Narrative 1: Freshplace Grocery At Freshplace Grocery, customers give their purchases to a sales clerk along with cash. The sales clerk enters the sale in a cash register and puts the money in the register drawer. At the end of the day, the sales clerk gives the cash and the register tape to the cashier. The cashier reconciles the cash and the tape to make sure all of the cash is present.

1. Use the narrative to prepare a table of entities and activities.

2. Use the narrative to draw a context diagram.

3. Use narrative to prepare a logical DFD.

12-3
Forten Company, a merchandiser, recently completed its calendar-year 2017 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company’s income statement and balance sheets follow.

Additional Information on Year 2017 Transactions

1. The loss on the cash sale of equipment was $5,125 (details in b).
2. Sold equipment costing $46,875, with accumulated depreciation of $30,125, for $11,625 cash.
3. Purchased equipment costing $96,375 by paying $30,000 cash and signing a long-term note payable for the balance.
4. Borrowed $4,000 cash by signing a short-term note payable.
5. Paid $50,125 cash to reduce the long-term notes payable.
6. Issued 2,500 shares of common stock for $20 cash per share.
7. Declared and paid cash dividends of $50,100.

Required:
1. Prepare a complete statement of cash flows; report its operating activities using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

Additional Information on Year 2017 Transactions

1. Net income was $114,975.
2. Accounts receivable increased.
3. Inventory increased.
4. Prepaid expenses decreased.
5. Accounts payable decreased.
6. Depreciation expense was $20,750.
7. Sold equipment costing $46,875, with accumulated depreciation of $30,125, for $11,625 cash. This yielded a loss of $5,125.
8. Purchased equipment costing $96,375 by paying $30,000 cash and (i.) by signing a long-term note payable for the balance.
9. Borrowed $4,000 cash by signing a short-term note payable.
10. Paid $50,125 cash to reduce the long-term notes payable.
11. Issued 2,500 shares of common stock for $20 cash per share.
12. Declared and paid cash dividends of $50,100.

Additional Information on Year 2017 Transactions

1. The loss on the cash sale of equipment was $5,125 (details in b).
2. Sold equipment costing $46,875, with accumulated depreciation of $30,125, for $11,625 cash.
3. Purchased equipment costing $96,375 by paying $30,000 cash and signing a long-term note payable for the balance.
4. Borrowed $4,000 cash by signing a short-term note payable.
5. Paid $50,125 cash to reduce the long-term notes payable.
6. Issued 2,500 shares of common stock for $20 cash per share.
7. Declared and paid cash dividends of $50,100.

Required:
Prepare a complete statement of cash flows; report its operating activities according to the direct method. (Amounts to be deducted should be indicated with a minus sign.)

  
Required:
Prepare a complete statement of cash flows using a spreadsheet; report its operating activities using the indirect method. (Enter all amounts as positive values.)
  

two issues of securities outstanding: common stock and $5,500,000 face value, 5-year, 3% convertible bonds which were issued January 1, 2019 when the market rate was 4%. Bond interest payments dates are June 30 and December 31. Each Bond is convertible into 40 shares of $20 par value common stock . On July 1, 2019 the holders of $1,100,000 face value exercise the conversion privilege . On the date, the bonds were selling at 110 and the market price of the stock was $35. The company uses the effective interest method for amortization of the of the bond premium.

What is the amount to be "Paid -in-Capital for Common Stock" on July 1, 2019?

Hawkins Engineering’s management wants to prepare budgets for one of its products, GalaxyRS, for July 2019. The firm sells the product for $800 per unit and has the following expected sales (in units) for these months in 2019:

April                       May                       June                      July                        August                  September

6,000                     4,000                     5,600                     6,500                     6,800                     7,800

Typically, cash sales for Hawkins represent 20% of sales while credit sales represent 80%. Hawkins bills customers on the first day of the month following the month of sale. Experience has shown that 85% of the company’s billings will be collected during the month of sale, 10% by the end of the month after the sale and 5% will ultimately be uncollectible.

The production process requires the following:

Standard Costs:

Galaxy-80                                                            4 lbs                       $1.25/lb

RS-360                                                                  2 lbs                       $5.00/lb

Direct labor                                                        

Skill level 1                                                        0.01 hours           $50/hour

Skill level 2                                                        0.10 hours           $20/hour

Variable manufacturing overhead is budgeted at $1,200 per batch (of 100 units) plus $80 per direct labor hour. In addition to variable overhead, the firm has a monthly fixed factory overhead of $60,000, of which $25,000 is depreciation expense. The firm pays all manufacturing labor and factory overhead when incurred.

