Discuss how you view the use of emerging accounting technology in an accounting career.
In: Accounting
3.
Swathmore Clothing Corporation grants its customers 30 days’
credit. The company uses the allowance method for its uncollectible
accounts receivable. During the year, a monthly bad debt accrual is
made by multiplying 2% times the amount of credit sales for the
month. At the fiscal year-end of December 31, an aging of accounts
receivable schedule is prepared and the allowance for uncollectible
accounts is adjusted accordingly.
At the end of 2020, accounts receivable were $584,000 and the
allowance account had a credit balance of $48,000. Accounts
receivable activity for 2021 was as follows:
Beginning balance | $ | 584,000 | ||
Credit sales | 2,670,000 | |||
Collections | (2,533,000 | ) | ||
Write-offs | (44,000 | ) | ||
Ending balance | $ | 677,000 | ||
The company’s controller prepared the following aging summary of
year-end accounts receivable:
Summary | ||||
Age Group | Amount | Percent Uncollectible | ||
0−60 days | $ | 395,000 | 5 | % |
61−90 days | 94,000 | 14 | ||
91−120 days | 54,000 | 24 | ||
Over 120 days | 134,000 | 35 | ||
Total | $ | 677,000 | ||
Required:
1. Prepare a summary journal entry to record the
monthly bad debt accrual and the write-offs during the year.
2. Prepare the necessary year-end adjusting entry
for bad debt expense.
3-a. What is total bad debt expense for
2021?
3-b. How would accounts receivable appear in the
2021 balance sheet?
In: Accounting
Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on its bilge pump product line for several years. The most recent quarterly contribution format income statement for the bilge pump product line follows: Thalassines Kataskeves, S.A. Income Statement—Bilge Pump For the Quarter Ended March 31 Sales $ 440,000 Variable expenses: Variable manufacturing expenses $ 137,000 Sales commissions 54,000 Shipping 11,000 Total variable expenses 202,000 Contribution margin 238,000 Fixed expenses: Advertising (for the bilge pump product line) 30,000 Depreciation of equipment (no resale value) 113,000 General factory overhead 48,000 * Salary of product-line manager 115,000 Insurance on inventories 13,000 Purchasing department 51,000 † Total fixed expenses 370,000 Net operating loss $ (132,000 ) *Common costs allocated on the basis of machine-hours. †Common costs allocated on the basis of sales dollars. Discontinuing the bilge pump product line would not affect sales of other product lines and would have no effect on the company’s total general factory overhead or total Purchasing Department expenses. Required: What is the financial advantage (disadvantage) of discontinuing the bilge pump product line?
In: Accounting
The chief accountant for Grandview Corporation provides you with
the company’s 2018 statement of cash flows and income statement.
The accountant has asked for your help with some missing figures in
the company’s comparative balance sheets. These financial
statements are shown next ($ in millions).
GRANDVIEW CORPORATION Statement of Cash Flows For the Year Ended December 31, 2018 |
|||||||
Cash Flows from Operating Activities: | |||||||
Collections from customers | $ | 112 | |||||
Payment to suppliers | (39 | ) | |||||
Payment of general & administrative expenses | (28 | ) | |||||
Payment of income taxes | (19 | ) | |||||
Net cash flows from operating activities | $ | 26 | |||||
Cash Flows from Investing Activities: | |||||||
Sale of investments | 75 | ||||||
Cash Flows from Financing Activities: | |||||||
Issuance of common stock | 15 | ||||||
Payment of dividends | (8 | ) | |||||
Net cash flows from financing activities | 7 | ||||||
Net increase in cash | $ | 108 | |||||
GRANDVIEW CORPORATION Income Statement For the Year Ended December 31, 2018 |
||||||
Sales revenue | $ | 120 | ||||
Cost of goods sold | 42 | |||||
Gross profit | 78 | |||||
Operating expenses: | ||||||
General and administrative | $ | 28 | ||||
Depreciation | 20 | |||||
Total operating expenses | 48 | |||||
Operating income | 30 | |||||
Other income: | ||||||
Gain on sale of investments | 20 | |||||
Income before income taxes | 50 | |||||
Income tax expense | 8 | |||||
Net income | $ | 42 | ||||
GRANDVIEW CORPORATION Balance Sheets At December 31 |
|||||||
2018 | 2017 | ||||||
Assets: | |||||||
Cash | $ | 175 | $ | ? | |||
Accounts receivable | ? | 94 | |||||
Investments | — | 55 | |||||
Inventory | 70 | ? | |||||
Property, plant & equipment | 160 | 160 | |||||
Less: Accumulated depreciation | (85 | ) | ? | ||||
Total assets | ? | ? | |||||
Liabilities and Shareholders’ Equity: | |||||||
Accounts payable to suppliers | $ | 52 | $ | 40 | |||
Payables for selling & admin. expenses | 19 | 19 | |||||
Income taxes payable | 32 | ? | |||||
Common stock | 255 | 240 | |||||
Retained earnings | ? | 30 | |||||
Total liabilities and shareholders’ equity | ? | ? | |||||
Required:
1. Calculate the missing amounts.
2. Prepare the operating activities section of
Grandview’s 2018 statement of cash flows using the indirect
method.
In: Accounting
3-6
On April 1, 2017, Jiro Nozomi created a new travel agency, Adventure Travel. The following transactions occurred during the company’s first month.
April | 1 | Nozomi invested $34,000 cash and computer equipment worth $25,000 in the company in exchange for common stock. | ||
2 | The company rented furnished office space by paying $2,000 cash for the first month’s (April) rent. | |||
3 | The company purchased $1,400 of office supplies for cash. | |||
10 | The company paid $2,300 cash for the premium on a 12-month insurance policy. Coverage begins on April 11. | |||
14 | The company paid $1,300 cash for two weeks' salaries earned by employees. | |||
24 | The company collected $18,500 cash on commissions from airlines on tickets obtained for customers. | |||
28 | The company paid $1,300 cash for two weeks' salaries earned by employees. | |||
29 | The company paid $550 cash for minor repairs to the company's computer. | |||
30 | The company paid $1,150 cash for this month's telephone bill. | |||
30 | The company paid $2,500 cash in dividends. |
The company's chart of accounts follows:
101 | Cash | 405 | Commissions Earned |
106 | Accounts Receivable | 612 | Depreciation Expense—Computer Equip. |
124 | Office Supplies | 622 | Salaries Expense |
128 | Prepaid Insurance | 637 | Insurance Expense |
167 | Computer Equipment | 640 | Rent Expense |
168 | Accumulated Depreciation—Computer Equip. | 650 | Office Supplies Expense |
209 | Salaries Payable | 684 | Repairs Expense |
307 | Common Stock | 688 | Telephone Expense |
318 | Retained Earnings | 901 | Income Summary |
319 | Dividends | ||
Use the following information:
Required:
1. & 2. Prepare journal
entries to record the transactions for April and post them to the
ledger accounts in Requirement 6b. The company records prepaid and
unearned items in balance sheet accounts.
3. Using account balances from Requirement 6b,
prepare an unadjusted trial balance as of April 30.
4. Journalize and post the adjusting entries for
the month and prepare the adjusted trial balance.
5a. Prepare the income statement for the month of
April 30, 2017.
5b. Prepare the statement of retained earnings for
the month of April 30, 2017.
5c. Prepare the balance sheet at April 30,
2017.
6a. Prepare journal entries to close the temporary
accounts and then post to Requirement 6b.
6b. Post the journal entries to the ledger.
7. Prepare a post-closing trial balance.
In: Accounting
On Jan 1, Bike Mart had a beginning inventory of 20 bicycles which it purchased for $365 each.
During January, the company purchases four more bicycles for $400 each. None were sold in January.
On February 15, the company purchases five more bicycles for $450 each.
Between February 16 and 28, Bike Mart sells 10 of these bicycles.
a.) Calculate Bike Mart’s Ending Inventory Balance (in dollars) at the end of February and Cost of Goods Sold through February using the FIFO Method. (show all work.)
b.) Calculate Bike Mart’s Ending Inventory Balance (in dollars) at the end of February and Cost of Goods Sold through February using the Weighted Average Method. (show all work.)
c.) At the end of February, will Bike Mart’s Net Income (profits) on its Income Statement be higher if it uses the FIFO or Weighted Average Inventory Method? Why?
e.) At the end of February, will Bike Mart’s Inventory Turnover Ratio be higher if it uses the FIFO or Weighted Average Inventory Method? Why?
