What is an Estimated Returns Inventory

An example of a Closing journal entry for sales revenue and sales discounts forfeited.

An example of Journal entry to record cost of merchandise sold under perpetual inventory system.

what is the Lower-of-cost-or-market (LCM) rule

Description of a good merchandise inventory control system.

Formula to calculate weighted-average unit cost for merchandise inventory.

Liberty Inc. acquired 100% of the voting common stock of Valance Inc. on January 1, 2018 by issuing 4,000 shares of Liberty Inc. $40 par value common stock that had a fair value of $120 per share. Valance Inc. will dissolve after the acquisition. Liberty incurred $40,000 of legal and accounting fees; and paid $25,000 in stock issuance costs as a result of this acquisition. The book value and fair value of Valance’s accounts on that date (prior to creating the combination) along with the book value of Pace's accounts are shown below:

Exercise 5-13 (Video)

Billings Company has the following information available for September 2020.

Unit selling price of video game consoles$400

Unit variable costs$280

Total fixed costs$54,000

Units sold600

Compute the unit contribution margin.

Unit contribution margin

Prepare a CVP income statement that shows both total and per unit amounts.

BILLINGS COMPANY
CVP Income Statement
For the Month Ended September 30, 2020

Total

Per Unit

Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesVariable Costs

$

$

Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesVariable Costs

Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesVariable Costs

$

Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesVariable Costs

Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesVariable Costs

$

Compute Billings’ break-even point in units.

Break-even point in units units

Prepare a CVP income statement for the break-even point that shows both total and per unit amounts.

BILLINGS COMPANY
CVP Income Statement
For the Month Ended September 30, 2020

Total

Per Unit

Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesVariable Costs

$

$

Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesVariable Costs

Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesVariable Costs

$

Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesVariable Costs

Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesVariable Costs

$

Riverbed Company was formed on December 1, 2016. The following information is available from Riverbed’s inventory records for Product BAP.

A physical inventory on March 31, 2017, shows 1,952 units on hand.

1. Prepare schedule to compute the ending inventory at March 31, 2017, under FIFO inventory method.

2. Prepare schedule to compute the ending inventory at March 31, 2017, under LIFO inventory method.

3. Calculate average-cost per unit. (Round answer to 2 decimal places, e.g. 2.76.)

4. Compute the ending inventory at March 31, 2017, under Weighted-average inventory method. (Round answer to 0 decimal places, e.g. 2,760.)

Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below:

beech corporation balance sheet June 30

1. Estimated sales for July, August, September, and October will be $350,000, $370,000, $360,000, and $380,000, respectively.

2. All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 45% in the month of sale and 55% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.

3. Each month’s ending inventory must equal 20% of the cost of next month’s sales. The cost of goods sold is 70% of sales. The company pays for 30% of its merchandise purchases in the month of the purchase and the remaining 70% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.

4. Monthly selling and administrative expenses are always $46,000. Each month $7,000 of this total amount is depreciation expense and the remaining $39,000 relates to expenses that are paid in the month they are incurred.

5. The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30.

Required:

1. Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter ended September 30.

2-a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30.

2-b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Also compute total cash disbursements for merchandise purchases for the quarter ended September 30.

3. Prepare an income statement for the quarter ended September 30.

4. Prepare a balance sheet as of September 30.

(TCO D) On January 1, 2010, Solis Co. issued its 10% bonds in the face amount of $3,000,000, which mature on January 1, 2020. The bonds were issued for $3,405,000 to yield 8%. Solis uses the effective-interest method of amortizing bond premium. Interest is payable semi-annually on July 1st and January 1st each year . At December 31, 2010, Please show the Journal entries to record the above:

1. Journal entry to record the Issue of Bonds on January 1, 2010.

2. Journal Entry to record the payment of Interest on July 1st, 2010 and January 1st, 2011. Be sure to record any adjusting entry for December 31st, 2010.

3. What is the Unamortized Discount or Premium Balance on Bonds Payable as of December 31st, 2011?? (Using the Effective Interest Method)

(Hint: Prepare yourself a Schedule like in the textbook to help you do this problem) (Round each answers to nearest dollar when preparing your schedule.)

Nash Company cans a variety of vegetable-type soups. Recently, the company decided to value its inventories using dollar-value LIFO pools. The clerk who accounts for inventories does not understand how to value the inventory pools using this new method, so, as a private consultant, you have been asked to teach him how this new method works.

He has provided you with the following information about purchases made over a 6-year period.

You have already explained to him how this inventory method is maintained, but he would feel better about it if you were to leave him detailed instructions explaining how these calculations are done and why he needs to put all inventories at a base-year value.

Compute the ending inventory for Richardson Company for 2013 through 2018 using dollar-value LIFO.

Ending inventory:

If you were to open a business, how would it be organized? Identify the type of business you might start and why you would choose that form of organization.

Scobie Company began 2016 with a retained earnings balance of $142,400. During an examination of its accounting records on December 31, 2016, Scobie found it had made the following material errors, for both financial reporting and income tax reporting, during 2015.

Scobie’s net income after taxes during 2016 was $60,000. The company has been subject to a 30% income tax rate for the past several years. It declared and paid dividends of $13,000 during 2016.

Required:

General Journal

Shaded cells have feedback.

Prepare whatever journal entries are necessary to correct Scobie’s books for its previous errors. Make your corrections directly to the Retained Earnings account on December 31. Additional Instructions

How does grading work?

PAGE 1

GENERAL JOURNAL

Score: 82/101

Points:

16.24 / 20

Feedback

Check My Work

To correct a prior period that has been closed, adjust the book values of the assets and liabilities so that their balances reflect the correct amounts. An offsetting adjustment is made to Retained Earnings for the cumulative effect of the adjustments for prior periods. In this problem you are instructed to record two entries rather than a compound entry so your journal should contain four entries for this problem.

Balance Sheet

Shaded cells have feedback.

Prepare Scobie Company’s Statement of Retained Earnings for the year ended December 31, 2016. Additional Instructions

Score: 4/31

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

Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of two new products for a five-year period. His annual pay raises are determined by his division’s return on investment (ROI), which has exceeded 17% each of the last three years. He has computed the cost and revenue estimates for each product as follows:

The company’s discount rate is 15%.

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor using tables.

Required:

1. Calculate the payback period for each product.

2. Calculate the net present value for each product.

3. Calculate the internal rate of return for each product.

4. Calculate the project profitability index for each product.

5. Calculate the simple rate of return for each product.

6a. For each measure, identify whether Product A or Product B is preferred.

6b. Based on the simple rate of return, Lou Barlow would likely:

Ida Sidha Karya Company is a family-owned company located in the village of Glanyar on the island of Bali in Indonesia. The company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $990. Selected data for the company’s operations last year follow: Units in beginning inventory 0 Units produced 240 Units sold 225 Units in ending inventory 15 Variable costs per unit: Direct materials $ 120 Direct labor $ 330 Variable manufacturing overhead $ 50 Variable selling and administrative $ 25 Fixed costs: Fixed manufacturing overhead $ 72,000 Fixed selling and administrative $ 27,000 The absorption costing income statement prepared by the company’s accountant for last year appears below: Sales $ 222,750 Cost of goods sold 180,000 Gross margin 42,750 Selling and administrative expense 32,625 Net operating income $ 10,125 Required: 1. Determine how much of the ending inventory consists of fixed manufacturing overhead cost deferred in inventory to the next period. 2. Prepare an income statement for the year using variable costing.