Questions
Prepare income statements using variable costing and absorption costing. Alexandra Manufacturing manufactures a single product.​ Cost,...

Prepare income statements using variable costing and absorption costing.

Alexandra Manufacturing manufactures a single product.​ Cost, sales, and production information for the company and its single product is as​ follows:

Sales price per unit $49

Variable manufacturing costs per unit manufactured (DM,DL and variable MOH) $30

Variable operating expenses per unit sold $3

Fixed manufacturing overhead (MOH) in total for the year $114,000

Fixed operating expenses in total for the year $46,000

Units manufactured during the year 19,000 units

Units sold during the year 16,500 units

Requirement 1. Prepare an income statement for the upcoming year using variable costing.

Requirement 2. Prepare an income statement for the upcoming year using absorption costing.

In: Accounting

The president of the retailer Prime Products has just approached the company’s bank with a request...

The president of the retailer Prime Products has just approached the company’s bank with a request for a $93,000, 90-day loan. The purpose of the loan is to assist the company in acquiring inventories. Because the company has had some difficulty in paying off its loans in the past, the loan officer has asked for a cash budget to help determine whether the loan should be made. The following data are available for the months April through June, during which the loan will be used:

  1. On April 1, the start of the loan period, the cash balance will be $36,000. Accounts receivable on April 1 will total $179,200, of which $153,600 will be collected during April and $20,480 will be collected during May. The remainder will be uncollectible.

  2. Past experience shows that 30% of a month’s sales are collected in the month of sale, 60% in the month following sale, and 8% in the second month following sale. The other 2% is bad debts that are never collected. Budgeted sales and expenses for the three-month period follow:

April May June
Sales (all on account) $ 232,000 $ 476,000 $ 296,000
Merchandise purchases $ 188,000 $ 163,500 $ 135,500
Payroll $ 22,800 $ 22,800 $ 26,900
Lease payments $ 31,400 $ 31,400 $ 31,400
Advertising $ 63,600 $ 63,600 $ 41,680
Equipment purchases $ 102,000
Depreciation $ 17,800 $ 17,800 $ 17,800
  1. Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases during March, which will be paid in April, total $162,500.

  2. In preparing the cash budget, assume that the $93,000 loan will be made in April and repaid in June. Interest on the loan will total $1,280.

Required:

1. Calculate the expected cash collections for April, May, and June, and for the three months in total.

2. Prepare a cash budget, by month and in total, for the three-month period. (Cash deficiency, repayments and interest should be indicated by a minus sign.)

Prime Products
Cash Budget
April May June Quarter
Beginning cash balance
Add receipts:
Collections from customers
Total cash available
Less cash disbursements:
Merchandise purchases
Payroll
Lease payments
Advertising
Equipment purchases
Total cash disbursements
Excess (deficiency) of cash available over disbursements
Financing:
Borrowings
Repayments
Interest
Total financing
Ending cash balance

In: Accounting

Volunteer Corporation reported taxable income of $470,000 from operations this year. During the year, the company...

Volunteer Corporation reported taxable income of $470,000 from operations this year. During the year, the company made a distribution of land to its sole shareholder, Rocky Topp. The land’s fair market value was $85,000 and its tax and E&P basis to Volunteer was $58,500. Rocky assumed a mortgage attached to the land of $17,000. Any gain from the distribution will be taxed at 21 percent. The company had accumulated E&P of $780,000 at the beginning of the year.

b. Compute Volunteer's current E&P.
c. Compute Volunteer’s accumulated E&P at the beginning of next year.
d. What amount of dividend income does Rocky report as a result of the distribution?
e. What is Rocky’s income tax basis in the land received from Volunteer?

In: Accounting

Impact on EPS, Rankings, and Computations Waseca Company had 5 convertible securities outstanding during all of...

