Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear feet of bamboo, which costs $2.00 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $12 per hour. Iguana has the following inventory policies:

• Ending finished goods inventory should be 40 percent of next month’s sales.
• Ending raw materials inventory should be 30 percent of next month’s production.

Expected unit sales (frames) for the upcoming months follow:   

Variable manufacturing overhead is incurred at a rate of $0.20 per unit produced. Annual fixed manufacturing overhead is estimated to be $8,400 ($700 per month) for expected production of 6,000 units for the year. Selling and administrative expenses are estimated at $750 per month plus $0.50 per unit sold.

     Iguana, Inc., had $14,800 cash on hand on April 1. Of its sales, 80 percent is in cash. Of the credit sales, 50 percent is collected during the month of the sale, and 50 percent is collected during the month following the sale.

     Of raw materials purchases, 80 percent is paid for during the month purchased and 20 percent is paid in the following month. Raw materials purchases for March 1 totaled $4,500. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $280 in depreciation. During April, Iguana plans to pay $4,300 for a piece of equipment.

1. Compute the budgeted cash receipts for Iguana. (Do not round your intermediate calculations. Round final answers to 2 decimal places.)

2. Compute the budgeted cash payments for Iguana. (Do not round your intermediate calculations. Round final answers to 2 decimal places.)

3. Prepare the cash budget for Iguana. Assume the company can borrow in increments of $1,000 to maintain a $14,000 minimum cash balance

When reading a legal text, the first rule to apply is the:

Literal Rule.

Golden Rule.

Mischief Rule.

Class Rule.

Discuss the model that you believe best fits the reality of the firm you are analysing and why. E...

Discuss the model that you believe best fits the reality of the firm you are analysing and why. Explain how you estimate the future growth of the firm.

Example model: FCFE model. DDM model and fundamental model. The firm is BASF (German chemical company and the largest chemical producer in the world).

Typed the answers please.

In two or three paragraphs explain the purpose of variance analysis and its benefits and drawbacks.

In the Illustrative Case in this chapter, payroll transactions for Brookins Company were analyzed, journalized, and posted for the third quarter of the fiscal year. In this problem, you are to record the payroll transactions for the last quarter of the firm's fiscal year. The last quarter begins on April 1, 20--. Narrative of Transactions: Apr. 1. Paid the treasurer of the union the amount of union dues withheld from workers' earnings during March. 15. Payroll: $8,310. All wages and salaries taxable. Withheld $890 for federal income taxes, $166.20 for state income taxes, and $140 for union dues. 15. Paid the treasurer of the state the amount of state income taxes withheld from workers' earnings during the first quarter. 15. Electronically transferred funds to remove the liability for FICA taxes and employees' federal income taxes withheld on the March payrolls. 29. Payroll: $7,975. All wages and salaries taxable. Withheld $815 for federal income taxes, $151.50 for state income taxes, and $135 for union dues. 29. Filed the Employer's Quarterly Federal Tax Return (Form 941) for the period ended March 31. No journal entry is required, since the FICA taxes and federal income taxes withheld have been timely paid. 29. Filed the state contribution return for the quarter ended March 31 and paid the amount to the state unemployment compensation fund. May 2. Paid the treasurer of the union the amount of union dues withheld from workers' earnings during April. 13. Payroll: $8,190. All wages and salaries taxable. Withheld $875 for federal income taxes, $160.05 for state income taxes, and $135 for union dues. 16. Electronically transferred funds to remove the liability for FICA taxes and federal income taxes withheld on the April payrolls. 31. Payroll: $8,755. All wages and salaries taxable. Withheld $971 for federal income taxes, $174.05 for state income taxes, and $140 for union dues. June 3. Paid the treasurer of the union the amount of union dues withheld from workers' earnings during May. 15. Payroll: $9,110. All wages and salaries taxable, except only $4,210 is taxable under FUTA and SUTA. Withheld $1,029 for federal income taxes, $187.15 for state income taxes, and $145 for union dues. 15. Electronically transferred funds to remove the liability for FICA taxes and federal income taxes withheld on the May payrolls. 30. Payroll: $8,960. All wages and salaries taxable, except only $2,280 is taxable under FUTA and SUTA. Withheld $988 for federal income taxes, $183.95 for state income taxes, and $145 for union dues. The following are the account balances forwarded as of April 1: (1) Union Due Payable: $100 (2) Employees SIT Payable: $546.92 (3) FICA Taxes Payable - OASDI: $1,068.88 (4) FICA Taxes Payable - HI: $249.98 (5) Employees FIT Payable: $1,124.00 (6) FUTA Taxes Payable: $149.16 (7) SUTA Taxes Payable: $571.78 (8) Cash: $57,673.56 (9) Wages and Salaries: $71,360.00 (10) Payroll Taxes: $6,846.74 Note: The SUTA tax rate is 2.3%. Analyze and journalize the transactions described in the narrative above. If an amount box does not require an entry, leave it blank or enter "0". If required, round your answers to the nearest cent. GENERAL JOURNAL PAGE 19 DATE DESCRIPTION DEBIT CREDIT 20-- Apr. 1-Union Dues Union Dues Payable 100 Cash 100 Apr. 15-Payroll Wages and Salaries FICA Taxes Payable-OASDI FICA Taxes Payable-HI Employees FIT Payable Employees SIT Payable Union Dues Payable Cash Apr. 15-Payroll Taxes Payroll Taxes FICA Taxes Payable-OASDI FICA Taxes Payable-HI FUTA Taxes Payable SUTA Taxes Payable Apr. 15-States Taxes Employees SIT Payable 546.92 Cash 546.92 Apr. 15-Federal Taxes FICA Taxes Payable-OASDI 1,068.88 FICA Taxes Payable-HI 249.98 Employees FIT Payable 1,124 Cash 2,442.86 Apr. 29-Payroll Wages and Salaries FICA Taxes Payable-OASDI FICA Taxes Payable-HI Employees FIT Payable Employees SIT Payable Union Dues Payable Cash Apr. 29-Payroll Taxes Payroll Taxes FICA Taxes Payable-OASDI FICA Taxes Payable-HI FUTA Taxes Payable SUTA Taxes Payable Apr. 29-SUTA SUTA Taxes Payable 571.78 Cash 571.78

