Pond Corporation holds 75 percent of the voting shares of Spring
Services Company. During 20X7, Pond sold inventory costing $63,000
to Spring Services for $105,000, and Spring Services resold
one-third of the inventory in 20X7. The remaining inventory was
resold in 20X8. Also in 20X7, Spring Services sold land with a book
value of $140,000 to Pond for $240,000. Pond continues to hold the
land at the end of 20X8. The companies file separate tax returns
and are subject to a 40 percent tax rate.
Required:
Prepare the consolidation entries relating to the intercorporate
sale of inventories and land needed in the consolidation worksheet
at the end of 20X8. Assume that Pond uses the equity method in
accounting for its investment in Spring Services.
In: Accounting
Benjamin, Inc., operates an export/import business. The company has considerable dealings with companies in the country of Camerrand. The denomination of all transactions with these companies is alaries (AL), the Camerrand currency. During 2017, Benjamin acquires 22,000 widgets at a price of 8 alaries per widget. It will pay for them when it sells them. Currency exchange rates for 1 AL are as follows:
September 1, 2017 | $ | 0.48 | |
December 1, 2017 | 0.42 | ||
December 31, 2017 | 0.50 | ||
March 1, 2018 | 0.43 | ||
(Input all amounts as positive values.)
Effect of Exchange Rate Fluctuations
a.2017
2018
b.2017
c.2017
2018
In: Accounting
Dorman Products Company uses a job order cost system and applies overhead to production on the basis of direct labor cost. On January 1, 2018, Job No. 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $30,000; direct labor $15,000; and manufacturing overhead $25,000. Job No. 49 had been completed at a cost of $100,000 and was part of finished goods inventory. There was a $35,000 balance in the Raw Materials inventory account.
During the month of January, the company began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were sold on account during the month for $120,000 and $150,000, respectively. The following additional events occurred during the month.
1. Purchased additional raw materials of $270,000 on account.
2. Incurred factory labor costs of $61,000. Of this amount $11,000 is related to employer payroll taxes.
3. Incurred manufacturing overhead costs as follows: indirect materials $5,000; indirect labor $17,000; depreciation expense $22,000 and accounts payable $9,000 (for utilities and repairs).
4. Assigned direct materials and direct labor to jobs as follows.
Job No. Direct Materials Direct Labor
50 $ 8,000 $ 7,000
51 29,000 16,000
52 32,000 20,000
5. The company uses direct labor cost as the activity base to assign overhead.
Instructions
PLEASE ONLY DO E & F (Everything has already been solved in separate questions)
(a) Calculate the predetermined overhead rate for the year 2018, assuming Dorman Products Company Manufacturing estimates total manufacturing overhead costs of $863,600 and direct labor costs of $680,000.
(b) Complete the job cost sheets for Jobs 50, 51, and 52. (This can be done also when you get to parts d. and e.)
(c) Prepare the journal entries to record the purchase of raw materials, the factory labor costs incurred, and the manufacturing overhead costs incurred during the month of January.
(d) Prepare the journal entries to record the assignment of direct materials, direct labor, and manufacturing overhead costs to production. In assigning manufacturing overhead costs, use the overhead rate calculated in (a). Post all costs to the job cost sheets as necessary.
(e) Prepare the journal entry to record the completion of Job 50 and Job 51 during the month.by using the total from the job cost sheets that were completed during the month.
(f) Prepare the journal entries to record the sale of Job 49 and Job 50 during the month.
(g) What is the balance in the Work in Process Inventory account at the end of the month? What does this balance consist of? (For example which Job and what specific costs.)
(h) What is the amount of over- or underapplied overhead for the month?
In: Accounting
Identify the three basic rules that apply to the REA model pattern.
In: Accounting
Perfect Pet Collar Company makes custom leather pet collars. The
company expects each collar to require 1.70 feet of leather and
predicts leather will cost $2.90 per foot. Suppose Perfect Pet made
65 collars during February. For these 65 collars, the company
actually averaged 1.90 feet of leather per collar and paid $2.40
per foot.
Required:
1. Calculate the standard direct materials cost per unit.
(Round your answer to 2 decimal places.)
2. Without performing any calculations, determine
whether the direct materials price variance will be favorable or
unfavorable.
3. Without performing any calculations, determine
whether the direct materials quantity variance will be favorable or
unfavorable.
