Waving Through the Window

You and your two roommates are starting a window washing service to help put yourself through college. There are two other well-established window washing services in your area.

• Should you set your price higher or lower than that of the competition? Justify your answer.

One roommate believes the most important objective in setting prices for the business is to generate a large profit, while keeping an eye on your competitors’ prices; the other roommate believes it is important to maximize sales and set prices according to what your customers expect to pay.

• Who is right and why?
• How do the number of competitors in the market in this situation affect YOUR pricing strategy?

Here are comparative statement data for Wildhorse Company and Sandhill Company, two competitors. All balance sheet data are as of December 31, 2022, and December 31, 2021.

(a)

Prepare a vertical analysis of the 2022 income statement data for Wildhorse Company and Sandhill Company. (Round all ratios to 1 decimal place, e.g. 2.5%.)

(b1)

Compute the 2022 return on assets and the return on common stockholders’ equity for both companies. (Round all ratios to 1 decimal place, e.g. 2.5%.)

Use 3 paragraphs: Briefly describe and distinguish the 'planning' and 'control' aspects of management accounting. Give examples of how management accounting information is used for both planning and control purposes in your organization.

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.

-Capital structure: must have both Investment by owner ($1,000,000) and Bank loan.

Set up an effective Internal Control System for the business using 5 different internal control elements.

Activity-Based Costing for a Service Company Crosswinds Hospital plans to use activity-based costing to assign hospital indirect costs to the care of patients. The hospital has identified the following activities and activity rates for the hospital indirect costs: Activity Activity Rate Room and meals $237 per day Radiology $334 per image Pharmacy $53 per physician order Chemistry lab $90 per test Operating room $740 per operating room hour The activity usage information associated with the two patients is as follows: Abel Putin Cheryl Umit Number of days 3 days 11 days Number of images 4 images 5 images Number of physician orders 6 orders 8 orders Number of tests 3 tests 6 tests Number of operating room hours 4 hours 7 hours a. Determine the activity cost associated with each patient.

Single Plantwide and Multiple Production Department Factory Overhead Rate Methods and Product Cost Distortion Pineapple Motor Company manufactures two types of specialty electric motors, a commercial motor and a residential motor, through two production departments, Assembly and Testing. Presently, the company uses a single plantwide factory overhead rate for allocating factory overhead to the two products. However, management is considering using the multiple production department factory overhead rate method. The following factory overhead was budgeted for Pineapple: Assembly Department $220,000 Testing Department 809,600 Total $1,029,600 Direct machine hours were estimated as follows: Assembly Department 4,400 hours Testing Department 8,800 Total 13,200 hours In addition, the direct machine hours (dmh) used to produce a unit of each product in each department were determined from engineering records, as follows: Commercial Residential Assembly Department 0.50 dmh 1.00 dmh Testing Department 1.00 2.00 Total machine hours per unit 1.50 dmh 3.00 dmh a. Determine the per-unit factory overhead allocated to the Commercial and Residential motors under the single plantwide factory overhead rate method, using direct machine hours as the allocation base. Commercial Motor $ per unit Residential Motor $ per unit b. Determine the per-unit factory overhead allocated to the Commercial and Residential motors under the multiple production department factory overhead rate method, using direct machine hours as the allocation base for each department. Commercial Motor $ per unit Residential Motor $ per unit

You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare a master budget for the upcoming second quarter. To this end, you have worked with accounting and other areas to gather the information assembled below.

The company sells many styles of earrings, but all are sold for the same price—$16 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings):

The concentration of sales before and during May is due to Mother’s Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month.

Suppliers are paid $5.70 for a pair of earrings. One-half of a month’s purchases is paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit. Only 20% of a month’s sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible.

Monthly operating expenses for the company are given below:

Insurance is paid on an annual basis, in November of each year.

The company plans to purchase $24,500 in new equipment during May and $57,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $27,750 each quarter, payable in the first month of the following quarter.

The company’s balance sheet as of March 31 is given below:

The company maintains a minimum cash balance of $67,000. All borrowing is done at the beginning of a month; any repayments are made at the end of a month.

The company has an agreement with a 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. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while still retaining at least $67,000 in cash.

Required:

Prepare a master budget for the three-month period ending June 30. Include the following detailed schedules:

1. a. A sales budget, by month and in total.

    b. A schedule of expected cash collections, by month and in total.

    c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total.

    d. A schedule of expected cash disbursements for merchandise purchases, by month and in total.

2. A cash budget. Show the budget by month and in total. Determine any borrowing that would be needed to maintain the minimum cash balance of $67,000.

3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach.

4. A budgeted balance sheet as of June 30.

Part 1: Record the following transactions for Classic Canine Cuts for the month of December in the General Journal.

Transaction Date Description
1 12/1 Issued 100,000 shares of common stock for $100,000.
2 12/2
A retail space is rented. Paid for one year of rent in advance totaling $24,000. (rent is $2,000 per month)
3 12/4 Purchased equipment for the business totaling $36,000.
4 12/5 Purchased $1,500 of supplies on account.
5 12/7 Provided services to customers for cash totaling $5,000.
6 12/9
Purchased an ad in the local newspaper to run during December for $400.
7 12/12
Customers purchased $1,000 of gift certificates for services to be provided in the future (pre-paid for future services).
8 12/15
Paid employee salaries for the first half of December totaling $1,200.
9 12/17 Paid $1,000 for the supplies that were purchased on December 5th.
10 12/20 Provided $2,500 of services to customers on account.
11 12/25 Paid a cash dividend of $800 to the shareholders.
12 12/30 Received $1,500 on account for services provided on 12/20.



Part 2: Post all of the transactions for the month of December from the General Journal to the General Ledger.


Part 3: Complete a Trial Balance as of December 31, 2019.




Page 3

Part 4: Record the adjusting entries for Classic Canine Cuts for the month of December in the General Journal.

Transaction Date Description
Adj. 1 12/31
One month of rent that was prepaid has been used for the month of December.
Adj. 2 12/31
The equipment purchased for $36,000 has a useful life of 5 years and no salvage value. (Monthly depreciation is $600.)
Adj. 3 12/31 At the end of December, $1,000 of supplies remain on hand.
Adj. 4 12/31
By the end of December $700 worth of the gift certificates had been redeemed by customers (revenue earned) for grooming services and had not been recorded.
Adj. 5 12/31
Salaries for the second half of December are $1,400, but they will not be paid until January 3rd.



Part 5: Post all of the adjusting entries for the month of December from the General Journal to the General Ledger.


Part 6: Complete an Adjusted Trial Balance as of December 31, 2019.

* Remember a balance in an account on the trial balance will carry over to the adjusted trial balance if it was not changed by an adjusting journal entry.*


Part 7: Complete an Income Statement for the month ended December 31, 2019.


Part 8: Complete a Statement of Retained Earnings for the month ended December 31, 2019.


Part 9: Prepare a Balance Sheet as of December 31, 2019.

Part 10. Record the closing entries for the year ending December 31, 2019.

Part 11. Post all of the year end closing entries from the General Journal to the General Ledger.

Part 12. Prepare a Post-Closing Trial Balance.


Page 4

General Journal Part 1

Ref # Date Account Debit Credit
1
  
  
2
  
  
3
  
  
4
  
  
5
  
  
6
  
  
7
  
  
8
  
  
9
  
  

  
Page 5

General Journal Part 1 (Continued)

Ref # Date Account Debit Credit
10
  
  
11
  
  
12
  
  


General Journal – Adjusting Entries Part 4

Ref # Date Account Debit Credit
A 1
  
  
A 2
  
  
A 3
  
  
A. 4
  
  
A. 5
  
  


Page 6

General Ledger Parts 2,5,11 TB = Trial Balance Total ATB = Adjusted Trial Balance Total CB= Closing Balance Total Post Journal references in left column for debits and right column for credits in each account. Assets

Ref # Cash Ref # Debit Credit TB



Ref # #
Accounts Receivable Ref # Debit Credit TB



Ref # Supplies Ref # Debit Credit TB ATB

Ref # Prepaid Rent Ref # Debit Credit TB ATB




Ref # Equipment Ref # Debit Credit TB




Ref # Accumulated Depreciation Ref # Debit Credit ATB





Page 7

Liabilities



Ref # Accounts Payable Ref # Debit Credit TB
















Ref # Salaries Payable Ref # Debit Credit ATB




Ref # Unearned (Deferred) Revenue Ref # Debit Credit TB ATB



  
Page 8

Stockholders’ Equity



Ref # Common Stock Ref # Debit Credit TB












Ref # Dividends Ref # Debit Credit TB CB



Ref # Retained Earnings Ref # Debit Credit CB





































Page 9

Revenue

Ref # Service Revenue Ref # Debit Credit TB ATB CB

Expenses

Ref # Advertising Expense Ref # Debit Credit TB CB
  
Page 10


Ref # Salaries Expense Ref # Debit Credit TB ATB CB

Ref # Depreciation Expense Ref # Debit Credit ATB CB



Ref # Rent Expense Ref # Debit Credit ATB CB



Ref # Supplies Expense Ref # Debit Credit ATB CB






  
Page 11

Part 3

Classic Canine Cuts Trial Balance December 31, 2019
Account Debit Credit
$ $












Total $ $   
Page 12

Part 6

Classic Canine Cuts Adjusted Trial Balance December 31, 2019
Account Debit Credit
$ $

















Total $ $


Page 13

Part 7

Classic Canine Cuts Income Statement For the Month Ended December 31, 2019
Revenue   
  
$
Expenses   
$




Total Expenses
$
Net Income
$


Part 8

Classic Canine Cuts Statement of Retained Earning December 31, 2019
Retained Earnings
Beginning Balance, December 1, 2019 $
  
Ending Balance, December 31, 2019
$



Page 14

Part 9

Classic Canine Cuts Balance Sheet December 31, 2019
Assets
  
Liabilities
  


Total Current Liabilities

Total Current Assets



Property Plant and Equipment   
Total Liabilities


Stockholders’ Equity
  
Total Property Plant and Equipment


Total Stockholders’ Equity

Total Assets

Total Liabilities and Stockholders’ Equity

  
Page 15




General Journal – Closing Entries Part 10 Revenue, Expense and Dividend accounts.

Ref # Date Account Debit Credit
C.1
  
  
C.2
  
  
  
  
  
  
C.3
  
  

  
Page 16


Part 12

Classic Canine Cuts Post-Closing Trial Balance December 31, 2019
Account Debit Credit
$ $










Total $ $

Conestoga Corporation operates manufacturing facilities in State P and State Q. In addition, the corporation owns nonbusiness rental property in State Q. Conestoga incurred the following compensation expenses:

Sixty percent of the time is spent by the administrative staff located in State Q and 30% of the time spent by officers located in State Q are devoted to the operation, maintenance, and supervision of the rental property. Both states exclude such rent income from the definition of apportionable income.

Round your answers to four decimal places before converting to a percentage. If required, round your final answers to two decimal places.

Conestoga's payroll factor for State P is  % and for State Q is  %.

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Determine the amount of sales (units) that would be necessary under

Break-Even Sales Under Present and Proposed Conditions

Darby Company, operating at full capacity, sold 91,800 units at a price of $129 per unit during the current year. Its income statement for the current year is as follows:

The division of costs between fixed and variable is as follows:

Management is considering a plant expansion program that will permit an increase of $903,000 in yearly sales. The expansion will increase fixed costs by $90,300, but will not affect the relationship between sales and variable costs.

Required:

1. Determine the total variable costs and the total fixed costs for the current year. Enter the final answers rounded to the nearest dollar.

2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Enter the final answers rounded to two decimal places.

3. Compute the break-even sales (units) for the current year. Enter the final answers rounded to the nearest whole number.
units

4. Compute the break-even sales (units) under the proposed program for the following year. Enter the final answers rounded to the nearest whole number.
units

5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $146,200 of income from operations that was earned in the current year. Enter the final answers rounded to the nearest whole number.
units

6. Determine the maximum income from operations possible with the expanded plant. Enter the final answer rounded to the nearest dollar.
$

7. If the proposal is accepted and sales remain at the current level, what will the income or loss from operations be for the following year? Enter the final answer rounded to the nearest dollar.
$ Income

8. Based on the data given, would you recommend accepting the proposal?

1. In favor of the proposal because of the reduction in break-even point.
2. In favor of the proposal because of the possibility of increasing income from operations.
3. In favor of the proposal because of the increase in break-even point.
4. Reject the proposal because if future sales remain at the current level, the income from operations will increase.
5. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales.

Choose the correct answer

I ONLY NEED THE ANSWER TO #6

Governmental Accounting

What are the five types of information must be presented in Management's Discussion and Analysis (MD&A)? Which financial statement is each type of information derived from, if any?

Ms Mary was accepted to Big State University and received a reduced tuition from $50,000 to $20,000. Mary also received a scholarship of $30,000 to attend Big State University. Since Mary's tuition is $20,000 she will use the remaining portion to cover her room and board expenses. BSU also offered Mary a part-time job as an admin. assistant where she will be paid $2,500 per year. Mary Smith needs your help in determining what is taxable and what is not taxable. Please use IRS publication 970 and let her know what /if anything is taxable and what is nontaxable and any other info that is relevant. Please write at leat 200 words to explain why.

Governmental Accounting

What are the differences between a cash flows statement prepared for a governmental electric utility versus one prepared for an investor-owned utility?

Journal Entries, T-Accounts, Cost of Goods Manufactured and Sold

During May, the following transactions were completed and reported by Jerico Company:

1. Materials purchased on account, $60,100.
2. Materials issued to production to fill job-order requisitions: direct materials, $50,000; indirect materials, $8,800.
3. Payroll for the month: direct labor, $75,000; indirect labor, $36,000; administrative, $28,000; sales, $19,000.
4. Depreciation on factory plant and equipment, $10,400.
5. Property taxes on the factory accrued during the month, $1,450.
6. Insurance on the factory expired with a credit to the prepaid insurance account, $6,200.
7. Factory utilities, $5,500.
8. Advertising paid with cash, $7,900.
9. Depreciation on office equipment, $800; on sales vehicles, $1,650.
10. Legal fees incurred but not yet paid for preparation of lease agreements, $750.
11. Overhead is charged to production at a rate of $18 per direct labor hour. Records show 4,000 direct labor hours were worked during the month.
12. Cost of jobs completed during the month, $160,000.

The company also reported the following beginning balances in its inventory accounts:

Required:

1. Prepare journal entries to record the transactions occurring in May. For a compound transaction, if an amount box does not require an entry, leave it blank.

2. Prepare T-accounts for Materials Inventory, Overhead Control, Work-in-Process Inventory, and Finished Goods Inventory. Post the entries to the T-account in the same order in which they were journalized.

3. Prepare a statement of cost of goods manufactured.

4. If the overhead variance is all allocated to cost of goods sold, by how much will cost of goods sold decrease or increase?
    by   $

Job Cost Flows, Journal Entries

On April 1, Sangvikar Company had the following balances in its inventory accounts:

Work-in-process inventory is made up of three jobs with the following costs:

During April, Sangvikar experienced the transactions listed below.

1. Materials purchased on account, $28,000.
2. Materials requisitioned: Job 114, $16,500; Job 115, $12,400; and Job 116, $5,000.
3. Job tickets were collected and summarized: Job 114, 150 hours at $15 per hour; Job 115, 220 hours at $17 per hour; and Job 116, 80 hours at $18 per hour.
4. Overhead is applied on the basis of direct labor cost.
5. Actual overhead was $4,765.
6. Job 115 was completed and transferred to the finished goods warehouse.
7. (1) Job 115 was shipped, and (2) the customer was billed for 125 percent of the cost.

Required:

1. Prepare journal entries for the April transactions.

2. Calculate the ending balances of each of the inventory accounts as of April 30. Post the entries to the T-accounts in the same order in which they were journalized.