The following data pertains to Efficient Market Investment software packages in the inventory of the Investment Software division of Efficient Market Investment Outlets:  

Answer each of the questions:

1. 1(a). Determine the cost of the inventory on December 31 and the cost of goods sold for the year ending on that date under the FIFO method.

2. 1(b). Determine the cost of the inventory on December 31 and the cost of goods sold for the year ending on that date under the LIFO method.

3. 1(c). Determine the unit cost, cost of the inventory on December 31 and the cost of goods sold for the year ending on that date under the average cost method.

4. 2. Assume that the replacement cost of each unit on December 31 is $107.25. Using the lower of cost or market rule, find the inventory amount under each of the methods given in 1.

Analyze:
What is the difference between the cost and market value of the inventory using the LIFO method?

Complete this question by entering your answers in the tabs below.

• Req 1A
• Req 1B
• Req 1C
• Req 2
• Analyze

Determine the cost of the inventory on December 31 and the cost of goods sold for the year ending on that date under the FIFO method.

Question 19

The following information on selected cash transactions for 2011 has been provided by Mancuso Company:

Proceeds from sale of land                                                       $160,000

Proceeds from long-term borrowings                                          400,000

Purchases of plant assets                                                        144,000

Purchases of inventories                                                           680,000

Proceeds from sale of Mancuso common stock                          240,000

What is the cash provided (used) by investing activities for the year ended December 31, 2011, as a result of the above information?

Information about Vinzant Company’s inventory of one item follows.

Questions:

1. Compute the cost of the ending inventory under the average cost method.
2. Compute the cost of the ending inventory under the FIFO method.
3. Compute the cost of the ending inventory under the LIFO method.

Answer each of the 3 questions by entering your answers in the tabs below.

Compute the cost of the ending inventory under the average cost method. (Round your "average cost per unit" answer to 2 decimal places.)

The Code of Ethics for Professional Accountants contains a specific requirement that must be met by the incoming auditor when there is a change in appointment. State the requirement and the paragraph number in APES 110 for the requirement.

Summative Case Study: SRS Educational Supply Company

Part 1 – Job Order Costing / Process Costing
SRS Educational Supply Company provides educational materials and supplies to educational institutions. The company provides educational supply needs that includes workbooks, classroom visual aids, instructor support materials, art supplies, lab supplies, and administrative office supplies. Since SRS Educational Supply Company consistently produces the same service to its customers, the company uses job order costing. The company’s processing units are assigned costs. For example, the company will determine all of the costs associated with the sales/marketing in a certain period and divide the costs by the number of customers that the company currently has. The cost per customer then becomes a part of the inputs and its used to determine the cost of sales/marketing and the cost of each customer. Service industries often do not match directly the normal costing systems, but the same concepts can still be used to determine the costs per customer.

The SRS Educational Press is wholly owned by the Company. It performs the bulk of its work for the print materials that are sold to the customers. The press also publishes and maintains a stock of books for general sale. The press uses normal costing to cost each job. Its job-costing system has two direct-cost categories (direct materials and direct manufacturing labor) and one indirect-cost pool (manufacturing overhead, allocated on the basis of direct manufacturing labor costs).

The following data (in thousands) pertain to 2017:

 Direct materials and supplies purchased on credit: $800  Direct materials used: $710  Indirect materials issued to various production departments: $100  Direct manufacturing labor: $1,300  Indirect manufacturing labor incurred by various production departments: $900  Depreciation on building and manufacturing equipment: $400  Miscellaneous manufacturing overhead incurred by various production departments: $550 o (Ordinarily, this would be detailed as repairs, photocopying, utilities, etc.)  Manufacturing overhead allocated at 160% of direct manufacturing labor costs: ?  Cost of goods manufactured: $4,120  Revenues: $8,000  Cost of goods sold (before adjustment for under- or overallocated manufacturing overhead): $4,020  Inventories, December 31, 2016 (not 2017):
o Materials control: $100 o Work-in-process control: $60 o Finished goods control: $500

Submission Requirements for Final Project I:

As the accountant, the company has asked you to perform the following tasks:

1. Prepare an overview diagram of the job-costing system at the SRS Educational Press. 2. Prepare journal entries to summarize the 2017 transactions. As your final entry, dispose of the year-end under- or overallocated manufacturing overhead as a write-off to cost of goods sold. Number your entries. Explanations for each entry may be omitted. 3. Show posted T-accounts for all inventories, Cost of Goods Sold, Manufacturing Overhead Control, and Manufacturing Overhead Allocated. 4. How did the SRS Educational Press perform in 2017? Should the company continue to have in-house press production?

You will submit your answers/explanations for Final Project I in a memo-style format to the company’s leadership team. Use Microsoft Word and Excel.

Create a simple Hair Salon business plan using these topics:

Overview

*Ownership and structure

*Company and History

Team

*Management team

* Advisors

Operations

*Location & Facilities

*Technology

*Equipment & Tools

Milestones & Metrics

*Milestones Table

* Key Metrics

Gant Company purchased 20 percent of the outstanding shares of Temp Company for $71,000 on January 1, 20X6. The following results are reported for Temp Company:
  

  
Required:
Determine the amounts reported by Gant as income from its investment in Temp for each year and the balance in Gant’s investment in Temp at the end of each year assuming that Gant uses the following options in accounting for its investment in Temp:

A.Carries the investment at fair value.

B.Uses the equity method.

