Explain the process of closing the books and describe the content and purpose of a post-closing trial balance. Answer in our own words and must be at least 200 words.

Cost of Goods Sold Budget

Wilmington Chemical Company uses oil to produce two types of plastic products, P1 and P2. Wilmington budgeted 26,000 barrels of oil for purchase in June for $67 per barrel. Direct labor budgeted in the chemical process was $209,000 for June. Factory overhead was budgeted $313,600 during June. The inventories on June 1 were estimated to be:

The desired inventories on June 30 were:

Use the preceding information to prepare a cost of goods sold budget for June.

Static Budget versus Flexible Budget

The production supervisor of the Machining Department for Niland Company agreed to the following monthly static budget for the upcoming year:

The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows:

The Machining Department supervisor has been very pleased with this performance because actual expenditures for January–March have been less than the monthly static budget of $735,000. However, the plant manager believes that the budget should not remain fixed for every month but should “flex” or adjust to the volume of work that is produced in the Machining Department. Additional budget information for the Machining Department is as follows:

a. Prepare a flexible budget for the actual units produced for January, February, and March in the Machining Department. Assume that depreciation is a fixed cost. Enter all amounts as positive numbers. If required, use per unit amounts carried out to two decimal places.

Feedback

For each level of production, show wages, utilities, and depreciation.

Consider performance and spending.

b. Compare the flexible budget with the actual expenditures for the first three months.

What does this comparison suggest?

The president of the retailer Prime Products has just approached the company’s bank with a request for a $91,000, 90-day loan. The purpose of the loan is to assist the company in acquiring inventories. Because the company has had some difficulty in paying off its loans in the past, the loan officer has asked for a cash budget to help determine whether the loan should be made. The following data are available for the months April through June, during which the loan will be used:

1. On April 1, the start of the loan period, the cash balance will be $15,800. Accounts receivable on April 1 will total $176,400, of which $151,200 will be collected during April and $20,160 will be collected during May. The remainder will be uncollectible.

2. Past experience shows that 30% of a month’s sales are collected in the month of sale, 60% in the month following sale, and 8% in the second month following sale. The other 2% is bad debts that are never collected. Budgeted sales and expenses for the three-month period follow:

3. Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases during March, which will be paid in April, total $159,000.

4. In preparing the cash budget, assume that the $91,000 loan will be made in April and repaid in June. Interest on the loan will total $1,260.

Required:

1. Calculate the expected cash collections for April, May, and June, and for the three months in total.

2. Prepare a cash budget, by month and in total, for the three-month period.

Solano Company has sales of $820,000, cost of goods sold of $530,000, other operating expenses of $60,000, average invested assets of $2,400,000, and a hurdle rate of 11 percent.

2. Several possible changes that Solano could face in the upcoming year follow. Determine each scenario’s impact on Solano’s ROI and residual income. (Note: Treat each scenario independently.)
a. Company sales and cost of goods sold increase by 30 percent.
b. Operating expenses decrease by $11,000.
c. Operating expenses increase by 20 percent.
d. Average invested assets increase by $460,000.
e. Solano changes its hurdle rate to 16 percent.

Explain the accrual basis of accounting and explain the reasons for adjusting entries. Must be 175 to 200 words

Using the computer to discover international financial misstatements in transactions and account balances. AMI international is a large office products company. Headquarters management imposed pressure on operating division managers to meet profit forecasts. The division managers met these profit goals using several accounting manipulations involving the record-keeping system that maintained all transactions and account balances on computer files. Employees who operated the computer accounting system were aware of the modifications of policy the managers ordered to accomplish the financial statement manipulations. The management and employees carried out these activities: 1. Deferred inventory write-downs for obsolote and damaged goods. 2. Kept open the sales entry system after the quarterly and annual cutoff dates, recording sales of goods shipped after the cutoff dates. 3. Recorded as sales transactions that had been as leases of office equipment. 4. Recorded shipments to branch offices as sales. 5. Postponed recording vendors invoices for parts and services until later, but the actual invoice date was faithfully entered according to accounting policy. REQUIRED: Describe one or more procedures that could be performed with CAAT to detect signs of each of these transactions manipulations. Limit your answer to the actual work accomplished by the computer software.

Sales Returns

Which of the following statements is true relating to the allowance for sales returns?

a. Sales returns is treated as an expense in the income statement and, therefore, reduces profit for the period.

b. An excess of the amount by which the allowance for sales returns is increased compared with the actual returns for the period indicates the company may have inflated profit for the period.

c. The amount by which the allowance for sales returns is reduced during the period is recognized as a reduction of sales for the period, thus reducing profts.

d. Increasing the allowance for sales returns by an amount that is less than the actual returns recognized for the period may indicate either the company is attempting to increase profit for the period or its estimates that less of its products will be returned in the future.

