Weatherly Lumber Company process wood pulp for manufacturing various paper products. The company employs aa process costing system for its manufacturing operations, All direct materials are added at the beginning of the process, and conversion costs are incurred uniformly throughout the process. This is the company's production schedule for My:

Work-in-Process Inventory, May 1 Tons of pulp 5,000 Materials 100% conversion 50%

Started during May Tons of pulp 18,000

Units to account for 23,000

Units from beginning Work-in-Process, which were completed and transferred out during May Tons of pulp, 5,000

Started and complete during May. 10,800

Work-in-Process Inventory, May 31 Tons of pulp 7,00 materials 100% Conversion 50%

Total units accounted for 23,000

Work-in-Process Inventory, May 1

Direct Materials $82,100

Conversion 61,342

Costs Incurred during May

Direct materials 283,140

Conversion 358,280

1. Calculate the equivalent units of direct materials and conversion during May. Use the FIFO method.

2. Calculate the cost per equivalent unit for both direct materials and conversion during May. Use the FIFO method.

Activity-Based Costing

Steampunk Corporation has the following predicted indirect costs and cost drivers for 2019 for the given activity cost pools:

The following activity predictions were also made for the year:

It is assumed that the cost per unit of activity for a given activity does not vary between departments. Steampunk's president, Abner Punk, is trying to evaluate the company's product mix strategy regarding two of its product models, SW100 and SG150. The company has been using a company wide overhead rate based on machine hours but is considering switching to either department rates of activity-based rates. The production manager has provided the following data for the production of a batch of 100 units for each of these models:

a. Determine the cost of one unit each of SW100 and SG150, assuming a company-wide overhead rate is used based on total machine hours.

Round rate to two decimal places.

Overhead rate based on total machine hours: $Answer per machine hour

Use rounded overhead rate calculated about for calculations below. Round cost answers to the nearest whole number. Round cost per unit to two decimal places.

b. Determine the cost of one unit of SW100 and SG150, assuming department overhead rates are used. Overhead is assigned based on machine hours in both departments.

Round to two decimal places, if applicable.

Overhead rate based on machine hours for Fabrication Dept.: $Answer per machine hour.

Overhead rate based on machine hours for Finishing Dept.: $Answer per machine hour.

Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed.

c. Determine the cost of one unit of SW100 and SG150, assuming activity-based overhead rates are used for maintenance, materials handling, machine setup, and inspection activities.

Round rate to two decimal places, if applicable.

Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed.

143) On January 2, 2010, Pannabaker Corporation issued $400,000, five-year, 10% bonds when the market rate of interest was 12%. The bonds pay interest annually on December 31. Pannabaker Corporation uses the effective-interest method of amortization and has a year-end of December 31.

(Note: present value tables required.)

a) Prepare the journal entry on January 2, 2010, to issue the bonds. b) Prepare the journal entry on December 31, 2010, to record the first annual interest payment and the amortization of the premium or discount.

144) Calculate the cash proceeds from the following issuances of bonds. All situations are independent of each other and all the bond issuances pay interest annually.

Note: present value tables required.

a) $100,000, five-year, 10% bonds issued when the market rate is 8% b)$50,000, 10-year, 8% bonds issued when the market rate is 12% c) $200,000, 10-year, 9% bonds issued when the market rate is $12% d) $100,000, five-year, 12% bonds issued when the market rate is 8%

145) Warren Corporation signs an agreement on January 2, 2010, to lease delivery equipment for a five-year period. The current market value of the delivery equipment on January 2, 2010, is $225,000. The lease agreement calls for annual payments of $50,040. The first payment is made on January 2, 2010, all other payments are made on December 31 of each year. The lease agreement calls for an 8% interest rate. The estimated remaining life of the delivery equipment is six years. Ownership of the delivery equipment will transfer to Warren Corporation at the end of the lease term.