The firm’s policy is to maintain an ending finished goods inventory each month equal to 10% of the following month’s budgeted sales, but in no case less than 500 units. All materials inventories are to be maintained at 5% of the production needs for the next month, but not to exceed 1,000 pounds. The firm expects all inventories at the end of June to be within the guidelines.

The purchase terms for materials are 3/10, n/30. Hawkings makes all payments within the discount period. Experience has shown that 80% of the purchases are paid in the month of the purchase and the remainder are paid in the month immediately following. In June 2019, the firm budgeted purchases of $30,000 for Galaxy-80 and $20,000 for RS-360.

Total budgeted marketing, distribution, customer service and administrative costs for 2019 are 1,850,000. Of this amount, $1,200,000 is considered fixed and includes depreciation expense of $150,000. The remainder varies with sales. The budgeted total sales for 2019 are $4 million. All marketing and administrative costs are paid in the month incurred.

Additional information follows:

                Cash balance                                                                      $40,000

Management desires to maintain an end-of-month minimum cash balance of $40,000. The firm has an agreement with a local bank to borrow its short-term needs in multiples of $1,000 up to $100,000 at an annual interest rate of 12%. Borrowings are assumed to occur at the end of the month. Bank borrowing at July 1 is $0.

Required:

On the basis of the preceding data and projections, prepare the following budgets:

1. Sales budget for July
2. Production budget for July
3. Production budget for August
4. Direct materials used budget for July (in units and dollars)

Big Company purchased a machine on February 1, 2013, and will make seven semiannual payments of $23,500 beginning five years from the date of purchase. The interest rate will be 12%, compounded semiannually. Determine the purchase price of the machine.

Given the financial statements below for Dragonfly Enterprises, what is the external financing need for a pro forma increase in sales of 12% if the company is operating at full capacity? Enter your answer as the nearest whole (e.g., 123), but do not include the $ sign. Dragonfly Enterprises Income Statement ($ Million) 2011 Sales 370 Cost of Goods Sold 226 Selling, Gen & Admin Exp 62 Depreciation 20 Earnings Before Int & Tax 62 Interest Expense 12 Taxable Income 50 Taxes at 40% 20 Net Income 30 Dividends 9 Addition to Retained Earn. 21 Balance Sheets as of 12-31 Assets 2010 2011 Cash 10 10 Account Receivable 46 50 Inventory 43 45 Total Current Assets 99 105 Net Fixed Assets 166 195 Total Assets 265 300 Liabilities and Owners Equity 2010 2011 Accounts Payable 26 30 Notes Payable 0 0 Total Current Liabilities 26 30 Long-Term Debt 140 150 Common Stock 22 22 Retained Earnings 77 98 Total Liab. and Owners Eq 265 300

The standards for one case of liquid weed killer are as follows: Direct materials 7 lb @ $ 9 /lb Direct labor 4.3 hr @ $ 19.2 /hr Variable overhead (based on machine hours) 1.4 hr @ $ 6.6 /hr During the week ended May 6, the following activity took place: 5,559 machine hours were worked. 29,553 lb of raw material were purchased for inventory at a total cost of $271,297. 4,180 cases of finished product were produced. 29,110 lb of raw material were used. 17,579 labor hours were worked at an average rate of $19.5 per hour. $35,411 actual variable overhead costs were incurred. Required: Calculate each of the following variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

a. price variance for raw materials purchased

b raw materials usage variance

c. direct labor rate variance

d. direct labor efficiency variance

e. variable overhead spending variance

f. variable overhead efficiency variance

**Please show work or explain**

1.) What are the differential revenues associated with the special order?Jake Company is considering a special order for 5,000 units at a price of $60 per unit. Jake's product normally sells for $84 per unit and has variable manufacturing costs of $45 per unit and variable selling costs of $9 per unit. Fixed manufacturing costs are $150,000 and fixed selling and administrative costs are $300,000. Jake has capacity to produce 30,000 units and is currently producing 20,000 units. If the order is accepted, , Jake will incur legal fees of $7,500 in connection with the order, but there will be no variable selling costs on the special order. What are the differential revenues associated with the special order?

a. $75,000

b. $120,000

c. $420,000

d. $300,000

e. None of these

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2.) What are the differential revenues associated with the special order?Jake Company is considering a special order for 5,000 units at a price of $60 per unit. Jake's product normally sells for $84 per unit and has variable manufacturing costs of $45 per unit and variable selling costs of $9 per unit. Fixed manufacturing costs are $150,000 and fixed selling and administrative costs are $300,000. Jake has capacity to produce 30,000 units and is currently producing 20,000 units. If the order is accepted, , Jake will incur legal fees of $7,500 in connection with the order, but there will be no variable selling costs on the special order. What are the differential costs associated with the special order?

a. $232,500

b. $67,500

c. $127,500

d. $322,500

e. None of these

Do you think this makes an impact on investors if a company is highly valued by their employees?

