A. Maintains separate capital and drawing accounts for each owner
B. May acquire assets, incur debt, and enter into contracts in its own name
C. Issues articles of incorporation as evidence of ownership in the corporation
D. Pays state income taxes but is not subject to the federal income tax
E. None of the above
1 points
Question 10
1.
The face value for a share of stock, printed on the stock certificate, is the stock’s:
Answer
A. Liquidation value
B. Stated value
C. Par value
D. Book value
E. None of the above
1 points
Question 11
1.
When only one class of stock is issued by a corporation, it should be termed:
Answer
A. Treasury stock
B. Authorized stock
C. Common stock
D. Class B stock
E. Preferred stock
1 points
Question 12
1.
Which of the following rights allows a shareholder of a corporation to maintain his or her proportionate interest in the corporation?
Answer
A. Preemptive right
B. Participation right
C. Preferred right
D. Cumulative right
E. None of the above
1 points
Question 13
1.
Squire, Inc., has outstanding 9,000 shares of $25 par value, 6% nonparticipating, cumulative preferred stock and 16,000 shares of $5 par value common stock. If the dividend on preferred stock is two years in arrears, and the total cash dividend declared this year is $85,000, then the total amounts distributed to preferred and common stockholders, respectively, are:
Answer
A. $40,500 and $44,500
B. $13,500 and $71,500
C. $31,875 and $53,125
D. $27,000 and $58,000
E. None of the above
1 points
Question 14
1.
Noble, Inc. has outstanding 10,000 shares of $40 par value, 6% nonparticipating, cumulative preferred stock, and 30,000 shares of $10 par value common stock. If the dividend on preferred stock is two years in arrears, and the total cash dividend declared this year is $207,000, the total amounts distributed to preferred and common stockholders are, respectively:
Answer
A. $48,000 and $159,000
B. $51,750 and $155,250
C. $24,000 and $183,000
D. $72,000 and $135,000
E. None of the above
1 points
Question 15
1.
Assume that a corporation’s dividends are two years in arrears for its outstanding preferred stock. In the corporation’s financial statements, these arrearages are:
Answer
A. Disclosed as a current liability in the balance sheet
B. Disclosed as a long term liability in the balance sheet
C. Disclosed in the notes to the financial statements
D. Disclosed as a current liability (for the most recent arrearage) and a long term liability (for the oldest arrearage) in the balance sheet
E. Not disclosed
1 points
Question 16
1.
Riepen, Inc., issued for $20 per share 3,000 shares of $15 par value common stock. The journal entry to record this transaction is:
Answer
A. Cash 60,000
Common Stock 60,000
B. Cash 60,000
Common Stock 45,000
Paid in Capital in Excess of Par Value 15,000
C. Cash 60,000
Common Stock 45,000
Retained Earnings 15,000
D. Cash 60,000
Common Stock 45,000
Gain on Sale of Stock 15,000
E. None of the above
1 points
Question 17
1.
Spartan Corporation was organized on January 1, 2011, with an authorization of 1,000,000 shares of $5 par value common stock. During 2011, Spartan had the following common stock transactions:
Jan. 4: Issued 100,000 shares @ $6 per share.
Apr. 8: Issued 200,000 shares @ $7 per share.
June 9: Issued 60,000 shares @ $10 per share.
July 29: Purchased 40,000 shares (treasury) @ $9 per share.
Dec. 31: Sold 40,000 shares held in treasury @ $12 per share.
Spartan had no other transactions affecting paid in capital. At December 31, 2011, what is the total amount of paid in capital?
Answer
A. $2,720,000
B. $1,800,000
C. $ 920,000
D. $ 800,000
E. None of the above
1 points
Question 18
1.
At December 31, 2011, Riley Corporation had 40,000 shares outstanding of $15 par value common stock. The shares were originally issued for $42 per share. On January 1, 2012, Riley split its common stock 3 for 1 with a corresponding reduction in the stock’s par value. The market price of the stock just before the split was $75 per share. After the split, the balance in the common stock account is:
Answer
A. $ 600,000
B. $3,000,000
C. $1,800,000
D. $1,680,000
E. None of the above
1 points
Question 19
1.
The excess of the sales price of treasury stock over its cost should be credited to:
Answer
A. Retained Earnings
B. Paid in Capital from Treasury Stock
C. Treasury Stock
D. Extraordinary Gain
E. None of the above
1 points
Question 20
1.
Larkspur Corporation purchased 300 shares of its own $10 par value common stock for $7,500. Later, these shares are sold for $7,800 cash. The journal entry to record the sale includes a:
Answer
A. $ 300 credit to Paid in Capital from Treasury Stock
B. $4,800 credit to Paid in Capital from Treasury Stock
C. $ 300 credit to Gain on Sale of Treasury Stock
D. $7,800 credit to Treasury Stock
E. None of the above
1 points
Question 21
1.
During 2011, Crockett, Inc.’s net income was $100,000. Its common stockholders’ equity was $700,000 at January 1, 2011 and $800,000 at December 31, 2011. During December, 2011, Crockett’s board of directors declared a $25,000 preferred stock dividend and a $60,000 common stock dividend. What is Crockett’s 2011 return on common stockholders’ equity?
Answer
A. 15.6%
B. 10.0%
C. 2.0%
D. 16.7%
E. None of the above
1 points
Question 22
1.
Draper Company is authorized to issue 600,000 shares of $5 par value common stock. By March 15, 2011, the company had issued 180,000 shares at $17 per share. On March 15, 2011, the company declared a 10% stock dividend when the market price was $20 per share. What amount is transferred from retained earnings to paid in capital as a result of the stock dividend?
Answer
A. $ 300,000
B. $ 90,000
C. $ 360,000
D. $1,200,000
E. None of the above
1 points
Question 23
1.
Haven Company is authorized to issue 200,000 shares of $20 par value common stock. By November 15, 2011, the company had issued 30,000 shares at $25 per share. On November 15, 2011, the company declared a 30% stock dividend when the market price was $26 per share. What amount is transferred from retained earnings to paid in capital as a result of the stock dividend?
Answer
A. $ 180,000
B. $ 234,000
C. $1,200,000
D. $1,560,000
E. None of the above
1 points
Question 24
1.
Which of the following items is disclosed in a statement of retained earnings?
Answer
A. Retained earnings balance at the beginning of the period
B. Common stock issued during the period
C. Treasury shares sold during the period
D. Paid in capital balance at the beginning of the period
E. None of the above
1 points
Question 25
1.
The following selected list of accounts with their normal balances was taken from the general ledger of Tudor Company as of December 31, 2011:
Common stock, $1 par $ 190,000
Retained earnings 131,000
Paid in capital in excess of par preferred 35,000
Treasury Stock 165,000
Preferred stock, $100 par 300,000
Paid in capital in excess of par common 380,000
Given above information, at the end of 2011:
Answer
A. Total Paid in Capital is $1,070,000, and Total Stockholders’ equity is $1,201,000
B. Total Paid in Capital is $905,000, and Total Stockholders’ equity is $871,000
C. Total Paid in Capital is $740,000, and Total Stockholders’ equity is $871,000
D. Total Paid in Capital is $740,000, and Total Stockholders’ equity is $609,000
1 points
Question 26
1.
Dennis Company issued 25,000 shares of $10 par value common stock at $15 per share. As a result of this transaction, Dennis Company’s:
Answer
A. Paid in Capital increased by $125,000
B. Common Stock increased by $125,000
C. Common Stock increased by $375,000
D. Paid in Capital increased by $375,000
1 points
Question 27
1.
Using the following information, the journal entry to record the January 1 transaction will be:
January 1: Atlantic Corporation reacquires 2,000 shares of its $5 par common stock for $22 per share.
March 5: Atlantic reissues 1,000 of the above mentioned shares for $25 per share.
Answer
A. Treasury Stock, Common 44,000
Cash 44,000
B. Investment in Treasury Stock 44,000
Cash 44,000
C. Cash 44,000
Treasury Stock, Common 44,000
D. Treasury Stock, Common 10,000
Paid in capital, Treasury Stock 34,000
Cash 44,000
1 points
Question 28
1.
Jones Company has never had any treasury stock transactions. On June 1 of the current year, they purchased 100 shares of its common stock (which has a par value of $10) for $5,000. On July 1, they reissued 50 of these shares at $52 per share. What is the balance in the Paid in Capital, Treasury Stock account on July 1?
Answer
A. $ 200
B. $ 100
C. $1,350
D. $ 150
1 points
Question 29
1.
Hampton Company has 200,000 shares of $10 par value common stock outstanding. On April 15, the company declared a 40% stock dividend. The current market value of the stock was $15 per common share. The journal entry on April 15 will include:
Answer
A. A credit to Paid in Capital in excess of par value, Common Stock for $400,000
B. A debit to Retained Earnings for $1,200,000
C. A credit to Common Stock Dividend Distributable for $800,000
D. A credit to Common Stock Dividends Distributable for $1,200,000
1 points
Question 30
1.
Hudson Company had 50,000 shares of $20 par value common stock outstanding on June 30. On July 1, the board of directors declared a 10% stock dividend when the market value of each share was $27. The journal entry on July 1 will include:
Answer
A. A credit to Common Stock Dividend Distributable for $135,000
B. A credit to Common Stock Dividend Distributable for $100,000
C. A debit to Retained Earnings for $100,000
D. A credit to Paid in capital in excess of par value $135,000.
1 points
Question 31
1.
Pamela Company has the following stock outstanding on December 31, 2011:
(a) Preferred Stock (8 percent cumulative, $10 par, 25,000 shares authorized; 10,000 shares issued and outstanding) $100,000
(b) Common Stock ($7 par, 250,000 shares authorized, 120,000 shares issued and outstanding) 840,000
Pamela did not pay any dividends in 2009. In 2010, they paid total dividends of $10,000, and in 2011, they paid total dividends of $20,000. How much dividends will be paid to common stockholders in 2011?
Answer
A. $10,000
B. $ 6,000
C. $ 8,000
D. $14,000
Aug 29, 2021 | Uncategorized
Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2012. Power Drive has the following transactions affecting stockholders’ equity in 2012.
March 1 Issues 64,000 additional shares of $1 par value common stock for $56 per share.
May 10 Repurchases 13,500 shares of treasury stock for $75 per share.
June 1 Declares a cash dividend of $4.00 per share to all stockholders of record on June 15.
(Hint: Dividends are not paid on treasury stock.)
July 1 Pays the cash dividend declared on June 1.
October 21 Reissues 3,500 shares of treasury stock purchased on May 10 for $95 per share.
Required:
Record each of these transactions.
Aug 29, 2021 | Uncategorized
Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 110,000 shares of common stock outstanding as of the beginning of 2012. Power Drive has the following transactions affecting stockholders’ equity in 2012.
March 1 Issues 63,000 additional shares of $1 par value common stock for $70 per share.
May 10 Repurchases 6,500 shares of treasury stock for $89 per share.
June 1 Declares a cash dividend of $2.50 per share to all stockholders of record on June 15.
(Hint: Dividends are not paid on treasury stock.)
July 1 Pays the cash dividend declared on June 1.
October 21 Reissues 3,500 shares of treasury stock purchased on May 10 for $100 per share.
Power Drive Corporation has the following beginning balances in its stockholders’ equity accounts on January 1, 2012: Common Stock, $110,000; Paid in Capital, $4,610,000; and Retained Earnings, $2,240,000. Net income for the year ended December 31, 2012, is $540,000.
Required:
Prepare the stockholders’ equity section of the balance sheet for Power Drive Corporation as of December 31, 2012.
Aug 29, 2021 | Uncategorized
Prepare the 2007 Statement of Cash Flows for Robins Corporation, using the indirect method. The following information has been provided to you:
DECEMBER 31,
2007 2006
current assets:
cash & cash equivalents |19,000| |3,000|
Accounts receivable |22,000| |23,000|
Inventories |34,000| |31,000|
Prepaid Expenses |1,000| |3,000|
Current liabilities:
notes payable (inventory purchases) |11,000| |7,000|
Accounts payable |24,000| |19,000|
Accrued Liabilities |7,000| |9,000|
income tax payable |10,000| |10,000|
Transaction Data For 2007:
Purchase of equipment |98,000|
Payment of cash dividends |18,000|
Net income |26,000|
Purchase of long term investment |8,000|
Depreciation expense |7,000|
issuance long term not payable to borrow cash |7,000|
issuance of common stock for cash |19,000|
sale of building |74,000|
Amortization expense |3,000|
Purchase of treasury stock |5,000|
Loss on sale of building |2,000|
Aug 29, 2021 | Uncategorized
Prepare adjusting entries, post to ledger accounts, and prepare adjusted trial balance.
(SO 4, 5, 6), AP
VOGEL CONSULTINGTrial BalanceJune 30, 2012
Debit Credit
Cash
$ 6,850
Accounts Receivable
7,000
Prepaid Insurance
2,880
Supplies
2,000
Equipment
15,000
Accounts Payable
$ 4,230
Unearned Service Revenue
5,200
Common Stock
22,000
Service Revenue
8,300
Salaries and Wages Expense
4,000
Rent Expense
2,000
$39,730
$39,730
In addition to those accounts listed on the trial balance, the chart of accounts for Vogel also contains the following accounts: Accumulated Depreciation”Equipment, Utilities Payable, Salaries and Wages Payable, Depreciation Expense, Insurance Expense, Utilities Expense, and Supplies Expense.
Other data:
Supplies on hand at June 30 total $720.
A utility bill for $180 has not been recorded and will not be paid until next month.
The insurance policy is for a year.
$4,100 of unearned service revenue has been earned at the end of the month.
Salaries of $1,250 are accrued at June 30.
The equipment has a 5 year life with no salvage value and is being depreciated at $250 per month for 60 months.
Invoices representing $3,900 of services performed during the month have not been recorded as of June 30.
Prepare the adjusting entries for the month of June.
Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance as beginning account balances. Use T accounts.
Prepare an adjusted trial balance at June 30, 2012
(b) Service rev.
$16,300
(c) Tot. trial balance
$45,310
Aug 29, 2021 | Uncategorized
Prepare a statement of stockholders’ equity for the year ended December 31, 2011, assuming these transactions occurred in sequence in 2011
Contributed capital
Common stock, $2 par value, 500,000 shares
authorized, 400,000 shares issued and outstanding $800,000
Additional paid in capital $1,200,000
Total contributed $2,000,000
Retained earning $4,200,000
Total stockholder’s equity $6,200,000
a.Issued 10,000 shares of $100 par value, 9 percent cumulative preferred stock at par after obtaining authorization from the state.
b.Issued 40,000 shares of common stock in connection with the conversion of bonds having a carrying value of $600,000.
c.Declared and issued a 2 percent common stock dividend. The market value on the date of declaration was $14 per share.
d.Purchased 10,000 shares of common stock for the treasury at a cost of $16 per share.
e.Earned net income of $460,000.
f.Declared and paid the full year’s dividend on preferred stock and a dividend of $0.40 per share on common stock outstanding at the end of the year.
g.Had foreign currency translation adjustment of negative $100,000.
I’m having trouble with finding addition paid capital for
Conversion of bonds into 40,000 shares of common stock
Issuance of 8,800 common shares in a stock dividend
Cash dividends for perferred and common
Aug 29, 2021 | Uncategorized
Presented below is the ledger for Heerey Co.
Cash
No. 101
10/1 5,000 10/4 400
10/10 650 10/12 1,500
10/10 4,000 10/15 250
10/20 500 10/30 300
10/25 2,000 10/31 500
Accounts Receivable
No. 112
10/6 800
10/20
500
10/20 940
Supplies
No. 126
10/4 400
Furniture
No. 149
10/3 2,000
Notes Payable
No. 200
10/10
4,000
Accounts Payable
No. 201
10/12 1,500
10/3
2,000
Heerey, Capital
No. 301
10/1 5,000
10/25 2,000
Service Revenue
No. 407
10/6 800
10/10 650
10/20 940
Heerey, Drawing
No. 306
10/30 300
Store Wages Expense
No. 628
10/31 500
Rent Expense
No. 729
10/15 250
Instructions
(a) Reproduce the journal entries for the transactions that occurred on Oct 1, 10, and 20.
Date
Account/Description Debit Credit
Oct. 1
(Owner’s investment of cash in business.)
10
(Received Cash for services provided.)
10
(Obtained loan from bank.)
20
(Received cash in payment of account.)
20
(Billed clients for services provided.)
(b) Determine the October 31 balance for each of the accounts above, and complete the trial balance at October 31, 2010. (If answer is zero, please enter 0. Do not leave any fields blank.)
HEEREY CO.
Trial Balance
October 31, 2010
Debit Credit
Cash $ $
Accounts Receivable
Supplies
Furniture
Notes Payable
Accounts Payable
Heerey, Capital
Heerey, Drawing
Service Revenue
Store Wages Expense
Rent Expense
$
Aug 29, 2021 | Uncategorized
Preston Wade, a local craftsman, normally sells his handcrafted wooden birdhouses for $88 each. Preston has the capacity to produce as many as 50 birdhouses a week. In a normal week, Preston makes 20 birdhouses with the following costs per unit:
Direct materials
$ 5.00
Direct labor
$20.00
Variable overhead
$ 4.00
Fixed overhead
$ 2.00
Refer to the Preston Wade information above. Preston has received a special order from a local plant nursery for 25 birdhouses. The nursery wishes to have the birdhouses engraved with their own logo, therefore, the order would require the rental of a special engraving tool at a cost of $200. Preston requires a minimum $2,000 profit on any special order.
The minimum price per birdhouse that Preston should charge the nursery is:
Answer
a. $80
b. $89
c. $117
d. $119
Aug 29, 2021 | Uncategorized
Primm Company produces a product that requires four standard gallons per unit. The standard price is $24.50 per gallon. The 2,500 units required 10,600 gallons, which were purchased at $23.75 per gallon. The product requires three standard hours per unit at a standard hourly rate of $20 per hour. 2,500 units required 7,900 hours at an hourly rate of $21.50 per hour. The standard variable overhead cost per unit is $2.50 per hour. The actual variable factory overhead was $19,050. The standard fixed overhead cost per unit is $1.30 per hour at 7,000 hours, which is 100% of normal capacity.
Prepare a 2012 income statement through gross profit for Primm Company. Assume Primm sold 2,500 units at $320 per unit
WHAT IS THE COST OF GOODS SOLD AT STANDARD
Aug 29, 2021 | Uncategorized
Pringly Division
A meeting of senior managers at the Pringly Division has been called to discuss the pricing strategy for a new product. Part of the discussion will focus on estimating sales for the new product. Over the past years, a number of new products have failed to meet their sales targets. It appears that the company’s profit for the year will be lower than budget and the main reason for this is the disappointing sales of new products.
A new technique for estimating the probability of achieving target sales and profits will be discussed. This requires managers to estimate demand for the new product and assign probabilities. A range, rather than only one goal will be established.
The first strategy is to set a selling price of $170 with annual fixed costs at $20,000,000. A number of managers are in favor of this strategy, as they believe it is important to reduce costs.
The second strategy is to increase spending on advertising and promotions and set a selling price of $200. With the higher selling price the annual fixed costs would increase to $25,000,000. The marketing department are adamant that increased emphasis on advertising and promotions is essential.
The following probability distributions have been agreed with the managers after consultation with all departments and is the same for both selling prices.
Estimated demand (units) Estimated probability (units)
150,000 0.25
180,000 0.5
200,000 0.25
Additional information:
‘ The estimate or variable cost per unit is $30.
‘ The probability of the new product achieving break even is very important. A profit greater than $4,000,000 is expected.
Compute break even at each level.
Thanks much ,
Mike
Aug 29, 2021 | Uncategorized
Print by: Richard Canada
ACC100156VA016 1124 001 / HW Chpt 4
Question 5
Apachi Company ended its fiscal year on July 31, 2010. The company’s adjusted trial balance as of the end of its fiscal year is as shown below.
APACHI COMPANY
Adjusted Trial Balance
July 31, 2010
No. Account Titles Debits Credits
101 Cash $14,840
112 Accounts Receivable 8,780
157 Equipment 15,900
167 Accumulated Depreciation $7,400
201 Accounts Payable 4,220
208 Unearned Rent Revenue 1,800
301 B. J. Apachi, Capital 45,200
306 B. J. Apachi, Drawing 16,000
404 Commission Revenue 65,000
429 Rent Revenue 6,500
711 Depreciation Expense 4,000
720 Salaries Expense 55,700
732 Utilities Expense 14,900
$130,120 $130,120
Instructions
(a) Prepare the closing entries. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.)
General Journal
J15
Date Account/Description Debit Credit
July 31
(To close revenue.)
July 31
(To close expenses.)
July 31
(To close net loss.)
July 31
(To close drawings.)
(b) Post to B.J. Apachi, Capital and No. 350 Income Summary accounts. (If answer is zero, please enter 0. Do not leave any fields blank. If balance is negative, use either a negative sign preceding the number eg 45 or parentheses eg (45).)
B.J. Apachi, Capital
No. 101
Date
Explanation
Ref.
Debit
Credit
Balance
July 31 Balance
31 Close net loss J15
31
Close drawing
J15
Income Summary
No. 101
Date
Explanation
Ref.
Debit
Credit
Balance
July 31 Close revenue J15
31 Close expenses J15
31
Close net loss
J15
(c) Prepare a post closing trial balance at July 31. (If answer is zero, please enter 0. Do not leave any fields blank.)
APACHI COMPANY
Post Closing Trial Balance
July 31, 2010
Debit Credit
Cash $ $
Accounts Receivable
Equipment
Accumulated Depreciation
Accounts Payable
Unearned Rent Revenue
B. J. Apachi, Capital
$ $
Question Attempts: 0 of 3 used
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Aug 29, 2021 | Uncategorized
Problem 19 50 Cash Budget
OBJECTIVE 3
The controller of Feinberg Company is gathering data to prepare the cash budget for July. He plans to develop the budget from the following information:
a. Of all sales, 40 percent are cash sales.
b. Of credit sales, 45 percent are collected within the month of sale. Half of the credit sales collected within the month receive a 2 percent cash discount (for accounts paid within 10 days). Thirty percent of credit sales are collected in the following month; remaining credit sales are collected the month thereafter. There are virtually no bad debts.
c. Sales for the second two quarters of the year follow. (Note: The first three months are actual sales, and the last three months are estimated sales.)
Sales
April
$ 450,000
May
580,000
June
900,000
July
1,140,000
August
1,200,000
September
1,134,000
View PDF
d. The company sells all that it produces each month. The cost of raw materials equals 26 percent of each sales dollar. The company requires a monthly ending inventory of raw materials Back to Top [View PDF]
P. 1009 [Click here to add Bookmark] equal to the coming month’s production requirements. Of raw materials purchases, 50 percent are paid for in the month of purchase. The remaining 50 percent is paid for in the following month.
e. Wages total $105,000 each month and are paid in the month incurred.
f. Budgeted monthly operating expenses total $376,000, of which $45,000 is depreciation and $6,000 is expiration of prepaid insurance (the annual premium of $72,000 is paid on January 1).
g. Dividends of $130,000, declared on June 30, will be paid on July 15.
h. Old equipment will be sold for $25,200 on July 4.
i. On July 13, new equipment will be purchased for $173,000.
j. The company maintains a minimum cash balance of $20,000.
k. The cash balance on July 1 is $27,000.
Required:
Prepare a cash budget for July. Give a supporting schedule that details the cash collections from sales.
Aug 29, 2021 | Uncategorized
Problem 19 50 Cash Budget
OBJECTIVE 3
The controller of Feinberg Company is gathering data to prepare the cash budget for July. He plans to develop the budget from the following information:
a. Of all sales, 40 percent are cash sales.
b. Of credit sales, 45 percent are collected within the month of sale. Half of the credit sales collected within the month receive a 2 percent cash discount (for accounts paid within 10 days). Thirty percent of credit sales are collected in the following month; remaining credit sales are collected the month thereafter. There are virtually no bad debts.
c. Sales for the second two quarters of the year follow. (Note: The first three months are actual sales, and the last three months are estimated sales.)
Sales
April
$ 450,000
May
580,000
June
900,000
July
1,140,000
August
1,200,000
September
1,134,000
View PDF
d. The company sells all that it produces each month. The cost of raw materials equals 26 percent of each sales dollar. The company requires a monthly ending inventory of raw materials Back to Top [View PDF]
P. 1009 [Click here to add Bookmark] equal to the coming month’s production requirements. Of raw materials purchases, 50 percent are paid for in the month of purchase. The remaining 50 percent is paid for in the following month.
e. Wages total $105,000 each month and are paid in the month incurred.
f. Budgeted monthly operating expenses total $376,000, of which $45,000 is depreciation and $6,000 is expiration of prepaid insurance (the annual premium of $72,000 is paid on January 1).
g. Dividends of $130,000, declared on June 30, will be paid on July 15.
h. Old equipment will be sold for $25,200 on July 4.
i. On July 13, new equipment will be purchased for $173,000.
j. The company maintains a minimum cash balance of $20,000.
k. The cash balance on July 1 is $27,000.
Required:
Prepare a cash budget for July. Give a supporting schedule that details the cash collections from sales.
Aug 29, 2021 | Uncategorized
PROBLEM 2’21 Schedule of Cost of Goods Manufactured; Income Statement; Cost Behavior [ LO2 ,
LO3 , LO4 , LO5 , LO6 ]
Selected account balances for the year ended December 31 are provided below for Superior Company:
Selling and administrative salaries . . . . . . . . . . . . $110,000
Purchases of raw materials . . . . . . . . . . . . . . . . . . $290,000
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?
Advertising expense . . . . . . . . . . . . . . . . . . . . . . . $80,000
Manufacturing overhead . . . . . . . . . . . . . . . . . . . . $270,000
Sales commissions . . . . . . . . . . . . . . . . . . . . . . . . $50,000
Inventory ba lances a t t he be ginning a nd end of t he ye ar w ere a s f ollows:
Beginning of End of
the Year the Year
Raw materials . . . . . . . . . . . . . . $40,000 $10,000
Work in process . . . . . . . . . . . . . ? $35,000
Finished goods . …………………….. $50,000 ?
The total manufacturing costs for the year were $683,000; the goods available for sale totaled
$740,000; and the cost of goods sold totaled $660,000.
Required:
1. Prepare a schedule of cost of goods manufactured and the cost of goods sold section of the company’s income statement for the year.
Aug 29, 2021 | Uncategorized
| Problem 2: Cash Flow Statement |
|
|
| The comparative Balance Sheet and Income Statement appears below in condensed form: |
| |
|
|
| BILLS MOTORS, INC. |
| BALANCE SHEET |
2003 |
2002 |
| Cash |
$ 105,500 |
$ 44,300 |
| Accounts Receivable |
65,000 |
71,000 |
| Merchandise Inventory |
163,400 |
155,700 |
| Investments |
0 |
60,000 |
| Equipment |
508,100 |
400,000 |
| Accumulated Depreciation Equipment |
(138,000) |
(151,000) |
| Total Assets |
$ 704,000 |
$ 580,000 |
| |
|
|
| Accounts Payable |
$ 65,600 |
$ 48,200 |
| Salaries Payable |
6,200 |
8,000 |
| Bonds Payable |
0 |
75,000 |
| Common Stock, $10 Par |
465,000 |
340,000 |
| Retained Earnings |
167,200 |
108,800 |
| Total Liabilities & Stockholder’s Equity |
$ 704,000 |
$ 580,000 |
| |
|
|
| INCOME STATEMENT |
|
|
| Sales |
|
$ 549,100 |
| Cost of Merchandise Sold |
|
(300,000) |
| Gross Profit |
|
$ 249,100 |
| Operating Expenses |
|
|
| Depreciation Expense |
27,000 |
|
| Other Operating Expenses |
123,600 |
150,600 |
| Income from Operations |
|
$ 98,500 |
| Other Income and Expense: |
|
|
| Gain on Sale of Investment |
3,500 |
|
| Interest Expense |
(6,600) |
(3,100) |
| Net Income |
|
$ 95,400 |
| |
|
|
| |
|
|
| Additional Data: |
|
|
| 1. Fully depreciated equipment with no book value, originally costing $40,000, was scrapped at a junk yard. |
| 2. Equipment was purchased for $148,100. |
|
|
| 3. Bonds Payable for $75,000 were retired by payment at their face value. |
|
| 4. Investments were sold at a gain of $3,500 above cost (book value). |
|
| 5. Cash dividends of $37,000 were declared and paid. |
|
|
| 6. Common Stock was issued at par value. |
|
|
PROBLEM REQUIREMENTS and INSTRUCTIONS:
Prepare a Statement of Cash Flows using the Indirect Method.
Your statement should be in the proper sequence order, neatly presented, and well defined
and labeled as illustrated in the text examples. At the bottom of your statement, calculate the company’s Free Cash Flow. Show your work (calculation) |
Aug 29, 2021 | Uncategorized
Problem 21 1A Part 2
2.
Allocate the depreciation, interest, and taxes occupancy costs to the Diaz and Wright departments in proportion to the relative market values of the floor space. Allocate the heating, lighting, and maintenance costs to the Diaz and Wright departments in proportion to the square feet occupied (ignoring floor space market values). (Round your cost per Sq. ft rate to 2 decimal places and final answers to the nearest whole number. Omit the “$” sign in your response.)
Department Total
Diaz’s Dept. $
Wright’s Dept. $
Depreciation”Building $ 18,000
Interest”Building mortgage 27,000
Taxes”Building and land 8,000
Gas (heating) expense 2,500
Lighting expense 3,000
Maintenance expense 5,500
Total occupancy cost $ 64,000
The building has 4,000 square feet on each floor. In prior periods, the accounting manager merely divided the $64,000 occupancy cost by 8,000 square feet to find an average cost of $8 per square foot and then charged each department a building occupancy cost equal to this rate times the number of square feet that it occupied.
Laura Diaz manages a first floor department that occupies 1,000 square feet, and Lauren Wright manages a second floor department that occupies 1,800 square feet of floor space. In discussing the departmental reports, the second floor manager questions whether using the same rate per square foot for all departments makes sense because the first floor space is more valuable. This manager also references a recent real estate study of average local rental costs for similar space that shows first floor space worth $30 per square foot and second floor space worth $20 per square foot (excluding costs for heating, lighting, and maintenance).
Aug 29, 2021 | Uncategorized
A product at the Wagon company enjoyed reasonable sales volume, but its contributions to profits were disappointing. Last year; 17,500 units were produced and sold. The selling price is $22 per unit, variable cost per unit is $18, and Fixed cost is $80,000.
Required
What is the break even quantity for this product? Use both graphic and algebraic approaches to get your answer.
Wagon is considering ways to either stimulate sales volumes or decrease variable costs. Management believes that sales can be increased by 30% or that Variable cost can be reduced to 85% of its current level. Which alternative leads to higher contributions to profits, assuming that each is equally costly to implement? (hint: Calculate profits for both alternatives and identify the one having the greatest profits).
What is the percent change in the per unit profit contribution generated by each alternative in part (b)
Aug 29, 2021 | Uncategorized
A product at the Wagon company enjoyed reasonable sales volume, but its contributions to profits were disappointing. Last year; 17,500 units were produced and sold. The selling price is $22 per unit, variable cost per unit is $18, and Fixed cost is $80,000.
Required
What is the break even quantity for this product? Use both graphic and algebraic approaches to get your answer.
Wagon is considering ways to either stimulate sales volumes or decrease variable costs. Management believes that sales can be increased by 30% or that Variable cost can be reduced to 85% of its current level. Which alternative leads to higher contributions to profits, assuming that each is equally costly to implement? (hint: Calculate profits for both alternatives and identify the one having the greatest profits).
What is the percent change in the per unit profit contribution generated by each alternative in part (b)
Aug 29, 2021 | Uncategorized
Project I
The trial balance of the Parton Wholesale Company contained the following accounts at December 31, 2010 the end of the company’s calendar year.
PARTON WHOLESALE COMPANY
Trial Balance
31 Dec 10
Debit Credit
Cash $ 34,400
Accounts Receivable 36,600
Merchandise Inventory (Beginning) 62,400
Land 92,000
Buildings 197,000
Accumulated Depreciation Buildings $ 54,000
Equipment 83,500
Accumulated Depreciation Equipment 42,400
Notes Payable 50,000
Accounts Payable 37,500
Common Stock 200,000
Retained Earnings 67,800
Dividends 10,000
Sales 886,100
Sales Discounts 4,600
Purchases 725,100
Purchase Discounts 16,000
Freight in 12,400
Salaries Expense 69,800
Utilities Expense 9,400
Repair Expense 5,900
Gas and Oil Expense 7,200
Insurance Expense 3,500
$ 1,353,800 $ 1,353,800
Adjustment data:
Depreciation is $10,000 on buildings and $9,000 on equipment. (Both are administrative expenses.)
Interest of $7,000 is unpaid on notes payable at December 31.
Other data:
Merchandise inventory on hand at December 31, 2010 is $90,000.
Salaries are 80% selling and 20% administrative.
Utilities expense, repair expense, and insurance expense are 100% administrative.
$15,000 of the notes payable are payable next year.
Gas and oil expense is a selling expense.
The beginning balance of accounts receivable is $34,750.
The amount of total assets at the beginning of the year is $469,225.
Instructions
Journalize the adjusting entries.
Prepare a multiple step income statement and a retained earnings statement for the year ended, as well as a classified balance sheet as of December 31, 2010.
Prepare the following ratios and show all support for your computations:
a) Current Ratio
b) Quick Ratio
c) Working Capital
d) Accounts Receivable Turnover
e) Average Collection Period
f) Inventory Turnover
g) Days in Inventory
h) Debt to Total Assets Ratio
i) Gross Profit Ratio
j) Profit Margin Ratio
k) Return on Assets Ratio
l) Asset Turnover Ratio
4) Based on the ratios computed in 3) above, answer the following questions and use the financial statement ratios to support your answers where appropriate:
Do you feel that the company is able to meet its current and long term obligations as they become due?
Comment on the profitability of the company with respect to the various profitability ratios that you computed.
Would you lend money to this company for the long term?
Comment on the ability of the company to collect its receivables and mange inventory.
2007 2008 2009 Industry Average
Liquidity
Current 2.39 2.68 2.90 3.12
Quick 1.10 1.16 1.21 1.56
Working Capital $ 98,750.00 $ 100,450.00 $ 103,000.00 $ 110,000.00
Leverage
Debt to Total Assets (%) 20.97% 21.98% 22.89% 20.89%
Times Interest Earned 8.75 9.12 9.56 10.22
Activity
Inventory Turnover (sales) 8.21 9.91 10.12 10.52
Fixed Asset Turnover 3.43 3.51 3.59 3.64
Total Asset Turnover 2.15 2.20 2.25 2.56
Average Collection Period (days) 14.95 14.69 14.42 14.28
Accounts Receivable Turnover 24.08 24.50 24.97 25.21
Days in Inventory 44.46 36.83 36.07 43.21
Profitability
Gross Profit Margin (%) 21.10% 22.50% 24.03% 24.56%
Net Profit (%) 6.89% 7.25% 7.89% 8.03%
Return on Total Assets (%) 15.50% 16.10% 16.24% 16.07%
Return on Equity (%) 20.15% 21.89% 22.15% 22.06%
Payout Ratio (%) 15.10% 15.84% 16.09% 16.86%
Aug 29, 2021 | Uncategorized
You are provided with the following data about a manufacturing firm. The company operates in Australia where the corporate tax rate is 30%.
Account:
Jan 1, 201X
Dec 31, 201X
Work in Process
Jan 1 100,000
Dec 31, 75,000
Raw Material Inventory
Jan 1 100,000
December 31 62,500
Finished Goods Inventory
Jan 1 50,000
Dec 31 125,000
Sales Revenue
2,500,000
Selling & Administrative expenses
375,000
Income tax
0.30
Raw Materials Purchased
450,000
Indirect Material
25,000
Direct Labour
500,000
Indirect labour
37,500
Factory heat, light and power
250,000
Depreciation of Factory Plant & Equipment
150,000
Other Factory Overhead
200,000
(i) prepare a cost of goods manufactured schedule, cost of goods sold schedule and an income statement.
(ii) Prepare ledger accounts (T accounts) showing the movement of costs through the manufacturing cycle up to the closing off of Cost of Goods Sold to the Income Statement
Aug 29, 2021 | Uncategorized
Q1 2. (Chat One Assigned Group Discussion Question 1 2) Assume Shorttime Corporation (the “corporation”) has been in existence for a short time and a minority shareholder who holds both voting and nonvoting common stock of the corporation tells you that she transferred to the corporation two shares of voting common stock in exchange for four shares of nonvoting common stock. You should assume that the total fair market value of the four shares of nonvoting common stock received by the shareholder (which is the same as the total fair market value of the two shares of voting common stock transferred to the corporation) is greater than the shareholder’s basis in the voting common stock transferred to the corporation. The exchange was not pursuant to a plan of reorganization.
a. Was the gain realized by the shareholder on the exchange recognized by the shareholder? Yes or no, and why or why not?
b. Did the corporation recognize any gain as a result of the transaction?
Aug 29, 2021 | Uncategorized
Ok so I have done this exercise before in class, however I have a couple questions with the exercise itself.
1. In the 2nd part of the problem, if purchases on inventory total $280,000 for December, then why does the total cash disbursements total $245,000 for that month? Where does the remaining $35,000 go?
2. On the 3rd part of the problem, what exactly does it mean that $50,000 of the $430,000 for Selling and Administrative expenses is for depreciation? I know it could probably be explained in simple terms, but I’m just wondering why depreciation isn’t actually listed in the cash budget, but rather assumed instead.
THE QUESTION
You have been asked to prepare a December cash budget for Ashton Company, a distributor of exercise equipment. The following information is available about the company’s operations:
a. The cash balance on December 1 is $40,000.
b. Actual sales for October and November and expected sales for December are as follows:
October November December
Cash sales $65,000 $70,000 $83,000
Sales on account $400,000 $525,000 $600,000
Sales on account are collected over a three month period as follows: 20% collected in the month of sale, 60% collected in the month following sale, and 18% collected in the second month following sale. The remaining 2% is uncollectible.
c.
Purchases of inventory will total $280,000 for December. Thirty percent of a month’s inventory purchases are paid during the month of purchase. The accounts payable remaining from November’s inventory purchases total $161,000, all of which will be paid in December.
d. Selling and administrative expenses are budgeted at $430,000 for December. Of this amount, $50,000 is for depreciation.
e. A new Web server for the Marketing Department costing $76,000 will be purchased for cash during December, and dividends totaling $9,000 will be paid during the month.
f. The company maintains a minimum cash balance of $20,000. An open line of credit is available from the company’s bank to bolster the cash position as needed.
Requirement 1:
Prepare a schedule of expected cash collections for December. (Omit the “$” sign in your response.)
December cash sales $
Collections on account:
October sales
November sales
December sales
Total cash collections
$
Requirement 2:
Prepare a schedule of expected cash disbursements for merchandise purchases for December. (Omit the “$” sign in your response.)
November purchases $
December purchases
Total cash payments
$
Requirement 3:
Prepare a cash budget for December. Indicate in the financing section any borrowing that will be needed during the month. Assume that any interest will not be paid until the following month.
THE ANSWER
1. Schedule of expected cash collections for December:
December cash sales
$?83,000
Collections on account:
October sales($400,000*18%)
72,000
November sales($525,000*60%)
315,000
December sales($600,000*20%)
120,000
Total cash collections
$590,000
2. Schedule of expected cash disbursements:
Payments to suppliers:
November purchases
$161,000
December purchases($280,000*30%)
84,000
Total cash payments
$245,000
3.
Ashton Company
Cash Budget
For the Month of December
Cash balance, beg.
$ 40,000
Add cash receipts: Collections from customers
$590,000
Total cash available before current financing
$630,000
Less disbursements:
Payments to suppliers for inventory
$245,000
Selling and administrative expenses
$380,000
New web server
$76,000
Dividends paid
$9,000
Total disbursements
$710,000
Excess (deficiency) of cash available over Disbursements
($80,000)
Financing:
Borrowings
$100,000
Repayments
$0
Interest
$0
Total financing
$100,000
Cash balance, ending
$ 20,000
Aug 29, 2021 | Uncategorized
Oswego Company has three divisions: A, B, and C. The company has a hurdle rate of 7.25 percent. Selected operating data of the three divisions are as follows:
Division A……..Division B…………Division C
Sales…………………………………$1,262,000……..$934,000………….$915,000
Cost of goods sold…………………….772,000…………657,000…………..637,000
Miscellaneous operating expenses…..56,000…………..52,000…………..52,100
Allocated corporate expenses…………47,000………….35,000…………..36,500
Average invested assets……………..4,210,000………3,920,000……….3,295,000
Oswego is considering an expansion project in the upcoming year that will cost $5.00 million and return $417,000 per year. The project would be implemented by only one of the three divisions.
1. Compute the ROI for each division. (Round your answers to 2 decimal places. Omit the “%” sign in your response.)
ROI
Division A ___________%
Division B ___________%
Division C ___________%
Aug 29, 2021 | Uncategorized
Oswego Company has three divisions: A, B, and C. The company has a hurdle rate of 7.25 percent. Selected operating data of the three divisions are as follows:
………………………………………….Division A……..Division B…………Division C
Sales…………………………………$1,262,000……..$934,000………….$915,000
Cost of goods sold…………………….772,000…………657,000…………..637,000
Miscellaneous operating expenses…..56,000…………..52,000…………..52,100
Allocated corporate expenses…………47,000………….35,000…………..36,500
Average invested assets……………..4,210,000………3,920,000……….3,295,000
Oswego is considering an expansion project in the upcoming year that will cost $5.00 million and return $417,000 per year. The project would be implemented by only one of the three divisions.
2. Compute the residual income for each division. (Round your answers to the nearest dollar amount. Negative amounts should be indicated by a minus sign. Omit the “$” sign in your response.)
Residual income
Division A $___________
Division B $___________
Division C $___________
Aug 29, 2021 | Uncategorized
Oswego Company has three divisions: A, B, and C. The company has a hurdle rate of 7.25 percent. Selected operating data of the three divisions are as follows:
………………………………………….Division A……..Division B…………Division C
Sales…………………………………$1,262,000……..$934,000………….$915,000
Cost of goods sold…………………….772,000…………657,000…………..637,000
Miscellaneous operating expenses…..56,000…………..52,000…………..52,100
Allocated corporate expenses…………47,000………….35,000…………..36,500
Average invested assets……………..4,210,000………3,920,000……….3,295,000
Oswego is considering an expansion project in the upcoming year that will cost $5.00 million and return $417,000 per year. The project would be implemented by only one of the three divisions.
3. Compute the return on the proposed expansion project. (Round your answer to 2 decimal places. Omit the “%” sign in your response.)
Return on proposed expansion project:___________%
Aug 29, 2021 | Uncategorized
Tamworth Truck manufactures part YYY used in several of its truck models. 10,000 units are produced each year with production costs as follows: Direct materials $ 45,000 Direct manufacturing labor 15,000 Variable support costs 35,000 Fixed support costs 25,000 Total costs $120,000 Tamworth Truck has the option of purchasing part YYY from an outside supplier at $11.20 per unit. If part YYY is outsourced, 40% of the fixed costs cannot be immediately converted to other uses (i.e. cannot be avoided). a. Describe ‘avoidable’ costs. What amount of the YYY production costs is avoidable? b. Should Tamworth Truck outsource YYY? Why or why not? c. What other items should Tamworth Truck consider before outsourcing any of the parts it currently manufactures?
Aug 29, 2021 | Uncategorized
Oswego Company has three divisions: A, B, and C. The company has a hurdle rate of 7.25 percent. Selected operating data of the three divisions are as follows:
………………………………………….Division A……..Division B…………Division C
Sales…………………………………$1,262,000……..$934,000………….$915,000
Cost of goods sold…………………….772,000…………657,000…………..637,000
Miscellaneous operating expenses…..56,000…………..52,000…………..52,100
Allocated corporate expenses…………47,000………….35,000…………..36,500
Average invested assets……………..4,210,000………3,920,000……….3,295,000
Oswego is considering an expansion project in the upcoming year that will cost $5.00 million and return $417,000 per year. The project would be implemented by only one of the three divisions.
4. Compute the new ROI and residual income for each division if the project was implemented within that division. (Round “ROI” answers to 3 decimal places and other answers to the nearest whole number. Negative amounts should be indicated by a minus sign.Omit the “$” & “%” signs in your response.)
……………………ROI……………Residual income
Division A:____________%…..$__________
Division B:____________%…..$__________
Division C:____________%…..$__________
Aug 29, 2021 | Uncategorized
An outdoor barbecue grill manufacturer has a standard costing system based on standard direct labor hours (DLHs) as the measure of activity. Data from the company’s flexible budget for manufacturing overhead are given below:
Denominator level of activity…………………………. 3,900 DLHs
Fixed overhead cost…………………………………… $49,530
The following data pertain to operations for the most recent period:
Actual hours…………………………………………… 3,800 DLHs
Standard hours allowed for the actual output……. 3,861 DLHs
Actual total fixed manufacturing overhead cost…. $50,230
What was the fixed manufacturing overhead budget variance for the period to the nearest dollar?
a. $806 U
b. $700 U
c. $1,970 F
d. $1,195 F
Aug 29, 2021 | Uncategorized
Owen’s enterprises is in the process of determining its capital budget for the next fiscal year. The firms current capital structure, which it considers to be optimal, is contained in the following balance sheet.
Balance Sheet
Current Assets $40,000,000 Accounts Payable $20,000,000
Fixed Assets 400,000,000 Other Current Liabilities 10,000,000
Total Assets $440,000,000 Long term debt 123,000,000
Common Stock at par 15,500,000.00
Paid in capital in excess of par 51,000,000
Retained earnings 220,500,000
Total Liabilities and
Stockholders equity 440,000,000
The following information has been obtained from conversations with financial officers, and the firms investment
banker and lead bank
‘The firm expects net income from this year to total $80 million. The firm intends to maintain its dividend
policy of paying 42.25 percent of earnings to stock holders
‘The firm can borrow $18 million from its bank at a 13 percent annual rate
‘any additional debt can be obtained through the issuance of debentures (at par) that carry
a 15 percent coupon rate
‘The firm currently pays $4.40 per share in dividends (Do). Dividends have grown at a 5% rate in the
past. This growth is expected to continue
‘The firm’s common stock currently trades at $4 per share. If the firm were to raise any external equity
the newly issued shares would net the company $40 per share
‘The firm is in the 40% marginal tax bracket.
Computes Owens marginal cost of capital schedule.
Aug 29, 2021 | Uncategorized
P10 1 (Classification of Acquisition and Other Asset Costs) At December 31, 2011, certain accounts
included in the property, plant, and equipment section of Reagan Company’s balance sheet had the following balances.
Land $230,000
Buildings 890,000
Leasehold improvements 660,000
Equipment 875,000
During 2012, the following transactions occurred.
1. Land site number 621 was acquired for $850,000. In addition, to acquire the land Reagan paid a
$51,000 commission to a real estate agent. Costs of $35,000 were incurred to clear the land. During the
course of clearing the land, timber and gravel were recovered and sold for $13,000.
2. A second tract of land (site number 622) with a building was acquired for $420,000. The closing statement indicated that the land value was $300,000 and the building value was $120,000. Shortly after
acquisition, the building was demolished at a cost of $41,000. A new building was constructed for
$330,000 plus the following costs.
Excavation fees $38,000
Architectural design fees 11,000
Building permit fee 2,500
Imputed interest on funds used
during construction (stock i nancing) 8,500
The building was completed and occupied on September 30, 2012.
3. A third tract of land (site number 623) was acquired for $650,000 and was put on the market for resale.
4. During December 2012, costs of $89,000 were incurred to improve leased office space. The related
lease will terminate on December 31, 2014, and is not expected to be renewed. (Hint: Leasehold improvements should be handled in the same manner as land improvements.)
5. A group of new machines was purchased under a royalty agreement that provides for payment of
royalties based on units of production for the machines. The invoice price of the machines was $87,000,
freight costs were $3,300, installation costs were $2,400, and royalty payments for 2012 were $17,500.
Instructions
(a) Prepare a detailed analysis of the changes in each of the following balance sheet accounts for 2012.
Land Leasehold improvements
Buildings Equipment
(b) List the items in the situation that were not used to determine the answer to (a) above, and indicate
where, or if, these items should be included in Reagan’s financial statements.
Aug 29, 2021 | Uncategorized
P10 3 (Classification of Land and Building Costs) Spitfire Company was incorporated on January 2,
2013, but was unable to begin manufacturing activities until July 1, 2013, because new factory facilities
were not completed until that date.
The Land and Building account reported the following items during 2013.
January 31 Land and building $160,000
February 28 Cost of removal of building 9,800
May 1 Partial payment of new construction 60,000
May 1 Legal fees paid 3,770
June 1 Second payment on new construction 40,000
June 1 Insurance premium 2,280
June 1 Special tax assessment 4,000
June 30 General expenses 36,300
July 1 Final payment on new construction 30,000
December 31 Asset write up 53,800
399,950
December 31 Depreciation”2013 at 1% 4,000
December 31, 2013 Account balance $395,950
The following additional information is to be considered.
1. To acquire land and building, the company paid $80,000 cash and 800 shares of its 8% cumulative
preferred stock, par value $100 per share. Fair value of the stock is $117 per share.
2. Cost of removal of old buildings amounted to $9,800, and the demolition company retained all
materials of the building.
3. Legal fees covered the following.
Cost of organization $ 610
Examination of title covering purchase of land 1,300
Legal work in connection with construction contract 1,860
$3,770
4. Insurance premium covered the building for a 2 year term beginning May 1, 2013.
5. The special tax assessment covered street improvements that are permanent in nature.
6. General expenses covered the following for the period from January 2, 2013, to June 30, 2013.
President’s salary $32,100
Plant superintendent’s salary”supervision of new building 4,200
$36,300
7. Because of a general increase in construction costs after entering into the building contract, the board
of directors increased the value of the building $53,800, believing that such an increase was justified
to reflect the current market at the time the building was completed. Retained earnings was credited
for this amount.
8. Estimated life of building”50 years.
Depreciation for 2013″1% of asset value (1% of $400,000, or $4,000).
Instructions
(a) Prepare entries to reflect correct land, building, and depreciation accounts at December 31, 2013.
(b) Show the proper presentation of land, building, and depreciation on the balance sheet at December
31, 2013.
Aug 29, 2021 | Uncategorized
P10 5 (Classification of Costs and Interest Capitalization) On January 1, 2012, Blair Corporation
purchased for $500,000 a tract of land (site number 101) with a building. Blair paid a real estate broker’s
commission of $36,000, legal fees of $6,000, and title guarantee insurance of $18,000. The closing statement
indicated that the land value was $500,000 and the building value was $100,000. Shortly after acquisition,
the building was razed at a cost of $54,000.
Blair entered into a $3,000,000 fixed price contract with Slatkin Builders, Inc. on March 1, 2012, for the
construction of an office building on land site number 101. The building was completed and occupied on
September 30, 2013. Additional construction costs were incurred as follows.
Plans, specii cations, and blueprints $21,000
Architects’ fees for design and supervision 82,000
The building is estimated to have a 40 year life from date of completion and will be depreciated using the
150% declining balance method.
To finance construction costs, Blair borrowed $3,000,000 on March 1, 2012. The loan is payable in
10 annual installments of $300,000 plus interest at the rate of 10%. Blair’s weighted average amounts of
accumulated building construction expenditures were as follows.
For the period March 1 to December 31, 2012 $1,300,000
For the period January 1 to September 30, 2013 1,900,000
Instructions
(a) Prepare a schedule that discloses the individual costs making up the balance in the land account in
respect of land site number 101 as of September 30, 2013.
(b) Prepare a schedule that discloses the individual costs that should be capitalized in the office building account as of September 30, 2013. Show supporting computations in good form.
Aug 29, 2021 | Uncategorized
P2. Part 1. Bubba Gump Shrimp Boats, Inc (a wholly owned subsidiary of BGS,Co) had the following fixed budget for its first year of operations. Each boat is sold for the same price. All variable expenses listed below are based on sales units of producing 10 boats. In the space next to the budgeted totals, prepare a flexible budget for the same year if the company were to manufacture and sell a total of 11 boats. (8 points)
Assuming Assuming
10 Boats 11 Boats
Manufactured Manufactured
And Sold And Sold
Sales $300,000
Cost of goods sold:
Direct materials 50,000
Direct labor 70,000
Overhead 30,000
Gross profit $150,000
Variable expenses $ 60,000
Fixed expenses $ 30,000
Total expenses$ 90,000
Net income $ 60,000
P2. Part 2. Why is the net income number for the flexible budget of 11 boats manufactured and sold during the year different than the fixed budget for 10 boats? (1 point)
Aug 29, 2021 | Uncategorized
Pacific Airlines has three service departments; ticketing, baggage handling, and aircraft maintenance. Costs of these departments are allocated to two revenue producing departments, domestic and international flights. Costs for the service departments are not separated into fixed and variable and the totals are as follows:
Ticketing $4,000,000
Baggage handling $2,000,000
Aircraft maintenance $6,000,000
Air miles are as follows:
Domestic 10,000,000
International 30,000,000
(a) Allocate the service department costs based on air miles.
(b) Evaluate World Airlines use of air miles as a basis for allocation. Do you think the cause and effect relationship is strong?
(c) Suggest alternative methods to allocate the service department costs.
Aug 29, 2021 | Uncategorized
Payment of $5,000 made to bank on a long term mortgage note payable.
Question 1 options:
A) Operating Activity Addition
B) Operating Activity Deduction
C) Investing Activity
D) Financing Activity
E) Noncash Schedule
Corporate headquarters land is received as a donation.
Question 2 options:
A) Operating Activity Addition
B) Operating Activity Deduction
C) Investing Activity
D) Financing Activity
E) Noncash Schedule
Save
Question 3 (1 point)
The Cash Flow Statement must be presented in the following order:
Question 3 options:
A) Operating Activity, Financing Activity, Investing Activity
B) Operating Activity, Investing Activity, Non cash schedule
C) Financing Activity, Operating Activity, Investing Activity
D) Operating Activity, Investing Activity, Financing Activity
E) Investing Activity, Operating Activity, Financing Activity
Save
Question 4 (1 point)
Bonds payable are converted into common stock.
Question 4 options:
A) Operating Activity Addition
B) Operating Activity Deduction
C) Investing Activity
D) Financing Activity
E) Noncash Schedule
Save
Question 5 (1 point)
Sale of equipment.
Question 5 options:
A) Operating Activity
B) Investing Activity
C) Financing Activity
Save
Question 6 (1 point)
Decrease of $4,500 in Accounts Payable Indirect Method
Question 6 options:
A) Operating Activity Addition
B) Operating Activity Deduction
C) Investing Activity
D) Financing Activity
E) Non cash Schedule
Save
Question 7 (1 point)
Common stock is sold for cash above par value.
Question 7 options:
A) Operating Activity
B) Investing Activity
C) Financing Activity
D) Noncash Activity
Save
Question 8 (1 point)
Cash dividends declared and paid.
Question 8 options:
A) Operating Activity Addition
B) Operating Activity Deduction
C) Investing Activity
D) Financing Activity
E) Noncash Schedule
Save
Question 9 (1 point)
Purchase of land.
Question 9 options:
A) Operating Activity
B) Investing Activity
C) Financing Activity
Save
Question 10 (1 point)
Common stock is sold for cash above par value
Question 10 options:
A) Operating Activity Addition
B) Operating Activity Deduction
C) Investing Activity
D) Financing Activity
E) Noncash Schedule
Save
Question 11 (1 point)
Receipt of dividends on investment.
Question 11 options:
A) Operating Activity
B) Investing Activity
C) Financing Activity
Save
Question 12 (1 point)
Decrease in Salaries Payable Indirect Method
Question 12 options:
A) Operating Activity Addition
B) Operating Activity Deduction
C) Investing Activity
D) Financing Activity
E) Noncash Schedule
Save
Question 13 (1 point)
Net Loss of $5,000 Indirect Method
Question 13 options:
A) Operating Activity Addition
B) Operating Activity Deduction
C) Investing Activity
D) Financing Activity
E) Noncash Schedule
Save
Question 14 (1 point)
Accounts payable are paid in cash.
Question 14 options:
A) Operating Activity
B) Investing Activity
C) Financing Activity
D) Noncash Activity
Save
Question 15 (1 point)
Purchase of treasury stock.
Question 15 options:
A) Operating Activity
B) Investing Activity
C) Financing Activity
Aug 29, 2021 | Uncategorized
Peeler company was incorporated A new business on January 1, 2010. The corporate charter approved on that date authorized the issuance of 1,000 shares of $100 par, 7% cumulative, nonparticipating preferred stock and 10,000 shares of $5 par common stock. On January 10, Peeler issued for cash 500 shares of preferred stock at $120 per share and 4,000 shares of common stock at $80 per share. On January 20, it issued 1,000 shares of common stock to acquire a building site at a time when the stock was selling for $70 a share.
During 2010, Peeler established an employee benefit plan and acquired 500 shares of common stock at $60 per share as treasury stock for that purpose. Later in 2010, it resold 100 shares of the stock at $65 per share
On December 31, 2010, Peeler determined its net income for the year to be $40,000. The firm declared the annual cash dividend to preferred stockholders and a cash dividend to $5 per share to the common stockholders. The dividends will be payed in 2011.
Required:
Develop the Stockholder’s Equity category of Peeler’s balance sheet as of December 31,2010. Indicate on the statement the number of shares authorized,issued, and outstanding for both preferred and common stock.
Aug 29, 2021 | Uncategorized
Accounting In a manufacturing business, there will be both direct and indirect costs. Describe both of these and cite a specific example. How can overhead costs be properly allocated so the true cost is known? Also, the cost of maintaining assets can be an especially important challenge. How do you determine when and why to dispose of plant assets? Your answer should be of 300 words and provide 1 reference.
Aug 29, 2021 | Uncategorized
Perit Industries has $100,000 to invest. The company is trying to decide between two alternative uses of the funds. The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries’ discount rate is 14%. (Ignore income taxes.) The alternatives are:
Project A Project B
Cost of equipment required
$100,000 $0
Working capital investment required
$0 $100,000
Annual cash inflows
$21,000 $15,750
Salvage value of equipment in six years
$8,000 $0
Life of the project
6 years 6 years
Required:
(a)Calculate net present value for each project. (Negative amount should be indicated by a minus sign. Round your answer to the nearest dollar amount. Omit the “$” sign in your response.)
Net present value
Project A
$
Project B
$
Aug 29, 2021 | Uncategorized
Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 37,000 Rets per year. Costs associated with this level of production and sales are given below:
Unit Total
Direct materials $12 $444,000
Direct labor 6 222,000
Variable manufacturing overhead 3 111,000
Fixed manufacturing overhead 9 333,000
Variable selling expense 1 37,000
Fixed selling expense 4 148,000
Total cost $35 $1,295,000
The Rets normally sell for $64 each. Fixed manufacturing overhead is constant at $333,000 per year within the range of 11,000 through 37,000 Rets per year.
Requirement 1:
Assume that due to a recession, Polaski Company expects to sell only 11,000 Rets through regular channels next year. A large retail chain has offered to purchase 4,500 Rets if Polaski is willing to accept a 15% discount off the regular price. There would be no sales commissions on this order; thus, variable selling expenses would be slashed by 56%. However, Polaski Company would have to purchase a special machine to engrave the retail chain’s name on the 4,500 units. This machine would cost $4,500. Polaski Company has no assurance that the retail chain will purchase additional units in the future. Calculate the net increase/decrease in profits next year if this special order is accepted.
Requirement 2:
Assume again that Polaski Company expects to sell only 11,000 Rets through regular channels next year. The U.S. Army would like to make a one time only purchase of 4,500 Rets. The Army would pay a fixed fee of $1.79 per Ret, and it would reimburse Polaski Company for all costs of production (variable and fixed) associated with the units. Because the army would pick up the Rets with its own trucks, there would be no variable selling expenses associated with this order. If Polaski Company accepts the order, by how much will profits increase or decrease for the year?
Requirement 3:
Assume the same situation as that described in Requirement (2) above, except that the company expects to sell 37,000 Rets through regular channels next year. Thus, accepting the U.S. Army’s order would require giving up regular sales of 4,500 Rets. If the Army’s order is accepted, by how much will profits increase or decrease from what they would be if the 4,500 Rets were sold through regular channels?
Aug 29, 2021 | Uncategorized
Pollachek Co. purchased land as a factory site for $450,000. The process of tearing down two old buildings on the site and constructing the factory required 6 months. The company paid $42,000 to raze the old buildings and sold salvaged lumber and brick for $6,300. Legal fees of $1,850 were paid for title investigation and drawing the purchase contract. Pollachek paid $2,200 to an engineering firm for a land survey, and $65,000 for drawing the factory plans. The land survey had to be made before definitive plans could be drawn. Title insurance on the property cost $1,500, and a liability insurance premium paid during construction was $900. The contractor’s charge for construction was $2,740,000. The company paid the contractor in two installments: $1,200,000 at the end of 3 months and $1,540,000 upon completion. Interest costs of $170,000 were incurred to finance the construction.
Determine the cost of the land and the cost of the building as they should be recorded on the books of Pollachek Co. Assume that the land survey was for the building.
Aug 29, 2021 | Uncategorized
After posting all actual factory overhead and applying factory overhead to production departments in a process costing system,
A. There will never be underapplied overhead.
B. There will never be overapplied overhead.
C. There will always be underapplied overhead.
D. There will always be overapplied overhead.
E. There may be over or underapplied overhead
Cost volume profit analysis is based on three basic assumptions. Which of the following is not one of these assumptions?
A. Total fixed costs remain constant over changes in volume.
B. Curvilinear costs change proportionately with changes in volume throughout the relevant range.
C. Variable costs per unit of output remain constant as volume changes.
D. Sales price per unit remains constant as volume changes.
E. All of these are basic assumptions
Aug 29, 2021 | Uncategorized
Match each of the following terms to the appropriate definition.
|
Term |
Definition |
| a. |
Attribute sampling |
a. The probablility that the true but unknown measure of the characteristic of interest is within specified limits |
| b. |
Desired confidence level |
b. The maximum deviation rate from a prescribed control that an auditor is willing to accept |
| c. |
Allowance for sampling risk |
c. The difference between the expected and the tolerable deviation rate |
| d. |
Sampling risk |
d. The posibility that the sample drawn is not representative of the population and leads to an incorrect conclusion |
| e. |
Sampling population |
e. All or a subset of the items that constitute the class of transactions |
| f. |
Nonstatistical sampling |
f. Relies on the auditors judgement to determine sample size and evaluate the results |
| g. |
Tolerable deviation rate |
g. Used to estimate the proportion of a population that posesses a certain characteristic |
Aug 29, 2021 | Uncategorized
Mateo Corporation is considering purchasing a new delivery truck. The truck has many advantages over the company’s current truck (not the least of which is that it runs). The new truck would cost $56,420. Because of the increased capacity, reduced maintenance costs, and increased fuel economy, the new truck is expected to generate cost savings of $8,990. At the end of 8 years the company will sell the truck for an estimated $27,960. Traditionally the company has used a rule of thumb that a proposal should not be accepted unless it has a payback period that is less than 50% of the asset’s estimated useful life. Nathan Levitt, a new manager, has suggested that the company should not rely solely on the payback approach, but should also employ the net present value method when evaluating new projects. The company’s cost of capital is 8%.
Compute the cash payback period and net present value of the proposed investment. (If the net present value is negative, use either a negative sign preceding the number eg 45 or parentheses eg (45). Round computations and final answer for present value to 0 decimal places, e.g. 125. Round answer for Payback period to 1 decimal place, e.g. 10.5. Round computations for Discount Factor to 5 decimal places.)
Payback period= years
Net present value= $
Aug 29, 2021 | Uncategorized
Module 5 Review Questions I. Absorption costing and over production Under absorption costing, a company had the following per unit costs when 10,000 units were produced. 1. Compute the company’s total production cost per unit if 25,000 units had been produced. 2. Why might a manager of a company using absorption costing produce more units than can currently be sold? II. Computing contribution margin AirTel Company sold 10,000 units of its product at a price of $80 per unit. Total variable cost is $50 per unit consisting of $40 in variable production cost and $10 in variable selling and administrative cost. Compute the contribution margin. III. Computing unit cost under absorption costing Rajeev Company reports the following information regarding its production costs. Compute its production cost per unit under absorption costing. IV. Production level, absorption costing, and gross margin Tramor Company reports the following cost data for its single product. The company regularly sells 20,000 units of its product at a price of $80 per unit. If Tramor doubles its production to 40,000 units while sales remain at the current 20,000 unit level, by how much would the company’s gross profit increase or decrease under absorption costing? V. Variable costing income statement and conversion to absorption costing income Torres Company began operations this year. During this first year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for its first year of operation follows: Sales (80,000 units x $50 per unit) ………………………………………… $4,000,000 Cost of goods sold Beginning inventory ……….……………………………………… $ 0 Cost of goods manufactured (100,000 units x $30 per unit) 3,000,000 Cost of goods available for sale …..…………………….………. 3,000,000 Ending inventory (20,000 units x $30) …………………………… 600,000 Cost of goods sold ….…………………………………………….. 2,400,000 Gross margin …..………………………………………………………. 1,600,000 Selling and administrative expenses ………………………………… 530,000 Net income ……………………………………………………………… $1,070,000 Additional information: a. Selling and administrative expenses consist of $350,000 in annual fixed expenses and $2.25 per unit in variable selling and administrative expenses. b. The company’s product cost of $30 per unit is computed as follows: Direct materials ………………………………… $5 per unit Direct labor ……………………………………… $14 per unit Variable overhead ……………………………… $2 per unit Fixed overhead ($900,000/100,000 units) …… $9 per unit 1. Prepare an income statement for the company under variable costing. 2. Explain any difference between the income under variable costing (from part 1) and the income reported above.
Aug 29, 2021 | Uncategorized
|
$12,200.
$11,800.
$11,400.
$10,000.
None of the above
|
|
|
3. (TCOs 1, 2, 3, & 11) In satisfying the support test and the gross income test for claiming a dependency exemption, a scholarship received by the person being claimed is handled the same way for each test. Do you agree or disagree with this statement? Why? (Points : 10)
|
|
4. (TCOs 1, 2, 3, & 11) DeWayne is a U.S. citizen and resident. He spends much of each year in the United Kingdom on business. He is married to Petula, a U.K. citizen and resident of London. DeWayne has heard that it is possible that he can file a joint income tax return for U.S. purposes. If this is so, what are the constraints he should consider in making any such decision? (Points : 10)
|
|
Aug 29, 2021 | Uncategorized
For the year ended December 31, 2014, the job cost sheets of Cinta Company contained the following data.
Job
Number |
|
Explanation |
|
Direct
Materials |
|
Direct
Labor |
|
Manufacturing
Overhead |
|
Total
Costs |
| 7640 |
|
Balance 1/1 |
|
$25,000 |
|
$24,000 |
|
$28,800 |
|
$77,800 |
|
|
Current year’s costs |
|
30,000 |
|
36,000 |
|
43,200 |
|
109,200 |
| 7641 |
|
Balance 1/1 |
|
11,000 |
|
18,000 |
|
21,600 |
|
50,600 |
|
|
Current year’s costs |
|
43,000 |
|
48,000 |
|
57,600 |
|
148,600 |
| 7642 |
|
Current year’s costs |
|
58,000 |
|
55,000 |
|
66,000 |
|
179,000 |
Other data:
| 1. |
|
Raw materials inventory totaled $15,000on January 1. During the year, $140,000of raw materials were purchased on account. |
| 2. |
|
Finished goods on January 1 consisted of Job No. 7638 for $87,000and Job No. 7639 for $92,000. |
| 3. |
|
Job No. 7640 and Job No. 7641 were completed during the year. |
| 4. |
|
Job Nos. 7638, 7639, and 7641 were sold on account for $530,000. |
| 5. |
|
Manufacturing overhead incurred on account totaled $120,000. |
| 6. |
|
Other manufacturing overhead consisted of indirect materials $14,000, indirect labor $18,000, and depreciation on factory machinery $8,000. |
|
|
|
 |
|
|
|
Aug 29, 2021 | Uncategorized
|
|
| Corporation Special Situations and Organization Structure |
|
|
|
| Tarass Inc. is an accrual method calendar year corporation. Tarass, Inc. did not qualify for the domestic production |
|
| activities deduction. The following information has been provided about the activities occurring in 2013: |
|
|
|
|
|
|
|
| Reported on the financial statement – income after taxes |
$25,85,000 |
| Life insurance proceeds from CFO’s death |
$1,00,000 |
| Revenue from sales |
$35,00,000 |
| Key person life insurance policies premium |
$15,000 |
| Cost of goods sold (reported on book) |
$2,75,000 |
| MACRS depreciation |
$65,000 |
| Book depreciation |
$4,40,000 |
| AMT depreciation |
$60,000 |
| Interest income on private activity tax exempt bonds |
$25,000 |
| Interest paid on loan to purchase tax exempt bonds |
$25,000 |
| Net capital loss |
$35,000 |
| Rental income received and earned in 2013 |
$5,000 |
| Rental income received in 2012 but earned in 2013 |
$10,000 |
| Rental income received in 2013 but not earned |
$5,000 |
| Overhead costs expensed for financial reporting but are included in ending inventory for tax purposes under 263A |
$45,000 |
| Overhead costs expensed for financial reporting in 2012 but included in 2012 ending inventory. All 2012 ending inventory was sold in 2013. |
$0 |
| Charitable contributions |
$3,15,000 |
| Federal income tax expense reported on financial statements |
$3,50,000 |
|
|
|
|
| Using the information provided, complete the following tasks: |
|
|
|
| 1. Using Excel, prepare a reconciliation of book income and tax income. Set up the Excel spreadsheet using the example below: |
|
|
|
|
|
|
|
|
|
|
|
| 2. Calculate Tarass Inc.’s tax liability for 2013. The calculation must be shown to receive full credit. |
|
|
|
| 3. Calculate Tarass Inc.’s alternate minimum tax for 2013, if any applies. The calculation must be shown to receive full credit. |
|
Aug 29, 2021 | Uncategorized
Metro Shuttle Company is considering investing in two new vans that are expected to generate combined cash inflows of $33,000 per year. The vans’ combined purchase price is $95,000. The expected life and salvage value of each are eight years and $21,600, respectively. Metro Shuttle has an average cost of capital of 12 percent.
Use Table 1 and Table 2.
Required:
a.
Calculate the net present value of the investment opportunity. (Round “PV Factor” to 6 decimal places, intermediate calculations and final answer to 2 decimal places. Negative amount should be indicated by a minus sign. Omit the “$” sign in your response.)
Net present value $
b 1.
Indicate whether the investment opportunity is expected to earn a return that is above or below the cost of capital.
Below
Above
b 2. Based on your answer in Requirement b 1, should the investment opportunity be accepted.
Rejected
Accepted
Aug 29, 2021 | Uncategorized
Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has
been experiencing problems as shown by its June contribution format income statement below:
Budgeted Actual
Sales (15,000 pools) . . . . . . . . . . . . . . . . . . . . $450,000 $450,000
Variable expenses:
Variable cost of goods sold* . . . . . . . . . . . . 180,000 196,290
Variable selling expenses . . . . . . . . . . . . . . 20,000 20,000
Total variable expenses . . . . . . . . . . . . . . . . . . 200,000 216,290
Contribution margin . . . . . . . . . . . . . . . . . . . . . 250,000 233,710
Fixed expenses:
Manufacturing overhead . . . . . . . . . . . . . . . 130,000 130,000
Selling and administrative . . . . . . . . . . . . . . 84,000 84,000
Total fi xed expenses . . . . . . . . . . . . . . . . . . . . 214,000 214,000
Net operating income . . . . . . . . . . . . . . . . . . . $ 36,000 $ 19,710
*Contains direct materials, direct labor, and variable manufacturing overhead.
Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given
instructions to “get things under control.” Upon reviewing the plant’s income statement, Ms. Dunn
has concluded that the major problem lies in the variable cost of goods sold. She has been provided
with the following standard cost per swimming pool:
(Standard quanitity or hours, Standard Price or Rate, Standard Cost)
Direct materials . . . . . . . . . . . . . . . . . 3.0 pounds $2.00 per pound $ 6.00
Direct labor . . . . . . . . . . . . . . . . . . . . 0.8 hours $6.00 per hour 4.80
Variable manufacturing overhead . . . 0.4 hours* $ 3.00 per hour 1.20
Total standard cost . . . . . . . . . . . . . . $12.00
*Based on machine hours.
During June the plant produced 15,000 pools and incurred the following costs:
a. Purchased 60,000 pounds of materials at a cost of $1.95 per pound.
b. Used 49,200 pounds of materials in production. (Finished goods and work in process inventories
are insignifi cant and can be ignored.)
c. Worked 11,800 direct labor hours at a cost of $7.00 per hour.
d. Incurred variable manufacturing overhead cost totaling $18,290 for the month. A total of
5,900 machine hours was recorded.
It is the company’s policy to close all variances to cost of goods sold on a monthly basis.
Required:
1. Compute the following variances for June:
a. Direct materials price and quantity variances.
b. Direct labor rate and effi ciency variances.
c. Variable overhead rate and effi ciency variances.
2. Summarize the variances that you computed in (1) above by showing the net overall favorable
or unfavorable variance for the month. What impact did this fi gure have on the company’s income
statement? Show computations.
3. Pick out the two most signifi cant variances that you computed in (1) above. Explain to
Ms. Dunn possible causes of these variances.