6. Calculate the direct materials price and
quantity variances. (Round your intermediate calculations
and final answers to 2 decimal places. Indicate the effect of each
variance by selecting "F" for favorable, "U" for
unfavorable.)
In: Accounting
Prepare general journal entries for the following transactions.
If an amount box does not require an entry, leave it blank. When required, enter amounts to the nearest cent. Assume 360 days in a year.
June 15 | Purchased $6,000 worth of equipment from a supplier on account. |
July 15 | Issued a $6,000, 30-day, 7% note in payment of the account payable. |
Aug. 14 | Paid $300 cash plus interest to the supplier, extending the note for 30 days from August 14. |
Sept. 13 | Paid the note in full. |
27 | Issued a $5,400, 60-day, 6% note to a supplier for purchase of merchandise. |
In: Accounting
An existing turning operation in an small parts manufacturing plant is currently generating 25% scrap. The value of the scrap including material, labor and overhead costs is $20.00/unit. The current rate of process is 2000 units / month of both good an bad product. The existing equipment was purchased 5 years ago for $500,000. Current operating costs are $20,000 per year. The equipment's market value currently is $150,000. It has 4 more years of life remaining.
A quality improvement team has determined that the scrap rate can be reduced to 7% if new tooling and major overhaul work could be performed and some of the major components be replaced. The improvements would also reduce the annual operating costs to $15,000 per year.
If the organization requires a 20% IRR what is the maximum that could be spent on the equipment to reduce the scrap rate?
In: Accounting
The following transactions and adjusting entries were completed by Legacy Furniture Co. during a three-year period. All are related to the use of delivery equipment. The double-declining-balance method of depreciation is used.
Year 1 | |
Jan. 4 | Purchased a used delivery truck for $28,000, paying cash. |
Nov. 2 | Paid garage $675 for miscellaneous repairs to the truck. |
Dec. 31 | Recorded depreciation on the truck for the year. The estimated useful life of the truck is four years, with a residual value of $5,000 for the truck. |
Year 2 | |
Jan. 6 | Purchased a new truck for $48,000, paying cash. |
Apr. 1 | Sold the used truck purchased on Jan. 4 of Year 1 for $15,000. (Record depreciation to date in Year 2 for the truck.) |
June 11 | Paid garage $450 for miscellaneous repairs to the truck. |
Dec. 31 | Record depreciation for the new truck. It has an estimated residual value of $9,000 and an estimated life of five years. |
Year 3 | |
July 1 | Purchased a new truck for $54,000, paying cash. |
Oct. 2 | Sold the truck purchased January 6, Year 2, for $16,750. (Record depreciation to date for Year 3 for the truck.) |
Dec. 31 | Recorded depreciation on the remaining truck purchased on July 1. It has an estimated residual value of $12,000 and an estimated useful life of eight years. |
Journalize the transactions and the adjusting entries. Refer to the Chart of Accounts for exact wording of account titles.
CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Legacy Furniture Co. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Journalize the transactions and the adjusting entries. Refer to the Chart of Accounts for exact wording of account titles. Scroll down to access pages 2 and 3 of the journal.
Journalize the Year 1 transactions and adjusting entries on Page 1.
PAGE 1
JOURNAL
ACCOUNTING EQUATION
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
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Adjusting Entries |
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Journalize the Year 2 transactions and adjusting entries on Page 2.
PAGE 2
JOURNAL
ACCOUNTING EQUATION
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Adjusting Entries |
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Journalize the Year 3 transactions and adjusting entries on Page 3.
PAGE 3
JOURNAL
ACCOUNTING EQUATION
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
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In: Accounting
Hillsong Inc. manufactures snowsuits. Hillsong is considering
purchasing a new sewing machine at a cost of $2.45 million. Its
existing machine was purchased five years ago at a price of $1.8
million; six months ago, Hillsong spent $55,000 to keep it
operational. The existing sewing machine can be sold today for
$240,845. The new sewing machine would require a one-time, $85,000
training cost. Operating costs would decrease by the following
amounts for years 1 to 7:
Year | 1 | $391,000 | ||
---|---|---|---|---|
2 | 399,100 | |||
3 | 411,000 | |||
4 | 426,000 | |||
5 | 433,200 | |||
6 | 435,300 | |||
7 | 436,500 |
The new sewing machine would be depreciated according to the
declining-balance method at a rate of 20%. The salvage value is
expected to be $379,800. This new equipment would require
maintenance costs of $94,900 at the end of the fifth year. The cost
of capital is 9%.
