Old Country Links, Inc., produces sausages in three production departments—Mixing, Casing and Curing, and Packaging. In the Mixing Department, meats are prepared and ground and then mixed with spices. The spiced meat mixture is then transferred to the Casing and Curing Department, where the mixture is force-fed into casings and then hung and cured in climate-controlled smoking chambers. In the Packaging Department, the cured sausages are sorted, packed, and labeled. The company uses the weighted-average method in its process costing system. Data for September for the Casing and Curing Department follow: Percent Completed Units Mixing Materials Conversion Work in process inventory, September 1 9 100 % 60 % 50 % Work in process inventory, September 30 9 100 % 20 % 10 % Mixing Materials Conversion Work in process inventory, September 1 $ 17,622 $ 531 $ 6,399 Cost added during September $ 190,298 $ 17,984 $ 171,931 Mixing cost represents the costs of the spiced meat mixture transferred in from the Mixing Department. The spiced meat mixture is processed in the Casing and Curing Department in batches; each unit in the above table is a batch and one batch of spiced meat mixture produces a set amount of sausages that are passed on to the Packaging Department. During September, 104 batches (i.e., units) were completed and transferred to the Packaging Department. Required: 1. Determine the Casing and Curing Department's equivalent units of production for mixing, materials, and conversion for the month of September. 2. Compute the Casing and Curing Department's cost per equivalent unit for mixing, materials, and conversion for the month of September. 3. Compute the Casing and Curing Department's cost of ending work in process inventory for mixing, materials, conversion, and in total for September. 4. Compute the Casing and Curing Department's cost of units transferred out to the Packaging Department for mixing, materials, conversion, and in total for September. 5. Prepare a cost reconciliation report for the Casing and Curing Department for September.

Accounts Receivable Turnover

All of the following statements are true for Garrison Company, who has an accounts receivable turnover rate of 10, except:

Select one:

a. Garrison writes off accounts receivables as uncollectible if they are more than 36.5 days old.

b. Garrison’s accounts receivable indicate greater liquidity than those of a business whose accounts receivable turnover rate is 4.

c. Garrison may have less liberal credit terms than a company with an accounts receivable turnover rate of 5.

d. Using a 365 day year, Garrison waits approximately 36.5 days to make collections of its credit sales.

If you were to start your own business, which business entity structure would you choose? Justify why your chosen structure is the best organizational form.

Explain the following business structures: sole proprietorship, partnership, LLC, and a corporation. In your analysis address the following for each business structure:

• Steps to form
• Personal liability for owners
• Taxation
• Advantages and disadvantages
• Your paper must be three to five pages

1. The Hill Company produced 5,000 units of X. The standard time per unit is 0.25 hours. The actual hours used to produce 5,000 units of X were 1,350 hours. The standard labor rate is $12 per hour. The actual labor cost was $18,900. What is the total direct labor cost variance?

a. $1,200 unfavorable

b. $3,900 unfavorable

c. $1,400 unfavorable

d. $2,700 unfavorable

2. The cost associated with the difference between the standard quantity and the actual quantity of direct materials used in producing a commodity is called the:

a. direct materials quantity variance

b. direct materials price variance

c. direct materials volume variance

d. controllable materials variance

3. The cost associated with the difference between the standard hours and the actual hours of direct labor spent producing a commodity is called the:

a. direct labor quantity variance

b. direct labor volume variance

c. direct labor rate variance

d. direct labor time variance

4. The difference between the budgeted fixed overhead at 100% of normal capacity and the standard fixed overhead for the actual production achieved during the period is called the:

a. efficiency variance

b. controllable variance

c. volume variance

d. total overhead variance

5. An unfavorable volume variance might be caused by which of the following factors?

a. an uneven work flow

b. machine breakdowns

c. repairs leading to work stoppages d. all of the above

6. Which of the following is an example of a nonfinancial performance measure?

a. number of customer complaints

b. direct labor time variance

c. controllable overhead variance d. all of the above

7. A quantity of 1,200 gallons of Material X is purchased at a price of $4.50 per gallon. The standard price is $4.00 per gallon. The journal entry for this purchase will include a:

a. debit to Materials for $5,400

b. debit to Direct Materials Price Variance for $600

c. credit to Direct Materials Price Variance for $600

d. debit to Work in Process for $4,800

You have been asked to prepare a December cash budget for Ashton Company, a distributor of exercise equipment. The following information is available about the company’s operations:

