Coolbrook Company has the following information available for
the past year:
| River Division | Stream Division | ||||
| Sales revenue | $ | 1,206,000 | $ | 1,805,000 | |
| Cost of goods sold and operating expenses | 893,000 | 1,291,000 | |||
| Net operating income | $ | 313,000 | $ | 514,000 | |
| Average invested assets | $ | 1,090,000 | $ | 1,510,000 | |
The company’s hurdle rate is 7.26 percent.
c. The company invests $253,000 in each division, an amount that generates $116,000 additional income per division
River Division
ROI_______%
Residual income (loss)______
Stream Division
ROI______%
Residual Income (loss)_______
d. Coolbrook changes its hurdle rate to 5.26 percent.
River Division
ROI_____%
Residual Income (loss)_______
Stream Division
ROI______%
Residual Income (loss)________
In: Accounting
Hi-Tek Manufacturing, Inc., makes two types of industrial component parts—the B300 and the T500. An absorption costing income statement for the most recent period is shown:
| Hi-Tek Manufacturing Inc. Income Statement |
|||
| Sales | $ | 1,704,000 | |
| Cost of goods sold | 1,250,524 | ||
| Gross margin | 453,476 | ||
| Selling and administrative expenses | 630,000 | ||
| Net operating loss | $ | (176,524 | ) |
Hi-Tek produced and sold 60,000 units of B300 at a price of $20 per unit and 12,600 units of T500 at a price of $40 per unit. The company’s traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the company’s two product lines is shown below:
| B300 | T500 | Total | ||||
| Direct materials | $ | 400,200 | $ | 162,900 | $ | 563,100 |
| Direct labor | $ | 120,700 | $ | 42,700 | 163,400 | |
| Manufacturing overhead | 524,024 | |||||
| Cost of goods sold | $ | 1,250,524 | ||||
The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek’s ABC implementation team concluded that $55,000 and $101,000 of the company’s advertising expenses could be directly traced to B300 and T500, respectively. The remainder of the selling and administrative expenses was organization-sustaining in nature. The ABC team also distributed the company’s manufacturing overhead to four activities as shown below:
| Manufacturing Overhead |
Activity | |||||
| Activity Cost Pool (and Activity Measure) | B300 | T500 | Total | |||
| Machining (machine-hours) | $ | 205,824 | 90,800 | 62,800 | 153,600 | |
| Setups (setup hours) | 156,200 | 75 | 280 | 355 | ||
| Product-sustaining (number of products) | 102,000 | 1 | 1 | 2 | ||
| Other (organization-sustaining costs) | 60,000 | NA | NA | NA | ||
| Total manufacturing overhead cost | $ | 524,024 | ||||
Required:
1. Compute the product margins for the B300 and T500 under the company’s traditional costing system.
2. Compute the product margins for B300 and T500 under the activity-based costing system.
3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.
In: Accounting
X company has the following information concerning the 2 products that it sells.
| Product 1 | Product 2 | |||
|
Sales Price per unit |
$800 | $300 | ||
| Variable cost per unit | $500 | $200 |
The company sells 12 units of Product 2 for each unit of Product 1 that it sells. How many units of Product 2 must it sell to breakeven if fixed costs total $75,000?
In: Accounting
On January 1, 2017, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1,789,900 in cash. The price paid was proportionate to Sellinger’s total fair value, although at the acquisition date, Sellinger had a total book value of $2,250,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger’s accounting records by $297,000. On January 1, 2018, Palka acquired an additional 25 percent common stock equity interest in Sellinger Company for $665,625 in cash. On its internal records, Palka uses the equity method to account for its shares of Sellinger.
During the two years following the acquisition, Sellinger reported the following net income and dividends:
| 2017 | 2018 | |||||
| Net income | $ | 465,000 | $ | 577,000 | ||
| Dividends declared | 150,000 | 190,000 | ||||
Show Palka’s journal entry to record its January 1, 2018, acquisition of an additional 25 percent ownership of Sellinger Company shares.
Prepare a schedule showing Palka’s December 31, 2018, equity method balance for its Investment in Sellinger account.
In: Accounting
Describe the four financial statements. Discuss the purpose of each financial statement and how one financial statement is related to the other.
please use a different answer than what's on the Chegg database and type out instead of writing for easy reading, thank you!
In: Accounting
Minden Company introduced a new product last year for which it is trying to find an optimal selling price. Marketing studies suggest that the company can increase sales by 5,000 units for each $2 reduction in the selling price. The company’s present selling price is $90 per unit, and variable expenses are $60 per unit. Fixed expenses are $838,800 per year. The present annual sales volume (at the $90 selling price) is 25,300 units.
