A company bought the available for sale investments during 2017 (no investments as of 12/31/16)
- they bought 200 shares of apple stock for $40,000 on 2/1/17
- they bought 100 treasury bonds at $1,000 par each with an 4% interest rate at 4/2/2017 (semi annual on 4/1 and 10/1)
- $50,000 of company B 9% bonds due 3/1/37, interest payable on 3/1. our company paid 50,000 plus accrued interest for these bonds on 7/1/17
Required:
1- prepare journal entries for 2017 for all purchases on the investments
2- prepare all the appropriate adjusting entries as of 12/31/17 for the investments, Fair Market Value as of 12/31/17
Company A C-Stock $42,000
Treasury bonds $104,000
Company B Bonds $51,000
3- The Treasury bonds were sold on 7/1/18 for $103,000 plus accrued interest . prepare the journal entry.
In: Accounting
Provide at least three reasons why companies are hesitant to adopt the intranet and for each reason describe how the company can best manage these issues
In: Accounting
Required information Exercise 8-18 Complete the accounting cycle (LO8-1, 8-2, 8-4, 8-6) On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances: Accounts Debit Credit Cash $ 25,100 Accounts Receivable 46,200 Allowance for Uncollectible Accounts $ 4,200 Inventory 20,000 Land 46,000 Equipment 15,000 Accumulated Depreciation 1,500 Accounts Payable 28,500 Notes Payable (6%, due April 1, 2022) 50,000 Common Stock 35,000 Retained Earnings 33,100 Totals $ 152,300 $ 152,300 During January 2021, the following transactions occur: January 2 Sold gift cards totaling $8,000. The cards are redeemable for merchandise within one year of the purchase date. January 6 Purchase additional inventory on account, $147,000. January 15 Firework sales for the first half of the month total $135,000. All of these sales are on account. The cost of the units sold is $73,800. January 23 Receive $125,400 from customers on accounts receivable. January 25 Pay $90,000 to inventory suppliers on accounts payable. January 28 Write off accounts receivable as uncollectible, $4,800. January 30 Firework sales for the second half of the month total $143,000. Sales include $11,000 for cash and $132,000 on account. The cost of the units sold is $79,500. January 31 Pay cash for monthly salaries, $52,000. Exercise 8-18 Part 1 1. Record each of the transactions listed above. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
In: Accounting
Solving for Unknowns
Misterio Company uses a standard costing system. During the past quarter, the following variances were computed:
| Variable overhead efficiency variance | $ 24,000 U |
| Direct labor efficiency variance | 120,000 U |
| Direct labor rate variance | 10,400 U |
Misterio applies variable overhead using a standard rate of $2 per direct labor hour allowed. Two direct labor hours are allowed per unit produced. (Only one type of product is manufactured.) During the quarter, Misterio used 30 percent more direct labor hours than should have been used.
Required:
1. What were the actual direct labor hours
worked?
hours
What are the total hours allowed?
hours
2. What is the standard hourly rate for direct
labor?
$ per hour
What is the actual hourly rate? Round your answer to the nearest
cent.
$ per hour
3. How many actual units were produced?
units
In: Accounting
Garver Industries has budgeted the following unit sales:
| 2017 | Units | ||
| January | 10,000 | ||
| February | 8,000 | ||
| March | 9,000 | ||
| April | 11,000 | ||
| May | 15,000 |
The finished goods units on hand on December 31, 2016, was 2,000
units. Each unit requires 3 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. 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 8,640 pounds of raw materials on
hand at December 31, 2016.
For the first quarter of 2017, prepare a production budget.
| GARVER INDUSTRIES Production Budget For the Quarter Ended March 31, 2017 |
||||||||||
| January | February | March | Total | |||||||
| Desired ending finished goods unitsExpected unit salesRequired production unitsTotal required unitsBeginning finished goods unitsCost per poundDirect materials purchases | ||||||||||
| Direct materials purchasesCost per poundDesired ending finished goods unitsExpected unit salesRequired production unitsTotal required unitsBeginning finished goods units | ||||||||||
| Cost per poundDirect materials purchasesExpected unit salesTotal required unitsRequired production unitsBeginning finished goods unitsDesired ending finished goods units | ||||||||||
| AddLess: | Direct materials purchasesExpected unit salesRequired production unitsCost per poundBeginning finished goods unitsTotal required unitsDesired ending finished goods units | |||||||||
| Cost per poundTotal required unitsExpected unit salesBeginning finished goods unitsDirect materials purchasesDesired ending finished goods unitsRequired production units | ||||||||||
For the first quarter of 2017, prepare a direct materials budget.
