In: Accounting
Range Energy Corp.’s financial statements for the current year
ended December 31, 2017, have been completed and submitted to you
for review. The equity account balances a year ago, at December 31,
2016, are as follows:
Preferred shares, $4.20 non-cumulative, 12,000
shares authorized, issued, and outstanding |
$768,050 |
Common shares, unlimited shares authorized, 140,000 shares issued and outstanding |
1,460,350 |
Retained earnings | 705,795 |
The only share transactions during 2017 were the declaration and
distribution of a 28,000 common share dividend on July 1 and the
issuance of 18,000 common shares for cash on October 31. The
company’s 2017 profit was $630,880. A cash dividend on the
preferred shares was declared on December 1, but was not paid as of
December 31. Earnings per share for 2017 were calculated as
follows:
Profit |
= |
$630,880 |
= | $3.39 |
Common shares outstanding on Dec. 31, 2017 | 186,000 |
Required:
1-a. The earnings per share is incorrect. Indicate what
changes should be made to the numerator and the denominator?
|
In: Accounting
Exercise 194
The financial statements of Lowz Company appear below:
LOWZ COMPANY Comparative Balance Sheet December 31 |
|||||||||
2020 | 2019 | ||||||||
Assets | |||||||||
Cash | $36,000 | $23,000 | |||||||
Accounts receivable | 25,000 | 34,000 | |||||||
Merchandise Inventory | 32,000 | 15,000 | |||||||
Property, plant, and equipment | 50,000 | 78,000 | |||||||
Accumulated depreciation | (21,000 | ) | (24,000 | ) | |||||
Total | $122,000 | $126,000 | |||||||
Liabilities and Stockholder's Equity | |||||||||
Accounts payable | $18,000 | $23,000 | |||||||
Income taxes payable | 9,000 | 8,000 | |||||||
Bonds payable | 8,000 | 33,000 | |||||||
Common stock | 28,000 | 24,000 | |||||||
Retained earnings | 59,000 | 38,000 | |||||||
Total | $122,000 | $126,000 |
LOWZ COMPANY Income Statement For the Year Ended December 31, 2020 |
|||||
Sales | $400,000 | ||||
Cost of goods sold | 270,000 | ||||
Gross profit | 130,000 | ||||
Operating expenses | 45,000 | ||||
Income from operations | 85,000 | ||||
Interest expense | 5,000 | ||||
Income before income taxes | 80,000 | ||||
Income tax expense | 24,000 | ||||
Net income | $56,000 |
The following additional data were provided: | ||
1. | Dividends declared and paid were $35,000. | |
2. | During the year, equipment was sold for $17,000 cash. This equipment cost $28,000 originally and had a book value of $17,000 at the time of sale. | |
3. | All depreciation expense is in the operating expenses. | |
4. | All sales and purchases are on account. | |
5. | Accounts payable pertain to merchandise suppliers. | |
6. | All operating expenses except for depreciation were paid in cash. |
Prepare a statement of cash flows for Lowz Company using the direct
method. (Show amounts that decrease cash flow with
either a - sign e.g. -15,000 or in parenthesis e.g.
(15,000).)
In: Accounting
The deduction for a contribution to a retirement plan for an owner of a sole proprietorship is not taken on Schedule C.
Select one:
True
False
Question 6
Not yet answered
Points out of 1.00
Flag question
Question text
Assuming Lee owns a dog grooming business, which is a sole proprietorship, and he has net self employment income of $100,000 and he pays SE tax of $16,000 (assumed), the most that he can contribute to a Keogh plan is $25,000.
Select one:
True
False
Question 7
Not yet answered
Points out of 1.00
Flag question
Question text
Assuming Fred owns a fire arms training business, which is a sole proprietorship, and he has net self employment income of $140,000 and he pays SE tax of $20,000 (assumed), the most that he can contribute to a Keogh plan is $26,000.
Select one:
True
False
Question 8
Not yet answered
Points out of 1.00
Flag question
Question text
Partnerships can have special allocations in which income is allocated disproportionately to ownership
Select one:
True
False
Question 9
Not yet answered
Points out of 1.00
Flag question
Question text
A family limited partnership generally separates the value of the business equally between the general partner(s) and the limited partners.
Select one:
True
False
Question 10
Not yet answered
Points out of 1.00
Flag question
Question text
One of the benefits of a FLP is that transfers of the limited partnership interests can be completed at a substantial valuation discount.
