You are on a plane traveling to visit family (pre-Covid 19) and you scroll through some news headlines on your tablet. You end up reading an editorial that discusses the changing nature of the economy. Specifically, the writer speculates that new technology will make the accounting profession outdated, since computers will automatically track and compile all financial data and make it easy for anyone with an online connection to access any data about a company’s operations that they wish. How will this affect your career prospects, as an accountant-to-be?

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Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.

4. Compute gross profit earned by the company for each of the four costing methods. For specific identification, the March 9 sale consisted of 95 units from beginning inventory and 225 units from the March 5 purchase; the March 29 sale consisted of 75 units from the March 18 purchase and 115 units from the March 25 purchase. (Round weighted average cost per unit to two decimals and final answers to nearest whole dollar.)

Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 44,000 Rets per year. Costs associated with this level of production and sales are given below:

The Rets normally sell for $53 each. Fixed manufacturing overhead is $308,000 per year within the range of 35,000 through 44,000 Rets per year.

Required:

1. Assume that due to a recession, Polaski Company expects to sell only 35,000 Rets through regular channels next year. A large retail chain has offered to purchase 9,000 Rets if Polaski is willing to accept a 16% discount off the regular price. There would be no sales commissions on this order; thus, variable selling expenses would be slashed by 75%. However, Polaski Company would have to purchase a special machine to engrave the retail chain’s name on the 9,000 units. This machine would cost $18,000. Polaski Company has no assurance that the retail chain will purchase additional units in the future. What is the financial advantage (disadvantage) of accepting the special order? (Round your intermediate calculations to 2 decimal places.)

2. Refer to the original data. Assume again that Polaski Company expects to sell only 35,000 Rets through regular channels next year. The U.S. Army would like to make a one-time-only purchase of 9,000 Rets. The Army would pay a fixed fee of $1.60 per Ret, and it would reimburse Polaski Company for all costs of production (variable and fixed) associated with the units. Because the army would pick up the Rets with its own trucks, there would be no variable selling expenses associated with this order. What is the financial advantage (disadvantage) of accepting the U.S. Army's special order?

3. Assume the same situation as described in (2) above, except that the company expects to sell 44,000 Rets through regular channels next year. Thus, accepting the U.S. Army’s order would require giving up regular sales of 9,000 Rets. Given this new information, what is the financial advantage (disadvantage) of accepting the U.S. Army's special order?

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Prepare journal entries to record the following merchandising transactions of Cabela’s, which uses the perpetual inventory system and the gross method. (Hint: It will help to identify each receivable and payable; for example, record the purchase on July 1 in Accounts Payable—Boden.) Jul. 1 Purchased merchandise from Boden Company for $6,000 under credit terms of 1/15, n/30, FOB shipping point, invoice dated July 1. Jul. 2 Sold merchandise to Creek Co. for $900 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $500. Jul. 3 Paid $125 cash for freight charges on the purchase of July 1. Jul. 8 Sold merchandise that had cost $1,300 for $1,700 cash. Jul. 9 Purchased merchandise from Leight Co. for $2,200 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9. Jul. 11 Received a $200 credit memorandum from Leight Co. for the return of part of the merchandise purchased on July 9. Jul. 12 Received the balance due from Creek Co. for the invoice dated July 2, net of the discount. Jul. 16 Paid the balance due to Boden Company within the discount period. Jul. 19 Sold merchandise that cost $800 to Art Co. for $1,200 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19. Jul. 21 Issued a $100 credit memorandum to Art Co. for an allowance on goods sold on July 19. Jul. 24 Paid Leight Co. the balance due, net of discount. Jul. 30 Received the balance due from Art Co. for the invoice dated July 19, net of discount. Jul. 31 Sold merchandise that cost $4,800 to Creek Co. for $7,000 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31. Requirement General Journal General Ledger Trial Balance Schedule of Receivables Schedule of Payables Income Statement Impact on Income

Cost—Volume—Profit Equation, Basic Concepts, Solving for Unknowns (LO 1,2,3 and 5)

Goldilocks Company produces high-end combination shampoos and conditioners in individual-use bottles for hotels. Each bottle sells for $0.90.

The variable costs for each bottle (materials, labour, and overhead) total $0.63. The total fixed costs are $210,600. During the most recent year 830,000 bottles were sold.

Required:

1. What is the BEP in units for Goldilocks? What is the margin of safety in units for the recent year?

2. Prepare an income statement for Goldilocks's most recent year.

3. How many units must be sold for Goldilocks to earn a profit of $40,500?

4. Using the contribution margin percentage approach, what is the level of sales dollars needed for Goldilocks to earn operating income of 20 percent of sales?

