Alsup Consulting sometimes performs services for which it
receives payment at the conclusion of the engagement, up to six
months after services commence. Alsup recognizes service revenue
for financial reporting purposes when the services are performed.
For tax purposes, revenue is reported when fees are collected.
Service revenue, collections, and pretax accounting income for
2017–2020 are as follows:
Service Revenue | Collections | Pretax Accounting Income |
|||||||
2017 | $ | 616,000 | $ | 581,000 | $ | 140,000 | |||
2018 | 700,000 | 710,000 | 205,000 | ||||||
2019 | 665,000 | 645,000 | 175,000 | ||||||
2020 | 650,000 | 675,000 | 155,000 | ||||||
There are no differences between accounting income and taxable
income other than the temporary difference described above. The
enacted tax rate for each year is 40%.
(Hint: You may find it helpful to prepare a schedule that shows the
balances in service revenue receivable at December 31,
2017–2020.)
Journal entry worksheet:
Record 2018 income taxes.
Record 2019 income taxes.
Record 2020 income taxes.
In: Accounting
Match each of the following terms with its correct definition:
job-order costing system
Process-costing system
overapplied overhead
plantwide overhead rate
predetermined overhead rate
job-order cost sheet
overhead variance
applied overhead
actual cost system
Time Ticket
materials requisition form
underapplied overhead
normal cost sytem
direct materials
manufacturing overhead
A. The amount by which applied overhead exceeds actual overhead
B. The job order number, or name, head this form.
C. Materials that can be easily and cost-effectively traced to a specific job
D. An overhead rate computed using estimated data
E. The amount by which actual overhead exceeds applied overhead
F. The difference between actual overhead and applied overhead
G. Indirect materials, indirect labor, and other costs related to manufacturing that cannot be easily to traced to a specific job
H. This form asks for the type, quantity, and unit price of direct materials.
I. Overhead assigned to production using predetermined rates
J. A costing system that accumulates production costs by process or by department for a given period of time
K. A single overhead rate calculated using all estimated overhead for a factory divided by the estimated activity level across the entire factory
L. A costing system in which costs are collected and assigned to units of production for each individual job
M. This form is filled out by each employee every day.
N. An approach that assigns actual costs of direct materials, direct labor, and overhead to products
O. An approach that assigns the actual costs of direct materials and direct labor to products but uses a predetermined rate to assign overhead costs
In: Accounting
Alsup Consulting sometimes performs services for which it receives payment at the conclusion of the engagement, up to six months after services commence. Alsup recognizes service revenue for financial reporting purposes when the services are performed. For tax purposes, revenue is reported when fees are collected. Service revenue, collections, and pretax accounting income for 2017–2020 are as follows:
service revenue collections pre tax accounting income
2017 | $ | 688,000 | $ | 653,000 | $ | 220,000 | |||
2018 | 780,000 | 795,000 | 285,000 | ||||||
2019 | 745,000 | 715,000 | 255,000 | ||||||
2020 | 730,000 | 760,000 | 235,000 | ||||||
There are no differences between accounting income and taxable income other than the temporary difference described above. The enacted tax rate for each year is 40%.
(Hint: You may find it helpful to prepare a schedule that shows the balances in service revenue receivable at December 31, 2017–2020.) Required: 1. Prepare the appropriate journal entry to record Alsup's 2018 income taxes, Alsup’s 2019 income taxes and Alsup’s 2020 income taxes.
In: Accounting
Why is there a need for three Financial Accounting Ratings Agencies? Are these agencies measuring the same
attributes? If not, what are the critical differences between these agencies? please elaborate
In: Accounting
What is accounts receivable? What is notes receivable and how are they different than accounts receivable? How do creditors decide to extend credit to their customers? What processes do credit managers use to evaluate new customers? Now explain the allowance for doubtful accounts and provide examples.
In: Accounting
Total Assets | $7,082,500 | |
Total Liabilities | 1,700,000 | |
Common Stock | 1,250,000 | |
Additional Paid in Capital | 2,097,500 | |
Donated Capital | 90,000 | |
Ret. Earnings 1/1/Year4 | 1,650,000 | |
Net Sales | 6,250,000 | |
Cost of Sales | 3,750,000 | |
Selling & Adm Expenses | 1,212,500 | |
Interest Expense | 122,500 | |
gain on sale of LT Investments | 130,000 | |
Income Tax Expense | 300,000 | |
Loss on Disposition of Plant Assets | 225,000 | |
Loss due to Earthquake Damage | 475,000 |
Pucket Corp. is in the process of preparing its financial statements for the year ended December 31, Year4. Before closing the books, it prepared the above Condensed Trial Balance Sheet.
