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There was only one current agency conflict that I found and that was the improperly handling of customers’ accounts by the San Francisco bank Wells Fargo. In this case, the employees of this bank opened accounts and transferred funds that were not wanted by the customers. In doing so the employees were rewarded with compensation due to selling products and opening accounts (Competitive Enterprise Institute). Possible solutions to resolving problems within the agency are to audit any work done by management, investors and analysts need to monitor anyone that is performing poorly, get rid of upper management that is not performing properly, and vote for a new board of directors if shareholders are not satisfied with results. If managers focus on the shareholders interest rather than their own then most of these problems can be solved.
In: Accounting
On July 1, Year 1, Danzer Industries Inc. issued $68,000,000 of 20-year, 11% bonds at a market (effective) interest rate of 14%, receiving cash of $54,404,080. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Required:
For all journal entries: If an amount box does not require an entry, leave it blank.
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds.
Year 1 July 1 | Cash | ||
Discount on Bonds Payable | |||
Bonds Payable |
Feedback
2. Journalize the entries to record the following:
a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the interest method. (Round to the nearest dollar.)
Year 1 Dec. 31 | Interest Expense | ||
Discount on Bonds Payable | |||
Cash |
Feedback
b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the interest method. (Round to the nearest dollar.)
Year 2 June 30 | Interest Expense | ||
Discount on Bonds Payable | |||
Cash |
Feedback
3. Determine the total interest expense for
Year 1.
$
In: Accounting
During the year ended December 31, 2019, Parent Company (the parent) sold merchandise to Subsidiary Corporation (a 90%-owned subsidiary) for a price of $32,340, at a markup of 32% of cost. Subsidiary sold merchandise acquired from Parent to outsider customers for $38,500 during 2019. Included in Subsidiary’s January 1, 2019, inventories were goods acquired from Parent at a billed price of $3,036 and included in Subsidiary’s December 31, 2019, inventories were goods acquired from Parent at a billed price of $2,310.
(i) Prepare the working paper eliminating entries (in journal entry format) related to the intercompany sale of merchandise for the year ended December 31, 2019.
(ii) Show how the working paper eliminating entry in part (i) adjusts cost of goods sold and ending inventory to the correct consolidated balances.
Parent
|
Subsidiary
|
Adjustments & Eliminations |
Consolidated |
||
Debits |
Credits |
||||
Cost of goods sold |
|||||
Inventory |
(iii) How (increase or decrease and the amount) is Parent’s 2019 equity in income of Subsidiary affected by the intercompany sale of merchandise?
In: Accounting
Equipment was acquired at the beginning of the year at a cost of $35,000. The equipment was depreciated using the A method of depreciation that provides periodic depreciation expense based on the declining book value of a fixed asset over its estimated life.double-declining-balance method based on an estimated useful life of ten years and an estimated The estimated value of a fixed asset at the end of its useful life.residual value of $680.
a. What was the The systematic periodic
transfer of the cost of a fixed asset to an expense account during
its expected useful life.depreciation for the first year?
$
b. Assuming the equipment was sold at the end
of year 2 for $8,090, determine the gain or loss on the sale of the
equipment.
$ Loss
Feedback
Book value is the asset cost minus accumulated depreciation. In the first year, the balance in the accumulated depreciation account is zero.
Compare the book value to the sale price. If the book value is more than the sale price, the equipment was sold for a loss. If the book value is less than the sale price, the equipment was sold for a gain.
Learning Objective 3.
c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.
Cash
|
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Accumulated Depreciation-Equipment
|
|||
Loss on Sale of Equipment
|
|||
Equipment
|
In: Accounting
On June 30, 2018, Georgia-Atlantic, Inc., leased warehouse equipment from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $403,067 over a five-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2018. Georgia-Atlantic’s incremental borrowing rate is 8%, the same rate IC used to calculate lease payment amounts. IC purchased the equipment from Builders, Inc.. at a cost of $3.4 million. (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.)
Required: 1. What pretax amounts related to the lease would IC report in its balance sheet at December 31, 2018?
2. What pretax amounts related to the lease would IC report in its income statement for the year ended December 31, 2018?
In: Accounting
1.
These items are taken from the financial statements of Grouper Corporation for 2022.
