Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2017, by investing capital in the amount of 55,000 pounds. The subsidiary immediately borrowed 136,000 pounds on a five-year note with 10 percent interest payable annually beginning on January 1, 2018. The subsidiary then purchased for 191,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2017, the subsidiary rented the building for three years to a group of local attorneys for 7,500 pounds per month. By year-end, rent payments totaling 75,000 pounds had been received, and 15,000 pounds was in accounts receivable. On October 1, 4,400 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 11,800 pounds back to Sullivan's Island Company on December 31, 2017. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound follow:

Prepare a statement of cash flows in pounds for Sullivan's Island Company's foreign subsidiary and then translate these amounts into U.S. dollars

Income Statement

Predetermined Overhead Rate, Application of Overhead to Jobs, Job Cost, Unit Cost

On August 1, Cairle Company’s work-in-process inventory consisted of three jobs with the following costs:

During August, four more jobs were started. Information on costs added to the seven jobs during the month is as follows:

Before the end of August, Jobs 70, 72, 73, and 75 were completed. On August 31, Jobs 72 and 75 were sold.

Cairle’s selling and administrative expenses for August were $1,300. Assume that Cairle prices its jobs at cost plus 25 percent.

Required:

Prepare an income statement for Cairle Company for August.

Feedback

True/False–Circle the best

TF 1. Multiple overhead rates may be applied to give more accurate product costs if departments consume resources differently.

TF 2.In a job-order cost sheet only the totals by cost component are recorded.

TF 3. In a process costing system, there is a separate Work-in-Process account for each process.

TF 4.Service firms cannot use a process costing approach because services are never homogeneous or repetitive.

TF 5. There is no difference in the unit costs computed under the weighted average and FIFO methods of process costing if there are no beginning work-in-process inventories.

TF6. Under the weighted average method, the equivalent units in the production report relate only to work done during the current period.

TF 7. In a process costing system, the costs of one processing department become the transferred-in costs of the next processing department.

TF 8. Theoretically speaking, the weighted average method in a process costing method provides a more realistic calculation of the costs incurred in a given period.

TF 9.The operation costing method assigns direct labor costs using the procedures of the process costing method

Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost.

Last year, the company sold 42,000 of these balls, with the following results:

Required:

1. Compute (a) last year's CM ratio and the break-even point in balls, and (b) the degree of operating leverage at last year’s sales level.

2. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls?

3. Refer to the data in (2) above. If the expected change in variable expenses takes place, how many balls will have to be sold next year to earn the same net operating income, $154,000, as last year?

4. Refer again to the data in (2) above. The president feels that the company must raise the selling price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement 1a), what selling price per ball must it charge next year to cover the increased labor costs?

5. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40.00%, but it would cause fixed expenses per year to double. If the new plant is built, what would be the company’s new CM ratio and new break-even point in balls?

6. Refer to the data in (5) above.

a. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $154,000, as last year?

b. Assume the new plant is built and that next year the company manufactures and sells 42,000 balls (the same number as sold last year). Prepare a contribution format income statement and Compute the degree of operating leverage.

A medium-sized industrial grade compressor can be purchased for $35,000. Annual O&M costs are expected to increase $1,300 every year, with a 1st year O&M cost of $2,000. (MARR =16%, and planning horizon is 10 years)

• The compressor salvage value for a given period t, is calculated based on the following equation: Salvage value (t) = $30,000– $3,000 * t

a) Find the Optimum Replacement Interval for this Equipment

b) Find the Optimum Replacement Interval for this Equipment if the O&M costs is increased to $1,600/yr. What is your conclusion?

c) Find the Optimum Replacement Interval for this Equipment if the initial cost is reduced to $32,000. What is your conclusion?

Consider the balance sheet of the following bank.

                                           Chase

     ------------------------------------------------------------------------------

     Reserves        3000       Checkable Deposits      5000

     Loans             7000       Savings and Time Deposits 8000  

     Bond Holdings      4000      Equity               1000

     Using balance sheets, show all the balance sheet steps of Chase making a loan of $1000. Provide a brief explanation for each step and assume that the loan check is re-deposited in another bank (provide a balance sheet for that bank as well). Verify how the money supply (M2) changes as a result

Seventy-Two Inc., a developer of radiology equipment, has stock outstanding as follows: 80,000 shares of cumulative preferred 3% stock, $15 par, and 401,400 shares of $24 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $55,700 ; second year, $78,000 ; third year, $78,900 ; fourth year, $98,300.

