Sabel Co. purchased assembly equipment for $780,000 on January 1, Year 1. The equipment is expected to have a useful life of 260,000 miles and a salvage value of $26,000. Actual mileage was as follows: Year 1 72,000 Year 2 69,000 Year 3 58,000 Year 4 49,000 Year 5 16,000 Required Compute the depreciation for each of the five years, assuming the use of units-of-production depreciation. Assume that Sabel earns $236,000 of cash revenue during Year 1. Record the purchase of the equipment and the recognition of the revenue and the depreciation expense for the first year in the following financial statements model. Assume that Sabel sold the equipment at the end of the fifth year for $27,200. Calculate the amount of gain or loss on the sale.

Data Analysis: Risk Assessment Stage: Explain how and why data analysis is used at the risk assessment stage of the audit process.  Data Analysis: Determination of Sampling Method and Audit Universe: Explain how data analysis is used in the determination of sampling method and audit universe.

The partnership of Duro, Kemp and Roth is to be liquidated as soon as possible after December 31, 2016. All cash on hand except for a $20,000 contingency balance is to be distributed at the end of each month until the liquidation is completed. Profits and losses are shared 50%, 30% and 20% by Duro, Kemp and Roth, respectively. The partnership balance sheet at December 31, 2006 contains the following.

Assets                                                             Liabilities and Capital

Cash                                        240,000            Accounts payable                  300,000

Accounts receivable              280,000            Note payable                         200,000

Loan to Roth                         40,000            Loan from Kemp                   20,000

Inventories                             400,000            Duro Capital (50%)               340,000

Land                                       100,000            Kemp Capital (30%)             340,000

Equipment – net                   300,000            Roth Capital (20%)                200,000

Goodwill                                 40,000

A summary of liquidation events is as follows

January 2017

Goodwill is written off, $200,000 is collected on account, inventory items that cost $160,000 are sold for $200,000. The accounts payable and notes payable are paid and cash is distributed.

February 2017

Equipment with a book value of $80,000 is sold for $60,000, the remaining inventory items are sold for $180,000, liquidation expenses of $4,000 are paid, a liability of $8,000 is discovered and cash is distributed.

March 2017    

The land is sold for $150,000, liquidation expenses of $5,000 are paid and cash is distributed.

April 2017

The remaining equipment is sold for $150,000, remaining receivables are wWritten off and all cash is distributed in final liquidation

REQUIRED: Prepare a statement of liquidation including safe payment schedules as required.

Paste Corporation has established new plant for the production of new product called “Diazinon”. There are two different manufacturing methods available to produce Diazinon. Either by using a process or an order base method. The assembling technique won't influence the quality or deals of the item. The evaluated manufacturing expenses of the two strategies are as per the following:

                                                                              Process base       Order base

Variable manufacturing cost per unit..................... Rs14.00         Rs.17.60

Fixed manufacturing cost per year ......................Rs. 2,440,000 Rs. 1,320,000

The organization's statistical surveying office has suggested an initial selling cost of Rs.35 per unit for     Diazinon. The yearly fixed selling and admin costs of the Diazinon are Rs.500, 000. The variable selling and regulatory costs are Rs. 2 per unit.

Required:

1. CM ratio and variable expenses ratio. If Paste Corporation uses the:

1. Process base manufacturing method.

2. Order base manufacturing method.

   II.      Break-even point in units and amount by formula method. If Paste Corporation uses the:

                        1. Process base manufacturing method.

                        2. Order base manufacturing method.

3. Margin of safety. Assuming 250,000 units are actual sales for.

1. Process base manufacturing method.

2. Order base manufacturing method.

4. Degree or operating leverage at actual sales level for.

1. Process base manufacturing method.

2. Order base manufacturing method.

Flexible Budgeting and Variance Analysis

I Love My Chocolate Company makes dark chocolate and light chocolate. Both products require cocoa and sugar. The following planning information has been made available:

I Love My Chocolate Company does not expect there to be any beginning or ending inventories of cocoa or sugar. At the end of the budget year, I Love My Chocolate Company had the following actual results:

Required:

1. Prepare the following variance analyses for both chocolates and the total, based on the actual results and production levels at the end of the budget year:

     a. Direct materials price variance, direct materials quantity variance, and total variance.

     b. Direct labor rate variance, direct labor time variance, and total variance.

Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

2. The variance analyses should be based on the standard  amounts at actual  volumes. The budget must flex with the volume changes. If the actual  volume is different from the planned volume, as it was in this case, then the budget used for performance evaluation should reflect the change in direct materials and direct labor that will be required for the actual  production. In this way, spending from volume changes can be separated from efficiency and price variances.

