On January 1, Year 1, Brown Co. borrowed cash from First Bank by issuing a $64,500 face value, four-year term note that had an 9 percent annual interest rate. The note is to be repaid by making annual cash payments of $19,909 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $34,185 cash per year.
c.Prepare an income statement, a balance sheet, and a statement of cash flows for each of the four years.
Complete this question by entering your answers in the tabs below.
Prepare the income statement for each of the four years.
In: Accounting
Mike Cichanowski founded Wenonah Canoe and
later purchased Current Designs, a company that
designs and manufactures kayaks. The kayak-manufacturing facility
is located just a few minutes from the canoe company’s headquarters
in Winona, Minnesota.
Current Designs makes kayaks using two different processes. The
rotational molding process uses high temperature to melt
polyethylene powder in a closed rotating metal mold to produce a
complete kayak hull and deck in a single piece. These kayaks are
less labor-intensive and less expensive for the company to produce
and sell.
Its other kayaks use the vacuum-bagged composite lamination process
(which we will refer to as the composite process). Layers of
fiberglass or Kevlar® are carefully placed by hand in a
mold and are bonded with resin. Then, a high-pressure vacuum is
used to eliminate any excess resin that would otherwise add weight
and reduce strength of the finished kayak. These kayaks require a
great deal of skilled labor as each boat is individually finished.
The exquisite finish of the vacuum-bagged composite kayaks gave
rise to Current Designs’ tag line, “A work of art, made for
life.”
Current Designs has the following managers:
| Mike Cichanowski, CEO |
| Diane Buswell, Controller |
| Deb Welch, Purchasing Manager |
| Bill Johnson, Sales Manager |
| Dave Thill, Kayak Plant Manager |
| Rick Thrune, Production Manager for Composite Kayaks |
(c) When Diane Buswell, controller for Current
Designs, reviewed the accounting records for a recent period, she
noted the cost items and amounts shown below (amounts are assumed).
Enter the amount for each item in the appropriate cost category.
Then sum the amounts in each cost category column.
| Product Costs | ||||||||||||
| Payee | Purpose | Amount | Direct Materials |
Direct Labour |
Manufacturing Overhead |
Period Costs |
||||||
| Winona Agency | Property insurance for the manufacturing plant | 3,120 | $ | $ | $ | $ | ||||||
| Bill Johnson (sales manager) | Payroll check—payment to sales manager | 1,700 | ||||||||||
| Xcel Energy | Electricity for manufacturing plant | 440 | ||||||||||
| Winona Printing | Price lists for salespeople | 90 | ||||||||||
| Jim Kaiser (sales representative) | Sales commissions | 1,300 | ||||||||||
| Dave Thill (plant manager) | Payroll check—payment to plant manager | 1,590 | ||||||||||
| Dana Schultz (kayak assembler) | Payroll check—payment to kayak assembler | 740 | ||||||||||
| Composite One | Bagging film used when kayaks are assembled; it is discarded after use |
250 | ||||||||||
| Fastenal | Shop supplies—brooms, paper towels, etc. | 900 | ||||||||||
| Ravago | Polyethylene powder which is the main ingredient for the rotational molded kayaks |
3,340 | ||||||||||
| Winona County | Property taxes on manufacturing plant | 5,670 | ||||||||||
| North American Composites | Kevlar® fabric for composite kayaks | 4,670 | ||||||||||
| Waste Management | Trash disposal for the company office building | 670 | ||||||||||
| None | Journal entry to record depreciation of manufacturing equipment |
4,900 | ||||||||||
| Totals | ||||||||||||
In: Accounting
Recording Income Tax Expense
The Boeing Company reports the following tax information in Note 4
to its 2014 financial report.
| Year ended December 31 | 2014 | 2013 | 2012 |
|---|---|---|---|
| Current tax expense | |||
| U.S. federal | $775 | $-84 | $756 |
| Non-U.S. | 93 | 78 | 63 |
| U.S. state | 71 | 13 | 21 |
| 939 | 7 | 831 | |
| Deferred tax expense | |||
| U.S. federal | 927 | 1,630 | 1,308 |
| Non-U.S | 36 | 43 | (15) |
| U.S state | (7) | 71 | 85 |
| 956 | 1,744 | 1,378 | |
| Total income tax expense | $1,895 | $1,751 | $2,209 |
a. Record Boeing's provision for income taxes for 2014 using the financial statement effects template.
