Koufax Materials Corporation produces plastic products for home appliances and electronics. The financial department has produced the following information for the year ended December 31.

Administrative salaries	$	2,645,000
Depreciation on the administrative building		1,162,000
Depreciation on the manufacturing plant		1,770,000
Direct labor		4,712,500
Direct materials inventory, January 1		1,089,200
Direct materials inventory, December 31		1,255,000
Direct materials purchased during the year		8,976,000
Distribution costs		677,000
Finished goods inventory, January 1		1,662,000
Finished goods inventory, December 31		1,389,500
Indirect labor		562,000
Insurance (on manufacturing plant)		73,200
Legal fees		516,300
Maintenance (on the manufacturing plant)		235,400
Manufacturing plant utiities		804,100
Marketing costs		769,250
Other manufacturing plant costs		650,880
Sales revenue		22,674,920
Taxes (on manufacturing plant and property)		235,600
Work-in-process inventory, January 1		423,250
Work-in-process inventory, December 31		416,700

Required:

a. Prepare a cost of goods manufactured and sold statement.

b. Prepare an income statement.

repare a cost of goods manufactured and sold statement.

	KOUFAX MATERIALS CORP. Cost of Goods Manufactured and Sold Statement For the Year Ending December 31 Manufacturing costs: Direct materials: Manufacturing overhead: Total overhead Total manufacturing costs Total cost of work-in-process during the year Costs of goods manufactured this year Cost of goods available for sale Cost of goods sold (to income statement)

Prepare an income statement. (Loss amounts should be indicated with a minus sign.)

	KOUFAX MATERIALS CORP. Income Statement For the Year Ending December 31 Total operating costs

Required:

a. Prepare a cost of goods manufactured and sold statement.

b. Prepare an income statement.

1. fontaine and Monroe are forming a partnership. Fontaine invests a building that has a market value of $356,000; the partnership assumes responsibility for a $128,000 note secured by a mortgage on the property. Monroe invests $103,000 in cash and equipment that has a market value of $78,000. For the partnership, the amounts recorded for total assets and for total capital account are:

2. Fontaine and Monroe are forming a partnership. Fontaine invests a building that has a market value of $354,000; the partnership assumes responsibility for a $127,000 note secured by a mortgage on the property. Monroe invests $102,000 in cash and equipment that has a market value of $77,000. For the partnership, the amounts recorded for Fontaine's Capital account and for Monroe's Capital account are:

subject: company accounting

Discuss the advantages for stakeholders where companies provide segment information in their financial reports under AASB 8 Operating Segments. What are the criticisms of the standard?  

Hyde Park Elementary has plans to build a new playground in 2017. They received a $120,000 government grant to be used for building the playground. They are hoping to break ground in May 2017 and complete the project by the start of school in September. Before they can start the project, however, they must dismantle the existing playground that has become unsafe based on current safety standards. They are also planning to complete soil testing once the existing playground is dismantled as a number of residential properties in the community have tested positive for soil contamination. Due to recent news articles, parents are very concerned about the potential for soil contamination and are demanding a full test to ensure their kids are not playing on a contaminated playground.

Sonya Muhammed, the school principal, has compiled the following estimates related to the new playground:

Cost for dismantling existing equipment	$22,000
Salvage value from the metal from existing equipment	$7,000
Soil testing	$18,000
New playground equipment	$45,000
Cost of installation	$16,000
Cost of resurfacing play area in rubber	$55,000
Cost of landscaping (including $5,000 for gravel)	$22,000
Cost of removing and replacing soil	$73,000

The costs for installation, resurfacing, landscaping, and soil removal are the costs quoted by professional contractors. Sonya was approached by the president of the student council, Josh Schwinn, who has volunteered the council’s time for installing and landscaping the new playground. This will save the school approximately $25,000 in costs and Sonya has decided to accept this offer as two of the council members who will be helping are journeymen carpenters.