P5-2B

Boone Hardware Store completed the following merchandising transactions in

the month of May. At the beginning of May, the ledger of Boone showed Cash of

$5,000 and Owner's Capital of $5,000.

May

1

Purchased merchandise on account from Adewale's Wholesale Supply

$4,200, terms 2/10, n/30.

2

Sold merchandise on account $2,100, terms 1/10, n/30. The cost of the

merchandise sold was $1,300.

5

Received credit from Adewale's Wholesale Supply for merchandise

returned $300.

9

Received collections in full, less discounts, from customers billed on

sales of $2,100 on May 2.

10

Paid Adewale's Wholesale Supply in full, less discount.

11

Purchased supplies for cash $400.

12

Purchased merchandise for cash $1,400.

15

Received refund for poor quality merchandise from supplier on cash

purchase $150.

17

Purchased merchandise from Agbaje Distributors $1,300, FOB

shipping point, terms 2/10, n/30.

19

Paid freight on May 17 purchase $130.

24

Sold merchandise for cash $3,200. The merchandise sold had a cost of

$2,000.

25

Purchased merchandise from Somerhalder, Inc. $620, FOB destination,

terms 2/10, n/30.

27

Paid Agbaje Distributors in full, less discount.

29

Made refunds to cash customers for defective merchandise $70. The

returned merchandise had a fair value of $30.

31

Sold merchandise on account $1,000 terms n/30. The cost of the

merchandise sold was $560.

Boone Hardware's chart of accounts includes the following: No. 101 Cash, No.

112 Accounts Receivable, No. 120 Inventory, No. 126 Supplies, No. 201

Accounts Payable, No. 301 Owner's Capital, No. 401 Sales Revenue, No. 412

Sales Returns and Allowances, No. 414 Sales Discounts, and No. 505 Cost of

Goods Sold.

Instructions

(a)

Journalize the transactions using a perpetual inventory system.

(b)

Enter the beginning cash and capital balances and post the transactions.

(Use J1 for the journal reference.)

(c)

Prepare an income statement through gross profit for the month of May

2012.

Bank Organizer ​Printers, Inc., produces luxury checkbooks with three checks and stubs per page. Each checkbook is designed for an individual customer and is ordered through the​ customer's bank. The​company's operating budget for September 2017 included these​ data:

The budgeted amounts for September 2017 ​were:

The actual results for September 2017 were as​ follows:

The executive vice president of the company observed that the operating income for September was much lower than​ anticipated, despite a​ higher-than-budgeted selling price and a​ lower-than-budgeted variable cost per unit. As the​ company's management​ accountant, you have been asked to provide explanations for the disappointing September results. Bank Organizer develops its flexible budget on the basis of budgeted​ per-output-unit revenue and​ per-output-unit variable costs without detailed analysis of budgeted inputs.

Exercise 1 – Constructing the statement of cash flows:

You are the controller of the Frank Underwood Corporation. On January 1, 2018, after the 2017 fiscal year has ended, you have the following information in front of you:

During the fiscal year 2017, the following events occurred:

1. The company issued long-term debt in the amount of$1,200. Some of the debt at the beginning of the year was paidin 2017.
2. Depreciation expense was $2,000.
3. The company purchased new PP&E, in cash. The company did not sell any of its PP&E in 2017. There was no impairment of PP&E in 2017.
4. The company issued 20 shares with a par value of $0.1 per share. In return, the company received a total of $2,052 in cash.
5. The company declared and paid a $560 dividend during 2017.
6. Net income in 2017 was $________ (use the information provided to find out).

Required:

Prepare the statement of cash flows for the year ended December 31, 2017,using the indirect method. Specifically:

1. Fill out the worksheet below.
2. Compose a properlyformatted cash flow statement.

Journal Entries and Trial Balance

On October 1, 20Y6, 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 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. (Do not insert the account numbers in the journal at this time.) Journal entry explanations may be omitted. If an amount box does not require an entry, leave it blank.