Impact on EPS, Rankings, and Computations

Waseca Company had 5 convertible securities outstanding during all of 2016. It paid the appropriate interest (and amortized any related premium or discount using the straightline method) and dividends on each security during 2016. Each of the convertible securities is described in the following table:

Security Description
10.2% bonds $200,000 face value. Issued at par. Each $1,000 bond is convertible into 28 shares of common stock.
12.0% bonds $160,000 face value. Issued at 110. Premium being amortized over 20-year life. Each $1,000 bond is convertible into 47 shares of common stock.
9.0% bonds $200,000 face value. Issued at 95. Discount being amortized over 10-year life. Each $1,000 bond is convertible into 44 shares of common stock.
8.3% preferred stock $120,000 par value. Issued at 108. Each $100 par preferred stock is convertible into 3.9 shares of common stock.
7.5% preferred stock $180,000 par value. Issued at par. Each $100 par preferred stock is convertible into 6 shares of common stock.

Additional data:

Net income for 2016 totaled $119,460. The weighted average number of common shares outstanding during 2016 was 40,000 shares. No share options or warrants are outstanding. The effective corporate income tax rate is 30%.

Required:

1. Prepare a schedule that lists the impact of the assumed conversion of each convertible security on diluted earnings per share. Round to two decimal places.

Waseca Company
Schedule of Impact on EPS
Impact
10.2% bonds $
12.0% bonds $
9.0% bonds $
8.3% preferred stock $
7.5% preferred stock $

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2. Prepare a ranking from 1-5 of the order in which each of the convertible securities should be included in diluted earnings per share. The convertible security having the most dilutive impact on diluted earnings per share is listed at the top of the ranking (i.e. "1").

Waseca Company
Schedule of Ranking
Ranking
10.2% bonds
12.0% bonds
9.0% bonds
8.3% preferred stock
7.5% preferred stock

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3. Compute basic earnings per share. Round to two decimal places.
$  per share

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4. Compute diluted earnings per share. Round to two decimal places.
$ per share

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5. Indicate the amount(s) of the earnings per share that Waseca would report on its 2016 income statement. Round to the nearest cent.

Basic earnings per share: $

Diluted earnings per share: $

In: Accounting

Equipment costing $590,000 with an expected useful life of 10 years and an expected salvage value...

Equipment costing $590,000 with an expected useful life of 10 years and an expected salvage value of $40,000, was purchased at the beginning of the year.

Calculate the depreciation expense for the first five years using:

(a) Sum-of-the-years' digits method. Do not round until final calculation. Round answers to the nearest whole number.

(b) Double-declining balance method (without straight-line switchover). Do not round until final calculation. Round answers to the nearest whole number.

In: Accounting

The price of a two-year 6% coupon bond was $100 on January 27 company issued a...

The price of a two-year 6% coupon bond was $100 on January 27
company issued a press-release where it announced that the previous CEO would resign and would be replaced by a more experienced one. That day the YTM of the bond became 5%, while on January 29th and afterwards the YTM reached 4%.Calculate the prices of the bond on January 28 and 29 . For simplicity of calculations ignore small
changes in time to maturity.
Plot the graph of the price dynamics (price on the Y axis and time on the X axis) on the date of the announcement and on the days following the announcement. Plot and explain the graph of the prices that you expect to see if the market was perfectly semi-strong form efficient. What is the name of the effect that you observe?

help to solve

In: Accounting

what are the 2 element that are an integral part of an accounting information system?

what are the 2 element that are an integral part of an accounting information system?

In: Accounting

In a 2-3 page paper, complete the case below and submit to instructor. Review the income...

In a 2-3 page paper, complete the case below and submit to instructor. Review the income statement for Uden Supply Company and answer the following:

Describe the purpose of analytical procedures performed in the planning stage of the audit.
Uden Supply has projected its 2004 gross profit at 31% of sales despite expectation for some shrinkage in margins. On the basis of Uden's operating performance in years 2001 - 2003 project your best guess for 2004. Project 2004 based on the incremental changes for each line item over the last three years.
Uden’s unaudited financial statements for the current year show a 31 percent gross profit rate. Assuming that this represents a misstatement from the amount that you developed as an expectation, calculate the estimated effect of this misstatement on net income before taxes for 20X4.
Indicate whether you believe that the difference calculated in part (c) is material. Explain your answer. (50-100 words).
Comparative income statement information for Uden Supply Company is presented in the accompanying table.

