On January 1, 2018, the general ledger of ACME Fireworks includes the following account balances:
Accounts Debit Credit
Cash $ 26,700
Accounts Receivable 49,400 Allowance for Uncollectible Accounts $ 5,800
Inventory 21,600
Land 62,000
Equipment 23,000 Accumulated Depreciation 3,100
Accounts Payable 30,100
Notes Payable (6%, due April 1, 2019) 66,000
Common Stock 51,000
Retained Earnings 26,700
Totals $ 182,700 $ 182,700
During January 2018, the following transactions occur:
January 2. Sold gift cards totaling $11,200. The cards are redeemable for merchandise within one year of the purchase date.
January 6. Purchase additional inventory on account, $163,000.
January 15. Firework sales for the first half of the month total $151,000. All of these sales are on account. The cost of the units sold is $81,800.
January 23. Receive $127,000 from customers on accounts receivable.
January 25. Pay $106,000 to inventory suppliers on accounts payable.
January 28. Write off accounts receivable as uncollectible, $6,400.
January 30. Firework sales for the second half of the month total $159,000. Sales include $13,000 for cash and $146,000 on account. The cost of the units sold is $87,500.
January 31. Pay cash for monthly salaries, $53,600.
RECORD JOURNAL ENTRY
In: Accounting
These balances were extracted from the books of Tembo Ltd as at 31 January 2018:
| Debit | Credit | |
| Retained earnings (31 January 2018) | 12,994,000.00 | |
| Interest payable | 175,312.50 | |
| Long term loan | 2,250,000.00 | |
| Application and allotment | 2,691,000.00 | |
| Shareholders for ordinary dividends | 30,000.00 | |
| Stated share capital (2 000 000 ordinary shares) | 4,000,000.00 | |
| Preference share capital and shareholders for preference dividends are not known |
Additional information:
On 28 February 2018 Tembo Ltd issued 877 000 ordinary shares and applications worth N$60 000.00 were returned due to an oversubscription.Underwriting commission was not accrued in the in the previous final year and the underwriter was paid a commission of 2%.Tembos accounting policy with respect to share issue costs is to minimize distributable reserves.The final dividend was paid on 3 February 2019.Tembo Ltd had issued 15 000,N$3, 6% cumulative preference shares on the 1 February 2016.Preference shares have never been issued at a premium and in case of preference shares declared they are then paid on 1 February.Furthermore ,Tembo Ltd declared and paid an ordinary interim dividend of 7 cents per share on 15 February 2018 and declared a final dividend of N$0.50c per share on 30 January 2019.
The first dividend ever to be paid by Tembo Ltd was the N$30 000.00 ordinary dividend of the prior year.The simple interest payable on the outstanding balance of the long term loan bears at 8.5%.The interest is payable annually on 28 February and the two capital repayments of N$350 000.00 and N$400 000.00 were made on 31 June 2018 and 31 December respectively.The net profit in the statement of profit or loss and comprehensive income is N$3 827 000.00 for the year ended 31 January 2019.This is before any of the information above has been taken into account.
You are required to:
1.Calculate the price at which each ordinary share was issued in the current year
2.Prepare all journal entries relating to the share issue ,to be processed in 2019 financial year.
3.What does the accounting policy say on distributable reserves with relation to the underwriter commission.
4.Calculate the dividends paid to ordinary shareholders during the year ended 31 January 2019 (4 marks )
5.Calculate the dividends paid to preference shareholders during the year ended 31 January 2019
6.Calculate the final net profit
7.Calculate the closing retained earnings
8.How would you determine the total asset value of Tembo Ltd.
In: Accounting
As the cost accounting manager at Cambria Chemicals (CC), you are responsible for compiling and reporting various performance measures to the senior managers. The company instituted many efficiency improvement programs recently, and the CFO has asked you to measure and report total factor productivity measures based on the three inputs (material, labor, and overhead). Data for the last two years follow:
| Year 2 | Year 1 | |||||
| Gallons input (thousands) | 10,600 | 9,600 | ||||
| Labor-hours (thousands) | 8,900 | 6,500 | ||||
| Gallons of output (thousands) | 12,400 | 10,400 | ||||
From the accounting records, you also gather the following information for the two years:
| Year 2 | Year 1 | ||||||
| Cost of inputs (per gallon) | $ | 79 | $ | 79 | |||
| Wage rate (per hour) | $ | 25 | $ | 16 | |||
| Total manufacturing overhead | $ | 1,360,000 | $ | 1,210,000 | |||
| Selling price of output (per gallon) | $ | 380 | $ | 385 | |||
Required:
a. Compute the total factor productivity measures for year 1 and year 2 based on the three inputs (material, labor, and overhead).
|
In: Accounting
Why is it important for an accountant to understand their business and industry as well as managements informational needs in addition to knowing how to generate financial statements? Note: You may use S&S as the context while answering this question. However, please present your own examples.