Required:
1. What is the present yearly net operating income or loss?
2. What is the present break-even point in unit sales and in dollar sales?
3. Assuming that the marketing studies are correct, what is the maximum annual profit that the company can earn? At how many units and at what selling price per unit would the company generate this profit?
4. What would be the break-even point in unit sales and in dollar sales using the selling price you determined in (3) above (e.g., the selling price at the level of maximum profits)?
Brewer 8e Rechecks 2019-08-29
In: Accounting
In: Accounting
Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Larkspur Company. The following information relates to this agreement.
| 1. | The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. | |
| 2. | The fair value of the asset at January 1, 2020, is $66,000. | |
| 3. | The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $5,000, none of which is guaranteed. | |
| 4. | The agreement requires equal annual rental payments of $21,328 to the lessor, beginning on January 1, 2020. | |
| 5. | The lessee’s incremental borrowing rate is 5%. The lessor’s implicit rate is 4% and is unknown to the lessee. | |
| 6. | Larkspur uses the straight-line depreciation method for all equipment. |
Click here to view factor tables.
(For calculation purposes, use 5 decimal places as
displayed in the factor table provided.)
Part 1
New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is partially correct.
Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round answers to 0 decimal places, e.g. 5,265.)
|
LARKSPUR COMPANY (Lessee) |
||||||||
|---|---|---|---|---|---|---|---|---|
|
Date |
Annual Lease |
Interest on |
Reduction of Lease |
Lease Liability |
||||
|
1/1/20 |
$enter a dollar amount |
$enter a dollar amount |
$enter a dollar amount |
$enter a dollar amount |
||||
|
1/1/20 |
enter a dollar amount |
enter a dollar amount |
enter a dollar amount |
enter a dollar amount |
||||
|
1/1/21 |
enter a dollar amount |
enter a dollar amount |
enter a dollar amount |
enter a dollar amount |
||||
|
1/1/22 |
enter a dollar amount |
enter a dollar amount |
enter a dollar amount |
enter a dollar amount |
||||
|
$enter a total amount for this column |
$enter a total amount for this column |
$enter a total amount for this column |
||||||
eTextbook and Media
List of Accounts
Part 2
New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is partially correct.
Prepare all of the journal entries for the lessee for 2020 and 2021 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee’s annual accounting period ends on December 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,265. Record journal entries in the order presented in the problem.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|
|---|---|---|---|---|
|
choose a transaction date1/1/2012/31/201/1/2112/31/21During 2020During 2021 1/1/2012/31/201/1/2112/31/21During 2020During 2021 |
enter an account title To record the lease |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To record the lease |
enter a debit amount |
enter a credit amount |
||
|
(To record the lease) |
||||
|
choose a transaction date1/1/2012/31/201/1/2112/31/21During 2020During 2021 1/1/2012/31/201/1/2112/31/21During 2020During 2021 |
enter an account title To record lease payment |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To record lease payment |
enter a debit amount |
enter a credit amount |
||
|
(To record lease payment) |
||||
|
choose a transaction date1/1/2012/31/201/1/2112/31/21During 2020During 2021 1/1/2012/31/201/1/2112/31/21During 2020During 2021 |
enter an account title To record interest expense |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To record interest expense |
enter a debit amount |
enter a credit amount |
||
|
(To record interest expense) |
||||
|
choose a transaction date1/1/2012/31/201/1/2112/31/21During 2020During 2021 1/1/2012/31/201/1/2112/31/21During 2020During 2021 |
enter an account title To record amortization of the right-of-use asset |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To record amortization of the right-of-use asset |
enter a debit amount |
enter a credit amount |
||
|
(To record amortization of the right-of-use asset) |
||||
|
choose a transaction date1/1/2012/31/201/1/2112/31/21During 2020During 2021 1/1/2012/31/201/1/2112/31/21During 2020During 2021 |
enter an account title To reverse interest expense |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To reverse interest expense |
enter a debit amount |
enter a credit amount |
||
|
(To reverse interest expense) |
||||
|
enter an account title To record lease payment |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To record lease payment |
enter a debit amount |
enter a credit amount |
||
|
enter an account title To record lease payment |
enter a debit amount |
enter a credit amount |
||
|
(To record lease payment) |
||||
|
choose a transaction date1/1/2012/31/201/1/2112/31/21During 2020During 2021 1/1/2012/31/201/1/2112/31/21During 2020During 2021 |
enter an account title To record interest expense |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To record interest expense |
enter a debit amount |
enter a credit amount |
||
|
(To record interest expense) |
||||
|
choose a transaction date1/1/2012/31/201/1/2112/31/21During 2020During 2021 1/1/2012/31/201/1/2112/31/21During 2020During 2021 |
enter an account title To record amortization of the right-of-use asset |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To record amortization of the right-of-use asset |
enter a debit amount |
enter a credit amount |
||
|
(To record amortization of the right-of-use asset) |
In: Accounting
Besserbrau AG is a German beer producer headquartered in Ergersheim, Bavaria. The company, which was founded in 1842 by brothers Hans and Franz Besser, is publicly traded, with shares listed on the Frankfurt Stock Exchange. Manufactur- ing in strict accordance with the almost 500-year-old German Beer Purity Law, Besserbrau uses only four ingredients in making its products: malt, hops, yeast, and water. While the other ingredients are obtained locally, Besserbrau imports hops from a company located in the Czech Republic. Czech hops are considered to be among the world’s finest. Historically, Besserbrau’s products were marketed exclusively in Germany. To take advantage of a potentially enormous market for its products and expand sales, Besserbrau began making sales in the People’s Republic of China three years ago. The company established a wholly owned sub- sidiary in China (BB Pijio) to handle the distribution of Besserbrau products in that country. In the most recent year, sales to BB Pijio accounted for 20 percent of Besserbrau’s sales, and BB Pijio’s sales to customers in China accounted for 10 per- cent of the Besserbrau Group’s total profits. In fact, sales of Besserbrau products in China have expanded so rapidly and the potential for continued sales growth is so great that the company recently broke ground on the construction of a brewery in Shanghai, China. To finance construction of the new facility, Besserbrau negotiated a listing of its shares on the London Stock Exchange to facilitate an initial public offering of new shares of stock.