| GARVER INDUSTRIES Direct Materials Budget For the Quarter Ended March 31, 2017 |
||||||||||
| January | February | March | Total | |||||||
| Direct materials purchasesTotal cost of direct materials purchasesTotal pounds needed for productionDirect materials per unitBeginning direct materialsDesired ending direct materialsCost per poundTotal materials requiredUnits to be produced | $ | $ | $ | |||||||
| Total pounds needed for productionDirect materials purchasesDirect materials per unitUnits to be producedTotal cost of direct materials purchasesTotal materials requiredDesired ending direct materialsBeginning direct materialsCost per pound | ||||||||||
| Cost per poundUnits to be producedDesired ending direct materialsDirect materials purchasesTotal pounds needed for productionBeginning direct materialsDirect materials per unitTotal materials requiredTotal cost of direct materials purchases | ||||||||||
| Total materials requiredCost per poundUnits to be producedDirect materials purchasesTotal cost of direct materials purchasesTotal pounds needed for productionDesired ending direct materialsDirect materials per unitBeginning direct materials | ||||||||||
| Direct materials purchasesCost per poundTotal materials requiredDirect materials per unitDesired ending direct materialsBeginning direct materialsTotal pounds needed for productionTotal cost of direct materials purchasesUnits to be produced | ||||||||||
| AddLess: | Direct materials per unitTotal pounds needed for productionTotal cost of direct materials purchasesBeginning direct materialsTotal materials requiredUnits to be producedCost per poundDirect materials purchasesDesired ending direct materials | |||||||||
| Units to be producedDirect materials purchasesDirect materials per unitTotal pounds needed for productionTotal materials requiredDesired ending direct materialsTotal cost of direct materials purchasesCost per poundBeginning direct materials | ||||||||||
| Desired ending direct materialsDirect materials per unitDirect materials purchasesCost per poundTotal materials requiredUnits to be producedTotal cost of direct materials purchasesBeginning direct materialsTotal pounds needed for production | ||||||||||
| Total cost of direct materials purchasesDirect materials per unitUnits to be producedTotal pounds needed for productionDesired ending direct materialsBeginning direct materialsDirect materials purchasesCost per poundTotal materials required | $ | $ | $ | $ | ||||||
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In: Accounting
Garver Industries has budgeted the following unit sales:
| 2017 | Units | ||
| January | 10,000 | ||
| February | 8,000 | ||
| March | 9,000 | ||
| April | 11,000 | ||
| May | 15,000 |
The finished goods units on hand on December 31, 2016, was 2,000
units. Each unit requires 3 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. 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 8,640 pounds of raw materials on
hand at December 31, 2016.
For the first quarter of 2017, prepare a production budget.
| GARVER INDUSTRIES Production Budget For the Quarter Ended March 31, 2017 |
||||||||||
| January | February | March | Total | |||||||
| Desired ending finished goods unitsExpected unit salesRequired production unitsTotal required unitsBeginning finished goods unitsCost per poundDirect materials purchases | ||||||||||
| Direct materials purchasesCost per poundDesired ending finished goods unitsExpected unit salesRequired production unitsTotal required unitsBeginning finished goods units | ||||||||||
| Cost per poundDirect materials purchasesExpected unit salesTotal required unitsRequired production unitsBeginning finished goods unitsDesired ending finished goods units | ||||||||||
| AddLess: | Direct materials purchasesExpected unit salesRequired production unitsCost per poundBeginning finished goods unitsTotal required unitsDesired ending finished goods units | |||||||||
| Cost per poundTotal required unitsExpected unit salesBeginning finished goods unitsDirect materials purchasesDesired ending finished goods unitsRequired production units | ||||||||||
For the first quarter of 2017, prepare a direct materials budget.
