Sour, Inc. has two channels, retail and online, which generate following results. One customer shops at the retail store, paying $40 for 1 unit of a product that costs $25. Another customer shops online, buying 3 units of a product that costs $16 and paying $20 each. Compute the following.
Retail margin (%):
% of Unit Sales Retail:
Dollar Sales Retail:
% of Dollar Sales Retail:
Average Unit Margin ($):
Average Margin (%):
Average Price ($):
Online margin (%):
% of Unit Sales Online.
Dollar Sales Online:
% of Dollar Sales Online:
In: Accounting
Scholes Systems supplies a particular type of office chair to large retailers such as Target, Costco, and Office Max. Scholes is concerned about the possible effects of inflation on its operations. Presently, the company sells 96,000 units for $60 per unit. The variable production costs are $30, and fixed costs amount to $1,560,000. Production engineers have advised management that they expect unit labor costs to rise by 20 percent and unit materials costs to rise by 5 percent in the coming year. Of the $30 variable costs, 60 percent are from labor and 20 percent are from materials. Variable overhead costs are expected to increase by 25 percent. Sales prices cannot increase more than 10 percent. It is also expected that fixed costs will rise by 6 percent as a result of increased taxes and other miscellaneous fixed charges. The company wishes to maintain the same level of profit in real dollar terms. It is expected that to accomplish this objective, profits must increase by 7 percent during the year. Required: a. Compute the volume in units and the dollar sales level necessary to maintain the present profit level, assuming that the maximum price increase is implemented. b. Compute the volume of sales and the dollar sales level necessary to provide the 7 percent increase in profits, assuming that the maximum price increase is implemented. c. If the volume of sales were to remain at 96,000 units, what price change would be required to attain the 7 percent increase in profits? Calculate the new price.
In: Accounting
Chataqua Can Company manufactures metal cans used in the food-processing industry. A case of cans sells for $25. The variable costs of production for one case of cans are as follows:
Direct material | $ | 8.00 | |
Direct labor | 2.00 | ||
Variable manufacturing overhead | 6.50 | ||
Total variable manufacturing cost per case | $ | 16.50 | |
Variable selling and administrative costs amount to $0.60 per case. Budgeted fixed manufacturing overhead is $300,000 per year, and fixed selling and administrative cost is $38,000 per year. The following data pertain to the company’s first three years of operation.
Year 1 | Year 2 | Year 3 | |||||||
Planned production (in units) | 75,000 | 75,000 | 75,000 | ||||||
Finished-goods inventory (in units), January 1 | 0 | 0 | 20,500 | ||||||
Actual production (in units) | 75,000 | 75,000 | 75,000 | ||||||
Sales (in units) | 75,000 | 54,500 | 85,250 | ||||||
Finished-goods inventory (in units), December 31 | 0 | 20,500 | 10,250 | ||||||
Actual costs were the same as the budgeted costs.
Required:
Prepare operating income statements for Chataqua Can Company for its first three years of operations using:
Absorption costing.
Variable costing.
Reconcile Chataqua Can Company’s operating income reported under absorption and variable costing for each of its first three years of operation. Use the shortcut method.
Suppose that during Chataqua’s fourth year of operation actual production equals planned production, actual costs are as expected, and the company ends the year with no inventory on hand.
What will be the difference between absorption-costing income and variable-costing income in year 4?
What will be the relationship between total operating income for the four-year period as reported under absorption and variable costing?
In: Accounting
JAMES ISLAND CLOTHING COMPANY | ||
Adjusted Trial Balance | ||
12/31/18 | ||
Account Title | Balance | |
Debit | Credit | |
Cash | $ 95,700 | |
Accounts Receivable | 12,000 | |
Inventory | 4,400 | |
Office Equipment | 26,000 | |
Truck | 18,000 | |
Accumulated Depreciation—Plant Assets | $ 6,000 | |
Accounts Payable | 5,500 | |
Note Payable—Short Term | 10,000 | |
Note Payable—Long Term | 33,000 | |
Common Stock | 100,000 | |
Retained Earnings | ||
Dividends | 1,000 | |
Sales Revenue | 15,000 | |
Cost of Goods Sold | 3,600 | |
Rent Expense | 2,000 | |
Advertising Expense | 800 | |
Depreciation Expense | 6,000 | |
$ 169,500 | $ 169,500 | |
Transaction data for 2018 | ||
Cash paid for purchase of office equipment | $ 6,000 | |
Cash paid for purchase of truck | 5,000 | |
Acquisition of plant assets with a long-term notes payable | 33,000 | |
Cash payment of dividends | 1,000 | |
Cash receipt from issuance of common stock | 100,000 |
REQUIREMENTS: 1) Complete the worksheet for the James Island Clothing Company, filling in the Transaction Analysis columns. 2) Prepare the James Island Clothing Company statement of cash flows for the year ended December 31, 2018. Use the indirect method.
