Exercise 3-16 Santana Mortgage Company uses a process cost system to accumulate costs in its Application Department. When an application is completed, it is forwarded to the Loan Department for final processing. The following processing and cost data pertain to September. 1. Applications in process on September 1, 200 2. Applications started in September, 1,000 3. Completed applications during September, 700 4. Applications still in process at September 30 were 100% complete as to materials (forms) and 60% complete as to conversion costs. Beginning WIP: Direct materials $1,320 Conversion costs 5,060 September costs: Direct materials $5,100 Direct labor 12,500 Overhead 9,856 Materials are the forms used in the application process, and these costs are incurred at the beginning of the process. Conversion costs are incurred uniformly during the process. Santana Mortgage Company uses the FIFO method. Also, assume that the applications in process on September 1 were 100% complete as to materials (application forms) and 40% complete as to conversion costs. Your answer is partially correct. Try again. Determine the equivalent units of service (production) for materials and conversion costs. Materials Conversion Costs The equivalent units of service (production) Your answer is incorrect. Try again. Compute the unit costs. (Round unit costs to 2 decimal places, e.g. 2.25.) Materials Conversion Costs Unit costs $ $ Your answer is incorrect. Try again. Prepare a cost reconciliation schedule. (Round unit costs to 2 decimal places, e.g. 2.25 and final answers to 0 decimal places, e.g. 1,225.) Costs accounted for: Applications completed: Work in process, September 1 $ Conversion costs $ Started and completed $ Work in process, September 30: Materials Conversion costs Total costs $ Click if you would like to Show Work for this question: Open Show Work Question Attempts: 8 of 15 used Save for later Submit Answer Exercise 3-16 Santana Mortgage Company uses a process cost system to accumulate costs in its Application Department. When an application is completed, it is forwarded to the Loan Department for final processing. The following processing and cost data pertain to September. 1. Applications in process on September 1, 200 2. Applications started in September, 1,000 3. Completed applications during September, 700 4. Applications still in process at September 30 were 100% complete as to materials (forms) and 60% complete as to conversion costs. Beginning WIP: Direct materials $1,320 Conversion costs 5,060 September costs: Direct materials $5,100 Direct labor 12,500 Overhead 9,856 Materials are the forms used in the application process, and these costs are incurred at the beginning of the process. Conversion costs are incurred uniformly during the process. Santana Mortgage Company uses the FIFO method. Also, assume that the applications in process on September 1 were 100% complete as to materials (application forms) and 40% complete as to conversion costs. Your answer is partially correct. Try again. Determine the equivalent units of service (production) for materials and conversion costs. Materials Conversion Costs The equivalent units of service (production) Your answer is incorrect. Try again. Compute the unit costs. (Round unit costs to 2 decimal places, e.g. 2.25.) Materials Conversion Costs Unit costs $ $ Your answer is incorrect. Try again. Prepare a cost reconciliation schedule. (Round unit costs to 2 decimal places, e.g. 2.25 and final answers to 0 decimal places, e.g. 1,225.) Costs accounted for: Applications completed: Work in process, September 1 $ Conversion costs $ Started and completed $ Work in process, September 30: Materials Conversion costs Total costs $ Click if you would like to Show Work for this question: Open Show Work Question Attempts: 8 of 15 used Save for later Submit Answer

The balances in the accounts of Maybe Ltd at 30 June 2019 and 30 June 2020 are:

Other information:

Share capital is increased by the bonus issue of 24 000 shares for $1.00 each out of retained earnings. Plant is acquired during the period at a cost of $36 000, while plant with a carrying amount of $nil (cost of $24 000, accumulated depreciation of $24 000) is scrapped.

Required:

a)      Reconstruct the allowance for doubtful debts and accounts receivable.

(6.5 marks)

b)      Reconstruct inventory and accounts payable

c)      Reconstruct accrued salaries

d)      Reconstruct property, plant and equipment and a

1. Comparing ABC and Plantwide Overhead Cost Assignments

   Wellington Chocolate Company uses activity-based costing (ABC). The controller identified two activities and their budgeted costs:

   Setting up equipment	$270,000
   Other overheard	$2,160,000

   Setting up equipment is based on setup hours, and other overhead is based on oven hours.
   Wellington produces two products, Fudge and Cookies. Information on each product is as follows:

   	Fudge			Cookies
   Units produced	8,000			445,000
   Setup hours	4,000			1,000
   Oven hours	1,800			12,600

   Required:

   Round your answers to the nearest whole dollar, unless otherwise directed.