Required: Discuss the various international accounting issues confronted by Besserbrau AG.
In: Accounting
In: Accounting
Sales and Production Budgets
Sonic Inc. manufactures two models of speakers, Rumble and Thunder. Based on the following production and sales data for June, prepare (a) a sales budget and (b) a production budget.
| Rumble | Thunder | ||
| Estimated inventory (units), June 1 | 256 | 69 | |
| Desired inventory (units), June 30 | 294 | 60 | |
| Expected sales volume (units): | |||
| East Region | 2,650 | 2,950 | |
| West Region | 5,750 | 5,000 | |
| Unit sales price | $120 | $215 |
a. Prepare a sales budget.
| Sonic Inc. | |||
| Sales Budget | |||
| For the Month Ending June 30 | |||
Product and Area |
Unit Sales Volume |
Unit Selling Price |
Total Sales |
| Model Rumble: | |||
| East Region | $ | $ | |
| West Region | |||
| Total | $ | ||
| Model Thunder: | |||
| East Region | $ | $ | |
| West Region | |||
| Total | $ | ||
| Total revenue from sales | $ | ||
b. Prepare a production budget.
| Sonic Inc. | ||
| Production Budget | ||
| For the Month Ending June 30 | ||
| Units Model Rumble | Units Model Thunder | |
| Expected units to be sold | ||
| Total units required | ||
| Total units to be produced | ||
In: Accounting
Cissi Jean Oliver opened Cleaning Angels, Inc. on March 31, 2019. During April, the following transactions were completed:
|
Apr 1 |
Issued 5,000 shares of Cleaning Angels common stock for $13,000. Each share has a $1.00 par. |
|
1 |
Borrowed $8,000 on a 2-year, 9% note payable. |
|
1 |
Paid $9,020 to purchase used floor and window cleaning equipment from a company going out of business ($4,820 was for the floor equipment and $4,200 for the window equipment). |
|
1 |
Paid $220 for April Internet and phone service. |
|
1 |
Purchased cleaning supplies for $980 on account. |
|
2 |
Hired 4 employees. Each will be paid $480 per 5-day work week (Monday-Friday). Employees will begin working on Monday, April 08. |
|
2 |
Obtained insurance coverage for $9,840 per year. Coverage runs from April 1, 2019, through March 31, 2020. Cissi Jean paid $2,460 cash for the first quarter of coverage. |
|
2 |
Discussions with the insurance agent indicated that providing outside window cleaning services would cost too much to insure. Cissi Jean sold the window cleaning equipment for $4,000 cash. |
|
15 |
Billed customers $3,900 for cleaning services performed through April 12, 2019. |
|
15 |
Received $600 from a customer for 4 weeks of cleaning services to begin on April 22, 2019. |
|
18 |
Paid $300 on amount owed on cleaning supplies. |
|
19 |
Paid $3.25 per share to buy 300 shares of Cleaning Angels, Inc common stock from a shareholder who disagreed with management goals. The shares will be held as treasury stock. |
|
22 |
Billed customers $4,300 for cleaning services performed through April 19. |
|
26 |
Paid cash for employees’ wages for 2 weeks (April 8-12 and 15-19). |
|
26 |
Collected $2,500 cash from customers billed on April 15. |
|
29 |
Paid $220 for Internet and phone services for May. |
|
29 |
Declared and paid a cash dividend of $0.10 per share. |
|
30 |
Received notice that a customer who was billed $200 for services performed April 8 has filed for bankruptcy. Cleaning Angels, Inc does not expect to collect any portion of this outstanding receivable. (Cleaning Angels will follow the GAAP Guidelines for uncollectible accounts.) |
Adjusting Data:
A. Services performed for customers through
April 30, 2019, but unbilled and uncollected were $3,800.
