how much would sales have to drop under the status quo strategy for the two strategi 546322

Aug 29, 2021 | Uncategorized

Gillette Inc., the leading producer of grooming aids, was faced with a significant corporate strategy decision early in 1994 on whether it would continue its high-margin strategy or shift to a lower margin strategy to increase sales revenues in the face of intense generic competition. The two strategies are being considered.

Status Quo High-Margin Strategy

* Maintain profit margins at 1993 levels (In 1993, net income was $575 million on revenues of $5,750 million.) from 1994 to 2003.

* The sales/book value ratio, which was 3 in 1993, can then be expected to decline to 2.5 between 1994 and 2003.

* Reduce net profit margin to 8% from 1994 to 2003.

* The sales/book value ratio will then stay at 1993 levels from 1994 to 2003.

The book value per share at the end of 1993 is $9.75. The dividend payout ratio, which was 33% in 1993, is expected to remain unchanged from 1994 to 2003 under either strategy, as is the beta, which was 1.30 in 1993. (The T.Bond rate is 7%) After 2003, the earnings growth rate is expected to drop to 6% and the dividend payout ratio is expected to be 60% under either strategy. The beta will decline to 1.0.

a. Estimate the price/sales ratio under the status quo strategy.

b. Estimate the price/sales ratio under the low margin strategy.

c. Which strategy would you recommend and why.

d. How much would sales have to drop under the status quo strategy for the two strategies to be equivalent?

the following are prices of options traded on microsoft corporation which pays no di 546210

Aug 29, 2021 | Uncategorized

The following are prices of options traded on Microsoft Corporation, which pays no dividends.

The stock is trading at $83, and the annualized riskless rate is 3.8%. The standard deviation in In stock prices (based upon historical data) is 30%.

a. Estimate the value of a three-month call, with a strike price of 85.

b. Using the inputs from the Black-Scholes model, specify how you would replicate this call.

c. What is the implied standard deviation in this call?

d. Assume now that you buy a call with a strike price of 85 and sell a call with a strike price of 90. Draw the payoff diagram on this position.

e. Using put-call parity, estimate the value of a three-month put with a strike price of

how much would you be willing to pay for this security 546216

Aug 29, 2021 | Uncategorized

A new security on AT&T will entitle the investor to all dividends on AT&T over the next three years, limit upside potential to 20%, but also provide downside protection below 10%. AT&T stock is trading at $50, and three-year call and put options are traded on the exchange at the following prices

How much would you be willing to pay for this security?

evaluate whether the following actions are likely to increase stock market efficienc 546223

Aug 29, 2021 | Uncategorized

Evaluate whether the following actions are likely to increase stock market efficiency, decrease it or leave it unchanged, and explain why.

a. The government imposes a transaction tax of 1% on all stock transactions.

Increase Efficiency___ Decrease Efficiency___ Leave unchanged___

b. The securities exchange regulators impose a restriction on all short sales to prevent rampant speculation.

Increase Efficiency___ Decrease Efficiency___ Leave unchanged___

c. An options market, trading call and put options, is opened up, with options traded on many of the stocks listed on the exchange.

Increase Efficiency___ Decrease Efficiency___ Leave unchanged___

d. The stock market removes all restrictions on foreign investors acquiring and holding stock in companies.

Increase Efficiency___ Decrease Efficiency___ Leave unchanged___

how many years would you have to hold this fund to break even 546229

Aug 29, 2021 | Uncategorized

You are examining the performance of two mutual funds. AD VALUE Fund has been in existence since January 1, 1988 and invests primarily in low Price Earnings Ratio stocks, with high dividend yields. AD GROWTH Fund has also been in existence since January 1, 1988 but it invests primarily in high growth stocks, with high PE ratios and low or no dividends. The performance of these funds over the last five years is summarized below:

The average risk free rate during the period was 6%. The current risk free rate is 3%.

a. How well or badly did these funds perform after adjusting for risk?

b. Assume that the front-end load on each of these funds is 5% (i.e. if you put $1000 in each of these funds today, you would only be investing $950 after the initial commission). Assume also that the excess returns you have calculated in part (a) will continue into the future and that you choose to invest in the fund that outperformed the market. How many years would you have to hold this fund to break even?

what is the expected return on heavytech over the next year 546245

Aug 29, 2021 | Uncategorized

You have just done a regression of monthly stock returns of HeavyTech Inc., a manufacturer of heavy machinery, on monthly market returns over the last five years and come up with the following regression:

RHeavyTech = 0.5% + 1.2 RM

The variance of the stock is 50% and the variance of the market is 20%. The current T.Bill rate is 3% (It was 5% one year ago). The stock is currently selling for $50, down $4 over the last year, and has paid a dividend of $2 during the last year and expects to pay a dividend of $2.50 over the next year. The NYSE composite has gone down 8% over the last year with a dividend yield of 3%. HeavyTech Inc. has a tax rate of 40%.

a. What is the expected return on HeavyTech over the next year?

b. What would you expect HeavyTech”s price to be one year from today?

c. What would you have expected HeavyTech”s stock returns to be over the last year?

d. What were the actual returns on HeavyTech over the last year?

e. HeavyTech has $100 million in equity and $5 million in debt. It plans to issue $50 million in new equity and retire $50 million in debt. Estimate the new beta.

estimate the beta for hewlett packard as a company is this beta going to be equal to 546248

Aug 29, 2021 | Uncategorized

You are analyzing the beta for Hewlett Packard and have broken down the company into four broad business groups with market values and betas for each group.

a. Estimate the beta for Hewlett Packard as a company. Is this beta going to be equal to the beta estimated by regressing past returns on HP stock against a market index. Why or Why not?

b. If the treasury bond rate is 7.5%, estimate the cost of equity for Hewlett Packard. Estimate the cost of equity for each division. Which cost of equity would you use to value the printer division?

c. Assume that HP divests itself of the mainframe business and pays the cash out as a dividend. Estimate the beta for HP after the divestiture. (HP had $1 billion in debt outstanding.)

calculate the degree of operating leverage for each of these firms 546249

Aug 29, 2021 | Uncategorized

The following table summarizes the percentage changes in operating income, percentage changes in revenue and betas for four pharmaceutical firms.

a. Calculate the degree of operating leverage for each of these firms.

b. Use the operating leverage to explain why these firms have different betas.

what will the beta of ad corporation be after divesting this division 546252

Aug 29, 2021 | Uncategorized

You have collected returns on AnaDone Corporation (AD Corp.), a large diversified manufacturing firm, and the NYSE index for five years:

a. Estimate the intercept (alpha) and slope (beta) of the regression.

b. If you bought stock in AD Corp. today, how much would you expect to make as a return over the next year? [The six month T.Bill rate is 6%]

c. Looking back over the last five years, how would you evaluate AD”s performance relative to the market?

d. Assume now that you are an undiversified investor and that you have all of your money invested in AD Corporation. What would be a good measure of the risk that you are taking on? How much of this risk would you be able to eliminate if you diversify?

e. AD is planning to sell off one of its divisions. The division under consideration has assets which comprise half of the book value of AD Corporation and 20% of the market value. Its beta is twice the average beta for AD Corp (before divestment). What will the beta of AD Corporation be after divesting this division?

what would an investor in mapco s stock require as a return if the t bond rate is 6 546253

Aug 29, 2021 | Uncategorized

You run a regression of monthly returns of Mapco Inc, an oil and gas producing firm, on the S&P 500 index and come up with the following output for the period 1991 to 1995.

Intercept of the regression = 0.06%

Slope of the regression = 0.46

Standard error of X-coefficient = 0.20

R squared = 5%

There are 20 million shares outstanding and the current market price is $2 per share. The firm has $20 million in debt outstanding. (The firm has a tax rate of 36%.)

a. What would an investor in Mapco”s stock require as a return if the T.Bond rate is 6%?

b. What proportion of this firm”s risk is diversifiable?

c. Assume now that Mapco has three divisions, of equal size (in market value terms). It plans to divest itself of one of the divisions for $20 million in cash and acquire another for $50 million (It will borrow $30 million to complete this acquisition). The division it is divesting is in a business line where the average unlevered beta is 0.20 and the division it is acquiring is in a business line where the average unlevered beta is 0.80. What will the beta of Mapco be after this acquisition?

you know the r squared of the regression is 0 36 and that your stock has a variance 546254

Aug 29, 2021 | Uncategorized

You have just run a regression of monthly returns of American Airlines (AMR) against the S&P 500 over the last five years. You have misplaced some of the output and are trying to derive it from what you have.

a. You know the R squared of the regression is 0.36 and that your stock has a variance of 67%. The market variance is 12%. What is the beta of AMR?

b. You also remember that AMR was not a very good investment during the period of the regression and that it did worse than expected (after adjusting for risk) by 0.39% a month for the five years of the regression. During this period, the average risk free rate was 4.84%. What was the intercept on the regression?

c. You are comparing AMR Inc. to another firm which also has an R squared of 0.48. Will the two firms have the same beta? If not, why not?

would your expected return estimate change if the purpose was to get a discount rate 546255

Aug 29, 2021 | Uncategorized

You have run a regression of monthly returns on Amgen, a large biotechnology firm, against monthly returns on the S&P 500 index, and come up with the following output.

Rstock = 3.28%+ 1.65 RMarket R₂= 0.20

The current one-year treasury bill rate is 4.8% and the current thirty-year bond rate is 6.4%. The firm has 265 million shares outstanding selling for $30 per share.

a. What is the expected return on this stock over the next year?

b. Would your expected return estimate change if the purpose was to get a discount rate to analyze a thirty-year capital budgeting project?

c. An analyst has estimated, correctly, that the stock did 51.10% better than expected, annually, during the period of the regression. Can you estimate the annualized risk free rate that she used for her estimate?

d. The firm has a debt/equity ratio of 3%, and faces a tax rate of 40%. It is planning to issue $2billion in new debt and acquire a new business for that amount with the same risk level as the firm”s existing business. What will the beta be after the acquisition?

based upon the intercept how well or badly did mad do relative to expectations durin 546256

Aug 29, 2021 | Uncategorized

You have just run a regression of monthly returns on MAD Inc., a newspaper and magazine publisher, against returns on the S&P 500 and arrived at the following result.

RMAD = – 0.05% + 1.20 RS&P

The regression has an R-squared of 22%. The current T.Bill rate is 5.5% and the current T.Bond rate is 6.5%. The riskfree rate during the period of the regression was 6%.

Answer the following questions relating to the regression.

a. Based upon the intercept, how well or badly did MAD do, relative to expectations, during the period of the regression?

b. You now realize that MAD Inc. went through a major restructuring at the end of last month (which was the last month of your regression) and made the following changes:

• The firm sold off its magazine division, which had an unlevered beta of 0.6, for $20 million.
• It borrowed an additional $20 million and bought back stock worth $40 million.
• After the sale of the division and the share repurchase, MAD Inc. had $40 million in debt and $120 million in equity outstanding.

If the firm’s tax rate is 40%, re-estimate the beta, after these changes.

what concerns if any would you have about using betas of comparable firms 546259

Aug 29, 2021 | Uncategorized

You are trying to estimate the beta of a private firm that manufactures home appliances. You have managed to obtain betas for publicly traded firms that also manufacture home appliances.

The private firm has a debt equity ratio of 25%, and faces a tax rate of 40%. The publicly traded firms all have marginal tax rates of 40% as well.

a. Estimate the beta for the private firm.

b. What concerns, if any, would you have about using betas of comparable firms?

estimate the market value of debt for this firm 546264

Aug 29, 2021 | Uncategorized

You have been asked to estimate the cost of capital for NewTel, a telecomm firm. The firm has the following characteristics:

• There are 100 million shares outstanding trading at $250 per share.
• The firm has a book value of ten-year debt of $10 billion and interest expenses of $600 million on the debt. The firm is not rated, but it had operating income of $2.5 billion last year. Firms with an interest coverage ratio of 3.5 to 4.5 were rated BBB.
• The unlevered beta of other telecomm firms is 0.80 The treasury bond rate is 6%, and the tax rate for the firm is 35%.

a. Estimate the market value of debt for this firm

b. Based upon the synthetic rating, estimate the cost of debt for this firm.

c. Estimate the cost of capital for this firm.

if the firm s current cost of borrowing is 7 estimate the debt value of operating le 546265

Aug 29, 2021 | Uncategorized

Derra Foods is a specialty food retailer. In its balance sheet, the firm reports $1 billion in book value of equity and no debt, but it has operating leases on all its stores. In the most recent year, the firm made $85 million in operating lease payments and its commitments to make lease payments for the next 5 years and beyond are summarized.

If the firm”s current cost of borrowing is 7%, estimate the debt value of operating leases. Estimate the book value debt to equity ratio.

zif software is a firm with significant research and development expenses in the mos 546268

Aug 29, 2021 | Uncategorized

Zif Software is a firm with significant research and development expenses. In the most recent year, the firm had $100 million in research and development expenses. R&D expenses are amortizable over 5 years and the R& D expenses over the last 5 years are as follows:

Assuming a linear amortization schedule (over 5 years), estimate

a. the value of the research asset.

b. the amount of R&D amortization this year.

c. the adjustment to operating income.

why is ford rsquo s working capital so high if you were told that ford capital the f 546270

Aug 29, 2021 | Uncategorized

The following is the balance sheet for Ford Motor Company as of December 31, 1994 (in millions).

The firm had revenues of $154,951 million in 1994 and cost of goods sold of $103,817 million.

a. Estimate the net working capital

b. Estimate the non-cash working capital.

c. Why is Ford’s working capital so high? If you were told that Ford Capital (the financing arm of Ford) was consolidated into this balance sheet, would that help you with your explanation?

d. Estimate non-cash working capital as a percent of revenues. If you were asked to estimate the non-cash working capital needs for a new automobile factory that Ford was constructing, would you use this ratio? Why or why not?

estimate non cash working capital as a percent of revenues if you were asked to esti 546271

Aug 29, 2021 | Uncategorized

You are analyzing the balance sheet for Bed, Bath and Beyond, a retail firm that sells home furnishings, from February 26, 1995 (in millions).