Good Slings Inc. manufactures several wood and string instruments at its factory in Thunder Bay. In particular, it is well-known for its production of classic guitars. Assume that Good Slings uses a periodic inventory system and a physical count of inventory takes place at year end. The company accumulated the following costs and account balances for the year ended December 31, 2010 with respect to direct materials:

In addition, the following table shows Good Slings’ remaining costs for the year:

Do not enter dollar signs or commas in the input boxes.

a) Calculate the cost of direct materials used in production for the year.

Materials used in production: $Answer
b) What is the total manufacturing overhead cost for the year?

Manufacturing Overhead: $Answer
c) Calculate total manufacturing costs.

Total Manufacturing Costs: $Answer
d) If there is no beginning work in process inventory and ending work in process inventory is $54,000, what is the cost of goods manufactured?

Cost of Goods Manufactured: $Answer

Write the calculation process, please

KU   Company   Private Limited uses a job-order costing system and a predetermined overhead rate based on machine hours.

At the beginning of the year, the company estimated manufacturing overhead for the year would be $250,000 and 10,000 machine hours would be used.

The following information pertains to the month of April of the current year:

Actual manufacturing overhead costs for the month of April were $38,600. Job #180 and #182 were completed in April.

1. Prime costs for Job # 180 amounted to: A.       $21,500

B.         $24,000

C.         $24,700

D.         $27,200

E.         $28,058

F.         $34,700

2. Conversion costs for Job # 182 in the month of April amounted to : A.       $ 5,888

B.        $ 8,800

C.        $11,888

D.        $22,800

E.        $28,800

F.         None of the above

3. The amount of underapplied or overapplied overhead for the month of April was:

1. $0

B.        $11,600

C.        $38,600

D.        $40,000

E.        $210,000

F.         None of the above

Q2. MA Company uses a job cost system in costing its jobs. In addition to the two dire ct cost c ategories (dire ct material s and dire ct labor), the company applies manufacturing overhead costs on the basi s of dire ct labor hours worke d. For the month   of October, 2007,   the following information was extra cted from   its a ccounting records:

1. Beginning inventory (1.10.2007) – direct materials: $50,000
2. Beginning inventory, Work-in-process (WIP) – Job # 123: $80,000 c. Beginning inventory, Work-in-process (WIP) – Job # 125: $125,000

4. Beginning inventory, Work-in-process (WIP) – Job # 128: $68,000
5. Total direct materials issued to the various jobs during October were as followed:

i. Job #123: $ 50,000

ii. Job #125: $ 30,000 iii. Job #128: $125,000 iv. Job #129: $ 55,000 v. Job #130: $ 30,000 TOTAL $290,000

6. Total direct labor costs for the month amounted to $52,000, all production

workers were paid the same rate, the dire ct labor hours (DLH) worke d for ea ch job during the month were as follows:

1. Job #123:   400 DLH
2. Job #125:   600 DLH
3. Job #128: 1,000 DLH
4. Job #129:   400 DLH v. Job #130: 200 DLH TOTAL 2,600 DLH

7. Manufacturing overhead is alloc ated using a predetermined overhead rate (POHR). POHR is currently $12 per DLH.
8. Closing inventory – direct materials: $60,000
1. Job #129 and Job #130 remained unfinished on 31.10.2007.
10. Total Actual Manufacturing Overhead amounted to $30,200.

1. For the month of October, manufa cturing overhead was:

1. $ 800 overapplied
2. $ 800 underapplied
3. $1,200 overapplied
4. $1,200 underapplied
5. None of the above

2. Cost of goods manufa ctured for Job #128 was:

A.        $157,000

B.        $213,000

C.        $225,000

D.        $233,000

E.        None of the above

3. The dollar amount for the clos ing inventory, WIP of Job #130 was:

A.        $30,000

B.        $34,500

C.        $36,500

D.        $40,500

E.        None of the above

4. Material purchased duri ng October amounted to: A. $290,000

B.        $300,000

C.        $310,000

D.        $320,000

E.        None of the above

Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 2016, were as follows:

Record on journal page 10:

Jan. 3: Issued 15,000 shares of $20 par common stock at $30, receiving cash.

Feb. 15:Issued 4,000 shares of $80 par preferred 5% stock at $100, receiving cash.

May 1: Issued $500,000 of 10-year, 5% bonds at 104, with interest payable semiannually.