UDEN SUPPLY COMPANY

Comparative Income Statement

Years Ended December 20X1, 20X2, and 20X3

(Thousands)

20X1 Audited 20X2 Audited 20X3 Audited 20X4 Expected

Sales 8,700 9,400 10,100

Cost of goods sold 6,000 6,500 7,000

Gross profit    2,700 2,900 3,100

Sales Commissions 610 660 710

Advertising 175 190 202

Salaries 1,061 1,082 1,103

Payroll taxes 184 192 199

Employee benefits 167 174 181

Rent 60 61 62

Depreciation   60 63 66

Supplies   26 28 30

Utilities 21 22 23

Legal and accounting 34 37 40

Miscellaneous 12 13 14

Interest expense 210 228 240

Net income before taxes 80 150 230

Incomes taxes 18 33 50

Net income 62 117 180

In: Accounting

Direct Materials Purchases Budget Anticipated sales for Safety Grip Company were 35,000 passenger car tires and...

Direct Materials Purchases Budget

Anticipated sales for Safety Grip Company were 35,000 passenger car tires and 11,000 truck tires. Rubber and steel belts are used in producing passenger car and truck tires according to the following table:

Passenger Car Truck
Rubber 25 lbs. per unit 58 lbs. per unit
Steel belts 7 lbs. per unit 18 lbs. per unit

The purchase prices of rubber and steel are $3.2 and $4.2 per pound, respectively. The desired ending inventories of rubber and steel belts are 33,000 and 7,000 pounds, respectively. The estimated beginning inventories for rubber and steel belts are 39,000 and 6,000 pounds, respectively.

Prepare a direct materials purchases budget for Safety Grip Company for the year ended December 31, 20Y9.

Safety Grip Company
Direct Materials Purchases Budget
For the Year Ending December 31, 20Y9
Rubber Steel Belts Total
Pounds required for production:
Passenger tires lbs. lbs.
Truck tires
Total pounds available lbs. lbs.
Total units purchased lbs. lbs.
Unit price x $ x $
Total direct materials to be purchased $ $ $

In: Accounting

RTI Company’s master budget calls for production and sale of 19,300 units for $98,430; variable costs...

RTI Company’s master budget calls for production and sale of 19,300 units for $98,430; variable costs of $44,390; and fixed costs of $18,600. During the most recent period, the company incurred $33,300 of variable costs to produce and sell 18,600 units for $86,300. During this same period, the company earned $26,300 of operating income. (Do not round intermediate calculations. Round final answer to the nearest whole dollar.)

Required:
1.

Determine the following for RTI Company:

a.

Flexible-budget operating income.

b.

Flexible-budget variance, in terms of contribution margin.

c.

Flexible-budget variance, in terms of operating income.

d.

Sales volume variance, in terms of contribution margin.

e.

Sales volume variance, in terms of operating income.

In: Accounting

iaz Company owns a milling machine that cost $125,400 and has accumulated depreciation of $93,000. Prepare...

iaz Company owns a milling machine that cost $125,400 and has accumulated depreciation of $93,000. Prepare the entry to record the disposal of the milling machine on January 3 under each of the following independent situations.

  1. The machine needed extensive repairs, and it was not worth repairing. Diaz disposed of the machine, receiving nothing in return.
  2. Diaz sold the machine for $17,300 cash.
  3. Diaz sold the machine for $32,400 cash.
  4. Diaz sold the machine for $40,400 cash

In: Accounting

At the end of 2017 fiscal year, L&Z Co. has the following information: Balance Sheets Current...