The school has two options in terms of dealing with the contaminated soil. The first option is to not partake in the soil testing and to simply resurface the play area with a poured-rubber matting that can cover the entire play surface. This will cost, as Sonya indicated in her estimates above, approximately $55,000 – a large chunk of the playground budget. The other option is to perform the soil testing. A municipal worker has estimated that there is a 40% chance that the soil is contaminated. If this is the case, the school will either need to resurface the area for $55,000 or it can have the contaminated soil removed and replaced for a hefty cost of $73,000 plus the cost of gravel. However, there is a 60% chance that the soil will not be contaminated. Sonya is wondering what they should do and has asked for your help.

REQUIRED

Prepare an analysis of the potential project costs for the following scenarios. Note: There is no need for gravel in the resurfacing scenario.

1. Resurface ground without doing soil testing .
   
2. Complete the soil testing. In this case there are two outcomes:

1. remove/replace the soil if contaminated.
2. resurface if contaminated.
   

Use the probabilities provided by the municipal worker to determine a weighted cost for each of these outcomes.

3. What option would you recommend for the school? Why? Are there other non-financial considerations that you need to include in your decision?

1. Write short notes on five issues that may be addressed by a company’s social responsibility report.

Johnson paid $325,000 to acquire 100% of Willis Corporation in a statutory merger. In addition, Johnson also agreed to pay the shareholders of Willis $0.40 in cash for every dollar in income from continuing operations of the combined entity over $75,000 in the first three years following acquisition. Johnson projects that there is a 20% (45%, 35%) probability that the income from continuing operations in the first three years following acquisition is $65,000 ($90,000, $115,000 respectively). Johnson uses a discount rate of 7%.

Information for Willis Corporation immediately before the merger was as follows:

	Book value	Fair value
Current assets	40,000	50,000
Plant assets	120,000	70,000
Liabilities	50,000	45,000

Previously unreported items identified as belonging to Willis:

	Fair value
Contracts under negotiation with potential customers	15,000
In-process research and development	12,000
Skilled workforce	23,000
Recent favorable press reports on Willis	2,000
Proprietary databases	8,000

1. Show your determination of the contingent consideration.
2. Show your determination the goodwill to be reported in this acquisition.

The following selected transactions are from Garcia Company.

2016
Dec.		16			Accepted a $20,400, 60-day, 12% note dated this day in granting Rita Griffin a time extension on his past-due account receivable.
		31			Made an adjusting entry to record the accrued interest on the Griffin note.

2017
Feb.		14			Received Griffin’s payment of principal and interest on the note dated December 16.
Mar.		2			Accepted a $9,000, 6%, 90-day note dated this day in granting a time extension on the past-due account receivable from Wright Co.
		17			Accepted a $7,200, 30-day, 10% note dated this day in granting Wang Lee a time extension on her past-due account receivable.
Apr.		16			Lee dishonored her note when presented for payment.
May		31			Wright Co. refused to pay the note that was due to Garcia Co. on May 31. Prepare the journal entry to charge the dishonored note plus accrued interest to Wright Co.’s accounts receivable.
July		16			Received payment from Wright Co. for the maturity value of its dishonored note plus interest for 46 days beyond maturity at 6%.
Aug.		7			Accepted a $22,000, 90-day, 10% note dated this day in granting a time extension on the past-due account receivable of Collins Co.
Sep.		3			Accepted a $11,400, 60-day, 10% note dated this day in granting Maria Gonzalez a time extension on his past-due account receivable.
Nov.		2			Received payment of principal plus interest from Gonzalez for the September 3 note.
Nov.		5			Received payment of principal plus interest from Collins for the August 7 note.
Dec.		1			Wrote off the Lee account against the Allowance for Doubtful Accounts.

• Requirement
• General Journal
• General Ledger
• Trial Balance
• Schedule of Receivables
• Calculation of Interest

Examine the duties of the management of a company and any company's auditors with regard to any company's financial statement.

State the basic purpose of financial Reporting standards and explain the fundamental concepts of accounting recognized by SSAP 2.

Explain the concept of value-for-money, describing the problems which may arise in applying the VFM model and suggest how the problems might be overcome.

