Alan Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $38,600. Purchases since January 1 were $65,700; freight-in, $3,300; purchase returns and allowances, $2,200. Sales are made at 33 ¹/₃% above cost and totaled $99,900 to March 9. Goods costing $10,000 were left undamaged by the fire; remaining goods were destroyed.

Compute the cost of goods destroyed. (Round gross profit percentage and final answer to 0 decimal places, e.g. 15% or 125.)

Compute the cost of goods destroyed, assuming that the gross profit is 33 ¹/₃% of sales. (Round ratios for computational purposes to 5 decimal places, e.g. 78.72345% and final answer to 0 decimal places, e.g. 28,987.)

11

consider the following information for Evans, Inc. when the company entered bankruptcy proceedings:

Inventory with a book value of $240,000 and realizable value of $175,000 is security for notes payable of $145,000. The equipment secures the remaining notes payable. Expected realizable values of the assets are:

The prepaid expenses and goodwill have a realizable value of zero. The entire wages payable balance is a priority liability.

Required

Compute the estimated deficiency to unsecured creditors.

Do not use negative signs with any of your answers below.

1/ On January 1, 2018, Badger Inc. adopted the dollar-value LIFO method. The inventory cost on this date was $100,300. The ending inventory, valued at year-end costs, and the relative cost index for each of the next three years is below:

What inventory balance would Badger report on its 12/31/2020 balance sheet?

Multiple Choice

• $129,050.

• $130,895.

• $154,860.

• None of these answer choices are correct.

2/ Nu Company reported the following pretax data for its first year of operations.

What is Nu's net income if it elects LIFO?

Multiple Choice

• $546.

• $910.

• $520.

• $312.

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Chicago Furniture Company produces combination desk and chair sets for the elementary schools in the Midwest. As the second quarter is progressing it is important for the controller to complete a budget for the third quarter. The sales department manager has provided the following forecast.

• In order to ensure Just-in-Time (JIT) deliveries are maintained in accordance with the needs of the schools Chicago Furniture Company has a standing policy that the inventory at the end of each month must be equal to 40% of the following month’s forecasted sales. On July 1st there will be 3,200 desk combos in inventory.
• The building of each desk combo requires 12 board feet of pine planks which cost $0.70 per foot. In order to maintain proper inventory for building the desk combos the department must have 30% of the next month’s production requirements.

Using Microsoft Excel, create a spreadsheet for the production and material purchases budget for the 3rd Quarter.

Exercise 7-7 Aging of receivables method LO P3

Daley Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following aging of receivables analysis.

a. Complete the below table to calculate the estimated balance of Allowance for Doubtful Accounts using the aging of accounts receivable method.
b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $3,600 credit.
c. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $100 debit.

Section 301 of the Sarbanes-Oxley Act requires that public companies have an audit committee. Independent auditors are increasingly involved with audit committees.

Select all of the following that are functions of the audit committee: (Select all that apply.)

• Selection of the independent auditor, discussion of audit fee with the auditor, and review of the auditor's engagement letter.

• Review of the independent auditor's overall audit plan (scope, purpose, and general audit procedures).

• Review of the annual financial statements before submission to the full board of directors for approval.

• Review of the results of the auditor's examination including experiences, restrictions, cooperation received, findings, and recommendations. Matters that the auditor believes should be brought to the attention of the directors or shareholders should be considered.

• Review of the independent auditor's evaluation of the company's internal control systems.

• Review of the company's accounting, financial, and operating controls.

• Review of the reports of internal audit staff.

• Review of interim financial reports to shareholders before the board of directors approves them.

• Review of the audit workpapers to ensure that the audit was conducted properly.

• Review of the makeup of the board of directors to ensure that they are qualified to oversee the audit process.

• Review of the qualifications of the audit staff to ensure that they are qualified to conduct the audit.

• Review of the applicable audit standards to ensure that they apply to the audited company.

1. Cost Information and FIFO

   Gunnison Company had the following equivalent units schedule and cost information for its Sewing Department for the month of December:

   	Direct Materials		Conversion Costs
   Units started and completed	45,000		45,000
   Add: Units in beginning work in process ×
   Percentage complete:
   7,000 × 0% direct materials	—
   7,000 × 50% conversion Costs			3,500
   Add: Units in ending work in process ×
   Percentage complete:
   12,000 × 100% direct materials	12,000		—
   12,000 × 35% conversion Costs	—		4,200
   Equivalent units of output	57,000		52,700
   Costs:
   Work in process, December 1:
   Direct Material			$91,000
   Conversion Costs			21,000
   Total work in process			$112,000
   Current costs:
   Direct Material			$798,000
   Conversion Costs			263,500
   Total current costs			$1,061,500

   Required:

   1. Calculate the unit cost for December, using the FIFO method.
   $ per equivalent unit

   2. Calculate the cost of goods transferred out, calculate the cost of EWIP, and reconcile the costs assigned with the costs to account for.

   Cost of goods transferred out	$
   Cost of EWIP	$

   Cost to account for:
   BWIP	$
   Current (December)
   Total	$

   3. What if you were asked for the unit cost from the month of November? Calculate November's unit cost.
   $ per equivalent unit

Discuss thoroughly at least 3 benefits and 3 risks of the fast-paced move to automation in accounting using at least one specific technology. Please do not include topics already discussed by you in this quiz or the last one.

Metlock Company provides the following selected information related to its defined benefit pension plan for 2017.
Compute pension expense.

Prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 2017. Preparation of a pension worksheet is not required. Benefits paid in 2017 were $37,500

Kumquat Farms Ltd. has decided to acquire a kumquat picking machine. The cost of the picking machine is $45,000, and it has an economic life of 10 years. At the end of seven years, the market (salvage) value is estimated to be $11,000. Seven years is the time horizon for analysis. The owner of Kumquat Farms Ltd. has discussed this acquisition with his financial services conglomerate. It has agreed to lend him the purchase price at 10 percent per year, payable in equal blended payments at the end of each year, for seven years. An alternative method of financing the equipment would be to lease it from the local leasing store. Annual lease payments, payable at the beginning of each of the next seven years, would be $7,750. This would be considered an operating lease. The equipment has a CCA of 20 percent. The benefits of any tax shields are realized at the end of each year. The company’s tax rate is 25 percent. Kumquat Farms’ cost of capital is 16 percent. a-1. Calculate PV cost of lease alternative. (Do not round intermediate calculations. Round the final answer to nearest whole dollar. Input the answer as positive value.) PV cost $ Not attempted a-2. Calculate PV cost of borrowing/purchase alternative. (Do not round intermediate calculations. Round the final answer to nearest whole dollar. Input the answer as positive value.) PV cost $ Not attempted b. Should Kumquat Farms Ltd. lease or buy the picking machine? Lease Borrow/Purshase

One item is omitted in each of the following summaries of balance sheet and income statement data for three different corporations, A, B, and C.

Determine the amounts of the missing items.

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 $13 cash on March 1 using a short-term note.
2. Purchased land on March 2 for future building site; paid cash, $7.
3. Issued additional shares of common stock on April 3 for $34.
4. Purchased software on July 4, $12 cash.
5. Purchased supplies on account on October 5 for future use, $17.
6. Paid accounts payable on November 6, $14.
7. Signed a $30 service contract on November 7 to start February 1, 2019.
8. Recorded revenues of $140 on December 8, including $30 on credit and $110 collected in cash.
9. Recognized salaries and wages expense on December 9, $75 paid in cash.
10. Collected accounts receivable on December 10, $14.

Data for adjusting journal entries as of December 31:

11. Unrecorded amortization for the year on software, $5.
12. Supplies counted on December 31, 2018, $11.
13. Depreciation for the year on the equipment, $7.
14. Interest of $2 to accrue on notes payable.
15. Salaries and wages earned but not yet paid or recorded, $13.
16. Income tax for the year was $9. It will be paid in 2019.

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

The following trial balance was extracted from the books of Big Bamboo Limited on December 31, 2020               

Additional Information:

1.      Stock at December 31, 2020 $80,000

2.      Payment of $10,100 for insurance relates to the first quarter of 2021.

3.      Wages owing $4,800

4.      Provision for bad debt is to be increased to $1,500

5.      Depreciation on fixed assets:

-          Motor vehicles 10% on cost

-          Buildings 15 % on the reducing balance method

Required:

Prepare for Big Bamboo Limited:

(a)    An income statement for the year ended December 31, 2020                      

(b)   A statement of financial position as at December 31, 2020                          

The Harding Corporation has $50 million of bonds outstanding that were issued at a coupon rate of 10.25 percent seven years ago. Interest rates have fallen to 9 percent. Preston Alter, the vice-president of finance, does not expect rates to fall any further. The bonds have 18 years left to maturity, and Preston would like to refund the bonds with a new issue of equal amount also having 18 years to maturity. The Harding Corporation has a tax rate of 25 percent. The underwriting cost on the old issue was 2.5 percent of the total bond value. The underwriting cost on the new issue will be 1.8 percent of the total bond value. The original bond indenture contained a five-year protection against a call, with an 8 percent call premium starting in the sixth year and scheduled to decline by one-half percent each year thereafter (Consider the bond to be seven years old for purposes of computing the premium). Use Appendix D. (Round "PV factor" to 3 decimal places.) a. Compute the discount rate. (Round the final answer to 2 decimal places.) Discount rate 6.75 6.75 Correct % b. Calculate the present value of total outflows. (Do not round intermediate calculations. Enter the answers in whole dollars, not in millions. Round the final answer to nearest whole dollar.) Total outflows $ 2812500 2812500 Incorrect c. Calculate the present value of total inflows. (Do not round intermediate calculations. Enter the answers in whole dollars, not in millions. Round the final answer to nearest whole dollar.) Total inflows $ 4801477 4801477 Correct d. Calculate the net present value. (Do not round intermediate calculations. Round the final answer to nearest whole dollar.) Net present value $ 1365193 1365193 Incorrect e. Should the Harding Corporation refund the old issue? Yes No

Taxes (LO 5.7)

Laura is a single taxpayer living in New Jersey with adjusted gross income for the 2018 tax year of $35,550. Laura's employer withheld $3,300 in state income tax from her salary. In April of 2018, she pays $600 in additional state taxes for her prior year's tax return. The real estate taxes on her home are $1,750 for 2018, and her personal property taxes, based on the value of the property, amount to $375. Also, she paid $75 for state gasoline taxes for the year.

Complete the taxes section of Schedule A below to report Laura's 2018 deduction for taxes assuming she chooses to deduct state and local income taxes.

If an amount is zero, enter "0". Enter all amounts as positive numbers.