What is the budgeting cycle and master budget? Why should companies use a master budget?

In 1941, President Roosevelt spoke about the “four freedoms.” For many in the country, however, these did not seem to apply to all Americans. Discuss briefly how the four freedoms were received by different groups of Americans during the war. How did the four freedoms inspire many to strive for more equality?

Journal Entries and Trial Balance

Elite Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on March 31, 2018, follows:

The following business transactions were completed by Elite Realty during April 2018:

Required:

Use the attached spreadsheet to complete parts 1 and 3. Click on the Spreadsheet icon to open and save the Excel file to your computer. Your input into the spreadsheet will not be included in your grade in CengageNOW on this problem.

1. Enter the April 1, 2018, balance of each account in the appropriate balance column of a four-column account. The word Balance has been entered in the item section and a check mark (√) has been placed in the Posting Reference column.

2. Journalize and insert the Posting References for the transactions for April in a two-column journal beginning on Page 18. For a compound transaction, if an amount box does not require an entry, leave it blank.

3. Post to the ledger, extending the account balance to the appropriate balance column after each posting.

4. Using the balances from the spreadsheet, prepare an unadjusted trial balance of the ledger as of April 30, 2018. List all accounts in the order of Assets, Liabilities, Stockholders’ equity, Revenues, and Expenses. If an amount box does not require an entry, leave it blank.

5a. Assume that the April 30 transaction for salaries and commissions should have been $5,620. As a result, the unadjusted trial balance in (4) would  

5b. Assume that the April 30 transaction for salaries and commissions should have been $5,620. Journalize the correcting entry. If an amount box does not require an entry, leave it blank.

5c. Assume that the November 30 transaction for salaries and commissions should have been $5,620. Is this error a transposition or slide?

Soto Inc. had the following utility cost with the related activity levels for the previous months. The company thinks that the utility cost is related to the activity level.

Use the high-low method to separte the cost into its fixed and variable components and answer the following questions.

A) What is the variable cost per unit? $

B) What is the total fixed cost? $

C) At an activity level of 29 what would be the expected cost? $

Journal Entries and Trial Balance

On October 1, 2018, 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 and insert the posting references for 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. For a compound transaction, if an amount box does not require an entry, leave it blank.

Portsmouth Company makes upholstered furniture. Its only variable cost is direct materials. The demand for the company's products far exceeds its manufacturing capacity. The bottleneck (or constriant) in the production process is upholstery labor-hours. Information concerning three of Portsmouth's upholstered chairs appears below:

Required:

1. Portsmouth is considering paying its upholstery laborers additional compensation to work overtime. Assuming that this extra time would be used to produce sofas, up to how much of an overtime premium per hour should the company be willing to pay to keep the upholstery shop open after normal working hours?

2. A small nearby upholstering company has offered to upholster furniture for Portsmouth at a price of $42 per hour. The management of Portsmouth is confident that this upholstering company’s work is high quality and their craftsmen can work as quickly as Portsmouth’s own craftsmen on the simpler upholstering jobs such as the Love Seat. How much additional contribution margin per hour can Portsmouth earn if if it hires the nearby upholstering company to make Love Seats?

3. Should Portsmouth hire the nearby upholstering company?

Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates:

During the year, Job 550 was started and completed. The following information is available with respect to this job:

Required:

1. Assume that Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base. Under this approach:

a. Compute the plantwide predetermined overhead rate.

b. Compute the total manufacturing cost of Job 550.

c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?

2. Assume that Landen’s controller believes that machine-hours is a better allocation base than direct labor-hours. Under this approach:

a. Compute the plantwide predetermined overhead rate.

b. Compute the total manufacturing cost of Job 550.

c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?

(Round your intermediate calculations to 2 decimal places. Round your Predetermined Overhead Rate answers to 2 decimal places and all other answers to the nearest whole dollar.)

Instructions:

Prepare an income statement, retained earnings statement, balance sheet, and statement of cash flows for the year ended May 31, 2019 in good form. See examples on 3-14, 3-15, and 11-20 of the textbook. Be sure to include subtotals like current assets, current liabilities, and gross profit. I already answered the income statement, retained earnings statement and balnce sheet. I just need help on the statement of cash flows please?

Corrigan Enterprises is studying the acquisition of two electrical component insertion systems for producing its sole product, the universal gismo. Data relevant to the systems follow.

Corrigan’s selling price is $60 per unit for the universal gismo, which is subject to a 10 percent sales commission. (In the following requirements, ignore income taxes.)

1.) How many units must the company sell to break even if Model 6754 is selected? (Do not round intermediate calculations and round your final answer up to nearest whole number.)

2.) 2-a. Calculate the net income of the two systems if sales and production are expected to average 46,000 units per year.

2-b. Which of the two systems would be more profitable?

Model No. 6754 or Model No. 4399

3.) Assume Model 4399 requires the purchase of additional equipment that is not reflected in the preceding figures. The equipment will cost $420,000 and will be depreciated over a five-year life by the straight-line method. How many units must Corrigan sell to earn $964,000 of income if Model 4399 is selected? As in requirement (2), sales and production are expected to average 46,000 units per year. (Do not round intermediate calculations and round your final answer up to nearest whole number.)

4.) Ignoring the information presented in part (3), at what volume level will the annual total cost of each system be equal? (Do not round intermediate calculations and round your final answer up to nearest whole number.)

The Parties: Kara & Karl Kelsey – owners of Karacal Kitchens Nia Netsuke – home owner in Battery Point Barry Brickle – Karl’s cousin and employee of Karacal Kitchens Mark Smith – 15-year-old worker The Facts: Kara and Karl Kelsey own and operate Karacal Kitchens, a small business operating from premises at Coleman Street in Moonah. The business custom designs, manufactures and installs bespoke kitchens. The business began operating in 2010 and by the end of 2018 it employed two cabinet makers and two designers. One of these designers is Barry Brickle, he has worked for Karacal Kitchens since the partnership was established in 2010. He is Karl’s cousin and he lent the partnership $100 000 when it commenced business. He has not been repaid these funds but receives interest from the partnership. He works for a salary, designing kitchens and on occasion he assists in the manufacture and installation of kitchens. Nia Netsuke owns a home in Battery Point in Hobart. Barry Brickle lives next door to Nia and in December 2018 she asks Barry for a quote to design, manufacture and install a new kitchen in her home. Barry is thinking about retiring from his work with Karacal Kitchens so decides to provide the quote to his neighbour without informing the partnership. He has his own large shed at his home in Battery Point and believes he will be able to create the kitchen and install it without informing Karacal Kitchens. Barry provides drawings and design specifications to Nia. He quotes $45 000 for the work. This quote is not written up using the standard form used by Karacal Kitchens. Barry prepares the design while on site at the Karacal Kitchens business premises in Moonah. Nia accepts the quote and Barry commences work on the kitchen on the 20 January 2019. He believes that it will take between three to four weeks of work to construct and install the new kitchen. Barry books three weeks leave with Karacal Kitchen. He approaches his friend’s grandson Mark Smith who is fifteen years old and looking for work. Barry offers Mark 20 hours a week work, assisting in the construction of Nia’s kitchen. He agrees to pay him $20 per hour. At the end of February Nia’s kitchen is not complete, Barry has been too sick to work, and Mark has little ability to work unsupervised. Rather than disappoint his neighbour, Barry approaches Kara Kelsey and lets her know he has started work on a kitchen for his neighbour. Kara is annoyed but agrees to have the partly assembled kitchen moved to the factory in Coleman Street, Moonah. The kitchen is then finished and installed by Karl into Nia’s home in the first week in March. Karacal Kitchens sends Nia an invoice for $50 000 for the kitchen. Nia objects to paying this amount, saying she had been quoted $45000. Barry also sends an invoice to Karacal Kitchens for $12 000 saying he had purchased a lot of material himself that he used to construct Nia’s kitchen. Mark also sent an invoice for his work to Karacal Kitchens – (60 hours X $20 per hour) = $1200. He says he is owed this for working in Barry’s shed on Nia’s kitchen. QUESTION:Questions on Contracts: Formation and Contents 1. Are there any enforceable agreements between any of the parties? If so who are the parties to the agreement and what are the terms? 2. Can either Barry, Karl and Kelsey argue that there is no contract with Mark because he is a minor? 3. Can Nia use the legal principle ‘privity of contract’ to argue that she does not have to pay Karacal Kitchens for the kitchen? Question on Contracts: Validity and Ending 4. Can Karl and Kara use the legal principle of ’termination by subsequent agreement’ to make the contract between Karacal Kitchens and Nia fully enforceable? Questions on Competition and Consumer Law and Law of Agency 5. Would the Australian Consumer Law apply to any of agreements? Why/why not? 6. What legal relationship do you believe Barry has with Karacal Kitchens? Is he an employee or an agent and why does it matter?