Use the net present value method to determine the following:
(If net present value is negative then
enter with negative sign preceding the number e.g. -45
or parentheses e.g. (45). Round present value answer to 0 decimal
places, e.g. 125. For calculation purposes, use 5 decimal places as
displayed in the factor table provided.)
Calculate the net present value
In: Accounting
20-03 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:
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
Multiple choice questions. No need to explain.
Question 21
Sandstrom Corporation has an extraordinary loss of $50,000, an unusual gain of $35,000, and a tax rate of 40%. At what amount should Sandstrom report each item?
Extraordinary loss |
Unusual gain |
|
|
|
|
Question 22
The approach most companies use to provide information related to the components of other comprehensive income is a
second separate income statement. |
combined income statement of comprehensive income. |
separate column in the statement of changes in stockholders' equity. |
footnote disclosure. |
Question 23
The following information applied to Howe, Inc. for 2010:
Merchandise purchased for resale |
$300,000 |
Freight-in |
8,000 |
Freight-out |
5,000 |
Purchase returns |
2,000 |
What is ending inventory?
$300,000. |
$303,000. |
$306,000. |
$311,000. |
Question 24
The following information was derived from the 2010 accounting records of Perez Co.:
Perez's Goods |
Perez 's Central Warehouse |
Held by Consigness |
Beginning inventory |
$130,000 |
$ 14,000 |
|
Purchases |
575,000 |
70,000 |
Freight-in |
10,000 |
Transportation to consignees |
5,000 |
Freight-out |
30,000 |
8,000 |
Ending inventory |
145,000 |
20,000 |
What is the cost of sales for 2010?
$570,000. |
$600,000. |
$634,000. |
$639,000. |
Question 25
The role of the Securities and Exchange Commission in the formulation of accounting principles can be best described as
consistently primary. |
consistently secondary. |
sometimes primary and sometimes secondary. |
non-existent. |
Question 26
The use of a Discounts Lost account implies that the recorded cost of a purchased inventory item is its
invoice price. |
invoice price plus the purchase discount lost. |
invoice price less the purchase discount taken. |
invoice price less the purchase discount allowable whether taken or not. |
Question 27
Trade discounts are
not recorded in the accounts; rather they are a means of computing a price. |
used to avoid frequent changes in catalogues. |
used to quote different prices for different quantities purchased. |
all of the above. |
Question 28
Under the cash basis of accounting, revenues are recorded
when they are earned and realized. |
when they are earned and realizable. |
when they are earned. |
when they are realized. |
Question 29
Under which section of the balance sheet is "cash restricted for plant expansion" reported?
Current assets. |
Non-current assets. |
Current liabilities. |
Stockholders' equity. |
In: Accounting
A dynamometer test lab currently has 45 computers with 20 printers. The computers cost $3,500 each and the printers were $350 each when purchased 2 years ago. The market value of the computers is estimated at $750 each today and the printers $75 each today. It is expected that the current equipment will last another 4 years and have no salvage value at that time. Operating expenses are $350 for each computer and $150 for each printer per year.
A new networked system is being considered that would have 45 terminal with a cost of $2.500 each; 7 printers would be purchased at $1000 each. The life of the new system is 6 years with a salvage value of $500 for the terminals and $400 for the printers at the end of that time. Operating expenses for the networked system are $6,000 per year.
A) What are the sunk costs at this point? (5 points)
B) If the firm desires a 15% IRR, determine the best alternative. (20 points)
Show ALL work.
