Budgeted Income Statement and Balance Sheet
As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 20Y9, the following tentative trial balance as of December 31, 20Y8, is prepared by the Accounting Department of Regina Soap Co.:
| Cash | $112,900 | ||
| Accounts Receivable | 198,700 | ||
| Finished Goods | 41,700 | ||
| Work in Process | 27,800 | ||
| Materials | 45,700 | ||
| Prepaid Expenses | 3,400 | ||
| Plant and Equipment | 584,800 | ||
| Accumulated Depreciation—Plant and Equipment | $251,500 | ||
| Accounts Payable | 161,300 | ||
| Common Stock, $10 par | 350,000 | ||
| Retained Earnings | 252,200 | ||
| $1,015,000 | $1,015,000 |
Factory output and sales for 20Y9 are expected to total 27,000 units of product, which are to be sold at $120 per unit. The quantities and costs of the inventories at December 31, 20Y9, are expected to remain unchanged from the balances at the beginning of the year.
Budget estimates of manufacturing costs and operating expenses for the year are summarized as follows:
| Estimated Costs and Expenses | ||||
| Fixed (Total for Year) |
Variable (Per Unit Sold) |
|||
| Cost of goods manufactured and sold: | ||||
| Direct materials | _ | $30 | ||
| Direct labor | _ | 9.5 | ||
| Factory overhead: | ||||
| Depreciation of plant and equipment | $27,000 | _ | ||
| Other factory overhead | 8,400 | 5.5 | ||
| Selling expenses: | ||||
| Sales salaries and commissions | 96,900 | 15 | ||
| Advertising | 81,000 | _ | ||
| Miscellaneous selling expense | 7,000 | 2.5 | ||
| Administrative expenses: | ||||
| Office and officers salaries | 63,700 | 7.5 | ||
| Supplies | 3,200 | 1 | ||
| Miscellaneous administrative expense | 1,700 | 2 | ||
Balances of accounts receivable, prepaid expenses, and accounts payable at the end of the year are not expected to differ significantly from the beginning balances. Federal income tax of $294,000 on 20Y9 taxable income will be paid during 20Y9. Regular quarterly cash dividends of $1 per share are expected to be declared and paid in March, June, September, and December on 35,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $158,000 cash in May.
Required:
1. Prepare a budgeted income statement for 20Y9.
| Regina Soap Co. | |||
| Budgeted Income Statement | |||
| For the Year Ending December 31, 20Y9 | |||
| $ | |||
| Cost of goods sold: | |||
| $ | |||
| Cost of goods sold | |||
| Gross profit | $ | ||
| Operating expenses: | |||
| Selling expenses: | |||
| $ | |||
| Total selling expenses | $ | ||
| Administrative expenses: | |||
| $ | |||
| Total administrative expenses | |||
| Total operating expenses | |||
| Income before income tax | $ | ||
| $ | |||
2. Prepare a budgeted balance sheet as of December 31, 20Y9.
| Regina Soap Co. Budgeted Balance Sheet December 31, 20Y9 |
|||
|---|---|---|---|
| Assets | |||
| Current assets: | |||
| $ | |||
| Inventories: | |||
| $ | |||
| Total current assets | $ | ||
| Property, plant, and equipment: | |||
| $ | |||
| Total property, plant, and equipment | |||
| Total assets | $ | ||
| Liabilities | |||
| Current liabilities: | |||
| $ | |||
| Stockholders' Equity | |||
| $ | |||
| Total stockholders’ equity | |||
| Total liabilities and stockholders’ equity | $ | ||
In: Accounting
In: Accounting
9.
Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) on January 1, 2016. The annual reporting period ends December 31. The trial balance on January 1, 2018, follows (the amounts are rounded to thousands of dollars to simplify):
| Account Titles | Debit | Credit | ||||
| Cash | $ | 2 | ||||
| Accounts Receivable | 6 | |||||
| Supplies | 13 | |||||
| Land | 0 | |||||
| Equipment | 67 | |||||
| Accumulated Depreciation | $ | 5 | ||||
| Software | 21 | |||||
| Accumulated Amortization | 7 | |||||
| Accounts Payable | 4 | |||||
| Notes Payable (short-term) | 0 | |||||
| Salaries and Wages Payable | 0 | |||||
| Interest Payable | 0 | |||||
| Income Tax Payable | 0 | |||||
| Common Stock | 84 | |||||
| Retained Earnings | 9 | |||||
| Service Revenue | 0 | |||||
| Salaries and Wages Expense | 0 | |||||
| Depreciation Expense | 0 | |||||
| Amortization Expense | 0 | |||||
| Income Tax Expense | 0 | |||||
| Interest Expense | 0 | |||||
| Supplies Expense | 0 | |||||
| Totals | $ | 109 | $ | 109 | ||
Transactions and events during 2018 (summarized in thousands of dollars) follow:
Data for adjusting journal entries as of December 31:
9-a. How much net income did H & H Tool, Inc., generate during 2018? What was its net profit margin?