Aug 29, 2021 | Uncategorized
Monson Company is considering three investment opportunities with cash flows as described below (Ignore income taxes):
Project A:
Cash investment now $ 13,700
Cash inflow at the end of 5 years $ 21,400
Cash inflow at the end of 8 years $ 21,400
Project B:
Cash investment now $ 11,900
Annual cash outflow for 5 years $ 3,400
Additional cash inflow at the end of 5 years $ 21,700
Project C:
Cash investment now $ 20,400
Annual cash inflow for 4 years $ 10,100
Cash outflow at the end of 3 years $ 4,700
Additional cash inflow at the end of 4 years $ 15,600
Required:
Compute the net present value of each project assuming Monson Company uses a 14% discount rate. (Use Table 12B.1 and Table 12B.2.) (Negative amounts should be indicated by a minus sign. Round “PV factors” to 3 decimal places. Round your intermediate calculations and final answers to the nearest dollar amount. Omit the “$” sign in your response.)
Net Present Value
Project A?
Project B?
Project C?
Aug 29, 2021 | Uncategorized
During its first month of operation, the Parker Landscaping Corporation, which specializes in residential
landscaping, completed the following transactions:
July 1 Carl Parker began business by investing $24,000 cash in the business
July 1 Paid the premium on a one year insurance policy, $3,000 in cash.
July 1 Paid the current month’s rent, $2,080 in cash.
July 2 Signed his first contract. Received $5,000 cash from customer, but NO WORK HAS BEEN DONE
on the contract.
July 3 Purchased landscaping equipment from Brookwood Company, $8,800. Paid $1,200 down and the
balance was placed on account. Payments will be $400.00 per month for nineteen months.
The first payment is due 8/1.
Note: Use Accounts Payable for the Balance Due.
July 8 Purchased landscaping supplies from Lakeside Company on account, $780.
July 9 Performed services for clients on account, $7,000.
July 10 Paid employee wages in cash, $2,200.
July 12 Paid utility bill for July, $308 in cash.
July 16 Received $2,000 cash from a client on account. (Refer to July 9)
July 19 Made payment on account to Lakeside Company, $400. (Refer to July 8)
July 20 Owner withdrew $1000 cash from the business for his personal use.
July 31 Received $5,000 cash from clients on account. (Refer to July 9).
July 31 Borrowed $4000 cash from the local Citizen National Bank. Signed a note promising
to repay the money in two years.
Aug 29, 2021 | Uncategorized
Multiple Choice Questions:
Question 1:
If the single amount of $5,000 is to be received in 3 years and discounted at 6%, its present value is
A) $4,198.
B) $4,717.
C) $4,333.
D) $4,700.
Answer:
Question 2:
Which of the following discount rates will produce the smallest present value?
A) 4%
B) 8%
C) 9%
D) 10%
Answer:
Question 3:
Suppose you have a winning lottery ticket and you are given the option of accepting $5,000,000 three years from now or taking the present value of the $5,000,000 now. The sponsor of the prize uses a 6% discount rate. If you elect to receive the present value of the prize now, the amount you will receive is
A) $4,198,100.
B) $4,319,200.
C) $4,450.
D) $5,000,000.
Aug 29, 2021 | Uncategorized
Multiple Choice Questions:
Question 1:
If the single amount of $5,000 is to be received in 3 years and discounted at 6%, its present value is
A) $4,198.
B) $4,717.
C) $4,333.
D) $4,700.
Answer:
Question 2:
Which of the following discount rates will produce the smallest present value?
A) 4%
B) 8%
C) 9%
D) 10%
Answer:
Question 3:
Suppose you have a winning lottery ticket and you are given the option of accepting $5,000,000 three years from now or taking the present value of the $5,000,000 now. The sponsor of the prize uses a 6% discount rate. If you elect to receive the present value of the prize now, the amount you will receive is
A) $4,198,100.
B) $4,319,200.
C) $4,450.
D) $5,000,000.
Aug 29, 2021 | Uncategorized
Multiple temporary differences defferred taxes
Coltsindy18 asked Multiple temporary differences.
The following information is available for the first three years of operations for Cooper Company:
1. Year Taxable Income
2010 $500,000
2011 330,000
2012 400,000
2. On January 2, 2010, heavy equipment costing $600,000 was purchased. The equipment had a life of 5 years and no salvage value. The straight line method of depreciation is used for book purposes and the tax depreciation taken each year is listed below:
Tax Depreciation
2010 2011 2012 2013 Total
$198,000 $270,000 $90,000 $42,000 $600,000
3. On January 2, 2011, $240,000 was collected in advance for rental of a building for a three year period. The entire $240,000 was reported as taxable income in 2011, but $160,000 of the $240,000 was reported as unearned revenue at December 31, 2011 for book purposes.
4. The enacted tax rates are 40% for all years.
Instructions
(b) Determine the deferred tax (asset) or liability at the end of 2010.
(c) Prepare a schedule of future taxable and (deductible) amounts at the end of 2011.
(d) Prepare a schedule of the deferred tax (asset) and liability at the end of 2011.
(e) Compute the net deferred tax expense (benefit) for 2011
Aug 29, 2021 | Uncategorized
Murcia Corporation has $4,000,000 of 8 percent, 25 year bonds dated May 1, 2011, with interest payable on April 30 and October 31. The company’s fiscal year ends on December 31, and it uses the straight line method to amortize bond premiums or discounts. The bonds are callable after 10 years at 103 or convertible into 40 shares of $10 par value common stock.
1. Assume the bonds are issued at 103.5 on May 1, 2011.
a. How much cash is received?
b. How much is Bonds Payable?
c. What is the difference between a and b called?
How much is it?
d1. With regard to the bond interest payment on October 31, 2011, how much cash is paid in interest?
d2. With regard to the bond interest payment on October 31, 2011, how much is the amortization?
d3. With regard to the bond interest payment on October 31, 2011, how much is interest expense?
2. Assume the bonds are issued at 96.5 on May 1, 2011.
a. How much cash is received?
b. How much is Bonds Payable?
c. What is the difference between a and b called?
SelectBond premiumBond discount
How much is it?
d1. With regard to the bond interest payment on October 31, 2011, how much cash is paid in interest?
d2. With regard to the bond interest payment on October 31, 2011, how much is the amortization?
d3. With regard to the bond interest payment on October 31, 2011, how much is interest expense?
3. Assume the issue price in requirement 1 and that the bonds are called and retired 10 years later.
a. How much cash will have to be paid to retire the bonds?
b. Is there a gain or loss on the retirement?
SelectGainLossNo gain or loss
If there is a gain or loss, how much is it?
4. Assume the issue price in requirement 2 and that the bonds are converted to common stock 10 years later.
a. Is there a gain or loss on conversion?
SelectGainLossNo gain or loss
How much is it? If there is no gain or loss, enter “0”.
b. How many shares of common stock are issued in exchange for the bonds?
shares
c. In dollar amounts, how does this transaction affect the total liabilities and the total stockholders’ equity of the company? In your answer, show the effects on four accounts.
Select DecreaseIncrease in liabilities $
Bonds payable $
Unamortized bond discount $
Bond carrying value $
Select DecreaseIncrease in stockholders’ equity $
Common stock $
Additional paid in capital $
Total common stock issue amount $
5. Assume that after 10 years market interest rates have dropped significantly and that the price of the company’s common stock has risen significantly. Also assume that management wants to improve its credit rating by reducing its debt to equity ratio and that it needs what cash it currently has for expansion.
Would management prefer the approach and result in requirement 3 or 4?
Aug 29, 2021 | Uncategorized
O’Quinn Co. distributes suitcases to retail stores and extends credit terms of 1/10, n/30 to all of its customers. At the end of June, O’Quinn’s inventory consisted of suitcases costing $1,396. During the month of July the following merchandising transactions occurred.
| July |
1 |
Purchased suitcases on account for $3,540 from Emerson Manufacturers, FOB destination, terms 2/10, n/30. The appropriate party also made a cash payment of $100 for freight on this date. |
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3 |
Sold suitcases on account to Straume Satchels for $3,986. The cost of suitcases sold is $2,392. |
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Paid Emerson Manufacturers in full. |
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12 |
Received payment in full from Straume Satchels. |
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17 |
Sold suitcases on account to The Going Concern for $2,668. The cost of the suitcases sold was $1,601. |
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18 |
Purchased suitcases on account for $1,784 from Hume Manufacturers, FOB shipping point, terms 1/10, n/30. The appropriate party also made a cash payment of $199 for freight on this date. |
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Received $319 credit (including freight) for suitcases returned to Hume Manufacturers. |
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Received payment in full from The Going Concern. |
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Sold suitcases on account to Desmond’s for $3,548. The cost of suitcases sold was $2,129. |
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Paid Hume Manufacturers in full. |
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31 |
Granted Desmond’s $225 credit for suitcases returned costing $135. |
O’Quinn’s chart of accounts includes the following: No. 101 Cash, No. 112 Accounts Receivable, No. 120 Merchandise Inventory, No. 201 Accounts Payable, No. 401 Sales, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts, No. 505 Cost of Goods Sold.
Instructions
Journalize the transactions for the month of July for O’Quinn using a perpetual inventory system. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2. Round answers to 0 decimal places, e.g. 125.)
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(To record credit sale to Straume Satchels.) |
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(To record cost of merchandise sold.) |
| July 9 |
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(To record credit sale to The Going Concern.) |
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(To record cost of merchandise sold.) |
| July 18 |
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(To record credit sale to Desmond’s.) |
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(To record cost of merchandise sold.) |
| July 30 |
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(To record credit to Desmond’s for returned goods.) |
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(To record cost of goods returned.) |
Click here if you would like to Show Work for this question
Aug 29, 2021 | Uncategorized
In obtaining evidential matter in support of financial statement assertions, the auditor develops specific audit procedures to address those assertions.
Required:
Your client is Hillmart, a retail department store that purchases all goods directly from wholesalers or manufacturers. Select the most appropriate audit procedure from the dropdowns to address the following assertions. (An audit procedure may be selected once, more than once, or not at all.)
Audit Procedure:
1. Examine current vendor price lists.
2. Review drafts of the financial statements.
3. Select a sample of items during the physical inventory count and determine that they have been included on count sheets.
4. Select a sample of recorded items and examine supporting vendor invoices and contracts.
5. Select a sample of recorded items on count sheets during the physical inventory count and determine that items are on hand.
6. Review loan agreements and minutes of board of directors’ meetings.
Match the below assertions with a number from the audit procedures above.
a. Ensure that the entity has legal title to inventory (rights and obligations).
b. Ensure that recorded inventory quantities include all products on hand (completeness).
c. Verify that inventory has been reduced, when appropriate, to replacement cost or net realizable value (valuation).
d. Verify that the cost of inventory has been properly determined (accuracy).
e. Verify that the major categories of inventory and their bases of valuation are adequately reported in the financial statements (completeness and accuracy and valuation for presentation and disclosure).
Aug 29, 2021 | Uncategorized
Ocean Division currently earns $780,000 and has divisional assets of $3.9 million. The division manager is considering the acquisition of a new asset that will add to profit. The investment has a cost of $675,000 and will have a yearly cash flow of $168,000. The asset will be depreciated using the straight line method over a six year life and is expected to have no salvage value. Divisional performance is measured using ROI with beginning of year net book values in the denominator. The company’s cost of capital is 15 percent. Ignore taxes.
Required:
(a) What is the divisional ROI before acquisition of the new asset? (Omit the “%” sign in your response.)
ROI before acquisition ? %
(b)
What is the divisional ROI in the first year after acquisition of the new asset? (Round your answer to 1 decimal place. Omit the “%” sign in your response.)
ROI after acquisition ? %
Aug 29, 2021 | Uncategorized
Ocean Division currently earns $780,000 and has divisional assets of $3.9 million. The division manager is considering the acquisition of a new asset that will add to profit. The investment has a cost of $675,000 and will have a yearly cash flow of $168,000. The asset will be depreciated using the straight line method over a six year life and is expected to have no salvage value. Divisional performance is measured using ROI with beginning of year net book values in the denominator. The company’s cost of capital is 15 percent. Ignore taxes. The division manager learns that he has the option to lease the asset on a year to year lease for $148,000 per year. All depreciation and other tax benefits would accrue to the lessor.
Required:
What is the divisional ROI if the asset is leased? (Round your answer to 1 decimal place. Omit the “%” sign in your response.)
ROI %
Aug 29, 2021 | Uncategorized
Ocean Division currently earns $780,000 and has divisional assets of $3.9 million. The division manager is considering the acquisition of a new asset that will add to profit. The investment has a cost of $675,000 and will have a yearly cash flow of $168,000. The asset will be depreciated using the straight line method over a six year life and is expected to have no salvage value. Divisional performance is measured using ROI with beginning of year net book values in the denominator. The company’s cost of capital is 15 percent. Ignore taxes. The division manager learns that he has the option to lease the asset on a year to year lease for $148,000 per year. All depreciation and other tax benefits would accrue to the lessor.
Required:
(a)
What is the division’s residual income before considering the project? (Enter your answer in dollars, not in millions. Omit the “$” sign in your response.)
Residual income $ ?
(b)
What is the division’s residual income if the asset is purchased? (Enter your answers in dollars not in millions. Omit the “$” sign in your response.)
Residual income $ ?
(c)
What is the division’s residual income if the asset is leased? (Enter your answers in dollars not in millions. Omit the “$” sign in your response.)
Residual income $ ?
Aug 29, 2021 | Uncategorized
Ocean Division currently earns $780,000 and has divisional assets of $3.9 million. The division manager is considering the acquisition of a new asset that will add to profit. The investment has a cost of $675,000 and will have a yearly cash flow of $168,000. The asset will be depreciated using the straight line method over a six year life and is expected to have no salvage value. Divisional performance is measured using ROI with beginning of year net book values in the denominator. The company’s cost of capital is 15 percent. Ignore taxes. The division manager learns that he has the option to lease the asset on a year to year lease for $148,000 per year. All depreciation and other tax benefits would accrue to the lessor.
Required:
What is the divisional ROI if the asset is leased? (Round your answer to 1 decimal place. Omit the “%” sign in your response.)
What is the ROI in %
Aug 29, 2021 | Uncategorized
| Chapter 5: Applying Excel |
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$45 |
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| Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre brand of cycle that was popular in the 1930s. |
| The retro look cycle would be sold for $13,000 and at that price, Thad estimates 800 units would be sold each year. The variable cost to produce and sell the cycles would be $9,100 per unit. |
| The annual fixed cost would be $1,560,000. |
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| Thad is worried about the selling price. Rumors are circulating that other retro brands of cycles may be revived. |
| If so, the selling price for the Western Hombre would have to be reduced to $10,100 to compete effectively. In that event, Thad would also reduce fixed expenses to $1,186,000 by reducing advertising expenses, |
| but he still hopes to sell 800 units per year. |
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Aug 29, 2021 | Uncategorized
The City of Martinville had the following pre closing account balances in its General Fund as of June 30, 2012. Debits and credits are not separated; each account had its “normal” balance. Among the expenditures that are recorded this year is an amount that has been expended on supplies ordered at the end of the previous year. Assume that the encumbrances do not lapse and that the city failed to make the proper journal entry or entries necessary to re establish the encumbrance in the current year.
Pre closing Trial Balance of the City of Martinville as of June 30, 2012:
Cash $80,000
Estimated Revenues 6,300,000
Revenues 6,380,000
Appropriations 5,890,000
Estimated Other Financing Sources 79,000
Estimated Other Financing Uses 320,000
Expenditures 5,920,000
Taxes Receivable Delinquent 45,000
Fund Balance – July 1, 2011 380,000
Vouchers Payable 140,000
Encumbrances 280,000
Transfer Out to Debt Service Fund 150,000
Transfer In from Enterprise Fund 100,000
Fund Balance Reserve for Encumbrances 300,000
Required:
(A) Prepare the necessary entries to close the General Fund of the City of Martinville.
(B) Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the City of Martinville for the year ended June 30, 2012. Please make sure you end with the Fund Balance for the year ending June 30, 2012.
Prepare entries in general journal form to record the following transactions in General Fund general ledger accounts for the fiscal year 2012. Please use the modified accrual accounting approach in recording the transactions.
a. The legal budget for the provided for $6,530,000 of estimated revenues and $5,975,000 of appropriations.
b. Assume that are $340,000 of purchase orders outstanding at the end of last fiscal year and these purchase orders will be honored in the current year. Prepare the entries to re establish the encumbrance.
c. Property taxes were levied in the amount of $4,650,000. It is estimated that 3.5 percent of the taxes will not be collected.
d. Purchase orders were issued for equipment and supplies in the amount of $2,760,000.
Supplies that were relating to all of the prior year purchase orders ($ 340,000) were received along with invoices amounting to $336,800.
Collections of current property taxes amounted to $4,190,000. The uncollected taxes were recorded as delinquent.
Aug 29, 2021 | Uncategorized
Cherney Electric sold $500,000, 10%, 10 year bonds on January 1, 2012. The bonds were dated January 1 and paid interest on January 1 and July 1. The bonds were sold at 104.
Instructions
(a) Prepare the journal entry to by Text Enhance” id=”_GPLITA_0″ style=”text decoration:underline” href=”#” in_rurl=”http://i.tracksrv.com/click?v=VVM6NDc1NTM6MjgzMDpyZWNvcmQ6MjM4ZTgyNzk2OWRiZGM3ZjVhNjZkMWEyMTc0NDJmNzM6ei0xMjQ3LTQ0Njc4Ond3dy50cmFuc3R1dG9ycy5jb206OTA2ODU6OTNjZjc1Y2UyNjU2MTM4N2IyN2ZlZmQzYjNkYjFiZTA”>record the issuance of the bonds on January 1, 2012.
(b) At December 31, 2012, the balance in the Premium on Bonds Payable account is $18,000. Show the balance sheet presentation of accrued interest and the bond liability at December 31, 2012.
(c) On January 1, 2014, when the carrying value of the bonds was $516,000, the company redeemed the bonds at 105. Record the redemption of the bonds assuming that interest for the period has already been paid.
Aug 29, 2021 | Uncategorized
IDEA is a data analysis tool. One of its more powerful uses is its ability to import data from different systems (that may be in different file formats, etc.) and aggregate the data into a single database that can be electronically queried and analyzed. Many larger companies use different data platforms in different areas of their business and these software packages will not always be compatible with each other. So if customer details were maintained in an Access database within the Sales department but the A/R ledger was maintained in a PeopleSoft system, IDEA could be used to take information from both systems and combine them into one electronic database for analysis.
As you will see working through this assignment, IDEA also has audit specific features that can help to more efficiently perform audit procedures.As an example, when a friend of mine first started at KPMG they were not using IDEA yet. Once KPMG implemented the software my friend was amazed how quickly IDEA could be used toanalyze journal entries. Prior to IDEA the firm would have to select a sample of journal entries for testwork and/or manually scan through entries looking for anything suspicious (round dollar amounts, suspicious descriptors, entries hitting certain accounts, etc.) as part of their fraud detection procedures. With IDEA, they were able to tell the software the parameters they were interested in looking at and then have the software scan ALL of the journal entries posted in a certain time window. IDEA would then kick out a detailed listing of the journal entries posted in that time frame that met their parameters which allowed them to better focus their audit efforts.
Getting Started with IDEA
The first work you do in IDEA IS SECTION 2.5. The accounts receivable folder that you are instructed to select on page 25 is a folder that you are tocreatepreviously on page 23. The data path specified in 2.5.1 on page 23 is just a recommended path. You can create a folder called “IDEA” anywhere (I recommend creating it on your desktop so you can find it easily). Once you create the IDEA folder, you need to create another folder within that one and call it “Accounts Receivable.” This is where you will be saving all of the IDEA files for this project. Once these two folders are set up, you need to copy the two files specified on page 23 from the IDEA CD and paste them into your Accounts Receivable folder.
Once you have all of the above completed, then revisit the instructions on page 24 and 25 and you should be able to navigate to the Accounts Receivable folder that you created (it will be found within the IDEA folder that you also created) and select it as the Working Folder.
To successfully complete this project:
1. Walk through and complete the process described in Chapter 2, related to the analysis of an accounts receivable database and other IDEA functionality.Approximately 11 files are generated from this process. Keep them in one directory and follow the remaining instructions for uploading the completed assignment.
2. Write a one page narrative in MS Word that documents the audit and data analysis processes that you employed using IDEA and that explains the audit findings presented in 2.17 (these are your “check figures” or the answers you should arrive at upon completing the assignment). For example, you may have some customers who were not approved for credit.
3. For each audit finding, insert a screenshot into the narrative that supports your finding and/or comments.
4. Compress and zip your 11 IDEA files and your narrative (that includes screenshots) into one file with the naming format:
last name first IDEA.zip. Upload the .zip file to your Assignment Folder in Blackboard. This assignment should take no longer than 3 hours.To compress and zip files in Windows 7, locate the desired files on your computer (use either Windows Explorer or My Computer), select each file that you want to include in the .zip by holding CTRL and clicking on the file.Right click and on the Menu that appears select Send To, Compressed zipped) File.The compress file will generate in the folder from which you are working.Rename the file according to the format above.Note:you may select files with different extensions (ie .doc, .xls) t
Aug 29, 2021 | Uncategorized
FIN 516 – WEEK 2 – MINI – CASE ASSIGNMENT
(This should be posted in Document Sharing)
Select a major industrial or commercial company based in the United States, and listed on one of the major stock exchanges in the United States. Each student should select a different company. Avoid selecting an insurance company or a bank, as the financial ratios for these financial businesses are different. Write a 7 – 8 page double spaced paper answering and demonstrating with calculations and financial data the following questions:
- What is the name of the company? What is the industry sector?
- What are the operating risks of the company?
- What is the financial risk of the company (the debt to total capitalization ratio)?
- Does the company have any preferred stock?
- What is the capital structure of the company?: Short term portion of Long Term Debt, Long Term Debt, Preferred Stock (if any), and market value of Common Stock issued and outstanding?
- What is the company’s current actual Beta?
- What would the Beta of this company be if it had no Long Term Debt in its capital structure? (Apply the Hamada Formula.)
- What is the company’s current Marginal Tax Rate?
- What is the Cost of Debt, before and after taxes?
- What is the Cost of Preferred Stock (if any)?
- What is the Cost of Equity?
- What is the cash dividend yield on the Common Stock?
- What is the Weighted Average Cost of Capital of the company?
- What is the Price Earnings Multiple of the company?
- How has the company’s stock been performing in the last 5 years?
- How would you assess the overall risk structure of the company in terms of its Operating Risks and Financial Risk (Debt to Capitalization Ratio)?
- Would you invest in this company? Why? Or Why not?
- The last page of your paper should be a Bibliography of the sources you used to prepare this paper.
Aug 29, 2021 | Uncategorized
Jasper Corporation incurred the following costs in April:
Salesperson’s salaries
$40,000
Factory maintenance worker
$20,000
Factory insurance
12,000
Administrative utilities
4,000
Factory supervisor salary
30,000
Administrative supplies
1,000
Advertising
15,000
Delivery truck insurance
2,000
Factory machine operator
22,000
Factory machine depreciation
6,000
Direct materials used
25,000
Receptionist salary
18,000
Total product costs are:
Answer
a. $115,000
b. $117,000
c. $130,000
d. $157,000
Question 47
Refer to the Jasper Corporation information above. Total period costs are:
Answer
a. $38,000
b. $40,000
c. $80,000
d. $86,000
Aug 29, 2021 | Uncategorized
John Fleming, chief administrator for Valley View Hospital, is concerned about the costs for tests in the hospital’s lab. Charges for lab tests are consistently higher at Valley View than at other hospitals and have resulted in many complaints. Also, because of strict regulations on amounts reimbursed for lab tests, payments received from insurance companies and governmental units have not been high enough to cover lab costs.
Mr. Fleming has asked you to evaluate costs in the hospital’s lab for the past month. The following information is available:
a. Two types of tests are performed in the lab’blood tests and smears. During the past month, 1,800 blood tests and 2,400 smears were performed in the lab.
b.
Small glass plates are used in both types of tests. During the past month, the hospital purchased 12,000 plates at a cost of $28,200. This cost is net of a 6% quantity discount. 1,500 of these plates were unused at the end of the month; no plates were on hand at the beginning of the month.
c. During the past month, 1,150 hours of labor time were recorded in the lab at a cost of $13,800.
d. The lab’s variable overhead cost last month totaled $7,820.
Valley View Hospital has never used standard costs. By searching industry literature, however, you have determined the following nationwide averages for hospital labs:
Plates: Two plates are required per lab test. These plates cost $2.50 each and are disposed of after the test is completed.
Labor: Each blood test should require 0.3 hours to complete, and each smear should require 0.15 hours to complete. The average cost of this lab time is $14 per hour.
Overhead: Overhead cost is based on direct labor hours. The average rate of variable overhead is $6 per hour.
Requirement 1:
Compute a materials price variance for the plates purchased last month and a materials quantity variance for the plates used last month. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values.
Materials price variance $? (Favorable/Unfavorable/None)
Materials quantity variance $? (Favorable/Unfavorable/None)
Requirement 2:
(a)
Compute a labor rate variance and a labor efficiency variance. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values.
Labor rate variance $? (Favorable/Unfavorable/None)
Labor efficiency variance $? (Favorable/Unfavorable/None)
(b)
In most hospitals, one half of the workers in the lab are senior technicians and one half are assistants. In an effort to reduce costs, Valley View Hospital employs only one fourth senior technicians and three fourths assistants. Would you recommend that this policy be continued?
No/Yes?
Requirement 3:
(a)
Compute the variable overhead rate and efficiency variances. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance.). Input all amounts as positive values.
Variable overhead rate variance $? (Favorable/Unfavorable/None)
Variable overhead efficiency variance $? (Favorable/Unfavorable/None)
Aug 29, 2021 | Uncategorized
Johnson Corporation began 2011 with inventory of 9,130 units of its only product. The units cost $8 each. The company uses a periodic inventory system and the LIFO cost method. The following transactions occurred during 2011:
a. Purchased 50,500 additional units at a cost of $10 per unit. Terms of the purchases were 2/10, n/30, and 100% of the purchases were paid for within the 10 day discount period. The company uses the gross method to record purchase discounts. The merchandise was purchased f.o.b. shipping point and freight charges of $0.60 per unit were paid by Johnson.
b. 1,010 units purchased during the year were returned to suppliers for credit. Johnson was also given credit for the freight charges of $0.60 per unit it had paid on the original purchase. The units were defective and were returned two days after they were received.
c. Sales for the year totaled 45,450 units at $16 per unit.
d. On December 28, 2011, Johnson purchased 5,050 additional units at $10 each. The goods were shipped f.o.b. destination and arrived at Johnson’s warehouse on January 4, 2012.
e. 13,170 units were on hand at the end of 2011.
Required:
(1) Determine ending inventory and cost of goods sold for 2011. (Round your intermediate calculations and final answers to the nearest dollar amount. Omit the “$” sign in your response.)
Ending inventory $
Cost of goods sold $
(2) Assuming that operating expenses other than those indicated in the above transactions amounted to $150,000, determine income before income taxes for 2011. (Round your intermediate calculations and final answers to the nearest dollar amount.Omit the “$” sign in your response.)
Income before income taxes would be $
Aug 29, 2021 | Uncategorized
Jonas Fritz, owner of Careful Construction, Inc., had a perplexing problem. Although his company always had enough work to keep the employees busy, company profits were falling. In fact, Careful Construction, Inc. will have difficulty meeting its payroll this year. Mr. Fritz compared Careful Construction, Inc.’s materials costs with the company’s overall revenues for the past three years.
Mr. Fritz could not understand why materials costs were rising so rapidly, especially since his other costs were remaining relatively constant.
Mr. Fritz showed the results to his friend, Larry Mason.
Mr. Fritz interrupted Ac€¦ “But how would employees get their hands on that much cash? I’m not a bankAc€¦ I don’t have much cash in the office Ac€¦ and my three office employees have worked here for years. We’re like family!”
Mr. Mason replied, “The employee, if it is an employee, probably is not walking out of the office with $20 bills. More likely they are altering your purchasing invoices and employee records.”
Requirements:
1. Using the Data provided by Exhibit 1, perform a single Benford’s Law analysis to determine which (if any) of Careful Construction’s suppliers are involved in the fraud.
2. A. Who is likely committing fraud at Careful Construction?
B. Name two possible ways that this individual could commit fraud.
3. Name three steps Mr. Fritz should take in order to verify his suspicions about who is committing fraud.
4. What are some controls Mr. Fritz could institute to prevent this type of fraud from happening again?
Aug 29, 2021 | Uncategorized
Letter Co. produces and sells two products, T and O. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the company sold 50,000 units of each product. Sales and costs for each product follow.
Product T Product O
Sales $ 800,000 $ 800,000
Variable costs 560,000 100,000
Contribution margin 240,000 700,000
Fixed costs 100,000 560,000
Income before taxes 140,000 140,000
Income taxes (32% rate) 44,800 44,800
Net income $ 95,200 $ 95,200
references
11.
value:
5 points
Problem 22 5A Part 1
Required:
1.
Compute the break even point in dollar sales for each product. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount. Omit the “$” sign in your response.)
Product T $
Product O $
ask instructorcheck my workeBook Links (3)references
12.
value:
5 points
Problem 22 5A Part 2
2.
Assume that the company expects sales of each product to decline to 33,000 units next year with no change in unit sales price. Prepare forecasted financial results for next year following the format of the contribution margin income statement as just shown with columns for each of the two products (assume a 32% tax rate). Also, assume that any loss before taxes yields a 32% tax savings. (Do not round your intermediate calculations. Round your final answers to the nearest whole dollar amount. Input all amounts as positive values except losses and tax savings on losses, which should be indicated by a minus sign.)
LETTER CO.
Forecasted Contribution Margin Income Statement
Product T Product O
$ $
Net income/loss $ $
ask instructorcheck my workeBook Links (3)references
13.
value:
10 points
Problem 22 5A Part 3
3.
Assume that the company expects sales of each product to increase to 64,000 units next year with no change in unit sales price. Prepare forecasted financial results for next year following the format of the contribution margin income statement shown with columns for each of the two products (assume a 32% tax rate). (Do not round your intermediate calculations. Round your final answers to the nearest whole dollar amount. Input all amounts as positive values except losses which should be indicated by minus sign. Omit the “$” sign in your response.)
LETTER CO.
Forecasted Contribution Margin Income Statement
Product T Product O
$ $
$ $
ask instructorcheck my workeBook Links (3)references
A?©2012 The McGraw Hill Companies. All rights reserved.
Aug 29, 2021 | Uncategorized
On the line in front of each statement, enter the letter corresponding to the term that best
fits that statement. An item may be used more than once or not at all.
A. Cash budget E. Responsibility accounting
B. Financial accounting F. Master budget
C. Capital expenditures budget G. Indirect costs
D. Sensitivity analysis H. Operating budget
____ A company?s plan for purchases of property, plant, equipment, and other
long term assets
____ Details how the company expects to go from the beginning cash balance to the
desired
ending cash balance.
____ A system for evaluating the performance of each responsibility center and its
manager.
____ A budget that projects cash inflows and outflows and the end of period balance
sheet.
____ Costs that cannot be traced to a single department
Aug 29, 2021 | Uncategorized
LO.2 (Sales budget) Pataky Co.’s sales manager estimates that 2,000,000 units of
product RI#698 will be sold in 2011. Th e product’s selling price is expected to decline
as the result of technology changes during the year and estimates of the sales price are
as follows:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
$17 $16 $14 $12
In talking with customers, the sales department discovered that sales quantities per
quarter could vary substantially. Th us, the sales manager has prepared the following
three sets of quarterly sales projections:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total
Scenario A 600,000 300,000 640,000 460,000 2,000,000
Scenario B 400,000 700,000 250,000 650,000 2,000,000
Scenario C 530,000 480,000 800,000 190,000 2,000,000
If Pataky’s sales department is able to infl uence customers, which of the potential sales
scenarios would be most profi table for the company? Would that scenario possibly
cause the company any diffi culties?
Aug 29, 2021 | Uncategorized
Major Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 47 range instruments and 303 pressure gauges were produced, and overhead costs of $88,867 were estimated. An analysis of estimated overhead costs reveals the following activities.
Activity Cost Driver Total Cost
1. Materials handling Number of requisitions $41,680
2. Machine setups Number of setups 25,092
3. Quality inspections Number of inspections 22,095
$88,867
The cost driver volume for each product was as follows.
Cost Driver Instruments Gauges Total
Number of requisitions 418 624 1,042
Number of setups 187 305 492
Number of inspections 250 241 491
Determine the overhead rate for each activity.
Materials handling___ $
Machine setup____ $
Quality inspections ____$
Assign the manufacturing overhead costs for April to the two products using activity based costing. (Round answers to 0 decimal places, e.g. 250.)
Instruments per unit_____ $
Gauges per unit ______$
Aug 29, 2021 | Uncategorized
Make all eight adjustments on the Adjusting Journal Entries” tab. Include description underneath.
12/31/12 Adjusting Journal Entries
JE # Account Titles Debits Credits
1 Jan Prepaid Insurance 18000
Cash 18000
2 Building 1500
depreciation ( Building) 1500
3 Cash 9000
Unearned rent revenue 9000
4
5 Cash 4000
Notes Payable 4000
6 Cost of Goods Sold 1100
7 Intangible Asses 20000
1000
21000
8
1 On March 1, ABC purchased a one year liability insurance policy for $18,000.
Upon purchase, the following journal entry was made:
Dr Prepaid insurance 18,000
Cr Cash 18,000
The expired portion of insurance must be recorded as of 12/31/12.
Notice that the expired portion from March through November has been recorded already.
Make sure that the Prepaid Insurance balance after the adjusting entry is correct.
2 Depreciation expense must be recorded (straight line) for the month of December.
The building was purchased on February 1, 2012 for $36,000 with a remaining useful life of 20 years and a salvage value of $6,000.
The method of depreciation for the building is straight line.
The equipment was purchased on February 1, 2012 for $12,000 with a remaining useful life of 5 years and a salvage value of $500.
The method of depreciation for the equipment is double declining balance.
Depreciation has been recorded for the building and equipment for months February through November.
3 On December 1, XYZ Co. agreed to rent space in ABC’s building for $3,000 per month,
and XYZ paid ABC on December 1 in advance for the first three months’ rent.
The entry made on December 1 was as follows:
Dr Cash 9,000
Cr Unearned rent revenue 9,000
The unearned revenue account must be adjusted to reflect the amount earned as of 12/31/12.
4 Per timecards, from the last payroll date through December 31, 2012, ABC’s employees have worked a total of 130 hours.
Including payroll taxes, ABC’s wage expense averages about $15 per hour. The next payroll date is January 5, 2013.
The liability for wages payable must be recorded as of 12/31/12.
5 On November 30, 2012, ABC borrowed $4,000 from American National Bank by issuing an interest bearing note payable.
This loan is to be repaid in three months (on February 28, 2013), along with interest computed at an annual rate of 9%.
The entry made on November 30 to record the borrowing was:
Dr Cash 4,000
Cr Notes payable 4,000
On February 28, 2013 ABC must pay the bank the amount borrowed plus interest.
Interest through 12/31/12 must be accrued.
6 ABC uses a periodic inventory system, and the ending inventory for each year is determined by taking a complete
physical inventory at year end. A physical count was taken on December 31, 2012, and the inventory on hand at
that time totaled $1,100.
Record the 2012 Cost of Goods Sold and the 12/31/12 Inventory adjustment. (This includes closing Purchases.)
7 It would be unusual for a company to have an asset impairment in Year 1, but for the sake of this example, ABC realized
that their intangible asset might be impaired on December 31, 2012. Record the impairment if any.
The expected future net cash flows for this intangible asset totals $20,000, and the fair value of the asset is $21,000.
Do this step after preparing the Income Statement except for the Income taxes line:
8 Corporate taxes are due in four estimated quarterly payments on April 15, June 15, September 15, and December 15.
However, for the purposes of this ABC illustration, we will assume that estimates are not paid, and that the tax is paid in full
on the return’s March 15, 2013 due date.
ABC’s income tax rate is 35%. The entire year’s income tax expense was estimated at the beginning of 2012 to be $24,000,
so January through November income tax expense recognized amounts to $22,000 (11/12 months).
Since we are assuming estimates are not made during the year, the balance in Income taxes payable represents
tax accrued for January through November. Assume no deferred tax assets or deferred tax liabilities.
Based on the income before income taxes figure from the income statement, record December’s income tax expense
so that the entire year’s tax expense is correct.
I am lost on 2, 4 and 8. Thank you
Aug 29, 2021 | Uncategorized
The manager of Healthy Snack Division of Fairfax Industries is evaluated on her division’s return on investment and residual income. The company requires that all divisions generate a minimum return on invested assets of 8 percent. Consistent failure to achieve this minimum target is grounds for the dismissal of a division manager. The annual cash bonus paid to division managers is 1 percent of residual income in excess of $100,000. The Snack Division’s operating margin for the year was $6.5 million, during which time its average invested capital was $50 million.
a.
Compute the Snack Division’s return on investment and residual income. (Enter your Residual income answer in millions. Omit the “$” & “%” signs in your response.)
Return on investment %
Residual income $ million
b.
Will the manager of the Snack Division receive a bonus for her performance? If so, how much will it be? (Omit the “$” sign in your response.)
Manager’s bonus $
Aug 29, 2021 | Uncategorized
A manager is trying to decide whether to build a small medium, or large facility. Demand can be low, average, or high, with the estimated probabilities being 0.25, 0.40, and 0.35, respectively.
A small facility is expected to earn an after tax net present value of just $18,000 if demand is low. If demand is average, the small facility is expected to earn $75,000; it can be increased to average size to earn a net present value of $60,000. If demand is high, the small facility is expected to earn $75,000 and can be expanded to average size to earn $90,000 or to large size to earn $125,000.
A medium sized facility is expected to lose an estimated $25,000 if demand is low and earn $140,000 if demand is average. If demand is high, the medium sized facility is expected to earn a net present value of $150,000; it can be expanded to a large size for a net payoff of $145,000.
If a large facility is built and demand is high, earnings are expected to be $220,000. If demand is average for the large facility, the present value is expected to be $125,000; if demand is low, the facility is expected to lose $60,000.
Draw a decision tree for this problem
How many machines should the company buy initially? What is the expected payoff for this alternative?
Aug 29, 2021 | Uncategorized
A manager is trying to decide whether to buy one machine or two. If only one is purchased and demand proves to be excessive, the second machine can be purchased later. Some sales will be lost, however, because the lead time for producing this type of machine is six months. In addition, the cost per machine will be lower if both are purchased at the same time. The probability of low demand is estimated to be 0.20. The after tax net present value of the benefits from purchsing the two machines together is $90,000 if demand is low and $180,000 if demand is high.
If one machine is purchased and demand is low, the net present value is $120,000. If demand is high, the manager has three options. Doing nothing has a net present value of $120,000; subcontracting, $160,000; and buying the second machine, $140,000.
Draw a decision tree for this problem
How many machines should the company buy initially? What is the expected payoff for this alternative?
Aug 29, 2021 | Uncategorized
Maria Turner has just graduated from college with a degree in accounting. She had planned to enroll immediately in the master’s program at her university but has been offered a lucrative job at a well known company. The job is exactly what Maria had hoped to find after obtaining her graduate degree.
In anticipation of master’s program classes, Maria has already spent $450 to apply for the program. Tuition is $8,000 per year, and the program will take two years to complete. Maria’s expected salary after completing the master’s program is approximately $60,000. If she pursues the master’s degree, Maria would stay in her current home that is near the campus and costs $600 per month in rent. She would also remain at her current job that pays $25,000 per year. Additionally, Maria’s immediate family is nearby. She spends considerable time with family and friends, especially during the holidays. This would not be possible if she accepts the job offer because of the distance from her new location.
The job Maria has been offered includes a salary of $50,000. She would have to relocate to another state, but her employer would pay the $5,000 for moving expenses. Maria’s rent in the new location would be approximately $800 per month. The new location is a fast growing, active city that offers a number of cultural activities that Maria would enjoy. The city is also home to Maria’s favorite Major League Baseball team, and she would expect to buy season tickets.
1. For each item following, determine the differential amount in Maria’s alternatives. For example, the incremental cost of tuition is $16,000 if Maria chooses to pursue the master’s degree. (Leave no cells blank be certain to enter “0” wherever required. Omit the “$” sign in your response.)
a. Monthly rent.:$__________
b. Salary for the next two years.:$__________
c. Salary after two years.:$__________
d. Moving expenses.:$__________
Aug 29, 2021 | Uncategorized
Martin S. Albert (Social Security number 111 11 1111) is 39 years old and is married to Michele R. Albert (Social Security number 123 45 6789). The Alberts live at 512 Ferry Road, Newport News, VA 23601. They file a joint return and have two dependent children (Charlene, age 17, and Jordan, age 18). Charlene’s Social Security number is 123 45 6788, and Jordan’s Social Security number is 123 45 6787. In 2011, Martin and
Michele had the following transactions:
a. Martin received $115,000 in salary from Red Steel Corporation, where he is a construction engineer. Withholding for Federal income tax was $10,750. The amounts withheld for FICA tax were as follows: $4,486 ($106,800 x 4.2%) for Social Security and $1,668 ($115,000 x 1.45%) for Medicare. Martin worked in Mexico from January 1, 2010, until February 15, 2011. His $115,000 salary for 2011 includes $16,000 he
earned for January and one half of February 2011 while working in Mexico.
b. Martin and Michele received $800 in qualified dividends on Green, Inc. stock and $400 interest on Montgomery County (Virginia) school bonds.
c. Martin received $2,300 interest from a Bahamian bank account.
d. Michele received 50 shares of Applegate Corporation common stock as a stock dividend. The shares had a fair market value of $2,000 at the time Michele received them, and she did not have the option of receiving cash.
e. Martin and Michele received a $900 refund on their 2010 Virginia income taxes. Their itemized deductions in 2010 totaled $12,500.
f. Martin paid $6,000 alimony to his former wife, Rose T. Morgan (Social Security number 123 45 6786).
g. Martin and Michele kept the receipts for their sales taxes paid of$1,100.
h. Martin and Michele’s itemized deductions were as follows:
ill State income tax paid and withheld totaled $5,100.
Real estate taxes on their principal residence were $3,400.
ill Mortgage interest on their principal residence was $2,500.
Cash contributions to the church totaled $2,800.
Part 1 Tax Computation
Compute the Alberts’ net tax payable (or refund due) for 2011.
Part 2 Tax Planning
The Alberts are considering buying another house. Their house mortgage payments
would increase by $500 (to $1,500) per. month, which includes a $250 increase in interest
and a $100 increase in property tax. The Alberts would like to know how much the mortgage
payments would increase net of any change in their income tax.
Aug 29, 2021 | Uncategorized
The master budget at Windsor, Inc., last period called for sales of 90,000 units at $36 each. The costs were estimated to be $15 variable per unit and $900,000 fixed. During the period, actual production and actual sales were 92,000 units. The selling price was $36.45 per unit. Variable costs were $17.70 per unit. Actual fixed costs were $900,000.
Required:
Prepare a sales activity variance analysis. (Leave no cells blank be certain to enter “0” wherever required. Input all amounts as positive values. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Omit the “$” sign in your response.)
Flexible Budget
(based on actual
of 92,000 units) Sales Activity
Variance Master Budget
(based on budgeted
90,000 units)
Sales revenue $ $ $
Less:
Variable manufacturing costs
Contribution margin $ $ $
Less:
Fixed costs
Operating profits $ $ $
Aug 29, 2021 | Uncategorized
Only need 1 page and Excel spreadsheet
Consider the following scenario:
Andre has asked you to evaluate his business, Andre’s Hair Styling. Andre has five barbers working for him. (Andre is not one of them.) Each barber is paid $9.90 per hour and works a 40 hour week and a 50 week year, regardless of the number of haircuts. Rent and other fixed expenses are $1,750 per month. Hair shampoo used on all clients is .40 per client. Assume that the only service performed is the giving of haircuts (including shampoo), the unit price of which is $12. Andre has asked you to find the following information.
- Find the contribution margin per haircut. Assume that the barbers’ compensation is a fixed cost. Show calculations to support your answer.
- Determine the annual break even point, in number of haircuts. Support your answer with an appropriate explanation. Show calculations to support your answer.
- What will be the operating income if 20,000 haircuts are performed? Show calculations to support your answer.
- Suppose Andre revises the compensation method. The barbers will receive $4 per hour plus $6 for each haircut. What is the new contribution margin per haircut? What is the annual break even point (in number of haircuts)? Show calculations to support your answer.
Need to be in APA Style with reference
| Grading Criteria |
Percentage |
| Find the contribution margin per haircut. |
25% |
| Determine the annual break even point, in number of haircuts. |
25% |
| What will be the operating income if 20,000 haircuts are performed? |
25% |
| Suppose Andre revises the compensation method. The barbers will receive $4 per hour plus $6 for each haircut. What is the new contribution margin per haircut? What is the annual break even point (in number of haircuts)? |
25% |
Aug 29, 2021 | Uncategorized
I have never done this before so I am totally in the “DARK”. How do I go about this?
Aug 29, 2021 | Uncategorized
Image Is Everything, Inc. (IIE) is located in an emerging market. It specializes in lithographic duplication, catering to demands from the nouveau riche for reproductions of paintings by artists such as Rembrandt, Picasso, Van Gogh, etc. Being the only game in the country, where millionaires are born every minute, IIE finds that demand outstrips capacity. IIE has a demand for 750 reproductions (jobs) every month. It charges $500 per job.
The painting reproduction process involves two steps, a “Preprint” step (the PP step), followed by a “Makeready & Print” step (the MP step). The footnote briefly explains these steps. Read it later if you wish to; you do not need to read it for this assignment. Both the PP step and the MP step require expensive, difficult to acquire, equipment and IIE has somehow smuggled one of each into the country. Each step requires a skilled artist. IIE operates two 10 hour shifts each day, 25 days a month. Each of the 4 artists employed full time by IIE is paid $100 per day, and reports for work every day without fail. Fixed cost expenses for supervision, rent, etc., amount to $10,000 per month. The cost of materials (inks, paper, solvents, etc.) adds up to $100 per job.
The PP step takes one hour on average. The equipment for this process step breaks down frequently, and it is thus unavailable for 20% of the time. Fortunately, these breakdowns do not affect the quality of a job in process. So, as soon as the equipment comes back up, the job continues from whatever stage it was in before the breakdown, without any problem.
The MP step requires a setup time (“Makeready” time) of 15 minutes per job followed by the print operation that takes 30 minutes per job. In addition, the artist executing this step spends one hour at the start of the shift to flush out all the ink from the equipment’s printing plates.
- What is the monthly operating profit for IIE?
Mike’s Mechanics, a reputed maintenance company, offers two services to improve IIE’s productivity.For a fee of it guarantees reducing downtime at the PP step from The other service offered is to install a new
- Should IIE contract with Mike’s Mechanics for either of these two services? If so, which one(s) should it write the contract for and what is the new monthly profit?
Snobs, Inc. is a company located near IIE.It approaches IIE Snobs .Snobs will provide all the material needed at no extra cost.Each of Snobs’ jobs .Assume that the MP process is extremely flexible and can switch between the reproduction work and Snobs’ jobs without any setup delays.Assume that the quality of reproductions is not degraded if there are any delays between the PP step and the MP step.Also assume thatprocessing times are deterministic and so you can load both equipment (PP and MP) to their full capacity without degrading service.
- Given this new demand, what should IIE do regarding its contract with Mike’s Mechanics? How much more money can it make per month, if at all?
- IIE is aware that Snobs is in desperate need for capacity, and that it can demand a higher price per job from Snobs. At what price would it become attractive for IIE to abandon its current reproduction jobs (which require both the PP and the MP processes) and dedicate all its capacity to cater to the demand from Snobs?
Aug 29, 2021 | Uncategorized
1.Assume that you want to determine the profit margin for a company. Which one of the following financial statements is the best source of this information?
a. Statement of retained earnings
b. Statement of cash flows
c. Statement of stockholders equity
d. Income statement
2. An accountant is uncertain about the best estimate of an amount for a business transaction. If two amounts are about equally likely, the amount least likely to overstate assets and income is selected. Which of the following qualities is characterized by this action?
a. comparability
b. conservatism
c. materiality
d. neutrality
3. You are a potential stockholder and are concerned that a particular company you are ready to invest in might have too much debt. Which financial statement would provide you information needed in order to evaluate your concern?
a. balance sheet
b. income statement
c. statement of retained earnings
d. statement of public accounting
4. Which one of the following items is correct concerning the time element of financial statements?
a. the balance sheet covers a period of time
b. the income statement lists amounts that occurred during a particular period.
c. an income statement lists amounts at a specific point in time
d. both the incomeand the balance sheet cover a period of time
5. Which of the following is an organization that lends funds to a business entity and expects repayment of the funds?
a. a partner
b. a stockholder
c. an owner
d. a creditor
6. Which one of the following groups is considered an internal user of financial statements?
a. a bank reviewing a loan application from a corporation
b. the labor union representing employees of a company that is involved in labor negotiations
c. the financial analysts for a brokerage firm who are preparing recommendation for t he firms brokers on companies in a certain industry
d. factory managers that supervise production line work
7. Which of the following best describes the term “assets”?
a. the amount of total profits earned by a business since it began operation
b. the amount of interst or claim that the owners have in the business
c. the economic resources of a business entity
d. the cumulative profits earned by a business less any dividend distributed
8. What is the primary objective of financial reporting?
a. to help investors make credit decision
b. to help management assess cash flows
c. topretect users from fraudulent financial information
d. to provide useful information for decision making
9. How are assets which are expected to be realized in cash, sold, or consumed within the normal operating cycle of a business or within one year (if the operating cycle is shorter than one year) reported on a classified balance sheet?
a. property, plant, and equipment
b. current assets
c. intangible assets
d. current liabilities
10. Which of the following would
not appear on an income statement?
a. sales revenue
b. cost of goods sold
c. accounts receivable
d. insurance expense
11. one effect on the accounting equation when a firm lends money is
a. stockholders equity decreases
b. liabilities increase
c. liabilities decrease
d. total assets remain the same
12. Which of the following transactions affects the liabilities for Benton, Inc.?
a. supplies are purchased for cash by Benton
b. Benton places an order for merchandise with a supplier; the merchandise will be shipped to Benton in 60 days
c. the owner of Benton invest $100,000 in the company
d. payment is made on a bank loan which Benton had obtained 6 months ago
13.
During March, Upton, Inc. purchased office supplies for cash. The supplies will be used in April. What effect does this purchase transaction have on the accounting equation?
- assets increase and stockholders equity decrease
- assets increase liabilities increase
- assets increase liabilities decrease
- there is no effect on the accounting equation as one asset increases while another asset account decreases
14. Owners of DogGone, Inc., Clifford and Sophie, are sent a dividend check from the company. For this transaction, what is the effect on the accounting equation for DogGone, Inc.?
a. assets decrease and stockholders equity decreases
b. assets increase and stockholders equity increases
c. liabilitie increase and stockholdes equity decreases
d. liabilities increase and stockholders equity decreases
15. Which of the following statements best describes one effect of recognizing expenses incurred by a business entity?
a. assets will increase
b. liabilities will decrease
c. stockholders equity will increase
d. stockholders equity will decrease
16. A company forgot to record four adjustments during 2010. Which one of the following omissions of adjustments will overstate assets?
a. sales made during the last week of the period are not recorded
b. interest on monies borrowed has not yet been recorded
c. prepaid insurance is not reduced for the portion of the policy that has expired during the period
d. income taxes owed but not yet paid are ignored
17. When is revenue from the sale of merchandise normally recognized?
a. On the date the sale is made
b. when the customer pays for the merchandise
c. either on the date on twhich the sale occurs, or the date on which the customer pays
d. when the merchandise is sold, if sold for cash, or when payment is received, if sold on credit.
18. Which one of the following is an example of an accrued liability?
a. wages have been earned by employees, but have not been paid at the end of the period
b. equipment that will benefit several periods has been purchased
c. an insurance policy that expires in a future period has been acquired
d. supplies are purchase and used over several months
19. Which one of the following adjustments decreases net income for the period?
a. recognintion of depreciation on plant assets
b. recognition of interest on a note receivable.
c. recoginition of services that had been provided to customers but the ash not yet been received
d. recognition of rent as earned that had been receivd in advance from customers
20. Which one of the following adjustments will increase assets?
a. interest incurred on money borrowed during the period but not yet paid to the bank is accrued
b. rent revenue is recorded for amount owed by a tenant but not yet paid
c. the use of supplies is recorded
d. depreciation for the period is recorded
21. Failure to record depreciation expense for the period results in which of the following?
a. net income being overstated
b. no effect on total assets
c. stockholders equity being overstated
d. both net income and stockholders equity being overstated
22. Which of the following transactions involves an accrued asset?
a. wages earned by employees but not yet paid
b. rent collected in advance from a tenant
c. rent owed by a tenant but no yet collected
d. one years premium on life insurance policy paid in advance
23. which the following organizations is primarily responsible for establishing GAAP today?
a. Financial Accounting Standads Board (FASB)
b. Securities and Exchange Commision (SEC)
c. internal revenue service (IRS)
d. federal government
24. which of the following organizations is responsible for setting auditing standards followed by public accounting firms in conducting independent audits of financial statements?
a. FASB
b. SEC
c. public company accounting oversight board (PCAOB)
d. Internal accounting standards board (IASB)
25. Which one of the following statements is true concerning assets?
a. they are recorded at market value and the adjusted for inflation
b. they are recorded at market value for financial reporting purposes as historical cost may be arbitrary
c. accountatnt use the term historical cost to refer to the original cost of an asset
d. assets are measured using the time period approach
Aug 29, 2021 | Uncategorized
Select any manufacturing or service company that produces unique products or provides specific services of your choice. Discuss the Job Order product costing system used and its problems in the selected company.
| Criteria |
Needs |
| Field requirements |
| Introduction of the selected company. |
Clear description on the following:
Company’s name and location,
number of years in business,
products and services,
and size of the company. |
| Explanation on the purposes of product cost information. |
Able to provide and explain adequately and clearly three purposes for which product cost information is required and were supported with relevant and clear example for each purpose. |
| Features of Job Order Costing and Source documents used in Job Order Costing System. |
Able to identify at least two features of Job Order Costing.
Explained clearly and adequately the functions of any three source documents used in this costing system and provide a sample of each document. |
| Description of manufacturing overheads allocation and its problem. |
Adequate and clear description of any two methods supported with examples on how manufacturing overheads are allocated among different jobs/ products.
Able to identify and discuss the main problem of using unsuitable base for overheads allocation and supported with an example. |
| Summary |
Adequately and clearly summarised the main features, important source documents, frequently used manufacturing overheads allocation method and the problem of Job Order Costing System.
It was presented in a coherent manner. |
Aug 29, 2021 | Uncategorized
Question 1
In 2011, Ace Co. Ltd exchanged machinery with Bee Co. Ltd. Following was related information:
Ace’s machinery Bee’s machinery Cost $250,000 $510,000 Accumulated depreciation 100,000 250,000 Fair value 175,000 172,000 Cash received 3,000 Cash paid 3,000
Ace purchased equipment by signing a 5 year non interest bearing note payable for $100,000. Market interest rate was 5%. Ace received a $5,000 government grant to help purchase the equipment.
Required: a. Assuming that the machinery exchange has commercial substance, prepare the required journal entries of the exchange for both Ace and Bee. b. Assuming that the machinery exchange does not have commercial substance, prepare the required journal entries of the exchange for both Ace and Bee. c. Prepare the required journal entry to record the purchase of the equipment by the non interest bearing note. d. Prepare the required journal entries to record the government grant using the 2 methods acceptable by MRS on the date when the grant is received.
Question On May 31, 2011, Giant Company paid $7,000,000 to acquire all of the ordinary shares of Small Company to form a division of Giant. At the time of the acquisition, Small reported the following statement of financial position:
Non current assets Current assets
Total assets
$5,400,000 Equity $5,000,000 1,800,000 Non current liabilities 1,000,000 Current liabilities 1,200,000 $7,200,000 Total equity and liabilities $7,200,000
At acquisition, fair value of the identifiable net assets of Small was $5,600,000. At December 31, 2011, Small reported the following statement of financial position information:
Current assets Non current assets (including goodwill) Current liabilities Non current liabilities Net assets
$1,600,000 4,800,000 (1,400,000) (L000,000) 4 000 000
Recoverable amount of the Small division on the same day was determined to be $4,200,000.
Required: a. Compute the amount of goodwill recognized, if any, on May 31, 2011. b. Determine the impairment loss, if any, to be recorded on December 31, 2011. c. Assuming that the recoverable amount of the Small division is $3,800,000, prepare the journal entry to record the impairment loss, if any, on December 31, 2011.
Aug 29, 2021 | Uncategorized
CCB Industries sells merchandise on a consignment basis to dealers. Shipping cost are chargeable to CCB, although in some cases the dealer pays them. The selling price of the merchandise averages 25% above cost of merchandise exclusive of freight. The dealer is paid a 10% commission on the sales price for all sales made. All dealer sales are made on a cash basis. the following consignment sales activities occurred during 2012:
Manufacturing cost of goods shipped on consignment…. 500,000
Freight cost incurred:
Paid by CCB:30,000
Paid by dealer:10,000 =40,000(30,000+10,000)
Sales price of merchandise sold by dealer…420,000
Payment made by dealers after deducting commission and freight costs……278,000
Instructions:
1. Prepare an account sales report
2. Determine the consignor’s profit on consignment
3. Prepare the entries on the books of the consignor and the books of the consignee relative to the given consignment transaction assuming: consignment profits are calculated separately.
Aug 29, 2021 | Uncategorized
Use the link provided below to download and access the software that coincides with the attached PDF instructions
https://files.transtutors.com/cdn/uploadassignments/328684_1_portfolio project instructions.pdf
Aug 29, 2021 | Uncategorized
| Answer 2 |
|
|
| The Gross Accounts Receivable are as follows: |
|
| Year |
2012 |
2011 |
| Gross Accounts Receivable |
$ 4,812 |
$ 5,003 |
|
|
|
|
|
|
| Allowance for uncollectible accounts is calculated based on the history of write offs, the level of past due accounts and relationships with the customers. So, this is a reasonably good measure of estimating uncollectible accounts. |
Solution Attachments:
| Answer 1 |
|
|
| Net Accounts Receivable means the Gross Accounts Receivable less any estimates of the amounts uncollectible from the customers. |
| Year |
2012 |
2011 |
| Gross Accounts Receivable |
$ 4,812 |
$ 5,003 |
| less: allowance for uncollectible accounts |
$ 53 |
$ 83 |
| Net Accounts Receivable |
$ 4,759 |
$ 4,920 |
Aug 29, 2021 | Uncategorized
1.Assume that you want to determine the profit margin for a company. Which one of the following financial statements is the best source of this information?
a. Statement of retained earnings
b. Statement of cash flows
c. Statement of stockholders equity
d. Income statement
2. An accountant is uncertain about the best estimate of an amount for a business transaction. If two amounts are about equally likely, the amount least likely to overstate assets and income is selected. Which of the following qualities is characterized by this action?
a. comparability
b. conservatism
c. materiality
d. neutrality
3. You are a potential stockholder and are concerned that a particular company you are ready to invest in might have too much debt. Which financial statement would provide you information needed in order to evaluate your concern?
a. balance sheet
b. income statement
c. statement of retained earnings
d. statement of public accounting
4. Which one of the following items is correct concerning the time element of financial statements?
a. the balance sheet covers a period of time
b. the income statement lists amounts that occurred during a particular period.
c. an income statement lists amounts at a specific point in time
d. both the incomeand the balance sheet cover a period of time
5. Which of the following is an organization that lends funds to a business entity and expects repayment of the funds?
a. a partner
b. a stockholder
c. an owner
d. a creditor
6. Which one of the following groups is considered an internal user of financial statements?
a. a bank reviewing a loan application from a corporation
b. the labor union representing employees of a company that is involved in labor negotiations
c. the financial analysts for a brokerage firm who are preparing recommendation for t he firms brokers on companies in a certain industry
d. factory managers that supervise production line work
7. Which of the following best describes the term “assets”?
a. the amount of total profits earned by a business since it began operation
b. the amount of interst or claim that the owners have in the business
c. the economic resources of a business entity
d. the cumulative profits earned by a business less any dividend distributed
8. What is the primary objective of financial reporting?
a. to help investors make credit decision
b. to help management assess cash flows
c. to pretect users from fraudulent financial information
d. to provide useful information for decision making
9. How are assets which are expected to be realized in cash, sold, or consumed within the normal operating cycle of a business or within one year (if the operating cycle is shorter than one year) reported on a classified balance sheet?
a. property, plant, and equipment
b. current assets
c. intangible assets
d. current liabilities
10. Which of the following would
not appear on an income statement?
a. sales revenue
b. cost of goods sold
c. accounts receivable
d. insurance expense
11. one effect on the accounting equation when a firm lends money is
a. stockholders equity decreases
b. liabilities increase
c. liabilities decrease
d. total assets remain the same
12. Which of the following transactions affects the liabilities for Benton, Inc.?
a. supplies are purchased for cash by Benton
b. Benton places an order for merchandise with a supplier; the merchandise will be shipped to Benton in 60 days
c. the owner of Benton invest $100,000 in the company
d. payment is made on a bank loan which Benton had obtained 6 months ago
13.
During March, Upton, Inc. purchased office supplies for cash. The supplies will be used in April. What effect does this purchase transaction have on the accounting equation?
- assets increase and stockholders equity decrease
- assets increase liabilities increase
- assets increase liabilities decrease
- there is no effect on the accounting equation as one asset increases while another asset account decreases
14. Owners of DogGone, Inc., Clifford and Sophie, are sent a dividend check from the company. For this transaction, what is the effect on the accounting equation for DogGone, Inc.?
a. assets decrease and stockholders equity decreases
b. assets increase and stockholders equity increases
c. liabilitie increase and stockholdes equity decreases
d. liabilities increase and stockholders equity decreases
15. Which of the following statements best describes one effect of recognizing expenses incurred by a business entity?
a. assets will increase
b. liabilities will decrease
c. stockholders equity will increase
d. stockholders equity will decrease
16. A company forgot to record four adjustments during 2010. Which one of the following omissions of adjustments will overstate assets?
a. sales made during the last week of the period are not recorded
b. interest on monies borrowed has not yet been recorded
c. prepaid insurance is not reduced for the portion of the policy that has expired during the period
d. income taxes owed but not yet paid are ignored
17. When is revenue from the sale of merchandise normally recognized?
a. On the date the sale is made
b. when the customer pays for the merchandise
c. either on the date on twhich the sale occurs, or the date on which the customer pays
d. when the merchandise is sold, if sold for cash, or when payment is received, if sold on credit.
18. Which one of the following is an example of an accrued liability?
a. wages have been earned by employees, but have not been paid at the end of the period
b. equipment that will benefit several periods has been purchased
c. an insurance policy that expires in a future period has been acquired
d. supplies are purchase and used over several months
19. Which one of the following adjustments decreases net income for the period?
a. recognintion of depreciation on plant assets
b. recognition of interest on a note receivable.
c. recoginition of services that had been provided to customers but the ash not yet been received
d. recognition of rent as earned that had been receivd in advance from customers
20. Which one of the following adjustments will increase assets?
a. interest incurred on money borrowed during the period but not yet paid to the bank is accrued
b. rent revenue is recorded for amount owed by a tenant but not yet paid
c. the use of supplies is recorded
d. depreciation for the period is recorded
21. Failure to record depreciation expense for the period results in which of the following?
a. net income being overstated
b. no effect on total assets
c. stockholders equity being overstated
d. both net income and stockholders equity being overstated
22. Which of the following transactions involves an accrued asset?
a. wages earned by employees but not yet paid
b. rent collected in advance from a tenant
c. rent owed by a tenant but no yet collected
d. one years premium on life insurance policy paid in advance
23. which the following organizations is primarily responsible for establishing GAAP today?
a. Financial Accounting Standads Board (FASB)
b. Securities and Exchange Commision (SEC)
c. internal revenue service (IRS)
d. federal government
24. which of the following organizations is responsible for setting auditing standards followed by public accounting firms in conducting independent audits of financial statements?
a. FASB
b. SEC
c. public company accounting oversight board (PCAOB)
d. Internal accounting standards board (IASB)
25. Which one of the following statements is true concerning assets?
a. they are recorded at market value and the adjusted for inflation
b. they are recorded at market value for financial reporting purposes as historical cost may be arbitrary
c. accountatnt use the term historical cost to refer to the original cost of an asset
d. assets are measured using the time period approach
Aug 29, 2021 | Uncategorized
Gringo Corporation factors $250,000 of accounts receivable with Winkler Financing, Inc. on a with recourse basis. Winkler Financing will collect the receivables. The receivables records are transferred to Winkler Financing on August 15, 20X1. Winkler Financing assesses a finance charge of 2% of the amount of accounts receivable and also reserves an amount equal to 4% of accounts receivable to cover probable adjustments. Instructions: (a) What conditions must be met for a transfer of receivables with recourse to be accounted for as a sale? (b) Assume the conditions from part (a) are met. Prepare the journal entry on August 15, 20X1, for Gringo to record the sale of receivables, assuming the recourse obligation has a fair value of $3,000.
Aug 29, 2021 | Uncategorized
A.
|
The finished goods inventory on hand at the end of each month must be equal to 6,000 units of Supermix plus 35% of the next month’s sales. The finished goods inventory on June 30 is budgeted to be 19,650 units.
B.The raw materials inventory on hand at the end of each month must be equal to one half of the following month’s production needs for raw materials. The raw materials inventory on June 30 is budgeted to be 85,000 cc of solvent H300.
C.
|
The company maintains no work in process inventories.
A sales busget for Supermix for the last 6 months is as follow: July 39,000, August 49,000, Set. 69,000, Oct. 34,000, Nov, 19,000 and Dec. 9,000
What is the budgeted sales for each month?
The desired ending & beginning inventory for each month? |
Aug 29, 2021 | Uncategorized
1. Prepare Benjamin and Brenda’s 2012 federal income tax return, submitting Form 1040 and any other required IRS forms and/or schedules.
2.Prepare Carl and Carla’s 2012 federal income tax return, submitting Form 1040 and any other required IRS forms and/or schedules.
Aug 29, 2021 | Uncategorized
Assignment
- Review the PCAOB Disciplinary report for Moore & Associates. In your opinion, were Ethos, Standard Drilling, and Biocoral committing fraud by hiring Moore & Associates? Why or why not?
- Read pages 1 32 of the 2012 Report to the Nations (see link below.) then answer questions 3 and 4.
- Define and describe each of three types of fraud. Include facts about the frequency, losses, duration, most common perpetrators, and most likely way the fraud is discovered.
- Research and describe one example of each type of fraud that occurred within the past 3 years. Identify your source and the company name. For your asset misappropriation example, identify the sub category to which your example relates (if possible.)
- Read pages 32 38 of the 2012 Report to the Nations. Then answer questions 6, 7 and 8.
- Give your reasoned opinion as to why external audits of financial statements and external audits of ICOFR (internal control over financial reporting) are not more effective at detecting fraud.
- Identify and describe the three “sides” of the fraud triangle. Give one example of each “side.”
- The concept of a fraud diamond was introduced in 2004. How does the fraud diamond differ from the fraud triangle?
Aug 29, 2021 | Uncategorized
LEE COLLEGE
STATEMENT OF ACTIVITY
FOR THE YEAR ENDED DECEMBER 31, 2012
Unrestricted Temporary Permanently Totals ……. Restricted Restricted Restricted
Revenues
Tuition and Fees 11,200,000 11,200,00
Endowment Inves 40,000,000 40,000,000
Auxiliary str 5,ic000,000 5,000,000
Contribution 100,000,000 100,000,000
Satif of Progaram Res 640,000,000 640,000,000
Plan Aquisision Restr 1,160,000 1,160,000
Net Assests Permanently
Restricted 3,290,000 3, 290, 000
Grants 950,000,000
Programs Restriction 640,000,000 (640,000,000)
Gain on long term Investment 750,000
Total Revenue 4,469,320,000
Expenses
Instruction Expenses 7,000,000
Research Expenses 4, 5000,000
Public Service Exp 1, 2000,000
Institutional Support Exp 700,000
Student Service Expense 150,000
Auxiliary Enterprise Exp 3,500,000
Undesignated Assets 980,000
Restricted Contribution 1,500,000
Plan Acquision Reclassi 1,160,000
Temporary Restricted Net 650,000
Permanently restricted Cont 2,540,000
Total Operating expenses 3,720,180
Change in Assets 749,140,000
Net assets in the Beginning 300,000,000
Ending Net Assets 752,140,000
Aug 29, 2021 | Uncategorized
Obtain the last five year’s published Income Statements and Balance Sheets for a company listed on the London Stock Market.
Identify 4 groups who would be interested in utilizing these financial statements and critically discuss the purposes for which they would use them.
Identify the accounting ratios that would best enable the chosen user groups to achieve their purpose and calculate these ratios for your chosen company (two for each user group).
Analyse the ratios calculated and discuss in relation to the user groups identified and their purpose of use.
Your assessment must contain an Introduction and Conclusion.
Aug 29, 2021 | Uncategorized
journal entires and ledgers, trial balance,adjustment entrie
Aug 29, 2021 | Uncategorized
Answer 1 to 7 based on page 5 33.
- Title I §101 of SOX establishes the Public Company Accounting Oversight Board (PCAOB.) Describe the composition of the Board and any limitations as to who may be appointed to the Board.
- Visit the PCAOB Web site. http://www.pcaobus.org/ Find the sample registration form. Identify at least four pieces of information required from the applicant (CPA firm).
- Visit the PCAOB Web site. http://www.pcaobus.org/ The PCAOB inspection reports are available to the public.
- Find an inspection report for any firm you choose and briefly review the PCAOB’s findings.
- Did the PCAOB find any audit deficiencies?
- If so, on what issues?
- Tax services are not specifically prohibited by SOX §201.
- In your opinion, should tax services be included in the prohibited list of services in SOX §201?
- Why or why not?
- In your opinion, should it matter if it is tax compliance work (tax returns) versus tax consulting?
- Can an auditor assist a client with design and implementation of an information system if the client company’s audit committee pre approves the fees in accordance with SOX §202?
- SOX §203 requires the engagement and reviewing partners to rotate off audit clients after five years. In your reasoned opinion, does audit partner rotation result in higher quality audits? Why or why not? You should find resources that address this issue on the Internet.
- SOX §301 provides additional authority and requirements for corporate audit committees.
- Describe the relationship between a company’s Board of Directors and the company’s audit committee.
- Identify two audit committee responsibilities identified in SOX §301
8. Read Section 301 on pages 30 through 33 in the Student Guide.
9. Review the Investor Relations area of the Microsoft Web site. http://www.microsoft.com/msft/default.mspx
- Does Microsoft have a procedure for employees or others to ask questions or report concerns about “…internal accounting controls, an accounting matter, or an auditing matter?”
- If so, who (title of the person) responds to questions or concerns communicated?
- Does Microsoft’s procedure seem to satisfy SOX section 301?
10. Identify the three certifications required by §302.
11. In your reasoned opinion, does §302 significantly increase the workload or responsibility of CEOs and CFOs? Why or why not?
12. SOX §402 was inspired in part by Tyco former CEO Dennis Kozlowski.
- Google Kozlowski and read several articles or interviews.
- How did he spend the money drained from Tyco?
- If you were on the jury at his trial, how would you interpret his claim (made to Morley Safer on 60 Minutes, March 25, 2007) that the issue was just “a major pay dispute [?]”
13. Find the 2012 Annual report at the Investor Relations area of the Microsoft Web site. http://www.microsoft.com/msft/default.mspx
- Read the Auditor’s Report in the Financial Review area.
- What standards were used by the CPA firm to conduct the financial statement audit?
- Find and read the certifications required by §302.
- Find and read the auditor’s report required by §404.
- What criteria were used by the auditors to conduct the audit of the internal control over financial reporting?
- What are the two specifically cited “inherent limitations” that may not allow auditors to prevent or detect material misstatements due to error or fraud on a timely basis?
14. Visit the Investor Relations area of the Microsoft Web site. http://www.microsoft.com/msft/corporate/default.mspx
- Find and read the code of ethics that meets the requirements of §406.
- Which employees (by title or class) are subject to the code of ethics?
Aug 29, 2021 | Uncategorized
For each of the following transactions on the statement of cash flows, indicate whether it would appear in the Operating Activities section (O), in the Investing Activities section, or in the Financing Activities section (F). Assume the use of the direct method in the Operating Activities section.
____ 1. Repayment of long term debt
____ 2. Purchase of Equipment
____ 3. Collection of customer’s account
____ 4. Issuance of common stock
____ 5. Purchase of another company
____ 6. Payment of dividends
____ 7. Payment of income taxes
____ 8. Sale of equipment
For each of the following items, indicate whether it would appear on a statement of cash flows prepared using the direct method (D) or the indirect method (I).
____ 1. Net income
____ 2. Increase in accounts receivable
____ 3. Collection on accounts receivable
____ 4. Payments on accounts payable
____ 5. Decrease in accounts payable
____ 6. Depreciation expense
____ 7. Gain on early retirement of bods
____ 8. Cash sales
Aug 29, 2021 | Uncategorized
Questions 1 (30 marks)
Kwong Fai Co. Ltd has been carrying on business as a garment
manufacturer for many years. The income statement of the company for
the year ended 31 December 2011 is as follows:
$ $
Gross profit from trading 1,185,000
Investment income 114,000
Interest income 39,000
Miscellaneous income 150,000
1,488,000
Less:
Salaries and directors’
remuneration
451,000
Rent and rates 168,000
Electricity and water 37,000
Telephone 13,000
Travelling and entertaining 142,000
General office repairs 239,000
Bad and doubtful debts 66,000
Professional charges 47,000
Sundry expenses 81,000
Depreciation on furniture and
fixture
42,000
Charitable donations 30,000
Net profit for the year
1,316,000
172,000
The following information relating to the above account is available:
i Depreciation charges on plant and machinery of $98,000 is included
in the cost of sales.