Select one:
True
False
In: Accounting
Select a company you are familiar with or one you are currently working in, or one with information publicly available. Using your own words as much as possible, and in not more than 2,000 words (in total):
(a) Provide a brief description of the organisation -
background, the organizational structure, the nature of business,
the industry and the environment it is operating in, its
products/services, etc.
(b) Choose one functional area (e.g. production, sales, customer
service etc.) and describe in detail how accounting information is
used to facilitate and influence decision makings to maximize firm
value.
(c) Discuss on whether the quality of the accounting information you have described achieved the objective of maximizing the firm value. Your comment on the quality of the accounting information can be based on the attributes of accuracy, timeliness and cost of producing the information.
(d) Suggest possible improvements to the quality of the accounting information that the company can adopt.
In: Accounting
If you do not complete your posting and your response postings by the due dates, you will not receive credit for this DQ. Your answer is worth 1 point and your response to another is worth 1 pt for a total of 2 points. Late answer or response will not be eligible to receive any points, so be sure you answer and respond by due dates.
DQ 17 What is an activity cost driver?
In: Accounting
Compare financial and non-financial performance, and explain why planning and control systems should consider both.
In: Accounting
Tami Tyler opened Tami’s Creations, Inc., a small manufacturing company, at the beginning of the year. Getting the company through its first quarter of operations placed a considerable strain on Ms. Tyler’s personal finances. The following income statement for the first quarter was prepared by a friend who has just completed a course in managerial accounting at State University.
Tami’s Creations, Inc. Income Statement For the Quarter Ended March 31 |
||||||
Sales (28,200 units) |
$ |
1,128,000 |
||||
Variable expenses: |
||||||
Variable cost of goods sold |
$ |
473,760 |
||||
Variable selling and administrative |
194,580 |
668,340 |
||||
Contribution margin |
459,660 |
|||||
Fixed expenses: |
||||||
Fixed manufacturing overhead |
322,040 |
|||||
Fixed selling and administrative |
161,870 |
483,910 |
||||
Net operating loss |
$ |
( 24,250) |
||||
Ms. Tyler is discouraged over the loss shown for the quarter, particularly because she had planned to use the statement as support for a bank loan. Another friend, a CPA, insists that the company should be using absorption costing rather than variable costing and argues that if absorption costing had been used the company probably would have reported at least some profit for the quarter.
At this point, Ms. Tyler is manufacturing only one product—a swimsuit. Production and cost data relating to the swimsuit for the first quarter follow:
Units produced |
33,200 |
|||
Units sold |
28,200 |
|||
Variable costs per unit: |
||||
Direct materials |
$ |
7.20 |
||
Direct labor |
$ |
7.60 |
||
Variable manufacturing overhead |
$ |
2.00 |
||
Variable selling and administrative |
$ |
6.90 |
||
Required:
3. During the second quarter of operations, the company again produced 33,200 units but sold 38,200 units. (Assume no change in total fixed costs.)
a. What is the company’s variable costing net operating income (loss) for the second quarter?
b. What is the company’s absorption costing net operating income (loss) for the second quarter?
c. Reconcile the variable costing and absorption costing net operating incomes for the second quarter.
In: Accounting
The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers it uses in its budgeting and performance reports—the number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 62 students enrolled in those two courses. Data concerning the company’s cost formulas appear below:
Fixed Cost per Month | Cost per Course | Cost per Student |
|||||
Instructor wages | $ | 2,900 | |||||
Classroom supplies | $ | 260 | |||||
Utilities | $ | 1,210 | $ | 80 | |||
Campus rent | $ | 4,700 | |||||
Insurance | $ | 2,400 | |||||
Administrative expenses | $ | 3,800 | $ | 43 | $ | 6 | |
For example, administrative expenses should be $3,800 per month plus $43 per course plus $6 per student. The company’s sales should average $900 per student.