9-b. Is the company financed primarily by liabilities or stockholders’ equity?
9-c. What is its current ratio?
In: Accounting
6.
[The following information applies to the questions
displayed below.]
Brothers Harry and Herman Hausyerday began operations of their
machine shop (H & H Tool, Inc.) on January 1, 2016. The annual
reporting period ends December 31. The trial balance on January 1,
2018, follows (the amounts are rounded to thousands of dollars to
simplify):
| Account Titles | Debit | Credit | ||||
| Cash | $ | 2 | ||||
| Accounts Receivable | 6 | |||||
| Supplies | 13 | |||||
| Land | 0 | |||||
| Equipment | 67 | |||||
| Accumulated Depreciation | $ | 5 | ||||
| Software | 21 | |||||
| Accumulated Amortization | 7 | |||||
| Accounts Payable | 4 | |||||
| Notes Payable (short-term) | 0 | |||||
| Salaries and Wages Payable | 0 | |||||
| Interest Payable | 0 | |||||
| Income Tax Payable | 0 | |||||
| Common Stock | 84 | |||||
| Retained Earnings | 9 | |||||
| Service Revenue | 0 | |||||
| Salaries and Wages Expense | 0 | |||||
| Depreciation Expense | 0 | |||||
| Amortization Expense | 0 | |||||
| Income Tax Expense | 0 | |||||
| Interest Expense | 0 | |||||
| Supplies Expense | 0 | |||||
| Totals | $ | 109 | $ | 109 | ||
Transactions and events during 2018 (summarized in thousands of dollars) follow:
Data for adjusting journal entries as of December 31:
6-a. Prepare an income statement.
6-b. Prepare the statement of retained earnings.
6-c. Prepare the balance sheet.
In: Accounting
5.
Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) on January 1, 2016. The annual reporting period ends December 31. The trial balance on January 1, 2018, follows (the amounts are rounded to thousands of dollars to simplify):
| Account Titles | Debit | Credit | ||||
| Cash | $ | 2 | ||||
| Accounts Receivable | 6 | |||||
| Supplies | 13 | |||||
| Land | 0 | |||||
| Equipment | 67 | |||||
| Accumulated Depreciation | $ | 5 | ||||
| Software | 21 | |||||
| Accumulated Amortization | 7 | |||||
| Accounts Payable | 4 | |||||
| Notes Payable (short-term) | 0 | |||||
| Salaries and Wages Payable | 0 | |||||
| Interest Payable | 0 | |||||
| Income Tax Payable | 0 | |||||
| Common Stock | 84 | |||||
| Retained Earnings | 9 | |||||
| Service Revenue | 0 | |||||
| Salaries and Wages Expense | 0 | |||||
| Depreciation Expense | 0 | |||||
| Amortization Expense | 0 | |||||
| Income Tax Expense | 0 | |||||
| Interest Expense | 0 | |||||
| Supplies Expense | 0 | |||||
| Totals | $ | 109 | $ | 109 | ||
Transactions and events during 2018 (summarized in thousands of dollars) follow:
Data for adjusting journal entries as of December 31:
In: Accounting
3.