| GARVER INDUSTRIES Direct Materials Budget For the Quarter Ended March 31, 2017 |
||||||||||
| January | February | March | Total | |||||||
| Direct materials purchasesTotal cost of direct materials purchasesTotal pounds needed for productionDirect materials per unitBeginning direct materialsDesired ending direct materialsCost per poundTotal materials requiredUnits to be produced | $ | $ | $ | |||||||
| Total pounds needed for productionDirect materials purchasesDirect materials per unitUnits to be producedTotal cost of direct materials purchasesTotal materials requiredDesired ending direct materialsBeginning direct materialsCost per pound | ||||||||||
| Cost per poundUnits to be producedDesired ending direct materialsDirect materials purchasesTotal pounds needed for productionBeginning direct materialsDirect materials per unitTotal materials requiredTotal cost of direct materials purchases | ||||||||||
| Total materials requiredCost per poundUnits to be producedDirect materials purchasesTotal cost of direct materials purchasesTotal pounds needed for productionDesired ending direct materialsDirect materials per unitBeginning direct materials | ||||||||||
| Direct materials purchasesCost per poundTotal materials requiredDirect materials per unitDesired ending direct materialsBeginning direct materialsTotal pounds needed for productionTotal cost of direct materials purchasesUnits to be produced | ||||||||||
| AddLess: | Direct materials per unitTotal pounds needed for productionTotal cost of direct materials purchasesBeginning direct materialsTotal materials requiredUnits to be producedCost per poundDirect materials purchasesDesired ending direct materials | |||||||||
| Units to be producedDirect materials purchasesDirect materials per unitTotal pounds needed for productionTotal materials requiredDesired ending direct materialsTotal cost of direct materials purchasesCost per poundBeginning direct materials | ||||||||||
| Desired ending direct materialsDirect materials per unitDirect materials purchasesCost per poundTotal materials requiredUnits to be producedTotal cost of direct materials purchasesBeginning direct materialsTotal pounds needed for production | ||||||||||
| Total cost of direct materials purchasesDirect materials per unitUnits to be producedTotal pounds needed for productionDesired ending direct materialsBeginning direct materialsDirect materials purchasesCost per poundTotal materials required | $ | $ | $ | $ | ||||||
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In: Accounting
Garver Industries has budgeted the following unit sales:
| 2017 | Units | ||
| January | 10,000 | ||
| February | 8,000 | ||
| March | 9,000 | ||
| April | 11,000 | ||
| May | 15,000 |
The finished goods units on hand on December 31, 2016, was 2,000
units. Each unit requires 3 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. 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 8,640 pounds of raw materials on
hand at December 31, 2016.
For the first quarter of 2017, prepare a production budget.
| GARVER INDUSTRIES Production Budget For the Quarter Ended March 31, 2017 |
||||||||||
| January | February | March | Total | |||||||
| Desired ending finished goods unitsExpected unit salesRequired production unitsTotal required unitsBeginning finished goods unitsCost per poundDirect materials purchases | ||||||||||
| Direct materials purchasesCost per poundDesired ending finished goods unitsExpected unit salesRequired production unitsTotal required unitsBeginning finished goods units | ||||||||||
| Cost per poundDirect materials purchasesExpected unit salesTotal required unitsRequired production unitsBeginning finished goods unitsDesired ending finished goods units | ||||||||||
| AddLess: | Direct materials purchasesExpected unit salesRequired production unitsCost per poundBeginning finished goods unitsTotal required unitsDesired ending finished goods units | |||||||||
| Cost per poundTotal required unitsExpected unit salesBeginning finished goods unitsDirect materials purchasesDesired ending finished goods unitsRequired production units | ||||||||||
For the first quarter of 2017, prepare a direct materials budget.