Retained earnings (beginning of year) |
$33,280 | |
Utilities expense |
2,110 | |
Equipment |
68,280 | |
Accounts payable |
22,570 | |
Cash |
15,070 | |
Salaries and wages payable |
5,840 | |
Common stock |
12,000 | |
Dividends |
12,000 | |
Service revenue |
69,290 | |
Prepaid insurance |
6,340 | |
Maintenance and repairs expense |
1,690 | |
Depreciation expense |
3,490 | |
Accounts receivable |
15,970 | |
Insurance expense |
2,310 | |
Salaries and wages expense |
38,290 | |
Accumulated depreciation—equipment |
22,570 |
(a1)
Prepare an income statement for the year ended December 31, 2022. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
2.
You are provided with the following information for Ayayai Enterprises, effective as of its April 30, 2022, year-end.
Accounts payable |
$844 | |
Accounts receivable |
910 | |
Accumulated depreciation—equipment |
670 | |
Cash |
1,370 | |
Common stock |
1,200 | |
Cost of goods sold |
1,070 | |
Depreciation expense |
325 | |
Dividends |
335 | |
Equipment |
2,520 | |
Income tax expense |
175 | |
Income taxes payable |
145 | |
Insurance expense |
220 | |
Interest expense |
410 | |
Inventory |
1,067 | |
Land |
3,200 | |
Mortgage payable |
3,600 | |
Notes payable (due March 31, 2023) |
161 | |
Prepaid insurance |
70 | |
Retained earnings (beginning) |
1,600 | |
Salaries and wages expense |
690 | |
Salaries and wages payable |
232 | |
Sales revenue |
5,200 | |
Stock investments (short-term) |
1,290 |
(a1)
Prepare an income statement for Ayayai Enterprises for the year ended April 30, 2022. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
In: Accounting
Troy Engines, Ltd., manufactures a variety of engines for use in heavy equipment. The company has always produced all of the necessary parts for its engines, including all of the carburetors. An outside supplier has offered to sell one type of carburetor to Troy Engines, Ltd., for a cost of $32 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally: |
Per Unit | 14,200 Units Per Year |
|||
Direct materials | $ | 9 | $ | 127,800 |
Direct labor | 11 | 156,200 | ||
Variable manufacturing overhead | 3 | 42,600 | ||
Fixed manufacturing overhead, traceable | 6* | 85,200 | ||
Fixed manufacturing overhead, allocated | 13 | 184,600 | ||
Total cost | $ | 42 | $ | 596,400 |
*40% supervisory salaries; 60% depreciation of special equipment (no resale value). |
Required: |
1a. |
Assuming that the company has no alternative use for the facilities that are now being used to produce the carburetors, compute the total cost of making and buying the parts. (Round your Fixed manufacturing overhead per unit rate to 2 decimals.) |
1b. | Should the outside supplier’s offer be accepted? | ||||
|
2a. |
Suppose that if the carburetors were purchased, Troy Engines, Ltd., could use the freed capacity to launch a new product. The segment margin of the new product would be $112,720 per year. Compute the total cost of making and buying the parts. (Round your Fixed manufacturing overhead per unit rate to 2 decimals.) |
2b. |
Should Troy Engines, Ltd., accept the offer to buy the carburetors for $32 per unit? |
||||
|
In: Accounting
question: Why is retained earnings on December 31, 2018, equal to $80,000 in all three cases despite the reporting of different amounts of net income each year?
Is it A,B, or C?
