compute the operating income from the crockett engagement using the abc system 645242

Aug 30, 2021 | Uncategorized

Using ABC to allocate costs and compute profit Suppose Pacific’s direct labor rate was $310 per hour, the documentation cost was $34 per page, the information technology support cost was $200 per application, and training costs were $110 per direct labor hour. The Crockett engagement used the following resources last month:

Requirements

1. Compute the cost assigned to the Crockett engagement, using the ABC system.

2. Compute the operating income from the Crockett engagement, using the ABC system.

indicate whether each is characteristic of a jit production system or a traditional 645243

Aug 30, 2021 | Uncategorized

Just in time characteristics Consider the following characteristics of either a JIT production system or a traditional production system.

a. Products are produced in large batches.

b. Large stocks of finished goods protect against lost sales if customer demand is higher than expected.

c. Suppliers make frequent deliveries of small quantities of raw materials.

d. Employees do a variety of jobs, including maintenance and setups as well as operating machines.

e. Machines are grouped into self contained production cells or production lines.

f. Machines are grouped according to function. For example, all cutting machines are located in one area.

g. The final operation in the production sequence “pulls” parts from the preceding operation.

h. Each employee is responsible for inspecting his or her own work.

i. Management works with suppliers to ensure defect free raw materials.

Requirement

1. Indicate whether each is characteristic of a JIT production system or a traditional production system.

use jit costing to prepare journal entries for the month including the entry to clos 645244

Aug 30, 2021 | Uncategorized

Recording JIT costing journal entries Quality Products uses a JIT system to manufacture trading pins for the Hard Rock Café. The standard cost per pin is $2 for raw materials and $3 for conversion costs. Last month Quality recorded the following data:

Requirement

1. Use JIT costing to prepare journal entries for the month, including the entry to close the Conversion costs account.

fortunado expects to produce 500 chrome bumpers during the year the bumpers are expe 645246

Aug 30, 2021 | Uncategorized

Product costing in an activity based costing system  Fortunado, Inc., uses activity based costing to account for its chrome bumper manufacturing process. Company managers have identified four manufacturing activities: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for 2012 and their allocation bases are as follows:

Fortunado expects to produce 500 chrome bumpers during the year. The bumpers are expected to use 4,000 parts, require 10 setups, and consume 1,000 hours of finishing time.

Requirements

1. Compute the cost allocation rate for each activity.

2. Compute the indirect manufacturing cost of each bumper.

turbo champs expects to produce 20 custom built motorcycles for the year the motorcy 645247

Aug 30, 2021 | Uncategorized

Product costing in an activity based costing system Turbo Champs, Corp., uses activity based costing to account for its motorcycle manufacturing process. Company managers have identified three supporting manufacturing activities: inspection, machine setup, and machine maintenance. The budgeted activity costs for 2012 and their allocation bases are as follows:

Turbo Champs expects to produce 20 custom built motorcycles for the year. The motorcycles are expected to require 100 inspections, 20 setups, and 100 maintenance hours.

Requirements

1. Compute the cost allocation rate for each activity.

2. Compute the indirect manufacturing cost of each motorcycle.

prior to 2012 elton used a direct labor hour single allocation base system compute t 645248

Aug 30, 2021 | Uncategorized

Product costing in an activity based costing system Elton Company manufactures wheel rims. The controller budgeted the following ABC allocation rates for 2012:

The number of parts is now a feasible allocation base because Elton recently purchased bar coding technology. Elton produces two wheel rim models: standard and deluxe. Budgeted data for 2012 are as follows:

The company expects to produce 500 units of each model during the year.

Requirements

1. Compute the total budgeted indirect manufacturing cost for 2012.

2. Compute the ABC indirect manufacturing cost per unit of each model. Carry each cost to the nearest cent.

3. Prior to 2012, Elton used a direct labor hour single allocation base system. Compute the (single) allocation rate based on direct labor hours for 2012. Use this rate to determine the indirect manufacturing cost per wheel rim for each model, to the nearest cent.

if elton rsquo s managers rely on the abc unit cost data computed in which model wil 645250

Aug 30, 2021 | Uncategorized

Elton’s managers have decided to use the same indirect manufacturing costs per wheel rim that they computed in 2012. In addition to the unit indirect manufacturing costs, the following data are budgeted for the company’s standard and deluxe models for 2013:

Because of limited machine hour capacity, Elton can produce either 2,000 standard rims or 2,000 deluxe rims.

Requirements

1. If Elton’s managers rely on the ABC unit cost data computed in, which model will they produce? Carry each cost to the nearest cent. (Ignore operating expenses for this calculation.)

2. If the managers rely on the single allocation base cost data, which model will they produce?

3. Which course of action will yield more income for Elton?

would implementing the value engineering recommendation enable elton to achieve its 645251

Aug 30, 2021 | Uncategorized

Activity based management and target cost Controller Michael Bender is surprised by the increase in cost of the deluxe model under ABC. Market research shows that for the deluxe rim to provide a reasonable profit, Elton will have to meet a target manufacturing cost of $656 per rim. A value engineering study by Elton’s employees suggests that modifications to the finishing process could cut finishing cost from $50 to $40 per hour and reduce the finishing direct labor hours per deluxe rim from 6.5 hours to 6 hours. Direct materials would remain unchanged at $50 per rim, as would direct labor at $56 per rim. The materials handling, machine setup, and insertion of parts activity costs also would remain the same.

Requirement

1. Would implementing the value engineering recommendation enable Elton to achieve its target cost for the deluxe rim?

prepare summary journal entries for august using jit costing including the entry to 645253

Aug 30, 2021 | Uncategorized

Recording manufacturing costs in a JIT costing system Dubuc produces electronic calculators. Suppose Dubuc’s standard cost per calculator is $27 for materials and $63 for conversion costs. The following data apply to August production:

Requirements

1. Prepare summary journal entries for August using JIT costing, including the entry to close the Conversion costs account.

2. The beginning balance of Finished goods inventory was $1,700. Use a T account to find the ending balance of Finished goods inventory.

classify each item as a prevention cost an appraisal cost an internal failure cost o 645254

Aug 30, 2021 | Uncategorized

Classifying quality costs Delance & Co. makes electronic components. Chris Delance, the president, recently instructed vice president Jim Bruegger to develop a total quality control program. “If we don’t at least match the quality improvements our competitors are making,” he told Bruegger, “we’ll soon be out of business.” Bruegger began by listing various “costs of quality” that Delance incurs. The first six items that came to mind were:

a. Costs incurred by Delance customer representatives traveling to customer sites to repair

defective products, $15,000.

b. Lost profits from lost sales due to reputation for less than perfect products, $60,000.

c. Costs of inspecting components in one of Delance’s production processes, $25,000.

d. Salaries of engineers who are redesigning components to withstand electrical overloads, $80,000.

e. Costs of reworking defective components after discovery by company inspectors, $40,000.

f. Costs of electronic components returned by customers, $55,000.

Requirement

1. Classify each item as a prevention cost, an appraisal cost, an internal failure cost, or an external failure cost. Then, determine the total cost of quality by category.

classify each cost as a prevention cost an appraisal cost an internal failure cost o 645255

Aug 30, 2021 | Uncategorized

Classifying quality costs and using these costs to make decisions Clarke, Inc., manufactures door panels. Suppose Clarke is considering spending the following amounts on a new total quality management (TQM) program:

Clarke expects the new program would save costs through the following:

Requirements

1. Classify each cost as a prevention cost, an appraisal cost, an internal failure cost, or an external failure cost.

2. Should Clarke implement the new quality program? Give your reason.

classify each of these costs into one of the four categories of quality costs preven 645256

Aug 30, 2021 | Uncategorized

Classifying quality costs and using these costs to make decisions Kane manufactures high quality speakers. Suppose Kane is considering spending the following amounts on a new quality program:

Kane expects this quality program to save costs, as follows:

It also expects this program to avoid lost profits from the following:

Requirements

1. Classify each of these costs into one of the four categories of quality costs (prevention, appraisal, internal failure, external failure).

2. Should Kane implement the quality program? Give your reasons.

to calculate cost of goods sold you may want to review hint in transaction l you clo 645203

Aug 30, 2021 | Uncategorized

Comprehensive accounting for manufacturing transactions School Stars produces stars for elementary teachers to reward their students. School Stars’ trial balance on June 1 follows:

June 1 balances in the subsidiary ledgers were as follows:

• Materials subledger: $4,300 paper and $1,900 indirect materials

• Work in process subledger: Job 120 $43,000; $0 for Job 121

• Finished goods subledger: $9,300 Large Stars and $12,000 Small Stars

June transactions are summarized as follows:

a. Collections on account, $155,000.

b. Marketing and general expenses incurred and paid, $22,000.

c. Payments on account, $37,000.

d. Materials purchases on credit: Paper, $26,600; indirect materials, $4,200.

e. Materials used in production (requisitioned):

• Job 120: Paper, $900

• Job 121: Paper, $7,850

• Indirect materials, $1,600

f. Wages incurred and assigned during June, $43,000. Labor time records for the month: Job 120, $4,800; Job 121, $18,500; indirect labor, $19,700.

g. Wages paid in June include the balance in the Wages payable account at May 31 and $39,900 of wages incurred during June.

h. Depreciation on plant and equipment, $2,700.

i. Manufacturing overhead was allocated at the predetermined rate of 90% of direct labor cost.

j. Jobs completed during the month: Job 120, 600,000 Large Stars at total cost of $53,020.

k. Credit sales on account: all of Job 120 for $133,000.

l. Closed the Manufacturing overhead account to Cost of goods sold.

Requirements

1. Journalize the transactions for the company. School uses a perpetual inventory system.

2. Open T accounts for the general ledger, the Materials ledger, the Work in process ledger, and the  finished goods ledger. Insert each account balance as given, and use the reference Bal. Post the journal entries to the T accounts using the transaction letters as a reference.

3. Prepare a trial balance at June 30, 2012.

4. Use the Work in process inventory T account to prepare a schedule of cost of goods manufactured for the month of June.

5. Prepare an income statement for the month of June. To calculate cost of goods sold, you may want to review. (Hint: In transaction l, you closed any under/over allocated manufacturing overhead to Cost of goods sold. In the income statement, show this correction as an adjustment to Cost of goods sold. If manufacturing overhead is under allocated, the adjustment will increase Cost of goods sold.

If overhead is over allocated, the adjustment will decrease Cost of goods sold.)

the predetermined manufacturing overhead rate usually turns out to be inaccurate why 645204

Aug 30, 2021 | Uncategorized

Accounting for manufacturing overhead Superior Woods manufactures jewelry boxes. The primary materials (wood, brass, and glass) and direct labor are traced directly to the products. Manufacturing overhead costs are allocated based on machine hours. Data for 2012 follow:

Requirements

1. Compute the predetermined manufacturing overhead rate.

2. Post actual and allocated manufacturing overhead to the Manufacturing overhead T account.

3. Close the under or over allocated overhead to Cost of goods sold.

4. The predetermined manufacturing overhead rate usually turns out to be inaccurate. Why don’t accountants just use the actual manufacturing overhead rate?

if jacquin wants to earn profits equal to 50 of sales revenue how much what fee shou 645205

Aug 30, 2021 | Uncategorized

Job order costing in a service company  Skylark Design, Inc., is a Web site design and consulting firm. The firm uses a job order costing system in which each client is a different job. Skylark Design traces direct labor, licensing costs, and travel costs directly to each job. It allocates indirect costs to jobs based on a predetermined indirect cost allocation rate, computed as a percentage of direct labor costs.

At the beginning of 2013, managing partner Judi Jacquin prepared the following budget estimates:

In November 2013, Skylark Design served several clients. Records for two clients appear here:

Requirements

1. Compute Skylark Design’s direct labor rate and its predetermined indirect cost allocation rate for 2012.

2. Compute the total cost of each job.

3. If Jacquin wants to earn profits equal to 50% of sales revenue, how much (what fee) should she charge each of these two clients?

4. Why does Skylark Design assign costs to jobs?

if draper wants to earn profits equal to 25 of sales revenue how much what fee shoul 645206

Aug 30, 2021 | Uncategorized

Accounting for manufacturing overhead This problem continues the Draper Consulting, Inc., situation Draper Consulting uses a job order costing system in which each client is a different job. Draper traces direct labor, daily per diem, and travel costs directly to each job. It allocates indirect costs to jobs based on a predetermined indirect cost allocation rate, computed as a percentage of direct labor costs. At the beginning of 2013, the controller prepared the following budget:

In November 2013, Draper served several clients. Records for two clients appear here:

Requirements

1. Compute Draper’s predetermined indirect cost allocation rate for 2012.

2. Compute the total cost of each job.

3. If Draper wants to earn profits equal to 25% of sales revenue, how much (what fee) should it charge each of these two clients?

4. Why does Draper assign costs to jobs?

should nature rsquo s own garden compute its predetermined manufacturing overhead ra 645208

Aug 30, 2021 | Uncategorized

Nature’s Own Garden manufactures organic fruit preserves sold primarily through health food stores and on the Web. The company closes for two weeks each December to enable employees to spend time with their families over the holiday season. Nature’s Own Garden’s manufacturing overhead is mostly straight line depreciation on its plant, and air conditioning costs for keeping the berries cool during the summer months. The company uses direct labor hours as the manufacturing overhead allocation base. President Cynthia Ortega has just approved new accounting software and is telling controller Jack Strong about her decision. “I think this new software will be great,” Ortega says. “It will save you time in preparing all those reports.” “Yes, and having so much more information just a click away will help us make better decisions and help control costs,” replies Strong. “We need to consider how we can use the new system to improve our business practices.” “And I know just where to start,” says Ortega. “You complain each year about having to predict the weather months in advance for estimating air conditioning costs to include in the calculation of the predetermined manufacturing overhead rate, when professional meteorologists can’t even get tomorrow’s forecast right! I think we should calculate the predetermined overhead rate on a monthly basis.” Controller Strong is not so sure this is a good idea.

Requirements

1. What are the advantages and disadvantages of Ortega’s proposal?

2. Should Nature’s Own Garden compute its predetermined manufacturing overhead rate on an annual basis or monthly basis? Explain.

identify the parties involved in paul york rsquo s dilemma what are his alternatives 645209

Aug 30, 2021 | Uncategorized

Farley, Inc., is a manufacturer that produces customized computer components for several well known computer assembly companies. Farley’s latest contract with CompWest.com calls for  arley to deliver sound cards that simulate surround sound from two speakers. Farley spent several hundred thousand dollars to design the sound card to meet CompWest.com’s specifications. Farley’s president, Bryon Wilson, has stipulated a pricing policy that requires the bid price for a new job to be based on Farley’s estimated costs to design, manufacture, distribute, and provide customer service for the job, plus a profit margin. Upon reviewing the contract figures, Farley’s controller, Paul York, was startled to find that the cost estimates developed by Farley’s cost accountant, Tony Hayes, for the CompWest.com bid were based on only the manufacturing costs. York is upset with Hayes. He is not sure what to do next.

Requirements

1. How did using manufacturing cost only, instead of using all costs associated with the CompWest.com job, affect the amount of Farley’s bid for the job?