May 16: Declared a dividend of $0.50 per share on common stock and $1.00 per share on preferred stock. On the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held, and 20,000 shares of preferred stock were outstanding. Journalize this transaction as a single entry.

May 26: Paid the cash dividends declared on May 16.

Jun. 1: Purchased 7,500 shares of Solstice Corp. at $40 per share, plus a $150 brokerage commission. The investment is classified as an available-for-sale investment.

June 8: Purchased 8,000 shares of treasury common stock at $33 per share.

June 22: Purchased 40,000 shares of Pinkberry Co. stock directly from the founders for $24 per share. Pinkberry has 125,000 shares issued and outstanding. Equinox Products Inc. treated the investment as an equity method investment.

June 30: Declared a $1.00 cash dividend per share on preferred stock. On the date of record, 20,000 shares of preferred stock were outstanding.

July 11: Paid the cash dividends declared on Jun. 30 to the preferred stockholders.

Aug. 27: Received $27,500 dividend from Pinkberry Co. investment of Jun. 22.

Then Record on journal page 11 the following:

Oct. 1: Purchased $90,000 of Dream Inc. 10-year, 5% bonds, directly from the issuing company, at their face amount plus accrued interest of $375. The bonds are classified as a held-to-maturity long-term investment.

Oct 7: Sold, at $38 per share, 2,600 shares of treasury common stock purchased on Jun. 8.

Oct 14: Received a dividend of $0.60 per share from the Solstice Corp. investment on Jun. 1.

Oct 29: Sold 1,000 shares of Solstice Corp. at $45, including commission.

Oct 31: Recorded the payment of semiannual interest on the bonds issued on May 1 and the amortization of the premium for six months. The amortization is determined using the straight-line method.

Dec. 31: Accrued interest for three months on the Dream Inc. bonds purchased on Oct. 1.

Dec 31: Pinkberry Co. recorded total earnings of $240,000. Equinox Products recorded equity earnings for its share of Pinkberry Co. net income.

Dec 31: The fair value for Solstice Corp. stock was $39.02 per share on December 31, 2016. The investment is adjusted to fair value, using a valuation allowance account. Assume Valuation Allowance for Available-for-Sale Investments had a beginning balance of zero.

Required: 1. Journalize the selected transactions. Refer to the Chart of Accounts for exact wording of account titles.

CHART OF ACCOUNTS- Equinox Products Inc.- General Ledger

ASSETS- 110 Cash 121 Accounts Receivable,122 Allowance for Doubtful Accounts ,131 Merchandise Inventory ,132 Interest Receivable, 133 Prepaid Expenses ,141 Investments-Solstice Corp., 142 Investment in Pinkberry Co. ,143 Investments-Dream Inc. Bonds ,144 Valuation Allowance for Available-for-Sale Investments ,181 Store Buildings and Equipment, 182 Accumulated Depreciation-Store Buildings and Equipment ,183 Office Buildings and Equipment ,184 Accumulated Depreciation-Office Buildings and Equipment ,191 Goodwill

LIABILITIES- 211 Accounts Payable, 221 Income Tax Payable, 225 Cash Dividends Payable ,251 Bonds Payable ,252 Discount on Bonds Payable, 253 Premium on Bonds Payable

EQUITY- 311 Preferred Stock, 312 Paid-in Capital in Excess of Par-Preferred Stock ,321 Common Stock, 322 Paid-in Capital in Excess of Par-Common Stock, 331 Retained Earnings ,341 Cash Dividends, 351 Treasury Stock ,352 Paid-in Capital from Sale of Treasury Stock ,361 Unrealized Gain (Loss) on Available-for-Sale Investments

REVENUE- 410 Sales, 611 Dividend Revenue, 621 Interest Revenue, 631 Income of Pinkberry Co. ,641 Gain on Sale of Investments

EXPENSES -511 Cost of Merchandise Sold ,512 Bad Debt Expense ,520 Sales Salaries Expense ,521 Sales Commissions, 522 Office Salaries Expense ,531 Advertising Expense ,532 Delivery Expense ,537 Store Supplies Expense ,538 Office Supplies Expense, 539 Office Rent Expense, 541 Income Tax Expense, 551 Depreciation Expense-Store Equipment ,552 Depreciation Expense-Office Equipment, 591 Miscellaneous Selling Expense ,592 Miscellaneous Administrative Expense ,710 Interest Expense, 731 Loss on Sale of Investments

For each of the statements below, indicate whether the statement is True or False AND provide one or two explanatory sentences to support your answer.

