Scholes Systems supplies a particular type of office chair to large retailers such as Target, Costco, and Office Max. Scholes is concerned about the possible effects of inflation on its operations. Presently, the company sells 98,000 units for $70 per unit. The variable production costs are $40, and fixed costs amount to $1,580,000. Production engineers have advised management that they expect unit labor costs to rise by 20 percent and unit materials costs to rise by 15 percent in the coming year. Of the $40 variable costs, 55 percent are from labor and 30 percent are from materials. Variable overhead costs are expected to increase by 25 percent. Sales prices cannot increase more than 10 percent. It is also expected that fixed costs will rise by 7 percent as a result of increased taxes and other miscellaneous fixed charges.

The company wishes to maintain the same level of profit in real dollar terms. It is expected that to accomplish this objective, profits must increase by 8 percent during the year.

Required:

a. Compute the volume in units and the dollar sales level necessary to maintain the present profit level, assuming that the maximum price increase is implemented. (Do not round intermediate calculations. Round up your answer for "Volume in units" to the nearest whole number and round your answer for "Sales" to the nearest whole dollar amount.)

b. Compute the volume of sales and the dollar sales level necessary to provide the 8 percent increase in profits, assuming that the maximum price increase is implemented. (Do not round intermediate calculations. Round up your answer for "Volume in units" to the nearest whole number and round your answer for "Sales" to the nearest whole dollar amount.)

c. If the volume of sales were to remain at 98,000 units, what price change would be required to attain the 8 percent increase in profits? Calculate the new price. (Round intermediate calculations of unit cost and final answer to 2 decimal places.)

CURRENT RATIO What is the formula? Current assets/current liabilities pg 51

Calculate the ratio current year. Page________ 7266/10132=.72

Calculate the ratio for the prior year. Page_______ 8753/9501=.92

Analyze the ratio trend.

2. RETURN ON ASSETS

What is the formula? net income/avg total assets

Calculate the ratio current year. 10990/((120,232)=9.15%

Page_______19_

Calculate the ratio for the prior year. Page_______ 3642/(120,480)=3.02%

Analyze the ratio trend.

3. RECEIVABLE TURNOVER RATIO What is the formula?Net credit Sales/Average Account Receivable

Calculate the ratio current year. Page_____26&51___26232/921= 28.48

Calculate the ratio for the prior year. Page_______26487/769=34.44

Analyze the ratio trend.

Help me Analyze the ratio trend : Current Ratio, Return on Assets, and Receivable turnover.

An analysis of the most significant ratios that prove that your company is worth investing in.

National Bank has several departments that occupy both floors of a two-story building. The departmental accounting system has a single account, Building Occupancy Cost, in its ledger. The types and amounts of occupancy costs recorded in this account for the current period follow. Depreciation—Building $ 27,000 Interest—Building mortgage 40,500 Taxes—Building and land 12,000 Gas (heating) expense 3,750 Lighting expense 4,500 Maintenance expense 8,250 Total occupancy cost $ 96,000 The building has 6,000 square feet on each floor. In prior periods, the accounting manager merely divided the $96,000 occupancy cost by 12,000 square feet to find an average cost of $8 per square foot and then charged each department a building occupancy cost equal to this rate times the number of square feet that it occupied. Diane Linder manages a first-floor department that occupies 1,000 square feet, and Juan Chiro manages a second-floor department that occupies 1,800 square feet of floor space. In discussing the departmental reports, the second-floor manager questions whether using the same rate per square foot for all departments makes sense because the first-floor space is more valuable. This manager also references a recent real estate study of average local rental costs for similar space that shows first-floor space worth $30 per square foot and second-floor space worth $10 per square foot (excluding costs for heating, lighting, and maintenance). Required: 1. Allocate occupancy costs to the Linder and Chiro departments using the current allocation method. (Round cost answers to 2 decimal places.)

1.Supplier invoices are received in the accounts department via email and printed. The details are entered into the accounts payable system by the accounts payable clerk, who then stamps the invoice as processed. The computer system automatically calculates the payment due date based on the supplier's credit terms that have been entered into the system.

2.As there are only a few suppliers each week, the accounts payable clerk validates the outstanding invoices via a phone call with the production manager. The production manager has an excellent memory for what he has ordered, and the deliveries received.