Other financial data for the year ended December 31, Year 4:
- Sales returns and allowances equaled $215,000, and sales discounts taken were $95,000.
- Estimated federal income tax payments were $200,000 and accrued federal income taxes equaled $100,000. The total charged to income tax expense does not properly reflect current or deferred income ta expense or interperiod income tax allocation for income statement purposes. The enacted tax rate on all types of taxable income for the current and future years is 30%. The alternative minimum tax is less than the regular income tax.
- Interest expense includes 6% interest on 20 year bonds issued at their face amount of $1,500,000.
- A $90,000 excess of carrying amount over tax basis in depreciable assets arose from receipt of a contribution of equipment by a local government on December 31, Year 4. it is expected to be depreciated over 5 years beginning in Year 5. There were no temporary differences prior to Year 5.
- Officer's Life insurance expense (not tax deductible) is $70,000.
- The earthquake damage is considered unusual and infrequent, but the disposition of plant assets is considered infrequent but not unusual. Moreover, the disposition of plant assets was not a disposal of a component of an entity.
- The shares of common stock ($5 par) traded on a national exchange:
Outstanding at 1/1/Year 4 | 200,000 |
Issued on 3/30 Year 4 as 10% Stock Dividend | 20,000 |
Issued Shares for $25 per share on 6/30/Year 4 | 30,000 |
Outstanding at 12/31/Year 4 | 250,000 |
- Puckett declared a $1.25 common stock dividend on December 28, Year 4.
Using this information enter the correct amounts for Pucket Corporation's income statement for the year ended December 31, Year 4.
Net Sales | ||
Cost of Sales | ||
Gross Profit | ||
Selling & Administrative Expenses | ||
Income from Operations | ||
Other Revenues and Gains: | ||
Gain on Sale of LT Investments | ||
Other Expenses and Losses: | ||
Interest Expense | ||
Loss on Disposition of Plant Assets | ||
Income from continuing operations before income tax | ||
Income Tax Expense: | ||
Current Tax Expense | ||
Deferred Tax Expense | ||
Income Before Extraordinary Item | ||
Extraordinary item-loss from Earthquake(net of applicable taxes) | ||
Net Income |
(if you could show all calculations as well that would be awesome!)
In: Accounting
The budget director of Birds of a Feather Inc., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for January:
Birdhouse | 6,000 units at $55 per unit |
Bird feeder | 4,500 units at $75 per unit |
Direct materials: | |
Wood | 220 ft. |
Plastic | 250 lb. |
Finished products: | |
Birdhouse | 300 units at $23 per unit |
Bird feeder | 240 units at $34 per unit |
Direct materials: | |
Wood | 180 ft. |
Plastic | 210 lb. |
Finished products: | |
Birdhouse | 340 units at $23 per unit |
Bird feeder | 200 units at $34 per unit |
In manufacture of BirdHouse: | |
Wood | 0.80 ft. per unit of product |
Plastic | 0.50 lb. per unit of product |
In manufacture of Bird Feeder: | |
Wood | 1.20 ft. per unit of product |
Plastic | 0.75 lb. per unit of product |
Wood | $8.00 per ft. |
Plastic | $1.20 per lb. |
Birdhouse: | |
Fabrication Department | 0.20 hr. at $15 per hr. |
Assembly Department | 0.30 hr. at $12 per hr. |
Bird Feeder: | |
Fabrication Department | 0.40 hr. at $15 per hr. |
Assembly Department | 0.35 hr. at $12 per hr. |
Indirect factory wages | $80,000 |
Depreciation of plant and equipment | 25,000 |
Power and light | 8,000 |
Insurance and property tax | 2,000 |
Sales salaries expense | $90,000 |
Advertising expense | 20,000 |
Office salaries expense | 18,000 |
Depreciation expense—office equipment | 800 |
Telephone expense—selling | 500 |
Telephone expense—administrative | 200 |
Travel expense—selling | 5,000 |
Office supplies expense | 250 |
Miscellaneous administrative expense | 450 |
Interest revenue | $300 |
Interest expense | 224 |
Required:
1. Prepare a sales budget for January.
Birds of a Feather Inc. Sales Budget For the Month Ending January 31 |
|||
---|---|---|---|
Unit Sales Volume |
Unit Selling Price |
Total Sales | |
Birdhouse | |||
Bird feeder | |||
Total revenue from sales | $ |
2. Prepare a production budget for January.
Birds of a Feather Inc. Production Budget For the Month Ending January 31 |
||||
---|---|---|---|---|
Units | ||||
Birdhouse | Bird Feeder | |||
Expected units to be sold | ||||
Plus desired inventory, January 31 | ||||
Total | ||||
Less estimated inventory, January 1 | ||||
Total units to be produced |
3. Prepare a direct materials purchases budget for January.
Birds of a Feather Inc. Direct Materials Purchases Budget For the Month Ending January 31 |
|||
---|---|---|---|
Wood | Plastic | Total | |
Required units for production: | |||
Birdhouse | |||
Bird feeder | |||
Plus desired units of inventory, January 31 | |||
Total | |||
Less estimated units of inventory, January 1 | |||
Total units to be purchased | |||
Unit price | $ | $ | |
Total direct materials to be purchased | $ | $ | $ |
4. Prepare a direct labor cost budget for January.
Birds of a Feather Inc. Direct Labor Cost Budget For the Month Ending January 31 |
||||||
---|---|---|---|---|---|---|
Fabrication Department |
Assembly Department | Total | ||||
Hours required for production: | ||||||
Birdhouse | ||||||
Bird feeder | ||||||
Total | ||||||
Hourly rate | $ | $ | ||||
Total direct labor cost | $ | $ | $ |
5. Prepare a factory overhead cost budget for January.
Birds of a Feather Inc. Factory Overhead Cost Budget For the Month Ending January 31 |
||
---|---|---|
Indirect factory wages | ||
Depreciation of plant and equipment | ||
Power and light | ||
Insurance and property tax | ||
Total | $ |
6. Prepare a cost of goods sold budget for January. Work in process at the beginning of January is estimated to be $29,000, and work in process at the end of January is estimated to be $35,400.
Birds of a Feather Inc. Cost of Goods Sold Budget For the Month Ending January 31 |
|||
---|---|---|---|
Direct materials: | |||
Cost of direct materials available for use | |||
Cost of direct materials placed in production | |||
Total manufacturing costs | |||
Total work in process during the period | |||
Cost of goods manufactured | |||
Cost of finished goods available for sale | |||
Cost of goods sold | $ |
7. Prepare a selling and administrative expenses budget for January.
Birds of a Feather Inc. Selling and Administrative Expenses Budget For the Month Ending January 31 |
|||
---|---|---|---|
Selling expenses: | |||
Sales salaries expense | |||
Advertising expense | |||
Telephone expense—selling | |||
Travel expense—selling | |||
Total selling expenses | |||
Administrative expenses: | |||
Office salaries expense | |||
Depreciation expense—office equipment | |||
Telephone expense—administrative | |||
Office supplies expense | |||
Miscellaneous administrative expense | |||
Total administrative expenses | |||
Total operating expenses | $ |
8. Prepare a budgeted income statement for January.
Birds of a Feather Inc. Budgeted Income Statement For the Month Ending January 31 |
|||
---|---|---|---|
Selling and administrative expenses: | |||
Total selling and administrative expenses | |||
Other revenue: | |||
Other expenses: | |||
$ |
In: Accounting
QualCo manufactures a single product in two departments: Cutting and Assembly. During May, the Cutting department completed a number of units of a product and transferred them to Assembly. Of these transferred units, 37,700 were in process in the Cutting department at the beginning of May and 153,800 were started and completed in May. May’s Cutting department beginning inventory units were 70% complete with respect to materials and 30% complete with respect to conversion. At the end of May, 51,500 additional units were in process in the Cutting department and were 70% complete with respect to materials and 20% complete with respect to conversion. The Cutting department had $462,668 of direct materials and $400,029 of conversion cost charged to it during May. Its beginning inventory included $74,275 of direct materials cost and $28,693 of conversion cost.
