Broadhead Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2: Units Unit Cost Inventory, December 31, prior year 2,940 $ 11 For the current year: Purchase, April 11 8,900 9 Purchase, June 1 7,940 14 Sales ($60 each) 10,980 Operating expenses (excluding income tax expense) $ 186,500
1. Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO.
In: Accounting
Financial information for two companies are presented below.
Fill in the missing amounts.
|
Sandhill Company |
Carla Vista Company |
|||
| Sales revenue | $ 90,800 | $ | ||
| Sales returns and allowances | $ 5,000 | |||
| Net sales | 83,000 | 127,000 | ||
| Cost of goods sold | 55,200 | |||
| Gross profit | $ | 41,000 | ||
| Operating expenses | 14,580 | |||
| Net income | $ | 18,000 |
eTextbook and Media
List of Accounts
Calculate the profit margin and the gross profit rate for each company. (Round answers to 1 decimal place, e.g. 15.5%.)
|
Sandhill Company |
Carla Vista Company |
|||||
| Profit margin | % | % | ||||
| Gross profit rate | % | % | ||||
In: Accounting
On June 10, Oriole Company purchased $ 7,500 of merchandise from
Ivanhoe Company, terms 2/10, n/30. Oriole Company pays
the freight costs of $ 360 on June 11. Goods totaling $ 300 are
returned to Ivanhoe Company for credit on June 12. On June 19,
Oriole Company pays Ivanhoe Company in full, less the purchase
discount. Both companies use a perpetual inventory
system.
Prepare separate entries for each transaction on the books of Oriole Company. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Choose a transaction date June 10June 11June 12June 19 |
Enter an account title |
Enter a debit amount |
Enter a credit amount |
|
Enter an account title |
Enter a debit amount |
Enter a credit amount |
|
|
Choose a transaction date June 10June 11June 12June 19 |
Enter an account title |
Enter a debit amount |
Enter a credit amount |
|
Enter an account title |
Enter a debit amount |
Enter a credit amount |
|
|
Choose a transaction date June 10June 11June 12June 19 |
Enter an account title |
Enter a debit amount |
Enter a credit amount |
|
Enter an account title |
Enter a debit amount |
Enter a credit amount |
|
|
Choose a transaction date June 10June 11June 12June 19 |
Enter an account title |
Enter a debit amount |
Enter a credit amount |
|
Enter an account title |
Enter a debit amount |
Enter a credit amount |
|
|
Enter an account title |
Enter a debit amount |
Enter a credit amount |
eTextbook and Media
List of Accounts
Prepare separate entries for each transaction for Ivanhoe Company. The merchandise purchased by Oriole Company on June 10 cost Ivanhoe Company $ 2,960, and the goods returned cost Ivanhoe Company $ 200. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Choose a transaction date June 10June 11June 12June 19 |
Enter an account title to record credit sale |
Enter a debit amount |
Enter a credit amount |
|
Enter an account title to record credit sale |
Enter a debit amount |
Enter a credit amount |
|
|
(To record credit sale) |
|||
|
Enter an account title to record cost of goods sold |
Enter a debit amount |
Enter a credit amount |
|
|
Enter an account title to record cost of goods sold |
Enter a debit amount |
Enter a credit amount |
|
| (To record cost of goods sold) | |||
|
Choose a transaction date June 10June 11June 12June 19 |
Enter an account title |
Enter a debit amount |
Enter a credit amount |
|
Enter an account title |
Enter a debit amount |
Enter a credit amount |
|
|
Choose a transaction date June 10June 11June 12June 19 |
Enter an account title to record credit sale |
Enter a debit amount |
Enter a credit amount |
|
Enter an account title to record credit sale |
Enter a debit amount |
Enter a credit amount |
|
|
(To record credit sale) |
|||
|
Enter an account title to record cost of goods returned |
Enter a debit amount |
Enter a credit amount |
|
|
Enter an account title to record cost of goods returned |
Enter a debit amount |
Enter a credit amount |
|
| (To record cost of goods returned) | |||
|
June 19 |
Enter an account title |
Enter a debit amount |
Enter a credit amount |
|
Enter an account title |
Enter a debit amount |
Enter a credit amount |
|
|
Enter an account title |
Enter a debit amount |
Enter a credit amount |
eTextbook and Media
In: Accounting
When is it possible to fund a million dollar balance in a newly established IRA?
In: Accounting
Irwin, Inc., constructed a machine at a total cost of $45
million. Construction was completed at the end of 2014 and the
machine was placed in service at the beginning of 2015. The machine
was being depreciated over a 10-year life using the
sum-of-the-years’-digits method. The residual value is expected to
be $1 million. At the beginning of 2018, Irwin decided to change to
the straight-line method.