3.The computer system automatically generates a weekly list of invoices due for payment. The accounts payable clerk flags the invoices for cheques to be processed as direct deposits are not used. The system does allow the user to exclude an invoice from the payment run. The accounts payable ledger and general ledger are automatically updated once the payment runs are complete

4.The cheques are forwarded to the financial controller for signature. Supporting documentation is only attached to the cheques for non-major suppliers. The financial controller calls the production manager to verify the review process (step 2) has taken place, and other payments are verified to the attached invoice. If the financial controller is not available the accounts payable clerk usually has the cheques signed by the marketing manager. The payables clerk avoids asking the CEO to sign cheques as he asks too many questions. Any supporting documentation to the cheque is signed to avoid duplicate payment.

5.Monthly statements are received from the suppliers. However, the accounts payable clerk does not believe statement reconciliations are necessary.

a-Identifies and explains ten (10) control weaknesses associated with the purchases, accounts payable and payments system outlined above

b-Identifies and explains the account balance assertions for raw material inventory and accounts payable that are most impacted by control weaknesses

c-Recommends and justifies a control improvement for each of the weaknesses identified in requirement one

Jorgansen Lighting, Inc., manufactures heavy-duty street lighting systems for municipalities. The company uses variable costing for internal management reports and absorption costing for external reports to shareholders, creditors, and the government. The company has provided the following data:
Year 1 year 2 year 3

Inventories:
Beginning (units) 210 160 180
Ending (units) 160 180 230
Variable costing net
operating income $290,000, $279,000 $250,000


The company's fixed manufacturing overhead per unit was constant at $560 for all three years.


Requirement 1:
Determine each year’s absorption costing net operating income. Present your answer in the form of a reconciliation report for year 1, 2 and 3.

Year 1 Year 2 Year 3
Beginning inventories

Ending inventories

Change in inventories

Fixed manufacturing overhead in beginning inventories

Fixed manufacturing overhead in ending inventories

Fixed manufacturing overhead deferred in (released from) inventorie

Variable costing net operating income

Add (deduct) fixed manufacturing overhead cost deferred in (released from) inventory under absorption costing



Absorption costing net operating income

Requirement 2:
In Year 4, the company's variable costing net operating income was $260,000 and its absorption costing net operating income was $290,000.

(a) Did inventories increase or decrease during Year 4?


(b) How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4?

Deferred or released ???
Ffixed manufacturing overhead cost $

Antuan Company set the following standard costs for one unit of its product. Direct materials (4.0 Ibs. @ $5.00 per Ib.) $ 20.00 Direct labor (1.7 hrs. @ $10.00 per hr.) 17.00 Overhead (1.7 hrs. @ $18.50 per hr.) 31.45 Total standard cost $ 68.45 The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume of 75% of the factory’s capacity of 20,000 units per month. Following are the company’s budgeted overhead costs per month at the 75% capacity level. Overhead Budget (75% Capacity) Variable overhead costs Indirect materials $ 15,000 Indirect labor 75,000 Power 15,000 Repairs and maintenance 30,000 Total variable overhead costs $ 135,000 Fixed overhead costs Depreciation—Building 23,000 Depreciation—Machinery 70,000 Taxes and insurance 17,000 Supervision 226,750 Total fixed overhead costs 336,750 Total overhead costs $ 471,750 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (61,500 Ibs. @ $5.10 per lb.) $ 313,650 Direct labor (20,000 hrs. @ $10.30 per hr.) 206,000 Overhead costs Indirect materials $ 41,550 Indirect labor 176,000 Power 17,250 Repairs and maintenance 34,500 Depreciation—Building 23,000 Depreciation—Machinery 94,500 Taxes and insurance 15,300 Supervision 226,750 628,850 Total costs $ 1,148,500 rev: 03_28_2018_QC_CS-122864 4. Compute the direct labor cost variance, including its rate and efficiency variances. AH = Actual Hours SH = Standard Hours AR = Actual Rate SR = Standard Rate

Kubin Company’s relevant range of production is 23,000 to 27,500 units. When it produces and sells 25,250 units, its average costs per unit are as follows:

Required:

1. For financial accounting purposes, what is the total amount of product costs incurred to make 25,250 units?

2. For financial accounting purposes, what is the total amount of period costs incurred to sell 25,250 units?

3. For financial accounting purposes, what is the total amount of product costs incurred to make 27,500 units?

4. For financial accounting purposes, what is the total amount of period costs incurred to sell 23,000 units?

During 2018, HomeVideo, Inc. recorded all cash receipts and cash disbursements. However, HomeVideo, Inc.’s banker is requiring an income statement and balance sheet prepared on an accrual basis.

