Problem #1 Mr. Blue is a licensed skin doctor. During the first month of the operation of his business, the following events and transactions occurred.

·             April 1 Invested $20,000 cash in his business.

·             1 Hired a secretary-receptionist at a salary of $700 per week payable monthly.

·             2 Paid office rent for the month $1,100.

·             3 Purchased doctor office’s supplies on account from Dazzle Company $4,000.

·             10 Performed medical services and billed insurance companies $5,100.

·             11 Received $1,000 cash advance from Sebastian for the medical service.

·             20 Received $2,100 cash for services performed from James.

·             30 Paid secretary-receptionist for the month $2,800.

·             30 Paid $2,400 to Dazzle for accounts payable due.

Mr. Blue uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126 Supplies, No. 201 Accounts Payable, No. 209 Unearned Service Revenue, No. 301 Owner’s Capital, No. 400 Service Revenue, No. 726 Salaries and Wages Expense, and No. 729 Rent Expense.

Instructions

(a) Journalize the transactions.

(b) Post to the ledger accounts.

(c) Prepare a trial balance on April 30, 2018

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Problem #3 The adjusted trial balance columns of the worksheet for Company, owned by Meteor and Blue, are as follows.

Meteor and Blue’s COMPANY

Worksheet

For the Year Ended December 31, 2018

Instructions

(a) Complete the worksheet by extending the balances to the financial statement columns.

(b) Prepare an income statement, owner’s equity statement, and a balance sheet.

(Note: $5,000 of the notes payable become due in 2019.) D. Thao did not make any additional investments in the business during the year.

(c) Prepare the closing entries.

what is fraud risk assessment in terms of municipal organisation or entity? What kinds of fraud risks that are faced by municipal organisations?

Review the sections on international accounting (IFRS) (See pages 9, 10, 59, 184, 267, 339, 376, 431, 489, 556, 568, 571, 668, 701. Discuss the major similarities and differences between U.S. GAAP and IFRS. Which of the differences do you find most interesting? If there is a convergence between U.S. GAAP and IFRS, would you choose the U.S. GAAP or IFRS method? Why?

Productivity Measurement, Technical and Allocative Efficiency, Partial Measures

Carsen Company produces handcrafted pottery that uses two inputs: materials and labor. During the past quarter, 25,000 units were produced, requiring 100,000 pounds of materials and 50,000 hours of labor. An engineering efficiency study commissioned by the local university revealed that Carsen can produce the same 25,000 units of output using either of the following two combinations of inputs:

The cost of materials is $7 per pound; the cost of labor is $12 per hour.

Required:

1. Compute the output-input ratio for each input of Combination F1. If required, round your answers to two decimal places.

Does this represent a productivity improvement over the current use of inputs?

What is the total dollar value of the improvement?
$

Classify this as a technical or an allocative efficiency improvement.

2. Compute the output-input ratio for each input of Combination F2. If required, round your answers to two decimal places.

Does this represent a productivity improvement over the current use of inputs?

Now, compare these ratios to those of Combination F1. What has happened?
F2 has  productivity for materials and   productivity for labor.

3. Compute the cost of producing 25,000 units of output using Combination F1.
$

Compare this cost to the cost using Combination F2.

Does moving from Combination F1 to Combination F2 represent a productivity improvement?

The comparative balance sheets and an income statement for Raceway Corporation follow.

Other Information

1. Purchased land for $112,400.
2. Purchased new equipment for $104,900.
3. Sold old equipment that cost $132,000 with accumulated depreciation of $112,800 for $19,200 cash.
4. Issued common stock for $53,000.

Required
Prepare the statement of cash flows for Year 2 using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

How am I to determine this answer if Chick fil A does not file a 10K

​

1) Chick fil A may experience a decline in its Current Ratio if:

a. its adherence to biblical principles increases Customer Goodwill.

b. its support of family values compels it to enrich its future Employee Pension Plan benefits.

c. its closure on Sundays reduces credit card Accounts Receivable.

d. its aggressive growth policy compels it to assume more long term mortgage debt.