2 ACT B414 Taxation I
ii Interest income:
Interest on loan to a wholly owned subsidiary resident in Hong Kong $15,000
Interest on a fixed deposit in US dollars with a local bank $24,000
iii Investment income:
Dividends from a subsidiary in Hong Kong $60,000
Rental income from property in Macau $54,000
iv Miscellaneous income:
Rent from subletting a property in Hong Kong $120,000
Gain on exchange $30,000
(realized, relating to open account with customers)
v Travelling and entertaining:
Workers’ transportation costs $60,000
Travelling allowances to staff $22,000
Cost of gasoline and repairs to the managing director’s car $60,000
vi General office repairs:
Electrical wiring in factory premises $200,000
Repairs to furniture and fixture $15,000
Cost of purchase of sundry utensils $24,000
($20,000 for initial purchases, other purchases are for replacement)
vii The bad debt accounts:
Increase in general provision for bad debts $7,000
Decrease in specific provision for bad debts ($41,000)
Loan to a director written off $100,000
viii Professional charges:
Audit fee $2,000
Legal fee: debt collection $15,000
Fee paid for designing a new machine $30,000
ix Sundry expenses:
Subscription to trade association $3,000
Expenses of staff dinner at the New Year $15,000
Special contribution to a recognized occupational retirement $60,000
scheme established during the year
Miscellaneous expenses (all allowable) $3,000
Aug 29, 2021 | Uncategorized
Several items are omitted from each of the following income statement and cost of goods manufactured statement data for the month of December 2012:
http://i1060.photobucket.com/albums/t452/sf49ersfan2003/Screenshot2012 04 12at95309AM.png
Note: Enter all amounts as positive numbers.
1. Determine the amounts of the missing items, identifying them by letter.
Letter Tom Company Jerry Company
a. $ $
b. $ $
c. $ $
d. $ $
e. $ $
f. $ $
2. Prepare a statement of cost of goods manufactured for Jerry Company.
http://i1060.photobucket.com/albums/t452/sf49ersfan2003/Screenshot2012 04 12at95816AM.png
3. Prepare an income statement for Jerry Company.
http://i1060.photobucket.com/albums/t452/sf49ersfan2003/Screenshot2012 04 12at95953AM.png
Thanks!
Aug 29, 2021 | Uncategorized
On January 1, 2011, NFB Visual Aids issued $800,000 of its 20 year, 8% bonds. The bonds were priced to yield 10%. Interest is payable semiannually on June 30 and December 31. NFB Visual Aids records interest expense at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2011, the fair value of the bonds was $668,000 as determined by their market value in the over the counter market.
Required:
1Determine the price of the bonds at January 1, 2011, and prepare the journal entry to record their issuance.
2Prepare the journal entry to record interest on June 30, 2011 (the first interest payment).
3Prepare the journal entry to record interest on December 31, 2011 (the second interest payment).
4Prepare the journal entry to adjust the bonds to their fair value for presentation in the December 31, 2011, balance sheet.
Aug 29, 2021 | Uncategorized
On January 1, 20X9, Company A acquired 80 percent of the common stock and 60 percent of the preferred stock of Company B, for $400,000 and $60,000, respectively. At the time of acquisition, the fair value of the common shares of Company B held by the noncontrolling interest was $100,000. Company B’s balance sheet contained the following balances: For the year ended December 31, 20X9, Company B reported net income of $100,000 and paid dividends of $40,000. The preferred stock is cumulative and pays an annual dividend of 10 percent. Based on the preceding information, the eliminating entry to prepare the consolidated financial statements for Company A as of December 31, 20X9 will include a credit to noncontrolling interest in net income of Company B for:Answer 140,000 154,000 152,000 150,000
Aug 29, 2021 | Uncategorized
|
Rex Baker and Ty Farney are forming a partnership to which Baker will devote three fourth time and Farney will devote full time. They have discussed the following alternative plans for sharing income and loss: (a) in the ratio of their initial capital investments, which they have agreed will be $32,000 for Baker and $48,000 for Farney; (b) in proportion to the time devoted to the business; (c) a salary allowance of $2,250 per month to Farney and the balance in accordance with the ratio of their initial capital investments; or (d) a salary allowance of $2,250 per month to Farney, 10% interest on their initial capital investments, and the balance shared equally. The partners expect the business to perform as follows: year 1, $14,000 net loss; year 2, $35,000 net income; and year 3, $58,333 net income.
|
Year 1
Income (Loss)
Sharing Plan Baker Farney
(a) $ $
(b) $ $
(c) $ $
(d) $ $
Year 2
Income (Loss)
Sharing Plan Baker Farney
(a) $ $
(b) $ $
(c) $ $
(d) $ $
Year 3
Income (Loss)
Sharing Plan Baker Farney
(a) $ $
(b) $ $
(c) $ $
(d) $ $
Aug 29, 2021 | Uncategorized
Unit3 IP
Consider the following scenario:
The Ski Pro Corporation, which produces and sells to wholesalers a highly successful line of water skis, has decided to diversify to stabilize sales throughout the year. The company is considering the production of cross country skis.
After considerable research, a cross country ski line has been developed. Because of the conservative nature of the company management, however, Minnetonka’s president has decided to introduce only one type of the new ski for this coming winter. If the product is a success, further expansion in future years will be initiated.
The ski selected is a mass market ski with a special binding. It will be sold to wholesalers for $80 per pair. Because of availability capacity, no additional fixed charges will be incurred to produce the skis. A $100,000 fixed charge will be absorbed by the skis, however, to allocate a fair share of the company’s present fixed costs to the new product.
Using the estimated sales and production of 10,000 pairs of skis as the expected volume, the accounting department has developed the following cost per pair of skis and bindings:
Direct Labor: $35
Direct Material: $30
Total Overhead: $15
Total: $80
Ski Pro has approached a subcontractor to discuss the possibility of purchasing the bindings. The purchase price of the bindings from the subcontractor would be $5.25 per binding, or $10.50 per pair. If the Ski Pro Corporation accepts the purchase proposal, it is predicted that direct labor and variable overhead costs would be reduced by 10% and direct material costs would be reduced by 20%.
Write a 1 page paper, and create a spreadsheet that answers the following questions:
Aug 29, 2021 | Uncategorized
Exercise 4 24: The Effect of Adjustments on the Accounting Equation
Determine whether recording each of the following adjustments will increase (i), decrease (d), or have no effect (NE) on each of the three elements of the accounting equation.
Transactions Assets = Liabilities + SE
- Prepaid insurance is reduced for the portion
of the policy that has expired during the period.
- Interest incurred during the period but not yet
Paid is accrued.
- Depreciation for the period is recorded
- Revenue is recorded for the earned portion of a
liability for amounts collected in advance from
customers.
- Rent revenue is recorded for amounts owed by
a tenant but not yet received.
- Income taxes owed but not yet paid are accrued.
Exercise 4 25: The accounting Cycle
The steps in the accounting cycle are listed in random order. Fill in the blank next to each step to indicate its order in the cycle. The first Step in the cycle is filled in as an example.
ORDER PROCEDURE
_________ Prepare a work sheet.
_________ Close the accounts.
_________ Collect and analyze information from source documents
_________ Prepare financial statements.
_________ Post transactions to accounts in the ledger.
_________ Record and post adjustments
_________ Journalize daily transactions
Aug 29, 2021 | Uncategorized
Annual Adjustments Palmer Industries prepares annual financial statements and adjusts its accounts only at the end of the year. The following information is available for the year ended December 31, 2010:?
a. Palmer purchased computer equipment two years ago for $15,000. The equipment has an estimated useful life of five years and an estimated salvage value of $250.?
b. The Office Supplies account had a balance of $3,600 on January 1, 2010. During 2010, Palmer added $17,600 to the account for purchases of office supplies during the year. A count of the supplies on hand at the end of December 2010 indicates a balance of $1,850.?
c. On August 1, 2010, Palmer created a liability account, Customer Deposits, for $24,000. This sum represents an amount that a customer paid in advance and that will be earned evenly by Palmer over a six month period.?
d. Palmer rented some office space on November 1, 2010, at a rate of $2,700 per month. On that date, Palmer recorded Prepaid Rent for three months’ rent paid in advance. ?
e. Palmer took out a 120 day, 9%, $200,000 note on November 1, 2010, with interest and principal to be paid at maturity. ?
f. Palmer operates five days per week with an average daily payroll of $500. Palmer pays its employees every Thursday. December 31, 2010, is a Friday. ??
Required?1. For each of the preceding situations, identify and analyze the adjustment to be recorded on December 31, 2010.?
2. Assume that Palmer’s accountant forgets to record the adjustments on December 31, 2010. Will net income for the year be understated or overstated? by what amount? (Ignore the effect of income taxes.)
Aug 29, 2021 | Uncategorized
Big Mountain
Big Mountain Coffee Roasters was founded in 1970 and began as a small cafe in Vermont roasting and serving premium coffee on the premises. Big Mountain blends and distributes coffee to a variety of customers, including cafes, delis, and restaurants and currently has about 8,700 customer accounts reaching states across the nation. As the company has grown, several beverages have been added to their product line, including signature blends, light and heavy roasts, decaffeinated coffee and teas, and herbal teas. Big Mountain has been publicly traded since 1990 and had sales in excess of S80 million for the fiscal year ended September 2011.
Big Mountain has a warehouse and manufacturing plant located in Vermont where it presently employs 275 full and part time workers. The company receives its beans in bulk from a select group of distributors located across the world, with their largest supplier being Columbia Beans Co. Big Mountain also sells accessories that complement their products, such as mugs, thermoses, and coffee containers that they purchase from their supplier Coffee Gear Inc. In addition to selling coffee and accessories, Big Mountain uses paper products such as coffee bags, coffee cups, and stirrers to distribute to their customers and package the coffee that they purchase from Save the Planet Inc.
Soles Order System
The sales process begins when a customer sends a customer order to the sales derk. The sales deck first does a credit check using the customer sales history records to authorise the transaction. The sales clerk then prepares a customer copy, a stock release, a file copy, a packing slip, an invoice, and a ledger copy of the sales order. All documents, including the customer order, are filed. Then the invoice, ledger copy, and file copy are sent to the billing department.
The billing department enters all the information from the source documents into the computer, adds prices, and bills the customer. The computer updates the sales journal and a journal voucher is prepared lat end of day) and sent to Victor, the general ledger clerk. The file copy is then filed and the stock release is sent to Laura in the warehouse. A copy of the invoice is mailed to the customer and the ledger copy is sent to the accounts receivable clerk in the accounting department.
Laura then uses the stock release to pick the goods from the shelf. A PC based inventory system is used to update the inventory subsidiary ledger from the stock release copy. The file copy is filed and the stock release is sent to the shipping department. At the end of the day Laura prepares a journal voucher, which is sent to the general ledger clerk. The shipping clerk, who reconciles the stock release along with the packing slip and file copy, then prepares a bill of lading. The shipping log is updated and the stock release and file copy are filed. The bill of lading and packing slip are given to the carrier along with the goods.
In the accounting department, relevant information taken from the ledger (sent from billing) is entered into the computer to update the accounts receivable records. A summary (end of day) is sent to Victor. The ledger copy is then filed in the accounting department. Victor reconciles the accounts receivable summary with the journal vouchers and updates the general ledger. All documents are then filed.
Cosh Receipts System
The mail room clerk receives the checks and remittance advices from the customer. He reconciles the checks with the remittance advices and prepares two copies of a remittance list. The checks and a remittance list are then sent to Jim, the cash receipts clerk in the accounting department. Jim uses a PC system to process the cash receipts, update the cash receipts journal, and prepare a journal voucher and three deposit slips. The journal voucher is sent to Victor, the general ledger clerk. The checks and two deposit slips are sent to the bank to be deposited into Big Mountain’s account. The third deposit slip and the remittance list are filed. The second remittance list and the remittance advices are sent to May, another cash receipts clerk who, using a separate PC, updates the accounts receivable subsidiary ledger and prepares an account summary, which is sent to Victor. The remittance list and the remittance advice are then filed. Victor uses the journal voucher and the account summary to update the general ledger. These two documents are then filed.
Required
a. Create a data flow diagram of the current system. b. Create a document/system flowchart of the existing system. c. Document any control weaknesses you note. d. The title of each flowchart should contain the following: the flowchart name, the company name and the date (As of December 31, 2011).
Aug 29, 2021 | Uncategorized
Balser Company manufactures and sells aproduct called JYMP. Results of last year for the manufacture and sale of JYMP’s are as follows:
|
Sales (8000 JYMP’s at 120 each)
|
$960,000
|
|
Less cost:
|
|
|
Variable production
|
464,000
|
|
Sales commission (15% of sales)
|
144,000
|
|
Salary of product line manager
|
100,000
|
|
Fixed product line advertising
|
160,000
|
|
Fixed manufacturing overhead
|
132,000
|
|
Total cost
|
1,000,000
|
|
Net operating loss
|
$(40,000)
|
Balser anticipates no change in the operating results for JYMP in the foreseeable future. Balser is re examining all of its productline and is trying to decide whether or not to discontinue the manufacture and sale of JYMP’s. Total fixed manufacturing overhead costs would not be affected by a decision to drop any one product line.
Assume that discontinuing the manufacture and sale of JYMP’s will have no effect on other product lines. If the company discontinues the JYMP product line, the change in annual operating income due to this decision
Aug 29, 2021 | Uncategorized
- After a careful analyses of Account Receivable a decision is made to establish an Allowance for Doubtful Account in the amount of $2,200.
- Estimated economic life of the building is 40 years; residual value is zero. Estimated economic life of equipment is 20 years with residual value of $12,000.
- Interest on the bond is payable Jan. 1 and July 1.
- Salaries and wages earned but repaid on Oct 31 amount to $5,000.
- 5.The inventory at Oct, 31, 1999 cost $26,000.
- 6.The income tax expense is estimated to be 40% of income before income taxes
WORM a 12 column work sheet to adjust accounts and classify the balances as to income
talkifelign, Retain timing arid Ialancc Siwet till Jude a pail of column for an adjusted trail
Aug 29, 2021 | Uncategorized
11
Electric, Inc maintains it accounts on the basis of a fiscal year ending October 31. The following unadjusted Trial Raining,. was prepared 1 / innn the general ledger ad October J I, 1999. Reversing entries had been made by Electric, Inc in November 1, 1998 the first day of the current fiscal year for the accrued interest payable and the accrued salaries and wages payable which had been recorded by adjusting entries on October 31, 1998.
De it Credit Cash 52,000 Account Receivable 32,000 Inventory, Oct 31, 198 47,000 Land 84,000 Building 210,000 Accum. Deprec.:Building 84,000 Equipment 252,000 Accum. Deprec: Equip 62,700 Account payable 45,000 Accrued interest payable 0 Accrued salaries/wages pay 0 Bond payable, 9% 100,000 Capital Stock 200,000 Retain Earning, Nov 1, 1998 88,800 Dividends 8,000 Sales 820,000 Purchases 490,000 Salaries & Wages Expense 56,500 Selling Expense 122,500 General Expense 41,000 Interest Expense 5,500 0 TOTAL 1,400,500 1,400.500
1. After a careful analyses of Account Receivable a decision is made to establish an Allowance for Doubtful Account in the amount of $2,200.
2. Estimated economic life of the building is 40 years; residual value is zero. Estimated economic life of equipment is 20 years with residual value of $12,000. 3. Interest on the bond is payable Jan. 1 and July 1. 4. Salaries and wages earned but repaid on Oct 31 amount to $5,000. 5. The inventory at Oct, 31, 1999 cost $26,000. 6. The income tax expense is estimated to be 40% of income before income taxes WORM a 12 column work sheet to adjust accounts and classify the balances as to income talkifelign, Retain timing arid Ialancc Siwet till Jude a pail of column for an adjusted trail..
Aug 29, 2021 | Uncategorized
- What is a “pass through” agency fund and under what conditions is it appropriate to use such a fund?
GASB standards require that investments be reported at fair value. Explain the GASB reporting requirements related to fair value. How do these requirements differ from reporting requirements for corporate entities?
Aug 29, 2021 | Uncategorized
Chanthaly Jackson
For any kind of companies it is important to choose and use the right types of costing system. Costing system is an accounting system uses by companies and organizations to monitor the company’s expenditures and overheads (“What is a Costing System?”, 2013). Job In –order costing system and a process costing system are the two major types of costing system uses in manufacturing and organization that provide services (Nurre, n.d.).
A job order costing system is use in order to determine and track the cost of generating specific individual job and calculating the cost per unit (Wild & Shaw, 2012). The job order costing system tracks the amount and the cost of material and labor for each specific job (Wild & Shaw). The job order costing system consisted of custom orders, heterogeneous products and services, low production volume, high production flexibility, and low to medium standardization (Wild & Shaw). These data are located in detail information thru the cost flows process in journal: during production, job completion, and job delivery (Wild & Shaw). While a process costing system focus on the individual process and the cost of each process is determine by the average of the total cost (Wild & Shaw). The process costing system consisted of repetitive procedures, homogeneous products and services, high production volume, low product flexibility, and high standardization (Wild & Shaw)
Job order costing system work best for companies that produce different products such as shipbuilding (ex. Bay Shipbuilding Company), aircraft manufacturing (ex. Boeing), hospital (ex. Florida Hospital Orlando), special order printing (ex. TC Printing), construction (ex. Granite Construction), movie studios (ex. Walt Disney Studios), and professional services (ex. law firms, accountants, appraisers, etc) (Nurre, n.d.). Process costing system work best for companies such as cement (ex. Nevada Cement Company), flour (ex. King Arthur Flour), brick (ex. Palmetto Brick Company), paper (ex. Awa Paper), bottling (ex. Coca Cola), chemicals (ex. The Chemical Company), sugar (ex. Imperial Sugar Company), coals (ex. Peabody Energy), steels (ex. AK Steel), and oil refining (ex. Continental Refining Company) (Nurre).
For a company that plans to start with only one version of the product by at some point in the future may offer a variety of option the best costing system to use is job order costing system. This way it is easier to keep track of the material cost and the cost to make individual unit, so for future order of the same item the company is able to predict the estimate cost of the order so the chance of being short on order or overproduce is minimize.
References
Nurre, R. (2013).
Systems Design –Job Order Costing.Retrieved from
http://smccd.edu/accounts/nurre/online/chtr3l
What is a Costing System? (2013). Retrieved from http://www.wisegeek.org/what is a costing
system
Wild, J. & Shaw, K. (2012). Managerial Accounting (3rd Ed.) [Online version]. Retrieved from
AIU Online Virtual Campus. Managerial Accounting. ACCT31 1302B 05:02 03
website.
Aug 29, 2021 | Uncategorized
Conwell Company manufactures its product, Vitadrink, through two manufacturing processes: Mixing and Packaging. All materials are entered at the beginning of each process. On October 1, 2012, inventories consisted of Raw Materials $26,000, Work in Process—Mixing $0, Work in Process—Packaging $250,000, and Finished Goods $289,000. The beginning inventory for Packaging consisted of 10,000 units that were 50% complete as to conversion costs and fully complete as to materials. During October, 50,000 units were started into production in the Mixing Department and the following transactions were completed.
1. Purchased $300,000 of raw materials on account.
2. Issued raw materials for production: Mixing $210,000 and Packaging $45,000.
3. Incurred labor costs of $258,900.
4. Used factory labor: Mixing $182,500 and Packaging $76,400.
5. Incurred $810,000 of manufacturing overhead on account.
6. Applied manufacturing overhead on the basis of $24 per machine hour. Machine hours were 28,000 in Mixing and 6,000 in Packaging.
7. Transferred 45,000 units from Mixing to Packaging at a cost of $979,000.
8. Transferred 53,000 units from Packaging to Finished Goods at a cost of $1,315,000.
9. Sold goods costing $1,604,000 for $2,500,000 on account.
Instructions
Journalize the October transactions.
Aug 29, 2021 | Uncategorized
Joy Grant Littles Within any company, large or small, correct costing is considered a vital aspect of the accounting process.Selecting process costing or a job order costing system is based off of what type of product the organization is going to sell or process [Muse, 2013].A job order costing system can be seen in manufacturing businesses like for furniture, printing, or shipbuilding, which all use this type of system.
Aug 29, 2021 | Uncategorized
- Prepare all general journal entries for the month of January, 2009.
- Prepare a trial balance as of 1/31/09.
- Prepare all closing entries for the month of January, 2009.
- Prepare a post closing trial balance as of 1/31/09.
- Prepare the income statement, balance sheet and statement of changes in shareholders’ equity for the month of January, 2009 in their proper formats.
Aug 29, 2021 | Uncategorized
You are required to critically evaluate the following statement: “Both Return on Investment (ROI) and Economic Value Added (EVA), when used as performance measures in an organisation, encourage managers to be short term in their focus and decision making”. If your critical evaluation tends to agree with the statement, briefly outline how the short term nature of such measures can be overcome. Part b. Many organisations use transfer pricing when transferring products between different divisions of the same organisation. You are required to discuss in detail the advantages and disadvantages of each of the following four methods: 1) Market based transfer prices; 2) Full cost transfer prices; 3) Cost plus a mark up transfer prices; and
Aug 29, 2021 | Uncategorized
- Micro Chip Computer Corporation Consolidated Statements of Operations For the period September 26, 2007 through September 25, 2008 Sales $8,334.00 Cost of Sales $5,458.00 Gross Margin $2,876.00 Operating expenses: R & D $525.00 Selling, General, and Administrative $691.00 In process R & D Restructuring costs Total Operating Exp $1,216.00 Operating income $1,660.00 Total interest and other Income net $194.00 Income before provision for Income taxes $1,854.00 Provision for income Taxes (15%) $278.10 Net income $1,575.90
Aug 29, 2021 | Uncategorized
| ACCT450 1203B 01 Business and Professional Ethics for Accountants |
| AssignmentName: |
Unit 3 Discussion Board |
| Deliverable Length: |
400–500 words |
| Details: |
Your CEO read a recent report on the importance of the SOX Act, but he acknowledged that he does not know much about it. He requested that you explain why the SOX Act was enacted and if you think it has helped the industry.
- Describe at least 3 main reasons that you think prompted the U.S. Congress to pass the SOX Act.
- Examine each of the following areas:
- Governance
- Auditor independence
- Disclosure practices
- Regulation of public accounting firms
- Dotwo things for each of these areas:
- Explain at least 1 provision in the SOX Act to provide expansive regulation to address what was generally seen as systematic failures in each area.
- State whether or not you agree that the new provisions dealt with the issues that you think prompted the U.S. Congress to enact the SOX Act, and explain your rationale for each area.
|
The following grading criteria will apply to this assignment:
| Grading Criteria |
| 40% |
Describe at least 3 main reasons that you think prompted the U.S. Congress to pass the SOX Act. |
| 20% |
Explain at least 1 provision in the SOX Act to provide expansive regulation to address what was generally seen as systematic failures in each area. |
| 20% |
State whether or not you agree that the new provisions dealt with the issues that you think prompted the U.S. Congress to enact the SOX Act, and explain your rationale for each area. |
| 20% |
Post a response to the Discussion Board, and comment on other postings. |
| Objective: |
? Develop critical skills by analyzing ethical and legal issues and problems, recognizing and assessing such issues and recommending specific actions to implement your analyses
? Improve oral and written communication skills through class discussions, cases analyses, formal and informal presentations, and group and written assignments |
Aug 29, 2021 | Uncategorized
Students should review the following statements and write 3paragraphs that provide support for your answers:
- Managers should base pricing decisions on both cost and market factors. In addition, they must also consider legal issues. Describe the influence that the law has on pricing decisions.
- “It is impossible to use Discounted Cash Flow methods for evaluating investments in research and development. There are no cost savings to measure, and we don’t even know what products might come out of our R&D activities.” This is a quote from an R&D manager who was asked to justify investment in a major research project based on its expected net present value. How would you respond to this statement? Do you agree or disagree? Explain.
Aug 29, 2021 | Uncategorized
A firm sold an investment in securities available for sale originally costing $30,000, for $28,000. At the beginning of the year, the investment had a valuation allowance of $3,000, debit. What is the correct disclosure for these events in the statement of cash flows prepared under the direct method, assuming this is the only investment in securities available for sale?
a. $28,000 investing cash inflow; add $33,000 in the reconciliation of earnings and net operating cash flow
b. $28,000 investing cash inflow; add $2,000 in the reconciliation of earnings and net operating cash inflow
c. $28,000 investing cash inflow; add $5,000 in the reconciliation of earnings and net operating cash inflow
d. Add $5,000 in the reconciliation of earnings and net operating cash flow.
Aug 29, 2021 | Uncategorized
Flower Enterprises Inc. expects its three departments to yield the following income for next year.
Sales Dept. F Dept. G Dept. H
Expenses $9,000 $10,000 $8,000
Avoidable 3,000 2,000 5,000
Unavoidable 4,000 6,000 1,000
Total expenses 7,000 8,000 6,000
Net income(loss) $2,000 $2,000 $2,000
Which of the following statements is true regarding Flower’s business segments?
If Dept. F is eliminated, overall profit will decline $5,000.
Overall profit will decline by $2,000 if any one of these segments is eliminated.
If Dept. G is eliminated, overall profit will decline $8,000.
If Dept. H is eliminated, overall profit will increase $3,000.
Eliminating Dept. H will reduce overall profit more than eliminating Dept. F.
Aug 29, 2021 | Uncategorized
The following data reflect the current month’s activity for Sills, Inc.:
Actual total direct labor $ 546,000
Actual hours worked 26,000
Standard labor hours allowed for actual output (flexible budget) 27,000
Direct labor price variance $ 19,500 U
Actual variable overhead $ 132,600
Standard variable overhead rate per standard direct labor hour $ 5.25
Variable overhead is applied based on standard direct labor hours allowed.
Required:
Compute the labor and variable overhead price and efficiency variances. (Do not round intermediate calculations. Input all amounts as positive values. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Omit the “$” sign in your response.)
Price Variance Efficiency Variance
Direct labor $ $
Variable overhead $ $
Aug 29, 2021 | Uncategorized
he following data relates to Plastic Fantastic which manufactures extruded plastic and silicon parts for use in logistic storage facilities. Plastic Fantastic operate under a process costing system in which all Direct Materials are added at the start and Conversion Costs are incurred evenly over the whole of production.
On January 1st 2012 Plastic Fantastic has 40,000 units in Work in Process (WIP) which are complete as to Direct Materials ($120,000) and 40% complete for Conversion ($17,700). 375,000 units are commenced during January and units completed and transferred to Finished Goods amounted to 400,000. Units in closing WIP are 25% completed.
The following costs were incurred during January:
Direct Materials $1,050,000
Conversion Costs $167,500
Required:
(i) Using the Weighted Average Cost Method determine the cost value of closing WIP and the cost value of goods transferred out during the period
Aug 29, 2021 | Uncategorized
Which of the following items can be inclusions in gross income?
a) During the year, shares of stock that the taxpayer had purchased as an investment double in value.
b) Amount an off duty motorcycle police officer received for escorting a funeral procession.
c) While his mother Shirley was in the hospital, the taxpayer sold Shirley’s jewelry and gave the money to his girlfriend Serena.
d) Child support payments received
e) A damage deposit the taxpayer recovered when he vacated the apartment he had rented.
f) Interest received by the taxpayer on an investment in bonds issued by IBM.
g) Amounts received by the taxpayer, a baseball “Hall of Famer,” for autographing sports equipment (e.g., balls, gloves).
h) Jury duty fees received.
Aug 29, 2021 | Uncategorized
The following monthly data are available for the Challenger company and its only product, Product SW:
Total Per Unit
Sales(400 units) 110,000 275
Variable Expenses 44,000 110
Contribution Margin 66,000 165
Fixed Expenses 52,800
Net Operating Income 13,200
A)Without resorting to Calculations, what is the total contribution margin at the break even point?
B) Management is contemplating the use of plastic gearing rather than metal gearing in product sw. this change would reduce variable costs by $15. The company’s marketing manager predicts that this would
reduce the overall quality of the product and thus would result in a decline in sales to a level of 350 units per month. Should this change be made?
C) Assume that Challenger Company is currently selling 400 units of Product SW per month. Management wants to increase sales and feels this can be done by cutting the selling price by $25 per unit and increasing the advertising budget by $20,000 per month. Management believes that these actions will increase unit sales by 50%. Should these changes be made?
D) Assume that Challenger Company is currently selling 400 units of Product Sw. Management wants to automate a portion of the production process for Product Sw. The new equipment would reduce direct labor costs by $20 per unit but would result in a monthly rental cost for the new robotic equipment of $10,000. Management also believes that the new equipment will increase the reliability of Product SW thus resulting in an increase in monthly sales of 12%. Should these changes be made?
Aug 29, 2021 | Uncategorized
The following static budget is provided:
Per unit Total
Sales $80 $880,000
Less variable costs:
Manufacturing costs 40 440,000
Selling and administrative costs 20 220,000
Contribution margin $20 $ 220,000
Less fixed costs:
Manufacturing costs 79,000
Selling and administrative costs 100,000
Total fixed costs 179,000
Net income $ 41,000
What will be the overall volume variance if 14,000 units are produced and sold?
$280,000 U
$101,000 F
$60,000 F
$0 F
Aug 29, 2021 | Uncategorized
The following unadjusted trial balance is prepared at fiscal year end for Rex Company.
REX COMPANY
Unadjusted Trial Balance
January 31,2011
Debit
Credit
Cash
$
29,800
Merchandise inventory
13,500
Store supplies
5,800
Prepaid insurance
2,200
Store equipment
42,600
Accumulated depreciation”Store equipment
$
17,100
Accounts payable
16,000
T. Rex, Capital
37,000
T. Rex, Withdrawals
2,250
Sales
114,750
Sales discounts
1,950
Sales returns and allowances
2,150
Cost of goods sold
38,000
Depreciation expense”Store equipment
0
Salaries expense
25,200
Insurance expense
0
Rent expense
12,000
Store supplies expense
0
Advertising expense
9,400
Totals
$
184,850
$
184,850
Rent expense and salaries expense are equally divided between selling activities and the general and administrative activities. Rex Company uses a perpetual inventory system.
a.
Store supplies still available at fiscal year end amount to $1,700.
b.
Expired insurance, an administrative expense, for the fiscal year is $1,650.
c.
Depreciation expense on store equipment, a selling expense, is $1,675 for the fiscal year.
d.
To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,300 of inventory is still available at fiscal year end.
references
Aug 29, 2021 | Uncategorized
Gardner Corporation purchased a truck at the beginning of 2010 for $75,000. The truck is estimated to have a salvage value of $3,000 and a useful life of 120,000 miles. It was driven 18,000 miles in 2010 and 32,000 miles in 2011. What is the book value of the truck on December 31, 2011?
Answer
A.
$55,800
B.
$30,000
C.
$42,000
D.
$45,000
1 points
Question 34
On April 1, 2010, O’Neill Co. purchased machinery for $120,000. Salvage value was estimated to be $5,000. The machinery will be depreciated over ten years using the double declining balance method. If depreciation is computed on the basis of the nearest full month, determine the depreciation expense for the period January 1 thru December 31, 2011 on this machinery.
Answer
A.
$20,550
B.
$20,800
C.
$20,400
D.
$20,933
1 points
Question 35
On January 1, 2009, a company acquired equipment for $120,000. The estimated life of the equipment is 5 years or 20,000 hours. The estimated residual value is $20,000. What is the amount of depreciation expense for 2011, if the company uses the double declining balance method of depreciation?
Answer
A.
$14,400
B.
$28,800
C.
$17,280
D.
$25,920
1 points
Question 36
Empire Machinery acquired a new machine on January 1, 2006 at a cost of $50,000, which was estimated to have a useful life of 10 years, and a salvage value of $20,000. Straight line depreciation was used. On January 1, 2012, management decided that the estimate of useful life had been too long and that the machinery would have to be retired after two more years, that is, at the end of the eighth year of service, but would retain its original salvage value. Under this revised estimate, calculate the depreciation expense for the seventh year of use.
Answer
A.
$ 6,250
B.
$ 5,000
C.
$ 6,000
D.
$10,000
1 points
Question 37
Equipment costing $20,000 with a salvage value of $4,000 and an estimated life of 8 years has been depreciated using the straight line method for 2 years. Assuming a revised estimated total life of 6 years, and no change in the salvage value, determine the depreciation expense for Year 3.
Answer
A.
$3,000
B.
$2,667
C.
$2,000
D.
$4,000
1 points
Question 38
A company purchased a computer on January 1, 2010 for $20,000 cash. The computer is estimated to have a 5 year useful life, and no salvage value. On January 1, 2011, due to obsolescence, the computer is estimated to have only 2 years of remaining useful life, and the estimated salvage value after the 2 remaining years will be $2,000. Assuming straight line depreciation, the amount of depreciation expense to be recorded on December 31, 2011 will be:
Answer
A.
$ 8,000
B.
$ 6,000
C.
$ 7,000
D.
$10,000
1 points
Question 39
A company sells a plant asset that originally cost $180,000 for $60,000 on December 31, 2010. The accumulated depreciation account had a balance of $90,000 after the current year’s depreciation had been recorded. The company should recognize a:
Answer
A.
$30,000 loss on disposal
B.
$60,000 loss on disposal
C.
$60,000 gain on disposal
D.
$30,000 gain on disposal
1 points
Question 40
A truck that cost $18,000, was estimated to have a salvage value of $4,000, and was expected to last 10 years. At the end of 5 years of use (assume straight line depreciation), it was sold for $15,000, the journal entry to record the sale will involve a:
Answer
A.
Credit to Gain on Sale for $8,000
B.
Debit to Loss on Sale for $4,000
C.
Credit to Truck for $11,000
D.
Debit to Accumulated Depreciation Truck for $7,000
Aug 29, 2021 | Uncategorized
You are the general accountant for Word Systems, Inc., a typing service based in Los Angeles, California. The company has decided to upgrade its equipment. It currently has a widely used version of a word processing program. The company wishes to invest in more up to date software and to improve its printing capabilities.
Two options have emerged. Option #1 is for the company to keep its existing computer system, and upgrade its word processing program. The memory of each individual work station would be enhanced, and a larger, more efficient printer would be used. Better telecommunications equipment would allow for the electronic transmission of some documents as well.
Option #2 would be for the company to invest in an entirely different computer system. The software for this system is extremely impressive, and it comes with individual laser printers. However, the company is not well known, and the software does not connect well with well known software. Payback and net present value information for these options follows:
Option #1 Option #2
Initial Investment ($80,000) ($225,000)
Returns: Year 1 45,000 75,000
Year 2 25,000 75,000
Year 3 10,000 75,000
Payback 3 years 3 years
Net present value 0 0
Required:
Prepare a report for management in which you make a recommendation for one system or the other, using the information given. Explain your recommendation fully.
________________________________________
Aug 29, 2021 | Uncategorized
Generic Motors Corporation has two divisions, Kadillack and Chevrolay. Their performance for last year is as follows.
|
Kadillack |
Chevrolay |
| Investment(operating assets) |
$200million |
$800million |
| Profit |
$34million |
$108million |
The required rate of return (cost of capital) for Generic Motors is 10% a year.
Required:
a) What isthe return on investment(ROI) for each division?
Kadillack ROI =%
(enter say 9.5% as 9.5, not as 0.095 and not as 9.5%)
Chevrolay ROI =%
Which division performs better, based on ROI? (1=Kadillack, 2=Chevrolay)
b) What is the residual income (RI) for each division?
Kadillack RI = $million
(enter say $3.52 million as 3.52, not as 3,520,000)
Chevrolay RI = $million
Which division performs better, based on RI? (1=Kadillack, 2=Chevrolay)
c) Which of the two measures (ROI or RI) would you use to decide which division performs better? Briefly explain your reasons.
Aug 29, 2021 | Uncategorized
Generic Motors Corporation is planning to invest $250,000 in year zero (today) in new equipment. This investment is expected to generate net cash flows of $100,000 a year for the next 4 years (years 1 4). The salvage value after 4 years is zero. The discount rate (cost of capital) is 20% a year.
Required:
a) What is the net present value (NPV) of this project?
NPV = $__________________
Should the firm invest, based on NPV? (1=yes, 2=no) ________________
b) What is the payback period for this project?
payback period = _________________ years
c) What is the modified payback period for this project?
between 1 and 2 years
between 2 and 3 years
between 3 and 4 years
d) What is the accounting rate of return (ARR) for this project?
To compute ARR, first compute:
annual depreciation=$_____________
annual income=$______________
average investment=$____________
ARR = ______________ % (enter say 10% as 10, not as 0.1 and not as 10%)
Aug 29, 2021 | Uncategorized
Giles Inc. manufactures high quality golfing equipment. Giles assigns overhead to products based on machine hours. At the beginning of the current year, estimated overhead costs were $500,000 and estimated machine hours were 50,000. During the year, 54,000 machine hours were actually used. By the end of the year, actual overhead costs were calculated to be $529,200.
What was the predetermined overhead rate?
Answer
a. $0.10 per machine hour
b. $9.80 per machine hour
c. $10.58 per machine hour
d. $10.00 per machine hour
3 points
Question 54
Refer to the Giles Inc. information above. How much total overhead was applied to products during the year?
Answer
a.
$571,536
b.
$540,000
c. $490,000
d. $529,200
3 points
Question 55
Refer to the Giles Inc. information above. By how much was overhead over or underapplied for the year?
Answer
a. $39,200 underapplied
b. $29,200 underapplied
c. $10,800 overapplied
d. $42,336 overapplied
Aug 29, 2021 | Uncategorized
Green Golf Accessories sells golf shoes, gloves, and a laser guided range finder that measures distance. Shown below are unit cost and sales data.
Shoes Gloves Rang Finder
Unit sales price $102 $33 $241
Unit variable costs 59 11 201
Unit contribution margin $43 $22 $40
Sales mix 32% 42% 26%
Fixed costs are $626,500.
A) Compute the break even point in units for the company. (Round computation for weighted average contribution margin to 2 decimal places, e.g. 31.50 and final answer to 0 decimal places, e.g. 21,500.)
B) Determine the number of units to be sold at the break even point for each product line. (Round answers to 0 decimal places, e.g. 5,000.)
Shoes ______?
Gloves _______?
Range finders ____?
Aug 29, 2021 | Uncategorized
han products manufactures 22,000 units of part s 6 each year for use on its production line. At this level of activity the cost per unit for part s 6 is as follows:
Direct materials 4.50 direct labor 5.00 variable manufacturing overhead 2.90
fixed manufacturing overhead 12.00
total cost of part $24.40
An outside supplier has offered to sell 22,000 units of part S 6 each year to Han Products for $44.00 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S 6 could be rented to another company at an annual rental of $594,200. However, Han Products has determined that two thirds of the fixed manufacturing overhead being applied to part S 6 would continue even if part S 6 were purchased from the outside supplier.
How much will profits increase or decrease if the outside supplier’s offer is accepted? (Input the amount as positive value. Omit the “$” sign in your response.)_________________
What is the total amount of avoidable costs if Han buys the units from an outside supplier? (Omit the “$” sign in your response: total cost_________________
Aug 29, 2021 | Uncategorized
Hello Transtutors can you please help me with these practice problems? 🙂
(Ignore income taxes in this problem.) Kumanu, Inc. is considering investing in new FMS equipment for its factory. This equipment will cost $80,000, is expected to last 6 years, and is expected to have a $10,000 salvage value at the end of 6 years. The new equipment is expected to generate cost savings of $20,000 per year in each of the 6 years. Kumanu’s discount rate is 16%. What is the net present value of this equipment?
a. $(2,200)
b. $3,700
c. $20,500
d. $(34,950)
(Ignore income taxes in this problem) The management of Nagata Corporation is investigating buying a small used aircraft to use in making airborne inspections of its above ground pipelines. The aircraft would have a useful life of 6 years. The company uses a discount rate of 13% in its capital budgeting. The net present value of the investment, excluding the intangible benefits, is $326,237. To the nearest whole dollar how large would the annual intangible benefit have to be to make the investment in the aircraft financially attractive?
a. $326,237
b. $54,373
c. $81,600
d. $42,411
(Ignore income taxes in this problem.) Tighe Corporation is contemplating purchasing equipment that would increase sales revenues by $420,000 per year and cash operating expenses by $231,000 per year. The equipment would cost $747,000 and have a 9 year life with no salvage value. The annual depreciation would be $83,000. The simple rate of return on the investment is closest to:
a. 25.3%
b. 14.2%
c. 11.1%
d. 25.2%
Aug 29, 2021 | Uncategorized
Henderson Manufacturing Inc. manufactures electric scooters. The company currently makes all of the electronic components for the scooter itself. When 6,000 motors are manufactured each year, the motor costs per unit are as follows:
Direct materials
$3
Direct labor
4
Variable overhead
5
Fixed overhead
8
Plymouth Inc. has offered to sell Henderson 6,000 motors for $15 per unit. If Henderson accepts the offer, 60% of the fixed overhead currently allocated to the motors could be avoided.
What are the relevant costs per unit of Henderson manufacturing the motors themselves?
Answer
a. $16.80
b. $15.20
c. $20.00
d. $12.00
2 points
Question 58
Refer to the Henderson Manufacturing Inc. information above. If Henderson accepts the offer to purchase 6,000 motors from Plymouth, net income will:
a. decrease by $1,200.
b. increase by $30,000.
c. decrease by $18,000.
d. increase by $10,800.
Answer
a. decrease by $1,200
b. increase by $30,000
c. decrease by $18,000
d. increase by $10,800
Aug 29, 2021 | Uncategorized
I have an Aged Trial Balance and my problem is stated as such…
“From the 2011 Aged Trial Balance calculate the allowance for bad debts using your auditor’s judgement. Compare the calculated amount with the allowance recorded and report the amount of overstatement/understatement.
I don’t know where to start. I also have an A/R Lead Schedule for year end 12/31/11, if this is needed (see below). I don’t want an answer just the steps to calculate what is being asked. I was not given any other information.
Please help!
|
Accounts Receivable Lead Schedule |
Prepared by |
|
|
For Year Ended 12/31/2011 |
Reviewed by |
|
| PBC |
|
|
|
|
|
|
|
(Audited) |
|
Credits/ |
Unaudited |
|
|
Balance |
|
Receipts/ |
Balance |
| Acct # |
Account Title |
12/31/2010 |
Additions |
Writeoffs |
12/31/2011 |
| 11000 |
Accounts Receivable |
$16,410,902.71 |
$231,613,231.99 |
$198,243,874.72 |
$49,780,259.98 |
|
|
|
|
|
|
|
|
|
|
|
|
| 11100 |
Advances to Employees |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
|
|
|
|
|
|
| 11400 |
Other Receivables |
$0.00 |
$1,000,000.00 |
$0.00 |
$1,000,000.00 |
|
|
|
|
|
|
| 11500 |
Allowance for Doubtful Accounts |
($1,262,819.88) |
$0.00 |
$8,810.13 |
($1,254,009.75) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$15,148,082.83 |
$232,613,231.99 |
$198,235,064.59 |
$49,526,250.23 |
Aug 29, 2021 | Uncategorized
Income Statement with Variances
Primm Company produces a product that requires four standard gallons per unit. The standard price is $24.50 per gallon. The 2,500 units required 10,600 gallons, which were purchased at $23.75 per gallon. The product requires three standard hours per unit at a standard hourly rate of $20 per hour. 2,500 units required 7,900 hours at an hourly rate of $21.50 per hour. The standard variable overhead cost per unit is $2.50 per hour. The actual variable factory overhead was $19,050. The standard fixed overhead cost per unit is $1.30 per hour at 7,000 hours, which is 100% of normal capacity.
Prepare a 2012 income statement through gross profit for Primm Company. Assume Primm sold 2,500 units at $320 per unit.
Aug 29, 2021 | Uncategorized
Input the formulas need to calculate margin, turnover, ROI and residual income.
Check your worksheet by changing the average operating assets in cell B6 to $9,000,000, net operating income in cell B5 to $5,400,000 and the minimum required rate of return in cell B7 to 16%. The ROI should nw 60% and the residual income should now be $3,960,000. If you do not get these answers, find the errors in your worksheet and correct them.
Enter a formula into each of the cells marked with a ? below
Review Problem: Return on Investment (ROI) and Residual Income
Data:
Sales $25,000,000
Net operating income $3,000,000
Average operating assets $10,000,000
Minimum required rate of return 25%
Compute the ROI:
Margin ?
Turnover ?
ROI ?
Compute the residual income :
Average operating assets ?
Net operating income ?
Minimum required return ?
Residual income ?
Aug 29, 2021 | Uncategorized
Consider the following scenario:
Your CFO, in her initial work, needs to decide whether to set up a job order costing system or a process type costing system. She has asked you to make a recommendation based on the following information. You plan to meet with her in the morning. Write 3 paragraphs in response to the following, and provide support for your recommendation:
1. Compare and contrast job order costing to process costing methods.
2. What kind of system works best in what kinds of companies?
3. What kind of system makes sense for your company, given that you plan to start with only one version of your product but at some point in the future may offer a variety of options?
Aug 29, 2021 | Uncategorized
P4.4
- How many different types of inventory does S & S sell?
- On the Create tab, in the Other group, click the Query Design button. Access opens the query window and the Show Table dialog box.
- In the Show Table dialog box, double click Inventory, and then click Close. Access adds the Inventory table to the query window and closes the Show Table dialog box.
- In the Inventory table field list, double click Item#. Access will copy this field to the design grid.
- Click the design tab, then click Totals (simply click the Sigma symbol). Access adds a row named Total to the design grid.
- In the Item# column, click the Total arrow, and then in the list that is provided, click Count. Access enters the word Count in the Total cell. Check the box in the Show row.
- Hit the Design tab, then click Run (the red exclamation mark).
- How many sales were made during October? (this is very similar to the first query)
- On the Create tab, in the Other group, click the Query Design button. Access opens the query window and the Show Table dialog box.
2 In the Show Table dialog box, double click Sales, and then click Close. Access adds the Sales table to the query window and closes the Show Table dialog box.
- In the Sales table field list, double click Sales Invoice# and double click Date. Access will copy these fields to the design grid.
- Click the design tab, then click Totals (simply click the Sigma symbol). Access adds a row named Total to the design grid.
- In the Sales Invoice# column, click the Total arrow, and then in the list that is provided, click Count. Access enters the word Count in the Total cell. Check the box in the Show row
- In the Date column, add the following expression in the criteria row:
>=#10/1/2005# AND
- Hit the Design tab, then click Run (the red exclamation mark).
- What were total sales in October?
- On the Create tab, in the Other Group, click the Query Design button. Access opens the query window and the Show Table dialog box.
- In the Show Table dialog box, double click Sales, double click Sales Inventory, and double click Inventory, and then click Close. Access adds the Sales, Sales Invoice, and Inventory tables to the query window and closes the Show Table dialog box.
- Click the design tab, then click Totals (simply click the Sigma symbol). Access adds a row named Total to the design grid.
- In the first column, click the Total arrow, and then in the list that is provided, click Expression.
- In the Field row of the first column, type the following: SalesTotal: Sum([Quantity]*[Unit Price]). Check the box in the Show column
- In the Sales table field list, double click date. Access will copy this field to the design grid (the second column).
- In the Date column, in the totals field, click the arrow and bring up the word Where.
- Type the following in the criteria field (do not check the box in the Show row):
>=#10/1/2005# AND
- Hit the Design tab, then click Run (the red exclamation mark). (Answer: 7,528)
d. What was the average amount of a sales transaction?
For this problem, we will need a total invoice calculation, we can do this by making a query.
- On the Create tab, in the Other group, click the Query Design button. Access opens the query window and the Show Table dialog box.
- In the Show Table dialog box, double click Sales Inventory, double click Inventory, and then click Close. Access adds the Sales Inventory and Inventory tables to the query window and closes the Show Table dialog box.
- In the Sales Inventory table field list, double click Sales Invoice#, Item #, and Quantity. In the Inventory table field list, double click Unit Price. Access will copy these fields to the design grid.
- In the fifth column on the grid type TotalSales: [Quantity]*[Unit Price]. Check all the boxes in the Show row.
- Hit the Design tab, then click Run (the red exclamation mark).
- Save your query as TotalSalesInvoice
- Now create a second query. Click the query design button. In the Show Table window, hit the query button then double click the query you just created (TotalSalesInvoice) hit Add, then Close
- Now double click the TotalSales field. Click the design tab, then click Totals symbol). In the Total row, highlight Avg (average) to the design grid. Now click Run. The answer is 1152.20.
Aug 29, 2021 | Uncategorized
Corin Corporation is considering the purchase of a machine that would cost $420,000 and would last for 8 years. At the end of 8 years, the machine would have a salvage value of $97,000. The machine would reduce labor and other costs by $76,000 per year. The company requires a minimum pretax return of 16% on all investment projects. (Ignore income taxes.)
Required:
Compute the internal rate of return of the project by inputting the variables that are entered into your calculator / Excel. (If a variable is not used in the calculation, input a zero (0). Omit the “$” and “%” signs in your response.) Round your answer to one decimal place and use a minus sign for negative numbers.
1.Interest Rate
(Rate, I, I/YR)%
2.Nper, N
3.PMT$
4.PV$
5.FV$
6.Internal Rate of Return (IRR)%
Aug 29, 2021 | Uncategorized
You own a credit card company. You want to evaluate the profitability of two representative customers, A and B. The numbers for customers A and B are as follows:
customer A customer B
credit card balance $1,500 $600
number of transactions 150 60
number of customer support calls 60 3
Your revenues and costs for customers are as follows:
* Revenues: The only source of revenue is the interest you charge on credit card balances. You charge customers an interest rate of 10% (10% APR). So, if the credit card balance is $100, your revenue is $100*0.1=$10.
* Costs: based on the estimates from your ABC system, each transaction costs you $0.25, and each customer support call costs you $2. Ignore all other costs.
Required:
a) compute the revenue you get from each customer, and the costs of serving each customer.
customer A customer B
Revenue $ _________ $ __________
Cost of transactions $ _______ $ __________
Cost of customer support calls $___________ $ ___________
b) compute the profit margin for each customer.
If you get a negative number, enter it with a minus sign, i.e., enter negative $200 as 200 not ($200)
profit margin for A = $ _____________
profit margin for B = $ _____________
c) if you solved (a) and (b) correctly, one of the customers should be unprofitable. What should you do about this customer?
Aug 29, 2021 | Uncategorized
Crinkle Cut Clothes Company manufactures two products CC1 and CC2. Current direct material and direct labor costs are detailed below. Next year the company wishes to use a plantwide overhead rate with direct labor hours as its allocation base. Next year’s overhead is estimated to be $338,250. The direct labor and direct materials costs are estimated to be consistent with the current year. Direct labor costs $28 per hour and the company expects to manufacture 22,000 units of CC1 and 91,000 units of CC2 next year.
CC1: Direct material per unit $37.10, Direct Labor Dollars Per Unit $22.40
CC2: Direct material per unit $25.20, Direct Labor Dollars Per Unit $15.40
Compute the plantwide overhead rate for next year.
$28.00 per DLH.
$37.80 per DLH.
$1.35 per DLH.
$5.00 per DLH.
$.20 per DLH.
Aug 29, 2021 | Uncategorized
The current balance sheet of Apex reports total assets of $20 million, total liabilities of $2 million, and owners’ equity of $18 million. Apex is considering several financing possibilities in order to expand operations. Each question based on this data is independent of any others.What will be the effect on Apex’s debt ratio if Apex’s owner invests an additional $2 million to finance its expansion?
A) The debt ratio will decrease from .1 (2/20) to .0909 (2/22) after the additional investment.
B) The debt ratio will decrease from 2/9 before to 2/11 after the additional investment.
C) The debt ratio will increase from 20 before to 22 after the additional investment.
D) Additional investment by owner will have no effect on the debt ratio
Aug 29, 2021 | Uncategorized
During the current year, Carl Equipment Stores had net sales of $600 million, a cost of goods sold of $500 million, average accounts receivable of $75 million, and average inventory of $50 million.Assuming a 365 day year, the number of days required for Carl Equipment to convert its average inventory into cash is:
A) 73.0.
B) 36.5.
C) 304.2.
D) 24.3.
Short term creditors are likely to view a higher than average inventory turnover rate as indicating that:
A) The company is able to sell its inventory quickly.
B) The company has a longer than average operating cycle.
C) A company is in financial difficulty.
D) The company probably has an excessive amount of inventory.
When a company sells bonds between interest dates they will pay which of the following at the first interest payment date?
A) An amount less than the stated interest rate times the principal.
B) An amount more than the stated interest rate times the principal.
C) The company may skip the first interest payment date since the appropriate time has not passed.
D) An amount equal to the stated interest rate times the principal.
Aug 29, 2021 | Uncategorized
Data
Manufacturing overhead $500,000
Selling and administrative overhead $300,000
Assembling Units Processing Orders Supporting Customers Other
Manufacturing overhead 50% 35% 5% 10%
Selling and administrative overhead 10% 45% 25% 20%
Total activity 1,000 250 100
units orders customers
OfficeMart orders:
Customers 1 customer
Orders 4 orders
Number of filing cabinets ordered in total 160 units
Selling price $595
Direct materials $180
Direct labor $50
Determine the product margin for the OfficeMart orders under a traditional cost system
Manufacturing overhead ?
Total activity ? units
Manufacturing overhead per unit ? per unit
Sales ?
Costs:
Direct materials ?
Direct labor ?
Manufacturing overhead ? ?
Traditional costing product margin ?
Aug 29, 2021 | Uncategorized
On December 1, 2012, Old World Deli signed a $300,000, 5%, six month note payable with the amount borrowed plus accrued interest due six months later on June 1, 2013. Old World Deli should record which of the following adjusting entries at December 31, 2012?
a. Debit Interest Expense and credit Interest Payable, $7,500.
b. Debit Interest Expense and credit Cash, $7,500.
c. Debit Interest Expense and credit Interest Payable, $1,250.
d. Debit Interest Expense and credit Cash, $1,250.
On September 1, 2012, Daylight Donuts signed a $100,000, 9%, six month note payable with the amount borrowed plus accrued interest due six months later on March 1, 2013. Daylight Donuts records the appropriate adjusting entry for the note on December 31, 2012. In recording the payment of the note plus accrued interest at maturity on March 1, 2013, Daylight Donuts would
a. Debit Interest Expense, $3,000.
b. Debit Interest Expense, $1,500.
c. Debit Interest Payable, $1,500.
d. Debit Interest Expense, $4,500.
Aug 29, 2021 | Uncategorized
Denver office equipment manufactures and sells metal shelving.It began operations on 1/1/11. Costs incurred for 2011 are as follows. (V stands for variable, F stands for fixed)
Direct materials used $147,600 V
Direct manufacturing labor costs 38,400 V
Plant energy costs 2,000 V
Indirect manufacturing labor costs 14,000 V
Indirect manufacturing labor costs 19,000 F
Other indirect manufacturing costs 11,000 V
Marketing distribution and customer service costs 128,000 V
marketing distribution and customer service costs 48,000 F
Administative costs 56,000 F
Variable manufacturing costs are variable to units produced. Varaible marketing distribution and customer service costs are variable to units sold
Beginning:1/1/11 Ending 12/31/11
Direct materials 0 lbs 2,400 lbs
Work in process 0 units 0 units
Finished goods o units ? units
Production in 2011 was 123,000 units. Two pounds of direct materials are used to make one unit of finished product. Revenues in 2011 were $594,000. The selling price and the purchase price per pound of direct materials were stable throughout year. The companys ending inventory of finished goods is carried at the average unit manufacturing cost for 2011. Finished goods inventory at 12/31/11 was $26,000.
1. calculate direct materials inventory total cost 12/31/11.
2. calculate finished goods inventory total units 12/31/11.
3. Calculate selling price in 2011.
4. Calculate operating income for 2011
Aug 29, 2021 | Uncategorized
Department G had 3,600 units, 25% completed at the beginning of the period, 11,000 units were completed during the period, 3,000 units were 1/5 completed at the end of the period, and the following manufacturing costs were debited to the departmental work in process account during the period: Work in process, beginning of period: $40,000 Costs added during period: Direct Materials (10,400 at $8) 83,200: Direct Labor 63,000: Factory Overhead 25,000: Assuming that all direct materials are placed in process at the beginning of production and that the FIFO method of inventory costing is used, what is the total cost of the units “started and completed” during the period? what is the total cost of 3,600 units of beginning inventory which were completed during the period? I got $62,206 for the second part of it but either too tired to focus properly or just not understanding how to do the first at all which makes me second guess the second part! thank you in advance!
Aug 29, 2021 | Uncategorized
The Dexon Company makes and sells a single product called a Mip and employs a standard costing system. The following standards have been established for one unit of Mip:
Standard Quantity
or Hours Standard Cost
per Mip
Direct materials 6 board feet $9.00
Direct labor 0.8 hours $9.60
There were no inventories of any kind on August 1. During August, the following events occurred:
Purchased 15,000 board feet at the total cost of $24,000.
Used 12,000 board feet to produce 2,100 Mips.
Used 1,700 hours of direct labor time at a total cost of $20,060.
To record the purchase of direct materials, the general ledger would include what entry to the Materials Price Variance Account?
a $1,500 credit
b $1,500 debit
c $6,000 credit
d $6,000 debit
Aug 29, 2021 | Uncategorized
The Diamond Freight Company has been offered a seven year contract to haul munitions for the government. Because this contract would represent new business, the company would have to purchase several new heavy duty trucks at a cost of $350,000 if the contract were accepted. Other data relating to the contract follow:
Annual net cash receipts (before taxes)
from the contract $105,000.00
Salvage value of the trucks at termination
of the contract $ 18,000.00
The trucks will have a useful life of seven years. To raise money to assist in the purchase of the new trucks, the company will sell several old, fully depreciated trucks for a total selling price of $16,000. The company requires a 16% after tax return on all equipment purchases. The tax rate is 30%. For tax purposes, the company computes depreciation deductions assuming zero salvage value and using straight line depreciation on the full cost of the trucks ($350,000). The new trucks would be depreciated over the seven year life.
Compute the net present value of this investment opportunity._______
Compute the internal rate of return of this investment opportunity. __________%
Aug 29, 2021 | Uncategorized
Dimitry Chernitsky is seeking part time employment while he attends school. He is considering purchasing technical equipment that will enable him to start a small training services company that will offer tutorial services over the Internet. Dimitry expects demand for the service to grow rapidly in the first two years of operation as customers learn about the availability of the Internet assistance. Thereafter, he expects demand to stabilize. The following table presents the expected cash flows.
Year of Operation Cash Inflow Cash Outflow
2012 $ 14,100 $ 9,600
2013 19,300 11,700
2014 21,700 12,800
2015 21,700 12,800
In addition to these cash flows, Mr. Chernitsky expects to pay $21,300 for the equipment. He also expects to pay $2,800 for a major overhaul and updating of the equipment at the end of the second year of operation. The equipment is expected to have a $1,200 salvage value and a four year useful life. Mr. Chernitsky desires to earn a rate of return of 8 percent.
Use Table 1.
Required:
a.
Calculate the net present value of the investment opportunity. (Round “PV Factor” to 6 decimal places, intermediate and final answers to 2 decimal places. Negative amount should be indicated by a minus sign. Omit the “$” sign in your response.)
Net present value $
b 1.
Indicate whether the investment opportunity is expected to earn a return that is above or below the desired rate of return.
Below
Above
b 2. Based on your answer in Requirement b 1, should the investment opportunity be accepted.
Accepted
Rejected
Aug 29, 2021 | Uncategorized
Dream Sewing Machine Company uses activity based costing to account for its
manufacturing process. Following are the four activities identified with the process and
their budgeted costs for the month of December:
Total Budgeted
Activity Cost Allocation Base
Materials handling $55,000 Number of parts
Machine setup 16,500 Number of setups
Assembling 23,000 Number of parts
Packaging 8,500 Number of finished units
Dream expects to produce 1,000 sewing machines in the month of December. The sewing
machines are expected to use 25,000 parts and require 15 setups.
a) Compute the cost allocation rate for each activity.
b) Compute the average manufacturing cost of each sewing machine assuming direct
materials are $175 per machine.
Aug 29, 2021 | Uncategorized
E22 19
Haslett Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product.
Direct materials (8 pounds at $2.50 per pound) $20
Direct labor (3 hours at $12.00 per hour) $36
During the month of April, the company manufactures 230 units and incurs the following actual costs.
Direct materials purchased and used (1,900 pounds) $4,940
Direct labor (700 hours) $8,120
Journalize the entries to record the materials and labor variances. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Account/Description Debit Credit
(To record materials price variance)
(To record materials quantity variance)
(To record labor price variance)
(To record labor quantity variance)
Aug 29, 2021 | Uncategorized
Edwards Company has two operating divisions, A and B. The following information is provided for Division A:
Unit selling price
$167
Unit variable costs
$117
Unit fixed costs
$ 37
Division B uses the type of product produced by Division A and has approached Division A about buying the product internally. Division B is currently paying $162 to purchase the product from an outside source. If Division A sells internally it can save $18.5 per unit in variable costs. Assuming that Division A has sufficient excess capacity to produce all of the units requested by Division B, which of the following is the lowest price Division A should consider for the transfer?
$117.00
$148.50
$162.00
$98.50
Aug 29, 2021 | Uncategorized
Federal Income Tax Withholding
Bob Browning’s weekly gross earnings for the present week were $2,750. Browning has three exemptions. Using the wage bracket withholding table below with a $63 standard withholding allowance for each exemption, what is Browning’s federal income tax withholding (to the nearest cent)?
Table for Percentage Method of Withholding
WEEKLY Payroll Period
(a) SINGLE person (including head of household)”
If the amount of wages (after subtracting withholding allowances) is: The amount of income tax to withhold is:
Not over $51…. $0
Over” But not over” of excess over”
$51 $198 10% $51
$198 $653 $14.70 plus 15% $198
$653 $1,533 $82.95 plus 25% $653
$1,533 $3,202 $302.95 plus 28% $1,533
$3,202 $6,916 $770.27 plus 33% $3,202
$6,916 ….. $1,995.89 plus 35% $6,916
$
Aug 29, 2021 | Uncategorized
financial statments
Question Details
The following events took place for Wreckin Ronnie Inc. during July2008, the first month of operations, as a producer of road bikes:
‘Purchased $165,800 of materials
‘Used $147,600 of direct materials in production
‘Incurred $96,250 of direct labor wages.
‘Applied factory overhead at a rate of 80% of direct laborcost.
‘Transferred $302,900 of work in process to finished goods.
‘Sold goods with a cost of $301,300.
‘Sold goods for $520,000
‘Incurred $119,000 of selling expenses.
‘Incurred $52,100 of administrative expenses.
1.Prepare the July income statement for WreckinRonnie. Assume that Wreckin Ronnie uses the perpetualinventory method.
2.Determine the inventory balances at the end of thefirst month of operations.
Aug 29, 2021 | Uncategorized
Finishing Touches has two classes of stock authorized: 8%, $12 par preferred, and $1 par value common. The following transactions affect stockholders’ equity during 2012, its first year of operations:
January 2 Issues 100,000 shares of common stock for $37 per share.
February 6 Issues 2,700 shares of 8% preferred stock for $18 per share.
September 10 Repurchases 11,000 shares of its own common stock for $35 per share.
December 15 Reissues 6,400 shares of treasury stock at $46 per share.
In its first year of operations, Finishing Touches has income of $168,000 and pays dividends at the end of the year of $95,400 ($1 per share) on all common shares outstanding and $2,592 on all preferred shares outstanding.
Required:
Prepare the stockholders’ equity section of the balance sheet for Finishing Touches as of December 31, 2012.
Aug 29, 2021 | Uncategorized
All Answers from a Taxation Qualified Employee Benefit Plan Perspective!
- What is a highly compensated employee?
- What effect does a highly compensated employee have on the minimum vesting requirement?
- What is the maximum amount that a self employed individual can contribute to a Keogh plan in 2011? 2012? 2013?
- When can a Keogh plan include a 401 (k) plan?
- Minimum coverage tests – what are the two alternative tests to comply with the minimum coverage requirements?
- Explain one of these minimum coverage tests in detail.
- What is permitted disparity?
- What is a top heavy plan?
- Describe in detail the process to get a plan qualified for I.R.S. purposes.
- Write a memorandum to Sam Tangy explaining the benefits of a qualified plan to him and his company, Tangy Corporation. This should be in the form of a well written fax memorandum.
Aug 29, 2021 | Uncategorized
A customer has asked Clougherty Corporation to supply 4,000 units of product M97, with some modifications, for $40.10 each. The normal selling price of this product is $48.00 each. The norm unit product cost of product M97 is computed as follows:
Direct materials $ 18.50
Direct Labor $ 1.20
Variable manufacturing overhead 8.40
Fixed manufacturing overhead 3.90
Unit product cost $32.00
Direct labor is a variable cost. The special order would have no effect on the companys total fixed manufacturing overhead costs. The customer would like some modifications made to product M97 that would increase the variable costs by $5.70 per unit and that would require a one time investment of $31,000 in special molds that would have no salvage value. This special order would have no effect on the companys other sales. The company has ample spare capacity for producing the special order.
Required:
Determine the effect on the companys total net operating income of accepting the special order.
Aug 29, 2021 | Uncategorized
Assignment File 1Assignment 2Due date: 12 July 2013Questions 1 (30 marks)Kwong Fai Co. Ltd has been carrying on business as a garment manufacturer for many years. The income statement of the company for the year ended 31 December 2011 is as follows:$$Gross profit from trading1,185,000Investment income114,000Interest income39,000Miscellaneous income150,0001,488,000Less:Salaries and directors’ remuneration451,000Rent and rates168,000Electricity and water37,000Telephone13,000Travelling and entertaining142,000General office repairs239,000Bad and doubtful debts66,000Professional charges47,000Sundry expenses81,000Depreciation on furniture and fixture42,000Charitable donations30,000Net profit for the year1,316,000172,000The following information relating to the above account is available:i Depreciation charges on plant and machinery of $98,000 is included in the cost of sales.2 ACT B414 Taxation Iii Interest income:Interest on loan to a wholly owned subsidiary resident in Hong Kong $15,000Interest on a fixed deposit in US dollars with a local bank $24,000iii Investment income:Dividends from a subsidiary in Hong Kong $60,000Rental income from property in Macau $54,000iv Miscellaneous income:Rent from subletting a property in Hong Kong $120,000Gain on exchange $30,000 (realized, relating to open account with customers)v Travelling and entertaining:Workers’ transportation costs $60,000Travelling allowances to staff $22,000Cost of gasoline and repairs to the managing director’s car $60,000vi General office repairs:Electrical wiring in factory premises $200,000Repairs to furniture and fixture $15,000Cost of purchase of sundry utensils $24,000 ($20,000 for initial purchases, other purchases are for replacement)vii The bad debt accounts:Increase in general provision for bad debts $7,000Decrease in specific provision for bad debts ($41,000)Loan to a director written off $100,000viiiProfessional charges:Audit fee $2,000Legal fee: debt collection $15,000Fee paid for designing a new machine $30,000ix Sundry expenses:Subscription to trade association $3,000Expenses of staff dinner at the New Year $15,000Special contribution to a recognized occupational retirement $60,000 scheme established during the yearMiscellaneous expenses (all allowable) $3,000Assignment File 3x Charitable donations:Except for $2,000 which was used for purchase of raffle tickets, the others were made to various approved charitable organizations without consideration. The raffle tickets were used for lucky draw by the general staff during the annual dinner.Required:a For Hong Kong profits tax purposes, determine the assessable profits of Kwong Fai Co. Ltd for the year of assessment 2011/12 before depreciation allowances. (18 marks)b Briefly explain your treatments to the items in notes (vi), (vii), (ix), and (x) above. (12 marks)Question 2 (25 marks)Mr Ma was a manager employed by a local import and export company. In his employment contract covering the three years ended 31 March 2012, it was provided that Mr Ma’s salary would be $55,000 per month with one month’s bonus payable at the end of March each year. Mr Ma was entitled to receive a holiday passage allowance, free quarters, reimbursement of utilities and free education benefits for his child. However, Mr Ma was required to pay for all local travelling expenses when visiting local clients and customers without reimbursement from the employer. At the end of the contract period, Mr Ma was entitled to a gratuity of $300,000.In the year ended 31 March 2012, Mr Ma received a holiday passage allowance of $60,000, three fifths of which was used to purchase holiday packages for him and his family while the balance was retained by him. Mr Ma’s son, aged 20, was studying at the University of London, the tuition fee for the year being $90,000. Mr Ma lived with his wife in a flat in Causeway Bay provided by his employer, and the utility benefit he received during the year was $10,000. The total travelling expenses incurred by Mr Ma during the year for visiting the local clients amounted to $24,000.Mr Ma donated $80,000 to the Community Chest of Hong Kong during the year. He contributed $25,000 to an MPF exempt retirement scheme during the year ended 31 March 2012. His employer contributed an equal amount to the stated scheme.In January 2012, Mr Ma’s application to emigrate to Australia was approved, and therefore he decided not to renew his employment contract with the employer. Mrs Ma has been a housewife and did not earn any salary income during the year.For many years, Mrs Ma had paid $1,500 per month for the maintenance of her father, who was 65 years old at the end of March 2012 and was resident in Hong Kong.4 ACT B414 Taxation IRequired:a Determine the Hong Kong salaries tax liability of Mr Ma for the year of assessment 2011/12, making the best election where appropriate. Ignore provisional salaries tax and tax reduction or waiver. (17 marks)b Justify and explain the tax treatments you have accorded to the following items in the tax computation:i reimbursement of utilitiesii gratuity upon completion of contractiii contribution to retirement schemesiv holiday passage allowances. (8 marks)Question 3 (25 marks)Ms Chan is the operations manager of Evergreen Trading Company Ltd, an import export company carrying on business in Hong Kong. She tells you that in December 2011 the company purchased a residential flat in Hung Hom ‘for rental purposes’ at a price of $6,000,000. The flat was used as security for a mortgage loan of $3,500,000 obtained from a local bank. To this day, no tenant has been found. She also tells you that a person seeing the company’s advertisement in the newspaper for renting the flat offered to buy it for $9,000,000. She is prepared to accept this price — but only if you can assure her that the gain on sale will not be subject to tax in Hong Kong.Required:Evaluate Ms Chan’s situation by referring to the six badges of trade and advise on whether the gain will be subject to Hong Kong profits tax. As the information given above may not be sufficient to deal with the issue adequately, you are required to set out in your answer what further information you might need in order to better assess the situation.Question 4 (20 marks)Marfan Ltd carries on business in Hong Kong as an agent of its parent company, Trouble Ltd, which was incorporated in the Cayman Islands. Under the terms of the Agency Agreement, Marfan Ltd is required to negotiate with customers in Hong Kong on behalf of Trouble Ltd, and has the sole and exclusive authority to fix prices and accept orders. In return for its services, Marfan Ltd is paid an agency fee based on 15% of the annual profits made on the contracts negotiated.Sales contracts are made in the name of Trouble Ltd and administered in Hong Kong by Marfan Ltd. All sales and purchases are recorded in the books of Trouble Ltd. Trouble Ltd purchases the goods from overseasAssignment File 5suppliers, but the shipments are often made directly to the customers in Hong Kong.In November 2012, Marfan Ltd was approached by a customer in Korea who was interested in placing a substantial order. Marfan Ltd sent its business development director to negotiate with the customer in Korea, and signed the contract there. Shipment was then made directly to the customer in Korea.Required:a Discuss the Hong Kong tax implication of the profits earned by Trouble Ltd in respect of the sales made to the Hong Kong customers through Marfan Ltd. (10 marks)b State, giving reasons, whether the agency fee earned by Marfan Ltd is taxable in Hong Kong. (5 marks)c Explain the Hong Kong profits tax implications to Marfan Ltd in respect of the sale transaction conducted in Korea. (5 marks)
Aug 29, 2021 | Uncategorized
Darth Company sells three products. Sales and contribution margin ratios for the three products follow:
|
Product X |
Product Y |
Product Z |
| Sales in dollars |
$29,000 |
$49,000 |
$109,000 |
| Contribution margin ratio |
43% |
38% |
13% |
| Given these data, the contribution margin ratio for the company as a whole would be:(Round your intermediate calculationsto 2 decimal places. Round your answer to whole percentage.) |
Aug 29, 2021 | Uncategorized
This is the complete task below, I tried to line up the questions to each task.
Task:
Create a multimedia presentation (e.g., PowerPoint, Keynote) in which you do the following:
Note: The slides in your presentation should include only the main points you wish to make, with more extensive information included in the presenter notes section of the presentation.
A. Recommend whether Shuzworld should build the proposed stand alone store, the strip mall store, or not proceed with construction, utilizing the appropriate decision analysis tool.
1. Submit a copy of the output from your decision analysis tool of choice.
a. Explain why you chose the decision analysis tool you used.
2. Discuss
two important factors that Shuzworld should consider while evaluating location alternatives for a new store.
