Accumulated earnings - Why do you think some 'tax experts' consider accumulated earnings an important issue to study?

The following information is from Remmer Company for the year 2017. Accounts Payable $145,000 Accounts Receivable 15,000 Cash (balance on January 1, 2017) 75,000 Cash (balance on December 31, 2017) Common Stock 100,000 Dividends 10,000 Equipment 755,000 Notes Payable 30,000 Office Expenses 95,000 Prepaid Rent 50,000 Retained Earnings (Jan 1 2017) 410,000 Retained Earnings (December 31, 2017) Salaries and Wages Expense 955,000 Salaries and Wages Payable 170,000 Sales Revenue 1,660,000 Supplies 25,000 Utilities Expense 530,000 Cash from Operating Activities 171,000 Cash from Investing Activities (40,000) Cash from Financing Activities (126,000) Required: 1. Using what you know about the relationship of the financial statements, solve for the ending Cash and ending Retained Earnings balances. 2. Prepare the four financial statements (Income Statement, Statement of Retained earnings, Balance Sheet and Statement of Cash Flows) for Remmer Company as of December 31, 2017. 3. Compute the following for Remmer Company: (Use year-end amounts as opposed to the averages for your calculations.) a. Return on Assets b. Profit Margin c. Asset Turnover d. Return on Equity 4. Do ratios alone provide enough information to gauge a company’s performance? What other information would help you to better utilize these ratios to make your decision about the company?

The following cost data describes the flow of costs for the year ending 31 December 2018 relates to Precise Manufacturing Ltd.

The company uses normal costing and the manufacturing overhead is applied at the rate of 120% of direct labour cost.

Required:

Determine the missing amounts in each of the divisions shown above.

Problem 9-6AA Entries for payroll transactions LO P2, P3, P5

Francisco Company has 10 employees, each of whom earns $3,100 per month and is paid on the last day of each month. All 10 have been employed continuously at this amount since January 1. On March 1, the following accounts and balances exist in its general ledger:

1. FICA—Social Security Taxes Payable, $3,844; FICA—Medicare Taxes Payable, $900. (The balances of these accounts represent total liabilities for both the employer's and employees' FICA taxes for the February payroll only.)
2. Employees' Federal Income Taxes Payable, $7,750 (liability for February only).
3. Federal Unemployment Taxes Payable, $372 (liability for January and February together).
4. State Unemployment Taxes Payable, $2,480 (liability for January and February together).

During March and April, the company had the following payroll transactions.

* FICA taxes are Social Security and Medicare, respectively.

Required:
Prepare journal entries to record the transactions and events for both March and April. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

Two things can cause a budget variance; quantity and cost. Why is a flexible budget essential for managers? What departments are responsible for quantity variances? Cost variances?   As a manager why do you think it is necessary to differentiate these causes?

Sabel Co. purchased assembly equipment for $780,000 on January 1, Year 1. The equipment is expected to have a useful life of 260,000 miles and a salvage value of $26,000. Actual mileage was as follows: Year 1 72,000 Year 2 69,000 Year 3 58,000 Year 4 49,000 Year 5 16,000 Required Compute the depreciation for each of the five years, assuming the use of units-of-production depreciation. Assume that Sabel earns $236,000 of cash revenue during Year 1. Record the purchase of the equipment and the recognition of the revenue and the depreciation expense for the first year in the following financial statements model. Assume that Sabel sold the equipment at the end of the fifth year for $27,200. Calculate the amount of gain or loss on the sale.

Data Analysis: Risk Assessment Stage: Explain how and why data analysis is used at the risk assessment stage of the audit process.  Data Analysis: Determination of Sampling Method and Audit Universe: Explain how data analysis is used in the determination of sampling method and audit universe.

The partnership of Duro, Kemp and Roth is to be liquidated as soon as possible after December 31, 2016. All cash on hand except for a $20,000 contingency balance is to be distributed at the end of each month until the liquidation is completed. Profits and losses are shared 50%, 30% and 20% by Duro, Kemp and Roth, respectively. The partnership balance sheet at December 31, 2006 contains the following.

Assets                                                             Liabilities and Capital

Cash                                        240,000            Accounts payable                  300,000

Accounts receivable              280,000            Note payable                         200,000

Loan to Roth                         40,000            Loan from Kemp                   20,000

Inventories                             400,000            Duro Capital (50%)               340,000

Land                                       100,000            Kemp Capital (30%)             340,000

Equipment – net                   300,000            Roth Capital (20%)                200,000

Goodwill                                 40,000

A summary of liquidation events is as follows

January 2017

Goodwill is written off, $200,000 is collected on account, inventory items that cost $160,000 are sold for $200,000. The accounts payable and notes payable are paid and cash is distributed.

February 2017

Equipment with a book value of $80,000 is sold for $60,000, the remaining inventory items are sold for $180,000, liquidation expenses of $4,000 are paid, a liability of $8,000 is discovered and cash is distributed.