At the end of 2017 fiscal year, L&Z Co. has the following information:

Balance Sheets

Current Assets

Accounts receivable, net of allowance of $1,076                               $16,194

a)   During 2018, the company wrote off $200 of specific accounts that were deemed uncollectable. Prepare the journal entry to record the write-off of these accounts receivable. (4 pts)

b) At the end of 2018 (12/31/2018), management estimate 8% of account receivables balance will likely be difficult to collect. The company’s Accounts Receivable has a gross ending balance of $17,600 . Prepare the journal entry to record bad debt expense for 2018 using the percentage of receivables method (the balance sheet approach). (8 pts)

c)  If credit sales for 2018 were $118,000, compute the amount of cash collected from customers in 2018 (note: take into account the event in part a). (6 pts)

d) On Oct 1st , 2018, the company sold coal to Beta Electric, receiving a 6-month, noninterest-bearing note for $100,000. The effective interest rate on the note is 8%. The company has a fiscal year-end of 12/31. (10 pts)

  1. i. Prepare the journal entry to record the sale. (6 pts)

ii. Prepare adjusting journal entries regarding the note receivable on 12/31/2018. (4 pts)

In: Accounting

Helix Corporation produces prefabricated flooring in a series of steps carried out in production departments. All...

Helix Corporation produces prefabricated flooring in a series of steps carried out in production departments. All of the material that is used in the first production department is added at the beginning of processing in that department. Data for May for the first production department follow: Percent Complete Units Materials Conversion Work in process inventory, May 1 73,000 85 % 50 % Work in process inventory, May 31 53,000 60 % 30 % Materials cost in work in process inventory, May 1 $ 57,900 Conversion cost in work in process inventory, May 1 $ 17,000 Units started into production 251,200 Units transferred to the next production department 271,200 Materials cost added during May $ 393,570 Conversion cost added during May $ 244,261 Required:

1. Assume that the company uses the weighted-average method of accounting for units and costs. Determine the equivalent units for May for the first process.

2. Compute the costs per equivalent unit for May for the first process. (Round your answers to 2 decimal places.)

3. Determine the total cost of ending work in process inventory and the total cost of units transferred to the next process in May. (Round your intermediate calculations to 2 decimal places.)

In: Accounting

3. McCormick & Company is considering establishing new products in a new factory in Largo, Maryland....

3. McCormick & Company is considering establishing new products in a new factory in Largo, Maryland. Theproject is expected to last for eight years. To determine the right financing option, you need to determine the appropriate discount based on the weighted average cost of capital. The cost of equity is estimated using the capital asset pricing model. Cash flows are assumed to be steady, the nominal risk-free rate for the short-term US government treasury bills is 1.5 percent, the 10-year government bonds rate is 2.5 percent, and the inflation rate is 2.54 percent. What is the real risk-free rate? Then, assume a beta of 1.2 and a market return of 5 percent. What is the cost of equity?

4. McCormick& Company is considering purchasing a new factory in Largo, Maryland. After you and your team have conducted an analysis of alternative investments and cost of capital, McCormick has decided that a risk premium of 13 percent is appropriate for the investment into a new factory. Adding the risk premium to the current risk-free rate of 7 percent, what is the minimum acceptable rate of return?

1.Liz is retiring from the US Postal Service and will turn 70 next year. After 39 years of service, her monthly pension is $7,500.  She does not qualify for Social Security.  Liz has accumulated $700,000 in her thrift savings plan.  The government requires that she convert it to an annuity or move it to a IRA.  All of the money is pretax and tax can be avoided if it is moved to the IRA.  The annuity will be calculated based on her life expectancy of 17.5 years after age 70. The current USTreasury long-term bond rate is 3 percent. How much will she get as an annuity monthly payment?  Should Liz take the annuity or move the money to the IRA? The tax regulations require that she take out 4 percent of the amount each year.

2. Kathy plans to move to Maryland and take a job at McCormick as the assistant director of HR. She and her husband, Stan, plan to buy a house in Garrison, MD, and their budget is $500,000. They have $100,000 for the down payment and McCormick will pay for closing costs. They are considering either a 30-year mortgage at 4.5 percent annual rate or a 15 year mortgage at 4 percent. Calculate the monthly payment for each. Property taxes and insurance will add $1,000 per month to which ever mortgage they choose. What should Kathy and Stan do?

In: Accounting

Why is it important to study and understand accounting? Explain the accounting equation and define its...

Why is it important to study and understand accounting? Explain the accounting equation and define its terms.

In: Accounting