subject: company accounting    

  Consolidation

Indigo Ltd gives $55 000 as an interest-free loan to Violet Ltd on 1 July 2019. Violet Ltd made a $20 000 repayment by 30 June 2020.Violet Ltd owns all the share capital of Indigo Ltd. The following transactions are independent:

1. Indigo Ltd rented a spare warehouse to Violet Ltd starting from 1 July 2019 for 1 year. The total charge for the rental was $3 500, and Violet Ltd paid half of this amount to Indigo Ltd on 1 January 2020 and the rest on 1 July 2020.
2. During March 2020, Indigo Ltd declared a $5000 dividend. The dividend was paid in August 2020.

Required

In relation to the above intragroup transactions:

1.      Prepare adjusting journal entries for the consolidation worksheet at 30 June 2020.

2.     Explain in detail why you made each adjusting journal entry.

Penny Worth Band Uniforms uses a standard costing system. The standard material and labor costs for producing a marching band hat are as follows:

During May, the company produced 3,340 band hats; 3,870 yards of material were purchased for $41,022, and 3,050 yards of material were used in production. Also during May, 4,240 direct labor hours were worked at a cost of $59,360. Calculate material price and quantity variances and labor rate and efficiency variances. Indicate whether the variances are favorable or unfavorable.

Material price variance $ _______ (favorable or unfavorable)

Material Quantity variance $ _______ (favorable or unfavorable)

LAbor rate variance $ _______ (favorable or unfavorable)

Labor efficiency variance $ _______ (favorable or unfavorable)

Pureform, Inc., uses the weighted-average method in its process costing system. It manufactures a product that passes through two departments. Data for a recent month for the first department follow:

The beginning work in process inventory was 90% complete with respect to materials and 75% complete with respect to labor and overhead. The ending work in process inventory was 70% complete with respect to materials and 10% complete with respect to labor and overhead.

Required:

1. Compute the first department's equivalent units of production for materials, labor, and overhead for the month.

2. Determine the first department's cost per equivalent unit for materials, labor, and overhead for the month. (Round your answers to 2 decimal places.)

Johnson, Inc. manufactures car seats in its Houston plant. Each car seat passes through the Assembly Dept and the Testing Dept. This problem focuses on the Assembly Dept. the process-costing system at Johnson, Inc. has a single direct-cost category (direct materials) and a single indirect-cost category (conversion costs). Direct materials are added at the beginning of the process. Conversion costs are added evenly during the process. When the Assembly Dept finished work on each car seat, it is immediately transferred to Testing.

Johnson, Inc. uses the First In First Out Method of process costing. Data for the Assembly Dept for June 2016 is:

                                                      Physical Units             Direct                  Conversion     

                                                (Car Seats)                 Materials           Costs

Work-in-process, June 1*             5,000               $1,250,000      $402,750

Started during Jun 2016              20,000

Completed during Jun 2016        22,500

Work-in-process Jun 30**            2,500

Total costs added during

   June 2016                                                           $4,500,000      $2,337,500

*Degree of completion: DM ?%; CC 60%

**Degree of completion: DM ?%; CC 70%

1. For each cost category; compute equivalent units in the Assembly Dept. Show

      physical units in the first column of the schedule.

2. For each cost category, summarize total Assembly Dept costs for June 2016 and

             calculate the cost per equivalent unit.

3. Assign total costs to units completed and transferred out and to units in ending Work in Process

4. Prepare the journal entry to move costs from WIP-Assembly Dept to the WIP-         

Testing Department.

Sunspot Beverages, Ltd., of Fiji uses the weighted-average method in its process costing system. It makes blended tropical fruit drinks in two stages. Fruit juices are extracted from fresh fruits and then blended in the Blending Department. The blended juices are then bottled and packed for shipping in the Bottling Department. The following information pertains to the operations of the Blending Department for June.

Required:

1. Calculate the Blending Department's equivalent units of production for materials and conversion in June.

2. Calculate the Blending Department's cost per equivalent unit for materials and conversion in June.

3. Calculate the Blending Department's cost of ending work in process inventory for materials, conversion, and in total for June.

