Bensen Company started business by acquiring $26,300 cash from the issue of common stock on January 1, Year 1. The cash acquired was immediately used to purchase equipment for $26,300 that had a $3,900 salvage value and an expected useful life of four years. The equipment was used to produce the following revenue stream (assume that all revenue transactions are for cash). At the beginning of the fifth year, the equipment was sold for $4,330 cash. Bensen uses straight-line depreciation. Year 1 Year 2 Year 3 Year 4 Year 5 Revenue $ 7,640 $ 8,140 $ 8,340 $ 7,140 $ 0 Required Prepare income statements, statements of changes in stockholders’ equity, balance sheets, and statements of cash flows for each of the five years.

Gulf States Manufacturing has the following data from year 1 operations, which are to be used for developing year 2 budget estimates:

All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $16,050 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $22,500. Sales volume and prices are expected to increase by 11 percent and 7 percent, respectively. On a per-unit basis, expectations are that materials costs will increase by 9 percent and variable manufacturing costs will decrease by 2 percent. Fixed cash manufacturing costs are expected to decrease by 7 percent.

Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 7 percent. Inventories are kept at zero. Gulf States operates on a cash basis.

1. Required information

Required: Prepare a budgeted income statement for year 2. (Do not round intermediate calculations.)

2. Required information

Required: Estimate the cash from operations expected in year 2. (Do not round intermediate calculations.)

Brandlin Company of Anaheim, California, sells parts to a foreign customer on December 1, 2017, with payment of 19,000 korunas to be received on March 1, 2018. Brandlin enters into a forward contract on December 1, 2017, to sell 19,000 korunas on March 1, 2018. Relevant exchange rates for the koruna on various dates are as follows:

Brandlin's incremental borrowing rate is 9 percent. The present value factor for two months at an annual interest rate of 9 percent (0.75 percent per month) is 0.9852. Brandlin must close its books and prepare financial statements at December 31.

1. a-1. Assuming that Brandlin designates the forward contract as a cash flow hedge of a foreign currency receivable and recognizes any premium or discount using the straight-line method, prepare journal entries for these transactions in U.S. dollars.

2. a-2. What is the impact on 2017 net income?

3. a-3. What is the impact on 2018 net income?

4. a-4. What is the impact on net income over the two accounting periods?

5. b-1. Assuming that Brandlin designates the forward contract as a fair value hedge of a foreign currency receivable, prepare journal entries for these transactions in U.S. dollars.

6. b-2. What is the impact on 2017 net income?

7. b-3. What is the impact on 2018 net income?

8. b-4. What is the impact on net income over the two accounting periods?

1. You manage a production line that operates using a monthly production cycle. There are five different products that could be made this month. However, you only have 500 hours of line capacity, so you must be careful which products you select to make in the production cycle.

Making a product incurs two types of setup costs: (1) a material “tear down” cost (measured in dollars) and (2) downtime for line preparation (measured in hours). Any quantity up to the forecasted monthly demand can be sold. Additional production details are given in the table below:

1. Based on this information, design a monthly production schedule to maximize monthly profit. Your solution should identify which products to make and the quantities of each. (Assume the line is not currently set up to make any of these products; Set Optimality Gap to .1%)
2. If you could go to a two-month production cycle with the same monthly demands and the same monthly capacity, would you select different products and quantities? (Again assume the line is not currently set up to make any of these products; Set Optimality Gap to .1%)

Lubricants, Inc., produces a special kind of grease that is widely used by race car drivers. The grease is produced in two processing departments—Refining and Blending. Raw materials are introduced at various points in the Refining Department. The following incomplete Work in Process account is available for the Refining Department for March: Work in Process—Refining Department March 1 balance 34,000 Completed and transferred to Blending ? Materials 151,600 Direct labor 80,200 Overhead 484,000 March 31 balance ? The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $7,700; direct labor, $4,700; and overhead, $21,600. Costs incurred during March in the Blending Department were: materials used, $46,000; direct labor, $17,200; and overhead cost applied to production, $104,000. Required: 1. Prepare journal entries to record the costs incurred in both the Refining Department and Blending Department during March. Key your entries to the items (a) through (g) below. Raw materials used in production. Direct labor costs incurred. Manufacturing overhead costs incurred for the entire factory, $656,000. (Credit Accounts Payable.) Manufacturing overhead was applied to production using a predetermined overhead rate. Units that were complete with respect to processing in the Refining Department were transferred to the Blending Department, $692,000. Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $710,000. Completed units were sold on account, $1,370,000. The Cost of Goods Sold was $670,000. 2. Post the journal entries from (1) above to T-accounts. The following account balances existed at the beginning of March. (The beginning balance in the Refining Department’s Work in Process is given in the T-account shown above.) Raw materials $ 214,600 Work in process—Blending Department $ 40,000 Finished goods $ 19,000

Julia Wallace, a professional violinist with Lincoln Symphony Orchestra, purchased a 200-year-old antique violin at a cost of $970,000. She thinks that it is a good investment because she knows that it will continue to appreciate in value as a treasured work of art. She plans to use this violin in concerts and wants to know if she can depreciate it as a business-use asset. Prepare a letter memo for the tax file documenting your conclusions.

Ivanhoe Co. reports the following information for 2017: sales revenue $767,200, cost of goods sold $503,000, operating expenses $87,800, and an unrealized holding loss on available-for-sale securities for 2017 of $59,600. It declared and paid a cash dividend of $14,450 in 2017.

Ivanhoe Co. has January 1, 2017, balances in common stock $362,300; accumulated other comprehensive income $87,600; and retained earnings $91,850. It issued no stock during 2017.

Prepare a statement of stockholders’ equity.

Sales and Production Budgets

Sonic Inc. manufactures two models of speakers, Rumble and Thunder. Based on the following production and sales data for June, prepare (a) a sales budget and (b) a production budget:

a. Prepare a sales budget.

b. Prepare a production budget. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

On January 1, 2019, Mancunian Corp. purchased 10% bonds, with a $200,000 face value, for $218,492.52. This price implies an 8% yield to Mancunian. The bonds pay interest on December 31 of each year. Mancunian uses the effective-interest method and classifies the bonds as available for sale securities.

The fair value of the bonds on December 31, 2019 equals $217,200. The fair value of the bonds on December 31, 2020 equals $208,340.

Prepare the journal entries to:

1. Record the purchase of the bonds on January 1, 2019.

2. Record receipt of interest on December 31, 2019.

3. Record the fair value adjustment on December 31, 2019.

4. Record receipt of interest on December 31, 2020.

5. Record the fair value adjustment on December 31, 2020.

6. Record the sale of these bonds on January 1, 2021 for $209,000. cash.

Please complete your answer on a separate piece of paper, then take a picture of your solution or scan it in, and upload the file below. Make sure you show all your work!!

The following information is available for Labrador Ltd. for calendar 2022:

Cost of goods sold........................................................    1,190,000

Income tax expense......................................................           9,000

Interest expense............................................................         30,000

Interest income..............................................................         38,000

Operating expenses......................................................       194,000

Sales............................................................................. $1,406,000

Instructions

(a)   Use the above information to prepare a multiple-step statement of income for the year ended December 31, 2022.

(b)   Calculate the gross profit margin and the profit margin for 2022.

Mel's Hair Salon uses a perpetual inventory system, recorded the following inventory transactions for this year:

                                                                      Purchases            Sales   

                                                            Units           Unit Cost             Units           Selling Price/Unit

Apr       1      Beginning inventory         90                 $ 16

          25      Purchase                       300                    18

May      4      Purchase                       130                    20

           16      Sale                                                                               240                   $32

Jun       4      Purchase                       100                    24

Instructions

(a)   Using the FIFO cost formula, calculate the cost of goods sold for the quarter ended June 30. Show calculations.

(b)   Using the average cost formula, calculate the ending inventory at June 30. Show calculations and use unrounded numbers in your calculations but round to the nearest cent for presentation purposes in your answer.

In late 2020, the Nicklaus Corporation was formed. The corporate charter authorizes the issuance of 5,000,000 shares of common stock carrying a $1 par value, and 1,000,000 shares of $5 par value, noncumulative, nonparticipating preferred stock. On January 2, 2021, 3,000,000 shares of the common stock are issued in exchange for cash at an average price of $10 per share. Also on January 2, all 1,000,000 shares of preferred stock are issued at $20 per share.

During 2021, the Nicklaus Corporation participated in three treasury stock transactions:

1. On June 30, 2021, the corporation reacquires 200,000 shares for the treasury at a price of $12 per share.
2. On July 31, 2021, 50,000 treasury shares are reissued at $15 per share.
3. On September 30, 2021, 50,000 treasury shares are reissued at $10 per share.

On November 1, 2021, the Nicklaus Corporation declares a $0.05 per share cash dividend on common stock and a $0.25 per share cash dividend on preferred stock. Payment is scheduled for December 1, 2021, to shareholders of record on November 15, 2021. (Please note that treasury stock are not eligible for dividends)

On December 2, 2021, the Nicklaus Corporation declares a 1% stock dividend payable on December 28, 2021, to shareholders of record on December 14. At the date of declaration, the common stock was selling in the open market at $20 per share. The dividend will result in 29,000 (0.01 × 2,900,000) additional shares being issued to shareholders.

QUESTIONS:

1. Prepare journal entries to record these transactions.

2. Prepare the December 31, 2021, shareholders' equity section of the balance sheet for the Nicklaus Corporation. (Assume net income for 2021 was $6,500,000.)

You are required to prepare a Direct Material Budget for the second quarter (April to June) by considering a manufacturing company operating in Saudi Arabia as a sample study.

Earlene’s Eyewear manufactures eyeglass frames.  The company uses a standard cost system.  Earlene has set the following standards for frame model 19841.

Direct Material                        4.5 oz. plastic per frame at $3.65 per oz.                 $16.425 per frame

Direct Labor                            .8 hours at $28 per hour                                             $22.40 per frame

In April, Earlene’s made 2,500 frames with a material cost of $48,000.  Earlene’s Eyewear purchased 12,000 oz. of plastic but only used 10,000 oz. of plastic for frame 19841.  

What is the Material Price Variance?

Which of the following could explain the material price variance calculated above?

a.   Earlene’s Eyewear paid less per oz because the material was purchased in bulk to receive a discount.

b.   Earlene’s Eyewear earned less per frame because more materials were purchased than used.

c.    Earlene’s Eyewear earned more per frame because there were no machine breakdowns and fewer labor hours were required than planned.

d.   Earlene’s Eyewear paid more per oz because the company decided to go with a higher quality material.