true or false: The weighted-average approach to process costing combines the work and costs done in prior periods with the work and costs done in the current period.

January 1, 2018, Apple is authorized to issue 200,000 shares $1.00 par common stock and 5,000 shares $200 par 5% cumulative and non-participating preferred stock. The transactions took place in 2018

Jan 14: issue 5,000 shares of common stock at $17 per share

Feb 2: issue 4,000 shares of preferred stock in exchange for building with a fair market value of $800,000

July 6: Re-purchased 2,000 shares of common stock at $18 per share (cost method)

Aug 15: sold 2,000 of the treasury shares at $19 per share

Dec 31: declared preferred dividends and a common stock dividends of $2.00 per share

Dec 31: close the income summary account ($150,000 of net income)

Prepare Journal entries for each transaction and prepare the statement of changes in OE for the 2018 year end.

Analysis and Interpretation of Profitability
Balance sheets and income statements for 3M Company follow.

(a) Compute net operating profit after tax (NOPAT) for 2008. Assume that the combined federal and statutory rate is: 35.9% (Round your answer to the nearest whole number.)

(b) Compute net operating assets (NOA) for 2008 and 2007. Treat noncurrent Investments as a nonoperating item.

(c) Compute 3M's RNOA, net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2008. (Round your answers to two decimal places. Do not round until your final answer. Do not use NOPM x NOAT to calculate RNOA.)

(d) Compute net nonoperating obligations (NNO) for 2008 and 2007.

(e) Compute return on equity (ROE) for 2008. (Round your answers to two decimal places. Do not round until your final answer.)

(f) What is the nonoperating return component of ROE for 2008? (Round your answers to two decimal places.)

Prepaid pension benefits is not considered an operating asset. Pension and post retirement benefits is considered an operating liability. Please clarify why Prepaid pension benefits is not part of the operating assets, and why Pension and post retirement benefits is part of operating liabilities.

Budgeted Income Statement and Supporting Budgets

The budget director of Gold Medal Athletic Co., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for March:

Estimated sales for March:

Estimated inventories at March 1:

Desired inventories at March 31:

Direct materials used in production:

Anticipated cost of purchases and beginning and ending inventory of direct materials:

Direct labor requirements:

Estimated factory overhead costs for March:

Estimated operating expenses for March:

Estimated other income and expense for March:

Estimated tax rate: 30%

Required:

1. Prepare a sales budget for March. Enter all amounts as positive numbers.

2. Prepare a production budget for March. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

3. Prepare a direct materials purchases budget for March. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

4. Prepare a direct labor cost budget for March. Enter all amounts as positive numbers.

5. Prepare a factory overhead cost budget for March.

6. Prepare a cost of goods sold budget for March. Work in process at the beginning of March is estimated to be $15,300, and work in process at the end of March is desired to be $14,800. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

7. Prepare a selling and administrative expenses budget for March.

8. Prepare a budgeted income statement for March.

1. A department uses the FIFO method of process costing. All direct materials are added at the beginning of the process. This department has the following data for this month.

   • 182 units in beginning WIP (53% complete with respect to conversion costs).
   • 11,540 units started
   • 184 units in ending WIP (55% complete with respect to conversion costs).
   • $15 direct material cost per equivalent unit
   • $17 conversion cost per equivalent unit
   • $4,432 beginning WIP direct materials costs
   • $3,638 beginning WIP conversion costs

   What is the department's total cost of units completed and transferred out (round final answer to nearest cent if necessary)?

Pope’s Garage had the following accounts and amounts in its financial statements on December 31, 2013. Assume that all balance sheet items reflect account balances at December 31, 2013, and that all income statement items reflect activities that occurred during the year then ended.

