Alcorn Service Company was formed on January 1, 2018.

Events Affecting the 2018 Accounting Period

1. Acquired $72,000 cash from the issue of common stock.

2. Purchased $3,600 of supplies on account.

3. Purchased land that cost $42,000 cash.

4. Paid $3,600 cash to settle accounts payable created in Event 2.

5. Recognized revenue on account of $66,000.

6. Paid $33,000 cash for other operating expenses.

7. Collected $50,000 cash from accounts receivable.

Information for 2018 Adjusting Entries

8. Recognized accrued salaries of $4,400 on December 31, 2018.

9. Had $1,400 of supplies on hand at the end of the accounting period.

Events Affecting the 2019 Accounting Period

1. Acquired $32,000 cash from the issue of common stock.

2. Paid $4,400 cash to settle the salaries payable obligation.

3. Paid $7,200 cash in advance to lease office space.

4. Sold the land that cost $42,000 for $42,000 cash.

5. Received $8,400 cash in advance for services to be performed in the future.

6. Purchased $2,200 of supplies on account during the year.

7. Provided services on account of $44,000.

8. Collected $45,000 cash from accounts receivable.

9. Paid a cash dividend of $4,000 to the stockholders.

10. Paid other operating expenses of $31,500.

Information for 2019 Adjusting Entries

11. The advance payment for rental of the office space (see Event 3) was made on March 1 for a one-year term.

12. The cash advance for services to be provided in the future was collected on October 1 (see Event 5). The one-year contract started on October 1.

13. Had $1,500 of supplies remaining on hand at the end of the period.

14. Recognized accrued salaries of $5,100 at the end of the accounting period.

15. Recognized $1,600 of accrued interest revenue.

1. b-1. Prepare an income statement for 2018 and 2019.

2. b-2. Prepare the statement of changes in stockholders’ equity for 2018 and 2019.

3. b-3. Prepare the balance sheet for 2018 and 2019.

4. b-4. Prepare the statement of cash flows for 2018 and 2019, using the vertical statements model.

In 2018, Borland Semiconductors entered into the transactions described below. In 2015, Borland had issued 175 million shares of its $1 par common stock at $30 per share.

Required: Assuming that Borland retires shares it reacquires, record the appropriate journal entry for each of the following transactions: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

On January 2, 2018, Borland reacquired 9 million shares at $28.00 per share.

On March 3, 2018, Borland reacquired 9 million shares at $33 per share.

On August 13, 2018, Borland sold 1 million shares at $38 per share.

On December 15, 2018, Borland sold 2 million shares at $33 per share.

Compare the interest rate risk of Bitcoin price to the interest rate risk of prices of other assets, such as bonds, stocks or properties

You have just been hired as a new management trainee by Ace Wholesale, Inc a distributor of

brooms 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 comprehensive budgets for the upcoming second quarter in order to show management the benefits that can be gained from an integrated budgeting program. To this end, you have worked with accounting and other areas to gather the information assembled below. The company sells many styles of brooms, but all are sold for the same price—$10 per unit.

Actual sales of brooms for the last three months and budgeted sales for the next six months follow (in units of brooms):

January (actual) 20,000

February (actual) 24,000

March (actual) 40,000

April (budget) 100,000

May (budget) 160,000

June (budget) 90,000

July (budget) 80,000

August (budget) 36,000

September (budget) 32,000

The concentration of sales before and during May is due to Graduation Days. Sufficient inventory should be on hand at the end of each month to supply 45% of the bracelets sold in the following month. Suppliers are paid $4 for a broom. 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, with no discount, and payable within 15 days. The company has found, however, that only 22% of a month’s sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 8% is collected in the second month following sale. Monthly operating expenses for the company are given below:

Variable:

Sales commissions 5% of Sales

Fixed:

Advertising $200,000

Rent $18,000

Salaries $106,000

Utilities $7,000

Insurance $3,000

Depreciation $14,000

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

The company plans to purchase $16,000 in new equipment during May and $40,000 in new

equipment during June; both purchases will be for cash. The company declares dividends of

$15,000 each quarter, payable in the first month of the following quarter.

