1. Statement of Cost of Goods Manufactured for a Manufacturing Company

   Cost data for Sandusky Manufacturing Company for the month ended January 31 are as follows:

   Inventories	January 1		January 31
   Materials	$208,750		$187,880
   Work in process	139,860		125,880
   Finished goods	108,550		127,760

   Direct labor		$375,750
   Materials purchased during January		400,800
   Factory overhead incurred during January:
   	Indirect labor	40,080
   	Machinery depreciation	24,220
   	Heat, light, and power	8,350
   	Supplies	6,680
   	Property taxes	5,850
   	Miscellaneous costs	10,860

   a. Prepare a cost of goods manufactured statement for January.

   Sandusky Manufacturing Company
   Statement of Cost of Goods Manufactured
   For the Month Ended January 31
   			$
   Direct materials:
   	$
   	$
   		$
   Factory overhead:
   	$
   Total factory overhead
   Total manufacturing costs incurred during January
   Total manufacturing costs			$
   Cost of goods manufactured			$

   b. Determine the cost of goods sold for January.
   $

Check My Work

1. Austin Co. manufactures a product called Aster in a three-process series. All materials are introduced at the beginning of the first process. Austin uses the first-in, first-out method of inventory costing. Unit and cost data for the first process (Department A) for the month of December follow:
   

   	Units	Completion	Cost
   Work in process inventory:
   December 1	12,000	60%	$140,400
   December 31	5,000	40%	?
   Started in December:	14,000
   Direct materials cost			106,400
   Conversion cost			70,310
   Completed in December	21,000		?

   Prepare Austin's Department A cost of production report for December.

   Round your cost per equivalent unit amounts to two decimal places. Round all other amounts to the nearest dollar. If an amount value is zero enter "0" as answer.

   Austin Company
   Cost of Production Report—Department A
   For the Month Ended December 31
   Unit Information
   Units charged to production:
   Inventory in process, December 1
   Received from materials storeroom
   Total units accounted for by Department A
   Units to be assigned cost:
   		Equivalent Units
   	Whole Units	Direct Materials	Conversion
   Inventory in process, December 1 (60% completed)
   Started and completed in December
   Transferred to Dept. B in December
   Inventory in process, December 31 (40% complete)
   Total units to be assigned costs
   Cost Information
   COSTS:
   		Direct Materials Costs	Conversion Costs
   Costs per equivalent unit:
   Total costs for December in Department A		$	$
   Total equivalent units
   Cost per equivalent unit		$	$
   Costs charged to production:
   	Direct Materials Costs	Conversion Costs	Total Costs
   Inventory in process, December 1			$
   Costs incurred in December
   Total costs accounted for by Department A			$
   Costs allocated to completed and partially completed units:
   Inventory in process, December 1, balance			$
   To complete inventory in process, December 1	$	$
   Started and completed in December
   Transferred to finished goods in December			$
   Inventory in process, December 31
   Total costs assigned by Department A			$

Your assistant prepared the following bank reconciliation statement. It appears that the statement is unacceptable and the task of preparing a proper reconciliation falls upon you.

Required:
1. Prepare a proper bank reconciliation showing the true Cash balance.

BRANDON COMPANY Bank Reconciliation May 31, 2017

Company's Books Bank Statement Balance per books Balance per bank Add Add Deduct Deduct

• 1

  Record to collection of EFT.

• 2

  Record to error, bank service charges, and NSF cheque.

2. Prepare the necessary journal entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1.

In 2020, Elaine paid $2,440 of tuition and $1,160 for books for her dependent son to attend State University this past fall as a freshman. Elaine files a joint return with her husband.

What is the maximum American opportunity tax credit that Elaine can claim for the tuition payment and books in each of the following alternative situations? (Leave no answer blank. Enter zero if applicable.)

Elaine’s AGI is $88,000.

What is the American opportunity tax credit?