Ignoring income taxes, prepare the journal entry relating to the
machine for 2018. (If no entry is required for a
transaction/event, select "No journal entry required" in the first
account field. Enter your answers in millions rounded to 1 decimal
place (i.e., 5,500,000 should be entered as 5.5).)
Answer:
In: Accounting
financial accounting by Spiceland, J. David; Thomas, Wayne; Hermann, Don
Turn to page# 117 -> Read the Ethical Dilemma section on Prepaid Advertising (100% Points). Part I: a) Write the journal entries to record the advertising expense for the month of November 2018 and December 2018 (Assume $500,000 per each month). b) Write the journal entry to record the advertising cost as a Prepaid Ads (an asset) for the fiscal year 2018. c) If the Prepaid Ads journal is recorded and posted in 2018 (from item b) , what is the reversal journal for this transaction in fiscal year 2019? Part II: Answer the two(2) questions asked from the Ethical Dilemma problem : (1) As an employee, should you knowingly record advertising cost incorrectly if asked to do so by your superior?” (2) Does your answer change if you believe that misreporting will save employee jobs? The answer to Q1& Q2 (Part II) should be a min 1 paragraph / max up to 2 paragraphs.
In: Accounting
Provide the following journal entries:
1. On Feb. 1 ABC Company issues 100,000 shares for common stock, $1 par, and 10,000 shares of preferred stock, 6%, $100 par. The common stock is sold at $72/share. The preferred stock is sold at $108 per share.
2. On April 1 the ABC Company Board declares the regular preferred dividend. The record date is April 15, the payment date is April 30.
3. On May 1 we buy back 10,000 shares of common at $81/share.
4. On June 15 we sell 1,000 shares of treasury stock at $85/share.
5. On October 15 we sell 2,000 shares of treasury stock at $62/share.
6. On Dec. 15 our stock is trading at $110/share. We declare a 2 for 1 stock split.
In: Accounting
|
Marine, Inc., manufactures a product that is available in both a flexible and a rigid model. The company has made the rigid model for years; the flexible model was introduced several years ago to tap a new segment of the market. Since introduction of the flexible model, the company’s profits have steadily declined, and management has become concerned about the accuracy of its costing system. Sales of the flexible model have been increasing rapidly. |
|
Overhead is applied to products on the basis of direct labor-hours. At the beginning of the current year, management estimated that $714,000 in overhead costs would be incurred and the company would produce and sell 2,000 units of the flexible model and 10,000 units of the rigid model. The flexible model requires 3.0 hour(s) of direct labor time per unit, and the rigid model requires 1.50 hour(s). Direct materials and labor costs per unit are given below: |
|
Flexible |
Rigid |
|||
|
Direct materials cost per unit |
$ |
125 |
$ |
80 |
|
Direct labor cost per unit |
$ |
30 |
$ |
15 |
|
Required: |
|
|
1-a. |
Compute the predetermined overhead rate using direct labor-hours as the basis for allocating overhead costs to products. |
|
1-b. |
Compute the unit product cost for one unit of each model. |
||||||||||
|
|
2. |
An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea. It came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities are listed as follows: |
|
Expected Activity |
|||||
|
Activity Cost Pool and Activity Measure |
Estimated Overhead Cost |
Flexible |
Rigid |
Total |
|
|
Purchase orders (number of orders) |
$ |
22,500 |
100 |
350 |
450 |
|
Rework requests (number of requests) |
12,500 |
75 |
175 |
250 |
|
|
Product testing (number of tests) |
170,000 |
650 |
710 |
1,360 |
|
|
Machine related (machine-hours) |
509,000 |
1,100 |
3,990 |
5,090 |
|
|
$ |
714,000 |
||||
|
Compute the activity rate for each of the activity cost pools. |
|||||||||||||||||||
|
|||||||||||||||||||
|
3. |
Using activity-based costing, do the following: |
|
a. |
Determine the total amount of overhead that would be assigned to each model for the year. |
|
|
b. |
Compute the unit product cost for one unit of each model. (Do not round intermediate calculations and round your answers to 2 decimal places.) |
||||||||
|
|||||||||
In: Accounting
Prospero Corporation’s total overhead costs at various levels of activity are presented below:
|
Month |
Machine-Hours |
Total Overhead Costs |
|
|
August |
8,000 |
$119,400 |
|
|
September |
12,000 |
$142,800 |
|
|
October |
16,000 |
$166,200 |
|
|
November |
4,000 |
$93,120 |
Assume that the total overhead costs above consist of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 4,000 machine-hour level of activity is:
|
Utilities (variable) |
$11,520 |
|
|
Supervisory salaries (fixed) |
15,600 |
|
|
Maintenance (mixed) |
66,000 |
|
|
Total overhead costs |
$93,120 |
Prospero Corporation’s management wants to break down the maintenance cost into its basic variable and fixed cost elements.
