Pat Inc. purchased the $100,000 face value outstanding bonds of Slinger Company, its 80%-owned subsidiary, for $97,000 on January 1, 20X3. The bonds mature on January 1, 20X6. The bonds have a stated interest rate of 8% and were sold for $101,000 on January 1, 20X1. The bonds pay interest each January 1. Amortization of the issue premium and /or discount will be on the straight-line basis. Instruction:
1. Record the entries Slinger Company would make on its books for 20X3
2. Record the entries Pat Inc. would make on its books for 20X3
In: Accounting
| Days Past Due | |||||||
| Customer | Balance | Not Past Due | 1-30 | 31-60 | 61-90 | 91-120 | over 120 |
|---|---|---|---|---|---|---|---|
| Subtotals | 553,900 | 307,500 | 132,900 | 60,900 | 20,500 | 18,300 | 13,800 |
The following accounts were unintentionally omitted from the aging schedule:
| Customer | Due Date | Balance | ||
|---|---|---|---|---|
| Arcade Beauty | May 28, 20Y1 | $3,000 | ||
| Creative Images | Sept. 7, 20Y1 | 6,200 | ||
| Excel Hair Products | Oct. 17, 20Y1 | 800 | ||
| First Class Hair Care | Oct. 24, 20Y1 | 2,100 | ||
| Golden Images | Nov. 23, 20Y1 | 700 | ||
| Oh The Hair | Nov. 29, 20Y1 | 3,600 | ||
| One Stop Hair Designs | Dec. 2, 20Y1 | 2,300 | ||
| Visions Hair and Nail | Jan. 5, 20Y2 | 7,600 | ||
Wig Creations has a past history of uncollectible accounts by age category, as follows:
| Age Class | Percent Uncollectible | |
|---|---|---|
| Not past due | 2 | % |
| 1-30 days past due | 4 | |
| 31-60 days past due | 12 | |
| 61-90 days past due | 18 | |
| 91-120 days past due | 40 | |
| Over 120 days past due | 85 | |
Required:
1. Determine the number of days past due for each of the preceding accounts. If an account is not past due, enter a zero.
| Customer | Due Date | Number of Days Past Due |
| Arcade Beauty | May 28, 20Y1 | days |
| Creative Images | Sept. 7, 20Y1 | days |
| Excel Hair Products | Oct. 17, 20Y1 | days |
| First Class Hair Care | Oct. 24, 20Y1 | days |
| Golden Images | Nov. 23, 20Y1 | days |
| Oh The Hair | Nov. 29, 20Y1 | days |
| One Stop Hair Designs | Dec. 2, 20Y1 | days |
| Visions Hair and Nail | Jan. 5, 20Y2 | days |
2. Complete the aging of receivables schedule by adding the omitted accounts to the bottom of the schedule and updating the totals. If an amount box does not require an entry, leave it blank.
| Wig Creations Company | |||||||
| Aging of Receivables Schedule | |||||||
| December 31, 20Y1 | |||||||
| Customer | Balance | Not Past Due | Days Past Due 1-30 | Days Past Due 31-60 | Days Past Due 61-90 | Days Past Due 91-120 | Days Past Due Over 120 |
| Subtotals | |||||||
| Arcade Beauty | |||||||
| Creative Images | |||||||
| Excel Hair Products | |||||||
| First Class Hair Care | |||||||
| Golden Images | |||||||
| Oh The Hair | |||||||
| One Stop Hair Designs | |||||||
| Visions Hair and Nail | |||||||
| Total | |||||||
| Percent uncollectible | 2% | 4% | 12% | 18% | 40% | 85% | |
| Estimate of uncollectible accounts | |||||||
3. Estimate the allowance for doubtful
accounts, based on the aging of receivables schedule.
$
4. Assume that the allowance for doubtful accounts for Wig Creations has a credit balance of $1,820 before adjustment on December 31, 20Y1. Journalize the adjustment for uncollectible accounts.
5. Assume that the adjusting entry in (4) was inadvertently omitted, how would the omission affect the balance sheet and income statement?
On the balance sheet, assets would be by because the allowance for doubtful accounts would be by . In addition, the owner’s capital account would be by because bad debt expense would be and net income by on the income statement.
In: Accounting
Discuss the partnership taxation topic of hot assets.
In: Accounting
Post the total amounts from the journal in the following general ledger accounts and in the accounts receivable subsidiary ledger accounts for Paula Kohr, Page Alistair, and Nic Nelson.
[The following information applies to the questions
displayed below.]
Wiset Company completes these transactions during April of the
current year (the terms of all its credit sales are 2/10,
n/30).
| Apr. | 2 | Purchased $15,600 of merchandise on credit from Noth Company, invoice dated April 2, terms 2/10, n/60. | |||
| 3 | (a) | Sold merchandise on credit to Page Alistair, Invoice No. 760, for $4,300 (cost is $3,100). | |||
| 3 | (b) | Purchased $1,590 of office supplies on credit from Custer, Inc. Invoice dated April 2, terms n/10 EOM. | |||
| 4 | Issued Check No. 587 to World View for advertising expense, $868. | ||||
| 5 | Sold merchandise on credit to Paula Kohr, Invoice No. 761, for $9,900 (cost is $6,900). | ||||
| 6 | Received an $80 credit memorandum from Custer, Inc., for the return of some of the office supplies received on April 3. | ||||
| 9 | Purchased $11,850 of store equipment on credit from Hal’s Supply, invoice dated April 9, terms n/10 EOM. | ||||
| 11 | Sold merchandise on credit to Nic Nelson, Invoice No. 762, for $11,700 (cost is $6,500). | ||||
| 12 | Issued Check No. 588 to Noth Company in payment of its April 2 invoice less the discount. | ||||
| 13 | (a) | Received payment from Page Alistair for the April 3 sale less the discount. | |||
| 13 | (b) | Sold $12,400 of merchandise on credit to Page Alistair (cost is $3,400), Invoice No. 763. | |||
| 14 | Received payment from Paula Kohr for the April 5 sale less the discount. | ||||
| 16 | (a) | Issued Check No. 589, payable to Payroll, in payment of sales salaries expense for the first half of the month, $10,400. Cashed the check and paid employees. | |||
| 16 | (b) | Cash sales for the first half of the month are $52,660 (cost is $36,700). (Cash sales are recorded daily from cash register data but are recorded only twice in this problem to reduce repetitive entries.) | |||
| 17 | Purchased $11,400 of merchandise on credit from Grant Company, invoice dated April 17, terms 2/10, n/30. | ||||
| 18 | Borrowed $60,000 cash from First State Bank by signing a long-term note payable. | ||||
| 20 | (a) | Received payment from Nic Nelson for the April 11 sale less the discount. | |||
| 20 | (b) | Purchased $820 of store supplies on credit from Hal’s Supply, invoice dated April 19, terms n/10 EOM. | |||
| 23 | (a) | Received a $700 credit memorandum from Grant Company for the return of defective merchandise received on April 17. | |||
| 23 | (b) | Received payment from Page Alistair for the April 13 sale less the discount. | |||
| 25 | Purchased $11,185 of merchandise on credit from Noth Company, invoice dated April 24, terms 2/10, n/60. | ||||
| 26 | Issued Check No. 590 to Grant Company in payment of its April 17 invoice less the return and the discount. | ||||
| 27 | (a) | Sold $3,180 of merchandise on credit to Paula Kohr, Invoice No. 764 (cost is $2,700). | |||
| 27 | (b) | Sold $8,400 of merchandise on credit to Nic Nelson, Invoice No. 765 (cost is $5,110). | |||
| 30 | (a) | Issued Check No. 591, payable to Payroll, in payment of the sales salaries expense for the last half of the month, $10,400. | |||
| 30 | (b) | Cash sales for the last half of the month are $71,000 (cost is $58,000). |
In: Accounting
Distinguish between recourse and non recourse debt within a partnership.
In: Accounting
Discuss guaranteed payments within the confines of partnership operations.
In: Accounting
Westside produces pillows with monthly unit sales and costs given as: Unit Sales: 4000 units Price: $10.00 per unit Variable costs: $5.50 per unit Fixed costs: $15,000
1. Westside is considering a 5% price cut without additional fixed cost. By what % would sales need to increase to keep profit constant for the 5% price cut?
2. Replacing goose feathers with synthetic filler will decrease the unit variable cost by $0.22. By what % would sales have to increase to assure the 5% price cut?
3. Given the production capacity of 4,000, the company has to install another workstation at a monthly cost of $800 (assume no change of variable costs). The new station raises plant capacity by 1,000 units. By what % would sales have to increase to justify a 5% price cut?