Use negative signs with answers when appropriate. When applicable, enter total amount for liabilities.
| Balance Sheet | Income Statement | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Transaction | Cash Asset | + | Noncash Asset |
= | Liabilities | + | Contrib. Capital |
+ | Earned Capital |
Revenues | - | Expenses | = | Net Income |
| To record income tax expense | Answer | + | Answer | = | Answer | + | Answer | + | Answer | Answer | - | Answer | = | Answer |
b. Record Boeing's provision for income taxes for 2014 using
journal entries.
| General Journal | ||
|---|---|---|
| Description | Debit | Credit |
| AnswerDeferred tax assetDeferred tax liabilityIncome tax expense | Answer | Answer |
| AnswerDeferred tax assetDeferred tax liabilityIncome tax expense | Answer | Answer |
| Income tax payable | Answer | Answer |
Please answer all parts of the question.
In: Accounting
Have you often wondered why investors sue the external auditors when massive fraud negatively affects the stock of a public company up to and including bankruptcy? Often when financial fraud is discovered, shareholders attempt to recover their losses by suing the external audit firm for negligence in not discovering the fraud earlier during a routine attestation engagement. Discuss whether privity and near privity (Ultramares Corp. v. Touche) is the same as ordinary negligence by including two to four legal liabilities associated with these terms
In: Accounting
Personal Budget At the beginning of the school year, Katherine Malloy decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the spring semester tuition, which is the same as the fall tuition. The following information relates to the budget: Cash balance, September 1 (from a summer job) $7,990 Purchase season football tickets in September 110 Additional entertainment for each month 280 Pay fall semester tuition in September 4,300 Pay rent at the beginning of each month 390 Pay for food each month 220 Pay apartment deposit on September 2 (to be returned December 15) 600 Part-time job earnings each month (net of taxes) 990 a. Prepare a cash budget for September, October, November, and December. Enter all amounts as positive values except an overall cash decrease which should be indicated with a minus sign.
| KATHERINE MALLOY | ||||
| Cash Budget | ||||
| For the Four Months Ending December 31 | ||||
| September | October | November | December | |
| Estimated cash receipts from: | ||||
| Part-time job | $ | $ | $ | $ |
| Deposit | ||||
| Total cash receipts | $ | $ | $ | $ |
| Estimated cash payments for: | ||||
| Season football tickets | $ | |||
| Additional entertainment | $ | $ | $ | |
| Tuition | ||||
| Rent | ||||
| Food | ||||
| Deposit | ||||
| Total cash payments | $ | $ | $ | $ |
| Overall cash increase (decrease) | $ | $ | $ | $ |
| Cash balance at beginning of month | ||||
| Cash balance at end of month | $ | $ | $ | $ |
b. Are the four monthly budgets that are
presented prepared as static budgets or flexible budgets?
c. Malloy can see that her present plan ------------ sufficient cash. If Malloy did not budget but went ahead with the original plan, she would be $---------- ----------- at the end of December, with no time left to adjust.
In: Accounting
|
Paul Sabin organized Sabin Electronics 10 years ago in order to produce and sell several electronic devices on which he had secured patents. Although the company has been fairly profitable, it is now experiencing a severe cash shortage. For this reason, it is requesting a $500,000 long-term loan from Gulfport State Bank, $100,000 of which will be used to bolster the cash account and $400,000 of which will be used to modernize certain key items of equipment. The company’s financial statements for the two most recent years follow: |
| SABIN ELECTRONICS | ||||||
| Comparative Balance Sheet | ||||||
| This Year | Last Year | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash | $ | 50,900 | $ | 79,000 | ||
| Marketable securities | — | 9,200 | ||||