2. Identify the parties involved in Paul York’s dilemma. What are his alternatives? How would each party be affected by each alternative? What should York do next?

based on what you have read above what was jerry rsquo s company using as a cost dri 645210

Aug 30, 2021 | Uncategorized

Jerry never imagined he’d be sitting there in Washington being grilled mercilessly by a panel of congressmen. But a young government auditor picked up on his scheme last year. His company produced hi tech navigation devices that were sold to both military and civilian clients. The military contracts were “cost plus,” meaning that payments were calculated based on actual production costs plus a profit markup. The civilian contracts were bid out in a very competitive market, and every dollar counted. Jerry knew that because all the jobs were done in the same factory, he could manipulate the allocation of overhead costs in a way that would shift costs away from the civilian contracts and into the military “cost plus” work. That way, the company would collect more from the government and be able to shave its bids down on civilian work. He never thought anyone would discover the alterations he had made in the factory workers’ time sheets, but one of his accountants had noticed and tipped off the government auditor. Now as the congressman from Michigan rakes him over the coals, Jerry is trying to figure out his chances of dodging jail time.

Requirements

1. Based on what you have read above, what was Jerry’s company using as a cost driver to allocate overhead to the various jobs?

2. Name two ways that reducing costs on the civilian contracts would benefit the company.

the filtration department completely processed 150 000 liters in february what was t 645212

Aug 30, 2021 | Uncategorized

Calculating conversion costs and unit cost Spring Fresh produces premium bottled water. Spring Fresh purchases artesian water, stores the water in large tanks, and then runs the water through two processes: filtration and bottling. During February, the filtration process incurred the following costs in processing 150,000 liters:

Spring Fresh had no beginning Work in process inventory in the Filtration Department in February.

Requirements

1. Compute the February conversion costs in the Filtration Department.

2. The Filtration Department completely processed 150,000 liters in February. What was the filtration cost per liter?

drawing a timeline computing equivalent units and assigning cost to completed units 645215

Aug 30, 2021 | Uncategorized

Drawing a timeline, computing equivalent units, and assigning cost to completed units and ending work in process; no beginning work in process inventory or cost transferred in  Crafty Paint prepares and packages paint products. Crafty Paint has two departments: (1) Blending and (2) Packaging. Direct materials are added at the beginning of the blending process (dyes) and at the end of the packaging process (cans). Conversion costs are added evenly throughout each process. Data from the month of May for the Blending Department are as follows:

Requirements

1. Fill in the timeline for the Blending Department.

2. Use the timeline to help you compute the Blending Department’s equivalent units for direct materials and for conversion costs.

3. Compute the total costs of the units (gallons)

a. completed and transferred out to the Packaging Department.

b. in the Blending Department ending Work in process inventory.

conversion costs are added evenly throughout each process data from the month of mar 645216

Aug 30, 2021 | Uncategorized

Drawing a timeline, computing equivalent units, and assigning cost to completed units and ending work in process; no beginning work in process inventory or cost transferred in  Samson Winery in Pleasant Valley, New York, has two departments: Fermenting and Packaging. Direct materials are added at the beginning of the fermenting process (grapes) and at the end of the packaging process (bottles). Conversion costs are added evenly throughout each process. Data from the month of March for the Fermenting Department are as follows:

Requirements

1. Draw a timeline for the Fermenting Department.

2. Use the timeline to help you compute the equivalent units for direct materials and for conversion costs.

3. Compute the total costs of the units (gallons)

a. completed and transferred out to the Packaging Department.

b. in the Fermenting Department ending Work in process inventory.

compute the bottling department equivalent units for the month of february use the w 645217

Aug 30, 2021 | Uncategorized

Computing equivalent units, computing cost per equivalent unit; assigning costs; journalizing; second department, weighted average method Cool Spring Company produces premium bottled water. In the second department, the Bottling Department, conversion costs are incurred evenly throughout the bottling process, but packaging materials are not added until the end of the process.

Costs in beginning Work in process inventory include transferred in costs of $1,700, direct labor of $700, and manufacturing overhead of $330. February data for the Bottling Department follow:

Requirements

1. Compute the Bottling Department equivalent units for the month of February. Use the weighted average method.

2. Compute the cost per equivalent unit for February.

3. Assign the costs to units completed and transferred out and to ending Work in process inventory.

4. Prepare the journal entry to record the cost of units completed and transferred out.

5. Post all transactions to the Work in process inventory—Bottling Department T account. What is the ending balance?

prepare a t account for work in process inventory mdash assembly to show its activit 645218

Aug 30, 2021 | Uncategorized

Computing equivalent units and assigning costs to completed units and ending work in process; no beginning work in process inventory or cost transferred in Amy Electronics makes CD players in three processes: assembly, programming, and packaging. Direct materials are added at the beginning of the assembly process. Conversion costs are incurred evenly throughout the process. The Assembly Department had no Work in process inventory on October 31. In mid November, Amy Electronics started production on 125,000 CD players. Of this number, 95,800 CD players were assembled during November and transferred out to the Programming Department. The November 30 Work in process inventory in the Assembly Department was 25% of the way through the assembly process. Direct materials costing $437,500 were placed in production in Assembly during November, and Direct labor of $200,800 and Manufacturing overhead of $134,275 were assigned to that department. Requirements

1. Compute the number of equivalent units and the cost per equivalent unit in the Assembly Department for November.

2. Assign total costs in the Assembly Department to (a) units completed and transferred to Programming during November and (b) units still in process at November 30.

3. Prepare a T account for Work in process inventory—Assembly to show its activity during November, including the November 30 balance.

show that the sum of a cost of goods transferred out of the mixing department and b 645219

Aug 30, 2021 | Uncategorized

Computing equivalent units and assigning costs to completed units and ending work in process; no beginning work in process inventory or cost transferred in  Reed Paper, Co., produces the paper used by wallpaper manufacturers. Reed’s fourstage process includes mixing, cooking, rolling, and cutting. During March, the Mixing Department started and completed mixing for 4,520 rolls of paper. The department started but did not finish the mixing for an additional 500 rolls, which were 20% complete with respect to both direct materials and conversion work at the end of March. Direct materials and conversion costs are incurred evenly throughout the mixing process. The Mixing Department incurred the following costs during March:

Requirements

1. Compute the number of equivalent units and the cost per equivalent unit in the Mixing Department for March.

2. Show that the sum of (a) cost of goods transferred out of the Mixing Department and (b) ending Work in process inventory—Mixing equals the total cost accumulated in the department during March.

3. Journalize all transactions affecting the company’s mixing process during March, including those already posted.

prepare the november production cost report for christine rsquo s dyeing department 645221

Aug 30, 2021 | Uncategorized

Computing equivalent units for a second department with beginning work in process inventory; preparing a production cost report and recording transactions on the basis of the report’s information; weighted average method Christine Carpet manufactures broadloom carpet in seven processes: spinning, dyeing, plying, spooling, tufting, latexing, and shearing. In the Dyeing Department, direct materials (dye) are added at the beginning of the process. Conversion costs are incurred evenly throughout the process. Christine uses weighted average process costing. Information for November 2012 follows:

Requirements

1. Prepare a timeline for Christine’s Dyeing Department.

2. Use the timeline to help you compute the equivalent units, cost per equivalent unit, and total costs to account for in Christine’s Dyeing Department for November.

3. Prepare the November production cost report for Christine’s Dyeing Department. 4. Journalize all transactions affecting Christine’s Dyeing Department during November, including the entries that have already been posted.

compute the cost per unit for lifts completed and transferred out to finished goods 645222

Aug 30, 2021 | Uncategorized

Computing equivalent units for a second department with beginning work in process inventory; assigning costs to completed units and ending work in process; weighted average method WaterBound uses three processes to manufacture lifts for personal watercraft: forming a lift’s parts from galvanized steel, assembling the lift, and testing the completed lifts. The lifts are transferred to finished goods before shipment to marinas across the country. WaterBound’s Testing Department requires no direct materials. Conversion costs are incurred evenly throughout the testing process. Other information follows:

The cost transferred into Finished goods inventory is the cost of the lifts transferred out of the Testing Department. WaterBound uses weighted average process costing.

Requirements

1. Draw a timeline for the Testing Department.

2. Use the timeline to compute the number of equivalent units of work performed by the Testing Department during the period.

3. Compute WaterBound’s transferred in and conversion costs per equivalent unit. Use the unit costs to assign total costs to (a) units completed and transferred out of Testing and (b) units in Testing’s ending Work in process inventory.

4. Compute the cost per unit for lifts completed and transferred out to Finished goods inventory. Why would management be interested in this cost?

assign total costs in the assembly department to a units completed and transferred t 645223

Aug 30, 2021 | Uncategorized

Computing equivalent units and assigning costs to completed units and ending work in process; no beginning work in process inventory or cost transferred in Beth Electronics makes CD players in three processes: assembly, programming, and packaging. Direct materials are added at the beginning of the assembly process. Conversion costs are incurred evenly throughout the process. The Assembly Department had no work in process inventory on March 31. In mid April, Beth Electronics started production on 115,000 CD players. Of this number, 99,000 CD players were assembled during April and transferred out to the Programming Department. The April 30 work in process inventory in the Assembly Department was 45% of the way through the assembly process. Direct materials costing $345,000 were placed in production in Assembly during April, and direct labor of $150,000 and manufacturing overhead of $62,400 were assigned to that department.

Requirements

1. Compute the number of equivalent units and the cost per equivalent unit in the Assembly Department for April.

2. Assign total costs in the Assembly Department to (a) units completed and transferred to Programming during April and (b) units still in process at April 30.

3. Prepare a T account for Work in process inventory—Assembly to show its activity during April, including the April 30 balance.

compute the number of equivalent units and the cost per equivalent unit in the mixin 645224

Aug 30, 2021 | Uncategorized

Computing equivalent units and assigning costs to completed units and ending work in process; no beginning work in process inventory or cost transferred in  Smith Paper, Co., produces the paper used by wallpaper manufacturers. Smith’s four stage process includes mixing, cooking, rolling, and cutting. During September, the Mixing Department started and completed mixing for 4,405 rolls of paper. The department started but did not finish the mixing for an additional 600 rolls, which were 20% complete with respect to both direct materials and conversion work at the end of September. Direct materials and conversion costs are incurred evenly throughout the mixing process. The Mixing Department incurred the following costs during September:

Requirements

1. Compute the number of equivalent units and the cost per equivalent unit in the Mixing Department for September.

2. Show that the sum of (a) cost of goods transferred out of the Mixing Department and (b) ending Work in process inventory—Mixing equals the total cost accumulated in the department during September.

3. Journalize all transactions affecting the company’s mixing process during September, including those already posted.

use the timeline to help you compute the equivalent units cost per equivalent unit a 645226

Aug 30, 2021 | Uncategorized

Computing equivalent units for a second department with beginning work in process inventory; preparing a production cost report and recording transactions on the basis of the report’s information; weighted average method Carol Carpet manufactures broadloom carpet in seven processes: spinning, dyeing, plying, spooling, tufting, latexing, and shearing. In the Dyeing Department, direct materials (dye) are added at the beginning of the process. Conversion costs are incurred evenly throughout the process. Carol uses weighted average process costing. Information for July 2012 follows:

Requirements

1. Prepare a timeline for Carol’s Dyeing Department.

2. Use the timeline to help you compute the equivalent units, cost per equivalent unit, and total costs to account for in Carol’s Dyeing Department for July.

3. Prepare the July production cost report for Carol’s Dyeing Department.

4. Journalize all transactions affecting Carol’s Dyeing Department during July, including the entries that have already been posted.

suppose compute it estimates it will use 400 000 000 parts a month and ship products 645230

Aug 30, 2021 | Uncategorized

Two of Compute It’s production activities are kitting (assembling the raw materials needed for each computer in one kit) and boxing the completed products for shipment to customers. Assume that Compute It spends $12,000,000 a month on kitting and $22,000,000 a month on boxing. Compute It allocates the following:

?Kitting costs based on the number of parts used in the computer

?Boxing costs based on the cubic feet of space the computer requires

Suppose Compute It estimates it will use 400,000,000 parts a month and ship products with a total volume of 20,000,000 cubic feet. Assume that each desktop computer requires 125 parts and has a volume of 10 cubic feet. What is the activity cost allocation rate?

what are the kitting and boxing costs assigned to one desktop computer 645231

Aug 30, 2021 | Uncategorized

What are the kitting and boxing costs assigned to one desktop computer?

accounting for materials and labor seattle enterprises produces lcd touch screen pro 645178

Aug 30, 2021 | Uncategorized

Accounting for materials and labor Seattle Enterprises produces LCD touch screen products. The company reports the following information at December 31, 2012:

Seattle began operations on January 30, 2012.

Requirements

1. What is the cost of direct materials used? The cost of indirect materials used?

2. What is the cost of direct labor? The cost of indirect labor?

what is the balance in the manufacturing overhead account before overhead is applied 645179

Aug 30, 2021 | Uncategorized

Accounting for overhead Teak Outdoor Furniture manufactures wood patio furniture. The company reports the following costs for June 2012:

Requirement

1. What is the balance in the Manufacturing overhead account before overhead is applied to jobs?

a particular governmental agency takes bids for specific items it utilizes each item 645183

Aug 30, 2021 | Uncategorized

Distinguishing between job order costing and process costing Consider the following incomplete statements.

a. _____ is used by companies that produce small quantities of many different products.

b. Georgia Pacific pulverizes wood into pulp to manufacture cardboard. The company uses a _____ system.

c. To record costs of manufacturing thousands of identical files, the file manufacturer will use a _____ system.

d. Companies that produce large numbers of identical products use _____ systems for product costing.

e. The computer repair service that visits your home and repairs your computer uses a _____ system.

f. Apple assembles electronic parts and software to manufacture millions of iPods. Apple uses a ___________ system.

g. Textbook publishers produce titles of a particular book in batches. Textbook publishers use a __________ system.

h. A company that bottles milk into one gallon containers uses a ________ system.

A company that makes large quantities of one type of tankless hot water heater uses a __________ system.

i. A particular governmental agency takes bids for specific items it utilizes. Each item requires a separate bid. The agency uses a ___________ system.

Requirement

1. Complete each of the statements with the term job order costing or the term process costing.

use the dates in the table to identify the status of each job compute sloan rsquo s 645184

Aug 30, 2021 | Uncategorized

Accounting for job costs Sloan Trailers’ job cost records yielded the following information:

Requirement

1. Use the dates in the table to identify the status of each job. Compute Sloan’s cost of (a) Work in process inventory at September 30, (b) Finished goods inventory at September 30, and (c) Cost of goods sold for September.

recorded manufacturing overhead depreciation on plant 10 000 plant insurance 1 300 p 645185

Aug 30, 2021 | Uncategorized

Job order costing journal entries Consider the following transactions for Judy’s Sofas:

a. Incurred and paid Web site expenses, $2,900.

b. Incurred manufacturing wages of $15,000, 60% of which was direct labor and 40%

of which was indirect labor.

c. Purchased materials on account, $24,000.

d. Used in production: direct materials, $9,500; indirect materials, $4,500.

e. Recorded manufacturing overhead: depreciation on plant, $10,000; plant insurance, $1,300; plant property tax, $4,200 (credit Property tax payable).

f. Allocated manufacturing overhead to jobs, 250% of direct labor costs.

g. Completed production, $38,000.

h. Sold inventory on account, $20,000; cost of goods sold, $10,000.

i. Journalized the closing of the manufacturing overhead account.