The Kollar Company has a defined benefit pension plan. Pension information concerning the fiscal years 2018 and 2019 are presented below ($ in millions):

Information Provided by Pension Plan Actuary:

1. Projected benefit obligation as of December 31, 2017 = $1,800.
2. Prior service cost from plan amendment on January 2, 2018 = $400 (straight-line amortization for 10-year average remaining service period).
3. Service cost for 2018 = $520.
4. Service cost for 2019 = $570.
5. Discount rate used by actuary on projected benefit obligation for 2018 and 2019 = 10%.
6. Payments to retirees in 2018 = $380.
7. Payments to retirees in 2019 = $450.
8. No changes in actuarial assumptions or estimates.
9. Net gain—AOCI on January 1, 2018 = $230.
10. Net gains and losses are amortized for 10 years in 2018 and 2019.

Information Provided by Pension Fund Trustee:

1. Plan asset balance at fair value on January 1, 2018 = $1,600.
2. 2018 contributions = $540.
3. 2019 contributions = $590.
4. Expected long-term rate of return on plan assets = 12%.
5. 2018 actual return on plan assets = $180.
6. 2019 actual return on plan assets = $210.

Required:
1. Calculate pension expense for 2018 and 2019.
2. Prepare the journal entries for 2018 and 2019 to record pension expense.
3. Prepare the journal entries for 2018 and 2019 to record any gains and losses and new prior service cost.
4. Prepare the journal entries for 2018 and 2019 to record the cash contribution to plan assets and benefit payments to retirees.

Giggles Comedy Emporium provides entertainment for birthday parties. Over the last year, Giggles has entertained at over 150 birthday parties. Giggles’ business is booming! The company has parties booked solid for the next six months. Customers generally must book 6-8 months in advance to secure a spot. Mark Spear, the owner of Giggles Comedy Emporium, however, is worried. His business is busy, his customers are extremely happy, his employees are happy, but he is barely breaking even. He cannot understand, with his business being so successful, why he is barely able to pay himself a wage. Mark has asked you to help him figure out what he is doing wrong.

The services provided at each party vary. Some customers only want a clown to perform and they handle the other party details themselves. Other customers want a full package – food, cake, entertainment, cleanup, party favours, decorations, and costumes for the kids. Mark has identified the following services that can be provided at a party.

• Clown: most, if not all, parties include a clown who performs for one hour at the party. Mark pays the clown $40 for each party.
• Food (excluding cake): when customers order food for their party through Giggles, Mark outsources this service to Carl’s Catering. Carl charges an average of $12 per child for food.
• Cake: Mark orders birthday cakes through his sister, Sarah, who has a small bakery and makes custom cakes for Giggles. Her smallest cake is 8” (which will serve up to 10 kids) and costs $40. She also makes a 10” cake for $60 (which serves 20 kids).
• Cleanup: Giggles also provides cleanup service. Cleaning staff are paid $15 per hour. Cleanup averages 2 hours per 20 kids.
• Party favours: Party favours can also be ordered through Giggles. These cost $5 per bag to assemble.
• Decorations: Giggles will also fully decorate a party. Decorating staff are paid $15 per hour and take one hour to decorate a party for 20 kids. Decorations cost an average of $50 for party of 20 kids.
• Costumes: Giggles also provides costumes for parties so the kids can dress up in a theme. On average, costumes cost $40 each and can be worn 25 times before needed to be replaced. Costumes are cleaned after every party at a cost of $5 each.  

Mark has set up a fee schedule for each service as follows:

Service	Fee charged to customer
Clown	$60 per party
Food	$15 per child
Cake	$2 per child
Cleanup	$2 per child
Party favours	$6 per child
Decorations	$2 per child
Costumes	$6 per child

During the two weeks, Mark catered 6 parties. Some details of the parties are shown below:

Customer	1	2	3	4	5	6
# of kids attended	20	25	45	15	5	12
Clown	Y	Y	Y	Y	N	Y
Food services	Y	Y	N	N	Y	N
Cake	Y	N	N	Y	Y	N
Clean up	Y	Y	N	N	Y	N
Party favours	Y	Y	N	N	y	N
Decorations	Y	Y	Y	N	Y	N
Costumes	N	N	Y	N	Y	N

REQUIRED:

Calculate the customer-level operating income for each customer by preparing a customer profitability analysis. Rank the customers according to profitability.