In: Accounting
Door2DoorCo are a large courier company who have just received a shipment of X new vans. They wish to lock in a tyre supply contract to keep these vans well shod over the Y months that they intend to keep the vans. The vans come with low quality tyres that will need to be replaced in 2 months. Two suppliers, ThriftyTread and WiserWheels have expressed interest at supplying tyres at a fixed price for the duration. The offers are summarised below:
Number of Vans, X – 120
Corporate Discount rate – J1=12.68% p.a.
Initial Tyre Life – 2 months
Keep vans for (Y) – 50 months
ThriftyTread
WiserWheels
a) For each of the two potential suppliers, illustrate Door2DoorCO’s tyre expenditure for the new vans as a fully labelled timeline diagram. (Remember that there are X new vans, and assume each van has 4 tyres.)
b) Determine the value in period 2 dollars of the expenditure stream if Door2DoorCo decide to go with ThriftyTreads. [Hint, you will firstly need to find the j3 rate equivalent to the corporate discount rate, you will then need to find the PV of the expenditure stream in period 2 dollars]
c) Thus determine the present value of the expenditure stream if Door2DoorCo decide to go with ThriftyTreads. [NB this is a bit tricky and is aimed at stronger students]
d) Determine the value in period 2 dollars of the expenditure stream if Door2DoorCo decide to go with WiserWheels.
e) Thus determine the present value of the expenditure stream if Door2DoorCo decide to go with WiserWheels [NB this is a bit tricky and is aimed at stronger students]
f) Comparing your answers for part (b) with part (d), OR part (c) with part (e), explain which tyre supplier Door2DoorCo should choose.
g) Suggest three legitimate business considerations which a manager may take into account that might influence or even change the recommendation from part (f). NB “These tyres are prettier”, “This company will bribe me with a kickback”, or “My wife works for that company” are NOT legitimate business reasons. (Write around 20~30 words explaining/justifying each consideration.)
In: Accounting
Ford Corporation is pulling together its direct labor budget for the next two months. Each unit of output requires 0.05 direct labor-hours. The direct labor rate is $7.80 per direct labor-hour. The production budget calls for producing 5,200 units in June and 5,700 units in July.
Required:
Prepare the direct labor budget for the next two months, assuming that the direct labor work force is fully adjusted to the total direct labor-hours needed each month. (Round your answers to 2 decimal places.)
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In: Accounting
Assuming the government does not eliminate LIFO, what are the ethical implications of a company switching its accounting policy from FIFO to LIFO, or the other way—from LIFO to FIFO? When and why would a company make this change? Explain your answer and discuss the financial statement effects.
In: Accounting
On April 1, 2017, Flounder Company received a condemnation award of $490,200 cash as compensation for the forced sale of the company’s land and building, which stood in the path of a new state highway. The land and building cost $68,400 and $319,200, respectively, when they were acquired. At April 1, 2017, the accumulated depreciation relating to the building amounted to $182,400. On August 1, 2017, Flounder purchased a piece of replacement property for cash. The new land cost $102,600, and the new building cost $456,000.
In: Accounting
Karla Tanner opened a web consulting business called Linkworks and recorded the following transactions in its first month of operations.
Apr. | 1 | Tanner invests $80,000 cash along with office equipment valued at $26,000 in the company in exchange for common stock. | ||
Apr. | 2 | The company prepaid $9,000 cash for twelve months’ rent for office space. The company's policy is record prepaid expenses in balance sheet accounts. | ||
Apr. | 3 | The company made credit purchases for $8,000 in office equipment and $3,600 in office supplies. Payment is due within 10 days. | ||
Apr. | 6 | The company completed services for a client and immediately received $4,000 cash. | ||
Apr. | 9 | The company completed a $6,000 project for a client, who must pay within 30 days. | ||
Apr. | 13 | The company paid $11,600 cash to settle the account payable created on April 3. | ||
Apr. | 19 | The company paid $2,400 cash for the premium on a 12-month insurance policy. The company's policy is record prepaid expenses in balance sheet accounts. | ||
Apr. | 22 | The company received $4,400 cash as partial payment for the work completed on April 9. | ||
Apr. | 25 | The company completed work for another client for $2,890 on credit. | ||
Apr. | 28 | The company paid $5,500 cash in dividends. | ||
Apr. | 29 | The company purchased $600 of additional office supplies on credit. | ||
Apr. | 30 | The company paid $435 cash for this month’s utility bill. |
Descriptions of items that require adjusting entries on April 30, follow.