A new business client comes to your office. There are three owners of the business. The three individuals, Alan, Bob, and Carol, are thinking about forming a partnership. Alan is only investing $1 million in cash. He will not have anything to do with the daily activities of the business. Bob has had some experience in the business and will be responsible for the day-to-day operations of the business. Carol has a great deal of experience and many contacts within the business. She will be responsible for attracting new clients. Neither Bob nor Carol are investing cash into the partnership. During the first year of operation, the partnership generated a profit of $150,000. None of the partners received distributions during the year.

Payment of Salary

A. Should the two partners who are working in the business receive a salary? Why or why not? Be sure to support your decision with research and quantitative data.

B. If the two non-investors did receive a salary, how would their capital account be affected? How would this impact a potential future liquidation or buyout? Be sure to thoroughly explain and support your answer.

C. Should the cash investor receive a higher share of the profits or other sharing options? Why or why not? Support your opinions with research and quantitative data.

D. If the cash investor did receive a salary, how would his capital account be affected? How would this impact a potential future liquidation or buyout? Be sure to thoroughly explain and support your answer.

E. How do the payment of salary and the allocation of profit affect entries and the financial bottom line? Be sure to support your explanation with concrete examples.

F. How could the payment of salary and allocation of profit be a more effective method of splitting the company's profits for the three partners? Explain a scenario in which the three partners would be all compensated fairly, and support your answer with logical reasoning.

G. What would be the value of each partner's capital account at the end of the year, given your proposed fair allocation method? Support your answer with quantitative data and an explanation of how you came to this conclusion.

Controllership in Accounting

Employment Rules vs Personal & Privacy Concerns

Characters:         Sandy, the controller of ABC, Inc., a small manufacturing company

Jacob, the controller of Micro, Inc., a small manufacturing company

Sandy is a controller of ABC, Inc., a small regional manufacturing company. During her

four years of employment at ABC, she has worked her way up through the ranks. She has

been the controller for the past year and has consistently received favorable evaluations.

Sandy enjoys her work and is good at what she does.

ABC, Inc., is close to finalizing a merger with Micro, Inc., a similar manufacturing company.

The merger will be finalized in two weeks, on July 1. When the companies merge, various

positions will be eliminated to avoid duplication of efforts in the merged company. A variety

of positions will be cut, including manufacturing workers, office staff, and management

positions. The decisions on personnel cuts will be announced August 1.

Jacob, the controller of Micro, Inc., has been with that company for less than a year. He is

perceived favorably by management. The newly merged company will need only one

controller, and Sandy has received unofficial confirmation that she will be the controller of

the new firm and that Jacob will be dismissed.

Sandy has had significant responsibility for her parents during the past two years. Her

father has terminal cancer, and the specialist has given him only six months to live. Her

mother is emotionally distressed and needs special attention from time to time. In addition,

after years of trying, Sandy has recently found out that she is pregnant. She plans to take a

short maternity leave and then return to work full-time.

Sandy realizes the time demands of her current and experted family and also the time

demands of working as the controller of the newly merged company. She feels that she will

be able to balance her personal and professional life in such a way that her job performance

will not suffer. Yet, she wonders if she should make her boss aware of her responsibility to

her parents and her pregnancy.

Answer the following questions from the case above :-

1. What are the relevant facts of the case?

2. What, if any, are the ethical issues?

3. Who are the stakeholders?

4. What are the possible alternatives including any ethical concerns?

5. What are the practical constraints?

6. What action(s) should be taken?

How shall an entity subsequently measure financial liabilities? Is IFRS measurement of financial liabilities similar to that of U.S. GAAP? Also briefly describe the requirements regarding an option to designate a financial liability at fair value through profit and loss. Does U.S. GAAP allow fair value option for financial assets and liabilities? What is “own credit” issue related to financial liabilities measured at fair value through profit and loss? How does IFRS 9 address this “own credit” issue?

Who should be included in the Audit Committees?