Required:
(1). Estimate how much of the $166,200 of overhead cost in October was maintenance cost. (Hint: to do this, it may be helpful to first determine how much of the $166,200 consisted of utilities and supervisory salaries. Think about the behavior of variable and fixed costs!)
(2). Using the high-low method, estimate a cost formula for maintenance.
(3). Express the company’s total overhead costs in the linear equation form Y = a + bX.
(4). What total overhead costs would you expect to be incurred at an operating activity level of 15,000 machine-hours?
In: Accounting
Your client is a local independent grocer with five stores which
competes with a number of large grocery chains. It purchases goods
from several large grocery supply chains as well as from various
vendors that sell directly to the store. Some vendors offer various
advertising rebates or other price concessions for stocking
goods.
Explain how your knowledge of the business and industry would
impact your audit of total purchases and accounts payable for the
client.
In: Accounting
|
The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of the hotel and the number of occupancy-days over the last year. An occupancy-day represents a room rented out for one day. The hotel's business is highly seasonal, with peaks occurring during the ski season and in the summer. |
|
Month |
Occupancy- Days |
Electrical |
||
|
January |
3,180 |
$ |
6,510 |
|
|
February |
2,920 |
$ |
6,261 |
|
|
March |
3,780 |
$ |
7,392 |
|
|
April |
2,160 |
$ |
5,569 |
|
|
May |
650 |
$ |
1,820 |
|
|
June |
2,050 |
$ |
5,261 |
|
|
July |
4,050 |
$ |
7,829 |
|
|
August |
4,070 |
$ |
7,896 |
|
|
September |
1,780 |
$ |
4,984 |
|
|
October |
570 |
$ |
1,596 |
|
|
November |
1,580 |
$ |
4,424 |
|
|
December |
2,680 |
$ |
5,908 |
|
|
Required: |
|
|
1. |
Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. (Do not round your intermediate calculations. Round your Variable cost answer to 2 decimal places and Fixed cost element answer to nearest whole dollar amount) |
|
|
2. |
What other factors other than occupancy-days are likely to affect the variation in electrical costs from month to month? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answers and double click the box with the question mark to empty the box for a wrong answers.) |
|
In: Accounting
Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 15% for all items sold.
Barbara Cheney, Pittman’s controller, has just prepared the company’s budgeted income statement for next year as follows:
| Pittman Company Budgeted Income Statement For the Year Ended December 31 |
||||||
| Sales | $ | 17,000,000 | ||||
| Manufacturing expenses: | ||||||
| Variable | $ | 7,650,000 | ||||
| Fixed overhead | 2,380,000 | 10,030,000 | ||||
| Gross margin | 6,970,000 | |||||
| Selling and administrative expenses: | ||||||
| Commissions to agents | 2,550,000 | |||||
| Fixed marketing expenses | 119,000 | * | ||||
| Fixed administrative expenses | 1,840,000 | 4,509,000 | ||||
| Net operating income | 2,461,000 | |||||
| Fixed interest expenses | 595,000 | |||||
| Income before income taxes | 1,866,000 | |||||
| Income taxes (30%) | 559,800 | |||||
| Net income | $ | 1,306,200 | ||||
*Primarily depreciation on storage facilities.
As Barbara handed the statement to Karl Vecci, Pittman’s president, she commented, “I went ahead and used the agents’ 15% commission rate in completing these statements, but we’ve just learned that they refuse to handle our products next year unless we increase the commission rate to 20%.”
“That’s the last straw,” Karl replied angrily. “Those agents have been demanding more and more, and this time they’ve gone too far. How can they possibly defend a 20% commission rate?”
“They claim that after paying for advertising, travel, and the other costs of promotion, there’s nothing left over for profit,” replied Barbara.
“I say it’s just plain robbery,” retorted Karl. “And I also say it’s time we dumped those guys and got our own sales force. Can you get your people to work up some cost figures for us to look at?”
“We’ve already worked them up,” said Barbara. “Several companies we know about pay a 7.5% commission to their own salespeople, along with a small salary. Of course, we would have to handle all promotion costs, too. We figure our fixed expenses would increase by $2,550,000 per year, but that would be more than offset by the $3,400,000 (20% × $17,000,000) that we would avoid on agents’ commissions.”
The breakdown of the $2,550,000 cost follows:
| Salaries: | |||
| Sales manager | $ | 106,250 | |
| Salespersons | 637,500 | ||
| Travel and entertainment | 425,000 | ||
| Advertising | 1,381,250 | ||
| Total | $ | 2,550,000 |
“Super,” replied Karl. “And I noticed that the $2,550,000 equals what we’re paying the agents under the old 15% commission rate.”