The firm had revenues of $440.3 million in 1994 and cost of goods sold of $249.2 million.

a. Estimate the net working capital

b. Estimate the non-cash working capital.

c. Estimate non-cash working capital as a percent of revenues. If you were asked to estimate the non-cash working capital needs for a new store for Bed, Bath and Beyond, would you use this ratio? Why or why not?

you have been provided with the current assets and current liabilities of a retailin 546272

Aug 29, 2021 | Uncategorized

You have been provided with the current assets and current liabilities of a retailing firm each quarter for the last 5 years, together with the revenues in each quarter.

a. Based on this information, estimate the non-cash working capital each quarter.

b. Estimate non-cash working capital as a percent of revenues each quarter.

c. Assume that you are told that there are economies of scale, when it comes to inventories. How would you test to see if there are any? What would your conclusions be?

estimate the value per share using the three stage dividend discount model 546282

Aug 29, 2021 | Uncategorized

Medtronic Inc., the world”s largest manufacturer of implantable biomedical devices, reported earnings per share in 1993 of $3.95 and paid dividends per share of $0.68. Its earnings were expected to grow 16% from 1994 to 1998, but the growth rate was expected to decline each year after that to a stable growth rate of 6% in 2003. The payout ratio was expected to remain unchanged from 1994 to 1998, after which it would increase each year to reach 60% in steady state. The stock was expected to have a beta of 1.25 from 1994 to 1998, after which the beta would decline each year to reach 1.00 by the time the firm becomes stable. (The treasury bond rate was 6.25%)

a. Assuming that the growth rate declines linearly (and the payout ratio increases linearly) from 1999 to 2003, estimate the dividends per share each year from 1994 to 2003.

b. Estimate the expected price at the end of 2003.

c. Estimate the value per share, using the three-stage dividend discount model.

the payroll register for jaffrey company for the week ended may 16 indicated the fol 546185

Aug 29, 2021 | Uncategorized

EX 10-12 Payroll entries

The payroll register for Jaffrey Company for the week ended May 16 indicated the following:

In addition, state and federal unemployment taxes were calculated at the rate of 5.4% and 0.8%, respectively, on $225,000 of salaries.

a. Journalize the entry to record the payroll for the week of May 16.

b. Journalize the entry to record the payroll tax expense incurred for the week of

May 16.

the store employs 8 full time and 12 part time workers the store rsquo s weekly payr 546187

Aug 29, 2021 | Uncategorized

EX 10-14 Payroll internal control procedures

Big Howie’s Hot Dog Stand is a fast-food restaurant specializing in hot dogs and hamburgers.

The store employs 8 full-time and 12 part-time workers. The store’s weekly payroll averages $5,600 for all 20 workers.

Big Howie’s Hot Dog Stand uses a personal computer to assist in preparing paychecks.

Each week, the store’s accountant collects employee time cards and enters the hours worked into the payroll program. The payroll program calculates each employee’s pay and prints a paycheck. The accountant uses a check-signing machine to sign the paychecks.

Next, the restaurant’s owner authorizes the transfer of funds from the restaurant’s regular bank account to the payroll account.

For the week of May 12, the accountant accidentally recorded 100 hours worked instead of 40 hours for one of the full-time employees.

Does Big Howie’s Hot Dog Stand have internal controls in place to catch this error? If so, how will this error be detected?

whenever an employee receives a pay raise the supervisor must fill out a wage adjust 546188

Aug 29, 2021 | Uncategorized

EX 10-15 Internal control procedures

Dave’s Scooters is a small manufacturer of specialty scooters. The company employs 14 production workers and four administrative persons. The following procedures are used to process the company’s weekly payroll:

a. Whenever an employee receives a pay raise, the supervisor must fill out a wage adjustment form, which is signed by the company president. This form is used to change the employee’s wage rate in the payroll system.

b. All employees are required to record their hours worked by clocking in and out on a time clock. Employees must clock out for lunch break. Due to congestion around the time clock area at lunch time, management has not objected to having one employee clock in and out for an entire department.

c. Whenever a salaried employee is terminated, Personnel authorizes Payroll to remove the employee from the payroll system. However, this procedure is not required when an hourly worker is terminated. Hourly employees only receive a paycheck if their time cards show hours worked. The computer automatically drops an employee from the payroll system when that employee has six consecutive weeks with no hours worked.

d. Paychecks are signed by using a check-signing machine. This machine is located in the main office so that it can be easily accessed by anyone needing a check signed.

e. Dave’s Scooters maintains a separate checking account for payroll checks. Each week, the total net pay for all employees is transferred from the company’s regular bank account to the payroll account.

State whether each of the procedures is appropriate or inappropriate, after considering the principles of internal control. If a procedure is inappropriate, describe the appropriate procedure.

what two conditions must be met in order for a product warranty liability to be repo 546193

Aug 29, 2021 | Uncategorized

EX 10-20 Accrued product warranty

General Motors Corporation (GM) disclosed estimated product warranty payable for comparative years as follows:

GM’s sales were $135,592 million in Year 2. Assume that the total paid on warranty claims during Year 2 was $3,000 million.

a. Why are short- and long-term estimated warranty liabilities separately disclosed?

b. Provide the journal entry for the Year 2 product warranty expense.

c. What two conditions must be met in order for a product warranty liability to be reported in the financial statements?

several months ago ayers industries inc experienced a hazardous materials spill at o 546194

Aug 29, 2021 | Uncategorized

EX 10-21 Contingent liabilities

Several months ago, Ayers Industries Inc. experienced a hazardous materials spill at one of its plants. As a result, the Environmental Protection Agency (EPA) fined the company $240,000. The company is contesting the fine. In addition, an employee is seeking $220,000 in damages related to the spill. Lastly, a homeowner has sued the company for $310,000.

The homeowner lives 35 miles from the plant, but believes that the incident has reduced the home’s resale value by $310,000.

Ayers’ legal counsel believes that it is probable that the EPA fine will stand. In addition, counsel indicates that an out-of-court settlement of $125,000 has recently been reached with the employee. The final papers will be signed next week. Counsel believes that the homeowner’s case is much weaker and will be decided in favor of Ayers. Other litigation related to the spill is possible, but the damage amounts are uncertain.

a. Journalize the contingent liabilities associated with the hazardous materials spill. Use the account “Damage Awards and Fines” to recognize the expense for the period.

b. Prepare a note disclosure relating to this incident.

gmeiner co had the following current assets and liabilities for two comparative year 546195

Aug 29, 2021 | Uncategorized

EX 10-22 Quick ratio

Gmeiner Co. had the following current assets and liabilities for two comparative years:

a. Determine the quick ratio for December 31, 2014 and 2013.

b. Interpret the change in the quick ratio between the two balance sheet dates.

the current assets and current liabilities for apple inc and dell inc are shown as f 546196

Aug 29, 2021 | Uncategorized

EX 10-23 Quick ratio

The current assets and current liabilities for Apple Inc. and Dell, Inc., are shown as follows at the end of a recent fiscal period:

a. Determine the quick ratio for both companies.

b. Interpret the quick ratio difference between the two companies.

the following items were selected from among the transactions completed by warwick c 546197

Aug 29, 2021 | Uncategorized

The following items were selected from among the transactions completed by Warwick Co. during the current year:

Feb. 3. Purchased merchandise on account from Onifade Co., $410,000, terms n/30.

Mar. 3. Issued a 45-day, 6% note for $410,000 to Onifade Co., on account.

Apr. 17. Paid Onifade Co. the amount owed on the note of March 3.

June 1. Borrowed $250,000 from Aldhiezer Bank, issuing a 60-day, 7.5% note.

July 21. Purchased tools by issuing a $300,000, 60-day note to Nash Co., which discounted the note at the rate of 8%.

31. Paid Aldhiezer Bank the interest due on the note of June 1 and renewed the loan by issuing a new 30-day, 9% note for $250,000. (Journalize both the debit and credit to the notes payable account.)

Aug. 30. Paid Aldhiezer Bank the amount due on the note of July 31.

Sept. 19. Paid Nash Co. the amount due on the note of July 21.

Dec. 1. Purchased office equipment from Oso Co. for $340,000, paying $40,000 and issuing a series of ten 8% notes for $30,000 each, coming due at 30-day intervals.

12. Settled a product liability lawsuit with a customer for $165,000, payable in January.

Warwick accrued the loss in a litigation claims payable account.

31. Paid the amount due Oso Co. on the first note in the series issued on December 1.

Instructions

1. Journalize the transactions.

2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year:

a. Product warranty cost, $32,500.

b. Interest on the nine remaining notes owed to Oso Co.

the following information about the payroll for the week ended december 30 was obtai 546198

Aug 29, 2021 | Uncategorized

PR 10-2A Entries for payroll and payroll taxes

The following information about the payroll for the week ended December 30 was obtained from the records of Qualitech Co.:

Tax rates assumed:

Social security, 6%

Medicare, 1.5%

State unemployment (employer only), 5.4%

Federal unemployment (employer only), 0.8%

Instructions

1. Assuming that the payroll for the last week of the year is to be paid on December 31, journalize the following entries:

a. December 30, to record the payroll.

b. December 30, to record the employer’s payroll taxes on the payroll to be paid on December 31. Of the total payroll for the last week of the year, $35,000 is subject to unemployment compensation taxes.

2. Assuming that the payroll for the last week of the year is to be paid on January 5 of the following fiscal year, journalize the following entries:

a. December 30, to record the payroll.

b. January 5, to record the employer’s payroll taxes on the payroll to be paid on January 5. Since it is a new fiscal year, all $675,000 in salaries is subject to unemployment compensation taxes.

ehrlich co began business on january 2 2013 salaries were paid to employees on the l 546199

Aug 29, 2021 | Uncategorized

PR 10-3A Wage and tax statement data on employer FICA tax

Ehrlich Co. began business on January 2, 2013. Salaries were paid to employees on the last day of each month, and social security tax, Medicare tax, and federal income tax were withheld in the required amounts. An employee who is hired in the middle of the month receives half the monthly salary for that month. All required payroll tax reports were filed, and the correct amount of payroll taxes was remitted by the company for the calendar year. Early in 2014, before the Wage and Tax Statements (Form W-2) could be prepared for distribution to employees and for filing with the Social Security Administration, the employees’ earnings records were inadvertently destroyed.

None of the employees resigned or were discharged during the year, and there were no changes in salary rates. The social security tax was withheld at the rate of 6.0% and Medicare tax at the rate of 1.5%. Data on dates of employment, salary rates, and employees’ income taxes withheld, which are summarized as follows, were obtained from personnel records and payroll records:

Instructions

1. Calculate the amounts to be reported on each employee’s Wage and Tax Statement

(Form W-2) for 2013, arranging the data in the following form:

2. Calculate the following employer payroll taxes for the year: (a) social security; (b) Medicare; (c) state unemployment compensation at 5.4% on the first $10,000 of each employee’s earnings; (d) federal unemployment compensation at 0.8% on the first $10,000 of each employee’s earnings; (e) total.

the following data for throwback industries inc relate to the payroll for the week e 546200

Aug 29, 2021 | Uncategorized

PR 10-4A Payroll register

The following data for Throwback Industries Inc. relate to the payroll for the week ended December 7, 2014:

Employees Mantle and Williams are office staff, and all of the other employees are sales personnel. All sales personnel are paid 1½ times the regular rate for all hours in excess of 40 hours per week. The social security tax rate is 6.0%, and Medicare tax is 1.5% of each employee’s annual earnings. The next payroll check to be used is No. 901.

Instructions

1. Prepare a payroll register for Throwback Industries Inc. for the week ended December 7, 2014. Use the following columns for the payroll register: Employee, Total Hours, Regular Earnings, Overtime Earnings, Total Earnings, Social Security Tax, Medicare Tax, Federal Income Tax, U.S. Savings Bonds, Total Deductions, Net Pay, Ck. No., Sales Salaries Expense, and Office Salaries Expense.

Journalize the entry to record the payroll for the week.

the following accounts with the balances indicated appear in the ledger of garcon co 546201

Aug 29, 2021 | Uncategorized

PR 10-5A Payroll accounts and year-end entries

The following accounts, with the balances indicated, appear in the ledger of Garcon Co. on December 1 of the current year:

The following transactions relating to payroll, payroll deductions, and payroll taxes occurred during December:

Dec. 2. Issued Check No. 410 for $3,400 to Jay Bank to purchase U.S. savings bonds for employees.

2. Issued Check No. 411 to Jay Bank for $27,046 in payment of $9,273 of social security tax, $2,318 of Medicare tax, and $15,455 of employees’ federal income tax due.

13. Journalized the entry to record the biweekly payroll. A summary of the payroll record follows:

27. Issued Check No. 541 in payment of the net amount of the biweekly payroll.

27. Journalized the entry to record payroll taxes on employees’ earnings of December 27: social security tax, $4,668; Medicare tax, $1,167; state unemployment tax, $225; federal unemployment tax, $75.

27. Issued Check No. 543 for $20,884 to State Department of Revenue in payment of employees’ state income tax due on December 31.

31. Issued Check No. 545 to Jay Bank for $3,400 to purchase U.S. savings bonds for employees.

31. Paid $45,000 to the employee pension plan. The annual pension cost is $60,000.

(Record both the payment and unfunded pension liability.)

Instructions

1. Journalize the transactions.

2. Journalize the following adjusting entries on December 31:

a. Salaries accrued: operations salaries, $8,560; officers salaries, $5,600; office salaries, $1,400. The payroll taxes are immaterial and are not accrued.

b. Vacation pay, $15,000.

the following items were selected from among the transactions completed by aston mar 546202

Aug 29, 2021 | Uncategorized

PR 10-1B Liability transactions

The following items were selected from among the transactions completed by Aston Martin Inc. during the current year:

Apr. 15. Borrowed $225,000 from Audi Company, issuing a 30-day, 6% note for that amount.

May 1. Purchased equipment by issuing a $320,000, 180-day note to Spyder Manufacturing Co., which discounted the note at the rate of 6%.

15. Paid Audi Company the interest due on the note of April 15 and renewed the loan by issuing a new 60-day, 8% note for $225,000. (Record both the debit and credit to the notes payable account.)

July 14. Paid Audi Company the amount due on the note of May 15.

Aug. 16. Purchased merchandise on account from Exige Co., $90,000, terms, n/30.

Sept. 15. Issued a 45-day, 6% note for $90,000 to Exige Co., on account.

Oct. 28. Paid Spyder Manufacturing Co. the amount due on the note of May 1.

30. Paid Exige Co. the amount owed on the note of September 15.

Nov. 16. Purchased store equipment from Gallardo Co. for $450,000, paying $50,000 and issuing a series of twenty 9% notes for $20,000 each, coming due at 30-day intervals.

Dec. 16. Paid the amount due Gallardo Co. on the first note in the series issued on November 16.

28. Settled a personal injury lawsuit with a customer for $87,500, to be paid in January.

Aston Martin Inc. accrued the loss in a litigation claims payable account.

Instructions

1. Journalize the transactions.

2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year:

a. Product warranty cost, $26,800.

b. Interest on the 19 remaining notes owed to Gallardo Co.

january 4 to record the employer rsquo s payroll taxes on the payroll to be paid on 546203

Aug 29, 2021 | Uncategorized

PR 10-2B Entries for payroll and payroll taxes

The following information about the payroll for the week ended December 30 was obtained from the records of Saine Co.:

Tax rates assumed:

Social security, 6%

Medicare, 1.5%

State unemployment (employer only), 5.4%

Federal unemployment (employer only), 0.8%

Instructions

1. Assuming that the payroll for the last week of the year is to be paid on December 31, journalize the following entries:

a. December 30, to record the payroll.

b. December 30, to record the employer’s payroll taxes on the payroll to be paid on December 31. Of the total payroll for the last week of the year, $30,000 is subject to unemployment compensation taxes.

