Ratio of Liabilities to Stockholders' Equity and Number of Times Interest Earned

The following data were taken from the financial statements of Hunter Inc. for December 31 of two recent years:

The income before income tax was $756,000 and $661,500 for the current and previous years, respectively.

a. Determine the ratio of liabilities to stockholders' equity at the end of each year. Round to one decimal place.

b. Determine the times interest earned ratio for both years. Round to one decimal place.

c. The ratio of liabilities to stockholders' equity has improved  and the number of times bond interest charges were earned has improved  from the previous year. These results are the combined result of a larger  income before income taxes and lower

Correct

interest expense in the current year compared to the previous year.

Forte Inc. produces and sells theater set designs and costumes. The company began operations on January 1, Year 1. The following transactions relate to securities acquired by Forte Inc., which has a fiscal year ending on December 31:

Record these transactions on page 10:

Record these transactions on page 11:

What is the difference between these two ? define each one

1- Pro Forma Operating Profitability

2- Profitability based on GAAP

(Please Type I can't read handwriting)

Sellers Construction Company purchased a compressor for $105,300 cash. It had an estimated useful life of four years and a $10,800 salvage value. At the beginning of the third year of use, the company spent an additional $9,260 related to the equipment. The company’s financial condition just prior to this expenditure is shown in the following statements model:

Required
Record the $9,260 expenditure in the statements model under each of the following independent assumptions: (In the Cash Flow column, use the initials "OA" for operating activities, "FA" for financing activities, "IA" for investing activity and "NA" for no affect. Enter any decreases to account balances with a minus sign.)

a. The expenditure was for routine maintenance.
b. The expenditure extended the compressor’s life.
c. The expenditure improved the compressor’s operating capacity.

Job order cost accounting for a service company

The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The The rate used to apply factory overhead costs to the goods manufactured. The rate is determined by dividing the budgeted overhead cost by the estimated activity usage at the beginning of the fiscal period.predetermined overhead rate is 40% of media purchases.

On August 1, the four advertising projects had the following accumulated costs:

During August, The Fly Company incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts:

At the end of August, both the Vault Bank and Take Off Airlines campaigns were completed. The costs of completed campaigns are debited to the cost of services account.

a. Journalize the summary entry to record the direct labor costs for the month.

Feedback

a. Increase the work in process for the direct costs and the applied overhead. Applied overhead should be based on media purchases. Transfer the cost of completed jobs out of work-in-process and into the cost of services account.

b. Journalize the summary entry to record the media purchases for the month.

Feedback

b. Increase the work in process for the direct costs and the applied overhead. Applied overhead should be based on media purchases. Transfer the cost of completed jobs out of work-in-process and into the cost of services account.

c. Journalize the summary entry to record the overhead applied for the month.

Feedback

c. Increase the work in process for the direct costs and the applied overhead. Applied overhead should be based on media purchases. Transfer the cost of completed jobs out of work-in-process and into the cost of services account.

d. Journalize the summary entry to record the completion of Vault Bank and Take Off Airlines for the month.

The Production Department of Hruska Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:

Each unit requires 0.25 direct labor-hours and direct laborers are paid $12.00 per hour.

In addition, the variable manufacturing overhead rate is $1.70 per direct labor-hour. The fixed manufacturing overhead is $84,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $24,000 per quarter.

Required:

1. Calculate the company’s total estimated direct labor cost for each quarter of the upcoming fiscal year and for the year as a whole. Assume that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the estimated number of units produced.

2&3. Calculate the company’s total estimated manufacturing overhead cost and the cash disbursements for manufacturing overhead for each quarter of the upcoming fiscal year and for the year as a whole

2&3

Calculate the company’s total estimated manufacturing overhead cost and the cash disbursements for manufacturing overhead for each quarter of the the upcoming fiscal year and for the year as a whole.

