Peter runs his own bricklaying business and is considering hiring a full time worker. He will pay his employee a gross wage of $48,500 p.a. His employee is also entitled to 4 weeks paid annual leave and 10 public holidays (2 weeks total). He knows that he has to pay PAYG withholding tax out of the gross wage figure (calculation not required), and has been advised that he has to pay 1.85% in WorkSafe insurance.

a. If this will be Peter’s only employee, does he have to pay payroll tax?

b. Are there any other costs Peter needs to factor in? List and briefly explain.

c. Calculate (showing workings) the full cost to Peter of hiring the above worker.

d. If Peter gives his worker the work vehicle and allows him to use it for personal travel, does this get taxed as well? If so, who pays the tax? (2.5 marks)

Steven's Battery Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $320,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $80,000 are allocated based on the number of employees. The costs of operating departments A and B are $160,000 and $240,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows:

Required

1-Allocate the costs of the service departments to the production departments using the direct method

2-Allocate the costs of the service departments to the production departments using the step-down method, if the service department with the highest percentage of interdepartmental support service is allocated first. (Round up)

Ida Sidha Karya Company is a family-owned company located in the village of Gianyar on the island of Bali in Indonesia. The company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $853. Selected data for the company’s operations last year follow:

Required:

1. Assume that the company uses absorption costing. Compute the unit product cost for one gamelan.(Round your intermediate calculations and final answer to nearest whole dollars.)

Unit Product Cost =

2. Assume that the company uses variable costing. Compute the unit product cost for one gamelan.

Unit Product Cost =

One of the variable production costs is the cost of steel. The standards for steel purchase prices and usage as set at the beginning of 2016 were:

Standard price of steel $25.00 per pound

Standard quantity of steel per car 100 pounds per car

Data on actual steel purchases for 2016 were:

Actual cost of steel purchased and used $28,700,000

Actual pounds of steel purchased and used 1,210,000 pounds

Recall that budgeted production for the year was 10,000 cars, while actual production was 11,000.

1. At the end of the year a cash bonus of 5% of performance above expectations is split among the members of the relevant departments. Performance above expectations is defined in terms of impact on total profits. What was the impact of the production department’s production activities on the company’s overall profits? What was the impact of the purchasing department’s activities on the company’s overall profits? Which department if any will receive a bonus? What size will that bonus pool be?

2. Are there any caveats in the performance evaluation mechanism used in question 1?

Scan House, a large campground in southern Florida, adjusts its accounts monthly. Most guests of the campground pay at the time they check out, and the amounts collected are credited to Camper Revenue. The following information is available as a source for preparing the adjusting entries at December 31:

1. Scan House invests some of its excess cash in certificates of deposit (CDs) with its local bank. Accrued interest revenue on its CDs at December 31 is $1,400. None of the interest has yet been received.

2. A six-month bank loan in the amount of $120,000 had been obtained on September 1. Interest is to be computed at an annual rate of 8 percent and is payable when the loan becomes due.

3. Depreciation on buildings owned by the campground is based on a 20-year life. The original cost of the buildings was $800,000. The Accumulated Depreciation: Buildings account has a credit balance of $300,000 at December 31, prior to the adjusting entry process. The straight-line method of depreciation is used.

4. Management signed an agreement to let 4H Troop 840 of Traverse City, Michigan, use the campground in June of next year. The agreement specifies that the 4H Troop will pay a daily rate of $50 per campsite, with a clause providing a minimum total charge of $3,500.

5. Salaries earned by campground employees that have not yet been paid amount to $2,800.

6. As of December 31, Scan House has earned $4,000 of revenue from current campers who will not be billed until they check out.

7. Several lakefront campsites are currently being leased on a long-term basis by a group of senior citizens. Nine months' rent of $54,000 was collected in advance and credited to Unearned Camper Revenue on October 1 of the current year.

8. A bus to carry campers to and from town and the airport had been rented the first week of December at a daily rate of $300. At December 31, no rental payment has been made, although the campground has had use of the bus for 25 days.

9. Unrecorded Income Taxes Expense accrued in December amounts to $15,000. This amount will not be paid until January 15.

Required: (prepare using an excel spreadsheet, include proper heading with your name, course name and number, and problem number – Chapter 2 Excel HW (1 of 2)

1. For each of the above numbered paragraphs, prepare the necessary adjusting entry (including an explanation). If no adjusting entry is required, explain why.

2. Indicate the effects that each of the adjustments in part a will have on the following sixtotal amounts in the campground's financial statements for the month of December. Organize your answer in tabular form, using the column headings shown below. Use the

letters I for increase, D for decrease, and NE for no effect. Adjusting entry 1 is provided as an example.

c. What is the amount of interest expense recognized for the entire current year on the $120,000 bank loan obtained September 1?

d. Compute the book value of the campground's buildings to be reported in the current year's December 31 balance sheet. (Refer to paragraph 3.)

On January 1, 2018, the general ledger of ACME Fireworks includes the following account balances:

Accounts Debit Credit

Cash $ 26,700

Accounts Receivable 49,400 Allowance for Uncollectible Accounts $ 5,800

Inventory 21,600

Land 62,000

Equipment 23,000 Accumulated Depreciation 3,100

Accounts Payable 30,100

Notes Payable (6%, due April 1, 2019) 66,000

Common Stock 51,000

Retained Earnings 26,700

Totals $ 182,700 $ 182,700

During January 2018, the following transactions occur:

January 2. Sold gift cards totaling $11,200. The cards are redeemable for merchandise within one year of the purchase date.

January 6. Purchase additional inventory on account, $163,000.

January 15. Firework sales for the first half of the month total $151,000. All of these sales are on account. The cost of the units sold is $81,800.