Question 1

Clean-It-Up manufactures industrial dryers and washers. The following information is available for February:

	Dryers	Washers
Budgeted units sold	10,000	40,000
Actual sales (in units)	8,820	33,180
Actual selling price per unit	$700	$900
Budgeted selling price per unit	$710	$930
Budgeted market share	20%	25%
Actual market share	25%	24%
Budget cont. margin /unit	$275	$375

REQUIRED:

1. Determine the sales-mix and sales-quantity variances.
2. Determine the market-share and market-size variances.
3. Discuss the potential causes of variance.

Contribution Margin Income Statement. Last month Kumar Production Company sold its product for $60 per unit. Fixed production costs were $40,000, and variable production costs amounted to $15 per unit. Fixed selling and administrative costs totaled $26,000, and variable selling and administrative costs amounted to $5 per unit. Kumar Production produced and sold 7,000 units last month.

Required:

1. Prepare a traditional income statement for Kumar Production Company.
2. Prepare a contribution margin income statement for Kumar Production Company.
3. Why do companies use the contribution margin income statement format?

1) If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is credited when a customer's account is written off as uncollectible?

a.Accounts Receivable

b.Uncollectible Accounts Payable

c.Bad Debt Expense

d.Allowance for Doubtful Accounts

2) If Modern Company received $3,650 from Connor Young Company on March 12 for the total amount of an account that had been written off on March 1, the entry to record the cash receipt after the account has been reinstated under the direct write-off method

a.includes a credit to Bad Debt Expense of $3,650.

b.is the same as it would be under the allowance method.

c.includes a debit to Allowance for Doubtful Accounts of $3,650.

d.includes a credit to Cash of $3,650.

3) If Modern Company received $3,650 from Connor Young Company on March 12 for the total amount of an account that had been written off on March 1, the entry to reinstate the account under the direct write-off method would include

a.a credit to Bad Debt Expense of $3,650.

b.a debit to Bad Debt Expense of $3,650.

c.a debit to Allowance for Doubtful Accounts of $3,650.

d.a credit to Cash of $3,650.

4) Days' sales in receivables is determined by dividing

a.Average Accounts Receivable by Sales.

b.365 by Accounts Receivable.

c.Average Accounts Receivable by Average Daily Sales.

d.None of these choices are correct.

5) Allowance for Doubtful Accounts will have

a.an unadjusted debit balance at the end of the period if the write-offs during the period were equal to the beginning balance.

b.an unadjusted debit balance at the end of the period if the write-offs during the period were less than the beginning balance.

c.an unadjusted credit balance at the end of the period if the write-offs during the period were more than the beginning balance.

d.an unadjusted credit balance at the end of the period if the write-offs during the period were less than the beginning balance.

6) A 90-day, 10% note for $9,000, dated April 15, is received from a customer on account. The face value of the note is

a.$8,100.

b.$9,225.

c.$9,000.

d.$9,900.

7) Under the allowance method, when a specific account is written off,

a.net income will decrease.

b.total assets will be unchanged.

c.total assets will decrease.

d.total assets will increase.

8) In the Current Assets section of the balance sheet, receivables are usually listed in order

a.of size.

b.alphabetically.

c.of due date.

d.that they can be turned into cash.

9) When analyzing accounts receivable, which of the following is not true?

a.Look for trends from year to year for accounts receivable turnover and days' sales in receivables.

b.Never look at accounts receivable turnover and days' sales in receivables ratios together because they could be misleading.

c.Companies may become less efficient in collecting receivables from one year to the next.

d.Companies may become more efficient in collecting receivables from one year to the next.

10) Financial statement data for the year ending December 31 for Gore Co. are as follows:

Sales	$4,250,000
Accounts receivable:
Beginning of year	600,000
End of year	630,000

Determine accounts receivable turnover for the year.

a.6.75

b.3.46

c.7.08

d.6.91

11) Receivables are _________ on the __________, which are listed in order of ____________.

a.current liabilities; balance sheet; size.

b.current assets; balance sheet; liquidity.

c.current liabilities; balance sheet; due date.

d.current assets; balance sheet; importance.