Note: present value tables required.

a) Prepare the journal entry on January 2, 2010, to record the lease agreement and make the first lease payment. b) Prepare the entry on December 31, 2010, to record the second lease payment and the accrual of interest.

Exercise 5.2

Fred's Hardware and Hobby House expects its sales to increase at a constant rate of 8 percent per year over the next three years. Current sales are $500,000.

Complete the following table by forecasting sales for each of the next three years.

If sales in 2003 were $300,000 and they grew to $500,000 by 2007 (a four-year period), the actual annual compound growth rate was:

10.76%

13.62%

18.56%

Which of the following are some of the hazards of employing a constant rate of growth forecasting model? Check all that apply.

It assumes that there are no cyclical variations.

It ignores seasonal trends.

It is ill-suited to estimate secular trends.

Accounting for Share Transactions
The shareholders' equity section of the consolidated balance sheet of Wilson Industries appeared as follows at the beginning of the year:

The following events occurred sequentially during the year:

1. A 2-for-1 forward stock split was executed.
2. A ten percent stock dividend was distributed when the Wilson share price was $40 per share.
3. Treasury stock valued at $6,000,000 was repurchased when the Wilson share price was $25 per share.

Required

1. How many Class A common shares are outstanding following the above events?

Answer

2. What is the par value per share of the Class A common stock following the above events? Round to the nearest three decimal places.

$Answer

3. Prepare a spreadsheet to illustrate the financial effects associated with the above three share transactions.

Use a negative sign with answers to indicate a reduction in an account balance and with treasury stock repurchase and balance.

4. Calculate the total value of shareholders' equity following the above events.

$Answer

On April 6, 2018, Home Furnishings purchased $41,000 of merchandise from Una's Imports, terms 3/10 n/45. On April 8, Home Furnishings returned $8,600 of the merchandise to Una's Imports for credit. Home Furnishings paid cash for the merchandise on April 15, 2018.

Required

1. What is the amount that Home Furnishings must pay Una's Imports on April 15?

   	Net amount due.

2. Record the events in a horizontal statements model. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, or NC for net change in cash. If the element is not affected by the event, leave the cell blank

   HOME FURNISHINGS Effect of Events on the Financial Statements Events Balance Sheet Income Statement Statement of Cash Flows Assets = Liabilities + Stockholders’ Equity Revenue – Expenses = Net Income Cash + Merchandise Inventory = Accounts Payable + Common Stock + Retained Earnings Purchase inventory + = + + – = Return inventory + = + + – = Discount percentage + = + + – = Paid accounts payable + = + + – =

3. How much must Home Furnishings pay for the merchandise purchased if the payment is not made until April 20, 2018?

1. 	Payment

2. Record the payment of the merchandise in Requirement (c) in a horizontal statements. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, NC for net change in cash and NA to indicate the element is not affected by the event.

   	HOME FURNISHINGS Effect of Events on the Financial Statements Events Balance Sheet Income Statement Statement of Cash Flows Assets = Liabilities + Stockholders’ Equity Revenue – Expenses = Net Income Cash + Merchandise Inventory = Accounts Payable + Common Stock + Retained Earnings Paid accounts payable + = + + – =

Presented below is information related to the Accounts Receivable accounts of Concord Inc. during the current year 2017.

1. An aging schedule of the accounts receivable as of December 31, 2017, is as follows.

*The $3,200 write-off of receivables is related to the 91-to-120 day category

2. The Accounts Receivable control account has a debit balance of $368,200 on December 31, 2017.

3. Two entries were made in the Bad Debt Expense account during the year: (1) a debit on December 31 for the amount credited to Allowance for Doubtful Accounts, and (2) a credit for $3,200 on November 3, 2017, and a debit to Allowance for Doubtful Accounts because of a bankruptcy.

4. Allowance for Doubtful Accounts is as follows for 2017.

5. A credit balance exists in the Accounts Receivable (60–90 days) of $4,700, which represents an advance on a sales contract.