| Accounts receivable, net | 354,800 | 158,000 | ||||
| Inventory | 710,000 | 316,000 | ||||
| Prepaid expenses | 15,300 | 11,800 | ||||
| Total current assets | 1,131,000 | 574,000 | ||||
| Plant and equipment, net | 1,000,000 | 726,000 | ||||
| Total assets | $ | 2,131,000 | $ | 1,300,000 | ||
| Liabilities and Shareholders’ Equity | ||||||
| Liabilities: | ||||||
| Current liabilities | $ | 588,000 | $ | 455,500 | ||
| Bonds payable, 12% | 300,000 | 300,000 | ||||
| Total liabilities | 888,000 | 755,500 | ||||
| Shareholders’ equity: | ||||||
| Preferred shares, no par ($6; 14,320 shares issued) | 179,000 | 179,000 | ||||
| Common shares, no par (unlimited
authorized, 17,000 issued) |
170,000 | 170,000 | ||||
| Retained earnings | 894,000 | 195,500 | ||||
| Total shareholders’ equity | 1,243,000 | 544,500 | ||||
| Total liabilities and shareholders’ equity | $ | 2,131,000 | $ | 1,300,000 | ||
| SABIN ELECTRONICS | ||||||
| Comparative Income Statement | ||||||
| This Year | Last Year | |||||
| Sales | $ | 3,700,000 | $ | 3,400,000 | ||
| Less: Cost of goods sold | 2,847,000 | 2,680,000 | ||||
| Gross margin | 853,000 | 720,000 | ||||
| Less: Operating expenses | 481,000 | 427,000 | ||||
| Net operating income | 372,000 | 293,000 | ||||
| Less: Interest expense | 36,000 | 36,000 | ||||
| Net income before taxes | 336,000 | 257,000 | ||||
| Less: Income taxes (30%) | 100,800 | 77,100 | ||||
| Net income | 235,200 | 179,900 | ||||
| Dividends paid: | ||||||
| Preferred dividends | 20,000 | 20,000 | ||||
| Common dividends | 66,600 | 58,450 | ||||
| Total dividends paid | 86,600 | 78,450 | ||||
| Net income retained | 148,600 | 101,450 | ||||
| Retained earnings, beginning of year | 525,400 | 423,950 | ||||
| Retained earnings, end of year | $ | 674,000 | $ | 525,400 | ||
|
During the past year, the company introduced several new product lines and raised the selling prices on a number of old product lines in order to improve its profit margin. The company also hired a new sales manager, who has expanded sales into several new territories. Sales terms are 2/10, n/30. All sales are on account. Assume that the following ratios are typical of firms in the electronics industry: |
| Current ratio | 2.5 | to 1 | |
| Acid-test (quick) ratio | 1.3 | to 1 | |
| Average age of receivables | 18 | days | |
| Inventory turnover in days | 60 | days | |
| Debt-to-equity ratio | 0.90 | to 1 | |
| Times interest earned | 6.0 | times | |
| Return on total assets | 13 | % | |
| Price–earnings ratio | 12 | ||
| Required: | |
| 1. |
To assist the Gulfport Bank in making a decision about the loan, compute the following ratios for both this year and last year (Use 365 days a year. Round your intermediate calculations to 1 decimal place. Round Debt-to-equity ratio to 3 decimal places and other answers to 2 decimal places.): |
| a. | The amount of working capital. |
| b. | The current ratio. |
| c. | The acid-test (quick) ratio. |
| d. |
The average age of receivables (the accounts receivable at the beginning of last year totalled $156,000). |
| e. |
The inventory turnover in days (the inventory at the beginning of last year totalled $312,000). |
| f. | The debt-to-equity ratio. |
| g. | The times interest earned. |
| 2. | For both this year and last year: |
| (a) |
Present the balance sheet in common-size format. (Leave no cells blank - be certain to enter "0" wherever required. Round your answers to 1 decimal place.) |
| (b) |
Present the income statement in common-size format down through net income. (Input all values as positive values. Round your answers to 1 decimal place.) |
In: Accounting
The Rose Williams Company has a C/M ratio of 36%. Breakeven sales are Rs. 160,000. The company earned a profit of Rs. 28,800 during the year.
Required:
(a) Fixed expense.
(b) Variable expense for the
year
(b) Sales for year
(d) Margin of safety ratio.
In: Accounting
The Village of Parry reported the following for its Print Shop Fund for the year ended April 30, 2017.
