Waterways for Chapter 9 (WCP9sum) Summer Waterways Corporation is preparing its budget for the coming year. The first step is to plan for the first quarter of that coming year. Waterways gathered the following information from the managers. Sales: Actual unit sates for November 113,500

Actual unit sales for December 103,100

Expected unit sales for January 114,000

Expected unit sales for February 113,500

Expected unit sales for March 116,000 Expected unit sales for April 126,000

Expected unit sales for May 138,500

Unit selling price $12 Waterways wants to keep 10% of the next month’s unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale and 15% of the Accounts Receivable are collected in the month after sale. Accounts receivable on December 31 totaled 183,780. Direct Materials: The product uses metal, plastic, and rubber. In total, each unit requires 2 pounds of material at an average cost of 0.75 per pound. Waterways likes to keep 5% of the materials needed for the next month in its ending inventory. Payment for materials is made within 15 days. 50% is paid in the month of purchase and 50% is paid in the month after purchase. Accounts Payable on December totaled $120,595. Raw materials on December 31 totaled 11,295 pounds. Direct Labor: Labor requires 12 minutes per unit for completion and is paid at a rate of $18 per hour. Manufacturing Overhead:

Indirect materials 30 cents per labor hour

Indirect labor 50 cents per labor hour

Utilities 45 cents per labor hour

Maintenance 25 cents per labor hour

Salaries $52,000 per month

Depreciation $16,800 per month

Property taxes $2,675 per month Insurance $2,200 per month

Janitorial $1,800 per month

Selling and Administrative Expenses: Variable selling and administrative cost per unit is $2.40.

Advertising $15,000 per month

Insurance $1,400 per month

Salaries $72,000 per month

Depreciation $2,500 per month

Other fixed costs $3,000 per month

Other Information: The cash balance on December 31 totaled $220,500, but management has decided that it wants to maintain a cash balance of at least $750,000 beginning January 31. Dividends are paid each month at the rate of $2.50 per share for 5,000 shares outstanding. The company has an open line of credit with the First National Bank. The terms of the agreement requires borrowing to be in $1,000 increments at 8% interest. Waterways borrows on the first day of the month and repays on the last day of the month. Reserve repayment, if required, until Waterways can pay the entire amount. A $250,000 equipment purchase is planned for February.

Instructions (Do all parts): Note: All budgets and schedules should be prepared by month for the first quarter (January, February, and March). Round all figures to the nearest dollar. For labor hours round to whole hours.

a. Prepare a sales budget.

b. Prepare a production budget.

c. Prepare a direct materials budget.

d. Prepare a direct labor budget.

e. Prepare a manufacturing overhead budget.

f. Prepare a selling and administrative budget.

g. Prepare a schedule for expected cash collections from customers.

h. Prepare a schedule for expected payments for materials purchases.

i. Prepare a cash budget.

I ONLY NEED PARTS e,f,g,h,i please

You are the lead auditor performing a walkthrough of the bank reconciliation performed by the company controller. What is the design deficiency of the control below ? What additional steps should the Controller perform ?

The Controller says, "I first review the sorted list of returned checks and find which numbers are missing. Second I determine the amount uncleared checks by referring to the cash disbursements journal. If the bank accounts reconcile at that point, the review is done. If it does not reconcile I search for in transit deposits, checks from the beginning outstanding checks list that still have not cleared, other reconciling items and bank errors until it reconciles."

Deriving cash flows for asset disposition. Custom Machining Company (CMC) purchased a made-to-order machine tool for grinding machine parts. The machine costs $160,000, and CMC installed it yesterday. Today, a vendor offers a machine tool that will do exactly the same work but costs only $80,000. Assume that the cost of capital is 12 percent, that both machines will last five years, that CMC will depreciate both machines on a straight-line basis for tax purposes with no salvage value, that the income tax rate is and will continue to be 40 percent, and that CMC earns sufficient income that it can offset any loss from disposing of or depreciating the ‘‘old’’ machine against other taxable income. How much, at a minimum, must the ‘‘old’’ machine fetch upon resale at this time to make purchasing the new machine worthwhile?

I have asked the question before, but I do not understand how depreciation * tax rate (for example $16,000* .4 = $64,000, instead of $4,000 or $32,000* .4= $128,000, instead of $8,000?).

Imaging Inc., a developer of radiology equipment, has stock outstanding as follows: 15,000 shares of cumulative preferred 2% stock, $140 par, and 50,000 shares of $25 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $28,200; second year, $65,800; third year, $83,300; fourth year, $110,000.

Compute the dividends per share on each class of stock for each of the four years. Round all answers to two decimal places. If no dividends are paid in a given year, enter "0".

Thermal Rising, Inc., makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider model, but also makes custom-designed paragliders. Management has designed an activity-based costing system with the following activity cost pools and activity rates:

Management would like an analysis of the profitability of a particular customer, Big Sky Outfitters, which has ordered the following products over the last 12 months:

The company’s direct labor rate is $18 per hour.

Required:

Using the company’s activity-based costing system, compute the customer margin of Big Sky Outfitters. (Round your intermediate calculations and final answer to the nearest whole dollar amount. Loss amounts should be entered with a minus sign.)

Vancouver manufacturing Ltd. manufactures a variety of high quality electronic components. Data from the last three months are presented below:

You are the controller for Vancouver manufacturing and you are reviewing the performance over the last 3 months. In addition, the controller notes that the company, although it has many detailed performance measures, is considering implementing a balanced scorecard and asks you to identify the measures you think would be most appropriate to include in the balanced scorecard.

