Karla Tanner opened a web consulting business called Linkworks and recorded the following transactions in its first month of operations.

Descriptions of items that require adjusting entries on April 30, follow.

• a) On April 2, the company prepaid $9,000 cash for twelve months' rent for office space.

• b) The balance in Prepaid insurance represents the premium paid for a 12-month insurance policy the policy's coverage began on April 1.

• c) Office supplies on hand as of April 30 total $1,200.

• d) Straight-line depreciation of office equipment, based on a 5-year life and a $4,000 salvage value, is $500 per month.

• e) The company has completed work for a client, but has not yet billed the $1,800 fee.

• f) Wages due to employees, but not yet paid, as of April 30 total $2,600.

This question requires:

General Journal tab -For each transaction, review the unadjusted balance and prepare the adjusting entry necessary to correctly report the revenue earned or the expense incurred. After adjusting the accounts, review the general ledger and trial balance for accuracy.

General Ledger tab - Each journal entry is posted automatically to the general ledger. Use the drop-down button to view the unadjusted or adjusted balances.

Trial Balance tab - You may view either the unadjusted or adjusted trial balance by choosing from the dropdown box below. Your choice will determine the reported values on the financial statement tabs.

Income Statement tab - Use the drop-downs to select the accounts properly included on the income statement. The unadjusted or adjusted balances will appear for each account, based on your selection.

Statement of Retained earnings tab - The unadjusted or adjusted balances will appear for each account, based on your selection.

Balance Sheet tab - Use the drop-downs to select the accounts properly included on the balance sheet. The unadjusted or adjusted balances will appear for each account, based on your selection.

Impact on Income tab -For each adjustment, indicate the income statement and balance sheet account affected, and the impact on net income. If an adjustment caused net income to decrease, enter the amount as a negative value. Net income before adjustments can be found on the income statement tab. (Hint: Select unadjusted on the dropdown.)

Selected hypothetical financial data of Target and Wal-Mart for 2022 are presented here (in millions). Target Corporation Wal-Mart Stores, Inc. Income Statement Data for Year Net sales $66,600 $407,000 Cost of goods sold 45,000 305,000 Selling and administrative expenses 14,900 79,000 Interest expense 730 1,800 Other income (expense) (75 ) (390 ) Income tax expense 1,500 7,400 Net income $ 4,395 $ 13,410 Balance Sheet Data (End of Year) Current assets $18,000 $50,000 Noncurrent assets 26,100 121,000 Total assets $44,100 $171,000 Current liabilities $10,000 $55,000 Long-term debt 17,200 45,000 Total stockholders’ equity 16,900 71,000 Total liabilities and stockholders’ equity $44,100 $171,000 Beginning-of-Year Balances Total assets $45,000 $163,000 Total stockholders’ equity 13,900 64,000 Current liabilities 10,900 54,000 Total liabilities 31,100 99,000 Other Data Average net accounts receivable $7,900 $3,800 Average inventory 6,800 34,200 Net cash provided by operating activities 5,600 26,800 Capital expenditures 1,600 11,600 Dividends 520 4,200 For each company, compute the following ratios. (Round current ratio answers to 2 decimal places, e.g. 15.50, debt to assets ratio and free cash flow answers to 0 decimal places, e.g. 5,275 and all answers to 1 decimal place, e.g. 1.8 or 1.83%.) Ratio Target Wal-Mart (1) Current ratio enter the current ratio :1 enter the current ratio :1 (2) Accounts receivable turnover enter accounts receivable turnover in times times enter accounts receivable turnover in times times (3) Average collection period enter average collection period in days days enter average collection period in days days (4) Inventory turnover enter inventory turnover in times times enter inventory turnover in times times (5) Days in inventory enter days in inventory ratio days enter days in inventory ratio days (6) Profit margin enter percentages % enter percentages % (7) Asset turnover enter asset turnover in times times enter asset turnover in times times (8) Return on assets enter percentages % enter percentages % (9) Return on common stockholders’ equity enter percentages % enter percentages % (10) Debt to assets ratio enter percentages % enter percentages % (11) Times interest earned enter times interest earned times enter times interest earned times (12) Free cash flow $enter a dollar amount $enter a dollar amount

Software Inc. is considering the purchase of new computer equipment totaling $150,000 with an estimated salvage value of $25,000 after three years. Maintenance, repairs, supplies, and other operating costs are estimated to be $13,000 per year. Determine the following:

1. The annual cost based on the depreciation.
2. The annual cost using a desired ROI of 15%.
3. If the funds to purchase the equipment are borrowed at a rate of 8% for three years, what is the effect on the annual costs?
4. What is the annual cost if the equipment is purchased from internal funds, and it is sold for $40,000 after two years?

Required information

[The following information applies to the questions displayed below.]