| GARVER INDUSTRIES Direct Materials Budget For the Quarter Ended March 31, 2017 |
||||||||||
| January | February | March | Total | |||||||
| Direct materials purchasesTotal cost of direct materials purchasesTotal pounds needed for productionDirect materials per unitBeginning direct materialsDesired ending direct materialsCost per poundTotal materials requiredUnits to be produced | $ | $ | $ | |||||||
| Total pounds needed for productionDirect materials purchasesDirect materials per unitUnits to be producedTotal cost of direct materials purchasesTotal materials requiredDesired ending direct materialsBeginning direct materialsCost per pound | ||||||||||
| Cost per poundUnits to be producedDesired ending direct materialsDirect materials purchasesTotal pounds needed for productionBeginning direct materialsDirect materials per unitTotal materials requiredTotal cost of direct materials purchases | ||||||||||
| Total materials requiredCost per poundUnits to be producedDirect materials purchasesTotal cost of direct materials purchasesTotal pounds needed for productionDesired ending direct materialsDirect materials per unitBeginning direct materials | ||||||||||
| Direct materials purchasesCost per poundTotal materials requiredDirect materials per unitDesired ending direct materialsBeginning direct materialsTotal pounds needed for productionTotal cost of direct materials purchasesUnits to be produced | ||||||||||
| AddLess: | Direct materials per unitTotal pounds needed for productionTotal cost of direct materials purchasesBeginning direct materialsTotal materials requiredUnits to be producedCost per poundDirect materials purchasesDesired ending direct materials | |||||||||
| Units to be producedDirect materials purchasesDirect materials per unitTotal pounds needed for productionTotal materials requiredDesired ending direct materialsTotal cost of direct materials purchasesCost per poundBeginning direct materials | ||||||||||
| Desired ending direct materialsDirect materials per unitDirect materials purchasesCost per poundTotal materials requiredUnits to be producedTotal cost of direct materials purchasesBeginning direct materialsTotal pounds needed for production | ||||||||||
| Total cost of direct materials purchasesDirect materials per unitUnits to be producedTotal pounds needed for productionDesired ending direct materialsBeginning direct materialsDirect materials purchasesCost per poundTotal materials required | $ | $ | $ | $ | ||||||
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In: Accounting
Johnson Computers repairs computers, along with selling and installing software on computers. Brian handles the repairs for the computers and is constantly asked by family and friends for assistance when they experience computer issues. In an effort to provide more personal income, Brian started doing repairs from his home on weekends and evenings, as a part-time venture. As most of the business is for family and friends, he does not want to charge as much as Johnson Computers does. During the budget process, Brian increased the budget for computer parts, and once approved, started to buy as many as the budget would allow. For the additional parts not needed by Johnson Computers, Brian took the parts home to use in his business. Brian makes sure the amount spent never exceeds the budgeted amount.
Explain how Brian’s use of the budget is considered fraudulent, and how the budget process should have found this issue.
What policies and procedures should Johnson Computers have in place to protect the business assets and prevent the business risk?
In: Accounting
Exercise 21A-5 a-c
Sage Hill Leasing Company signs an agreement on January 1, 2017,
to lease equipment to Cole Company. The following information
relates to this agreement.
| 1. | The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years. | |
| 2. | The cost of the asset to the lessor is $401,000. The fair value of the asset at January 1, 2017, is $401,000. | |
| 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 $22,050, none of which is guaranteed. | |
| 4. | The agreement requires equal annual rental payments, beginning on January 1, 2017. | |
| 5. | Collectibility of the lease payments by Sage Hill is probable. |
a. Assuming the lessor desires a 8% rate of return on its investment, calculate the amount of the annual rental payment required.
b. Prepare an amortization schedule that is suitable for the lessor for the lease term.
c. Prepare all of the journal entries for the lessor for 2017 and 2018 to record the lease agreement, the receipt of lease payments, and the recognition of revenue. Assume the lessor’s annual accounting period ends on December 31, and it does not use reversing entries.
In: Accounting
Fey Company’s organization chart includes the president; the vice president of production; three assembly plants—Dallas, Atlanta, and Tucson; and two departments within each plant—Machining and Finishing. Budget and actual manufacturing cost data for July 2017 are as follows.
Finishing Department—Dallas: direct materials $42,500 actual, $44,000 budget; direct labor $83,400 actual, $82,000 budget; manufacturing overhead $51,000 actual, $49,200 budget.
Machining Department—Dallas: total manufacturing costs $220,000 actual, $219,000 budget.
Atlanta Plant: total manufacturing costs $424,000 actual, $420,000 budget.
Tucson Plant: total manufacturing costs $494,200 actual, $496,500 budget.
The Dallas plant manager’s office costs were $95,000 actual and $92,000 budget. The vice president of production’s office costs were $132,000 actual and $130,000 budget. Office costs are not allocated to departments and plants. Instructions Using the format shown in Illustration 10-19 (page 427), prepare the reports in a responsibility system for:
(a) The Finishing Department—Dallas.
(b) The plant manager—Dallas.
(c) The vice president of production.
In: Accounting
how does Apple INC. use Activity Based costing? 1. Describe the company and its business. 2. What was the scope of the ABC project? 3. What were the goals for the ABC project? 4. Summarize the results of the project.
In: Accounting
In: Accounting
a) How do standard costs are developed.
b) How do we calculate and interpret variances for direct materials.
c) What are the advantages and disadvantages of decentralization.
