Petro Motors Inc. (PMI) produces small gasoline-powered motors
for use in lawn mowers. The company has been growing steadily over
the past five years and is operating at full capacity. PMI recently
completed the addition of new plant and equipment at a cost of
$7,800,000, thereby increasing its manufacturing capacity to
100,000 motors annually. The addition to plant and equipment will
be depreciated on a straight-line basis over 10 years.
Sales of motors were 60,000 units prior to the completion of the
additional capacity. Cost records indicated that manufacturing
costs had totaled $60 per motor, of which $48 per motor was
considered to be variable manufacturing costs. PMI has used the
volume of activity at full capacity as the basis for applying fixed
manufacturing overhead. The normal selling price is $80 per motor,
and PMI pays a 5% commission on the sale of its motors.
LawnPro.com offered to purchase 35,000 motors at a price of $60 per
unit to test the viability of distributing lawn mower replacement
motors through its website. PMI would be expected to produce the
motors, store them in its warehouse, and ship individual motors to
LawnPro.com customers. As orders are placed directly through the
LawnPro.com website, they would be forwarded instantly to PMI. No
commissions will be paid on this special sales order, and freight
charges will be paid by the customer purchasing a motor.
A. Calculate the cost per motor, for cost accounting purposes, after completion of the additional plant capacity.
B. Should the offer from LawnPro.com be accepted?
C. If relevant cost analysis was not considered, is it likely that a correct special order analysis would have been made?
In: Accounting
The Company uses a single department production process.
Materials are added at the start of the production process and
labor and overhead are added as indicated. For January 2018, the
Company records have the following information:
UNITS:
Beginning
WIP:
10,000 units
100% complete for materials, 50% complete for labor; 3% complete for overhead
Units started in process 50,000 units
Units completed 49,000 units
Ending WIP: 11,000 units
100% complete for materials, 60% complete for labor; 20% complete for overhead
PRODUCTION COSTS:
Work in Process, Beginning of the Month:
Materials
$ 22,000
Labor
18,000
Overhead
11,000
51,000
Current Month Costs:
Materials
$ 320,000
Labor
180,160
Overhead
152,840
653,000
Total Costs:
$ 704,000
Prepare a Cost of Production Summary using the FiFO method (calculations for equivalent units of production, cost per equivalent unit of production, total cost for units completed and WIP, ending). Prepare your calculations for Materials, Labor, and Overhead separately. Prepare the appropriate journal entries at month end.
In: Accounting
1) On January 1, Year 1, Shaq Co. acquired 100% of the outstanding common stock of O’Neal Co. As part of the total consideration transferred, Shaq promised to the shareholders of O’Neal to issue on May 1, Year 2, additional 1,000 shares of common stock if the total consolidated net income for Year 1 is greater than $1Billion. The consolidated net income in Year 1 was $1.2 Billion.
The controller of Shaq Co. took the ACCY 410 class at the UIUC and remembers that this contingent consideration must be classified as equity (i.e., APIC) in the consolidated financial statements. However, the controller did not always come prepared to the class and does not remember whether this contingent consideration should be remeasured on 12/31/Year 1 or not.
Research and cite a specific paragraph in the Accounting Standard Codification that can help the controller to determine whether this contingent consideration should be remeasured at the year-end, or not. Unless specifically requested, your response should not cite implementation guidance and illustrations.