In: Accounting
Capital Toys’ management is considering eliminating product A, which has been showing a loss for several years. The company’s annual income statement, in $000s, is as follows
| A | B | C | Total | |
| Sales Revenue | $ 2,200.00 | $ 1,400.00 | $ 1,800.00 | $ 5,400.00 |
| Variable expenses | $ 1,650.00 | $ 600.00 | $ 1,080.00 | $ 3,330.00 |
| Contribution margin | $ 550.00 | $ 800.00 | $ 720.00 | $ 2,070.00 |
| Advertising expense | $ 500.00 | $ 475.00 | $ 720.00 | $ 1,695.00 |
| Depreciation expense | 15 | 10 | 20 | 45 |
| Corporate expenses | 90 | 80 | 105 | 275 |
| Total fixed expenses | $ 605.00 | $ 565.00 | $ 645.00 | $ 1,815.00 |
| Operating income | $ (55.00) | $ 235.00 | $ 75.00 | $ 255.00 |
a.Restate the income statement in segment margin format.
b. What would be the effect on income if product A were dropped?
c. Management is considering making a new product using product A’s equipment. If the new product’s selling price per unit were $12, its variable costs were $8, and its advertising costs were the same as for product A, how many units of the new product would the company have to sell to make the switch from product A to the new product worthwhile?
In: Accounting
Question:
what is the difference between rights of assertion and observation assertion.
Include which financial statements are they related to and what accounts are relevant to each.
In: Accounting
ABC Inc. is evaluating a project that will increase annual sales by $230,000 and annual cash costs by $88,000. The project will initially require $145,000 in fixed assets that will be depreciated straight-line to a zero book value over the 4-year life of the project. The applicable tax rate is 35 percent.
A. What is the depreciation tax shield? (Hint: Use straight-line depreciation to find annual depreciation)
B. Using the straight-line depreciation method, what is the book value of the asset at the end of year 2?
C. The asset for the project is classified as a 5-year property for MACRS. What is the book value of the asset at the end of year 4?
D. What is the operating cash flow for this project?
E. ABC Inc. has determined that it requires $35,000 in NWC, has a required rate of return of 14%, and plans on using the operating cash flow from problem D to evaluate its project. What is the NPV? Using the decision rule, should we accept the project? (Hint: Include NWC at the beginning and end of project)
In: Accounting
On June 30, 2017, Wisconsin, Inc., issued $158,250 in debt and 19,400 new shares of its $10 par value stock to Badger Company owners in exchange for all of the outstanding shares of that company. Wisconsin shares had a fair value of $40 per share. Prior to the combination, the financial statements for Wisconsin and Badger for the six-month period ending June 30, 2017, were as follows:
| Wisconsin | Badger | |||||||||||
| Revenues | $ | (1,001,000) | $ | (362,000) | ||||||||
| Expenses | 690,000 | 247,000 | ||||||||||
| Net income | $ | (311,000) | $ | (115,000) | ||||||||
| Retained earnings, 1/1 | $ | (869,000) | $ | (204,000) | ||||||||
| Net income | (311,000) | (115,000) | ||||||||||
| Dividends declared | 111,750 | 0 | ||||||||||
| Retained earnings, 6/30 | $ | (1,068,250) | $ | (319,000) | ||||||||
| Cash | $ | 92,250 | $ | 114,000 | ||||||||
| Receivables and inventory | 482,000 | 183,000 | ||||||||||
| Patented technology (net) | 935,000 | 293,000 | ||||||||||
| Equipment (net) | 713,000 | 695,000 | ||||||||||
| Total assets | $ | 2,222,250 | $ | 1,285,000 | ||||||||
| Liabilities | $ | (524,000) | $ | (496,000) | ||||||||
| Common stock | (360,000) | (200,000) | ||||||||||
| Additional paid-in capital | (270,000) | (270,000) | ||||||||||
| Retained earnings | (1,068,250) | (319,000) | ||||||||||
| Total liabilities and equities | $ | (2,222,250) | $ | (1,285,000) | ||||||||
Wisconsin also paid $37,000 to a broker for arranging the
transaction. In addition, Wisconsin paid $46,600 in stock issuance
costs. Badger’s equipment was actually worth $811,250, but its
patented technology was valued at only $269,600.