B. Recommend project techniques that can be used with the construction project plan for the store being built.
1. Present a network diagram indicating the critical path.
C. Evaluate the trade offs of allocating production line workers to minimize production costs.
1. Recommend a production mix that maximizes profits for Shuzworld’s Shanghai plant, utilizing the appropriate decision analysis tool.
a. Submit a copy of the output from your decision analysis tool of choice.
i. Explain why you chose the decision analysis tool you used.
D. Evaluate Shuzworld’s reordering practices at the Baltimore store, utilizing a Monte Carlo simulation to evaluate variables that exhibit random (probabilistic) behavior as inputs to a 20 day inventory simulation.
E. Discuss ways to give Shuzworld a competitive advantage by doing the following:
1. Recommend a human resources strategy to improve employee efficiency and effectiveness in the operations segments of Shuzworld.
2. Discuss applicable operations management philosophies that focus on reducing waste and increasing efficiency in Shuzworld’s production processes.
Shuzworld retail stores analysis
Shuzworld’s retail development specialist, Gloria Rodriguez, is pleased with your work. She asks you to help her, and the retail stores location team, on some additional projects.
You join her in the conference room to discuss your next assignment. Gloria has her laptop connected to a video projector so she can walk you through a slideshow.
Siting a new store
“We’re looking at possibly siting a Shuzworld store in one of our prime target markets,” she explains. She projects the first slide.
“We have three options. We can lease an existing box store on Route 20, just outside Auburn. We’re calling this the stand alone option. Alternatively, we can open a store in the Auburn Mall. And the third option is to do nothing now and wait for a better time to move into the market.”
She advances to the next slide.
“As you can see, there’s a big upside potential for the stand alone store. If the market is favorable, and we think there’s a 50/50 chance it will be, the profit potential is significant.”
She advances to a third slide.
“The mall store option isn’t as profitable as the stand alone box store,” she says. “We’ll carry a much smaller inventory because our square footage is much less, and we won’t have the same store traffic. That isn’t to say we won’t turn a profit, because we estimate that if there’s a favorable market, we’ll do quite well. Again, it’s 50/50 on the market favorability question.”
“We need to present senior management with these three options in a graphic manner,” Rodriguez adds. “And there’s one other wrinkle. Some of the retail stores location team members think we should invest $20,000 in a research survey to assess whether the market is favorable or not. I’ve estimated that the survey is 60% likely to be positive and 40% likely to be negative. The survey proposal indicates that the probability of a favorable market will increase to 70% when the survey is positive and that the probability of an unfavorable market will increase to 80% when the survey is negative.”
“So should we spend the money on the market research? And which of the options makes the most sense for Shuzworld in Auburn?”
QUESTIONS 1:
A. Recommend whether Shuzworld should build the proposed stand alone store, the strip mall store, or not proceed with construction, utilizing the appropriate decision analysis tool.
1. Submit a copy of the output from your decision analysis tool of choice.
a. Explain why you chose the decision analysis tool you used.
2. Discuss
two important factors that Shuzworld should consider while evaluating location alternatives for a new store.
Determining production mix
It’s still dark outside when you arrive at Shuzworld’s headquarters for a scheduled 6AM Skype session with Dieter Handel. It’s 5PM in Shanghai, the close of the business day, but Handel is eager to discuss his latest business challenge with you.
“Here’s the situation,” he says, staring intently into the webcam. “We’re struggling to keep production costs down in the Shanghai plant. I don’t want to see us shift any more production to Shuzworld H or F. I have two production mix problems I need your help with.”
“I just looked at the schedule for next month’s production of Kidshuz shoes and sneakers. We’re told the forecasted demand requires us to produce at least 25 batches of Kidshuz shoes and at least 10 batches of Kidshuz sneakers this month.”
Handel looks down, scanning some papers in his hand. “Based on my latest figures, the shoes cost me $2,000 per batch to produce and the sneakers cost $1,500 per batch to produce.”
“I need a production plan for a total of 50 batches of shoes and sneakers for this period which will meet all requirements and minimize production costs.”
Capacity issues:
“I have one other issue I’d like to get resolved,” Handel continues. “We’re producing two versions of loafers: the Kiltie Tassel Loafer and the Classic Penny Loafer.”
“The production of these two slip on products both require processing in our assembly department and our finishing department.”
Handel pauses. “I’ve e mailed you a table showing how long each batch of loafers takes in the two departments, and the profit per batch.”
| Product |
Assembly Department |
Finishing Department |
Profit per batch |
| Batches of Tassel Loafers |
2 hours |
8 hours |
$800 |
| Batches of Penny Loafers |
6 hours |
4 hours |
$1,200 |
“I’ve also sent the available capacity, in hours, for both departments and the minimum production level.”
| Department |
Capacity Hours |
Product |
Min. Production Level |
| Assembly |
1200 |
Batches of Tassel Loafers |
50 |
| Finishing |
1600 |
Batches of Penny Loafers |
100 |
“What we need from you is the optimal number of batches of Tassel Loafers and number of batches of Penny Loafers that will maximize total profit and meet the required constraints.”
QUESTION 2
C. Evaluate the trade offs of allocating production line workers to minimize production costs.
1. Recommend a production mix that maximizes profits for Shuzworld’s Shanghai plant, utilizing the appropriate decision analysis tool.
a. Submit a copy of the output from your decision analysis tool of choice.
i. Explain why you chose the decision analysis tool you used.
Shuzworld One: a grand reopening
Cynthia Crowninshield waits until after you have both finished your lunch at Omaha’s best steakhouse before she introduces the topic of your next project.
“Shuzworld’s first stand alone store was constructed in Bellevue,” she explains. “It’s called Shuzworld One by everyone in the company and it always has been seen as our flagship location, even if it’s not our most profitable or best selling outlet.”
“Now it’s time to upgrade Shuzworld One, modernizing the store and adding some square footage. The construction project will involve expanding the store by a significant amount.”
She pauses to sip her coffee. “Here’s the situation. We have the initial task list outline and some time estimates for how long the Shuzworld One upgrade will take. We’re using the optimistic time estimates as crash times.”
Crowninshield produces a print out and places it on the table between you.
Shuzworld One Expansion Project
|
|
|
Time Estimates (days) |
| Activity |
Description |
Predecessors |
Optimistic |
Most Likely |
Pessimistic |
Crash Cost/Day |
|
| A |
Funding/liability protection |
|
5 |
10 |
15 |
$1,000 |
|
| B |
Excavate grounds |
A |
10 |
20 |
40 |
2,500 |
|
| C |
Pour foundation |
B |
10 |
15 |
30 |
2,000 |
|
| D |
Inspect new equipment |
B |
10 |
20 |
30 |
500 |
|
| E |
Install utilities |
C |
15 |
20 |
40 |
4,000 |
|
| F |
Inspection(utilities) |
E |
0.1 |
0.1 |
0.1 |
0 |
|
| G |
Build out facility |
D,F |
15 |
20 |
35 |
1,500 |
|
| H |
Final inspection |
G |
0.1 |
0.1 |
0.1 |
0 |
|
| I |
Prep for operations signs, etc. |
H |
5 |
10 |
15 |
500 |
|
| J |
Clean up |
I |
3 |
5 |
10 |
1,200 |
|
“Here’s what we will need: a network drawing, identification of the critical path for the project, and how long we should expect the project to take? We also need to know the number of days to plan on if we want to have a 95% likelihood of finishing the project within that time frame.”
She pauses and looks at you. “I know my father will want a grand reopening for Shuzworld One, with a celebration with friends, family, and business partners from all over the country. If we have the crash the project to 5 days earlier than the initial critical path, how would this be accomplished and at what cost?”
“I’ll be frank. I want the crash scenario in my back pocket because it would be safer to finish the project early and have Shuzworld One sparkling for the grand reopening.”
QUESTION 3:
B. Recommend project techniques that can be used with the construction project plan for the store being built.
1. Present a network diagram indicating the critical path
Ordering issues in Baltimore
“While we have you to assist us,” Rodriguez continues, “there is one other project you could help us with. The manager in our Baltimore stand alone store, Jim Charter, has been asking for a better way of figuring out how to restock.”
Rodriguez hands you the print out of an e mail from Charter.
E mail
From: James Charter
To: Gloria Rodriguez
Re: Restocking issues
Great seeing you at the regional conference.
As I mentioned then, I’m struggling with reordering/restocking here at the store.
We have a fairly standard process here where we order by the case (one dozen shoes per case) from the regional warehouse. Our daily demand for the number of cases of shoes ranges from seven to twelve cases.
When we submit an order for new product, the lead time for delivery of that product also varies between one and three days with delivery the next morning counting as day one.
As you can see from the embedded spreadsheet, I’ve aggregated our sales over the past 200 days.
| Cases sold per day |
Frequency of days given cases sold |
| 7 |
34 |
| 8 |
36 |
| 9 |
38 |
| 10 |
42 |
| 11 |
26 |
| 12 |
24 |
| Total Days = 200 |
Here’s a 40 day snap shot of how quickly we get the cases from the regional warehouse.
| Lead time for delivery |
Frequency of days for delivery time |
| 1 |
12 |
| 2 |
20 |
| 3 |
8 |
Total Days = 40
Note: Delivery next morning constitutes Day # 1 |
What would be ideal is a way to test an inventory policy of ordering 30 cases of shoes at a time at the end of the business day whenever the ending inventory is 12 cases or fewer. That would give me a decision rule I could follow.
I know you have a lot on your plate, but any help would be greatly appreciated.
Sincerely,
James Charter
Store Manager
Shuzworld Baltimore
When you have finished reading the e mail, Rodriguez continues. “We’d appreciate whatever you can do to handle this request. We just don’t have the analytical tools to respond directly to Jim.”
QUESTION 4:
D. Evaluate Shuzworld’s reordering practices at the Baltimore store, utilizing a Monte Carlo simulation to evaluate variables that exhibit random (probabilistic) behavior as inputs to a 20 day inventory simulation.
QUESTION 5:
E. Discuss ways to give Shuzworld a competitive advantage by doing the following:
1. Recommend a human resources strategy to improve employee efficiency and effectiveness in the operations segments of Shuzworld.
2. Discuss applicable operations management philosophies that focus on reducing waste and increasing efficiency in Shuzworld’s production processes.
Aug 29, 2021 | Uncategorized
UNIT2 BD 4PARAGRAPH ACTIVITY based costing differs from traditional costing systems in a number of ways. In activity based costing, non manufacturing as well as manufacturing costs may be assigned to products. And, some manufacturing costs may be excluded from product costs. 1. Discuss other differences between activity based costing and the traditional costing systems. 2. Discuss the reasons that activity based costing may be resisted by top management. 3. Discuss why activity rates are important to management. 4. In your opinion, why activity based costing approach is probably unacceptable for external financial reports. The controller of Chicago Company is in charge of installing a new costing system that includes the allocation of indirect manufacturing costs to the producing departments. After studying the situation, he found there were three cost drivers that could be used to assign the indirect costs, each with its own merits. After computing the allocations for the departments on a sample month, he found that each cost driver favored (that is, assigned less costs to) a different department. Machine hours favored Department X, direct manufacturing labor hours favored Department Y, and number of processing steps performed favored Department Z. 1. What additional factors must the controller consider before deciding on an allocation base for the indirect manufacturing cost assignment to the departments? Grading Criteria Percentage Differences between activity based costing and traditional costing and the reasons that activity based costing may be resisted by top management 20% Why activity rates are important to management 20% Why activity based costing approach is probably unacceptable for external financial reports 20% Additional factors must the controller consider before deciding on an allocation base for the indirect manufacturing cost assignment to the departments 20% Response to peer posts 20%
Aug 29, 2021 | Uncategorized
Laughter Landscaping has the following independent cases at the end of the year on December 31, 2014:
a. each Friday, Laughter pays employees for the current weeks work. The amounts of the weekly payroll is $7,000 for a five day workweek. This year December 31 falls on a Wednesday.b. Details of Prepaid insurance are shown in the account: Prepaid Insurance Jan 1 $ 4,500.Laughter prepay’s a full year insurance each year in January 1. Record insurance expense for the year ended December 31.d. The beginning balance of Supplies was $4,000. During the year, Laughter purchased supplies for $5,200 and at December 31 the supplies on hand total $2,400.d. Laughter designed a landscape plan, and the client paid Laughter $7,000 at the start of the project. Laughter recorded this amount as unearned service revenue. The job will take several months to complete, the Laughter estimates that the company has earned 60% of the total revenue during the current year.e. Depreciation for the current year included Equipment, $3,700; and Trucks, $1,300. Make a compound entry.
Aug 29, 2021 | Uncategorized
Following the Narrative of Transactions printed in your practice set, key the January transactions for Bath Designs Inc. into the General Journal. Click on the Journals toolbar button and select the General Journal tab. (All transactions for this simulation will be entered in the General Journal.) For each transaction, key the date in the format of 00/00/00 or click on the calendar icon and select the date from the pop up calendar that appears. Enter the account to be debited in the Account column by keying the account number or the account name or by clicking the Chart of Accounts button and selecting the desired account from the list that pops up. Tab to the Debit column and enter the debit amount. Follow the same procedure for the account(s) to be credited. When using the Accounts Payable or Accounts Receivable account, you must also select a vendor/customer from the drop down list that will appear in the Vendor/Customer column. After you have entered all transaction information, click on the Post button (or press Enter). When using the Work in Process account, be sure to manually post to the appropriate Job Cost Record using the forms provided in the practice set
Aug 29, 2021 | Uncategorized
hello
i attach three document and i want to get answer for it
Aug 29, 2021 | Uncategorized
| Program Area |
Costs |
| Administration |
|
| Salaries: |
|
| Administrator |
$60,000 |
| Assistant |
$35,000 |
| Two Secretaries |
$42,000 |
| Supplies |
$35,000 |
| Advertising and promotion |
$9,000 |
| Professional meetings/dues |
$14,000 |
| Purchased Services: |
|
| Accounting and billing |
$15,000 |
| Custodial |
$13,000 |
| Security |
$12,000 |
| Consulting |
$10,000 |
| Community Mental Health Services |
|
| Salaries (two social workers) |
$46,000 |
| Transportation |
$10,000 |
| Outpatient mental health treatment |
|
| Salaries: |
|
| Psychiatrist |
$86,000 |
| Two Social Workers |
$70,000 |
In an Excel spreadsheet:
- Provide a dollar range of costs to reduce budgets (worst and best case analysis).
- She needs to cut $94,000 in cost. Prioritize those cuts that can be made without impacting the operation or quality care of the organization.
In addition to the Excel spreadsheet required to support your responses, you must prepare an APA formatted paper that will address the following:
- Describe how managerial accounting is different from cost accounting.
- Describe the lean production philosophy.
- Compare and contrast accounting principles in lean production to those of typical production.
- Describe how you would advise Dr. White to prepare for reduced budgets.
Aug 29, 2021 | Uncategorized
|
Adams Company, a manufacturer of in home decorative fountains, began operations on September 1 of the current year. Its cost and sales information for this year follows.
|
|
|
|
|
| Production costs |
|
|
|
| Direct materials |
$ |
40 |
per unit |
| Direct labor |
$ |
60 |
per unit |
| Overhead costs for the year |
|
|
|
| Variable overhead |
$ |
3,000,000 |
|
| Fixed overhead |
$ |
7,000,000 |
|
| Nonproduction costs for the year |
|
|
|
| Variable selling and administrative |
$ |
770,000 |
|
| Fixed selling and administrative |
$ |
4,250,000 |
|
| Production and sales for the year |
|
|
|
| Units produced |
|
100,000 |
units |
| Units sold |
|
70,000 |
units |
| Sales price per unit |
$ |
350 |
per unit |
|
Aug 29, 2021 | Uncategorized
See attached
Aug 29, 2021 | Uncategorized
Company that is about to acquire an item of plant.
- A 5 year operating lease with annual payments in advance of $15,000.
- Included in the lease cost is a maintenance warrantee for the term of the lease.
- Insurance of the plant are the responsibility of the lessee. The annual cost of insurance is estimated at $1,200 per year.
- The company tax rate is 35% and the company’s cost of capital is 12%.
- The bank has indicated that they will charge 8% on moneys borrowed.
- Under the purchase option, the plant will be depreciated straight line over five years with an estimated residual value equal to 25% of the original cost. Assume the plant is sold at the end of 5 years.
- The market price of the plant is $70,000.
- An initial deposit of 20% is required for the purchase option.
- Assume annual compounding with instalment on the purchase option in arrears
- Assume that tax is paid or received in the same year of the transaction or event.
- The plant comes with a 3 year manufacturer’s warrantee after which it will cost the company an annual maintenance charge of $2,500 paid in advance.
- Calculate the net present value (NPV) for the lease and purchase option and make a recommendation as to which alternative is best. (Show workings)
Aug 29, 2021 | Uncategorized
Response to this post
e:Re:2. Cost Management Cost recommendations
I can appreciate this explanation of traditional costing systems and activity based costing methods. A few questions though could be asked to make it easier for me to understand. Some of these are: What would you consider as an individual product? What are cost drivers?
I think that the reason top level management is resistant to activity costing systems is twofold. One, I think that they don’t want to do it because it is time consuming and costly. Two, I think that because they are already doing costing methods for the external financial reports and the activity costing systems can’t be used on those reports that they don’t want to do it.
Triston Mitchell
Aug 29, 2021 | Uncategorized
Why the Depreciation for F&E is 675 based on the solution and the Dep for P&M is 600.
- Depreciation is charged at 10% per annum on the Furniture & Equipment and 15% per annum on the Plant & Machinery.
- PLEASE FOCUS ON THE ONES MARKED IN RED
Aug 29, 2021 | Uncategorized
7.1 Assume that the managers of Fort Winston Hospital are setting the price on a new outpatient service. Here are relevant data estimates:
Variable cost per visit $ 5.00
Annual direct fixed costs $500,000
Annual overhead allocation $ 50,000 Expected annual utilization 10,000
- What per visit price must be set for the service to break even? To earn an annual profit of $100,000?
- Repeat Part a, but assume that the variable cost per visit is $10.
- Return to the data given in the problem. Again repeat Part a, but assume that direct fixed costs are $1,000,000.
- Repeat Part a assuming both $10 in variable cost and $1,000,000 in direct fixed costs.
7.2 The audiology department at Randall Clinic offers many services to the clinic’s patients. The three most common, along with cost and utilization data, are as follows:
Service Variable Cost Annual Direct Annual # Visits
per Service Fixed Costs
Basic exam $5 $50,000 3,000
Advanced examination $7 $30,000 1,500
Therapy session $10 $40,000 500
- What is the fee schedule for these services, assuming that the goal is to cover only variable and direct fixed costs?
- Assume that the audiology department is allocated $100,000 in total overhead by the clinic, and the department director has al located $50.000 of this amount to the three services listed above. What is the fee schedule assuming that these overhead costs must be covered? (To answer this question, assume that the allocation of overhead costs to each service is made on the basis of number of visits.)
- Assume that these services must make a combined profit of $25,000 . Now what is the fee schedule? (To answer this question, assume that the profit requirement is allocated in the same way as overhead costs.) lied Laboratories is combining some of its most common
7.3 Allied Laboratories is combining some of its most common tests into one price packages. One such package will contain three tests that have the following variable costs:
Test A Test B Test C
Disposable syringe $3.00 $3.00 $3.00
Blood vial 0.50 0.50 0.50
Forms 0.15 0.15 0.15
Reagents 0.80 0.60 1.20
Sterile bandage 0.10 0.10 0.10
Breakage/losses 0.05 0.05 0.05
When the tests are combined, only one syringe, form, and sterile bandage will be used. Furthermore, only one charge for breakage/losses will apply. Two blood vials are required, and reagent costs will remain the same (reagents from all three tests are required).
- As a starting point, what is the price of the combined test assuming marginal cost pricing?
- Assume that Allied wants a contribution margin of $10 per test. What price must be set to achieve this goal?
- Allied estimates that 2,000 of the combined tests will be conducted during the first year. The annual allocation of direct fixed and overhead costs total $40,000. What price must be set to cover full costs? What price must be set to produce a profit of $20,000 on the combined test?
7.4 Assume that Valley Forge Hospital has only the following three payer groups:
Number of Average Revenue Variable Cost
Payer Admissions per Admission per Admission
PennCare 1,000 $5,000 $3,000
Medicare 4,000 4,500 4,000
Commercial 8,000 7,000 2,500
The hospital’s fixed costs are $38 million,
- What is the hospital’s net income?
- Assume that half of the 100.000 covered lives in the commercial payer group will be moved into a capitated plan. All utilization and cost data remain the same. What PMPM rate will the hospital have to charge to retain its Part a net income?
- What overall net income would be produced if the admission rate of the capitated group were reduced from the commercial level by 10 percent?
- Assuming that the utilization reduction also occurs, what overall net income would be produced if the variable cost per admission for the capitated group were lowered to $2,200?
8.1 Consider the following 2011 data for Newark General Hospital (in millions of dollars):
Static Flexible Actual
Budget Budget Results
Revenues $4.7 $4.8 $4.5
Costs 4.1 4.1 4.2
Profits 0.6 0.7 0.3
a. Calculate and interpret the profit variance.
b. Calculate and interpret the revenue variance.
c. Calculate and interpret the cost variance.
d. Calculate and interpret the volume and price variances on the revenue side.
e. Calculate and interpret the volume and management variances on the cost side.
f. How are the variances calculated above related?
8.2 Here are the 2011 revenues for the Wendover Group Practice Association for four different budgets (in thousands of dollars):
Flexible Flexible
Static Enrollment/Utilization) (Enrollment) Actual
Budget Budget Budget Results
$425 $200 $180 $300
a. What does the budget data tell you about the nature of Wendover’s patients: Are they capitated or fee for service? (Hint: See the note to Exhibit 8.7.)
b. Calculate and interpret the following variances:
• Revenue variance
• Volume variance
• Price variance
• Enrollment variance
8.3 Here are the budgets of Brandon Surgery Center for the most recent historical quarter (in thousands of dollars):
Static Flexible Actual
Number of surgeries 1,200 1,300 1,300
Patient revenue $2,400 $2,600 $2,535
Salary expense 1,200 1,300 1,365
Non salary expense 600 650 585
Profit $600 $650 $585
The center assumes that all revenues and costs are variable and hence tied directly to patient volume.
a. Explain how each amount in the flexible budget was calculated. (Hint Examine the static budget to determine the relationship of each bud get line to volume.)
b. Determine the variances for each line of the profit and loss statement, both in dollar terms and in percentage terms. (Hint: Each line has atotal variance, a volume variance, and a price variance [for revenues and management variance [for expenses].)
c. What do the Part b results tell Brandon</st1:place></st1:city>’s managers about the surgery center’s operations for the quarter?
8.4 Refer to Carroll Clinic’s 2011 operating budget contained in Exhibit 8.3, Instead of the actual results reported in Exhibit 8.4, assume the results reported below:
Carroll Clinic: New 2011 Results
/. Volume:
A. FFS 34,000 visits
B. Capitated lives 30,000 members Number of member months 360,000
Actual utilization per
member month 0.12
Number of visits 43,200 visits
C. Total actual visits 77,200 visits
II. Revenues:
A.FFS $28 per visit
X 34,000 actual visits $ 952,000
B. Capitated lives $ 2.75 PMPM
X 360,000 actual member months $ 990,000
C.Total actual revenues $1,942,000
III. Costs:
A. Variable Costs:
Labor $1,242,000 (46,000 hours at $27/hour)
Supplies 126,000 (90,000 units at $1.40/unit)
Total variable costs $ 17.72 ($1,368,000 / 77,200)
B. Fixed Costs
Overhead, plant,
and equipment $525,000
C. Total actual costs $1,893,000
IV. Profit & Loss Statement:
Revenues:
FFS $952,000
Capitated $990,000
Total $1,942,000
Costs:
Variable:
FFS $602,487
Capitated 765,513
Total $1,368,000
Contribution Margin $574,000
Fixed Costs 525,000
Actual profit $49,000
- Construct Carroll’s flexible budget for 2011
- What are the profit variance, revenue variance, and cost variance?
- Consider the revenue variance. What is the component volume variance? The price variance?
- Break down the cost variance into volume and management components.
- Break down the management variance into labor, supplies, and fixed cost variances.
- Interpret your results. In particular, focus on the differences between the variance analysis here and the Carroll Clinic illustration presented in the chapter.
Aug 29, 2021 | Uncategorized
Complete the following activities and submit your answers to your instructor in a Word document formatted to proper APA specifications. Include any relevant supporting calculations.
Chapter 14:
- E14 16 – page 789
- E14 18 – page 789
- P14 21 – page 799
Chapter 15:
- E15 25 – page 856
- P15 3 – page 860
Carefully review theGrading Rubricfor the criteria that will be used to evaluate your assignment.
Aug 29, 2021 | Uncategorized
Part 2. Horizontal and Vertical Financial Statement Analysis with Explanatory Narrative.
General formatting requirements: Please construct visually attractive and easily readable worksheets. Round your calculated percentages to the nearest one tenth of one percent (e.g., 100.0%; 65.2%; 4.3%, etc).
- Use Excel to prepare a horizontal and a vertical analysis of the following selected income statement components: Net revenues, gross profit, SG&A expenses, and Net Income. The specific terminology and classifications will vary somewhat across companies. Use the three most recent years’ income statement data to construct two horizontal income statement analyses and three vertical analyses.
- From your company’s 10 K, locate management’s discussion and analysis of year to year financial and operating results to identify the main reasons for the changes, trends, and relationships in your horizontal and vertical spreadsheets. Organize your analysis under four headings: Net revenues; inventory and cost of sales; SG&A expenses;, and Net Income. Your narrative should require approximately three pages. In your narrative, please refer to the specific horizontal or vertical percentages you are explaining, describe more than one factor for each income component, identify relevant offsetting factors when applicable, and quantify the impact of those factors.
- Print and attach a copy of each spreadsheet and a copy of the Excel formulas for each spreadsheet, for a total of four spreadsheet printouts. You may insert the spreadsheets directly into your Word file. Instructions for viewing and printing formulas in Excel:
- Highlight area on spreadsheet
- Select Tools, Select Options, Select View tab
- Under Window Options, place a Ö in the Formulas box
- Print
- To return to original document, repeat above steps and uncheck the Formulas box.
Alternatively, use Control and tilde (the ~ key just to the left of the #1 key) to toggle between original document and formulas.
Part 3. Identify Major Sources of Cash and Use Operating Cash Flow to Evaluate the Quality of Earnings.
From your company’s Statement of Cash Flows, (a) list the dollar amount and sign (positive or negative) of your company’s three or four major investing cash flows and three or four major financing cash flows for the most recent fiscal year reported, and (b) use the operating cash flow section to evaluate the quality of your company’s earnings for the most recent fiscal year reported.
Aug 29, 2021 | Uncategorized
A product passes through three processes. During March, 2011, 1,000 finished units are produced with the following expenditure:
Overhead expenses amounted in all to Rs. 6000. They are to be apportioned on the basis of direct wages. Main raw materials issued to Process A (besides above) were worth Rs. 6,000. Ignoring the question of stock prepare the Process Accounts concerned.
Aug 29, 2021 | Uncategorized
Jack, age 75, died on December 1, 2012. Jack was single at time of his death. He is survived by his only son, Jim. Jack died intestate and Jim was appointed the administrator of his estate. At the time of his death Jack owned the following assets:
Cash savings account held jointly with his son $550,000 (all monies deposited into account belonged to Jack).
Series EE Bonds face value $600,000 DOD (Date of Death) value $950,000 Accrued Interest $90,000. The bonds were redeemed on December 15, 2012.
4 family building owned as tenant in common with his brother, Tom. Property was purchased 1/1/73 Cost $500,000 MV (Market Value) DOD $3,500,000.00, mortgage payable $300,000. Rent receivable from property at DOD $2,500 which was collected after his death.
Art Collection MV DOD $1,600,000
5,000 shares of ABC stock DOD high 31 low 28 closing price 30 (stock was purchased 2/1/1998 Cost $125,000).
10,000 shares of XYZ stock DOD high 35 low 33 closing price 34 (stock was purchased 5/1/1980 Cost $130,000).
Life estate in principal residence cost $400,000 MV DOD $1,000,000.
Life insurance policy held in ILIT $1,000,000.
Life insurance policy owned by his son $500,000.
Stock portfolio held in a revocable trust $1,700,000.
In June 2012 Jack gifted his 2 family rental property to his son and retained the right to receive the rental income for the rest of his life. The property was purchased for $250,000. On the date of gift and DOD, the property value was $500,000. No gift tax was paid.
Automobile $60,000
Aug 29, 2021 | Uncategorized
Class 1 Project 2 2.xls Sheet3 S Corp Tax Return Corporate Tax Return Corporation Tax Return Gross Sales Less: Returns & Allowances Less: Cost of Goods Sold Gross Profit Income Deductions
Aug 29, 2021 | Uncategorized
(a) In 2010, Myers declared and paid a cash dividend of $9,000.
(b) The company converted $100,000 of bonds into common stock.
(c) Equipment with a cost of $22,000 and a book value of $13,000 was sold for $10,000.
(d) Land was acquired for cash.
Instructions:
Prepare an indirect cash flow statement on the “Cash Flow Statement” tab below
Aug 29, 2021 | Uncategorized
See attached
Aug 29, 2021 | Uncategorized
Apr. 2 Purchased merchandise from Blue Company under the following terms: $3,400 price, invoice dated April 2, credit terms of 2/15, n/60, and FOB shipping point. 3 Paid $190 for shipping charges on the April 2 purchase. 4 Returned to Blue Company unacceptable merchandise that had an invoice price of $600. 17 Sent a check to Blue Company for the April 2 purchase, net of the discount and the returned merchandise. 18 Purchased merchandise from Fox Corp. under the following terms: $7,250 price, invoice dated April 18, credit terms of 2/10, n/30, and FOB destination. 21 After negotiations, received from Fox a $2,030 allowance on the April 18 purchase. 28 Sent check to Fox paying for the April 18 purchase, net of the discount and allowance. Prepare journal entries to record the above transactions for a retail store. Assume a perpetual inventory system. (
Aug 29, 2021 | Uncategorized
Beginning raw materials = $43
Raw materials purchases = $29
Raw materials stolen = $17. [Assume that the cost of raw materials stolen is not included in COGS but is shown as a separate line item on the income statement.]
Raw materials ending = $22
Beginning work in process = $50
Direct labor = $31
Overhead allocated to products = $24
Ending work in process = $10
Beginning finished goods inventory = $21
Ending finished goods inventory = $5
Salesperson salaries = $97
Advertising paid for this and the next year = $26. [Assume that advertising is equally allocated to the two years.]
Revenue = $199
What is:Cost of raw material issued to WIP, Cost of Goods Manufactured, Cost of Goods Sold and Net Income
Aug 29, 2021 | Uncategorized
Andrew, Brian, Colin, Diana and Elizabeth were the directors of Gemsales Pty Ltd, a company engaged in the business of importing and supplying jewellery as wholesalers to the local market.
The company decided that as the market was becoming more competitive it needed to expand its business as it felt with increased volumes of sales it would be able to lower its prices and be more competitive. In order to do so it obtained a $4 million dollar loan from the Friendly Bank Ltd. $3 million was used to buy more stock and $1 million was used to buy a large new warehouse and showrooms from Traders Pty Ltd.
Colin was not at the meeting that had made these decisions as he was in hospital recovering from a serious accident. Elizabeth, as was her usual custom, had not attended the meeting but signed the requisite documentation agreeing to the expansion of the business and the getting of the loan. Diana who attended, said she did not know if she agreed and abstained from voting. Andrew and Brian both voted to go ahead with the expansion and the getting of the loan.
At about this time Brian has established contact with Victor, who was setting up a new business as a retailer of jewellery. Victor was looking for reliable suppliers, but said he would not deal with Gemsales Pty Ltd as he did not like Andrew, the Managing Director. Not wishing to miss out on such a lucrative business opportunity, Brian arranged to set up his own business as a jewellery wholesaler and a contract was entered into between Victor and Brian for the supply of jewellery.
Six months later, Brian resigned as a director. At the same time it was clear the company had over extended itself and was insolvent and could not pay the interest on its loans.
It also became clear that Brian was a major shareholder in Traders Pty Ltd and the other directors were unaware of this at the time of the purchase of the warehouse and showrooms. Furthermore, Brian had been approaching other established customers of Gemsales Pty Ltd and had secured orders for his own business.
Advise as to the liability of ALL the parties both under common law and the Corporations Law. In your answer you should address all the issues relating to each of the directors and their duties to the corporation.
Aug 29, 2021 | Uncategorized
Using BUDGETED data create a mini contribution margin income statement illustrating the break even point of sales for Danshui Plant No. 2. Use the information derived in your contribution margin income statement to also calculate the number units that must be sold at breakeven. (“Prep” worksheet)
- Calculate the static budget variance for each line item of the Danshui Plant No. 2 contribution margin income statement, depicting favorable variances in yellow text and unfavorable variances in red text. Calculate the total dollar value that will be depicted within the flexible budget column of the flexible budget for each income statement line item. (“Prep” worksheet)
- Calculate the expected sales price and cost per unit of product. Calculate the actual sales price and cost per unit of product. (“Prep” worksheet)
- Prepare a complete flexible budget, including calculations of the “Flexible Budget Variance” and “Sales Volume Variance” for each contribution margin income statement line item; depict favorable variances in yellow text and unfavorable variances in red text. (“Flexible” worksheet)
- “Flash memory” materials and “assembly and packaging” labor costs appear to warrant further investigation based on the significance of their flexible budget variances. Assuming a standard of one flash memory card and one direct labor hour per finished good unit, compute the price and efficiency variances for both “flash memory” materials and “assembly and packaging” labor costs. Within the orange shaded cells use an “Ifàthen” formula that utilizes the positive or negative numerical representation of the calculated price, efficiency, and total flexible budget variances in dollars to indicate whether each of those aforementioned variances are favorable or unfavorable. (“Variances” worksheet)
- Within the “response” worksheet provide specific reasons as to why Danshui Plant No. 2 was unprofitable at a level of 180,000 iPhone 4s produced, even though the breakeven analysis would indicate they should have been profitable at that level of production. Focus your attention on the reasons why the “flash memory” materials and “assembly and packaging” labor price and efficiency variances ended up as they did.
Aug 29, 2021 | Uncategorized
FIN 615 Mastery Problem 1This assignment draws on your understanding of Chapters 1 and 2. Create the Balance Sheet,Income Statement and Statement of Retained Earnings for the following company in an Excelworkbook, employing three sheets. Use the prescribed GAAP presentation for the financialstatements. When possible reference/link data across sheets to make the spreadsheet as dynamicas possible. Demonstrate your ability to apply Excel formatting functions to cells and to theoverall report, consistent with the GSMT Expectations for Excel posted under Course Content.Use formulas to perform the calculations (ie SUM, AVG, GEOMEAN, etc) and apply theOutliner feature as appropriate.1) Prepare the company’s balance sheet at January 31, 2010. Use an appropriate formula tocompute ending retained earnings.2) From the balance sheet, create a pie chart for Total Assets. Employ best practices inpresenting charts.3) Prepare the company’s income statement for the year ended January 31, 2010.4) Prepare a statement of retained earnings and calculate the company’s dividend for theyear.Company Data:Amounts of the assets and liabilities of DolanBanking Company, as of January 31,2010, are given as follows. Also included are revenue and expense figures for the yearended on that date (amounts in millions):Total revenue…………………… $ 37.8 Investment assets………………… $169.6Receivables……………………… 0.9 Property and equipment, net .. 1.9Current liabilities……………… 151.1 Other expenses………………….. 6.9Common stock…………………. 14.0 Retained earnings, beginning 8.6Interest expense…………… 0.8 Retained earnings, ending ….. ?Salary and otheremployee expenses………. 17.7 Cash…………………………………… 2.1Long termliabilities……….. 2.8 Other assets……………………….. 14.4
Aug 29, 2021 | Uncategorized
- to show the impact of the various transactions on the fundamental equation of accounting
- NOT required to record the transactions as journal entries with debits and credits
Aug 29, 2021 | Uncategorized
Unit 1 Managerial Acct IP
You are the manager of an accounting department and would like to hire another managerial accountant to focus on internal accounting. The CEO is not convinced that a managing accountant position is needed.
Prepare a 1page memo for the CEO on the following:
- Explain the objectives and characteristics of an internal accounting system.
- Include an explanation of the importance of this information to the company.
- Include an explanation of ethics in business and the managerial accountant’s role in upholding the code of ethics.
Aug 29, 2021 | Uncategorized
Question I
Please answer the followings: a. What is the maximum price that you are willing to pay for a machine if it is expected to provide annual savings of $20,000 at the end of each year for 10 years and to have a resale value of $50,000 at the end of year 10. Assume an interest rate of 9% p.a. compounded annually. b. If $8,000 is deposited annually starting on January 1, 2010 and earns 9% p.a. compounded annually, how much will be accumulated by December 31, 2019? • c. Compute the cost of an investment if it earns $6,000 at the end of every 3 months for 5 years at 12% compounded quarterly. d. How much must be invested now to receive $40,000 for ten years if the first $40,000 is received today and the interest rate is 8% p.a. compounded annually? e. A machine will be leased for 15 years with rent received at the beginning of each year. If the machine cost is $160,000 and return of 10% p.a. compounded annually is required, compute the amount of the annual rent. f. Determine the market price of a $400,000, ten year, 10% (pays interest semiannually. at the end of each period) bond sold to yield an interest rate of 12% p.a. compounded semi annually.
Aug 29, 2021 | Uncategorized
QUESTION 1
Classify each cost item of Ripon Printers into one of the business functions of the value chain, either :
(1) R&D, (2) design, (3) production, (4) marketing, (5) distribution, or (6) customer service.
Item:
a. cost of customer order forms
b. cost of paper used in manufacture of books
c. cost of paper used in packing cartons to ship books
d. cost of paper used in display at national trade show
e. depreciation of trucks used to transport books to college bookstores
f. cost of the wood used to manufacture paper
g. salary of the scientists attempting to find another source of printing ink
h. cost of defining the book size so that a standard sized box is filled to capacity
(4 marks)
QUESTION 2
List the four standards of ethical conduct for management accountants.
For each standard, give an example that demonstrates compliance with that standard.
(4 marks)
QUESTION 3
Generally, companies follow one of two broad strategies: offering a quality product at a low price, or offering a unique product or service priced higher than the competition.
Assume you are opening a small food outlet across the street from your campus.
How might that business be operated under each of the two broad strategies?
Consider the following specific operational areas:
o target customers
o products offered
o product pricing
o location choice
o advertising content
o advertising media
(6marks)
QUESTION 4
You have been employed as an entry level management accountant for a little under a year.
You suspect that your immediate supervisor is involved in a significant fraud involving diverting of company assets to personal use.
Briefly describe the steps you might take to resolve this dilemma.
(10 marks)
QUESTION 5
The Wildcat Company has provided the following information:
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Units of Output
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30,000 Units
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42,000 Units
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Direct materials
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$ 180,000
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$ 252,000
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Workers’ wages
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1,080,000
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1,512,000
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Supervisors’ salaries
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312,000
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312,000
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Equipment depreciation
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151,200
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151,200
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Maintenance
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81,600
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110,400
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Utilities
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384,000
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528,000
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Total
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$2,188,800
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$2,865,600
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Using the high low method and the information provided above:
a)identify the linear cost function equation and
b)estimate the total cost at 36,000 units of output.
(6 marks)
Aug 29, 2021 | Uncategorized
Required A. Prepare a monthly schedule of expected cash receipts for the first quarter of 2014. B. Prepare a monthly purchases budget for the first quarter of 2014. C. Prepare a monthly schedule of expected cash payments for the first quarter of 2014. D. Prepare a monthly cash budget for the first quarter of 2014. E. Prepare a monthly budgeted income statement for the first quarter of 2014. F. Calculate the difference between the expected increase in cash and the expected profit or loss for the first quarter. Explain why the two amounts are different.
A=M=I
Aug 29, 2021 | Uncategorized
Rtriuiremtn14 for Problem Sat 2 Prof, 0′ Kelly ACCI 2301 Summer 2, 2013
The work is to he completed on an individual basis and should not be discussed w sib other students in the course. ‘the use of outside resources should not be used with the exception of the textbook and course materials. Your signature on the cover page confirms that you have complied with this policy.1 he assignment *should be turned in electronically using Turn it in (found in the Assignments tab of Blackboard) by 3 l,m on Wednesday, .lune 19, 2013. You are also required to bring a hard copy of your answers to the problem wet to class and turn it in directly to me at the beginning of class on that day. I, Answer the problems included in the assignment in order and relerence your answers with the corresponding letters a, h, c, d, e, as appropriate. It is important that you make it clear which question you are answering, No introduction (,r tomtit of the problem is required. 2. Clearly show all calculations done to arrive at your answers and analyses. Where possible, use Tables and Exhibits to present calculations and quantitative analyses. You will be evaluated on the clarity of the solutions as well as the quality of the analysis. 3. Support your answers with evidence drawn from the fat..;’ , in the problem along with additional material discussed in class and in the
4. Calculations are only the beginning of the anal You must interpret the calculations and assess their implications and significance fur the managerial analysis and decisions under discussion, He careful to respond directly to the question asked. ‘type your answers, double spaced, in /2 point font. Number each page sequentially including exhibits.
6. Type an 8 V2″ x I I” cover page that include:, your name, instructor name, section time of the course, and the date the case write up is due. You a!’,’, ‘,ign your name on the cover page which confirms the f011owing: 1 completed the assignment on an individual hasi’, and did not di ,c uss the questions or my answers with other students in the course. I did not use any outside resources with the exception of the textbook and (nurse I pled re that the work I am submitting is completely my own. ,ST A PLE the pages in the upper left hand comer , (Paper dips have a nasty habit of coming off, and pages are lost.) Submit only the stapled 8 1/2″ x 11″ pages
Aug 29, 2021 | Uncategorized
| Enter the appropriate numbers/formulas in the shaded (gray) cells. An asterisk (*) will appear |
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| COX SECURITY SYSTEMS |
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December 28, 20 |
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MARITAL STATUS |
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CIT |
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PAY |
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$ 5,000.00 |
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2,750.00 |
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520.00 |
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| Smith, Joseph |
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465.00 |
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M |
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380.00 |
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| Gillespie, Michelle |
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1 |
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350.00 |
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| Smart, Jennifer |
M |
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575.00 |
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| White, Matthew J. |
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0 |
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425.00 |
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$10,465.00 |
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Aug 29, 2021 | Uncategorized
You are to research for an event (NOT BP Gulf of Mexico or Exxon Valdez as they are likely to be discussed with you) where a company created a situation where their legitimacy was compromised. Considering the aspects of PAT, System oriented theories and/or Social & Environmental, discuss the case. This should be in a report format, introducing the case, discussing the issues, how did they manage the situation, the conclusion (outcomes) as well as your recommendations and views. Note: the case must be within the past few years so that information is easily sourced.
Sources that you will find useful include;
Websites:
- AASB (website of Australian Accounting Standards Board)
- IASB (website of International Accounting Standards Board)
- FASB (website of US based Financial Accounting Standards Board
- ICAA (Institute of Chartered Accountants in Australia)
- CPAA (Certified Practising Accountants Australia)
It is also recommended that you utilise Proquest and Google Scholar as well as Financial review, the Age and BRW (Business Review Weekly)
Report structure: should consist of summary, introduction, points of discussion and conclusion. Where you feel a number of theories are applicable and that is quite likely, ensure they are clearly identified.
Please ensure you attach a copy of the case study to your hard copy assignment.
Aug 29, 2021 | Uncategorized
hi there, i need to write this 2,000 words report by sunday midnight. it’s about the cases of oil spill (but we can write down about bp and the other case). could you please find other similar cases, discuss about it and put down some reference as well within this report
Aug 29, 2021 | Uncategorized
An extensive consultation paper has been provided to you related to the Conceptual Framework from the International Public Sector Accounting Standards Board.
As a group, you are to read the report, understanding its purpose and then discuss Phases 3 and 4 (Measurement as well as Presenting information in GPFR’s). NOTE: you are not required to discuss Phases 1 & 2.
This will require further research by your group to understand the background, a clear understanding of the relevance of each phase and a discussion as to where this will lead, what the likely outcomes are and why. You should consider and include the history and practices in Australia in your report, e.g. AASB and the structure that existed pre IASB. As a conclusion, you are to include what you have learned/understood from the paper and from your findings.
Aug 29, 2021 | Uncategorized
1 SUNDERLAND BUSINESS SCHOOL Module Strategic Management Accounting APC309 Individual assignment Hand in Date: Monday 8th July 2013 General Information 1. Weighting – 100% of the marks for this module 2. This is an individual assignment of about 3,000 words (plus or minus 5%), excluding appendices and bibliography. The word count MUST be shown on the front of the assignment. 3. There are a number of parts to this assignment. Each part is equally weighted. All parts are discreet from one another. 4. All of the learning outcomes for the module are being assessed in this assignment. The learning outcomes are shown in the section entitled “Marking Guide”, which is further on in this document. 5. The University’s policy on cheating collusion and plagiarism will be applied to this piece of work. 6. The hand in date is: Requirements: Part a. You are required to critically evaluate the following statement: “Both Return on Investment (ROI) and Economic Value Added (EVA), when used as performance measures in an organisation, encourage managers to be short term in their focus and decision making”. If your critical evaluation tends to agree with the statement, briefly outline how the short term nature of such measures can be overcome. Part b. Many organisations use transfer pricing when transferring products between different divisions of the same organisation. You are required to discuss in detail the advantages and disadvantages of each of the following four methods: 1) Market based transfer prices; 2) Full cost transfer prices; 3) Cost plus a mark up transfer prices; and 2 4) Negotiated transfer prices. Guidance: Students are encouraged to be inquisitive and innovative in their approach as to what should be included in this report. The following may be of some use in providing guidance as to what could possibly be included, although this is in no way meant to be prescriptive. The aim of the assignment is to help you understand how key areas of strategic management accounting are applied in practice. This will include investigating topics from throughout the course linked to the above issues. Some of the principles, concepts ad models will be more relevant to your chosen approach than others and so it is likely that different students will formulate different approaches to the problems. This is normal, it is not expected that all of the course content will be used in the analysis, concentrate on that which you feel is most important. As part of your work you might find it helpful to briefly explore the underlying theory behind the key areas of investigation that you identify before applying them to report. With a total of 3,000 words you do not have a lot of room for long introductions so assume you are writing to a sophisticated audience who has a working knowledge of strategic management accounting and is well versed in business theory. Numerical example for illustrative purposes may be of use but should not be the main thrust of the work. If used they should be to provide evidence to support your findings from your other analysis of position and policies. If other sources are used remember to reference everything! Please avoid relying too heavily on descriptive sections reproducing information available from course material or the set text. It is your own logical, evaluation of the situation, the interpretation of course material and presentation, with critical analysis, of a coherent strategic plan that will attract high marks. 3 ASSESSMENT CRITERIA Criteria Fail (<34) Fail (35 39) 3 rd (40 49) 2:2 (50 59) 2:1 (69 69) Ist (70+) Knowledge of relevant concepts and issues Fails to identify the majority of the concepts relevant to the question or introduces topics that are not relevant. The ordering of the concepts indicates a lack of understanding of key concepts. Fails to identify the majority of the concepts relevant to the question. Those concepts that are used are misapplied. The ordering of the concepts is in appropriate. Identifies some of the key concepts, but not all o f them, or displays an in correct understanding of some of the concepts discussed. The ordering of the concepts may be adhoc. Identifies and utilises some of the key concepts relevant to the question. Uses some of the concepts, but not always in an appropriate context. The work is ordered appropriately Identifies the majority of the key concepts relevant to the question and uses them in an appropriate context. Orders and structures them in a logical sequence Identifies all of the key concepts relevant to the question and uses them in an appropriate context. The material is structured to show significant understanding of the key issues. Depth of understanding and extent of critical evaluation (including evidence of wider reading) The student has failed to address the question set or appears to have answered a different question to that set. There is no evidence of any reading. No key issues identified. There is no evaluation of the validity of the sources used or the work is based on one key source. Inappropriate sources are used extensively. There is no evidence of appropriate wider reading. No reflection on key issues. There is some evaluation of the materials used in the work. The work is based on a limited number of appropriate sources. Little reflection on key issues. Good evaluation of materials used, with discernment obvious as to key sources. The work is based on a number of appropriate sources. Some reflection on key issues. Good evaluation of all key/important sources materials used. The work is based on a wide range of appropriate sources. Good reflection on key issues. The work is set in a context where wider reading and appreciation of the context is obvious. The material included is relevant to the topic and appropriate in addressing the key issues identified in the assignment Evidence of appropriate analysis The student fails to draw any relationships from the material used or the student is incorrect in the relationships that they draw. The student draws one or two basic relationships from the material used, but then subsequently misapply these concepts. The student draws one or two basic relationships from the material used, but fails to identify other important relationships. There may be some evidence they have not clearly understood all of the material they have presented The student draws some limited relationships from the material used. There might be minor issues where the student is incorrect in the assertions that they make, but overall they demonstrate appropriate analysis. The student starts to demonstrate they understand the key relationships from the material used. There are no substantive errors in their analysis. All the key connections are drawn between materials from different sources. The student makes no substantive errors in their analysis and reflects upon the key issues identified in their analysis. Ability to synthesise relevant material from a range of sources The student fails to use any appropriate sources. There is extensive repetition of notes given out in class. The student uses just a few non academic sources of information or the material used is inappropriate for UG level study. They quote verbatim extensively from one or two sources. They use quotations incorrectly to support an argument. The student uses a few sources of information or the material used is inappropriate for UG level study. Extensive verbatim quotes are used as a replacement for the students own work. The student may be limited in their use of academic sources such as journals and books, but there is evidence that they have attempted to access a range of sources including non academic ones. The student has accessed a range of academic sources such as journals and books, and also appropriate non academic ones. Verbatim quotes are used to enhance the arguments being developed rather than as a replacement for the students own work. The student has accessed a wide range of appropriate sources. They make reference to a wide range of material in their work. Verbatim quotes are used from a range of sources to illustrate and support the arguments being developed, but without becoming a substitute for the students own work. Structure and clarity of presentation. The work has no coherent structure. The work is littered with spelling and typographical errors. Very poor use of English. Where appropriate tables/graphs are not used. Referencing is poor or non existent. The work is poorly organised, and structured. There are many spelling and typographical errors. Poor use of English. Where appropriate tables/graphs are not used. Referencing is patchy and incomplete. The work is poorly structured. There are spelling and typographical errors. Poor use of English. Where appropriate tables/graphs are not used appropriately. Some of the referencing is incomplete The work has a clear structure and generally a logical progression. Occasional typographical and spelling errors. Some use of tables/graphs is made where appropriate. The work has overall a coherent structure and a clear and logical progression. Very few typographical and spelling errors. Good use of tables/graphs is made where appropriate. The work is well structured with clearly defined objectives that are achieved. Typographical and spelling errors are rare. Excellent use of tables/graphs is made where appropriate. 4
Aug 29, 2021 | Uncategorized
Deanna Leachman
Decision makers need useful information from both financial and managerial accounting. Collecting information and managing information in order to report nonmonetary and monetary info to managers, and other people who are interested in the company. ( Introduction to Managerial Accounting, Chapter 1)
These procedures enable the business to make decisions on budgeting, product costs, predicting future costs of services and products, and profit analysis.
Managerial Accounting is what provides information for the internal decision makers. This type of accounting gives information that financial accounting does not, such as, product pricing performance evaluations, whether to purchase new equipment of not, to drop or keep a certain product, or product line, or whether to save money and make needed parts instead of buying them. Financial Accounting does not provide managers this type of information. Managerial Accounting allows for long term planning, (5 10 years) but along the way, this information will be reviewed and updated or changed to meet demands or goals in the short term. (Planning and controlling) (McGraw Hill, Higher Education (2012).This type of accounting looks at the company or business in bits and pieces. Managerial Accounting takes both qualitative and quantitative into account when it comes to decision making, employees’ moral, environmental and community issues, as well as the reputation of the company. Information in Managerial Accounting is information that is accessible on demand, rather than in increments. However the risk of accuracy will be given up in order to get needed information quicker. Accounting of this nature is for use internally only, and does not need to follow GAAP, and since there is not a format to really follow, managers are free to use this in order to make informed decisions concerning the business. Functions of this accounting style would be controlling plans and making changes to these plans in order to complete tasks that enable goals to be met, motivating and also following basic strategy plans as well. This accounting also reports on monetary and non monetary information, and some of the same information that financial accounting shows. Manager Accounting is an integral part of the business. Internally these reports will be viewed by the board of directors, CEO’s, managers, (dept. and plant) and supervisors.
Financial Accounting deals with the results, past and the present, and avoids any predictions. Financial reporting deals with any past transactions and events, and are available to outsiders only after weeks of audits are completed, which means decisions that need to be made quickly need to go to the managerial accounting figures. Financial Accounting is focused on the company as a whole, whereas, managerial accounting focuses on the company in divisions or departments. Financial Accounting must follow GAAP guidelines, and this statement will only cover monetary information. These external reports will be viewed by the bank, stockholders, investors and creditors. (Managerial Accounting Purpose, (June 2013)
Accounts use computers; however they need to be somewhat an expert in the management information systems, and in most cases computer programming. The computer relays information on financial, operational, and compliance related info that is a necessity in order to run a successful company. This computer system enables the accountant to provide information from management and employees, back up to management and throughout the business. (Introduction to Managerial Accounting, Chapter 1) Digital technology has changed the way accounting is done. What used to be done in 2 weeks can now be done in four days. One website called Fin Web is a network of sites that enables employees to enter their expense reports, purchase goods, and services from their laptops. The technology today allows information to be updated, and this has reduced the amount of paperwork, publishing, transaction time, and distribution costs. This is also a plus as it cuts down the time it used to take to get certain types of information, and benefits the company when it comes to achieving the ability to add value and spend less time processing transactions. Excel web sheets replaced the more than 40 general ledgers and allowed companies to have a system so than virtually all transactions flow automatically thru a web site on the Microsoft intranet into the SAP system and then extracted on a daily basis.(Accounting the digital way1999)This also allows users to customize reports, and find answers on almost any financial issues.
Boggs, S Journal of Accountancy: Accounting the digital way, How Microsoft adds it up. (1999) http://www.journalofaccountancy.com/issues/1999/may/boggs
Introduction to Managerial Accounting’ Chapter1 (2013) http://www.unf.edu/~dtanner/dtch/ch1.pdf
Managerial Accounting, Concepts and PrinciplesRetrieved fromhttp://wow.coursesmart.com/0077673654/firstsection
M.U.S.E. Managerial Accounting Purpose, (June 2013) Retrieved fromhttps://class.aiuniv.edu/_layouts/MUSEViewer/Asset.aspx?MID=MU13185&aid=AT65533
Wild, J; Shaw, Ken: McGraw Hill Higher Education (2012) Chapter 1, pgs. 3 7
Aug 29, 2021 | Uncategorized
show all calculations
Loper Corporation manufactures a single product. The standard cost per unit of product is shown below:
Direct materials 2 pound at $5 per pound $ 10.00
Direct labor 2 hours at $12 per hour 24.00
Variable manufacturing overhead 12.00
Fixed manufacturing overhead 6.00
Total standard cost per unit $52.00
The predetermined manufacturing overhead rate is $9 per direct labor hour ($18/2). It was computed from a master manufacturing overhead budget based on normal production of 15,000 direct labor hours (7,500 units) for the month. The master budget showed total variable costs of $90,000 ($6 per hour) and total fixed overhead costs of $45,000 ($3 per hour). Overhead is applied on the basis of direct labor hours. Actual costs for October in producing 7,400 units were as follows:
Direct materials (15,000 pounds) $ 73,500
Direct labor (14,900 hours) 181,780
Variable overhead 88,990
Fixed overhead 44,000
Total manufacturing costs $388,270
The purchasing department buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories, therefore, can be ignored.
Instructions: Compute all of the materials, labor and overhead variances. Your answer should include the material price variance, material quantity variance, labor price variance, labor quantity variance and total overhead variance. Clearly label your answers (abbreviations are fine) and show all calculations.
Aug 29, 2021 | Uncategorized
In cases 1 3 below, assume that Division A has a product that can be sold either to Division B of the same company or to outside customers. The managers of both divisions are evaluated based on their own division’s return on investment (ROI). The managers are free to decide if they will participate in any internal transfers. All transfer prices are negotiated. Treat each case independently.
Division A:
1 2 3 4
Capacity in units 52,000 309,000 101,000 204,000
Number of units now being sold to outside customers 52,000 309,000 76,000 204,000
Selling price per unit to outside customers $99 $42 $61 $47
Variable costs per unit $60 $20 $35 $33
Fixed costs per unit (based on capacity) $26 $9 $20 $9
Division B:
Number of units needed annually 10,700 73,000 20,000 64,000
Purchase price now being paid to an outside supplier $90 $39 $61 “
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| Required: |
| 1. |
Refer to case 1. A study has indicated that Division A can avoid $5 per unit in variable costs on any sales to Division B.
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| a. |
What is the minimum transfer price for Division A? (Omit the “$” sign in your response.) |
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| b. |
What is the maximum transfer price for Division B? (Omit the “$” sign in your response.)
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| 2. |
Refer to case 2. Assume that Division A can avoid $5 per unit in variable costs on any sales to Division B.
| a 1. |
What is the minimum transfer price for Division A? (Omit the “$” sign in your response.)
|
| a 2. |
What is the maximum transfer price for Division B? (Omit the “$” sign in your response.)
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| a 3. |
Would you expect any disagreement between the two divisional managers over what the transfer price should be?
| b. |
Assume that Division A offers to sell 73,000 units to Division B for $38 per unit and that Division B refuses this price. What will be the loss in potential profits for the company as a whole? (Input the amount as a positive value. Omit the “$” sign in your response.) Loss in potential profits for the company =?????
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| 3. |
Refer to case 3. Assume that Division B is now receiving a 4% price discount from the outside supplier.
| 1. |
What is the minimum transfer price for Division A? (Omit the “$” sign in your response.)
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| a 2. |
What is the range of transfer price the manager’s of both divisions should agree? (Round your answers to 2 decimal places. Omit the “$” sign in your response.)The transfer price can be a lowest of $ and a highest of $
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| 4. |
Refer to case 4. Assume that Division B wants Division A to provide it with 64,000 units of a different product from the one that Division A is now producing. The new product would require $30 per unit in variable costs and would require that Division A cut back production of its present product by 32,000 units annually. What is the lowest acceptable transfer price from Division A’s perspective? (Round your intermediate and final answers to 2 decimal places. Omit the “$” sign in your response.)
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Aug 29, 2021 | Uncategorized
Question 1
1. At December 31, 2012 Mower Company’s inventory records indicated a balance of $652,000. Upon further investigation it was determined that this amount included the following:(1)$112,000 in inventory purchases made by Mower shipped from seller 12/27/12 terms FOB destination, but not due to be received until January 2nd. (2)$74,000 in goods sold by Mower with terms FOB destination on December 27th. The goods are not expected to reach their destination until January 6th. (3) $6000 of goods received on consignment from Dolly Company. What is Mower’s correct inventory balance at December 31,2012?
A.$540,000
B.$646,000
C.$460,000
D.$534,000
2 points
Question 2
2.Alpha First Company just began business and made the following four inventory purchases in June:
June1150 units$780
June10200 units1,170
June15200 units1,260
June28150 units990
3. A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. Using the LIFO inventory method, the value of the ending inventory on June 30 is
A.$1,300
B.$1,365
C.$1,650
D.$1,620
2 points
Question 3
4.Quark Inc. just began business and made the following four inventory purchases in June:
June1150 units$825
June10200 units1,120
June15200 units1,140
June28150 units885
5. A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for June is
A.$1385
B.$1425
C.$1455
D.$1475
2 points
Question 4
6. Noise Makers Inc. has the following inventory data:
July 1Beginning inventory20 units at $19$380
July7Purchases70 units at $20$1,400
July 22Purchases10 units at $22$220
7. A physical count of merchandise inventory on July 30 reveals that there are 40 units on hand. Using the average cost method, the value of ending inventory is:
A.$780
B.$800
C.$813
D.$820
2 points
Question 5
8. Dole Industries had the following inventory transactions occur during 2012:
Feb. 1, 2012Purchase54$90 = $4,860
Mar. 14, 2012Purchase93$94 = $8,742
May 1, 2012Purchase66$98 = $6,468
9. The company sold 153 units at $126 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company’s gross profit using LIFO?
A.$14,646
B.$14,190
C.$5,088
D.$4,632
2 points
Question 6
10.Nelson Corporation sells three different products. The following information is available on December 31: Product X 200 units at total cost $800 market $700; Product Y 400 units total cost $800 market $600 and Product Z 1,000 units total cost $3,000 market $4,000.
11. When applying the lower of cost or market rule to each item, what will Nelson’s total ending inventory balance be?
A.$4,600
B.$4,300
C.$5,300
D.$4,400
2 points
Question 7
12.The following information was available for Bower Company at December 31, 2012: beginning inventory $90,000; ending inventory $70,000; cost of goods sold $660,000; and sales $900,000. Bower’s days in inventory in 2012 was:
A.38.8 days
B.44.0 days
C.50.0 days
D.60.8 days
2 points
Question 8
13.Red Company had the following records: Ending inventories: 2012 $34,580, 2011 $27,650, 2010 $30,490. Cost of goods sold: 2012 $182,000, 2011 $178,000, 2010 $174,200. What is Red’s inventory turnover ratio for 2011? (rounded)
A.6.1 times
B.5.7 times
C..2 times
D.6.4 times
2 points
Question 9
14. Butler Company reported ending inventory at December31, 2012 of $1,200,000 under LIFO. It also reported a LIFO reserve of $210,000 at January 1, 2012 and $300,000 at December 31, 2012. Cost of goods sold for 2012 was $4,100,000. If Butler Company had used FIFO during 2012, its cost of goods sold for 2012 would have been:
A.$4,400,000
B.$4,190,000
C.$4,010,000
D.$3,800,000
2 points
Question 10
15. Johnson Company has a high inventory turnover that has increased over the last year. All of the following statements are true regarding this situation except Johnson Company:
A.is minimizing funds tied up in inventory
B.is increasing the amount of inventory on hand relative to sales
C.may be losing sales due to inventory shortages
D.has a cost of goods sold that is increasing relative to its average inventory
2 points
Question 11
16. On January 1, 2011, the Accounts Receivable balance was $18,000 and the balance in the Allowance for Doubtful Accounts was $1,400. On January 15, 2011 a $400 uncollectible account was written off. The net realizable value of accounts receivable immediately after the write off is:
A.$17,600
B.$16,200
C.$16,600
D.$17,000
2 points
Question 12
17. The year end adjusting entry to recognized estimated uncollectible accounts will
A.increase assets and decrease equity
B.decrease assets and decrease equity
C.increase liabilities an increase equity
D.decrease liabilities and increase equity
2 points
Question 13
18. Valdez Company uses the percent of receivables method to estimate uncollectible accounts expense. Valdez began 2012 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $38,250 and $2,900, respectively. During the year, the company wrote of $2,320 in uncollectible accounts. In preparation for the company’s 2012 estimate, Valdez prepared the following aging schedule: Not yet due $26,000 1% uncollectible, $11,250 5% uncollectible, $2,480 10% uncollectible, $1,100 25% uncollectible, $950 50% uncollectible. What will Valdez record as Bad Debt Expense for 2012?
A.$1,243
B.$1,823
C.$2,320
D.$3,563
2 points
Question 14
19. The practice of reporting the net realizable value of receivable in the financial statements is commonly called:
A.the cash flow method of accounting for uncollectible accounts
B.the direct write off method of accounting for uncollectible accounts
C.the allowance method of accounting for uncollectible accounts
D.Both a and b are correct
2 points
Question 15
20. Which one of the following is NOT an accurate description of the Allowance for Doubtful Accounts?
A.The account is an income statement account
B.The account is a contra account
C.The amount of the Allowance for Doubtful Accounts decreases the net realizable value of a company’s receivables
D.
2 points
Question 16
21.Which of the following is NOT a significant difference between the allowance method and the direct write off method of accounting for uncollectible accounts?
A.One method requires the estimation of uncollectible accounts and the other does not
B.One method conforms to GAAP and the other does not
C.On method reports net realizable value on the balance sheet and the other does not
D.One method requires writing off of uncollectible accounts and the other does not
2 points
Question 17
22. The party that issues a promissory note is known as the
A.lender
B.maker
C.borrower
D.both B and C
2 points
Question 18
23. What does the accounts receivable turnover ratio measure?
A.Average balance of accounts receivable
B.How quickly the accounts receivable balance increases
C.How quickly accounts receivable turn into cash
D.How quickly inventory turns into accounts receivable
2 points
Question 19
24. Ralston Company reports the following information for the2011 fiscal year: Sales on account $355,000, Accounts Receivable $90,000, Allowance for Doubtful Accounts $3,500. Determine the average number of days it takes Ralston to collect its accounts receivable.
A.80
B.85
C.89
D.98
2 points
Question 20
25. A 90 day note dated April 30, 2012 would mature on:
A.July 30, 2012
B.July 29, 2012
C.July 31,2012
D.August 1, 2012
2 points
Question 21
26. Which of the following assets would NOT be depreciated?
A.a factory building
B.parking lot constructed for employees
C.land that was purchased for a future building site
D.equipment used to produce products
2 points
Question 22
27. Lincoln Company recorded $40,000 of depreciation as of December 31,2013 on assets acquired that were purchase on January 1, 2013. The assets cost $200,000 and had an estimated useful life of 10 years. The method Lincoln used for depreciating the assets was:
A.the straight line method
B.an improper method
C.a method permitted only for tax purposes
D.an accelerated method
2 points
Question 23
28. How is the depreciation process consistent with the matching principle?
A.the accumulated depreciation account is matched with the plant asset account on the balance sheet
B.the cost of consuming plant assets is match with the periods that benefit from using the assets
C.the book value of the asst is matched with the current market value of the asset
D.the depreciation method used is matched with the expected productivity of the asset
2 points
Question 24
29. Quick Freight owned a truck which cost $30,000 when it was purchased on January 1, 2012. It had accumulate depreciation of $18,000 at December 31,2013. The company originally estimated the truck would have a residual value after using it for four years of $3,000. It sold the truck for $22,500 cash on January 1, 2014. The amount of gain (loss) on the sale of the truck was
A.$4,500 gain
B.$19,500 gain
C.$1,500 loss
D.$10,500 gain
2 points
Question 25
30. Equipment with a cost of $256,000 has an estimated salvage value of $24,000 and an estimated life of 4 years or 12,000 hours. It is to be depreciated by the straight line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours?
A.$64,000
B.$70,000
C.$66,000
D.$58,000
2 points
Question 26
31. A plant asset was purchased on January 1 for $60,000 with an estimated salvage value of $12,000 at the end of its useful life. The current year’s Depreciation Expense is $4,000 calculated on the straight line basis and the balance of the Accumulated Depreciation account at the end of the year is $20,000. The remaining useful life of the plant asset is
A.15 years
B.12 years
C.5 years
D.7 years
2 points
Question 27
32. Stine Company purchased machinery with a list price of $32,000. They were given a 10% discount by the manufacturer. They paid $200 for shipping and sales tax of $1,500. Stine estimates that the machinery will have a useful life of 10 years and a residual value of $10,000. If Stine uses straight line depreciation, annual depreciation will be
A.$2,050
B.$2,036
C.$3,050
D.$1,880
2 points
Question 28
33. Jack’s Copy Shop bought equipment for $90,000 on January 1, 2011. Jack estimated the useful life to be 3 years with no salvage value, and the straight line method of depreciation will be used. On January 1, 2012, Jack decides that the business will use the equipment for a total of 5 years. What is revised depreciation expense for 2012?
A.$30,000
B.$12,000
C.$15,000
D.$22,500
2 points
Question 29
34. On May 1, 2012, Irwin Company purchased a copyright to Quick Computer Tutorials for $75,000. It is estimated that the copyright will have a useful life of 5 years. The amount of Amortization Expense recognized for the year 2012 would be.
A.$15,000
B.$10,000
C.$7,500
D.$8,000
2 points
Question 30
35. On October 1, 2012, Hess Company places a new asset into service. The cost of the asset is $60,000 with an estimated 5 year useful life and $15,000 salvage value at the end of its useful life. What is the book value of the plant asset on the December 31, 2012, balance sheet assuming that Hess Company used the double declining balance method of depreciation?
A.$39,000
B.$45,000
C.$54,000
D.$57,000
2 points
Question 31
36. On January 1, 2012, Beta Company issued 5 year bonds having a face value of $100,000. The bonds pay 7% interest annually and were sold for $94,706 to yield 8.34% interest. Beta’s 2012 income statement should report what amount for interest expense on these bonds?
A.$6,630
B.$7,000
C.$7,898
D.$8,340
2 points
Question 32
37. Under what conditions must a contingency be reported as a liability?
A.it probably will result in a loss and the amount of the loss can be reasonably estimated.
B.it possibly will result in a loss and the amount of the loss can be reasonable estimated.
C.it is remotely possible it will result in a loss and the amount of the loss can be reasonably estimated.
D.it probably will result in a loss, whether or not the amount of the loss can e reasonably estimate.
2 points
Question 33
38. If a company enters into a capital lease agreement, it will record
A.an asset only
B.a liability only
C.an asset and a liability
D.an expense only
2 points
Question 34
39. Renoir Enterprises called 400 of its $1,000 face value bonds that had been outstanding for 7 years of the scheduled 30 year life. The bonds had a carrying value, when called, of $400,000 and had a market value of $417,500. The company paid $1,020 for each called bond. What amount of gain or loss should the company report from this transaction?
A.$18,500 loss
B.$8,000 loss
C.$17,500 loss
D.$9,500 gain
2 points
Question 35
40. At the date of a bond issue, the effective rate of interest is significantly above the stated rate of interest. If the bond has a $1,000 face value, the proceeds from the issue would b
A.more than $1,000
B.less than $1,000
C.$1,000
D.$0
2 points
Question 36
41. A retail store credited the Sales account for the sales price and the amount of the sales tax on sales. If the sales tax rate is 5% and the balance in the Sales account amounted to $189,000, what is the amount of the sales taxes owed to the taxing agency?
A.$180,000
B.$189,000
C.$9,450
D.$9,000
2 points
Question 37
42. On January 1, 2012, Ermler Company, a calendar year company, issued $800,000 of notes payable, of which $200,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2012 is
A.Current Liability, $800,000
B.Long term Debt, $800,000
C.Current Liabilities, $400,000; Long term Debt $400,000
D.Current Liabilities, $200,000; Long term Debt $600,000
2 points
Question 38
43. Two sisters operate a bed and breakfast on the coast of Maine. As customers make reservations they are required to pay cash in advance equal to one half of the rate for their stay. How should the sisters account for the cash received as reservations are made?
A.Cash is debited and Unearned Revenue is credited
B.Cash is debited and Earned Revenue is credited
C.Unearned Revenue is debited an Earned Revenue is credited
D.Cash is debited and Sales is credited
2 points
Question 39
44. In a recent year Hart Corporation had net income of $140,000, interest expense of $30,000, and tax expense of $40,000. What was Hart Corporation times interest earned ratio for the year?
A.7.00
B.4.66
C.5.67
D.6.00
2 points
Question 40
45. Downs Company issued $800,000 of 8%, 5 year bonds at 106, which pays interest annually. Assuming straight line amortization, what is the total interest cost of the bonds?
A.$368,000
B.$272,000
C.$224,000
D.$320,000
2 points
Question 41
46. Winters Company has announced that it twill distribute a 15% common stock dividend on its $10 par value common stock that is currently selling for $75 per share. Upon receiving the new shares, a common stockholder will have increased his/her ownership value by
A.zero
B.15% of the par value of shares owned before the stock dividend
C.15% of the market value of the shares owned before the stock dividend
D.15% of the difference between par value and market value of the shares owned before the stock dividend
2 points
Question 42
47. Net income during 2012 totaled $30,000 and the board of directors wishes to distribute a total of $15,000 in cash dividends. The common stockholders will receive what amount per share?
A.$15
B.$11
C.$3
D.$0
2 points
Question 43
48. Dividends on common stock are
A.recorded as expense when paid
B.recorded as expense when declared
C.recorded as expense at year end
D.recorded as a reduction of retained earnings
2 points
Question 44
49. The issuance of a common stock dividend
A.reduces a company’s retained earnings balance
B.brings new owners into a corporation
C.decreases the number of shares of outstanding stock
D.increases a company retained earnings balance
2 points
Question 45
50. Tomlinson Packing Corporation began business in 2010 by issuing 20,000 shares of $5 par common stock for $8 per share and 5,000 shares of 6%, $10 par preferred stock for par. At year end, the common stock had a market value of $10. On its December 31, 2012 balance sheet, Tomlinson Packing would report
A.Common Stock of $200,000
B.Common Stock of $100,000
C.Common Stock of $160,000
D.Paid in Capital of $150,000
2 points
Question 46
51. Leary Manufacturing Corporation purchased 4,000 shares of its own previously issued $10 par common stock for $92,000. As a result of this event
A.Leary’s Common Stock account decreased $40,000
B.Leary’s total stockholders’ equity decreased $92,000
C.Leary’s Paid in Capital in Excess of Par Value account decreased $52,000
D.All of the above
2 points
Question 47
52. The number of shares of issued stock equals
A.unissued shares minus authorized shares
B.outstanding shares plus treasury shares
C.authorized shares minus treasury shares
D.outstanding shares plus authorized shares
2 points
Question 48
53. A corporation records a dividend related liability
A.On the record date
B.on the payment date
C.when dividends are in arrears
D.on the declaration date
2 points
Question 49
54. Which of the following statements is NOT true about a 2 for 1 split?
A.Par value per share is reduced to half of what it was before the split.