2. In 2020, Laureen is currently single. She paid $2,400 of qualified tuition and related expenses for each of her twin daughters Sheri and Meri to attend State University as freshmen ($2,400 each for a total of $4,800). Sheri and Meri qualify as Laureen’s dependents. Laureen also paid $1,750 for her son Ryan’s (also Laureen’s dependent) tuition and related expenses to attend his junior year at State University. Finally, Laureen paid $1,250 for herself to attend seminars at a community college to help her improve her job skills. (Leave no answer blank. Enter zero if applicable.)

a. What is the maximum amount of education credits Laureen can claim for these expenditures? Laureen's AGI is $45,000. If Laureen claims education credits for her three children and herself, how much credit is she allowed to claim in total? If she claims education credits for her children, how much of her children’s tuition costs that do not generate credits may she deduct as for AGI expenses?

-American opportunity tax credit? _______

Lifetime learning credit?_______

For AGI deduction?_______

3.In 2020, Laureen is currently single. She paid $2,400 of qualified tuition and related expenses for each of her twin daughters Sheri and Meri to attend State University as freshmen ($2,400 each for a total of $4,800). Sheri and Meri qualify as Laureen’s dependents. Laureen also paid $1,750 for her son Ryan’s (also Laureen’s dependent) tuition and related expenses to attend his junior year at State University. Finally, Laureen paid $1,250 for herself to attend seminars at a community college to help her improve her job skills.

b. Laureen’s AGI is $95,000. What is the maximum amount of education deductions Laureen can claim to the extent the costs don’t generate a credit?

For AGI deduction?_______

4.
In 2020, Laureen is currently single. She paid $2,400 of qualified tuition and related expenses for each of her twin daughters Sheri and Meri to attend State University as freshmen ($2,400 each for a total of $4,800). Sheri and Meri qualify as Laureen’s dependents. Laureen also paid $1,750 for her son Ryan’s (also Laureen’s dependent) tuition and related expenses to attend his junior year at State University. Finally, Laureen paid $1,250 for herself to attend seminars at a community college to help her improve her job skills. (Leave no answer blank. Enter zero if applicable.)

c. Laureen’s AGI is $45,000 and Laureen paid $12,100 (not $1,750) for Ryan to attend graduate school (i.e., his fifth year, not his junior year).

-American opportunity tax credit? _______

Lifetime learning credit?_______

5.This year Luke has calculated his gross tax liability at $2,240. Luke is entitled to a $3,060 nonrefundable personal tax credit, a $1,830 business tax credit, and a $820 refundable personal tax credit. In addition, Luke has had $2,850 of income taxes withheld from his salary. (Input the amount as a positive value.)

What is Luke’s net tax due or refund?

6.

In 2020, Zach is single with no dependents. He is not claimed as a dependent on another’s return. All of his income is from salary and he does not have any for AGI deductions.

What is his earned income credit in the following alternative scenarios? Use Exhibit 8-10. (Round your intermediate calculations to whole dollar amount. Round your final answer to the nearest whole dollar amount. Leave no answer blank. Enter zero if applicable.)

d. Zach is 24 years old and his AGI is $4,100.

What is the earned income credit?_____

7.

Julie paid a day care center to watch her two-year-old son while she worked as a computer programmer for a local start-up company.

What amount of child and dependent care credit can Julie claim in each of the following alternative scenarios? Use Exhibit 8-9

a. Julie paid $2,180 to the day care center and her AGI is $50,000

What is the child & dependent care credit?___

Top executive officers of Tildon Company, a merchandising firm, are preparing the next year’s budget. The controller has provided everyone with the current year’s projected income statement.

Cost of goods sold is usually 70 percent of sales revenue, and selling and administrative expenses are usually 10 percent of sales plus a fixed cost of $30,000. The president has announced that the company’s goal is to increase net income by 15 percent.