Betty DeRose, Inc. operates two departments, the handling department and
the packaging department. During April, the handling department reported
the following information:

                                           % complete      % complete
                                units         DM           conversion 
work in process, April 1        18,000        38%             71%
units started during April      80,000
work in process, April 30       44,000        82%             47%

The cost of beginning work in process and the costs added during April
were as follows:

                                 DM         Conversion       Total cost
work in process, April 1      $ 51,764       $152,477         $204,241
costs added during April       191,452        232,125          423,577
total costs                    243,216        384,602          627,818

Calculate the conversion unit cost using the weighted average process
costing method.

Special Place, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter:

1. Budgeted monthly absorption costing income statements for April–July are:

*Includes $15,000 of depreciation each month.

2. Sales are 20% for cash and 80% on account.

3. Sales on account are collected over a three-month period with 10% collected in the month of sale; 70% collected in the first month following the month of sale; and the remaining 20% collected in the second month following the month of sale. February’s sales totaled $155,000, and March’s sales totaled $215,000.

4. Inventory purchases are paid for within 15 days. Therefore, 50% of a month’s inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchases during March total $91,700.

5. Each month’s ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $63,000.

6. Dividends of $23,000 will be declared and paid in April.

7. Land costing $31,000 will be purchased for cash in May.

8. The cash balance at March 31 is $45,000; the company must maintain a cash balance of at least $40,000 at the end of each month.

9. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $200,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter

The company’s president is interested in knowing how reducing inventory levels and collecting accounts receivable sooner will impact the cash budget. He revises the cash collection and ending inventory assumptions as follows:

1. Sales continue to be 20% for cash and 80% on credit. However, credit sales from April, May, and June are collected over a three-month period with 25% collected in the month of sale, 65% collected in the month following sale, and 10% in the second month following sale. Credit sales from February and March are collected during the second quarter using the collection percentages specified in the main section.

2. The company maintains its ending inventory levels for April, May, and June at 15% of the cost of merchandise to be sold in the following month. The merchandise inventory at March 31 remains $63,000 and accounts payable for inventory purchases at March 31 remains $91,700.

Required:

1. Using the president’s new assumptions in (a) above, prepare a schedule of expected cash collections for April, May, and June and for the quarter in total.

2. Using the president’s new assumptions in (b) above, prepare the following for merchandise inventory:

a. A merchandise purchases budget for April, May, and June.

b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June and for the quarter in total.

3. Using the president’s new assumptions, prepare a cash budget for April, May, and June, and for the quarter in total.

C. Clean-All, Inc. sells washing machines with a 3-year assurance type warranty. In the past, Clean-All has found that in the year after the sale, warranty costs have been 3% of sales; in the second year after sale, 5% of sales; and in the third year after sale, 7% of sales. the following data are also available:

Year Sales Warranty Expenditures

2018 650,000 82,000

2019 700,000 85,000

Instructions:

1. Prepare the journal entries for the preceding transactions for 2018-2019. Closing entries are not required.

2. Determine the amount Clean-All will report as liability on December 31, 2019, assuming the liability had a balance of $101,200 on December 31, 2017.

The shareholders’ equity section of the balance sheet of TNL Systems Inc. included the following accounts at December 31, 2017: Shareholders' Equity ($ in millions) Common stock, 300 million shares at $1 par $ 300 Paid-in capital—excess of par 2,400 Paid-in capital—share repurchase 2 Retained earnings 2,000 Required: 1. During 2018, TNL Systems reacquired shares of its common stock and later sold shares in two separate transactions. Prepare the entries for both the purchase and subsequent resale of the shares assuming the shares are (a) retired and (b) viewed as treasury stock. A) On February 5, 2018, TNL Systems purchased 7 million shares at $12 per share.B) On July 9, 2018, the corporation sold 3 million shares at $14 per share. C)On November 14, 2020, the corporation sold 3 million shares at $9 per share. 2. Prepare the shareholders’ equity section of TNL Systems’ balance sheet at December 31, 2020, comparing the two approaches. Assume all net income earned in 2018–2020 was distributed to shareholders as cash dividends.