1. Compute the number of units transferred to Assembly.
2-4. Using the FIFO method, assign May’s costs to the units transferred out and assign costs to its ending work in process inventory. (Round "Cost per EUP" to 2 decimal places.)
In: Accounting
Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company’s costs:
Fixed Cost per Month |
Cost per Car Washed |
||||||
Cleaning supplies | $ | 0.50 | |||||
Electricity | $ | 1,300 | $ | 0.07 | |||
Maintenance | $ | 0.15 | |||||
Wages and salaries | $ | 4,000 | $ | 0.20 | |||
Depreciation | $ | 8,100 | |||||
Rent | $ | 1,900 | |||||
Administrative expenses | $ | 1,400 | $ | 0.02 | |||
For example, electricity costs are $1,300 per month plus $0.07 per car washed. The company expects to wash 8,500 cars in August and to collect an average of $6.40 per car washed.
The actual operating results for August appear below.
Lavage Rapide | ||
Income Statement | ||
For the Month Ended August 31 | ||
Actual cars washed | 8,600 | |
Revenue | $ | 56,500 |
Expenses: | ||
Cleaning supplies | 4,750 | |
Electricity | 1,865 | |
Maintenance | 1,515 | |
Wages and salaries | 6,060 | |
Depreciation | 8,100 | |
Rent | 2,100 | |
Administrative expenses | 1,470 | |
Total expense | 25,860 | |
Net operating income | $ | 30,640 |
Required:
Prepare a flexible budget performance report that shows the company’s revenue and spending variances and activity variances for August. (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
E8-26
ComplexChemComplexChem,
Inc., produces chemicals for large biotech companies. It has the following data for manufacturing overhead costs during August
20172017:
|
||||||||||||
|
Requirement
Fill in the blanks. Use F for favorable and U for unfavorable:
(If no variance exists leave the dollar value blank. Label the
variance as favorable (F), unfavorable (U) or never a variance
(N).)
Variable |
||||||||||
(1) |
Spending variance |
|
||||||||
(2) |
Efficiency variance |
|||||||||
(3) |
Production-volume variance |
|||||||||
(4) |
Flexible-budget variance |
|||||||||
(5) |
Underallocated(overallocated) manufacturing overhead |
|||||||||
VARIABLE |
FIXED |
|||||||||
-1 |
Spending variance |
$ |
$ |
|||||||
-2 |
Efficiency variance |
|||||||||
-3 |
Production-volume variance |
|||||||||
-4 |
Flexible-budget variance |
|||||||||
-5 |
Underallocated (overallocated) |
|||||||||
manufacturing overhead |
||||||||||
In: Accounting
Question 2 - 1,500 words
The Senior Partner of the firm you work for has appointed you to a new role. It is now your responsibility to review upcoming accounting standards and provide a report to the partners on the proposed standard and the opinions of other industry players on the changes.
Firstly, you are required to find a current exposure draft or proposal for a new accounting standard which has been opened for public comments. (These can be found on the websites of most standard-setting organisations, such as the IASB, AASB and FASB. Hint: These websites can be quite difficult to navigate, so as a first step try typing “IASB exposure draft and comment letters”/”FASB exposure draft and comment letters” into Google or other search engine of your choice). Read a sample of the comments from a range of respondents. Select four respondents, ideally from different types of organisations for example, from accounting bodies, industry, companies or corporate bodies. If you are having a problem finding suitable comments letters then contact your subject coordinator.
In your own words, supporting your evaluation with appropriate citations, appropriately referenced in APA 6 style, you are required to include the following information in the report.
Please note: you need to attach the comment letters you selected for your report (there is no need to attach the exposure draft
In: Accounting
Part 1:
Part 2:
For this section, prepare the following adjusted journal entries.
Part 3:
Transaction data
Jonathan Swiss owns the Sports Watch Repairs Store. He provides the transactions relating to the month of January this year.
January 2 Invested $10,000 cash as well as providing watch repair equipment with a valuation of $4,800 (Hint: Treat watch repair equipment as part of capital.)
