Can you explain how to solve this problem?

On January 1, 2017, Spring Fashions Inc. enters into a contract with a southeast retail company to provide 500 dresses for $62,500 ($125 per dress) over the next 10 months. On October 1, 2017, after 450 of the dresses had been delivered (50 dresses per month), the contract is modified.

Required: 1: Fifty dresses were delivered each month for the first 9 months of 2017. Prepare Spring Fashions’s monthly journal entry to record revenue.

2: Assume that the contract is modified to sell, once the original 500 dresses are delivered, an additional 100 dresses at $110 per dress, which is the stand-alone selling price on October 1, 2017. Assume the dresses are delivered evenly in November and December 2017. Prepare the journal entries to record the contract modification.

Prepare journal entries to record a monthly cash sale on January 31 under the original contract and a monthly cash sale on November 30 under the modified contract.

Question 1 in this assignment will not be graded. However you NEED it for the facts of the problem assigned specifically to you and you will use it to check answers from the excel spreadsheet. You will turn in the excel spreadsheet as your Budget Project, part 1 and THAT will be graded.

Once you get the correct numbers in your spreadsheet you do not to to re-enter them below. Just enter the numbers you are still needing to check. (Remember, Question 1. is not graded.)

Question 2 in this assignment must be completed in OWL and is GRADED. Your points on this question are your grade for Budget Project, part 2.

Save your excel budget as you go. You will need it to complete OWL question 2, as well as to turn in as Budget Project, Part 1.

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Fabulous is a retail company that sells specialized gardening products. The company is considering opening a new store on October 1, Year1. As budget coordinator, you have been asked to prepare a master budget for the first 3 months of the company’s operation. You have gathered the following information:

October sales are estimated to be $500000 of which 45 percent will be cash and the remainder will be on credit. The company expects all sales to increase at the rate of 10 percent per month for November and December. Sales in January Year 2 are expected to be $400000.

The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale.

Prepare a sales budget and a schedule of cash receipts using these facts and your excel template. Check your answers here before moving to the next part, by completing the cells requested in the chart below.

The cost of goods sold is 80 percent of sales. The company desires to maintain a minimum ending inventory equal to 30 percent of the next month’s cost of goods sold. (Ending inventory for December is based on budgeted January Year2 sales.)

Assume that all inventory purchases are made on account (on credit). The company pays 40 percent of accounts payable in the month of purchase and the remaining amount in the following month.

In excel, prepare an inventory purchases budget and a cash payments budget for inventory purchases. Use the check figures below before you continue.

Budgeted selling and administrative expenses per month follow.

• Salary expense (fixed): $ 38400
• Sales commissions:  5 percent of Sales
• Supplies expense:   2 percent of Sales
• Utilities (fixed): $3200              
• Depreciation on store equipment (fixed)*:   You compute    
• Rent (fixed) $ 12000          
• Miscellaneous (fixed): $ 2000      

*The capital expenditures budget indicates that the company will spend $900000 on October 1 for store fixtures, which are expected to have a $24000 residual value and a 96 month useful life.

Utilities and sales commissions are paid the month after they are incurred; all other expenses are paid in the month in which they are incurred.

In excel, prepare the selling and administrative expenses budget and the cash payments budget for selling and administrative expenses. Check the key figures below.

Fabulous issued common stock for $600000 on October 5.

A dividend of $2600 was paid on December 15.

The company borrows and repays funds in increments of $1,000 on the last day of the month. The company also pays its vendors on the last day of the month. It pays interest of 1percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $40000 cash cushion.   

Prepare a cash budget on your excel template. Check key figure below.

Worley Company buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundreds of hospitals. Worley sets its prices for all hospitals by marking up its cost of goods sold to those hospitals by 5%. For example, if a hospital buys supplies from Worley that cost Worley $100 to buy from manufacturers, Worley would charge the hospital $105 to purchase these supplies.

For years, Worley believed that the 5% markup covered its selling and administrative expenses and provided a reasonable profit. However, in the face of declining profits, Worley decided to implement an activity-based costing system to help improve its understanding of customer profitability. The company broke its selling and administrative expenses into five activities as shown:

Worley gathered the data below for two of the many hospitals that it serves—University and Memorial (each hospital purchased medical supplies that had cost Worley $36,000 to buy from manufacturers):

Required:

1. Compute the total revenue that Worley would receive from University and Memorial.

2. Compute the activity rate for each activity cost pool.

3. Compute the total activity costs that would be assigned to University and Memorial.

4. Compute Worley’s customer margin for University and Memorial.

What revenue or expense amounts are necessary to make a sell-or-process further decision?

Diego Company manufactures one product that is sold for $77 per unit in two geographic regions—the East and West regions. The following information pertains to the company’s first year of operations in which it produced 59,000 units and sold 54,000 units.

The company sold 41,000 units in the East region and 13,000 units in the West region. It determined that $330,000 of its fixed selling and administrative expense is traceable to the West region, $280,000 is traceable to the East region, and the remaining $52,000 is a common fixed expense. The company will continue to incur the total amount of its fixed manufacturing overhead costs as long as it continues to produce any amount of its only product.