A: Net income over sufficiently long time periods equals cash inflows minus cash outflows. Walmart acquired the land in 2016 for $100,000 and sold it for $180,000 in 2018. Thus, the total effect on net income through the realization of the increase in the va
B: Net income over sufficiently long time periods equals cash inflows plus cash outflows. Walmart acquired the land in 2016 for $100,000 and sold it for $180,000 in 2018. Thus, the total effect on net income through the realization of the increase in the val
C: Net income over sufficiently long time periods equals cash inflows minus cash outflows. Walmart acquired the land in 2016 for $100,000 and sold it for $180,000 in 2018. Thus, the total effect on net income through the realization of the increase in the va
In: Accounting
The December 31, 2019, balance sheet for Franklin Corporation is presented here. These are the only accounts on Franklin’s balance sheet. Amounts indicated by question marks (?) can be calculated using the following additional information:
FRANKLIN CORPORATION Balance Sheet As of December 31, 2019 |
|||
Assets | |||
Cash | $ | 40,000 | |
Accounts receivable (net) | ? | ||
Inventory | ? | ||
Property, plant, and equipment (net) | 294,000 | ||
$ | 441,000 | ||
Liabilities and Stockholders’ Equity | |||
Accounts payable (trade) | $ | ? | |
Income taxes payable (current) | 40,000 | ||
Long-term debt | ? | ||
Common stock | 300,000 | ||
Retained earnings | ? | ||
$ | ? | ||
Additional Information | |||
Current ratio (at year end) | 1.5 to 1.0 | ||
Total liabilities ÷ Total stockholders’ equity | 80 | % | |
Gross margin percent | 30 | % | |
Inventory turnover (Cost of goods sold ÷ Ending inventory) | 9.8 | times | |
Gross margin for 2019 | $ | 315,000 | |
Required
(For all requirements, negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)
|
In: Accounting
Income Statement
Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 53,700 units will be produced, with the following total costs:
Direct materials | ? |
Direct labor | 72,000 |
Variable overhead | 23,000 |
Fixed overhead | 250,000 |
Next year, Pietro expects to purchase $127,500 of direct materials. Projected beginning and ending inventories for direct materials and work in process are as follows:
Direct materials Inventory |
Work-in-Process Inventory |
|
Beginning | $6,000 | $13,300 |
Ending | $5,900 | $15,300 |
Next year, Pietro expects to produce 53,700 units and sell
53,000 units at a price of $17.00 each. Beginning inventory of
finished goods is $42,500, and ending inventory of finished goods
is expected to be $34,000. Total selling expense is projected at
$29,500, and total administrative expense is projected at
$112,500.
Required:
1. Prepare an income statement in good form. Round the percent to four decimal places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as 88.35.
Pietro Frozen Foods, Inc. | |||
Income Statement | |||
For the Coming Year | |||
Percent | |||
Sales | $ | % | |
Cost of goods sold | % | ||
Gross margin | $ | % | |
Less operating expenses: | |||
Selling expenses | $ | ||
Administrative expenses | % | ||
Operating income | $ |
% |
2. What if the cost of goods sold percentage for the past few years was 50.17 percent? Management's reaction might be:
In: Accounting
The Regal Cycle Company manufactures three types of bicycles—a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: |
Total | Dirt Bikes |
Mountain Bikes |
Racing Bikes |
|||||
Sales | $ | 925,000 | $ | 262,000 | $ | 405,000 | $ | 258,000 |
Variable manufacturing and selling expenses | 463,000 | 113,000 | 196,000 | 154,000 | ||||
Contribution margin | 462,000 | 149,000 | 209,000 | 104,000 | ||||
Fixed expenses: | ||||||||
Advertising, traceable | 70,500 | 9,000 | 40,800 | 20,700 | ||||
Depreciation of special equipment | 44,200 | 20,900 | 7,800 | 15,500 | ||||
Salaries of product-line managers | 114,200 | 40,300 | 38,400 | 35,500 | ||||
Allocated common fixed expenses* | 185,000 | 52,400 | 81,000 | 51,600 | ||||
Total fixed expenses | 413,900 | 122,600 | 168,000 | 123,300 | ||||
Net operating income (loss) | $ | 48,100 | $ | 26,400 | $ | 41,000 | $ | (19,300) |
*Allocated on the basis of sales dollars. |
Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. |
Required: |
1a. |
What is the impact on net operating income by discontinuing racing bikes? (Decreases should be indicated by a minus sign.) |
1b. | Should production and sale of the racing bikes be discontinued? | ||||
|
2a. | Prepare a segmented income statement. |
2b. |
Would a segmented income statement format be more usable to management in assessing the long-run profitability of the various product lines. |
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|
In: Accounting
The debits to Work in Process—Roasting Department for St. Arbucks Coffee Company for July 2016, together with information concerning production, are as follows:
Work in process, July 1, 600 pounds, 40% completed | $1,944* | |||
*Direct materials (600 X $2.8) | $1,680 | |||
Conversion (600 X 40% X $1.1) | $264 | |||
$1,944 | ||||
Coffee beans added during July, 19,000 pounds | 52,250 | |||
Conversion costs during July | 22,512 | |||
Work in process, July 31, 1,000 pounds, 40% completed | ? | |||
Goods finished during July, 18,600 pounds | ? |
All direct materials are placed in process at the beginning of production.
a. Prepare a cost of production report, presenting the following computations:
If an amount is zero, enter in "0". For the cost per equivalent unit, round your answer to two decimal places.