Why do you think that some companies do not invest in valuing their employees?

What keeps Google at the top of the list?

Lionel Corporation manufactures pharmaceutical products sold through a network of sales agents in the United States and Canada. The agents are currently paid an 18% commission on sales; that percentage was used when Lionel prepared the following budgeted income statement for the fiscal year ending June 30, 2019

Since the completion of the income statement, Lionel has learned that its sales agents are requiring a 5% increase in their commission rate (to 23%) for the upcoming year. As a result, Lionel’s president has decided to investigate the possibility of hiring its own sales staff in place of the network of sales agents and has asked Alan Chen, Lionel’s controller, to gather information on the costs associated with this change.

Alan estimates that Lionel must hire eight salespeople to cover the current market area, at an average annual payroll cost for each employee of $80,000, including fringe benefits expense. Travel and entertainment expenses is expected to total $650,000 for the year, and the annual cost of hiring a sales manager and sales secretary will be $175,000. In addition to their salaries, the eight salespeople will each earn commissions at the rate of 10% of sales. The president believes that Lionel also should increase its advertising budget by $550,000 if the eight salespeople are hired.

Required

1. Determine Lionel’s breakeven point (operating profit = 0) in sales dollars for the fiscal year ending June 30, 2019, if the company hires its own sales force and increases its advertising costs. Prove this by constructing a contribution income statement.

2. If Lionel continues to sell through its network of sales agents and pays the higher commission rate, determine the estimated volume in sales dollars that would be required to generate the operating profit as projected in the budgeted income statement.

REQUIREMENT 1

Determine Lionel’s breakeven point (operating profit = 0) in sales dollars for the fiscal year ending June 30, 2019, if the company hires its own sales force and increases its advertising costs. Prove this by constructing a contribution income statement. (Do not round intermediate calculations. Enter your answers in thousands of dollars.)

• Required 2

If Lionel continues to sell through its network of sales agents and pays the higher commission rate, determine the estimated volume in sales dollars that would be required to generate the operating profit as projected in the budgeted income statement. (Do not round intermediate calculations. Enter your answers in thousands of dollars.)

Department S had no work in process at the beginning of the period. It added 11,600 units of direct materials during the period at a cost of $81,200. During the period, 8,700 units were completed, and 2,900 units were 20% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. Direct labor was $50,112, and factory overhead was $27,840. The total cost of units completed during the period was a. $107,880 b. $160,776 c. $133,980 d. $60,900

Fogerty Company makes two products—titanium Hubs and Sprockets. Data regarding the two products follow:

Additional information about the company follows:

1. Hubs require $30 in direct materials per unit, and Sprockets require $16.

2. The direct labor wage rate is $11 per hour.

3. Hubs require special equipment and are more complex to manufacture than Sprockets.

4. The ABC system has the following activity cost pools:

Required:

1. Compute the activity rate for each activity cost pool.

2. Determine the unit product cost of each product according to the ABC system.

Your supervisor has just finished taking a college course in which she learned about flowcharting and data-flow diagrams.

In the data-flow diagrams, there are four basic symbols that are used. Prepare a written paper describing and discussing these symbols, including the following:

• Why these symbols are important
• How they can help accounting information systems to be better understood

Walters Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January 1, 2021, options were granted for 40 million $1 par common shares. The exercise price is the market price on the grant date—$8 per share. Options cannot be exercised prior to January 1, 2023, and expire December 31, 2027. The fair value of the 40 million options, estimated by an appropriate option pricing model, is $1 per option.

Required: 1. Determine the total compensation cost pertaining to the incentive stock option plan.

2. to 5. Prepare the appropriate journal entries to record compensation expense on December 31, 2021 and 2022. Prepare the appropriate journal entry to record the exercise of 75% of the options on March 12, 2023, when the market price is $9 per share and the entry on December 31, 2027, when the remaining options that have vested expire without being exercised.

Activity-Based Costing and Conventional Costs Compared
Chef Grill Company manufactures two types of cooking grills: the Gas Cooker and the Charcoal Smoker. The Cooker is a premium product sold in upscale outdoor shops; the Smoker is sold in major discount stores. Following is information pertaining to the manufacturing costs for the current month.

Manufacturing overhead follows:

Rounding instructions: Do not round until your final answers. Round total cost answers to the nearest dollar and per unit answers to the nearest cent.

(a) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming all manufacturing overhead is assigned on the basis of direct labor dollars.

HINT: Use 8.4708 for overhead rate calculations.

(b) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming manufacturing overhead is assigned using activity-based costing.