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.

2) The Central Valley Company is a merchandising firm that sells a single product. The company's revenues and expenses for the last three months are given below:

Required:

a. Determine which expenses are mixed and, by use of the high-low method, separate each mixed expense into its variable and fixed components. State the cost formula for each mixed expense.

b. Compute the company's total contribution margin for May.

Give an example of an adjusting journal entry for each of the following transactions. Provide three correct responses:

Equal growth of an expense and a liability:

Earning of revenue that was previously recorded as unearned revenue:

Equal growth of an asset and revenue:

Increase in an expense and decrease in an asset:

On January 1, Year 1, Webb Construction Company overhauled four cranes, resulting in a slight increase in the life of the cranes. Such overhauls occur regularly at two-year intervals and have been treated as a maintenance expense in the past. Management is considering whether to capitalize this year’s $28,420 cash cost in the Cranes asset account or to expense it as a maintenance expense. Assume that the cranes have a remaining useful life of two years and no expected salvage value. Assume straight-line depreciation.

Required
a. Determine the amount of additional depreciation expense Webb would recognize in Year 1 and Year 2 if the cost were capitalized in the Cranes account.
b. Determine the amount of expense Webb would recognize in Year 1 and Year 2 if the cost were recognized as maintenance expense.
c. Determine the effect of the overhaul on cash flow from operating activities for Year 1 and Year 2 if the cost were capitalized and expensed through depreciation charges.
d. Determine the effect of the overhaul on cash flow from operating activities for Year 1 and Year 2 if the cost were recognized as maintenance expense.

3. What is the relationship between cash flows from operations and Income for the year of the statement?

4. Explain the difference between the direct method and the indirect method of disclosing cash flows from operations.

5. Do you believe that cash inflows and outflows associated with nonoperating items such as interest expense, interest revenue, and dividend revenue, should be separated from operating cash flows? Explain.

creating a journal

v

he following were selected from among the transactions completed by Babcock Company during November of the current year:

Rutkey Collectibles is a small toy company that manufactures and sells metal replicas of classic cars. Each car sells for $3.30 The cost of each unit follows:

One of Rutkey's regular customers asked the company to fill a special order of 800 units at a selling price of $2.30 per unit. Rutkey's can fill the order using existing capacity without affecting total fixed costs for the month. However, Rutkey's manager was concerned about selling at a price below the $2.80 cost per unit and has asked for your advice.

Required:

a. Prepare a schedule to show the impact of providing the special order of 800 units on Rutkey's profits in addition to the regular production and sales of 17,900 units per month.

b. Based solely on the data given, what is the lowest price per unit at which the model cars could be sold for the special order without reducing Rutkey's profits?

c. If Rutkey Collectibles company was operating at capacity, what would happen to operating profit if the special order was accepted?

Due to erratic sales of its sole product—a high-capacity battery for laptop computers—PEM, Inc., has been experiencing financial difficulty for some time. The company’s contribution format income statement for the most recent month is given below: Sales (13,200 units × $20 per unit) $ 264,000 Variable expenses 158,400 Contribution margin 105,600 Fixed expenses 117,600 Net operating loss $ (12,000 )

Required: Please help with questions 4 and 5 ONLY.

1. Compute the company’s CM ratio and its break-even point in unit sales and dollar sales.

2. The president believes that a $6,600 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $87,000 increase in monthly sales. If the president is right, what will be the increase (decrease) in the company’s monthly net operating income?

3. Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $37,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)?

4. Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would grow sales. The new package would increase packaging costs by 0.60 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,300?

5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $54,000 each month. a. Compute the new CM ratio and the new break-even point in unit sales and dollar sales. b. Assume that the company expects to sell 20,500 units next month. Prepare two contribution format income statements, one assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, as well as in total, for each alternative.) c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20,500)?