Requirement

1. Journalize the transactions in Judy’s general journal.

describe the letter transactions in the above accounts 645186

Aug 30, 2021 | Uncategorized

Identifying job order costing journal entries Consider the following:

Requirement

1. Describe the letter transactions in the above accounts.

compute the predetermined manufacturing overhead rate per direct labor dollar 645187

Aug 30, 2021 | Uncategorized

Allocating manufacturing overhead Selected cost data for Antique Print, Co., are as follows:

Requirements

1. Compute the predetermined manufacturing overhead rate per direct labor dollar.

2. Prepare the journal entry to allocate overhead cost for the year.

3. Use a T account to determine the amount of underallocated or overallocated manufacturing overhead.

4. Prepare the journal entry to close the balance of the Manufacturing overhead account.

close the manufacturing overhead account to cost of goods sold does your entry incre 645188

Aug 30, 2021 | Uncategorized

Allocating manufacturing overhead Brooks Foundry uses a predetermined manufacturing overhead rate to allocate overhead to individual jobs, based on the machine hours required. At the beginning of 2012, the company expected to incur the following:

At the end of 2012, the company had actually incurred:

Requirements

1. Compute Brooks’ predetermined manufacturing overhead rate.

2. Prepare the journal entry to allocate manufacturing overhead.

3. Post the manufacturing overhead transactions to the Manufacturing overhead T account. Is manufacturing overhead underallocated or overallocated? By how much?

4. Close the Manufacturing overhead account to Cost of goods sold. Does your entry increase or decrease cost of goods sold?

use a t account to determine whether manufacturing overhead is under allocated or ov 645189

Aug 30, 2021 | Uncategorized

Allocating manufacturing overhead  Depreciation on manufacturing property, plant, and equipment was actually $550,000, not the $600,000 she originally reported. Unadjusted balances at the end of 2012 include:

Requirements

1. Use a T account to determine whether manufacturing overhead is under allocated or over allocated, and by how much.

2. Prepare the journal entry to close out the under allocated or over allocated manufacturing overhead.

3. What is the adjusted ending balance of Cost of goods sold?

how many machine hours did krazy kayaks use in 2012 645190

Aug 30, 2021 | Uncategorized

Allocating manufacturing overhead The manufacturing records for Krazy Kayaks at the end of the 2012 fiscal year show the following information about manufacturing overhead:

Requirements

1. How many machine hours did Krazy Kayaks use in 2012?

2. Was manufacturing overhead over or under allocated for the year and by how much?

3. Prepare the journal entry to close out the over or under allocated overhead.

if martin wants to earn a profit that equals 45 of the job rsquo s cost how much sho 645192

Aug 30, 2021 | Uncategorized

Job order costing in a service company  Martin Realtors, a real estate consulting firm, specializes in advising companies on potential new plant sites. The company uses a job order costing system with a predetermined indirect cost allocation rate, computed as a percentage of direct labor costs. At the beginning of 2012, managing partner Andrew Martin prepared the following budget for the year:

Peters Manufacturing, Inc., is inviting several consultants to bid for work. Andrew Martin estimates that this job will require about 240 direct labor hours.

Requirements

1. Compute Martin Realtors’ (a) hourly direct labor cost rate and (b) indirect cost allocation rate.

2. Compute the predicted cost of the Peters Manufacturing job.

3. If Martin wants to earn a profit that equals 45% of the job’s cost, how much should he bid for the Peters Manufacturing job?

what is the gross profit for job 3 what other costs must this gross profit cover 645193

Aug 30, 2021 | Uncategorized

Analyzing cost data Bluebird Manufacturing makes carrying cases for portable electronic devices. Its costing records yield the following information:

Requirements

1. Which type of costing system is Bluebird using? What piece of data did you base your answer on?

2. Use the dates in the table to identify the status of each job. Compute Bluebird’s account balances at October 31 for Work in process inventory, Finished goods inventory, and Cost of goods sold. Compute, by job, account balances at November 30 for Work in process inventory, Finished goods inventory, and Cost of goods sold.

3. Prepare journal entries to record the transfer of completed units from Work in process to Finished goods for October and November.

4. Record the sale of Job 3 for $2,100.

5. What is the gross profit for Job 3? What other costs must this gross profit cover?

accounting for construction transactions quaint construction inc is a home builder i 645194

Aug 30, 2021 | Uncategorized

Accounting for construction transactions Quaint Construction, Inc., is a home builder in Arizona. Quaint uses a job order costing system in which each house is a job. Because it constructs houses, the company uses an account titled Construction overhead. The company applies overhead based on estimated direct labor costs. For the year, it estimated construction overhead of $1,100,000 and total direct labor cost of $2,750,000. The following events occurred during August:

a. Purchased materials on account, $400,000.

b. Requisitioned direct materials and used direct labor in construction. Record the materials requisitioned.

c. The company incurred total wages of $200,000. Use the data from item b to assign the wages.

d. Depreciation of construction equipment, $6,200.

e. Other overhead costs incurred on houses 402 through 405:

f. Allocated overhead to jobs.

g. Houses completed: 402, 404.

h. House sold: 404 for $250,000.

Requirements

1. Calculate Quaint’s construction overhead application rate for the year.

2. Prepare journal entries to record the events in the general journal.

3. Open T accounts for Work in process inventory and Finished goods inventory. Post the appropriate entries to these accounts, identifying each entry by letter. Determine the ending account balances, assuming that the beginning balances were zero.

4. Add the costs of the unfinished houses, and show that this total amount equals the ending balance in the Work in process inventory account.

5. Add the cost of the completed house that has not yet been sold, and show that this equals the ending balance in Finished goods inventory.

6. Compute gross profit on the house that was sold. What costs must gross profit cover for Quaint Construction?

wages paid in june include the balance in the wages payable account at may 31 and 32 645196

Aug 30, 2021 | Uncategorized

Comprehensive accounting for manufacturing transactions Howie Stars produces stars for elementary teachers to reward their students. Howie Stars’ trial balance on June 1 follows:

a. June 1 balances in the subsidiary ledgers were as follows:

b. Materials subledger: Paper, $4,700; indirect materials, $1,000

c. Work in process subledger: Job 120, $39,400; $0 for Job 121

d. Finished goods subledger: Large Stars, $9,400; Small Stars, $11,000

June transactions are summarized as follows:

Collections on account, $152,000.

1. Marketing and general expenses incurred and paid, $28,000.
2. Payments on account, $36,000.
3. Materials purchases on credit: Paper, $22,900; indirect materials, $3,800.
4. Materials used in production (requisitioned):

• Job 120: paper, $850

• Job 121: paper, $7,650

• Indirect materials, $1,000

e. Wages incurred and assigned during June, $35,000. Labor time records for the month: Job 120, $3,500; Job 121, $16,600; indirect labor, $14,900.

f. Wages paid in June include the balance in the Wages payable account at May 31 and $32,200 of wages incurred during June.

g. Depreciation on plant and equipment, $2,600.

h. Manufacturing overhead was allocated at the predetermined rate of 50% of direct labor cost.

i. Jobs completed during the month: Job 120, 300,000 Large Stars at total cost of $45,500.

j. Credit sales on account: all of Job 120 for $111,000.

k. Closed the Manufacturing overhead account to Cost of goods sold.

if manufacturing overhead is under allocated the adjustment will increase cost of go 645197

Aug 30, 2021 | Uncategorized

Requirements

1. Journalize the transactions for the company. Howie uses a perpetual inventory system.

2. Open T accounts for the general ledger, the Materials ledger, the Work in process ledger, and the  finished goods ledger. Insert each account balance as given, and use the reference Bal. Post the journal entries to the T accounts using the transaction letters as a reference.

3. Prepare a trial balance at June 30, 2012.

4. Use the Work in process inventory T account to prepare a schedule of cost of goods manufactured for the month of June.

5. Prepare an income statement for the month of June. To calculate cost of goods sold, you may want to review (Hint: In transaction l, you closed any under/over allocated manufacturing overhead to Cost of goods sold. In the income statement, show this correction as an adjustment to Cost of goods sold.

If manufacturing overhead is under allocated, the adjustment will increase Cost of goods sold. If overhead is over allocated, the adjustment will decrease Cost of goods sold.)

the predetermined manufacturing overhead rate usually turns out to be inaccurate why 645198

Aug 30, 2021 | Uncategorized

Accounting manufacturing overhead White Woods manufactures jewelry boxes. The primary materials (wood, brass, and glass) and direct labor are traced directly to the products. Manufacturing overhead costs are allocated based on machine hours. Data for 2012 follow:

Requirements

1. Compute the predetermined manufacturing overhead rate.

2. Post actual and allocated manufacturing overhead to the Manufacturing overhead T account.

3. Close the under or overallocated overhead to Cost of goods sold.

4. The predetermined manufacturing overhead rate usually turns out to be inaccurate. Why don’t accountants just use the actual manufacturing overhead rate?

if simone wants to earn profits equal to 50 of service revenue how much what fee sho 645199

Aug 30, 2021 | Uncategorized

Job order costing in a service company Crow Design, Inc., is aWeb site design and consulting firm. The firm uses a job order costing system in which each client is a different job. Crow Design traces direct labor, licensing costs, and travel costs directly to each job. It allocates indirect costs to jobs based on a predetermined indirect cost allocation rate, computed as a percentage of direct labor costs.At the beginning of 2012, managing partner Sally Simone prepared the following budget estimates:

In November 2012, Crow Design served several clients. Records for two clients appear here:

Requirements

1. Compute Crow Design’s direct labor rate and its predetermined indirect cost allocation rate for 2012.

2. Compute the total cost of each job.

3. If Simone wants to earn profits equal to 50% of service revenue, how much (what fee) should she charge each of these two clients?

4. Why does Crow Design assign costs to jobs?

what is the gross profit for job 3 what other costs must this gross profit cover 645200

Aug 30, 2021 | Uncategorized

Analyzing cost data  Stratton Manufacturing makes carrying cases for portable electronic devices. Its costing records yield the following information:

Requirements

1. Which type of costing system is Stratton using? What piece of data did you base your answer on?

2. Use the dates in the table to identify the status of each job. Compute Stratton’s account balances at October 31 for Work in process inventory, Finished goods inventory, and Cost of goods sold. Compute, by job, account balances at November 30 for Work in process inventory, Finished goods inventory, and Cost of goods sold.

3. Prepare journal entries to record the transfer of completed units from work in process to finished goods for October and November.

4. Record the sale of Job 3 for $2,200.

5. What is the gross profit for Job 3? What other costs must this gross profit cover?

compute gross profit on the house that was sold what costs must gross profit cover f 645201

Aug 30, 2021 | Uncategorized

Accounting for construction transactions Cottage Construction, Inc., is a home builder in Arizona. Cottage uses a job order costing system in which each house is a job. Because it constructs houses, the company uses an account titled Construction overhead. The company applies overhead based on estimated direct labor costs. For the year, it estimated construction overhead of $1,050,000 and total direct labor cost of $3,500,000. The following events occurred during August:

a. Purchased materials on account, $460,000.

b. Requisitioned direct materials and used direct labor in construction. Record the materials requisitioned.

c. The company incurred total wages of $210,000. Use the data from item b to assign the wages.

d. Depreciation of construction equipment, $6,000.

e. Other overhead costs incurred on houses 402 through 405:

f. Allocated overhead to jobs.

g. Houses completed: 402, 404.

h. House sold: 404 for $200,000.

Requirements

1. Calculate Cottage’s construction overhead application rate for the year.

2. Record the events in the general journal.

3. Open T accounts for Work in process inventory and Finished goods inventory. Post the appropriate entries to these accounts, identifying each entry by letter. Determine the ending account balances, assuming that the beginning balances were zero.

4. Add the costs of the unfinished houses, and show that this total amount equals the ending balance in the Work in process inventory account.

5. Add the cost of the completed house that has not yet been sold, and show that this equals the ending balance in Finished goods inventory.

6. Compute gross profit on the house that was sold. What costs must gross profit cover for Cottage Construction?

prepare a job cost record similar to exhibit 17 6 for job 423 calculate the predeter 645202

Aug 30, 2021 | Uncategorized

Preparing and using a job cost record  True Technology, Co., manufactures CDs and DVDs for computer software and entertainment companies. True uses job order costing and has a perpetual inventory system.

On November 2, True began production of 5,500 DVDs, Job 423, for Leopard Pictures for $1.60 sales price per DVD. True promised to deliver the DVDs to Leopard by November 5. True incurred the following costs:

Leopard Pictures provides the movie file for True to burn onto the DVDs at a cost of $0.45 per DVD. True Technology allocates manufacturing overhead to jobs based on the relation between estimated overhead of $550,000 and estimated direct labor costs of $500,000. Job 423 was completed and shipped on November 3.

Requirements

1. Prepare a job cost record similar to Exhibit 17 6 for Job 423. Calculate the predetermined overhead rate, then allocate manufacturing overhead to the job.

2. Journalize in summary form the requisition of direct materials (including the movie files) and the assignment of direct labor and manufacturing overhead to Job 423.

3. Journalize completion of the job and the sale of the 5,500 DVDs.

prepare two separate schedules computing cost of goods sold and supporting schedules 645122

Aug 30, 2021 | Uncategorized

(FIFO and LIFO Effects) You are the vice president of finance of Mickiewicz Corporation, a retail company that prepared two different schedules of gross margin for the first quarter ended March 31, 2012. These schedules appear below.

The computation of cost of goods sold in each schedule is based on the following data.

Peggy Fleming, the president of the corporation, cannot understand how two different gross margins can be computed from the same set of data. As the vice president of finance, you have explained to Ms. Fleming that the two schedules are based on different assumptions concerning the flow of inventory costs, i.e., FIFO and LIFO. Schedules 1 and 2 were not necessarily prepared in this sequence of cost flow assumptions.

Instructions

Prepare two separate schedules computing cost of goods sold and supporting schedules showing the composition of the ending inventory under both cost flow assumptions (assume periodic system).

what method would you recommend to the owner to minimize income taxes in 2012 using 645123

Aug 30, 2021 | Uncategorized

(FIFO and LIFO—Periodic) Tom Brady Shop began operations on January 2, 2012. The following stock record card for footballs was taken from the records at the end of the year.

A physical inventory on December 31, 2012, reveals that 110 footballs were in stock. The bookkeeper informs you that all the discounts were taken. Assume that Tom Brady Shop uses the invoice price less discount for recording purchases.

Instructions

(a) Compute the December 31, 2012, inventory using the FIFO method.

(b) Compute the 2012 cost of goods sold using the LIFO method.

(c) What method would you recommend to the owner to minimize income taxes in 2012, using the inventory information for footballs as a guide?

why does a company that uses lifo have extra cash explain whether this situation wil 645124

Aug 30, 2021 | Uncategorized

(LIFO Effect) The following example was provided to encourage the use of the LIFO method. In a nutshell, LIFO subtracts inflation from inventory costs, deducts it from taxable income, and records it in a LIFO reserve account on the books. The LIFO benefit grows as inflation widens the gap between current year and past year (minus inflation) inventory costs. This gap is:

Instructions

(a) Explain what is meant by the LIFO reserve account.

