Edison Leasing leased high-tech electronic equipment to Manufacturers Southern on January 1, 2018. Edison purchased the equipment from International Machines at a cost of $139,107. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Prepare a lease amortization schedule and appropriate entries for Edison Leasing from the beginning of the lease through January 1, 2019. Edison’s fiscal year ends December 31.

1. 1/1/2018 Record the lease.

2. 1/1/2018 Record cash received

3. 4/1/2018 Record cash received.

4. 7/1/2018 Record cash received.

5. 10/1/2018 Record cash received.

6. 12/31/2018 Record interest receivable.

7. 1/1/2019 Record cash received.

Perez Bike Company makes the frames used to build its bicycles. During 2018, Perez made 24,000 frames; the costs incurred follow:

Perez has an opportunity to purchase frames for $118 each.

Additional Information

1. The manufacturing equipment, which originally cost $570,000, has a book value of $460,000, a remaining useful life of five years, and a zero salvage value. If the equipment is not used to produce bicycle frames, it can be leased for $69,000 per year.

2. Perez has the opportunity to purchase for $920,000 new manufacturing equipment that will have an expected useful life of five years and a salvage value of $71,000. This equipment will increase productivity substantially, reducing unit-level labor costs by 60 percent. Assume that Perez will continue to produce and sell 24,000 frames per year in the future.

3. If Perez outsources the frames, the company can eliminate 80 percent of the inventory holding costs.

Required

1. Determine the avoidable cost per unit of making the bike frames, assuming that Perez is considering the alternatives of making the product using the existing equipment or outsourcing the product to the independent contractor. Based on the quantitative data, should Perez outsource the bike frames?

2. Assuming that Perez is considering whether to replace the old equipment with the new equipment, determine the avoidable cost per unit to produce the bike frames using the new equipment and the avoidable cost per unit to produce the bike frames using the old equipment. Calculate the increase or decrease in the company's profit if the company uses new equipment.

3. Assuming that Perez is considering whether to either purchase the new equipment or outsource the bike frame, calculate.

DO IT! 6.2 (LO 2) The accounting records of Americo Electronics show the following data.

Compute cost of goods sold under different cost flow methods.

Determine cost of goods sold during the period under a periodic inventory system using (a) the FIFO method, (b) the LIFO method, and (c) the average-cost method. (Round unit cost to nearest tenth of a cent.)

On December 31, 2017, Ainsworth, Inc., had 800 million shares of common stock outstanding. Twenty five million shares of 6%, $100 par value cumulative, nonconvertible preferred stock were sold on January 2, 2018. On April 30, 2018, Ainsworth purchased 30 million shares of its common stock as treasury stock. Twelve million treasury shares were sold on August 31. Ainsworth issued a 5% common stock dividend on June 12, 2018. No cash dividends were declared in 2018. For the year ended December 31, 2018, Ainsworth reported a net loss of $165 million, including an after-tax loss from discontinued operations of $450 million. Required: 1. Compute Ainsworth's net loss per share for the year ended December 31, 2018. 2. Compute the per share amount of income or loss from continuing operations for the year ended December 31, 2018. 3. Prepare an EPS presentation that would be appropriate to appear on Ainsworth's 2018 and 2017 comparative income statements. Assume EPS was reported in 2017 as $0.65, based on net income (no discontinued operations) of $520 million and a weighted-average number of common shares of 800 million.

16. A developer of video game software has seven proposals for new games. Unfortunately,
the company cannot develop all the proposals because its budget for new projects
is limited to $950,000, and it has only 20 programmers to assign to new projects.
The financial requirements, returns, and the number of programmers required by each project are summarized in the following table. Projects 2 and 6 require specialized
programming knowledge that only one of the programmers has. Both of these
projects cannot be selected because the programmer with the necessary skills can be
assigned to only one of the projects. (Note: All dollar amounts represent thousands.)
Project Programmers Required Capital Required Estimated NPV
1 7 $250 $650
2 6 $175 $550
3 9 $300 $600
4 5 $150 $450
5 6 $145 $375
6 4 $160 $525
7 8 $325 $750
a. Formulate an ILP model for this problem.
b. Create a spreadsheet model for this problem and solve it.
c. What is the optimal solution?

1) Bakerston Company is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year:

The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 33,000 machine-hours and incur $231,000 in manufacturing overhead cost. The following transactions were recorded for the year:

• Raw materials were purchased, $315,000.

• Raw materials were requisitioned for use in production, $307,000 ($281,000 direct and $26,000 indirect).

• The following employee costs were incurred: direct labour, $377,000; indirect labour, $96,000; and administrative salaries, $172,000.

• Selling costs, $147,000.

• Factory utility costs, $10,000.                                                                    

• Depreciation for the year was $127,000 of which $120,000 is related to factory operations and $7,000 is related to selling and administrative activities.

• Manufacturing overhead was applied to jobs. The actual level of activity for the year was 34,000 machine-hours.

• Sales for the year totalled $1,253,000.

Required:

a. Prepare a schedule of cost of goods manufactured in good form.

b. Was the overhead underapplied or overapplied and by how much?

c. Prepare an income statement for the year in good form.

Sims Company, a manufacturer of tablet computers, began operations on January 1, 2017. Its cost and sales information for this year follows. Manufacturing costs Direct materials $ 40 per unit Direct labor $ 60 per unit Overhead costs for the year Variable overhead $ 4,400,000 Fixed overhead $ 6,600,000 Selling and administrative costs for the year Variable $ 750,000 Fixed $ 4,250,000 Production and sales for the year Units produced 110,000 units Units sold 80,000 units Sales price per unit $ 350 per unit

1. Prepare an income statement for the year using variable costing. 2. Prepare an income statement for the year using absorption costing. 3. Under what circumstance(s) is reported income identical under both absorption costing and variable costing?

Exact Photo Service purchased a new color printer at the beginning of Year 1 for $38,600. The printer is expected to have a four-year useful life and a $3,400 salvage value. The expected print production is estimated at $1,788,000 pages. Actual print production for the four years was as follows:

The printer was sold at the end of Year 4 for $3,550.

Required
a. Compute the depreciation expense for each of the four years, using double-declining-balance depreciation.

Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparing the master budget for the first quarter:

1. As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances:

2. Actual sales for December and budgeted sales for the next four months are as follows:

3. Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at December 31 are a result of December credit sales.

4. The company’s gross margin is 40% of sales. (In other words, cost of goods sold is 60% of sales.)

5. Monthly expenses are budgeted as follows: salaries and wages, $20,000 per month: advertising, $60,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $42,900 for the quarter.

6. Each month’s ending inventory should equal 25% of the following month’s cost of goods sold.

7. One-half of a month’s inventory purchases is paid for in the month of purchase; the other half is paid in the following month.

8. During February, the company will purchase a new copy machine for $1,500 cash. During March, other equipment will be purchased for cash at a cost of $72,500.

9. During January, the company will declare and pay $45,000 in cash dividends.

10. Management wants to maintain a minimum cash balance of $30,000. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.

Required:

Using the data above, complete the following statements and schedules for the first quarter:

1. Schedule of expected cash collections:

2-a. Merchandise purchases budget:

2-b. Schedule of expected cash disbursements for merchandise purchases:

3. Cash budget:

4. Prepare an absorption costing income statement for the quarter ending March 31.

5. Prepare a balance sheet as of March 31.

Mercedes, Co. has the following quarterly financial information. 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter Sales Revenue $ 925,800 $ 935,300 $ 933,600 $ 941,400 Cost of Goods Sold 305,700 318,300 317,900 323,100 Operating Expenses 248,900 260,300 258,500 262,600 Interest Expense 4,200 4,200 4,200 4,100 Income Tax Expense 85,500 88,400 88,400 90,900 Average Number of Common Shares Outstanding 799,030 794,064 795,670 809,000 Stock price when Q4 EPS released $ 24 Required: Calculate the gross profit percentage for each quarter. Calculate the net profit margin for each quarter. Calculate the EPS for each quarter. Calculate the Price/Earnings ratio at the end of the year.

• Required A
• Required B
• Required C
• Required D

Calculate the gross profit percentage for each quarter. (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

• Required A
• Required B
• Required C
• Required D

Calculate the net profit margin for each quarter. (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

• Required A
• Required B
• Required C
• Required D

Calculate the EPS for each quarter. (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

• Required A
• Required B
• Required C
• Required D

Calculate the Price/Earnings ratio at the end of the year. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

The condensed financial statements of Murawski Company for the years 2019 and 2020 are presented follows. (Amounts in thousands.)

Compute the following ratios for 2020 and 2019. (Round current ratio and invertory turnover ratio to 2 decimal places, e.g. 1.62 or 1.62% and all other answers to 1 decimal place, e.g. 1.6 or 1.6%.)

Sales and Purchase-Related Transactions for Seller and Buyer Using Perpetual Inventory System The following selected transactions were completed during April between Swan Company and Bird Company: Apr. 2. Swan Company sold merchandise on account to Bird Company, $53,100, terms FOB shipping point, 2/10, n/30. Swan paid freight of $1,555, which was added to the invoice. The cost of the goods sold was $36,260. 8. Swan Company sold merchandise on account to Bird Company, $43,850, terms FOB destination, 1/15, n/eom. The cost of the goods sold was $27,180. 8. Swan Company paid freight of $1,105 for delivery of merchandise sold to Bird Company on April 8. 12. Bird Company paid Swan Company for purchase of April 2. 23. Bird Company paid Swan Company for purchase of April 8. 24. Swan Company sold merchandise on account to Bird Company, $64,710, terms FOB shipping point, n/eom. The cost of the goods sold was $36,120. 25. Swan Company paid Bird Company a cash refund of $2,380 for damaged merchandise in the April 8 sale. Bird Company kept the merchandise. 26. Bird Company paid freight of $840 on April 24 purchase from Swan Company. 30. Bird Company paid Swan Company on account for purchase of April 24. Required: 1. Journalize the April transactions for Swan Company (the seller). If an amount box does not require an entry, leave it blank.

Marilyn Terrill is the senior auditor for the audit of Uden Supply Company for the year ended December 31, 20X4. In planning the audit, Marilyn is attempting to develop expectations for planning analytical procedures based on the financial information for prior years and her knowledge of the business and the industry, including these:

1. Based on economic conditions, she believes that the increase in sales for the current year should approximate the historical trend.
2. Based on her knowledge of industry trends, she believes that the gross profit percentage for 20X4 should be about 2 percent less than the percentage for 20X3.
3. Based on her knowledge of regulations, she is aware that the effective tax rate for the company for 20X4 has been reduced by 5 percent from that in 20X3.
4. Based on a review of the general ledger, she determined that average depreciable assets have increased by 10 percent. Purchases of equipment occurred relatively evenly throughout the year.
5. Based on her knowledge of economic conditions, she is aware that the effective interest rate on the company’s line of credit for 20X4 was approximately 12 percent. The average outstanding balance of the line of credit is $3,900,000. This line of credit is the company’s only interest-bearing debt.
6. Based on her discussions with management the advertising and sales commission percentages are expected to stay the same. Based on her knowledge of the industry, she believes that the amount of other expenses should be consistent with the trends from prior years.

Comparative income statement information for Uden Supply Company is presented in the below table.

Required:

b. Determine the expected amounts for 20X4 for each of the income statement items. (Round gross profit ratio and income taxes ratio to nearest four decimal places. Round other ratios to nearest two decimal places. Round all other intermediate computations to the nearest whole value. Enter your answers in thousands.)

c. Uden’s unaudited financial statements for the current year show a 30.82 percent gross profit rate. Assuming that this represents a misstatement from the amount that you developed as an expectation, calculate the estimated effect of this misstatement on net income before taxes for 20X4. (Enter your answers in thousands.)

Next

Crawford Corporation incurred the following transactions:

Purchased raw materials on account $46,300.

Raw Materials of $36,000 were requisitioned to the factory.

An analysis of the materials requisition slips indicated that $6,800 was classified as indirect materials.

Factory labor costs incurred were $59,900, of which $51,000 pertained to factory wages payable and $8,900 pertained to employer payroll taxes payable.

Time tickets indicated that $54,000 was direct labor and $5,900 was indirect labor.

Manufacturing overhead costs incurred on account were $80,500.

Depreciation on the company's office building was $8,100.

Manufacturing overhead was applied at the rate of 150% of direct labor cost. Goods costing $88,000 were completed and transferred to finished goods.

Finished goods costing $75,000 to manufacture were sold on account for $103,000.