Required

The following items are independent of each other:

A. Prepare a pro forma income statement. What percentage increase in sales would enable the company to reach its goal?

B. The market may become stagnant next year, and the company does not expect an increase in sales revenue. The production manager believes that an improved production procedure can cut cost of goods sold by 2 percent. Prepare a pro forma income statement still assuming the President's goal to increase net income by 15 percent. Calculate the required reduction in selling & administrative expenses to achieve the budgeted net income.

C. The company decides to escalate its advertising campaign to boost consumer recognition, which will increase selling and administrative expenses to $230,000. With the increased advertising, the company expects sales revenue to increase by 15 percent. Assume that cost of goods sold remains a constant proportion of sales. Prepare a pro forma income statement. Will the company reach its goal?

3) What’s the difference between “financial statement materiality” and “performance materiality” and how are they used in an audit. Provide an example.

Port Ormond Carpet Company manufactures carpets. Fiber is placed in process in the Spinning Department, where it is spun into yarn. The output of the Spinning Department is transferred to the Tufting Department, where carpet backing is added at the beginning of the process and the process is completed. On January 1, Port Ormond Carpet Company had the following inventories:

Departmental accounts are maintained for factory overhead, and both have zero balances on January 1. Manufacturing operations for January are summarized as follows:

Journal

1. Journalize the entries to record the operations, using the dates provided with the summary of manufacturing operations. Refer to the Chart of Accounts for exact wording of account titles.

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JOURNAL

ACCOUNTING EQUATION

Final Questions

2. Compute the January 31 balances of the inventory accounts.

3. Compute the January 31 balances of the factory overhead accounts. Enter all amounts as positive numbers.

Jarvene Corporation uses the FIFO method in its process costing system. The following data are for the most recent month of operations in one of the company’s processing departments:

The cost of beginning inventory according to the company’s costing system was $7,830 of which $4,824 was for materials and the remainder was for conversion cost. The costs added during the month amounted to $184,110. The costs per equivalent unit for the month were:

Required:

1. Compute the total cost per equivalent unit for the month.

2. Compute the equivalent units of material and conversion in the ending inventory.

3. Compute the equivalent units of material and conversion that were required to complete the beginning inventory.

4. Compute the number of units started and completed during the month.

5. Compute the cost of ending work in process inventory for materials, conversion, and in total for the month.

6. Compute the cost of the units transferred to the next department for materials, conversion, and in total for the month.

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2
• Required 3
• Required 4
• Required 5
• Required 6

Compute the total cost per equivalent unit for the month. (Round your answer to 2 decimal places.)

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2
• Required 3
• Required 4
• Required 5
• Required 6

Compute the equivalent units of material and conversion in the ending inventory.

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2
• Required 3
• Required 4
• Required 5
• Required 6

Compute the equivalent units of material and conversion that were required to complete the beginning inventory.

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2
• Required 3
• Required 4
• Required 5
• Required 6

Compute the number of units started and completed during the month.

• Required 1
• Required 2
• Required 3
• Required 4
• Required 5
• Required 6

Compute the cost of ending work in process inventory for materials, conversion, and in total for the month. (Round your intermediate calculations to 2 decimal places.)

Compute the cost of the units transferred to the next department for materials, conversion, and in total for the month. (Round your intermediate calculations to 2 decimal places.)

(4) Performance-Based Share Option Compensation Plan

On January 1, 2016, Pierce Company establishes a performance-based share option plan for its 80 top executives. The terms of the plan are that each executive is granted a maximum of 200 options after completing a 3-year service period. The exact number of options granted, however, depends on the percentage increase in sales over the 3-year period. The terms are: (1) if sales increase between 0% and 3%, each executive is granted 90 options; (2) if sales increase between 4% and 6%, each executive is granted 140 options; and (3) if sales increase at least 7%, each executive is granted the maximum number of options. Each option entitles the executive to acquire one share of the company’s $10 par common stock at a price of $45. The options expire at the end of 4 years.