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

Assets

Cash $74,000

Accounts receivable (net) 331,200

Inventory 180,000

Prepaid insurance 21,000

Property and equipment (net) 950,000

Total assets $1,556,200

Liabilities and Stockholders’ Equity

Accounts payable $134,000

Dividends payable 15,000

Common stock 800,000

Retained earnings 607,200

Total liabilities and stockholders’ equity $1,556,200

The company maintains a minimum cash balance of $50,000. 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 $50,000 in cash.

Required:

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

detailed budgets:

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

* A schedule of expected cash disbursements for merchandise purchases, by month and in total?

* 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 $50,000?

The following is a series of related transactions between Siogo Shoes, a shoe wholesaler, and Sole Mates, a chain of retail shoe stores. Feb. 9 Siogo Shoes sold Sole Mates 195 pairs of hiking boots on account, terms 2/10, n/30. The cost of these boots to Siogo Shoes was $120 per pair, and the sales price was $150 per pair. Feb. 12 United Express charged $90 for delivering this merchandise to Sole Mates. These charges were split evenly between the buyer and seller and were paid immediately in cash. Feb. 13 Sole Mates returned 10 pairs of boots to Siogo Shoes because they were the wrong size. Siogo Shoes allowed Sole Mates full credit for this return. Feb. 19 Sole Mates paid the remaining balance due to Siogo Shoes within the discount period. Both companies use a perpetual inventory system. Required: a. Record this series of transactions in the general journal of Siogo Shoes. (The company records sales at gross sales price.) b. Record this series of transactions in the general journal of Sole Mates. (The company records purchases of merchandise at net cost and uses a Transportation-in account to record transportation charges on inbound shipments.)

Pearl Products Limited of Shenzhen, China, manufactures and distributes toys throughout South East Asia. Three cubic centimeters (cc) of solvent H300 are required to manufacture each unit of Supermix, one of the company’s products. The company now is planning raw materials needs for the third quarter, the quarter in which peak sales of Supermix occur. To keep production and sales moving smoothly, the company has the following inventory requirements:

1. The finished goods inventory on hand at the end of each month must equal 2,000 units of Supermix plus 20% of the next month’s sales. The finished goods inventory on June 30 is budgeted to be 10,600 units.

2. The raw materials inventory on hand at the end of each month must equal one-half of the following month’s production needs for raw materials. The raw materials inventory on June 30 is budgeted to be 66,000 cc of solvent H300.

3. The company maintains no work in process inventories.

A monthly sales budget for Supermix for the third and fourth quarters of the year follows.

Required:

1. Prepare a production budget for Supermix for the months July, August, September, and October.

3. Prepare a direct materials budget showing the quantity of solvent H300 to be purchased for July, August, and September, and for the quarter in total.

2. Financial statements for Kinder Corporation are presented below.

KINDER CORPORATION

Comparative Balance Sheet

December 31

                                                                                                                      2015                  2014  

Assets

Cash...................................................................................................       $    4,000           $ 6,000

Accounts receivable (net)..................................................................           16,000             12,000

Inventory............................................................................................           20,000             18,000

Land...................................................................................................           28,000               8,000

Equipment..........................................................................................           62,000             60,000

Accumulated depreciation—equipment............................................          (20,000)          (14,000)

      Total assets..................................................................................       $110,000           $90,000

Liabilities and Stockholders' Equity

Accounts payable..............................................................................       $ 10,000           $16,000

Long-term notes payable...................................................................           34,000             19,000

Common stock ($10 par value).........................................................           50,000             50,000

Retained earnings..............................................................................           16,000               5,000

      Total liabilities and stockholders' equity......................................       $110,000           $90,000

KINDER CORPORATION

Income Statement

For the year ended December 31, 2015

Sales revenue .....................................................................................................             $370,000

Less: Sales returns and allowances ...................................................................                 10,000

Net sales .............................................................................................................             $360,000

Cost of goods sold ..............................................................................................               275,000

Gross profit .........................................................................................................                 85,000

Operating expenses ...........................................................................................                 40,000

Income before income taxes ..............................................................................                 45,000

Income tax expense ...........................................................................................                 18,000

Net income ..........................................................................................................             $ 27,000

Additional Information: All sales were on account. The market price of Kinder's common stock was $42 on December 31, 2015, 5000 shares of common stock issued and outstanding.