January 23. Receive $127,000 from customers on accounts receivable.

January 25. Pay $106,000 to inventory suppliers on accounts payable.

January 28. Write off accounts receivable as uncollectible, $6,400.

January 30. Firework sales for the second half of the month total $159,000. Sales include $13,000 for cash and $146,000 on account. The cost of the units sold is $87,500.

January 31. Pay cash for monthly salaries, $53,600.

RECORD JOURNAL ENTRY

These balances were extracted from the books of Tembo Ltd as at 31 January 2018:

Additional information:

On 28 February 2018 Tembo Ltd issued 877 000 ordinary shares and applications worth N$60 000.00 were returned due to an oversubscription.Underwriting commission was not accrued in the in the previous final year and the underwriter was paid a commission of 2%.Tembos accounting policy with respect to share issue costs is to minimize distributable reserves.The final dividend was paid on 3 February 2019.Tembo Ltd had issued 15 000,N$3, 6% cumulative preference shares on the 1 February 2016.Preference shares have never been issued at a premium and in case of preference shares declared they are then paid on 1 February.Furthermore ,Tembo Ltd declared and paid an ordinary interim dividend of 7 cents per share on 15 February 2018 and declared a final dividend of N$0.50c per share on 30 January 2019.

The first dividend ever to be paid by Tembo Ltd was the N$30 000.00 ordinary dividend of the prior year.The simple interest payable on the outstanding balance of the long term loan bears at 8.5%.The interest is payable annually on 28 February and the two capital repayments of N$350 000.00 and N$400 000.00 were made on 31 June 2018 and 31 December respectively.The net profit in the statement of profit or loss and comprehensive income is N$3 827 000.00 for the year ended 31 January 2019.This is before any of the information above has been taken into account.

You are required to:

1.Calculate the price at which each ordinary share was issued in the current year

2.Prepare all journal entries relating to the share issue ,to be processed in 2019 financial year.

3.What does the accounting policy say on distributable reserves with relation to the underwriter commission.

4.Calculate the dividends paid to ordinary shareholders during the year ended 31 January 2019 (4 marks )

5.Calculate the dividends paid to preference shareholders during the year ended 31 January 2019

6.Calculate the final net profit

7.Calculate the closing retained earnings

8.How would you determine the total asset value of Tembo Ltd.

As the cost accounting manager at Cambria Chemicals (CC), you are responsible for compiling and reporting various performance measures to the senior managers. The company instituted many efficiency improvement programs recently, and the CFO has asked you to measure and report total factor productivity measures based on the three inputs (material, labor, and overhead). Data for the last two years follow:

From the accounting records, you also gather the following information for the two years:

Required:

a. Compute the total factor productivity measures for year 1 and year 2 based on the three inputs (material, labor, and overhead).

Why is it important for an accountant to understand their business and industry as well as managements informational needs in addition to knowing how to generate financial statements? Note: You may use S&S as the context while answering this question. However, please present your own examples.

Capital Toys’ management is considering eliminating product A, which has been showing a loss for several years. The company’s annual income statement, in $000s, is as follows

a.Restate the income statement in segment margin format.

b. What would be the effect on income if product A were dropped?

c. Management is considering making a new product using product A’s equipment. If the new product’s selling price per unit were $12, its variable costs were $8, and its advertising costs were the same as for product A, how many units of the new product would the company have to sell to make the switch from product A to the new product worthwhile?

Question:

what is the difference between rights of assertion and observation assertion.

Include which financial statements are they related to and what accounts are relevant to each.

ABC Inc. is evaluating a project that will increase annual sales by $230,000 and annual cash costs by $88,000. The project will initially require $145,000 in fixed assets that will be depreciated straight-line to a zero book value over the 4-year life of the project. The applicable tax rate is 35 percent.

A. What is the depreciation tax shield? (Hint: Use straight-line depreciation to find annual depreciation)

B. Using the straight-line depreciation method, what is the book value of the asset at the end of year 2?

C. The asset for the project is classified as a 5-year property for MACRS. What is the book value of the asset at the end of year 4?

D. What is the operating cash flow for this project?

E. ABC Inc. has determined that it requires $35,000 in NWC, has a required rate of return of 14%, and plans on using the operating cash flow from problem D to evaluate its project. What is the NPV? Using the decision rule, should we accept the project? (Hint: Include NWC at the beginning and end of project)

On June 30, 2017, Wisconsin, Inc., issued $158,250 in debt and 19,400 new shares of its $10 par value stock to Badger Company owners in exchange for all of the outstanding shares of that company. Wisconsin shares had a fair value of $40 per share. Prior to the combination, the financial statements for Wisconsin and Badger for the six-month period ending June 30, 2017, were as follows:

Wisconsin also paid $37,000 to a broker for arranging the transaction. In addition, Wisconsin paid $46,600 in stock issuance costs. Badger’s equipment was actually worth $811,250, but its patented technology was valued at only $269,600.

What are the consolidated balances for the following accounts?

Problem 12-22 Accept or Reject a Special Order [LO12-4]

1. You have completed the Cash Flow statement. Pleased with your work so far, Barry asks you to work on an assignment for Steve Fox, relating to a different Regal subsidiary, Phrygian Equipment Capital. Phrygian has two business segments that are reported separately in its financial statements. The segments are “machinery” and “investment and Insurance.” In its management accounts, the company reports four different divisional results. The four divisions are machinery leasing, machinery sales, investments, and insurance. The results of the segments and the divisions follow:

Steve has asked you for a technical analysis on how Phrygian should report its segment information, under IAS 14, as of its year-end of December 31, 2017