On the grant date, Pierce uses an option pricing model to estimate that the fair value of each share option is $15.50. Pierce’s employee turnover rate is expected to be 16% over the service period. At the end of 2017, because of lower turnover, Pierce revises its estimated turnover rate to 14% for the service period. At the end of 2018, options vest for 68 executives. On February 3, 2019, 50 executives exercise their options when the market price of the company’s common stock is $62 per share. During the remainder of the year, the market price declines so that at the end of 2019 the other 18 executives allow their options to expire.

Based on a projection of past trends, on the grant date Pierce estimates that its sales will increase about 5% by the end of 2018. This estimate appears accurate through 2017. However, in the last half of 2018, sales increase so much that at the end of 2018 Pierce determines that its total sales have increased by 7% over the 3-year service period. All inventory is shipped by Pierce to its customers under FOB destination terms.

Required:

Prepare Pierce’s memorandum entry and the journal entry on December 31, 2016 in regard to this plan. Additional Instructions

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GENERAL JOURNAL

Prepare Pierce’s memorandum entry and the journal entry on December 31, 2017 in regard to this plan. Additional Instructions

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GENERAL JOURNAL

Prepare Pierce’s memorandum entry and the journal entry on December 31, 2018 in regard to this plan. Additional Instructions

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GENERAL JOURNAL

Prepare Pierce’s memorandum entry and the journal entries on February 3, 2019 and December 31, 2019 in regard to this plan. Additional Instructions

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GENERAL JOURNAL

Show how the account(s) related to the plan is (are) reported in the shareholders’ equity section of Pierce’s December 31, 2017, balance sheet. Additional Instructions

Prepare a schedule of Pierce’s compensation computations for its compensatory share option plan for 2016 through 2018.Additional Instructions

Peter acquires 100% of Saul for 5,254,360 in a tax-free business combination. The applicable income tax rate is 30%. Goodwill is not deductible for tax purposes. Based on the following information about the assets and liabilities of Sunfish, what amount should Porpoise record as goodwill for this acquisition on the date of acquisition?

Brothers Mike and Tim Hargen began operations of their tool and die shop (H & H Tool, Inc.) on January 1, 2016. The annual reporting period ends December 31. The trial balance on January 1, 2017, follows:

Transactions during 2017 follow:

1. Borrowed $20,000 cash on a 5-year, 6 percent note payable, dated March 1, 2017.
2. Purchased land for a future building site on March 15, 2017; paid cash, $18,000.
3. Earned $301,000 in revenue. Transactions dated August 30, 2017 , including $64,000 on credit and the rest in cash.
4. Sold 4,000 additional shares of capital stock for cash at $1 market value per share on January 1, 2017.
5. Incurred $143,000 in remaining expenses for 2017, invoices dated October 15, 2017, including $35,000 on credit and the rest paid in cash.
6. Collected accounts receivables on November 10, 2017, $39,000.
7. Purchased other assets on November 15, 2017, $13,000 cash.
8. Purchased supplies on account for future use on December 1, 2017, $38,000.
9. Paid accounts payable on December 15, 2017, $36,000.
10. Signed a three-year $44,000 service contract on December 17, 2017 to start February 1, 2018.
11. Declared and paid cash dividends on December 20, 2017, $36,000.

Data for adjusting entries:

12. Supplies counted on December 31, 2017, $29,000.
13. Depreciation for the year on the equipment, $14,000.
14. Interest accrued on notes payable (to be computed).
15. Wages earned by employees since the December 24 payroll but not yet paid, $16,000.
16. Income tax expense, $13,000, payable in 2018

1. Prepare journal entries for transactions (a) through (k). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. Prepare the adjusting entries for transactions (l) through (p). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

3. Post the journal entries for transactions (a) through (k) and adjusting entries for transactions (l) through (p) to the respective T-Accounts

4. Prepare an income statement (including earnings per share), statement of stockholders’ equity, and balance sheet. (For the Statement of Stockholders' Equity and Balance Sheet only, items to be deducted must be indicated with a minus sign. Round "Earnings per share" to 2 decimal places.)