1. Compute the indicated ratios at December 31, 2015, or for the year ended December 31, 2015, as appropriate. Report answers to two decimal places.

      1.   Return on assets is ______________________________________________________.

      2.   Acid-test ratio is ________________________________________________________.

      3.   Profit margin ___________________________________________________________.

      4.   Payout ratio is __________________________________________________________.

      5.   Debt to assets ratio is ____________________________________________________.

      6.   Asset turnover is ________________________________________________________.

      7.   Accounts receivable turnover is ____________________________________________.

      8.   Price-earnings ratio is ____________________________________________________.

      9.   Current ratio is __________________________________________________________.

      10. Debit to Equity___________________________________________________________

      11. Inventory Turnover and Days in Inventory _____________________________________

      12. Earnings per share ______________________________________________________

      13. Accounts Receivable Turnover and Days in Sales ______________________________

The Kaumajet Factory produces two products - table lamps and desk lamps. It has two separate departments - Finishing and Production. The overhead budget for the Finishing Department is $492,298, using 375,800 direct labor hours. The overhead budget for the Production Department is $406,351 using 69,700 direct labor hours. If the budget estimates that a desk lamp will require 5 hours of finishing and 8 hours of production, what is the total amount of factory overhead the Kaumajet Factory will allocate to desk lamps using the multiple production department factory overhead rate method with an allocation base of direct labor hours, if 10,700 units are produced?

Axe Ltd. purchased a building worth Tshs. 200,000 on January 1, 2008. The building has a useful life of 20 years and the company uses straight line method. On December 31, 2010 the company intends to switch to revaluation model and carries out a revaluation exercise which estimates the fair value of the building to be Tshs.190,000 as at December 31, 2010. On December 31, 2012 Axe Ltd. revalues the building again to find out that the fair value should be Tshs.140,000. The expected useful life has remained unchanged
Required: Calculate
a)Revaluation surplus amounts and show the Journal to record the revaluations
b)Depreciation charge for each period
c)Excess depreciation to be transferredand show the Journal to record the transfer

Superior Micro Products uses the weighted-average method in its process costing system. During January, the Delta Assembly Department completed its processing of 25,300 units and transferred them to the next department. The cost of beginning work in process inventory and the costs added during January amounted to $718,668 in total. The ending work in process inventory in January consisted of 2,600 units, which were 60% complete with respect to materials and 40% complete with respect to labor and overhead. The costs per equivalent unit for the month were as follows:

Required:

1. Compute the equivalent units of materials, labor, and overhead in the ending work in process inventory for the month.

2. Compute the cost of ending work in process inventory for materials, labor, overhead, and in total for January.

3. Compute the cost of the units transferred to the next department for materials, labor, overhead, and in total for January.

4. Prepare a cost reconciliation for January. (Note: You will not be able to break the cost to be accounted for into the cost of beginning work in process inventory and costs added during the month.)

TAKE HOME QUIZ

ABC Incorporated began operations on Jan 1^st, 2012 with an initial issuance of 10,000 shares,( each with par value $0.10), for $5 per share

1. On Jan 1^st, 2012, the company purchased a two-year fire insurance policy worth $10,000 and had paid it with cash.
2. Company purchased equipment worth $100,000 on Jan 1^st by signing a one-year Notes Payable. Interest rate on the loan was 8% and the interest and the entire principal will be paid on Jan 1^st 2013. The depreciation on equipment for the year 2012 was $20,000
3. On February 1^st, 2012 the company entered into a contract to provide consulting services. It received an advance of $120,000. The company performs 5% of the work for which it was contracted, every month.
4. On November 15^th, 2012, the company bought a piece of land for $200,000 by taking a 30-year mortgage loan.
5. On Dec 1^st, the company makes a mortgage payment $2,000 which was composed of $1,500 principal payment and $500 interest expense.
6. In 2012, the company purchased (in cash) and used up office supplies worth $20,000.
7. Company purchased Investments worth $20,000 on Apr 1^st 2012. The company receives 10% interest on its Investments annually on June 30^th
8. On Feb 15^th, 2012, the company bought toys inventory worth $90,000 on credit from its suppliers.
9. On March 20^th, 2012, the company sold toys for $180,000. The company received 50% cash and the rest remained on account. The cost of these toys sold was $40,000
10. The company’s franchisees owe ABC’s $800 in royalties for sales the franchisees made in the last week of December 2012.
11. Utilities expenses for the year 2012 were $10,000 and were paid in cash.
12. Wages accrued in the last week of 2012 were $2,000 and will be paid in the first week of 2013.
13. On December 15^th, 2012, the company declared cash dividends of $20,000 which will be paid sometime in 2013.