The following is a recap of the cash receipts for 2018:

The cash disbursements data is available on the attached Excel sheet. In addition, HomeVideo, Inc.’s payroll disbursements for wages totaled $105,200. The data was obtained from a separate (not provided) payroll journal.

Daniels’, a family friend, has asked for your assistance in preparing HomeVideo, Inc.’s financial statements at December 31, 2018 on an accrual basis. The following additional information is available:

1. Customers owed the company $16,500 at year-end for credit sales. Also, HomeVideo, Inc.’s cash collections included $7,000 of amounts collected in advance from other customers for services to be performed in 2019.
2. The firm signed a 3-year lease for a retail store with rent payments starting in January 2018. The rent is due on the 15^thof every month. Additionally, a security deposit of $5,000 was paid along with the first rent payment. This deposit is likely to be returned at the end of the lease term.
3. The equipment purchased during 2018 is depreciated on a straight-line basis assuming no salvage value. The firm uses a convention where one-half year of depreciation is taken in the year of acquisition (regardless of the actual purchase date).
4. The insurance payment was for a 1-year policy starting on February 1, 2018.
5. At year-end, $21,000 is owed to suppliers for merchandise purchased on credit and received.
6. At year-end, merchandise inventory costing $53,700 and supplies totaling $6,400 remained on hand.
7. Salaries earned, but not yet paid to employees at year-end totaled $7,300.
8. The bank loan requires interest at 10% per year and was issued on June 1, 2018. The principal and interest are to be repaid together on May 31, 2019.

Home Video, Inc. (Cash disbursements 1/1/2018 through 3/31/2019):

Required:

• Prepare an analysis that shows how cash-based income is converted to accrual-based net income for 2018.
• Prepare an accrual-based income statement for 2018 and a balance sheet as of December 31, 2018 using good form.
• Prepare a brief memo explaining the cash-to-accrual conversion and the results of your calculations.

On February 1, 2018, Cromley Motor Products issued 6% bonds, dated February 1, with a face amount of $95 million. The bonds mature on January 31, 2022 (4 years). The market yield for bonds of similar risk and maturity was 8%. Interest is paid semiannually on July 31 and January 31. Barnwell Industries acquired $95,000 of the bonds as a long-term investment. The fiscal years of both firms end December 31. (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 issued on February 1, 2018.
2-a. Prepare amortization schedules that indicate Cromley’s effective interest expense for each interest period during the term to maturity.
2-b. Prepare amortization schedules that indicate Barnwell’s effective interest revenue for each interest period during the term to maturity.
3. Prepare the journal entries to record the issuance of the bonds by Cromley and Barnwell’s investment on February 1, 2018.
4. Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2020.

(Req-3 JE's: FEB 1, 2018: Record the issuance of the bonds by Cromley. FEB 1 2018: Record the Bond investment by Barnwell.)

(Req-4(Cromley): 1 Record the payment of interest for Cromley Company. 2 Record the accrued interest for Cromley Company. 3 Record the payment of interest for Cromley Company. 4 Record the payment of interest for Cromley Company. 5 Record the accrued interest for Cromley Company. 6 Record the payment of interest for Cromley Company.)

(Req-4(Barnwell): 1 Record the receipt of interest for Barnwell Company. 2 Record the accrued interest for Barnwell Company. 3 Record the receipt of interest for Barnwell Company. 4 Record the receipt of interest for Barnwell Company. 5 Record the accrued interest for Barnwell Company. 6 Record the receipt of interest for Barnwell Company.)

Budgeted Income Statement and Supporting Budgets

The budget director of Jupiter Helmets 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 May:

a. Estimated sales for May:

b. Estimated inventories at May 1:

c. Desired inventories at May 31:

d. Direct materials used in production:

e. Anticipated cost of purchases and beginning and ending inventory of direct materials:

f. Direct labor requirements:

g. Estimated factory overhead costs for May:

h. Estimated operating expenses for May:

i. Estimated other income and expense for May:

j. Estimated tax rate: 25%

4. Prepare a direct labor cost budget for May.

6. Prepare a cost of goods sold budget for May. Work in process at the beginning of May is estimated to be $4,200, and work in process at the end of May is desired to be $3,800.

