Chavez Company most recently reconciled its bank statement and book balances of cash on August 31 and it reported two checks outstanding, No. 5888 for $1,037 and No. 5893 for $508. The following information is available for its September 30, 2017, reconciliation. From the September 30 Bank Statement PREVIOUS BALANCE TOTAL CHECKS AND DEBITS TOTAL DEPOSITS AND CREDITS CURRENT BALANCE 20,000 9,783 11,411 21,628 CHECKS AND DEBITS DEPOSITS AND CREDITS Date No. Amount Date Amount 09/03 5888 1,037 09/05 1,187 09/04 5902 708 09/12 2,242 09/07 5901 1,852 09/21 4,103 09/17 657 NSF 09/25 2,342 09/20 5905 926 09/30 22 IN 09/22 5903 412 09/30 1,515 CM 09/22 5904 2,121 09/28 5907 215 09/29 5909 1,855 From Chavez Company’s Accounting Records Cash Receipts Deposited Date Cash Debit Sept. 5 1,187 12 2,242 21 4,103 25 2,342 30 1,718 11,592 Cash Disbursements Check No. Cash Credit 5901 1,852 5902 708 5903 412 5904 2,078 5905 926 5906 998 5907 215 5908 356 5909 1,855 9,400 Cash Acct. No. 101 Date Explanation PR Debit Credit Balance Aug. 31 Balance 18,455 Sept. 30 Total receipts R12 11,592 30,047 30 Total disbursements D23 9,400 20,647 Additional Information Check No. 5904 is correctly drawn for $2,121 to pay for computer equipment; however, the recordkeeper misread the amount and entered it in the accounting records with a debit to Computer Equipment and a credit to Cash of $2,078. The NSF check shown in the statement was originally received from a customer, S. Nilson, in payment of her account. Its return has not yet been recorded by the company. The credit memorandum is from the collection of a $1,540 note for Chavez Company by the bank. The bank deducted a $25 collection fee. The collection and fee are not yet recorded. Required: 1. Prepare the September 30, 2017, bank reconciliation for this company.
2. Prepare the journal entries to adjust the
book balance of cash to the reconciled balance. (If no
entry is required for a transaction/event, select "No journal entry
required" in the first account field.)
1 Record the entry related to the September 30 deposit, if required.
2 Record the entry related to interest earned, if required.
3 Record the entry related to the note receivable and the collection fee, if required.
4 Record the entry related to the outstanding checks, if required.
5 Record the entry related to the NSF check, if required.
6 Record the entry related to the error on check 5904, if required.
In: Accounting
Required information
Problem 8-5 (Algo) Various inventory costing methods [LO8-1, 8-4]
Skip to question
[The following information applies to the questions
displayed below.]
Ferris Company began January with 7,000 units of its principal
product. The cost of each unit is $6. Merchandise transactions for
the month of January are as follows:
Purchases | |||||||||
Date of Purchase | Units | Unit Cost* | Total Cost | ||||||
Jan. 10 | 6,000 | $ | 7 | $ | 42,000 | ||||
Jan. 18 | 7,000 | 8 | 56,000 | ||||||
Totals | 13,000 | 98,000 | |||||||
* Includes purchase price and cost of freight.
Sales | ||
Date of Sale | Units | |
Jan. 5 | 3,000 | |
Jan. 12 | 1,000 | |
Jan. 20 | 4,000 | |
Total | 8,000 | |
12,000 units were on hand at the end of the month.
Problem 8-5 (Algo) Part 1
Required:
1. Calculate January's ending inventory and cost
of goods sold for the month using FIFO, periodic system.
2. Calculate January's ending inventory and
cost of goods sold for the month using LIFO, periodic system.
4. Calculate January's ending inventory and cost of goods sold for the month using Average cost, periodic system.
5. Calculate January's ending inventory and
cost of goods sold for the month using Average cost, perpetual
system. (Round average cost per unit to 4 decimal places.
Enter sales with a negative sign.)
In: Accounting
Worley Company buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundreds of hospitals. Worley sets its prices for all hospitals by marking up its cost of goods sold to those hospitals by 5%. For example, if a hospital buys supplies from Worley that cost Worley $100 to buy from manufacturers, Worley would charge the hospital $105 to purchase these supplies.