2. Assuming that the payroll for the last week of the year is to be paid on January 4 of the following fiscal year, journalize the following entries:

a. December 30, to record the payroll.

b. January 4, to record the employer’s payroll taxes on the payroll to be paid on January 4. Since it is a new fiscal year, all $1,185,000 in salaries is subject to unemployment compensation taxes.

jocame inc began business on january 2 2013 salaries were paid to employees on the l 546204

Aug 29, 2021 | Uncategorized

PR 10-3B Wage and tax statement data and employer FICA tax

Jocame Inc. began business on January 2, 2013. Salaries were paid to employees on the last day of each month, and social security tax, Medicare tax, and federal income tax were withheld in the required amounts. An employee who is hired in the middle of the month receives half the monthly salary for that month. All required payroll tax reports were filed, and the correct amount of payroll taxes was remitted by the company for the calendar year. Early in 2014, before the Wage and Tax Statements (Form W-2) could be prepared for distribution to employees and for filing with the Social Security Administration, the employees’ earnings records were inadvertently destroyed.

None of the employees resigned or were discharged during the year, and there were no changes in salary rates. The social security tax was withheld at the rate of 6.0% and Medicare tax at the rate of 1.5% on salary. Data on dates of employment, salary rates, and employees’ income taxes withheld, which are summarized as follows, were obtained from personnel records and payroll records:

Instructions

1. Calculate the amounts to be reported on each employee’s Wage and Tax Statement

(Form W-2) for 2013, arranging the data in the following form:

2. Calculate the following employer payroll taxes for the year: (a) social security;

(b) Medicare;

(c) state unemployment compensation at 5.4% on the first $10,000 of

each employee’s earnings; (d) federal unemployment compensation at 0.8% on the

first $10,000 of each employee’s earnings; (e) total.

the following data for flexco inc relate to the payroll for the week ended december 546205

Aug 29, 2021 | Uncategorized

PR 10-4B Payroll register

The following data for Flexco Inc. relate to the payroll for the week ended December 7, 2014:

Employees Grove and Seaver are office staff, and all of the other employees are sales personnel. All sales personnel are paid 1½ times the regular rate for all hours in excess of 40 hours per week. The social security tax rate is 6.0% of each employee’s annual earnings, and Medicare tax is 1.5% of each employee’s annual earnings. The next payroll check to be used is No. 328.

Instructions

1. Prepare a payroll register for Flexco Inc. for the week ended December 7, 2014. Use the following columns for the payroll register: Employee, Total Hours, Regular Earnings, Overtime Earnings, Total Earnings, Social Security Tax, Medicare Tax, Federal Income Tax, U.S. Savings Bonds, Total Deductions, Net Pay, Ck. No., Sales Salaries Expense, and Office Salaries Expense.

1. Journalize the entry to record the payroll for the week.

the following accounts with the balances indicated appear in the ledger of codigo co 546206

Aug 29, 2021 | Uncategorized

PR 10-5B Payroll accounts and year-end entries

The following accounts, with the balances indicated, appear in the ledger of Codigo Co. on December 1 of the current year:

The following transactions relating to payroll, payroll deductions, and payroll taxes occurred during December:

Dec. 1. Issued Check No. 815 to Aberderas Insurance Company for $2,520, in payment of the semiannual premium on the group medical insurance policy.

1. Issued Check No. 816 to Alvarez Bank for $8,131, in payment for $2,913 of social security tax, $728 of Medicare tax, and $4,490 of employees’ federal income tax due.

2. Issued Check No. 817 for $2,300 to Alvarez Bank to purchase U.S. savings bonds for employees.

12. Journalized the entry to record the biweekly payroll. A summary of the payroll record follows:

12. Issued Check No. 822 in payment of the net amount of the biweekly payroll.

12. Journalized the entry to record payroll taxes on employees’ earnings of December 12: social security tax, $1,452; Medicare tax, $363; state unemployment tax, $315; federal unemployment tax, $90.

15. Issued Check No. 830 to Alvarez Bank for $7,938, in payment of $2,904 of social security tax, $726 of Medicare tax, and $4,308 of employees’ federal income tax due.

26. Journalized the entry to record the biweekly payroll. A summary of the payroll record follows:

Dec. 26. Journalized the entry to record payroll taxes on employees’ earnings of December 26: social security tax, $1,455; Medicare tax, $364; state unemployment tax, $150; federal unemployment tax, $40.

30. Issued Check No. 851 for $6,258 to State Department of Revenue, in payment of employees’ state income tax due on December 31.

30. Issued Check No. 852 to Alvarez Bank for $2,300 to purchase U.S. savings bonds for employees.

31. Paid $55,400 to the employee pension plan. The annual pension cost is $65,500. (Record both the payment and the unfunded pension liability.)

Instructions

1. Journalize the transactions.

2. Journalize the following adjusting entries on December 31:

a. Salaries accrued: sales salaries, $4,275; officers salaries, $2,175; office salaries, $825.

The payroll taxes are immaterial and are not accrued.

b. Vacation pay, $13,350.

tonya latirno is a certified public accountant cpa and staff accountant for kennedy 546207

Aug 29, 2021 | Uncategorized

CP 10-1 Ethics and professional conduct in business

Tonya Latirno is a certified public accountant (CPA) and staff accountant for Kennedy and Kennedy, a local CPA firm. It had been the policy of the firm to provide a holiday bonus equal to two weeks’ salary to all employees. The firm’s new management team announced on November 15 that a bonus equal to only one week’s salary would be made available to employees this year. Tonya thought that this policy was unfair because she and her coworkers planned on the full two-week bonus. The two-week bonus had been given for 10 straight years, so it seemed as though the firm had breached an implied commitment. Thus, Tonya decided that she would make up the lost bonus week by working an extra six hours of overtime per week over the next five weeks until the end of the year. Kennedy and Kennedy’s policy is to pay overtime at 150% of straight time.

Tonya’s supervisor was surprised to see overtime being reported, since there is generally very little additional or unusual client service demands at the end of the calendar year. However, the overtime was not questioned, since firm employees are on the “honor system” in reporting their overtime.

Discuss whether the firm is acting in an ethical manner by changing the bonus. Is Tonya behaving in an ethical manner?

the annual examination of felton company rsquo s financial statements by its externa 546208

Aug 29, 2021 | Uncategorized

CP 10-2 Recognizing pension expense

The annual examination of Felton Company’s financial statements by its external public accounting firm (auditors) is nearing completion. The following conversation took place between the controller of Felton Company (Francie) and the audit manager from the public accounting firm (Sumana).

Sumana: You know, Francie, we are about to wrap up our audit for this fiscal year. Yet, there is one item still to be resolved.

Francie: What’s that?

Sumana: Well, as you know, at the beginning of the year, Felton began a defined benefit pension plan. This plan promises your employees an annual payment when they retire, using a formula based on their salaries at retirement and their years of service. I believe that a pension expense should be recognized this year, equal to the amount of pension earned by your employees.

Francie: Wait a minute. I think you have it all wrong. The company doesn’t have apension expense until it actually pays the pension in cash when the employee retires. After all, some of these employees may not reach retirement, and if they don’t, the company doesn’t owe them anything.

Sumana: You’re not really seeing this the right way. The pension is earned by your employees during their working years. You actually make the payment much later—when they retire. It’s like one long accrual—much like incurring wages in one period and paying them in the next. Thus, I think that you should recognize the expense in the period the pension is earned by the employees.

Francie: Let me see if I’ve got this straight. I should recognize an expense this period for something that may or may not be paid to the employees in 20 or 30 years, when they finally retire. How am I supposed to determine what the expense is for the current year? The amount of the final retirement depends on many uncertainties: salary levels, employee longevity, mortality rates, and interest earned on investments to fund the pension. I don’t think that an amount can be determined, even if I accepted your arguments.

Evaluate Sumana’s position. Is she right or is Francie correct?

why does tina song want to conduct business transactions using cash not check or cre 546209

Aug 29, 2021 | Uncategorized

CP 10-3 Ethics and professional conduct in business

Marvin Turner was discussing summer employment with Tina Song, president of Motown

Construction Service:

Tina: I’m glad that you’re thinking about joining us for the summer. We could certainly use the help.

Marvin: Sounds good. I enjoy outdoor work, and I could use the money to help with next year’s school expenses.

Tina: I’ve got a plan that can help you out on that. As you know, I’ll pay you $14 per hour, but in addition, I’d like to pay you with cash. Since you’re only working for the summer, it really doesn’t make sense for me to go to the trouble of formally putting you on our payroll system. In fact, I do some jobs for my clients on a strictly cash basis, so it would be easy to just pay you that way.

Marvin: Well, that’s a bit unusual, but I guess money is money.

Tina: Yeah, not only that, it’s tax-free!

Marvin: What do you mean?

Tina: Didn’t you know? Any money that you receive in cash is not reported to the IRS on a W-2 form; therefore, the IRS doesn’t know about the income—hence, it’s the same as tax-free earnings.

a. Why does Tina Song want to conduct business transactions using cash (not check or credit card)?

b. How should Marvin respond to Tina’s suggestion?

jackie fox owns and operates platinum transport co during the past year jackie incur 546113

Aug 29, 2021 | Uncategorized

EX 9-5 Capital and revenue expenditures

Jackie Fox owns and operates Platinum Transport Co. During the past year, Jackie incurred the following costs related to an 18-wheel truck:

1. Changed engine oil.

2. Installed a television in the sleeping compartment of the truck.

3. Installed a wind deflector on top of the cab to increase fuel mileage.

4. Modified the factory-installed turbo charger with a special-order kit designed to add 50 more horsepower to the engine performance.

5. Replaced a headlight that had burned out.

6. Replaced a shock absorber that had worn out.

7. Replaced fog and cab light bulbs.

8. Replaced the hydraulic brake system that had begun to fail during his latest trip through the Rocky Mountains.

9. Removed the old CB radio and replaced it with a newer model with a greater range.

10. Replaced the old radar detector with a newer model that is fastened to the truck with a locking device that prevents its removal.

Classify each of the costs as a capital expenditure or a revenue expenditure.

list the errors you find in the following partial balance sheet 546130

Aug 29, 2021 | Uncategorized

EX 9-22 Balance sheet presentation

List the errors you find in the following partial balance sheet:

verizon communications is a major telecommunications company in the united states tw 546131

Aug 29, 2021 | Uncategorized

EX 9-23 Fixed asset turnover ratio

Verizon Communications is a major telecommunications company in the United States. Two recent balance sheets for Verizon disclosed the following information regarding fixed assets:

Verizon’s revenue for Year 2 was $106,565 million. Assume the fixed asset turnover for the telecommunications industry averages approximately 1.10.

a. Determine Verizon’s fixed asset turnover ratio for Year 2. Round to two decimal places.

b. Interpret Verizon’s fixed asset turnover ratio.

the following payments and receipts are related to land land improvements and buildi 546137

Aug 29, 2021 | Uncategorized

PR 9-1A Allocating payments and receipts to fixed asset accounts

The following payments and receipts are related to land, land improvements, and buildings acquired for use in a wholesale ceramic business. The receipts are identified by an asterisk.

Instructions

1. Assign each payment and receipt to Land (unlimited life), Land Improvements (limited life), Building, or Other Accounts. Indicate receipts by an asterisk. Identify each item by letter and list the amounts in columnar form, as follows:

2. Determine the amount debited to Land, Land Improvements, and Building.

3. The costs assigned to the land, which is used as a plant site, will not be depreciated, while the costs assigned to land improvements will be depreciated. Explain this seemingly contradictory application of the concept of depreciation.

4. What would be the effect on the income statement and balance sheet if the cost of filling and grading land of $12,000 [payment (i)] was incorrectly classified as Land Improvements rather than Land? Assume Land Improvements are depreciated over a 20-year life using the double-declining-balance method.

waldum company purchased packaging equipment on january 5 2012 for 135 000 the equip 546138

Aug 29, 2021 | Uncategorized

PR 9-2A Comparing three depreciation methods

Waldum Company purchased packaging equipment on January 5, 2012, for $135,000. The equipment was expected to have a useful life of three years, or 18,000 operating hours, and a residual value of $13,500. The equipment was used for 8,600 hours during 2012, 5,300 hours in 2013, and 4,100 hours in 2014.

Instructions

1. Determine the amount of depreciation expense for the years ended December 31, 2012, 2013, and 2014, by (a) the straight-line method, (b) the units-of-output method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the three years by each method. The following columnar headings are suggested for recording the depreciation expense amounts:

2. What method yields the highest depreciation expense for 2012?

3. What method yields the most depreciation over the three-year life of the equipment?

new lithographic equipment acquired at a cost of 800 000 at the beginning of a fisca 546140

Aug 29, 2021 | Uncategorized

PR 9-4A Depreciation by two methods; sale of fixed asset

New lithographic equipment, acquired at a cost of $800,000 at the beginning of a fiscal year, has an estimated useful life of five years and an estimated residual value of $90,000. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On the basis of the data presented to the manager, the double-declining-balance method was selected. In the first week of the fifth year, the equipment was sold for $135,000.

Instructions

1. Determine the annual depreciation expense for each of the estimated five years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by (a) the straight-line method and (b) the double-declining-balance method. The following columnar headings are suggested for each schedule:

2. Journalize the entry to record the sale.

3. Journalize the entry to record the sale, assuming that the equipment was sold for $88,750 instead of $135,000.

the following transactions adjusting entries and closing entries were completed by l 546141

Aug 29, 2021 | Uncategorized

PR 9-5A Transactions for fixed assets, including sale

The following transactions, adjusting entries, and closing entries were completed by Legacy Furniture Co. during a three-year period. All are related to the use of delivery equipment. The double-declining-balance method of depreciation is used.

2012 Jan. 4. Purchased a used delivery truck for $28,000, paying cash.

Nov. 2. Paid garage $675 for miscellaneous repairs to the truck.

Dec. 31. Recorded depreciation on the truck for the year. The estimated useful life of the truck is four years, with a residual value of $5,000 for the truck.

2013 Jan. 6. Purchased a new truck for $48,000, paying cash.

Apr. 1. Sold the used truck for $15,000. (Record depreciation to date in 2013 for the truck.)

June 11. Paid garage $450 for miscellaneous repairs to the truck.

Dec. 31. Record depreciation for the new truck. It has an estimated residual value of $9,000 and an estimated life of five years.

