Questions
Here are comparative balance sheets for Velo Company. VELO COMPANY Comparative Balance Sheets December 31 Assets...

Here are comparative balance sheets for Velo Company.

VELO COMPANY
Comparative Balance Sheets
December 31

Assets

2017

2016

Cash

$ 72,800

$ 33,300

Accounts receivable

86,400

71,300

Inventory

170,200

186,700

Land

72,800

101,600

Equipment

260,000

200,000

Accumulated depreciation—equipment

(66,500

)

(33,800

)

   Total

$595,700

$559,100

Liabilities and Stockholders’ Equity

Accounts payable

$ 35,000

$ 47,200

Bonds payable

150,800

203,600

Common stock ($1 par)

215,200

173,000

Retained earnings

194,700

135,300

   Total

$595,700

$559,100


Additional information:

1. Net income for 2017 was $102,000.
2. Cash dividends of $42,600 were declared and paid.
3. Bonds payable amounting to $52,800 were redeemed for cash $52,800.
4. Common stock was issued for $42,200 cash.
5. No equipment was sold during 2017, but land was sold at cost.


Prepare a statement of cash flows for 2017 using the indirect method.

In: Accounting

Discuss the applicability of the first and third general standards of GAAS to accounting and auditing...

Discuss the applicability of the first and third general standards of GAAS to accounting and auditing research.

In: Accounting

Glad Bags produces restaurant storage containers. The company makes two sizes of containers: regular (55 gallon)...


Glad Bags produces restaurant storage containers. The company makes two sizes of containers: regular (55 gallon) and large (100 gallon). The company uses the same machinery to produce both sizes. The machinery can be run for only 2,500 hours per period. Glad can produce 20 regular containers every hour, whereas it can produce 8 large containers in the same amount of time. Fixed costs amount to $1,000,000 per period. Sales prices and variable costs are as follows:

Per Unit

Regular

Large

Sales price

$105

$225

Variable costs

28

42

Demand

30,000

20,000

Total investment $12,500,000

Required rate of return                                  10%

Consider each of the following INDEPENDENT scenarios:

1)      To maximize profits, how many of each size container should Glad produce? Prepare an income statement with this level of sales.

2)      Assume the company makes only the regular product. Glad is a price taker. The market price for the regular container recently dropped to $100 per container as there is a new low-cost online market entrant. Glad needs to earn the necessary income to satisfy its financial stakeholders. How much does Glad need to reduce costs to satisfy its required rate of return?

3)      Glad Products is deciding whether to outsource the production of a type of glue that is included in its containers. It currently costs Glad $.90 to make each bottle of glue in-house. If Glad Products outsources, it can buy the glue ready-made for $1.20 each and can shut down the production facilities it is currently using to manufacture the glue and save $10,000 a year in fixed costs. Glad currently allocates $50,000 in fixed costs to the glue. Annual requirement for the glue is 12,000 units. What is the effect of outsourcing?

In: Accounting

Companion Computer Company has been purchasing carrying cases for its portable computers at a delivered cost...

Companion Computer Company has been purchasing carrying cases for its portable computers at a delivered cost of $68 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 40% of direct labor cost . The fully absorbed (absorption-cost based, not variable or ABC) unit costs to produce comparable carrying cases are expected to be as follows:

Direct Materials $25.00
Direct Labor 32.00
Factory overhead (40% of direct labor) 12.80
Total cost per unit $69.80

If Companion Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 15% of the direct labor costs.
Prepare a differential analysis report for the make or buy (outsource) decision. Would you advise making or buying the carrying cases? Include qualitative reasons as well as the calculations. Explain.

In: Accounting

Starbucks is a coffee company—a big coffee company. During a 10-year period, the number of Starbucks...


Starbucks is a coffee company—a big coffee company. During a 10-year period, the number of Starbucks locations in China grew from 24 to over 1,000. The following is adapted from Starbucks’s annual report for the year ended October 2, 2016, and dollars are reported in millions.

Accounts Payable $ 5,020
Accounts Receivable 595
Cash 2,910
Common Stock 420
Equipment 4,060
Intangible Assets 3,200
Inventory 1,460
Notes Payable (long-term) 2,010
Notes Payable (short-term) 1,620
Prepaid Rent 605
Retained Earnings 4,490
Short-Term Investments 730


Assume that the following events occurred in the following quarter, which ended December 31, 2016. Dollars are in millions.

