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

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’s managers have made the following additional assumptions and estimates:

1. Estimated sales for July, August, September, and October will be $400,000, $420,000, $410,000, and $430,000, 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 15% 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 $56,000. Each month $8,000 of this total amount is depreciation expense and the remaining $48,000 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.

Prepare a balance sheet as of September 30.

Luke Corporation produces a variety of products, each within their own division. Last year, the managers at Luke developed and began marketing a new chewing gum, Bubbs, to sell in vending machines. The product, which sells for $5.60 per case, has not had the market success that managers expected and the company is considering dropping Bubbs.

The product-line income statement for the past 12 months follows:

All products at Luke receive an allocation of corporate overhead costs, which is computed as 5 percent of product revenue. The 5 percent rate is computed based on the most recent year’s corporate cost as a percentage of revenue. Data on corporate costs and revenues for the past two years follow:

Roy O. Andre, the product manager for Bubbs, is concerned about whether the product will be dropped by the company and has employed you as a financial consultant to help with some analysis. In addition to the information given above, Mr. Andre provides you with the following data on product costs for Bubbs:

1. Calculate the break-even for Bubbs in cases per month based on production fixed costs and the Contribution Margin calculated above.

2. Write out a profit formula for Bubbs using Q, CM, and FC as in the prior question. For the desired profit note the after tax profit is .05 P Q / (1-TX), where P is the selling price per case and TX is the tax rate. Now solve for Q to determine the number of case Bubbs must produce and sell per month to earn a 5% return on revenues

SafeData Corporation has the following account balances and respective fair values on June 30:

Privacy First, Inc., obtained all of the outstanding shares of SafeData on June 30 by issuing 20,000 shares of common stock having a $1 par value but a $70 fair value. Privacy First incurred $10,000 in stock issuance costs and paid $70,000 to an investment banking firm for its assistance in arranging the combination. In negotiating the final terms of the deal, Privacy First also agrees to pay $95,000 to SafeData’s former owners if it achieves certain revenue goals in the next two years. Privacy First estimates the probability adjusted present value of this contingent performance obligation at $28,500.

1. What is the fair value of the consideration transferred in this combination?
2. How should the stock issuance costs appear in Privacy First’s postcombination financial statements?
3. How should Privacy First account for the fee paid to the investment bank?
4. How does the issuance of these shares affect the stockholders’ equity accounts of Privacy First, the parent?
5. How is the fair value of the consideration transferred in the combination allocated among the assets acquired and the liabilities assumed?
6. If Privacy First’s stock had been worth only $45 per share rather than $70, how would the consolidation of SafeData’s assets and liabilities have been affected?

The manager of ABC Company bought 50 trucks for the business use. When he recorded the trucks, he doubled the estimated life of the trucks. The second year he increased the residual value. Requirements 1. Explain why he doubled the estimated life in the first year. 2. Explain why he increased the residual value. 3. Discuss the GAAP issues of each of the above 4. Discuss the ethical issue of each of the above

each requirement with at least 5 complete grammatically correct sentences.

Scottsdale Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2017, the following balances relate to this plan.

Plan assets $480,000

Projected benefit obligation 625,000

Accumulated OCI (PSC) 100,000 Dr.

Accumulated OCI (Gain/Loss) 85,000 Cr.

As a result of the operation of the plan during 2017, the following additional data are provided by the actuary:

Service cost for 2017 $90,000

Settlement rate 9%

Actual return on plan assets in 2017 57,000

Expected return on plan assets 10%

Unexpected loss from change in projected benefit obligation, due to change in actuarial predictions 76,000

Contributions in 2017 99,000

Benefits paid retirees in 2017 85,000

Avg. remaining service life (all employees) 12 years

1.Use the spreadsheet Pensions to prepare a pension worksheet. On the pension worksheet, compute pension expense, pension asset/liability, projected benefit obligation, plan assets, prior service cost, and net gain or loss.

2.Prepare the journal entry using the spreadsheet Journal Entries to record pension expense in 2017.

3.Indicate the reporting of the 2017 pension amounts in the income statement and balance sheet using the spreadsheet Pensions.

4.What is the amount of deferred pension gain or loss that the company will carry forward to 2018? Compute the same items as in (#1), assuming that the expected rate of return is 14% and the Accumulated OCI (Gain/Loss) is a Debit balance at January 1, 2017.

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King City Specialty Bikes (KCSB) produces high-end bicycles. Costs to manufacture and market the bicycles at last year's volume level of 2,050 bicycles per month are shown in the following table:

KCSB expects to produce and sell 2,450 bicycles per month in the coming year. The bicycles sell for $590 each.

An outside contractor makes an offer to assemble 750 of KCSB's bicycles per month and ship them directly to KCSB's customers as orders are received from its sales force. It will charge KCSB $170 per bicycle. KCSB would provide the materials for each bicycle, but the outside contractor would assemble, box, and ship the bicycles. If KCSB accepts the offer, its variable manufacturing costs would be reduced by 40% for the 750 bicycles assembled by the outside contractor, and its variable nonmanufacturing costs for those 750 bicycles would be cut by 60%. In addition, it would be able to save $22,550 of fixed manufacturing costs; fixed nonmanufacturing costs would be unchanged.

KCSB's marketing manager thinks that it could sell 85 specialty racing bicycles per month for $6,500 each, and its production manager thinks that it could use the idle resources to produce each of these bicycles for variable manufacturing costs of $5,300 per bicycle and variable nonmanufacturing costs of $300 per bicycle.

REQUIRED [Note: Round unit cost computations to the nearest cent]

What is the difference in KCSB's monthly costs between accepting the proposal and rejecting the proposal?   (Note: If the costs of accepting the proposal are less than the costs of rejecting it, enter the difference as a positive number; if the accept costs are more than the reject costs, enter the difference as a negative number.)

The Hope Co. sells direct to retail customers and also to wholesalers. On January,
1, 2018 the balance of the retail accounts receivable was P418,000 while the allowance for bad debts with
respect to retail customers was a credit of P15,200.
The following summary pertains only to retail sales since 2015
Credit Sales - Bad Debts Written off - Bad Debts Recoveries
2015 - P2,220,000 P52,000 P4,300
2016 - 2,450,000 59,000 7,500
2017 - 2,930,000 60,000 7,200
2018 - 3,000,000 62,000 8,400
Bad debts are provided for as a percentage of credit sates. The accountant calculates the percentage annually
by using the experience of the three years prior to the current year. The formula is bad debts written off less
recoveries expressed as a percentage of the credit sales for the same period. Total collections from customers
amounted to P2,760,40. This amount included P50,000 for which the goods are to be delivered next year. During
the year. The company recorded the bad debts written off as bad debts expense
Based on the above and the result of your audit, answer the following:
1. The percentage to be used to compute the allowance for bad debt on December 31,2018 is
2. How much is the doubtful accounts expense for 2018?
3. The doubtful accounts expense for 2018 is overstated by
4. The ledger balance of the accounts receivable after necessary adjust on December 31, 2018 was a debit of
5. The ledger balance of the allowance for bad debts after necessary adjustments on December 31, 2018 was
a credit of

Basil has $123,000 AGI (before any rental loss). He also owns several rental properties in which he actively participates. The rental properties produced a $36,550 loss in the current year. How much, if any, of the rental loss can Basil deduct in the current year?

1. True___False___ The issuance of Common Stock produces Sales (or Revenue) for a corporation.       

2. True___False___ The issuance of Common Stock produces a profit for a corporation.               

3. True___False___ Dollar amounts on a Balance Sheet are valid only for a single date.

4. True___False___ An Income Statement provides information about a company’s performance.

5. True___False___ A Journal entry always consists of at least one Debit and one Credit.

6. True___False___ The Journal provides a chronological record of a company’s transactions.

The Brookstone Company produces 9 volt batteries and AAA batteries. The Brookstone Company uses a plantwide rate to apply overhead based on direct labor hours. The following data is given:

What is the predetermined overhead rate? (round to 2 decimal places)

a.$0.65

b.$0.70

c.$0.67

d.$0.62

The following information is available for Department C for the month of June:

Materials are added at the beginning of the process. Round unit costs to two decimal places.

The cost of ending work in process using the weighted average method is

a. $23,760.

b.$16,992.

c.$21,312.

d.None of these choices are correct

Due to erratic sales of its sole product—a high-capacity battery for laptop computers—PEM, Inc., has been experiencing financial difficulty for some time. The company’s contribution format income statement for the most recent month is given below:

Required:

1. Compute the company’s CM ratio and its break-even point in unit sales and dollar sales.

2. The president believes that a $6,800 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $82,000 increase in monthly sales. If the president is right, what will be the increase (decrease) in the company’s monthly net operating income?

3. Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $33,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)?

4. Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would grow sales. The new package would increase packaging costs by $0.40 per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,400?

5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $54,000 each month.

a. Compute the new CM ratio and the new break-even point in unit sales and dollar sales.

b. Assume that the company expects to sell 20,800 units next month. Prepare two contribution format income statements, one assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, as well as in total, for each alternative.)

c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20,800)?

Multiple steps are requried for this question

Adger Corporation is a service company that measures its output based on the number of customers served. The company provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results for May as shown below:

When preparing its planning budget the company estimated that it would serve 30 customers per month; however, during May the company actually served 35 customers.

Please answer the following letters towards the question

a. What amount of revenue would be included in Adger’s flexible budget for May?

b. What amount of employee salaries and wages would be included in Adger’s flexible budget for May?

c. What amount of travel expenses would be included in Adger’s flexible budget for May?

d. What amount of other expenses would be included in Adger’s flexible budget for May?

e. What net operating income would appear in Adger’s flexible budget for May?

f. What is Adger’s revenue variance for May? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

g. What is Adger’s employee salaries and wages spending variance for May? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

h. What is Adger’s travel expenses spending variance for May? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

i What is Adger’s other expenses spending variance for May? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

j.  What amount of revenue would be included in Adger’s planning budget for May?

k.  What amount of employee salaries and wages would be included in Adger’s planning budget for May?

l. What amount of travel expenses would be included in Adger’s planning budget for May?

m. What amount of other expenses would be included in Adger’s planning budget for May?

n. What activity variance would Adger report in May with respect to its revenue? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

o. What activity variances would Adger report with respect to each of its expenses for May? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)