For years, Worley believed that the 5% markup covered its selling and administrative expenses and provided a reasonable profit. However, in the face of declining profits, Worley decided to implement an activity-based costing system to help improve its understanding of customer profitability. The company broke its selling and administrative expenses into five activities as shown:
Activity Cost Pool (Activity Measure) | Total Cost | Total Activity | |||
Customer deliveries (Number of deliveries) | $ | 264,000 | 3,000 | deliveries | |
Manual order processing (Number of manual orders) | 600,000 | 8,000 | orders | ||
Electronic order processing (Number of electronic orders) | 322,000 | 14,000 | orders | ||
Line item picking (Number of line items picked) | 696,000 | 480,000 | line items | ||
Other organization-sustaining costs (None) | 630,000 | ||||
Total selling and administrative expenses | $ | 2,512,000 | |||
Worley gathered the data below for two of the many hospitals that it serves—University and Memorial (each hospital purchased medical supplies that had cost Worley $31,000 to buy from manufacturers):
Activity |
||
Activity Measure | University | Memorial |
Number of deliveries | 11 | 23 |
Number of manual orders | 0 | 40 |
Number of electronic orders | 13 | 0 |
Number of line items picked | 200 | 250 |
Required:
1. Compute the total revenue that Worley would receive from University and Memorial.
2. Compute the activity rate for each activity cost pool.
3. Compute the total activity costs that would be assigned to University and Memorial.
4. Compute Worley’s customer margin for University and Memorial. (Hint: Do not overlook the $31,000 cost of goods sold that Worley incurred serving each hospital.)
Compute the total revenue that Worley would receive from University and Memorial.
Required1
|
Required2
Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.)
|
Compute the total activity costs that would be assigned to University and Memorial.
Required3
|
Required4
Compute Worley’s customer margin for University and Memorial. (Hint: Do not overlook the $31,000 cost of goods sold that Worley incurred serving each hospital.) (Loss amounts should be indicated with a minus sign. Round your intermediate calculations to 2 decimal places. Round your final answers to the nearest whole number.)
|
In: Accounting
Selk Steel Co., which
began operations on January 4, 2017, had the following subsequent
transactions and events in its long-term investments.
2017
Jan. | 5 | Selk purchased 60,000 shares (20% of total) of Kildaire's common stock for $1,560,000. | ||
Oct. | 23 | Kildaire declared and paid a cash dividend of $3.20 per share. | ||
Dec. | 31 | Kildaire’s net income for 2017 is $1,164,000, and the fair value of its stock at December 31 is $30.00 per share. |
2018
Oct. | 15 | Kildaire declared and paid a cash dividend of $2.60 per share. | ||
Dec. | 31 | Kildaire’s net income for 2018 is $1,476,000, and the fair value of its stock at December 31 is $32.00 per share. |
2019
Jan. | 2 | Selk sold all of its investment in Kildaire for $1,894,000 cash. |
Problem 15-4A Part 2
Part 2
Assume that although Selk owns 20% of Kildaire’s outstanding stock,
circumstances indicate that it does not have a significant
influence over the investee and that it is classified as an
available-for-sale security investment.
Required:
1. Prepare journal entries to record the preceding
transactions and events for Selk. Also prepare an entry dated
January 2, 2019, to remove any balance related to the fair value
adjustment. (If no entry is required for a
transaction/event, select "No journal entry required" in the first
account field.)
In: Accounting
PERCENTAGE OF COMPLETION METHOD AttiK Construction Company currently has a long-term construction project. The project has a contract price of $130,000,000 with total estimated costs of $100,000,000. AttiK appropriately uses the percentage of completion method. After 2 years of construction, the following costs have been accumulated: Actual cost incurred, Year 1 $30,000,000 Total estimated costs remaining after Year 1 70,000,000 Actual cost incurred, Year 2 50,000,000 Total estimated cost remaining after Year 2 20,000,000 Determine the gross profit for each of the first 2 years of the construction contract.
In: Accounting
In: Accounting
3-3
Wells Technical Institute (WTI), a school owned by Tristana
Wells, provides training to individuals who pay tuition directly to
the school. WTI also offers training to groups in off-site
locations. Its unadjusted trial balance as of December 31, 2017,
follows. WTI initially records prepaid expenses and unearned
revenues in balance sheet accounts. Descriptions of items
athrough h that require adjusting entries on
December 31, 2017, follow.
WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31, 2017 |
|||||
Debit | Credit | ||||
Cash | $ | 27,849 | |||
Accounts receivable | 0 | ||||
Teaching supplies | 10,710 | ||||
Prepaid insurance | 16,068 | ||||
Prepaid rent | 2,143 | ||||
Professional library | 32,133 | ||||
Accumulated depreciation—Professional library | $ | 9,641 | |||
Equipment | 74,968 | ||||
Accumulated depreciation—Equipment | 17,139 | ||||
Accounts payable | 35,341 | ||||
Salaries payable | 0 | ||||
Unearned training fees | 15,000 | ||||
Common stock | 13,000 | ||||
Retained earnings | 55,123 | ||||
Dividends | 42,845 | ||||
Tuition fees earned | 109,254 | ||||
Training fees earned | 40,702 | ||||
Depreciation expense—Professional library | 0 | ||||
Depreciation expense—Equipment | 0 | ||||
Salaries expense | 51,415 | ||||
Insurance expense | 0 | ||||
Rent expense | 23,573 | ||||
Teaching supplies expense | 0 | ||||
Advertising expense | 7,498 | ||||
Utilities expense | 5,998 | ||||
Totals | $ | 295,200 | $ | 295,200 | |
2-a. Post the balance from the unadjusted trial
balance and the adjusting entries in to the T-accounts.
2-b. Prepare an adjusted trial balance.
Post the balance from the unadjusted trial balance and the adjusting entries in to the T-account
-a. Prepare Wells Technical Institute's income
statement for the year 2017.
3-b. Prepare Wells Technical Institute's statement
of owner's equity for the year 2017.
3-c. Prepare Wells Technical Institute's balance
sheet as of December 31, 2017.
In: Accounting
The following selected transactions were taken from the books of
Ripley Company for 2018:
1. On February 1, 2018, borrowed $70,000 cash from the
local bank. The note had a 6 percent interest rate and was due on
June 1, 2018.
2. Cash sales for the year amounted to $240,000 plus
sales tax at the rate of 7 percent.
3. Ripley provides a 90-day warranty on the
merchandise sold. The warranty expense is estimated to be 1 percent
of sales.
4. Paid the sales tax to the state sales tax agency on
$210,000 of the sales.
5. Paid the note due on June 1 and the related interest.
6. On November 1, 2018, borrowed $20,000 cash from
the local bank. The note had a 6 percent in-
terest rate and a one-year term to maturity.
7. Paid $2,100 in warranty repairs.
8. A customer has filed a lawsuit against Ripley for
$1 million for breach of contract. The company
attorney does not believe the suit has merit.
Required
a. Answer the following questions:
(1) (2) (3)
What amount of cash did Ripley pay for interest during 2018?
What amount of interest expense is reported on Ripley’s income statement for 2018?
What is the amount of warranty expense for 2018?
b. Prepare the current liabilities section of the
balance sheet at December 31, 2018.
c. Show the effect of these transactions on the financial
statements using a horizontal statements model like the one below.
Use + for increase, − for decrease, and NA for not affected. In the
Cash Flow column, indicate whether the item is an operating
activity (OA), investing activity
(IA), or financing activity (FA).
a. (1) Cash paid for interest: $. x % x /12 =
(2) Interest Expense: $ x % x /12 = $
$ x % x /12 =
Total Interest Expense $
(3) Warranty Expense: $ x % = $
b.
Interest Payable |
Sales Tax Payable |
|
6.1 |
2.2 4.3 |
|
Bal. |
Bal. |
1$ x % x /12 = $ 2$ x % = $
3$ x % = $
Warranty Payable |
Notes Payable |
|
3.4 |
1. |
|
7. |
5. |
|
Bal. |
6. |
|
Bal. |
4$ x % = $
Ripley Company |
|||
Current Liabilities |
|||
$ |
|||
Total Current Liabilities |
$ |
||
Note: Is there anything that should not be recorded and why?
In: Accounting
Prepare general journal entries without explanations to record the following transactions:
Jan 1 Sold merchandise to Kelly Graham for $1,000 on account. The merchandise cost $600 and the company uses a perpetual inventory system and does not expect any returns.
Feb 1 Received $300 from Graham.
Jul 1 Wrote off the balance of Graham’s account as uncollectible.