FASB ASC - - -
In: Accounting
Highridge Homes has the following payroll information for the week ended February 21:
| Name | Earnings at End of Previous Week | Daily Time | Pay Rate | Federal Income Tax | ||||||
| S | M | T | W | T | F | S | ||||
| Arthur, P. | 7,800.00 | 8 | 8 | 8 | 8 | 8 | 45.00 | 226.78 | ||
| Bills, D. | 2,060.00 | 8 | 8 | 8 | 8 | 8 | 12.50 | 26.00 | ||
| Carney, W. | 2,085.00 | 8 | 8 | 8 | 8 | 8 | 12.95 | 27.00 | ||
| Dorn, J. | 748.00 | 8 | 8 | 22.00 | 11.00 | |||||
| Edgar, L. | 2,687.00 | 8 | 8 | 8 | 8 | 8 | 15.00 | 37.00 | ||
| Fitzwilson, G. | 4,150.00 | 8 | 8 | 8 | 8 | 8 | 8 | 23.00 | 125.00 | |
Taxable earnings for Social Security are based on the first $118,500. Taxable earnings for Medicare are based on all earnings. Taxable earnings for federal and state unemployment are based on the first $7,000. Employees are paid time-and-a-half for work in excess of 40 hours per week.
Required:
1. Complete the payroll register. The Social Security tax rate is 6.2 percent, and the Medicare tax rate is 1.45 percent. Begin payroll checks with No. 2080. If required, round your intermediate calculations and the final answers to the nearest cent and use the rounded answers in subsequent computations. If an amount is zero, enter "0".
| HIGHRIDGE HOMES | |||||||||||||||
| PAYROLL REGISTER FOR WEEK ENDED February 21, 20-- | |||||||||||||||
NAME |
TOTAL HOURS |
BEGINNING CUMULATIVE EARNINGS |
EARNINGS | ENDING CUMULATIVE EARNINGS |
TAXABLE EARNINGS | DEDUCTIONS | PAYMENTS | ||||||||
REGULAR |
OVERTIME |
TOTAL |
UNEMPLOYMENT |
SOCIAL SECURITY |
MEDICARE |
FEDERAL INCOME TAX |
SOCIAL SECURITY TAX |
MEDICARE TAX |
TOTAL |
NET AMOUNT |
CK. NO. |
||||
| Arthur, P. | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||
| Bills, D. | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||
| Carney, W. | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||
| Dorn, J. | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||
| Edgar, L. | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||
| Fitzwilson, G. | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||
| $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||
Feedback
The payroll register consists of beginning and ending cumulative earnings, Current earnings, Taxable earnings, and deductions bringing you to the Net Pay amount. Be sure and watch for the maximum amounts on Social Security Taxable income and also Unemployment Taxable income. An example of a payroll register is in your textbook.
2. Prepare a general journal entry to record the payroll. The firm's general ledger contains a Wages Expense account and a Wages Payable account. Then assuming that the firm has transferred funds from its regular bank account to its special payroll bank account and that this entry has been made, prepare a general journal entry to record the payment of wages. When necessary, round your intermediate calculations and the final answers to the nearest cent. If an amount box does not require an entry, leave it blank.
| GENERAL JOURNAL | PAGE | ||||
|---|---|---|---|---|---|
| DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | |
| 20-- | |||||
| Feb. 21 | Wages Expense | ||||
| Employees' Federal Income Tax Payable | |||||
| FICA Social Security Tax Payable | |||||
| FICA Medicare Tax Payable | |||||
| Wages Payable | |||||
| Payroll register for week ended February 21. | |||||
| Feb. 21 | Wages Payable | ||||
| Cash—Payroll Bank Account | |||||
| Paid wages for week ended February 21. | |||||
In: Accounting
Decision on Accepting Additional Business
Brightstone Tire and Rubber Company has capacity to produce 136,000 tires. Brightstone presently produces and sells 104,000 tires for the North American market at a price of $99 per tire. Brightstone is evaluating a special order from a European automobile company, Euro Motors. Euro is offering to buy 16,000 tires for $79.15 per tire. Brightstone's accounting system indicates that the total cost per tire is as follows:
| Direct materials | $38 |
| Direct labor | 14 |
| Factory overhead (60% variable) | 23 |
| Selling and administrative expenses (30% variable) | 20 |
| Total | $95 |
Brightstone pays a selling commission equal to 5% of the selling price on North American orders, which is included in the variable portion of the selling and administrative expenses. However, this special order would not have a sales commission. If the order was accepted, the tires would be shipped overseas for an additional shipping cost of $5 per tire. In addition, Euro has made the order conditional on receiving European safety certification. Brightstone estimates that this certification would cost $83,200.