(b) How does LIFO subtract inflation from inventory costs?

(c) Explain how the cash flow of $174,400 in this example was computed. Explain why this amount may not be correct.

(d) Why does a company that uses LIFO have extra cash? Explain whether this situation will always exist.

assume that the december 2 2013 purchase cost is the current cost of inventory hint 645125

Aug 30, 2021 | Uncategorized

(Alternative Inventory Methods—Comprehensive) Belanna Corporation began operations on December 1, 2012. The only inventory transaction in 2012 was the purchase of inventory on December 10, 2012, at a cost of $20 per unit. None of this inventory was sold in 2012. Relevant information is as follows.

During the year, the following purchases and sales were made.

The company uses the periodic inventory method.

Instructions

(a) Determine ending inventory under (1) specific identification, (2) FIFO, (3) LIFO, and (4) average cost. (Round unit cost to four decimal places.)

(b) Determine ending inventory using dollar value LIFO. Assume that the December 2, 2013, purchase cost is the current cost of inventory. (Hint: The beginning inventory is the base layer priced at $20 per unit.)

use the dollar value lifo method to compute the ending inventory for choctaw company 645128

Aug 30, 2021 | Uncategorized

(Dollar Value LIFO) Presented below is information related to Martin Company.

Instructions

Use the dollar value LIFO method to compute the ending inventory for Choctaw Company for 2009 through 2013.

answer each of the preceding questions about inventories and explain your answers 645129

Aug 30, 2021 | Uncategorized

(Various Inventory Issues) The following independent situations relate to inventory accounting.

1. Kim Co. purchased goods with a list price of $175,000, subject to trade discounts of 20% and 10%, with no cash discounts allowable. How much should Kim Co. record as the cost of these goods?

2. Keillor Company’s inventory of $1,100,000 at December 31, 2012, was based on a physical count of goods priced at cost and before any year end adjustments relating to the following items.

(a) Goods shipped from a vendor f.o.b. shipping point on December 24, 2012, at an invoice cost of $69,000 to Keillor Company were received on January 4, 2013.

(b) The physical count included $29,000 of goods billed to Sakic Corp. f.o.b. shipping point on December 31, 2012. The carrier picked up these goods on January 3, 2013.

What amount should Keillor report as inventory on its balance sheet?

3. Zimmerman Corp. had 1,500 units of part M.O. on hand May 1, 2012, costing $21 each. Purchases of part M.O. during May were as follows.

A physical count on May 31, 2012, shows 2,000 units of part M.O. on hand. Using the FIFO method, what is the cost of part M.O. inventory at May 31, 2012? Using the LIFO method, what is the inventory cost? Using the average cost method, what is the inventory cost?

4. Ashbrook Company adopted the dollar value LIFO method on January 1, 2012 (using internal price indexes and multiple pools). The following data are available for inventory pool A for the 2 years following adoption of LIFO.

Computing an internal price index and using the dollar value LIFO method, at what amount should the inventory be reported at December 31, 2013?

5. Donovan Inc., a retail store chain, had the following information in its general ledger for the year 2013.

What is Donovan’s inventoriable cost for 2013?

Instructions

Answer each of the preceding questions about inventories, and explain your answers.

show separately the effect if any of each of the eight transactions on the december 645130

Aug 30, 2021 | Uncategorized

(Inventory Adjustments) Dimitri Company, a manufacturer of small tools, provided the following information from its accounting records for the year ended December 31, 2012.

Additional information is as follows.

1. Included in the physical count were tools billed to a customer f.o.b. shipping point on December 31, 2012. These tools had a cost of $31,000 and were billed at $40,000. The shipment was on Dimitri’s loading dock waiting to be picked up by the common carrier.

2. Goods were in transit from a vendor to Dimitri on December 31, 2012. The invoice cost was $76,000, and the goods were shipped f.o.b. shipping point on December 29, 2012.

3. Work in process inventory costing $30,000 was sent to an outside processor for plating on December 30, 2012.

4. Tools returned by customers and held pending inspection in the returned goods area on December 31, 2012, were not included in the physical count. On January 8, 2013, the tools costing $32,000 were inspected and returned to inventory. Credit memos totaling $47,000 were issued to the customers on the same date.

5. Tools shipped to a customer f.o.b. destination on December 26, 2012, were in transit at December 31, 2012, and had a cost of $26,000. Upon notification of receipt by the customer on January 2, 2013, Dimitri issued a sales invoice for $42,000.

6. Goods, with an invoice cost of $27,000, received from a vendor at 5:00 p.m. on December 31, 2012, were recorded on a receiving report dated January 2, 2013. The goods were not included in the physical count, but the invoice was included in accounts payable at December 31, 2012.

7. Goods received from a vendor on December 26, 2012, were included in the physical count. However, the related $56,000 vendor invoice was not included in accounts payable at December 31, 2012, because the accounts payable copy of the receiving report was lost.

8. On January 3, 2013, a monthly freight bill in the amount of $8,000 was received. The bill specifically related to merchandise purchased in December 2012, one half of which was still in the inventory at December 31, 2012. The freight charges were not included in either the inventory or in accounts payable at December 31, 2012.

Instructions

Using the format shown below, prepare a schedule of adjustments as of December 31, 2012, to the initial amounts per Dimitri’s accounting records. Show separately the effect, if any, of each of the eight transactions on the December 31, 2012, amounts. If the transactions would have no effect on the initial amount shown, enter NONE.

prepare the adjusting entry necessary on august 31 if financial statements are to be 645131

Aug 30, 2021 | Uncategorized

(Purchases Recorded Gross and Net) Some of the transactions of Torres Company during August are listed below. Torres uses the periodic inventory method.

August 10 Purchased merchandise on account, $12,000, terms 2/10, n/30.

13 Returned part of the purchase of August 10, $1,200, and received credit on account.

15 Purchased merchandise on account, $16,000, terms 1/10, n/60.

25 Purchased merchandise on account, $20,000, terms 2/10, n/30.

28 Paid invoice of August 15 in full.

Instructions

(a) Assuming that purchases are recorded at gross amounts and that discounts are to be recorded when taken:

(1) Prepare general journal entries to record the transactions.

(2) Describe how the various items would be shown in the financial statements.

(b) Assuming that purchases are recorded at net amounts and that discounts lost are treated as financial expenses:

(1) Prepare general journal entries to enter the transactions.

(2) Prepare the adjusting entry necessary on August 31 if financial statements are to be prepared at that time.

(3) Describe how the various items would be shown in the financial statements.

(c) Which of the two methods do you prefer and why?

assume that perpetual inventory records are kept in units only carry unit costs to t 645132

Aug 30, 2021 | Uncategorized

(Compute FIFO, LIFO, and Average Cost) Hull Company’s record of transactions concerning part X for the month of April was as follows.

Instructions

(a) Compute the inventory at April 30 on each of the following bases. Assume that perpetual inventory records are kept in units only. Carry unit costs to the nearest cent.

(1) First in, first out (FIFO).

(2) Last in, first out (LIFO).

(3) Average cost.

(b) If the perpetual inventory record is kept in dollars, and costs are computed at the time of each withdrawal, what amount would be shown as ending inventory in (1), (2), and (3) above? Carry average unit costs to four decimal places.

assume that perpetual inventory records are kept in units only carry unit costs to t 645133

Aug 30, 2021 | Uncategorized

(Compute FIFO, LIFO, and Average Cost) Some of the information found on a detail inventory card for Slatkin Inc. for the first month of operations is as follows.

Instructions

(a) From these data compute the ending inventory on each of the following bases. Assume that perpetual inventory records are kept in units only. Carry unit costs to the nearest cent and ending inventory to the nearest dollar.

(1) First in, first out (FIFO).

(2) Last in, first out (LIFO).

(3) Average cost.

(b) If the perpetual inventory record is kept in dollars, and costs are computed at the time of each withdrawal, would the amounts shown as ending inventory in (1), (2), and (3) above be the same? Explain and compute. (Round average unit costs to four decimal places.)

compute cost of goods sold assuming ehlo uses 645134

Aug 30, 2021 | Uncategorized

(Compute FIFO, LIFO, Average Cost—Periodic and Perpetual) Ehlo Company is a multiproduct firm. Presented below is information concerning one of its products, the Hawkeye.

Instructions

Compute cost of goods sold, assuming Ehlo uses:

(a) Periodic system, FIFO cost flow.

(b) Perpetual system, FIFO cost flow.

(c) Periodic system, LIFO cost flow.

(d) Perpetual system, LIFO cost flow.

(e) Periodic system, weighted average cost flow.

(f) Perpetual system, moving average cost flow.

name the account s presented in the financial statements that would have different a 645135

Aug 30, 2021 | Uncategorized

(Financial Statement Effects of FIFO and LIFO) The management of Tritt Company has asked its accounting department to describe the effect upon the company’s financial position and its income statements of accounting for inventories on the LIFO rather than the FIFO basis during 2012 and 2013. The accounting department is to assume that the change to LIFO would have been effective on January 1, 2012, and that the initial LIFO base would have been the inventory value on December 31, 2011. Presented below are the company’s financial statements and other data for the years 2012 and 2013 when the FIFO method was employed.

Other data:

1. Inventory on hand at December 31, 2011, consisted of 40,000 units valued at $3.00 each.

2. Sales (all units sold at the same price in a given year):

2012—150,000 units @ $6.00 each 2013—180,000 units @ $7.50 each

3. Purchases (all units purchased at the same price in given year):

2012—150,000 units @ $3.50 each 2013—180,000 units @ $4.40 each

4. Income taxes at the effective rate of 40% are paid on December 31 each year.

Instructions

Name the account(s) presented in the financial statements that would have different amounts for 2013 if LIFO rather than FIFO had been used, and state the new amount for each account that is named. Show computations.

prepare a schedule to compute the inventory amounts at december 31 2012 and 2013 usi 645137

Aug 30, 2021 | Uncategorized

(Internal Indexes—Dollar Value LIFO) On January 1, 2012, Bonanza Wholesalers Inc. adopted the dollar value LIFO inventory method for income tax and external financial reporting purposes. However, Bonanza continued to use the FIFO inventory method for internal accounting and management purposes. In applying the LIFO method, Bonanza uses internal conversion price indexes and the multiple pools approach under which substantially identical inventory items are grouped into LIFO inventory pools. The following data were available for inventory pool no. 1, which comprises products A and B, for the 2 years following the adoption of LIFO.

Instructions

(a) Prepare a schedule to compute the internal conversion price indexes for 2012 and 2013. Round indexes to two decimal places.

(b) Prepare a schedule to compute the inventory amounts at December 31, 2012 and 2013, using the dollar value LIFO inventory method.

enter the beginning balances and then post the transactions to the following account 645167

Aug 30, 2021 | Uncategorized

Skippy Scooters manufactures motor scooters. The company has automated production, so it allocates manufacturing overhead based on machine hours. Skippy expects to incur $240,000 of manufacturing overhead costs and to use 4,000 machine hours during 2011. At the end of 2010, Skippy reported the following inventories:

During January 2011, Skippy actually used 300 machine hours and recorded the following transactions:

a. Purchased materials on account, $31,000

b. Used direct materials, $39,000

c. Manufacturing wages incurred totaled $40,000, of which 90% was direct labor and 10% was indirect labor

d. Used indirect materials, $3,000

e. Incurred other manufacturing overhead, $13,000 on account

f. Allocated manufacturing overhead for January 2011

g. Cost of completed motor scooters, $100,000

h. Sold scooters on account, $175,000; cost of scooters sold, $95,000

Requirements

1. Compute Skippy’s predetermined manufacturing overhead rate for 2011.

2. Journalize the transactions in the general journal.

3. Enter the beginning balances and then post the transactions to the following accounts: Materials inventory, Work in process inventory, Finished goods inventory, Wages payable, Manufacturing overhead, and Cost of goods sold.

4. Close the ending balance of Manufacturing overhead. Post your entry to the T accounts.

5. What are the ending balances in the three inventory accounts and in Cost of goods sold?

would an advertising agency use job or process costing what about a cell phone manuf 645168

Aug 30, 2021 | Uncategorized

1. Would an advertising agency use job or process costing? What about a cell phone manufacturer?

a. Advertising agency—process costing; Cell phone manufacturer—process costing

b. Advertising agency—job order costing; Cell phone manufacturer—job order costing

c. Advertising agency—process costing; Cell phone manufacturer—job order costing

d. Advertising agency—job order costing; Cell phone manufacturer—process costing

2. When a manufacturing company uses direct materials, it assigns the cost by debiting

a. Direct materials.

b. Work in process inventory.

c. Manufacturing overhead.

d. Materials inventory.

3. When a manufacturing company uses indirect materials, it assigns the cost by debiting

a. Work in process inventory.

b. Indirect materials.

c. Materials inventory.

d. Manufacturing overhead.

actually used 16 000 000 machine hours and incurred the following actual costs 645169

Aug 30, 2021 | Uncategorized

a. allocates manufacturing overhead based on machine hours.

b. estimated 12,000,000 machine hours and $93,000,000 of manufacturing overhead costs.

c. Actually used 16,000,000 machine hours and incurred the following actual costs:

what entry would gell make to close the manufacturing overhead account 645171

Aug 30, 2021 | Uncategorized

What entry would Gell make to close the manufacturing overhead account?

if the company had 34 000 of materials inventory at the beginning of the period what 645175

Aug 30, 2021 | Uncategorized

Accounting for materials Rite Packs manufactures backpacks. Its plant records include the following materials related transactions:

Requirements

1. Journalize the entries to record these transactions.

2. Post these transactions to the Materials inventory account.

3. If the company had $34,000 of Materials inventory at the beginning of the period, what is the ending balance of Materials inventory?

accounting for materials consider the following t accounts 645176

Aug 30, 2021 | Uncategorized

Accounting for materials Consider the following T accounts:

Requirement

1. Use the T accounts to determine direct materials used and indirect materials used.

accounting for labor creative crystal ltd reports the following labor related transa 645177

Aug 30, 2021 | Uncategorized

Accounting for labor Creative Crystal, Ltd., reports the following labor related transactions at its plant in Portland, Oregon.

Requirement

1. Journalize the entry for the incurrence and assignment of these wages.

compute the april 30 inventory and the april cost of goods sold using the average co 645101

Aug 30, 2021 | Uncategorized

Amsterdam Company uses a periodic inventory system. For April, when the company sold 600 units, the following information is available.

Compute the April 30 inventory and the April cost of goods sold using the average cost method.

compute the value of the 2012 and 2013 inventories using the dollar value lifo metho 645103

Aug 30, 2021 | Uncategorized

Arna, Inc. uses the dollar value LIFO method of computing its inventory. Data for the past 3 years follow.