In: Accounting
The following transactions and adjusting entries were completed by a paper-packaging company called Gravure Graphics International during 2018 and 2019. The company uses straight-line depreciation for trucks and other vehicles, double-declining-balance depreciation for buildings, and straight-line amortization for patents.
2018 | ||||
January | 2 | Paid $99,000 cash to purchase storage shed components. | ||
January | 3 | Paid $2,000 cash to have the storage shed erected. The storage shed has an estimated life of 10 years and a residual value of $5,000. | ||
April | 1 | Paid $45,000 cash to purchase a pickup truck for use in the business. The truck has an estimated useful life of five years and a residual value of $3,000. | ||
May | 13 | Paid $900 cash for minor repairs to the pickup truck's upholstery. | ||
July | 1 | Paid $16,000 cash to purchase patent rights on a new paper bag manufacturing process. The patent is estimated to have a remaining useful life of five years. | ||
December | 31 | Recorded depreciation and amortization on the pickup truck, storage shed, and patent. | ||
2019 | ||||
June | 30 | Sold the pickup truck for $38,000 cash. (Record the depreciation on the truck prior to recording its disposal.) | ||
December | 31 | Recorded depreciation on the storage shed. Also determined that the patent was impaired and wrote off its remaining book value (i.e., wrote down the book value to zero). |
Required:
Prepare the journal entries required on each of the above dates. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)
In: Accounting
Explain the tax treatment of property contributions from the shareholder/member/partner to each type entity upon formation, including a discussion of the basis the entity would take in the contributed property and the basis the shareholder/member/owner would have in the entity as a result of the contribution.
In: Accounting
Brokers
With so much information available on the internet, why would
someone choose to utilize a broker, when investing?
In: Accounting
t December 31, 2017, Cord Company's plant asset and accumulated depreciation and amortization accounts had balances as follows:
Category | Plant Asset | Accumulated Depreciation and Amortization |
|||||
Land | $ | 184,000 | $ | — | |||
Buildings | 1,950,000 | 337,900 | |||||
Machinery and equipment | 1,575,000 | 326,500 | |||||
Automobiles and trucks | 181,000 | 109,325 | |||||
Leasehold improvements | 234,000 | 117,000 | |||||
Land improvements | — | — | |||||
Depreciation methods and useful lives:
Buildings—150% declining balance; 25 years.
Machinery and equipment—Straight line; 10 years.
Automobiles and trucks—150% declining balance; 5 years, all
acquired after 2014.
Leasehold improvements—Straight line.
Land improvements—Straight line.
Depreciation is computed to the nearest month and residual values
are immaterial. Transactions during 2018 and other
information:
Required:
1. Prepare a schedule analyzing the changes in
each of the plant asset accounts during 2018. Do not analyze
changes in accumulated depreciation and amortization.
2. For each asset category, prepare a schedule
showing depreciation or amortization expense for the year ended
December 31, 2018.
In: Accounting
Jackpot Mining Company operates a copper mine in central
Montana. The company paid $2,000,000 in 2018 for the mining site
and spent an additional $800,000 to prepare the mine for extraction
of the copper. After the copper is extracted in approximately four
years, the company is required to restore the land to its original
condition, including repaving of roads and replacing a greenbelt.
The company has provided the following three cash flow
possibilities for the restoration costs (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.):
Cash Outflow | Probability | |||
1 | $ | 500,000 | 25% | |
2 | 600,000 | 40% | ||
3 | 800,000 | 35% | ||
To aid extraction, Jackpot purchased some new equipment on July 1,
2018, for $160,000. After the copper is removed from this mine, the
equipment will be sold for an estimated residual amount of $40,000.
There will be no residual value for the copper mine. The
credit-adjusted risk-free rate of interest is 15%.
The company expects to extract 12.0 million pounds of copper from
the mine. Actual production was 3.6 million pounds in 2018 and 5.0
million pounds in 2019.
Required:
1. Compute depletion and depreciation on the mine
and mining equipment for 2018 and 2019. The units-of-production
method is used to calculate depreciation. (The expected
format for rounding is presented in the appropriate rows of the
table. Round your final answers to nearest whole
dollar.)
In: Accounting
April 1 Beginning Inventory 200 units @ $1
5 Purchases 200 units @ $2
8 Sales 300 units
10 Purchases 200 units @ $3
15 Purchases 200 units @ $4
18 Sales 300 units
20 Purchases 200 units @ $5
25 Purchases 200 units @ $6
28 Sales 300 units
Compute the proper cost to be assigned to ending inventory, cost of goods sold, and gross profit under each of these methods using the periodic system:
(a) Average cost, (b) FIFO, and (c) LIFO.