|
Village of Parry-Print Shop Fund |
||
|
Statement of Revenues, Expenses, and Changes in Net Position |
||
|
For the Year ended April 30, 2017 |
||
|
Operating revenues: |
||
|
Charges for services |
$1,110,000 |
|
|
Operating expenses: |
||
|
Salaries and benefits |
$500,000 |
|
|
Depreciation |
303,000 |
|
|
Supplies used |
202,000 |
|
|
Utilities |
72.700 |
|
|
Total operating expenses |
1,077,700 |
|
|
Income from operations |
32,300 |
|
|
Nonoperating income (expenses): |
||
|
Interest revenue |
3,400 |
|
|
Interest expense |
(5,500) |
|
|
Total nonoperating expenses |
(2,100) |
|
|
Income before transfers |
30,200 |
|
|
Transfers in |
190,000 |
|
|
Changes in net position |
220,200 |
|
|
Net position-beginning |
1,124,000 |
|
|
Net position-ending |
$1,344,200 |
|
The Print Shop Fund records also revealed the following:
|
1. Contribution from General Fund for working capital needs |
$86,000 |
|
2. Contribution from General Fund for purchase of equipment |
104,000 |
|
3. Loan (interest-free) from Water Utility Fund for purchase of equipment |
304,000 |
|
4. Purchase of equipment |
(504,000) |
|
5. Purchase of one-year investments |
(54,000) |
|
6. Paid off a bank loan outstanding at May 1, 2016 |
(66,300) |
|
The loan was for short-term operating purposes |
|
|
And was the only interest-bearing debt outstanding |
|
|
7. Signed a capital lease on April 30, 2017 |
$47,900 |
The following balances were observed in current asset and current liability accounts. ( ) denote credit balances:
|
5/1/2016 |
4/30/2017 |
|
|
Cash |
$196,700 |
$383,100 |
|
Accrued interest receivable |
300 |
800 |
|
Due from other funds |
40,000 |
58,000 |
|
Supplies |
0 |
0 |
|
Accrued salaries and benefits |
(26,000) |
(36,000) |
|
Utility bills payable |
(5,200) |
(8,000) |
|
Accounts payable (for supplies only) |
(39,000) |
(31,000) |
|
Accrued interest payable |
(2,800) |
0 |
|
Bank loan payable |
(66,300) |
0 |
Prepare a Statement of Cash Flows for the Village of Parry Print Shop Fund for the year ended April 30, 2017. Include the reconciliation of operating income to net cash provided by operating activities.
In: Accounting
ABC Grocers, Inc. has an investment in debt securities of $200,000 from Keller Company, a privately-held corporation. The debt security was purchased on 1/1/15 and the terms were as follows: 5-year loan, annual interest rate 9% with interest payments each December 31, beginning 12/31/15, and principal payment at maturity on 12/31/19. ABC Grocers" intends to hold the investment to maturity. They classified the investment as HTM (held-to-maturity) for U.S. GAAP and as amortized cost for IFRS according to IFRS No. 9. At the end of 2015, ABC received the first interest payment of $18,000 but objective evidence indicated to ABC's management that Keller was experiencing signaficant financial difficulty due to sales projections not being realized. Based on the financial difficulty of Keller, ABC's management revised the discounted future cash flows estimate to $170,000 using the original interest rate og9%, thus concluding that they had suffered credit losses of $30,000. The Company handles impairments according to IAS No. 39. On 12/31/15, ABC recorded the following for IFRS: Debit Credit Other-than-temporary (OTT) - impairment loss-I/S 30,000 Investment in Debt Securities - Keller 30,000 On 12/31/15, ABC Grocers recorded the following for U.S. GAAP: Debit Credit Other-than-temporary (OTT) - Impairment loss - I/S 30,000 Discount on Investment in Debt Securities - Keller 30,000 At 12/31/16, Keller's Financial difficulties have significantly improved and therefore, ABC's management decided the investment is no longer impaired. Required: Assuming ABC has already recorded the receipt of the second interest payment, record necessary adjusting journal entries in their own adjusting journal entry workpaper and also in the respective trial balance worksheet for 12/31/16.
In: Accounting
Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafeteria. Direct costs for each department and the proportion of service costs used by the various departments for the month of August follow:
| Proportion of Services Used By | |||||
| Department | Direct Costs | Maintenance | Cafeteria | Machining | Assembly |
| Machining | 101,000.00 | ||||
| Assembly | 68,400.00 | ||||
| Maintenance | 42,400.00 | 0 | 0.2 | 0.6 | 0.2 |
| Cafeteria | 34,000.00 | 0.6 | 0 | 0.2 | 0.2 |
1)
Compute the allocation of service department costs to producing departments using the direct method. (Do not round intermediate calculations.)
Machining
Assembly
2) Assume that both Machining and Assembly work on just two jobs during the month of August: CM-22 and CM-23. Costs are allocated to jobs based on machine-hours in Machining and labor-hours in Assembly. The number of labor- and machine-hours worked in each department are as follows:
| Machining | Assembly | ||||
| Job CM-22: | Machine-hours | 180 | 40 | ||
| Labor-hours | 50 | 20 | |||
| Job CM-23: | Machine-hours | 40 | 20 | ||
| Labor-hours | 30 | 240 | |||
How much of the service department costs allocated to Machining
and Assembly in the direct method should be allocated to Job CM-22?
How much should be allocated to Job CM-23? (Round
"Department rate" to 2 decimal places.)
CM-22 CM-23
Machining:
Assembly:
In: Accounting
Q2.
International Brands Ltd. Is operating at 60% capacity and
producing 2,700 pieces of product A. The cost of production for the
month of August 2012 was:
Rs.