8. Prepare a budgeted income statement for May. If required, round your interim calculations to nearest whole value.

Kubin Company’s relevant range of production is 20,000 to 23,000 units. When it produces and sells 21,500 units, its average costs per unit are as follows:

Required:

1. Assume the cost object is units of production:

a. What is the total direct manufacturing cost incurred to make 21,500 units?

b. What is the total indirect manufacturing cost incurred to make 21,500 units?

2. Assume the cost object is the Manufacturing Department and that its total output is 21,500 units.

a. How much total manufacturing cost is directly traceable to the Manufacturing Department?

b. How much total manufacturing cost is an indirect cost that cannot be easily traced to the Manufacturing Department?

3. Assume the cost object is the company’s various sales representatives. Furthermore, assume that the company spent $75,250 of its total fixed selling expense on advertising and the remainder of the total fixed selling expense comprised the fixed portion of the company's sales representatives’ compensation.

a. When the company sells 21,500 units, what is the total direct selling expense that can be readily traced to individual sales representatives?

b. When the company sells 21,500 units, what is the total indirect selling expense that cannot be readily traced to individual sales representatives?

This week we cover bond financing. Often times when large amount of funds are needed for a project or expansion, companies and governments seek financing to help pursue these projects. Define what a bond is and discuss the advantages and disadvantages of bond financing, such as those covered in your chapter. Consider discussing why a company might choose to issue a bond instead of stock, a form of equity financing.

Shamrock, Inc. issues a $550,000, 10%, 10-year mortgage note on December 31, 2017, to obtain financing for a new building. The terms provide for annual installment payments of $89,510.

Prepare the entry to record the mortgage loan on December 31, 2017, and the first installment payment on December 31, 2018.

Dr. Shikongo and Dr. Sauer were in a partnership and traded together for some time. On 01 July

2016 Dr. Sauer decided to withdraw from the partnership to start her own practice. Their

abridged statement of financial position as at 30 June 2016 was:

ASSETS N$ EQUITY & LIABILITIES N$

Property, Plant & Equipment (PPE) 152,500.00 Capital: Dr. Shikongo 76,200.00

Accumulated depreciation:PPE (20,000.00) Capital: Dr. Sauer 65,200.00

Vehicles 65,000.00 Current account: Dr. Shikongo 21,750.00

Accumulated depreciation:Vehicle (25,000.00) Current account: Dr. Sauer 27,250.00

Trade receivable 27,600.00 Loan: Deutche Bank 31,000.00

Allowance for bad debts (3,500.00) Trade payable 17,500.00

Cash 42,300.00

238,900.00 238,900.00

Transactions for July 2016:

1. Trade receivable who owed N$ 20, 050.00 settled their accounts in full.

2. The trades payable were settled in full.

3. A vehicle was sold for N$ 19, 500.00 with a carrying value of N$ 25, 000.00.

4. A vehicle was sold for N$ 15, 000.00 with a carrying value of N$ 6, 000.00.

5. The loan from Deutche Bank was repaid in full.

6. The equipment was disposed of for N$ 50, 000.00

7. Land and building was sold by public auction for N$ 70, 000.00

You are required to:

1. Do the journal entries to record Dr. Sauers’ withdrawal from the partnership. ( 12

Marks)

2. Prepare the following accounts to show the liquidation and dissolution of Dr. Shikongo

& Dr. Sauer Partnership:

a. Realisation account. ( 6 Marks)

b. Capital accounts of the partners (in a columnar form) in the general ledger. ( 8

Marks)

3. Mention and discuss three factors that may lead to the dissolution of a partnership. ( 6

Marks)

ASSETS N$ EQUITY & LIABILITIES N$

Property, Plant & Equipment (PPE) 152,500.00 Capital: Dr. Shikongo 76,200.00

Accumulated depreciation:PPE (20,000.00) Capital: Dr. Sauer 65,200.00

Vehicles 65,000.00 Current account: Dr. Shikongo 21,750.00

Accumulated depreciation:Vehicle (25,000.00) Current account: Dr. Sauer 27,250.00

Trade receivable 27,600.00 Loan: Deutche Bank 31,000.00

Allowance for bad debts (3,500.00) Trade payable 17,500.00

Cash 42,300.00

238,900.00 238,900.00