A company issues 800,000 of 10% bonds dated 6/1/16 which are due 6/1/26. interest is paid annually at 6/1. the market rate for the bond is 9.75%

on 5/1/19 the company retired all of these bonds for 802,000 plus accrued interest.

prepare journal entries from 2016 to 2019

Profitability Analysis
Assume Strands, a local hair salon, provides cuts, perms, and hairstyling services. Annual fixed costs are $150,000, and variable costs are 40 percent of sales revenue. Last year's revenues totaled $300,000.

(a) Determine its break-even point in sales dollars.
$Answer 375,000 wrong

(b) Determine last year's margin of safety in sales dollars.
$Answer 75,000 wrong

(c) Determine the sales volume required for an annual profit of $80,000.

Round your answer to the nearest dollar.
$Answer 316,667 wrong

Multiple Product Planning with Taxes
In the year 2017, Pyramid Consulting had the following contribution income statement:

D) What is the break-even point in sales revenue if management makes a decision that increases fixed costs by $57,000?

Use rounded contribution margin ratio (2 decimal places) for your calculation.
$ 657,692 wrong

Would Yogurt Vi use job costing or process costing in calculating the cost of a customer's cup of frozen yogurt and toppings?

Yogurt Vi (pronounced vee) is a frozen yogurt restaurant with several locations in Ohio. Customers will select the flavor of frozen yogurt they want and fill their cup from the self-serve machine with the desired amount of the frozen yogurt. Next the customer will proceed to the toppings bar, where they can select from a large variety of toppings including strawberries, kiwis, gummy bears, chocolate chips, crushed Oreos, M&M candies, sprinkles, salted caramels, and many other toppings. Once the customer has finished adding toppings, the customer then proceeds to the cash register where the cup of frozen yogurt and toppings is weighed. The customer is charged a flat fee of $0.48 per ounce.

Questions

1. Do you think that Yogurt Vi pays the same amount to its suppliers for each of the toppings? For example, is it probable that fresh strawberries cost the exact same amount as M&M candies? Do you think the toppings would cost the same amount as the frozen yogurt mix that is put into the soft-serve machines?
2. From a technical viewpoint, do you think Yogurt Vi would use a job costing system or a process costing system for calculating the cost of each customer’s order? Explain.
3. From a practical standpoint, do you think Yogurt Vi would use a job costing system or a process costing system for calculating the cost of each customer’s order? Explain.

            Assets at 12/31/03                                 Liabilities at 12/31/03

            Cash                                   $   200         Short-term trade payables            $   500

            Short-term trade receivables     600         Note payable to CEO, due 8/31/04 (2) 350

            Inventories                               700         Wages payable                                 100

            Prepaid warehouse rentals (1) 300         Customer advances (3)                     150

            Property & equipment, net       900         Income taxes payable                         50

            Total assets                       $2,700         Bonds payable, due 2004-11 (4)       800

                                                                           Total liabilities                            $1,950

            Notes:

            1.   Prepaid warehouse rentals cover the period 1/1/04-12/31/05.

2.   Following a plan adopted on 12/31/03, the Company borrowed $350 from the bank on 1/15/04, giving a 10% note payable due on 8/31/05 in exchange, and used the proceeds from this loan to repay the 8/31/04 note payable.

            3.   Customer advances are for goods to be delivered during 2004.

4.   Bonds payable are due in annual increments of $100, beginning on 12/31/04 and ending on 12/31/11.

Shown above is a complete listing of Zed Corp.’s assets and liabilities at December 31, 2003. Zed’s 12/31/03 balance sheet will be issued to shareholders and the SEC on or about 1/31/04.

In its contract with bondholders, Zed promises, while the bonds are outstanding, to maintain:

       a. a current ratio no smaller than 1.75;

       b. working capital no smaller than $500;

       c. a ratio of total liabilities to total stockholders’ equity no greater than 3.00; and

       d. a ratio of noncurrent liabilities to total assets no greater than 0.40.

Bondholders may declare the bonds immediately due and payable if Zed violates one or more of these contract provisions.

Are Zed’s 12/31/03 balance sheet relationships in compliance with the terms of the company’s contract with bondholders? Support your answer with a detailed calculation of total current assets, total current liabilities, and each of the balance sheet relationships in (a)-(d) above.

Shadee Corp. expects to sell 550 sun visors in May and 320 in June. Each visor sells for $21. Shadee’s beginning and ending finished goods inventories for May are 60 and 45 units, respectively. Ending finished goods inventory for June will be 60 units.

Each visor requires a total of $3.50 in direct materials that includes an adjustable closure that the company purchases from a supplier at a cost of $2.00 each. Shadee wants to have 27 closures on hand on May 1, 21 closures on May 31, and 22 closures on June 30. Additionally, Shadee’s fixed manufacturing overhead is $1,300 per month, and variable manufacturing overhead is $1.75 per unit produced.

Required: 1. Determine Shadee's budgeted cost of closures purchased for May and June. 2. Determine Shadee's budget manufacturing overhead for May and June.

Required: 2: Determine Shadee's budget manufacturing overhead for May and June. (Do not round your intermediate values. Round your answers to 2 decimal places.)

1. On November 28, 20x7, Barrett Company purchased 20,000 shares of HAL Corporation common stock for $360,000. Barrett's management intends to hold the shares for a short period of time. On December 31, 20x7, the price of HAL stock was $15 per share. Finally, on January 19, 20x8, Barrett sells all 20,000 shares for $375,000. Prepare Barrett's journal entries for November 28, December 31, and January 19.

This is from a case Called

Waste Management, Inc

Manipulating Accounting Estimates

and here is the required questions

REQUIRED

1. [1] Review Waste Management’s Consolidated Balance Sheet as of December 31, 1996. Identify accounts whose balances were likely based on significant management estimation techniques. Describe the reasons why estimates were required for each of the accounts identified.