Must show calculations
In: Accounting
V & T Faces, Inc., would like to open a retail store in Miami. The initial investment to purchase the building is $420,000, and an additional $50,000 in working capital is required. Since this store will be operating for many years, the working capital will not be returned in the near future.
V & T Faces expects to remodel the store at the end of 3 years at a cost of $100,000. Annual net cash receipts from daily operations (cash receipts minus cash payments) are expected to be as follows:
Year 1 |
$80,000 |
Year 2 |
$115,000 |
Year 3 |
$118,000 |
Year 4 |
$140,000 |
Year 5 |
$155,000 |
Year 6 |
$167,000 |
Year 7 |
$175,000 |
The company’s required rate of return is 13 percent. Assume management decided to limit the analysis to 7 years.
In: Accounting
Question 2
Motswatswa (Pty) Ltd manufactures a special make of lounge suite covers and has compiled the following data in order to put together their first quarter operating budget for 2020:
January February March April
Sales (units) 35,000 31,000 38,000 29,000
Additional information:
Motswatswa sells each cover for R95.
Company policy is to have 30% of next month's sales (in units) in ending finished goods inventory. This policy was met in December.
Company policy is to have 40% of next month's production needs in ending raw materials inventory. The production needs for April is 95,500. This policy was met in December. It takes three meters of material to produce each cover and the cost is R2.75/meters.
Required:
A. Prepare a sales budget for the January, February and March and for the first quarter in total. (4)
B. Prepare a production budget for January, February and March and for the first quarter in total. (8)
C. Prepare a direct material purchases budget for January, February and March and for the first quarter in total. (12)
In: Accounting
Plum Corporation began the month of May with $700,000 of current assets, a current ratio of 1.80:1, and an acid-test ratio of 1.50:1. During the month, it completed the following transactions (the company uses a perpetual inventory system). |
May | 2 | Purchased $60,000 of merchandise inventory on credit. |
8 | Sold merchandise inventory that cost $55,000 for $135,000 cash. | |
10 | Collected $26,000 cash on an account receivable. | |
15 | Paid $27,500 cash to settle an account payable. | |
17 | Wrote off a $5,000 bad debt against the Allowance for Doubtful Accounts account. | |
22 | Declared a $1 per share cash dividend on its 69,000 shares of outstanding common stock. | |
26 | Paid the dividend declared on May 22. | |
27 | Borrowed $85,000 cash by giving the bank a 30-day, 10% note. | |
28 | Borrowed $110,000 cash by signing a long-term secured note. | |
29 | Used the $195,000 cash proceeds from the notes to buy new machinery. |
Required: |
Prepare a table showing Plum's (1) current ratio, (2) acid-test ratio, and (3) working capital after each transaction. (Do not round intermediate calculations. Round your ratios to 2 decimal places and the working capitals to nearest dollar amount.Subtracted amount should be indicated with a minus sign.) |
|
In: Accounting
Complete the following partial worksheet for Pat Inc. and subsidiary Slinger Company for the first year subsequent to acquisition intercompany bonds, 20X4 Pat Inc. and Subsidiary Slinger Company Partial Consolidated Worksheet For the Year Ended December 31, 20X4 Trial Balance Eliminations and Adjustments Pat Slinger Dr. Cr. Interest receivable 8,000 Investments in Slinger bonds 99,000 Interest payable (8,000) Bonds payable (100,000) Premium on bonds payable (200) Interest income (9,000) Interest expense 7,800 Elimination and Adjustments:
(B1) Eliminate the intercompany bonds and the applicable interest revenue and expense. Record the adjustment to retained earnings
(B2) Eliminate the intercompany interest payable and receivable.
In: Accounting
At December 31, 2020, Cord Company's plant asset and accumulated depreciation and amortization accounts had balances as follows
Category | Plant Asset | Accumulated Depreciation and Amortization |
|||||
Land | $ | 185,000 | $ | — | |||
Buildings | 2,000,000 | 338,900 | |||||
Equipment | 1,625,000 | 327,500 | |||||
Automobiles and trucks | 182,000 | 110,325 | |||||
Leasehold improvements | 236,000 | 118,000 | |||||
Land improvements | — | — | |||||
Depreciation methods and useful lives:
Buildings—150% declining balance; 25 years.
Equipment—Straight line; 10 years.
Automobiles and trucks—200% declining balance; 5 years, all
acquired after 2017.
Leasehold improvements—Straight line.
Land improvements—Straight line.
Depreciation is computed to the nearest month and residual values
are immaterial. Transactions during 2021 and other
information:
For each asset category, prepare a schedule showing depreciation or amortization expense for the year ended December 31, 2021. (Do not round intermediate calculations. Round your final answers to nearest whole dollar.)
|
In: Accounting