Financial Statements from the End-of-Period Spreadsheet

Demo Consulting is a consulting firm owned and operated by Jesse Flatt. The following end-of-period spreadsheet was prepared for the year ended August 31, 20Y9:

Based on the preceding spreadsheet, prepare an income statement for Demo Consulting.

Based on the preceding spreadsheet, prepare a statement of stockholders’ equity for Demo Consulting. During the year ended August 31, 20Y9, $3,100 of additional common stock was issued. If an amount box does not require an entry, leave it blank. If a net loss is incurred or dividends were paid, enter that amount as a negative number using a minus sign.

Based on the preceding spreadsheet, prepare a balance sheet for Demo Consulting.

CompUSA Inc. sells computer hardware. It also markets related software and software-support services. The company prepares annual forecasts for sales, of which the first six months of 2019 are given below.

In a typical month, total sales are broken down as follows: cash sales, 30%; VISA® credit card sales, 65%; and 5% open account (the company’s own charge accounts). For budgeting purposes, assume that cash sales plus bank credit card sales are received in the month of sale; bank credit card sales are subject to a 3% processing fee, which is deducted daily at the time of deposit into CompUSA’s cash account with the bank. Cash receipts from collection of accounts receivable typically occur as follows: 20% in the month of sale, 50% in the month following the month of sale, and 27% in the second month following the month of sale. The remaining receivables generally turn out to be uncollectible.

CompUSA’s month-end inventory requirements for computer hardware units are 30% of the following month’s estimated sales. A one-month lead time is required for delivery from the hardware distributor. Thus, orders for computer hardware units are generally placed by CompUSA on the 25th of each month to ensure availability in the store on the first day of the month needed. These units are purchased on credit, under the following terms: n/45, measured from the time the units are delivered to CompUSA. Assume that CompUSA takes the maximum amount of time to pay its invoices. On average, the purchase price for hardware units runs 60% of selling price.

Required:

1. Calculate estimated cash receipts for April 2019.

2. The company is looking at the number of hardware units to order on January 25.

a. Determine the estimated number of units to be ordered.

b. Calculate the dollar cost (per unit and total) for these units.

3. Cash planning in this line of business is critical to success. Management feels that the assumption of selling price per unit ($3,000) is firm—at least for the foreseeable future. Also, it is comfortable with the 30% rate for end-of-month inventories. It is not so sure, however, about (a) the Cost of Goods Sold (CGS) rate (because of the state of flux in the supplier market) and (b) the level of predicted sales in March 2019. Discussions with marketing and purchasing suggest that three outcomes are possible for each of these two variables, as follows:

The preceding outcomes are assumed to be independent, which means that there are nine possible combinations (3 × 3). You are asked to conduct a sensitivity analysis to determine the range of possible cash outflows for April 10, under different combinations of the above. Assume, for simplicity, that sales volume for April is fixed. Complete the following table:

1. XYZ Sporting Corp. manufactures two types of products – Footwear and Apparel. The following table shows the estimated annual overhead cost of XYZ for the year of 2019 -

XYZ usually deploys a plantwide overhead rate based on machine hours. But the management of the company decided to implement an activity-based costing (ABC) system to allocate all $2,150,000 of its overhead costs to three cost pools –

The following table shows the distribution of resource consumption across the activity cost pools

1. Calculate the company’s plantwide overhead rate. Using the plantwide overhead rate,how much overhead cost is allocated to Apparel and how much is allocated to Footwear?
2. Calculate the activity rates of Customer Orders, Product Design, and Order Size. )
3. Using the ABC system, how much overhead cost is allocated to Apparel and how much is allocated to Footwear?

Assume the following set of facts for questions 5-6.

Puig corp. has developed some standard costs for the year based on a capacity of 180,000 direct labor hours as follows (Puig uses direct labor hours as a base for overhead):

Cost per unit:

direct materials        4 pounds @ $7 = $28

fixed overhead          2 hours @ $4 =   8

During the year, 90,000 units were scheduled for production; however, only 80,000 units were actually produced. The following data relate to the year:

Direct labor efficiency variance $20,000 u.

Actual direct labor hours were 165,000.

The denominator level of volume was 180,000 direct labor    hours.

____ 5. The standard wage per hour for direct labor is:

(a) $ 6

(b) $ 5

(c) $ 4

(d) $ 3

(e) none of the above, the correct answer is ________.

___ 6. The production volume variance for the year is:

(a) $60,000 f

(b) $60,000 u

(c) $30,000 u

(d) $30,000 f

(e) none of the above, the correct answer is _________.

Budgeted Income Statement and Balance Sheet

As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 20Y9, the following tentative trial balance as of December 31, 20Y8, is prepared by the Accounting Department of Regina Soap Co.:

Factory output and sales for 20Y9 are expected to total 27,000 units of product, which are to be sold at $120 per unit. The quantities and costs of the inventories at December 31, 20Y9, are expected to remain unchanged from the balances at the beginning of the year.

Budget estimates of manufacturing costs and operating expenses for the year are summarized as follows:

Balances of accounts receivable, prepaid expenses, and accounts payable at the end of the year are not expected to differ significantly from the beginning balances. Federal income tax of $294,000 on 20Y9 taxable income will be paid during 20Y9. Regular quarterly cash dividends of $1 per share are expected to be declared and paid in March, June, September, and December on 35,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $158,000 cash in May.

Required:

1. Prepare a budgeted income statement for 20Y9.

2. Prepare a budgeted balance sheet as of December 31, 20Y9.

9.

Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) on January 1, 2016. The annual reporting period ends December 31. The trial balance on January 1, 2018, follows (the amounts are rounded to thousands of dollars to simplify):

Transactions and events during 2018 (summarized in thousands of dollars) follow:

1. Borrowed $11 cash on March 1 using a short-term note.
2. Purchased land on March 2 for future building site; paid cash, $8.
3. Issued additional shares of common stock on April 3 for $30.
4. Purchased software on July 4, $11 cash.
5. Purchased supplies on account on October 5 for future use, $19.
6. Paid accounts payable on November 6, $12.
7. Signed a $20 service contract on November 7 to start February 1, 2019.
8. Recorded revenues of $174 on December 8, including $47 on credit and $127 collected in cash.
9. Recognized salaries and wages expense on December 9, $92 paid in cash.
10. Collected accounts receivable on December 10, $31.

Data for adjusting journal entries as of December 31:

11. Unrecorded amortization for the year on software, $7.
12. Supplies counted on December 31, 2018, $12.
13. Depreciation for the year on the equipment, $5.
14. Interest of $1 to accrue on notes payable.
15. Salaries and wages earned but not yet paid or recorded, $13.
16. Income tax for the year was $7. It will be paid in 2019.

1. 9-a. How much net income did H & H Tool, Inc., generate during 2018? What was its net profit margin?

2. 9-b. Is the company financed primarily by liabilities or stockholders’ equity?

3. 9-c. What is its current ratio?

6.

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

Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) on January 1, 2016. The annual reporting period ends December 31. The trial balance on January 1, 2018, follows (the amounts are rounded to thousands of dollars to simplify):

Transactions and events during 2018 (summarized in thousands of dollars) follow:

1. Borrowed $11 cash on March 1 using a short-term note.
2. Purchased land on March 2 for future building site; paid cash, $8.
3. Issued additional shares of common stock on April 3 for $30.
4. Purchased software on July 4, $11 cash.
5. Purchased supplies on account on October 5 for future use, $19.
6. Paid accounts payable on November 6, $12.
7. Signed a $20 service contract on November 7 to start February 1, 2019.
8. Recorded revenues of $174 on December 8, including $47 on credit and $127 collected in cash.
9. Recognized salaries and wages expense on December 9, $92 paid in cash.
10. Collected accounts receivable on December 10, $31.

Data for adjusting journal entries as of December 31:

11. Unrecorded amortization for the year on software, $7.
12. Supplies counted on December 31, 2018, $12.
13. Depreciation for the year on the equipment, $5.
14. Interest of $1 to accrue on notes payable.
15. Salaries and wages earned but not yet paid or recorded, $13.
16. Income tax for the year was $7. It will be paid in 2019.

1. 6-a. Prepare an income statement.

2. 6-b. Prepare the statement of retained earnings.

3. 6-c. Prepare the balance sheet.

5.

Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) on January 1, 2016. The annual reporting period ends December 31. The trial balance on January 1, 2018, follows (the amounts are rounded to thousands of dollars to simplify):

Transactions and events during 2018 (summarized in thousands of dollars) follow:

1. Borrowed $11 cash on March 1 using a short-term note.
2. Purchased land on March 2 for future building site; paid cash, $8.
3. Issued additional shares of common stock on April 3 for $30.
4. Purchased software on July 4, $11 cash.
5. Purchased supplies on account on October 5 for future use, $19.
6. Paid accounts payable on November 6, $12.
7. Signed a $20 service contract on November 7 to start February 1, 2019.
8. Recorded revenues of $174 on December 8, including $47 on credit and $127 collected in cash.
9. Recognized salaries and wages expense on December 9, $92 paid in cash.
10. Collected accounts receivable on December 10, $31.

Data for adjusting journal entries as of December 31:

11. Unrecorded amortization for the year on software, $7.
12. Supplies counted on December 31, 2018, $12.
13. Depreciation for the year on the equipment, $5.
14. Interest of $1 to accrue on notes payable.
15. Salaries and wages earned but not yet paid or recorded, $13.
16. Income tax for the year was $7. It will be paid in 2019.

5. Post the adjusting entries from requirement 4 and prepare an adjusted trial balance. (Enter your answers in thousands of dollars.)

3.

Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) on January 1, 2016. The annual reporting period ends December 31. The trial balance on January 1, 2018, follows (the amounts are rounded to thousands of dollars to simplify):

Transactions and events during 2018 (summarized in thousands of dollars) follow:

1. Borrowed $11 cash on March 1 using a short-term note.
2. Purchased land on March 2 for future building site; paid cash, $8.
3. Issued additional shares of common stock on April 3 for $30.
4. Purchased software on July 4, $11 cash.
5. Purchased supplies on account on October 5 for future use, $19.
6. Paid accounts payable on November 6, $12.
7. Signed a $20 service contract on November 7 to start February 1, 2019.
8. Recorded revenues of $174 on December 8, including $47 on credit and $127 collected in cash.
9. Recognized salaries and wages expense on December 9, $92 paid in cash.
10. Collected accounts receivable on December 10, $31.

Data for adjusting journal entries as of December 31:

11. Unrecorded amortization for the year on software, $7.
12. Supplies counted on December 31, 2018, $12.
13. Depreciation for the year on the equipment, $5.
14. Interest of $1 to accrue on notes payable.
15. Salaries and wages earned but not yet paid or recorded, $13.
16. Income tax for the year was $7. It will be paid in 2019.

3. Prepare an unadjusted trial balance. (Enter your answers in thousands of dollars.)

Chart of Entity Comparison

Question:

Choose four characteristics (Rows) and describe how two of the entity selections options differ (e.g. Basis Decrease from Operations in Sole Proprietor vs. C Corporation)

The following transactions were recorded in the General Journal of Hudson Supplies: General Journal of Hudson Supplies Date Details Debit Credit 1/11 Cash at bank 31,000 Inventory 10,000 Machinery 9,500 Motor vehicle 8,000 Capital 58,500 Commencement of business 4/11 Office equipment 12,600 GST Receivable 1,260 Accounts Payable Control 13,860 Purchased office equipment on credit from Real Services 8/11 Inventory 6,660 GST Receivable 666 Accounts Payable Control 7,326 Purchased inventory on credit from Simpson Pty Ltd 10/11 Cash at bank 7,150 Sales 6,500 GST Payable 650 Sold goods for cash Cost of goods sold 2,900 Inventory 2,900 Cost of sales 11/11 Wages 3,495 Cash at bank 3,495 Paid wages Accounts Payable Control 7,326 Cash at bank 7,326 Paid A/c Payable – Simpson Pty Ltd 6 LA023517 Assessment 3, FNSACC311, Ed 2 & 3 © New South Wales Technical and Further Education Commission, 2018 (TAFE NSW), Archive version 1, June 2018 21/11 Accounts Receivable Control 4,125 Sales 3,750 GST Payable 375 Sold goods on credit to Simic Ltd Cost of goods sold 800 Inventory 800 Cost of sales 25/11 Inventory 1,200 GST Receivable 120 Cash at bank 1,320 Purchased inventory for cash 29/11 Cash at bank 4,125 Accounts Receivable Control 4,125 Amount received from Simic Ltd Required For the above General Journal entries: 1. Post the transactions to the general ledger. 2. Balance each general ledger T – account. 3. Prepare a Trial Balanc

Explain some of the challenges faced by the channel manager in attempting to exercise leadership to motivate channel members in the interorganizational setting of the marketing channel?  You are expected to fully address the question fully.

The following transactions occurred in April at Steve’s Cabinets, a custom cabinet firm.

1. Purchased $80,000 of materials on account.

2. Issued $4,000 of supplies from the materials inventory.

3. Purchased $56,000 of materials on account.

4. Paid for the materials purchased in transaction (1) using cash.

5. Issued $68,000 in direct materials to the production department.

6. Incurred direct labor costs of $100,000, which were credited to Wages Payable.

7. Paid $106,000 cash for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing plant.

8. Applied overhead on the basis of 125 percent of $100,000 direct labor costs.

9. Recognized depreciation on manufacturing property, plant, and equipment of $50,000.

The following balances appeared in the accounts of Steve’s Cabinets for April.

Required:

a. Prepare journal entries to record the transactions.

b. Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold.