Questions

1. Jones Company is a merchandise company that uses the perpetual inventory method.  The business prepares financial statements on a monthly basis and has the following adjusted trial balance at January 31:

8,000       Cash                                        10,000       Notes payable (all long-term)

11,000     Accounts receivable                   42,600       Owner’s capital, January 1

22,500     Merchandise inventory                4,000        Owner’s withdrawals

34,200     Equipment                                314,700    Sales revenue

7,400       Accumulated depreciation            230,400     Cost of goods sold

5,800       Accounts payable                       71,400      Operating expenses

1,000       Wages payable

1. Prepare a MUTLIPLE STEP income statement for Jones Company IN GOOD FORMAT for January.

2. Prepare a statement of owner’s equity for Jones Company IN GOOD FORMAT for January.

C. Prepare a classified balance sheet for Jones Company IN GOOD FORMAT for January.

2. A business that uses the perpetual inventory method has the following financial data regarding its merchandise inventory for January:

      Beginning inventory                    20 units at $5.00 each       

      January 1:  Purchase                    50 units at $5.50 each

      January 5:  Purchase                    60 units at $6.00 each

      Ending inventory                         35 units

All January sales occurred after January 5.

1. Determine COST OF GOODS SOLD for January under FIFO.
2. Determine COST OF GOODS SOLD for January under LIFO.

Discuss the implication for auditors, clients public and regulations in matters such as: 1. the approach to auditing, 2. Regulations on auditing, 3. Forms of audit reports, 4. Communication of audit matters

Sharp Company manufactures a product for which the following standards have been set:

During March, the company purchased direct materials at a cost of $56,610, all of which were used in the production of 2,875 units of product. In addition, 4,700 direct labor-hours were worked on the product during the month. The cost of this labor time was $37,600. The following variances have been computed for the month:

Required:

1. For direct materials:

a. Compute the actual cost per foot of materials for March.

6.00

b. Compute the price variance and the spending variance.

2. For direct labor:

a. Compute the standard direct labor rate per hour.

b. Compute the standard hours allowed for the month’s production.

c. Compute the standard hours allowed per unit of product.

Case Study: Property and Equipment - Substantive procedures

Your firm is auditing the financial statement of Newthorpe Manufacturing Ltd for the year ended 30 June 2015. You have been assigned to the audit of the company's property, plant and equipment, which includes freehold land and buildings, plant and machinery, fixtures and fittings and motor vehicles.

The freehold land and buildings were purchased 12 years earlier (in July 2003) for $2 million. At the date of purchase, a valuer estimated that both the land and the buildings each had a value of $1 million. Depreciation has been charged since 2003 on the building at 2% per year on cost. At 30 June 2015 the accumulated depreciation is $200,000 before the revaluation.

A qualified valuer who is not an employee of the company, valued the land and buildings at $5 million ($2.9 million for the land and $2.1 million for the buildings) These values will be incorporated into the financial statements as at 30 June 2015.

The partner in charge of the audit is concerned at the large increase in the value of the land and buildings since they were purchased. She has asked you to check the reliability and accuracy of the valuation. she suggest that ASA 620 Using the work of an Auditor's Expert (ISA 620) could help you when carrying out this work.

In addition, you have been asked to verify the existence and completeness of plant and machinery recorded in the company's computerised non-current asset register, which records the description of each non-current asset, the original cost, the depreciation charge and the accumulated depreciation

Required;

1. Describe the audit work your will carry out to check whether the valuer has provided an accurate and independent valuation of the land and buildings

2. Describe the audit work you will carry out to check the existence and completeness of plant and machinery, as recorded in the company's non-current asset register.

O

ld Camp Company manufactures awnings for its own line of tents. The company is currently operating at capacity and has received an offer from one of its suppliers to make the 12,000 awnings it needs for $22 each. Old Camp’s costs to make the awning are $10 in direct materials and $6 in direct labor. Variable manufacturing overhead is 75 percent of direct labor. If Old Camp accepts the offer, $40,000 of fixed manufacturing overhead currently being charged to the awnings will have to be absorbed by other product lines.  

Required:
1. Complete the incremental analysis for the decision to make or buy the awnings in the table provided below.

  

2. Should Old Camp continue to manufacture the awnings or should they purchase the awnings from the supplier?

3. Assuming that the capacity released by purchasing the awnings allowed Old Camp to record a profit of $22,000, should Old Camp continue to manufacture or purchase the awnings?

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

Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows:

The planning budget for March was based on producing and selling 32,000 units. However, during March the company actually produced and sold 37,000 units and incurred the following costs:

1. Purchased 160,000 pounds of raw materials at a cost of $7.40 per pound. All of this material was used in production.

2. Direct laborers worked 67,000 hours at a rate of $17 per hour.

3. Total variable manufacturing overhead for the month was $422,100.

1. What raw materials cost would be included in the company’s planning budget for March?

2. What raw materials cost would be included in the company’s flexible budget for March?

3. What is the materials price variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input all amounts as positive values.)

4. What is the materials quantity variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input all amounts as positive values.)

Diaz Company incurred the following costs during the year 2020.

Determine the amount of research and development costs that would be disclosed in the financial statements of Diaz company for the year 2020.

Note: Round your answer to the nearest whole dollar.

Hi can you assist me with this. Can you explain each of the similarities and differences in maybe a short paragraph. Thank you so

3) Provide THREE ways in which Governmental entities are similar to For Profit Entities and
THREE ways in which they are different (30 pts )

What arguments can be given that the historical cost framework should be abandoned?

PA11-3 Comparing, Prioritizing Multiple Projects [LO 11-1, 11-2, 11-3, 11-6] Hearne Company has a number of potential capital investments. Because these projects vary in nature, initial investment, and time horizon, management is finding it difficult to compare them. Assume straight line depreciation method is used. Project 1: Retooling Manufacturing Facility This project would require an initial investment of $5,600,000. It would generate $1,000,000 in additional net cash flow each year. The new machinery has a useful life of eight years and a salvage value of $1,180,000. Project 2: Purchase Patent for New Product The patent would cost $3,925,000, which would be fully amortized over five years. Production of this product would generate $785,000 additional annual net income for Hearne. Project 3: Purchase a New Fleet of Delivery Trucks Hearne could purchase 25 new delivery trucks at a cost of $190,000 each. The fleet would have a useful life of 10 years, and each truck would have a salvage value of $6,500. Purchasing the fleet would allow Hearne to expand its customer territory resulting in $950,000 of additional net income per year. Required: 1. Determine each project's accounting rate of return. (Round your answers to 2 decimal places.) 2. Determine each project's payback period. (Round your answers to 2 decimal places.) 3. Using a discount rate of 10 percent, calculate the net present value of each project. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round your intermediate calculations to 4 decimal places and final answers to 2 decimal places.) 4. Determine the profitability index of each project and prioritize the projects for Hearne. (Round your intermediate calculations to 2 decimal places. Round your final answers to 4 decimal places.)

Adelphi Company purchased a machine on January 1, 2017, for $70,000. The machine was estimated to have a service life of ten years with an estimated residual value of $5,000. Adelphi sold the machine on January 1, 2021 for $28,000. Adelphi uses the double declining method for depreciation. Using this information, how much is the gain or (loss) for the equipment sale entry made on January 1, 2021. Enter a loss as a negative number.

Bond Premium, Entries for Bonds Payable Transactions

Campbell Inc. produces and sells outdoor equipment. On July 1, Year 1, Campbell issued $15,000,000 of 10-year, 10% bonds at a market (effective) interest rate of 8%, receiving cash of $17,038,598. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.

Required:

If an amount box does not require an entry, leave it blank.

1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.

2. Journalize the entries to record the following:

a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)

b. The interest payment on June 30, Year 2, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)

3. Determine the total interest expense for Year 1. Round to the nearest dollar.
$

4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest?
Yes

5. Compute the price of $17,038,598 received for the bonds by using Exhibit 5 and Exhibit 7. (Round to the nearest dollar.) Your total may vary slightly from the price given due to rounding differences.

Return on Investment, Margin, Turnover Ready Electronics is facing stiff competition from imported goods. Its operating income margin has been declining steadily for the past several years. The company has been forced to lower prices so that it can maintain its market share. The operating results for the past 3 years are as follows: Year 1 Year 2 Year 3 Sales $14,000,000 $ 9,500,000 $ 9,000,000 Operating income 1,200,000 1,295,000 945,000 Average assets 15,000,000 15,000,000 17,750,000 For the coming year, Ready's president plans to install a JIT purchasing and manufacturing system. She estimates that inventories will be reduced by 70% during the first year of operations, producing a 20% reduction in the average operating assets of the company, which would remain unchanged without the JIT system. She also estimates that sales and operating income will be restored to Year 1 levels because of simultaneous reductions in operating expenses and selling prices. Lower selling prices will allow Ready to expand its market share. (Note: Round all numbers to two decimal places.) Required: 1. Compute the ROI, margin, and turnover for Years 1, 2, and 3. Year 1 Year 2 Year 3 ROI % % % Margin % % % Turnover 2. Conceptual Connection: Suppose that in Year 4 the sales and operating income were achieved as expected, but inventories remained at the same level as in Year 3. Compute the expected ROI, margin, and turnover. ROI % Margin % Turnover Why did the ROI increase over the Year 3 level? 3. Conceptual Connection: Suppose that the sales and net operating income for Year 4 remained the same as in Year 3 but inventory reductions were achieved as projected. Compute the ROI, margin, and turnover. ROI % Margin % Turnover Why did the ROI exceed the Year 3 level? 4. Conceptual Connection: Assume that all expectations for Year 4 were realized. Compute the expected ROI, margin, and turnover. ROI % Margin % Turnover Why did the ROI increase over the Year 3 level?

Assume Interstellar Communications Ltd.’s balance sheet includes the following assets under Property,
Plant, and Equipment: Land, Buildings, and Motor-Carrier Equipment. Interstellar Communications has
a separate accumulated depreciation account for each of these assets except land. Further, assume
that Interstellar completed the following transactions:
• Jan 2: Sold motor-carrier equipment with accumulated depreciation of $67,000 (cost of
$130,000) for $70,000 cash. Purchased similar new equipment with a cash price of $176,000.
• July 3: Sold a building that had cost $650,000 and had accumulated depreciation of $145,000
through December 31 of the preceding year. Depreciation is computed on a straight-line basis.
The building had a 40-year useful life and a residual value of $250,000. Interstellar received
$100,000 cash and a $400,000 note receivable.
• Oct 29: Purchased land and a building for a single price of $420,000. An independent appraisal
valued the land at $150,000 and the building at $300,000.
• Dec 31: Recorded depreciation as follows: New motor-carrier equipment has an expected useful
life of six years and an estimated residual value of 5% of cost. Depreciation is computed on the
double-diminishing-balance method. Depreciation on buildings is computed by the straight-line
method. The new building carries a 40-year useful life and a residual value equal to 10% of its
cost.
1. Please journalize each of the transactions from Jan 2nd – Dec 31st.