Calculate the dividends per share on each class of stock for each of the four years. Round all answers to two decimal places. If no dividends are paid in a given year, enter "0".

United Motors specializes in producing one specialty vehicle. It is called Surfer and is styled to easily fit multiple surfboards in its back area and​ top-mounted storage racks.

United has the following manufacturing​ costs:

United currently produces 180 vehicles per month

Requirements

PLEASE SOLVE THIS QUESTION IN AN EXCEL SHEET ?

1 a. Given that food sales are $450,000 for the year and beverages sales are 80,000, prepare   a statement of income for Mavericks Restaurant using the expenses below. (Use Figure 1.1 on pg 5 as a guide). Hint: Remember “controllable fixed” costs fall under Other Controllable Expenses. (round to two decimal points)

Administrative Expenses     $4,000

Employee Benefits $27,550

Cost of food sold $140,000

Salaries and wages $120,000

Utilities $26,000

Depreciation on equipment $14,100

Cost of beverages sold $16,230

Interest expense     $3,100

Occupancy costs $33,200

Advertising     $5,000

b. Based on the figures above, calculate:

Prime cost percent

Overhead cost percent

Profit percent

(Remember to ensure they equal up to 100%)

Labor cost percent

Food cost percent

1. Atkinson Building Supplies had the following transactions during August. Atkinson uses a perpetual inventory system. Using the accounts listed below and the journal paper provided, journalize the transactions in proper form. Indicate no entry if appropriate. Omit explanations.

.                Cash                                                                Dividends

                  Supplies                                                           Sales

                  Prepaid Insurance                                           Sales Returns and Allowances

                  Prepaid Rent                                                   Sales Discounts

                  Merchandise Inventory                                   Cost of Goods Sold

                  Accounts Receivable                                      Wages Expense

                  Allowance for Uncollectible Accounts          Insurance Expense     

                  Equipment                                                       Supplies Expense

                  Accumulated Depreciation Equipment           Utilities Expense                    

                  Accounts Payable                                            Interest Expense

                  Notes Payable                                                             Depreciation Expense

                  Unearned Revenue                                          Bad Debt Expense

                  Interest Payable                                               Discount Expense

                  Common Stock                                               Rent Expense

                  Paid in Capital in Excess of Par Value           Income Summary                               

                  Retained Earnings                                                                  

Aug. 1 Borrowed $8,000 on a 6 month note payable at 3% interest.

Aug. 2 Paid $1,500 for a one-year insurance policy.

Aug. 3 Rented office space and paid the August rent of $800.

Aug. 4 Purchased equipment costing $15,000 for $4,000 cash and the remainder on

             credit

Aug. 5 Purchased supplies on account for $400.

1. What justifies the markedly different accounting and financial reporting practices of governments as compared with business organizations?
2. What are the differences that distinguish governments from business organizations?
3. What are some of the differences in accounting standards between governments and business organizations?

Required information

Exercise 3-31 Manufacturing Cost Flows (LO 3-2, 3-5, 3-6)

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

Reimel Furniture Company, Inc. incurred the following costs during 20x2.

During 20x2, products costing $120,000 were finished, and products costing $132,000 were sold on account for $195,000. There were no purchases of raw material during the year. The beginning balances in the firm’s inventory accounts are as follows:

Exercise 3-31 Part 1

Required:

1. Prepare T-accounts to show the flow of costs through the company’s manufacturing accounts during 20x2.

Raw material inventory

work in process inventory

wages payable

manufacturing overehad

finished goods inventory

sales revenue

accounts receivable

Cost of goods sold

2. Prepare a partial balance sheet and a partial income statement to reflect the information given above.

For each of the unrelated transactions described below, present the entries required to record each transaction.

(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

FKG Inc. carries the following debt investments on its books at December 31, 2017, and December 31, 2018. All securities were purchased during 2017. Trading Securities: Company Cost Value, Dec. 31, 2017 Value, Dec. 31, 2018 A Company $25,000 $13,000 $20,000 B Company $13,000 $20,000 $20,000 C Company $35,000 $30,000 $25,000 Available for Sale Securities: Company Cost Value, Dec. 31, 2017 Value, Dec. 31, 2018 X Company $210,000 $130,000 $50,000 Y Company $ 50,000 $ 60,000 $70,000

Required:

(1.) Prepare the necessary journal entries for FKG on December 31, 2017, and December 31, 2018.

(2.) What net effect would the valuation of these debt investments have on 2017 net income?

(3.) What net effect would the valuation of these debt investments have on 2018 net income?