Assuming that the books have not been closed for 2017, make the necessary correcting entries.

Question text

Accounting for Shareholders' Equity Transactions
The shareholders' equity section of the balance sheet of The Claremont Company appeared as follows at the end of the first year of operations:

During the second year of operations, the following transactions occurred:

1. Generated net income of $4.8 million.
2. Paid a cash dividend of $1.2 million.
3. Purchased 100,000 shares of common stock at $7.6 per share.
4. Executed a 1-for-2 reverse stock split.

Prepare the shareholders' equity section of the balance sheet of Claremont Company at the end of the second year of operations.

Use a negative sign with treasury stock answer.

Evergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31. During 2021, the following transactions related to receivables occurred:

Required:
1. Prepare the necessary journal entries for Evergreen for each of the above dates. For transactions involving the sale of merchandise, ignore the entry for the cost of goods sold.
2. Prepare any necessary adjusting entries at December 31, 2021. Adjusting entries are only recorded at year-end.
3. Prepare a schedule showing the effect of the journal entries on 2021 income before taxes.

Complete a Schedule of Cost of Goods Manufactured and a Manufacturing Company Income statement. Use the Cost of Goods Manufactured that was developed in the Schedule of Cost of Goods Statement in the income statement.

                                                                        Jan-Feb

Cost of Goods Manufactured Data                 170000

Direct labor                                                     20200

Depreciation                                                   350300

Purchases of direct material                           80175

Beginning work-in-process                             65200

Ending direct materials                                   17750

Indirect materials                                           18575

Plant utilities, insurance and Property taxes  27100

Ending work-in-process                                  70025

Beginning direct materials                              29500

Indirect labor  

Manufacturing Income Statement Data        1001000

Net sales revenue                                           53500

Income taxes                                                  250

Beginning finished goods                               5300

Supplies expense                                            60425

Ending finished goods inventory                    660375

Cost of goods manufactured                          120125

Wage expense                                                6750

Depreciation expense                                    100025

Rent expense                                                  10075

Insurance expense      

At the beginning of 2018, the Redd Company had the following balances in its accounts:

During 2018, the company experienced the following events:

1. Purchased inventory that cost $5,800 on account from Redd Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $530 were paid in cash.

2. Returned $300 of the inventory that it had purchased because the inventory was damaged in transit. The seller agreed to pay the return freight cost.

3. Paid the amount due on its account payable to Redd Company within the cash discount period.

4. Sold inventory that had cost $6,300 for $9,300 on account, under terms 2/10, n/45.

5. Received merchandise returned from a customer. The merchandise originally cost $530 and was sold to the customer for $830 cash. The customer was paid $830 cash for the returned merchandise.

6. Delivered goods FOB destination in Event 4. Freight costs of $630 were paid in cash.

7. Collected the amount due on the account receivable within the discount period.

8. Took a physical count indicating that $2,000 of inventory was on hand at the end of the accounting period.

c-1. Prepare a multistep income statement.

c-2. Prepare a statement of changes in stockholders’ equity.

c-3. Prepare a balance sheet.

Prepare a statement of cash flows. (Enter cash outflows as negative amounts.)

Would the market-value debt ratio tend to be higher than the book-value debt ratio during a stock market boom or a recession? Explain.

Why would the WACC based on market values tend to be higher than the one based on book values if the stock price exceeded its book value?

Which would you expect to be more stable over time, a firm’s book-value or market-value capital structure? Explain.

The following events were completed by Dana’s Imports in September 2018:

Required

1. Record each event in a statements model like the following one. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, or NC for net change in cash. If the element is not affected by the event, leave the cell blank. The first event is recorded as an example.

2. Prepare an income statement for the month ending September 30.

3. Prepare a statement of cash flows for the month ending September 30.

A.

B.

Prepare an income statement for the month ending September 30.

C.

Prepare a statement of cash flows for the month ending September 30. (Enter cash outflows as negative amounts.)