  1. Paid $1,350 cash for additional intangible assets.
  2. Issued additional shares of common stock for $10,700 in cash.
  3. Purchased equipment; paid $4,700 in cash and signed additional long-term loans for $9,600.
  4. Paid $870 cash for accounts payable owed at October 2.
  5. Conducted negotiations to purchase a coffee farm, which is expected to cost $8,600.
  1. Summarize the journal entry effects from part 3 using T-accounts. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

In: Accounting

Each response should be about one paragraph long, describing the justification for your decision. Costco Wholesale...

Each response should be about one paragraph long, describing the justification for your decision.

Costco Wholesale sells a yearly Executive Membership on April 1st, and receives $120 in cash from the customer. The contract states that the membership is not refundable, unless the member relocates to an area in which there is not a Costco within 20 miles. Are the revenue recognition criteria met or not met? Why or why not?

In: Accounting

NutraLabs, Inc., leased a protein analyzer to Werner Chemical, Inc., on September 30, 2018. NutraLabs manufactured...

NutraLabs, Inc., leased a protein analyzer to Werner Chemical, Inc., on September 30, 2018. NutraLabs manufactured the machine at a cost of $5 million. The five-year lease agreement calls for Werner to make quarterly lease payments of $391,548, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2018. NutraLabs’ implicit interest rate is 12%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price at which NutraLabs is “selling” the equipment (present value of the lease payments) at September 30, 2018 2. What pretax amounts related to the lease would NutraLabs report in its balance sheet at December 31, 2018? 3. What pretax amounts related to the lease would NutraLabs report in its income statement for the year ended December 31, 2018? 4. What pretax amounts related to the lease would NutraLabs report in its statement of cash flows for the year ended December 31, 2018?

In: Accounting

compute horizontal analysis - HP Inc. base year 2018 Consolidated Balance Sheets - USD ($) $...

compute horizontal analysis - HP Inc.

base year 2018

Consolidated Balance Sheets - USD ($) $ in Millions

Oct. 31, 2018

Oct. 31, 2017

Current assets:

Cash and cash equivalents

$ 5,166

$ 6,997

Accounts receivable, net

5,113

4,414

Inventory

6,062

5,786

Other current assets

5,046

5,121

Total current assets

21,387

22,318

Property, plant and equipment, net

2,198

1,878

Goodwill

5,968

5,622

Other non-current assets

5,069

3,095

Total assets

34,622

32,913

Current liabilities:

Notes payable and short-term borrowings

1,463

1,072

Accounts payable

14,816

13,279

Employee compensation and benefits

1,136

894

Taxes on earnings

340

214

Other accrued liabilities

7,376

6,953

Total current liabilities

25,131

22,412

Long-term debt

4,524

6,747

Other non-current liabilities

5,606

7,162

Commitments and contingencies

Stockholders’ deficit:

Preferred stock, $0.01 par value (300 shares authorized; none issued)

0

0

Common stock, $0.01 par value (9,600 shares authorized; 1,560 and 1,650 shares issued and outstanding at October 31, 2018, and 2017 respectively)

16

16

Additional paid-in capital

663

380

Accumulated deficit

(473)

(2,386)

Accumulated other comprehensive loss

(845)

(1,418)

Total stockholders’ deficit

(639)

(3,408)

Total liabilities and stockholders’ deficit

$ 34,622

$ 32,913

In: Accounting

In 2016, Makkah Corporation bought land for as a site for its new factory facility that...

In 2016, Makkah Corporation bought land for as a site for its new factory facility that was planned to be built in 2016. The following information related to the land and the factory building:

  1. Purchase cost of the land                                                        $400,000
  2. Closing cost                                                                                30,000
  3. Assumption of lien on the land                                                 100,000
  4. Cleaning and draining cost for the land                                     60,000
  5. Demolition and removal of an old building on the land             70,000
  6. Sale of salvaged material from the old building                         18,000
  7. Land permanent improvements                                                  60,000
  8. Costs of walkways, fences, and parking lots                             80,000
  9. Building permit fees                                                                  24,000
  10. Architectural design costs                                                           58,000
  11. Excavation costs                                                                         72,000
  12. Construction costs of the new building                                    570,000

Requirements:

  1. What was the cost of the land that should be recognized on Makkah’s balance sheet on Dec 31, 2016?
  2. If the new building was completed in 2016, what was the cost of the building that should be recognized on Makkah’s book at the end of 2016 (ignore any depreciation)?

In: Accounting

Keeton Company sponsors a defined benefit pension plan for its 600 employees. The company’s actuary provided...

Keeton Company sponsors a defined benefit pension plan for its 600 employees. The company’s actuary provided the following information about the plan.

