Three grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western Siberia. The cost of the musk oil is $1.70 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3:

The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter’s production needs. Some 38,400 grams of musk oil will be on hand to start the first quarter of Year 2.

Required:

Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2.

A partial trial balance of Julie Hartsack Corporation is as follows on December 31, 2018. Dr. Cr. Supplies $2,700 Salaries and wages payable $1,500 Interest Receivable 5,100 Prepaid Insurance 90,000 Unearned Rent 0 Interest Payable 15,000 Additional adjusting data: 1. A physical count of supplies on hand on December 31, 2018, totaled $1,100. 2. Through oversight, the Salaries and Wages Payable account was not changed during 2018. Accrued salaries and wages on December 31, 2018, amounted to $4,400. 3. The Interest Receivable account was also left unchanged during 2018. Accrued interest on investments amounts to $4,350 on December 31, 2018. 4. The unexpired portions of the insurance policies totaled $65,000 as of December 31, 2018. 5. $28,000 was received on January 1, 2018, for the rent of a building for both 2018 and 2019. The entire amount was credited to rent revenue. 6. Depreciation on equipment for the year was erroneously recorded as $5,000 rather than the correct figure of $50,000. 7. A further review of depreciation calculations of prior years revealed that equipment depreciation of $7,200 was not recorded. It was decided that this oversight should be corrected by a prior period adjustment.Pass the necessary adjusting entries for the following taking into account income tax effects (40% tax rate) and assuming that the books have been closed. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) 1. Depreciation on equipment for the year was erroneously recorded as $5,000 rather than the correct figure of $50,000. 2. A further review of depreciation calculations of prior years revealed that equipment depreciation of $7,200 was not recorded. It was decided that this oversight should be corrected by a prior period adjustment.

2016

2017

Required:
1-a. First, complete the table below to calculate the interest amount at December 31, 2016.
1-b. Use the calculated value to prepare your journal entries for 2016 transactions.
1-c. First, complete the table below to calculate the interest amounts.
1-d. Use those calculated values to prepare your journal entries for 2017 transactions.

The journal entries for 1 d are listed below:

Received Todd’s payment of principal and interest on the note dated December 16.

Accepted a $6,200, 7%, 90-day note dated this day in granting a time extension on the past-due account receivable from Midnight Co.

Accepted a $3,000, 30-day, 7% note dated this day in granting Ava Privet a time extension on her past-due account receivable.

Privet dishonored her note when presented for payment.

Midnight Co. refused to pay the note that was due to Ohlm Co. on May 31. Prepare the journal entry to charge the dishonored note plus accrued interest to Midnight Co.’s accounts receivable.

Received payment from Midnight Co. for the maturity value of its dishonored note plus interest for 46 days beyond maturity at 7%.

Accepted a $8,150, 90-day, 9% note dated this day in granting a time extension on the past-due account receivable of Mulan Co.

Accepted a $3,610, 60-day, 12% note dated this day in granting Noah Carson a time extension on his past-due account receivable.

Received payment of principal plus interest from Carson for the September 3 note.

Received payment of principal plus interest from Mulan for the August 7 note.

Wrote off the Privet account against Allowance for Doubtful Accounts.

Problem 10-2A The following are selected transactions of Blanco Company. Blanco prepares financial statements quarterly. Jan. 2 Purchased merchandise on account from Nunez Company, $21,600, terms 3/10, n/30. (Blanco uses the perpetual inventory system.) Feb. 1 Issued a 9%, 2-month, $21,600 note to Nunez in payment of account. Mar. 31 Accrued interest for 2 months on Nunez note. Apr. 1 Paid face value and interest on Nunez note. July 1 Purchased equipment from Marson Equipment paying $10,400 in cash and signing a 10%, 3-month, $70,800 note. Sept. 30 Accrued interest for 3 months on Marson note. Oct. 1 Paid face value and interest on Marson note. Dec. 1 Borrowed $27,600 from the Paola Bank by issuing a 3-month, 8% note with a face value of $27,600. Dec. 31 Recognized interest expense for 1 month on Paola Bank note.