Instructions

Compute the value of the 2012 and 2013 inventories using the dollar value LIFO method.

based on the above information calculate the amount that should appear on garza rsqu 645105

Aug 30, 2021 | Uncategorized

(Inventoriable Costs) In your audit of Garza Company, you find that a physical inventory on December 31, 2012, showed merchandise with a cost of $441,000 was on hand at that date. You also discover the following items were all excluded from the $441,000.

1. Merchandise of $61,000 which is held by Garza on consignment. The consignor is the Bontemps Company.

2. Merchandise costing $33,000 which was shipped by Garza f.o.b. destination to a customer on December 31, 2012. The customer was expected to receive the merchandise on January 6, 2013.

3. Merchandise costing $46,000 which was shipped by Garza f.o.b. shipping point to a customer on December 29, 2012. The customer was scheduled to receive the merchandise on January 2, 2013.

4. Merchandise costing $73,000 shipped by a vendor f.o.b. destination on December 30, 2012, and received by Garza on January 4, 2013.

5. Merchandise costing $51,000 shipped by a vendor f.o.b. shipping point on December 31, 2012, and received by Garza on January 5, 2013.

Instructions

Based on the above information, calculate the amount that should appear on Garza’s balance sheet at December 31, 2012, for inventory.

assuming that each of the amounts is material state whether the merchandise should b 645106

Aug 30, 2021 | Uncategorized

(Inventoriable Costs) Assume that in an annual audit of Webber Inc. at December 31, 2012, you find the following transactions near the closing date.

1. A special machine, fabricated to order for a customer, was finished and specifically segregated in the back part of the shipping room on December 31, 2012. The customer was billed on that date and the machine excluded from inventory although it was shipped on January 4, 2013.

2. Merchandise costing $2,800 was received on January 3, 2013, and the related purchase invoice recorded January 5. The invoice showed the shipment was made on December 29, 2012, f.o.b. destination.

3. A packing case containing a product costing $3,400 was standing in the shipping room when the physical inventory was taken. It was not included in the inventory because it was marked “Hold for shipping instructions.” Your investigation revealed that the customer’s order was dated December 18, 2012, but that the case was shipped and the customer billed on January 10, 2013. The product was a stock item of your client.

4. Merchandise costing $720 was received on December 28, 2012, and the invoice was not recorded. You located it in the hands of the purchasing agent; it was marked “on consignment.”

5. Merchandise received on January 6, 2013, costing $680 was entered in the purchases journal on January 7, 2013. The invoice showed shipment was made f.o.b. supplier’s warehouse on December 31, 2012. Because it was not on hand at December 31, it was not included in inventory.

Instructions

Assuming that each of the amounts is material, state whether the merchandise should be included in the client’s inventory, and give your reason for your decision on each item.

prepare correcting general journal entries required at december 31 2012 assuming tha 645107

Aug 30, 2021 | Uncategorized

(Inventoriable Costs—Perpetual) Bradford Machine Company maintains a general ledger account for each class of inventory, debiting such accounts for increases during the period and crediting them for decreases. The transactions below relate to the Raw Materials inventory account, which is debited for materials purchased and credited for materials requisitioned for use.

1. An invoice for $8,100, terms f.o.b. destination, was received and entered January 2, 2013. The receiving report shows that the materials were received December 28, 2012.

2. Materials costing $7,300 were returned to the supplier on December 29, 2012, and were shipped f.o.b. shipping point. The return was entered on that date, even though the materials are not expected to reach the supplier’s place of business until January 6, 2013.

3. Materials costing $28,000, shipped f.o.b. destination, were not entered by December 31, 2012, “because they were in a railroad car on the company’s siding on that date and had not been unloaded.”

4. An invoice for $7,500, terms f.o.b. shipping point, was received and entered December 30, 2012. The receiving report shows that the materials were received January 4, 2013, and the bill of lading shows that they were shipped January 2, 2013.

5. Materials costing $19,800 were received December 30, 2012, but no entry was made for them because “they were ordered with a specified delivery of no earlier than January 10, 2013.”

Instructions

Prepare correcting general journal entries required at December 31, 2012, assuming that the books have not been closed.

prepare any correcting entries to adjust inventory to its proper amount at december 645108

Aug 30, 2021 | Uncategorized

(Inventoriable Costs—Error Adjustments) Werth Company asks you to review its December 31, 2012, inventory values and prepare the necessary adjustments to the books. The following information is given to you.

1. Werth uses the periodic method of recording inventory. A physical count reveals $234,890 of inventory on hand at December 31, 2012.

2. Not included in the physical count of inventory is $10,420 of merchandise purchased on December 15 from Browser. This merchandise was shipped f.o.b. shipping point on December 29 and arrived in January. The invoice arrived and was recorded on December 31.

3. Included in inventory is merchandise sold to Bubbey on December 30, f.o.b. destination. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale on account for $12,800 on December 31. The merchandise cost $7,350, and Bubbey received it on January 3.

4. Included in inventory was merchandise received from Dudley on December 31 with an invoice price of $15,630. The merchandise was shipped f.o.b. destination. The invoice, which has not yet arrived, has not been recorded.

5. Not included in inventory is $8,540 of merchandise purchased from Minsky Industries. This merchandise was received on December 31 after the inventory had been counted. The invoice was received and recorded on December 30.

6. Included in inventory was $10,438 of inventory held by Werth on consignment from Jackel Industries.

7. Included in inventory is merchandise sold to Sims f.o.b. shipping point. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale for $18,900 on December 31. The cost of this merchandise was $11,520, and Sims received the merchandise on January 5.

8. Excluded from inventory was a carton labeled “Please accept for credit.” This carton contains merchandise costing $1,500 which had been sold to a customer for $2,600. No entry had been made to the books to reflect the return, but none of the returned merchandise seemed damaged.

Instructions

(a) Determine the proper inventory balance for Werth Company at December 31, 2012.

(b) Prepare any correcting entries to adjust inventory to its proper amount at December 31, 2012. Assume the books have not been closed.

determining merchandise amounts periodic two or more items are omitted in each of t 645109

Aug 30, 2021 | Uncategorized

(Determining Merchandise Amounts—Periodic) Two or more items are omitted in each of the following tabulations of income statement data. Fill in the amounts that are missing.

assuming no purchase or payment transactions other than those given above prepare th 645110

Aug 30, 2021 | Uncategorized

(Purchases Recorded Net) Presented below are transactions related to Guillen, Inc. May 10 Purchased goods billed at $20,000 subject to cash discount terms of 2/10, n/60.

11 Purchased goods billed at $15,000 subject to terms of 1/15, n/30.

19 Paid invoice of May 10.

24 Purchased goods billed at $11,500 subject to cash discount terms of 2/10, n/30.

Instructions

(a) Prepare general journal entries for the transactions above under the assumption that purchases are to be recorded at net amounts after cash discounts and that discounts lost are to be treated as financial expense.

(b) Assuming no purchase or payment transactions other than those given above, prepare the adjusting entry required on May 31 if financial statements are to be prepared as of that date.

indicate the effect of each of these errors on working capital current ratio assume 645113

Aug 30, 2021 | Uncategorized

(Inventory Errors—Periodic) Thomason Company makes the following errors during the current year. (In all cases, assume ending inventory in the following year is correctly stated.)

1. Both ending inventory and purchases and related accounts payable are understated. (Assume this purchase was recorded and paid for in the following year.)

2. Ending inventory is overstated, but purchases and related accounts payable are recorded correctly.

3. Ending inventory is correct, but a purchase on account was not recorded. (Assume this purchase was recorded and paid for in the following year.)

Instructions

Indicate the effect of each of these errors on working capital, current ratio (assume that the current ratio is greater than 1), retained earnings, and net income for the current year and the subsequent year.

by what amount will income before taxes be adjusted up or down as a result of the co 645114

Aug 30, 2021 | Uncategorized

(Inventory Errors) At December 31, 2012, Dwight Corporation reported current assets of $390,000 and current liabilities of $200,000. The following items may have been recorded incorrectly. Dwight uses the periodic method.

1. Goods purchased costing $22,000 were shipped f.o.b. shipping point by a supplier on December 28. Dwight received and recorded the invoice on December 29, 2012, but the goods were not included in Dwight’s physical count of inventory because they were not received until January 4, 2013.

2. Goods purchased costing $20,000 were shipped f.o.b. destination by a supplier on December 26. Dwight received and recorded the invoice on December 31, but the goods were not included in Dwight’s 2012 physical count of inventory because they were not received until January 2, 2013.

3. Goods held on consignment from Kishi Company were included in Dwight’s December 31, 2012, physical count of inventory at $13,000.

4. Freight in of $3,000 was debited to advertising expense on December 28, 2012.

Instructions

(a) Compute the current ratio based on Dwight’s balance sheet.

(b) Recompute the current ratio after corrections are made.

(c) By what amount will income (before taxes) be adjusted up or down as a result of the corrections?

prepare a worksheet to show the adjusted net income figure for each of the 6 years a 645115

Aug 30, 2021 | Uncategorized

(Inventory Errors) The net income per books of Adamson Company was determined without knowledge of the errors indicated below.

Instructions

Prepare a worksheet to show the adjusted net income figure for each of the 6 years after taking into account the inventory errors.

prepare schedules to compute the ending inventory at march 31 2012 under each of the 645118

Aug 30, 2021 | Uncategorized

(FIFO, LIFO, Average Cost Inventory) Esplanade Company was formed on December 1, 2011. The following information is available from Esplanade’s inventory records for Product BAP.

A physical inventory on March 31, 2012, shows 1,500 units on hand.

Instructions

Prepare schedules to compute the ending inventory at March 31, 2012, under each of the following inventory methods.

(a) FIFO.

(b) LIFO.

(c) Weighted average.

assuming that the periodic inventory method is used compute the inventory cost at ju 645119

Aug 30, 2021 | Uncategorized

(Compute FIFO, LIFO, Average Cost—Periodic) Presented below is information related to radios for the Couples Company for the month of July.

Instructions

(a) Assuming that the periodic inventory method is used, compute the inventory cost at July 31 under each of the following cost flow assumptions.

(1) FIFO.

(2) LIFO.

(3) Weighted average.

(b) Answer the following questions.

(1) Which of the methods used above will yield the lowest figure for gross profit for the income statement? Explain why.

(2) Which of the methods used above will yield the lowest figure for ending inventory for the balance sheet? Explain why.

assuming that perpetual records are maintained and they tie into the general ledger 645120

Aug 30, 2021 | Uncategorized

(FIFO and LIFO—Periodic and Perpetual) The following is a record of Cannondale Company’s transactions for Boston Teapots for the month of May 2012.

Instructions

(a) Assuming that perpetual inventories are not maintained and that a physical count at the end of the month shows 510 units on hand, what is the cost of the ending inventory using (1) FIFO and (2) LIFO?

(b) Assuming that perpetual records are maintained and they tie into the general ledger, calculate the ending inventory using (1) FIFO and (2) LIFO.

prepare a condensed income statement for the year on both bases for comparative purp 645121

Aug 30, 2021 | Uncategorized

(FIFO and LIFO, Income Statement Presentation) The board of directors of Oksana Corporation is considering whether or not it should instruct the accounting department to change from a first in, firstout (FIFO) basis of pricing inventories to a last in, first out (LIFO) basis. The following information is available.

Instructions

Prepare a condensed income statement for the year on both bases for comparative purposes.

distinguish between product costs and period costs as they relate to inventory 645095

Aug 30, 2021 | Uncategorized

1. What is a product financing arrangement? How should product financing arrangements be reported in the financial statements?

2. Where, if at all, should the following items be classified on a balance sheet?

(a) Goods out on approval to customers.

(b) Goods in transit that were recently purchased f.o.b. destination.

(c) Land held by a realty firm for sale.

(d) Raw materials.

(e) Goods received on consignment.

(f) Manufacturing supplies

3. At the balance sheet date, Clarkson Company held title to goods in transit amounting to $214,000. This amount was omitted from the purchases figure for the year and also from the ending inventory. What is the effect of this omission on the net income for the year as calculated when the books are closed? What is the effect on the company’s financial position as shown in its balance sheet? Is materiality a factor in determining whether an adjustment for this item should be made?

4. Define “cost” as applied to the valuation of inventories.

5. Distinguish between product costs and period costs as they relate to inventory.

how might a company obtain a price index in order to apply dollar value lifo 645096

Aug 30, 2021 | Uncategorized

1. Ford Motor Co. is considering alternate methods of accounting for the cash discounts it takes when paying suppliers promptly. One method suggested was to report these discounts as financial income when payments are made. Comment on the propriety of this approach.

2. Zonker Inc. purchases 500 units of an item at an invoice cost of $30,000. What is the cost per unit? If the goods are shipped f.o.b. shipping point and the freight bill was $1,500, what is the cost per unit if Zonker Inc. pays the freight charges? If these items were bought on 2/10, n/30 terms and the invoice and the freight bill were paid within the 10 day period, what would be the cost per unit?

3. Specific identification is sometimes said to be the ideal method of assigning cost to inventory and to cost of goods sold. Briefly indicate the arguments for and against this method of inventory valuation.

4. FIFO, weighted average, and LIFO methods are often used instead of specific identification for inventory valuation purposes. Compare these methods with the specific identification method, discussing the theoretical propriety of each method in the determination of income and asset valuation.

5. How might a company obtain a price index in order to apply dollar value LIFO?

what is the dollar value method of lifo inventory valuation what advantage does the 645097

Aug 30, 2021 | Uncategorized

1. Describe the LIFO double extension method. Using the following information, compute the index at December 31, 2012, applying the double extension method to a LIFO pool consisting of 25,500 units of product A and 10,350 units of product B. The base year cost of product A is $10.20 and of product B is $37.00. The price at December 31, 2012, for product A is $21.00 and for product B is $45.60. (Round to two decimal places.)

2. As compared with the FIFO method of costing inventories, does the LIFO method result in a larger or smaller net income in a period of rising prices? What is the comparative effect on net income in a period of falling prices?

3. What is the dollar value method of LIFO inventory valuation? What advantage does the dollar value method have over the specific goods approach of LIFO inventory valuation? Why will the traditional LIFO inventory costing method and the dollar value LIFO inventory costing method produce different inventory valuations if the composition of the inventory base changes?

prepare the current assets section of the december 31 balance sheet 645099

Aug 30, 2021 | Uncategorized

Included in the December 31 trial balance of Rivera Company are the following assets.

Prepare the current assets section of the December 31 balance sheet.

determine the corrected amounts for 2012 cost of goods sold and december 31 2012 ret 645100

Aug 30, 2021 | Uncategorized

1. Matlock Company uses a perpetual inventory system. Its beginning inventory consists of 50 units that cost $34 each. During June, the company purchased 150 units at $34 each, returned 6 units for credit, and sold 125 units at $50 each. Journalize the June transactions.

2. Stallman Company took a physical inventory on December 31 and determined that goods costing $200,000 were on hand. Not included in the physical count were $25,000 of goods purchased from Pelzer Corporation, f.o.b. shipping point, and $22,000 of goods sold to Alvarez Company for $30,000, f.o.b. destination. Both the Pelzer purchase and the Alvarez sale were in transit at year end. What amount should Stallman report as its December 31 inventory?