January 4 Paid first month's rent of $900 cash
January 6 Received $2,500 cash for watch repairs
January 8 Purchased supplies on account from Sears for $500
January 9 Repaired a vintage watch on account for $1,500
January 9 Paid $575 cash for wages
January 12 Purchased watch repair equipment for $1,200 cash
January 13 Received $5,500 cash from watch repairs
January 16 Purchased equipment on account from Sears for $1,000
January 18 Paid $520 cash for advertising expense
January 20 Withdrew $750 cash for personal expenses
January 22 Received $950 cash on account for work done on January 9
January 23 Paid $475 cash for wages
January 26 Received $7,000 cash from watch repairs
January 27 Paid $850 cash on account for the January 16 transactions
January 30 Received $480 cash from repairs previously done on an antique watch
Thank you.
In: Accounting
Dublin Chips is a manufacturer of prototype chips based in Buffalo, New York.
Next year, in 2018, Dublin Chips expects to deliver 615 prototype chips at an average price of $95,000. Dublin Chips' marketing vice president forecasts growth of 65 prototype chips per year through 2024.
That is, demand will be 615 in 2018, 680 in 2019, 745 in 2020, and so on. The plant cannot produce more than 585 prototype chips annually. To meet future demand, Dublin Chips must either modernize the plant or replace it. The old equipment is fully depreciated and can be sold for $4,200,000 if the plant is replaced. If the plant is modernized, the costs to modernize it are to be capitalized and depreciated over the useful life of the updated plant. The old equipment is retained as part of the modernize alternative.
The following data on the two options are available:
Modernize |
Replace |
||
Initial investment in 2018 |
$35,300,000 |
$66,300,000 |
|
Terminal disposal value in 2024 |
$7,500,000 |
$16,000,000 |
|
Useful life |
7 years |
7 years |
|
Total annual cash operating cost per prototype chip |
$78,500 |
$66,000 |
Dublin Chips uses straight-line depreciation, assuming zero terminal disposal value. For simplicity, we assume no change in prices or costs in future years. The investment will be made at the beginning of 2018, and all transactions thereafter occur on the last day of the year. Dublin Chips' required rate of return is 14%. There is no difference between the modernize and replace alternatives in terms of required working capital. Dublin Chips pays a 35% tax rate on all income. Proceeds from sales of equipment above book value are taxed at the same 35% rate.
1. |
Calculate the after-tax cash inflows and outflows of the
modernize and replace alternatives over the 2018 -2024 period. |
2. |
Calculate the net present value of the modernize and replace alternatives. |
3. |
Suppose Dublin Chips is planning to build several more plants.
It wants to have the most advantageous tax position possible.Dublin
Chips has been approached by Spain, Malaysia, and Australia to
construct plants in their countries. Briefly describe in
qualitative terms the income tax features that would be
advantageous to Dublin Chips. |
Let's begin with the modernize alternative. Start by computing the present value of theafter-tax cash flows from operations, then calculate the present value of the after-tax cash savings from depreciation and the terminal disposal value, and finally, determine the total net present value (NPV) of the investment for the modernize alternative.
Net Cash |
Present Value |
||||
PV factor |
Inflow |
of Cash Flows |
|||
Net initial investment |
|||||
After-tax cash flows from operations: |
|||||
Dec 31, 2018 |
x |
= |
|||
Dec 31, 2019 |
x |
|
= |
||
Dec 31, 2020 |
x |
= |
|||
Dec 31, 2021 |
x |
= |
|||
Dec 31, 2022 |
x |
= |
|||
Dec 31, 2023 |
x |
= |
|||
Dec 31, 2024 |
x |
= |
In: Accounting
What is the difference between grease payment and bribery? Is grease payment legal per FCPA and per the law of all other countries?
In: Accounting
Maher Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 157 Units in beginning inventory 0 Units produced 3,710 Units sold 3,490 Units in ending inventory 220 Variable costs per unit: Direct materials $ 47 Direct labor $ 50 Variable manufacturing overhead $ 9 Variable selling and administrative expense $ 11 Fixed costs: Fixed manufacturing overhead $ 118,720 Fixed selling and administrative $ 10,470 Required: a. What is the unit product cost for the month under variable costing? b. What is the unit product cost for the month under absorption costing? c. Prepare a contribution format income statement for the month using variable costing. d. Prepare an income statement for the month using absorption costing. e. Reconcile the variable costing and absorption costing net operating incomes for the month.
In: Accounting