The company planned to run four courses with a total of 62 students; however, it actually ran four courses with a total of only 54 students. The actual operating results for September appear below:
Actual | ||
Revenue | $ | 52,900 |
Instructor wages | $ | 10,880 |
Classroom supplies | $ | 15,970 |
Utilities | $ | 1,940 |
Campus rent | $ | 4,700 |
Insurance | $ | 2,540 |
Administrative expenses | $ | 3,770 |
Required:
Prepare a flexible budget performance report that shows both revenue and spending variances and activity variances for September. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
In: Accounting
You are on a plane traveling to visit family (pre-Covid 19) and you scroll through some news headlines on your tablet. You end up reading an editorial that discusses the changing nature of the economy. Specifically, the writer speculates that new technology will make the accounting profession outdated, since computers will automatically track and compile all financial data and make it easy for anyone with an online connection to access any data about a company’s operations that they wish. How will this affect your career prospects, as an accountant-to-be?
In: Accounting
Required information
[The following information applies to the questions
displayed below.]
Warnerwoods Company uses a perpetual inventory system. It entered
into the following purchases and sales transactions for
March.
Date | Activities | Units Acquired at Cost | Units Sold at Retail | |||||||||
Mar. | 1 | Beginning inventory | 160 | units | @ $52.20 per unit | |||||||
Mar. | 5 | Purchase | 255 | units | @ $57.20 per unit | |||||||
Mar. | 9 | Sales | 320 | units | @ $87.20 per unit | |||||||
Mar. | 18 | Purchase | 115 | units | @ $62.20 per unit | |||||||
Mar. | 25 | Purchase | 210 | units | @ $64.20 per unit | |||||||
Mar. | 29 | Sales | 190 | units | @ $97.20 per unit | |||||||
Totals | 740 | units | 510 | units | ||||||||
4. Compute gross profit earned by the company for each of the four costing methods. For specific identification, the March 9 sale consisted of 95 units from beginning inventory and 225 units from the March 5 purchase; the March 29 sale consisted of 75 units from the March 18 purchase and 115 units from the March 25 purchase. (Round weighted average cost per unit to two decimals and final answers to nearest whole dollar.)
In: Accounting
Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 44,000 Rets per year. Costs associated with this level of production and sales are given below:
Unit | Total | ||||||
Direct materials | $ | 20 | $ | 880,000 | |||
Direct labor | 8 | 352,000 | |||||
Variable manufacturing overhead | 3 | 132,000 | |||||
Fixed manufacturing overhead | 7 | 308,000 | |||||
Variable selling expense | 4 | 176,000 | |||||
Fixed selling expense | 6 | 264,000 | |||||
Total cost | $ | 48 | $ | 2,112,000 | |||
The Rets normally sell for $53 each. Fixed manufacturing overhead is $308,000 per year within the range of 35,000 through 44,000 Rets per year.
Required:
1. Assume that due to a recession, Polaski Company expects to sell only 35,000 Rets through regular channels next year. A large retail chain has offered to purchase 9,000 Rets if Polaski is willing to accept a 16% discount off the regular price. There would be no sales commissions on this order; thus, variable selling expenses would be slashed by 75%. However, Polaski Company would have to purchase a special machine to engrave the retail chain’s name on the 9,000 units. This machine would cost $18,000. Polaski Company has no assurance that the retail chain will purchase additional units in the future. What is the financial advantage (disadvantage) of accepting the special order? (Round your intermediate calculations to 2 decimal places.)
2. Refer to the original data. Assume again that Polaski Company expects to sell only 35,000 Rets through regular channels next year. The U.S. Army would like to make a one-time-only purchase of 9,000 Rets. The Army would pay a fixed fee of $1.60 per Ret, and it would reimburse Polaski Company for all costs of production (variable and fixed) associated with the units. Because the army would pick up the Rets with its own trucks, there would be no variable selling expenses associated with this order. What is the financial advantage (disadvantage) of accepting the U.S. Army's special order?
3. Assume the same situation as described in (2) above, except that the company expects to sell 44,000 Rets through regular channels next year. Thus, accepting the U.S. Army’s order would require giving up regular sales of 9,000 Rets. Given this new information, what is the financial advantage (disadvantage) of accepting the U.S. Army's special order?