January 1,

December 31,

2017

2017

2018

Projected benefit obligation $2,800,000 $3,650,000 $4,195,000
Accumulated benefit obligation 1,900,000 2,430,000 2,900,000
Plan assets (fair value and market-related asset value) 1,700,000 2,900,000 3,790,000
Accumulated net (gain) or loss (for purposes of the corridor calculation) 0 198,000 (24,000 )
Discount rate (current settlement rate) 9 % 8 %
Actual and expected asset return rate 10 % 10 %
Contributions 1,030,000 600,000


The average remaining service life per employee is 10.5 years. The service cost component of net periodic pension expense for employee services rendered amounted to $400,000 in 2017 and $475,000 in 2018. The accumulated OCI (PSC) on January 1, 2017, was $1,260,000. No benefits have been paid.

Correct answer iconYour answer is correct.

Compute the amount of accumulated OCI (PSC) to be amortized as a component of net periodic pension expense for each of the years 2017 and 2018.

Amount of accumulated OCI (PSC) to be amortized for the year 2017

$

Amount of accumulated OCI (PSC) to be amortized for the year 2018

$

Prepare a schedule which reflects the amount of accumulated OCI (G/L) to be amortized as a component of pension expense for 2017 and 2018.

Year

Projected Benefit
Obligation

Plan
Assets

10%
Corridor

Accumulated
OCI (G/L)

Minimum Amortization
of (Gain) Loss

2017

$

$

$

$

$

2018

Determine the total amount of pension expense to be recognized by Keeton Company in 2017 and 2018.

Pension expense for 2017

$

Pension expense for 2018

$

In: Accounting

Determine the amount of sales (units) that would be necessary under Break-Even Sales Under Present and...

Determine the amount of sales (units) that would be necessary under

Break-Even Sales Under Present and Proposed Conditions

Darby Company, operating at full capacity, sold 126,900 units at a price of $126 per unit during the current year. Its income statement for the current year is as follows:

Sales $15,989,400
Cost of goods sold 7,896,000
Gross profit $8,093,400
Expenses:
Selling expenses $3,948,000
Administrative expenses 3,948,000
Total expenses 7,896,000
Income from operations $197,400

The division of costs between fixed and variable is as follows:

Variable Fixed
Cost of goods sold 70% 30%
Selling expenses 75% 25%
Administrative expenses 50% 50%

Management is considering a plant expansion program that will permit an increase of $1,260,000 in yearly sales. The expansion will increase fixed costs by $126,000, but will not affect the relationship between sales and variable costs.

6. Determine the maximum income from operations possible with the expanded plant. Enter the final answer rounded to the nearest dollar.
$

7. If the proposal is accepted and sales remain at the current level, what will the income or loss from operations be for the following year? Enter the final answer rounded to the nearest dollar.
$

In: Accounting

Determining missing items in return and residual income computations Data for Uberto Company are presented in...

Determining missing items in return and residual income computations

Data for Uberto Company are presented in the following table of rates of return on investment and residual incomes:


Invested Assets

Income from Operations

Return on Investment
Minimum Return Minimum Acceptable Income from Operations
Residual Income
$960,000 $230,400 (a) 13% (b) (c)
$580,000 (d) (e) (f) $63,800 $29,000
$290,000 (g) 14% (h) $29,000 (i)
$220,000 $46,200 (j) 12% (k) (l)

Determine the missing values, identified by the letters above. For all amounts, round to the nearest whole number.

a. %
b. $   
c. $   
d. $   
e. %
f. %
g. $   
h. %
i. $   
j. %
k. $   
l. $   

In: Accounting

You have just been hired as a new management trainee by Earrings Unlimited, a distributor of...

You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare a master budget for the upcoming second quarter. To this end, you have worked with accounting and other areas to gather the information assembled below.

The company sells many styles of earrings, but all are sold for the same price—$16 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings):

January (actual) 21,200 June (budget) 51,200
February (actual) 27,200 July (budget) 31,200
March (actual) 41,200 August (budget) 29,200
April (budget) 66,200 September (budget) 26,200
May (budget) 101,200

The concentration of sales before and during May is due to Mother’s Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month.

Suppliers are paid $4.60 for a pair of earrings. One-half of a month’s purchases is paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit. Only 20% of a month’s sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible.

Monthly operating expenses for the company are given below:

Variable:
Sales commissions 4 % of sales
Fixed:
Advertising $ 260,000
Rent $ 24,000
Salaries $ 118,000
Utilities $ 10,000
Insurance $ 3,600
Depreciation $ 20,000

Insurance is paid on an annual basis, in November of each year.

The company plans to purchase $19,000 in new equipment during May and $46,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $19,500 each quarter, payable in the first month of the following quarter.