B. Cleaning Angels used the allowance method to
estimate bad debts. Cleaning Angels estimates that 3% of its
month-end receivables will not be collected.
C. Record 1 month of depreciation for the floor
equipment. Use the straight-line method, an estimated life of 4
years, and $500 salvage value.
D. Record 1 month of insurance expense.
E. An inventory count shows $500 of supplies on
hand at April 30.
F. One week of services were performed for the
customer who paid in advance on April 15.
G. Accrue for wages owed through April 30,
2019.
H. Accrue for interest expense for 1 month.
I. Cissi Jean estimates a 20% income tax rate.
(Hint: Prepare an income statement up to “income before taxes” to
help with the income tax calculation.)
Instructions:
Possible account titles to use, please:
|
Accounts Payable |
Loss on Disposal of Equipment |
|
Accounts Receivable |
Notes Payable |
|
Allowance for Doubtful Accounts |
Paid in Capital in Excess of Par/Com |
|
Accumulated Depreciation/Building |
Paid in Capital in Excess of Par/Pref |
|
Accumulated Depreciation/Equip |
Preferred Stock |
|
Bad Debt Expense |
Prepaid Insurance |
|
Bonds Payable |
Prepaid Rent |
|
Building |
Prepaid Utilities |
|
Cash |
Rent Expense |
|
Cash Dividends |
Retained Earnings |
|
Common Stock |
Salaries and Wages Expense |
|
Cost of Goods Sold |
Salaries and Wages Payable |
|
Depreciation Expense |
Sales Discounts |
|
Dividends Payable |
Sales Returns and Allowances |
|
Equipment |
Sales Revenue |
|
Gain on Disposal of Equipment |
Selling Expenses |
|
Income Tax Expense |
Service Revenue |
|
Income Tax Payable |
Supplies |
|
Income Summary |
Supplies Expense |
|
Insurance Expense |
Treasury Stock |
|
Interest Expense |
Unearned Service Revenue |
|
Interest Payable |
Utilities Expense |
|
Inventory |
Utilities Payable |
|
Land |
In: Accounting
Sheridan Inc. reported income from continuing operations before
taxes during 2020 of $804,900. Additional transactions occurring in
2020 but not considered in the $804,900 are as follows.
| 1. | The corporation experienced an uninsured flood loss in the amount of $93,900 during the year. | |
| 2. | At the beginning of 2018, the corporation purchased a machine for $70,200 (salvage value of $11,700) that had a useful life of 6 years. The bookkeeper used straight-line depreciation for 2018, 2019, and 2020, but failed to deduct the salvage value in computing the depreciation base. | |
| 3. | Sale of securities held as a part of its portfolio resulted in a loss of $58,400 (pretax). | |
| 4. | When its president died, the corporation realized $159,600 from an insurance policy. The cash surrender value of this policy had been carried on the books as an investment in the amount of $47,530 (the gain is nontaxable). | |
| 5. | The corporation disposed of its recreational division at a loss of $117,100 before taxes. Assume that this transaction meets the criteria for discontinued operations. | |
| 6. | The corporation decided to change its method of inventory pricing from average-cost to the FIFO method. The effect of this change on prior years is to increase 2018 income by $60,600 and decrease 2019 income by $21,510 before taxes. The FIFO method has been used for 2020. The tax rate on these items is 30%. |
Prepare an income statement for the year 2020 starting with income
from continuing operations before taxes. Compute earnings per share
as it should be shown on the face of the income statement. Common
shares outstanding for the year are 108,490 shares. (Assume a tax
rate of 30% on all items, unless indicated otherwise.)
(Round earnings per share to 2 decimal places, e.g.
1.48 and all other answers to 0 decimal places, e.g.
5,275.)
In: Accounting
Based on each of the following scenarios below, draft an effective finding for the Management Letter. Five Components of an effective finding:
Write one paragraph.
scenario:
During an operational audit of a University department, it was discovered that four new vehicles had been purchased in January, but had not yet been insured by the time the audit occurred in April. The vehicles had been driven approximately 3,000 miles during that time.
In: Accounting
Problem 10-1 Acquisition costs [LO10-1, 10-2, 10-3, 10-4]
Tristar Production Company began operations on September 1,
2018. Listed below are a number of transactions that occurred
during its first four months of operations. (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:
Prepare journal entries to record each of the above transactions.
(If no entry is required for a transaction/event, select
"No journal entry required" in the first account field. Round final
answers to the nearest whole dollars.)
In: Accounting