Brothers Harry and Herman Hausyerday began operations of their
machine shop (H & H Tool, Inc.) on January 1, 2016. The annual
reporting period ends December 31. The trial balance on January 1,
2018, follows (the amounts are rounded to thousands of dollars to
simplify):
| Account Titles | Debit | Credit | ||||
| Cash | $ | 2 | ||||
| Accounts Receivable | 6 | |||||
| Supplies | 13 | |||||
| Land | 0 | |||||
| Equipment | 67 | |||||
| Accumulated Depreciation | $ | 5 | ||||
| Software | 21 | |||||
| Accumulated Amortization | 7 | |||||
| Accounts Payable | 4 | |||||
| Notes Payable (short-term) | 0 | |||||
| Salaries and Wages Payable | 0 | |||||
| Interest Payable | 0 | |||||
| Income Tax Payable | 0 | |||||
| Common Stock | 84 | |||||
| Retained Earnings | 9 | |||||
| Service Revenue | 0 | |||||
| Salaries and Wages Expense | 0 | |||||
| Depreciation Expense | 0 | |||||
| Amortization Expense | 0 | |||||
| Income Tax Expense | 0 | |||||
| Interest Expense | 0 | |||||
| Supplies Expense | 0 | |||||
| Totals | $ | 109 | $ | 109 | ||
Transactions and events during 2018 (summarized in thousands of dollars) follow:
Data for adjusting journal entries as of December 31:
In: Accounting
Chart of Entity Comparison
| Sole Proprietor | Partnership | C Corporation | S Corporation | LLC | |
| Legal Status | Same entity as owner | Separate entity from owner | Separate entity from owner | Separate entity from owner | Separate entity from owner |
| Tax Year | Same as owner | Majority interest rules; principal partner rules; or the least aggregate deferral of income rule; exceptions may be the business purpose of 444 election | Calendar or fiscal year | Calendar year; 444 election; or business purpose demonstrated | Depends on tax status as sole proprietorship, partnership, or corporation |
| Self-employment Tax | Yes | Yes if general partner, generally no if limited partner | No, since payment for services is in the form of wages | No, since payment for services is in the form of wages | Depends on tax status as sole proprietorship, partnership, or corporation |
| Charitable Contributions | Generally 50% limitation | Generally 50% limitation at partner level | Generally 10% limitation | Generally 50% limitation at shareholder level | Depends on tax status as sole proprietorship, partnership or corporation |
| Management | Owner | May be divided among partners | Board of Directors | Board of Directors | Per articles of organization |
| Number of Owners | One | Unlimited | Unlimited | 100 | Depends on tax status as sole proprietorship, partnership, or corporation |
Question:
Choose four characteristics (Rows) and describe how two of the entity selections options differ (e.g. Basis Decrease from Operations in Sole Proprietor vs. C Corporation)
In: Accounting
The following transactions were recorded in the General Journal of Hudson Supplies: General Journal of Hudson Supplies Date Details Debit Credit 1/11 Cash at bank 31,000 Inventory 10,000 Machinery 9,500 Motor vehicle 8,000 Capital 58,500 Commencement of business 4/11 Office equipment 12,600 GST Receivable 1,260 Accounts Payable Control 13,860 Purchased office equipment on credit from Real Services 8/11 Inventory 6,660 GST Receivable 666 Accounts Payable Control 7,326 Purchased inventory on credit from Simpson Pty Ltd 10/11 Cash at bank 7,150 Sales 6,500 GST Payable 650 Sold goods for cash Cost of goods sold 2,900 Inventory 2,900 Cost of sales 11/11 Wages 3,495 Cash at bank 3,495 Paid wages Accounts Payable Control 7,326 Cash at bank 7,326 Paid A/c Payable – Simpson Pty Ltd 6 LA023517 Assessment 3, FNSACC311, Ed 2 & 3 © New South Wales Technical and Further Education Commission, 2018 (TAFE NSW), Archive version 1, June 2018 21/11 Accounts Receivable Control 4,125 Sales 3,750 GST Payable 375 Sold goods on credit to Simic Ltd Cost of goods sold 800 Inventory 800 Cost of sales 25/11 Inventory 1,200 GST Receivable 120 Cash at bank 1,320 Purchased inventory for cash 29/11 Cash at bank 4,125 Accounts Receivable Control 4,125 Amount received from Simic Ltd Required For the above General Journal entries: 1. Post the transactions to the general ledger. 2. Balance each general ledger T – account. 3. Prepare a Trial Balanc
In: Accounting
Explain some of the challenges faced by the channel manager in attempting to exercise leadership to motivate channel members in the interorganizational setting of the marketing channel? You are expected to fully address the question fully.
In: Accounting
The following transactions occurred in April at Steve’s Cabinets, a custom cabinet firm.
Purchased $80,000 of materials on account.
Issued $4,000 of supplies from the materials inventory.
Purchased $56,000 of materials on account.
Paid for the materials purchased in transaction (1) using cash.
Issued $68,000 in direct materials to the production department.
Incurred direct labor costs of $100,000, which were credited to Wages Payable.
Paid $106,000 cash for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing plant.
Applied overhead on the basis of 125 percent of $100,000 direct labor costs.
Recognized depreciation on manufacturing property, plant, and equipment of $50,000.
The following balances appeared in the accounts of Steve’s Cabinets
for April.
| Beginning | Ending | |||||
| Materials Inventory | $ | 148,200 | ? | |||
| Work-in-Process Inventory | 33,000 | ? | ||||
| Finished Goods Inventory | 166,000 | $ | 143,200 | |||
| Cost of Goods Sold | 263,400 | |||||
Required:
a. Prepare journal entries to record the transactions.
b. Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold.
In: Accounting
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