Required:

Prepare the journal entries (both regular and adjusting), trial balance, Income Statement, Statement of Retained Earnings and Balance Sheet for the year ending December 31^st 2012. Also create a T-Account for Cash.

On July 1, 2018, Tony and Suzie organize their new company as a corporation, Great Adventures Inc. The following transactions occur from August 1 through December 31. Also, the balances are provided for the month ended July 31.
  
The articles of incorporation state that the corporation will sell 32,000 shares of common stock for $1 each. Each share of stock represents a unit of ownership. Tony and Suzie will act as co-presidents of the company. The following business activities occur during July for Great Adventures.
  
Jul. 1 Sell $16,000 of common stock to Suzie.
Jul. 1 Sell $16,000 of common stock to Tony.
Jul. 1 Purchase a one-year insurance policy for $5,760 ($480 per month) to cover injuries to participants during outdoor clinics.
Jul. 2 Pay legal fees of $2,000 associated with incorporation.
Jul. 4 Purchase office supplies of $1,600 on account.
Jul. 7 Pay for advertising of $220 to a local newspaper for an upcoming mountain biking clinic to be held on July 15. Attendees will be charged $30 the day of the clinic.
Jul. 8 Purchase 10 mountain bikes, paying $10,900 cash.
Jul. 15 On the day of the clinic, Great Adventures receives cash of $1,500 from 50 bikers. Tony conducts the mountain biking clinic.
Jul. 22 Because of the success of the first mountain biking clinic, Tony holds another mountain biking clinic and the company receives $2,000.
Jul. 24 Pay for advertising of $690 to a local radio station for a kayaking clinic to be held on August 10. Attendees can pay $100 in advance or $150 on the day of the clinic.
Jul. 30 Great Adventures receives cash of $7,000 in advance from 70 kayakers for the upcoming kayak clinic.
Aug. 1 Great Adventures obtains a $46,000 low-interest loan for the company from the city council, which has recently passed an initiative encouraging business development related to outdoor activities. The loan is due in three years, and 6% annual interest is due each year on July 31.
Aug. 4 The company purchases 14 kayaks, paying $27,000 cash.
Aug. 10 Twenty additional kayakers pay $3,000 ($150 each), in addition to the $7,000 that was paid in advance on July 30, on the day of the clinic. Tony conducts the first kayak clinic.
Aug. 17 Tony conducts a second kayak clinic, and the company receives $11,700 cash.
Aug. 24 Office supplies of $1,600 purchased on July 4 are paid in full.
Sep. 1 To provide better storage of mountain bikes and kayaks when not in use, the company rents a storage shed, purchasing a one-year rental policy for $2,760 ($230 per month).
Sep. 21 Tony conducts a rock-climbing clinic. The company receives $13,900 cash.
Oct. 17 Tony conducts an orienteering clinic. Participants practice how to understand a topographical map, read an altimeter, use a compass, and orient through heavily wooded areas. The company receives $19,700 cash.
Dec. 1 Tony decides to hold the company’s first adventure race on December 15. Four-person teams will race from checkpoint to checkpoint using a combination of mountain biking, kayaking, orienteering, trail running, and rock-climbing skills. The first team in each category to complete all checkpoints in order wins. The entry fee for each team is $510.Dec. 5 To help organize and promote the race, Tony hires his college roommate, Victor. Victor will be paid $60 in salary for each team that competes in the race. His salary will be paid after the race.Dec. 8 The company pays $1,000 to purchase a permit from a state park where the race will be held. The amount is recorded as a miscellaneous expense.Dec. 12 The company purchases racing supplies for $2,900 on account due in 30 days. Supplies include trophies for the top-finishing teams in each category, promotional shirts, snack foods and drinks for participants, and field markers to prepare the racecourse.Dec. 15 The company receives $20,400 cash from a total of forty teams, and the race is held.Dec. 16 The company pays Victor’s salary of $2,400.
Dec. 31 The company pays a dividend of $4,300 ($2,150 to Tony and $2,150 to Suzie).
Dec. 31 Using his personal money, Tony purchases a diamond ring for $4,200. Tony surprises Suzie by proposing that they get married. Suzie accepts and they get married!