Required:

Evaluate the performance of the company and prepare a detailed Balanced Scorecard.

Equivalent Units and Related Costs; Cost of Production Report; Entries

Dover Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling departments, emerging as finished chemicals.

The balance in the account Work in Process—Filling was as follows on January 1:

The following costs were charged to Work in Process—Filling during January:

During January, 34,500 units of specialty chemicals were completed. Work in Process—Filling Department on January 31 was 3,000 units, 30% completed.

Required:

1. Prepare a cost of production report for the Filling Department for January. If an amount is zero, enter "0". If required, round your cost per equivalent unit answers to two decimal places.

2. Journalize the entries for (1) costs transferred from Reaction to Filling and (2) the cost transferred from Filling to Finished Goods. If an amount box does not require an entry, leave it blank.

3. Determine the increase or decrease in the cost per equivalent unit from December to January for direct materials and conversion costs. If required, round your answers to two decimal places.

4. Discuss the uses of the cost of production report and the results of part (3).

The cost of production report may be used as the basis for allocating product costs between   and  . The report can also be used to control costs by holding each department head responsible for the units entering production and the costs incurred in the department. Any differences in unit product costs from one month to another, such as those in part (3), can be studied carefully and any significant differences investigated.

Comparative financial statement data for Carmono Company follow:

For this year, the company reported net income as follows:

This year Carmono declared and paid a cash dividend. There were no sales of property, plant, and equipment during this year. The company did not repurchase any of its own stock this year.

Required:

1. Using the indirect method, prepare a statement of cash flows for this year.

2. Compute Carmono’s free cash flow for this year.

47. List the four types of audit opinions that can be issued in an audit of financial statements. ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

48. Give an example of a situation where an auditor issues an unmodified opinion and adds an emphasis of matter paragraph. __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

49. When a client changes its accounting policy, the auditor is required to issue what in relation to the change in policy under GAAP and SEC rules?   ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

50. Under the PCAOB’s new auditor report standard, an auditor is required to issue a Critical Audit Matters (CAM). What are the 4 requirements necessitating the issues of a CAM? ______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Do the following problems in Excel. Submit your Excel spreadsheet so I can see how you solved the problems (functions you used).

1. Assume the same facts as in part 1, except on Feb. 1, 2016, due to financial problems, Barrick deposit nothing in the fund. After this date, they resume and make sufficient equal payments to meet their goal of $32 million on Aug. 1, 2018. In other words, they make the same amount of payments in the fund as part 1 from Aug. 1, 2013-Aug. 1, 2018. Determine the first set of required payments and the second set of required payments. (10 points).

2. Barrick is comparing two gold mines.

Mine A: The mine is expected to make $3.5 billion in year 1, $4.5 billion in year 2, and $5.5 billion in years 3-6 and $4.25 billion in years 7-10. At the end of year 10, Barrick will need to spend $202 million on environmental clean-up costs and expects the residual value to be $200 billion.

Mine B: The mine is currently in operation and produces $4.1 billion per year. At the end of 10 years the residual value would be $200 billion and no environmental clean-up costs would be necessary.

Which mine should Barrick buy for $142 billion. (To simplify things, assume Net Income is earned one time per year at the end of the year.) The appropriate discount rate is 6.22% compounded quarterly. (15 points)

Marin Construction Company began work on a $424,000 construction contract in 2020. During 2020, Marin incurred costs of $279,500, billed its customer for $204,500, and collected $170,500. At December 31, 2020, the estimated additional costs to complete the project total $150,500. Prepare Marin’s journal entry to record profit or loss, if any, using (a) the percentage-of-completion method and (b) the completed-contract method. (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. Round answers to 0 decimal places, e.g. 5,275.)

Six Measures of Solvency or Profitability

The following data were taken from the financial statements of Gates Inc. for the current fiscal year.

Assuming that total assets were $4,471,000 at the beginning of the current fiscal year, determine the following. When required, round to one decimal place.

As a recently hired MBA intern, you are working in a consulting capacity to provide an analysis for Al Dente's Italian Restaurant. A financial income Statement is presented below: Sales $2,698,000 Cost of sales (all variable) $1,557,563 Gross Margin $1,140,438 Operating expenses: Variable $277,975 Fixed $213,675 Total operating expenses: $491,650 Administative expenses (all fixed) $564,375 Net operating income $84,413 This income statement presents the sales, expenses and pre-tax operating income for a local eating facility. At Al Dente, the average meal cost for lunches and dinners are $20 and $40 respectively. Al Dente serves both lunch and dinner 300 days per year and serves twice as many lunches as dinners. As the MBA intern you are to prepare a managerial accounting focused report to the owners of Al Dente's Italian Restaurant, to include the following:

2. Compute the break-even volume of the number of lunches and dinners. Assume that the CM% for each meal category is the same as the average CM% as calculated in #1. Hint: To solve a break even sales mix, use the horizontal formula:

Net operating income = ($Sales – $Variable costs) – $fixed costs

Net operating income = $CM – $fixed costs

At Breakeven, NOI = $0

Therefore, $CM = $ Fixed costs

Now solve for the unit $CM for each item. Let X be the number of dinners, 2X the number of lunches. $CM is the combined total of the $CM for dinners, and the $CM for lunches.