Deferred Revenue
True or false: A reduction of the deferred revenue account can be interpreted as a leading indicator of lower future revenues. Explain

a. Fale. Revenue is recognized when the deferred revenue liability increases. If the deferred revenue account has decreased, more cash came in from customers and more revenue will be recgnized in the future.

b. True. Revenue is recognized when the deferred revenue liability decreases. If the deferred revenue account has decreased, less cash came in from customers and less revenue will be recognized in the future.

c. False. Revenue is recognized when the deferred revenue liability decreases. If the deferred revenue account has decreased, less cash came in from customers and more revenue will be recognized in the future.

d. True. Revenue is recognized when the deferred revenue liability decreases. If the deferred revenue account has decreased, more cash came in from customers and less revenue will be recognized in the future.

Foreign Exchange Effects on Sales  
True or false: A multinational company reports that a large amount of its sales is generated in foreign currencies that have strengthened vis-à-vis the $US. Consolidated revenues are likely lower than would have been reported in the absence of such a shift in exchange rates.

a. False. Strengthening foreign currencies implies a weakening $US. As the $US weakens, foreign currencies purchase less $US, resulting in an decrease in foreign currency-denominated sales, expense and profit. Consolidated revenues will therefore, likely be higher.

b. True. Strengthening foreign currencies implies a weakening $US. As the $US weakens, foreign currencies purchase less $US, resulting in an decrease in foreign currency-denominated sales, expense and profit. Consolidated revenues will therefore, likely be lower.

c. False. Strengthening foreign currencies implies a weakening $US. As the $US weakens, foreign currencies purchase more $US, resulting in an increase in foreign currency-denominated sales, expense and profit. Consolidated revenues will therefore, likely be higher.

d. True. Strengthening foreign currencies implies a weakening $US. As the $US weakens, foreign currencies purchase less $US, resulting in an increase in foreign currency-denominated sales, expense and profit. Consolidated revenues will therefore, likely be lower.

Choose a US firm and a country where the firm is not currently present. Develop an in‐ house proposal suggesting whether and how your firm should enter the market. Be sure to include: ‐ Financial analysis of investment decision (NPV of cash flows) ‐ Foreign exchange risk analysis and risk mitigation recommendation ‐ Possible financing alternatives ‐ Tax optimization views

1. Which of the following statements is true of a normal costing system?

In a normal costing system, only the costs incurred for direct materials are used to determine unit cost.

In a normal costing system, only actual costs of direct materials, direct labor, and overhead are used to determine unit cost.

In a normal costing system, unit costs are determined by adding estimated direct materials, estimated direct labor, and actual overhead.

In a normal costing system, unit costs are determined by adding actual direct materials, actual direct labor, and estimated overhead.

d

2. Which of the following is a difference between the actual cost system and the normal cost system?

The actual cost system determines unit cost by adding actual costs of direct materials and actual direct labor, whereas the normal cost system determines unit cost by adding actual direct materials, actual direct labor, and estimated overhead.

The actual cost system determines unit cost by adding actual direct materials, actual direct labor, and actual overhead, whereas the normal cost system determines unit cost by adding actual direct materials, actual direct labor, and estimated overhead.

The actual cost system determines unit cost by adding actual costs of direct materials and actual direct labor, whereas the normal cost system determines unit cost by adding actual direct labor and estimated overhead.

The actual cost system determines unit cost by approximating the year’s actual total cost at the beginning of the year, whereas the normal cost system determines unit cost by approximating the year’s actual total cost based on the total cost of the prior year.

3. Using the normal costing method, how can the overhead costs be estimated or calculated?

Overhead costs can be calculated by approximating the year’s actual overhead at the end of the year and then using the actual rate to obtain the needed unit cost information.

Overhead costs are estimated by approximating the year’s estimated overhead at the beginning of the year and then using the actual rates from the most recent year to obtain the needed unit cost information.

Overhead costs can be estimated by approximating the year’s actual overhead at the beginning of the year and then using a predetermined rate throughout the year to obtain the needed unit cost information.

Overhead costs can be calculated by approximating the year’s actual overhead at the end of the first six months of the year and then using the actual rate of this period to obtain the needed unit cost information.

1. Nile Machinery Inc. estimated an annual overhead cost of $200,000 for the year 20X1. It also estimated an annual activity level of 4,000 units for the year. The actual overhead cost was $240,000. Calculate the predetermined overhead rate per unit for Nile Machinery for the year 20X1.

$60 per unit

$10 per unit

$50 per unit

$100 per unit

2. For the year 20X1, Argon Systems Inc.’s predetermined overhead rate was 40% of direct labor costs. By the end of the year, the total costs for direct labor was $100,000. The actual overhead for the year 20X1 was $38,000. Calculate the overhead variance for the year 20X1.