Sep 1 Unexpectedly received payment in full from Graham.
In: Accounting
Discuss the importance of companies having proper internal controls. Give an example from your experience in which an organization had good or weak controls in place and state why they were good or weak controls.
In: Accounting
Your textbook outlines several techniques to gain your reader's attention in the opening of a persuasive message. List two of these techniques and write an original example of each.
In: Accounting
The journal of accountancy is written created but which organization?
a. FASB
b. IASB
c. AICPA
d. SEC
In: Accounting
Insurance expense | $10,000 |
Sales returns and allowances | 22,400 |
Bad debt expense | 6,000 |
Accounts payable | 81,000 |
Accounts receivable | 108,590 |
Allowance for doubtful accounts | 8,500 |
Accumulated depreciation – equipment | 27,740 |
Depreciation expense | 1,200 |
Interest revenue | 2,100 |
Cash | 80,970 |
Common stock (10,000 shares outstanding) | 100,000 |
Cost of goods sold | 598,550 |
Dividends declared | 18,000 |
Equipment | 139,450 |
General expenses | 114,250 |
Dividends payable | 2,000 |
Sales discounts | 23,000 |
Interest expense | 5,600 |
Paid-in capital in excess of par | 110,000 |
Marketable Securities | 12,000 |
Merchandise inventory | 154,250 |
Prepaid insurance | 11,225 |
Salaries expense | 42,100 |
Retained earnings | ? |
Dividend Revenue | 10,000 |
Salaries Payable | 12,350 |
Sales | 983,900 |
Selling expenses | 139,210 |
The selling expenses and general expense categories above are a combination of numerous accounts not needed to be listed separately (they are mainly composed of senior executives’ salaries and other compensation items). If you do not know if an account is selling or general/admin. then split the dollar amount 50/50 between the 2 categories. This only matters in the preparation of the multi-step income statement. Needed A Single Step income statement Multiple-step income statement Statement of retained earnings |
In: Accounting
LEASE VERSUS BUY Morris-Meyer Mining Company must install $1.5 million of new machinery in its Nevada mine. It can obtain a bank loan for 100% of the required amount. Alternatively, a Nevada investment banking firm that represents a group of investors believes that it can arrange for a lease financing plan. Assume that the following facts apply: The equipment falls in the MACRS 3-year class. The applicable MACRS rates are 33%, 45%, 15%, and 7%.
2. Estimated maintenance expenses are $75,000 per year.
3. Morris-Meyer’s federal-plus-state tax rate is 40%.
4. If the money is borrowed, the bank loan will be at a rate of 15%, amortized in 4 equal installments to be paid at the end of each year.
5. The tentative lease terms call for end-of-year payments of $400,000 per year for 4 years.
6. Under the proposed lease terms, the lessee must pay for insurance, property taxes, and maintenance.
7. The equipment has an estimated salvage value of $400,000, which is the expected market value after 4 years, at which time Morris-Meyer plans to replace the equipment regardless of whether the firm leases or purchases it. The best estimate for the salvage value is $400,000, but it may be much higher or lower under certain circumstances.
To assist management in making the proper lease-versus-buy decision, you are asked to answer the following questions.
a. Assuming that the lease can be arranged, should Morris-Meyer lease or borrow and buy the equipment? Explain.
b. Consider the $400,000 estimated salvage value. Is it appropriate to discount it at the same rate as the other cash flows? What about the other cash flows—are they all equally risky? Explain.
In: Accounting
On June 30, 2018, Singleton Computers issued 6% stated rate bonds with a face amount of $200 million. The bonds mature on June 30, 2033 (15 years). The market rate of interest for similar bond issues was 5% (2.5% semiannual rate). Interest is paid semiannually (3%) on June 30 and December 31, beginning on December 31, 2018. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price of the bonds on June 30, 2018. 2. Calculate the interest expense Singleton reports in 2018 for these bonds using the effective interest method.
Required 1
Determine the price of the bonds on June 30, 2018. (Enter your answers in whole dollars. Round percentage answers to one decimal place. Round your final answers to nearest whole dollar amount.)
|
Required 2
Calculate the interest expense Singleton reports in 2018 for these bonds using the effective interest method. (Enter your answers in whole dollars. Round your final answers to nearest whole dollar amount.)
|
In: Accounting