What are the consolidated balances for the following accounts?
In: Accounting
Problem 12-22 Accept or Reject a Special Order [LO12-4]
| Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 38,000 Rets per year. Costs associated with this level of production and sales are given below: |
| Unit | Total | ||||
| Direct materials | $ | 15 | $ | 570,000 | |
| Direct labor | 6 | 228,000 | |||
| Variable manufacturing overhead | 3 | 114,000 | |||
| Fixed manufacturing overhead | 7 | 266,000 | |||
| Variable selling expense | 2 | 76,000 | |||
| Fixed selling expense | 6 | 228,000 | |||
| Total cost | $ | 39 | $ | 1,482,000 | |
| The Rets normally sell for $44 each. Fixed manufacturing overhead is constant at $266,000 per year within the range of 33,000 through 38,000 Rets per year. |
| Required: | |
| 1. |
Assume that due to a recession, Polaski Company expects to sell only 33,000 Rets through regular channels next year. A large retail chain has offered to purchase 5,000 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 5,000 units. This machine would cost $10,000. Polaski Company has no assurance that the retail chain will purchase additional units in the future. Determine the impact on profits next year if this special order is accepted. |
| 2. |
Refer to the original data. Assume again that Polaski Company expects to sell only 33,000 Rets through regular channels next year. The U.S. Army would like to make a one-time-only purchase of 5,000 Rets. The Army would pay a fixed fee of $1.80 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. If Polaski Company accepts the order, by how much will profits increase or decrease for the year? |
| 3. |
Assume the same situation as that described in (2) above, except that the company expects to sell 38,000 Rets through regular channels next year. Thus, accepting the U.S. Army’s order would require giving up regular sales of 5,000 Rets. If the Army’s order is accepted, by how much will profits increase or decrease from what they would be if the 5,000 Rets were sold through regular channels? |
In: Accounting
|
Revenue External $m |
Revenue Internal $m |
Segment results (profit/loss) $m |
Segment assets $m |
Segment liabilities $m |
|
|
Machinery: |
|||||
|
Leasing |
180 |
20 |
32 |
194 |
50 |
|
Sales |
110 |
15 |
(4) |
24 |
22 |
|
FS Disclosure Amount |
290 |
35 |
28 |
218 |
72 |
|
Investment and Insurance: |
|||||
|
Investment |
120 |
130 |
80 |
192 |
65 |
|
Insurance |
60 |
8 |
(53) |
116 |
95 |
|
FS Disclosure Amount |
180 |
138 |
27 |
308 |
160 |
|
Total |
470 |
173 |
55 |
526 |
232 |
Steve has asked you for a technical analysis on how Phrygian should report its segment information, under IAS 14, as of its year-end of December 31, 2017
In: Accounting
On January 1, 2021, the general ledger of Dynamite Fireworks includes the following account balances:
| Accounts | Debit | Credit | |||||
| Cash | $ | 25,500 | |||||
| Accounts Receivable | 6,900 | ||||||
| Supplies | 4,800 | ||||||
| Land | 67,000 | ||||||
| Accounts Payable | $ | 4,900 | |||||
| Common Stock | 82,000 | ||||||
| Retained Earnings | 17,300 | ||||||
| Totals | $ | 104,200 | $ | 104,200 | |||
During January 2021, the following transactions occur:
| January | 2 | Purchase rental space for one year in advance, $11,100 ($925/month). | ||
| January | 9 | Purchase additional supplies on account, $5,200. | ||
| January | 13 | Provide services to customers on account, $27,200. | ||
| January | 17 | Receive cash in advance from customers for services to be provided in the future, $5,400. | ||
| January | 20 | Pay cash for salaries, $13,200. | ||
| January | 22 | Receive cash on accounts receivable, $25,800. | ||
| January | 29 | Pay cash on accounts payable, $5,700. |
What is the amount of profit reported for the month of January?
Calculate the ratio of current assets to current liabilities at the end of January.
Based on Dynamite Fireworks’ profit and ratio of current assets to current liabilities, indicate whether Dynamite Fireworks appears to be in good or bad financial condition.