3. Bienvenu Enterprises reported cost of goods sold for 2012 of $1,400,000 and retained earnings of $5,200,000 at December 31, 2012. Bienvenu later discovered that its ending inventories at December 31, 2011 and 2012, were overstated by $110,000 and $35,000, respectively. Determine the corrected amounts for 2012 cost of goods sold and December 31, 2012, retained earnings.

prepare all journal entries necessary to reflect the transactions above 645057

Aug 30, 2021 | Uncategorized

(Journalize Various Accounts Receivable Transactions) The balance sheet of Starsky Company at December 31, 2012, includes the following.

Transactions in 2012 include the following.

1. Accounts receivable of $138,000 were collected including accounts of $60,000 on which 2% sales discounts were allowed.

2. $5,300 was received in payment of an account which was written off the books as worthless in 2012.

3. Customer accounts of $17,500 were written off during the year.

4. At year end, Allowance for Doubtful Accounts was estimated to need a balance of $20,000. This estimate is based on an analysis of aged accounts receivable.

Instructions

Prepare all journal entries necessary to reflect the transactions above.

prepare a schedule showing the income statement effects for the year ended december 645062

Aug 30, 2021 | Uncategorized

(Income Effects of Receivables Transactions) Sandburg Company requires additional cash for its business. Sandburg has decided to use its accounts receivable to raise the additional cash and has asked you to determine the income statement effects of the following contemplated transactions.

1. On July 1, 2012, Sandburg assigned $400,000 of accounts receivable to Keller Finance Company. Sandburg received an advance from Keller of 80% of the assigned accounts receivable less a commission of 3% on the advance. Prior to December 31, 2012, Sandburg collected $220,000 on the assigned accounts receivable, and remitted $232,720 to Keller, $12,720 of which represented interest on the advance from Keller.

2. On December 1, 2012, Sandburg sold $300,000 of net accounts receivable to Wunsch Company for $270,000. The receivables were sold outright on a without recourse basis.

3. On December 31, 2012, an advance of $120,000 was received from First Bank by pledging $160,000 of Sandburg’s accounts receivable. Sandburg’s first payment to First Bank is due on January 30, 2013.

Instructions

Prepare a schedule showing the income statement effects for the year ended December 31, 2012, as a result of the above facts.

prepare a bank reconciliation dated may 31 2012 proceeding to a correct cash balance 645063

Aug 30, 2021 | Uncategorized

(Petty Cash, Bank Reconciliation) Bill Jovi is reviewing the cash accounting for Nottleman, Inc., a local mailing service. Jovi’s review will focus on the petty cash account and the bank reconciliation for the month ended May 31, 2012. He has collected the following information from Nottleman’s bookkeeper for this task.

Petty Cash

1. The petty cash fund was established on May 10, 2012, in the amount of $250.

2. Expenditures from the fund by the custodian as of May 31, 2012, were evidenced by approved receipts for the following.

On May 31, 2012, the petty cash fund was replenished and increased to $300; currency and coin in the fund at that time totaled $26.40.

Bank Reconciliation

Deposits in transit are determined to be $3,000, and checks outstanding at May 31 total $850. Cash on hand (besides petty cash) at May 31, 2012, is $246.

Instructions

(a) Prepare the journal entries to record the transactions related to the petty cash fund for May.

(b) Prepare a bank reconciliation dated May 31, 2012, proceeding to a correct cash balance, and prepare the journal entries necessary to make the books correct and complete.

(c) What amount of cash should be reported in the May 31, 2012, balance sheet?

prepare a bank reconciliation dated june 30 2012 proceeding to a correct cash balanc 645064

Aug 30, 2021 | Uncategorized

(Bank Reconciliation and Adjusting Entries) The cash account of Aguilar Co. showed a ledger balance of $3,969.85 on June 30, 2012. The bank statement as of that date showed a balance of $4,150. Upon comparing the statement with the cash records, the following facts were determined.

1. There were bank service charges for June of $25.

2. A bank memo stated that Bao Dai’s note for $1,200 and interest of $36 had been collected on June 29, and the bank had made a charge of $5.50 on the collection. (No entry had been made on Aguilar’s books when Bao Dai’s note was sent to the bank for collection.)

3. Receipts for June 30 for $3,390 were not deposited until July 2.

4. Checks outstanding on June 30 totaled $2,136.05.

5. The bank had charged the Aguilar Co.’s account for a customer’s uncollectible check amounting to $253.20 on June 29.

6. A customer’s check for $90 had been entered as $60 in the cash receipts journal by Aguilar on June 15.

7. Check no. 742 in the amount of $491 had been entered in the cash journal as $419, and check no. 747 in the amount of $58.20 had been entered as $582. Both checks had been issued to pay for purchases of equipment.

Instructions

(a) Prepare a bank reconciliation dated June 30, 2012, proceeding to a correct cash balance.

(b) Prepare any entries necessary to make the books correct and complete.

prepare a bank reconciliation to the correct balance at november 30 for haselh of in 645065

Aug 30, 2021 | Uncategorized

(Bank Reconciliation and Adjusting Entries) Presented below is information related to Haselhof Inc.

Balance per books at October 31, $41,847.85; receipts $173,523.91; disbursements $164,893.54. Balance per bank statement November 30, $56,274.20.

The following checks were outstanding at November 30.

Included with the November bank statement and not recorded by the company were a bank debit memo for $27.40 covering bank charges for the month, a debit memo for $372.13 for a customer’s check returned and marked NSF, and a credit memo for $1,400 representing bond interest collected by the bank in the name of Haselhof Inc. Cash on hand at November 30 recorded and awaiting deposit amounted to $1,915.40.

Instructions

(a) Prepare a bank reconciliation (to the correct balance) at November 30, for Haselh of Inc. from the information above.

(b) Prepare any journal entries required to adjust the cash account at November 30.

compute the loss national organization bank will suffer from botosan rsquo s financi 645066

Aug 30, 2021 | Uncategorized

(Loan Impairment Entries) On January 1, 2012, Botosan Company issued a $1,200,000, 5 year, zero interest bearing note to National Organization Bank. The note was issued to yield 8% annual interest. Unfortunately, during 2013 Botosan fell into financial trouble due to increased competition. After reviewing all available evidence on December 31, 2013, National Organization Bank decided that the loan was impaired. Botosan will probably pay back only $800,000 of the principal at maturity.

Instructions

(a) Prepare journal entries for both Botosan Company and National Organization Bank to record the issuance of the note on January 1, 2012. (Round to the nearest $10.)

(b) Assuming that both Botosan Company and National Organization Bank use the effective interest method to amortize the discount, prepare the amortization schedule for the note.

(c) Under what circumstances can National Organization Bank consider Botosan’s note to be impaired?

(d) Compute the loss National Organization Bank will suffer from Botosan’s financial distress on December 31, 2013. What journal entries should be made to record this loss?

how should kimmel account for the note receivable and the related interest on decemb 645068

Aug 30, 2021 | Uncategorized

(Various Receivable Accounting Issues) Kimmel Company uses the net method of accounting for sales discounts. Kimmel also offers trade discounts to various groups of buyers.

On August 1, 2012, Kimmel sold some accounts receivable on a without recourse basis. Kimmel incurred a finance charge.

Kimmel also has some notes receivable bearing an appropriate rate of interest. The principal and total interest are due at maturity. The notes were received on October 1, 2012, and mature on September 30, 2014.

Kimmel’s operating cycle is less than one year.

Instructions

(a) (1) Using the net method, how should Kimmel account for the sales discounts at the date of sale?

What is the rationale for the amount recorded as sales under the net method?

(2) Using the net method, what is the effect on Kimmel’s sales revenues and net income when customers do not take the sales discounts?

(b) What is the effect of trade discounts on sales revenues and accounts receivable? Why?

(c) How should Kimmel account for the accounts receivable factored on August 1, 2012? Why?

(d) How should Kimmel account for the note receivable and the related interest on December 31, 2012? Why?

which of the foregoing methods would you recommend to mr pierce in regard to 1 allow 645069

Aug 30, 2021 | Uncategorized

(Bad Debt Reporting Issues) Clark Pierce conducts a wholesale merchandising business that sells approximately 5,000 items per month with a total monthly average sales value of $250,000. Its annual bad debt rate has been approximately 1½% of sales. In recent discussions with his bookkeeper, Mr. Pierce has become confused by all the alternatives apparently available in handling the Allowance for Doubtful Accounts balance. The following information has been presented to Pierce.

1. An allowance can be set up (a) on the basis of a percentage of sales or (b) on the basis of a valuation of all past due or otherwise questionable accounts receivable. Those considered uncollectible can be charged to such allowance at the close of the accounting period, or specific items can be charged off directly against (1) Gross Sales or to (2) Bad Debt Expense in the year in which they are determined to be uncollectible.

2. Collection agency and legal fees, and so on, incurred in connection with the attempted recovery of bad debts can be charged to (a) Bad Debt Expense, (b) Allowance for Doubtful Accounts, (c) Legal Expense, or (d) Administrative Expense.

3. Debts previously written off in whole or in part but currently recovered can be credited to (a) Other Revenue, (b) Bad Debt Expense, or (c) Allowance for Doubtful Accounts.

Instructions

Which of the foregoing methods would you recommend to Mr. Pierce in regard to (1) allowances and charge offs, (2) collection expenses, and (3) recoveries? State briefly and clearly the reasons supporting your recommendations.

how should wallace company report the allowance for doubtful accounts on its balance 645070

Aug 30, 2021 | Uncategorized

(Basic Note and Accounts Receivable Transactions)

Part 1

On July 1, 2012, Wallace Company, a calendar year company, sold special order merchandise on credit and received in return an interest bearing note receivable from the customer. Wallace Company will receive interest at the prevailing rate for a note of this type. Both the principal and interest are due in one lump sum on June 30, 2013.

Instructions

When should Wallace Company report interest revenue from the note receivable? Discuss the rationale for your answer.

Part 2

On December 31, 2012, Wallace Company had significant amounts of accounts receivable as a result of credit sales to its customers. Wallace uses the allowance method based on credit sales to estimate bad debts. Past experience indicates that 2% of credit sales normally will not be collected. This pattern is expected to continue.

Instructions

(a) Discuss the rationale for using the allowance method based on credit sales to estimate bad debts.

Contrast this method with the allowance method based on the balance in the trade receivables accounts.

(b) How should Wallace Company report the allowance for doubtful accounts on its balance sheet at December 31, 2012? Also, describe the alternatives, if any, for presentation of bad debt expense in Wallace Company’s 2012 income statement.

compute the amount of the year end adjustment necessary to bring allowance for doubt 645071

Aug 30, 2021 | Uncategorized

(Bad Debt Reporting Issues) Valasquez Company sells office equipment and supplies to many organizations in the city and surrounding area on contract terms of 2/10, n/30. In the past, over 75% of the credit customers have taken advantage of the discount by paying within 10 days of the invoice date.

The number of customers taking the full 30 days to pay has increased within the last year. Current indications are that less than 60% of the customers are now taking the discount. Bad debts as a percentage of gross credit sales have risen from the 1.5% provided in past years to about 4% in the current year.

The controller has responded to a request for more information on the deterioration in collections of accounts receivable with the report reproduced below.

Instructions

(a) Prepare an accounts receivable aging schedule for Valasquez Company using the age categories identified in the controller’s report to the finance committee showing:

(1) The amount of accounts receivable outstanding for each age category and in total.

(2) The estimated amount that is uncollectible for each category and in total.

(b) Compute the amount of the year end adjustment necessary to bring Allowance for Doubtful Accounts to the balance indicated by the age analysis. Then prepare the necessary journal entry to adjust the accounting records.

(c) In a recessionary environment with tight credit and high interest rates:

(1) Identify steps Valasquez Company might consider to improve the accounts receivable situation.

(2) Then evaluate each step identified in terms of the risks and costs involved.

how should corrs account for the sale without recourse of a february 1 2012 note rec 645072

Aug 30, 2021 | Uncategorized

Corrs Wholesalers Co. sells industrial equipment for a standard 3 year note receivable. Revenue is recognized at time of sale. Each note is secured by a lien on the equipment and has a face amount equal to the equipment’s list price. Each note’s stated interest rate is below the customer’s market rate at date of sale. All notes are to be collected in three equal annual installments beginning one year after sale. Some of the notes are subsequently sold to a bank with recourse, some are subsequently sold without recourse, and some are retained by Corrs. At year end, Corrs evaluates all outstanding notes receivable and provides for estimated losses arising from defaults.

Instructions

(a) What is the appropriate valuation basis for Corrs’s notes receivable at the date it sells equipment?

(b) How should Corrs account for the sale, without recourse, of a February 1, 2012, note receivable sold on May 1, 2012? Why is it appropriate to account for it in this way?

(c) At December 31, 2012, how should Corrs measure and account for the impact of estimated losses resulting from notes receivable that it

(1) Retained and did not sell?

(2) Sold to bank with recourse?

what are the effects of the sale of the note receivable with recourse on rolen rsquo 645073

Aug 30, 2021 | Uncategorized

(Zero Interest Bearing Note Receivable) On September 30, 2011, Rolen Machinery Co. sold a machine and accepted the customer’s zero interest bearing note. Rolen normally makes sales on a cash basis. Since the machine was unique, its sales price was not determinable using Rolen’s normal pricing practices. After receiving the first of two equal annual installments on September 30, 2012, Rolen immediately sold the note with recourse. On October 9, 2013, Rolen received notice that the note was dishonored, and it paid all amounts due. At all times prior to default, the note was reasonably expected to be paid in full.

Instructions

(a) (1) How should Rolen determine the sales price of the machine?

(2) How should Rolen report the effects of the zero interest bearing note on its income statement for the year ended December 31, 2011? Why is this accounting presentation appropriate?

(b) What are the effects of the sale of the note receivable with recourse on Rolen’s income statement for the year ended December 31, 2012, and its balance sheet at December 31, 2012?

(c) How should Rolen account for the effects of the note being dishonored?

how should moresan account for the trade accounts receivable factored on november 1 645074

Aug 30, 2021 | Uncategorized

(Reporting of Notes Receivable, Interest, and Sale of Receivables) On July 1, 2012, Moresan Company sold special order merchandise on credit and received in return an interest bearing note receivable from the customer. Moresan will receive interest at the prevailing rate for a note of this type. Both the principal and interest are due in one lump sum on June 30, 2013.

On September 1, 2012, Moresan sold special order merchandise on credit and received in return a zero interest bearing note receivable from the customer. The prevailing rate of interest for a note of this type is determinable. The note receivable is due in one lump sum on August 31, 2014.

Moresan also has significant amounts of trade accounts receivable as a result of credit sales to its customers. On October 1, 2012, some trade accounts receivable were assigned to Indigo Finance Company on a non notification (Moresan handles collections) basis for an advance of 75% of their amount at an interest charge of 8% on the balance outstanding.

On November 1, 2012, other trade accounts receivable were sold on a without recourse basis. The factor withheld 5% of the trade accounts receivable factored as protection against sales returns and allowances and charged a finance charge of 3%.

Instructions

(a) How should Moresan determine the interest revenue for 2012 on the:

(1) Interest bearing note receivable? Why?

(2) Zero interest bearing note receivable? Why?

(b) How should Moresan report the interest bearing note receivable and the zero interest earing note receivable on its balance sheet at December 31, 2012?