In: Accounting
Estimating Share Value Using the ROPI Model The following are forecasts of Abercrombie & Fitch's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of January 29, 2011. Refer to the information in the table to answer the following requirements. Reported Horizon Period (In millions) 2011 2012 2013 2014 2015 Terminal Period Sales $ 3,469 $ 3,989 $ 4,587 $ 5,275 $ 6,066 $ 6,187 NOPAT 152 319 367 422 485 495 NOA 1,032 1,173 1,349 1,551 1,784 1,820 Answer the following requirements assuming a discount rate (WACC) of 10%, a terminal period growth rate of 2%, common shares outstanding of 87.2 million, and net nonoperating obligations (NNO) of $(858) million. (Negative NNO reflects net nonoperating assests such as investments rather than net obligations) (a) Estimate the value of a share of Abercrombie & Fitch common stock using the residual operating income (ROPI) model as of January 29, 2011. Rounding instructions: Round answers to the nearest whole number unless noted otherwise. Use your rounded answers for subsequent calculations. Do not use negative signs with any of your answers. Reported Horizon Period (In millions) 2011 2012 2013 2014 2015 Terminal Period ROPI (NOPAT - [NOABeg × rw]) Answer 216 Answer 250 Answer 287 Answer 330 Answer 317 Discount factor [1 / (1 + rw)t ] (round 5 decimal places) Answer 0.90909 Answer 0.82645 Answer 0.75131 Answer 0.68301 Present value of horizon ROPI Answer 196 Answer 206 Answer 216 Answer 225 Cum present value of horizon ROPI Answer 842 Present value of terminal ROPI Answer 2,703 NOA Answer 1,032 Total firm value Answer 4,577 NNO Answer 858 Firm equity value Answer 3,719 Shares outstanding (millions) Answer 872 (round one decimal place) Stock price per share Answer 42.65 (round two d
In: Accounting
Krandolph Metals, Inc., is a manufacturer of aluminum cans for the beverage industry. Krandolph
purchases aluminum and other raw materials from several vendors. The purchasing process at
Krandolph occurs as follows:
When inventory of any raw material seems low, a purchasing agent examines the records to
determine the vendor who supplied the last purchase of that raw material. The purchasing agent
prepares a three
‐
copy PO and mails the top copy to the vendor. One copy is filed in the purchasing
department, and one copy is forwarded to the inventory control department (inventory record
keeping). Inventory control personnel update the inventory subsidiary ledger and file the PO by
number in the inventory control files.
When the goods arrive at the receiving dock, a receiving report is prepared from information on
the packing slip. One copy of the receiving report is filed in the receiving department, and one
copy is forwarded to purchasing so that the purchasing department is informed of the receipt of
goods.
The vendor mails an invoice for the raw materials directly to the accounts payable department.
When the invoice is received, accounts payable personnel prepare a cash disbursement voucher to
approve payment. The voucher is forwarded to the cash disbursements department. The accounts
payable department also updates the accounts payable subsidiary ledger and files the invoice by
invoice number.
Upon receiving the cash disbursement voucher, an employee in the cash disbursements department
prepares a two
‐
copy check. The top copy of the check is mailed to the vendor, and the second copy
is forwarded to the general ledger department. The cash disbursement voucher is stamped “paid”
and returned to the accounts payable department. The voucher is filed with the invoice in the
accounts payable department.
The general ledger department records the check in the general ledger and returns the check copy
to the cash disbursements department, where it is filed.
2. Draw two BPDs to reflect the business processes at Krandolph. One BPD should depict the
purchasing processes, and the second BPD should depict the cash disbursements processes.
In: Accounting
20-3 20-08
Costs per Equivalent Unit
The following information concerns production in the Baking Department for March. All direct materials are placed in process at the beginning of production.
ACCOUNT Work in Process—Baking Department | ACCOUNT NO. | ||||||||
Date | Item | Debit | Credit | Balance | |||||
Debit | Credit | ||||||||
Mar. | 1 | Bal., 4,200 units, 1/3 completed | 8,050 | ||||||
31 | Direct materials, 75,600 units | 128,520 | 136,570 | ||||||
31 | Direct labor | 34,530 | 171,100 | ||||||
31 | Factory overhead | 19,426 | 190,526 | ||||||
31 | Goods finished, 76,500 units | 183,530 | 6,996 | ||||||
31 | Bal. ? units, 3/5 completed | 6,996 |
a. Based on the above data, determine each cost listed below. Round "cost per equivalent unit" answers to the nearest cent.
1. Direct materials cost per equivalent unit | $ |
2. Conversion cost per equivalent unit | $ |
3. Cost of the beginning work in process completed during March | $ |
4. Cost of units started and completed during March | $ |
5. Cost of the ending work in process | $ |
b. Assuming that the direct materials cost is
the same for February and March, did the conversion cost per
equivalent unit increase, decrease, or remain the same in
March?
In: Accounting