1. The cash balance on December 1 is $50,600.

2. Actual sales for October and November and expected sales for December are as follows:

Sales on account are collected over a three-month period as follows: 20% collected in the month of sale, 60% collected in the month following sale, and 18% collected in the second month following sale. The remaining 2% is uncollectible.

3. Purchases of inventory will total $317,000 for December. Thirty percent of a month’s inventory purchases are paid during the month of purchase. The accounts payable remaining from November’s inventory purchases total $190,000, all of which will be paid in December.

4. Selling and administrative expenses are budgeted at $526,000 for December. Of this amount, $58,600 is for depreciation.

5. A new web server for the Marketing Department costing $78,000 will be purchased for cash during December, and dividends totaling $15,500 will be paid during the month.

6. The company maintains a minimum cash balance of $20,000. An open line of credit is available from the company’s bank to increase its cash balance as needed.

Required:

1. Calculate the expected cash collections for December.

2. Calculate the expected cash disbursements for merchandise purchases for December.

3. Prepare a cash budget for December. Indicate in the financing section any borrowing that will be needed during the month. Assume that any interest will not be paid until the following month.

Your task is to write a procedure or checklist of things that are required to prepare financial forecasts and projections of an organisation. Please ensure you include the following in your procedure/checklist:

1. Timetable preparation
2. Identifying assumptions and parameters
3. Issuing instructions for preparation of forecasts and projections
4. Collecting and analysing data
5. Documentation of results
6. Approval protocols

You will be required to provide the procedure and checklist to the assessor.

Question 1:

One of the COSO principles of internal control requires organizations to demonstrate a commitment to attract,develop, and retain competent individuals in alignment with objectives. Discuss how this can be done.

Question 2 :

What are the three types of law that are relevant to auditors’ legal liability? Explain the causes of legal action under each type.

Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2017, by issuing 10,500 shares of $10 par value common stock. Haynes’s shares had a $15 per share fair value. On that date, Turner reported a net book value of $110,750. However, its equipment (with a five-year remaining life) was undervalued by $8,850 in the company’s accounting records. Also, Turner had developed a customer list with an assessed value of $37,900, although no value had been recorded on Turner’s books. The customer list had an estimated remaining useful life of 10 years. The following balances come from the individual accounting records of these two companies as of December 31, 2017: Haynes Turner Revenues $ (686,000 ) $ (318,000 ) Expenses 490,000 149,000 Investment income Not given 0 Dividends declared 100,000 80,000 The following balances come from the individual accounting records of these two companies as of December 31, 2018: Haynes Turner Revenues $ (799,000 ) $ (390,000 ) Expenses 516,000 180,500 Investment income Not given 0 Dividends declared 110,000 60,000 Equipment 571,000 359,000 a. What balance does Haynes’s Investment in Turner account show on December 31, 2018, when the equity method is applied? b. What is the consolidated net income for the year ending December 31, 2018? c-1. What is the consolidated equipment balance as of December 31, 2018? c-2. Would this answer be affected by the investment method applied by the parent? d. Prepare entry *C for the beginning of the Retained Earnings account on a December 31, 2018 by using initial value, partial equity and equity method. Req A to C2Req D a. What balance does Haynes’s Investment in Turner account show on December 31, 2018, when the equity method is applied? b. What is the consolidated net income for the year ending December 31, 2018? c-1. What is the consolidated equipment balance as of December 31, 2018? c-2. Would this answer be affected by the investment method applied by the parent? Show less a. Investment in Turner account b. Consolidated net income c-1. Consolidated equipment c-2. Would this answer be affected by the investment method applied by the parent? Prepare entry *C for the beginning of the Retained Earnings account on a December 31, 2018 by using initial value, partial equity and equity method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Consolidation Worksheet Entries Prepare entry *C if the parent used the initial value method. Note: Enter debits before credits. Date Accounts Debit Credit December 31, 2018

Problem 5-35 information used for the cash budget for second quarter

Sunland Products, a rapidly growing distributor of home gardening equipment, is formulating its plans for the coming year. Carol Jones, the firm’s marketing director, has completed the following sales forecast.

Phillip Smith, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projection. He has gathered the following information.

Question Two

The following balances were extracted from the books of Bashara Kabwa Enterprises, a wholesale business, as at 31 October 2018:

Drawings                                                                     660,000

Trade receivables                                                         990,000

Purchases                                                                     2,303,840

Sales returns                                                                 79,420

Capital                                                                         4,101,100

Trade payables                                                             330,000

Sales                                                                            4,691,280

Purchases returns                                                          120,340

Discount received                                                         93,720

Provision for depreciation: Motor vehicles                     176,000

                                         Fixtures and fittings             63,800

Allowances for doubtful debts                                       44,000

15% bank loan                                                             220,000

Salaries and wage                                                         1,034,000

Discount allowed                                                          54,560

Bank balance                                                               568,260

Cash in hand                                                                26,400

Electricity expenses                                                      103,840

Rent and rates                                                              54,560

Freehold premises (cost)                                               1,569,700

Fixtures and fittings (cost)                                             334,400

Motor vehicles (cost)                                                    462,000

Stationery                                                                    34,320

Postage and telephone expenses                                    44,000

Insurance premiums                                                      13,200

Bad debts written off                                                    15,840

Motor vehicle expenses                                                 84,920

Inventory (1 November 2017)                                       1,393,480

Interest on bank loan                                                     16,500

Additional information:

1. The value of inventory as at 31 October 2018 was Sh. 1,036,400
2. Sales includes Sh. 300,000 worth of goods sold by Bashara Kabwa Enterprises agents, who are allowed 15% commission on such sales. This transaction has not been recorded in the books.
3. Depreciation is to be provided as follows:

Fixtures and fittings      – 10% per annum on reducing balance basis.

Motor vehicle               – 15% per annum on straight line basis.

4. Annual insurance premium amounted to Sh. 12,000.
5. As at 31 October 2017, there was a balance of Sh. 65,000 received from a customer in cash.
6. Salaries and wages were in arrears of Sh. 35,000
7. The Electricity bill for the month of October of Sh. 14,500 was received on 5 November 2018.
8. An allowance of 5% is to be maintained for doubtful debts.
9. Goods worth Sh. 48,840 had been distributed to potential customers as free samples.

Required:

1. Income statement for the year ended 31 October 2018
2. Statement of Financial position as at 31 October 2018                            

Maya Lee and John Spencer are facing an important decision. After having discussed different financial scenarios into the wee hours of the morning, the two computer engineers felt it was time to finalize their cash flow projections and move to the next stage – decide which of two possible projects they should undertake. Both had a bachelor degree in engineering and had put in several years as maintenance engineers in a large chip manufacturing company. About six months ago, they were able to exercise their first stock options. That was when they decided to quit their safe, steady job and pursue their dreams of starting a venture of their own. In their spare time, almost as a hobby, they had been collaborating on some research into a new chip that could speed up certain specialized tasks by as much as 25%. At this point, the design of the chip was complete. While further experimentation might improve the performance of their design, any delay in entering the market now may prove to be costly, as one of the established players might introduce a similar product of their own. The duo knew that now was the time to act if at all. They estimated that they would need to spend about $2,500,000 on plant, equipment and supplies. As for future cash flows, they felt that the right strategy at least for the first year would be to sell their product at dirt-cheap prices in order to induce customer acceptance. Then, once the product had established a name for itself, the price could be raised. By the end of the fifth year, their product in its current form was likely to be obsolete. However, the innovative approach that they had devised and patented could be sold to a larger chip manufacturer for a decent sum. Accordingly, the two budding entrepreneurs estimated the cash flows for this project (call it Project A) as follows: Year Project A Expected Cash flows ($) 0 ($2,500,000) 1 $290,000 2 $400,000 3 $880,000 4 $1,600,000 5 $1,600,000 An alternative to pursuing this project would be to immediately sell the patent for their innovative chip design to one of the established chip makers. They estimated that they would receive around $200,000 for this. It would probably not be reasonable to expect much more as neither their product nor their innovative approach had a track record. They could then invest in some plant and equipment that would test silicon wafers for zircon content before the wafers were used to make chips. Too much zircon would affect the long-term performance of the chips. The task of checking the level of zircon was currently being performed by chip makers themselves. However, many of them, especially the smaller ones, did not have the capacity to permit 100% checking. Most tested only a sample of the wafers they received. Maya and John were confident that they could persuade at least some of the chip makers to outsource this function to them. By exclusively specializing in this task, their little company would be able to slash costs by more than half, and thus allow the chip manufacturers to go in for 100% quality check for roughly the same cost as what they were incurring for a partial quality check today. The life of this project too (call it project B) is expected to be only about five years. The initial investment for this project is estimated at $ 2,600,000. After taking into account the sale of their patent, the net investment would be $2,400,000. As for the future, Maya and John were reasonably sure that there would be sizable profits in the first couple of years. But thereafter, the zircon content problem would slowly start to disappear with advancing technology in the wafer industry. Keeping all this in mind, they estimate the cash flows for this project as follows: Year Project B Expected Cash flows ($) 0 ($2,400,000) 1 $1,450,000 2 $1,215,000 3 $470,000 4 $285,000 5 $165,000 Maya and John now need to make their decision. For purposes of analysis, they plan to use a required rate of return of 15% for both projects. Ideally, they would prefer that the project they choose have a payback period of less than 4 years and a discounted payback period of less than 5 years. Below are the results of the analysis they have carried out so far: Metrics Project A Project B Payback period (in years) 3.58 1.78 Discounted payback period (in years) 4.57 2.71 Net Present Value (NPV) $343,534 $333,601 Internal Rate of Return (IRR) 19.22% 23.50% Profitability Index 1.1374 1.1390 Modified Internal Rate of Return (MIRR) 18.00% 18.03% One of the concerns that Maya and John have is regarding the reliability of their cash flow estimates. All the analysis in the table above is based on “expected” cash flows. However, they are both aware that actual future cash flows may be higher or lower. Assignment: Suppose that Maya and John have hired you as a consultant to help them make the decision. Please draft an official memo to them with your analysis and recommendations. Your submission should cover the following questions: Briefly, summarize the key facts of the case and identify the problem being faced by our two budding entrepreneurs. In other words, what is the decision that they need to make? (10 points) An excellent paper will demonstrate the ability to construct a clear and insightful problem statement while identifying all underlying issues. What are some approaches that can be used to solve this problem? What are some various criteria or metrics that can be used to help make this decision? (10 points) An excellent paper will propose solutions that are sensitive to all the identified issues. a) Rank the projects based on each of the following metrics: Payback period, Discounted payback period, NPV, IRR, Profitability Index, and MIRR. (10 points) b) John believes that the best approach to make the decision is the NPV approach. However, Maya is not so sure that ignoring the other metrics is a good idea. Which of the approaches or metrics would you propose? In other words, would you prefer one or more of these approaches over the others? Explain why. (20 points) An excellent paper will include an evaluation of solutions containing thorough and insightful explanations, feasibility of solutions, and impacts of solutions. a) Which of these projects would you recommend? Explain why. (10 points) b) Briefly state the limitations of the approach you used in making this decision, and outline what further analysis you would recommend. (20 points)