“It’s even better than that,” explained Barbara. “We can actually save $78,200 a year because that’s what we’re paying our auditors to check out the agents’ reports. So our overall administrative expenses would be less.”
“Pull all of these numbers together and we’ll show them to the executive committee tomorrow,” said Karl. “With the approval of the committee, we can move on the matter immediately.”
Required:
1. Compute Pittman Company’s break-even point in dollar sales for next year assuming:
a. The agents’ commission rate remains unchanged at 15%.
b. The agents’ commission rate is increased to 20%.
c. The company employs its own sales force.
2. Assume that Pittman Company decides to continue selling through
agents and pays the 20% commission rate. Determine the dollar sales
that would be required to generate the same net income as contained
in the budgeted income statement for next year.
3. Determine the dollar sales at which net income would be equal regardless of whether Pittman Company sells through agents (at a 20% commission rate) or employs its own sales force.
4. Compute the degree of operating leverage that the company would expect to have at the end of next year assuming:
a. The agents’ commission rate remains unchanged at 15%.
b. The agents’ commission rate is increased to 20%.
c. The company employs its own sales force.
Use income before income taxes in your operating leverage computation.
In: Accounting
|
Broucek Inc. makes baby furniture from fine hardwoods. The company uses a job-order costing system and predetermined overhead rates to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Preparation Department is based on machine hours, and the rate in the Fabrication Department is based on direct labor-hours. At the beginning of the year, the company’s management made the following estimates for the year: |
|
|
Department |
|
|
|
Preparation |
Fabrication |
|
Machine-hours |
99,000 |
30,000 |
|
Direct labor-hours |
53,000 |
77,000 |
|
Direct materials cost |
$214,000 |
$224,000 |
|
Direct labor cost |
$480,000 |
$561,000 |
|
Fixed manufacturing overhead cost |
$415,800 |
$662,200 |
|
Variable manufacturing overhead per machine-hour |
$3.50 |
- |
|
Variable manufacturing overhead per direct labor-hour |
- |
$5.50 |
|
Job 135 was started on April 1 and completed on May 12. The company's cost records show the following information concerning the job: |
|
|
Department |
|
|
|
Preparation |
Fabrication |
|
Machine-hours |
400 |
86 |
|
Direct labor-hours |
70 |
164 |
|
Direct materials cost |
$1,140 |
$1,520 |
|
Direct labor cost |
$890 |
$1,170 |
|
Required: |
|
1. |
Compute the predetermined overhead rate used during the year in the Preparation Department. Compute the rate used in the Fabrication Department. (Round your answers to 2 decimal places.) |
|
||||||||||
|
2. |
Compute the total overhead cost applied to Job 135. (Round "Predetermined overhead rate" to 2 decimal places, other intermediate calculations and final answer to the nearest dollar amount.) |
|
3-a. |
What would be the total cost recorded for Job 135? (Round "Predetermined overhead rate" to 2 decimal places, other intermediate calculations and final answers to the nearest dollar amount.) |
|
|||||||||||||||||||||||||
|
3-b. |
If the job contained 44 units, what would be the unit product cost? (Round "Predetermined overhead rate" and final answer to 2 decimal places and other intermediate calculations to the nearest dollar amount.) |
|
4. |
At the end of the year, the records of Broucek Inc. revealed the following actual cost and operating data for all jobs worked on during the year: |
|
|
Department |
|
|
|
Preparation |
Fabrication |
|
Machine-hours |
61,200 |
26,800 |
|
Direct labor-hours |
38,000 |
55,000 |
|
Direct materials cost |
$175,800 |
$432,000 |
|
Manufacturing overhead cost |
$475,550 |
$721,400 |
|
What was the amount of underapplied or overapplied overhead in each department at the end of the year? (Round "Predetermined overhead rate" to 2 decimal places.) |
|
rev: 10_28_2015_QC_CS-28446
|
In: Accounting
Citrus Girl Company (CGC) purchases quality citrus produce from local growers and sells the produce via the Internet across the United States. To keep costs down, CGC maintains a warehouse, but no showroom or retail sales outlets. CGC has the following information for the second quarter of the year:
Required:
1. Compute the budgeted cost of purchases for each month in the second quarter.
2. Complete the budgeted income statement for each month in the second quarter.
In: Accounting
Carlsbad Corporation's sales are expected to increase from $5 million in 2018 to $6 million in 2019, or by 20%. Its assets totaled $4 million at the end of 2018. Carlsbad is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2018, current liabilities are $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accrued liabilities. Its profit margin is forecasted to be 3%.
In: Accounting