What was the key control weakness in this case?

Many small businesses cannot afford to hire enough people for adequate separation of duties. What can they do to compensate for this?

Pearl Products Limited of Shenzhen, China, manufactures and distributes toys throughout Southeast Asia. Three cubic centimeters (cc) of solvent H300 are required to manufacture each unit of Supermix, one of the company’s products. The company now is planning raw materials needs for the third quarter, the quarter in which peak sales of Supermix occur. To keep production and sales moving smoothly, the company has the following inventory requirements:

1. The finished goods inventory on hand at the end of each month must equal 3,000 units of Supermix plus 25% of the next month’s sales. The finished goods inventory on June 30 is budgeted to be 13,250 units.

2. The raw materials inventory on hand at the end of each month must equal one-half of the following month’s production needs for raw materials. The raw materials inventory on June 30 is budgeted to be 63,375 cc of solvent H300.

3. The company maintains no work in process inventories.

A monthly sales budget for Supermix for the third and fourth quarters of the year follows.

Required:

1. Prepare a production budget for Supermix for the months July, August, September, and October.

3. Prepare a direct materials budget showing the quantity of solvent H300 to be purchased for July, August, and September, and for the quarter in total.

20 idea development social entrepreneurship (non profit ) for poor people

During 2017, the following transactions were recorded by the Port Hudson Community Hospital, a private sector not-for-profit institution.

1. Gross charges for patient services, all charged to Patient Accounts Receivable, amounted to $1,830,000. Contractual adjustments with third-party payers amounted to $490,000.
2. Charity services, not included in transaction 1, would amount to $72,000, had billings been made at gross amounts.
3. Other revenues, received in cash, were parking lot, $23,000; cafeteria, $39,500; gift shop, $6,500.
4. Cash gifts for cancer research amounted to $28,550 for the year. During the year, $55,400 was expended for cancer research technicians’ salaries (debit Operating Expense—Salaries and Benefits).
5. Mortgage bond payments amounted to $54,800 for principal and $31,600 for interest. Assume unrestricted resources are used.
6. During the year, the hospital received, in cash, unrestricted contributions of $46,200 and unrestricted income of $38,750 from endowment investments. (It is the hospital’s practice to treat unrestricted gifts as nonoperating income.)
7. New equipment, costing $158,000, was acquired using donor-restricted cash that was on hand at the beginning of the year. Port Hudson’s policy is to record all equipment in the unrestricted net asset class.
8. An old piece of lab equipment that originally cost $80,000 and that had an undepreciated cost of $16,000 was sold for $10,000 cash.
9. At the end of 2017, pledges received in the amount of $135,000 were intended to be paid and used for unrestricted purposes in 2018.
10. Cash contributions were received as follows: temporarily restricted for purposes other than plant, $43,750; temporarily restricted for plant acquisition, $136,000.
11. Bills totaling $225,300 were received for the following items:

12. Depreciation of plant and equipment amounted to $189,000.
13. Cash payments on vouchers payable amounted to $176,100. Another $806,900 was expended on wages and benefits. Cash collections of patient accounts receivable amounted to $1,186,000.
14. Closing entries were prepared.

Required:
a. Record the transactions in the general journal of the Port Hudson Community Hospital.
b. Prepare a Statement of Operations for the Port Hudson Community Hospital for the year ended December 31, 2017.

If you could show how you got the answers, that would be great! Thanks!

You set up your own business in merchandising sector. You lease a space of 6,000 square feet to open a luxury watch shop.

The following is minimum information regarding the business:

- Specific sub-sector: Merchandising sector.

-   Business model: buying and selling luxury watches.

-   Investment by owner: $1,000,000

- You hire a shop manager, two accounting staffs who also keep the merchandise, one security officer, and 8 full-time sales assistants.

-   Business costs/expenses should have at least the following: cost of merchandise sold, rent expense, salary, utilities expense, advertising expense, interest expense, and miscellaneous expenses.

1. 1/1/2019 : Opened the business, invested $1,000,000 cash in the business.
2. 1/1/2019; bought a building for the business purpose for 100,000 cash. The building has a useful economic life of 10 years.
3. 1/1/2019; bought store and office fixture for $20000 cash.

4. 1/1/2019: purchased 100 luxury watches (Inventory) for $200,000 with $100,000 cash payment, the remaining amount payable on 2/1/2020. ( each watch costs $2,000)
5. 3/1/2019: purchased 50 luxury watches (Inventory) for $250,000. Each watch costs $5,000.
6. 4/1/2019: purchased 40 luxury watches (Inventory) for $240,000. Each cost $6,000.

7. 6/1/2019: Sold 130 watched for $1,300,000. Of which $300,000 cash was received at the time of sale. The remaining amount to be received on 5/2/2020.

8. 7/1/2019: paid $1,200 in advance for 12 months’ property insurance
9. 8/1/2019: borrowed $500,000 from a local Chase bank. Inrerest rate is 12%/year. Interest is paid every 6 months- the first payment date is 2/1/2020. Principal is paid on 8/1/2020.
10. 9/1/2019: to expand business, you rent a showroom in the next building. Paid $24,000 cash in advance for 12 month’s rent.

11. 12/31/2019: Paid 2019 utilities expense, advertising expense, and miscellaneous expense for $5000, $15,000, and $4,000, respectively.

12. Salary is paid on the last day of each month. Each month’s salary expense is $20,000.

Notes:

13. On 12/31/2019: Physical inventory showed that there were 60 luxury watches on hand at the end of the period. The company used periodic inventory system, and used FIFO costing method.
14. Your business used straight-line depreciation method for all fixed assets.
15. Ignore tax.

16. Prepare financial statements on 12/31/2019.

identify a large company that is currently accumulating a cash hoard, evaluate how the company can use the cash flow statement to project efficient uses of the cash hoard it has accumulated. Suggest at least two (2) advantages and two (2) disadvantages of companies accumulating cash hoards. Provide a rationale for your suggestion.

What are the major advantages and disadvantages of the single-step form of income statement compared to the multiple-step income statement? Can a business incur a gross profit but incur a loss?

Straight-Line, Declining-Balance, and Sum-of-the-Years'-Digits Methods

A light truck is purchased on January 1 at a cost of $38,730. It is expected to serve for eight years and have a salvage value of $5,690. Calculate the depreciation expense for the first and third years of the truck’s life using the following methods. If required, round your answers to the nearest cent.

Cost of Production Report: Weighted average method

Sunrise Coffee Company roasts and packs coffee beans. The process begins in the Roasting Department. From the Roasting Department, the coffee beans are transferred to the Packing Department. The following is a partial work in process account of the Roasting Department at December 31:

Required:

Prepare a cost of production report, using the weighted average method, and identify the missing amounts for Work in Process—Roasting Department. Assume that direct materials are placed in process during production. If required, round your cost per equivalent unit answer to two decimal places.

Overhead Application, Activity-Based Costing, Bid Prices

Firenza Company manufactures specialty tools to customer order. Budgeted overhead for the coming year is:

Previously, Sanjay Bhatt, Firenza Company's controller, had applied overhead on the basis of machine hours. Expected machine hours for the coming year are 50,000. Sanjay has been reading about activity-based costing, and he wonders whether or not it might offer some advantages to his company. He decided that appropriate drivers for overhead activities are purchase orders for purchasing, number of setups for setup cost, engineering hours for engineering cost, and machine hours for other. Budgeted amounts for these drivers are 5,000 purchase orders, 500 setups, and 2,500 engineering hours.

Sanjay has been asked to prepare bids for two jobs with the following information:

The typical bid price includes a 40 percent markup over full manufacturing cost.

1. Calculate a plantwide rate for Firenza Company based on machine hours.
$ per machine hour

What is the bid price of each job using this rate?

2. Calculate activity rates for the four overhead activities

What is the bid price of each job using these rates?

Brewster Company manufactures elderberry wine. Last year, Brewster earned operating income of $193,000 after income taxes. Capital employed equaled $2.9 million. Brewster is 45 percent equity and 55 percent 10-year bonds paying 6 percent interest. Brewster’s marginal tax rate is 40 percent. The company is considered a fairly risky investment and probably commands a 12-point premium above the 5 percent rate on long-term Treasury bonds.

Required:

Use a spreadsheet to perform your calculations and round all interim and percentage figures to four decimal places. If the EVA is negative, enter your answer as a negative amount.

1. No changes are made; calculate EVA using the original data.

$ ????

2. Sugar will be used to replace another natural ingredient (atomic number 33) in the elderberry wine. This should not affect costs but will begin to affect the market assessment of Brewster Company, bringing the premium above long-term Treasury bills to 10 percent the first year and 7 percent the second year. Calculate revised EVA for both years.

3. Brewster is considering expanding but needs additional capital. The company could borrow money, but it is considering selling more common stock, which would increase equity to 80 percent of total financing. Total capital employed would be $4,000,000. The new after-tax operating income would be $390,000. Using the original data, calculate EVA. Then, recalculate EVA assuming the materials substitution described in Requirement 2. New after-tax income will be $390,000, and in Year 1, the premium will be 10 percent above the long-term Treasury rate. In Year 2, it will be 7 percent above the long-term Treasury rate. (Hint: You will calculate three EVAs for this requirement.)

Marc Goudreau, administrator of Clearwater Hospital, was puzzled by the prior month’s reports. “Every month, it’s anyone’s guess whether the lab will show a profit or a loss. Perhaps the only answer is to increase our lab fees again.”

“We can’t,” replied Rhoda Groves, the controller. “There are still a lot of complaints about the last increase, particularly from the insurance companies and government health units. They’re now paying only about 86% of what we bill. I’m beginning to think the problem is on the cost side.”

To determine if the Clearwater lab costs are in line with those of other hospital labs, Goudreau has asked you to evaluate the costs for the past month. Groves has provided you with the following information:

1. Two basic types of tests are performed in the lab—smears and blood tests. During the past month, 2,100 smears and 1,500 blood tests were performed in the lab.
2. Small glass plates are used in both types of tests. During the past month, the hospital purchased 22,000 plates at a cost of $71,808. This cost is net of a 4% purchase discount. A total of 1,200 of these plates were unused at the end of the month; no plates were on hand at the beginning of the month.
3. During the past month, 1,760 hours of labour time were used in performing smears and blood tests. The cost of this labour time was $18,392.00.
4. The lab’s variable overhead cost last month totalled $11,000.
5. Fixed overhead cost last month totalled $14,000.

Clearwater Hospital has never used standard costs. By searching industry literature, however, you have determined the following nationwide averages for hospital labs:

Required:

1. Compute the materials price variance for the plates purchased last month, and compute a materials quantity variance for the plates used last month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

2-a. Compute a labour rate variance and a labour efficiency variance for the lab. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Do not round intermediate calculation and round your final answers to 1 decimal place.)

3-a. Compute the variable overhead spending and efficiency variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

4. Compute the fixed overhead budget and volume variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Carlsville Company, which began operations in 2017, invests its idle cash in trading securities. The following transactions are from its short-term investments in trading securities.

2017

2018

2019

Required:
Prepare journal entries to record these short-term investment activities for the years shown. On December 31 of each year, prepare the adjusting entry to record any necessary fair value adjustment for the portfolio of trading securities. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations.)

Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows:

Parker Plastic had the following actual results for the past year:

Required:
1, 2, 3, & 4. Prepare the journal entry to record Parker Plastic's direct materials, direct labor, variable overhead, fixed overhead costs and related variances. Assume the company purchases raw materials as needed and does not maintain any ending inventories.

1. Record entry for direct materials costs and variances.

2. Record entry for direct labor costs and variances.

3. Record the entry for variable overhead costs and variances.

4. Record the entry for fixed overhead costs and variances.

Exercise 10-18

Pronghorn Company purchased an electric wax meter on April 30, 2017, by trading in its old gas model and paying the balance in cash. The following data relate to the purchase.

Prepare the journal entries necessary to record this exchange, assuming that the exchange (a) has commercial substance, and (b) lacks commercial substance. Pronghorn’s fiscal year ends on December 31, and depreciation has been recorded through December 31, 2016. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)