In: Accounting
Brightstone Tire and Rubber Company has capacity to produce 176,500 tires. Brightstone presently produces and sells 131,600 tires for the North American market at a price of $190 per tire. Brightstone is evaluating a special order from a European automobile company, Euro Motors. Euro is offering to buy 15,100 tires for $115.30 per tire. Brightstone’s accounting system indicates that the total cost per tire is as follows:
| Direct materials | $55 |
| Direct labor | 24 |
| Factory overhead (57% variable) | 23 |
| Selling and administrative expenses (43% variable) | 27 |
| Total | $129.00 |
Brightstone pays a selling commission equal to 4% of the selling price on North American orders, which is included in the variable portion of the selling and administrative expenses. However, this special order would not have a sales commission. If the order was accepted, the tires would be shipped overseas for an additional shipping cost of $7.06 per tire. In addition, Euro has made the order conditional on receiving European safety certification. Brightstone estimates that this certification would cost $121,253.
| Required: | |
| A. | Prepare a differential analysis dated January 21 on whether to reject (Alternative 1) or accept (Alternative 2) the special order from Euro Motors. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required. |
| B. | Determine whether the company should reject (Alternative 1) or accept (Alternative 2) the special order from Euro Motors |
| C. | What is the minimum price per unit that would be financially acceptable to Brightstone? |
A. Prepare a differential analysis dated January 21 on whether to reject (Alternative 1) or accept (Alternative 2) the special order from Euro Motors. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required.
Score: 6/143
|
Differential Analysis |
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Reject Order (Alternative 1) or Accept Order (Alternative 2) |
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January 21 |
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1 |
Reject Order |
Accept Order |
Differential Effect on Income |
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2 |
(Alternative 1) |
(Alternative 2) |
(Alternative 2) |
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3 |
✔ |
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11 |
B. Determine whether the company should reject (Alternative 1) or accept (Alternative 2) the special order from Euro Motors.
Reject
Accept
The company is indifferent since the result is the same regardless of which alternative is chosen.
Points:
0 / 1
C. What is the minimum price per unit that would be financially acceptable to Brightstone?
In: Accounting
Required
For each of the following events, determine the amount of freight paid by The Box Company. Also indicate whether the freight cost would be classified as a product or period (selling and administrative) cost.
Purchased inventory with freight costs of $1,900. The goods were shipped FOB shipping point.
Sold merchandise to a customer. Freight costs were $2,200. The goods were shipped FOB shipping point.
Purchased merchandise inventory with freight costs of $2,800. The merchandise was shipped FOB destination.
Shipped merchandise to customers, freight terms FOB destination. The freight costs were $1,700
(Not all cells will require input.)
In: Accounting
onestoga Corporation operates manufacturing facilities in State P and State Q. In addition, the corporation owns nonbusiness rental property in State Q. Conestoga incurred the following compensation expenses:
|
Sixty percent of the time is spent by the administrative staff located in State Q and 30% of the time spent by officers located in State Q are devoted to the operation, maintenance, and supervision of the rental property. Both states exclude such rent income from the definition of apportionable income.
Round your answers to four decimal places before converting to a percentage. If required, round your final answers to two decimal places.
Conestoga's payroll factor for State P is % and for State Q is %.
In: Accounting
A-13 Present Value of Cash Flows Rush Corporation plans to acquire production equipment for $625,000 that will be depreciated for tax purposes as follows: year 1, $125,000; year 2, $215,000; and in each of years 3 through 5, $95,000 per year. A 14 percent discount rate is appropriate for this asset, and the company’s tax rate is 40 percent. Use Exhibit A.8 and Exhibit A.9. Required: a. Compute the present value of the tax shield resulting from depreciation. (Round PV factor to 3 decimal places and other intermediate calculations to nearest whole number.) b. Compute the present value of the tax shield from depreciation assuming straight-line depreciation ($125,000 per year). (Round PV factor to 3 decimal places and other intermediate calculations to nearest whole number.)
In: Accounting
Calculate the depreciation for the following scenarios. Bought a piece of equipment costing $30,000, with a salvage value of $10,000.
a) Figure the SL depreciation for year one and year two. Assuming a 10 year useful life.
b) Figure the units of production (activity) depreciation. Assuming that total units will be 100,000.
Year 1 – 20,000 units
Year 2 - 30,000 units
c)Figure the double declining balance depreciation for year one and year two. Assuming a 4 year life.
d) Figure the SL depreciation; assuming a 10 year life; if the equipment was purchased on July 1st.
e) Prepare the Journal Entry for a (SL Depreciation)
In: Accounting
The following information about the payroll for the week ended December 30 was obtained from the records of Pharrell Co.:
| Salaries: | |
| Sales salaries | $402,000 |
| Warehouse salaries | 210,000 |
| Office salaries | 165,000 |
| $777,000 | |
| Deductions: | |
| Income tax withheld | $135,975 |
| Social security tax withheld | 46,620 |
| Medicare tax withheld | 11,655 |
| Retirement savings | 17,094 |
| Group insurance | 13,986 |
| $225,330 | |
| Tax rates assumed: | |
| Social security | 6% |
| Medicare | 1.5% |
| State unemployment (employer only) | 5.4% |
| Federal unemployment (employer only) | 0.6% |
| Required: | |||||
| 1. | Assuming that the payroll for the last week of the year is to
be paid on December 31, journalize the following entries (refer to
the Chart of Accounts for exact wording of account titles):
|
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| 2. | Assuming that the payroll for the last week of the year is to
be paid on January 5 of the following fiscal year, journalize the
following entries (refer to the Chart of Accounts for exact wording
of account titles):
|
| CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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X
Journal
Scroll down to access additional pages of the journal.
| 1. | Assuming that the payroll for the last week of the year is to
be paid on December 31, journalize the following entries (refer to
the Chart of Accounts for exact wording of account titles):
|
PAGE 11
JOURNAL
ACCOUNTING EQUATION
| DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
|---|---|---|---|---|---|---|---|---|
|
1 |
| 2. | Assuming that the payroll for the last week of the year is to be paid on January 5 of the following fiscal year, journalize the following entries (refer to the Chart of Accounts for exact wording of account titles): |
| A. On page 11 of the journal: December 30, to record the payroll. |
PAGE 11
JOURNAL
ACCOUNTING EQUATION
| DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
|---|---|---|---|---|---|---|---|---|
|
1 |
| B. On page 12 of the journal: January 5, to record the employer's payroll taxes on the payroll to be paid on January 5. Because it is a new fiscal year, all salaries are subject to unemployment compensation taxes. |
PAGE 12
JOURNAL
ACCOUNTING EQUATION
| DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
|---|---|---|---|---|---|---|---|---|
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In: Accounting
At July 31, Crane Company has this bank information: cash
balance per bank $8,360, outstanding checks $800, deposits in
transit $1,325 and a bank service charge $20.
Determine the adjusted cash balance per bank at July 31.
| The adjusted cash balance per bank at July 31 | $ |
In: Accounting
During April 2019 Kelly Consulting entered into the following
transactions:
Apr 2 Received cash from clients as an advance payment
for services to be provided in May for $ 3,500.
Apr 5 Received cash from clients on account, $
3,800.
Apr 9 Paid cash for a newspaper advertisement, $
300.
Apr 13 Paid Office Stationary Company for part of the
debt incurred last year, $ 400. When the office supplies were
initially purchased, they were on account.
Apr 15 Cash received for services provided $
8,500.
Apr 16 Paid part-time receptionist for two weeks’ salary including
the amount owing on March 31, 2008. The total payment was for $
750.
Apr 17 Recorded cash from cash clients for fees earned
during Apr 1-17 for $ 8,200.
Apr 20 Purchased supplies on account, $ 400.
Apr 21 Recorded services provided on account for the
period Apr 16 – 20, $ 3,900.
Apr 25 Recorded cash from cash clients for fees earned
for the period Apr 17-23, $ 5,100.
Apr 27 Received cash from clients on account, $
9,500.
Apr 28 Paid part-time receptionist for two weeks’
salary, $ 750.
Apr 29 Paid telephone bill for April, $ 120.
Apr 30 Paid electricity bill for April, $ 290.
Apr 30 Recorded cash from cash clients for fees earned
for the period Apr 26-30, $ 3,875.
Apr 30 Recorded services provided on account for the
remainder of April, $ 3,200.
Apr 30 Kelly withdrew $ 8,000 for personal use.
Instructions
Record the above transactions in the general journal. An
explanation line is not required.
Post the beginning account balance and all of April’s transactions
to T accounts. Prepare an unadjusted trial balance. Ensure debits
equal credits. Remember that the cash T account is quite large so
give yourself enough room.
At the end of April, the following adjustment data was assembled.
Journalize the adjusting entries in the general journal and post to
the T accounts. .
Apr 30 Insurance used up during April, $ 300.
Apr 30 Supplies remaining on hand at Apr 30th are $
600.
Apr 30 Office equipment depreciated during the month. Original cost
of equipment is $ 14,500. Equipment expected to last 3 years and
have a salvage value of $2,625. Calculate and record the monthly
depreciation amount rounded to full dollars.
Apr 30 Accrued receptionist salary on Apr 30th is $
240.
Apr 30 Rent expired (used up) during April was $
1,600.
Apr 30 Unearned fees remaining on April 30 are $
2,000.
Instructions (continued)
Prepare an unadjusted trial balance ensuring total debits equal
total credits.
Prepare an Income Statement, a Statement of Owner’s Equity and a
Balance Sheet.
Record the closing journal entries into the general journal and
post to the T Accounts. (Usually closing entries are completed at
year-end not after 1 month. I am trying to save you some
work).
Prepare a post-closing trial balance.
What is the current ratio at April 30th?
What is the acid-test ratio at April 30th?
In: Accounting