St. Arbucks Coffee Company | |||
Cost of Production Report-Roasting Department | |||
For the Month Ended July 31, 2016 | |||
Unit Information | |||
Units charged to production: | |||
Inventory in process, July 1 | |||
Received from materials storeroom | |||
Total units accounted for by the Roasting Department | |||
Units to be assigned costs: | |||
Equivalent Units | |||
Whole Units | Direct Materials (1) | Conversion (1) | |
Inventory in process, July 1 | |||
Started and completed in July | |||
Transferred to finished goods in July | |||
Inventory in process, July 31 | |||
Total units to be assigned costs | |||
Cost Information | |||
Costs per equivalent unit: | |||
Direct Materials | Conversion | ||
Total costs for July in Roasting Department | $ | $ | |
Total equivalent units | |||
Cost per equivalent unit (2) | $ | $ | |
Costs assigned to production: | |||
Direct Materials | Conversion | Total | |
Inventory in process, July 1 | $ | ||
Costs incurred in July | |||
Total costs accounted for by the Roasting Department | $ | ||
Cost allocated to completed and partially completed units: | |||
Inventory in process, July 1 balance | $ | ||
To complete inventory in process, July 1 | $ | $ | |
Cost of completed July 1 work in process | $ | ||
Started and completed in July | |||
Transferred to finished goods in July (3) | $ | ||
Inventory in process, July 31 (4) | |||
Total costs assigned by the Roasting Department | $ | ||
b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (June). If required, round your answers to the nearest cent.
Increase or Decrease | Amount | |
Change in direct materials cost per equivalent unit | $ | |
Change in conversion cost per equivalent unit | $ |
Check My Work1 more Check My Work uses remaining.
The debits to Work in Process—Roasting Department for St. Arbucks Coffee Company for July 2016, together with information concerning production, are as follows:
Work in process, July 1, 600 pounds, 40% completed | $1,944* | |||
*Direct materials (600 X $2.8) | $1,680 | |||
Conversion (600 X 40% X $1.1) | $264 | |||
$1,944 | ||||
Coffee beans added during July, 19,000 pounds | 52,250 | |||
Conversion costs during July | 22,512 | |||
Work in process, July 31, 1,000 pounds, 40% completed | ? | |||
Goods finished during July, 18,600 pounds | ? |
All direct materials are placed in process at the beginning of production.
a. Prepare a cost of production report, presenting the following computations:
If an amount is zero, enter in "0". For the cost per equivalent unit, round your answer to two decimal places.
St. Arbucks Coffee Company | |||
Cost of Production Report-Roasting Department | |||
For the Month Ended July 31, 2016 | |||
Unit Information | |||
Units charged to production: | |||
Inventory in process, July 1 | |||
Received from materials storeroom | |||
Total units accounted for by the Roasting Department | |||
Units to be assigned costs: | |||
Equivalent Units | |||
Whole Units | Direct Materials (1) | Conversion (1) | |
Inventory in process, July 1 | |||
Started and completed in July | |||
Transferred to finished goods in July | |||
Inventory in process, July 31 | |||
Total units to be assigned costs | |||
Cost Information | |||
Costs per equivalent unit: | |||
Direct Materials | Conversion | ||
Total costs for July in Roasting Department | $ | $ | |
Total equivalent units | |||
Cost per equivalent unit (2) | $ | $ | |
Costs assigned to production: | |||
Direct Materials | Conversion | Total | |
Inventory in process, July 1 | $ | ||
Costs incurred in July | |||
Total costs accounted for by the Roasting Department | $ | ||
Cost allocated to completed and partially completed units: | |||
Inventory in process, July 1 balance | $ | ||
To complete inventory in process, July 1 | $ | $ | |
Cost of completed July 1 work in process | $ | ||
Started and completed in July | |||
Transferred to finished goods in July (3) | $ | ||
Inventory in process, July 31 (4) | |||
Total costs assigned by the Roasting Department | $ | ||
b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (June). If required, round your answers to the nearest cent.