2014 July 1. Purchased a new truck for $54,000, paying cash.

Oct. 2. Sold the truck purchased January 6, 2013, for $16,750. (Record depreciation to date for 2014 for the truck.)

Dec. 31. Recorded depreciation on the remaining truck. It has an estimated residual value of $12,000 and an estimated useful life of eight years.

Instructions

Journalize the transactions and the adjusting entries.

data related to the acquisition of timber rights and intangible assets during the cu 546142

Aug 29, 2021 | Uncategorized

PR 9-6A Amortization and depletion entries

Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows:

a. Timber rights on a tract of land were purchased for $1,600,000 on February 22. The stand of timber is estimated at 5,000,000 board feet. During the current year, 1,100,000 board feet of timber were cut and sold.

b. On December 31, the company determined that $3,750,000 of goodwill was impaired.

c. Governmental and legal costs of $6,600,000 were incurred on April 3 in obtaining a patent with an estimated economic life of 12 years. Amortization is to be for threefourths of a year.

Instructions

1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items.

2. Journalize the adjusting entries required to record the amortization, depletion, or impairment for each item.

the following payments and receipts are related to land land improvements and buildi 546143

Aug 29, 2021 | Uncategorized

PR 9-1B Allocating payments and receipts to fixed asset accounts

The following payments and receipts are related to land, land improvements, and buildings acquired for use in a wholesale apparel business. The receipts are identified by an asterisk.

Instructions

1. Assign each payment and receipt to Land (unlimited life), Land Improvements (limited life), Building, or Other Accounts. Indicate receipts by an asterisk. Identify each item by letter and list the amounts in columnar form, as follows:

2. Determine the amount debited to Land, Land Improvements, and Building.

3. The costs assigned to the land, which is used as a plant site, will not be depreciated, while the costs assigned to land improvements will be depreciated. Explain this seemingly contradictory application of the concept of depreciation.

4. What would be the effect on the income statement and balance sheet if the cost of paving the parking lot of $21,600 [payment (o)] was incorrectly classified as Land rather than Land Improvements? Assume Land Improvements are depreciated over a 10-year life using the double-declining-balance method.

determine the amount of depreciation expense for the years ended december 31 2013 20 546144

Aug 29, 2021 | Uncategorized

PR 9-2B Comparing three depreciation methods

Waylander Coatings Company purchased waterproofing equipment on January 6, 2013, for $320,000. The equipment was expected to have a useful life of four years, or 20,000 operating hours, and a residual value of $35,000. The equipment was used for 7,200 hours during 2013, 6,400 hours in 2014, 4,400 hours in 2015, and 2,000 hours in 2016.

Instructions

1. Determine the amount of depreciation expense for the years ended December 31, 2013, 2014, 2015, and 2016, by (a) the straight-line method, (b) the units-of-output method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the four years by each method. The following columnar headings are suggested for recording the depreciation expense amounts:

2. What method yields the highest depreciation expense for 2013?

3. What method yields the most depreciation over the four-year life of the equipment?

journalize the entry to record the sale assuming that the equipment sold for 10 500 546146

Aug 29, 2021 | Uncategorized

PR 9-4B Depreciation by two methods; sale of fixed asset

New tire retreading equipment, acquired at a cost of $110,000 at the beginning of a fiscal year, has an estimated useful life of four years and an estimated residual value of $7,500. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On the basis of the data presented to the manager, the double-declining-balance method was selected.

In the first week of the fourth year, the equipment was sold for $18,000.

Instructions

1. Determine the annual depreciation expense for each of the estimated four years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by (a) the straight-line method and (b) the double-declining-balance method. The following columnar headings are suggested for

2. Journalize the entry to record the sale.

3. Journalize the entry to record the sale, assuming that the equipment sold for $10,500 instead of $18,000.

the following transactions adjusting entries and closing entries were completed by r 546147

Aug 29, 2021 | Uncategorized

PR 9-5B Transactions for fixed assets, including sale

The following transactions, adjusting entries, and closing entries were completed by Robinson Furniture Co. during a three-year period. All are related to the use of delivery equipment. The double-declining-balance method of depreciation is used.

2012 Jan. 8. Purchased a used delivery truck for $24,000, paying cash.

Mar. 7. Paid garage $900 for changing the oil, replacing the oil filter, and tuning the engine on the delivery truck.

Dec. 31. Recorded depreciation on the truck for the fiscal year. The estimated useful life of the truck is four years, with a residual value of $4,000 for the truck.

2013 Jan. 9. Purchased a new truck for $50,000, paying cash.

Feb. 28. Paid garage $250 to tune the engine and make other minor repairs on the used truck.

Apr. 30. Sold the used truck for $9,500. (Record depreciation to date in 2013 for the truck.)

Dec. 31. Record depreciation for the new truck. It has an estimated residual value of $12,000 and an estimated life of eight years.

2014 Sept. 1. Purchased a new truck for $58,500, paying cash.

4. Sold the truck purchased January 9, 2013, for $36,000. (Record depreciation to date for 2014 for the truck.)

Dec. 31. Recorded depreciation on the remaining truck. It has an estimated residual value of $16,000 and an estimated useful life of 10 years.

Instructions

Journalize the transactions and the adjusting entries.

data related to the acquisition of timber rights and intangible assets during the cu 546148

Aug 29, 2021 | Uncategorized

PR 9-6B Amortization and depletion entries

Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows:

a. On December 31, the company determined that $3,400,000 of goodwill was impaired.

b. Governmental and legal costs of $4,800,000 were incurred on September 30 in obtaining a patent with an estimated economic life of eight years. Amortization is to be for one-fourth year.

c. Timber rights on a tract of land were purchased for $2,975,000 on February 4. The stand of timber is estimated at 12,500,000 board feet. During the current year, 4,150,000 board feet of timber were cut and sold.

Instructions

1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items.

2. Journalize the adjusting entries to record the amortization, depletion, or impairment for each item.

what factors would you present for tim rsquo s consideration in the selection of a d 546151

Aug 29, 2021 | Uncategorized

CP 9-3 Effect of depreciation on net income

Tuttle Construction Co. specializes in building replicas of historic houses. Tim Newman, president of Tuttle Construction, is considering the purchase of various items of equipment on July 1, 2012, for $400,000. The equipment would have a useful life of five years and no residual value. In the past, all equipment has been leased. For tax purposes, Tim is considering depreciating the equipment by the straight-line method. He discussed the matter with his CPA and learned that, although the straight-line method could be elected, it was to his advantage to use the Modified Accelerated Cost Recovery System (MACRS) for tax purposes. He asked for your advice as to which method to use for tax purposes.

1. Compute depreciation for each of the years (2012, 2013, 2014, 2015, 2016, and 2017) of useful life by (a) the straight-line method and (b) MACRS. In using the straight-line method, one-half year’s depreciation should be computed for 2012 and 2017. Use the MACRS rates presented on page 417.

2. Assuming that income before depreciation and income tax is estimated to be $750,000 uniformly per year and that the income tax rate is 40%, compute the net income for each of the years 2012, 2013, 2014, 2015, 2016, and 2017 if (a) the straight-line method is used and (b) MACRS is used.

3. What factors would you present for Tim’s consideration in the selection of a depreciation method?

the following table shows the revenues and average net fixed assets for a recent fis 546153

Aug 29, 2021 | Uncategorized

CP 9-5 Fixed asset turnover: three industries

The following table shows the revenues and average net fixed assets for a recent fiscal year for three different companies from three different industries: retailing, manufacturing, and communications.

a. For each company, determine the fixed asset turnover ratio. Round to two decimal places.

b. Explain Walmart’s ratio relative to the other two companies.

nabors company reported the following current assets and liabilities for december 31 546172

Aug 29, 2021 | Uncategorized

PE 10-8A Quick ratio

Nabors Company reported the following current assets and liabilities for December 31, 2014 and 2013:

a. Compute the quick ratio for December 31, 2014 and 2013.

b. Interpret the company’s quick ratio. Is the quick ratio improving or declining?

adieu company reported the following current assets and liabilities for december 31 546173

Aug 29, 2021 | Uncategorized

PE 10-8B Quick ratio

Adieu Company reported the following current assets and liabilities for December 31,

2014 and 2013:

a. Compute the quick ratio for December 31, 2014 and 2013.

b. Interpret the company’s quick ratio. Is the quick ratio improving or declining?

if coca cola did not issue additional long term debt next year what would be the tot 546180

Aug 29, 2021 | Uncategorized

EX 10-7 Current portion of long-term debt

The Coca-Cola Company reported the following information about its long-term debt in the notes to a recent financial statement (in millions):

Long-term debt is comprised of the following:

a. How much of the long-term debt was disclosed as a current liability on the current year’s December 31 balance sheet?

b. How much did the total current liabilities change between the preceding year and the current year as a result of the current portion of long-term debt?

c. If Coca-Cola did not issue additional long-term debt next year, what would be the total long-term debt on December 31 of the upcoming year?

determine the gross pay and the net pay for each of the three employees for the curr 546182

Aug 29, 2021 | Uncategorized

EX 10-9 Calculate payroll

Snyder Company has three employees—a consultant, a computer programmer, and an administrator. The following payroll information is available for each employee:

* For hourly employees, overtime is paid for hours worked in excess of 40 hours per week.

For the current pay period, the computer programmer worked 60 hours and the administrator worked 50 hours. The federal income tax withheld for all three employees, who are single, can be determined from the wage bracket withholding table in Exhibit 3 in the chapter. Assume further that the social security tax rate was 6.0%, the Medicare tax rate was 1.5%, and one withholding allowance is $70.

Determine the gross pay and the net pay for each of the three employees for the current pay period.

in the following summary of data for a payroll period some amounts have been intenti 546183

Aug 29, 2021 | Uncategorized

EX 10-10 Summary payroll data

In the following summary of data for a payroll period, some amounts have been intentionally omitted:

a. Calculate the amounts omitted in lines (1), (3), (8), and (12).

b. Journalize the entry to record the payroll accrual.

c. Journalize the entry to record the payment of the payroll.

polo ralph lauren corporation designs markets and distributes a variety of apparel h 546063

Aug 29, 2021 | Uncategorized

EX 8-26 Accounts receivable turnover and days’ sales in receivables

Polo Ralph Lauren Corporation designs, markets, and distributes a variety of apparel, home decor, accessory, and fragrance products. The company’s products include such brands as Polo by Ralph Lauren, Ralph Lauren Purple Label, Ralph Lauren, Polo Jeans Co., and Chaps. Polo Ralph Lauren reported the following (in thousands) for two recent years:

Assume that accounts receivable (in millions) were $576,700 at the beginning of Year 1.

a. Compute the accounts receivable turnover for Year 2 and Year 1. Round to one decimal place.

b. Compute the days’ sales in receivables for Year 2 and Year 1. Round to one decimal place.

c. What conclusions can be drawn from these analyses regarding Ralph Lauren’s efficiency in collecting receivables?

h j heinz company was founded in 1869 at sharpsburg pennsylvania by henry j heinz 546064

Aug 29, 2021 | Uncategorized

EX 8-27 Accounts receivable turnover and days’ sales in receivables

H.J. Heinz Company was founded in 1869 at Sharpsburg, Pennsylvania, by Henry J. Heinz. The company manufactures and markets food products throughout the world, including ketchup, condiments and sauces, frozen food, pet food, soups, and tuna. For two recent years, H.J. Heinz reported the following (in thousands):

Assume that the accounts receivable (in thousands) were $1,171,797 at the beginning of Year 1.

a. Compute the accounts receivable turnover for Year 2 and Year 1. Round to one decimal place.

b. Compute the days’ sales in receivables at the end of Year 2 and Year 1. Round to one decimal place.

c. What conclusions can be drawn from these analyses regarding Heinz’s efficiency in collecting receivables?

the limited brands inc sells women clothing and personal health care products throug 546065

Aug 29, 2021 | Uncategorized

EX 8-28 Accounts receivable turnover and days’ sales in receivables

The Limited Brands Inc. sells women’s clothing and personal health care products through specialty retail stores including Victoria’s Secret and Bath & Body Works stores. The Limited Brands reported the following (in millions) for two recent years:

Assume that accounts receivable (in millions) were $313 at the beginning of Year 1.

a. Compute the accounts receivable turnover for Year 2 and Year 1. Round to one decimal place.

b. Compute the day’s sales in receivables for Year 2 and Year 1. Round to one decimal place.

c. What conclusions can be drawn from these analyses regarding The Limited Brands’ efficiency in collecting receivables?

the following transactions were completed by the irvine company during the current f 546066

Aug 29, 2021 | Uncategorized

PR 8-1A Entries related to uncollectible accounts

The following transactions were completed by The Irvine Company during the current fiscal year ended December 31:

Feb. 8. Received 40% of the $18,000 balance owed by DeCoy Co., a bankrupt business, and wrote off the remainder as uncollectible.

May 27. Reinstated the account of Seth Nelsen, which had been written off in the preceding year as uncollectible. Journalized the receipt of $7,350 cash in full payment of Seth’s account.

Aug. 13. Wrote off the $6,400 balance owed by Kat Tracks Co., which has no assets.

Oct. 31. Reinstated the account of Crawford Co., which had been written off in the preceding year as uncollectible. Journalized the receipt of $3,880 cash in full payment of the account.

Dec. 31. Wrote off the following accounts as uncollectible (compound entry): Newbauer Co., $7,190; Bonneville Co., $5,500; Crow Distributors, $9,400; Fiber Optics, $1,110.

31. Based on an analysis of the $1,785,000 of accounts receivable, it was estimated that $35,700 will be uncollectible. Journalized the adjusting entry.

Instructions

1. Record the January 1 credit balance of $26,000 in a T account for Allowance for Doubtful Accounts.

2. Journalize the transactions. Post each entry that affects the following selected T accounts and determine the new balances:

Allowance for Doubtful Accounts

Bad Debt Expense

3. Determine the expected net realizable value of the accounts receivable as of December 31.

4. Assuming that instead of basing the provision for uncollectible accounts on an analysis of receivables, the adjusting entry on December 31 had been based on an estimated expense of ¼ of 1% of the net sales of $18,200,000 for the year, determine the following:

a. Bad debt expense for the year.

b. Balance in the allowance account after the adjustment of December 31.

c. Expected net realizable value of the accounts receivable as of December 31.

call systems company a telephone service and supply company has just completed its f 546067

Aug 29, 2021 | Uncategorized

PR 8-3A Compare two methods of accounting for uncollectible receivables

Call Systems Company, a telephone service and supply company, has just completed its fourth year of operations. The direct write-off method of recording bad debt expense has been used during the entire period. Because of substantial increases in sales volume and the amount of uncollectible accounts, the company is considering changing to the allowance method. Information is requested as to the effect that an annual provision of 1% of sales would have had on the amount of bad debt expense reported for each of the past four years. It is also considered desirable to know what the balance of Allowance for Doubtful Accounts would have been at the end of each year. The following data have been obtained from the accounts:

Instructions

1. Assemble the desired data, using the following column headings:

2. Experience during the first four years of operations indicated that the receivables were either collected within two years or had to be written off as uncollectible.