B.Total contributed capital increases
C.The market price probably will decrease
D.A stockholder with ten shares before the split owns twenty shares after the split
2 points
Question 50
55. Ferman Corporation had net income of $200,000 and paid dividends of $50,000 to common stockholders and $20,000 to preferred stockholders in 2012. Ferman Corporation’s common stockholders’ equity at the beginning and end of 2012 was $870,000 and $1,130,000, respectively. Ferman Corporation’s payout ratio for 2012 was
A.$5 per share
B.35%
C.25%
D.10%
Aug 29, 2021 | Uncategorized
Charlie’s Hotdog Stand sells hotdogs for $2.50 each. The variable costs per hotdog are $.50. Charlie’s fixed costs are currently $800 per month. Charlie is considering expanding his business to three hotdog stands which will increase fixed costs per month by $1,200.
Refer to the Charlie’s Hotdog Stand information above. If Charlie does expand his business to three stands, how many additional hotdogs will need to be sold per month in order to break even?
Answer
a. 1,000
b. 480
c. 600
d. 480
2 points
Question 55
Refer to the Charlie’s Hotdog Stand information above. If Charlie does expand his business to three stands, how many hotdogs will need to be sold per month in order to earn a target profit of $5,000?
Answer
a. 2,500
b. 2.800
c. 3,100
d. 3,500
Aug 29, 2021 | Uncategorized
Chippewas Company sells one product. Presented below is information for January for the Chippewas Company.
Jan. 1 Inventory 100 units at $6 each
4 Sale 80 units at $8 each
11 Purchase 150 units at $6.50 each
13 Sale 120 units at $8.75 each
20 Purchase 160 units at $7 each
27 Sale 100 units at $9 each
Chippewas uses the FIFO cost flow assumption. All purchases and sales are on account.
(a) Assume Chippewas uses a periodic system. Prepare all necessary journal entries, including the end of month closing entry to record cost of goods sold. A physical count indicates that the ending inventory for January is 110 units. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Date Description/Account Debit Credit
Jan. 4
Jan. 11
Jan. 13
Jan. 20
Jan. 27
Jan. 31
(b) Compute gross profit using the periodic system.
$
(c) Assume Chippewas uses a perpetual system. Prepare all necessary journal entries.
Date Description/Account Debit Credit
Jan. 4
Inventory
Jan. 11
Jan. 13 Accounts receivable
Jan. 20
Jan. 27 Accounts receivable
(d) Compute gross profit using the perpetual system.
$
Aug 29, 2021 | Uncategorized
Question 1 Dean and Jerry each own 50% of Pardners, Inc. an S corporation. At the start of the year, it has $5,000 of AEP and $8,000 in AAA. Pardners’ taxable income is $10,000. It distributes $6,000 to each shareholder midyear and distributes another $4,000 to each at the end of the year. How is Dean taxed on his distributions? Answer a. $500 dividend income. b. $1,000 dividend income. c. $1,500 dividend income. d. $2,000 dividend income. e. $3,000 dividend income. 4 points Question 2 Dunkenfield, Inc. is an S Corporation. Bill is the sole shareholder.
Aug 29, 2021 | Uncategorized
You are a new junior accountant at Cleaniew Corporation, mark of lenses for eyeglasses Your company sells generic quality lenses for a moderate price. Your boss, the Controller, has gven firm is which, except that you know that you are firm A you the latest month report for the lens rade assocution You do nut know which
(Check to view the data)
Requirement
1. Calculate the total variable cost per unit for each firm in the trade association. Compute the percent of total for the material labor, and enable orcad components
2. Using Firm A as the benchmark calculate direct material and direct manufacturing labor price and efficiency variances for the
Aug 29, 2021 | Uncategorized
Complete the work sheet. In completing the worksheet, compute State of Illinois corporate income taxes at 41/2% of pretax income. The state income tax is deductible on the federal tax return, and the federal tax is not deductible on the Illinois return. Assume federal corporate income tax on income subject to federal tax is as follows:
First $50,000 @15%
Next 25,000 @25%
Remainder @34%
Income between $100,000 and $335,000 is assessed a 5% federal surtax, not to exceed $11,750.
Hint: Corporations subject to federal income tax must make estimated tax payments throughout the year. At the time of the payment, the account Income Tax Expense is debited and Cash is credited. To determine the taxable income at year end, net the total debits and total credits from the income statement in the worksheet. Note that the estimated income tax expense is listed as a debit and must be subtracted from total debits when determining taxable income (federal tax is not a deductible item). Prepare the journal entry for income taxes
SB: The pretax income is $254,608 and the estimated income tax expense throughout the year is $72,000.
After my calculation, I got $74,817 for the federal income tax and $11,457 for the state income tax.
My only problem is how to figure the amount I have to journalize for income taxes:
Dr Income tax expense ?
Cr Income taxes payable ?
Aug 29, 2021 | Uncategorized
ASSIGNMENT FINANCIAL ACCOUNTING THEORY
Case Study Question 1 (20 marks) (500 words)
Read headline “Health rates as top social issue”. Would you expect management to worry about attitudinal surveys, such as the one described in Headline below. Explain you answer, as well explaining how such surveys might impact on the disclosure policies of an organisation.
CANBERRA: Health has taken over from crime as the most important social issue seen to be facing Australia, figures showed yesterday.
The survey of people’s views of environmental issues found the environment rated fifth in importance even though three in four Australians had at least one environment concern.
The Australian Bureau of Statistics (ABS) figures showed 29% of respondents believed health was the most important social issue.
This was followed by crime (24%) education and unemployment (both 16%) and environmental problems (16 %).
In 1996, crime was seen as the most important social issue, followed by health, education, unemployment, the environment.
In the latest survey, dated March 1998, health was the most important issue to older people and least important to people aged 35 44.
In general, younger people were more concerned about long term environmental problems although 19 24 year olds, as well as 45 54 year olds were most concerned about unemployment.
But the survey said 71% of Australians were concerned with at least one specific environmental problem.
The figure was up from 68% in 1996 but down from 75% in 1992.
People living in ACT were most concerned while Tasmanians were the least concerned about environmental problems.
Air pollution continued to be the problem of greatest worry for Australians, with 32% reporting it as their major concern.
The Chronicle,
Case Study Question 2 (20 marks) 500 words
Read headline “Think before you spend” and then, drawing on material covered in this subject, Accounting Theory, identify some ways in which you think corporations would respond to such allegations.
Here are some of the products “The Rough Guide to Ethical Shopping” believes we should think about before buying:
Beverages: Maxwell House. One of the thousands of familiar brands Bird’s, Jacobs, Ritz and Toblerone are others owned by tobacco giant Philip Morris of Marlboro cigarette fame, which recently changed its name to Altria.
It denies to this day that smoking is addictive, was fined for failing to disclose political donations and was one of George Bush’s largest corporate campaign contributors.
Clothing: Nike trainers. Nike is said to have petitioned the Indonesia government for exemption from the minimum wage and has been accused of lying about labour conditions at its contractor factories.
According to Sweatshop Watch, an average Nike worker would need to put in 72,000 years of work to receive what Tiger Woods gets for one five year contract to publicise the brand.
Food: Tiger prawns. Hugely popular nowadays in restaurants and supermarkets, tiger prawns are mostly raised in man made pools in Bangladesh and the Philippines.
It takes 50,000 litres of water to produce a kilogram of prawn meat and the chemical additives to promote rapid growth ends up polluting the surrounding farming land.
People are routinely displaced to make way for these farms. Rape and murder have been reported in some cases.
Sport: Snooker cues. Thousands of snooker cues are made every year using wood from the Indonesian ramin tree. The ramin, which is also used for furniture and window blinds, is a rare and endangered tree listed under the Convention on International Trade in Endangered Species, but continues to be logged illegally at an alarming rate.
(Irish Independent, 1 December 2004, Independent Newspapers Ireland Ltd)
CASE STUDY QUESTION 3 (20 MARKS) 500 words
Read headline “Lay off Big Macs, radio boss tells staff” and using Legitimacy Theory as the basis of your argument, explain why a company such as McDonald’s would not want a radio station to make adverse comments about it. If the station does make adverse statements, how might McDonald’s react from a corporate disclosure perspective?
Top management at radio 2UE ordered the station’s broadcaster not to make derogatory comments about McDonald’s on air or the station would lose its $170,000 advertising account with the fast food chain, according to a leaked in internal memo.
The memo from program director John Brennan in February reveals for the first time that the practice of tailoring editorial comment to suit 2UE’s advertisers in an internal part of the top rating radio station’s culture.
‘It’s going to be a tough year for revenue and we need all the help we can get from everyone concerned’ the management memo says.
‘It is obviously imperative that no derogatory comments about McDonald’s are made be any broadcaster on the station. Any such comment would see an immediate cancellation of the contract’
The memo will be investigated by the Australian Authority’s inquiry into the radio station next month.
Mr Brennan’s directive appears to contravene the Commercial Radio Code of Practice, under which a radio must promote accuracy and fairness in news and current affairs programs. The code may be reviewed by the ABA in separate public hearings and may result in moves away from self regulation.
The memo contradicts statements by 2UE chief John Conde this week about the role of station management in the scandal involving John Laws and the now defunct $1.2 million deal with Australian Bankers’ Association.
The banks’ deal with Laws also involved refraining from negative comments about the client on air.
McDonald’s spokesman John Blyth said the company was unaware the 2UE directive had issued and would never make its advertising contracts conditional on editorial comment.
The memo was addressed to Alan Jones, John Laws, John Stanley, Mike Carlton, Peter Bosly, Ray Hadly, Stan Zemanek and eight other on air presenters.
Senior management was also party to the directive.
In a letter to the Australian yesterday, Mr Conde confirmed Mr Brennan wrote the memo, which had ‘reflected (his) exuberance’. He said Mr Brennan had promptly clarified the memo, telling staff he only intended to avoid any announcer ‘sending up’ the McDonald’s ads. ‘It was made plain 2UE was not seeking to curtail editorial comment’
In a separate statement, Mr Conde said 2UE and its affiliates were to receive $707,000 from the
Bank deal. Laws says his share was $303,000.
Amanda Meade (Australian, 22 July 1999 p.1)
Case Study Question 1 (20 marks)
Read headline “Bank to slash extra 1000 jobs” explain whether you think the banks would or should respond to the concerns of Australian Consumers’ Association and/or the concerns of the Finance Sector Union. What theories did you rely on (if any) to inform your judgement?
The Commonwealth Bank will slash another 1000 jobs despite its annual profit jumping 11 per cent to 2.6 billion.
But the bank has vowed not to shut any more branches even those already marked for closure.
Stunned union officials yesterday described the latest job cuts as scandalous. They said workers were worried about their future, unsure about which jobs would go and from where.
Consumer advocates claimed customers would bear the brunt of the cuts and urged the Federal Government to act.
Finance Sector Union national secretary Tony Beck said staff were already reeling from job losses and branch closures.
‘It is unbelievable’ Mr Beck said. ‘They have just shed 500 jobs, all from the retail network. Now we get this punch with another 1000 jobs.’
The Commonwealth Bank yesterday said it would cut 1000 staff by eliminating duplication, inefficiencies and some back office processing. It said 1550 jobs would go, while another 550 jobs would be created, with redundancies and other changes tipped to cost $120 million.
The bank announced a net profit of $2.655 billion for the past financial year. At the same time, customers paid more than $1.8 billion in fees, commissions and other charges.
Income from lending fees rose 32 per cent to $618 million, mainly because of the boom in housing. And income from commission and other fees jumped 6 per cent to $1.242 billion.
The Australian Consumers’ Association is urging the Federal Government to protect consumers from excessive fees.
It also wants a social charter set up laying out minimum standards of access and affordability to banking.
ACA finance policy officer Catherine Wolthuizen yesterday said there was double whammy of record profits and job cuts.
‘When does it stop?’ Ms Wolthuizen said. ‘A job shedding of that scale, given how close to the bone cuts have gone, there isn’t much fat left to trim.
‘How much profit is enough for greedy banks like Commonwealth and how much further will it flout consumer and community demands before the Government acts?’
Nicola Webber, Herald Sun 22, August 2002, p. 5
Aug 29, 2021 | Uncategorized
See attached General Fund and Governmental Activities Submit your responses to the following questions in a 1 2 page summary MSWord document.
Aug 29, 2021 | Uncategorized
PROBLEMS
* Basic ** Moderate *** Challenging
INCOME FORECAST *
The Sporting Spa Resort has 100 residential villas to accommodate guests. The accountant for the resort has asked you, the marketing manager, to prepare a budget for expected relaxation treatment receipts for the month of September 2014. The facilities are provided exclusively for the use of resort guests. The resort caters only for adults. Past records indicate that for the month of September the average adult occupancy for each of the villas is two persons, who stay an average of 5 days. The occupancy rate for the villas in the resort for September is approximately 90%. The resort provides three types of relaxation treatments — a therapeutic massage for $120, a massage and facial treatment for $180, and a straight facial for $80. Past records for September indicate that 60% of guests have a therapeutic massage, 20% have a massage and facial, and 20% have just a facial treatment. Required Prepare the budget for relaxation treatments for the month of September 2014.
PREPARING A SALES FORECAST **
LO 8
CleanAir Ltd manufactures exhaust fans designed for apartment use. The company markets this line in two geographic areas, one with a humid climate and the other with a dry climate. Approxi mately 60% of all new apartment blocks in the two areas will have an individual exhaust fan installed in each apartment. They have also projected that 5% of the existing apartments will install new individual exhaust fans to improve existing systems or replace old ones that cannot be repaired. Based on past experience, CleanAir Ltd expects to capture 30% of the new apartment block construction market and 10% of the replacement market. The company sells two models of exhaust fans — the standard and the deluxe, a more energy efficient unit. Builders will use the standard model in 70% of the apartments they construct and the deluxe model in 30%. When an existing block installs new exhaust fans, it will use the standard model in 25% of the apartments and the deluxe model in 75%. The other information available is:
Humid climate Dry climate Number of apartments to be constructed 4200 5100 Number of existing apartments 50 000 40 000 Selling price — standard S750 S800 Selling price — deluxe S1150 S1200
Required Prepare a sales forecast for CleanAir Ltd by market area.
BUDGETED FINANCIAL STATEMENTS FOR A QUARTER FOR A RETAIL FIRM **
LOB
High Street Grocers is preparing a quarterly budget covering the 3 months ending 30 September 2014. The information available for the budget is as follows: 1. Cash sales represent 60% of all monthly sales; 50% of all credit sales are collected in the month after sale and the remainder are collected in the second month following the sale. 2. Inventory purchases that are made on account equal 60% of the sales forecast for that month; 30% of the purchases are paid for in the month of purchase, and 70% are paid for in the following month. 3. Ending inventory on 30 September 2014 is projected to be $57 800. 4. Equipment purchases at the end of September are budgeted at $95 000. 5. Other quarterly expenses are budgeted as follows: electricity, $14 700; rent, $55 000; salaries. $154000. These expenses are paid when incurred.
526 Part 3 Financial planning, control and decision making
Aug 29, 2021 | Uncategorized
ACC 450/550 SUMMER 2013
AUDIT REPORT PROJECT
Requirements:
Must have following:
Cover sheet with distribution list (list of who receives report appropriate to findings, must have proper titles and names – line up both columns – do not center each line)
Al Kaline VP Finance
Miguel Cabrera VP Engineering
Dave Bing VP Purchasing
Justin Verlander VP Human Resource
Gordie Howe AVP Controller
Dave Dombrowski VP Investor Relations
Duane Borkowski External Auditor Partner
D. Robert Okopny Chief Audit Executive
Your Name Manager, Internal Audit
Table of Contents – generally don’t use dots, and page numbers must line up
EACH OF THE FOLLOWING HEADINGS WILL BE CENTERED ALL CAPITAL LETTERS
Executive Summary – decide what might be important enough for high level executives regarding your results (this is not just a repeat of the findings). Some may be important, some not.
Background – Summarize information required by key senior management based on the background data provided – Be sure to evaluate and analyze what is key to the audit report. Senior company management and the Audit Committee have limited time and would like to focus on the important areas. Use information below and you can make up anything else needed. Write as someone who is an internal auditor of Acme Corporation, not an external consulting internal auditor.
Audit Scope and Purpose – Needs to be developed based on the audit findings. Need paragraph or few lines on each. What is the scope of the audit and what is the primary purpose. Remember the definition of internal auditing.
Write up of
Findings – these are the problems, issues, opportunities or whatever you want to call them
Write up of
Recommendations – to fix the problems
Reply – insert a heading for a Reply for each finding, but you do not need to provide any writing as this space would normally be used by the “auditee”.
Summary, must include an
overall evaluation of entity (use an appropriate key developed by you) this is a necessary section and this is not a repeat of the individual findings and an evaluation of those will be marked down at least 5 percent for no overall evaluation. Similar to a grade in class, or personnel performance review, but not using the same scale.
Organize each finding (use name for the finding, not the word finding e.g. Missing Cash Deposit), Recommendation, and Reply by Department –
you (not me) have to decide which departments match to specific findings:
You must make up (
Be creative) what you do not have for the write ups below. The information should make some rationale sense.
Findings to write up
EVERYONE MUST USE THE SAME DATA. A PRIMARY PART OF YOUR GRADE WILL BE BASED ON HOW THESE FINDINGS ARE DEVELOPED, NOT JUST WHAT WAS GIVEN TO YOU – just repeating gets you about 50 percent. THIS IS THE MAJOR PART OF THE ASSIGNMENT.
1. Thirty two accounts payable were paid twice each (duplicate payments) due to lack of documents being cancelled when paid by the Treasurer (total amount $814,002). This was out of a total of 790 documents and $4.6 million.
2. Employees at the Baton Rouge, Louisiana plant were observed in a hazardous area without protective footwear and/or safety glasses. Additionally, one employee lost her sight two years ago because of lax safety standards, one other was treated for eye irritations in this area and one employee lost a toe that may have been protected by required steel toed shoes and protective eye shields if they had been wearing them.
3. Travel expenses in the amount of $64,074 were found to be reimbursed without proper supporting documentation which is contrary to policy. These reimbursements were found in a review of a sample of 25 employees. This site has 49 regular travelers. These discrepancies were primarily found in five top executive accounts.
4. Purchasing did not submit timely materials price data required for developing direct material costs for standard costs. This may have caused faulty product costing and pricing standards and variance analyses. One product was underpriced by 2.5 percent and subsequently the company incurred a loss of $279,400 in six months of 2012.
5. The Human Resources department in the Michigan Division has recently hired mostly from one ethnic community, indicating that job openings have not been publicly advertised which resulted in the lack of a diverse applicant pool.
6. Last year’s audit recommendations regarding plant safety standards for machine maintenance and hand protection guards have not been implemented despite previous agreement by the auditee. (Hint: never write an audit comment against the internal audit function meaning against yourself or to “management” because most companies do not have a management department – use specific department names).
7. A building construction contract worth $34.4 million was found to be started without a right to audit clause included in the contract, which is standard for all construction projects.
Example of one finding (these are headings without content): Use this format – do not right justify anything, do use hanging indents, be consistent
I. TREASURY
(This a dept.)
- Unapproved Cash Payments (The name of the finding given by you) – this is a heading
Condition
Start your discussion here (under the heading). The meaning of these headings will be discussed in class. They are also in the Gleim book and in the ISPPIAs.
Criteria
Cause
Effect
Recommendation
Management Action (include the timing)
REPEATING ONLY WHAT I GAVE IS NOT GOOD ENOUGH YOU MUST DEVELOP THE FINDINGS !!!
OAK ENTERPRISES, inc. background Data
- Total employees 14,200 (2,100 salaried, 12,100 hourly)
- Total payroll – Salaried $214 million, Hourly $901 million
- Hourly work force unionized in Brazil, Canada, China, Mexico and U.S.
- Total Benefits – $147 million
- Purchasing Department – 92 employees
- Annual purchases $1.7 billion
- Total Revenue – $10.1 billion
- Accounts Payable highly centralized with 42 employees
- Annual project expenses $52.1 million
- Headquarters in Michigan with plants located in Brazil, Canada, China, Mexico, and United States.
- Research Centers in U.S. and China
- Plant in China just recently expanded
- Accounts Payable system launched in 2011.
- EPS for 2012 $4.20; a decrease from $4.94 in 2011
- Accounts Receivable totaled $2.2 billion
- New line of credit established with a Global Bank International
- New product line was launched in the first half 2012
- Accounts Receivable call center co sourced in India
- New general ledger system launched in 2011
- Purchasing system upgraded with the general ledger system launch
- P cards launched in U.S. and Canada replacing the petty cash in 2010
- Integrated Employee Relations system launched with the general ledger system in 2007
- Employees who travel are issued AMEX cards
- Logistics has been re sourced to a new supplier
- Work force at the Michigan plant expanded after receiving tax incentives for re training in 2011
- Additional common stock shares issued in June 2011
- Additional long term debt issued in August 2011
Formatting rules:
- Times New Roman 12 font 1.25” margins left and right
- Double spaced
- No right or center justification except for centered headings
- Center all caps bold first level headings
- Each spelling error with reduce your score by 5 percent. Remember that spell check does not check spelling of all CAP words unless you set it to do so.
- No personal pronouns – I, me, us, we – minus 1 Percent for each time
- Normally, should have extra space above each heading to separate from previous section
- Must have an space between each paragraph or indent each paragraph
- Each heading except for Reply at end of page without text will reduce your score by 10 percent. Proof before printing.
- Use word percent, not %, but use the number (eg. 10 percent). Do not use &.
Headings example (not including cover sheet and table of contents)
EXECUTIVE SUMMARY
BACKGROUND
AUDIT SCOPE AND PURPOSE
FINDINGS
I.
TREASURY
- UNAPPROVED CASH PAYMENTS
Write information for this level of heading here under the heading, not to the right of the heading.Do not indent large portions of text – only the heading is indented.
- – how does the auditor recommend fixing the problem?
Management Action (Reply) – need heading, but you do not answer for the department (auditee)
Then the next department and finding with all the above statements
Aug 29, 2021 | Uncategorized
Making business recommendations Submission details
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The assessment task is due on the date specified by your assessor. Any variations to this arrangement must be approved in writing by your assessor.
Submit this document with any required evidence attached. See specifications below for details. Performance objective
- Use conversion and consolidation procedures to compile analysis in accordance with organisational requirements.
- Ensure that recommendations are logically derived and supported by evidence in report.
- Provide recommendations to propose constructive actions to enhance the effectiveness and efficacy of functions and services.
- Ensure recommendations are concise and facilitate direction and control of organisation’s operations.
- Identify and prioritise significant issues in statements including comparative financial performances for review and decision making.
- Ensure structure and format of reports are clear and conform to organisation and statutory requirements.
Assessment description In groups of 2–3 use the following Profit and Loss Statement, Operating Budget and actual results for Packett Packaging Pty Ltd to prepare a report for Packett Packaging Pty Ltd management team that provides analysis of their performance against their budget for 2009/2010 financial year.
Distance based learners:
Use the following Profit and Loss Statement, Operating Budget and actual results for Packett Packaging Pty Ltd to prepare a report for Packett Packaging Pty Ltd management team that provides analysis of their performance against their budget for 2009/2010 financial year.
Procedure In a PowerPoint document, together, prepare a report (2–3 pages) for the Packett Packaging Pty Ltd management team that provides analysis of their performance against their budget for 2009/2010 financial year.
Your report should include:
- trend analysis of performance versus budget over the 12 month period for:
- sales
- expenses
- averages for the period, for example average profit or cost per unit (cardboard box manufactured) for each month
- significant issues or areas of concern
- recommendations, for example; budget modifications, business priority areas for the next 3 months, opportunities to improve performance, etc.
Your group will be required to present your report to the class as part of your assessment. Your facilitator will advise you regarding the date that you will be required to present. Please note all group members must participate in presenting your report.
The following information has been provided to assist you in preparing your report. Please see following pages for completed reports:
- Profit and Loss Statement for 2009/2010 financial year
- Operating Budget for 2009/2010 financial year
- Actual results for 2009/2010 by month for:
- Income
- Expense
- Profit
- Number of units produced.
Distance based learners:
In a PowerPoint document, prepare a report (2–3 pages) for the Packett Packaging Pty Ltd management team that provides analysis of their performance against their budget for 2009/2010 financial year.
Your report should include:
- trend analysis of performance versus budget over the 12 month period for:
- sales
- expenses
- averages for the period, for example average profit or cost per unit (cardboard box manufactured) for each month
- significant issues or areas of concern
- recommendations, for example; budget modifications, business priority areas for the next 3 months, opportunities to improve performance, etc.
The following information has been provided to assist you in preparing your report. Please see following pages for completed reports:
- Profit and Loss Statement for 2009/2010 financial year
- Operating Budget for 2009/2010 financial year
- Actual results for 2009/2010 by month for:
- Income
- Expense
- Profit
- Number of units produced.
Specifications
- Please provide completed documents by the date nominated by your assessor.
- Ensure you keep a copy of all work submitted for your records.
and
- Remember – accuracy is essential when working with financial data.
- Reports provided to management teams need to be professional and the analysis completed needs to be relevant and accurate.
Class based learners:
- All group members must participate in the presentation of your report.
- One hard copy report must be submitted to your facilitator detailing the names of all group members.
Distance based learners:
- You will need to email to your assessor or alternatively post a hard copy of your completed report. Please contact your assessor for postal address if required.
Aug 29, 2021 | Uncategorized
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Assignment Type:Individual Project Deliverable Length:5–10 slides with speaker notes
Points Possible:100 Due Date:6/16/2013 11:59:59 PM CT
APA formatted references
Speaker notes
For your next orientation meeting with your new hire, and to be helpful when other new accountants are hired, prepare a PowerPoint presentation of 5–10 slides with speaker notes that includes the following:
- Describe and explain at least 3 differences in for profit entities and governmental agencies that cause them to have different required accounting procedures; include an example of each.
- At least 1 slide should explain which regulating authority oversees the accounting rules for governmental vs. for profit entities. Include an example and brief explanation, in your own words, of the most recent new guideline established by the agency overseeing government accounting. Access the following Web site: www.gasb.org/st/stpgl.
- At least 1 slide should explain at least 2 differences between governmental entities and nonprofit, nongovernmental agencies, including an example of each difference.
Please submit your assignment.
The following grading criteria will apply to this assignment:
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Grading Criteria
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50%
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Describe and explain at least 3 differences in for profit entities and governmental agencies that cause them to have different required accounting procedures; include an example of each.
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25%
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At least 1 slide should explain which regulating authority oversees the accounting rules for governmental vs. for profit entities. Include an example and brief explanation, in your own words, of the most recent new guideline established by the agency overseeing government accounting.
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25%
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At least 1 slide should explain at least 2 differences between governmental entities and nonprofit, nongovernmental agencies, including an example of each difference.
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Aug 29, 2021 | Uncategorized
3 pairs of journal entries with notesAPA formatted References
You are believer that new employees should practice their accounting skills before “throwing them into the fire.” Therefore, you have listed a series of transactions that require journal entries and updating of T Accounts.
You know that preparing nonprofit journal entries are easy, so you ask the new employee to
- prepare, side by side, the correct journal entry for the identical transaction:
- once for a nonprofit entity
- once for a for profit company
- include notes for each transaction
- Transaction 1: Assume a nonprofit has a restricted fund for capital asset purchases. Compare the journal entries for the cash purchase of a $10,000 computer by the nonprofit, to how the journal entry would look for this for profit.
- Transaction 2: Assume that a nonprofit has a need for $80,000 for a particular new marketing expenditure, and a for profit entity needs to raise an additional $80,000 to pay for some unanticipated marketing expenses. How would the journal entities look at the acquisition of the funds and the subsequent spending of the funds?
- Transaction 3: The for profit entity sells $120,000 with net 30 day terms, while the nonprofit entity has a fund raising drive for which they receive pledges of $120,000. How do the two journal entries look?
Please submit your assignment.
The following grading criteria will apply to this assignment:
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Grading Criteria
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30%
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For Transaction 1, prepare, side by side, the correct journal entry for a nonprofit entity and a for profit company.
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30%
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For Transaction 2, prepare, side by side, the correct journal entry for a nonprofit entity and a for profit company 1.
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30%
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For Transaction 3, prepare, side by side, the correct journal entry for a nonprofit entity and a for profit company.
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10%
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All Notes in the journal entries are correct.
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Aug 29, 2021 | Uncategorized
Assignment Type:Individual Project
Deliverable Length:1 Excel worksheet & 300–400 words
Points Possible:100
Due Date:7/14/2013 11:59:59 PM CT
APA formatted References
So your new accountant could practice the budgeting process in your for profit company, you want her to compare budgeting methods for two different kinds of entities.
You give her information for a for profit and for a nonprofit entity and ask her to complete the following:
- Given the assumptions and data in this Excel file:
- complete next year’s budgeted figures for each entity within the same Excel worksheet (yellow cells)
- include your reasoning for most of the budgeted figures (green cells)
Because of a bad recession, government grants were not cut by 50% but are eliminated completely for next year’s budget and fundraising efforts—despite an increase in expenses—did not improve at all.
- Write a memo of 300–400 words explaining what you would recommend that the museum manager do.
Please submit your assignment.
The following grading criteria will apply to this assignment:
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Grading Criteria
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50%
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Complete next year’s budgeted figures for each entity within the same Excel worksheet (yellow cells).
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30%
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Include your reasoning for most of the budgeted figures (green cells).
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20%
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Write a memo of 300–400 words explaining what you would recommend that the Museum Manager do.
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Aug 29, 2021 | Uncategorized
I only want;
pg7, q4
pg9, q3,q8
pg12, q1 ( draw layout)
pg13, q2
pg14, q3
pg15, q4 ( draw spreadsheet layout)
pg17, q5
pg23,q2
pg24, q3
pg25, q4
pg26, q5
Aug 29, 2021 | Uncategorized
Company A has only been in existence for two full years as a public company. Prior to this, it was a segment of large multinational and was spun off as stand alone, public company. It commenced its first year of operations as a public company on January 1, 20X1, and its fiscal year end is on December 31. Also, Company A acquired 100% of the stock of Company B at November 1 20X1 for $200M. Company B has a fiscal year that ends on October 31. At the acquisition date, Company B becomes a fully consolidated subsidiary of Company A.
Company A was issued a qualified audit opinion resulting in a material weakness, by it s external, independent auditors due to a litany of accounting problems as noted below. Company A, has engaged your firm, a CPA advisory firm, to help it navigate the process of evaluating its income statement and balance sheet.
You need to evaluate Company A’s financial statements and also determine whether to restate prospectively or retrospectively, if at all, and whether to use the Iron Curtain method or Rollover Method as provided by by the SEC. After your study and analysis, you write an accounting memo answering the following.
A. Does Company A need to restate its F/S? B. Define and discuss Iron Curtain vs. Rollover C. Define and discuss prospective vs. retrospective D. Which approach(es) should be used for error correction, if at all? E. Pick 4 of the items below and also No. 8 for a total of 5 items. Identify the errors, if any, and determine the correcting entries, as appropriate , that should be made at Dec. 31, 20X2 for Company A, under the recommended approaches in (2) above. Explain why you think an error exists. Where necessary, make any defensible, reasonable assumptions to apply your approach. If corrections are made, present entries for both the Income Statements and the Balance Sheets for each of the two year as appropriate. F. Cite authoritative literature and explain to the management of Company A what needs to be Anna to rnrrArt and nactata itc Fit if npreccan, and annrnnriate.
Aug 29, 2021 | Uncategorized
The company has been investigating a number of projects but has been unable to accurately calculate an appropriate benchmark rate for measuring these projects. You have been supplied with the following information and asked to calculate the weighted average cost of capital (WACC) for the company.
Geotech Consulting
Statement of Financial Position (extract from 30 June 2010 accounts)
Common Stock par value $2.00 4,000,000
14% Preference Shares par value $3.00 3,000,000
12% Bonds semi annual (face value $100) 2,000,000
Term Loan 350,000
Mortgage 700,000
Additional Information:
• The ordinary shares are currently trading at $2.86 while the Preference shares are trading at $3.15.
• Return on government bonds is 4%, the market risk premium 6% and the growth rate in dividends has been consistently 3% over the past five years. A consultant has estimated the company to have a beta of 1.3.
• Corporate tax rate is 35%
• The bonds originally had a 6 year term to maturity and were issued exactly two years ago.
• The before tax return on similar risk bonds is 9%
• Interest on the term loan is 10% and the Mortgage 9%.
Required;
Calculate the weighted average cost of capital for CTRL using the market valuation approach (show your workings).
Answer:
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Weighted Average Cost of Capital (WACC)
The internal rate of return for the project is 13%. While this rate is higher than the market rate, the management would like to compare it to the company’s current cost of capital. You have been provided with the following information and asked to calculate the weight average cost of capital.
The company issued 2,000 six year semi annual bonds two years ago with a face value of $1,000 and coupon rate of 8%. The bonds are currently trading at $1150. The company also have a 9% term loan with an outstanding principal of $750,000. The only other component of debt is a $1.2 million 7.5% mortgage.
The company have three components of equity including;
• Retained earnings of $800,000
• Ordinary shares par value $3.00 $6 million
• 14% preference shares par value $5.00 $2 million
Additional Information:
• The ordinary shares are currently trading at $4.25 while the Preference shares are trading at $5.50.
• Return on government bonds is 4%, the market risk premium 7% and the growth rate in dividends has been consistently 3% over the past six years. A consultant has estimated the company to have a beta of 1.4.
• Dividends paid per ordinary share last year was $0.75
• Corporate tax rate is 35%
• The bonds are currently trading for $1150 per bond
• Interest on the term loan is 9% and the Mortgage 7.5%.
Required;
1. Calculate the weighted average cost of capital for Brown Limited using the market valuation approach. (In calculating the cost of ordinary shares you should use the average based on the dividend growth and capital asset pricing model (CAPM) show your workings).
Based on your calculation, recommend to the company what they should do in relation to the investment project (include the rationale for your recommendation)
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Clearview Ltd would like to raise capital of $10 million to fund its new project, it has the following options:
Clearview Ltd can issues bonds at a price of $985. The coupon is 8% and issue costs are 1% of the $1,000 par value. The bonds will mature in 5 years and the company tax rate is 33%;
Clearview can sell preference shares for $75 per share. The preference shares pay a $7.50 dividend while issue costs of $3 per share would be incurred by the firm.
Clearview share is traded at $3.85 and has just paid a $0.28 dividend. The company has a beta of 1.25 and a dividend growth rate of 4.5%. The risk free rate is 5.5% and the market risk premium is 5.8%.
Clearview needs to finance its $10 million capital with the following values of debt, equity and preference shares for the company.
Debt $3,000,000
Preference Shares $1,000,000
Equity $6,000,000
Required;
1. Calculate the cost of debt.
(3 marks)
2. Calculate the cost of Preference share.
(3 marks)
3. Calculate the cost of equity with two methods.
(6 marks)
4. Calculate the weighted average cost of capital Clearview limited, please use CAPM for cost of equity calculation. (4 marks)
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Northwest Bank has a current capital structure consisting of $250 000 of 16% (annual interest) debt and 20 000 ordinary shares. The firm pays tax at the rate of 30%.
Required:
a) Using EBIT values of $80000 and $120000, determine the associated EPS. (2 marks)
b) Using $80 000 of EBIT as a base, calculate the degree of financial leverage ( DFL)
(2 marks)
Rework parts a) and b), assuming the firm has $100 000 of 16% (annual interest) debt and 30 000 ordinary shares.
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You are the financial manager for an earthmoving company in Manukau. You have been asked to assess the following purchase or lease alternatives for the acquisition of a digger. The cost of the digger if purchased is $85,000. You have also been supplied with the following information to assist you in formulating your recommendation to management.
• A five year operating lease with annual payments in advance of $17,000. Included in the lease cost is a maintenance warrantee for the first year then after that period the lessee will be required to pay for the ongoing maintenance for the term of the lease. The lessee intends to enter into a maintenance contract to cover the remaining term of the lease costing $1500 per year.
• The company is expected to return the digger following the term of the lease.
• The company tax rate is 30% and the company’s cost of capital is 11%.
• The bank has indicated that they will charge 11% on moneys borrowed.
• Under the purchase option, the digger will be depreciated straight line with 0% residual value. At the end of the fifth year the company is expected to sell the digger for $18,000.
• Assume annual compounding
• Assume that tax is paid in the year following that in which the expense had been incurred.
• The digger comes with a one year service warrantee. Following the first year the company estimates it will need to pay $1500 in advance annually for a continued service contract.
Required:
a) Calculate the net present value (NPV) for the lease and purchase option and make a recommendation as to which alternative is best. (Show workings)
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You have been asked to help a colleague choose between two companies with which she is planning to buy shares. Summary information with regard the two companies is provided below.
Capital Structure Profiles
Company A Company B
Ordinary Shares Par value $3.00 $1,200,000 $700,000
Bond 10% $300,000 $800,000
The corporate tax rate is 35%.
Required:
a) Calculate the earnings per share (EPS) for each company if the level of earnings before interest and tax (EBIT) for each company is $100,000
b) Calculate the earnings per share (EPS) for each company if the level of earnings before interest and tax (EBIT) for each company is increased to $200,000.
c) Comment on the significance of your findings from questions a) and b) above?
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Question 3: Capital Structure
a) Cool Ltd has sales of 150 000 units at a price of $10 per unit. It faced fixed operating costs of $250 000 and variable operating cost of $5 per unit. The company is subject to a tax rate of 30% and has a weighted average cost of capital of 8.5%. Calculate Cool Ltd’s net operating profits after taxes (NOPAT) and use it to estimate the value of the firm.
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Risk and Return and Sources of Finance
Suppose financial analysts believe there are four equally likely states of the economy: depression, recession, normal and boom. The return on the super Ltd are expected to follow the economy closely, while the returns on the Slow Ltd are not. The return predictions are as follow:
Super Ltd Returns Slow Ltd Returns
Ra Rb
Depression 20% 5%
Recession 10 20
Normal 30 12
Boom 50 9
Required:
a) Based in the total return information provided above, calculate Mean and Standard Deviation for Super Ltd and Slow Ltd.
b) Calculate the Correlation between Super Ltd and Slow Ltd.
c) Describe the characteristics of a preference share and why this may be more attractive from both the perspective of the issuing company and investor.
d) Briefly explain the relationship between the total return, the relative return and the cumulative wealth index.
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Financial Derivatives
Required:
Martin has just purchased 5000 share of Harvey Norman at $6.15, and he has decided to write covered calls against these shares. Accordingly, he sells five Harvey Norman calls at their current market price of $0.575; the calls have three months to expiration and carry a strike price of $6.50. The shares pay a quarterly dividend of $0.08 a share.
a) Determine the total profit and holding period return Martin will generate if the share raises to $6.5 a share by the expiration date on the calls. (6 Marks)
b) What happens to Marin’s profit (and return) if the price of the share rises to more than $6.50 a share? (6 Marks)
c) Does this covered call position offer any protection (or cushion) against a drop in the price of the share? Explain.
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Managing Foreign Exchange Exposure
The client’s company, based in Australia has sold US$2,000,000 of machine parts to a US customer. The payment has been deferred for six months.
Spot exchange rate = US$1.0252/AU$
Six month forward rate = US$1.0468/AU$
Company’s cost of capital = 12.0% p.a.
US 6 month deposit rate = 6.0% p.a.
US 6 month borrow rate = 9.5% p.a.
Australian 6 month borrowing rate = 7.0% p.a.
Australian 6 month deposit rate = 4.0% p.a.
Six month call option for US$2,000,000; strike price $1.055/AU$, premium price is 1.5%
The company’s forecast for 6 month spot rate is $1.0500/AU$
Required;
a) Calculate the value of the sale in Australian dollars assuming the company’s forecast rate and if they do not hedge. Comment on your result in light of whether or not the company should hedge.
b) Calculate and value of the proceeds from the sale if a forward market hedge is used.
c) If the company entered in a forward market hedge, calculate the foreign exchange loss or gain if the transaction had been recorded in the books at the spot rate at the time.
d) Explain and calculate the process of hedging the transaction exposure using a money market hedge.(Show workings)
e) Explain the role of interest rate differentials in your calculation in d) and calculate the implicit interest rate that would make you indifferent between the forward exchange contract and the money market hedge.
f) Calculate and explain the process of covering the transaction’s exposure through the options market.
g) Based on your calculations above, which alternative would you recommend and why?
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Question
Serenade Limited is a New Zealand based manufacturer who has just purchased a new machine that will be used to modernize their production line. Delivery is due in six months time. The machine was purchased in the United States at a price of US$2,400,000, payable on delivery. At present the spot rate is US$0.5050/NZ$.
Serenade’s finance manager has been investigating the choice available for managing the foreign exchange exposure that the company face and has made the following estimates at who the spot rate will be in 6 months time when payment for the machine must be made.
The NZ$ will not go below US$0.7750/NZ$
The NZ$ will most likely be US$0.8150/NZ$
The NZ$ will not go above US$0.8500/NZ$
The finance manager obtained the following quotes
Six month forward rate US$0.8000/NZ$
Call option of the US$ @ 0.8100 NZ$0.02/US$
Put option of the US$ @ 0.8100 NZ$0.015/US$
Interest rate on NZ$ six month debt 7% per annum
Interest rate of US$ six month deposits 5% per annum
Required:
a) Assume Serenade decides not to cover its FX risk. What will the NZ$ cost of the machine be for each of the three future spot rate estimates made by the Finance Manager.
b) Assume Serenade take out a forward contract. What will the NZ$ cost of the machine be in six months time?
c) Which of the two option contracts given above would Serenade use to hedge their FX risk?
d) If Serenade covers its FX risk using an option, what will be the NZ$ cost of the machine based on the most likely future spot rate estimated made by the finance manager? Include all costs associated with the option that are needed to compare it with the costs of the other hedging choices.
e) If Serenade use a money market hedge to eliminate the FX risk, what will be the NZ$ cost of the machine?
f) Which of the hedging choices (unhedged, forward, option or money market hedge) would give the lowest cost of the machine based on the most likely future spot rate estimated by the finance manager? Which one would you recommend Serenade Ltd to use?
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Short Term Financial Management
ABC Ltd uses 100 000 litres of oil each year in its manufacturing process. The oil is used at a constant rate and can be purchased and received within 15 days. The firm has sufficient storage capacity for up to 50 000 litres. The firm has analysis its inventory costs and found that its order cost is $250 per order and its carrying cost is $2 per litre per year.
Calculate each of the following based on the information provided.
a) Calculate the EOQ for the company’s oil.
b) Calculate the total cost of the plan suggested by the EOQ.
c) Calculate the firm’s recorder point in terms of litres.
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Calculate each of the following based on the information provided.
d) If a firm has an average accounts payable balance of $34,700 and COGS of $348,000 and the operating cycle is 45 days, what will be the cash cycle?
e) You have been given the following information by the financial department.
Particulars Amount
Opening AR $168,750
Closing AR $184,230
Opening AP $146,250
Closing AP $96,480
Opening Stock $157,612
Closing Stock $205,310
Cost of Goods Sold $365,942
Credit Sales $649,300
Using the information from the above table, calculate the following
1. Accounts Payable Period
2. Accounts Receivables Period
3. Inventory Period
4. Operating Cycle
5. Cash Cycle
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Aug 29, 2021 | Uncategorized
DB Unit1 1Paragraph Consider the following scenario: You are a senior level manager in a large company: • List and explain the types of accounting information that are important to you and your staff when making decisions. • Explain how your managerial accountant uses technology to develop and communicate this information throughout your large company.
Aug 29, 2021 | Uncategorized
6. The FASB specified in Statement No. 140 three conditions that must be met if a transfer of receivables is to accounted for as a sale. Which of the following is not one of the three conditions specified?
a. The transferred assets have been isolated from the transferor.
b. The transferor’s obligation under the recourse provisions can be reasonably estimated.
c. The transferee has the right to pledge or exchange the transferred assets.
d. The transferor does not maintain effective control over the assets through an agreement to repurchase the assets before their maturity.
ANS: ___________
7. Which one of the following statements is NOT correct?
a. The accounting function should be separated from the custodianship of a company’s assets.
b. Certain clerical personnel in a company should be rotated among various jobs.
c. A company’s personnel should be given well defined responsibilities.
d. The responsibility of receiving merchandise and paying for it usually should be given to one person.
ANS:________
Aug 29, 2021 | Uncategorized
8) The cumulative effects of other comprehensive income items is included in retained earnings, on the balance sheet.
a. true
b. false
9) The account Valuation Allowance for Trading Securities is found on the:
a. Income statement as Other Revenue (Expenses)
b. Statement of Retained Earnings
c. Balance sheet as an adjustment to the asset account
d. Balance sheet as an adjustment to Stockholders’ Equity
10) Held to Maturity securities
a. are reported at their fair market value on the balance sheet date
b. are primarily purchased to earn interest revenue
c. include both stocks and bonds
d. all of the above
14) All of the following are disadvantages of fair value use except:
a. fair values may not be readily obtainable.
b. fair values can only be used on balance sheet accounts.
c. fair values may cause more fluctuations as change occurs from period to period.
d. comparability between companies may be impacted by different fair value measurement.
15) All of the following are factors contributing to the trend for regulators to adopt accounting principles using fair value concepts except:
a. the ease of applying market values to assets and liabilities.
b. pressure on regulators to adopt an international set of accounting principles and standards.
c. hybrid measurement methods within GAAP that conflict with each other.
d. a greater percentage of total assets existing as receivables and securities.
Aug 29, 2021 | Uncategorized
The Abbott Company currently makes 10,000 units annually of a part it utilizes in the products it manufactures. Current costs for the part are as follows:
Direct materials $16.25
Direct labor 11.85
Variable manufacturing overhead 6.30
Fixed manufacturing overhead 10.20
Total $44.60
Other information:
If the company decides to buy the part the empty warehouse space could be rented for $35,000 annually. In addition, half of the fixed manufacturing overhead costs would be avoided if the company decides to buy the part. The company has an offer from a manufacturer to produce the part for $42 per unit. If the company decides to accept the offer the net advantage or disadvantage to the company’s annual net income would be:
Answer
An advantage of $10,000.
An advantage of $35,000.
A disadvantage of $25,000.
An advantage of $26,000.
Aug 29, 2021 | Uncategorized
Agassi Manufacturing Company uses a job order cost system in each of its three manufacturing departments. Manufacturing overhead is applied to jobs on the basis of direct labor cost in Department D, direct labor hours in Department E, and machine hours in Department K.
In establishing the predetermined overhead rates for 2012 the following estimates were made for the year.
Department
D
E
K
Manufacturing overhead $1,065,000 $1,500,000 $840,000
Direct labor costs $1,500,000 $1,675,000 $603,000
Direct labor hours 134,000 125,000 53,600
Machine hours 536,000 670,000 120,000
During January, the job cost sheets showed the following costs and production data.
Department
D
E
K
Direct materials used $187,600 $168,840 $104,520
Direct labor costs $160,800 $147,400 $50,250
Manufacturing overhead incurred $119,260 $166,160 $99,160
Direct labor hours 10,720 14,740 4,690
Machine hours 45,560 60,300 10,300
Compute the predetermined overhead rate for each department. (Round answers to 3 decimal places, e.g. 15.525.)
D %
E $
K $
Compute the total manufacturing costs assigned to jobs in January in each department.
Department
Manufacturing Costs D
E
K
Direct materials $ $ $
Direct labor
Overhead applied
Total $
$
$
Compute the under or overapplied overhead for each department at January 31. (For negative numbers use either a negative sign preceding the number, e.g. 45 or parenthesis, e.g. (45).)
Department
Manufacturing Overhead D
E
K
Incurred $ $ $
Applied
Under (over) applied $
$
$
Aug 29, 2021 | Uncategorized
Altertech Inc. manufactures a product which contains a circuit board. The company has always purchased this circuit board from a supplier for $32 each. Altertech recently upgraded its own manufacturing capabilities and now has enough excess capacity (including trained workers) to begin manufacturing the circuit board instead of buying it. The company prepared the following per unit cost projections of making the circuit board, assuming that overhead is allocated to the part at the normal predetermined overhead rate of 110% of direct labor cost.
Direct materials $2
direct labor 20
Overhead (fixed and variable) 22
Total $44
The required volume of output to produce the circuit boards will not require any incremental fixed overhead. Incremental variable overhead cost is $3 per circuit board. What is the effect on income if Altertech decides to make the circuit boards?
Income will decrease by $7 per unit.
Income will increase by $7 per unit.
Income will increase by $12 per unit.
Income will decrease by $12 per unit.
Income will increase by $10 per unit.
Aug 29, 2021 | Uncategorized
Andreas Boards sells a snowboard Xpert, that is popular with snowboard enthusiasts. Below is information relating to Andreas purchases of Xpert snowboards during September. During the same month, 121 Xpert snowboards were sold. Andreas uses a periodic inventory system.
Date Explanation Units Unit Cost Total Cost
Sept 1 Inventory 26 $ 97 $2,522
Sept 12 Purchases 45 105 4,725
Sept 19 Purchases 20 108 2,160
Sept 26 Purchases 50 109 5,450
Totals 141 $14,857
Compute the ending inventory at September 30 and cost of goods sold using the FIFO and LIFO methods.
FIFO LIFO
Ending Inventory $ $
Cost of goods sold $ $
For both FIFO and LIFO, compute the sum of cost of goods sold and ending inventory. What do you notice about the result for each method.
(Which one is correct)
the sums for FIFO and LIFO are equal
the sum is greater for LIFO
the sum is greater for FIFO
Aug 29, 2021 | Uncategorized
During April, Leary Company sold 1000 units of Product Q. Its beginning inventory and purchases during the month are shown below. (Assume the periodic inventory system is used.)
April 1
Beginning inventory
200 units @ $1
April 5
Purchases
200 units @ $2
April 10
Purchases
200 units @ $3
April 15
Purchases
200 units @ $4
April 20
Purchase
200 units @ $5
April 25
Purchase
200 units @ $6
Compute the cost of the ending inventory under each of three methods: (a) average cost, (b) LIFO, and (c) FIFO. Explain how you calculated each answer.
Excel spreadsheet format:
Journal
Date/Description/Debit/Credit
Account Name Balance
Date/Item/Debit/Credit Debit/Credit
Aug 29, 2021 | Uncategorized
Artistic Woodcrafting Inc. cabinet shop. The offer two grades of cabinet Grade I and Grade II
Last year $850,000 sales volume, First 6 months this year $600,000 and sales expected to be $1.6 billion for the entire year.
The average unit selling prices, unit, variable costs, and direct cost are as follows:
Grade I Unit Price 3,400 Unit variable cost 2,686 Direct fixed cost 95,000
Grade II Unit Price 1,600 Unit variable cost 1,323 Direct fixed cost 95,000
Common fixed cost (fixed cost not traceable to either cabinet) are $35,000
Currently for every 3 Grade I sold, 7 Grade II are sold.
1. Calculate the number of Grade 1 and Grade II cabinets expected to be sold during current year.
2. Calculate the number of Grade I and Grade II cabinets that must be sold to breakeven.
3. If computer controlled machines are purchase to make parts variable cost will decrease by 9%
but common fixed will increase by $44,000. Commute the effect on operating income also calculate
new break even point. Machines purchases at beginning of 6th month. Fixed cost incurred uniformaly.
4. Use original data. AWI is adding a retail outlet. This increase fixed cost by $70,000 per year.This change
sales mix to 1:1. Retail outlet sales expected to increase by 30%..assumed opened at beginning of
6th month. Calculate the effect on expected profits for the current year, calculate new break even point.
Fixed cost are incurred uniformly.
Aug 29, 2021 | Uncategorized
Artistic Woodcrafting Inc. cabinet shop. The offer two grades of cabinet Grade I and Grade II
Last year $850,000 sales volume, First 6 months this year $600,000 and sales expected to be $1.6 billion for the entire year.
The average unit selling prices, unit, variable costs, and direct cost are as follows:
Grade I Unit Price 3,400 Unit variable cost 2,686 Direct fixed cost 95,000
Grade II Unit Price 1,600 Unit variable cost 1,323 Direct fixed cost 95,000
Common fixed cost (fixed cost not traceable to either cabinet) are $35,000
Currently for every 3 Grade I sold, 7 Grade II are sold.
1. Calculate the number of Grade 1 and Grade II cabinets expected to be sold during current year.
2. Calculate the number of Grade I and Grade II cabinets that must be sold to breakeven.
Aug 29, 2021 | Uncategorized
Could someone please assist me with these questions, it would be greatly appreciated. Thank you
1 One difficulty with self imposed budgets is that they are not subject to any type of review.
A) True
B) False
2. Sales forecasts are drawn up after the cash budget has been completed because only then are the funds available for marketing known.
A) True
B) False
3. Dengel Inc. is working on its cash budget for November. The budgeted beginning cash balance is $24,000. Budgeted cash receipts total $177,000 and budgeted cash disbursements total $167,000. The desired ending cash balance is $50,000.
To attain its desired ending cash balance for November, the company needs to borrow:
A) $0
B) $16,000
C) $50,
D) $84,000
4. Deschambault Inc. is working on its cash budget for December. The budgeted beginning cash balance is $14,000. Budgeted cash receipts total $127,000 and budgeted cash disbursements total $126,000. The desired ending cash balance is $40,000. To attain its desired ending cash balance for December, the company needs to borrow:
A) $25,000
B) $0
C) $55,000
D) $40,000
5. Self imposed budgets typically are:
A) not subject to review by higher levels of management since to do so would contradict the participative aspect of the budgeting processing.
B) not subject to review by higher levels of management except in specific cases where the input of higher management is required.
C) subject to review by higher levels of management in order to prevent the budgets from becoming too loose.
D) not critical to the success of a budgeting program.
6. Lunderville Inc. bases its selling and administrative expense budget on budgeted unit sales. The sales budget shows 3,200 units are planned to be sold in December. The variable selling and administrative expense is $3.10 per unit. The budgeted fixed selling and administrative expense is $60,800 per month, which includes depreciation of $6,720 per month. The remainder of the fixed selling and administrative expense represents current cash flows. The cash disbursements for selling and administrative expenses on the December selling and administrative expense budget should be:
A) $70,720
B) $54,080
C) $64,000
D) $9,920
7. Which of the following is not a benefit of budgeting?
A) It reduces the need for tracking actual cost activity.
B) It sets benchmarks for evaluation performance.
C) It uncovers potential bottlenecks.
D) It formalizes a manager’s planning efforts.
8. Mosbey Inc. is working on its cash budget for June. The budgeted beginning cash balance is $16,000. Budgeted cash receipts total $188,000 and budgeted cash disbursements total $187,000. The desired ending cash balance is $40,000. The excess (deficiency) of cash available over disbursements for June will be:
A) $15,000
B) $1,000
C) $17,000
D) $204,000
9. The manufacturing overhead budget at Mahapatra Corporation is based on budgeted direct labor hours. The direct labor budget indicates that 7,900 direct labor hours will be required in May. The variable overhead rate is $9.50 per direct labor hour. The company’s budgeted fixed manufacturing overhead is $112,970 per month, which includes depreciation of $18,170. All other fixed manufacturing overhead costs represent current cash flows.
10. The May cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:
A) $75,050
B) $188,020
C) $94,800
D) $169,850
11. Salge Inc. bases its manufacturing overhead budget on budgeted direct labor hours. The variable overhead rate is $8.10 per direct labor hour. The company’s budgeted fixed manufacturing overhead is $74,730 per month, which includes depreciation of $20,670. All other fixed manufacturing overhead costs represent current cash flows. The direct labor budget indicates that 5,300 direct labor hours will be required in September.
The September cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:
A) $42,930
B) $54,060
C) $96,990
D) $117,660
12. The Yost Company makes and sells a single product, Product A. Each unit of Product A requires 1.2 hours of labor at a labor rate of $8.40 per hour. Yost Company needs to prepare a Direct Labor Budget for the second quarter.
If the budgeted direct labor cost for May is $161,280, then the budgeted production of Product A for May is:
A) 16,000 units
B) 19,200 units
C) 23,040 units
D) 16,800 units
13. Hardy, Inc., has budgeted sales in units for the next five months as follows:
Past experience has shown that the ending inventory for each month should be equal to 20% of the next month’s sales in units. The inventory on May 31 contained 1,640 units. The company needs to prepare a production budget for the next five months.
The total number of units produced in July should be:
A) 7,240 units
B) 6,620 units
C) 6,300 units
D) 5,980 units
15. Shuck Inc. bases its manufacturing overhead budget on budgeted direct labor hours. The direct labor budget indicates that 8,100 direct labor hours will be required in May. The variable overhead rate is $1.40 per direct labor hour. The company’s budgeted fixed manufacturing overhead is $100,440 per month, which includes depreciation of $8,910. All other fixed manufacturing overhead costs represent current cash flows. The May cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:
A) $102,870
B) $11,340
C) $91,530
D) $111,780
16. Deshaies Corporation is preparing its cash budget for November. The budgeted beginning cash balance is $10,000. Budgeted cash receipts total $100,000 and budgeted cash disbursements total $104,000. The desired ending cash balance is $30,000.
The excess (deficiency) of cash available over disbursements for November is:
A) $110,000
B) $6,000
C) ($4,000)
D) $14,00
17. Hagos Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.84 direct labor hours. The direct labor rate is $9.40 per direct labor hour. The production budget calls for producing 2,100 units in June and 1,900 units in July. If the direct labor work force is fully adjusted to the total direct labor hours needed each month, what would be the total combined direct labor cost for the two months?
A) $15,792.00
B) $15,002.40
C) $16,581.60
D) $31,584.00
18. Deshaies Corporation is preparing its cash budget for November. The budgeted beginning cash balance is $10,000. Budgeted cash receipts total $100,000 and budgeted cash disbursements total $104,000. The desired ending cash balance is $30,000.
To attain its desired ending cash balance for November, the company should borrow:
A) $36,000
B) $30,000
C) $24,000
D) $0
19. The manufacturing overhead budget at Mahapatra Corporation is based on budgeted direct labor hours. The direct labor budget indicates that 7,900 direct labor hours will be required in May. The variable overhead rate is $9.50 per direct labor hour. The company’s budgeted fixed manufacturing overhead is $112,970 per month, which includes depreciation of $18,170. All other fixed manufacturing overhead costs represent current cash flows.
The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for May should be:
A) $14.30
B) $21.50
C) $9.50
D) $23.80
20.0 The manufacturing overhead budget at Cutchin Corporation is based on budgeted direct labor hours. The direct labor budget indicates that 2,800 direct labor hours will be required in September. The variable overhead rate is $7.00 per direct labor hour. The company’s budgeted fixed manufacturing overhead is $43,120 per month, which includes depreciation of $3,640. All other fixed manufacturing overhead costs represent current cash flows. The September cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:
A) $59,080
B) $62,720
C) $19,600
D) $39,480
Aug 29, 2021 | Uncategorized
Assume the following unadjusted account balances at the end of the accounting period: Accounts Receivable, $15,000; Allowances for Uncollectible Accounts, $400 (debit balance); Net sales, $100,000. If the company’s past experience indicates credit losses of 2% of net sales, the adjusting entry to estimate uncollectible accounts is:
Answer
A.
Bad Debts Expense
2,000
Allowance for Uncollectible Accounts
2,000
B.
Bad Debts Expense
2,400
Allowance for Uncollectible Accounts
2,400
C.
Bad Debts Expense
1,600
Allowance for Uncollectible Accounts
1,600
D.
Bad Debts Expense
2,000
Accounts Receivable
2,000
E. None of the above
Aug 29, 2021 | Uncategorized
Assume that in January 2010, an Oatmeal House restaurant purchased a building, paying
$56,000 cash and signing a $107,000 note payable. The restaurant paid another $61,000 to
remodel the building. Furniture and fixtures cost $53,000, and dishes and supplies?a current
asset?were obtained for $9,200.
Oatmeal House is depreciating the building over 20 years by the straight line method, with
estimated residual value of $55,000. The furniture and fixtures will be replaced at the end of
five years and are being depreciated by the double declining balance method, with zero
residual value. At the end of the first year, the restaurant still has dishes and supplies worth
$1,700.
Requirements
1. Journalize the purchase of the building and the purchase of the furniture and fixtures.
2. Make an adjusting entry for dishes and supplies.
3. Show what the restaurant will report for supplies, PPE, and cash flows at the end of
the first year on its:
Income statement
Balance sheet
Statement of cash flows (investing only)
Note: The purchase of dishes and supplies is an operating cash flow because supplies are a
current asset.
Thanks
Aug 29, 2021 | Uncategorized
Assume that the Oregon Ice Cream Company is considering the costs of two of their product lines ice cream sandwiches and dessert bars. The company identified the following partial list of activities, costs, and activity drivers expected for the next year.
Activity. Expected Costs. Cost Driver
Extrusion Costs $637,500 Number batches made
Packaging Costs $44,000 Number of units made
Products. Ice Cream Sandwiches Dessert Bars
Product volume 350,000 units 200,000 units
Batches made 400 batches 350 batches
Refer to the data above. How much overhead cost will be assigned to the desert bar product line using activity based costing (ABC)?
340,750
$247,818
$16,000
$297,500
$313,500
Aug 29, 2021 | Uncategorized
The auto repair shop of Quality Motor Company uses standards to control the labor time and labor cost in the shop. The standard labor cost for a motor tune up is given below:
Job: Motor tune up
Standard Hours: 2.2
Standard Rate: $5.5
Standard cost: $12.1
The record showing the time spent in the shop last week on motor tune ups has been misplaced. However, the shop supervisor recalls that 130 tune ups were completed during the week, and the controller recalls the following variance data relating to tune ups:
Labor rate variance
$47F
Total labor variance
$965F
Requirement 1:
Determine the number of actual labor hours spent on tune ups during the week.
Requirement 2:
Determine the actual hourly rate of pay for tune ups last week. (Round your answer to 1 decimal place. Omit the “$” sign in your response.)
Aug 29, 2021 | Uncategorized
Baker Winery manufactures a fine wine in two departments, Fermenting and Bottling. In the Fermenting Department, grapes are aged in casks for a period of 30 days. In the Bottling Department, the wine is bottled then sent to the finished goods warehouse. Labor and overhead are incurred uniformly through both processes. Materials are entered at the begining of both processes. Cost and Production data for the fermenting Department for December 2010 are presented below:
Cost Data
Begining Work in process inventory $37,000 ($30,000 of material costs)
Materials $390,000
Conversion Costs $155,000
Total Costs $582,000
Production Costs
Begining work in process(gallons) 5,000 (40%)
Gallons started into production 55,000
Ending work in process(gallons) 8,000(25%)
Instructions: a) compute the equivalent units of production
b) Determine the unit production costs
c) Determine the costs to be assigned to units transferred out and ending work in process.
Aug 29, 2021 | Uncategorized
The Beal Manufacturing Company’s job costing system has two direct cost categories; direct materials and direct manufacturing labor. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct manufacturing labor hours (DLH). At the beginning of 2012, Beal adopted the following standards for its manufacturing costs:
INPUT Cost per output unit
Direct Materials 3 lbs. @ $5 per lb. $ 15.00
Direct Manufacturing Labor 5 hrs. @ $15 per hr. $ 75.00
Manufacturing Overhead
Variable $6 per DLH $ 30.00
Fixed $8 per DLH $ 40.00
Std. Cost per output unit $ 160.000
The denominator level for total manufacturing overhead per month in 2012 is 40,000 direct manufacturing labor hours. Bell’s actual budget for January indicated the following:
Direct Materials purchased 25,000 lbs. @$5.20 per lb.
Direct Materials used 23,100 lbs.
Direct Manufacturing Labor 40,100 hrs. @$14.60 per hr.
Total Actual Manufacturing Overhead (variable and fixed) $600,000
Actual Production 7,800 output units
Prepare a schedule of total standard manufacturing costs for the 7,800 units in January 2012.
For the month of January 2012, compute the following variances, indicating whether each is favorable (F) or unfavorable (U):
a. Direct materials price variance, based on purchases
b. Direct materials efficiency variance
c. Direct manufacturing labor price variance
d. Direct manufacturing labor efficiency variance
e. Total manufacturing overhead spending variance
f. Variable manufacturing overhead efficiency variance
g. Production volume variance
Aug 29, 2021 | Uncategorized
Betancourt International has operations in Arrakis. The balance sheet for this division in Arrakeen solaris shows assets of 31,000 solaris, debt in the amount of 11,500 solaris, and equity of 19,500 solaris.
Required:
(a)
If the current exchange ratio is 1.41 solaris per dollar, what does the balance sheet look like in dollars?
Balance Sheet
Assets Liabilities
Debt $
Equity
Assets $ Total liabilities & equity $
(b)
Assume that one year from now the balance sheet in solaris is exactly the same as at the beginning of the year. If the exchange rate is 1.56 solaris per dollar, what does the balance sheet look like in dollars now?
Balance Sheet
Assets Liabilities
Debt $
Equity
Assets $ Total liabilities & equity $
(c)
Assume that one year from now the balance sheet in solaris is exactly the same as at the beginning of the year. If the exchange rate is 1.26 solaris per dollar, what does the balance sheet look like in dollars now?
Balance Sheet
Assets Liabilities
Debt $
Equity
Assets $ Total liabilities & equity $
Aug 29, 2021 | Uncategorized
blue Bay Logistics Ltd.’s shareholders’ equity accounts were as follows at the beginning of the current fiscal year, April 1, 2009:
$6 cumulative preferred shares (20,000 shares issued) $1,800,000
Common shares (500,000 shares issued) 3,750,000
Contributed capital reacquisition of common shares 50,000
Retained earnings 1,500,000
Total shareholders’ equity $7,100,000
During the year, the following selected transactions occurred:
June 1 Reacquired 22,800 common shares for $9 per share.
July 1 Issued 52,000 common shares for $10 per share.
Feb. 28 Declared the annual preferred dividend to shareholders of record on March 12, payable on April 1.
Mar. 31 Net earnings for the year ended March 31, 2009, were $1,021,350.
Calculate the weighted average number of common shares for the year.
Aug 29, 2021 | Uncategorized
Bradley Company’s required rate of return is 14%. The company has an opportunity to be the exclusive distributor of a popular consumer item. No new equipment would be needed, but the company would have to use one fourth of the space in a warehouse it owns. The warehouse cost $200,000 new and is currently half empty. There are no other plans to use the empty space. In addition, the company would have to invest $100,000 in working capital to carry inventories and accounts receivable for the new product line. The company would have the distributorship for only 5 years. The distributorship would generate a $17,000 annual net cash inflow. (Ignore income taxes)
Required:
Compute the net present value of the project at 14% by inputting the variables that are entered into your calculator / Excel. (If a variable is not used in the calculation, input a zero (0). Omit the “$” and “%” signs in your response.) Round answers to the nearest dollar and use a minus sign for negative numbers.
1. Interest Rate
(Rate, I, I/YR)%
2.Nper, N
3.PMT$
4.PV$
5.FV$
6.Net present value$
7.Should be project be accepted?
Aug 29, 2021 | Uncategorized
Burget Clinic uses client visits as its measure of activity. During July, the clinic budgeted for 2,100 client visits, but its actual level of activity was 2,110 client visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for July:
Data used in budgeting:
Fixed element per month Variable element per client visit
Revenue… NONE $47.10
Personal expenses… $22,700 $16.90
Medical supplies… 1,600 6.50
Occupancy expenses… 6,900 1.50
Administrative expenses… 3,400 0.40
Total expenses.. $34600 $25.30
Actual results for July
Revenue… $101,491
Personal expenses… $55,699
Medical supplies… $15,895
Occupancy expenses… $9,785
Administrative expenses… $4,424
The spending variance for medical supplies in July would be closest to?
Aug 29, 2021 | Uncategorized
1. The net initial investment for a piece of construction equipment is $1,000,000. Annual cash inflows are expected to increase by $200,000 per year. The equipment has a 8 year useful life. What is the payback period?
a. 8 years
b. 7 years
c. 6 years
d. 5 years
2. Shirt Company wants to purchase a new cutting machine for its sewing plant. The investment is expected to generate annual cash inflows of $300,000. The required rate of return is 12% and the current machine is expected to last for 4 years. What is the maximum dollar amount Shirt Company would be willing to spend for the machine, assuming its life is also four years?
a. $507,000
b. $720,000
c. $791,740
d. $911,100
3. Which of the following is not an appropriate term for the required rate of return?
a. discount rate
b. hurdle rate
c. cost of capital
d. all of the above are appropriate terms for the required rate of return.
4. You have just learned you are a beneficiary in the will of your late Aunt Susan. The executrix of her estate has given you three options as to how you may receive your inheritance:
Option 1: You may receive $50,000 immediately.
Option 2: You may receive $75,000 at the end of six years.
Option 3: You may receive $11,000 at the end of each year for six years.
If your desired rate of return is 8%, which option would you prefer?
a. Option 1 because the present value is higher by $2,750.
b. Option 3 because the present value is higher by $853.
c. Option 1 because the future value is higher by $4,350.
d. Option 2 because you will receive $25,000 more than Option 1.
5. Assume your goal in life is to retire with 1.5 million dollars. How much would you need to save at the end of each year if you earn an average interest of 8% on your investments (compounded annually) and you have a 40 year work life? HINT: You will need to use the FVA table to calculate the payment amount.
a. $6,900.00
b. $5,790.23
c. $69,044.87
d. $153,389.91
6. The Zeron Corporation recently purchased a new machine for its factory operations at a cost of $921,250. The investment is expected to generate $250,000 in annual cash flows for a period of six years. The required rate of return is 14%. The old machine has a remaining life of six years. The new machine is expected to have zero value at the end of the six year period. The disposal value of the old machine at the time of replacement is zero. What is the internal rate of return?
a. 15%
b. 16%
c. 17%
d. 18%
7. Ann Terrell invests $14,973.80 now for a series of $2,000 annual returns beginning one year from now. Ann will earn 9% on the initial investment. How many annual payments will Ann receive?
a. 7
b. 9
c. 11
d. 13
8. In a make or buy decision related to a component part, what costs are normally considered to be relevant to the decision?
a. direct labor costs incurred to make the component internally.
b. the amount paid for equipment used to make the component internally.
c. the total cost that the outside supplier incurs in producing the component.
d. the selling price of the completed product which uses the component.
9. A company can sell all the units it can produce of either Product A or Product B
but not both. Product A has a unit contribution margin of $16 and takes two machine hrs to make and product B has a unit contribution margin of $30 and takes three machine hrs to make. If there are 1,000 machine hours available to manufacture a product, income will be
a. $2,000 more if Product A is made.
b. $2,000 less if Product B is made.
c. $2,000 less if Product A is made.
d. the same if either product is made.
10. Adler Company manufactures a product with a unit variable cost of $50 and a unit sales price of $88. Fixed manufacturing costs were $240,000 when 10,000 units were produced and sold. The company has a one time opportunity to sell an additional 2,000 units at $70 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:
a. Income would decrease by $8,000
b. Income would increase by $8,000
c. Income would increase by $140,000
d. Income would increase by $40,000
Aug 29, 2021 | Uncategorized
1. On October 1, 2009, Marcus Corporation purchased $20,000 of 6% bonds of Roberts Corporation, due in 8 1/4 years. The bonds were purchased at a price of $17,561 plus interest of $300 accrued from July 1, 2009, the date of the last semi annual interest payments. Journalize the purchase of the bonds plus interest.
2. On January 2, Todd Company acquired 40% of the outstanding stock of McGuire Company for $205,000. For the year ending, December 31, McGuire earned income of $48,000 and paid dividends of $14,000.
Prepare the entries for Todd Company for the purchase of the stock, share of McGuire income and dividends received from McGuire.
3. Fortune Corporation’s comparative balance sheet for current assets and liabilities was as follows:
Dec 31,2010:
Accounts receivable 7,500Ac€¦Inventory 11,500Ac€¦Accounts payable 4,300Ac€¦dividends payable 4,000.
Dec 31,2009:
Accounts receivable 5,200Ac€¦Inventory 16,000Ac€¦Accounts payable 5,200Ac€¦dividends payable 3,000.
Net income was $65,000. Prepare the cash flows from operating activities section of the Statement of Cash Flows.
Aug 29, 2021 | Uncategorized
1. Topper Toys has developed a new toy called the Brainbuster. The company has a standard cost system to help control costs and has established the following standards for the Brainbuster toy:
Direct materials: 8 pieces per toy at $0.30 per piece
Direct labor: 1.2 hours per toy at $7 per hour
During the month of August, the company produced 5,000 Brainbuster toys. Production data for the month on the toy follow:
Direct materials: 50,000 pieces were purchased for use in production at a cost of $0.28 per piece.
Direct labor: 6,400 direct labor hours were worked at a cost of $48,000.
Required:
1. Compute the following variances for the month
a. Direct materials price and quantity variances.
b. Direct labor price and quantity variances.
Aug 29, 2021 | Uncategorized
1. Watins, Inc.’s 2011 income statement reported net sales of $5,000,000. Watin’s average accounts receivable during 2011 amounted to $450,000. Using 360 days to a year, Watin’s:
A) Accounts receivable turnover rate is approximately 2 times.
B) Accounts receivable turnover rate is approximately 13.8 times.
C) Average number of days to collect an account receivable is 32 days.
D) Accounts receivable turnover rate is approximately 1.25 times.
2. During the year 2009, Tosco Corporation suffered an $800,000 loss when its factory was destroyed in a flood. Assuming the corporate income tax rate is 36%, what amount will Tosco report as an extraordinary loss on its income statement for 2009? Assume floods are not common in this area.