The company’s balance sheet as of March 31 is given below:

Assets
Cash $ 80,000
Accounts receivable ($43,520 February sales; $527,360 March sales) 570,880
Inventory 121,808
Prepaid insurance 24,000
Property and equipment (net) 1,010,000
Total assets $ 1,806,688
Liabilities and Stockholders’ Equity
Accounts payable $ 106,000
Dividends payable 19,500
Common stock 920,000
Retained earnings 761,188
Total liabilities and stockholders’ equity $ 1,806,688

The company maintains a minimum cash balance of $56,000. All borrowing is done at the beginning of a month; any repayments are made at the end of a month.

The company has an agreement with a bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while still retaining at least $56,000 in cash.

Required:

Prepare a master budget for the three-month period ending June 30. Include the following detailed schedules:

1. a. A sales budget, by month and in total.

    b. A schedule of expected cash collections, by month and in total.

    c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total.

    d. A schedule of expected cash disbursements for merchandise purchases, by month and in total.

2. A cash budget. Show the budget by month and in total. Determine any borrowing that would be needed to maintain the minimum cash balance of $56,000.

3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach.

4. A budgeted balance sheet as of June 30.

In: Accounting

Sunshine Co. Ltd. is a manufacturing company. It manufactures 2 products, known as ‘A’ and ‘Z’....

Sunshine Co. Ltd. is a manufacturing company. It manufactures 2 products, known as ‘A’ and ‘Z’. The following information is given for the year 2017: -
The standard direct materials and direct labour used for each product is as follows:
‘A’ ‘Z’
Material 1 10 units 8 units
Material 2 5 units 9 units
Direct Labour 10 hours 15 hours
Standard direct materials and direct labour costs:
($)
Material 1 8.20 per unit
Material 2 17.00 per unit
Direct Labour 14.00 per hour

ICLBAT/JANUARY 2019
4

Other important data is as follows for the year 2017:
Direct material
Material 1 Material 2
Opening inventory (units) 9,000 8,500
Closing inventory required (units) 10,000 2,000

Finished product
‘A’ ‘Z’
Forecast sales (units) 8,500 1,600
Selling price per unit $ 500 $ 660
Ending inventory required (units) 2,000 100
Beginning inventory (units) 200 90

Required:
Prepare the following budgets for the year 2017: -
(a) Sales budget

(b) Production budget

(c) Direct materials usage budget

(d) Direct materials purchase budget

(e) Direct labour budget

In: Accounting

20-3 20-16 Cost of Production Report The debits to Work in Process—Roasting Department for Morning Brew...

20-3 20-16 Cost of Production Report

The debits to Work in Process—Roasting Department for Morning Brew Coffee Company for August, together with information concerning production, are as follows:

Work in process, August 1, 700 pounds, 60% completed $3,220*
*Direct materials (700 X $3.7) $2,590
Conversion (700 X 60% X $1.5) $630
$3,220
Coffee beans added during August, 22,000 pounds 80,300
Conversion costs during August 34,768
Work in process, August 31, 1,100 pounds, 50% completed ?
Goods finished during August, 21,600 pounds ?

All direct materials are placed in process at the beginning of production.

a. Prepare a cost of production report, presenting the following computations:

  1. Direct materials and conversion equivalent units of production for August
  2. Direct materials and conversion costs per equivalent unit for August
  3. Cost of goods finished during August
  4. Cost of work in process at August 31

If an amount is zero, enter in "0". For the cost per equivalent unit, round your answer to two decimal places.

Morning Brew Coffee Company
Cost of Production Report-Roasting Department
For the Month Ended August 31
Unit Information
Units charged to production:
Inventory in process, August 1
Received from materials storeroom
Total units accounted for by the Roasting Department
Units to be assigned costs:
Equivalent Units
Whole Units Direct Materials (1) Conversion (1)
Inventory in process, August 1
Started and completed in August
Transferred to finished goods in August
Inventory in process, August 31
Total units to be assigned costs
Cost Information
Costs per equivalent unit:
Direct Materials Conversion
Total costs for August in Roasting Department $ $
Total equivalent units
Cost per equivalent unit (2) $ $
Costs assigned to production:
Direct Materials Conversion Total
Inventory in process, August 1 $
Costs incurred in August
Total costs accounted for by the Roasting Department $
Costs allocated to completed and partially completed units:
Inventory in process, August 1 balance $
To complete inventory in process, August 1 $ $
Cost of completed August 1 work in process $
Started and completed in August
Transferred to finished goods in August (3) $
Inventory in process, August 31 (4)
Total costs assigned by the Roasting Department $

b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (July). If required, round your answers to the nearest cent.

Increase or Decrease Amount
Change in direct materials cost per equivalent unit $
Change in conversion cost per equivalent unit

In: Accounting