On January 1, Year 1, Reese Incorporated issued bonds with a face value of $270,000, a stated rate of interest of 8 percent, and a five-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 7 percent at the time the bonds were issued. The bonds sold for $281,070. Reese used the effective interest rate method to amortize bond premium.

Required

Prepare an amortization table. What item in the table would appear on the Year 3 balance sheet? What item in the table would appear on the Year 3 income statement? What item and amount in the table would appear on the Year 3 statement of cash flows (Direct Method) and under which section of the statement of cash flows would this item appear?

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

• Req A
• Req B to D

b. What item in the table would appear on the Year 3 balance sheet?
c. What item in the table would appear on the Year 3 income statement?
d. What item and amount in the table would appear on the Year 3 statement of cash flows (Direct Method) and under which section of the statement of cash flows would this item appear?

DataSpan, Inc., automated its plant at the start of the current year and installed a flexible manufacturing system. The company is also evaluating its suppliers and moving toward Lean Production. Many adjustment problems have been encountered, including problems relating to performance measurement. After much study, the company has decided to use the performance measures below, and it has gathered data relating to these measures for the first four months of operations.

requirement 3

3-a. (Month 5) Refer to the move time, process time, and so forth, given for month 4. Assume that in month 5 the move time, process time, and so forth, are the same as in month 4, except that through the use of Lean Production the company is able to completely eliminate the queue time during production. Compute the new throughput time and MCE.

3-b. (Month 6) Refer to the move time, process time, and so forth, given for month 4. Assume in month 6 that the move time, process time, and so forth, are again the same as in month 4, except that the company is able to completely eliminate both the queue time during production and the inspection time. Compute the new throughput time and MCE.

(Round your answers to 1 decimal place.)

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A copy machine acquired with a cost of $1,410 has an estimated useful life of 4 years. It is also expected to have a useful operating life of 13,350 copies. Assuming that it will have a salvage value of $75, determine the depreciation for the first year and second year by the (15 points) (a) straight-line method (b) double-declining-balance method (c) units-of-output method (4,500 copies were made the first year 3,200 copies second year

Contribution Margin, Break-Even Sales, Cost-Volume-Profit Chart, Margin of Safety, and Operating Leverage

Belmain Co. expects to maintain the same inventories at the end of 20Y7 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows:

It is expected that 5,600 units will be sold at a price of $160 a unit. Maximum sales within the relevant range are 7,000 units.

Required:

1. Prepare an estimated income statement for 20Y7.

2. What is the expected contribution margin ratio? Round to the nearest whole percent.
%

3. Determine the break-even sales in units and dollars.

4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales?
$

5. What is the expected margin of safety in dollars and as a percentage of sales?

6. Determine the operating leverage. Round to one decimal place.

Break-Even Sales Under Present and Proposed Conditions

Darby Company, operating at full capacity, sold 154,100 units at a price of $105 per unit during the current year. Its income statement is as follows:

The division of costs between variable and fixed is as follows:

Management is considering a plant expansion program for the following year that will permit an increase of $1,260,000 in yearly sales. The expansion will increase fixed costs by $168,000, but will not affect the relationship between sales and variable costs.

Required:

1. Determine the total variable costs and the total fixed costs for the current year.

2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year.

3. Compute the break-even sales (units) for the current year.
units

4. Compute the break-even sales (units) under the proposed program for the following year.
units

5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $5,855,500 of income from operations that was earned in the current year.
units

6. Determine the maximum income from operations possible with the expanded plant.
$

7. If the proposal is accepted and sales remain at the current level, what will the income or loss from operations be for the following year?
$  

8. Based on the data given, would you recommend accepting the proposal?

1. In favor of the proposal because of the reduction in break-even point.
2. In favor of the proposal because of the possibility of increasing income from operations.
3. In favor of the proposal because of the increase in break-even point.
4. Reject the proposal because if future sales remain at the current level, the income from operations will increase.
5. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales.

Choose the correct answer.

Complete the table to determine the Baddebt Expenses for the period.

Villanueva, Inc. is a supplier of supplies. The following is the status of accounts receivable ("Aging")

Assuming a credit balance of $3,050.00 on the counter account. (Allowancefordoubtfulaccounts.) How much should we affect the account?
Determine the net realizable value after adjustment.
Prepare the entries for the period adjustment.