4. Calculate the Blending Department's cost of units transferred out to the Bottling Department for materials, conversion, and in total for June.

5. Prepare a cost reconciliation report for the Blending Department for June.

What is the formula for the following ratios AND what do they measure?

Inventory turnover

Days' sales in inventory

Show-Off, Inc. sells merchandise through three retail outlets—in Las Vegas, Reno, and Sacramento—and operates a general corporate headquarters in Reno. A review of the company’s income statement indicates a record year in terms of sales and profits. Management, though, desires additional insights about the individual stores and has asked that Judson Wyatt, a newly hired intern, prepare a segmented income statement. The following information has been extracted from Show-Off’s accounting records:

• The sales volume, sales price, and purchase price data follow:

• The following expenses were incurred for sales commissions, local advertising, property taxes, management salaries, and other noncontrollable (but traceable) costs:

1. Local advertising decisions are made at the store manager level. The sales manager’s salary in Sacramento is determined by the Sacramento store manager; in contrast, store manager salaries are set by Show-Off’s vice president.

• Nontraceable fixed corporate expenses total $333,450.
• The company uses a responsibility accounting system.

Required:

1. Assume the role of Judson Wyatt and prepare a segmented income statement for Show-Off.
2. Identify the probable causes for the poor performance of the weakest store.
3. Which of the following should be reviewed in evaluating the performance of the store manager?

Assume the role of Judson Wyatt and prepare a segmented income statement for Show-Off. (Round your answers to the nearest whole dollar.)

• Required 1

Identify the probable causes for the poor performance of the weakest store. (Select which of the following statements (is) are true by selecting an "X".)

Which of the following should be reviewed in evaluating the performance of the store manager?

Ending inventory presented on the balance sheet must be based on the Lower of Cost or Market. What does this mean?

Cone Corporation is in the process of preparing its December 31, 2018, balance sheet. There are some questions as to the proper classification of the following items:

1. $56,000 in cash restricted in a savings account to pay bonds payable. The bonds mature in 2022.
2. Prepaid rent of $30,000, covering the period January 1, 2019, through December 31, 2020.
3. Note payable of $212,000. The note is payable in annual installments of $26,000 each, with the first installment payable on March 1, 2019.
4. Accrued interest payable of $18,000 related to the note payable.
5. Investment in marketable securities of other corporations, $92,000. Cone intends to sell one-half of the securities in 2019.

Required:
Prepare a partial classified balance sheet to show how each of the above items should be reported.

Analysis and Interpretation of Profitability
Balance sheets and income statements for Best Buy Co., Inc. follow.

NOTE: Use net income attributable to controlling interests in your computations, when applicable.

a. Compute ROE for 2011.

Do not round until your final answer. Round answer to two decimal places.

ROE =Answer%  

b. Confirm that ROE equals ROE computed using the component measures for profit margin, asset turnover, and financial leverage using: ROE = PM * AT * FL.

   Compute the components of ROE.

   Do not round until your final answer. Round answer to two decimal places.

  PM = Answer%
   AT = Answer
   FL = Answer
  

c. Compute adjusted ROA. Assume a tax rate of: 37.0%.

Round answer to two decimal places.  
Adjusted ROA =Answer%

Compute and Interpret Measures for DuPont Disaggregation Analysis
Balance sheets and income statements for 3M Company follow.

a. Compute the DuPont model component measures for profit margin, asset turnover, and financial leverage. Then, compute ROA.

Round profit margin and ROA to two decimal places (ex: 0.12345 = 12.35%)
Round asset turnover and financial leverage to three decimal places.

Profit margin Answer

%
Asset turnover Answer

Financial leverage Answer

ROA Answer

b. Compute ROE. Confirm that ROE equals ROE computed using the component measures from part a (ROE = PM x AT x FL).
Round answer to two decimal places (ex: 0.12345 = 12.35%)
Answer

c. Compute adjusted ROA (assume a statutory tax rate of 37% and pretax net interest expense of $123).
Round answer to two decimal places (ex: 0.12345 = 12.35%)

What is Financial Statement Analysis?

What is Porter’s Five Forces Framework? Please identify each force individually.