(c) How should Moresan account for subsequent collections on the trade accounts receivable assigned on October 1, 2012, and the payments to Indigo Finance? Why?

(d) How should Moresan account for the trade accounts receivable factored on November 1, 2012? Why?

assuming all sales were made on account compute the ending accounts receivable balan 645076

Aug 30, 2021 | Uncategorized

(Receivables Management) As the manager of the accounts receivable department for Beavis Leather Goods, Ltd., you recently noticed that Kelly Collins, your accounts receivable clerk who is paid $1,200 per month, has been wearing unusually tasteful and expensive clothing. (This is Beavis’s first year in business.) This morning, Collins drove up to work in a brand new Lexus.

Naturally suspicious by nature, you decide to test the accuracy of the accounts receivable balance of $192,000 as shown in the ledger. The following information is available for your first year (precisely 9 months ended September 30, 2012) in business.

Instructions

Assuming all sales were made on account, compute the ending accounts receivable balance that should appear in the ledger, noting any apparent shortage. Then, draft a memo dated October 3, 2012, to Mark Price, the branch manager, explaining the facts in this situation. Remember that this problem is serious, and you do not want to make hasty accusations.

what were the cash and cash equivalents reported by coca cola and pepsico at the end 645079

Aug 30, 2021 | Uncategorized

Comparative Analysis Case

The Coca Cola Company and PepsiCo, Inc.

Instructions

(a) What were the cash and cash equivalents reported by Coca Cola and PepsiCo at the end of 2009? What does each company classify as cash equivalents?

(b) What were the accounts receivable (net) for Coca Cola and PepsiCo at the end of 2009? Which company reports the greater allowance for doubtful accounts receivable (amount and percentage of gross receivable) at the end of 2009?

(c) Assuming that all “net operating revenues” (Coca Cola) and all “net sales” (PepsiCo) were net credit sales, compute the accounts receivable turnover ratio for 2009 for Coca Cola and PepsiCo; also compute the days outstanding for receivables. What is your evaluation of the difference?

what are compensating balance arrangements and how should they be reported in financ 645080

Aug 30, 2021 | Uncategorized

Financial Statement Analysis Cases

Case I Occidental Petroleum Corporation

Occidental Petroleum Corporation reported the following information in a recent annual report.

Instructions

(a) What items other than coin and currency may be included in “cash”?

(b) What items may be included in “cash equivalents”?

(c) What are compensating balance arrangements, and how should they be reported in financial statements?

(d) What are the possible differences between cash equivalents and short term (temporary) investments?

(e) Assuming that the sale agreement meets the criteria for sale accounting, cash proceeds were $345 million, the carrying value of the receivables sold was $360 million, and the fair value of the recourse liability was $15 million, what was the effect on income from the sale of receivables?

(f) Briefly discuss the impact of the transaction in (e) on Occidental’s liquidity.

compute microsoft s accounts receivable turnover ratio for 2009 and discuss your res 645081

Aug 30, 2021 | Uncategorized

Case: Microsoft Corporation

Microsoft is the leading developer of software in the world. To continue to be successful Microsoft must generate new products, which requires significant amounts of cash. Shown below is the current asset and current liability information from Microsoft’s June 30, 2009, balance sheet (in millions). Following the Microsoft data is the current asset and current liability information for Oracle (in millions), another major software developer.

Part 1 (Cash and Cash Equivalents)

Instructions

(a) What is the definition of a cash equivalent? Give some examples of cash equivalents. How do cash equivalents differ from other types of short term investments?

(b) Calculate (1) the current ratio and (2) working capital for each company for 2009 and discuss your results.

(c) Is it possible to have too many liquid assets?

Part 2 (Accounts Receivables)

Microsoft provided the following disclosure related to its accounts receivable.

Instructions

(a) Compute Microsoft’s accounts receivable turnover ratio for 2009 and discuss your results. Microsoft had sales revenue of $58,437 million in 2009.

(b) Reconstruct the summary journal entries for 2009 based on the information in the disclosure.

(c) Briefly discuss how the accounting for bad debts affects the analysis in Part 2 (a).

what is the conceptual basis for recording bad debt expense based on the percentage 645082

Aug 30, 2021 | Uncategorized

Accounting, Analysis, and Principles

The Flatiron Pub provides catering services to local businesses. The following information was available for The Flatiron for the years ended December 31, 2011 and 2012.

Flatiron management is preparing for a meeting with its bank concerning renewal of a loan and has collected the following information related to the above balances.

1. The cash reported at December 31, 2012, refl ects the following items: petty cash $1,575 and postage stamps $110. The Other current assets balance at December 31, 2012, includes the checking account balance of $4,000.

2. On November 30, 2012, Flatiron agreed to accept a 6 month, $5,000 note bearing 12% interest, payable at maturity, from a major client in settlement of a $5,000 bill. The above balances do not reflect this transaction.

3. Flatiron factored some accounts receivable at the end of 2012. It transferred accounts totaling $10,000 to Final Factor, Inc. with recourse. Final Factor will receive the collections from Flatiron’s customers and will retain 2% of the balances. Final Factor assesses Flatiron a finance charge of 3% on this transfer. The fair value of the recourse liability is $400. However, management has determined that the amount due from the factor and the fair value of the resource obligation have not been recorded, and neither are included in the balances above.

4. Flatiron charged off uncollectible accounts with balances of $1,600. On the basis of the latest available information, the 2012 provision for bad debts is estimated to be 2.5% of accounts receivable.

Accounting

(a) Based on the above transactions, determine the balance for (1) Accounts Receivable and

(2) Allowance for Doubtful Accounts at December 31, 2012.

(b) Prepare the current assets section of The Flatiron’s balance sheet at December 31, 2012.

Analysis

(a) Compute Flatiron’s current ratio and accounts receivable turnover ratio for December 31, 2012. Use these measures to analyze Flatiron’s liquidity. The accounts receivable turnover ratio in 2011 was 4.37.

(b) Discuss how the analysis you did above of Flatiron’s liquidity would be affected if Flatiron had transferred the receivables in a secured borrowing transaction.

Principles

What is the conceptual basis for recording bad debt expense based on the percentage of receivables at December 31, 2012?

identify relevant codification section that addresses transfers of receivables 645083

Aug 30, 2021 | Uncategorized

BRIDGE TO THE PROFESSION

Professional Research: FASB Codification

As the new staff person in your company’s treasury department, you have been asked to conduct research related to a proposed transfer of receivables. Your supervisor wants the authoritative sources for the following items that are discussed in the securitization agreement.

Instructions

Prepare responses to the following. Provide Codification references for your responses.

(a) Identify relevant Codification section that addresses transfers of receivables.

(b) What are the objectives for reporting transfers of receivables?

(c) Provide definitions for the following:

(1) Transfer.

(2) Recourse.

(3) Collateral.

(d) Provide other examples (besides recourse and collateral) that qualify as continuing involvement.

prepare the entry if any to record the impairment of the loan on december 31 2014 by 645088

Aug 30, 2021 | Uncategorized

1. Briefly describe the impairment evaluation process and assessment of receivables on an individual or collective basis.

2. What are some steps taken by both the FASB and IASB to move to fair value measurement for financial instruments? In what ways have some of the approaches differed?

3. On December 31, 2012, Firth Company borrowed $62,092 from Paris Bank, signing a 5 year, $100,000 zero internet bearing note. The note was issued to yield 10% interest. Unfortunately, during 2012, Firth began to experience financial diffi culty. As a result, at December 31, 2012, Paris Bank determined that it was probable that it would collect only $75,000 at maturity. The market rate of interest on loans of this nature is now 11%.

Instructions

(a) Prepare the entry (if any) to record the impairment of the loan on December 31, 2014, by Paris Bank.

(b) Prepare the entry on March 31, 2015, if Paris learns that Firth will be able to repay the loan under the original terms.

compute the amount of cash and cash equivalents to be reported on weinstein co rsquo 645025

Aug 30, 2021 | Uncategorized

(Determining Cash Balance) The controller for Weinstein Co. is attempting to determine the amount of cash and cash equivalents to be reported on its December 31, 2012, balance sheet. The following information is provided.

1. Commercial savings account of $600,000 and a commercial checking account balance of $800,000 are held at First National Bank of Olathe.

2. Money market fund account held at Volonte Co. (a mutual fund organization) permits Weinstein to write checks on this balance, $5,000,000.

3. Travel advances of $180,000 for executive travel for the first quarter of next year (employee to reimburse through salary reduction).

4. A separate cash fund in the amount of $1,500,000 is restricted for the retirement of long term debt.

5. Petty cash fund of $1,000.

6. An I.O.U. from Marianne Koch, a company customer, in the amount of $150,000.

7. A bank overdraft of $110,000 has occurred at one of the banks the company uses to deposit its cash receipts. At the present time, the company has no deposits at this bank.

8. The company has two certificates of deposit, each totaling $500,000. These CDs have a maturity of 120 days.

9. Weinstein has received a check that is dated January 12, 2013, in the amount of $125,000.

10. Weinstein has agreed to maintain a cash balance of $500,000 at all times at First National Bank of Olathe to ensure future credit availability.

11. Weinstein has purchased $2,100,000 of commercial paper of Sergio Leone Co. which is due in 60 days.

12. Currency and coin on hand amounted to $7,700.

Instructions

(a) Compute the amount of cash and cash equivalents to be reported on Weinstein Co.’s balance sheet at December 31, 2012.

(b) Indicate the proper reporting for items that are not reported as cash on the December 31, 2012, balance sheet.

for each individual situation determine the amount that should be reported as cash i 645026

Aug 30, 2021 | Uncategorized

(Determine Cash Balance) Presented below are a number of independent situations.

Instructions

For each individual situation, determine the amount that should be reported as cash. If the item(s) is not reported as cash, explain the rationale.

1. Checking account balance $925,000; certificate of deposit $1,400,000; cash advance to subsidiary of $980,000; utility deposit paid to gas company $180.

2. Checking account balance $500,000; an overdraft in special checking account at same bank as normal checking account of $17,000; cash held in a bond sinking fund $200,000; petty cash fund $300; coins and currency on hand $1,350.

3. Checking account balance $590,000; postdated check from a customer $11,000; cash restricted due to maintaining compensating balance requirement of $100,000; certified check from customer $9,800; postage stamps on hand $620.

4. Checking account balance at bank $42,000; money market balance at mutual fund (has checking privileges) $48,000; NSF check received from customer $800.

5. Checking account balance $700,000; cash restricted for future plant expansion $500,000; short term Treasury bills $180,000; cash advance received from customer $900 (not included in checking account balance); cash advance of $7,000 to company executive, payable on demand; refundable deposit of $26,000 paid to federal government to guarantee performance on construction contract.

compute an estimate of the ending balance of accounts receivable from customers that 645028

Aug 30, 2021 | Uncategorized

(Determine Ending Accounts Receivable) Your accounts receivable clerk, Mary Herman, to whom you pay a salary of $1,500 per month, has just purchased a new Audi. You decided to test the accuracy of the accounts receivable balance of $117,000 as shown in the ledger. The following information is available for your first year in business.

Instructions

Compute an estimate of the ending balance of accounts receivable from customers that should appear in the ledger and any apparent shortages. Assume that all sales are made on account.

prepare the journal entry to record bad debt expense assuming sandel company estimat 645031

Aug 30, 2021 | Uncategorized

(Recording Bad Debts) Sandel Company reports the following financial information before adjustments.

Instructions

Prepare the journal entry to record bad debt expense assuming Sandel Company estimates bad debts at (a) 1% of net sales and (b) 5% of accounts receivable.

give the entry for estimated bad debts assuming that the allowance is to provide for 645033

Aug 30, 2021 | Uncategorized

(Computing Bad Debts and Preparing Journal Entries) The trial balance before adjustment of Estefan Inc. shows the following balances.

Instructions

Give the entry for estimated bad debts assuming that the allowance is to provide for doubtful accounts on the basis of (a) 4% of gross accounts receivable and (b) 1% of net sales.

age the balance and specify any items that apparently require particular attention a 645035

Aug 30, 2021 | Uncategorized

(Bad Debts—Aging) Puckett, Inc. includes the following account among its trade receivables.

Instructions

Age the balance and specify any items that apparently require particular attention at year end.

prepare all necessary entries in general journal form for sanford corp 645036

Aug 30, 2021 | Uncategorized

(Journalizing Various Receivable Transactions) Presented below is information related to Sanford Corp.

Instructions

Prepare all necessary entries in general journal form for Sanford Corp.

prepare the journal entry to record this payment 645037

Aug 30, 2021 | Uncategorized

(Assigning Accounts Receivable) On April 1, 2012, Prince Company assigns $500,000 of its accounts receivable to the Third National Bank as collateral for a $300,000 loan due July 1, 2012. The assignment agreement calls for Prince Company to continue to collect the receivables. Third National Bank assesses a finance charge of 2% of the accounts receivable, and interest on the loan is 10% (a realistic rate of interest for a note of this type).

Instructions

(a) Prepare the April 1, 2012, journal entry for Prince Company.

(b) Prepare the journal entry for Prince’s collection of $350,000 of the accounts receivable during the period from April 1, 2012, through June 30, 2012.

(c) On July 1, 2012, Prince paid Third National all that was due from the loan it secured on April 1, 2012.

Prepare the journal entry to record this payment.

using the data above give the journal entries required to record each of the followi 645038

Aug 30, 2021 | Uncategorized

(Journalizing Various Receivable Transactions) The trial balance before adjustment for Sinatra Company shows the following balances.

Instructions

Using the data above, give the journal entries required to record each of the following cases. (Each situation is independent.)

1. To obtain additional cash, Sinatra factors without recourse $20,000 of accounts receivable with Stills Finance. The finance charge is 10% of the amount factored.

2. To obtain a one year loan of $55,000, Sinatra assigns $65,000 of specific receivable accounts to Ruddin Financial. The finance charge is 8% of the loan; the cash is received and the accounts turned over to Ruddin Financial.

3. The company wants to maintain Allowance for Doubtful Accounts at 5% of gross accounts receivable.

4. The company wishes to increase the allowance account by 1½% of net sales.

prepare the journal entry on july 1 2012 for mays finance corporation to record the 645041

Aug 30, 2021 | Uncategorized

(Transfer of Receivables without Recourse) SEK Corp. factors $400,000 of accounts receivable with Mays Finance Corporation on a without recourse basis on July 1, 2012. The receivables records are transferred to Mays Finance, which will receive the collections. Mays Finance assesses a finance charge of 1½% of the amount of accounts receivable and retains an amount equal to 4% of accounts receivable to cover sales discounts, returns, and allowances. The transaction is to be recorded as a sale.

Instructions

(a) Prepare the journal entry on July 1, 2012, for SEK Corp. to record the sale of receivables without recourse.

(b) Prepare the journal entry on July 1, 2012, for Mays Finance Corporation to record the purchase of receivables without recourse.

record the two journal entries that should be recorded by rentoul inc for the sales 645042

Aug 30, 2021 | Uncategorized

On July 1, 2012, Rentoul Inc. made two sales.