5. Identify the type of transaction for (a) through (k) for the statement of cash flows (O for operating, I for investing, F for financing), and the direction and amount of the effect. (List cash outflows as negative amounts. For transactions with no effect, choose "NE".)

6. Prepare the closing entry on December 31, 2017. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. After recording this closing entry, post the entry to the General Ledger in Part (3).)

7-a. Compute the current ratio for 2017. (Round your answer to 2 decimal places.)

7-b. Compute the total asset turnover ratio for 2017. (Round your answer to 2 decimal places.)

7-c. Compute the net profit margin ratio for 2017. (Enter your answer as a percentage rounded to 1 decimal place (i.e. 0.123 should be entered as 12.3).)

“This is really an odd situation,” said Jim Carter, general manager of Highland Publishing Company. “We get most of the jobs we bid on that require a lot of press time in the Printing Department, yet profits on those jobs are never as high as they ought to be. On the other hand, we lose most of the jobs we bid on that require a lot of time in the Binding Department. I would be inclined to think that the problem is with our overhead rates, but we’re already computing separate overhead rates for each department. So what else could be wrong?”

Highland Publishing Company is a large organization that offers a variety of printing and binding work. The Printing and Binding departments are supported by three service departments. The costs of these service departments are allocated to other departments in the order listed below. The Personnel cost is allocated based on number of employees. The Custodial Services cost is allocated based on square feet of space occupied and the Maintenance cost is allocated based on machine-hours.

Budgeted overhead costs in each department for the current year are shown below:

Because of its simplicity, the company has always used the direct method to allocate service department costs to the two operating departments.

Required:

1. Using the step-down method, allocate the service department costs to the consuming departments. Then compute predetermined overhead rates in the two operating departments. Use machine-hours as the allocation base in the Printing Department and direct labor-hours as the allocation base in the Binding Department.

2. Repeat (1) above, this time using the direct method. Again compute predetermined overhead rates in the Printing and Binding departments.

3. Assume that during the current year the company bids on a job that requires machine and labor time as follows:

a. Determine the amount of overhead cost that would be assigned to the job if the company used the overhead rates developed in (1) above. Then determine the amount of overhead cost that would be assigned to the job if the company used the overhead rates developed in (2) above.

Question 10

The comparative balance sheets for Rothlisberger Company as of December 31 are presented below.

Additional information:

***Prepare a statement of cash flows for the year ended December 31, 2020, using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Leslie Sporting Goods is a locally owned store that specializes in printing team jerseys. The majority of its business comes from orders for various local teams and organizations. While Leslie’s prints everything from bowling team jerseys to fraternity/sorority apparel to special event shirts, summer league baseball and softball team jerseys are the company’s biggest source of revenue.

A portion of Leslie’s operating information for the company’s last year follows:

Required:
3. Using the high-low method, calculate the store’s total fixed operating costs and variable operating cost per jersey. (Do not round your intermediate calculations. Round your "Variable Cost" answer to 2 decimal places and "Fixed Cost" answer to the nearest whole number.)

  
4. Using the high-low method results, calculate the store’s expected operating cost if it printed 440 jerseys. (Do not round your intermediate calculations. Round your answer to the nearest whole number.)

   

5. Perform a least-squares regression analysis on Leslie’s data. (Use Microsoft Excel or a statistical package to find the coefficients using least-squares regression. Round your answers to 2 decimal places.)


  
6. Using the regression output, create a linear equation (y = a + bx) for estimating Leslie’s operating costs. (Round your answers to 2 decimal places.)



7. Using the least-squares regression results, calculate the store’s expected operating cost if it prints 650 jerseys. (Round your intermediate calculations to 2 decimal places. Round your final answer to 2 decimal places.)