Does the estimate of 1% of sales appear to be reasonably close to the actual experience with uncollectible accounts originating during the first two years? Explain.

flush mate co wholesales bathroom fixtures during the current fiscal year flush mate 546068

Aug 29, 2021 | Uncategorized

PR 8-4A Details of notes receivable and related entries

Flush Mate Co. wholesales bathroom fixtures. During the current fiscal year, Flush Mate Co. received the following notes:

Instructions

1. Determine for each note (a) the due date and (b) the amount of interest due at maturity, identifying each note by number.

2. Journalize the entry to record the dishonor of Note (3) on its due date.

3. Journalize the adjusting entry to record the accrued interest on Notes (5) and (6) on December 31.

4. Journalize the entries to record the receipt of the amounts due on Notes (5) and (6) in January

the following data relate to notes receivable and interest for cgh cable co a cable 546069

Aug 29, 2021 | Uncategorized

PR 8-5A Notes receivable entries

The following data relate to notes receivable and interest for CGH Cable Co., a cable manufacturer and supplier. (All notes are dated as of the day they are received.)

Apr. 10. Received a $144,000, 5%, 60-day note on account.

May 15. Received a $270,000, 7%, 120-day note on account.

June 9. Received $145,200 on note of April 10.

Aug. 22. Received a $150,000, 4%, 45-day note on account.

Sept. 12. Received $276,300 on note of May 15.

30. Received a $210,000, 8%, 60-day note on account.

Oct. 6. Received $150,750 on note of August 22.

18. Received a 120,000, 5%, 60-day note on account.

Nov. 29. Received $212,800 on note of September 30.

Dec. 17. Received $121,000 on note of October 18.

Instructions

Journalize the entries to record the transactions.

the following were selected from among the transactions completed by caldemeyer co d 546070

Aug 29, 2021 | Uncategorized

PR 8-6A Sales and notes receivable transactions

The following were selected from among the transactions completed by Caldemeyer Co. during the current year. Caldemeyer Co. sells and installs home and business security systems.

Jan. 3. Loaned $18,000 cash to Trina Gelhaus, receiving a 90-day, 8% note.

Feb. 10. Sold merchandise on account to Bradford & Co., $24,000. The cost of the merchandise sold was $14,400.

13. Sold merchandise on account to Dry Creek Co., $60,000. The cost of merchandise sold was $54,000.

Mar. 12. Accepted a 60-day, 7% note for $24,000 from Bradford & Co. on account.

14. Accepted a 60-day, 9% note for $60,000 from Dry Creek Co. on account.

Apr. 3. Received the interest due from Trina Gelhaus and a new 120-day, 9% note as a renewal of the loan of January 3. (Record both the debit and the credit to the notes receivable account.)

May 11. Received from Bradford & Co. the amount due on the note of March 12.

13. Dry Creek Co. dishonored its note dated March 14.

July 12. Received from Dry Creek Co. the amount owed on the dishonored note, plus interest for 60 days at 12% computed on the maturity value of the note.

Aug. 1. Received from Trina Gelhaus the amount due on her note of April 3.

Oct. 5. Sold merchandise on account to Halloran Co., $13,500. The cost of the merchandise sold was $8,100.

15. Received from Halloran Co. the amount of the invoice of October 5, less 2% discount.

Instructions

Journalize the entries to record the transactions.

the following transactions were completed by the wild trout gallery during the curre 546071

Aug 29, 2021 | Uncategorized

PR 8-1B Entries related to uncollectible accounts OBJ. 4

The following transactions were completed by The Wild Trout Gallery during the current fiscal year ended December 31:

Jan. 19. Reinstated the account of Arlene Gurley, which had been written off in the preceding year as uncollectible. Journalized the receipt of $2,660 cash in full payment of Arlene’s account.

Apr. 3. Wrote off the $12,750 balance owed by Premier GS Co., which is bankrupt.

July 16. Received 25% of the $22,000 balance owed by Hayden Co., a bankrupt business, and wrote off the remainder as uncollectible.

Nov. 23. Reinstated the account of Harry Carr, which had been written off two years earlier as uncollectible. Recorded the receipt of $4,000 cash in full payment.

Dec. 31. Wrote off the following accounts as uncollectible (compound entry): Cavey Co., $3,300; Fogle Co., $8,100; Lake Furniture, $11,400; Melinda Shryer, $1,200.

31. Based on an analysis of the $2,350,000 of accounts receivable, it was estimated that $60,000 will be uncollectible. Journalized the adjusting entry.

Instructions

1. Record the January 1 credit balance of $50,000 in a T account for Allowance for Doubtful Accounts.

2. Journalize the transactions. Post each entry that affects the following T accounts and determine the new balances:

Allowance for Doubtful Accounts Bad Debt Expense

3. Determine the expected net realizable value of the accounts receivable as of December 31.

4. Assuming that instead of basing the provision for uncollectible accounts on an analysis of receivables, the adjusting entry on December 31 had been based on an estimated expense of ½ of 1% of the net sales of $15,800,000 for the year, determine the following:

a. Bad debt expense for the year.

b. Balance in the allowance account after the adjustment of December 31.

c. Expected net realizable value of the accounts receivable as of December 31.

digital depot company which operates a chain of 40 electronics supply stores has jus 546072

Aug 29, 2021 | Uncategorized

PR 8-3B Compare two methods of accounting for uncollectible receivables

Digital Depot Company, which operates a chain of 40 electronics supply stores, has just completed its fourth year of operations. The direct write-off method of recording bad debt expense has been used during the entire period. Because of substantial increases in sales volume and the amount of uncollectible accounts, the firm is considering changing to the allowance method. Information is requested as to the effect that an annual provision of ¼% of sales would have had on the amount of bad debt expense reported for each of the past four years. It is also considered desirable to know what the balance of Allowance for Doubtful Accounts would have been at the end of each year. The following data have been obtained from the accounts:

Instructions

1. Assemble the desired data, using the following column headings:

2. Experience during the first four years of operations indicated that the receivables were either collected within two years or had to be written off as uncollectible.

Does the estimate of ¼% of sales appear to be reasonably close to the actual experience with uncollectible accounts originating during the first two years? Explain.

gen x ads co produces advertising videos during the current fiscal year gen x ads co 546073

Aug 29, 2021 | Uncategorized

PR 8-4B Details of notes receivable and related entries

Gen-X Ads Co. produces advertising videos. During the current fiscal year, Gen-X Ads Co. received the following notes:

Instructions

1. Determine for each note (a) the due date and (b) the amount of interest due at maturity, identifying each note by number.

2. Journalize the entry to record the dishonor of Note (3) on its due date.

3. Journalize the adjusting entry to record the accrued interest on Notes (5) and (6) on December 31.

4. Journalize the entries to record the receipt of the amounts due on Notes (5) and (6) in January and February.

the following data relate to notes receivable and interest for owens co a financial 546074

Aug 29, 2021 | Uncategorized

PR 8-5B Notes receivable entries

The following data relate to notes receivable and interest for Owens Co., a financial services company. (All notes are dated as of the day they are received.)

Mar. 8. Received a $33,000, 5%, 60-day note on account.

31. Received an $80,000, 7%, 90-day note on account.

May 7. Received $33,275 on note of March 8.

16. Received a $72,000, 7%, 90-day note on account.

June 11. Received a $36,000, 6%, 45-day note on account.

29. Received $81,400 on note of March 31.

July 26. Received $36,270 on note of June 11.

Aug. 4. Received a $48,000, 9%, 120-day note on account.

14. Received $73,260 on note of May 16.

Dec. 2. Received $49,440 on note of August 4.

Instructions

Journalize the entries to record the transactions.

the following were selected from among the transactions completed during the current 546075

Aug 29, 2021 | Uncategorized

PR 8-6B Sales and notes receivable transactions

The following were selected from among the transactions completed during the current year by Danix Co., an appliance wholesale company:

Jan. 21. Sold merchandise on account to Black Tie Co., $28,000. The cost of merchandise sold was $16,800.

Mar. 18. Accepted a 60-day, 6% note for $28,000 from Black Tie Co. on account.

May 17. Received from Black Tie Co. the amount due on the note of March 18.

June 15. Sold merchandise on account to Pioneer Co. for $17,700. The cost of merchandise sold was $10,600.

21. Loaned $18,000 cash to JR Stutts, receiving a 30-day, 8% note.

25. Received from Pioneer Co. the amount due on the invoice of June 15, less 1% discount.

July 21. Received the interest due from JR Stutts and a new 60-day, 9% note as a renewal of the loan of June 21. (Record both the debit and the credit to the notes receivable account.)

Sept. 19. Received from JR Stutts the amount due on her note of July 21.

22. Sold merchandise on account to Wycoff Co., $20,000. The cost of merchandise sold was $12,000.

Oct. 14. Accepted a 30-day, 6% note for $20,000 from Wycoff Co. on account.

Nov. 13. Wycoff Co. dishonored the note dated October 14.

Dec. 28. Received from Wycoff Co. the amount owed on the dishonored note, plus interest for 45 days at 8% computed on the maturity value of the note.

Instructions

Journalize the entries to record the transactions.

for several years xtreme co rsquo s sales have been on a ldquo cash only rdquo basis 546077

Aug 29, 2021 | Uncategorized

CP 8-2 Estimate uncollectible accounts

For several years, Xtreme Co.’s sales have been on a “cash only” basis. On January 1, 2011, however, Xtreme Co. began offering credit on terms of n/30. The amount of the adjusting entry to record the estimated uncollectible receivables at the end of each year has been ½ of 1% of credit sales, which is the rate reported as the average for the industry.

Credit sales and the year-end credit balances in Allowance for Doubtful Accounts for the past four years are as follows:

Laurie Jones, president of Xtreme Co., is concerned that the method used to account for and write off uncollectible receivables is unsatisfactory. She has asked for your advice in the analysis of past operations in this area and for recommendations for change.

1. Determine the amount of (a) the addition to Allowance for Doubtful Accounts and (b) the accounts written off for each of the four years.

2. a. Advise Laurie Jones as to whether the estimate of ½ of 1% of credit sales appears reasonable.

b. Assume that after discussing (a) with Laurie Jones, she asked you what action might be taken to determine what the balance of Allowance for Doubtful Accounts should be at December 31, 2014, and what possible changes, if any, you might recommend in accounting for uncollectible receivables. How would you respond?

best buy is a specialty retailer of consumer electronics including personal computer 546078

Aug 29, 2021 | Uncategorized

CP 8-3 Accounts receivable turnover and days’ sales in receivables

Best Buy is a specialty retailer of consumer electronics, including personal computers, entertainment software, and appliances. Best Buy operates retail stores in addition to the Best Buy, Media Play, On Cue, and Magnolia Hi-Fi Web sites. For two recent years, Best Buy reported the following (in millions):

Assume that the accounts receivable (in millions) were $1,868 at the beginning of fiscal Year 1.

1. Compute the accounts receivable turnover for Year 2 and Year 1. Round to one decimal place.

2. Compute the days’ sales in receivables at the end of Year 2 and Year 1. Round to one decimal place.

3. What conclusions can be drawn from (1) and (2) regarding Best Buy’s efficiency in collecting receivables?

4. What assumption did we make about sales for the Best Buy ratio computations that might distort the ratios and therefore cause the ratios not to be comparable for Year 2 and Year 1?

apple inc designs manufactures and markets personal computers and related personal c 546079

Aug 29, 2021 | Uncategorized

CP 8-4 Accounts receivable turnover and days’ sales in receivables

Apple Inc. designs, manufactures, and markets personal computers and related personal computing and communicating solutions for sale primarily to education, creative, consumer, and business customers. Substantially all of the company’s net sales over the last five years are from sales of its Macs, iPods, iPads, and related software and peripherals. For two recent fiscal years, Apple reported the following (in millions):

Assume that the accounts receivable (in millions) were $2,422 at the beginning of fiscal Year 1.

1. Compute the accounts receivable turnover for Year 2 and Year 1. Round to one decimal place.

2. Compute the days’ sales in receivables at the end of Year 2 and Year 1. Round to one decimal place.

3. What conclusions can be drawn from (1) and (2) regarding Apple’s efficiency in collecting receivables?

costco wholesale corporation operates membership warehouses that sell a variety of b 546080

Aug 29, 2021 | Uncategorized

CP 8-5 Accounts receivable turnover and days’ sales in receivables

Costco Wholesale Corporation operates membership warehouses that sell a variety of branded and private label products. Headquartered in Issaquah, Washington, it also sells merchandise online in the United States (Costco.com) and in Canada (Costco.ca). For two recent years, Costco reported the following (in millions):

Assume that the accounts receivable (in thousands) were $1,009 at the beginning of Year 1.

1. Compute the accounts receivable turnover for Year 2 and Year 1. Round to one decimal place.

2. Compute the days’ sales in receivables at the end of Year 2 and Year 1. Round to one decimal place.

3. What conclusions can be drawn from (1) and (2) regarding Costco’s efficiency in collecting receivables?

4. Given the nature of Costco’s operations, do you believe Costco’s accounts receivable turnover ratio would be higher or lower than a typical manufacturing company, such as H.J. Heinz Company? Explain.

the accounts receivable turnover ratio will vary across companies depending on the n 546081

Aug 29, 2021 | Uncategorized

CP 8-6 Accounts receivable turnover

The accounts receivable turnover ratio will vary across companies, depending on the nature of the company’s operations. For example, an accounts receivable turnover of 6 for a retailer is unacceptable, but might be excellent for a manufacturer of specialty milling equipment. A list of well-known companies follows:

1. Categorize each of the preceding companies as to whether its turnover ratio is likely

to be above or below 15.

2. Based on (1), identify a characteristic of companies with accounts receivable turnover ratios above 15.

financial statement data for years ending december 31 for depuy company are shown be 546107

Aug 29, 2021 | Uncategorized

PE 9-9A Fixed asset turnover ratio

Financial statement data for years ending December 31 for DePuy Company are shown below.

a. Determine the fixed asset turnover ratio for 2014 and 2013.

b. Does the change in the fixed asset turnover ratio from 2013 to 2014 indicate a favorable or an unfavorable trend?

dick gaines owns and operates gaines print co during february gaines print co incurr 546109

Aug 29, 2021 | Uncategorized

EX 9-1 Costs of acquiring fixed assets

Dick Gaines owns and operates Gaines Print Co. During February, Gaines Print Co. incurred the following costs in acquiring two printing presses. One printing press was new, and the other was used by a business that recently filed for bankruptcy.