Walsh Company manufactures and sells one product. The following information pertains to each of the company’s first two years of operations:

During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During its second year of operations, it produced 40,000 units and sold 50,000 units. The selling price of the company’s product is $58 per unit.

Required:

1. Assume the company uses variable costing:

a. Compute the unit product cost for year 1 and year 2.

b. Prepare an income statement for year 1 and year 2.

2. Assume the company uses absorption costing:

a. Compute the unit product cost for year 1 and year 2. (Round your answers to 2 decimal places.)

b. Prepare an income statement for year 1 and year 2. (Round your intermediate calculations to 2 decimal places)

3. Reconcile the difference between variable costing and absorption costing net operating income in year 1 and year 2.

Texas Rex sells t-shirts. Expected sales for each quarter is 1000, 1200, 1500, and 2000 t-shirts at $10.00 each. They anticipate no price change.

The Direct Materials Budget tells management how much must be bought to support production and the cost of those purchases.

Plain t-shirts cost $3.00 each, and ink (for the screen printing) cost $0.20 per ounce. The factory needs one plain t-shirt and five ounces of ink for each logoed t-shirt that it produces. Texas Rex’s policy is to have 10% of the following quarter’s needs in ending inventory. The factory has 58 plain t-shirts and 390 ounces of ink on hand on January 1. At the end of the year, the desired ending inventory is 106 plain t-shirts and 530 ounces of ink.

Texas Rex, Inc.

Direct Materials Budget

For the year ending December 31, 2018

Plain t-shirts:                      Q1                          Q2                          Q3                          Q4                          Total

Units to be Produced

Direct Materials per unit_______            _______             ________           _______             ________

Production Needs          

Desired Ending Inv.         _______             _______             ________           _______             ________

Total Needs

Less Beginning Inv.          _______             _______             ________           _______             ________

Direct Materials

To be Purchased

Cost per t-shirt                  _______             _______             ________           _______             ________

Total T-shirt Purchase

Cost

Ink:                                        Q1                          Q2                          Q3                          Q4                          Total

Units to be Produced

Direct Materials per unit_______            _______             ________           _______             ________

Production Needs          

Desired Ending Inv.         _______             _______             ________           _______             ________

Total Needs

Less Beginning Inv.          _______             _______             ________           _______             ________

Direct Materials

To be Purchased

Cost per ounce                 _______             _______             ________           _______             ________

Total Ink Purchase Cost

Total Cost of

All Direct Materials

Paul’s Pool Service provides pool cleaning, chemical application, and pool repairs for residential customers. Clients are billed weekly for services provided and usually pay 50 percent of their fees in the month the service is provided. In the month following service, Paul collects 40 percent of service fees. The final 10 percent is collected in the second month following service. Paul purchases his supplies on credit, and pays 50 percent in the month of purchase and the remaining 50 percent in the month following purchase. Of the supplies Paul purchases, 80 percent is used in the month of purchase, and the remainder is used in the month following purchase.

The following information is available for the months of June, July, and August, which are Paul’s busiest months:

• June 1 cash balance $14,900.
• June 1 supplies on hand $3,900.
• June 1 accounts receivable $8,200.
• June 1 accounts payable $3,800.
• Estimated sales for June, July, and August are $24,600, $36,900, and $39,000, respectively.
• Sales during May were $22,600, and sales during April were $16,400.
• Estimated purchases for June, July, and August are $9,200, $17,400, and $12,300, respectively.
• Purchases in May were $5,100.

Required:
1. Compute budgeted cash receipts and budgeted cash payments for each month.