Do both methods for all three years

In the context of the world of business, explain what we mean by the term compliance. Relating to this, is anyone familiar with the Sarbanes-Oxley (SOX) legislation enacted by Congress in 2002? What was contained in this legislation, and what prompted it? Can you provide a specific example of one of the major points of this legislation? Why was it enacted? Separately, does the term compliance apply to any other areas of business besides the SOX legislation?

Port Company purchased 31,500 of the 105,000 outstanding shares of Sund Company common stock on January 1, 20X2, for $189,000. The purchase price was equal to the book value of the shares purchased. Sund reported the following:

Required:
Compute the amounts Port Company should report as the carrying values of its investment in Sund Company at December 31, 20X2, 20X3, and 20X4.

National Bank currently has $500 million in transaction deposits on its balance sheet. The current reserve requirement is 10 percent, but the Federal Reserve is decreasing this requirement to 8 percent.

Show the balance sheet of the Federal Reserve and National Bank if National Bank converts all excess reserves to loans, but borrowers return only 50 percent of these funds to National Bank as transaction deposits.

Show the balance sheet of the Federal Reserve and National Bank if National Bank converts 75 percent of its excess reserves to loans and borrowers return 60 percent of these funds to National Bank as transaction deposits.      

Mesa Company is authorized to issue 1,000,000 shares of its $5 par value common stock and 600,000 shares of its $10 par value preferred stock. During 2018 – its first year of business - the company earned $650,000 of net income and had the following select transactions. No dividends were declared or paid throughout the year. The net income and events below are the only ones that impact Stockholders’ Equity this year.

1. Issued 300,000 shares of common stock for $35 per share
2. Issued 100,000 shares of preferred stock for $55 per share
3. Reacquired 80,000 shares of common stock at $30 per shares
4. Reissued 20,000 shares from treasury for $33 per share
5. Reissued 10,000 shares from treasury for $35 per share
6. Reissued 20,000 shares from treasury for $25 per share
7. Reissued 5,000 shares from treasury for $27 per share

Required: Prepare journal entries OR a financial statements effects template to record the above transactions.

Transfer Pricing with Idle Capacity

Oriole, Inc., owns a number of food service companies. Two divisions are the Coffee Division and the Donut Shop Division. The Coffee Division purchases and roasts coffee beans for sale to supermarkets and specialty shops. The Donut Shop Division operates a chain of donut shops where the donuts are made on the premises. Coffee is an important item for sale along with the donuts and, to date, has been purchased from the Coffee Division. Company policy permits each manager the freedom to decide whether or not to buy or sell internally. Each divisional manager is evaluated on the basis of return on investment and residual income.

Recently, an outside supplier has offered to sell coffee beans, roasted and ground, to the Donut Shop Division for $4.30 per pound. Since the current price paid to the Coffee Division is $4.75 per pound, Ashleigh Tremont, the manager of the Donut Shop Division, was interested in the offer. However, before making the decision to switch to the outside supplier, she decided to approach Santigui Melendez, manager of the Coffee Division, to see if he wanted to offer an even better price. If not, then Ashleigh would buy from the outside supplier.

Upon receiving the information from Ashleigh about the outside offer, Santigui gathered the following information about the coffee:

^*Fixed overhead is based on $1,530,000 / 1,000,000 pounds.

Required:

1. Now, assume that the Coffee Division is currently selling 950,000 pounds. If no units are sold internally, total coffee sales will drop to 850,000 pounds. Suppose that Santigui refuses to lower the transfer price from $4.75 and the Donut Division purchases from the external supplier. Compute the effect on each division's profits and on the profits of the firm as a whole. Enter an increase in profits as a positive amount, and enter a decrease as a negative amount.

2. Refer to Requirement 1. What are the minimum and maximum transfer prices? Round your answers to the nearest cent.

Suppose that the transfer price is set at the maximum price less $1. Will the two divisions accept this transfer price?  

Compute the effect on the firm's profits and on each division's profits.

3. Suppose that the Coffee Division has operating assets of $2,000,000. Assume that the Coffee Division sells 850,000 pounds to outsiders and 100,000 pounds to the Donut Division at a price of $4.75 per pound. What is divisional ROI based on this situation? Enter your answer as a percentage, rounded to two decimal places. For example, the decimal value .03827 would be entered as "3.83" percent.
-----%

Now, refer to Requirement 2. What will divisional ROI be if the transfer price of the maximum price less $1 is implemented?
----- %

Each response should be about one paragraph long, describing the justification for your decision.

On October 1st, a customer orders a Roomba 980 robotic vacuum from iRobot. The product has a 14 day trial period, which begins on the date of delivery. If the customer does not want the product at the end of the trial period, he must return the product in its original packaging, in good condition, within 21 days of the delivery date, to receive a full refund. The Roomba 980 is delivered on October 5th. Are the revenue recognition criteria met or not met? Why or why not?

J. Lo’s Clothiers has forecast credit sales for the fourth quarter of the year:

Experience has shown that 35 percent of sales are collected in the month of sale, 65 percent are collected in the following month, and 0 percent are never collected.

Prepare a schedule of cash receipts for J. Lo’s Clothiers covering the fourth quarter (October through December).

Exercise 8-3 (Algo) Direct Materials Budget [LO8-4]

Two grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western Siberia. The cost of the musk oil is $2.10 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3:

The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter’s production needs. Some 33,600 grams of musk oil will be on hand to start the first quarter of Year 2.

Required:

Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2.