Costs related to new printing press:

1. Fee paid to factory representative for installation

2. Freight

3. Insurance while in transit

4. New parts to replace those damaged in unloading

5. Sales tax on purchase price

6. Special foundation

Costs related to used printing press:

7. Fees paid to attorney to review purchase agreement

8. Freight

9. Installation

10. Repair of damage incurred in reconditioning the press

11. Replacement of worn-out parts

12. Vandalism repairs during installation

a. Indicate which costs incurred in acquiring the new printing press should be debited to the asset account.

b. Indicate which costs incurred in acquiring the used printing press should be debited to the asset account.

cedar springs company completed the following selected transactions during june 2014 546011

Aug 29, 2021 | Uncategorized

PR 7-2B Transactions for petty cash, cash short and over

Cedar Springs Company completed the following selected transactions during June 2014: June 1. Established a petty cash fund of $1,000.

12. The cash sales for the day, according to the cash register records, totaled $9,440.

The actual cash received from cash sales was $9,506.

30. Petty cash on hand was $46. Replenished the petty cash fund for the following disbursements, each evidenced by a petty cash receipt:

June 2. Store supplies, $375.

10. Express charges on merchandise purchased, $105 (Merchandise Inventory).

14. Office supplies, $85.

15. Office supplies, $90.

18. Postage stamps, $33 (Office Supplies).

20. Repair to fax, $100 (Miscellaneous Administrative Expense).

21. Repair to office door lock, $25 (Miscellaneous Administrative Expense).

22. Postage due on special delivery letter, $9 (Miscellaneous Administrative Expense).

28. Express charges on merchandise purchased, $110 (Merchandise Inventory).

30. The cash sales for the day, according to the cash register records, totaled $13,390. The actual cash received from cash sales was $13,350.

30. Increased the petty cash fund by $200.

Instructions

Journalize the transactions.

comparing the bank statement and the accompanying canceled checks and memos with the 546012

Aug 29, 2021 | Uncategorized

PR 7-3B Bank reconciliation and entries

The cash account for Stone Systems at July 31, 2014, indicated a balance of $17,750. The bank statement indicated a balance of $33,650 on July 31, 2014. Comparing the bank statement and the accompanying canceled checks and memos with the records reveals the following reconciling items:

a. Checks outstanding totaled $17,865.

b. A deposit of $9,150, representing receipts of July 31, had been made too late to appear on the bank statement.

c. The bank had collected $6,095 on a note left for collection. The face of the note was $5,750.

d. A check for $390 returned with the statement had been incorrectly recorded by Stone Systems as $930. The check was for the payment of an obligation to Holland Co. for the purchase of office supplies on account.

e. A check drawn for $1,810 had been incorrectly charged by the bank as $1,180.

f. Bank service charges for July amounted to $80.

Instructions

1. Prepare a bank reconciliation.

2. Journalize the necessary entries. The accounts have not been closed.

3. If a balance sheet were prepared for Stone Systems on July 31, 2014, what amount should be reported as cash?

the cash account for collegiate sports co on november 1 2014 indicated a balance of 546013

Aug 29, 2021 | Uncategorized

PR 7-4B Bank reconciliation and entries

The cash account for Collegiate Sports Co. on November 1, 2014, indicated a balance of $81,145. During November, the total cash deposited was $293,150, and checks written totaled $307,360. The bank statement indicated a balance of $112,675 on November 30, 2014. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:

a. Checks outstanding totaled $41,840.

b. A deposit of $12,200, representing receipts of November 30, had been made too late to appear on the bank statement.

c. A check for $7,250 had been incorrectly charged by the bank as $2,750.

d. A check for $760 returned with the statement had been recorded by Collegiate Sports Co. as $7,600. The check was for the payment of an obligation to Ramirez Co. on account.

e. The bank had collected for Collegiate Sports Co. $7,385 on a note left for collection.

The face of the note was $7,000.

f. Bank service charges for November amounted to $125.

g. A check for $2,500 from Hallen Academy was returned by the bank because of insufficient funds.

Instructions

1. Prepare a bank reconciliation as of November 30.

2. Journalize the necessary entries. The accounts have not been closed.

3. If a balance sheet were prepared for Collegiate Sports Co. on November 30, 2014, what amount should be reported as cash?

the following is an excerpt from a conversation between two sales clerks jean moen a 546015

Aug 29, 2021 | Uncategorized

CP 7-2 Internal controls

The following is an excerpt from a conversation between two sales clerks, Jean Moen and Sara Cheney. Jean and Sara are employed by Turpin Meadows Electronics, a locally owned and operated electronics retail store.

Jean: Did you hear the news?

Sara: What news?

Jean: Neal and Linda were both arrested this morning.

Sara: What? Arrested? You’re putting me on

Jean: No, really! The police arrested them first thing this morning. Put them in handcuffs, read them their rights the whole works. It was unreal

Sara: What did they do?

Jean: Well, apparently they were filling out merchandise refund forms for fictitious customers and then taking the cash.

Sara: I guess I never thought of that. How did they catch them?

Jean: The store manager noticed that returns were twice that of last year and seemed to be increasing. When he confronted

Neal, he became flustered and admitted to taking the cash, apparently over $9,000 in just three months. They’re going over the last six months’ transactions to try to determine how much Linda stole. She apparently started stealing first.

Suggest appropriate control procedures that would have prevented or detected the theft of cash.

the following is an excerpt from a conversation between the store manager of wholeso 546016

Aug 29, 2021 | Uncategorized

CP 7-3 Internal controls

The following is an excerpt from a conversation between the store manager of Wholesome Grocery Stores, Kara Dahl, and Lynn Shutes, president of Wholesome Grocery Stores.

Lynn: Kara, I’m concerned about this new scanning system.

Kara: What’s the problem?

Lynn: Well, how do we know the clerks are ringing up all the merchandise?

Kara: That’s one of the strong points about the system. The scanner automatically rings up each item, based on its bar code. We update the prices daily, so we’re sure that the sale is rung up for the right price.

Lynn: That’s not my concern. What keeps a clerk from pretending to scan items and then simply not charging his friends? If his friends were buying 10–15 items, it would be easy for the clerk to pass through several items with his finger over the bar code or just pass the merchandise through the scanner with the wrong side showing. It would look normal for anyone observing. In the old days, we at least could hear the cash register ringing up each sale.

Kara: I see your point.

Suggest ways that Wholesome Grocery Stores could prevent or detect the theft of merchandise as described.

doris tidwell and jo yost are both cash register clerks for fuller rsquo s organic m 546017

Aug 29, 2021 | Uncategorized

CP 7-4 Ethics and professional conduct in business

Doris Tidwell and Jo Yost are both cash register clerks for Fuller’s Organic Markets. Tom Ward is the store manager for Fuller’s Organic Markets. The following is an excerpt of a conversation between Doris and Jo:

Doris: Jo, how long have you been working for Fuller’s Organic Markets?

Jo: Almost five years this April. You just started two weeks ago . . . right?

Doris: Yes. Do you mind if I ask you a question?

Jo: No, go ahead.

Doris: What I want to know is, have they always had this rule that if your cash register is short at the end of the day, you have to make up the shortage out of your own pocket?

Jo: Yes, as long as I’ve been working here.

Doris: Well, it’s the pits. Last week I had to pay in almost $40.

Jo: It’s not that big a deal. I just make sure that I’m not short at the end of the day.

Doris: How do you do that?

Jo: I just shortchange a few customers early in the day. There are a few jerks that deserve it anyway. Most of the time, their attention is elsewhere and they don’t think to check their change.

Doris: What happens if you’re over at the end of the day?

Jo: Tom lets me keep it as long as it doesn’t get to be too large. I’ve not been short in over a year. I usually clear about $20 to $30 extra per day.

Discuss this case from the viewpoint of proper controls and professional behavior.

the records of parker company indicate a july 31 cash balance of 10 400 which includ 546018

Aug 29, 2021 | Uncategorized

CP 7-5 Bank reconciliation and internal control

The records of Parker Company indicate a July 31 cash balance of $10,400, which includes undeposited receipts for July 30 and 31. The cash balance on the bank statement as of July 31 is $10,575. This balance includes a note of $2,250 plus $150 interest collected by the bank but not recorded in the journal. Checks outstanding on July 31 were as follows: No. 2670, $1,050; No. 3679, $675; No. 3690, $1,650; No. 5148, $225; No. 5149, $750; and No. 5151, $800. On July 25, the cashier resigned, effective at the end of the month. Before leaving on July 31, the cashier prepared the following bank reconciliation:

Calculator Tape of Outstanding Checks:

0*

225+

750+

800+

1,675*

Subsequently, the owner of Parker Company discovered that the cashier had stolen an unknown amount of undeposited receipts, leaving only $1,500 to be deposited on July 31.

The owner, a close family friend, has asked your help in determining the amount that the former cashier has stolen.

1. Determine the amount the cashier stole from Parker Company. Show your computations in good form.

2. How did the cashier attempt to conceal the theft?

3. a. Identify two major weaknesses in internal controls, which allowed the cashier to steal the undeposited cash receipts.

b. Recommend improvements in internal controls, so that similar types of thefts of undeposited cash receipts can be prevented.

tearlab corp is a health care company that specializes in developing diagnostic devi 546020

Aug 29, 2021 | Uncategorized

CP 7-7 Cash to monthly cash expenses ratio

TearLab Corp. is a health care company that specializes in developing diagnostic devices for eye disease. TearLab reported the following data (in thousands) for three recent years:

1. Determine the monthly cash expenses for Year 3, Year 2, and Year 1. Round to one decimal place.

2. Determine the ratio of cash to monthly cash expenses as of December 31, for Year 3, Year 2, and Year 1. Round to one decimal place.

3. Based on (1) and (2), comment on TearLab’s ratio of cash to monthly operating expenses for Year 3, Year 2, and Year 1.

financial statement data for years ending december 31 for chiro solutions company ar 546040

Aug 29, 2021 | Uncategorized

PE 8-6A Accounts receivable turnover and number of days’ sales in receivables

Financial statement data for years ending December 31 for Chiro-Solutions Company are shown below.

a. Determine the accounts receivable turnover for 2014 and 2013.

b. Determine the number of days’ sales in receivables for 2014 and 2013. Round to one decimal place.

c. Does the change in accounts receivable turnover and the number of days’ sales in receivables from 2013 to 2014 indicate a favorable or an unfavorable trend?

financial statement data for years ending december 31 for robinhood company are show 546041

Aug 29, 2021 | Uncategorized

PE 8-6B Accounts receivable turnover and number of days’ sales in receivables

Financial statement data for years ending December 31 for Robinhood Company are shown below.

a. Determine the accounts receivable turnover for 2014 and 2013.

b. Determine the number of days’ sales in receivables for 2014 and 2013. Round to one decimal place.

c. Does the change in accounts receivable turnover and the number of days’ sales in receivables from 2013 to 2014 indicate a favorable or an unfavorable trend?

mgm resorts international owns and operates hotels and casinos including the mgm gra 546043

Aug 29, 2021 | Uncategorized

EX 8-2 Nature of uncollectible accounts

MGM Resorts International owns and operates hotels and casinos including the MGM Grand and the Bellagio in Las Vegas, Nevada. As of a recent year, MGM reported accounts receivable of $415,654,000 and allowance for doubtful accounts of $93,760,000. Johnson & Johnson manufactures and sells a wide range of healthcare products including Band-Aids and Tylenol. As of a recent year, Johnson & Johnson reported accounts receivable of $10,114,000,000 and allowance for doubtful accounts of $340,000,000.

a. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for MGM Resorts International. Round to one decimal place.

b. Compute the percentage of the allowance for doubtful accounts to the accounts receivable, for Johnson & Johnson. Round to one decimal place.

c. Discuss possible reasons for the difference in the two ratios computed in (a) and (b).

at the end of the current year the accounts receivable account has a debit balance o 546047

Aug 29, 2021 | Uncategorized

EX 8-6 Providing for doubtful accounts

At the end of the current year, the accounts receivable account has a debit balance of $6,125,000 and net sales for the year total $66,800,000. Determine the amount of the adjusting entry to provide for doubtful accounts under each of the following assumptions:

a. The allowance account before adjustment has a debit balance of $18,000. Bad debt expense is estimated at ¾ of 1% of net sales.

b. The allowance account before adjustment has a debit balance of $18,000. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $475,000.

c. The allowance account before adjustment has a credit balance of $10,000. Bad debt expense is estimated at ½ of 1% of net sales.

d. The allowance account before adjustment has a credit balance of $10,000. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $360,000.

toot auto supply distributes new and used automobile parts to local dealers througho 546048

Aug 29, 2021 | Uncategorized

EX 8-7 Number of days past due

Toot Auto Supply distributes new and used automobile parts to local dealers throughout the Midwest. Toot’s credit terms are n/30. As of the end of business on October 31, the following accounts receivable were past due:

traditional bikes co is a wholesaler of motorcycle supplies an aging of the company 546050

Aug 29, 2021 | Uncategorized

EX 8-11 Estimating doubtful accounts

Traditional Bikes Co. is a wholesaler of motorcycle supplies. An aging of the company’s accounts receivable on December 31, 2014, and a historical analysis of the percentage of uncollectible accounts in each age category are as follows:

Estimate what the proper balance of the allowance for doubtful accounts should be as of December 31, 2014.

entries for bad debt expense under the direct write off and allowance 546051

Aug 29, 2021 | Uncategorized

EX 8-13 Entries for bad debt expense under the direct write-off and allowance

Methods The following selected transactions were taken from the records of Shipway Company for the first year of its operations ending December 31, 2014:

Apr. 13. Wrote off account of Dean Sheppard, $8,450.

May 15. Received $500 as partial payment on the $7,100 account of Dan Pyle. Wrote off

the remaining balance as uncollectible.

July 27. Received $8,450 from Dean Sheppard, whose account had been written off on April 13. Reinstated the account and recorded the cash receipt.

Dec. 31. Wrote off the following accounts as uncollectible (record as one journal entry):

31. If necessary, record the year-end adjusting entry for uncollectible accounts.

a. Journalize the transactions for 2014 under the direct write-off method.

b. Journalize the transactions for 2014 under the allowance method. Shipway Company uses the percent of credit sales method of estimating uncollectible accounts expense. Based on past history and industry averages, ¾% of credit sales are expected to be uncollectible. Shipway Company recorded $3,778,000 of credit sales during 2014.

c. How much higher (lower) would Shipway Company’s net income have been under the direct write-off method than under the allowance method?

the following selected transactions were taken from the records of rustic tables com 546052

Aug 29, 2021 | Uncategorized

EX 8-14 Entries for bad debt expense under the direct write-off and allowance methods

The following selected transactions were taken from the records of Rustic Tables Company for the year ending December 31, 2014:

June 8. Wrote off account of Kathy Quantel, $8,440.