a) On April 2, the company prepaid $9,000 cash for twelve months' rent for office space.
b) The balance in Prepaid insurance represents the premium paid for a 12-month insurance policy the policy's coverage began on April 1.
c) Office supplies on hand as of April 30 total $1,200.
d) Straight-line depreciation of office equipment, based on a 5-year life and a $4,000 salvage value, is $500 per month.
e) The company has completed work for a client, but has not yet billed the $1,800 fee.
f) Wages due to employees, but not yet paid, as of April 30 total $2,600.
This question requires:
General Journal tab -For each transaction, review the unadjusted balance and prepare the adjusting entry necessary to correctly report the revenue earned or the expense incurred. After adjusting the accounts, review the general ledger and trial balance for accuracy.
General Ledger tab - Each journal entry is posted automatically to the general ledger. Use the drop-down button to view the unadjusted or adjusted balances.
Trial Balance tab - You may view either the unadjusted or adjusted trial balance by choosing from the dropdown box below. Your choice will determine the reported values on the financial statement tabs.
Income Statement tab - Use the drop-downs to select the accounts properly included on the income statement. The unadjusted or adjusted balances will appear for each account, based on your selection.
Statement of Retained earnings tab - The unadjusted or adjusted balances will appear for each account, based on your selection.
Balance Sheet tab - Use the drop-downs to select the accounts properly included on the balance sheet. The unadjusted or adjusted balances will appear for each account, based on your selection.
Impact on Income tab -For each adjustment, indicate the income statement and balance sheet account affected, and the impact on net income. If an adjustment caused net income to decrease, enter the amount as a negative value. Net income before adjustments can be found on the income statement tab. (Hint: Select unadjusted on the dropdown.)
In: Accounting
Selected hypothetical financial data of Target and Wal-Mart for 2022 are presented here (in millions). Target Corporation Wal-Mart Stores, Inc. Income Statement Data for Year Net sales $66,600 $407,000 Cost of goods sold 45,000 305,000 Selling and administrative expenses 14,900 79,000 Interest expense 730 1,800 Other income (expense) (75 ) (390 ) Income tax expense 1,500 7,400 Net income $ 4,395 $ 13,410 Balance Sheet Data (End of Year) Current assets $18,000 $50,000 Noncurrent assets 26,100 121,000 Total assets $44,100 $171,000 Current liabilities $10,000 $55,000 Long-term debt 17,200 45,000 Total stockholders’ equity 16,900 71,000 Total liabilities and stockholders’ equity $44,100 $171,000 Beginning-of-Year Balances Total assets $45,000 $163,000 Total stockholders’ equity 13,900 64,000 Current liabilities 10,900 54,000 Total liabilities 31,100 99,000 Other Data Average net accounts receivable $7,900 $3,800 Average inventory 6,800 34,200 Net cash provided by operating activities 5,600 26,800 Capital expenditures 1,600 11,600 Dividends 520 4,200 For each company, compute the following ratios. (Round current ratio answers to 2 decimal places, e.g. 15.50, debt to assets ratio and free cash flow answers to 0 decimal places, e.g. 5,275 and all answers to 1 decimal place, e.g. 1.8 or 1.83%.) Ratio Target Wal-Mart (1) Current ratio enter the current ratio :1 enter the current ratio :1 (2) Accounts receivable turnover enter accounts receivable turnover in times times enter accounts receivable turnover in times times (3) Average collection period enter average collection period in days days enter average collection period in days days (4) Inventory turnover enter inventory turnover in times times enter inventory turnover in times times (5) Days in inventory enter days in inventory ratio days enter days in inventory ratio days (6) Profit margin enter percentages % enter percentages % (7) Asset turnover enter asset turnover in times times enter asset turnover in times times (8) Return on assets enter percentages % enter percentages % (9) Return on common stockholders’ equity enter percentages % enter percentages % (10) Debt to assets ratio enter percentages % enter percentages % (11) Times interest earned enter times interest earned times enter times interest earned times (12) Free cash flow $enter a dollar amount $enter a dollar amount
In: Accounting
Software Inc. is considering the purchase of new computer equipment totaling $150,000 with an estimated salvage value of $25,000 after three years. Maintenance, repairs, supplies, and other operating costs are estimated to be $13,000 per year. Determine the following:
In: Accounting
Required information
[The following
information applies to the questions displayed below.]