   1. Calculate the activity rate for (a) setting up equipment and (b) other overhead.

   a. Setting up equipment	$ per setup hour
   b. Other overhead	$ per oven hour

   2. How much total overhead is assigned to Fudge using ABC?
   $

   3. What is the unit overhead assigned to Fudge using ABC? Round to the nearest cent.
   $per unit

   4. Now, ignoring the ABC results, calculate the plantwide overhead rate, based on oven hours. Round to the nearest cent.
   $ per oven hour

   5. How much total overhead is assigned to Fudge using the plantwide overhead rate?
   $

   6a. The difference in the total overhead assigned to Fudge is different under the ABC system and non–ABC system because  .

   6b. What is the difference in total overhead assigned to fudge under the two methods?

   $

On December 31, 2017, Sage Company signed a $1,022,000 note to Pronghorn Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Sage’s financial situation worsened. On December 31, 2019, Pronghorn Bank determined that it was probable that the company would pay back only $613,200 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $1,022,000 loan.

Determine the amount of cash Sage received from the loan on December 31, 2017. (Round present value factors to 5 decimal places, e.g. 0.52513 and final answer to 0 decimal places, e.g. 5,275.)

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Prepare a note amortization schedule for Pronghorn Bank up to December 31, 2019. (Round answers to 0 decimal places, e.g. 5,275.)

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Determine the loss on impairment that Pronghorn Bank should recognize on December 31, 2019. (Round present value factors to 5 decimal places, e.g. 0.52500 and final answer to 0 decimal places, e.g. 5,275.)

Richard, barry and Andrew decided to enter into a partnership agreement as from 1^st July 2018, some of the provisions of which were as follows.

1. Richard to contribute $24000 cash, inventory the fair value of which was $51000, plant and machinery $94320, accounts receivable totalling $15240
2. Barry to contribute $45000 cash and act as manager for the business at an annual salary of $38400 to be allocated to him at the end of each year.
3. Andrew to contribute $19800 cash, land $144000, premises $288000, furniture and fittings $48600, and motor vehicles $37800. A mortgage of $216000 secured over the premises was outstanding and the partnership agreed to assume the mortgage.
4. Profits or losses of the firm to be divided between or borne by Richard, barry and Andrew in the proportion of 2:1:3 respectively.
5. Interest to be allowed at 8% p.a. on the capital contribution by the partners. Interest at 10% p.a. to be charged on partners’ drawings.
6. During the year ended 30 June 2019, the income of the partnership totaled $144960, and the expenses (excluding interest on capital and drawings and Barry’s salary) amounted to $51600.
7. Richard withdrew $14400 on 1 October 2018 and $9600 on 1 January 2019; Barrie withdrew $4800 only on 1 April 2019; Andrew withdrew $12000 on 30 June 2019.

Required

Prepare general journal entries necessary to open the records of the partnership.

Prepare the balance sheet of the partnership immediately after formation.

Prepare a Profit Distribution account for the year ended 30 June 2019.

Austin Company reports the following components of stockholders’ equity on December 31, 2016:

In year 2017, the following transactions affected its stockholders’ equity accounts.

• Requirement
• General Journal
• General Ledger
• Trial Balance
• Statement of RE
• Stockholders Equity
• Impact on Equity

General Journal tab - Prepare the necessary journal entries.

Statement of Retained Earnings tab - Prepare the Statement of Retained Earnings for the Austin Corporation for the year ended December 31, 2017.

Stockholders' Equity tab - Prepare the Stockholders' equity section of Austin Corporation's December 31, 2017 balance sheet.

Impact on Equity tab - For each transaction, indicate the total change in Stockholders' Equity, if any. Verify that total equity, as calculated, agrees with the amount reported on the Stockholders' Equity tab.

Rally, Inc. produces the Mayhem Raider, an all-terrain utility vehicle. It currently purchases the Mayhem Raider's engine from a supplier but is considering making the engine in-house. The firm produces 100 engines per month.

Cost to buy: $5,000 per engine.

Cost to make: $300,000 in machinery and labor cost per month. $210,000 in other costs per month.