Analyze each transaction.  Under each category in the accounting equation, indicate whether the transaction:

A. increases,

B. decreases, or

C. has no effect.  The item (a) is provided as an example.

1. Provided services to a customer on account.  (Revenue increases causing Stockholders’ Equity to increase, Assets increase, and no effect on Liabilities).

6.  Collected from customers for services provided on account.

7.  Incurred salaries for the month, will pay next week.

8.  Purchased office equipment and will pay vendor later.

9.     At the beginning of January, the balance in the Retained Earnings account is $210,000 for BMJ Corporation.  During the month of January, BMJ had the following external transactions.

$______________Determine ending Retained Earnings for January 31st.

Old Country Links, Inc., produces sausages in three production departments—Mixing, Casing and Curing, and Packaging. In the Mixing Department, meats are prepared and ground and then mixed with spices. The spiced meat mixture is then transferred to the Casing and Curing Department, where the mixture is force-fed into casings and then hung and cured in climate-controlled smoking chambers. In the Packaging Department, the cured sausages are sorted, packed, and labeled. The company uses the weighted-average method in its process costing system. Data for September for the Casing and Curing Department follow: Percent Completed Units Mixing Materials Conversion Work in process inventory, September 1 9 100 % 60 % 50 % Work in process inventory, September 30 9 100 % 20 % 10 % Mixing Materials Conversion Work in process inventory, September 1 $ 17,622 $ 531 $ 6,399 Cost added during September $ 190,298 $ 17,984 $ 171,931 Mixing cost represents the costs of the spiced meat mixture transferred in from the Mixing Department. The spiced meat mixture is processed in the Casing and Curing Department in batches; each unit in the above table is a batch and one batch of spiced meat mixture produces a set amount of sausages that are passed on to the Packaging Department. During September, 104 batches (i.e., units) were completed and transferred to the Packaging Department. Required: 1. Determine the Casing and Curing Department's equivalent units of production for mixing, materials, and conversion for the month of September. 2. Compute the Casing and Curing Department's cost per equivalent unit for mixing, materials, and conversion for the month of September. 3. Compute the Casing and Curing Department's cost of ending work in process inventory for mixing, materials, conversion, and in total for September. 4. Compute the Casing and Curing Department's cost of units transferred out to the Packaging Department for mixing, materials, conversion, and in total for September. 5. Prepare a cost reconciliation report for the Casing and Curing Department for September.

Accounts Receivable Turnover

All of the following statements are true for Garrison Company, who has an accounts receivable turnover rate of 10, except:

Select one:

a. Garrison writes off accounts receivables as uncollectible if they are more than 36.5 days old.

b. Garrison’s accounts receivable indicate greater liquidity than those of a business whose accounts receivable turnover rate is 4.

c. Garrison may have less liberal credit terms than a company with an accounts receivable turnover rate of 5.

d. Using a 365 day year, Garrison waits approximately 36.5 days to make collections of its credit sales.

If you were to start your own business, which business entity structure would you choose? Justify why your chosen structure is the best organizational form.

Explain the following business structures: sole proprietorship, partnership, LLC, and a corporation. In your analysis address the following for each business structure:

• Steps to form
• Personal liability for owners
• Taxation
• Advantages and disadvantages
• Your paper must be three to five pages

1. The Hill Company produced 5,000 units of X. The standard time per unit is 0.25 hours. The actual hours used to produce 5,000 units of X were 1,350 hours. The standard labor rate is $12 per hour. The actual labor cost was $18,900. What is the total direct labor cost variance?