1. [4] The Waste Management fraud primarily centered on inappropriate estimates of salvage values and useful lives for property and equipment. Describe techniques Andersen auditors could have used to assess the reasonableness of those estimates used to create Waste Management’s financial statements.

1. [6] Several of the Waste Management accounting personnel were formerly employed by the company’s auditor, Arthur Andersen. What are the risks associated with allowing former auditors to work for a client in key accounting positions? Research Section 206 of the Sarbanes−Oxley Act of 2002 and provide a brief summary of the restrictions related to the ability of a public company to hire accounting personnel who were formerly employed by the company’s audit firm.

List indicators that a company may be an agent, not a principal, in a revenue transaction and explain the significance of this relationship in revenue recognition.

On January 1, 2018, Ellison Co. issued 9 year bonds with a face value of $250,000,000 and a stated interest rate of 7.5%, payable semiannually on July 1 and January 1. The bonds were sold to yield 8%.

a. The issue price of the bonds is

b. Record the issuance on January 1, 2018.

c. Prepare the journal entries for the interest expense and payments for 2018, 2019, 2020, 2021 and 2022.

In January 2018, Deep Sea Oil Inc. builds and begins operating an oil drilling platform in the Gulf of Mexico. The company expects to operate the platform for 9 years and will be required to remove the platform at the end of 9 years at an expected cost of $25,000,000. Assuming that the discount rate is 8%.

a. Prepare the journal entry to record the asset retirement obligation (ARO) in January 2018

b. Prepare the journal entry to record the annual depreciation in 2018 and adjustment to the ARO.

c. Prepare the amortization schedule for the ARO.

d. Assume that at the end of 9 years, it costs the company $24,889,000 to remove the platform. Prepare the entry (assume payment is in cash).

Sam and Alex are married and file jointly. Throughout the year, they received dividend income from two stocks. Stock XYZ paid out a non-qualified dividend (based on timing of ownership relative to the ex-dividend date) of $5,500. Stock ABC instead paid out $3,800 as a qualified dividend. The couple’s only other income during the year was $200,000 in salaries in total. But, they are not considered high income taxpayers. (Assume the tax year is 2020).

a. What was the additional tax Sam and Alex had to pay because of the dividend income from Stock XYZ?

b. What was the additional tax Same and Alex had to pay because of the dividend income from Stock ABC?

On December 31, 2015, Milton Company acquired a computer from Hamil Corporation by issuing a $600,000 zero-interest-bearing note, payable in full on December 31, 2019. Milton Company’s credit rating permits it to borrow funds from its several lines of credit at 10%. The computer is expected to have a 5-year life and a $70,000 residual value.
Prepare the journal entry for the purchase on December 31, 2015 and any necessary adjusting entries relative to depreciation (use straight-line) and amortization on December 31, 2016

Problem C, Contingencies Z Corp. filed a claim for patent infringement against M Corp. in October 2020. In preparing its financial statements for the year ending December 31, 2020, M Corp. financial accounting group obtained the following information related to this claim:

• M Corp’s Risk Management Department believes that M will incur a loss from this lawsuit. They estimate the loss will be in a range from $15 million to $20 million, but cannot give a more precise estimate.

• The trial will likely not take place for two years, in 2022 or 2023.

• M Corp’s CFO insists that the company will fight this claim “until the end of time.” Based on that, the CFO maintains that no loss need be recorded because none will be incurred … ever!

• M Corp’s legal department believes the case will be resolved within four years, if appeals are necessary. They agree with Risk Management’s assessment.

Your Assignment Assume that you are the Controller of M Corp (you are the top accounting officer and report directly to the CFO). What do you say to the CFO about this matter? You must resolve this issue now so that financial statements can be prepared. You can literally write what you would say, or you can do it in the form of a brief message. But you must state your opinion on how this should be handled (not forgetting that your boss thinks nothing needs to be done). And it must be brief (the CFO does not like to read long messages … get to the point!)

Corporation P acquired the stock of Corporation T for $40 Million from T shareholders. No Section 338 election was made. Corporation T has assets with a fair market value of $25 Million and an adjusted basis of $22 Million. Corporation T also has a net operating loss carryover of $10 Million. The federal long term tax exempt rate at the date of acquisition is 4%.

A) What is P’s basis in T’s assets and what is the annual limitation on the use of T’s net

operating loss?

B) Briefly explain the rules for corporate net operating losses arising after 2017.

Kitchen Supply, Inc. (KSI), manufactures three types of flatware: institutional, standard, and silver. It applies all indirect costs according to a predetermined rate based on direct labor-hours. A consultant recently suggested that the company switch to an activity-based costing system and prepared the following cost estimates for year 2 for the recommended cost drivers.

In addition, management estimated 7,400 direct labor-hours for year 2.

Assume that the following cost driver volumes occurred in January, year 2:

Actual labor costs were $16 per hour.

Required:

a. (1) Compute a predetermined overhead rate for year 2 for each cost driver using the estimated costs and estimated cost driver units prepared by the consultant. (Round your answers to 2 decimal places.)

(2) Compute a predetermined rate for year 2 using direct labor-hours as the allocation base. (Round your answer to 2 decimal places.)

b. Compute the production costs for each product for January using direct labor-hours as the allocation base and the predetermined rate computed in requirement a(2). (Do not round intermediate calculations.)

c. Compute the production costs for each product for January using the cost drivers recommended by the consultant and the predetermined rates computed in requirement a. (Note: Do not assume that total overhead applied to products in January will be the same for activity-based costing as it was for the labor-hour-based allocation.) (Do not round intermediate calculations.)