a. Prepare a differential analysis dated January 21 on whether to reject (Alternative 1) or accept (Alternative 2) the special order from Euro Motors. If an amount is zero, enter zero "0". If required, round interim calculations to two decimal places.
| Differential Analysis | |||
| Reject Order (Alt. 1) or Accept Order (Alt. 2) | |||
| January 21 | |||
| Reject Order (Alternative 1) |
Accept Order (Alternative 2) |
Differential Effect on Income (Alternative 2) |
|
| Revenues | $ | $ | $ |
| Costs: | |||
| Direct materials | |||
| Direct labor | |||
| Variable factory overhead | |||
| Variable selling and admin. expenses | |||
| Shipping costs | |||
| Certification costs | |||
| Income (Loss) | $ | $ | $ |
Determine whether to reject (Alternative 1) or accept
(Alternative 2) the special order from Euro Motors.
b. What is the minimum price per unit that
would be financially acceptable to Brightstone? Round your answer
to two decimal places.
$per unit
In: Accounting
Question:
Complete the items below that would appear on a book/tax
reconciliation for Schedule M-1 on the IRS Form 1120, U.S.
Corporation Income Tax Return, for InterTax’s first year of
operations. Based on the data provided in the exhibit, enter the
appropriate values in the associated cells below. Please enter
additions as positive whole numbers and subtractions as negative
whole numbers. If an amount is zero, enter a zero (0).
Note: The deduction for organizational expenses in the
year was $5,707.
| A | B | |
| 1.) | Net income per books | |
| 2.) | Federal income tax per books | |
| 3.) | Depreciation recorded on books not deducted on the return | |
| 4.) | Charitable contributions recorded on books not deducted on the return | |
| 5.) | Other expenses recorded on books not deducted on return | |
| 6.) | Tax-exempt interest | |
| 7.) | Depreciation deducted on return not expensed on the books | |
| 8.) | Taxable income per tax return | $ |
InterTac Inc.
INCOME STATEMENT:
| Tax | Book | |
| Income | ||
| Consulting Fees | 1,880,000 | 1,880,000 |
| Tax-Exempt Interest | 0 | 2,400 |
| Interest Income on Bank Accounts | 16,400 | 16,400 |
| Total Income | 1,896,400 | 1,898,800 |
| Expenses | ||
| Organization Expenses | 5,707 | 15,600 |
| Office Salaries | 800,000 | 800,000 |
| Salaries and Wages | 240,000 | 240,000 |
| Rent | 76,800 | 76,800 |
| Utilities | 12,000 | 12,000 |
| Advertising | 30,000 | 30,000 |
| Repairs | 2,000 | 2,000 |
| Taxes | 10,000 | 10,000 |
| Employee Benefits | 2,000 | 2,000 |
| Interest | 10,000 | 10,000 |
| Office Supplies | 7,000 | 7,000 |
| Depreciation | 75,200 | 30,400 |
| Total Expense | 1,207,707 | 1,235,800 |
| Net Income Before Contributions | 625,693 | 663,000 |
| Charitable Contributions | 62,569 | 80,000 |
| Pre-Tax Income | 563,124 | 583,000 |
| Federal Tax Expense | 191,462 | 186,560 |
| Net Income | 371,662 | 396,440 |
Note: There were no shareholder distributions during the year.
In: Accounting
On July 1, 2019, the Renaissance Hotel collected a deposit of $1,335 from a customer for a banquet room and catering services for a wedding which will occur on June 30, 2021, the market rate of interest is 6%.
Required:
In: Accounting
Wyatt Company has budgeted the following units sales for 2011:
January 10,000 units
February 8,000 units
March 9,000 units
April 11,000 units
May 15,000 units
Data regarding Finished Goods and Raw Materials Inventory is as follows:
FINISHED GOODS:
The finished goods units on hand on December 31, 2010 was 2,000 units. Each unit required 2 pounds of raw materials that are estimated to cost an average of $4 per pound. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 20% of next month's anticipated sales.