Underapplied variance of $2,000

Overapplied variance of $2,000

Underapplied variance of $4,000

Overapplied variance of $4,000

3. Which of the following is the mathematical expression to calculate the predetermined overhead rate for a department?

Predetermined Departmental Overhead Rate = Actual Department Overhead ÷ Estimated Departmental Activity Level

Predetermined Departmental Overhead Rate = Estimated Department Overhead ÷ Actual Departmental Activity Level

Predetermined Departmental Overhead Rate = Estimated Department Overhead ÷ Estimated Departmental Activity Level

Predetermined Departmental Overhead Rate = Actual Department Overhead ÷ Actual Departmental Activity Level

4. Regal Manufacturing Corp., manufacturers of custom-made motor engines, has an estimated overhead of $109,500 and estimated direct labor hours of 21,900 at the beginning of the current year. It applies overhead based on direct labor hours. Actual direct labor hours for the current year are 22,500. Calculate the overhead applied to production for the year.

$106,580

$112,500

$3,000

$5,920

1. Which of the following documents lists the total cost for a single job?

Sales order

Job-order cost sheet

Bill of materials

Goods receipt note

2. Which of the following is true of a material requisition form?

It includes the data like type, quantity, and unit price of the direct materials issued to a job.

It lists the total material cost for a single job.

It is filled out by each employee every day to identify total material cost and abnormal wastage of material.

It is prepared using the information of material cost entered in the job-order cost sheet.

3. Vector Paperwork's Inc. produces high-quality paper and other stationery items. It uses the job-order costing system in its manufacturing process. In the factory, 100 employees work in the production process, 20 as supervisors, 30 in the sales department, and 5 in the accounting department. For which of the following employees must time ticket be filled out for at the end of each job?

Employees in the accounting department

Employees in the sales department

Supervisors

Employees in the production process

X. Bonds Company
The following is a single-step income statement for the X. Bonds Company:

Refer to X. Bonds Company. If the income statement were prepared in a multiple-step format, income from operations would be:

a.$126,000.

b.$146,000.

c.$185,000.

d.$171,000.

Provide 5 examples of "off book" financial transactions on which SOX requires you to report if material. Please put some explanation for these.

Patterson Ltd was registered on 18 March 2017, as a company with a constitution limiting the shares that could be offered to; 4 000 000 Ordinary A shares and 2 000 000 non-voting Ordinary B shares. The company issued a prospectus dated 12 May inviting the public to apply for 3 000 000 Ordinary A class shares at $2.50 per share. The terms of the shares on issue are $1.00 on application, $1.00 on allotment and $0.50 to be called within six months of allotment. If the issue is oversubscribed the directors will make a pro-rata issue of shares and the excess application money will be applied to allotment and calls before any refunds will be given. On 15 May the directors also decided to issue 1 000 000 non voting Ordinary B shares as fully paid to the promoters for a payment of $2.00 per share. On 30 June applications closed. Applications for 4 500 000 shares in total had been received with applicants for 1 500 000 shares paying $2.50 and the remainder paying only the application fee. On 4 July the shares were allotted, with all allotment money owed, paid by the 30 July. On 22 July share issue costs of $35,000 for the Ordinary A shares. The share issue costs related to legal expenses associated with the share issue and fees associated with the drafting and advertising of the prospectus and share issue. The call on the Ordinary A shares was made on 25 August and due by 30 September. All call money was received except for the call on 20 000 shares. The directors met and forfeited the shares on 8 October. On 23 October the $2.50 shares were reissued at $2.20 fully paid to $2.50. Costs associated with reissuing the forfeited shares totalled $8,000. The money was refunded to the defaulting shareholders on 10 November. The directors announced on 23 November that they were to make a further issue of 1 000 000 Ordinary A shares in 8 months time for $4.00 per share. They issued a call option on these shares, with $0.60 payable by 15 December. All options were sold. Required: '

(a) Prepare a schedule for the Ordinary A share issue that shows the break-up of:

• number of shares applied for;

• number of shares allotted

• total cash received;

• cash received that relates to application;

• cash received that relates to allotment;

• cash received that relates to calls (in advance); and

• cash refunded.

(b) Prepare journal entries for the above transactions. Note: the entries should be in strict date order of the underlying event. (Narrations required)

Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared monthly for each department. The planning budget and flexible budget for the Production Department are based on the following formulas, where q is the number of labor-hours worked in a month:

The Production Department planned to work 4,100 labor-hours in March; however, it actually worked 3,900 labor-hours during the month. Its actual costs incurred in March are listed below:

Required:

1. Prepare the Production Department’s planning budget for the month.

2. Prepare the Production Department’s flexible budget for the month.

3. Prepare the Production Department’s flexible budget performance report for March, including both the spending and activity variances.