A) $512,000.
B) $288,000.
C) $800,000.
D) Nothing, since this does not qualify as an extraordinary item
3. Topper Corporation has 60,000 shares of $1 par value common stock and 16,000 shares of cumulative 7%, $100 par preferred stock outstanding. Topper has not paid a dividend for the prior year. If Topper declares a $1.95 per share dividend this year, what will be the total amount they must pay their shareholders?
A) $341,000.
B) $327,000.
C) $117,000.
D) $177,000.
Aug 29, 2021 | Uncategorized
ACT 325 Portfolio Project Description Your portfolio project is due by the end of Week 8. Please complete the following seven problems based on the serial problem presented in the textbook beginning with Chapter 13. You are encouraged to use the working papers to create your answers. Please make sure to cite all sources that support your overall conclusions. You should paste any required Excel tables and type your answers into a Microsoft Word document, clearly labeling label each problem. Problem 1 Santana Rey created Business Solutions on October 1, 2011.
Aug 29, 2021 | Uncategorized
Complete the following exercise. Fill in the Excel spreadsheet provided via the link below to provide your answers to part a. Then paste the Excel data into a Word document on which you can also write the answer to part b.
| Administrative Expenses……………………………………………………………………………. |
$ 70,000 |
| Finished Goods Inventory January 1, 2011…………………………………………………….. |
120,000 |
| Cost of Goods Manufactured during the year………………………………………………… |
200,000 |
| Finished Goods Inventory December 31, 2011……………………………………………….. |
60,000 |
| Selling Expenses………………………………………………………………………………………. |
40,000 |
| Sales………………………………………………………………………………………………………. |
680,000 |
Required:
- Using the information for Superior Manufacturing Company, prepare the income statement for the year ended December 31, 2011. (Assume a 30 % income tax.)
- Create a report between 200 and 300 words in length for leadership. The topic is the state of this company. Make some suggestions if there are areas you feel need to be further investigated.
Aug 29, 2021 | Uncategorized
15 19 Support department cost allocation; direct and step down methods. Phoenix Pa rtners provides management consultin g servic es to g overnment a nd corpora te clients. Phoenix h a s two support departments”administrative services (AS) and information systems (IS)”and two operating departments” government consulting (GOVT) and corporate consulting (CORP). For the first quarter of 201 2, Phoenix’s cost records ind ica te the following:
| |
|
|
Support |
|
Operating |
|
| |
|
|
AS |
IS |
|
GOVT |
CORP |
total |
| Budgeted overhead costs before any interdepartment cost allocations |
|
|
|
|
|
|
| |
|
|
|
|
|
| $ 60,000 |
$2,400,000 |
|
$ 8,756,000 |
$ 12,452,000 |
$ 24,206,000 |
| Support work supplied by AS (budgeted head count) |
|
|
|
|
|
|
| |
25% |
|
40% |
35% |
100% |
| Support work supplied by IS (budgeted computer time) |
|
|
|
|
|
|
| 10% |
|
|
30% |
60% |
100% |
1 . Allocate the two support departments’ costs to the two operating departments using the following methods:
a. Direct method
b. Step down method (allocate AS first)
c. Step down method (allocate IS first)
2. Compare and explain differences in the support department costs allocated to each operating department.
3. What approaches might be used to decide the sequence in which to allocate support departments
when using the step down method?
| |
|
|
Support
|
|
Operating
|
|
|
|
|
|
AS
|
IS
|
|
GOVT
|
CORP
|
total
|
|
Budgeted overhead costs before any interdepartment cost allocations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ 60,000
|
$2,400,000
|
|
$ 8,756,000
|
$ 12,452,000
|
$ 24,206,000
|
|
Support work supplied by AS (budgeted head count)
|
|
|
|
|
|
|
|
|
25%
|
|
40%
|
35%
|
100%
|
|
Support work supplied by IS (budgeted computer time)
|
|
|
|
|
|
|
|
10%
|
|
|
30%
|
60%
|
100%
|
Aug 29, 2021 | Uncategorized
15 24
Allocation of common costs.
Sunny Gunn, a self employed consultant near Sacramento, received an invitation to visit a prospective client in Baltimore. A few days later, she received an invitation to make a presentation to a prospective client in Chicago. She decided to combine her visits, traveling from Sacramento to Baltimore, Baltimore to Chicago, and Chicago to Sacramento.
Gunn received offers for her consulting services from both companies. Upon her return, she decided to accept the engagement in Chicago. She is puzzled over how to allocate her travel costs between the two clients. She has collected the following data for regular round trip fares with no stopovers:
Sacramento to Baltimore $1 ,200
Sacramento to Chicago $ 800
Gunn paid $1 ,600 for her three leg flight (Sacramento’Baltimore, Baltimore’Chicago, Chicago’Sacramento). I n add ition, she paid $40 each way for limousines from her home to Sacra mento Airport and back when she returned.
1 . How should Gunn allocate the $1 ,600 airfare between the clients in Baltimore and Chicago using (a) the stand alone cost allocation method, (b) the incremental cost allocation method, and (c) the Shapley value method?
2. Which method would you recommend Gunn use and why?
3. How should Gunn allocate the $80 limousine charges between the clients in Baltimore and Chicago?
Aug 29, 2021 | Uncategorized
161) The cost of wages paid to employees directly involved in converting materials to finished product is classified as direct labor cost.
a. true
b. false
162) At the beginning of 2011, the Gilbert Company’s work in process inventory account had a balance of $30,000. During 2011, $68,000 of direct materials were used in production, and $66,000 of direct labor costs were incurred. Factory overhead in 2011 amounted to $90,000. Cost of goods manufactured is $220,000 in 2011. The balance in work in process inventory on December 31, 2011, is:
a. $24,000
b. $34,000
c. $6,000
d. $66,000
163) Which of the following would be least likely to be considered a managerial accounting report?
a. a statement of stockholders’ equity
b. a schedule of total manufacturing costs incurred
c. a report to analyze potential efficiencies and savings for the purchase of new production equipment.
d. a statement of cost of goods manufactured
164) Costs which are reported on the income statement as part of cost of goods sold are referred to as:
a. cost of goods manufactured
b. administrative expenses
c. operating expenses
d. period costs
165) What term is used to describe the process of monitoring operating results and comparing actual results with the expected results?
a. Controlling
b. Planning
c. Improving
d. Directing
Aug 29, 2021 | Uncategorized
17) Yankton Company began the year without an investment portfolio. During the year they purchased investments classified as trading securities at a cost of $13,000. At the end of the year, the market value of the securities was $11,000. The Yankton Company’s financial statements for the current year should show
a. a loss of $2,000 on the income statement and temporary investments of $11,000 on the balance sheet
b. no loss on the income statement and net trading securities of $13,000 on the balance sheet
c. a loss of $2,000 on the income statement and net trading securities of $13,000 on the balance sheet
d. no loss on the income statement, net trading securities of $11,000 and an unrealized loss of $2,000 as a stockholders’ equity adjustment on the balance sheet
19) The account Unrealized Gain (Loss) on Available For Sale Securities should be included in the
a. Statement of Retained Earnings
b. Balance sheet as an adjustment to the asset account
c. Balance sheet as an adjustment to Stockholders’ Equity
d. Income statement as Other Revenue (Expenses)
20)When management seeks to achieve personal departmental objectives that may work to the detriment of the entire company, the manager is experiencing:
a. goal conflict
b. cushions
c. padding
d. budgetary slack
21) The account Unrealized Gain (Loss) on Trading Securities should be included in the
a. Statement of Retained Earnings
b. Balance sheet as an adjustment to Stockholders’ Equity
c. Balance sheet as an adjustment to the asset account
d. Income statement as Other Revenue (Expenses)
23) When a bond is purchased for an investment, the purchase price, minus the brokerage commission, plus any accrued interest is recorded.
a. true
b. false
Aug 29, 2021 | Uncategorized
251) At the beginning of the period, the Cutting Department budgeted direct labor of $155,000, direct material of $165,000 and fixed factory overhead of $15,000 for 9,000 hours of production. The department actually completed 10,000 hours of production. What is the appropriate total budget for the department, assuming it uses flexible budgeting.
a. $368,889
b. $335,000
c. $416,000
d. $370,556
252) At the beginning of the period, the Assembly Department budgeted direct labor of $110,000, direct material of $170,000 and fixed factory overhead of $28,000 for 8,000 hours of production. The department actually completed 10,000 hours of production. What is the appropriate total budget for the department, assuming it uses flexible budgeting.
a. $378,000
b. $350,000
c. $288,000
d. $305,000
253) A disadvantage of static budgets is that they:
a. do not show possible changes in underlying activity levels
b. show the expected results of a responsibility center for several levels of activity
c. start with a clean slate
d. cannot be used by service companies
255)The process of developing budget estimates by requiring all levels of management to estimate sales, production, and other operating data as though operations were being initiated for the first time is referred to as:
a. continuous budgeting
b. flexible budgeting
c. zero based budgeting
d. master budgeting
256) A variant of fiscal year budgeting whereby a twelve month projection into the future is maintained at all times is termed:
a. zero based budgeting
b. master budgeting
c. flexible budgeting
d. continuous budgeting
Aug 29, 2021 | Uncategorized
46) Budgets need to be fair and attainable for employees to consider the budget important in their normal daily activities. Which of the following is not considered a human behavior problem?
a. Allowing goals to be so low that employees develop a “spend it or lose it” attitude.
b. Setting goals among managers that conflict with one another.
c. Setting goals too tightly making it difficult to meet performance expectation.
d. Allowing employees the opportunity to be a part of the budget process.
47) Trading securities are reported on the balance sheet at cost.
a. true
b. false
49) Investments in bonds that management intends to hold to maturity are called trading securities.
a. true
b. false
50) Investment in Bonds are reported on the balance sheet at lower of cost or market.
a. true
b. false
51) Investment in Bonds is listed on the balance sheet after Bonds Payable.
a. true
b. false
Aug 29, 2021 | Uncategorized
THE FINANCIAL REPORTING PROJECT This project involves an in depth analysis of a publicly traded company, and a comparison to its peers in the industry. The project will be completed in groups of 3 4 students. Your instructor will form groups in the first few weeks of the semester. The following list is a sample of the type of companies which may be assigned: Apple Computer, Microsoft Intel Pfizer Pepsi IBM Johnson & Johnson Proctor & Gamble Wal Mart Dell Computer Home Depot Lowe’s Home Improvement Target Walgreen JC Penney Best Buy CVS Barnes and Noble Borders As soon as your group is formed and a company assigned, your group must obtain a copy of your company’s latest Annual Report or 10 K. You can do this by downloading and printing the documents from your company’s website or from the EDGAR database at the Securities & Exchange Commission (www.sec.gov). The project is completed in two phases. The first phase emphasizes a basic understanding of the company and the business and economic environment in which it operates. It also requires that you obtain an understanding of the information provided in the Annual Report or 10 K. The final phase involves computation of ratios and financial analysis, including an investment recommendation. At the conclusion of the final phase, you will also evaluate each member of your group by completing the evaluation form included in this packet. The report is completed in two phases so that the entire work on the project is not deferred until the end of the term. Further, by turning in two reports, you will obtain timely feedback from your professor that will help you improve your performance in the final report. Each progress report requires a group leader to coordinate the work. Rotate your group leader for each progress report. Based on past experience, the following procedures will help you maximize your performance in the project: • Each group member should independently complete the assignments required for each progress report before networking with other members of the group. • The group discussion should review all of the individual work, investigate and resolve disagreements, and work together to prepare written reports. • After the draft of each report is completed, each person in the group should review the draft to ensure that the writing is concise and clear, and that the spelling and grammar are appropriate, before turning in the final draft to the instructor. The quality of the project will be judged on the basis of a collective, not an allocated effort. Experiencing the challenges and the rewards of working as a group in a business setting is an integral part of the learning process in this course. Individual grades may be adjusted based on the evaluation of the group members submitted by each member. A major objective of the project is to help develop your communication skills, including the ability to communicate clearly and concisely. Hence each report is restricted to the following maximum page length. PROGRESS REPORT 1 5 pages maximum (excluding exhibits and supporting computations.) PROGRESS REPORT 2 5 pages maximum (excluding exhibits and supporting computation) Your report must be typewritten (word processed) and double spaced. To ensure consistency, you must use a 12 point font and a 1” margin throughout (left, right, top and bottom). VERY IMPORTANT: POINTS WILL BE DEDUCTED FROM YOUR REPORT IF THE INSTRUCTIONS BELOW ARE NOT FOLLOWED! When you submit your reports to your instructor, clearly state: The name of your company; and The full names of ALL of your Group Members (For example, listing groups members’ names as Al, Sue, and Jack is not acceptable) The Financial Reporting Project PROGRESS REPORT 1 Due June 3, 2013 NOTE: This report should not exceed 5 pages text (double spaced; 12 pt) Exhibits and supporting calculations do not count as part of the total 5 pages. The purpose of this report is help you develop a basic understanding of your company and the business environment in which it operates. The information contained within Annual Report and 10 K of your company, along with other readings and resources, will help you complete this report. Company Background A. What is the ticker symbol of your company? Identify the stock exchange(s) where your company stock trades. B. Read the auditor’s report included in the annual report of the company and explain its purpose. Identify the name of the auditing firm. C. Explain the major operations of your company. What products does it sell and/or services does it render? Identify the major competitors of the company. D. Using the Wall Street Journal or Internet to record the closing price on May 23, 2013. Developments relating to the Company A. Is the demand for the products and services provided by this company increasing, decreasing, or staying stable? Explain the factors that are influencing the demand for products and services of this company. B. Identify and briefly explain at least two significant events (technological breakthroughs, regulatory changes) that may have affected the company recently. Understanding the Annual Report and 10K (Note: Show your computations) 1. How does current year’s sales revenues and net income (i.e., earnings) compare with that in previous years? Compute the annual growth rate for the last five years for both sales revenue and net income . [For example, if revenues in Year 1 and 2 are 100 and 125 respectively, the growth rate from Year 1 to Year 2 is 25%]. What earnings trend do you observe and what factors may be causing this trend? 2. Calculate the gross margin percentage (Gross Profit divided by Net Sales) for each period presented in the income statement. What trend in gross margin do you observe and what factors may be causing this trend? 3. Where are the resources of your company employed? Do this by calculating a percent of the total assets for each asset displayed in the balance sheet. The total should equal 100%. What are the three largest assets as a percentage of the total? 4. What method(s) of depreciation does your company use? Does the company use the same method of depreciation for all types of long lived assets? Where did you find this information? 5. What method(s) does your company use to value its inventory? Compute the inventory turnover ratio for the last two years. This may require you to look up the financial statements for the most recent three years in order to compute average inventory. Comment on the trend observed. 6. Examine the financial structure of the company. Do this by calculating the amount of total liabilities and stockholders’ equity as a percentage of total assets. The total should equal 100%. Which is the primary source of funding for assets and what conclusions can you draw from this? 7. Identify the major components of stockholders’ equity by examining the Statement of Stockholders Equity. What types of accounts and transaction resulted in major changes in the Stockholder Equity accounts during the most recent year? 8. The 10K provides some important information to interested parties, including the stockholder, which is not found in the Annual Report. Briefly explain the nature of the some of this additional information contained in this SEC filing. Include at least two items of interest. The Financial Reporting Project PROGRESS REPORT 2 Due June 19, 2013 NOTE: This report should not exceed 5 pages (double spaced; 12 pt). The supporting calculations for the ratios does not count as part of the total 5 pages. The objective of this final report is for you to analyze the company in terms of its profitability, liquidity, and provide your investment and credit recommendations. You will also have an opportunity to learn about executive compensation and corporate governance. Based on your research, prepare a well written, concise report that covers the following issues. 1. Compute the following ratios for the most recent year and include them in an Appendix to this report. [The calculations for each of these ratios can be found in your textbook. The numbers you use for these ratios should agree with the numbers in financial statements. Show all of your supporting work]. a. Return on Equity (Return on Owners’ Investment) b. Return on Assets (Return on Total Investment) c. Earnings per Share d. Net Profit Margin e. Current Ratio f. Quick Ratio g. Accounts Receivable Turnover h. Inventory Turnover i. Times interest earned j. Debt to Equity ratio k. Price/Earnings (P/E) ratio (Use the market price as of the balance sheet date). 2. Identify a company that you believe is the closest competitor (“competitor”) to your company. Compute the ratios in (1) above for the competitor and include them in the Appendix. Based on your computations in (1) and (2) above, address the following: Profitability: 1. What is your assessment of the profitability of your firm in the most recent year? How does your firm’s profitability compare with that of the competitor? 2. Compare the cash flows from operating activities for your firm with the net income for the most recent year. What factors have contributed to the difference between these two numbers? Liquidity and Capital Structure: 1. Will the company be able to meet its obligations as they become due? How does your firm’s liquidity compare with that of the competitor? 2. What is the capital structure of your company (i.e., what percentage of the total assets of the company are financed through liabilities and what percentage through stockholders’ equity)? 3. Is the capital structure of the competitor significantly different from that of your company? Briefly explain your answer. International Financial Reporting Standards (IFRS) 1. What is the purpose of IFRS? 2. What is the IASB? 3. What are some of the overall differences between US GAAP and IFRS? 4. If your company adopted IFRS: (a) Would its reporting for inventory differ? Briefly explain. (b) Identify other areas that would be impacted if your company adopted IFRS. Recommendations 1. Based on your analysis, would you loan money to this company short term? Would you loan money to this company long term? Explain your answer. 2. Provide a recommendation as to whether an individual should buy, sell, or hold (if they already own it) the stock of this company. Your recommendation should be supported by an adequate explanation and reference to supporting analysis and ratios. Note that the quality of the arguments you provide in support of your position for (1) and (2) above is more important than your final recommendation. Financial Accounting Evaluation of Group Members – The Financial Reporting Project Company:____________________ Complete the following evaluation for your entire group. Identify your group members in the column headings (notice that you MUST include their names). INCLUDE YOURSELF IN THE EVALUATION!! Use the following categories to assign numerical scores from 0 to 10. Score Score Score Score Outstanding 10 Above Average 8 Below Average 5 to 6 Unsatisfactory 1 to 2 Excellent 9 Average 7 Poor 3 to 4 Did not participate 0 Scores for each Group Member (write a score from 0 to 10) Evaluation Criteria Your Name: Name: Name: Name: Name: 1. Attended group meetings. 2. Contributed to group discussions. 3. Assumed a fair share of the group work. 4. Worked well with others. 5. Was creative and enthusiastic. 6. Assumed a leadership role. 7. Contributed to the writing and editing of progress reports. 8. Was timely in preparing work. 9. Provided quality work. 10. Helped others in the group to learn. TOTAL please compute the total points for each group member Return the completed evaluation DIRECTLY to the instructor by June 20, 2013.
Aug 29, 2021 | Uncategorized
4.(15) X corp. Balance sheet reports the following amounts of Stockholder s Equity:
Preferred stock, 7 % , $20 par, 6 000 shares authorized, 6 000 shares iss..‘eci (liquidation value $ pershare) …………………….. ……………………………………………………………….. $ 120 000
Paid — in — capital in excess of par preferred 12.000
Common stock, $ 1 par, 20 000 shares authorized, 18 000 shares
issued
18 000
Paid in capital in excess of par common .152 000 Retained earning 800 000 Suppose that four years cumulative preferred dividends are in arrears. Compute A. The book value per common share. B.ROE (common stock)
Aug 29, 2021 | Uncategorized
Develop an ABC Costing System for Classic Pen Co. using the information provided in the case and the requirements below.
Required:
- Identify the appropriate activity cost pools and cost drivers (hint: there should be four).
- Identify the appropriate portions of the $60,000 “Support Expenses” to be aligned with each of the identified activity cost pools. (hint: some of this $60,000 is now going to be “attached” to direct labor as additional direct cost, causing the total amount distributed among the activity cost pools to be less than $60,000).
- Calculate the activity cost rates for each of the activity cost pools.
- Calculate the amount of “Support Expenses” to be allocated to each of the four product lines for each activity.
- Calculate the operating income for each product line within this ABC costing environment. Which product lines were being undercosted under the old simple costing system? Which product lines were being overcosted?
Detail your answers to each of the above requirements within a single Microsoft Excel worksheet, using a logical and coherent presentation of all calculations and results (presentation, readability, and logical flow of worksheet will be considered as part of the grade on this assignment). Please use formulas in all cells where calculations are present, using cell references for inputs where applicable. You should be detailing the inputs of all calculations within your worksheet prior to representing the calculation result. For example, if you’re calculating the activity cost rate of the [insert generic activity cost pool name here] cost pool:
Instead of:
| [Generic] cost pool activity cost rate: |
50% |
Show:
| Generic cost pool: |
$100,000 |
/ |
$200,000 |
= |
50% |
Aug 29, 2021 | Uncategorized
You have been asked to explore three database alternatives for a merchant who provides shoes to retail stores. The merchant needs the database to keep the financial records. employee records, inventory records and general use records for the business Answer the questions below in your report. week
1 identify three database systems and discuss the purpose for choosing these three options
2. Pick only ONE of the above database systems and discuss the Hardware and software components required to run it
3. Discuss the costs involved in implementing the database
4. Discuss other factors which the business should consider before implementing the database
5. Provide sufficient citations throughout and matching
Aug 29, 2021 | Uncategorized
the submitted cash flow model to be filled out based on some on the info that is given in the word document. This is a cash flow representation for a Pizza store set up. The country for the Pizza store set up is Guyana and as such some additional research may need to be done to fill in some of the other information. but most should be provided in the word document sent or already filled in by me. Please include explanations in a separate document for things such as depreciation and assumptions on interests, taxes, capital maintenance, nvp, irr, residual value , etc
You can use any of the International chain pizza’s are a marker to get information from. ( once not provided in already). feel free to make changes to any thing that I am imputed ( just make a note in a separate doucment
Aug 29, 2021 | Uncategorized
EX 19 12 Entry for jobs completed; cost of unfinished jobs
The following account appears in the ledger after only part of the postings have been completed for March:
|
Work in Process |
| Balance, March 1 |
$ 18,000 |
| Direct materials |
122,500 |
| Direct labor |
145,000 |
| Factory overhead |
80,000 |
View PDF
Jobs finished during March are summarized as follows:
| Job 320 |
$72,400 |
Job 327 |
$ 46,200 |
| Job 326 |
79,200 |
Job 350 |
144,600 |
View PDF
a. Journalize the entry to record the jobs completed.
b. Determine the cost of the unfinished jobs at March 31.
OBJ. 2
Aug 29, 2021 | Uncategorized
I need at least 3 pages minimum QAR AUDIT PROGRAM HINTS A QAR OR QUIP IS AN AUDIT OF INTERNAL AUDIT, NOT OF SOME OTHER AREA OF THE ORGANIZATION (e.
Aug 29, 2021 | Uncategorized
Part I : completed
The
salesperson
receives
a hardcopy customer
order from
the customer. The salesperson enters the customer order into the salesperson’s mobile device using the Sales Order Program which retrieves information from the Customer Master file, enters data into the Sales Order Transaction file, and updates the information in the Customer Master file. The salesperson forwards the hardcopy of the customer order to the sales manager.
The sales manager
receives the hardcopy of the customer order from the salesperson. The sales manager views the salesperson’s order entered into the Sales Order Program by retrieving data from the Customer Master File and the Sales Order Transaction file. The sales manager then manually compares the hardcopy of the customer order with the sales order on the computer screen and approves the hardcopy with a signature. The sales manager then files the signed hardcopy in the Approved Customer Orders file cabinet by customer number. The sales manager prints a picking ticket for each sales order by using the Sales Order Program and retrieving information from the Sales Order Transaction file. The sales manager sends the picking ticket to the warehouse clerk.
Part II
The warehouse clerk
receives the picking ticket from the sales manager. The warehouse clerk manually gathers the items listed on the picking ticket (NOTE: use the input/output parallelogram symbol to represent the items). The warehouse clerk enters the items picked into a mobile device using the Order Processing Program which retrieves information from the Customer Master file and the Sales Order Transaction file and enters data into the Orders Processed Transaction file. The warehouse clerk brings the picking ticket and items to the shipping clerk.
The shipping clerk
receives the picking ticket and items from the warehouse clerk. The shipping clerk enters the items received into a mobile device using the Shipping Program which retrieves information from the Customer Master file and the Sales Order Transaction file and enters data into the Shipments Transaction file. The shipping clerk files the picking ticket in the Completed Picking Tickets file by date. The shipping clerk prints a packing slip using the Shipping Program which retrieves data from the Customer Master file, Sales Order Transaction file, and Shipments Transaction file. The shipping clerk sends the packing slip and items to the customer.
Instructions:
Create one file in Excel with two worksheets (use a new, blank file).
Create a Table of Entities and Activities on the first worksheet.
Create a Document Flowchart on the second worksheet.
Assignment #2 builds from Assignment #1.
Assignment #1 – the Narrative represents the 1st half of the process.
Assignment #2 – the Narrative includes the 1st and 2nd halves of the process.
The grade for #2 will include the Table and Flowchart from #1.
Aug 29, 2021 | Uncategorized
Read the cases and find out the following required information.
Required: 1 Calculate the material handling rate that would have been used by Eloise Smith’s predecessor at East Coast Marine. 2 (a) Calculate the revised material handling costs to be allocated on a per purchase order basis. (b) Discuss why purchase orders might be a more reliable cost driver than the dollar amount of direct material. 3 Calculate the difference due to the change to the new method of allocating material handling costs to government contracts. 4 Prepare a forecast of the cumulative dollar impact over a three year period (based on the coming year plus 2 more years) of Eloise Smith’s recommended change for allocating Material Handling Department costs to the Government Contracts Unit. Round all calculations to the nearest whole number. 5 Referring to the standards of ethical conduct for accountants described in Chapter 1: (a) Discuss why Eloise Smith has an ethical conflict. (b) Identify several steps that Smith could take to resolve the ethical conflict.
CCMA. act.4preal
Required: I Describe the changes in cost structure that are likely to have occurred at Cravings for Cakes over the last 20 years, and explain their causes. 2 Do you think that the existing costing system understates or overstates the cost of: (a) Lamington? (b) Danish pastry? Explain your answers. 3 Explain how activitybased costing could overcome the deficiencies inherent in the existing costing system. 4 What factors should U.B. Bright consider when deciding whether to use: (a) Simple activitybased costing system to assign manufacturing overhead to products? lb) Activity based system that includes both manufacturing overhead and non manufacturing costs? Cc) Comprehensive activity based system that includes all product related costs except direct material?
Aug 29, 2021 | Uncategorized
As discussed in today’s meeting, Paper Inc. ‘s Board of Directors has requested a set of pro forma financial statements for the proposed acquisition of Scissor Company.
For the past several years Paper Inc’s Executive Management Team hasreceived continued pressure from its investors for their lack of growth (markets share, revenue, and profits). On May 1, 2012 the Chief Executive Officer, Chief Operating Officer, and the Chief Financial Officer all resigned under duress (pressured by Board of Directors to resign).
For the past twelve months, Paper Inc.’s Board of Directors and Executive Management Team had been in discussions with Scissor Company’s Board of Directors about a possible merger (Paper Inc. acquiring 75% of Scissor Company). The Paper Inc.Board has determined that this acquisition would be in the best interest of its shareholders.
The Board has requested that the Accounting Department provide pro forma financial statements (income statement, statement of retained earnings, and balance sheet) for the proposed consolidated company. In addition, the Board has asked for a detailed explanation on how the consolidation process works. They specifically requested a walk through of the consolidation work paper.
Detailed Request:
- Prepare a consolidated balance sheet (January 1, 2012) – assuming the acquisition had taken place on January 1, 2012 (remember to provide work paper detail).
- Prepare a pro forma income statement, statement of retained earnings, and balance sheet (assuming the acquisition had taken place on January 1, 2012) as of December 31, 2012 (remember to show work paper detail using the 3 section format). Apply the cost method.
- Document all general ledger journal entries (REAL Entries) that would take place using the assumption above.
Base Data:
As of 1/1/12 the balance sheets for Paper Inc. (acquirer) and Scissor Company (acquired) immediately prior to the combination were as follows:
| Balance Sheet as of 12/31/11 |
|
|
Scissor Company |
|
Paper Inc. |
Scissor Company |
|
Fair Value |
| Cash |
$750,000 |
$230,000 |
|
Same as BV |
| Current Assets |
207,000 |
6,000 |
|
Same as BV |
| PPE (net) |
813,000 |
54,000 |
|
Same as BV |
| Land |
150,000 |
25,000 |
|
$50,000 |
| Total |
1,920,000 |
315,000 |
|
|
|
|
|
|
|
| Liabilities |
850,000 |
90,000 |
|
Same as BV |
| Common Stock, $20 par |
825,000 |
120,000 |
|
|
| APIC |
109,000 |
30,000 |
|
|
| Retained Earnings |
136,000 |
75,000 |
|
|
| Total |
1,920,000 |
315,000 |
|
|
Key Data and Assumptions:
- As of 12/31/11 FV of Scissor Company net assets is equal to BV with the exception of Land, which has a FV of $50,000. On January 1, 2012, Paper Inc. common stock had a fair value of $30 per share. It is expected that Paper Inc.’s common stock will have a fair value of $30 per share on 12/31/2012.
- Assume that Paper Inc. issues 9,600 shares of its $20 par value common stock for 75% of Skins outstanding stock on January 1, 2012.
- Assume that the income statements for Paper Inc. and Scissor are the following in fiscal year 2012. In addition, assume Paper Inc. had dividends declared of $40,000 and Scissor Company declared $20,000.
| Income Statement |
|
|
|
|
|
|
Paper Inc. |
Scissor |
| Revenue |
|
|
$900,000 |
$350,000 |
| Dividend Income |
|
|
15,000 |
|
|
Total revenues |
|
915,000 |
350,000 |
|
|
|
|
|
| COGS |
|
|
550,000 |
150,000 |
| Operating Expenses |
|
|
150,000 |
100,000 |
|
|
|
700,000 |
250,000 |
|
Net Income |
|
215,000 |
100,000 |
Note:
- Ignore tax impact
- Net Asset change for the year should be added to the cash account
Aug 29, 2021 | Uncategorized
Which one of the following best describes the conditions under which a P 40a budget exhibit is required to be submitted?
When the line item is part of budget activities 4, 5, or 7
When the line item covers advance procurement funds for a weapon system
When the line item is an aggregation of different end items requiring funding of less than $5 million apiece
When the line item funding is $5 million or more in the budget year
2) Which one of the following contracts most likely would NOT require contract performance reporting by a Contract Performance Report (CPR)?
18 month Fixed Price Incentive Fee Procurement contract valued at $165 million (then year dollars)
36 month Cost Plus Award Fee RDT&E contract valued at $54 million (then year dollars)
24 month Cost Plus Fixed Fee RDT&E contract valued at $3.8 million (then year dollars)
3) All of the following are characteristics of an effective reclama, EXCEPT:
Is concise
Provides specific, believable impacts on the program
Uses technical jargon and acronyms
Specifically addresses reasoning for proposed funding cut
4) Which one of the following statements is FALSE concerning the P 3a budget exhibit?
It includes a schedule for installation of modification kits
It may display RDT&E funding information as well as procurement funding information
It provides a listing of all items that will be purchased with advance procurement funds
It specifies the quantity of items funded each year, when applicable
5 Which of the following is NOT a primary input to the Programming Phase of the PPBE process ?
Fiscal Guidance (FG)
Combatant Commander’s Integrated Priority Lists (IPLs)
National Military Strategy (NMS)
6) The budget exhibit that provides a schematic display of major program milestones for a project is the:
R 3
R 4
R 2
R 1
7 Place these PPBE process Budgeting Phase activities in the order in which they most commonly occur:
Reclamas to draft Resource Management Decisions (RMDs ) (budgeting phase annex) 1 2 3 4
Preparation of budget inputs by operational organizations and field activities 1 2 3 4
OSD/OMB Budget Hearings 1 2 3 4
Component preparation of the Budget Estimate Submission (BES) 1 2 3 4
8) All of the following are reasons that an acquisition program may lose funding during the PPBE process, EXCEPT:
Providing vague justification for requested funding
Failure to comply with funding policies
Clear articulation of system needs and capabilities
Funding profile absorbs excessively large share of Component’s topline
9 The budget exhibit that provides detailed cost information for each project under a program element in RDT&E budget activities 4, 5, or 7 with funding of $1 million or more in any budget year is the:
R 3a
R 2
R 1
R 3
10) Which one of the following would likely trigger a question or adjustment by a budget analyst reviewing a budget request?
RDT&E program used a Procurement escalation index
Budget request is consistent with the program’s current cost estimates and schedule
Program’s obligations and expenditures are close to goals
11) Which one of the following is NOT a primary input to the Planning Phase of the PPBE process?
Defense Planning Guidance (DPPG)
National Military Strategy (NMS )
Chairman’s Program Recommendation (CPR)
National Security Strategy (NSS
Aug 29, 2021 | Uncategorized
RESEARCH ESSAY TOPIC In recent years there has been a general trend for accounting standard setters to issue accounting standards that measure assets and liabilities at ‘fair value’. Nevertheless, other valuation approaches (for example, historical cost, net realisable value and present value) are required for particular classes of assets and liabilities (as stipulated by particular accounting standards), with the result that we have a ‘mixed approach’ to measuring financial performance and financial position. (Adapted from Deegan 2009, Financial Accounting Theory, p204) 1. Discuss two AASB accounting standards that utilise different measurement approaches. 2. Describe the application of your chosen standards. QUESTION 2: Long term debt financing Casino.com Corporation is building a $25 million office building in Las Vegas and is financing the construction at an 80 percent loan to value ratio, where the loan is in the amount of $20,000,000. This loan has a ten year maturity, calls for monthly payments, and is contracted at an interest rate of 8 percent. Required: Using the above information, answer the following questions. a) What is the monthly payment? b) How much of the first payment is interest? c) How much of the first payment is principal? d) How much will Casino.com Corporation owe on this loan after making monthly payments for three years (the amount owed immediately after the thirty sixth payment)? e) Should this loan be refinanced after three years with a new seven year 7 percent loan, if the cost to refinance is $250,000? To make this decision, calculate the new loan payments and then the present value of the difference in the loan payments. f) Returning to the original ten year 8 percent loan, how much is the loan payment if these payments are scheduled for quarterly rather than monthly payments? g) For this loan with quarterly payments, how much will Casino.com Corporation owe on this loan after making quarterly payments for three years (the amount owed immediately after the twelfth payment)?
Aug 29, 2021 | Uncategorized
RESEARCH ESSAY TOPIC
In recent years there has been a general trend for accounting standard setters to issue accounting standards that measure assets and liabilities at ‘fair value’. Nevertheless, other valuation approaches (for example, historical cost, net realisable value and present value) are required for particular classes of assets and liabilities (as stipulated by particular accounting standards), with the result that we have a ‘mixed approach’ to measuring financial performance and financial position.
(Adapted from Deegan 2009, Financial Accounting Theory, p204)
- Discuss two AASB accounting standards that utilise different measurement approaches.
- Describe the application of your chosen standards.
QUESTION 2: Long term debt financing
Casino.com Corporation is building a $25 million office building in Las Vegas
and is financing the construction at an 80 percent loan to value ratio, where the
loan is in the amount of $20,000,000. This loan has a ten year maturity, calls for
monthly payments, and is contracted at an interest rate of 8 percent.
Required: Using the above information, answer the following questions.
a) What is the monthly payment?
b) How much of the first payment is interest?
c) How much of the first payment is principal?
d) How much will Casino.com Corporation owe on this loan after making
monthly payments for three years (the amount owed immediately after the
thirty sixth payment)?
e) Should this loan be refinanced after three years with a new seven year 7
percent loan, if the cost to refinance is $250,000? To make this decision,
calculate the new loan payments and then the present value of the difference
in the loan payments.
f) Returning to the original ten year 8 percent loan, how much is the loan
payment if these payments are scheduled for quarterly rather than monthly
payments?
g) For this loan with quarterly payments, how much will Casino.com
Corporation owe on this loan after making quarterly payments for three
years (the amount owed immediately after the twelfth payment)?
Aug 29, 2021 | Uncategorized
CASE STUDY (Process of Accounting).
Rajiv and Rahul were twin brothers. Rajiv was interested in computers and would find time to always work on computers either at college or at his friend’s place. His keen interest in subject made him take up computer software for his degree course. He pleaded with his father Mr. Raghunath and purchased a computer for his use at home. Rahul was always interested in sitting at his father’s shop at the nearby market place selling electrical appliances. He would often go and help his father at the shop after college hours.
Mr. Raghunath was happy that Rahul showed keen interest in his business but was worried about Ram who would always spend time with computers.
He felt that if the interest of the two sons be put together they could start a flourishing business of their own. The boom in the IT industry made him find ways to satisfy his son’s dream.
After college, the twins were drifting apart due to varied interest. Mr. Raghunath decided that this is the time for him to intervene and make decisions for his sons.
He decided to start a computer business for his sons. He asked Rahul, a commerce graduate to draw up a proposal for the same. Rahul came out with the following ideas:
The area they lived on ad run shop consisted of middle income group families and many of them did not possess computers at home
Their shop could provide the following services:
? Computer classes for various age groups.
? Computer using facilities on payment per hourly basis and printing of documents from computers.
? Internet access facility at the prevailing market rates by entering into contract with AIRTEL.
? Computer games corer for children
Rajiv jumped at the idea and they made up a common proposal. Rajiv wanted that they purchase 10 computers and start with first two areas of operation and expand when things go well.
The shop they had at the market place was a single storey building. Their father offered to build the first floor and give it to them for their business. He spent `5,00,000 on construction of the facility and gave them `5,00,000 for the business. The sons went to bank and put up their proposal and managed to get a loan to the extent of 75% of the cost of computers ` 4,00,000 with printers. As the bank manager was aware of the credit worthiness of Mr. Raghunath, he advanced loan of `3,00,000. Total amount to be repaid will be `3,60,000 including interest in three annual installments as follows:
? End of the first year = ` 1,30,000
? End of the 2nd year = ` 1,20,000
? End of the 3rd year = ` 1,10,000
(Where ` 1, 00,000 is the principal repayment)
They started business on 1st April 2010. Rahul decided to deposit ` 4, 40,000 in the bank.
He gave ` 1, 00,000 to computer company as 25% of the value of computers purchased and ` 3, 00,000 out of bank loan availed. He deposited ` 20,000 for electrical connection with the Electricity Board. He paid deposit of ` 1, 00,000 with AIRTEL for Internet connection. He used the telephone connection of the shop as there were two connections at the shop. The brothers got the computer café furnished by paying ` 50,000. Rahul got pamphlets printed and distributed at the cost of ` 4,500 in the surrounding colonies.
All payments were to be made by cheques. All the receipts were in cash to be deposited in the bank on the same day.
The students on the average paid a monthly fee of ` 500 for the three months computer evening classes.
There were a number of internet subscribers and receipts on account of internet facility was ` 10,000 a month in the first quarter on an average. They decided to buy and sell computer stationery also like floppy, discs, CDs etc.
At the end of the financial year, their results showed the following:
`
Total revenue including sale of computer stationery 4,98,000
Purchase of computer stationery 55,000
Electricity charges yet to be paid 1,24,000
Telephone charges 34,000
Petty expenses 12,000
Entertainment expenses 10,000
Maintenance expenses 10,000
There was a helper at their father’s shop, who agreed to clean up the computer café and fetched water to various visitors. For the additional services, he was paid ` 500 per month. They withdrew `.3, 000 by cheque each month for their personal expenses. They paid bank loan regularly.
The father was pleased at their son’s efficiency. He wanted to expand business.
Mean while Rahul received the pass book statement (for the end of March 2011) which showed the transactions as follows:
Particulars Deposit Withdrawal Balance `
Balance as on 1 march 2011 4,76,500 CR
Fees remitted direct into business account. 50,000 5,26,500 CR
Bank charges 500 5,26,000 CR
Withdrawal by cheque no…… 6,000 5,20,000 CR
Payment by cheque no……. 6,000 5,14,000 CR
Interest credited 2,000 5,16,000 CR
Balance as on 31 march 2011 5,16,000 (CR)
1. Analyze the transactions and explain the rules applied as per double entry system of bookkeeping.
2. Journalize the above transactions. Post them into the ledgers and prepare trial balance.
3. Prepare Bank Reconciliation Statement and make necessary adjustment in the books of account.
4. Prepare Profit and Loss account and Balance Sheet.
5. Charge depreciation @25% on computers, @10% on furniture, 5% on buildings.
6. Paisa can be rounded off.
7. What are the basic assumptions and concepts applied by Rahul while preparing the above statements?
8. Calculate profitability ratios.
9. They approached bank for further loan. Compute the ratios the banker will require before granting the loan.
10. Comment on the efficiency of the business if the net profit and gross profit in similar type of business concerns are 20% and 50% respectively.
Aug 29, 2021 | Uncategorized
Section A
Question 1
Campbell runs a clothing store and has produced the following trial balance for the year ended 31
st March 2012. The trial balance produced does not balance and he has asked for your help.
You are required to help Campbell by:
- Preparing journal entries to correct the trial balance and deal with all of the year end adjustments including the fire. (36 Marks)
- Producing an income statement for the year and a balance sheet as at 31st March 2012. (24 Marks)
Campbell – Trial Balance as at 31 March 2012
|
£’000 |
£’000 |
| Accumulated depreciation of land and buildings at 1.4.11. |
|
600 |
| Accumulated depreciation of shop fittings at 1.4.11 |
|
640 |
| Bank Interest |
40 |
|
| Bank loan at 5% |
|
1600 |
| Capital |
|
838 |
| Carriage inwards |
80 |
|
| Carriage outwards |
126 |
|
| Cash at bank |
|
116 |
| Discounts allowed |
124 |
|
| Discounts received |
|
58 |
| Drawings |
305 |
|
| Heat and light |
254 |
|
| Insurance |
295 |
|
| Inventory as at 1.4.11 |
402 |
|
| Land and buildings |
2400 |
|
| Office expenses |
320 |
|
| Payables (Creditors) |
|
440 |
| Purchases |
5992 |
|
| Provision for doubtful debts as at 1.4.11 |
|
32 |
| Receivables |
1216 |
|
| Returns Inwards |
240 |
|
| Returns outwards |
|
200 |
| Sales |
|
9840 |
| Shop fittings |
1240 |
|
| Wages |
1480 |
|
|
|
|
|
|
|
| TOTALS |
14514 |
14364 |
Adjustments:
- The land and buildings are shown at cost including £800,000 for the land. Buildings are depreciated on a straight line basis over 50 years
- Shop fittings are depreciated at 20% per annum on a reducing balance basis
- Campbell took goods valued at £24,000 from the shop for his own use during the year
- Insurance includes £36,000 for the year to December 2012
- An accrual for heat and light for £8000 is needed
- A bad debt of £16000 is to be written off and the provision for doubtful debts should be maintained at 2% of the remaining receivables
- Campbell sold some shop fittings on 31 March 2012 for £50,000 he has debited the cash at bank account but nothing else. The fittings cost £240,000 5 years ago.
- An interest payment on the bank loan is due. The loan was taken out in 2009.
- A payment to a supplier for £50,000 has been debited to payables and debited to the cash at bank account.
- A payment for insurance for £50,000 has been debited to the office expenses account and credited to the cash at bank account
- An invoice for clothing goods for £50,000 has been debited to office expenses and credited to payables
- On 31 March 2012 there was a fire in Campbell’s storeroom and all of his remaining inventory and his inventory records were destroyed. In addition to information in the trial balance you know that all sales are made based on a standard margin of 40% and that the inventory is covered by an insurance policy which covers the sales value of any inventory lost.
Section B – The following data is to be used for questions 2 AND 3
Sessegnon Ltd Income Statement for the year ended 31 December 2011
|
£000s |
£000s |
| Sales |
|
1,690 |
| Cost of Sales |
|
1,252 |
| Gross Profit |
|
438 |
| Admin expenses |
144 |
|
| Depreciation |
170 |
|
| Loss on sale of machinery |
60 |
374 |
| Operating Profit |
|
64 |
| Interest payable |
|
32 |
| Profit Before Tax |
|
32 |
| Tax |
|
10 |
| Profit After Tax |
|
22 |
Sessegnon Ltd Balance Sheet as at 31 December 2011
|
2011 |
2011 |
2010 |
2010 |
|
£000s |
£000s |
£000s |
£000s |
| Non Current Assets NBV |
|
4500 |
|
3274 |
| Current Assets |
|
|
|
|
| Inventory |
136 |
|
148 |
|
| Receivables |
160 |
|
190 |
|
| Cash at Bank |
|
296 |
180 |
518 |
| Total Assets |
|
4796 |
|
3792 |
| Non Current Liabilities |
|
|
|
|
| Bank Loan |
1500 |
|
640 |
|
| Current Liabilities |
|
|
|
|
| Trade Payables |
192 |
|
155 |
|
| Taxation |
15 |
|
60 |
|
| Interest Payable |
10 |
|
7 |
|
| Bank Overdraft |
115 332 |
|
222 |
|
| Total Liabilities |
|
1832 |
|
862 |
| Net Assets |
|
2964 |
|
2930 |
| Equity |
|
|
|
|
| Share Capital |
|
1000 |
|
950 |
| Share Premium Account |
|
30 |
|
20 |
| Retained Earnings |
|
1934 |
|
1960 |
|
|
2964 |
|
2930 |
Notes
- Dividends were paid during the year
- The assets disposed of had a book value of £260,000
Question 2
Prepare a cashflow statement for the year ended 31 December 2011 and describe what it tells us.
TOTAL = 40 Marks
Question 3
Analyse the profitability, the liquidity and the gearing of Sessegnon Ltd based on the information above and using appropriate financial ratios. Would a new supplier be willing to give them credit?
TOTAL = 40 Marks
Aug 29, 2021 | Uncategorized
Your final portfolio for the class will be to create a marketing plan for the company of your choice. You will need to select a company that you have not used for your other assignments in the class. Your plan information should address all areas covered in this course for a marketing plan.
Use the marketing plan information that is required reading for this module for your final portfolio project (Appendix 2A). The marketing plan document is essential to business strategy and is a focal point of this introductory class. The essential information of a marketing plan is outlined in this document and will serve as the blueprint for your portfolio project due this week.
Appendix 2A Marketing Plan:
http://highered.mcgraw hill.com/sites/0078028833/student_view0/marketing_planl
Your portfolio should be a Word document of 8 10 pages and professional in appearance. Review theProject Portfolio Guidelines and the Portfolio Project rubric available in the Course Information. Please be sure to use 6 8 sources to validate your opinions. The CSU Global Library is a good place to search for credible sources.
Aug 29, 2021 | Uncategorized
ACT350 Portfolio Project Page 1 of 2 Using these 2007 annual reports for The Coca Cola Company and PepsiCo, Inc., answer the following questions. Write these up in a Word document, clearly identifying your response to each lettered item. Show supporting calculations for the items lettered c, f, h, l, m, o, p, r, s and u. a. What are the primary lines of business of these two companies as shown in their notes to the financial statements? b. Which company has the dominant position in beverage sales? c. Which company has the greater percentage increase in total assets from 2006 to 2007? d. Which company had more depreciation and amortization expense for 2007? Provide a rationale as to why there is a difference in these amounts between the two companies. e. What type of income format(s) is used by these two companies? Identify any differences in income statement format between these two companies. f. What are the gross profits, operating profits, and net incomes for these two companies over the three year period 2005 2007? Which company has had better financial results over this period of time? g. What format(s) did these companies use to present their balance sheets? h. How much working capital did each of these companies have at the end of 2007? Speculate as to their rationale for the amount of working capital they maintain. i. What is the most significant difference in the asset structure of the two companies? What causes this difference? j. What were the two companies’ trends in net cash provided by operating activities over the period 2005 to 2007? k. What were the cash and cash equivalents reported by Coca Cola and PepsiCo at the end of 2007? What does each company classify as cash equivalents? l. What were the accounts receivable (net) for Coca Cola and PepsiCo at the end of 2007? Which company reports the greater allowance for doubtful accounts receivable (amount and percentage of gross receivable) at the end of 2007? m. What is the amount of inventory reported by Coca Cola at December 31, 2007, and by PepsiCo at December 29, 2007? What percent of total assets is invested in inventory by each company? n. What inventory costing methods are used by Coca Cola and PepsiCo? How does each company value its inventories? o. Compute and compare the inventory turnover ratios and days to sell inventory for Coca Cola and PepsiCo for 2007. Indicate why there might be a significant difference between the two companies. ACT350 Portfolio Project Page 2 of 2 p. What amount is reported in the balance sheets as property, plant, and equipment (net) of CocaCola at December 31, 2007, and of PepsiCo at December 29, 2007? What percentage of total assets is invested in property, plant, and equipment by each company? q. What depreciation methods are used by Coca Cola and PepsiCo for property, plant, and equipment? How much depreciation was reported by Coca Cola and PepsiCo in 2007, 2006, and 2005? r. Compute and compare the following ratios for Coca Cola and PepsiCo for 2007: Asset turnover, Profit margin on sales, and Rate of return on assets. s. What amounts for intangible assets were reported in their respective balance sheets by CocaCola and PepsiCo? What percentage of total assets is each of these reported amounts? t. On what basis and over what periods of time did Coca Cola and PepsiCo amortize their intangible assets? u. What were Coca Cola’s and PepsiCo’s net revenues (sales) for the year 2007? Which company increased its revenues more (dollars and percentage) from 2006 to 2007? v. Are the revenue recognition policies of Coca Cola and PepsiCo similar? Explain.
Aug 29, 2021 | Uncategorized
Simulation Exercise
In this exercise your group will define a job specification, create a job advertisement, conduct 3 interviews and make an appointment. Define how to measure performance outcomes, and get written feedback from the entire class. (10%) marks
Report
Then submit a 1500 word report outlining the job requirements, performance outcomes observed and any appraisal issues. Conclude with recommendations for example on how to maintain or improve performance or discuss how rewards can influence the outcomes.
Your report should contain the following elements:
·Description of Recruitment objectives
·Description of the context of the hiring
·Specification of the performance standards to be attained by the recruiter
·job specification
·job advertisement
·interview questions outline
·Specification of the feedback form
·Report on the recruitment experience in class
·Analysis of the feedback from observers
·Analysis and discussion of the feedback from observers
·Recommendations to improve the recruitment process.
·Where appropriate you should bring ideas form journal articles (at least 5) into the discussion.
In class activity assessment
Setting goals and performance expectations (3)
Quality of feedback provided (2)
Engagement of rest of class as participants (2)(20%) marks
Aug 29, 2021 | Uncategorized
there’s a group assignment
i have attached the file please read it 2 or 3 times so u get the proper knowledge what to do,
there’s two part =
1. its group exercise ( job specification, create a job advertisement, conduct 3 interviews and make an appointment.Define how to measure performance outcomes, and get written feedback from the entire class.) 10%marks
2. report writing(1500 word) about outlining the job requirements, performance outcomes observed and any appraisal issues .
just read the file that i have attached properly u will get it what to do it . 20% marks
please read the file proeprly its 10% + 20% total 30% marks assignment please
Aug 29, 2021 | Uncategorized
Draft Balanced Scorecard assignment
For a business that desires to be a responsible and profitable enterprise, students are required to construct a balanced scorecard that reflects the triple bottom line – economic, social and environmental aspects. The scorecard will specify critical success factors, performance indicators, targets, and appropriate initiatives
Additional information and suggestions for assessment 3 – Gekko Eco Hotels (GEH)
As a ‘up and coming’ manager in GEH, your ability to take a broad view of the organisation and work well in multidisciplinary teams has been noted – and you have appointed to overhaul the performance management system.
·GEH is considering the possibility of constructing a Balanced Scorecard, and has settled on a structure of 6 perspectives
·GEH is in the business of owning and running hotels with an ‘eco’ theme – meaning they must be environmentally and socially responsible, but capable of making a good profit in the medium to long term. There are 3 aspects to the business: eco sleep; eco eats; and eco tours
Some contextual notes
i. GEH has sold a large issue of shares, and has raised sufficient capital to go on a major expansion program
ii. A key financial focus is sales GEH is interested in revenue growth, not short term profit, for the next three years.
iii. GEH is interested in tracking the relationship between operating costs and revenue – although it is acknowledged this may suffer as they go through a growth and learning phase
iv. GEH does not want more than 70 cents debt per dollar of assets – since this is the limit that has been set by its bankers
v. GEH acknowledges that many of the sites for its hotels are in communities where women and people with disabilities have been at particular disadvantage in relation to employment
vi. GEH has concluded that it must continually develop new services/products’ and improve processes, and this should be done using the ideas and experiences of its customers and suppliers
vii. GEH notes that it cannot just say that the food and drink served in its eco eats restaurants provides a ‘healthy’ option, these products must be healthy in a discernible way
viii. GEH notes that small businesses have had trouble ‘getting off the ground’ in many of its current and potential locations – and those that have started up have been constrained in their ability to grow
ix. In villages surrounding the cities in which GEH operates, there is often a very poor water supply from wells or polluted streams
x. GEH’s business model relies on outsourcing of all laundry and cleaning services
xi. GEH purchases and runs the fleet of vehicles for its eco tours
Required
Prepare a draft BSC for discussion by senior management one that shows a holistic and balanced approach to performance measurement and management.
CSFs and associated KPIs > Measures > Targets > Initiatives
Steps (see format example below)
- Decide on your perspectives. Maybe start with the conventional 4 (financial, customers, internal processes and learning & growth); or 5 (e.g. ABB: financial, customers, internal processes, employees and innovation); or more (by adding a separate social and/or environmental perspective)
- Decide on your CSFs for each perspective. Note your specific concrete objectives as an action (words like … improve, promote, provide, develop; get; support; find). Note that each ‘CSF’ is an ‘objective’). Usually 3 to 5 CSFs for each perspective is deemed about right.
- Decide one or more KPIs that articulate each CSF
- For each CSF & associated KPIs, specify the one or more measures to be used
- Where possible, propose targets for a measure. Any targets are to be seen as a starting point for further investigation and debate – you may find some data in readings to use as proposed benchmarks
- Indicate the nature of 1 or 2 initiatives that you would propose to support each of your prioritized CSFs and associated KPIs
Aug 29, 2021 | Uncategorized
Student Name: ………………………………………………
(Block letters)
Student Number: ……………………………………………
HA3021 Company Law
Assessment 2
Assessment Value: 20%
Due: Week 10 in Class
Assignment Topic:
Andrew, Brian, Colin, Diana and Elizabeth were the directors of Gemsales Pty Ltd, a company engaged in the business of importing and supplying jewellery as wholesalers to the local market.
The company decided that as the market was becoming more competitive it needed to expand its business as it felt with increased volumes of sales it would be able to lower its prices and be more competitive. In order to do so it obtained a $4 million dollar loan from the Friendly Bank Ltd. $3 million was used to buy more stock and $1 million was used to buy a large new warehouse and showrooms from Traders Pty Ltd.
Colin was not at the meeting that had made these decisions as he was in hospital recovering from a serious accident. Elizabeth, as was her usual custom, had not attended the meeting but signed the requisite documentation agreeing to the expansion of the business and the getting of the loan. Diana who attended, said she did not know if she agreed and abstained from voting. Andrew and Brian both voted to go ahead with the expansion and the getting of the loan.
At about this time Brian has established contact with Victor, who was setting up a new business as a retailer of jewellery. Victor was looking for reliable suppliers, but said he would not deal with Gemsales Pty Ltd as he did not like Andrew, the Managing Director. Not wishing to miss out on such a lucrative business opportunity, Brian arranged to set up his own business as a jewellery wholesaler and a contract was entered into between Victor and Brian for the supply of jewellery.
Six months later, Brian resigned as a director. At the same time it was clear the company had over extended itself and was insolvent and could not pay the interest on its loans.
It also became clear that Brian was a major shareholder in Traders Pty Ltd and the other directors were unaware of this at the time of the purchase of the warehouse and showrooms. Furthermore, Brian had been approaching other established customers of Gemsales Pty Ltd and had secured orders for his own business.
Advise as to the liability of ALL the parties both under common law and the Corporations Law. In your answer you should address all the issues relating to each of the directors and their duties to the corporation.
PLEASE NOTE THE FOLLOWING INSTRUCTIONS:
References must be cited in Harvard referencing style (eg Smith 1992) .The assignment must include a bibliography (list of references used in the assignment). The Internet may be used for authoritative reference material provided the source, author, date of access, and site address is clearly shown in footnote format.
In addition to sources from the Internet, at least three hard copy sources must also be used. These can be either books or articles or both. Materials from any common law jurisdiction may be used.
Aug 29, 2021 | Uncategorized
Assignment Topic:
Andrew, Brian, Colin, Diana and Elizabeth were the directors of Gemsales Pty Ltd, a company engaged in the business of importing and supplying jewellery as wholesalers to the local market.
The company decided that as the market was becoming more competitive it needed to expand its business as it felt with increased volumes of sales it would be able to lower its prices and be more competitive. In order to do so it obtained a $4 million dollar loan from the Friendly Bank Ltd. $3 million was used to buy more stock and $1 million was used to buy a large new warehouse and showrooms from Traders Pty Ltd.
Colin was not at the meeting that had made these decisions as he was in hospital recovering from a serious accident. Elizabeth, as was her usual custom, had not attended the meeting but signed the requisite documentation agreeing to the expansion of the business and the getting of the loan. Diana who attended, said she did not know if she agreed and abstained from voting. Andrew and Brian both voted to go ahead with the expansion and the getting of the loan.
At about this time Brian has established contact with Victor, who was setting up a new business as a retailer of jewellery. Victor was looking for reliable suppliers, but said he would not deal with Gemsales Pty Ltd as he did not like Andrew, the Managing Director. Not wishing to miss out on such a lucrative business opportunity, Brian arranged to set up his own business as a jewellery wholesaler and a contract was entered into between Victor and Brian for the supply of jewellery.
Six months later, Brian resigned as a director. At the same time it was clear the company had over extended itself and was insolvent and could not pay the interest on its loans.
It also became clear that Brian was a major shareholder in Traders Pty Ltd and the other directors were unaware of this at the time of the purchase of the warehouse and showrooms. Furthermore, Brian had been approaching other established customers of Gemsales Pty Ltd and had secured orders for his own business.
Advise as to the liability of ALL the parties both under common law and the Corporations Law. In your answer you should address all the issues relating to each of the directors and their duties to the corporation.
Aug 29, 2021 | Uncategorized
to evaluate the payroll system for the Skip Rope Manufacturing Company. Part 2 will involve a
company called Kowal Manufacturing Company in which you are required to identify the
weaknesses in their current system among others. The two (2) cases are selected form you
textbook, Accounting Information Systems 12th edition by M.B. Romney and P.J. Steinbart.
The assignment aims to develop the student’s understanding of an information system in the area
of Human Resources Management and Payroll Cycle. The task also aims for the student to be
able to analyse a case and identify the threats and weaknesses and give corresponding
recommendations. This group project itself includes several assignments, each of which
comprises a part of the students’ task. However, it is well encouraged to include any additional
information that students may think will be useful in conducting financial statements analysis of
the selected company.
General Rules and Requirements:
The report should be prepared by a small group (with a maximum of three members) with the
Aug 29, 2021 | Uncategorized
As discussed in today’s meeting, Paper Inc. ‘s Board of Directors has requested a set of pro forma financial statements for the proposed acquisition of Scissor Company. For the past several years Paper Inc’s Executive Management Team hasreceived continued pressure from its investors for their lack of growth (markets share, revenue, and profits). On May 1, 2012 the Chief Executive Officer, Chief Operating Officer, and the Chief Financial Officer all resigned under duress (pressured by Board of Directors to resign). For the past twelve months, Paper Inc.’s Board of Directors and Executive Management Team had been in discussions with Scissor Company’s Board of Directors about a possible merger (Paper Inc. acquiring 75% of Scissor Company). The Paper Inc.Board has determined that this acquisition would be in the best interest of its shareholders. The Board has requested that the Accounting Department provide pro forma financial statements (income statement, statement of retained earnings, and balance sheet) for the proposed consolidated company. In addition, the Board has asked for a detailed explanation on how the consolidation process works. They specifically requested a walk through of the consolidation work paper. Detailed Request: 1. Prepare a consolidated balance sheet (January 1, 2012) – assuming the acquisition had taken place on January 1, 2012 (remember to provide work paper detail). 2. Prepare a pro forma income statement, statement of retained earnings, and balance sheet (assuming the acquisition had taken place on January 1, 2012) as of December 31, 2012 (remember to show work paper detail using the 3 section format). Apply the cost method. 3. Document all general ledger journal entries (REAL Entries) that would take place using the assumption above. Base Data: As of 1/1/12 the balance sheets for Paper Inc. (acquirer) and Scissor Company (acquired) immediately prior to the combination were as follows: Balance Sheet as of 12/31/11 Scissor Company Paper Inc. Scissor Company Fair Value Cash $750,000 $230,000 Same as BV Current Assets 207,000 6,000 Same as BV PPE (net) 813,000 54,000 Same as BV Land 150,000 25,000 $50,000 Total 1,920,000 315,000 Liabilities 850,000 90,000 Same as BV Common Stock, $20 par 825,000 120,000 APIC 109,000 30,000 Retained Earnings 136,000 75,000 Total 1,920,000 315,000 Key Data and Assumptions: • As of 12/31/11 FV of Scissor Company net assets is equal to BV with the exception of Land, which has a FV of $50,000. On January 1, 2012, Paper Inc. common stock had a fair value of $30 per share. It is expected that Paper Inc.’s common stock will have a fair value of $30 per share on 12/31/2012. • Assume that Paper Inc. issues 9,600 shares of its $20 par value common stock for 75% of Skins outstanding stock on January 1, 2012. • Assume that the income statements for Paper Inc. and Scissor are the following in fiscal year 2012. In addition, assume Paper Inc. had dividends declared of $40,000 and Scissor Company declared $20,000. Income Statement Paper Inc. Scissor Revenue $900,000 $350,000 Dividend Income 15,000 Total revenues 915,000 350,000 COGS 550,000 150,000 Operating Expenses 150,000 100,000 700,000 250,000 Net Income 215,000 100,000 Note: Ignore tax impact Net Asset change for the year should be added to the cash account
Aug 29, 2021 | Uncategorized
You have been hired to evaluate the payroll system for the Skip Rope Manufacturing Company. The company processes its payroll in house. Use Table 15 1 as a reference to prepare a list of questions to evaluate Skip Rope’s internal control structure as it pertains to payroll processing for its factory employees. Each question should be phrased so that it can be answered with either a yes or a no; all no answers should indicate potential internal control weaknesses. Include a third column listing the potential problem that could arise if that particular control were not in place.
Aug 29, 2021 | Uncategorized
There are 2 questions only.
Please give me step by step answer
Aug 29, 2021 | Uncategorized
9 39. Choosing an Activity Based Costing System Pickle Motorcycles. Inc. (PM!), manufactures three motorcycle models: a cruising bike (Route 66), a street bike (Main Street), and a starter model (Alley Cat). Because of the different materials used production processes for each model differ significantly in terms of machine types and time re quirements. Once parts arc produced, however, assembly time per unit required for each type of bike is similar. For this reasoi , PMl allocates overhead on the basis of machine hours. Last year,
Aug 29, 2021 | Uncategorized
At year end, the following items have not yet been recorded. a. Interest at 6% is receivable on the note for one full year. b. Rent paid in advance at December 31, $10,800 (originally charged to expense). c. Accrued salaries at December 31, $11,600. d. Insurance expired during the year, $4,000. e. Estimated bad debts, 1% of gross sales. (Hint: ignore existing balance of allowance for doubtful accounts) f. Depreciation on furnittut and equipment, 10% per year.
Instructions (a) Prepare the necessary adjusting entries. (b) Prepare the necessary closing entries.
Aug 29, 2021 | Uncategorized
You are to research for an event (NOT BP Gulf of Mexico or Exxon Valdez as they are likely to be discussed with you) where a company created a situation where their legitimacy was compromised. Considering the aspects of PAT, System oriented theories and/or Social & Environmental, discuss the case. This should be in a report format, introducing the case, discussing the issues, how did they manage the situation, the conclusion (outcomes) as well as your recommendations and views. Note: the case must be within the past few years so that information is easily sourced. Sources that you will find useful include; Websites: • AASB (website of Australian Accounting Standards Board) • IASB (website of International Accounting Standards Board) • FASB (website of US based Financial Accounting Standards Board • ICAA (Institute of Chartered Accountants in Australia) • CPAA (Certified Practising Accountants Australia) It is also recommended that you utilize Proquest and Google Scholar as well as Financial review, the Age and BRW (Business Review Weekly) Marks will be given on the soundness of your argument, research conducted, quality of report (presentation, referencing) and the understanding of the issues. Each report will be assessed individually.
Aug 29, 2021 | Uncategorized
Using the financial statements for Oracle Corporationand Microsoft Corporation, respectively, you will calculate and compare the financial ratios listed further down this document
for the fiscal year ending 2011 and prepare your comments about the liquidity, solvency and profitability of the two companies based on your ratio calculations
Aug 29, 2021 | Uncategorized
Wilmington University
BAC 301 – Cost Accounting I
Test – Chapters 1, 2 and 3
Problem #1
Complete a performance report for the month of May, 2007 for the Daily Bulletin, a regional newspaper showing four columns:
- Actual results
- Budgeted amount
- Difference: actual result minus budgeted amount
- Difference as a percentage of budged amount
Use the following data:
Adverting pages sold: 910
Budgeting advertising pages 900
Advertising revenue $4,368,000
Budget advertising revenue $4,410,000
Give the variances for:
- Number of pages as a dollar and percentage.
- Total advertising revenue as a dollar and percentage.
- Average rate per page as a dollar and percentage.
Does the report indicate any cause of managerial investigation?
Problem #2
Evans Inc. had the following activities during the year.
Direct materials:
Beginning inventory $ 40,000
Purchases 123,200
Ending inventory 20,800
Direct manufacturing labor 32,000
Manufacturing overhead 24,000
Beginning work in process inventory 1,600
Ending work in process inventory 8,000
Beginning finished goods inventory 48,000
Ending finished goods inventory 32,000
- What is the cost of direct materials used during the year
- What is the cost of goods manufacturing for the year
- What is the cost of goods sold for the year
- What amount of prime costs was added to production during the year
- What amount of conversion costs was added to production during the year
Problem #3
Ballpark Concessions currently sells hot dogs. During a typical month, the stand reports a profit of $9,000 with sales of $50,000, fixed costs of $21,000, and variable costs of .64 per hot dog.
Next year the company plans to start selling nachos for $3 per unit.Nachos will have a variable cost of $0.72 and new equipment and personnel to produce nachos will increase monthly fixed costs by $8,808.Initial sales of nachos should total 5,000 units.Most of the nacho sales are anticipated to come from current hot dog purchasers, therefore, monthly sales of hot dogs are expected to decline to $20,000.
After the first year of nacho sales, the company president believes that hot dog sales will increase to $33,750 a month and nacho sales will increase to 7,500 units a month.
- Determine the monthly breakeven sales in dollars before adding nachos.
- Determine the monthly breakeven sales during the first year of nacho sales, assuming a constant sales mix of 1 hotdog and 2 units of nachos.
Aug 29, 2021 | Uncategorized
2.1 Academic integrity means that all work which is presented is produced by the student alone, with all sources and collaboration fully acknowledged. 2.2 Any failure to meet the requirements of academic integrity in any form of academic work will be regarded as a breach of the requirements of academic integrity and, depending on the circumstances and the nature of the breach, consequences including penalties may be expected to follow. Breaches of academic integrity may include plagiarism, collusion, fabrication, falsification, double submission of work and misconduct in examinations. 2.2.1 Plagiarism Plagiarism is the use of another person’s words or ideas as if they were one’s own. It may occur as a result of lack of understanding and/or inexperience about the correct way to acknowledge and reference sources. It may result from poor academic practice, which may include poor note taking, careless downloading of material or failure to take sufficient care in meeting the required standards. It may also occur as a deliberate misuse of the work of others with the intent to deceive. It may include, but is not restricted to: ? presenting extracts, without quotation marks and/or without appropriate referencing, from books, articles, theses, other published or unpublished works, films, music, choreography, working papers, seminar or conference papers, internal reports, computer software codes, lecture notes or tapes, numerical calculations, data or work from another student. In such cases, it is not adequate merely to acknowledge the source. This applies to material accessed in hard copy, electronically or in any other medium; ? close paraphrasing of sentences or whole paragraphs with or without acknowledgement by referencing of the original work; ? adopting ideas or structures from a source without acknowledgment; ? using source codes and data from other’s work without acknowledgement; ? arranging for someone else to undertake all or part of a piece of work and presenting that work as one’s own; ? submitting another student’s work whether or not it has been previously submitted by that student.
Aug 29, 2021 | Uncategorized
Auditing ACC 254
Part three — Case
Hotel Heaven is just a stroke away
The hotel is situated on the beautiful Island of St Maarten and has been in operation for 15 years now. The hotel management is experienced staff. The hotel has a relatively large staff (25 persons in service). Payroll is a large part of operating expenses. For businesses in St Maarten it is always hard to find qualified people.
The hotel has 40 high standard rooms and 1 bridal suite. The hotel is open throughout the year and has fluctuating occupancy percentages.
Limited high quality hotels with superior service are available in St. Maarten. There are no other hotels like Heaven is just a stroke away in Dutch St. Maarten. Managing a hotel is very expensive in St. Maarten.
Currently Sint Maarten has a stable government. The hotel currently has good relationships with Government. Government issues rules and regulations for hotels to maintain proper standards and especially with regard to personnel there are many rules to abide by. Regular checks are made by government institutions to see to it that the hotel is living up to the regulations. Non abiding can, when found by government, result in high fines.
The economy of St Maarten is currently suffering from the financial crisis in the USA. An unstable economy will have a direct impact on the hotel as the guests may cancel their bookings, or even not make anymore bookings. The hotel guests mainly comprise of returning guests. Almost 25% of the guests have even been coming to the hotel for more than 10 years in a row now. The ave a room revenue per ni it for the hotel is a lot hiezLLhan the average hotels in St Maarten.
The objective of the hotel is to provide an unforgettable holiday experience with full Lservice staff and rooms that are more than perfect.
Next to the management of the hotel there is a board of shareholders. The hotel is owned by a group of 5 shareholders for which the capital is divided equally. The five viol shareholders meet on a bi monthly basis to discuss the status of the hotel. Prior to the 00) meeting they receive financial overviews of the hotel. The financial manager of the hotel is the cousin of one of the shareholders. This shareholder also operates a wholesale operation for hotels on St Maarten where foods and other stock such as plates and cutlery can be purchased. The other shareholders have no relationships to management. The general manager of the hotel has been with the hotel for 10 years now. The audit assignment has been given to your company by the board of the 5 shareholders.
The general manager has weekly meetings with department heads. Management discusses the key risks faced by the organizations on regular bases (for most 9.N N issues weekly): Management is involved in the daily activities. Management receives al
Final exam 6 of 8
Aug 29, 2021 | Uncategorized
Solving a case study
Aug 29, 2021 | Uncategorized
| Requirement 2: |
|
Calculate Overhill’s contribution margin ratio and its total contribution margin at each sales level indicated in the cost data table assuming the company sells each bike for $650. (Round your answers to 2 decimal places. Omit the “%” sign in your response.)
|
|
500 Units |
800 Units |
1,000 Units |
| Total contribution margin |
$ |
$ |
$ |
| Contribution margin ratio |
% |
% |
% |
|
| Requirement 3: |
|
Calculate profit at each of the sales levels assuming a sales price of $650. (Negative amount should be indicated by a minus sign. Omit the “$” sign in your response.)
|
|
500 Units |
800 Units |
1,000 Units |
| Profit / Loss |
$ |
$ |
$ |
Aug 29, 2021 | Uncategorized
The income statement, balance sheet, and additional information for Video Phones, Inc., are provided.
VIDEO PHONES, INC.
Income Statement
For the Year Ended December 31, 2012 |
| Revenues |
|
$ |
3,036,000 |
| Expenses: |
|
|
|
| Cost of goods sold |
$ 1,950,000 |
|
|
| Operating expenses |
858,000 |
|
|
| Depreciation expense |
27,000 |
|
|
| Loss on the sale of land |
8,000 |
|
|
| Interest expense |
15,000 |
|
|
| Income tax expense |
48,000 |
|
|
|
|
|
|
| Total expenses |
|
|
2,906,000 |
|
|
|
|
| Net income |
|
$ |
130,000 |
|
|
|
|
|
VIDEO PHONES, INC.
Balance Sheet
December 31 |
|
2012 |
2011 |
| Assets |
|
|
| Current assets: |
|
|
| Cash |
$ 186,000 |
$ 144,000 |
| Accounts receivable |
81,000 |
60,000 |
| Inventory |
105,000 |
135,000 |
| Prepaid rent |
12,000 |
6,000 |
| Long term assets: |
|
|
| Investment |
105,000 |
0 |
| Land |
210,000 |
240,000 |
| Equipment |
270,000 |
210,000 |
| Accumulated depreciation |
(69,000) |
(42,000) |
|
|
|
| Total assets |
$ 900,000 |
$ 753,000 |
|
|
|
| Liabilities and Stockholders’ Equity |
|
|
| Current liabilities: |
|
|
| Accounts payable |
$ 66,000 |
$ 81,000 |
| Interest payable |
6,000 |
10,000 |
| Income tax payable |
15,000 |
14,000 |
| Long term liabilities: |
|
|
| Notes payable |
285,000 |
225,000 |
| Stockholders’ equity: |
|
|
| Common stock |
300,000 |
300,000 |
| Retained earnings |
228,000 |
123,000 |
|
|
|
| Total liabilities and equity |
$ 900,000 |
$ 753,000 |
|
|
|
|
| Additional Information for 2012: |
| 1. |
Purchase investment in bonds for $105,000. |
| 2. |
Sell land costing $30,000 for only $22,000, resulting in an $8,000 loss on sale of land. |
| 3. |
Purchase $60,000 in equipment by borrowing $60,000 with a note payable due in three years. No cash is exchanged in the transaction.
|
| 4. |
Declare and pay a cash dividend of $25,000. |
| Required: |
|
Prepare the statement of cash flows using the indirect method. Disclose any noncash transactions in an accompanying footnote. (Amounts to be deducted should be indicated with minus sign. Omit the “$” sign in your response.)
|
VIDEO PHONES, INC.