Aug. 14. Received $3,000 as partial payment on the $12,500 account of Rosalie Oakes.

Wrote off the remaining balance as uncollectible.

Oct. 16. Received the $8,440 from Kathy Quantel, whose account had been written off on June 8. Reinstated the account and recorded the cash receipt.

Dec. 31. Wrote off the following accounts as uncollectible (record as one journal entry):

31. If necessary, record the year-end adjusting entry for uncollectible accounts.

a. Journalize the transactions for 2014 under the direct write-off method.

b. Journalize the transactions for 2014 under the allowance method, assuming that the allowance account had a beginning balance of $36,000 on January 1, 2014, and the company uses the analysis of receivables method. Rustic Tables Company prepared the following aging schedule for its accounts receivable:

c. How much higher (lower) would Rustic Tables’ 2014 net income have been under the direct write-off method than under the allowance method?

casebolt company wrote off the following accounts receivable as uncollectible for th 546055

Aug 29, 2021 | Uncategorized

EX 8-17 Entries for bad debt expense under the direct write-off and allowance methods

Casebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31, 2014:

a. Journalize the write-offs for 2014 under the direct write-off method.

b. Journalize the write-offs for 2014 under the allowance method. Also, journalize the adjusting entry for uncollectible accounts. The company recorded $5,250,000 of credit sales during 2014. Based on past history and industry averages, ¾% of credit sales are expected to be uncollectible.

c. How much higher (lower) would Casebolt Company’s 2014 net income have been under the direct write-off method than under the allowance method?

determine the due date and the amount of interest due at maturity on the following n 546057

Aug 29, 2021 | Uncategorized

EX 8-19 Determine due date and interest on notes

Determine the due date and the amount of interest due at maturity on the following notes dated in 2014:

journalize the following transactions in the accounts of safari games co which opera 546061

Aug 29, 2021 | Uncategorized

EX 8-24 Entries for receipt and dishonor of notes receivable

Journalize the following transactions in the accounts of Safari Games Co., which operates a riverboat casino:

Apr. 18. Received a $60,000, 30-day, 7% note dated April 18 from Glenn Cross on account.

30. Received a $42,000, 60-day, 8% note dated April 30 from Rhoni Melville on account.

May 18. The note dated April 18 from Glenn Cross is dishonored, and the customer’s account is charged for the note, including interest.

June 29. The note dated April 30 from Rhoni Melville is dishonored, and the customer’s account is charged for the note, including interest.

Aug. 16. Cash is received for the amount due on the dishonored note dated April 18 plus interest for 90 days at 8% on the total amount debited to Glenn Cross on May 18.

Oct. 22. Wrote off against the allowance account the amount charged to Rhoni Melville on June 29 for the dishonored note dated April 30.

list any errors you can find in the following partial balance sheet 546062

Aug 29, 2021 | Uncategorized

EX 8-25 Receivables on the balance sheet

List any errors you can find in the following partial balance sheet:

managerial accounting 545715

Aug 29, 2021 | Uncategorized

Vega Foods, Inc., has recently purchased a small mill that it intends to operate as one of its subsidiaries. The newly acquired mill has three products that it offers for sale—wheat cereal, pancake mix, and flour. Each product sells for $10 per package. Materials, labor, and other variable production costs are $4.30 per bag of wheat cereal, $5.50 per bag of pancake mix, and $3.10 per bag of flour. Sales commissions are 10% of sales for any product. All other costs are fixed.

Document Preview:

Vega Foods, Inc., has recently purchased a small mill that it intends to operate as one of its subsidiaries. The newly acquired mill has three products that it offers for sale—wheat cereal, pancake mix, and flour. Each product sells for $10 per package. Materials, labor, and other variable production costs are $4.30 per bag of wheat cereal, $5.50 per bag of pancake mix, and $3.10 per bag of flour. Sales commissions are 10% of sales for any product. All other costs are fixed.??The mill’s income statement for the most recent month is given below:??  ? ? ? ?Product Line?? ?Total?Company?Wheat?Cereal?Pancake?Mix?Flour??  Sales?$?990,000? ?$?330,000? ?$?430,000? ?$?230,000? ?? ??????????????  Expenses:? ? ? ? ? ? ? ? ? ? ? ? ??       Materials, labor, and other? ?449,700? ? ?141,900? ? ?236,500? ? ?71,300? ??       Sales commissions? ?99,000? ? ?33,000? ? ?43,000? ? ?23,000? ??       Advertising? ?139,380? ? ?60,900? ? ?52,200? ? ?26,280? ??       Salaries? ?105,000? ? ?51,000? ? ?21,000? ? ?33,000? ??       Equipment depreciation? ?49,500? ? ?16,500? ? ?21,500? ? ?11,500? ??       Warehouse rent? ?19,800? ? ?6,600? ? ?8,600? ? ?4,600? ??       General administration? ?90,000? ? ?30,000? ? ?30,000? ? ?30,000? ?? ??????????????  Total expenses? ?952,380? ? ?339,900? ? ?412,800? ? ?199,680? ?? ??????????????  Net operating income (loss)?$?37,620? ?$?(9,900)? ?$?17,200? ?$?30,320? ?? ? ??This document was truncated here because it was created in the Evaluation Mode.

Attachments:

Vega-Foods.docx

calculate the cost of coffee beans per ounce of coffee sold 545785

Aug 29, 2021 | Uncategorized

Calculate the cost of coffee beans per ounce of coffee sold. 2. Calculate the cost of cups, lids, sleeves, cream, and sugar per unit for small, medium, and large cups of coffee and in total. 3. Calculate the total labor costs for the year. 4. Prepare an income statement for The Daily Grind for the last year. You can assume that there are no inventories on hand at the end of the year. (All coffee and supplies purchased during the year are consumed.) 5. Determine whether the costs incurred by The Daily Grind are fixed, variable (with respect to number of cups of coffee sold), or mixed. 6. Use regression analysis and the high/low method to calculate the monthly fixed cost and the variable component of the utility expenses incurred by The Daily Grind. Use cups of coffee sold as the independent variable and utility expense as the dependent variable in your regression analysis. After calculating both numbers, round your final answers to two decimal places. 7. Compare the regression results with the high/low results. Which model would you suggest? 8. Calculate the contribution margin earned for each product (round to three decimal places) and the weighted-average contribution margin (round to four decimal places). 9. Assume the sales mix given in the problem. What is Daily Grind’s break-even point in terms of the number of cups of coffee sold during the year? 10. David is contemplating adding a new 20-ounce product for the coming year and discontinuing sales of the small 8-ounce cup. The new cup, lid, and sleeve cost the same as the 16-ounce cup, but cream and sugar is expected to cost $.06 per cup instead of $.04 per cup. The new extra-large cup would be priced at $2.40. David anticipates that the new sales mix would be 50% for the 12-ounce cup, 30% for the 16-ounce cup, and 20% for the new 20-ounce cup. Assume that material, labor, and overhead costs remain thesame in the upcoming year. How would this change in sales mix affect the company’s breakeven point? 11. David would like to increase sales in the second year of operations so that he may raise his salary to $50,000 (not including $15,000 of fringe benefits) while reducing his workload to 40 hours per week with two paid weeks of vacation during the year. Reducing his workload will require increasing the number of hours worked by parttime employees by 1,080 hours per year. Assume the introduction of the extra-large cup and the new sales mix as discussed in requirement 10. What level of annual sales would be required in order for David to reach his goal? 12. Write a short memo to David and discuss whether you think he will be able to reach his goal during the second year of operations.

Attachments:

C1.pdf

C2.pdf

C3.pdf

abc company inc is a foreign corporation registered in the state of illinois 545792

Aug 29, 2021 | Uncategorized

ABC Company, Inc. is a foreign corporation registered in the State of Illinois.

Where are this firm’s official offices located (geographically) to have such a

designation?

2. Using the format shown in the Study Guide and in the Homework answers:

Cohn, Dole, Wojcik, Moore, and Murphy are partners in GSU Medical

Supply Company. The partnership agreement states that Cohn is to receive

a salary of $100,000, and Dole and Wojcik are to receive salaries of $85,000

apiece. Moore is to receive a sales commission of 1% of the firm’s gross

revenues. Murphy is to receive 3% on her investment at the

beginning of the year. Sales for fiscal 2013 were $10,000,000. Murphy’s

investment at the beginning of the year was $2,000,000. After paying salaries,

commissions, and interest on investment, the remaining profits/losses are to be

allocated on a 1:2:3:4:5 basis (Cohn, Dole, Wojcik, Moore, and Murphy).

The profit for 2013 before paying salaries, commissions, and interest is $900,000

Compute the allocation of partners’ total payments for 2013.

3. The ABC Medical Practice Plan, Inc., had 10,000 of $50 par value common stock

and 3,000 shares of $100 value, 3% cumulative preferred stock outstanding for

the years 2012 and 2013. The company declared cash dividends of $9,000 and

$15,000 respectively for the years 2012 and 2013. Compute the total dividends

That would be paid to the common and preferred shareholders for each year.

NOTE: Students must use the format shown in the Study Guide and in the

Homework answers.

4. ABC Company, Inc. is a foreign corporation registered in the State of Illinois.

Where are this firm’s official offices located (geographically) to have such a

designation?

5. ABF (Adkins, Bell and Fox) partnership is dissolving. Creditors are owed

$52,000. Each partner contributed $30,000 to the business as a capital invest-

ment. Partner Adkins loaned the business $20,000, Partner Bell loaned the

business $5,000, and Partner Fox did not make any loans. There is $83,000

in the firm’s bank account after all other assets have been liquidated. Allocate

the bank balance among all of the involved parties: Creditors, Partner Adkins,

Partner Bell, and Partner Fox.

Attachments:

AcctTHw.docx

financial reporting 545793

Aug 29, 2021 | Uncategorized

problem 8 4 hull company s record of transactions concerning part x for the month of 545860

Aug 29, 2021 | Uncategorized

stockholders equity 545970

Aug 29, 2021 | Uncategorized

Penn Company was formed on July 1, 2012. It was authorized to issue309,700shares of $12par value common stock and104,100shares of9% $25par value, cumulative and nonparticipating preferred stock. Penn Company has a July 1–June 30 fiscal year.

The following information relates to the stockholders’ equity accounts of Penn Company.

Common Stock

Prior to the 2014–2015 fiscal year, Penn Company had115,100shares of outstanding common stock issued as follows.

During the 2014–2015 fiscal year, the following transactions regarding common stock took place.

Preferred Stock

Penn issued40,300shares of preferred stock at $44per share on July 1, 2013.

Cash Dividends

Penn has followed a schedule of declaring cash dividends in December and June, with payment being made to stockholders of record in the following month. The cash dividends which have been declared since inception of the company through June 30, 2015, are shown below.

No cash dividends were declared during June 2015 due to the company’s liquidity problems.

Retained Earnings

As of June 30, 2014, Penn’s retained earnings account had a balance of $708,900. For the fiscal year ending June 30, 2015, Penn reported net income of $42,200.

Prepare the stockholders’ equity section of the balance sheet, for Penn Company as of June 30, 2015, as it should appear in its annual report to the shareholders.

this is the proof of the information that i received 545973

Aug 29, 2021 | Uncategorized

Your answer is partially correct.

Assume that
Amazon.comhas a stock-option plan for top management. Each stock option represents the right to purchase a share of Amazon $1 par value common stock in the future at a price equal to the fair value of the stock at the date of the grant. Amazon has 5,000 stock options outstanding, which were granted at the beginning of 2014. The following data relate to the option grant.

(a)Prepare the journal entries for the first year of the stock-option plan.
(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
1/1/14
12/31/14

(b)Prepare the journal entries for the first year of the plan assuming that, rather than options, 700 shares of restricted stock were granted at the beginning of 2012.
(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
1/1/14
12/31/14

(c)Now assume that the market price of Amazon stock on the grant date was $45 per share. Prepare the journal entries for the first year of the plan assuming that, rather than options, 700 shares of restricted stock were granted at the beginning of 2012.
(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
1/10/14
12/31/14

identify each of the following reconciling items as a an addition to the cash balanc 545994

Aug 29, 2021 | Uncategorized

EX 7-16 Bank reconciliation

Identify each of the following reconciling items as: (a) an addition to the cash balance according to the bank statement, (b) a deduction from the cash balance according to the bank statement, (c) an addition to the cash balance according to the company’s records, or (d) a deduction from the cash balance according to the company’s records. (None of the transactions reported by bank debit and credit memos have been recorded by the company.)

1. Bank service charges, $30.

2. Check of a customer returned by bank to company because of insufficient funds, $1,750.

3. Check for $390 incorrectly recorded by the company as $930.

4. Check for $50 incorrectly charged by bank as $500.

5. Deposit in transit, $9,700.

6. Outstanding checks, $33,110.

7. Note collected by bank, $24,600.

the following data were accumulated for use in reconciling the bank account of allen 545995

Aug 29, 2021 | Uncategorized

EX 7-18 Bank reconciliation

The following data were accumulated for use in reconciling the bank account of Allenby Co. for August:

1. Cash balance according to the company’s records at August 31, $31,080.

2. Cash balance according to the bank statement at August 31, $38,280.

3. Checks outstanding, $12,460.

4. Deposit in transit, not recorded by bank, $5,850.

5. A check for $180 in payment of an account was erroneously recorded in the check register as $810.

6. Bank debit memo for service charges, $40.

a. Prepare a bank reconciliation, using the format shown in Exhibit 7.

b. If the balance sheet were prepared for Allenby Co. on August 31, what amount should be reported for cash?

c. Must a bank reconciliation always balance (reconcile)?

an accounting clerk for chesner co prepared the following bank reconciliation 545997

Aug 29, 2021 | Uncategorized

EX 7-21 Bank reconciliation

An accounting clerk for Chesner Co. prepared the following bank reconciliation:

a. From the data in the above bank reconciliation, prepare a new bank reconciliation for Chesner Co., using the format shown in the illustrative problem.

b. If a balance sheet were prepared for Chesner Co. on July 31, 2014, what amount should be reported for cash?

identify the errors in the following bank reconciliation 545998

Aug 29, 2021 | Uncategorized

EX 7-22 Bank reconciliation

Identify the errors in the following bank reconciliation:

alaska impressions co records all cash receipts on the basis of its cash register ta 545999

Aug 29, 2021 | Uncategorized

EX 7-23 Using bank reconciliation to determine cash receipts stolen

Alaska Impressions Co. records all cash receipts on the basis of its cash register tapes.

Alaska Impressions Co. discovered during October 2014 that one of its sales clerks had stolen an undetermined amount of cash receipts by taking the daily deposits to the bank.