March 2017    

The land is sold for $150,000, liquidation expenses of $5,000 are paid and cash is distributed.

April 2017

The remaining equipment is sold for $150,000, remaining receivables are wWritten off and all cash is distributed in final liquidation

REQUIRED: Prepare a statement of liquidation including safe payment schedules as required.

Paste Corporation has established new plant for the production of new product called “Diazinon”. There are two different manufacturing methods available to produce Diazinon. Either by using a process or an order base method. The assembling technique won't influence the quality or deals of the item. The evaluated manufacturing expenses of the two strategies are as per the following:

                                                                              Process base       Order base

Variable manufacturing cost per unit..................... Rs14.00         Rs.17.60

Fixed manufacturing cost per year ......................Rs. 2,440,000 Rs. 1,320,000

The organization's statistical surveying office has suggested an initial selling cost of Rs.35 per unit for     Diazinon. The yearly fixed selling and admin costs of the Diazinon are Rs.500, 000. The variable selling and regulatory costs are Rs. 2 per unit.

Required:

1. CM ratio and variable expenses ratio. If Paste Corporation uses the:

1. Process base manufacturing method.

2. Order base manufacturing method.

   II.      Break-even point in units and amount by formula method. If Paste Corporation uses the:

                        1. Process base manufacturing method.

                        2. Order base manufacturing method.

3. Margin of safety. Assuming 250,000 units are actual sales for.

1. Process base manufacturing method.

2. Order base manufacturing method.

4. Degree or operating leverage at actual sales level for.

1. Process base manufacturing method.

2. Order base manufacturing method.

Flexible Budgeting and Variance Analysis

I Love My Chocolate Company makes dark chocolate and light chocolate. Both products require cocoa and sugar. The following planning information has been made available:

I Love My Chocolate Company does not expect there to be any beginning or ending inventories of cocoa or sugar. At the end of the budget year, I Love My Chocolate Company had the following actual results:

Required:

1. Prepare the following variance analyses for both chocolates and the total, based on the actual results and production levels at the end of the budget year:

     a. Direct materials price variance, direct materials quantity variance, and total variance.

     b. Direct labor rate variance, direct labor time variance, and total variance.

Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

2. The variance analyses should be based on the standard  amounts at actual  volumes. The budget must flex with the volume changes. If the actual  volume is different from the planned volume, as it was in this case, then the budget used for performance evaluation should reflect the change in direct materials and direct labor that will be required for the actual  production. In this way, spending from volume changes can be separated from efficiency and price variances.

What is the budgeting cycle and master budget? Why should companies use a master budget?

In 1941, President Roosevelt spoke about the “four freedoms.” For many in the country, however, these did not seem to apply to all Americans. Discuss briefly how the four freedoms were received by different groups of Americans during the war. How did the four freedoms inspire many to strive for more equality?

Journal Entries and Trial Balance

Elite Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on March 31, 2018, follows:

The following business transactions were completed by Elite Realty during April 2018:

Required:

Use the attached spreadsheet to complete parts 1 and 3. Click on the Spreadsheet icon to open and save the Excel file to your computer. Your input into the spreadsheet will not be included in your grade in CengageNOW on this problem.

1. Enter the April 1, 2018, balance of each account in the appropriate balance column of a four-column account. The word Balance has been entered in the item section and a check mark (√) has been placed in the Posting Reference column.

2. Journalize and insert the Posting References for the transactions for April in a two-column journal beginning on Page 18. For a compound transaction, if an amount box does not require an entry, leave it blank.

3. Post to the ledger, extending the account balance to the appropriate balance column after each posting.

4. Using the balances from the spreadsheet, prepare an unadjusted trial balance of the ledger as of April 30, 2018. List all accounts in the order of Assets, Liabilities, Stockholders’ equity, Revenues, and Expenses. If an amount box does not require an entry, leave it blank.

5a. Assume that the April 30 transaction for salaries and commissions should have been $5,620. As a result, the unadjusted trial balance in (4) would  

5b. Assume that the April 30 transaction for salaries and commissions should have been $5,620. Journalize the correcting entry. If an amount box does not require an entry, leave it blank.

5c. Assume that the November 30 transaction for salaries and commissions should have been $5,620. Is this error a transposition or slide?

Soto Inc. had the following utility cost with the related activity levels for the previous months. The company thinks that the utility cost is related to the activity level.

Use the high-low method to separte the cost into its fixed and variable components and answer the following questions.

A) What is the variable cost per unit? $

B) What is the total fixed cost? $

C) At an activity level of 29 what would be the expected cost? $

Journal Entries and Trial Balance

On October 1, 2018, Jay Pryor established an interior decorating business, Pioneer Designs. During the month, Jay completed the following transactions related to the business:

Enter the following transactions on Page 2 of the two-column journal:

Required:

1. Journalize and insert the posting references for each transaction in a two-column journal beginning on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. For a compound transaction, if an amount box does not require an entry, leave it blank.