1. It sold land having a fair value of $900,000 in exchange for a 4 year zero interest bearing promissory note in the face amount of $1,416,163. The land is carried on Rentoul’s books at a cost of $590,000.

2. It rendered services in exchange for a 3%, 8 year promissory note having a face value of $400,000 (interest payable annually).

Rentoul Inc. recently had to pay 8% interest for money that it borrowed from British National Bank. The customers in these two transactions have credit ratings that require them to borrow money at 12% interest.

Instructions

Record the two journal entries that should be recorded by Rentoul Inc. for the sales transactions above that took place on July 1, 2012.

prepare the journal entries to record transactions related to petty cash for the mon 645046

Aug 30, 2021 | Uncategorized

(Petty Cash) McMann, Inc. decided to establish a petty cash fund to help ensure internal control over its small cash expenditures. The following information is available for the month of April.

1. On April 1, it established a petty cash fund in the amount of $200.

2. A summary of the petty cash expenditures made by the petty cash custodian as of April 10 is as follows.

The petty cash fund was replenished on April 10. The balance in the fund was $12.

3. The petty cash fund balance was increased $100 to $300 on April 20.

Instructions

Prepare the journal entries to record transactions related to petty cash for the month of April.

prepare the journal entry to record the reimbursement of the petty cash fund 645047

Aug 30, 2021 | Uncategorized

(Petty Cash) The petty cash fund of Teasdale’s Auto Repair Service, a sole proprietorship, contains the following.

The general ledger account Petty Cash has a balance of $300.

Instructions

Prepare the journal entry to record the reimbursement of the petty cash fund.

prepare a bank reconciliation going from balance per bank and balance per book to co 645048

Aug 30, 2021 | Uncategorized

(Bank Reconciliation and Adjusting Entries) Kipling Company deposits all receipts and makes all payments by check. The following information is available from the cash records.

Instructions

(a) Prepare a bank reconciliation going from balance per bank and balance per book to correct cash balance.

(b) Prepare the general journal entry or entries to correct the Cash account.

what amount of cash should be reported in the august 31 balance sheet 645049

Aug 30, 2021 | Uncategorized

(Bank Reconciliation and Adjusting Entries) Aragon Company has just received the August 31, 2012, bank statement, which is summarized below.

The general ledger Cash account contained the following entries for the month of August.

Deposits in transit at August 31 are $3,800, and checks outstanding at August 31 total $1,550. Cash on hand at August 31 is $310. The bookkeeper improperly entered one check in the books at $146.50 which was written for $164.50 for supplies (expense); it cleared the bank during the month of August.

Instructions

(a) Prepare a bank reconciliation dated August 31, 2012, proceeding to a correct balance.

(b) Prepare any entries necessary to make the books correct and complete.

(c) What amount of cash should be reported in the August 31 balance sheet?

determine the loss on impairment that sauk city bank should recognize on december 31 645051

Aug 30, 2021 | Uncategorized

(Impairments) On December 31, 2012, Conchita Martinez Company signed a $1,000,000 note to Sauk City Bank. The market interest rate at that time was 12%. The stated interest rate on the note was 10%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Conchita Martinez’s financial situation worsened. On December 31, 2014, Sauk City Bank determined that it was probable that the company would pay back only $600,000 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $1,000,000 loan.

Instructions

(a) Determine the amount of cash Conchita Martinez received from the loan on December 31, 2012.

(b) Prepare a note amortization schedule for Sauk City Bank up to December 31, 2014.

(c) Determine the loss on impairment that Sauk City Bank should recognize on December 31, 2014.

prepare any entries you consider necessary to correct francis rsquo s accounts at de 645052

Aug 30, 2021 | Uncategorized

(Determine Proper Cash Balance) Francis Equipment Co. closes its books regularly on December 31, but at the end of 2012 it held its cash book open so that a more favorable balance sheet could be prepared for credit purposes. Cash receipts and disbursements for the first 10 days of January were recorded as December transactions. The information is given below.

1. January cash receipts recorded in the December cash book totaled $45,640, of which $28,000 represents cash sales, and $17,640 represents collections on account for which cash discounts of $360 were given.

2. January cash disbursements recorded in the December check register liquidated accounts payable of $22,450 on which discounts of $250 were taken.

3. The ledger has not been closed for 2012.

4. The amount shown as inventory was determined by physical count on December 31, 2012. The company uses the periodic method of inventory.

Instructions

(a) Prepare any entries you consider necessary to correct Francis’s accounts at December 31.

(b) To what extent was Francis Equipment Co. able to show a more favorable balance sheet at December 31 by holding its cash book open? (Compute working capital and the current ratio.) Assume that the balance sheet that was prepared by the company showed the following amounts:

answer the questions relating to each of the five independent situations as requeste 645053

Aug 30, 2021 | Uncategorized

(Bad Debt Reporting) Presented below are a series of unrelated situations.

1. Halen Company’s unadjusted trial balance at December 31, 2012, included the following accounts.

Halen Company estimates its bad debt expense to be 1½% of net sales. Determine its bad debt expense for 2012.

2. An analysis and aging of Stuart Corp. accounts receivable at December 31, 2012, disclosed the following.

What is the net realizable value of Stuart’s receivables at December 31, 2012?

3. Shore Co. provides for doubtful accounts based on 3% of credit sales. The following data are available for 2012.

What is the balance in Allowance for Doubtful Accounts at December 31, 2012?

4. At the end of its first year of operations, December 31, 2012, Darden Inc. reported the following information.

What should be the balance in accounts receivable at December 31, 2012, before subtracting the allowance for doubtful accounts?

5. The following accounts were taken from Bullock Inc.’s trial balance at December 31, 2012.

If doubtful accounts are 3% of accounts receivable, determine the bad debt expense to be reported for 2012.

Instructions

Answer the questions relating to each of the five independent situations as requested.

what is the dollar effect of the year end bad debt adjustment on the before tax inco 645054

Aug 30, 2021 | Uncategorized

(Bad Debt Reporting—Aging) Manilow Corporation operates in an industry that has a high rate of bad debts. Before any year end adjustments, the balance in Manilow’s Accounts Receivable account was $555,000 and the Allowance for Doubtful Accounts had a credit balance of $40,000. The year end balance reported in the balance sheet for Allowance for Doubtful Accounts will be based on the aging schedule shown below.

Instructions

(a) What is the appropriate balance for Allowance for Doubtful Accounts at year end?

(b) Show how accounts receivable would be presented on the balance sheet.

(c) What is the dollar effect of the year end bad debt adjustment on the before tax income?

prepare the journal entry for the year end adjustment to the allowance for doubtful 645055

Aug 30, 2021 | Uncategorized

(Bad Debt Reporting) From inception of operations to December 31, 2012, Fortner Corporation provided for uncollectible accounts receivable under the allowance method: provisions were made monthly at 2% of credit sales; bad debts written off were charged to the allowance account; recoveries of bad debts previously written off were credited to the allowance account; and no year end adjustments to the allowance account were made. Fortner’s usual credit terms are net 30 days.

The balance in Allowance for Doubtful Accounts was $130,000 at January 1, 2012. During 2012, credit sales totaled $9,000,000, interim provisions for doubtful accounts were made at 2% of credit sales, $90,000 of bad debts were written off, and recoveries of accounts previously written off amounted to $15,000.

Fortner installed a computer system in November 2012, and an aging of accounts receivable was prepared for the first time as of December 31, 2012. A summary of the aging is as follows.

Based on the review of collectibility of the account balances in the “prior to 1/1/12” aging category, additional receivables totaling $60,000 were written off as of December 31, 2012. The 80% uncollectible estimate applies to the remaining $90,000 in the category. Effective with the year ended December 31, 2012, Fortner adopted a different method for estimating the allowance for doubtful accounts at the amount indicated by the year end aging analysis of accounts receivable.

Instructions

(a) Prepare a schedule analyzing the changes in Allowance for Doubtful Accounts for the year ended December 31, 2012. Show supporting computations in good form.

(b) Prepare the journal entry for the year end adjustment to the Allowance for Doubtful Accounts balance as of December 31, 2012.

when the financial controller of bakers company set the budget for the year ahead it 644918

Aug 30, 2021 | Uncategorized

When the financial controller of Bakers Company set the budget for the year ahead, it was expected that monthly output of cake packages would be 12,000 units. In March the output was increased to 14,000 per month following negotiation with a chain of corner shops. The following table reports the original budget and the actual outcome for the month of March.

Required

(1) Prepare a statement showing a flexible budget and variances.

(2) Make a recommendation on the most significant variance for investigation, and suggest two possible causes to investigate.

write a short comment to the financial controller on the effectiveness of the cleani 644919

Aug 30, 2021 | Uncategorized

The financial controller of the local town council set a budget for street cleaning in one estate as shown in the first column below. In the month of April the cleaning supervisor cut back on 20 miles of cleaning to save costs. The actual costs for April are shown in the second column below.

Required

(1) Prepare a statement showing a flexible budget and variances.

(2) Write a short comment to the financial controller on the effectiveness of the cleaning supervisor’s attempt to reduce costs.

containing a statement comparing the original budgeted profits of comfort and seats 644922

Aug 30, 2021 | Uncategorized

Seats Ltd (‘Seats’) manufactures seats for installation in buses. It obtains its raw materials from Comfort Ltd (‘Comfort’), a wholly owned subsidiary which sells only to Seats. The raw materials of foam and covering are cut to shape by Comfort and sold to Seats in packages ready for assembly. Seats could obtain raw materials from suppliers other than Comfort but would pay a price 10% higher than that charged by Comfort. One third of the output of Seats is bought by Buses Ltd (‘Buses’), a company which produces buses. Buses has at present significant unutilised production capacity and could produce and sell more buses if the price of buses could be reduced. To achieve this, Buses would require Seats to reduce its selling prices and has asked Seats to quote a lower price. Buses has indicated its willingness to increase its total purchases from Seats to one of the following options:

The total volume includes in each case the number of seats currently being purchased by Buses from Seats. The directors of Seats are prepared to offer a lower price to Buses subject to the following restrictions:

1 Other existing customers must be guaranteed to receive their present level of supplies at present day prices.

2 There can be no expansion of the productive capacity of either Seats or Comfort.

Sales and production volumes are always equal. The following budgets for the year to 30 June Year 9 were prepared before Buses made the request for a price reduction:

Required

Write a report to the directors of Seats Ltd:

(a) advising on the effect of each of the options proposed by Buses; and

(b) containing a statement comparing the original budgeted profits of Comfort and Seats with the profits which would arise if Seats group were to adopt the most advantageous option.

you have been appointed financial controller of constructabus plc a coach building c 644923

Aug 30, 2021 | Uncategorized

You have been appointed financial controller of Constructabus plc, a coach building company, which specialises in two types of bus, a standard double deck vehicle and a luxury coach model. The chassis and engine are bought in and the framework of each bus is built on the assembly floor. All the fixtures and fittings are added in the finishing shed to meet customers’ specifications.

The head of the accounts department has provided you with the following information for the year ended 31 August Year 8:

Further information:

1 Stocks are valued at variable cost of production for management accounting purposes. Work in progress may be ignored. At 1 September Year 7, stock values were £25,000 per standard bus and £21,500 per luxury coach.

2 The assembly floor has achieved full working capacity during the year but the finishing shed was 25% under utilized. The head of the accounts department has prepared the following budget for the year ending 31 August Year 9:

Further information:

1 Labour hours per unit are assumed to be the same as for the year ended 31 August Year 8.

2 Due to changing patterns in public transport, the budget has recognised that demand for standard buses has fallen by 40% but that sales of the luxury coaches will expand by 25%.

Required:

Prepare a report for the board which provides:

(a) a statement of budgeted profit for each product for the year ending 31 August Year 9;

(b) a comparison of this budget with the actual results for each product for the year ended 31 August Year 8; and

(c) comments on your analysis.

you have been approached by james johnstone for advice on budgeting techniques mr jo 644924

Aug 30, 2021 | Uncategorized

You have been approached by James Johnstone for advice on budgeting techniques. Mr Johnstone has recently inherited a majority shareholding in, and been appointed managing director of, Nicholas Knitwear Ltd (‘NK”). NK is a small, long established family firm which manufactures knitwear for sale to several department stores. It also owns and operates three retail outlets in tourist areas which sell NK products and other gift items. NK is profitable, but Mr Johnstone is concerned that no one seems to know exactly how profitable it could be or should be. The quarterly management accounts report this year”s actual figures compared with last year”s actual figures, with no comment on the differences. Mr Johnstone realises that NK should have budgets against which annual performance can be measured, but has no idea as to how to proceed. Write a report to Mr Johnstone advising him on appropriate budgeting techniques for NK.

explain how the control process uses standard costs and variances 644926

Aug 30, 2021 | Uncategorized

1. Define the terms ‘standard cost’ and ‘variance’.
2. Explain the purpose of using standard costs.
3. Describe the problems of choosing the level of output for standards.
4. Explain how the control process uses standard costs and variances.
5. Calculate and interpret variances for product costs and sales margins.
6. Combine calculation of all variances in a case study.
7. Explain how variances may be investigated.
8. Use flexible budgeting to calculate variances in a case study.
9. Discuss the usefulness of variance analysis.
10. Understand the broader views that exist regarding variance analysis.
11. Describe and discuss research into the use of standard costing.

give three reasons for regarding variance reports as a useful tool of management 644936

Aug 30, 2021 | Uncategorized

1. Give three reasons for regarding variance reports as a useful tool of management.

2. It was budgeted that to produce 20,000 concrete building blocks in one month would require 100,000 kg of material. In the month of May, only 16,000 blocks were produced, using 80,080 kg of material. The standard cost of materials is £3 per kg. What is the materials usage variance?

3. The standard cost of direct labour in the month of August is £36,000. There is a direct labour rate variance of £6,000 adverse and a direct labour efficiency variance of £2,500 favourable. What is the actual cost of direct labour in the month?

4. Fixed overhead for the month of October has been budgeted at £16,000 with an expectation of 8,000 units of production. The actual fixed overhead cost is £17,500 and the actual production is 7,000 units. What is the variance?

the monthly budget of plastics ltd manufacturers of specialist containers was prepar 644937

Aug 30, 2021 | Uncategorized

The monthly budget of Plastics Ltd, manufacturers of specialist containers, was prepared on the following specification:

The following actual results were recorded for the month of May Year 8:

Actual costs incurred were:

Further information

(a) Throughout May the price paid for direct materials was £1.25 per kg. Direct material is used as soon as it arrives on site. No stocks of materials were held at the start or end of May.

(b) The labour rate paid throughout the month was £4.10 per hour.

(c) The selling price of finished goods was £70 per unit throughout the month.

(d) Stocks of finished goods are valued at standard cost of production.

Required

(a) Calculate the budgeted profit for May Year 8, based on the actual sales volume achieved.

(b) Calculate the cost variances for the month of May.

(c) Explain how cost variances may be used to identify responsibility for cost control within the company.

carry pack ltd manufactures and sells plastic cases for portable computers productio 644939

Aug 30, 2021 | Uncategorized

Carry pack Ltd manufactures and sells plastic cases for portable computers. Production each month equals sales orders received. The following monthly budget was prepared at the start of Year 6, to apply throughout the year: