Multiple-Product Break-even, Break-Even Sales Revenue

Cherry Blossom Products Inc. produces and sells yoga-training products: how-to DVDs and a basic equipment set (blocks, strap, and small pillows). Last year, Cherry Blossom Products sold 13,500 DVDs and 4,500 equipment sets. Information on the two products is as follows:

Total fixed cost is $94,500.

Suppose that in the coming year, the company plans to produce an extra-thick yoga mat for sale to health clubs. The company estimates that 9,000 mats can be sold at a price of $17 and a variable cost per unit of $10. Total fixed cost must be increased by $31,500 (making total fixed cost $126,000). Assume that anticipated sales of the other products, as well as their prices and variable costs, remain the same.

Daisy Tree Partnership owns and operates two apartment complexes in the metropolitan area. The first complex was contributed to the partnership by partner L. The other two partners (M and N) contributed cash which, together with borrowed funds, was used to purchase the second complex. The three partners share partnership income, loss, gain and deduction equally. The tax basis and book value of the partnership’s assets at the end of the current year are as follows: Tax Book Cash and equivalents Tax $60,000.00 Book $60,000.00 Receivables Tax $- Book $45,000.00 Apartment Complex 1 Tax $600,000.00 Book $1,500,000.00 Accumulated depreciation, complex 1 Tax $(120,000.00) Book $(300,000.00) Apartment Complex 2 Tax $2,475,000.00 Book $2,475,000.00 Accumulated depreciation, complex 2 Tax $(180,000.00) Book $(180,000.00) Land and other assets Tax $200,000.00 Book $200,000.00             Total assets Tax $2,035,000.00 Book $4,070,000.00 B. Does the curative allocation of depreciation on complex 2 from L to M and N completely “cure” the discrepancy caused by the ceiling rule with respect to the allocation of depreciation on complex 1? C. How can the partnership eliminate the remaining discrepancy?

Which of the following is a substantive analytical procedure?

1. Foot the accounts payable trial balance and compare with the general ledger.

2. Confirm accounts payable balances directly with vendors.

3. Multiply the commission rate by total sales and compare the results with commission expense.

4. Compute inventory turnover for each major product line and compare with industry standards.

Group of answer choices

All of the above are substantive analytical procedures

Item 4 only

Items 3 and 4

Item 3 only

Items 1, 3, and 4

Whispering Company reports pretax financial income of $66,100 for 2020. The following items cause taxable income to be different than pretax financial income.

Whispering’s tax rate is 30% for all years, and the company expects to report taxable income in all future years. There are no deferred taxes at the beginning of 2020.Compute taxable income and income taxes payable for 2020.

Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Prepare the income tax expense section of the income statement for 2020, beginning with the line “Income before income taxes.” (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Compute the effective income tax rate for 2020. (Round answer to 1 decimal places, e.g. 25.5%.)

On January 1, 2016, Alpha Corporation had 100,000 shares of common stock outstanding. On April 15, the board declared a $0.30 per share dividend to be paid to stockholders of record on May 4. The dividend was distributed on May 15. Use this information to prepare the General Journal entries (without explanation) for April 15 & May 15. If no entry is required then write "No Entry Required."

Crane Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis.

From the information above, determine the amount of Crane Company inventory.

$

Whispering, Inc. had the following equity investment portfolio at January 1, 2017.

During 2017, the following transactions took place.

During 2018, the following transactions took place.

Prepare journal entries for each of the above transactions.

Prepare a partial balance sheet showing the investment-related amounts to be reported at December 31, 2017 and 2018.

Lindon Company is the exclusive distributor for an automotive product that sells for $50.00 per unit and has a CM ratio of 30%. The company’s fixed expenses are $345,000 per year. The company plans to sell 27,200 units this year. Required: 1. What are the variable expenses per unit? (Round your "per unit" answer to 2 decimal places.) 2. What is the break-even point in unit sales and in dollar sales? 3. What amount of unit sales and dollar sales is required to attain a target profit of $195,000 per year? 4. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $5.00 per unit. What is the company’s new break-even point in unit sales and in dollar sales? What dollar sales is required to attain a target profit of $195,000?

On January 1, 2020, French Company acquired 60 percent of K-Tech Company for $313,500 when K-Tech’s book value was $413,500. The fair value of the newly comprised 40 percent noncontrolling interest was assessed at $209,000. At the acquisition date, K-Tech's trademark (20-year remaining life) was undervalued in its financial records by $80,000. Also, patented technology (10-year remaining life) was undervalued by $29,000.

In 2020, K-Tech reports $25,500 net income and declares no dividends. At the end of 2021, the two companies report the following figures (stockholders’ equity accounts have been omitted):

What is the 2021 consolidated net income before allocation to the controlling and noncontrolling interests?

In 2021, assuming K-Tech has declared no dividends, what are the noncontrolling interest’s share of the subsidiary’s income and the ending balance of the noncontrolling interest in the subsidiary?

Titans, Inc uses a periodic inventory system. One of the store's most popular products is a nerf-type basketball. The inventory quantities, purchases, and sales of this product for the most recent year are as follows:

A. What is the cost of the December 31 inventory and the cost of goods sold for the basketballs during the year under each of the following cost flow assumptions? Show your work.

1. First in, first-out

2. Last in, first-out

3. Weighted Average cost (round to the nearest dollar, except unit cost)

B. Which of the three inventory pricing methods provides the most useful balance sheet valuation of inventory considering the current replacement cost of the basketballs? Explain.

C. Which of the three inventory pricing methods provides the most useful measure of income in light of the costs incurred by Titans to replace the basketballs when they are sold? Consider which method results in a net income measure that is most predictive of future profitability. In other words, if you were thinking about buying stock in Titans, which inventory pricing measure gives you the most useful measure of its future profitability? Explain.

Income Statements under Absorption Costing and Variable Costing

Joplin Industries Inc. manufactures and sells high-quality sporting goods equipment under its highly recognizable J-Sports logo. The company began operations on May 1 and operated at 100% of capacity (41,800 units) during the first month, creating an ending inventory of 3,800 units. During June, the company produced 38,000 garments during the month but sold 41,800 units at $95 per unit. The June manufacturing costs and selling and administrative expenses were as follows:

a. Prepare an income statement according to the absorption costing concept for June.

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a. Under absorption costing, the cost of goods manufactured includes direct materials, direct labor, and factory overhead costs. Both fixed and variable factory costs are included as part of factory overhead.

Learning Objective 1.

b. Prepare an income statement according to the variable costing concept for June.

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b. Under variable costing, the cost of goods manufactured includes only variable manufacturing costs.

b. Under variable costing, the cost of goods manufactured includes only variable manufacturing costs.

Learning Objective 1.

c. What is the reason for the difference in the amount of income from operations reported in (a) and (b)?

Under the absorption costing  method, the fixed manufacturing cost included in the cost of goods sold is matched with the revenues. Under variable costing , all of the fixed manufacturing cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. Thus, when inventory decreases, the absorption costing  income statement will have a lower income from operations.

The following information relates to the debt securities investments of Kingbird Company.

(a) Prepare any journal entries you consider necessary, including year-end entries (December 31), assuming these are available-for-sale securities

29) The IRS has issued a summons for the tax file held by CPA Ann Whitman for her clients, the Harberts. The file consists of paper and electronic spreadsheets in which Whitman detailed some tax computations using assumptions that the IRS would find to be “too aggressive.” In addition, the file includes notes from meetings with the Harberts, income and balance sheet data as to their personal assets, and other technical correspondence, including email messages. In a memo to the tax research file, summarize the current status of the law as to whether the privilege of confidentiality protects these documents from the government.

Pirate Company purchased 60 percent ownership of Ship Corporation on January 1, 20X1, for $82,800. On that date, the noncontrolling interest had a fair value of $55,200 and Ship reported common stock outstanding of $100,000 and retained earnings of $20,000. The full amount of the differential is assigned to land to be used as a future building site. Pirate uses the fully adjusted equity method in accounting for its ownership of Ship. On December 31, 20X2, the trial balances of the two companies are as follows: Pirate Company Ship Corporation Item Debit Credit Debit Credit Cash and Accounts Receivable $ 69,400 $ 51,200 Inventory 60,000 55,000 Land 40,000 30,000 Buildings & Equipment 520,000 350,000 Investment in Ship Corporation 103,780 Cost of Goods Sold 99,800 61,000 Depreciation Expense 25,000 15,000 Interest Expense 6,000 14,000 Dividends Declared 40,000 10,000 Accumulated Depreciation $175,000 $ 75,000 Accounts Payable 68,800 41,200 Bonds Payable 80,000 200,000 Bond Premium 1,200 Common Stock 200,000 100,000 Retained Earnings 227,960 50,000 Sales 200,000 120,000 Income from Ship Corporation 11,020 $963,980 $963,980 $586,200 $586,200 Page 289Ship sold inventory costing $25,500 to Pirate for $42,500 in 20X1. Pirate resold 80 percent of the purchase in 20X1 and the remainder in 20X2. Ship sold inventory costing $21,000 to Pirate in 20X2 for $35,000, and Pirate resold 70 percent of it prior to December 31, 20X2. In addition, Pirate sold inventory costing $14,000 to Ship for $28,000 in 20X2, and Ship resold all but $13,000 of its purchase prior to December 31, 20X2. Assume both companies use straight-line depreciation and that no property, plant, and equipment has been purchased since the acquisition. Required Record the journal entry or entries for 20X2 on Pirate’s books related to its investment in Ship Corporation, using the equity method. Prepare the consolidation entries needed to complete a consolidated worksheet for 20X2. Prepare a three-part consolidation worksheet for 20X2.