Arndt, Inc., reported the following for 2018 and 2019 ($ in
millions):
2018 | 2019 | ||||||
Revenues | $ | 995 | $ | 1,055 | |||
Expenses | 798 | 838 | |||||
Pretax accounting income (income statement) | $ | 197 | $ | 217 | |||
Taxable income (tax return) | $ | 185 | $ | 255 | |||
Tax rate: 40% | |||||||
4. Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. Using the schedule, prepare the necessary journal entry to record income taxes for 2019.
Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
5. Compute the deferred tax amounts that should be reported on the 2019 balance sheet. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
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In: Accounting
Case Inc. is a construction company specializing in custom patios. The patios are constructed of concrete, brick, fiberglass, and lumber, depending upon customer preference. On June 1, 2020, the general ledger for Case Inc. contains the following data.
Raw Materials Inventory | $4,600 | Manufacturing Overhead Applied | $35,000 | |||
Work in Process Inventory | $5,425 | Manufacturing Overhead Incurred | $29,800 |
Subsidiary data for Work in Process Inventory on June 1 are as
follows.
Job Cost Sheets |
||||||
Customer Job |
||||||
Cost Element |
Rodgers |
Stevens |
Linton |
|||
Direct materials | $700 | $900 | $900 | |||
Direct labor | 300 | 500 | 500 | |||
Manufacturing overhead | 375 | 625 | 625 | |||
$1,375 | $2,025 | $2,025 |
During June, raw materials purchased on account were $5,000, and
all wages were paid. Additional overhead costs consisted of
depreciation on equipment $900 and miscellaneous costs of $500
incurred on account.
A summary of materials requisition slips and time tickets for June
shows the following.
Customer Job |
Materials Requisition Slips |
Time Tickets |
||
Rodgers | $700 | $800 | ||
Koss | 1,900 | 900 | ||
Stevens | 600 | 400 | ||
Linton | 1,400 | 1,400 | ||
Rodgers | 400 | 500 | ||
5,000 | 4,000 | |||
General use | 1,500 | 1,100 | ||
$6,500 | $5,100 |
Overhead was charged to jobs at the same rate of $1.25 per dollar
of direct labor cost. The patios for customers Rodgers, Stevens,
and Linton were completed during June and sold for a total of
$20,200. Each customer paid in full.
Journalize the June transactions: (1) for purchase of raw materials, factory labor costs incurred, and manufacturing overhead costs incurred; (2) assignment of direct materials, labor, and overhead to production; and (3) completion of jobs and sale of goods. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
No. |
Account Titles and Explanation |
Debit |
Credit |
(1) |
|||
(To record purchase of raw materials) | |||
(To record factory labor costs paid) | |||
(To record manufacturing overhead costs incurred) | |||
(2) |
|||
(To record assignment of direct materials) | |||
(To record assignment of factory labor) | |||
(To record assignment of manufacturing overhead) | |||
(3) |
|||
(To record completion of jobs) | |||
(To record sale of goods) | |||
(To record the cost of goods sold) |
Post the entries to Work in Process Inventory. (Post
the entries to Work in Process Inventory in the order presented in
the problem.)
Work in Process Inventory |
|||||
6/1 | June | ||||
6/30 | |||||
Reconcile the balance in Work in Process Inventory with the
costs of unfinished jobs.
Costs of unfinished Job: ________ Direct Materials $ ________ + Direct Labor $ ____________ |
In: Accounting