Statement of Cash Flows Indirect Method
For the Year Ended December 31, 2012 |
| Cash Flows from Operating Activities |
|
|
| (Click to select)Net incomeNet loss |
$ |
|
| Adjustments for noncash effects: |
|
|
| (Click to select)Increase in accounts receivableDepreciation expenseDecrease in accounts receivableIncrease in income tax payableDecrease in inventoryDecrease in accounts payableLoss on sale of landDecrease in income tax payableIncrease in accounts payableIncrease in inventory |
|
|
| (Click to select)Decrease in accounts payableDecrease in inventoryDecrease in income tax payableDecrease in accounts receivableLoss on sale of landIncrease in inventoryIncrease in income tax payableIncrease in accounts payableDepreciation expenseIncrease in accounts receivable |
|
|
| Changes in current assets and current liabilities: |
|
|
| (Click to select)Purchase investment in bondsIncrease in income tax payableDecrease in accounts payablePurchase equipment issuing a note payableIncrease in prepaid rentDecrease in interest payableDecrease in inventoryIncrease in accounts receivableLoss on sale of landDepreciation expense |
|
|
| (Click to select)Purchase equipment issuing a note payableIncrease in accounts receivableDecrease in inventoryDecrease in interest payableIncrease in prepaid rentDecrease in accounts payableLoss on sale of landPurchase investment in bondsDepreciation expenseIncrease in income tax payable |
|
|
| (Click to select)Purchase investment in bondsLoss on sale of landPurchase equipment issuing a note payableIncrease in income tax payableDecrease in interest payableIncrease in prepaid rentDecrease in inventoryDepreciation expenseDecrease in accounts payableIncrease in accounts receivable |
|
|
| (Click to select)Loss on sale of landDecrease in inventoryDepreciation expenseDecrease in interest payablePurchase equipment issuing a note payablePurchase investment in bondsIncrease in accounts receivableIncrease in income tax payableIncrease in prepaid rentDecrease in accounts payable |
|
|
| (Click to select)Decrease in accounts payablePurchase investment in bondsIncrease in prepaid rentDepreciation expensePurchase equipment issuing a note payableIncrease in accounts receivableIncrease in income tax payableDecrease in interest payableDecrease in inventoryLoss on sale of land |
|
|
| (Click to select)Decrease in accounts payablePurchase equipment issuing a note payableDecrease in interest payableDepreciation expenseIncrease in prepaid rentIncrease in accounts receivableDecrease in inventoryIncrease in income tax payableLoss on sale of landPurchase investment in bonds |
|
|
|
|
|
| Net cash flows from operating activities |
|
$ |
| Cash Flows from Investing Activities |
|
|
| (Click to select)Increase in income tax payableDepreciation expenseDecrease in accounts payableDecrease in interest payablePurchase investment in bondsDecrease in inventoryPurchase equipment issuing a note payableIncrease in accounts receivableSale of landIncrease in prepaid rent |
|
|
| (Click to select)Sale of landPurchase investment in bondsIncrease in income tax payableDecrease in accounts payableIncrease in prepaid rentDecrease in inventoryDepreciation expensePurchase equipment issuing a note payableIncrease in accounts receivableDecrease in interest payable |
|
|
|
|
|
| Net cash flows from investing activities |
|
|
| Cash Flows from Financing Activities |
|
|
| (Click to select)Increase in income tax payableIncrease in accounts receivableDecrease in inventoryDecrease in interest payablePayment of cash dividendsPurchase investment in bondsIncrease in prepaid rentDepreciation expenseLoss on sale of landDecrease in accounts payable |
|
|
|
|
|
| Net cash flows from financing activities |
|
|
|
|
|
| (Click to select)Net decrease in cashNet increase in cash |
|
|
| (Click to select)Cash at the end of the periodCash at the beginning of the period |
|
|
|
|
|
| (Click to select)Cash at the end of the periodCash at the beginning of the period |
|
$ |
|
|
|
| Noncash Activities |
|
|
| (Click to select)Purchase equipment issuing a note payableDecrease in inventoryIncrease in accounts receivableDecrease in interest payablePurchase investment in bondsDecrease in accounts payableIncrease in income tax payableDepreciation expenseIncrease in prepaid rentSale of land |
|
$ |
Aug 29, 2021 | Uncategorized
points
| The following income statement and balance sheet for Virtual Gaming Systems are provided. |
VIRTUAL GAMING SYSTEMS
Income Statement
For the year ended December 31, 2012 |
| Sales revenue |
|
$3,036,000 |
| Cost of goods sold |
|
1,950,000 |
| |
|
|
| Gross profit |
|
1,086,000 |
| Expenses |
|
|
| Operating expenses |
858,000 |
|
| Depreciation expense |
27,000 |
|
| Loss on sale of land |
8,000 |
|
| Interest expense |
15,000 |
|
| Income tax expense |
48,000 |
|
| |
|
|
| Total expenses |
|
956,000 |
| |
|
|
| Net income |
|
$ 130,000 |
|
|
|
|
VIRTUAL GAMING SYSTEMS
Balance Sheet
December 31 |
|
2012 |
2011 |
| Assets |
|
|
| Current assets: |
|
|
| Cash |
$186,000 |
$144,000 |
| Accounts receivable |
81,000 |
60,000 |
| Inventory |
105,000 |
135,000 |
| Prepaid rent |
12,000 |
6,000 |
| Long term assets: |
|
|
| Investment in bonds |
105,000 |
0 |
| Land |
210,000 |
240,000 |
| Equipment |
270,000 |
210,000 |
| Less: Accumulated depreciation |
(69,000) |
(42,000) |
| |
|
|
| Total assets |
$900,000 |
$753,000 |
| |
|
|
| Liabilities and Stockholders’ Equity |
|
|
| Current liabilities: |
|
|
| Accounts payable |
$ 66,000 |
$ 81,000 |
| Interest payable |
6,000 |
3,000 |
| Income tax payable |
15,000 |
14,000 |
| Long term liabilities: |
|
|
| Notes payable |
285,000 |
225,000 |
| Stockholders’ equity: |
|
|
| Common stock |
300,000 |
300,000 |
| Retained earnings |
228,000 |
130,000 |
| |
|
|
| Total liabilities and stockholders’ equity |
$900,000 |
$753,000 |
| |
|
|
|
| Required: |
|
Assuming that all sales were on account, calculate the following risk ratios for 2012. (Round your intermediate and final answers to 1 decimal place. Omit the “%” sign in your response)
|
| Risk Ratios |
| 1. Receivables turnover ratio |
|
times |
| 2. Average collection period |
|
days |
| 3. Inventory turnover ratio |
|
times |
| 4. Average days in inventory |
|
days |
| 5. Current ratio |
|
to 1 |
| 6. Acid test ratio |
|
to 1 |
| 7. Debt to equity ratio |
|
% |
| 8. Times interest earned ratio |
|
times |
Aug 29, 2021 | Uncategorized
Company Law Assignment Topic: Andrew, Brian, Colin, Diana and Elizabeth were the directors of Gemsales Pty Ltd, a company engaged in the business of importing and supplying jewellery as wholesale
Aug 29, 2021 | Uncategorized
Customer Orders
The salesperson receives a hardcopy customer order from the customer. The salesperson enters the customer order into the salesperson’s mobile device using the Sales Order Program which retrieves information from the Customer Master file, enters data into the Sales Order Transaction file, and updates the information in the Customer Master file. The salesperson forwards the hardcopy of the customer order to the sales manager.
The sales manager receives the hardcopy of the customer order from the salesperson. The sales manager views the salesperson’s order entered into the Sales Order Program by retrieving data from the Customer Master File and the Sales Order Transaction file. The sales manager then manually compares the hardcopy of the customer order with the sales order on the computer screen and approves the hardcopy with a signature. The sales manager then files the signed hardcopy in the Approved Customer Orders file cabinet by customer number. The sales manager prints a picking ticket for each sales order by using the Sales Order Program and retrieving information from the Sales Order Transaction file. The sales manager sends the picking ticket to the warehouse clerk.
Instructions:
Create one file in Excel with two worksheets (use a new, blank file).
Create a Table of Entities and Activities on the first worksheet.
Create a Document Flowchart on the second worksheet.
Aug 29, 2021 | Uncategorized
Cost Accounting and Decision Making (ACC2CAD) Semester 1, 2013
Mini case study 5: Cost Allocation
Due: Submit your report via LMS before 5 pm, Friday, 24th May 2013. (Penalty will apply to late submissions. 1 mark will be deducted with each day’s delay)
This mini case study is designed to encompass the following graduate skills/capabilities, written communication, critical thinking, team work and presentation of information/information literacy.
THIS IS A TEAM ASSIGNMENT. Your team may have 2 or 3 members and the team members can be from any of the ACC2CAD tutorials. Each team submits only one assignment. Please ensure you include your team members’ names and student numbers on the cover sheet (refer to p.3). Individuals who want to submit the assignment on their own are also allowed in Case Study 5 and no group penalty will be applied.
Delaware, a computer software consulting company, has three major functional areas: computer programming, information systems consulting, and software training. Julie Waltz, a pricing analyst in the accounting department, has been asked to develop total costs for the functional areas. These costs will be used as a guide in pricing a new contract. In computing these costs, Julie is considering two different methods of the departmental allocation approach to allocate overhead costs: the direct method and the step down method. She assembled the following data from the two service departments, information systems and facilities.
1
Aug 29, 2021 | Uncategorized
Exercise 24.11
STATEMENT OF CASH FLOWS FOR SOLE TRADER AND ANALYSIS
The financial statements for the business of Jet’s Ski Equipment are shown below:
LO 5
JET’S SKI EQUIPMENT Comparative Statements of Financial Position as at 30 June
2013 2014 ASSETS Cash at bank $ 27 000 Accounts receivable $ 42 000 51 000 Inventory 144 000 168 000 Store equipment 90 000 108 000 Accumulated depreciation — store equipment (27 000) (45 000) Land 120 000 60 000 Buildings 180 000 180 000 Accumulated depreciation — buildings (9 000) (15 000) $540 000 $534 000 LIABILITIES AND EQUITY Accounts payable $ 72 000 $ 78 000 Bank overdraft 30 000 J. Waters, Capital 438 000 456 000 $540 000 $534 000
JET’S SKI EQUIPMENT Income Statement for year ended 30 June 2014
INCOME Sales revenue $270 000 EXPENSES Cost of sales $144 000 Depreciation — store equipment 21 000 Depreciation — buildings 6 000 Other expenses 60 000 Loss on sale of land 12 000 Loss on sale of equipment 9 000 252 000 PROFIT $ 18 000
Additional information (a) All purchases and sales of inventories are on credit. (b) On 1 July 2013, J. Waters injected a further capital contribution of $21000 cash into the business. (c) During the year, store equipment costing $18 000 with a carrying amount of $15 000 was sold for $6000 cash. (d) Half the land on hand at the beginning of the year was sold for $48 000 cash. (e) During the year, the owner withdrew $6000 from the business bank account in order to pay his personal income tax bill and $300 per week for 50 weeks for private consumption. Required A. Prepare the statement of cash flows for Jet’s Ski Equipment for the year ended 30 June 2014, using the direct method. B. Comment on the cash flow position as shown in the entity’s statement of cash flows.
Statement of cash flows Chapter 24 1027
Aug 29, 2021 | Uncategorized
Chatter Corporation operates in an industry that has a high rate of bad debts. Before any year end adjustments, the balance in Chatter’s Accounts Receivable account was $389,000 and the Allowance for Doubtful Accounts had a debit balance of $5,000. The year end balance reported in the balance sheet for the Allowance for Doubtful Accounts will be based on the aging schedule shown below:
| Days Account Outstanding |
Amount |
Probability of Collection |
| Less than 16 days |
$293,000 |
.97 |
| Between 16 and 30 days |
$102,000 |
.89 |
| Between 31 and 45 days |
$ 70,000 |
.83 |
| Between 46 and 60 days |
$ 55,000 |
.76 |
| Between 61 and 75 days |
$ 28,000 |
.60 |
| Over 75 days |
$ 8,000 |
.30 |
- What is the appropriate balance for the Allowance for Doubtful Accounts at year end?
- Show how accounts receivable would be presented on the balance sheet.
- What is the dollar effect of the year end bad debt adjustment on the before tax income?
Aug 29, 2021 | Uncategorized
Lander Inc. had the following balance sheet at December 31, 2008:
LANDER, INC.
Balance Sheet
December 31, 2008 |
| Cash |
$45,300 |
|
Accounts payable |
$33,800 |
| Accounts receivable |
$18,900 |
|
Bonds payable |
$35,000 |
| Investments |
$25,000 |
|
Common stock |
$190,000 |
| Plant assets (net) |
$78,000 |
|
Retained earnings |
$18,400 |
| Land |
$110,000 |
|
|
|
|
|
|
|
|
| Total Assets |
$277,200 |
|
Total Liabilities & Equity |
$277,200 |
During 2009 the following occurred.
- Lander liquidated its available for sale investment portfolio at a loss of $6,500.
- A tract of land was purchased for $31,000.
- An additional $20,000 in common stock was issued at par.
- Dividends totaling $5,000 were declared and paid to stockholders.
- Net income for 2009 was $29,000, including $7,000 in depreciation expense.
- Land was purchased through the issuance of $25,000 in additional bonds.
- At December 31, 009, Cash was $72,650, Accounts Receivable was $35,250, and Accounts Payable was $32,500.
- Prepare a statement of cash flows for the year 2009 for Lander.
- Prepare the balance sheet as it would appear at December 31, 2009.
Aug 29, 2021 | Uncategorized
Listed below are the transactions for Hunter Marketing. Inc. for the month of July:
July 1 Hunter begins his marketing company and invests $50,000 cash.
July 5 Purchases computers and office equipment on account from OfficeMax for $10,250.
July 6 Pays rent for office space $800 for the month.
July 6 Employs a secretary, Mary Jones.
July 8 Purchases office supplies for cash $960.
July 9 Receives $2,430 from customer for services performed.
July 11 Pays miscellaneous office expenses $375.
July 13 Bills customers $4,900 for serviced performed.
July 15 Pays Office Max $3,500 on account.
July 18 Withdraws $2,000 from business for personal use.
July 20 Receives $1,900 from customers on account.
July 23 Bills customers $6,320 for services performed.
July 30 Pays the following expenses in cash: office salaries $2,300 and utilities $400.
- Enter the transactions shown above in appropriate general ledger accounts (use T accounts). Use the following ledger accounts: Cash, Accounts Receivable, Supplies on Hand, Office Equipment, Accumulated Depreciation, Accounts Payable, Hunter Capital, Service Revenue, Rent Expense, Miscellaneous Office Expense, Office Salaries Expense, Supplies Expense, Utilities Expense, Depreciation Expense and Income Summary.
- Prepare an unadjusted trial balance.
- Record depreciation using a 5 year life on the office equipment, the straight line method, and no salvage value. Round to whole numbers. Also, record an adjustment for office supplies used in the amount of $510.
- Prepare an adjusted trial balance.
- Prepare an income statement, a statement of retained earnings, and an unclassified balance sheet.
- Close the ledger.
- Prepare a post closing trial balance.
Aug 29, 2021 | Uncategorized
In working out your responses to the Discussion Question, you should choose examples from your own experience or find appropriate cases on the Web that you can discuss. Credit will be given for references you make to relevant examples from real companies.
Identify key reasons that organisations may need to hold inventories. What factors may lead an organisation to change the level of inventories that it holds? How could such a decision affect the other elements of working capital?
The answer:
1. should not be less than 500 word
2. Use and indicate three references (harvard referencing), one of them is Atrill, P. & McLaney, E. (2012) Management accounting for decision makers. 7th ed. Harlow, England : Pearson Education Ltd. ( the referencing sector is not counted as part of the answer)
Thank you
Aug 29, 2021 | Uncategorized
2—Voidable transactions 588FA Unfair preferences (1) A transaction is an unfair preference given by a company to a creditor of the company if, and only if: (a) the company and the creditor are parties to the transaction (even if someone else is also a party); and (b) the transaction results in the creditor receiving from the company, in respect of an unsecured debt that the company owes to the creditor, more than the creditor would receive from the company in respect of the debt if the transaction were set aside and the creditor were to prove for the debt in a winding up of the company; even if the transaction is entered into, is given effect to, or is required to be given effect to, because of an order of an Australian court or a direction by an agency. (2) For the purposes of subsection (1), a secured debt is taken to be unsecured to the extent of so much of it (if any) as is not reflected in the value of the security.
Aug 29, 2021 | Uncategorized
The purpose of the Paper is for you to show learning achieved in the course by describing your understanding and application of knowledge in the field of accounting. The Paper should also focus on real life, real time application of topics covered in this course; the uses you have seen and the uses you can envision. Focus of the Project Select one of the major topics listed below using course topics previously referenced as the basis for the paper. Explain the role of the FASB in monitoring and controlling business reporting and accounting practices in the modern organization.
Aug 29, 2021 | Uncategorized
A company reports the following beginning inventory and purchases for January. On January 26 the company sells 360 units. What is t ts155 units that remain in ending inventory at January, 31, assuming costs are assigned based on a perpetual inventory system and use of FIFO? (Round per unit costs to three decimals, but inventory balances to the dollar.)
Units Beginning inventory on January I 320 Purchase on January 9 85 Purchase on January 25 110
Unit Cost
$6.00 6.40 6.60
440111r L — ______ Refer to the information in QS 5 1 and assume the perpetual inventory systems is used determine the costs assigned to ending inventory when costs are assigned based on LIFO.) Round per unit costs to three decimals, but inventory balances to the dollar.)
Refer to the information in QS 5 1 and assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on weighted average. (Round per unit costs to three decimals. but inventory balances to the dollar.)
Aug 29, 2021 | Uncategorized
|
The Varone Company makes a single product called a Hom. The company has the capacity to produce 40,000 Homs per year. Per unit costs to produce and sell one Hom at that activity level are:
|
| Direct materials |
$31 |
| Direct labor |
$21 |
| Variable manufacturing overhead |
$16 |
| Fixed manufacturing overhead |
$18 |
| Variable selling expense |
$10 |
| Fixed selling expense |
$7 |
|
The regular selling price for one Hom is $100. A special order has been received at Varone from the Fairview Company to purchase 7,900 Homs next year at 10% off the regular selling price. If this special order were accepted, the variable selling expense would be reduced by 20%. However, Varone would have to purchase a specialized machine to engrave the Fairview name on each Hom in the special order. This machine would cost $11,900 and it would have no use after the special order was filled. The total fixed costs, both manufacturing and selling, are constant within the relevant range of 30,000 to 40,000 Homs per year. Assume direct labor is a variable cost.
|
|
If Varone can expect to sell 31,000 Homs next year through regular channels and the special order is accepted at 10% off the regular selling price, the effect on net operating income next year due to accepting this order would be a:
|
Aug 29, 2021 | Uncategorized
WadeAf?cA????1A????1s outstanding stock consists of 46,000 shares of cumulative 9.00% preferred stock with a $10 par value and also 115,000 shares of common stock with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends.
|
| 2011 |
$ |
33,000 |
| 2012 |
|
36,525 |
| 2013 |
|
73,900 |
| 2014 |
|
106,400 |
|
Determine the amount of dividends paid each year to each of the two classes of stockholders. (Leave no cells blank be certain to enter “0” wherever required. Omit the “$” sign in your response.)
|
Preferred |
Common |
| 2011 |
$ |
$ |
| 2012 |
$ |
$ |
| 2013 |
$ |
$ |
| 2014 |
$ |
$ |
|
|
Determine the total dividends paid to each class for the four years combined. (Omit the “$” sign in your response.)
|
Preferred |
Common |
| Total dividends for four years |
$ |
$ |
|
|
Aug 29, 2021 | Uncategorized
|
Watson Technical Institute (WTI), a school owned by Tom Watson, provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off site locations. Its unadjusted trial balance as of December 31, 2011, follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items a through h that require adjusting entries on December 31, 2011, follow.
|
| Additional Information Items |
| a. |
An analysis of WTI’s insurance policies shows that $3,468 of coverage has expired. |
| b. |
An inventory count shows that teaching supplies costing $3,006 are available at year end 2011. |
| c. |
Annual depreciation on the equipment is $13,871. |
| d. |
Annual depreciation on the professional library is $6,936. |
| e. |
On November 1, WTI agreed to do a special six month course (starting immediately) for a client. The contract calls for a monthly fee of $2,300, and the client paid the first five months’ fees in advance. When the cash was received, the Unearned Training Fees account was credited. The fee for the sixth month will be recorded when it is collected in 2012.
|
| f. |
On October 15, WTI agreed to teach a four month class (beginning immediately) for an individual for $4,519 tuition per month payable at the end of the class. The class started on October 15, but no payment has yet been received. (WTI’s accruals are applied to the nearest half month; for example, October recognizes one half month accrual.)
|
| g. |
WTI’s two employees are paid weekly. As of the end of the year, two days’ salaries have accrued at the rate of $100 per day for each employee.
|
| |
The balance in the Prepaid Rent account represents rent for December H.
WATSON TECHNICAL INSTITUTE
Unadjusted Trial Balance
December 31, 2011 |
|
Debit |
Credit |
| Cash |
$ |
27,547 |
|
|
| Accounts receivable |
|
0 |
|
|
| Teaching supplies |
|
10,594 |
|
|
| Prepaid insurance |
|
15,894 |
|
|
| Prepaid rent |
|
2,120 |
|
|
| Professional library |
|
31,784 |
|
|
| Accumulated depreciation”Professional library |
|
|
$ |
9,537 |
| Equipment |
|
74,153 |
|
|
| Accumulated depreciation”Equipment |
|
|
|
16,954 |
| Accounts payable |
|
|
|
38,294 |
| Salaries payable |
|
|
|
0 |
| Unearned training fees |
|
|
|
11,500 |
| T. Watson, Capital |
|
|
|
67,385 |
| T. Watson, Withdrawals |
|
42,381 |
|
|
| Tuition fees earned |
|
|
|
108,069 |
| Training fees earned |
|
|
|
40,261 |
| Depreciation expense”Professional library |
|
0 |
|
|
| Depreciation expense”Equipment |
|
0 |
|
|
| Salaries expense |
|
50,858 |
|
|
| Insurance expense |
|
0 |
|
|
| Rent expense |
|
23,319 |
|
|
| Teaching supplies expense |
|
0 |
|
|
| Advertising expense |
|
7,417 |
|
|
| Utilities expense |
|
5,933 |
|
|
|
|
|
|
|
| Totals |
$ |
292,000 |
$ |
292,000 |
|
|
|
|
|
|
| 2. |
Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made only at year end. (Round your answer to nearest dollar amount. Omit the “$” sign in your response.)
|
|
Aug 29, 2021 | Uncategorized
|
Weaver Company’s predetermined overhead rate is $18.00 per direct labor hour and its direct labor wage rate is $16.00 per hour. The following information pertains to Job A 200:
|
|
|
| Direct materials |
$200 |
| Direct labor |
$240 |
|
| 1. |
What is the total manufacturing cost assigned to Job A 200? (Omit the “$” sign in your response.)
|
| Total manufacturing cost |
$ |
| 2. |
If Job A 200 consists of 60 units, what is the average cost assigned to each unit included in the job?(Round your answer to 2 decimal places. Omit the “$” sign in your response.)
|
Aug 29, 2021 | Uncategorized
Westerville Company Reported the follwoing results from last years operations:
Sales…….$1,000,000.00
Variable Expenses……..$300,000.00
Contribution Margin……..$$700,000.00
Fixed Expenses………….$500,000.00
Net Operating Income……$200,000.00
Average Operating Assets……..$625,000.00
This year the company has a $120,000.00 investment opportunity with the following cost revenue characteristics:
Sales…..$200,000.00
Contribution Margin Ratio……..60% of sales.
Fixed Expenses…..$90,000.00
If the compmany pursues the investment opportunity and otherwise performs the same as last year, what ROI will it earn this year?
Westerville’s Chief Executive Officer will earn a hourly bonus only if her residual income from las year exceeeds her residual income from last year. Would she pursue the investment opportunity?
Aug 29, 2021 | Uncategorized
Wheeler corporation produces and sell special eyeglass straps for sporting enthusiasts. In 2011, the company budgeted for production and sales of 1200 straps. However, the company produced and sold just 1100 straps. Each strap has a standard requiring one metre of material at budgeted cost of 1.50 per metre and two hours of assembly time at a cost of 12 dollar per hour. Actual costs for the production of 1100 items were 1435.50 for materials (990 metres at 1.45 dollar per meter) and 29 161 dollar for labour (2420 hours at 12.05 dollar per hour).
Required:
a. Calculate the direct material price variance
b. Calculate the direct material usage variance
c. Calculate the direct labour rate variance
d. Calculate the direct labour efficiency variance
Aug 29, 2021 | Uncategorized
PLEASE SHOW ALL WORK
Cactus Construction sells $1,000,000 of 8% bonds on January 1, 20XX. The bonds are unsecured but registered to the name of the purchaser. The bonds are due in 5 years, with interest payable annually at year end.
1.Determine the value of the bonds if the market interest rate is 9%. Show the effect on the accounting equation (by account title) AND the journal entries at the date of issuance and at year end.
PLEASE SHOW ALL WORK
2.Determine the value of the bonds if the market interest rate is 7%. Show the effect on the accounting equation (by account title) AND the journal entries at the date of issuance and at year end.
PLEASE SHOW ALL WORK
Aug 29, 2021 | Uncategorized
PLEASE SHOW ALL WORK
An electric utility issued 3,000 shares of common stock, all of the same class; 2,800 shares are outstanding and 200 are held in the treasury. On August 15, 20XX, the board of directors declared a cash dividend of $2.10 per share, payable on September 15, 20XX, to stockholders of record on August 31, 20XX.
What are the entries to the accounting equation (by account title)? Give the appropriate journal entries.
Date of Declaration
Assets = Liab. + Equity
Date of Record
Assets = Liab. + Equity
Date of Payment
Assets = Liab. + Equity
Stockholders’ Equity
The following information comes from a balance sheet at December 31, 20XX:
Common Stock, $1 par, 1,000,000 shares authorized $ 160,000
Paid in Capital in Excess of Par Common Stock 120,000
Total Capital Stock 280,000
Retained Earnings 80,000
Less: Treasury Stock (4,000 common shares at cost)
Total Stockholders’ Equity $320,000
Answer the following questions:
1. How many shares of common stock are issued?
2. How many shares of common stock are outstanding?
3. Assuming that all shares were sold at the same price, what was the original selling price per share?
4. If the company declares a 2 for 1 stock split on December 31, 20XX, describe the resulting change, if any, in the balances in capital stock accounts, par value, issued shares and outstanding shares of the common stock. Be detailed with words and numbers.
Aug 29, 2021 | Uncategorized
|
Xavier Construction negotiates a lump sum purchase of several assets from a company that is going out of business. The purchase is completed on January 1, 2011, at a total cash price of $830,000 for a building, land, land improvements, and four vehicles. The estimated market values of the assets are building, $498,200; land, $253,800; land improvements, $75,200; and four vehicles, $112,800. The company’s fiscal year ends on December 31.
|
1a.
|
Prepare a table to allocate the lump sum purchase price to the separate assets purchased. (Round your percentage answers to the nearest whole number. Omit the “$” and “%” signs in your response.)
|
|
1b. Prepare the journal entry to record the purchase. (Omit the “$” sign in your response.)
2.
|
Compute the depreciation expense for year 2011 on the building using the straight line method, assuming a 15 year life and a $30,000 salvage value. (Round your answer to the nearest dollar amount. Omit the “$” sign in your response.)
|
3.
|
Compute the depreciation expense for year 2011 on the land improvements assuming a five year life and double declining balance depreciation. (Omit the “$” sign in your response.)
|
|
|
Aug 29, 2021 | Uncategorized
During its first year of operations, Cupola Fan Corporation issued 30,000 of $1 par Class B shares for $385,000 on June 30, 2013. Share issue costs were $1,500. One year from the issue date (July 1, 2014), the corporation retired 10% of the shares for $39,500.
| 1. |
Prepare the journal entry to record the issuance of the shares. (If no entry is required for a particular event, select “No journal entry required” in the first account field.)
|
|
| 2. |
Prepare the journal entry to record the declaration of a $2 per share dividend on December 1, 2013. (If no entry is required for a particular event, select “No journal entry required” in the first account field.)
|
|
| 3. |
Prepare the journal entry to record the payment of the dividend on December 31, 2013. (If no entry is required for a particular event, select “No journal entry required” in the first account field.)
|
|
| 4. |
Prepare the journal entry to record the retirement of the shares. (If no entry is required for a particular event, select “No journal entry required” in the first account field.)
|
|
|
|
|
|
Aug 29, 2021 | Uncategorized
A few years ago, the ACME Manufacturing Company installed automated robots worth millions of dollars in its furniture assembly lines, believing that the robots would improve profitability and increase the efficiency of the manufacturing process. However, ACME lost many millions of dollars more despite the fact that it was able to make furniture faster using the robots. Why would this happen? What could have caused this situation? ACME then tried to increase profits (operating income) by making more products that could be sold in a period. Should this tactic be used to increase operating income? Would this happen in service companies or only manufacturing companies? Explain.
I need some insight to compare my answers to. I would appreciate any hlep. Thanks!
Aug 29, 2021 | Uncategorized
Several years ago, Penston Company purchased 90 percent of the outstanding shares of Swansan Corporation. Penston made the acquisition because Swansan produced a vital component used in Penston’s manufacturing process. Penston wanted to ensure an adequate supply of this item at a reasonable price. The former owner, James Swansan, retained the remaining 10 percent of Swansan’s stock and agreed to continue managing this organization. He was given responsibility for the subsidiary’s daily manufacturing operations but not for any financial decisions.
Swanson’s takeover has proven to be a successful undertaking for Penston. The subsidiary has managed to supply all of the parent’s inventory needs and distribute a variety of items to outside customers.
At a recent meeting, Penston’s president and the company’s chief financial officer began discussing Swansan’s debt position. The subsidiary had a debt to equity ratio that seemed unreasonably high considering the significant amount of cash flows being generated by both companies. Payment of the interest expense, especially on the subsidiary’s outstanding bonds, was a major cost, one that the corporate officials hoped to reduce. However, the bond indenture specified that Swansan could retire this debt prior to maturity only by paying 107 percent of face value.
This premium was considered prohibitive. Thus, to avoid contractual problems, Penston acquired a large portion of Swansan’s liability on the open market for 101 percent of face value. Penston’s purchase created an effective loss of $300,000 on the debt, the excess of the price over the book value of the debt, as reported on Swansan’s books.
Company accountants currently are computing the noncontrolling interest’s share of consolidated net income to be reported for the current year. They are unsure about the impact of this $300,000 loss. The subsidiary’s debt was retired, but officials of the parent company made the decision. Who lost his $300,000?
Aug 29, 2021 | Uncategorized
Several years ago, Polar Inc. acquired an 80% interest in Icecap Co. The book values of Icecap’s asset and liability accounts at that time were considered to be equal to their fair values. Polar’s acquisition value corresponded to the underlying book value of Icecap so that no allocations or goodwill resulted from the transaction.
The following selected account balances were from the individual financial records of these two companies as of December 31, 2011:
| |
Polar Inc. |
Icecap Co. |
| Sales |
$896,000 |
$504,000 |
| Cost of goods sold |
406,000 |
276,000 |
| Operating expenses |
210,000 |
147,000 |
| Retained earnings, 1/1/11 |
1,036,000 |
252,000 |
| Inventory |
484,000 |
154,000 |
| Buildings (net) |
501,000 |
220,000 |
| Investment income |
Not given |
|
Assume that Polar sold inventory to Icecap at a markup equal to 25% of cost. Intra entity transfers were $130,000 in 2010 and $165,000 in 2011. Of this inventory, $39,000 of the 2010 transfers were retained and then sold by Icecap in 2011, while $55,000 of the 2011 transfers were held until 2012.
Required:
For the consolidated financial statements for 2011, determine the balances that would appear for the following accounts.
(1) Cost of Goods Sold
(2) Inventory
(3) Noncontrolling Interest in Subsidiary’s Net Income
Aug 29, 2021 | Uncategorized
Ziad Company had a beginning inventory on January 1 of 150 units of Product 4 18 15 at a cost of $20 per unit. During the year, the following purchases were made.
| Mar. 15 |
|
400 units |
|
at |
|
$23 |
|
Sept. 4 |
|
350 units |
|
at |
|
$26 |
| July 20 |
|
250 units |
|
at |
|
$24 |
|
Dec. 2 |
|
100 units |
|
at |
|
$29 |
1,000 units were sold. Ziad Company uses a periodic inventory system.
Determine the cost of goods available for sale.
Aug 29, 2021 | Uncategorized
Zytel Corporation produces cleaning compounds and solutions for industrial and household use. While most of its products are processed independently, a few are related. Grit 337, a coarse cleaning powder with many industrial uses, costs $2.50 a pound to make and sells for $3.70 a pound. A small portion of the annual production of this product is retained for further processing in the Mixing Department, where it is combined with several other ingredients to form a paste, which is marketed as a silver polish selling for $4.90 per jar. This further processing requires 1/4 pound of Grit 337 per jar. Costs of other ingredients, labor, and variable overhead associated with this further processing amount to $2.20 per jar. Variable selling costs are $0.40 per jar. If the decision were made to cease production of the silver polish, $8,300 of Mixing Department fixed costs could be avoided. Zytel has limited production capacity for Grit 337, but unlimited demand for the cleaning powder.
| Required: |
|
Calculate the minimum number of jars of silver polish that would have to be sold to justify further processing of Grit 337. (Round your intermediate calculation to 2 decimal places and final answer to the nearest whole number.)
|
Aug 29, 2021 | Uncategorized
A Inc., employs a process costing system. Direct materials are added at the beginning of the process. Here is the information about July’s activities:
On July 1
Beginning inventories 850 units, 60% complete
Direct materials cost $5,000
Conversion Costs $4,000
During July
Number of units started 15,000
Direct materials added $155,000
Conversion costs added $83,520
On July 31
Ending Inventories 1,600 units, 40% complete
Using FIFO method, (A) the number of units started and completed in July was? (B) the number of equivalent units of conversion costs was? (C) the cost of goods completed and transferred out during July was?
For A I came up with 14,250 but not sure if I am doing the process correctly please advise.
Thank you in advance for your help!
Aug 29, 2021 | Uncategorized
1.
At what amount will accounts receivable be reported on the balance sheet if the gross receivable balance is $23,500 and the allowance for doubtful accounts is estimated at 4% of gross receivables?
Answer
A. $23,500
B. $22,560
C. $24,940
D. $14,100
1 points
Question 2
1.
Destin Deals estimates its uncollectible accounts by aging its accounts receivable and applying percentages to various aged categories of accounts. Destin Deals’ computes a total of $1,680 in estimated uncollectible accounts as of December 31, 2011. Its Accounts Receivable account has a balance of $56,400 and its Allowance for Doubtful Accounts has a credit balance of $240 before adjustment at December 31, 2011. How much bad debts expense will Destin Deals’ report in 2011?
Answer
A. $ 240
B. $1,440
C. $1,680
D. $1,920
1 points
Question 3
1.
In accounting for credit losses:
Answer
A. The allowance method matches losses with related sales better than the direct write off method
B. The direct write off method involves estimating credit losses
C. The direct write off method consistently understates assets on the balance sheet
D. Both B and C
1 points
Question 4
1.
Under the allowance method of accounting for credit losses, the entry to write off a specific account:
Answer
A. Will increase total assets
B. Debits Bad Debts Expense and credits Allowance for Uncollectible Accounts
C. Is the same as the entry to write off a specific account under the direct write off method
D. Does not affect net income or total assets
E. None of the above
1 points
Question 5
1.
The entry to record the write off of Lowell Company’s account under the direct write off method is:
Answer
A. Accounts Receivable Lowell Company
Allowance for Doubtful Accounts
B. Bad Debts Expense
Allowance for Doubtful Accounts
C. Allowance for Doubtful Accounts
Accounts Receivable Lowell Company
D. Bad Debts Expense
Accounts Receivable Lowell Company
E. None of the above
1 points
Question 6
1.
If a company fails to make an adjusting entry to estimate uncollectible accounts, then this error:
Answer
A. Understates owners’ equity
B. Understates assets
C. Overstates net income
D. Overstates expenses
E. Does none of the above
1 points
Question 7
1.
A retailer that makes credit card sales:
Answer
A. Makes no entries for such sales on its own records
B. Absorbs any losses on uncollectible credit card accounts
C. Is charged a fee ranging from 1% to 5% of the amount of each credit card sale
D. Records such sales as a debit to Cash or Accounts Receivable, a debit to Credit Card Fees Expense, and a credit to Sales Revenue
E. Both C) and D)
1 points
Question 8
1.
Ruiz Company’s Accounts Receivable balance at December 31 was $150,000 and there was a credit balance of $700 in the Allowance for Uncollectible Accounts, The year’s sales were $800,000. The firm estimates credit losses for the year at 1 1/2% of sales. After the appropriate adjusting entry is made for credit losses, what is the net amount of accounts receivable included in the current assets at year end?
Answer
A. $150,000
B. $137,300
C. $162,700
D. $138,700
E. None of the above
1 points
Question 9
1.
Assume the following unadjusted account balances at the end of the accounting period: Accounts Receivable, $15,000; Allowances for Uncollectible Accounts, $400 (debit balance); Net sales, $100,000. If the company’s past experience indicates credit losses of 2% of net sales, the adjusting entry to estimate uncollectible accounts is:
Answer
A. Bad Debts Expense 2,000
Allowance for Uncollectible Accounts 2,000
B. Bad Debts Expense 2,400
Allowance for Uncollectible Accounts 2,400
C. Bad Debts Expense 1,600
Allowance for Uncollectible Accounts 1,600
D. Bad Debts Expense 2,000
Accounts Receivable 2,000
E. None of the above
1 points
Question 10
1.
Assume the following unadjusted account balances at the end of the accounting period: Accounts Receivable, $45,000; Allowance for Uncollectible Accounts, $500 (credit balance); and Sales revenue $300,000. If the company ages the accounts and determines that $1,500 of receivables may be uncollectible, the adjusting entry should be:
Answer
A. Bad Debts Expense 1,500
Accounts Receivable 1,500
B. Bad Debts Expense 1,000
Allowance for Uncollectible Accounts 1,000
C. Bad Debts Expense 2,000
Allowance for Uncollectible Accounts 2,000
D. Bad Debts Expense 1,500
Allowance for Uncollectible Accounts 1,500
E. None of the above
1 points
Question 11
1.
A firm that uses the allowance method of recording credit losses wrote off the $500 account of Alpha Company in November, 2011. In January 2012, Alpha paid the $500. The entry or entries to record the payment is/are:
Answer
A. Cash 500
Recoveries of Accounts Written Off 500
B. Accounts Receivable Alpha 500
Allowance for Uncollectible Accounts 500
Cash 500
Accounts Receivable Alpha 500
C. Allowance for Uncollectible Accounts 500
Accounts Receivable Alpha 500
D. Accounts Receivable Alpha 500
Bad Debts Expense 500
Cash 500
Accounts Receivable Alpha 500
E. None of the above
1 points
Question 12
1.
After writing off a customer’s account, a company using the allowance method subsequently collected the account in full. It should:
Answer
A. Debit Cash and credit Accounts Receivable
B. Debit Cash and credit Miscellaneous Income
C. Debit Accounts Receivable and credit Allowance for Uncollectible Accounts
D. Both A) and C)
E. None of the above
1 points
Question 13
1.
A $9,000, 3 month, 8% note is dated June 1. The maturity date and maturity value of the note are, respectively:
Answer
A. September 1; $9,180
B. August 29; $9,180
C. September 1; $180
D. August 29; $9,000
E. None of the above
1 points
Question 14
1.
A note for $6,000 is dated May 3 and it matures on August 1. The note is a:
Answer
A. 3 month note
B. 90 day note
C. 91 day note
D. Both A and B
E. None of the above
1 points
Question 15
1.
If a company fails to make an adjusting entry to accrue interest on a note receivable, then this error:
Answer
A. Overstates expenses
B. Understates income
C. Understates assets
D. Understates owners’ equity
E. All of these except A
1 points
Question 16
1.
Wong Company paid Lee Company for merchandise with a $4,500, 90 day, 10% note dated December 11. What entry should Lee make in its books at the end of the accounting period on December 31?
Answer
A. Interest receivable 25
Interest income 25
B. Cash 25
Interest receivable 25
C. Interest income 25
Interest receivable 25
D. Cash 25
Interest income 25
E. None of the above
1 points
Question 17
1.
Mangini Company has net credit sales of $700,000 for the year and it estimates that uncollectible accounts will be 2% of sales. If its Allowance for Doubtful Accounts has a credit balance of $1,000 prior to adjustment, its balance after adjustment will be a credit of
Answer
A. $13,980
B. $15,000
C. $13,000
D. $14,000
1 points
Question 18
1.
Triantis Company has the following unadjusted account balances on December 31, of the current year. The preadjustment balance of Allowance for Doubtful Accounts is $1,600 debit. This company uses the following aging of accounts receivable to estimate its bad debts.
Accounts Age Balance Estimated Uncollectible %
Current (not yet due) $96,000 1.0%
1 30 past due $64,000 3.5%
31 60 past due $16,000 12.0%
61 90 past due $6,500 42.0%
Over 90 days past due $3,200 67.0%
Total $185,700
The Net Realizable Value of Accounts Receivable reported on the year end Balance Sheet will be:
Answer
A. $177,306
B. $175,706
C. $174,106
D. $195,694
1 points
Question 19
1.
Libes Company’s Accounts Receivable account has a balance of $322,000 and the Allowance for Doubtful Accounts has a debit balance of $850 at fiscal year end prior to adjustment. If the estimate based on the percentage of sales approach to estimating uncollectibles is $19,900, the net realizable value of accounts receivable reported on the balance sheet after adjustment is:
Answer
A. $302,950
B. $301,250
C. $321,150
D. $302,100
1 points
Question 20
1.
Prior to the write off of a $100 customer account, Hawks Company had the following account balances:
Accounts receivable $9,800
Allowance for doubtful accounts 500
The net realizable value of the Accounts Receivable before and after the write off was:
Answer
A. Before After
$9,300 $9,300
B. Before After
$9,300 $9,200
C. Before After
$9,300 $9,100
D. Before After
$9,400 $9,300
1 points
Question 21
1.
Gabby Company’s Accounts Receivable Account has a debit balance of $895,000, and the Allowance for Doubtful Accounts has a debit balance of $1,500 at the end of the year before adjustment. An analysis of their customers’ accounts estimates that 2% of year end account receivable will be uncollectible. The adjusting journal entry for doubtful accounts will include:
Answer
A. Debit Bad Debts Expense $19,400
B. Credit Allowance for Doubtful Accounts, $17,900
C. Credit Allowance for Doubtful Accounts, $16,400
D. Debit Bad Debts Expense $16,400
1 points
Question 22
1.
The data below is for Randall Corporation for 2011.
Accounts receivable December 31, 2011 $236,000
Customer accounts written off as uncollectible during 2011: 8,000
Allowance for doubtful accounts January 1, 2011 8,700
Estimated uncollectible accounts based on an aging analysis 9,600
If the aging approach is used to estimate bad debts, determine the bad debt expense for 2011.
Answer
A. $8,000
B. $8,100
C. $8,900
D. $8,700
1 points
Question 23
1.
During 2011, a company’s credit sales were $131,000, and its cash collections from credit customers were $125,000. Also, $1,800 in uncollectible accounts receivable were written off (using the allowance method) during the year. On December 31, 2011, the company’s Accounts Receivable balance was $25,000. What must have been the balance of accounts receivables on January 1, 2011?
Answer
A. $32,800
B. $20,800
C. $17,200
D. $29,200
1 points
Question 24
1.
On December 31, 2011, Hanks Company’s accounts receivable balance was of $311,000, and an analysis of their accounts receivable suggests that the Allowance for Doubtful Accounts should be 2% of accounts receivable. The balance in the Allowance for Doubtful Accounts on January 1, 2011 was $5,970 (credit). During the year 2011, the company wrote off $6,450 of bad debts. What amount should be reported as the Bad debt expense for the year 2011?
Answer
A. $5,740
B. $6,700
C. $6,200
D. $6,220
1 points
Question 25
1.
Tammy Company reported total sales for the current year to be $2,000,000, including cash sales of $500,000. Management estimates bad debts to be 5% of credit sales. The Allowance for Doubtful Accounts prior to adjustment has a debit balance of $10,000. The ending balance of the Allowance for Doubtful Accounts after adjustment will be:
Answer
A. $ 65,000
B. $ 75,000
C. $110,000
D. $ 85,000
1 points
Question 26
1.
Aarons Company lends Zenith Company $40,000 on April 1, accepting a four month, 9% interest note. Aarons Company prepares its financial statements on April 30. What adjusting entry should be made by Aarons Company before the financial statements can be prepared?
Answer
A. Interest Receivable 1,200
Interest Revenue 1,200
B. Note Receivable 40,000
Cash 40,000
C. Cash 300
Interest Revenue 300
D. Interest Receivable 300
Interest Revenue 300
1 points
Question 27
1.
On November 1, Kotler Company accepted a 3 month note receivable as payment for services provided to Norman Company. The face value of was $8,000 face value, and had a stated 6% annual rate of interest. Kotler Company closed its books on December 31. On February 1, the journal entry to record the collection of the note should include a credit to:
Answer
A. Interest Revenue for $120
B. Interest Revenue for $40
C. Notes Receivable for $8,120
D. Interest Receivable for $120
1 points
Question 28
1.
A company received a Note Receivable from a customer for a sale. The 9 percent, 9 month note was received on May 31, 2011 for an amount of $120,000. Determine the company’s accrued interest receivable (from this note) on its December 31, 2011 balance sheet.
Answer
A. $ 6,300
B. $10,800
C. $ 8,100
D. $ 7,200
1 points
Question 29
1.
On December 1, 2010, Terps Company accepted a $12,000, 120 day, 8% note from a customer in granting an extension to a past due account. Terps Company’s accounting period ends on December 31, and the note is collected in full on the due date. Which one of the following statements will be false for Terps Company?
Answer
A. On December 31, 2010, they will credit Interest Receivable for $80
B. On March 31, 2011, they will credit Notes Receivable for $12,000
C. On March 31, 2011, they will credit Interest Receivable for $80
D. On March 31, 2011, they will credit Interest Revenue for $240
1 points
Aug 29, 2021 | Uncategorized
1. On April 30, 2009, Tilton Products purchased machinery for $88,000. The useful life of this machinery is estimated at 8 years, with an $8,000 residual value. Refer to the information above. Assume that in its financial statements, Tilton Products uses straight line depreciation and the half year convention. Depreciation expense recognized on this machinery in 2009 and 2010 will be:
A) $5,000 in 2009 and $10,000 in 2010.
B) $5,500 in 2009 and $11,000 in 2010
C) $6,000 in 2009 and $12,000 in 2010.
D) $7,500 in 2009 and $11,000 in 2010.
2. On April 30, 2009, Tilton Products purchased machinery for $88,000. The useful life of this machinery is estimated at 8 years, with an $8,000 residual value. Refer to the information above. Assume that in its financial statements, Tilton Products uses straight line depreciation and the half year convention.Refer to the information above. Assume that in its financial statements, Tilton Products uses straight line depreciation and rounds depreciation for fractional years to the nearest month. Depreciation expense recognized on this machinery in 2009 and 2010 will be:
A) $5,833 in 2009 and $10,000 in 2010.
B) $6,667 in 2009 and $10,000 in 2010.
C) $10,000 in 2009 and $10,000 in 2010.
D) $2,333 in 2009 and $7,000 in 2010.
Aug 29, 2021 | Uncategorized
1.The cost of merchandise purchased is not an expense at the time of purchase because of the inventory purchase principle.
True
False
2. Suppose ShoeFanatic.com used the average cost method and the perpetual inventory system. Using the information below, compute the average unit cost of the company’s inventory on hand at September 8. Round unit cost to the nearest cent.
Date # of units Cost/unit
Begin Inventory on hand 8 $18
Sep 8 Purchase 24 $19
Sep 14 Sale 20 $38
Sep 22 Purchase 16 $21
Sep 27 Sale 24 $38
a. $56.10
b. $18.75
c. $44.00
d. Cannot be determined from the data given
3. what inventory costing method results in the lowest net income during a period of rising inventory costs.
a. Average cost
b. Specific unit cost
c. First in, first out (FIFO)
d. Last in, first out (LIFO)
2. Which inventory costing method assigns to ending inventory the newest the most recent costs incurred during the period?
a. First in, first out (FIFO)
b. Average cost
c. Specific unit cost
d. Last in, first out (LIFO)
Which of those are right?
Aug 29, 2021 | Uncategorized
1.
When a flexible budget is used in performance evaluation, actual costs are compared to what the costs should have been for the actual level of activity during the period rather than to the static planning budget.
A) True
B) False
2.
A favorable spending variance occurs when the actual cost exceeds the amount of that cost in the flexible budget.
A) True
B) False
3.
A flexible budget can be used to determine what costs should have been at a given level of activity.
A) True
B) False
5.
Wadhams Snow Removal’s cost formula for its vehicle operating cost is $1,900 per month plus $430 per snow day. For the month of December, the company planned for activity of 16 snow days, but the actual level of activity was 21 snow days. The actual vehicle operating cost for the month was $11,470. The vehicle operating cost in the planning budget for December would be closest to:
A) $10,930
B) $11,470
C) $8,739
D) $8,780
7.
Fullagar Corporation’s cost formula for its manufacturing overhead is $15,400 per month plus $11 per machine hour. For the month of May, the company planned for activity of 7,500 machine hours, but the actual level of activity was 7,540 machine hours. The actual manufacturing overhead for the month was $102,710.
The spending variance for manufacturing overhead in May would be closest to:
A) $4,370 U
B) $4,810 F
C) $4,810 U
D) $4,370 F
8.
Celius Midwifery’s cost formula for its wages and salaries is $2,410 per month plus $292 per birth. For the month of March, the company planned for activity of 113 births, but the actual level of activity was 116 births. The actual wages and salaries for the month was $35,340. The spending variance for wages and salaries in March would be closest to:
A) $942 F
B) $66 F
C) $66 U
D) $942 U
10.
Whit Catering uses two measures of activity, jobs and meals, in the cost formulas in its budgets and performance reports. The cost formula for catering supplies is $380 per month plus $94 per job plus $11 per meal. A typical job involves serving a number of meals to guests at a corporate function or at a host’s home. The company expected its activity in October to be 20 jobs and 216 meals, but the actual activity was 19 jobs and 221 meals. The actual cost for catering supplies in October was $4,790. The catering supplies in the flexible budget for October would be closest to:
A) $4,404
B) $4,790
C) $4,636
D) $4,597
12.
Fullagar Corporation’s cost formula for its manufacturing overhead is $15,400 per month plus $11 per machine hour. For the month of May, the company planned for activity of 7,500 machine hours, but the actual level of activity was 7,540 machine hour
TB 57 Fullagar Corporation’s cost formula for its manufacturing overhead is $15,400 per month plus $11 per machine hour. For the month of May, the company planned for activity of 7,500 machine hours, but the actual level of activity was 7,540 machine hours. The actual manufacturing overhead for the month was $102,710.
The activity variance for manufacturing overhead in May would be closest to:
A) $440 U
B) $440 F
C) $4,810 F
D) $4,810 U
16.
Mcquain Boat Wash’s cost formula for its cleaning equipment and supplies is $1,950 per month plus $20 per boat. For the month of June, the company planned for activity of 85 boats, but the actual level of activity was 125 boats. The actual cleaning equipment and supplies for the month was $4,380.
The spending variance for cleaning equipment and supplies in June would be closest to:
A) $730 U
B) $70 U
C) $70 F
D) $730 F
17.
Cadavieco Detailing’s cost formula for its materials and supplies is $1,990 per month plus $8 per vehicle. For the month of November, the company planned for activity of 92 vehicles, but the actual level of activity was 52 vehicles. The actual materials and supplies for the month was $2,440.
The materials and supplies in the planning budget for November would be closest to:
A) $2,726
B) $2,406
C) $4,317
D) $2,440
19.
Kara Catering uses two measures of activity, jobs and meals, in the cost formulas in its budgets and performance reports. The cost formula for catering supplies is $310 per month plus $84 per job plus $17 per meal. A typical job involves serving a number of meals to guests at a corporate function or at a host’s home. The company expected its activity in July to be 15 jobs and 127 meals, but the actual activity was 14 jobs and 126 meals. The actual cost for catering supplies in July was $3,620. The activity variance for catering supplies in July would be closest to:
A) $109 F
B) $109 U
C) $101 F
D) $101 U
20.
Cadavieco Detailing’s cost formula for its materials and supplies is $1,990 per month plus $8 per vehicle. For the month of November, the company planned for activity of 92 vehicles, but the actual level of activity was 52 vehicles. The actual materials and supplies for the month was $2,440.
The spending variance for materials and supplies in November would be closest to:
A) $34 F
B) $286 F
C) $34 U
D) $286 U
Aug 29, 2021 | Uncategorized
Shuck Inc. bases its manufacturing overhead budget on budgeted direct labor hours. The direct labor budget indicates that 8,800 direct labor hours will be required in May. The variable overhead rate is $1.70 per direct labor hour. The company’s budgeted fixed manufacturing overhead is $100,510 per month, which includes depreciation of $8,840. All other fixed manufacturing overhead costs represent current cash flows. The May cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:
| |
$87,910 |
| |
$80,910 |
| |
$187,050 |
| |
$168,820
Please solve before 9pm if possible
Many thanks! |
Aug 29, 2021 | Uncategorized
For each of the following items, indicate by using the appropriate code letter, how the item should be reported in the statement of cash flows, using the indirect method. A. Added to net income B. Deducted from net income C. Cash outflow – investing activity D. Cash inflow – investing activity E. Cash outflow – financing activity F. Cash inflow – financing activity G. Significant noncash investing and financing activity 1. Decrease in accounts payable during a period. _____ 2. Declaration and payment of a cash dividend. ______ 3. Loss on a sale of Land. _____ 4. Decrease in accounts receivable during a period. ______ 5. Redemption of bonds for cash. _____ 6. Proceeds from sale of equipment at book value. ______ 7. Issuance of common stock for cash. _____ 8. Purchase of a building for cash _____ 9. Acquisition of land in exchange for common stock. ______ 10. Increase in merchandise inventory during a period. ______
Aug 29, 2021 | Uncategorized
Smart Hardware purchased new shelving for its store on April 1, 2011. The shelving is expected to have a 20 year life and no residual value. The following expenditures were associated with the purchase:
Cost of the shelving $ 12,000
Freight charges 520
Sales taxes 780
Installation of shelving 2,700
Cost to repair shelf damaged during installation 400
1. Compute depreciation expense for the years 2011 through 2014, using the straight line method with fractional years rounded to the nearest whole month. (Omit the “$” sign in your response.)
Year Depreciation expense
a. 2011 $ _____________
b. 2012 $ _____________
c. 2013 $ _____________
d. 2014 $ _____________
2. Compute depreciation expense for the years 2011 through 2014, using the 200 percent declining balance, using the half year convention. (Omit the “$” sign in your response.)
Year Depreciation expense
a. 2011 $ _____________
b. 2012 $ _____________
c. 2013 $ _____________
d. 2014 $ _____________
3.Compute depreciation expense for the years 2011 through 2014, using the 150 percent declining balance, using the half year convention. (Omit the “$” sign in your response.)
Year Depreciation expense
a. 2011 $ _____________
b. 2012 $ _____________
c. 2013 $ _____________
d. 2014 $ _____________
4. Which of the depreciation methods applied in part a resulted in the lowest reported book value at the end of 2014?
a. straight line method of depreciation
b. MACRS method of depreciation
c. 150 percent declining balance
d. 200 percent declining balance
5. Is book value an estimate of an asset’s fair value?
a.Yes
b. No
6. Assume that Smart Hardware sold the old shelving that was being replaced. The old shelving had originally cost $9,000. Its book value at the time of the sale was $400. Record the sale of the old shelving was sold for $1,200 cash. (Omit the “$” sign in your response.)
Choose the best answer: for A G
Cash
Accumulated depreciation: Shelving
Loss of sale of asset
Gain on sale of assets
Notes receivable
Shelving
Loss of disposal of assets
Gain of disposal of assets
QUESTIONS:
General Journal Debit Credit
DEBIT
a____________ Debit b$_____
c____________ Debit d $_____
CREDIT
E______ Credit F $_________
G_______ Credit H $_________
7.
Assume that Smart Hardware sold the old shelving that was being replaced. The old shelving had originally cost $9,000. Its book value at the time of the sale was $400. Record the sale of the old shelving was sold for $200 cash. (Omit the “$” sign in your response.)
Choose the best answer:
Lost of sale of asset
Cash
Loss of disposal of assets
Notes receivable
Gain on sale assets
Shelving
Accumulated deprecation shelving
Gain on disposal of assets
QUESTIONS:
General Journal Debit Credit
DEBIT
a____________ Debit b $_____
c____________ Debit d $ _____
e_____________ Debit f $_______
Aug 29, 2021 | Uncategorized
|
Smithson Company uses a job order costing system and has two manufacturing departments”Molding and Fabrication. The company provided the following estimates at the beginning of the year:
|
|
Molding |
Fabrication |
Total |
| Machine hours |
|
25,000 |
|
35,000 |
60,000 |
| Fixed manufacturing overhead costs |
$ |
710,000 |
$ |
270,000 |
$ 980,000 |
| Variable manufacturing overhead per machine hour |
$ |
5.00 |
$ |
5.00 |
|
|
|
During the year, the company had no beginning or ending inventories and it started, completed, and sold only two jobs”Job D 75 and Job C 100. It provided the following information related to those two jobs:
|
| Job D 75: |
Molding |
Fabrication |
Total |
| Direct materials cost |
$ |
375,000 |
$ |
324,000 |
$ |
699,000 |
| Direct labor cost |
$ |
220,000 |
$ |
180,000 |
$ |
400,000 |
| Machine hours |
|
18,000 |
|
7,000 |
|
25,000 |
|
| Job C 100: |
Molding |
Fabrication |
Total |
| Direct materials cost |
$ |
210,000 |
$ |
270,000 |
$ |
480,000 |
| Direct labor cost |
$ |
160,000 |
$ |
260,000 |
$ |
420,000 |
| Machine hours |
|
7,000 |
|
28,000 |
|
35,000 |
|
Smithson had no overapplied or underapplied manufacturing overhead during the year.
Compute the total manufacturing costs assigned to Job D 75 and Job C 100.
|
If Smithson establishes bid prices that are 120% of total manufacturing costs, what bid price would it have established for Job D 75 and Job C 100?
What is Smithson’s cost of goods sold for the year?
|
Aug 29, 2021 | Uncategorized
|
|
Standard
|
Actual
|
|
Material Cost Per Yard
|
$2.00
|
$2.10
|
|
Standard Yards per Unit
|
4.5 yards
|
4.75 yards
|
|
Units of Production
|
|
9,500
|
5. Calculate the Total Direct Materials cost variance using the above information:
|
a.
|
$9,262.50 Unfavorable
|
|
b.
|
$9,262.50 Favorable
|
|
c.
|
$3,780.00 Unfavorable
|
|
d.
|
$3,562.50 Favorable
|
6. Calculate the Direct Materials Price variance using the above information:
|
a.
|
$1,795.50 Favorable
|
|
b.
|
$378.00 Favorable
|
|
c.
|
$4,512.50 Unfavorable
|
|
d.
|
$378.00 Unfavorable
|
7. Calculate the Direct Materials Quantity variance using the above information:
| a. |
$4,512.50 Unfavorable
|
|
b.
|
$4,512.50 Favorable
|
|
c.
|
$4,750 Unfavorable
|
|
d.
|
$4,750 Favorable
|
Aug 29, 2021 | Uncategorized
Statements on Standards for Tax Services No. 3″Certain Procedural Aspects of Preparing Returns. Tax returns are based on information provided by the client. This statement sets forth the applicable standards for members concerning this information. Specifically, in preparing or signing a return, members are not required to examine or verify a client’s supporting data. A member may rely on information supplied by the taxpayer unless the information appears to be incorrect, incomplete, inconsistent, or unreasonable under the circumstances. However, if the applicable law or regulations impose a specific record keeping requirement to claim a deduction, the member should inquire and satisfy himself or herself that the required records do exist. Members are specifically encouraged to make use of a taxpayer’s returns for one or more prior years in preparing the current return, whenever feasible. The practice should help avoid the omission or duplication of items and provide a basis for the treatment of similar or related transactions.
Situation:
A client, Mal Manley, fills out his client questionnaire for the previous year and on it provides information for the preparation of his individual income tax return. The IRS has never audited Mal’s returns. Mal reports that he made over 100 relatively small cash contributions totaling $24,785 to charitable organizations. In the last few years, Mal’s charitable contributions have averaged about $15,000 per year. For the previous year, Mal’s adjusted gross income was roughly $350,000, about a 10% increase from the year before.
Directions: Apply Statements on Standards for Tax Services No. 3 (As shown Above)
1. Determine whether you can accept at face value Mal’s information concerning his charitable contributions.
2. Now assume that the IRS recently audited Mal’s tax return for two years ago and denied 75% of that year’s charitable contribution deduction because the deduction was not substantiated. Assume also that Mal indicates that, in the previous year, he contributed $25,000 (instead of $24,785).
3. How do these changes of fact affect your earlier decision?
PLEASE ORIGINAL WORK ONLY!
Aug 29, 2021 | Uncategorized
The last step in the accounting procedure for process costing is the calculation of equivalent units of production. A) False
B) True
2. The closer a company moves towards Just in Time production, the differences in unit costs between average costing and FIFO will be reduced. A) True
B) False
3. Conversion and direct materials are generally both added at the end of the production process. A) True
B) False
4. In a process costing system, costs flow into finished goods inventory only from the work in process inventory of the last manufacturing process. A) True
B) False
5. Costs of ending work in process inventory are included in the cost per equivalent unit computation. A) True
B) False
Aug 29, 2021 | Uncategorized
Steven Company owns 40% of the outstanding voting common stock of Nicole Corp. and has the ability to significantly influence the investee’s operations. On January 3, 2011, the balance in the Investment in Nicole Corp. account was $503,000. Amortization associated with this acquisition is $12,000 per year. During 2011, Nicole earned a net income of $120,000 and paid cash dividends of $40,000. Previously in 2010, Nicole had sold inventory costing $35,000 to Steven for $50,000. All but 25% of that inventory had been sold to outsiders by Steven during 2010. Additional sales were made to Steven in 2011 at a transfer price of $75,000 that had cost Nicole $54,000. Only 10% of the 2011 purchases had not been sold to outsiders by the end of 2011.
Required:
(A) What amount of unrealized intra entity inventory profit should be deferred by Steven at December 31, 2010?
(B) What amount of unrealized intra entity profit should be deferred by Steven at December 31, 2011?
(C) What amount of equity income would Steven have recognized in 2011 from its ownership interest in Nicole?
(D) What was the balance in the Investment in Nicole Corp. account at December 31, 2011?
Aug 29, 2021 | Uncategorized
- Sunrise Corporation has a return on investment of 15%. A Sunrise division, which currently has a 13% ROI and $750,000 of residual income, is contemplating a massive new investment that will (1) reduce divisional ROI and (2) produce $120,000 of residual income. If Sunrise strives for goal congruence, the investment:
-
-
-
- should not be acquired because it reduces divisional ROI.
-
- should not be acquired because it produces $120,000 of residual income.
-
- should not be acquired because the division’s ROI is less than the corporate ROI before the investment is considered.
-
- should be acquired because it produces $120,000 of residual income for the division.
-
- should be acquired because after the acquisition, the division’s ROI and residual income are both positive numbers.
Aug 29, 2021 | Uncategorized
|
Sven’s Cookhouse is a popular restaurant located on Lake Union in Seattle. The owner of the restaurant has been trying to better understand costs at the restaurant and has hired a student intern to conduct an activity based costing study. The intern, in consultation with the owner, identified three major activities. She then completed the first stage allocations of costs to the activity cost pools, using data from last month’s operations. The results appear below:
|
| Activity Cost Pool |
Activity Measure |
Total Cost |
Total Activity |
| Serving a party of diners |
Number of parties served |
$ |
19,470 |
5,900 |
parties |
| Serving a diner |
Number of diners served |
$ |
110,110 |
12,100 |
diners |
| Serving a drink |
Number of drinks ordered |
$ |
36,750 |
10,500 |
drinks |
|
|
The above costs include all of the costs of the restaurant except for organization sustaining costs such as rent, property taxes, and top management salaries. A group of diners who ask to sit at the same table are counted as a party. Some costs, such as the costs of cleaning linen, are the same whether one person is at a table or the table is full. Other costs, such as washing dishes, depend on the number of diners served.
|
|
Prior to the activity based costing study, the owner knew very little about the costs of the restaurant. He knew that the total cost for the month (including organization sustaining costs) was $180,000 and that 12,000 diners had been served. Therefore, the average cost per diner was $15.
|
Aug 29, 2021 | Uncategorized
|
Talboe Company makes wheels which it uses in the production of children’s wagons. Talboe’s costs to produce 150,000 wheels annually are as follows:
|
| Direct material |
$ 30,000 |
| Direct labor |
45,000 |
| Variable manufacturing overhead |
22,500 |
| Fixed manufacturing overhead |
63,000
|
| Total |
$160,500
|
|
An outside supplier has offered to sell Talboe similar wheels for $0.80 per wheel. If the wheels are purchased from the outside supplier, $18,000 of annual fixed manufacturing overhead would be avoided and the facilities now being used to make the wheels would be rented to another company for $46,500 per year.
|
|
What is the highest price that Talboe could pay the outside supplier for each wheel and still be economically indifferent between making or buying the wheels? (Round your answer to 2 decimal places.)
|
Aug 29, 2021 | Uncategorized
|
Talboe Company makes wheels which it uses in the production of children’s wagons. Talboe’s costs to produce 230,000 wheels annually are as follows:
|
| Direct material |
$ 46,000 |
| Direct labor |
69,000 |
| Variable manufacturing overhead |
34,500 |
| Fixed manufacturing overhead |
73,000
|
| Total |
$222,500
|
|
An outside supplier has offered to sell Talboe similar wheels for $0.80 per wheel. If the wheels are purchased from the outside supplier, $28,000 of annual fixed manufacturing overhead would be avoided and the facilities now being used to make the wheels would be rented to another company for $70,900 per year.
|
| If Talboe chooses to buy the wheel from the outside supplier, then the change in annual net operating income is a: |
| |
$64,400 increase |
| |
$72,100 increase |
| |
$46,000 increase |
| |
$6,500 decrease |
Aug 29, 2021 | Uncategorized
Could you please tell me how to find the answers to this question?
The Cash account in the general ledger of Lyco Corporation showed a balance of $21,749 at December 31 (but prior to performing a bank reconciliation). The company’s bank statement showed a balance of $22,000 at the same date. The only reconciling items consisted of: (1) a $5,000 deposit in transit, (2) a bank service charge of $200, (3) outstanding checks totaling $9,000, (4) a $3,000 check marked “NSF” from Susque Company, one of Lyco’s customers, and (5) a check written for office supplies in the amount of $1,832, recorded by the company’s bookkeeper as a debit to Office Supplies of $1,283, and a credit to Cash of $1,283.
In addition to the above information, Lyco owned the following financial assets at December 31: (1) a money market account of $60,000, (2) $3,000 of high grade, 120 day commercial paper, and (3) $5,000 of highly liquid stock investments.
I’m trying to get the adjusted cash balance for a bank reconciliation. I don’t understand what I’m doing wrong.
My thoughts are that the Error Corrections is $549 (1832 1283), but the computer is saying that’s wrong.
I also think that the NSF check is $3000, but the computer’s saying THAT’S wrong.
I would think that the bank service charge is $200, but the computer says that’s wrong also.
My guess for outstanding checks is $9000. Is it a computer error or am I just totally jacked up? I read the chapter twice and I think I’m doing it right? If anyone can help, I would really appreciate it. I’ve been on this problem for an hour now and it’s driving me crazy!
Aug 29, 2021 | Uncategorized
Can someone please tell me what is wrong with this journal entry? Please tell me the general purpose of adjusting journal entries, the financial statement effects of her error, and the proper entry that should have been made.
Assume that you are the chief accountant at a small service company that prepares financial statements on December 31 of each year. You have a new staff member, Bethany Johnson, who is tasked with preparing journal entries for the company. While reviewing Bethany’s work, you come across the following scenario.
On June 1, 2009, the company paid for property insurance on a newly purchased building. The insurance expires on May 31, 2010. Bethany recorded the following two journal entries regarding the insurance. Please explain the error that Bethony made. In your explanation, please discuss the general purpose of adjusting journal entries, the financial statement effects of her error, and the proper entry that should have been made.
Aug 29, 2021 | Uncategorized
Terry Marks is a well known architect. He wants to start his own business and convinces Rob Norris, his cousin and a civil engineer, to contribute capital. Together, they form a partnership to design and build commercial real estate. On January 1, 2011, Norris invests a building worth $126,000 and equipment valued at $132,000 as well as $52,000 in cash. Although Marks makes no tangible contribution to the partnership, he will operate the business and be an equal partner in the beginning capital balances.
To entice Norris to join this partnership, Marks draws up the following profit and loss agreement:
Norris will be credited annually with interest equal to 10 percent of the beginning capital balance for the year.
Norris will also have added to his capital account 20 percent of partnership income each year (without regard for the preceding interest figure) or $7,000, whichever is larger. All remaining income is credited to Marks.
Neither partner is allowed to withdraw funds from the partnership during 2011. Thereafter, each can draw $7,000 annually or 10 percent of the beginning capital balance for the year, whichever is larger.
The partnership reported a net loss of $12,000 during the first year of its operation. On January 1, 2012, Alice Dunn becomes a third partner in this business by contributing $60,000 cash to the partnership. Dunn receives a 25 percent share of the business’s capital. The profit and loss agreement is altered as follows:
Norris is still entitled to (1) interest on his beginning capital balance as well as (2) the share of partnership income just specified.
Any remaining profit or loss will be split on a 6:4 basis between Marks and Dunn, respectively.
Partnership income for 2012 is reported as $96,000. Each partner withdraws the full amount that is allowed.
On January 1, 2013, Dunn becomes ill and sells her interest in the partnership (with the consent of the other two partners) to Judy Postner. Postner pays $215,000 directly to Dunn. Net income for 2013 is $95,000 with the partners again taking their full drawing allowance.
On January 1, 2014, Postner withdraws from the business for personal reasons. The articles of partnership state that any partner may leave the partnership at any time and is entitled to receive cash in an amount equal to the recorded capital balance at that time plus 10 percent.
As luck would have it, also on January 1, 2014, two young partners are admitted from the staff, each at 50% of Postner departing capital withdrawal. James Smith and Savannah (her full name) each contribute cash in exchange for their capital interest.
Part A: Prepare journal entries to record the preceding transactions on the assumption that the bonus (or no revaluation) method is used. Drawings need not be recorded, although the balances should be included in the closing entries.
Part B: Prepare journal entries to record the previous transactions on the assumption that the goodwill (or revaluation) method is used. Drawings need not be recorded, although the balances should be included in the closing entries.
Part C: The partnership of Marks, Norris, Smith, and Savannah has now operated for several years. Last year, Marks and Norris reduced their interests in the business and the partnership agreement was amended to reapportion capital interests. Since then, recent market declines have caused several partners to undergo personal financial problems. As a result, the partners have decided to terminate operations and liquidate the business. The following balance sheet is drawn up as a guideline for this process:
|
Cash
|
$ 65,000
|
Liabilities
|
$ 54,000
|
|
Accounts receivable
|
132,000
|
Smith, loan
|
85,000
|
|
Inventory
|
151,000
|
Marks, capital (30%)
|
195,000
|
|
Land
|
110,000
|
Norris, capital (10%)
|
138,000
|
|
Building and equipment (net)
|
193,000
|
Smith, capital (20%)
|
99,000
|
|
|
|
Savannah, capital (40%)
|
80,000
|
|
Total assets
|
$651,000
|
Total liabilities and capital
|
$651,000
|
When the liquidation commenced, expenses of $20,000 were anticipated as being necessary to dispose of all property. Prepare a predistribution plan for the partnership.
Part D: The following transactions transpire during the liquidation of the Marks, Norris, Smith, and Savannah partnership:
Collected 90 percent of the total accounts receivable with the rest judged to be uncollectible.
Sold the land, building, and equipment for $175,000.
Made safe capital distributions.