(GOOD or BAD)
In: Accounting
Oscar Fox, the accounting manager of Onaka Antique Company, is preparing his company’s cash budget for the next quarter. Onaka desires to maintain a cash cushion of $2,000 at the end of each month. As cash flows fluctuate, the company either borrows or repays funds at the end of a month. It pays interest on borrowed funds at the rate of 1 percent per month.
|
Cash Budget |
July |
August |
September |
|
Section 1: Cash Receipts |
|||
|
Beginning cash balance |
$ 10,000 |
$ ? |
$ ? |
|
Add cash receipts |
90,000 |
96,000 |
104,000 |
|
Total cash available (a) |
100,000 |
? |
? |
|
Section 2: Cash Payments |
|||
|
For inventory purchases |
81,000 |
76,500 |
85,500 |
|
For S&A expenses |
18,500 |
18,000 |
19,500 |
|
For interest expense |
0 |
? |
? |
|
Total budgeted disbursements (b) |
99,500 |
? |
? |
|
Section 3: Financing Activities |
|||
|
Surplus (shortage) |
500 |
? |
? |
|
Borrowing (repayments) (c) |
1,500 |
? |
? |
|
Ending Cash Balance (a − b + c) |
$ 2,000 |
$ 2,000 |
$ 2,000 |
Required
In: Accounting
Prepare the journal entry to apply factory overhead for April 30 according to the predetermined overhead rate. Refer to the Chart of Accounts for exact wording of account titles. Cavy Company estimates that total factory overhead costs will be $559,619 for the year. Direct labor hours are estimated to be 90,700. Required: Determine (a) the predetermined factory overhead rate; (b) the amount of factory overhead applied to Job 567 if the amount of direct labor hours is 1,200 and Job 999 if the amount of direct labor hours is 3,100; and (c) prepare the journal entry to apply factory overhead for April according to the predetermined overhead rate. Refer to the Chart of Accounts for exact wording of account titles. DATE DESCRIPTION POST. REF. DEBIT CREDIT
In: Accounting
Bierce Corporation has two manufacturing departments--Machining and Finishing. The company used the following data at the beginning of the year to calculate predetermined overhead rates:
| Machining | Finishing | Total | ||||
| Estimated total machine-hours (MHs) | 4,000 | 6,000 | 10,000 | |||
| Estimated total fixed manufacturing overhead cost | $ | 10,000 | $ | 33,000 | $ | 43,000 |
| Estimated variable manufacturing overhead cost per MH | $ | 2.80 | $ | 6.00 | ||
During the most recent month, the company started and completed two jobs--Job B and Job K. There were no beginning inventories. Data concerning those two jobs follow:
| Job B | Job K | |||||
| Direct materials | $ | 16,000 | $ | 8,200 | ||
| Direct labor cost | $ | 22,600 | $ | 2,700 | ||
| Machining machine-hours |
2,700 | 1,300 | ||||
| Finishing machine-hours | 600 | 5,400 | ||||
Required:
a. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate that overhead rate. (Round your answer to 2 decimal places.)
b. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate the amount of manufacturing overhead applied to Job B. (Do not round intermediate calculations.)
c. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate the amount of manufacturing overhead applied to Job K. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)
d. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments. What is the departmental predetermined overhead rate in the Machining department? (Round your answer to 2 decimal places.)
e. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. What is the departmental predetermined overhead rate in the Finishing department? (Round your answer to 2 decimal places.)
f. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. How much manufacturing overhead will be applied to Job B? (Do not round intermediate calculations.)
g. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. How much manufacturing overhead will be applied to Job K?. (Do not round intermediate calculations.)
In: Accounting
Which of the following are not typical problems of traditional costing approaches (as compared to Activity-Based Costing)?
Under-costing of low-volume, high-complexity products
Over-costing of high-volume, low-complexity products
Over-producing unprofitable products
Under-producing profitable products
None of the above
Under variable costing, Gross Profit is equal to:
Sales - Variable Costs
Sales - Fixed Costs
Sales - Variable Costs - Fixed Costs
Contribution Margin - Fixed Costs
Variable costing does not calculate Gross Profit
Which of the following is not a factor to consider when deciding whether to accept a special order?
Whether this order will hurt the brand name of the company
Whether other potential orders would be more profitable
Whether additional fixed costs would need to be incurred
Whether the offered price is sufficient to cover prime costs and fixed overhead allocated
All of the above
If a company has sufficient excess capacity, which of the following costs are relevant to the decision to make or buy a new product?
Direct materials
Variable overhead
Fixed overhead
Costs of buying from the outside vendor
A, B, and D only
In: Accounting