The Mayhem Raider is at the early stages of its product life cycle. Making the engines in-house should allow the firm's to have better long-term control over this product over and can lead to significant cost efficiencies in the future.

Which of the following is TRUE?

Activity-Based Supplier Costing

Clearsound uses Alpha Electronics and La Paz Company to buy two electronic components used in the manufacture of its cell phones: Component 125X and Component 30Y. Consider two activities: testing components and reordering components. After the two components are inserted, testing is done to ensure that the two components in the phones are working properly. Reordering occurs because one or both of the components have failed the test and it is necessary to replenish component inventories. Activity cost information and other data needed for supplier costing are as follows:

I. Activity Costs Caused by Suppliers (testing failures and reordering as a result)

II. Supplier Data

Required:

Determine the cost of each supplier by using ABC. Round Test and Reorder rates to the nearest dollar, and final answers to the nearest cent.

The Ste. Marie Division of Pacific Media Corporation just started operations. It purchased depreciable assets costing $47 million and having a four-year expected life, after which the assets can be salvaged for $9.4 million. In addition, the division has $47 million in assets that are not depreciable. After four years, the division will have $47 million available from these nondepreciable assets. This means that the division has invested $94 million in assets with a salvage value of $56.4 million. Annual depreciation is $9.4 million. Annual operating cash flows are $27 million. Depreciation is computed on a straight-line basis, recognizing the salvage values noted. Ignore taxes. Assume that the division uses beginning-of-year asset values in the denominator for computing ROI.

Required:

a. & b. Compute ROI, using net book value and gross book value. (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).)

Diego Company manufactures one product that is sold for $81 per unit in two geographic regions—the East and West regions. The following information pertains to the company’s first year of operations in which it produced 52,000 units and sold 47,000 units.

The company sold 35,000 units in the East region and 12,000 units in the West region. It determined that $260,000 of its fixed selling and administrative expense is traceable to the West region, $210,000 is traceable to the East region, and the remaining $82,000 is a common fixed expense. The company will continue to incur the total amount of its fixed manufacturing overhead costs as long as it continues to produce any amount of its only product.

a.  What is the unit product cost under variable costing?

b. What is the unit product cost under absorption costing?

c. What is the company’s total contribution margin under variable costing?

d. What is the company’s net operating income (loss) under variable costing?

Based on the following data and using a 365-day year:

a. Compute the accounts receivable turnover. Round your answer to two decimal places.

b. Compute the number of days' sales in receivables for year 2. Round your answer to two decimal places.
days

c. The industry average turnover is 20 times during the year, and the number of days' sales in receivables averages 25. How does this situation compare to the industry average?

Is it slightly better or slightly worse than the average?

The level of assurance provided by an external audit is absolute. Is this statement true or false? Explain?

Use the information below to answer the following question.

The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1.

Assuming that the company uses the perpetual inventory system, determine the cost of merchandise sold for the sale of May 20 using the FIFO inventory cost method.

a.$120

b.$180

c.$144

d.$136

The unadjusted trial balance as of December 31, 2021, for the Bagley Consulting Company appears below. December 31 is the company’s reporting year-end.

Information necessary to prepare the year-end adjusting entries appears below.

1. The buildings have an estimated useful life of 50 years with no salvage value. The company uses the straight-line depreciation method.
2. The office equipment is depreciated at 10 percent of original cost per year.
3. Prepaid insurance expired during the year, $1,600.
4. Accrued salaries at year-end, $1,250.
5. Deferred rent revenue at year-end should be $800.

Required:
1. From the trial balance and information given, prepare adjusting entries.
2. Post the beginning balances and adjusting entries into the appropriate T-accounts.
3. Prepare an adjusted trial balance.
4. Prepare closing entries.
5. Prepare a post-closing trial balance.

On May 31, 2016, Sandals report purchased a truck at a cost of $160,000. before placing the truck into service, The company spend $2,500 painting it, $500 replacing tires, and $5,000 overhauling the engine. The truck should remain in service for 5 years and have a residual value of $7,500. The truck’s annual mileage is expected to be 15,000 in each of the first two years and 10,000 miles in the next three years. In deciding which depreciation method to use, the general manager request depreciation schedule for each of the depreciation methods (straight line, unit-of production, and double – declining-balance). work out each depreciation in the depreciation schedule. pass all transaction in the journal entry. journal entry must be included. show working out for each depreciation