a. $1,200 unfavorable

b. $3,900 unfavorable

c. $1,400 unfavorable

d. $2,700 unfavorable

2. The cost associated with the difference between the standard quantity and the actual quantity of direct materials used in producing a commodity is called the:

a. direct materials quantity variance

b. direct materials price variance

c. direct materials volume variance

d. controllable materials variance

3. The cost associated with the difference between the standard hours and the actual hours of direct labor spent producing a commodity is called the:

a. direct labor quantity variance

b. direct labor volume variance

c. direct labor rate variance

d. direct labor time variance

4. The difference between the budgeted fixed overhead at 100% of normal capacity and the standard fixed overhead for the actual production achieved during the period is called the:

a. efficiency variance

b. controllable variance

c. volume variance

d. total overhead variance

5. An unfavorable volume variance might be caused by which of the following factors?

a. an uneven work flow

b. machine breakdowns

c. repairs leading to work stoppages d. all of the above

6. Which of the following is an example of a nonfinancial performance measure?

a. number of customer complaints

b. direct labor time variance

c. controllable overhead variance d. all of the above

7. A quantity of 1,200 gallons of Material X is purchased at a price of $4.50 per gallon. The standard price is $4.00 per gallon. The journal entry for this purchase will include a:

a. debit to Materials for $5,400

b. debit to Direct Materials Price Variance for $600

c. credit to Direct Materials Price Variance for $600

d. debit to Work in Process for $4,800

You have been asked to prepare a December cash budget for Ashton Company, a distributor of exercise equipment. The following information is available about the company’s operations:

1. The cash balance on December 1 is $50,600.

2. Actual sales for October and November and expected sales for December are as follows:

Sales on account are collected over a three-month period as follows: 20% collected in the month of sale, 60% collected in the month following sale, and 18% collected in the second month following sale. The remaining 2% is uncollectible.

3. Purchases of inventory will total $317,000 for December. Thirty percent of a month’s inventory purchases are paid during the month of purchase. The accounts payable remaining from November’s inventory purchases total $190,000, all of which will be paid in December.

4. Selling and administrative expenses are budgeted at $526,000 for December. Of this amount, $58,600 is for depreciation.

5. A new web server for the Marketing Department costing $78,000 will be purchased for cash during December, and dividends totaling $15,500 will be paid during the month.

6. The company maintains a minimum cash balance of $20,000. An open line of credit is available from the company’s bank to increase its cash balance as needed.

Required:

1. Calculate the expected cash collections for December.

2. Calculate the expected cash disbursements for merchandise purchases for December.

3. Prepare a cash budget for December. Indicate in the financing section any borrowing that will be needed during the month. Assume that any interest will not be paid until the following month.

Your task is to write a procedure or checklist of things that are required to prepare financial forecasts and projections of an organisation. Please ensure you include the following in your procedure/checklist:

1. Timetable preparation
2. Identifying assumptions and parameters
3. Issuing instructions for preparation of forecasts and projections
4. Collecting and analysing data
5. Documentation of results
6. Approval protocols

You will be required to provide the procedure and checklist to the assessor.

Question 1:

One of the COSO principles of internal control requires organizations to demonstrate a commitment to attract,develop, and retain competent individuals in alignment with objectives. Discuss how this can be done.

Question 2 :

What are the three types of law that are relevant to auditors’ legal liability? Explain the causes of legal action under each type.

Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2017, by issuing 10,500 shares of $10 par value common stock. Haynes’s shares had a $15 per share fair value. On that date, Turner reported a net book value of $110,750. However, its equipment (with a five-year remaining life) was undervalued by $8,850 in the company’s accounting records. Also, Turner had developed a customer list with an assessed value of $37,900, although no value had been recorded on Turner’s books. The customer list had an estimated remaining useful life of 10 years. The following balances come from the individual accounting records of these two companies as of December 31, 2017: Haynes Turner Revenues $ (686,000 ) $ (318,000 ) Expenses 490,000 149,000 Investment income Not given 0 Dividends declared 100,000 80,000 The following balances come from the individual accounting records of these two companies as of December 31, 2018: Haynes Turner Revenues $ (799,000 ) $ (390,000 ) Expenses 516,000 180,500 Investment income Not given 0 Dividends declared 110,000 60,000 Equipment 571,000 359,000 a. What balance does Haynes’s Investment in Turner account show on December 31, 2018, when the equity method is applied? b. What is the consolidated net income for the year ending December 31, 2018? c-1. What is the consolidated equipment balance as of December 31, 2018? c-2. Would this answer be affected by the investment method applied by the parent? d. Prepare entry *C for the beginning of the Retained Earnings account on a December 31, 2018 by using initial value, partial equity and equity method. Req A to C2Req D a. What balance does Haynes’s Investment in Turner account show on December 31, 2018, when the equity method is applied? b. What is the consolidated net income for the year ending December 31, 2018? c-1. What is the consolidated equipment balance as of December 31, 2018? c-2. Would this answer be affected by the investment method applied by the parent? Show less a. Investment in Turner account b. Consolidated net income c-1. Consolidated equipment c-2. Would this answer be affected by the investment method applied by the parent? Prepare entry *C for the beginning of the Retained Earnings account on a December 31, 2018 by using initial value, partial equity and equity method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Consolidation Worksheet Entries Prepare entry *C if the parent used the initial value method. Note: Enter debits before credits. Date Accounts Debit Credit December 31, 2018

Problem 5-35 information used for the cash budget for second quarter

Sunland Products, a rapidly growing distributor of home gardening equipment, is formulating its plans for the coming year. Carol Jones, the firm’s marketing director, has completed the following sales forecast.

Phillip Smith, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projection. He has gathered the following information.

Question Two

The following balances were extracted from the books of Bashara Kabwa Enterprises, a wholesale business, as at 31 October 2018:

Drawings                                                                     660,000

Trade receivables                                                         990,000

Purchases                                                                     2,303,840

Sales returns                                                                 79,420

Capital                                                                         4,101,100

Trade payables                                                             330,000

Sales                                                                            4,691,280

Purchases returns                                                          120,340

Discount received                                                         93,720

Provision for depreciation: Motor vehicles                     176,000

                                         Fixtures and fittings             63,800

Allowances for doubtful debts                                       44,000

15% bank loan                                                             220,000

Salaries and wage                                                         1,034,000

Discount allowed                                                          54,560

Bank balance                                                               568,260

Cash in hand                                                                26,400

Electricity expenses                                                      103,840

Rent and rates                                                              54,560

Freehold premises (cost)                                               1,569,700

Fixtures and fittings (cost)                                             334,400

Motor vehicles (cost)                                                    462,000

Stationery                                                                    34,320

Postage and telephone expenses                                    44,000

Insurance premiums                                                      13,200

Bad debts written off                                                    15,840

Motor vehicle expenses                                                 84,920

Inventory (1 November 2017)                                       1,393,480

Interest on bank loan                                                     16,500

Additional information:

1. The value of inventory as at 31 October 2018 was Sh. 1,036,400
2. Sales includes Sh. 300,000 worth of goods sold by Bashara Kabwa Enterprises agents, who are allowed 15% commission on such sales. This transaction has not been recorded in the books.
3. Depreciation is to be provided as follows:

Fixtures and fittings      – 10% per annum on reducing balance basis.

Motor vehicle               – 15% per annum on straight line basis.

4. Annual insurance premium amounted to Sh. 12,000.
5. As at 31 October 2017, there was a balance of Sh. 65,000 received from a customer in cash.
6. Salaries and wages were in arrears of Sh. 35,000
7. The Electricity bill for the month of October of Sh. 14,500 was received on 5 November 2018.
8. An allowance of 5% is to be maintained for doubtful debts.
9. Goods worth Sh. 48,840 had been distributed to potential customers as free samples.

Required:

1. Income statement for the year ended 31 October 2018
2. Statement of Financial position as at 31 October 2018