RAW MATERIALS INVENTORY:
They also have a policy of maintaining a raw materials inventory at the end of each month equal to 30% of the pounds needed for the following month's production. There were 5,760 pounds of raw materials on hand at December 31, 2010.
How many units should be produced for the first quarter of 2011?
What is the total cost of direct materials purchases for the first quarter of 2011?
In: Accounting
Overhead volume variances do not signal that overhead costs are in or out of control. Do you agree?
Please no hand-written answers.
In: Accounting
3) Magic Co. holds 100% of the outstanding common stock of Jonson Co. and would like to prepare year-end (December 31, Year 2) consolidated financial statements. The separate financial statements of Magic Co. are prepared for fiscal year ending December 31, Year 2. Jonson Co. reports its separate financial statements for the fiscal year ending June 30, Year 1.
Research and cite a specific paragraph in the Accounting Standard Codification that can help Magic Co. to determine whether it can use the financial statements of Jonson Co. (from June 30, Year 1) for preparing the consolidated financial statements for the fiscal year ending December, 31, Year 2, without any adjustments. Unless specifically requested, your response should not cite implementation guidance and illustrations.
FASB ASC - - -
In: Accounting
Towing Company has budgeted sales for the next six months as follows: Sales for Cash Sales on Account May $42,000 $257,000 June $37,000 $243,000 July $29,000 $238,000 August $48,000 $269,000 September $52,000 $251,000 October $45,000 $263,000 On average, 32% of the sales on account are collected in the month of sale, 40% are collected in the month following sale, 16% are collected in the second month following sale, 8% are collected in the third month following sale, and the remaining 4% is collected four months after the month of sale. Calculate Towing Company's budgeted accounts receivable at October 31.
In: Accounting
Henry Company reported the following information for 2017:
TRANSACTIONS UNITS UNIT COST
Beginning Inventory – January 1 6,000 $ 3.00
Purchases
April 10 9,000 3.50
July 20 5,000 3.80
November 24 5,000 4.00
During 2017, Henry sold 12,000 units. The company uses a periodic inventory system.
REQUIRED:
What is the value of ending inventory and cost of goods sold for 2017 under the following assumptions:
In: Accounting
Jeffrey owns 100% of HR Company. In 2016, he lent the firm $70,000. In 2018, he cancelled the debt. The results of this debt cancellation are:
A. HR Company recognizes $70,000 gain; no effect to Jeffrey
B. HR Company recognizes $70,000 gain; Jeffry has $70,000 bad debt
C. HR Company has no income; no effect to Jeffrey
D. HR Company has no income; Jeffrey has $70,000 bad debt
E. HR Company has no income; Jeffrey increases his basis in HR Company Stock
In: Accounting
PartA： Jan 1st, 2020: Tony Inc. buys a machine from Avengers Inc. and will make 3 equal payments of 200,000 over the next 18 months (payments on June 30, 2020; Dec 31, 2020; and June 30, 2021). The interest rate on this annuity is 14%. Record all the journal entries from Jan 1st 2020 until the expiration of the annuity. (4 points) Assume the machine does not depreciate.
Part B: Create the balance sheet as of December 31st, 2020 along with the income statement and cash flow statement for the time period of Jan 1st, 2020 to Dec 31st,2020 (6 points) (There might have a $1 rounding issue ）
Thank you so much guys!!!
In: Accounting
2) Lebron Co. acquired the entire outstanding shares of common stock of Cavaliers Co. On the acquisition date the total fair value of net identifiable assets acquired (i.e., far value of identifiable assets acquired and liabilities assumed) was greater than the consideration transferred for the shares.
Research and cite a specific paragraph in the Accounting Standard Codification that can help the company to determine how this difference should be recognized in the consolidated financial statements. Unless specifically requested, your response should not cite implementation guidance and illustrations.
FASB ASC - - -
In: Accounting