Learned that Savannah, who has become personally insolvent, will make no further contributions.
Paid all liabilities.
Sold all inventory for $96,000.
Made safe capital distributions again.
Paid liquidation expenses of $14,000.
Made final cash disbursements to the partners based on the assumption that all partners other than Savannah are personally solvent.
Prepare journal entries to record these liquidation transactions?
Aug 29, 2021 | Uncategorized
Tony and Suzie purchase a Suburban for $12,000. The vehicle is purchased in late June, and will be put into use on July 1, 2013. Annual insurance from GEICO runs $1800 per year. The paint is starting to fade, so they spend an extra $3,000 to repaint the vehicle, placing the Great Adventures logo on the front hoood, back, and both sides. An additional $2,000 is spent on a deluxe roof rack and a trailer hitch. They expect to use the Suburban for five years and then sell the vehicle for 4500.
1. Determine the amount that should be recorded for the new vehicle.
2. Indicate where any amounts not included in the Equipment account should be recorded.
3. Prepare a depreciation schedule using the straight line. The first and last years will have a half year of depreciation due to the beginning of service life on July 1.
4. Record the sale of the vehicle two years later on July 1, 2015, for $10,000.
Aug 29, 2021 | Uncategorized
The Toque Cooking Academy runs short cooking courses at its small campus. Management has identified two cost drivers that it uses in its budgeting and performance reportsAfA?A??cAf?A???A??1Af?A???A??1the number of courses and the total number of students. For example, the school might run four courses in a month and have a total of 60 students enrolled in those four courses. Data concerning the companyAfA?A??cAf?A???A??1Af?A???A??1s cost formulas appear below:
| Fixed Cost per Month |
Cost per Course |
Cost per
Student |
| Instructor wages |
|
|
$2,910 |
|
| Classroom supplies |
|
|
|
$290 |
| Utilities |
$ |
1,220 |
$60 |
|
| Campus rent |
$ |
4,600 |
|
|
| Insurance |
$ |
2,200 |
|
|
| Administrative expenses |
$ |
3,700 |
$43 |
$5 |
For example, administrative expenses should be $3,700 per month plus $43 per course plus $5 per student. The companys sales should average $880 per student.
|
Actual |
| Revenue |
$ |
49,900 |
| Instructor wages |
$ |
10,920 |
| Classroom supplies |
$ |
17,250 |
| Utilities |
$ |
1,870 |
| Campus rent |
$ |
4,600 |
| Insurance |
$ |
2,340 |
| Administrative expenses |
$ |
3,598 |
| |
The actual operating results for October appear below:
1. The Toque Cooking Academy expects to run four courses with a total of 60 students in October. Complete the companys planning budget for this level of activity.
2 The school actually ran four courses with a total of 58 students in October. Complete the companys flexible budget for this level of activity.
3. Complete the flexible budget performance report that shows both activity variances and revenue and spending variances for October.
Aug 29, 2021 | Uncategorized
Toy Truck Corporation produces children’s toy trucks using a continious production process. In November, the beginning work in process inventory was 420 units, which were 50 percent complete; the ending balance was 400 units, which were 70 percent complete.
During November, 15,000 units were started into production. The Work in Process Inventory account had a beginning balance of $937 for direct materials costs and $370 for conversion costs. In the course of the month, $35,300 of direct materials were added to the process, and $31,689 of conversion costs were assigned. Using the FIFO costing method, prepare a process cost report that computes the equivalent units for November, the product unit cost for toyts, and the ending balance in the Work in Process Inventory account. (Round cost per equaivalent unit to the nearest cent.)
Aug 29, 2021 | Uncategorized
Using the single rate method, allocate costs to the dark chocolate division and the milk chocolate division n these three ways:
Budgeted Actual
Cost of Truck Fleet $94,500 $76,000
# of round trips for dark chocolate 30 30
# of round trips for milk chocolate 15 10
A. Calculate the budgeted rate per round trip and allocate costs based on round trips budgeted for each division.
(The budgeted round rate per round trip is ?
This translates t indirect costs allocated to the dark chocolate division for ?
And Mike chocolate?
B.) Calculat the budgeted ate per round trip and allocate costs based on actual round trips used by each division.
(The budgeted round rate per round trip is ?
This translates t indirect costs allocated to the dark chocolate division for ?
And Mike chocolate?
C.) Calculate the actual rate per round trip and allocate costs based on actual round trips used by each division.
(The budgeted round rate per round trip is ?
This translates t indirect costs allocated to the dark chocolate division for ?
And Mike chocolate?
Aug 29, 2021 | Uncategorized
The Vang Hotel opened for business on May 1, 2012. Here is its trial balance before adjustment on May 31.
VANG HOTEL
Trial Balance
May 31, 2012 |
|
|
Debit |
|
Credit |
| Cash |
|
$ 2,500 |
|
|
| Prepaid Insurance |
|
1,800 |
|
|
| Supplies |
|
2,600 |
|
|
| Land |
|
15,000 |
|
|
| Buildings |
|
70,000 |
|
|
| Equipment |
|
16,800 |
|
|
| Accounts Payable |
|
|
|
$ 4,700 |
| Unearned Rent Revenue |
|
|
|
3,300 |
| Mortgage Payable |
|
|
|
36,000 |
| Common Stock |
|
|
|
60,000 |
| Rent Revenue |
|
|
|
9,000 |
| Salaries and Wages Expense |
|
3,000 |
|
|
| Utilities Expense |
|
800 |
|
|
| Advertising Expense |
|
500 |
|
|
|
|
$113,000 |
|
$113,000 |
Other data:
| 1. |
|
Insurance expires at the rate of $450 per month. |
| 2. |
|
A count of supplies shows $1,050 of unused supplies on May 31. |
| 3. |
|
(a) Annual depreciation is $3,600 on the building. |
|
|
(b) Annual depreciation is $3,000 on equipment. |
| 4. |
|
The mortgage interest rate is 6%. (The mortgage was taken out on May 1.) |
| 5. |
|
Unearned rent of $2,500 has been earned. |
| 6. |
|
Salaries of $900 are accrued and unpaid at May 31. |
|
|
Your answer is partially correct. Try again. |
|
|
Journalize the adjusting entries on May 31.
(Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
|
|
Your answer is partially correct. Try again. |
|
|
Prepare a ledger using T accounts. Enter the trial balance amounts and post the adjusting entries.
(Post entries in the order of journal entries presented in the previous question.)
Aug 29, 2021 | Uncategorized
The following data are applicable to process A for January 2013 of Silva Ltd.
Opening work in progress as at 01
st January: 400 Units @ Rs. 4.00 per unit.
Degree of completion: Materials 100%, Labour and Overhead 40%.
Inputs introduced during the month: 1,500 units.
Outputs transferred to the next process: 1,450 units.
Closing work in progress as at 31
st January: 300 units.
Degree of completion: Material 100%, Labour and Overhead 70%.
Normal process loss is 10% of the input during the period.
Other relevant information regarding the process is:
Materials Rs. 3,500
LabourRs. 4,500
OverheadRs. 2,500
Required:
1.Prepare the statement of production, cost and evaluation using FIFO method.
2.Prepare the process account for process A for the month of January.
Aug 29, 2021 | Uncategorized
- Rachel owns 100% of the stock of Cardinal Corporation. In the current year Rachel transfers an installment obligation, tax basis of $180,000 and fair market value of $350,000, for additional stock in Cardinal worth $350,000.
| |
|
Rachel has a taxable gain of $180,000. |
| |
|
Rachel has a taxable gain of $170,000. |
| |
|
Rachel recognizes no taxable gain on the transfer. |
| |
|
Rachel has a basis of $350,000 in the additional stock she received in Cardinal Corporation. |
| |
|
None of the above. |
Question 2
- If a transaction qualifies under A?§ 351, any recognized gain is equal to the value of the boot received.
True
False
- Jane transfers property (basis of $180,000 and fair market value of $500,000) to Green Corporation for 80% of its stock (worth $425,000) and a long term note (worth $75,000), executed by Green Corporation and made payable to Jane. As a result of the transfer:
| |
|
Jane recognizes no gain. |
| |
|
Jane recognizes a gain of $75,000. |
| |
|
Jane recognizes a gain of $270,000. |
| |
|
Jane recognizes a gain of $320,000. |
| |
|
None of the above. |
- Wade and Paul form Swan Corporation with the following investments. Wade transfers machinery (basis of $40,000 and fair market value of $100,000), while Paul transfers land (basis of $20,000 and fair market value of $90,000) and services rendered (worth $10,000) in organizing the corporation. Each is issued 25 shares in Swan Corporation. With respect to the transfers:
| |
|
Wade has no recognized gain; Paul recognizes income/gain of $80,000. |
| |
|
Neither Wade nor Paul has recognized gain or income on the transfers. |
| |
|
Swan Corporation has a basis of $30,000 in the land transferred by Paul. |
| |
|
Paul has a basis of $30,000 in the 25 shares he acquires in Swan Corporation. |
| |
|
None of the above. |
Aug 29, 2021 | Uncategorized
|
Ravsten Company uses a job order costing system.
|
|
The company applies overhead cost to jobs on the basis of machine hours. For the current year, the company estimated that it would work 42,000 machine hours and incur $191,100 in manufacturing overhead cost. The following transactions occurred during the year:
|
|
a.
|
Raw materials requisitioned for use in production, $240,000 (75% direct and 25% indirect).
|
|
b.
|
The following costs were incurred for employee services:
|
|
|
|
Direct labor
|
$
|
166,000
|
|
Indirect labor
|
$
|
24,000
|
|
Sales commissions
|
$
|
16,000
|
|
Administrative salaries
|
$
|
31,000
|
|
|
c.
|
Heat, power, and water costs incurred in the factory, $48,000.
|
|
d.
|
Insurance costs, $16,000 (85% relates to factory operations, and 15% relates to selling and administrative activities).
|
|
e.
|
Advertising costs incurred, $56,000.
|
|
f.
|
Depreciation recorded for the year, $66,000 (80% relates to factory operations, and 20% relates to selling and administrative activities).
|
|
g.
|
The company used 46,000 machine hours during the year.
|
|
h.
|
Goods that cost $486,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse.
|
|
i.
|
Sales for the year totaled $712,000. The total cost to manufacture these goods according to their job cost sheets was $481,000.
|
|
1.
|
Determine the underapplied or overapplied overhead for the year.
|
2. Prepare an income statement for the year. (Hint: No calculations are required to determine the cost of goods sold before any adjustment for underapplied or overapplied overhead.)
Aug 29, 2021 | Uncategorized
Ray, the owner of a small company, asked Holmes, CPA, to conduct an audit of the company’s records. Ray told Holmes that the audit must be completed in time to submit audited financial statements to a bank as part of a loan application. Homes immediately accepted the engagement and agreed to provide an auditor’s report within three weeks. Ray agreed to pay Holmes a fixed fee plus a bonus if the loan was granted. Holmes hired two accounting students to conduct the audit and spent several hours telling them exactly what to do. Holmes told the students not to spend time reviewing the controls, but instead to concentrate on proving the mathematical accuracy of the ledger accounts and to summarize the data in the accounting records that support Ray’s financial statements. The students followed Holmes’ instructions and after two weeks gave Holmes the financial statements, which did not include footnotes because the company did not have any unusual transactions. Holmes reviewed the statements and prepared and unqualified auditor’s report. The report, however, did not refer to GAAP or to the year to year application of such principles. Briefly describe each of the ten PCAOB guidance standards and indicate how the action(s) of Holmes resulted in a failure to comply with each standard.
Aug 29, 2021 | Uncategorized
If you received inventory without a bill, once the bill has arrived you could do all of the following, except: A) enter the bill against the inventory already recorded B) enter the inventory and then enter the bill separately C) enter the bill and wait for the inventory to arrive D) enter the inventory and bill at the same time
All the times below are when you can receive a bill except: A) when receiving a service B) when submitting a purchase order C) when receiving inventory D) after receiving inventory
The Purchase Orders window is used to record which one of the following transactions A) Cash purchases of supplies B) services received but not yet paid C) an order to purchase goods from a vendor D) a customer order to purchase goods
Aug 29, 2021 | Uncategorized
Required:
1. For 2012, compete Aspen Ridge limited partnership’s page 1 of Form 1065; Schedule K on page 4 of Form 1065; complete lines 1 and 2 of the Analysis of Net Income (Loss) on page 5 of Form 1065; schedules M 1 and M 2 on page 5 of Form 1065; and Mark Sullivan’s Scheulde K 1.
2. The forms and schedules can be found at www.irs.gov
Facts:
Aspen Ridge was formed on 4/1/09 by Mark Sullivan, its general partner, and two other limited partners when they each contirbuted equal amounts of cash to start the business. Mark has 33.33% of profits and capital interest and thhe limited partners hold the remaining 66.66% of the profits and capital interests.
Income Statement for the Year Ended Dec 2012
Sales 965,500
Sales returns and allowances (9700)
COGS (538,200)
Gross Profit from operations 417,600
other Income:
interest from money market account 3,200
gain from sale of photo 34,000
Gross Income 454,800
Expenses:
employee wages 95,400
interest on A/P 2,700
payroll and property tax 10,800
supplies 4,300
rent on retail building 18,500
depreciation on furniture 4,550
advertising 8,300
guaranteed payment to Mark 35,000
utilities 6,400
accounting and legal services 4,400
meals and entertainment 2,240
charitable contributions 3,300
misc exp 5,750
total exp (201,640)
Net Income for Books $ 253,160
Notes:
1. Aspen Ridge has total assets of $1,725,800 and total liabilities of $540,300 at the beginning of the year and total assets of $2,065,300 and total liabilities of $806,640 at the end of the year.
2. Partnership liabilities consist of A/P, and Mark, as general partner, is legally responsible for paying these liabilities if partnership cannot.
3. 2 years ago, Aspen Ridge purchased a photo with the intent to display it permanently in the store. This year, the photo was sold to a local ski lodge where it now hangs on the wall. The $34,000 recognized gain from the sal of the photo is reflected in the income statement above.
4. For tax purposes, Aspen Ridge has consistently elected under Section 179 to expense any furniture or fixtures purchased every year. As a result, it does not have a tax basis in any of its depreciable assets. This year, Aspen Ridge expenses $17,300 of signs and display cases for tax purposes.
5. On Nov. 20th, Aspen Ridge distributed $180,000 ($60,000 each partner) to the partners.
6. Misc. expenses include a $900 fine for violating a local signage ordinance.
7. Aspen Ridge maintains its books using GAAP.
Aug 29, 2021 | Uncategorized
Below is the Retained Earnings account for the year 2014 for Acadian Corp.
| Retained earnings, January 1, 2014 |
|
|
|
$261,530 |
| Add: |
|
|
|
|
| Gain on sale of investments (net of tax) |
|
$45,130 |
|
|
| Net income |
|
88,430 |
|
|
Refund on litigation with government, related to the year 2011
(net of tax) |
|
25,530 |
|
|
Recognition of income earned in 2013, but omitted from income
statement in that year (net of tax) |
|
29,330 |
|
188,420 |
|
|
|
|
449,950 |
| Deduct: |
|
|
|
|
| Loss on discontinued operations (net of tax) |
|
38,930 |
|
|
| Write off of goodwill (net of tax) |
|
63,930 |
|
|
Cumulative effect on income of prior years in changing from
LIFO to FIFO inventory valuation in 2014 (net of tax) |
|
27,130 |
|
|
| Cash dividends declared |
|
35,930 |
|
165,920 |
| Retained earnings, December 31, 2014 |
|
|
|
$284,030 |
Prepare a corrected retained earnings statement. Acadian Corp. normally sells investments of the type mentioned above. FIFO inventory was used in 2014 to compute net income. (List items that increase retained earnings first.)
Aug 29, 2021 | Uncategorized
Rhino’s Landscaping sells a quality brand of hoes, shovels, and rakes in a sales mix of 2:4:2 (25%, 50%, 25%). The company’s fixed costs are $61,000. Product data include the following:
Hoes Unit sales price $12……………..Unit Variable costs $8
Shovels unit sales price $15………….unit variable costs $7
Rakes unit sales price $16…………….unit variable costs $8
Required
a.) compute the overall contribution margin per unit for the company.
b.)Determine overall breakeven point for the company (total units)
c.)Calculate the breakeven point in units for each product:
Hoes
Shovels
Rakes
d.)Determine the overall breakeven point in total sales dollars for the company
Aug 29, 2021 | Uncategorized
|
Rickers Inc. produces and sells two products. Data concerning those products for the most recent month appear below:
|
|
Product O66C |
Product V67G |
| Sales |
$42,000 |
$47,000 |
| Variable expenses |
$13,000 |
$28,830 |
|
The fixed expenses of the entire company were $38,960. The break even point in sales dollars for the entire company is closest to: (Round your intermediate calculations to 2 decimal places and final answer to the nearest dollar amount.)
|
| |
$46,080 |
| |
$38,960 |
| |
$73,509 |
| |
$80,790 |
Aug 29, 2021 | Uncategorized
|
The Robinson Corporation has $53 million of bonds outstanding that were issued at a coupon rate of 7 1/2 percent seven years ago. Interest rates have fallen to 6 1/2 percent. Mr. Brooks, the vice president of finance, does not expect rates to fall any further. The bonds have 18 years left to maturity, and Mr. Brooks would like to refund the bonds with a new issue of equal amount also having 18 years to maturity. The Robinson Corporation has a tax rate of 35 percent. The underwriting cost on the old issue was 2.5 percent of the total bond value. The underwriting cost on the new issue will be 1.8 percent of the total bond value. The original bond indenture contained a five year protection against a call, with a 9.5 percent call premium starting in the sixth year and scheduled to decline by one half percent each year thereafter. (Consider the bond to be 7 years old for purposes of computing the premium). Assume the discount rate is equal to the aftertax cost of new debt rounded to the nearest whole number.
|
|
What would be the aftertax cost of the call premium at the end of year 9 (in dollar value)? (Please explain all steps )
|
| Aftertax cost of the call premium |
$
|
Aug 29, 2021 | Uncategorized
Sanderson Company’s year end balance sheets follow.
|
At December 31 |
|
|
2012 |
|
|
2011 |
|
|
2010 |
|
Assets |
|
|
|
|
|
|
|
|
|
|
Cash |
|
$ |
29,607 |
|
$ |
35,657 |
|
$ |
35,343 |
|
Accounts receivable, net |
|
|
86,677 |
|
|
62,399 |
|
|
46,653 |
|
Merchandise inventory |
|
|
106,800 |
|
|
82,456 |
|
|
51,708 |
|
Prepaid expenses |
|
|
9,342 |
|
|
8,993 |
|
|
3,848 |
|
Plant assets, net |
|
|
274,457 |
|
|
247,463 |
|
|
219,448 |
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
506,883 |
|
$ |
436,968 |
|
$ |
357,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
126,214 |
|
$ |
72,371 |
|
$ |
46,182 |
|
Long term notes payable secured by
mortgages on plant assets |
|
|
95,294 |
|
|
102,513 |
|
|
78,108 |
|
Common stock, $10 par value |
|
|
162,500 |
|
|
162,500 |
|
|
162,500 |
|
Retained earnings |
|
|
122,875 |
|
|
99,584 |
|
|
70,210 |
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
$ |
506,883 |
|
$ |
436,968 |
|
$ |
357,000 |
|
|
|
|
|
|
|
|
|
|
|
| (1) |
Compute the current ratio for the year ended 2012, 2011, and 2010. (Round your answers to 2 decimal places.)
|
| (2) |
Compute the acid test ratio for the year ended 2012, 2011, and 2010. (Round your answers to 2 decimal places.)
|
Aug 29, 2021 | Uncategorized
Sarah Jones, the manager of the Teen Division of Ellen Clothing Company, was evaluating the acquisition of a new embroidery machine. The budgeted operating income of the Teen Division was $4,000,000 with total assets of $22,000,000 and noninterest bearing current liabilities of $1,000,000. The proposed investment would add $450,000 to operating income and would require an additional investment of $3,500,000. The targeted rate of return for the Teen Division is 14%. Ignoring taxes, how much is the return on investment of the Teen division if the embroidery machine is purchased?
Answer
Sarah Jones, the manager of the Teen Division of Ellen Clothing Company, was evaluating the acquisition of a new embroidery machine. The budgeted operating income of the Teen Division was $4,000,000 with total assets of $22,000,000 and noninterest bearing current liabilities of $1,000,000. The proposed investment would add $450,000 to operating income and would require an additional investment of $3,500,000. The targeted rate of return for the Teen Division is 14%. Ignoring taxes, how much is the return on investment of the Teen division if the embroidery machine is purchased?
Answer
Aug 29, 2021 | Uncategorized
|
Scheney Company uses the weighted average method in its process costing system. The company’s work in process inventory on March 31 consisted of 29,000 units. The units in the ending work in process inventory were 100% complete with respect to materials and 70% complete with respect to labor and overhead. If the cost per equivalent unit for March was $2.00 for materials and $4.50 for labor and overhead, the total cost in the March 31 work in process inventory was:
|
| |
$97,150 |
| |
$188,500 |
| |
$149,350 |
| |
$131,950 |
Aug 29, 2021 | Uncategorized
A school district receives a grant from the federal government to support programs directed at ”special needs” students. The grant is a matching grant in which each dollar spent by the school district on teacher salaries for special needs education will be matched up to $1 million by the federal government. The federal government agrees that it will advance monies to the school district so that the school district will be able to pay a portion of each month’s teachers’ salaries from federal funds. The grant’s contractual terms stipulate that the school district must not com mingle the federal monies that it has been advanced with other monies of the school district. The school district also is required to file quarterly and annual reports showing the amounts that the school district has spent on special needs education and the resultant amount that is either a receivable from or payable to the federal government. As a new comptroller, you must decide which fund or funds should be used to account for the federal grant and the school district match. After some research, you believe that the school district has some options as to the governmental funds that it will use for financial reporting purposes. What are the options? In which fund or funds, would you report the transactions associated with the federal grant and school district match? Should they be accounted for in the same fund? What factors influenced your decision?
Aug 29, 2021 | Uncategorized
Screen Time is a direct marketer of popular DVD movies. Following is information about its revenue and cost structure:
| Selling Price |
$13.00 per DVD |
| Variable Costs: Production (manufacturing costs) |
$3.00 per DVD |
| Selling and Administration (non manufacturing costs) |
$1.00 per DVD |
Fixed Costs:
| Production (manufacturing costs) |
$1,000,000 per year |
| Selling and Administration (non mfg costs) |
$3,000,000 per year |
In which range does the break even point fall? Answer
| |
A. |
Between 400,001 and 450,000 units |
| |
B. |
Between 450,001 and 500,000 units |
| |
C. |
Between 350,001 and 400,000 units |
| |
D. |
Between 300,000 and 350,000 units |
Aug 29, 2021 | Uncategorized
Sedona Company set the following standard costs for one unit of its product for 2013.
|
|
|
|
|
| Direct material (15 Ibs. @ $3.20 per Ib.) |
|
$ |
48.00 |
|
| Direct labor (10 hrs. @ $9.50 per hr.) |
|
|
95.00 |
|
| Factory variable overhead (10 hrs. @ $4.60 per hr.) |
|
|
46.00 |
|
| Factory fixed overhead (10 hrs. @ $2.20 per hr.) |
|
|
22.00 |
|
|
|
|
|
|
| Standard cost |
|
$ |
211.00 |
|
|
|
|
|
|
|
|
The $6.80 ($4.60 + $2.20) total overhead rate per direct labor hour is based on an expected operating level equal to 75% of the factory’s capacity of 56,000 units per month. The following monthly flexible budget information is also available.
|
|
|
Operating Levels (% of capacity) |
|
|
|
|
|
|
|
|
70% |
|
|
|
75% |
|
|
|
80% |
|
| Budgeted output (units) |
|
|
39,200 |
|
|
|
42,000 |
|
|
|
44,800 |
|
| Budgeted labor (standard hours) |
|
|
392,000 |
|
|
|
420,000 |
|
|
|
448,000 |
|
| Budgeted overhead (dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
| Variable overhead |
|
$ |
1,803,200 |
|
|
$ |
1,932,000 |
|
|
$ |
2,060,800 |
|
| Fixed overhead |
|
|
924,000 |
|
|
|
924,000 |
|
|
|
924,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total overhead |
|
$ |
2,727,200 |
|
|
$ |
2,856,000 |
|
|
$ |
2,984,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the current month, the company operated at 70% of capacity, employees worked 371,000 hours, and the following actual overhead costs were incurred.
|
|
|
|
|
|
| Variable overhead costs |
|
$ |
1,716,000 |
|
| Fixed overhead costs |
|
|
1,015,200 |
|
|
|
|
|
|
| Total overhead costs |
|
$ |
2,731,200 |
|
|
|
|
|
|
|
Compute the variable overhead spending and efficiency variances. (Round “AVR” and “SVR” to 2 decimal places.)
Aug 29, 2021 | Uncategorized
|
Selected account balances from the adjusted trial balance for Olinda Corporation as of its calendar year end December 31, 2013, follow.
|
|
|
Debit |
Credit |
| a. |
Interest revenue |
|
|
|
|
|
$ |
14,300 |
|
| b. |
Depreciation expense”Equipment. |
|
$ |
34,300 |
|
|
|
|
|
| c. |
Loss on sale of equipment |
|
|
26,150 |
|
|
|
|
|
| d. |
Accounts payable |
|
|
|
|
|
|
44,300 |
|
| e. |
Other operating expenses |
|
|
106,700 |
|
|
|
|
|
| f. |
Accumulated depreciation”Equipment |
|
|
|
|
|
|
71,900 |
|
| g. |
Gain from settlement of lawsuit |
|
|
|
|
|
|
44,300 |
|
| h. |
Accumulated depreciation”Buildings |
|
|
|
|
|
|
175,100 |
|
| i. |
Loss from operating a discontinued segment (pretax) |
|
|
18,550 |
|
|
|
|
|
| j. |
Gain on insurance recovery of tornado damage (pretax and extraordinary) |
|
|
|
|
|
|
29,420 |
|
| k. |
Net sales |
|
|
|
|
|
|
1,001,500 |
|
| l. |
Depreciation expense”Buildings |
|
|
52,300 |
|
|
|
|
|
| m. |
Correction of overstatement of prior year’s sales (pretax) |
|
|
16,300 |
|
|
|
|
|
| n. |
Gain on sale of discontinued segment’s assets (pretax) |
|
|
|
|
|
|
35,500 |
|
| o. |
Loss from settlement of lawsuit |
|
|
24,050 |
|
|
|
|
|
| p. |
Income taxes expense |
|
|
? |
|
|
|
|
|
| q. |
Cost of goods sold |
|
|
485,500 |
|
|
|
|
|
|
ASSUME THE COMPANY’S INCOME TAX RATE IS 30% FOR ALL ITEMS.
What is the amount of income from continuing operations before income taxes?
What is the amount of the income taxes expense?
What is the amount of income from continuing operations?
What is the total amount of after tax income (loss) associated with the discontinued segment?
What is the amount of income (loss) before the extraordinary items?
What is the amount of net income for the year?
Aug 29, 2021 | Uncategorized
| Selected balance sheet accounts for Tibbetts Company on September 30, 2010, are as follows: |
|
|
|
|
| Cash |
$ |
41,600 |
|
| Marketable securities |
|
75,400 |
|
| Accounts receivable, net |
|
111,800 |
|
| Inventory |
|
117,000 |
|
| Prepaid expenses |
|
18,200 |
|
|
|
|
|
| Total current assets |
$ |
364,000 |
|
|
|
|
|
| Accounts payable |
$ |
107,800 |
|
| Other accrued liabilities |
|
24,200 |
|
| Short term debt |
|
44,000 |
|
|
|
|
|
| Total current liabilities |
$ |
176,000 |
|
|
|
|
|
|
| Requirement 1: |
|
Calculate the working capital, current ratio, and acid test ratio for Tibbetts Company as of September 30, 2010. (Round “ratios” to 2 decimal places. Omit the “$” sign in your response.)
|
|
|
| Working capital |
$ |
| Current ratio |
|
| Acid test ratio |
|
|
Aug 29, 2021 | Uncategorized
The service company. Excellent Maids, cleans hotel rooms at resorts on Hilton Head Island. Excellent has identified three activities involved in cleaning. Information on those activities for the month of May follow:
| Cost Pools |
Cost Drivers |
Estimated Overhead Cost |
Expected
Use of Cost Drivers |
| Cleaning bed linens |
Number of beds |
$72,000 |
48,000 beds |
| Cleaning bathrooms |
Number of bathrooms |
64,000 |
32,000 bathrooms |
| Other cleaning |
Number of hotel rooms and public spaces |
45,000 |
18,000 spaces
|
At the Calypso Resort, the company cleaned 900 rooms during March, 1,200 public spaces, changed 1,600 beds, and cleaned 900 bath rooms. Using ABC, how much overhead is applied to each hotel room cleaned?
Aug 29, 2021 | Uncategorized
|
Shown below are responsibility income statements for Butterfield, Inc., for the month of March.
|
|
Investment Centers
|
|
|
Butterfield, Inc
|
|
Division 1
|
|
Division 2
|
|
|
Dollars
|
|
%
|
|
Dollars
|
|
%
|
|
Dollars
|
|
%
|
|
|
Sales
|
$
|
460,000
|
|
100.00
|
%
|
|
$
|
290,000
|
|
100
|
%
|
|
$
|
170,000
|
|
100
|
%
|
|
|
Variable costs
|
|
225,000
|
|
48.91
|
|
|
|
174,000
|
|
60
|
|
|
|
51,000
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution margin
|
$
|
235,000
|
|
51.09
|
%
|
|
$
|
116,000
|
|
40
|
%
|
|
$
|
119,000
|
|
70
|
%
|
|
|
Fixed costs traceable to divisions
|
|
142,500
|
|
30.98
|
|
|
|
60,900
|
|
21
|
|
|
|
81,600
|
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Division responsibility margin
|
$
|
92,500
|
|
20.11
|
%
|
|
$
|
55,100
|
|
19
|
%
|
|
$
|
37,400
|
|
22
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common fixed costs
|
|
50,000
|
|
10.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
$
|
42,500
|
|
9.24
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit Centers
|
|
|
Division 1
|
|
Product A
|
|
Product B
|
|
|
Dollars
|
|
%
|
|
Dollars
|
|
%
|
|
Dollars
|
|
%
|
|
|
Sales
|
$
|
290,000
|
|
100
|
%
|
|
$
|
116,000
|
|
100.00
|
%
|
|
$
|
174,000
|
|
100.00
|
%
|
|
|
Variable costs
|
|
174,000
|
|
60
|
|
|
|
52,200
|
|
45.00
|
|
|
|
121,800
|
|
70.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution margin
|
$
|
116,000
|
|
40
|
%
|
|
$
|
63,800
|
|
55.00
|
%
|
|
$
|
52,200
|
|
30.00
|
%
|
|
|
Fixed costs traceable to products
|
|
40,600
|
|
14
|
|
|
|
12,180
|
|
10.50
|
|
|
|
28,420
|
|
16.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product responsibility margin
|
$
|
75,400
|
|
26
|
%
|
|
$
|
51,620
|
|
44.50
|
%
|
|
$
|
23,780
|
|
13.67
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common fixed costs
|
|
20,300
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Responsibility margin for division
|
$
|
55,100
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a.
|
The company plans to initiate an advertising campaign for one of the two products in Division 1. The campaign would cost $3,000 per month and is expected to increase the sales of whichever product is advertised by $40,000 per month. Compute the expected increase in the responsibility margin of Division 1 assuming that (1) product A is advertised and (2) product B is advertised. (Omit the “$” sign in your response.)
|
|
Expected change in responsibility margin
|
|
Product A
|
$ 19000
|
|
Product B
|
$ 9000
|
|
|
e.
|
Prepare an income statement for Butterfield, Inc., by division, under the assumption that in April the monthly sales in Division 2 increase to $190,000 Organize this income statement in the format illustrated above, including columns for percentages. (Round your answers to 2 decimal places. Omit the “$” sign in your response.)
|
|
BUTTERFIELD, INC.
Income Statement by Divisions
For the Month Ended March 31
|
|
|
|
Divisions
|
|
Butterfield, Inc.
|
Division 1
|
Division 2
|
|
Dollars
|
Percent
|
Dollars
|
Percent
|
Dollars
|
Percent
|
|
(Click to select)Fixed costs traceable to divisionsContribution marginSalesVariable costsCommon costs
|
$
|
|
$
|
|
$
|
|
|
(Click to select)Variable costsCommon costsFixed costs traceable to divisionsSalesContribution margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Click to select)Variable costsContribution marginCommon costsFixed costs traceable to divisionsSales
|
$
|
|
$
|
|
$
|
|
|
(Click to select)Variable costsFixed costs traceable to divisionsSalesContribution marginCommon costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Division responsibility margin
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
|
(Click to select)Common costsVariable costsFixed costs traceable to divisionsContribution marginSales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
$
|
|
|
|
|
|
Aug 29, 2021 | Uncategorized
Periodic Inventory Using FIFO,LIFO, and Weighted Average Cost Methods
The units of an item available for sale during the year were as follows:
| Jan. 1 |
Inventory |
17 |
units at $27 |
$459 |
| July 7 |
Purchase |
14 |
units at $29 |
406 |
| Nov. 23 |
Purchase |
13 |
units at $30 |
390 |
| Available for sale |
44 |
units |
$1,255 |
There are 13 units of the item in thephysical inventory at December 31. The periodic inventory system is used. Determine the inventory cost using (a) the first in, first out (FIFO) method; (b) the last in, first out (LIFO) method; and (c) the weighted average cost method (round per unit cost to two decimal places and your final answer to the nearest whole dollar).
| a. |
First in, first out (FIFO) |
$ |
| b. |
Last in, first out (LIFO) |
$ |
| c. |
Weighted average cost |
$
|
Aug 29, 2021 | Uncategorized
|
Perit Industries has $100,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are:
|
|
Project A |
Project B |
| Cost of equipment required |
$100,000 |
$0 |
| Working capital investment required |
$0 |
$100,000 |
| Annual cash inflows |
$21,000 |
$15,750 |
| Salvage value of equipment in six years |
$8,000 |
$0 |
| Life of the project |
6 years |
6 years |
|
|
The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries’ discount rate is 14%. (Ignore income taxes.)
|
|
Solve this problem using your financial calculator or Excel, NOT the tables in the chapter.
|
1. Calculate the NVP for project B?
Aug 29, 2021 | Uncategorized
Perpetual Inventory Using LIFO
Beginning inventory, purchases, and sales for Item CZ83 are as follows:
| October 1 |
|
Inventory |
108 units @ $17 |
| 5 |
|
Sale |
86 units |
| 11 |
|
Purchase |
120 units @ $20 |
| 21 |
|
Sale |
101 units |
Assuming a perpetual inventory system and using the last in, first out (LIFO) method, determine (a) the cost of merchandise sold on October 21 and (b) the inventory on October 31.
| a. Cost of merchandise sold on October 21 |
$ |
| b. Inventory on October 31 |
$
|
Aug 29, 2021 | Uncategorized
Phil Collins Realty Corporation purchased a tract of unimproved land for $52,000. This land was improved and subdivided into building lots at an additional cost of $30,000. These building lots were all of the same size but owing to differences in location were offered for sale at different prices as follows.
| Group |
|
No. of Lots |
|
Price per Lot |
| 1 |
|
9 |
|
|
$4,050 |
|
| 2 |
|
17 |
|
|
5,400 |
|
| 3 |
|
20 |
|
|
2,700 |
|
Operating expenses for the year allocated to this project total $16,300. Lots unsold at the year end were as follows.
| Group 1 |
|
5 lots |
| Group 2 |
|
7 lots |
| Group 3 |
|
4 lots |
At the end of the fiscal year Phil Collins Realty Corporation instructs you to arrive at the net income realized on this operation to date. (Round ratios for computational purposes to 1 decimal place, e.g 78.7% and final answer to 0 decimal places, e.g. 5,845.)
Net Income $________
Aug 29, 2021 | Uncategorized
|
Pike Seafood Company purchases lobsters and processes them into tails and flakes. It sells the lobster tails for $20 per pound and the flakes for $15 per pound. On average, 100 pounds of lobster are processed into 57 pounds of tails and 24 pounds of flakes, with 19 pounds of waste. Assume that the company purchased 3,000 pounds of lobster for $6.00 per pound and processed the lobsters with an additional labor cost of $1,800. No materials or labor costs are assigned to the waste. The company sold 1,510 pounds of tails and 710 pounds of flakes.
|
references
5. value:
10.00 points
Exercise 21 14B Part 1
| (1) |
What is the allocated cost of the sold items? The company allocates joint costs on a value basis.(Round your cost per pound to 2 decimal places. Omit the “$” sign in your response.)
|
|
Cost of goods sold |
| Lobster tails |
$ |
| Lobster flakes |
$ |
|
check my workeBook Linkreferences
6. value:
10.00 points
Exercise 21 14B Part 2
| (2) |
What is the allocated cost of the ending inventory? The company allocates joint costs on a value basis. (Round your cost per pound to 2 decimal places. Omit the “$” sign in your response.)
|
|
Cost of the ending inventory |
| Lobster tails |
$ |
| Lobster flakes |
$ |
|
check my workeBook Linkreferences
A?©
2013 McGraw Hill Education. All rights reserved.
Aug 29, 2021 | Uncategorized
|
Pillar Steel Co., which began operations on January 4, 2011, had the following subsequent transactions and events in its long term investments.
|
| 2011 |
| Jan. |
5 |
Pillar purchased 30,000 shares (20% of total) of Kildaire’s common stock for $780,000. |
| Oct. |
23 |
Kildaire declared and paid a cash dividend of $1.60 per share. |
| Dec. |
31 |
Kildaire’s net income for 2011 is $582,000, and the fair value of its stock at December 31 is $27.75 per share.
|
| Oct. |
15 |
Kildaire declared and paid a cash dividend of $1.30 per share. |
| Dec. |
31 |
Kildaire’s net income for 2012 is $738,000, and the fair value of its stock at December 31 is $30.45 per share.
|
| 2013 |
|
|
Jan. 2 Pillar sold all of its investment in Kildaire for $947,000 cash.
Question:
Compute the net increase or decrease in Pillar’s equity from January 5, 2011, through January 2, 2013, resulting from its investment in Kildaire.
|
Aug 29, 2021 | Uncategorized
| The Pioneer Company has provided the following account balances: |
|
| Cash $38,600; |
| Short term investments $4,600; |
| Accounts receivable $6,600; |
| Inventory $51,000; |
| Long term notes receivable $2,600; |
| Equipment $99,000; |
| Factory Building $186,000; |
| Intangible assets $6,600; |
| Accounts payable $29,400; |
| Accrued liabilities payable $3,700; |
| Short term notes payable $15,200; |
| Long term notes payable $95,000; |
| Contributed capital $186,000; |
| Retained earnings $65,700. |
| What is Pioneer’s current ratio? (Round your final answer to two decimal places.) |
| |
2.09 |
| |
2.26 |
| |
3.05 |
| |
1.03
| The Pioneer Company has provided the following account balances: |
|
| Cash $39,100; |
| Short term investments $5,100; |
| Accounts receivable $7,100; |
| Inventory $53,500; |
| Long term notes receivable $3,100; |
| Equipment $101,500; |
| Factory Building $191,000; |
| Intangible assets $7,100; |
| Accounts payable $28,900; |
| Accrued liabilities payable $3,450; |
| Short term notes payable $16,200; |
| Long term notes payable $97,500; |
| Contributed capital $191,000; |
| Retained earnings $70,450. |
|
| What are Pioneer’s total current assets? |
| |
$51,300 |
| |
$104,800 |
| |
$54,400 |
| |
$44,200 |
|
| The Pioneer Company has provided the following account balances: |
|
| Cash $38,300; |
| Short term investments $4,300; |
| Accounts receivable $6,300; |
| Inventory $49,500; |
| Long term notes receivable $2,300; |
| Equipment $97,500; |
| Factory Building $183,000; |
| Intangible assets $6,300; |
| Accounts payable $29,700; |
| Accrued liabilities payable $3,850; |
| Short term notes payable $14,600; |
| Long term notes payable $93,500; |
| Contributed capital $183,000; |
| Retained earnings $62,850. |
|
| What are Pioneer’s total current liabilities? |
| |
$44,300 |
| |
$33,550 |
| |
$48,150 |
| |
$141,650 |
Aug 29, 2021 | Uncategorized
Plant, properties, and equipment are stated at cost less accumulated depreciation. Expenditures for betterments are capitalized, whereas normal repairs and maintenance are expensed as incurred. The units of production method of depreciation is used for major pulp and paper mills, and the straight line method is used for other plants and equipment.
Annual straight line depreciation rates are, for buildings 2A??1 percent to 8A??1percent, and for machinery andequipment 5percent to 33 percent.
Instructions
a. Are the depreciation methods used in the company’s financial statements determined by current income tax laws? If not, who is responsible for selecting these methods? Explain.
Aug 29, 2021 | Uncategorized
| Pong Incorporated’s income statement for the most recent month is given below. |
|
Total |
Store G |
Store H |
| Sales |
$158,300 |
$63,100 |
$95,200 |
| Variable expenses |
53,767 |
30,919 |
22,848 |
|
|
|
|
| Contribution margin |
104,533 |
32,181 |
72,352 |
| Traceable fixed expenses |
68,400 |
17,000 |
51,400 |
|
|
|
|
| Segment margin |
36,133 |
$15,181 |
$20,952 |
| Common fixed expenses |
22,100 |
|
|
|
|
|
|
| Net operating income |
$ 14,033 |
|
|
|
|
|
|
|
If Store G sales increase by $46,200 with no change in fixed costs, the overall company net operating income should:
|
| |
increase by $28,182 |
| |
increase by $23,562 |
| |
increase by $4,620 |
| |
increase by $9,240 |
Aug 29, 2021 | Uncategorized
Preparing financial statements
Presented here are the accounts of Gate City Answering Service for the year ended
December 31, 2014.
Land $ 8,000 Owner contribution, 2014 $ 28,000
Notes Payable 32,000 Accounts Payable 11,000
Property Tax Expense 2,600 Accounts Receivable 1,000
Wayne, Withdrawals 30,000 Advertising Expense 15,000
Rent Expense 13,000 Building 145,200
Salaries Expense 65,000 Cash 3,000
Salaries Payable 1,300 Equipment 16,000
Service Revenue 192,000 Insurance Expense 2,500
Office Supplies 10,000 Interest Expense 7,000
Wayne, Capital, 12/31/13 54,000
Net Income $86,900
Requirements
1. Prepare Gate City Answering Service’s income statement
2. Prepare the statement of owner’s equity.
3. Prepare the balance sheet.
Aug 29, 2021 | Uncategorized
Presented below is the balance sheet of Sargent Corporation for the current year, 2014.
SARGENT CORPORATION
BALANCE SHEET
DECEMBER 31, 2014 |
| Current assets |
|
$ 489,430 |
|
Current liabilities |
|
$ 384,430 |
| Investments |
|
644,430 |
|
Long term liabilities |
|
1,004,430 |
| Property, plant, and equipment |
|
1,724,430 |
|
Stockholders’ equity |
|
1,774,430 |
| Intangible assets |
|
305,000 |
|
|
|
$3,163,290 |
|
|
$3,163,290 |
|
|
|
|
The following information is presented.
| 1. |
|
The current assets section includes cash $154,430, accounts receivable $174,430 less $14,430 for allowance for doubtful accounts, inventories $184,430, and unearned rent revenue $9,430. Inventory is stated on the lower of FIFO cost or market. |
| 2. |
|
The investments section includes the cash surrender value of a life insurance contract $44,430; investments in common stock, short term (trading) $84,430 and long term (available for sale) $274,430; and bond sinking fund $241,140. The cost and fair value of investments in common stock are the same. |
| 3. |
|
Property, plant, and equipment includes buildings $1,044,430 less accumulated depreciation $364,430; equipment $454,430 less accumulated depreciation $184,430; land $504,430; and land held for future use $270,000. |
| 4. |
|
Intangible assets include a franchise $169,430; goodwill $104,430; and discount on bonds payable $31,140. |
| 5. |
|
Current liabilities include accounts payable $144,430; notes payable short term $84,430 and long term $124,430; and income taxes payable $31,140. |
| 6. |
|
Long term liabilities are composed solely of 7% bonds payable due 2022. |
| 7. |
|
Stockholders’ equity has preferred stock, no par value, authorized 200,000 shares, issued 74,430 shares for $446,580; and common stock, $1.00 par value, authorized 400,000 shares, issued 104,430 shares at an average price of $10. In addition, the corporation has retained earnings of $283,550. |
Prepare a balance sheet in good form, adjusting the amounts in each balance sheet classification as affected by the information given above.
(List Current Assets in order of liquidity. List Property, Plant and Equipment in order of Land, Building and Equipment. Enter account name only and do not provide the descriptive information provided in the question.)
Aug 29, 2021 | Uncategorized
Presented below is information related to Dino Radja Company.
| Date |
|
Ending Inventory
(End of Year Prices) |
|
Price
Index |
| December 31, 2011 |
|
|
$ 51,400 |
|
|
100 |
| December 31, 2012 |
|
|
161,736 |
|
|
138 |
| December 31, 2013 |
|
|
161,476 |
|
|
158 |
| December 31, 2014 |
|
|
186,561 |
|
|
171 |
| December 31, 2015 |
|
|
220,064 |
|
|
184 |
| December 31, 2016 |
|
|
259,540 |
|
|
190 |
Compute the ending inventory for Dino Radja Company for 2011 through 2016 using the dollar value LIFO method.
|
|
|
Ending Inventory |
| 2011 |
|
|
$ |
| 2012 |
|
|
$ |
| 2013 |
|
|
$ |
| 2014 |
|
|
$ |
| 2015 |
|
|
$ |
| 2016 |
|
|
$ |
Aug 29, 2021 | Uncategorized
Presented below are a number of balance sheet items for Montoya, Inc., for the current year, 2014.
Goodwill $ 125,000 Accumulated depreciation”equipment $ 292,000
Payroll taxes payable 177,591 Inventory 239,800
Bonds payable 300,000 Rent payable (short term) 45,000
Discount on bonds payable 15,000 Income taxes payable 98,362
Cash 360,000 Rent payable (long term) 480,000
Land 480,000 Common stock, $1 par value 200,000
Notes receivable 445,700 Preferred stock, $10 par value 150,000
Notes payable (to banks) 265,000 Prepaid expenses 87,920
Accounts payable 490,000 Equipment 1,470,000
Retained earnings ? Equity investments (trading) 121,000
Income taxes receivable 97,630 Accumulated depreciation”buildings 270,200
Notes payable (long term) 1,600,000 Buildings 1,640,000
Prepare a classified balance sheet in good form. Common stock authorized was 400,000 shares, and preferred stock authorized was 20,000 shares. Assume that notes receivable and notes payable are short term, unless stated otherwise. Cost and fair value of equity investments (trading) are the same.
Aug 29, 2021 | Uncategorized
Priscilla has the following inventory information.
| July 1 |
|
Beginning Inventory |
|
20 units at $19 |
|
$ 380 |
| 7 |
|
Purchases |
|
70 units at $20 |
|
1,400 |
| 22 |
|
Purchases |
|
10 units at $23 |
|
230 |
|
|
|
|
|
|
$2,010
|
Aug 29, 2021 | Uncategorized
Problem 13 1A Stockholders equity transactions and analysis LO C2, P1
|
Kinkaid Co. is incorporated at the beginning of this year and engages in a number of transactions. The following journal entries impacted its stockholders, equity during its first year of operations.
|
| |
General Journal |
Debit |
Credit |
| a. |
Cash |
300,000 |
|
| |
Common Stock, $25 Par Value |
|
250,000 |
| |
Paid In Capital in Excess of Par Value, Common Stock |
|
50,000 |
| |
|
|
|
| b. |
Organization Expenses |
200,000 |
|
| |
Common Stock, $25 Par Value |
|
129,000 |
| |
Paid In Capital in Excess of Par Value, Common Stock |
|
71,000 |
| |
|
|
|
| c. |
Cash |
46,000 |
|
| |
Accounts Receivable |
18,500 |
|
| |
Building |
82,200 |
|
| |
Notes Payable |
|
59,700 |
| |
Common Stock, $25 Par Value |
|
57,000 |
| |
Paid In Capital in Excess of Par Value, Common Stock |
|
30,000 |
| |
|
|
|
| d. |
Cash |
145,000 |
|
| |
Common Stock, $25 Par Value |
|
77,000 |
| |
Paid In Capital in Excess of Par Value, Common Stock |
|
68,000 |
|
| |
How many shares of common stock are outstanding at year end?
Numbers of outstanding shares:
3.
|
What is the amount of minimum legal capital (based on par value) at year end?
Minimum legal capital:
4.
| |
What is the total paid in capital at year end? |
|
|
Total paid in capital:
5.
|
What is the book value per share of the common stock at year end if total paid in capital plus retained earnings equals $786,000?
|
|
|
|
. |
|
|
Aug 29, 2021 | Uncategorized
Problem 18 36 Basic Earnings per Share”Simple Capital Structure
(LO2) The following condensed financial statements for Hudson Corporation were prepared by the accounting department:
Instructions: Compute the basic EPS under each of the following independent assumptions (the company has a simple capital structure). Show all calculations.
1. No change in the capital structure occurred in 2013.
2. On December 31, 2012, there were 160,000 shares outstanding. On May 1, 2013, 60,000 shares were sold at par, and on October 1, 2013, 30,000 shares were sold at par.
3. On December 31, 2012, there were 200,000 shares outstanding. On July 1, 2013, the company issued a 25% stock dividend.
Discussion Case 18 47 But Why Is EPS Different if Income Is the Same?
Fredrica Brown has $200,000 that she plans to invest in growth stocks. She has narrowed her choices to two companies in the same industry, White Inc. and Adam Inc. Each company has a documented history of growth and an established, strong position within the industry. Last year, each company reported net income of $10 million and a return on owners’ investment of 17%; however, White reported EPS of $1.32, and Adam reported EPS of $2.75.
Fredrica requests that you explain why the EPS differs when other measures of activity and profitability are similar. What factors contribute to and limit the comparability of these data?
Aug 29, 2021 | Uncategorized
|
Production and cost data for the month of February for Process A of the Packer manufacturing Company follow:
|
|
|
Units in process, February 1
(100% complete with respect to materials,
25% complete with respect to conversion cost) |
|
3,600 |
| New units started in process |
|
8,800 |
| Units completed |
|
7,000 |
Units in process, February 28
(100% complete with respect to materials,
1/3 complete with respect to conversion cost) |
|
5,400 |
|
|
|
| Work in process inventory, February 1: |
|
|
| Materials |
$ |
680 |
| Conversion |
$ |
180 |
| Costs incurred in February: |
|
|
| Materials issued |
$ |
3,598 |
| Conversion |
$ |
1,976 |
|
|
The company uses the weighted average cost method in its process costing system.
|
| a. |
Calculate the equivalent units and cost per equivalent unit for February for materials and for conversion costs. (Do not round intermediate calculations. Round your cost per equivalent unit answers to 3 decimal places. Omit the “$” sign in your response.)
|
|
Materials |
Conversion |
| Equivalent units of production |
|
|
| Cost per equivalent unit |
$ |
$ |
|
| b. |
Determine the cost transferred to finished goods. (Do not round intermediate calculations. Round your cost per equivalent unit answers to 3 decimal places. Omit the “$” sign in your response.)
|
| Cost transferred to finished goods |
$ |
| c. |
Determine the amount of cost that should be assigned to the ending work in process. (Do not round intermediate calculations. Round your cost per equivalent unit answers to 3 decimal places. Omit the “$” sign in your response.)
|
| Cost of ending work in process |
$
|
Aug 29, 2021 | Uncategorized
Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the company’s performance, consideration is being given to dropping several flights that appear to be unprofitable.
A typical income statement for one round trip of one such flight (flight 482) is as follows:
Ticket revenue (165 seats Af— 40%
occupancy Af— $205 ticket price) $13,530 100.0%
Variable expenses ($11 per person) 726
Contribution margin 12,804
94.6%
Flight expenses:
Salaries, flight crew 1,770
Flight promotion 610
Depreciation of aircraft 1,530
Fuel for aircraft 5,610
Liability insurance 4,290
Salaries, flight assistants 1,310
Baggage loading and flight preparation 1,550
Overnight costs for flight crew and
assistants at destination 240
Total flight expenses 16,910
Net operating loss $(4,106)
The following additional information is available about flight 482:
a. Members of the flight crew are paid fixed annual salaries, whereas the flight assistants are paid based on the number of round trips they complete.
b. One third of the liability insurance is a special charge assessed against flight 482 because in the opinion of the insurance company, the destination of the flight is in a “high risk” area. The remaining two thirds would be unaffected by a decision to drop flight 482.
c. The baggage loading and flight preparation expense is an allocation of ground crews’ salaries and depreciation of ground equipment. Dropping flight 482 would have no effect on the company’s total baggage loading and flight preparation expenses.
d. If flight 482 is dropped, Pegasus Airlines has no authorization at present to replace it with another flight.
e. Aircraft depreciation is due entirely to obsolescence. Depreciation due to wear and tear is negligible.
f. Dropping flight 482 would not allow Pegasus Airlines to reduce the number of aircraft in its fleet or the number of flight crew on its payroll.
Required:
By how much will the profits increase or decrease if flight 482 is discontinued? (Input the amount as positive value. Omit the “$” sign in your response.)
Profits would decrease or increase by $
Aug 29, 2021 | Uncategorized
Quad States Community Service Agency expended federal awards during the most recent fiscal year in the following amounts for the programs shown:
Additional information indicates that Programs 4 and 10 were audited as major programs in each of the two preceding fiscal years, with no audit findings reported.
Required
a. Which programs would be considered Type A programs and why? Type B programs?
b. Based on the information provided, which programs would you select for audit and why?
c. If you found out that a new manager with no previous experience was now in charge of Program 4, would your answer to part b change? If so how? (Wilson 526 527)
Wilson. Accounting for Governmental and Nonprofit Entities, 15th Edition. McGraw Hill Learning Solutions, 2010. VitalBook file.
Aug 29, 2021 | Uncategorized
-
Question 1
-
With respect to the valuation of inventory and measurement of the cost of goods sold, the principle of consistency means that the same method should be applied:
-
| |
|
A) In successive accounting periods.
|
| |
|
B) By all companies in a given industry.
|
| |
|
C) To all products in the inventory.
|
| |
|
D) In financial statements and income tax returns.
|
Question 2
Use the following to answer questions 2 3:
At year end, the perpetual inventory records of Williams Co. indicate 60 units of a particular product in inventory, acquired at the following dates and unit costs:
Purchased in August: 30 units at $900 per unit
Purchased in November: 30 units at $950 per unit
However, a complete physical inventory taken at year end indicates only 50 units of this product actually are on hand.
2. Refer to the above data. Assuming that Williams uses the FIFO flow assumption, it should record this inventory shrinkage by:
-
| |
|
A) Debiting Cost of Goods Sold $9,500
|
| |
|
B) Crediting Cost of Goods Sold $9,000.
|
| |
|
C) Debiting Cost of Goods Sold $9,000.
|
| |
|
D) Crediting Cost of Goods Sold $9,500.
|
Question 3
3. Refer to the above data. Assuming that Williams uses the LIFO flow assumption, the cost of these items to be included in inventory in the company’s year end balance sheet is:
-
| |
|
A) $46,500
|
| |
|
B) $46,000
|
| |
|
C) $46,250.
|
| |
|
D) Some other amount.
|
Question 4
4. On Saturday, June 30, Dalton Stereo sold merchandise to Tom Reed on account. The sales price was $4,200, and the cost of goods sold was $3,100. The sales revenue was recorded immediately, but the entry recording the cost of goods sold was dated Monday, July 2. As a result, net income for June was:
-
| |
|
A) Overstated by $4,200.
|
| |
|
B) Overstated by $3,100.
|
| |
|
C) Overstated by $1,100.
|
| |
|
D) Not affected, but the net income for July is understated.
|
Question 5
5. For the last several years Goldschmidt Corporation has operated with a gross profit rate of 45%. On January 1 of the current year the company had on hand inventory with a cost of $700,000. Purchases of merchandise during January amounted to $200,000, and sales for the month were $385,000. With the gross profit method, the estimated inventory at January 31 is:
-
| |
|
A) $515,000
|
| |
|
B) $688,250
|
| |
|
C) $726,750
|
| |
|
D) $700,000
|
Question 6
6. In a period of rising prices, a company is most likely to use the FIFO method of pricing inventory if:
-
| |
|
A) Each item in the inventory is unique.
|
| |
|
B) Management wants the same unit cost assigned to items sold and items remaining in inventory.
|
| |
|
C) Management’s primary objective is to minimize income taxes.
|
| |
|
D) Management wants the company’s income statement to indicate the highest possible amounts of gross profit and net income.
|
Question 7
Use the following information to answer questions 7 through 9.
Tek Toys, Inc. uses a perpetual inventory system. The company’s beginning inventory of a particular product and its purchases during the month of January were as follows:
| |
Quantity
|
Unit Cost
|
Total Cost
|
|
Beginning Inventory (Jan 1)
|
16
|
$10
|
$160
|
|
Purchases (Jan 11)
|
14
|
$12
|
$168
|
|
Purchases (Jan 20)
|
23
|
$15
|
$345
|
| |
|
|
|
|
Total
|
53
|
|
$673
|
On January 14, Tek Toys, Inc. sold 25 units of this product. The other 28 units remained in inventory at January 31.
7. Refer to the above data. Assuming that Tek Toys uses the FIFO flow assumption, the cost of goods sold to be recorded at January 14 is:
-
| |
|
A) $278
|
| |
|
B) $268.
|
| |
|
C) $393.
|
| |
|
D) Some other amount.
|
Question 8
-
8. Refer to the above data. Assuming that Tek Toys uses the LIFO flow assumption, the cost of goods sold to be recorded at January 14 is:
-
| |
|
A) $393.
|
| |
|
B) $268.
|
| |
|
C) $278.
|
| |
|
D) Some other amount.
|
Question 9
-
9. Refer to the above data. Assuming that Tek Toys uses the average cost flow assumption, the cost of goods sold to be recorded at January 14 is (round cost per unit to nearest cent):
-
| |
|
A) $317.50
|
| |
|
B) $308.25.
|
| |
|
C) $273.25.
|
| |
|
D) $250.25
|
Question 10
10. If ending inventory is overstated in the current year:
Answer
-
| |
|
A. Net Income will also be overstated in the current year
|
| |
|
B. Next year’s beginning inventory will also be overstated
|
| |
|
C. Next year’s net income will be understated
|
| |
|
D. All three of the above statements are correct
|
Question 11
11. During the current year, Carl Equipment Stores had net sales of $600 million, a cost of goods sold of $500 million, average accounts receivable of $60 million, and average inventory of $50 million.
Carl Equipment ‘s inventory turnover rate is:
-
| |
|
A. 5 times
|
| |
|
B. 10 times
|
| |
|
C. 15 times
|
| |
|
D. Some other amount
|
Question 12
12. If an error in valuing inventory occurs in one year:
-
| |
|
A. It has no effect upon income in the following year.
|
| |
|
B. It has no effect upon the income statement, only on the balance sheet
|
| |
|
C. It is self correcting after two years.
|
| |
|
D. Retained earnings will be adversely affected until corrected.
|
Question 13
13. Short term creditors are likely to view a higher than average inventory turnover rate as indicating that:
-
| |
|
A. A company is in financial difficulty
|
| |
|
B. The company is able to sell its inventory quickly
|
| |
|
C. The company probably has an excessive amount of inventory
|
| |
|
D. The company has a longer than average operating cycle
|
Question 14
14. Many companies state in their annual reports that inventory is shown at the lower of its cost or market value. This means that the inventory:
-
| |
|
A. Is obsolete
|
| |
|
B. Has been written down to a carrying value below cost
|
| |
|
C. Is shown at the lesser of cost or sales value.
|
| |
|
D. None of the above
|
Question 15
15. The write down of inventory:
-
| |
|
A. Only affects the balance sheet and not the income statement
|
| |
|
B. Only affects the income statement and not the balance sheet
|
| |
|
C. Affects both the income statement and the balance sheet
|
| |
|
D. Affects neither the income statement nor the balance sheet
|
Aug 29, 2021 | Uncategorized
Mr. Mei Yo Chien is retired. He is married, and the couple have the following sources of income”
? Pension income $12,000
? Taxable distributions from Mr. Chien’s 401(k) 15,000
? Taxable interest income 2,000
? Mr. Chien’s Social Security benefit 14,000
? Mrs. Chien’s Social Security benefit 7,000
a. Determine the gross income reported on the Chiens’ joint tax return.
b. Without changing your answer to part (a) above, assume that the Chiens also had $10,000 interest income on tax exempt municipal bonds. Would your answer to part (a) above change as a result of this additional source of income? If so, what would their gross income now be?
** I will be giving full poit total to a detailed answer with computations
Aug 29, 2021 | Uncategorized
Mulligan Manufacturing Company uses a job order cost system with overhead applied to products at a rate of 150 percent of direct labor cost.
| Required: |
|
Treating each case independently, selected from the manufacturing data given below, find the missing amounts. You should do them in the order listed.
|
Case 1 |
Case 2 |
Case 3 |
| Direct material used |
17,000 |
|
10,500 |
| Direct labor |
16,000 |
|
|
| Manufacturing overhead applied |
|
13,000 |
|
| Total current manufacturing costs |
|
27,000 |
33,000 |
| Beginning work in process inventory |
8,400 |
|
7,700 |
| Ending work in process inventory |
4,400 |
8,400 |
|
| Cost of goods manufactured |
|
45,000 |
3,001 |
| Beginning finished goods inventory |
3,500 |
10,200 |
|
| Ending finished goods inventory |
7,200 |
|
6,700 |
| Cost of goods sold |
|
39,000 |
38,000 |
|
Aug 29, 2021 | Uncategorized
|
The Munchkin Theater is a nonprofit organization devoted to staging plays for children. The theater has a very small full time professional administrative staff. Through a special arrangement with the actors’ union, actors and directors rehearse without pay and are paid only for actual performances.
|
|
|
The costs from the current year’s planning budget appear below. The Munchkin Theater had tentatively planned to put on seven different productions with a total of 60 performances. For example, one of the productions was Peter Rabbit, which had five performances.
|
The Munchkin Theater
Costs from the Planning Budget
For the Year Ended December 31 |
| Budgeted number of productions |
|
7 |
| Budgeted number of performances |
|
60 |
| Actors’ and directors’ wages |
$ |
120,000 |
| Stagehands’ wages |
|
24,000 |
| Ticket booth personnel and ushers’ wages |
|
19,800 |
| Scenery, costumes, and props |
|
63,700 |
| Theater hall rent |
|
48,600 |
| Printed programs |
|
16,500 |
| Publicity |
|
17,500 |
| Administrative expenses |
|
42,000 |
|
|
|
| Total |
$ |
352,100 |
|
|
|
|
|
Some of the costs vary with the number of productions, some with the number of performances, and some are fixed and depend on neither the number of productions nor the number of performances. The costs of scenery, costumes, props, and publicity vary with the number of productions. It doesn’t make any difference how many times Peter Rabbit is performed, the cost of the scenery is the same. Likewise, the cost of publicizing a play with posters and radio commercials is the same whether there are 10, 20, or 30 performances of the play. On the other hand, the wages of the actors, directors, stagehands, ticket booth personnel, and ushers vary with the number of performances. The greater the number of performances, the higher the wage costs will be. Similarly, the costs of renting the hall and printing the programs will vary with the number of performances. Administrative expenses are more difficult to pin down, but the best estimate is that approximately 65% of the budgeted costs are fixed, 20% depend on the number of productions staged, and the remaining 15% depend on the number of performances.
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After the beginning of the year, the board of directors of the theater authorized changing the theater’s program to six productions and a total of 64 performances. Actual costs were higher than the costs from the planning budget. (Grants from donors and ticket sales were also correspondingly higher, but are not shown here.) Data concerning the actual costs appear below:
|
The Munchkin Theater
Actual Costs
For the Year Ended December 31 |
| Actual number of productions |
|
6 |
| Actual number of performances |
|
64 |
| Actors’ and directors’ wages |
$ |
124,000 |
| Stagehands’ wages |
|
25,100 |
| Ticket booth personnel and ushers’ wages |
|
21,300 |
| Scenery, costumes, and props |
|
60,000 |
| Theater hall rent |
|
53,200 |
| Printed programs |
|
16,950 |
| Publicity |
|
16,500 |
| Administrative expenses |
|
40,450 |
|
|
|
| Total |
$ |
357,500 |
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| 1. |
Complete the flexible budget for The Munchkin Theater based on the actual activity of the year. (Round your intermediate calculations and final answers to the nearest dollar amount. Omit the “$” sign in your response.) |
The Munchkin Theater
Flexible Budget
For the Year Ended December 31 |
| Actors’ and directors’ wages |
$ |
| Stagehands’ wages |
|
| Ticket booth personnel and ushers’ wages |
|
| Scenery, costumes, and props |
|
| Theater hall rent |
|
| Printed programs |
|
| Publicity |
|
| Administrative expenses |
|
|
|
| Total |
$ |
|
|
|
| 2. |
Complete the flexible budget performance report for the year that shows both activity variances and spending variances. (Input all amounts as positive values. Leave no cells blank be certain to enter “0” wherever required. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Round your intermediate calculations and final answers to the nearest dollar amount. Omit the “$” sign in your response.)
|
The Munchkin Theater
Flexible Budget Performance Report
For the Year Ended December 31 |
|
Activity Variances |
Flexible Budget |
Spending Variances |
| Actors’ and directors’ wages |
$ |
(Click to select) F U None |
$ |
$ |
(Click to select) F U None |
| Stagehands’ wages |
|
(Click to select) F U None |
|
|
(Click to select) F U None |
Ticket booth personnel and
ushers’ wages |
|
(Click to select) F U None |
|
|
(Click to select) F U None |
| Scenery, costumes, and props |
|
(Click to select) F U None |
|
|
(Click to select) F U None |
| Theater hall rent |
|
(Click to select) F U None |
|
|
(Click to select) F U None |
| Printed programs |
|
(Click to select) F U None |
|
|
(Click to select) F U None |
| Publicity |
|
(Click to select) F U None |
|
|
(Click to select) F U None |
| Administrative expenses |
|
(Click to select) F U None |
|
|
(Click to select) F U None |
|
|
|
|
|
|
| Total |
$ |
(Click to select) F U None |
$ |
$ |
(Click to select) F U None |
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eBook Links (2)references
Aug 29, 2021 | Uncategorized
Muzyka Corporation uses the FIFO method in its process costing system. Data concerning the first processing department for the most recent month are listed below:
Beginning work in process inventory:
Units in beginning work in process inventory 300
Materials costs $5,900
Conversion costs $3,000
Percentage complete with respect to materials 85%
Percentage complete with respect to conversion 20%
Units started into production during the month 5,300
Materials costs added during the month $105,922
Conversion costs added during the month $225,221
Ending work in process inventory:
Units in ending work in process 800
Percentage complete with respect to materials 50%
Percentage complete with respect to conversion 40%
SHOW ALL WORK FOR CREDIT.
Total Pts.
Earned
_____ 1. What are the total units started and completed during the month? (1 pt.)
_____ 2. What are the total units transferred out during the month? (1 pt.)
_____ 3. What are the equivalent units for materials for the month in the first processing
department? (3 pts.)
_____ 4. What are the equivalent units for conversion costs for the month in the first
processing department? (3 pts.)
_____ 5. The cost per equivalent unit for materials for the month in the first processing department is closest to: (1 pt.)
_____ 6. The cost per equivalent unit for conversion costs for the first department for the month is closest to: (1 pt.)
_____ 7. The cost per equivalent whole unit for the month in the first processing department is closest to: (1 pt.)
_____ 8. The total cost assigned to beginning inventory is closest to: (3 pts.)
_____ 9. The total cost transferred from the first processing department to the next processing department during the month is closest to: (2 pts.)
_____ 10.The cost of ending work in process inventory in the first processing department
according to the company’s cost system is closest to: (2 pts.)
Aug 29, 2021 | Uncategorized
Need help with this quick!
Question 7
Acme Auto Supplies listed the following accounts on their December 31, 2007
Cash $60,000
Prepaid Insurance $40,000
Accounts Receivable $50,000
Inventory $70,000
Land held for investment $80,000
Land $95,000
Building $100,000
Less: Accumulated Depreciation <$30,000>
( Trademark $70,000
)Accounts Payable $65,000
Salaries Payable $10,000
Mortgage Payable $90,000
Common Stock $120,000
Retained Earnings $250,000
The current ratio is
2.93:1.
1.86:1.
3.38:1.
2.00:1. *** i think this one??
and this question
The total amount of working capital is
$155,000.
$60,000.
$150,000.
$145,000
Aug 29, 2021 | Uncategorized
You are the new Chief Financial Officer for Callahan Automotive and have been asked by the Chief Executive Officer to take a look at the Muffler Division. The other two divisions of Callahan Automotive, the Brake Pad Division and the Oil Filter Division are performing well financially, however the Muffler Division has shown a loss for the past three quarters and the CEO is considering dropping the division. Discontinuing the muffler division would not affect the company’s sales of its other product lines, its total general factory overhead, or its total purchasing department expenses.
Below is the Muffler Division’s income statement for the current quarter.
|
Callahan Automotive
|
|
Income Statement Muffler Division
|
|
For the Quarter Ended June 30
|
| |
|
|
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Sales
|
|
$450,000
|
|
Variable Expenses:
|
|
|
|
Variable Manufacturing Overhead
|
$130,000
|
|
|
Sales Commissions
|
$ 48,000
|
|
|
Shipping
|
$ 12,000
|
|
|
Total Variable Expenses
|
|
$190,000
|
| |
|
|
|
Contribution Margin
|
|
$ 260,000
|
| |
|
|
|
Fixed Expenses:
|
|
|
|
Salary of Product Line Manager
|
$ 21,000
|
|
|
General Factory Overhead *
|
$104,000
|
|
|
Depreciation of Equipment (no resale value)
|
$ 36,000
|
|
|
Advertising ‘ traceable
|
$110,000
|
|
|
Insurance on inventories
|
$ 9,000
|
|
|
Purchasing Department **
|
$ 50,000
|
|
|
Total Fixed Expenses
|
|
$330,000
|
| |
|
|
|
Net Operating Loss
|
|
$ (70,000)
|
| |
|
|
|
*allocated on the basis of machine hours
|
|
|
|
** allocated on the basis of sales dollars
|
|
|
Would you recommend to the CEO that the company discontinue the Muffler Division?
Support your answer with appropriate computations. Include in your response which line items on the income statement are relevant to this decision and why.
Aug 29, 2021 | Uncategorized
Norr and Caylor established a partnership on January 1, 2010. Norr invested cash of $100,000 and Caylor invested $30,000 in cash and equipment with a book value of $40,000 and fair value of $50,000. For both partners, the beginning capital balance was to equal the initial investment. Norr and Caylor agreed to the following procedure for sharing profits and losses:
12% interest on the yearly beginning capital balance;
$10 per hour of work that can be billed to the partnership’s clients; and
the remainder divided in a 3:2 ratio.
The Articles of Partnership specified that each partner should withdraw no more than $1,000 per month.
For 2010, the partnership’s income was $70,000. Norr had 1,000 billable hours, and Caylor worked 1,400 billable hours. In 2011, the partnership’s income was $24,000, and Norr and Caylor worked 800 and 1,200 billable hours, respectively. Each partner withdrew $1,000 per month throughout 2010 and 2011.
Required:
(A) Determine the amount of net income allocated to each partner for 2010.
(B) Determine the balance in both capital accounts at the end of 2010.
Aug 29, 2021 | Uncategorized
Obama Company sells its product for $25 per unit. During 2012, it produced 20,000 units and sold 15,000 units (there was no beginning inventory). Costs per unit are: direct materials $5, direct labour $4, and variable overhead $3. Fixed costs are: $300,000 manufacturing overhead, and $50,000 selling and administrative expenses. The per unit manufacturing cost under variable costing is
Aug 29, 2021 | Uncategorized
Obed Corp. makes three models of high performance cross country ski machines. Current operating data are summarized below:
Selling price per unit Variable cost per unit Monthly sales volume (units)
Ski1
Ac‚¬ 400 Ac‚¬ 100 600
Ac‚¬ Ac‚¬
Ski2 Ski3
500 Ac‚¬ 250 200 Ac‚¬ 150 400 500
Fixed expenses per month total Ac‚¬ 185.820.
Required:
(a) Calculate the contribution margin ratio for each product
(b) Calculate the firm’s overall contribution margin ratio
(c) Calculate the firm’s break even point in sales euros
(d) Calculate the firm’s operating income
(e) Management is considering the elimination of the Ski3 model due to low sales
volume. As a result, total fixed expenses can be reduced by Ac‚¬60.000 per month. Assuming that this change would not affect the other models, would you recommend the elimination of the Ski3 model ?
MANAGERIAL AC….docx
appletree.pdf
photo 4.PNG
MyFile 1 .txt
advance accou….xlsx
photo.JPG
Chapter one 1….ppt
COMPANY PERFO….jpg
USERS RATIOS.jpg
REPORT ON PER….jpg
REPORT ON PER….jpg
yimg 11135565….jpg
yimg 11135565….jpg
Attachments 2….zip
photo 4.JPG
photo 5.JPG
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Data Table.png
part A.png
part B.png
ex.jpg
image.jpg
9DND 7P9T T7….jpg