In: Accounting
Cougar Plastics Company has been operating for three years. At December 31, 2014, the accounting records reflected the following: |
Cash | $ | 22,000 | Accounts payable | $ | 20,000 | |
Investments (short-term) | 2,600 | Accrued liabilities payable | 2,800 | |||
Accounts receivable | 3,700 | Notes payable (short-term) | 6,800 | |||
Inventory | 28,000 | Notes payable (long-term) | 42,000 | |||
Notes receivable (long-term) | 2,700 | Common stock | 10,500 | |||
Equipment | 47,000 | Additional paid-in capital | 94,500 | |||
Factory building | 95,000 | Retained earnings | 28,500 | |||
Intangibles | 4,100 | |||||
During the year 2015, the company had the following summarized activities: |
a. | Purchased short-term investments for $8,800 cash. |
b. | Lent $5,300 to a supplier who signed a two-year note. |
c. |
Purchased equipment that cost $20,000; paid $5,200 cash and signed a one-year note for the balance. |
d. |
Hired a new president at the end of the year. The contract was for $79,000 per year plus options to purchase company stock at a set price based on company performance. |
e. | Issued an additional 2,200 shares of $0.50 par value common stock for $18,000 cash. |
f. | Borrowed $17,000 cash from a local bank, payable in three months. |
g. |
Purchased a patent (an intangible asset) for $2,200 cash. |
h. |
Built an addition to the factory for $28,000; paid $7,700 in cash and signed a three-year note for the balance. |
i. |
Returned defective equipment to the manufacturer, receiving a cash refund of $1,500. |
rev: 09_05_2014_QC_53105, 09_06_2014_QC_53105, 10_06_2014_QC_55409
9.
value:
1.00 points
Required information
Required: |
1. & 2. |
Post the T-accounts for each of the accounts on the balance sheet and enter the balances at the end of 2014 as beginning balances for 2015. (Two items have been given in the cash T-account as examples). |
References
eBook & Resources
Check my work
10.
value:
1.00 points
Required information
4. | Prepare a trial balance at December 31, 2015. |
References
eBook & Resources
Check my work
11.
value:
1.00 points
Required information
5. |
Prepare a classified balance sheet at December 31, 2015. |
rev: 09_05_2014_QC_53105, 09_06_2014_QC_53105
References
eBook & Resources
Check my work
12.
value:
1.00 points
Required information
6. |
Compute the current ratio for 2015. (Round your answer to 2 decimal places.) |
References
eBook & Resources
In: Accounting
Prepare journal entries to record the following merchandising transactions of Cabela’s, which uses the perpetual inventory system and the gross method. (Hint: It will help to identify each receivable and payable; for example, record the purchase on July 1 in Accounts Payable—Boden.) Jul. 1 Purchased merchandise from Boden Company for $6,000 under credit terms of 1/15, n/30, FOB shipping point, invoice dated July 1. Jul. 2 Sold merchandise to Creek Co. for $900 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $500. Jul. 3 Paid $125 cash for freight charges on the purchase of July 1. Jul. 8 Sold merchandise that had cost $1,300 for $1,700 cash. Jul. 9 Purchased merchandise from Leight Co. for $2,200 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9. Jul. 11 Received a $200 credit memorandum from Leight Co. for the return of part of the merchandise purchased on July 9. Jul. 12 Received the balance due from Creek Co. for the invoice dated July 2, net of the discount. Jul. 16 Paid the balance due to Boden Company within the discount period. Jul. 19 Sold merchandise that cost $800 to Art Co. for $1,200 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19. Jul. 21 Issued a $100 credit memorandum to Art Co. for an allowance on goods sold on July 19. Jul. 24 Paid Leight Co. the balance due, net of discount. Jul. 30 Received the balance due from Art Co. for the invoice dated July 19, net of discount. Jul. 31 Sold merchandise that cost $4,800 to Creek Co. for $7,000 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31. Requirement General Journal General Ledger Trial Balance Schedule of Receivables Schedule of Payables Income Statement Impact on Income
In: Accounting
Cost—Volume—Profit Equation, Basic Concepts, Solving for Unknowns (LO 1,2,3 and 5)
Goldilocks Company produces high-end combination shampoos and conditioners in individual-use bottles for hotels. Each bottle sells for $0.90.
The variable costs for each bottle (materials, labour, and overhead) total $0.63. The total fixed costs are $210,600. During the most recent year 830,000 bottles were sold.
Required:
1. What is the BEP in units for Goldilocks? What is the margin of safety in units for the recent year?
2. Prepare an income statement for Goldilocks's most recent year.
3. How many units must be sold for Goldilocks to earn a profit of $40,500?
4. Using the contribution margin percentage approach, what is the level of sales dollars needed for Goldilocks to earn operating income of 20 percent of sales?
In: Accounting