Direct Material
54,000
Direct wages
8,100
Variable Overheads
9,900
Fixed Overheads
18,000
The products are currently sold at an average price of Rs. 72.
A tender for supply of 900 pieces per month has been received. To submit tender the following information has been ascertained.
• Variable Overheads attributable to various activity
level is:
%
Per month
Rs.
50
8,280
60
9,900
70
11,520
80
13,500
90
15,300
100
16,920
Required: (Mark 5)
(a) Calculate the bidding price which will yield a
10% profit.
(b) Prepare a statement showing the effect on the
monthly profit if the company’s tender is
accepted.
In: Accounting
At the beginning of 2018, Ace Company had the following portfolio of investments in available-for-sale debt securities (all of which were acquired at par value):
|
Security |
Cost |
1/1/2018 Fair Value |
| A | $20,000 | $25,000 |
| B | 30,000 | 29,000 |
| Totals | $50,000 | $54,000 |
During 2018, the following transactions occurred:
| May 3 | Purchased C debt securities at their par value for $50,000. |
| July 1 | Sold all of the A securities for $25,000 plus interest of $1,000. |
| Dec. 31 | Received interest of $7,600 on the B and C securities. Additionally the following information was available: |
|
Security |
12/31/18 Fair Value |
| B | $29,000 |
| C | 52,500 |
Required:
| 1. | Prepare journal entries to record the preceding information. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2. | What is the balance in the Unrealized Holding Gain/Loss account on December 31, 2018? | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
3. What justification does the FASB give for its treatment of unrealized holding gains and losses for available-for-sale securities? FASB requires unrealized gains and losses for available-for-sale securities to be reported as a component of other comprehensive income because:
|
In: Accounting
how to solve this question step by step.
Calculate the number of workers that should have been available to process the July claims, and show all work.
Standard time for processing per claim (simple claim)=36 minutes
Standard time for processing per claim (complex claim)=1.25 hours
Expected work hours per day 7.5 hours
Compensation cost per employee= $135 per day
Total working days=20
The number of July processed claims (simple)=3000
The number of July processed claims (complex)=960
In: Accounting
Mott Company has a line of credit with Bay Bank. Mott can borrow up to $570,000 at any time over the course of the calendar year. The following table shows the prime rate expressed as an annual percentage along with the amounts borrowed and repaid during the year. Mott agreed to pay interest at an annual rate equal to 1 percent above the bank’s prime rate. Funds are borrowed or repaid on the first day of each month. Interest is payable in cash on the last day of the month. The interest rate is applied to the outstanding monthly balance. For example, Mott pays 8 percent (7 percent + 1 percent) annual interest on $75,000 for the month of January. Month Amount Borrowed or (Repaid) Prime Rate for the Month, % January $ 75,000 7 February 57,000 7 March (50,000 ) 8 April through October No change No change November (36,000 ) 8 December (22,000 ) 7 Mott earned $42,000 of cash revenue during the year.
b.Prepare an income statement, balance sheet, and statement of cash flows for the year.
Complete this question by entering your answers in the tabs below.
Prepare the income statement for the year.
In: Accounting
Hellier Contractors paints interiors of residences and commercial structures. The firm's management has established cost standards per 100 square feet of area to be painted.
|
Direct material ($18 per gallon of paint) |
$1.50 |
|
Direct labor |
2.00 |
|
Variable overhead |
0.60 |
|
Fixed overhead (based on 600,000 square feet per month) |
1.25 |
Management has determined that 400 square feet can be painted by
the average worker each hour. During May, the company painted
600,000 square feet of space and incurred the following costs:
|
Direct material (450 gallons purchased and used) |
$ 8,300.00 |
|
Direct labor (1,475 hours) |
12,242.50 |
|
Variable overhead |
3,480.00 |
|
Fixed overhead |
7,720.00 |
Answer the following questions related to the Manufacturing Overhead Variances.
Note: for the Variable overhead variances, use DLH as the allocation base.
21. Determine the Fixed overhead spending variance (do not include a negative sign or words in your answer)
22. Determine the Volume variance (do not include a negative sign or words in your answer)
23. Determine the Total Fixed Overhead Variance (do not include a negative sign or words in your answer)
24. Was the Total Fixed Overhead Variance favorable or unfavorable?
25. Identify other cost drivers (other than SF) that could be used as a basis for measuring activity and computing variances for this company. Check all that could apply to this company.
| Number of brush cleanings |
| number of hours of use of the paint spayers |
| number of hours worked |
| number of jobs worked per month |
| number of rooms painted |
In: Accounting