a. In New Zealand, the Capital Asset Pricing Model (CAPM) that is used to compute the cost of equity capital adjusts the risk free rate for the average investor tax rate but this adjustment is not made for the risk free rate component in the post-tax market risk premium.

b. Reinvestments in the firm’s net operating assets are deducted from NOPAT to arrive at free cash flows to the firm to maintain the firm’s operating capability and to grow the firm.

c. To ensure the free cash flows in the perpetuity (terminal) period grow at a constant terminal growth rate g, the relationships between components in the income statement and balance sheet must be the same in the last year of the horizon period and first year of the perpetuity (terminal) period.

d. When using the market multiples approach to value the target’s firm/enterprise value, we would use multiples based on comparable companies’ net profit after tax and book value of equity and apply these multiples to the target firm’s net operating profit after tax and net operating assets.

Problem 8-29 Completing a Master Budget [LO8-2, LO8-4, LO8-7, LO8-8, LO8-9, LO8-10]

The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods:

1. The gross margin is 25% of sales.

2. Actual and budgeted sales data:

3. Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The accounts receivable at March 31 are a result of March credit sales.

4. Each month’s ending inventory should equal 80% of the following month’s budgeted cost of goods sold.

5. One-half of a month’s inventory purchases is paid for in the month of purchase; the other half is paid for in the following month. The accounts payable at March 31 are the result of March purchases of inventory.

6. Monthly expenses are as follows: commissions, 12% of sales; rent, $2,000 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $927 per month (includes depreciation on new assets).

7. Equipment costing $1,200 will be purchased for cash in April.

8. Management would like to maintain a minimum cash balance of at least $4,000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $20,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.

Required:

Using the preceding data:

2. Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases.

3. Complete the cash budget.

4. Prepare an absorption costing income statement for the quarter ended June 30.

5. Prepare a balance sheet as of June 30.

Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases.

Complete the cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.)

Prepare an absorption costing income statement for the quarter ended June 30

Prepare a balance sheet as of June 30.

Raintree, CPA, is conducting a training session for you, a staff auditor, regarding the control environment. For each of the factors in the table below, identify the appropriate internal control component by double­clicking on the shaded cell and selecting the appropriate component from the list provided.

Components( Control enviroment, Risk assesment, Information and communication systems, monitoring and existing control activities)

Lott Company uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1, 2017, Job No. 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $24,600, direct labor $14,760, and manufacturing overhead $19,680. As of January 1, Job No. 49 had been completed at a cost of $110,700 and was part of finished goods inventory. There was a $18,450 balance in the Raw Materials Inventory account.

During the month of January, Lott Company began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $150,060 and $194,340, respectively. The following additional events occurred during the month.

Prepare the journal entries to record the purchase of raw materials, the factory labor costs incurred, and the manufacturing overhead costs incurred during the month of January. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Prepare the journal entries to record the assignment of direct materials, direct labor, and manufacturing overhead costs to production. In assigning manufacturing overhead costs, use the overhead rate calculated in (a). (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Total the job cost sheets for any job(s) completed during the month. Prepare the journal entry to record the completion of any job(s) during the month. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Prepare the journal entries to record the sale of any job(s) during the month. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

What is the balance in the Finished Goods Inventory account at the end of the month? What does this balance consist of?

What is the amount of over- or underapplied overhead?

Tobin’s Frozen Pizza Inc. has determined from its production budget the following estimated production volumes for 12'' and 16'' frozen pizzas for November:

There are three direct materials used in producing the two types of pizza. The quantities of direct materials expected to be used for each pizza are as follows:

In addition, Tobin’s has determined the following information about each material:

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below.

Open spreadsheet

Prepare November's direct materials purchases budget for Tobin’s Frozen Pizza Inc. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Round your final answers to the nearest dollar.

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 $3,800 Manufacturing Overhead Applied $34,900 Work in Process Inventory $5,775 Manufacturing Overhead Incurred $30,800 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 $700 $1,000 Direct labor 300 600 600 Manufacturing overhead 375 750 750 $1,375 $2,050 $2,350 During June, raw materials purchased on account were $5,100, and all wages were paid. Additional overhead costs consisted of depreciation on equipment $900 and miscellaneous costs of $400 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 $900 Koss 2,200 800 Stevens 500 300 Linton 1,400 1,200 Rodgers 300 300 5,100 3,500 General use 1,600 1,200 $6,700 $4,700 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 $20,600. Each customer paid in full. (a) 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) di (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) List of Accounts