In: Accounting
You have recently been hired by Bio Lux Company, in its relatively new treasury management department. Bio Lux was founded five years ago by Jessica Parker. Jessica found a method to produce high quality shampoo using natural ingredients. The shampoo produced by Bio Lux is in a good position to compete with other more established shampoo producers. The company is privately owned by Jessica Parker and her family, and it had sales of $12 million last year.
Bio Lux primarily sells its products through a wholesaler who distributes the products through its network of retailers throughout the country. Bio Lux’s growth to date has come from its innovation, quality, and low costs. When the company had sufficient capital, it would expand production. Relatively little formal analysis has been used in its capital budgeting process. Jessica has just read about capital budgeting techniques and has come to you for help. For starters, the company has never attempted to determine its cost of capital, and Jessica would like you to perform the analysis. Because the company is privately owned, it is difficult to determine the cost of equity for the company. Jessica wants you to use a similar company to estimate the cost of capital (WACC) for Bio Lux, and she has chosen Procter & Gamble as a representative company. The following questions will lead you through the steps to calculate this estimate.
1. To estimate the cost of equity for Procter & Gamble, go to finance.yahoo.com and enter the ticker symbol “PG.” Follow the various links at this website to find answers to the following questions:
a) What is the most recent stock price (and provide the associated date) listed for Procter & Gamble?
b) What is the market value of equity, or market capitalization?
c) How many shares of stock does Procter & Gamble have outstanding?
d) What is the beta for Procter & Gamble?
e) Now go back to finance.yahoo.com and follow the “Bonds” link. What is the yield on three-month Treasury bills? Using a 6 percent market risk premium, what is the cost of equity for Procter & Gamble using the CAPM?
In: Accounting
Requirements (Part one):Prepare an income statement for Petunia's Posies, a merchandiser, for the year ended December 31, 2016.
Part One: In 2015, Petunia Conway opened Petunia's Posies, a small retail shop selling floral arrangements
On December 31, 2016, her accounting records show the following:
|
Sales revenue. . . . . . . . . . . . . . . . |
$51,000 |
|
Utilities for shop. . . . . . . . . . . . . . |
$1,200 |
|
Inventory on December 31, 2016. . |
$9,900 |
|
Inventory on January 1, 2016. . . . . |
$12,600 |
|
Rent for shop. . . . . . . . . . . . . . . . |
$3,200 |
|
Sales commisions. . . . . . . . . . . . . |
$4,300 |
|
Purchases of merchandise. . . . . . |
$38,500 |
----------
Requirements (Part two):
|
1. |
Calculate the Cost of Goods Manufactured for
Floral Mart Manufacturing for the year ended December31,2017. |
|
2. |
Prepare an income statement for
Floral Mart Manufacturing for the year ended December 31,2017. |
|
3. |
How does the format of the income statement for
Floral Mart Manufacturing differ from the income statement ofPetunia's Posies? |
Part Two: Petunia's Posies was so successful that Petunia decided to manufacture her own brand of floral supplies: Floral Mart Manufacturing.
At the end of December 2017, her accounting records show thefollowing:
|
Utilities for plant. . . . . . . . . . . . . . . . . . . . . . . . . |
$5,100 |
|
Delivery expense. . . . . . . . . . . . . . . . . . . . . . . . |
$4,500 |
|
Sales salaries expense. . . . . . . . . . . . . . . . . . . . |
$5,000 |
|
Plant janitorial services. . . . . . . . . . . . . . . . . . |
$1,750 |
|
Work in process inventory, December 31, 2017. . . |
$5,500 |
|
Finished goods inventory, December 31, 2016. . . |
$0 |
|
Finished goods inventory, December 31, 2017. . . |
$2,000 |
|
Sales revenue. . . . . . . . . . . . . . . . . . . . . . . . . . |
$103,000 |
|
Customer service hotline expense. . . . . . . . . . . |
$1,800 |
|
Direct labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
$27,000 |
|
Direct material purchases. . . . . . . . . . . . . . . . . . |
$39,000 |
|
Rent on manufacturing plant. . . . . . . . . . . . . . . . |
$8,200 |
|
Raw materials inventory, December 31, 2016. . . . |
$17,000 |
|
Raw materials inventory, December 31, 2017. . . . |
$8,500 |
|
Work in process inventory, December 31, 2016. . . |
$0 |
Part Three: Show the ending inventories that would appear on these balance sheets:
|
1. |
Petunia's Posies at December 31, 2016 |
|
2. |
Floral Mart Manufacturing at December 31, |
In: Accounting