On January 1, 20X1, Kiner Company formed a foreign subsidiary that issued all of its currently outstanding common stock on that date. Selected accounts from the balance sheets, all of which are shown in local currency units, are as follows: December 31 20X2 20X1 Accounts Receivable (net of allowance for uncollectible accounts of 1,900 LCU on December 31, 20X2, and 1,700 LCU on December 31, 20X1) LCU 45,000 LCU 40,000 Inventories, at cost 68,000 63,000 Property, Plant and Equipment (net of allowance for accumulated depreciation of 37,000 LCU on December 31, 20X2, and 18,000 LCU on December 31, 20X1) 205,300 190,000 Long-Term Debt 100,000 120,000 Common Stock, authorized 19,000 shares, par value 10 LCU per share; issued and outstanding, 9,500 shares on December 31, 20X2, and December 31, 20X1 95,000 95,000 Additional Information: Exchange rates are as follows: LCU $ January 1, 20X1–July 31, 20X1 2.0 = 1 August 1, 20X1–October 31, 20X1 1.8 = 1 November 1, 20X1–June 30, 20X2 1.7 = 1 July 1, 20X2–December 31, 20X2 1.5 = 1 Average monthly rate for 20X1 1.9 = 1 Average monthly rate for 20X2 1.6 = 1 An analysis of the accounts receivable balance is as follows: 20X2 20X1 Accounts Receivable: Balance at beginning of year LCU 41,700 Sales (42,000 LCU per month in 20X2 and 37,000 LCU per month in 20X1) 504,000 LCU 444,000 Collections (495,600 ) (401,000 ) Write-offs (May 20X2 and December 20X1) (3,200 ) (1,300 ) Balance at end of year LCU 46,900 LCU 41,700 20X2 20X1 Allowance for Uncollectible Accounts: Balance at beginning of year LCU 1,700 Provision for uncollectible accounts 3,400 LCU 3,000 Write-offs (May 20X2 and December 20X1) (3,200 ) (1,300 ) Balance at end of year LCU 1,900 LCU 1,700 An analysis of inventories, for which the first-in, first-out inventory method is used, follows: 20X2 20X1 Inventory at beginning of year LCU 63,000 Purchases (June 20X2 and June 20X1) 315,000 LCU 355,000 Goods available for sale LCU 378,000 LCU 355,000 Inventory at end of year (68,000 ) (63,000 ) Cost of goods sold LCU 310,000 LCU 292,000 On January 1, 20X1, Kiner’s foreign subsidiary purchased land for 28,000 LCU and plant and equipment for 180,000 LCU. On July 4, 20X2, additional equipment was purchased for 37,000 LCU. Plant and equipment is being depreciated on a straight-line basis over a 10-year period with no residual value. A full year’s depreciation is taken in the year of purchase. On January 15, 20X1, 7 percent bonds with a face value of 120,000 LCU were issued. These bonds mature on January 15, 20X7, and the interest is paid semiannually on July 15 and January 15. The first interest payment was made on July 15, 20X1. Required: Prepare a schedule translating the selected accounts into U.S. dollars as of December 31, 20X1, and December 31, 20X2, respectively, assuming that the local currency unit is the foreign subsidiary’s functional currency. (Round your dollar amounts to nearest whole dollar.)

Bills Bird House Bonanza

The following information relates to the manufacturing plant of Bills Bird House Bonanza:

Inventory Values                                           September1                September 30

Direct Materials for bird houses                    122,200                    115,500

Work In Progress of bird houses                    200,000                      225,500

Finished and Complete bird houses               140,400                      125,500

Production Data for the Month of September:

Direct Labor for bird house production                     275,500

Anticipated Actual Factory Overhead December 31             200,200

Direct Materials Purchased                                        234,400

Bills Bird House Bonanza uses one factory over-head account and applies factory overhead to production at 70% of direct labor cost. Over-and-Under applied overhead is not recognized until year-end.

Required:

What is the total manufacturing cost for month of September for Bills Bird House Bonanza?

1. TYU Inc. has a profit margin of 8.3 percent and a payout ratio of 42 percent. The firm has annual sales of $386,400, current liabilities of $37,200, long-term debt of $123,800, and net working capital of $16,700, and net fixed assets of $391,500. No external equity financing is possible. What is the internal growth rate?

2.  Jump Company., has annual sales of $40,934, depreciation of $3,100, interest paid of $750, cost of goods sold of $22,400, taxes of $3,084, and dividends paid of $4,060. The firm has total assets of $55,300 and total debt of $32,600. The firm wants to maintain a constant payout ratio but does not want to incur any additional external financing. What is the firm's maximum rate of growth?