1. Horizontal Analysis of the Income Statement

   Income statement data for Winthrop Company for two recent years ended December 31, are as follows:

   	Current Year			Previous Year
   Sales	$800,000			$640,000
   Cost of goods sold	676,500			550,000
   Gross profit	$123,500			$90,000
   Selling expenses	$35,650			$31,000
   Administrative expenses	31,980			26,000
   Total operating expenses	$67,630			$57,000
   Income before income tax	$55,870			$33,000
   Income tax expenses	22,300			13,200
   Net income	$33,570			$19,800

   a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place.

   Winthrop Company
   Comparative Income Statement
   For the Years Ended December 31
   	Current year Amount	Previous year Amount	Increase (Decrease) Amount	Increase (Decrease) Percent
   Sales	$800,000	$640,000	$	%
   Cost of goods sold	676,500	550,000		%
   Gross profit	$123,500	$90,000	$	%
   Selling expenses	$35,650	$31,000	$	%
   Administrative expenses	31,980	26,000		%
   Total operating expenses	$67,630	$57,000	$	%
   Income before income tax	$55,870	$33,000	$	%
   Income tax expense	22,300	13,200		%
   Net income	$33,570	$19,800	$	%

   Feedback

   b. The net income for Winthrop Company increased between years. This increase was the combined result of an

   • increase
   • decrease
   in sales and
   • higher
   • lower
   percentage
   • increase
   • decrease
   in cost of goods sold. The cost of goods sold increased at a
   • slower
   • faster
   rate than the increase in sales, thus causing the percentage increase in gross profit to be
   • greater
   • less
   than the percentage increase in sales.

Bell Company, a manufacturer of audio systems, started its production in October 2020. For the preceding 3 years, Bell had been a retailer of audio systems. After a thorough survey of audio system markets, Bell decided to turn its retail store into an audio equipment factory.

Raw material costs for an audio system will total $75 per unit. Workers on the production lines are on average paid $14 per hour. An audio system usually takes 5 hours to complete. In addition, the rent on the equipment used to assemble audio systems amounts to $5,300 per month. Indirect materials cost $7 per system. A supervisor was hired to oversee production; her monthly salary is $3,700.

Factory janitorial costs are $1,600 monthly. Advertising costs for the audio system will be $9,100 per month. The factory building depreciation expense is $6,000 per year. Property taxes on the factory building will be $8,400 per year.

Assuming that Bell manufactures, on average, 1,000 audio systems per month, enter each cost item on your answer sheet, placing the dollar amount per month under the appropriate headings. Total the dollar amounts in each of the columns.

Compute the cost to produce one audio system

Problem 3: Another Sleuth Question

1. In 1/1/ 20x1 Co. X sold a machine. On that date the “Machinery” account had a balance of $400,000 and a balance of $500,000 at 2/31/x4. The Machinery Accumulated Depreciation Account had beginning and ending balances of $200,000 and $250,000, respectively. During the year Co. X purchased $120,000 of machinery and had $60,000 of Deprecation Expense

• How much of Machinery Cost was written off on the sale of Machinery?

• How much of Machinery Cost was written off on the sale of Machinery?

• If the company experienced a loss on the sale of machinery of , how much cash was collected when the machinery was sold?                     

1. Vertical Analysis of Income Statement

   Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:

   	Current Year		Previous Year
   Sales	$580,000		$522,000
   Cost of goods sold	324,800		261,000
   Selling expenses	104,400		104,400
   Administrative expenses	110,200		93,960
   Income tax expense	17,400		26,100

   a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.