The following data have been gathered for October:

No deposits were in transit on October 31.

a. Determine the amount of cash receipts stolen by the sales clerk.

b. What accounting controls would have prevented or detected this theft?

mattel inc designs manufactures and markets toy products worldwide mattel rsquo s to 546001

Aug 29, 2021 | Uncategorized

EX 7-25 Variation in cash flows

Mattel, Inc., designs, manufactures, and markets toy products worldwide. Mattel’s toys include Barbie™ fashion dolls and accessories, Hot Wheels™, and Fisher-Price brands.

For a recent year, Mattel reported the following net cash flows from operating activities (in thousands):

Explain why Mattel reported negative net cash flows from operating activities during the first three quarters and a large positive cash flow for the fourth quarter, with overall net positive cash flow for the year.

capstone turbine corporation produces and sells turbine generators for such applicat 546003

Aug 29, 2021 | Uncategorized

EX 7-27 Cash to monthly cash expenses ratio

Capstone Turbine Corporation produces and sells turbine generators for such applications as charging electric, hybrid vehicles. Capstone Turbine reported the following financial data for a recent year (in thousands):

a. Determine the monthly cash expenses. Round to one decimal place.

b. Determine the ratio of cash to monthly cash expenses. Round to one decimal place.

c. Based on your analysis, do you believe that Capstone Turbine will remain in business?

allos therapeutics inc is a biopharmaceutical company that develops drugs for the tr 546004

Aug 29, 2021 | Uncategorized

EX 7-28 Cash to monthly cash expenses ratio

Allos Therapeutics, Inc., is a biopharmaceutical company that develops drugs for the treatment of cancer. Allos Therapeutics reported the following financial data (in thousands) for three recent years:

a. Determine the monthly cash expenses for Year 3, Year 2, and Year 1. Round to one decimal place.

b. Determine the ratio of cash to monthly cash expenses for Year 3, Year 2, and Year 1 as of December 31. Round to one decimal place.

c. Based on (a) and (b), comment on Allos Therapeutics’ ratio of cash to monthly operating expenses for Year 3, Year 2, and Year 1.

who works under the supervision of the treasurer 546005

Aug 29, 2021 | Uncategorized

PR 7-1A Evaluating internal control of cash

The following procedures were recently installed by Raspberry Creek Company:

a. After necessary approvals have been obtained for the payment of a voucher, the treasurer signs and mails the check. The treasurer then stamps the voucher and supporting documentation as paid and returns the voucher and supporting documentation to the accounts payable clerk for filing.

b. The accounts payable clerk prepares a voucher for each disbursement. The voucher along with the supporting documentation is forwarded to the treasurer’s office for approval.

c. Along with petty cash expense receipts for postage, office supplies, etc., several postdated employee checks are in the petty cash fund.

d. At the end of the day, cash register clerks are required to use their own funds to make up any cash shortages in their registers.

e. At the end of each day, all cash receipts are placed in the bank’s night depository.

f. At the end of each day, an accounting clerk compares the duplicate copy of the daily cash deposit slip with the deposit receipt obtained from the bank.

g. All mail is opened by the mail clerk, who forwards all cash remittances to the cashier.

The cashier prepares a listing of the cash receipts and forwards a copy of the list to the accounts receivable clerk for recording in the accounts.

h. The bank reconciliation is prepared by the cashier, who works under the supervision of the treasurer.

Instructions

Indicate whether each of the procedures of internal control over cash represents (1) a strength or (2) a weakness. For each weakness, indicate why it exists.

picasso restoration company completed the following selected transactions during may 546006

Aug 29, 2021 | Uncategorized

PR 7-2A Transactions for petty cash, cash short and over

Picasso Restoration Company completed the following selected transactions during May 2014:

May 1. Established a petty cash fund of $800.

10. The cash sales for the day, according to the cash register records, totaled $3,345. The actual cash received from cash sales was $3,358.

31. Petty cash on hand was $275. Replenished the petty cash fund for the following disbursements, each evidenced by a petty cash receipt:

May 3. Store supplies, $290.

7. Express charges on merchandise sold, $70 (Delivery Expense).

9. Office supplies, $12.

13. Office supplies, $25.

19. Postage stamps, $18 (Office Supplies).

21. Repair to office file cabinet lock, $20 (Miscellaneous Administrative Expense).

May 22. Postage due on special delivery letter, $16 (Miscellaneous Administrative Expense).

24. Express charges on merchandise sold, $40 (Delivery Expense).

30. Office supplies, $10.

May 31. The cash sales for the day, according to the cash register records, totaled $6,155. The actual cash received from cash sales was $6,125.

31. Decreased the petty cash fund by $50.

Instructions

Journalize the transactions.

the cash account for remedy medical co at april 30 2014 indicated a balance of 18 88 546007

Aug 29, 2021 | Uncategorized

PR 7-3A Bank reconciliation and entries

The cash account for Remedy Medical Co. at April 30, 2014, indicated a balance of $18,885.

The bank statement indicated a balance of $23,775 on April 30, 2014. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:

a. Checks outstanding totaled $7,840.

b. A deposit of $3,580, representing receipts of April 30, had been made too late to appear on the bank statement.

c. The bank collected $3,780 on a note left for collection. The face of note was $3,600.

d. A check for $770 returned with the statement had been incorrectly recorded by Remedy Medical Co. as $700. The check was for the payment of an obligation to Copelin Co. for a purchase on account.

e. A check drawn for $330 had been erroneously charged by the bank as $3,300.

f. Bank service charges for April amounted to $110.

Instructions

1. Prepare a bank reconciliation.

2. Journalize the necessary entries. The accounts have not been closed.

3. If a balance sheet were prepared for Remedy Medical Co. on April 30, 2014, what amount should be reported as cash?

the cash account for fit bike co at august 1 2014 indicated a balance of 12 190 546008

Aug 29, 2021 | Uncategorized

PR 7-4A Bank reconciliation and entries

The cash account for Fit Bike Co. at August 1, 2014, indicated a balance of $12,190.

During August, the total cash deposited was $28,100 and checks written totaled $33,010.

The bank statement indicated a balance of $12,550 on August 31. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:

a. Checks outstanding totaled $7,440.

b. A deposit of $2,880, representing receipts of August 31, had been made too late to appear on the bank statement.

c. The bank had collected for Fit Bike Co. $2,080 on a note left for collection. The face of the note was $2,000.

d. A check for $580 returned with the statement had been incorrectly charged by the bank as $850.

e. A check for $640 returned with the statement had been recorded by Fit Bike Co. as $460. The check was for the payment of an obligation to Brown Co. on account.

f. Bank service charges for August amounted to $20.

g. A check for $900 from Murdock Co. was returned by the bank due to insufficient funds.

Instructions

1. Prepare a bank reconciliation as of August 31.

2. Journalize the necessary entries. The accounts have not been closed.

3. If a balance sheet were prepared for Fit Bike Co. on August 31, 2014, what amount should be reported as cash?

all sales are rung up on the cash register and a receipt is given to the customer 546010

Aug 29, 2021 | Uncategorized

PR 7-1B Evaluating internal control of cash

The following procedures were recently installed by The China Shop:

a. All sales are rung up on the cash register, and a receipt is given to the customer. All sales are recorded on a record locked inside the cash register.

b. Each cashier is assigned a separate cash register drawer to which no other cashier has access.

c. At the end of a shift, each cashier counts the cash in his or her cash register, unlocks the cash register record, and compares the amount of cash with the amount on the record to determine cash shortages and overages.

d. Checks received through the mail are given daily to the accounts receivable clerk for recording collections on account and for depositing in the bank.

e. Vouchers and all supporting documents are perforated with a PAID designation after being paid by the treasurer.

f. Disbursements are made from the petty cash fund only after a petty cash receipt has been completed and signed by the payee.

g. The bank reconciliation is prepared by the cashier.

Instructions

Indicate whether each of the procedures of internal control over cash represents

(1) a strength or (2) a weakness. For each weakness, indicate why it exists.

centered publishing company specializes in health awareness books 544910

Aug 29, 2021 | Uncategorized

Cost-Based Pricing

P 2. Centered Publishing Company specializes in health awareness books. Because the field of health awareness is very competitive, Jay Rosenbek, the company’s president, maintains a strict policy about selecting manuscripts to publish. Rosenbek wants to publish only books whose projected earnings are 20 percent above total projected costs. Three titles were accepted for publication during the year. The authors of those books are Tone, Tyme, and Klay. Projected costs for each book and allocation percentages for common costs are shown here.

Expected sales for the year are as follows: Tone, 26,000 copies; Tyme, 32,000 copies; and Klay, 20,000 copies.

Required

1. Prepare a cost analysis that computes the desired profit for each of the three books and in total.

2. Use gross margin pricing to compute the selling price for each book. (Hint: Treat royalty costs as production costs.)

3. If the competition’s average selling price for a book similar to Klay’s is $22, should this influence the pricing decision? Explain.

ace maintenance inc repairs heavy construction equipment and vehicles 544911

Aug 29, 2021 | Uncategorized

Time and Materials Pricing in a Service Business

P 3. Ace Maintenance, Inc., repairs heavy construction equipment and vehicles. Recently, the Shanti Construction Company had one of its giant earthmovers overhauled and its tires replaced. Repair work for a vehicle of that size usually takes from one week to ten days. The vehicle must be lifted up so that maintenance workers can gain access to the engine. Parts are normally so large that a crane must be used to put them into place.

The company uses the time and materials pricing system and data from the previous year to compute markup percentages for overhead related to parts and materials and overhead related to direct labor. It adds markups of 130 percent to the cost of materials and parts and 140 percent to the cost of direct labor to cover overhead and profit. The following materials, parts, and direct labor are needed to repair the giant earthmover:

Required

Prepare a complete billing for this job. Include itemized amounts for each type of materials, parts, and direct labor. Follow the time and materials pricing approach, and show the total price for the job.

prepares its master budget on a quarterly basis 545143

Aug 29, 2021 | Uncategorized

Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparing the master budget for the first quarter:

1. As of December 31, (the end of the prior quarter), the company’s general ledger showed the following account balances:

Cash $48,000 (debit)
Accounts receivable $224,000 (debit)
Inventory $60,000 (debit)
Buildings and equipment, net $370,000 (debit)
Accounts payable $93,000 (credit)
Capital stock $500,000 (credit)
Retained earnings $109,000 (credit)

1. Actual sales for December and budgeted sales for the next four months are as follows: December $280,000, January $400,000, February $600,000, March $300,000 and April $200,000.
2. Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at December 31 are a result of December credit sales.
3. The company’s gross margin is 40% of sales. (In other words, cost of goods sold is 60% of sales.)
4. Monthly expenses are budgeted as follows: salaries and wages, $27,000 per month; advertising, $70,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $42,000 per quarter.
5. Each month’s ending inventory should equal 25% of the following month’s cost of goods sold.
6. One half of the month’s inventory purchases is paid for in the month of purchase; the other half is paid in the following month.
7. During February, the company will purchase a new copy machine for $1,700 cash. During March, other equipment will be purchased for cash at a cost of $84,500.
8. During January, the company will declare and pay $45,000 in cash dividends.
9. Management wants to maintain a minimum cash balance of $30,000. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.

Attachments:

Hillyard-Comp….docx

production of seagren industries inc 545145

Aug 29, 2021 | Uncategorized

Seagren Industries Inc. manufactures in separate processes furniture for homes. In each process, materials are entered at the beginning, and conversion costs are incurred uniformly. Production and cost data for the first process in making two products in two different manufacturing plants are as follows.

Cutting Department

Production Data—July

Plant 1 T12-Tables

Plant 2 C10-Chairs

Work in process units, July 1

–0–

–0–

Units started into production

19,000

16,000

Work in process units, July 31

3,000

500

Work in process percent complete

60

80

Cost Data—July

Work in process, July 1

–0–??$

–0–??$

Materials

380,000

288,000

Labor

234,200

110,000

Overhead

104,000

96,700

Total

$718,200

$494,700

Instructions

(a)

For each plant:

1.

Compute the physical units of production.

2.

Compute equivalent units of production for materials and for conversion costs.

3.

Determine the unit costs of production.

4.

Show the assignment of costs to units transferred out and in process.

(b)

Prepare the production cost report for Plant 1 for July 2012.

as auditor for banquo amp associates you have been assigned to check duncan corporat 545201

Aug 29, 2021 | Uncategorized

As auditor for Banquo & Associates, you have been assigned to check Duncan Corporation’s computation of earnings per share for the current year. The controller, Mac Beth, has supplied you with the following computations.

You have developed the following additional information.

1. There are no other equity securities in addition to the common shares.
2. There are no options or warrants outstanding to purchase common shares.
3. There are no convertible debt securities.
4. Activity in common shares during the year was as follows.

Questions:

taxation 545222

Aug 29, 2021 | Uncategorized

ACT B415F (Jan 2014) TMA 1 You are an independent tax advisor and one of your clients, Triceratops Toys Manufacturing Limited, has provided you with the following information. Triceratops Toys Manufacturing Limited was incorporated in Hong Kong in 2002. The company was formed to take over the partnership business owned by the Cheung’s brothers, Albert Cheung and Bernard Cheung. Albert and Bernard each owns 40% of the shares of the company and the remaining 20% of the shares are owned by their sister, Crystal.

Document Preview:

B415F Taxation II Assignment 2 (January 2014 Term) Due Date: 31 March, 2014 For tax rates and personal allowances, please refer to your textbook or Inland Revenue Department’s website. Answer ALL of the following questions. Marks will be awarded for logical arguments, appropriate presentation, and original explanation in your answers. Outline where appropriate relevant tax provisions, guidelines published by the Inland Revenue Department and / or relevant tax cases in support. Question 1 (35 marks) You are an independent tax advisor and one of your clients, Triceratops Toys Manufacturing Limited, has provided you with the following information. Triceratops Toys Manufacturing Limited was incorporated in Hong Kong in 2002. The company was formed to take over the partnership business owned by the Cheung’s brothers, Albert Cheung and Bernard Cheung. Albert and Bernard each owns 40% of the shares of the company and the remaining 20% of the shares are owned by their sister, Crystal. The original Board of Directors consists of Cheung’s brothers and their sister, Crystal. In addition to being directors of the company, Albert and Bernard are responsible for the running of the company. Albert is the managing director and is responsible for the sales operations. Bernard holds the title of finance manager and is in charge of the compa ’s finance. Their brother-in-law, Dickson Tang is employed as the production manager to the manufacturing operations. The company has been profitable with the annual turnover over HK$20 million. The profits of the company have been mainly derived from exporting toys to overseas countries. The manufacturing operations had been carried out in Hong until 31 July 2012 when the company moved its manufacturing operations to Mainland China. The manufacturing operations in China began in August 2012. Although the manufacturing operations are now in China, the company maintains its purchase, sales and other…

Attachments:

Jan-2014-ACT-….pdf

the trial balance of james appliance company is given make further entries 545258

Aug 29, 2021 | Uncategorized