The following information relates to year-end adjusting entries as of December 31, 2018.
  
a. Depreciation of the mountain bikes purchased on July 8 and kayaks purchased on August 4 totals $8,200.
b. Six months’ worth of insurance has expired.
c. Four months’ worth of rent has expired.
d. Of the $1,600 of office supplies purchased on July 4, $400 remains.
e. Interest expense on the $46,000 loan obtained from the city council on August 1 should be recorded.
f. Of the $2,900 of racing supplies purchased on December 12, $130 remains.
g. Suzie calculates that the company owes $14,200 in income taxes.
  
Assume the following ending balances for the month of July.

5-c. Prepare a classified balance sheet as of December 31, 2018. (Amounts to be deducted should be indicated with minus sign.)

Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year. Management has prepared the following summary of its budgeted cash flows:

The company’s beginning cash balance for the upcoming fiscal year will be $47,000. The company requires a minimum cash balance of $10,000 and may borrow any amount needed from a local bank at a quarterly interest rate of 3%. The company may borrow any amount at the beginning of any quarter and may repay its loans, or any part of its loans, at the end of any quarter. Interest payments are due on any principal at the time it is repaid. For simplicity, assume that interest is not compounded.

complete the company's cash budget for the upcoming fiscal year. (Cash deficiency, repayments, and interest, should be indicated by a minus sign.)

All analysis should be done in MS Excel, and a memo to your boss explaining the situation, your

analysis, and conclusion should be prepared in MS Word. You must upload both files to be graded.

You will only get full credit for the assignment if your analysis is correct, all calculations and/or formulas

use cell references, and your memo has the right content, flows well, and is properly formatted, and

grammatically correct. An example of a good memo, and an Excel template is provided for your benefit.

You can add or delete columns in the excel template as needed.

Playtan Corporation has a machine that either should be repaired or should be replaced soon.

You have recently been hired by Playtan and one of your assignments is to help decide whether

replacing the machine, or repairing it is in the best interest of your company.

Investment required for repairing the machine is only $500,000 and cost to replace the machine

is $3,000,000. Repairing the machine will cut down on the number of returns from customers

and increase cash flows, while replacing the machine may increase the number of units sold.

Playtan has evaluated and calculated additional cash flows that will be generated under the two

scenarios over the next five years as follows:

Year

Cash flow (if repaired)

Cash Flow (if replaced)

1

197,000

1,613,000

2

160,000

1,185,000

3

178,000

978,100

4

139,000

997,800

5

117,000

990,000

Playtan does not accept projects that will pay back in more than 3 years, or any projects that will not

maximize shareholder wealth. So, you will need to use all capital budgeting techniques you’ve learnt in

your Finance class to ensure that the right option is chosen.

Cost of capital for the project (repair or replacement) could be anywhere from 8% to 14%, so you will

conduct your analyses at various weighted average cost of capital (WACC) or Required rate of return

points including at least five at 8%, 9%, 11%, 13%, and 14% for both scenarios, and also draw an NPV

profile for both situation using your calculations.

Use your knowledge of capital budgeting and time value of money to decide which of the options is better

for Playtan. All analysis must be done in Excel. Your excel model should be such that it can be used by

Playtan or any other corporation for similar capital budgeting situations – so anyone can change any

numbers and use the model again. This would require all calculations to be using cell references and excel

functions. You must write a memo to your boss, explaining the situation, your analysis, and your

conclusion. You must also explain the drawbacks of your technique/s if there are any.

Make sure that all your submissions have your full name, class, and section number included.

What is the nature and purpose of a "letter of representations"? Comment on the quality or strength of the audit evidence yielded by a letter of representations.