Increase or Decrease | Amount | |
Change in direct materials cost per equivalent unit | $ | |
Change in conversion cost per equivalent unit | $ |
Check My Work1 more Check My Work uses remaining.
In: Accounting
Katie's Wedding Planning Service completed the following transactions: (10 MARKS)
a. Billed clients for service, $1,350.
b. Completed work for clients who paid $500 cash.
c. Received a bill for utilities to be paid later, $120. d. Collected cash on account from clients, $800.
e. Paid the amount due for utilities.
f. Withdrew $400 cash for personal use.
In: Accounting
1. Alicia has been working for JMM Corp. for 32 years. Alicia participates in JMM’s defined benefit plan. Under the plan, for every year of service for JMM she is to receive 2 percent of the average salary of her three highest years of compensation from JMM. She retired on January 1, 2018. Before retirement, her annual salary was $570,000, $600,000, and $630,000 for 2015, 2016, and 2017. What is the maximum benefit Alicia can receive in 2018?
2.Brooklyn has been contributing to a traditional IRA for seven years (all deductible contributions) and has a total of $30,000 in the account. In 2018, she is 39 years old and has decided that she wants to get a new car. She withdraws $20,000 from the IRA to help pay for the car. She is currently in the 24 percent marginal tax bracket. What amount of the withdrawal, after tax considerations, will Brooklyn have available to purchase the car?
In: Accounting
Activity-Based Budget
Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are 15,600 for the Sleepeze, 12,700 for the Plushette, and 5,100 for the Ultima. Gene Dixon, vice president of sales, has provided the following information:
Suppose that Gene is considering three sales scenarios as follows:
Pessimistic | Expected | Optimistic | ||||||
Price | Quantity | Price | Quantity | Price | Quantity | |||
Sleepeze | $173 | 12,700 | $188 | 15,600 | $188 | 17,960 | ||
Plushette | 302 | 10,130 | 349 | 12,700 | 363 | 14,440 | ||
Ultima | 890 | 2,170 | 980 | 5,100 | 1,200 | 5,100 |
Suppose Gene determines that next year's Sales Division activities include the following:
Research—researching current and future conditions in the industry
Shipping—arranging for shipping of mattresses and handling calls from purchasing agents at retail stores to trace shipments and correct errors
Jobbers—coordinating the efforts of the independent jobbers who sell the mattresses
Basic ads—placing print and television ads for the Sleepeze and Plushette lines
Ultima ads—choosing and working with the advertising agency on the Ultima account
Office management—operating the Sales Division office
The percentage of time spent by each employee of the Sales Division on each of the above activities is given in the following table:
Gene |
Research Assistant |
Administrative Assistant |
||||
Research | - | 75 | % | - | ||
Shipping | 30 | % | - | 15 | % | |
Jobbers | 10 | 10 | 25 | |||
Basic ads | - | 15 | 40 | |||
Ultima ads | 35 | - | 5 | |||
Office management | 25 | - | 15 |
Additional information is as follows:
Required:
1. Prepare an activity-based budget for next year by activity. Use the expected level of sales activity. If required, round answers to the nearest dollar.
Olympus, Inc. | |||
Activity-Based Budget | |||
For Next Year | |||
Research: | |||
Salaries | $ | ||
Internet connections | $ | ||
Shipping: | |||
Salaries | $ | ||
Telephone | |||
Ship Sleepeze | |||
Ship Plushette | |||
Ship Ultima | |||
Jobbers: | |||
Salaries | $ | ||
Telephone | |||
Commissions | |||
Basic ads: | |||
Salaries | $ | ||
Advertising | |||
Ultima ads: | |||
Salaries | $ | ||
Advertising | |||
Office management: | |||
Salaries | $ | ||
Depreciation | |||
Office Supplies | |||
Total | $ |
2. On the basis of the budget prepared in Requirement 1, advise Gene regarding actions that might be taken to reduce expenses.
In: Accounting