   Innovation Quarter Inc.
   Comparative Income Statement
   For the Years Ended December 31
   	Current year Amount	Current year Percent	Previous year Amount	Previous year Percent
   Sales	$580,000	%	$522,000	%
   Cost of goods sold	324,800	%	261,000	%
   Gross profit Income from operations Net income Total operating expenses	$	%	$	%
   Selling expenses	104,400	%	104,400	%
   Administrative expenses	110,200	%	93,960	%
   Gross profit Income from operations Net income Total operating expenses	$	%	$	%
   Gross profit Income from operations Net income Total operating expenses		%		%
   Income tax expense	17,400	%	26,100	%
   Gross profit Income from operations Net income Total operating expenses	$	%	$	%

   Feedback

   b. The vertical analysis indicates that the cost of goods sold as a percent of sales

   • increased
   • decreased
   by 6 percentage points, while selling expenses
   • increased
   • decreased
   by 2 percentage points, and administrative expenses
   • increased
   • decreased
   by 1 percentage points. Thus, net income as a percent of sales
   • increased
   • decreased
   by 3 percentage points.

Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below:

*Contains direct materials, direct labor, and variable manufacturing overhead.

Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to “get things under control.” Upon reviewing the plant’s income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool:

*Based on machine-hours.

During June, the plant produced 15,000 pools and incurred the following costs:

1. Purchased 60,000 pounds of materials at a cost of $4.95 per pound.
2. Used 49,200 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.)
3. Worked 11,800 direct labor-hours at a cost of $17.00 per hour.
4. Incurred variable manufacturing overhead cost totaling $18,290 for the month. A total of 5,900 machine-hours was recorded.

It is the company’s policy to close all variances to cost of goods sold on a monthly basis.

Required:

1. Compute the following variances for June:

a. Materials price and quantity variances.

b. Labor rate and efficiency variances.

c. Variable overhead rate and efficiency variances.

2. Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for the month.

Problem 17-3A Applying activity-based costing LO P1, P3, A1, A2, C3

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

Craft Pro Machining produces machine tools for the construction industry. The following details about overhead costs were taken from its company records.

Additional information on the drivers for its production activities follows.

Problem 17-3A Parts 2, 3 & 4

2, 3 & 4. Compute the activity overhead rates using ABC. Combine the grinding and polishing activities into a single cost pool. Determine overhead costs to assign to the following jobs using ABC. What is the overhead cost per unit for Job 3175? What is the overhead cost per unit for Job 4286? (Round your activity rate and average overhead cost per unit to 2 decimal places. Round "overhead assigned" to the nearest whole dollar.)
                                               

                                       Overhead Cost----Activity Drivers-----Activity Rate---Activity Driver incurred----------Overhead assigned------Activity Driver incurred------Overhead Assigned

Grinding and Polishing---------------------------/--------------/Machine Hours-------------/--------------------------------/-------------------------------------/------------------------------------/------------------------------------l

Product Modification-----------------------------/---------------/Engineering Hours--------/--------------------------------/-------------------------------------/------------------------------------/-------------------------------------l

Providing Power----------------------------------/----------------/Direct Labor Hours--------/-------------------------------/--------------------------------------/------------------------------------/-------------------------------------l

System Calibration-----------------------------/---------------/batches-------------------------/-------------------------------/--------------------------------------/-------------------------------------/------------------------------------l

Waterway Family Instruments makes cellos. During the past year, the company made 6,380 cellos even though the budget planned for only 5,580. The company paid its workers an average of $15 per hour, which was $1 higher than the standard labor rate. The production manager budgets four direct labor hours per cello. During the year, a total of 24,790 direct labor hours were worked.

(a) Calculate the direct labor rate and efficiency variances. (If variance is zero, select "Not Applicable" and enter 0 for the amounts.)

Department G had 3,600 units 25% completed at the beginning of the period, 11,000 units were completed during the period, 3,000 units were 20% completed at the end of the period, and the following manufacturing costs were debited to the departmental work in process account during the period:

All direct materials are placed in process at the beginning of production, and the first-in, first-out method of inventory costing is used. What is the total cost of the units started and completed during the period (round unit cost calculations to whole dollars)?

a.$211,200

b.$190,275

c.$20,934

d.$120,060

Alpha Company provided the following data concerning its income statement: sales, $1,025,000; purchases, $500,000; beginning inventory, $260,000; ending inventory, $242,000; operating expenses, $93,000; freight-in, $5,000; sales discounts, $27,000; purchases discounts, $15,000; sales returns & allowances, $95,000; and purchases returns & allowances, $38,000. The data are complete and provide the basis for preparation of an income statement. How much is net income?