Required:

1. What is the unit product cost under variable costing?

2. What is the unit product cost under absorption costing?

3. What is the company’s total contribution margin under variable costing?

4. What is the company’s net operating income (loss) under variable costing?

5. What is the company’s total gross margin under absorption costing?

FASB 6-3 APB Opinion NO. 9 Several parts of APB Opinion No 9 are still GAAP, Find three of these references in the FASB ASC.

Hi-Tek Manufacturing, Inc., makes two types of industrial component parts—the B300 and the T500. An absorption costing income statement for the most recent period is shown:

Hi-Tek produced and sold 60,000 units of B300 at a price of $21 per unit and 12,700 units of T500 at a price of $40 per unit. The company’s traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the company’s two product lines is shown below:

The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek’s ABC implementation team concluded that $51,000 and $108,000 of the company’s advertising expenses could be directly traced to B300 and T500, respectively. The remainder of the selling and administrative expenses was organization-sustaining in nature. The ABC team also distributed the company’s manufacturing overhead to four activities as shown below:

Required:

1. Compute the product margins for the B300 and T500 under the company’s traditional costing system.

2. Compute the product margins for B300 and T500 under the activity-based costing system.

3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.

You are a legal assistant for the attorney of the FUN company. You must conduct research and find three (3) court opinions (i.e. cases that have been previously decided by the court) that are precedent (i.e. have similar facts and issues of law) to the case below. You must provide the case title and citation of each of the three (3) cases you find.

Three months ago the CEO for FUN Company sent a letter to the Pastor for the Church of Stranger Things pledging a $3,000,000.00 donation to the Church. Upon receipt of this news, the Pastor contacted FUN’s CEO who re-assured the Pastor that the Church would be receiving a check for this amount within the ensuing four to six weeks. The Pastor, who for several years had wanted to expand the Church in order to increase its congregation, immediately hired an architect and paid him $400,000.00 to design the new ambitious project. The Pastor was in love with the architect’s design, so he quickly hired a general contractor for $750,000.00 to start the building process. In addition to the $750,000.00 for the labor, the Pastor paid another 1,100,000.00 for the tools and materials needed for the project. Five weeks after receiving the letter and first speaking to FUN’s CEO on the phone, the bishop called FUN because he was nervous about the fact that he had not received the check and he had already incurred such significant expenses. Note that the only reason the Pastor engaged in this ambitious construction project was because of the extra money he was counting on getting from FUN since the Church’s structure did not need it to continue its regular operations. The CEO at that point told the Pastor that soon after committing to donate the money, FUN’s finances started going terribly wrong and as such at this point, they were not able to make a donation to the church. The Pastor is now demanding that FUN still true to its word and give the church the donation.

Accounting:

At the end of 2019, BETA Ltd, in order to compile the 2020 budget, gives the following info: - Product P1: Stock (in units) 31/12/2019: 7.000 - Product P2: Stock (in units) 31/12/2019 9.000 Company predicts to sell 20.000 EUR of P1 with price EUR 10 and EUR 25.000 of P2 with price EUR 12. Also, the final stock of P1 is expected to be 30% of its sales in units and the final stock of P2 20% of its sales in units. Concerning raw materials, the stock in units on 31/12/2019 is for Material M1 8.000 in units and for Material M2 12.000 in units. Also final stock for M1 is expected to be 10% of its use and for M2 20% of its use. Finally, note that for the production of P1 , 1 M1 and 3 M2 are needed and for the production of P2, 4M1 and 2 M2 are needed. The following are needed: a. The production in units for P1 and P2. b. Assuming that raw material M1 is bought EUR 4 per kilo and raw material M2 EUR 2 per kilo, find the cost of the required purchases of M1 and M2. c. Assuming that the cost of raw material M1 is EUR 4 per kilo and the cost of raw material M2 EUR 3 per kilo, direct labour 70.000, cost of electricity at head office 30.000, indirect materials 45.000 and the rest various factory costs 95.000 , find the direct (first ) cost of the company.

Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on its bilge pump product line for several years. The most recent quarterly contribution format income statement for the bilge pump product line follows:

*Common costs allocated on the basis of machine-hours.

†Common costs allocated on the basis of sales dollars.

Discontinuing the bilge pump product line would not affect sales of other product lines and would have no effect on the company’s total general factory overhead or total Purchasing Department expenses.

Required:

a. Compute the increase or decrease of net operating income if the product line is continued or discontinued. (Decreases should be indicated by a minus sign.)

b. Would you recommend that the bilge pump product line be discontinued?

Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information:

If the company keeps and overhauls its present delivery truck, then the truck will be usable for five more years. If a new truck is purchased, it will be used for five years, after which it will be traded in on another truck. The new truck would be diesel-operated, resulting in a substantial reduction in annual operating costs, as shown above.

The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 13% discount rate.

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.

Required:

1. What is the net present value of the “keep the old truck” alternative?

2. What is the net present value of the “purchase the new truck” alternative?

3. Should Bilboa Freightlines keep the old truck or purchase the new one?