2. Compute the balances necessary to prepare a budgeted balance sheet for August 31 for each of the following accounts:

Julio and Maria are planning for their children to continue their education after
grade 12. They would like to know the types of tuition fees that are eligible for
the tuition fees tax credit and whether they can claim this credit if they pay for
their children's education.(In Canada)

COVID-19: The impact on Audits The Corona Virus (COVID-19) is already impacting South Africa in various ways and many businesses are faced with operational difficulties. However, entities must remember that the restrictions resulting from the virus, will also impact financial reporting requirements and increase the focus on certain areas during audits. Going concern Management of an entity are required to provide the auditor with their assessment of the entity’s ability to continue as a going concern. The assessment should take into account all available information about the future and cover at least 12 months from the end of the reporting period. It may be difficult to make a meaningful Base Case economic forecast, let alone a plausible downside economic scenario. In this highly uncertain environment, going concern assessments will be more difficult for entities to make, and more companies will need to report a material uncertainty related to going concern. The objectives of the auditor are: • to obtain sufficient appropriate audit evidence regarding, and conclude on, the appropriateness of management’s use of the going concern basis of accounting in the presentation of financial statements; and • to conclude on whether a material uncertainty exists related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern. The conclusion reached by the auditor may have a significant impact on the audit opinion.

Required:
Discuss the potential impact of Covid-19 on the possible audit opinions that can be issued by external auditors.
[25 marks]

Indicate for each transaction below the account(s) and amount(s) that should be debited and credited. Use abbreviated account titles.

You have borrowed a loan of $20,000 from a bank to buy a car from Chase at the interest rate of

7.5% each year. You have promised the Chase to make mortgage style payments.

16. If you want to borrow this loan for three years, what is the total payment in each year?

            A) $6,191

             B) $1,500

             C) $ 7,691

             D) $ 7,154

             E) None of the above

17. If you want to borrow this loan for three years, what is the principal payment in year one?

            A) $6,191

             B) $1,500

             C) $ 7,691

             D) $ 7,154

             E) None of the above

18. If you want to borrow this loan for three years, what is the principal payment in year two?

            A) $6,191

             B) $1,500

             C) $ 7,691

             D) $ 7,154

             E) None of the above

19. If you want to borrow this loan for three years, what is the principal payment in year three?

            A) $6,191

             B) $1,500

             C) $ 7,691

             D) $ 7,154

             E) None of the above

20. If you want to borrow this loan for three years, what is the interest payment in year one?

            A) $6,191

             B) $1,500

             C) $ 7,691

             D) $ 7,154

             E) None of the above

21. If you want to borrow this loan for one year, what is the total payment?

            A) $21,500

             B) $20,000

             C) $1,500

             D) $7,691

             E) None of the above

22. If you want to borrow this loan for one year, what is the principal payment in this year?

            A) $21,500

             B) $20,000

             C) $1,500

             D) $7,691

             E) None of the above

23. If you want to borrow this loan for one year, what is the interest payment in this year?

            A) $21,500

             B) $20,000

             C) $1,500

             D) $7,691

             E) None of the above

24. If you want to borrow this loan for one year, what is the beginning balance in this year?

            A) $21,500

             B) $20,000

             C) $1,500

             D) $7,691

             E) None of the above

25. If you want to borrow this loan for one year, what is the ending balance in this year?

            A) $21,500

             B) $20,000

             C) $1,500

             D) $7,691

             E) None of the above

Lehman Pottery Company manufactures clay molded pottery on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production.

Data for the Assembly Department for August 2019 are:

Work in process, beginning inventory: 0 units

Units started during August 450 units

Work in process, ending inventory: 300 units

Direct materials (100% complete)

Conversion costs (60% complete)

Costs for August: Costs for Assembly:

Direct materials $58,000

Conversion costs $45,000

Using the 5 step format in the Textbook and solutions manual, prepare the Production Cost Worksheet using the Weighted Average Method.

Round to 2 digits when calculating the Cost per Equivalent Unit (Example $28.58)

Countywide Cable Services, Inc. is organized with three segments: Metro, Suburban, and Outlying. Data for these segments for the year just ended follow.

In addition to the expenses listed above, the company has $85,000 of common fixed expenses. Income-tax expense for the year is $285,000.

Required:

1. Prepare a segmented income statement for Countywide Cable Services, Inc.