Arndt, Inc., reported the following for 2018 and 2019 ($ in millions):

1. Expenses each year include $40 million from a two-year casualty insurance policy purchased in 2018 for $80 million. The cost is tax deductible in 2018.
2. Expenses include $3 million insurance premiums each year for life insurance on key executives.
3. Arndt sells one-year subscriptions to a weekly journal. Subscription sales collected and taxable in 2018 and 2019 were $38 million and $67 million, respectively. Subscriptions included in 2018 and 2019 financial reporting revenues were $35 million ($13 million collected in 2017 but not recognized as revenue until 2018) and $43 million, respectively. Hint: View this as two temporary differences—one reversing in 2018; one originating in 2018.
4. 2018 expenses included a $29 million unrealized loss from reducing investments (classified as trading securities) to fair value. The investments were sold in 2019.
5. During 2017, accounting income included an estimated loss of $7 million from having accrued a loss contingency. The loss was paid in 2018 at which time it is tax deductible.
6. At January 1, 2018, Arndt had a deferred tax asset of $8 million and no deferred tax liability.

4. Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. Using the schedule, prepare the necessary journal entry to record income taxes for 2019.

Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

5. Compute the deferred tax amounts that should be reported on the 2019 balance sheet. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

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.

Subsidiary data for Work in Process Inventory on June 1 are as follows.

During June, raw materials purchased on account were $5,000, and all wages were paid. Additional overhead costs consisted of depreciation on equipment $900 and miscellaneous costs of $500 incurred on account.

A summary of materials requisition slips and time tickets for June shows the following.

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 $20,200. Each customer paid in full.

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.)

Post the entries to Work in Process Inventory. (Post the entries to Work in Process Inventory in the order presented in the problem.)

Reconcile the balance in Work in Process Inventory with the costs of unfinished jobs.

The Foundational 15 [LO2-1, LO2-2, LO2-3, LO2-4]

[The following information applies to the questions displayed below.]

Sweeten Company had no jobs in progress at the beginning of March and no beginning inventories. The company has two manufacturing departments—Molding and Fabrication. It started, completed, and sold only two jobs during March—Job P and Job Q. The following additional information is available for the company as a whole and for Jobs P and Q (all data and questions relate to the month of March):

Sweeten Company had no underapplied or overapplied manufacturing overhead costs during the month.

Required:

For questions 1-8, assume that Sweeten Company uses a plantwide predetermined overhead rate with machine-hours as the allocation base. For questions 9-15, assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments.

1. What was the company’s plantwide predetermined overhead rate? (Round your answer to 2 decimal places.)

2. How much manufacturing overhead was applied to Job P and how much was applied to Job Q? (Do not round intermediate calculations.)

3. What was the total manufacturing cost assigned to Job P? (Do not round intermediate calculations.)

4. If Job P included 20 units, what was its unit product cost? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)

5. What was the total manufacturing cost assigned to Job Q? (Do not round intermediate calculations.)

6. If Job Q included 30 units, what was its unit product cost? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)

7. Assume that Sweeten Company used cost-plus pricing (and a markup percentage of 80% of total manufacturing cost) to establish selling prices for all of its jobs. What selling price would the company have established for Jobs P and Q? What are the selling prices for both jobs when stated on a per unit basis assuming 20 units were produced for Job P and 30 units were produced for Job Q? (Do not round intermediate calculations. Round your final answers to nearest whole dollar.)

8. What was Sweeten Company’s cost of goods sold for March? (Do not round intermediate calculations.)

WEEK #6: VALIDITY, STRENGTH, AND

DETERMINING WHETHER ARGUMENTS ARE INDUCTIVE OR DEDUCTIVE

ASSIGNMENT 1:

A. Determine whether the following deductive arguments are valid or invalid.

1. New York City is either in the U.S.A. or France. But it's not in France. It follows that New York City is in France.

2. If the moon is made of green snot, then there are boogers on the moon. The moon is made of green snot; therefore, there are boogers on the moon.

3. If a car is made by FORD, then it comes with a warranty. Corvette cars are not made by FORD. Therefore, Corvette cars do not come with a warranty.

B. Determine whether the following inductive arguments are strong or weak.

1. The Governor of the state of Michigan has stated that the water supply of Flint (a city in Michigan) does not constitute a major threat to the public health. Furthermore, his Cabinet members agree with him on this point. Accordingly, we conclude that the water supply of Flint (a city in Michigan) does not constitute a major threat to the public health.

2. Two weeks after Pope Francis visited Mexico City to warn against the ills of drug-trafficking and violence, the city suffered a severe earthquake. Therefore, Pope Francis caused the severe quake in Mexico City.

3. 45 million turkeys are killed each year for Thanksgiving. Therefore, the next turkey killed is certain to be for Thanksgiving.

ASSIGNMENT 2:

Determine whether the following arguments are inductive or deductive and correspondingly valid/invalid or strong/weak.