Simmons Consulting Co. has the following accounts in its ledger: Cash; Accounts Receivable; Supplies; Office Equipment; Accounts Payable; Michael Short, Capital; Michael Short, Drawing; Fees Earned; Rent Expense; Advertising Expense; Utilities Expense; Miscellaneous Expense.

Journalize the selected transactions for October 20Y3. If an amount box does not require an entry, leave it blank.

Based on past experience, Leickner Company expects to purchase raw materials from a foreign supplier at a cost of 1,400,000 marks on March 15, 2018. To hedge this forecasted transaction, the company acquires a three-month call option to purchase 1,400,000 marks on December 15, 2017. Leickner selects a strike price of $0.62 per mark, paying a premium of $0.004 per unit, when the spot rate is $0.62. The spot rate increases to $0.624 at December 31, 2017, causing the fair value of the option to increase to $9,000. By March 15, 2018, when the raw materials are purchased, the spot rate has climbed to $0.64, resulting in a fair value for the option of $28,000.

1. Prepare all journal entries for the option hedge of a forecasted transaction and for the purchase of raw materials, assuming that December 31 is Leickner's year-end and that the raw materials are included in the cost of goods sold in 2018.

2. What is the overall impact on net income over the two accounting periods?

3. What is the net cash outflow to acquire the raw materials?

Smith Electronic Company’s chip-mounting production department had 300 units of unfinished product, each 50% completed on September 30. During October of the same year, this department put another 800 units into production and completed 900 units and transferred them to the next production department. At the end of October, 200 units of unfinished product, 70% completed, were recorded in the ending Work-in-Process Inventory. Smith Electronic introduces all direct materials when the production process is 50% complete. Direct labor and factory overhead (i.e., conversion) costs are added uniformly throughout the process.

Following is a summary of production costs incurred during October:

Required:

1. Calculate each of the following amounts using weighted-average process costing:
a. Equivalent units of direct materials and conversion.
b. Equivalent unit costs of direct materials and conversion.
c. Cost of goods completed and transferred out during the period.
d. Cost of Work-in-Process Inventory at the end of the period.

2. Prepare a production cost report for October using the weighted-average method.

3. Repeat requirement 1 using the FIFO method.

4. Repeat requirement 2 using the FIFO method.

Wonderland Post Office: Mail sorting time variance One of the operations in the Wonderland Post Office is a mechanical mail sorting operation. In this operation, handwritten letter mail is sorted at a rate of one letter per second. An operator sitting at a keyboard mechanically sorts the letter from a three-digit code. The manager of the mechanical sorting operation wishes to determine the number of temporary employees to hire for December. The manager estimates that there will be an additional 27,000,000 pieces of mail in December, due to the upcoming holiday season. Assume that the sorting operators are temporary employees. The union contract requires that temporary employees be hired for one month at a time. Each temporary employee is hired to work 125 hours in the month. a. How many temporary employees should the manager hire for December? 57 employees b. If each temporary employee earns a standard $13 per hour, what would be the direct labor time variance if the actual number of additional letters sorted in December was 26,208,000? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. $ 4,300 Unfavorable

Greenmount Ltd, an ASX listed consumer goods corporation aims to acquire a fashion business to generate new growth opportunities. Following a formal search process, external advisors have identified the following two businesses as best matching entitiesfor a potential take-over: Tallows Ltd and Bilgola Ltd. Only one will be selected. To move forward with the selection process, the external advisor has estimated that both firms have the same entity value of $2m based on a Discounted Cash Flow (DCF) model, i.e. acquisition price of $2 million (excluding advisor fees), which will be paid as cash consideration. The external advisor will charge $5,000 finder’s fee and $3,000 legal fees paid in cash to prepare all required due diligence.

You have been given access to the following information about the assets, liabilities, and shareholders’ equity for both potential target firms:

Tallows Ltd:

Additional information for Tallows Ltd: Taking into account current market information and historical data of the firm, you determine the following fair values: Accounts receivables: $18,000, Inventory: $180,000, Property Plant and Equipment: $1,000,000.

Additional information for Bilgola Ltd:

Considering current market prices and further historical information from the company, you determine the following fair values: Accounts receivable $200,000, Inventory $500,000, Property Plant and Equipment $2,000,000.

Nicholas Less, the CFO of Greenmount Ltd has been under pressure to increase the companies’earnings as soon as possible. He has to provide a recommendation on which firm to acquire at the next board of directors meeting in two weeks. In preparation for the meeting, Nicholas has asked you to prepare a fact sheet that evaluates the acquisition of the two potential target firms, Tallows Ltd and Bilgola Ltd from an accounting perspective.

1. You remember an in-class discussion from your studies about the use of fair value accounting versus historical cost accounting. Provide arguments for and against the use of both methods and explain the trade-off between the two methods in the context of the objective and fundamental characteristics of financial reporting.