1. Most birds can fly, and an ostrich is a bird.   So, ostriches most probably can fly.

2. If the Taliban take power in Afghanistan, then they will eventually take power in all Central Asia. And, if the Taliban take power in all Central Asia, then they will take over the rest of the world. Thus, once the Taliban take power in Afghanistan, they will take over the rest of the world.

3. Either Maria will earn an A in this logic course or she will earn a B, C, D, E, or I. Maria did not earn a B, C, D, E, or I. So, she must have earned an A.

Forten Company, a merchandiser, recently completed its calendar-year 2017 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company’s income statement and balance sheets follow.

Additional Information on Year 2017 Transactions

1. The loss on the cash sale of equipment was $9,125 (details in b).
2. Sold equipment costing $58,875, with accumulated depreciation of $34,125, for $15,625 cash.
3. Purchased equipment costing $100,375 by paying $38,000 cash and signing a long-term note payable for the balance.
4. Borrowed $4,400 cash by signing a short-term note payable.
5. Paid $52,125 cash to reduce the long-term notes payable.
6. Issued 2,900 shares of common stock for $20 cash per share.
7. Declared and paid cash dividends of $50,900.

Required:
1. Prepare a complete statement of cash flows; report its operating activities using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
  

The statement of cash flows is very useful because it provides valuable information to investors, creditors, and other users. Distinguish among the three types of activities that are reported in the statement of cash flows. Please discuss in detail. (Please no handwritten responses - they can be difficult to decipher.)

Measuring Cost Behavior

Month                         Setup Hours (X)                    Setup Costs (Y)

January                                100                                        $1,000

February                              200                                         1,250   

March                                  300                                          2,250           

April                                    400                                          2,500           

May                                     500                                          3,750

What is the variable cost per unit using least-squares regression?

A. $4.50

B. $6.75

C. $7.25

D. $8.95

What is the fixed cost using least-squares regression?

A. $100

B. $105

C. $125

D. $135

What is the total cost at a level of 800 setup hours using least-squares regression?

A. $4,235

B. $4,765

C. $4,985

D. $5,525   

Variable Costing and Segment Reporting: Tools for Management. Search the Internet and provide a "recent" real world example of a company's use of any of the concepts discussed in the Chapter

Rotorua Products, Ltd., of New Zealand markets agricultural products for the burgeoning Asian consumer market. The company’s current assets, current liabilities, and sales over the last five years (Year 5 is the most recent year) are as follows:

Required:

1. Express all of the asset, liability, and sales data in trend percentages. Use Year 1 as the base year. (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)Rotorua Products, Ltd., of New Zealand markets agricultural products for the burgeoning Asian consumer market. The company’s current assets, current liabilities, and sales over the last five years (Year 5 is the most recent year) are as follows:

Required:

1. Express all of the asset, liability, and sales data in trend percentages. Use Year 1 as the base year. (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

Jobs Inc. has recently started the manufacture of Tri-Robo, a three wheeled robot that can scan a home for fires and as leaks and then transmit the information to a smartphone. The cost structure to manufacture 20,000 Tri-Robos is as follows: dIRECT MATERIALS $50 per robot - Cost $100000, Direct Labor $40 per robot - 800,000, Variable overhead $6 per robot 120,000, Allocated fixed overhead $30 per robot 600,000. Jobs is approached by Tieh Inc. which offers to ake Tri-Robo for $115 per unit or $2,300,000. a. Using incremental analysis, determine whether Jobs should accept this offer undr each of the following Independent asumptions. 1. Asume that $405,000 of the fixed overhead cost can be avoided. 2. Assume that none of the fixed overhead can be avoided. However, if the robots are purchased from Tienh Inc;, Jobs can use the released productive resources to generate additional income of $375,000. b. Describe the qualitative factors that might affect the decision to purchase the robots from an outside supplier.

Ayayai Corporation had the following stockholders’ equity accounts on January 1, 2020: Common Stock ($5 par) $500,000, Paid-in Capital in Excess of Par—Common Stock $200,000, and Retained Earnings $120,000. In 2020, the company had the following treasury stock transactions.

Ayayai Corporation uses the cost method of accounting for treasury stock. In 2020, the company reported net income of $30,000.

Prepare the stockholders’ equity section for Ayayai Corporation at December 31, 2020. (Enter the account name only and do not provide the descriptive information provided in the question.)

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $22.95 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below:

The total cost of operating the company for the year is $347,000 which includes the following costs:

Resource consumption is distributed across the activities as follows:

Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on.

Required:

1. Prepare the first-stage allocation of costs to the activity cost pools.

2. Compute the activity rates for the activity cost pools.

3. The company recently completed a 200 square foot carpet-cleaning job at the Flying N Ranch—a 51-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system.

4. The revenue from the Flying N Ranch was $45.90 (200 square feet @ $22.95 per hundred square feet). Calculate the customer margin earned on this job.