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2) Chick-fil-A may experience a decline in its Net Profit (or Net Income) Ratio if:

a. its closure on Sundays reduces Revenue.

b. its popularity with the evangelical Christian market increases Revenue.

c. its reliance on part-time employees reduces Expenses.

d. its shift from chicken to beef products increases Revenue.

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3) Chick-fil-A’s Christian beliefs:

a. have no significant impact on any of its financial results.

b. may have a significant impact on its profitability because of its closure on Sundays.

c. have been abandoned in its quest to optimize its financial results.

d. prevent it from competing directly with Shake Shack.

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4) Use appropriate analytical conclusions about the two organizations.

Shake Shack 10K 2018:

a. is in danger of running short of resources to pay its debts next year.

b. has been unprofitable for the past two years.

c. always produces more than enough operating cash to fully cover its investing activities each year.

d. appears to be a fiscally sound firm.

During 2017, Martinez Company started a construction job with a contract price of $1,580,000. The job was completed in 2019. The following information is available.

Instructions:

Complete a chart analyzing the above information showing revenue, the % of completion every year and the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used.

Prepare all necessary journal entries for 2017, 2018, and 2019.

Compute the amount of gross profit to be recognized each year, assuming the completed-contract method is used.

Problem 5-22 CVP Applications; Contribution Margin Ratio; Break-Even Analysis; Cost Structure [LO5-1, LO5-3, LO5-4, LO5-5, LO5-6]

Due to erratic sales of its sole product—a high-capacity battery for laptop computers—PEM, Inc., has been experiencing financial difficulty for some time. The company’s contribution format income statement for the most recent month is given below:

Required:

1. Compute the company’s CM ratio and its break-even point in unit sales and dollar sales.

2. The president believes that a $6,900 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $85,000 increase in monthly sales. If the president is right, what will be the increase (decrease) in the company’s monthly net operating income?

3. Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $31,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)?

4. Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would grow sales. The new package would increase packaging costs by 0.70 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,600?

5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $51,000 each month.

a. Compute the new CM ratio and the new break-even point in unit sales and dollar sales.

b. Assume that the company expects to sell 20,400 units next month. Prepare two contribution format income statements, one assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, as well as in total, for each alternative.)

c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 20,400)?

Swifty Corporation purchased a depreciable asset for $710000 on April 1, 2015. The estimated salvage value is $71000, and the estimated useful life is 5 years. The straight-line method is used for depreciation. What is the balance in accumulated depreciation on May 1, 2018 when the asset is sold?

Prepare a comparative balance sheet of Headland Company showing the percent each item is of the total assets or total liabilities and stockholders’ equity. (Round percentages to 2 decimal places, e.g. 2.25%.)

eTextbook and Media

Prepare a comparative balance sheet of Headland Company showing the dollar change and the percent change for each item. (If there is a decrease from 2020 to 2021, then enter the amounts and percentages with either a negative sign, i.e. -92,000, -25.25 or parenthesis, i.e. (92,000), (25.25).)

Rocket Company produces small gasoline-powered engines for model airplanes. Mr. Clemens, Rocket’s CFO, has presented you with the following cost information:

Using this cost information, prepare a cost of goods manufactured schedule for Mr. Clemens.

Caroline is retired and receives income from a number of sources. the payments are from bonds that Caroline purchased over past years and disability insurance policy that Caroline purchased. Calculate her income

Distributions from qualified pension plan $5400

Interest on binds issued by City of Austin, Texas $2500

Social Security benefits $8200

Interest on US Treasury Bills $2300

Interest on bonds issued by Ford Motor Company $1900

Interest on bonds issued by City of Quebec, Canada $2750

Disability insurance $9500

1. Jones Incorporated uses direct labour hours as its basis for overhead allocation. Jones produces 1,000 units of product this month, utilizing 5,050 direct labour hours in the process. In incurring 5,050 direct labour hours this month, Jones incurred direct labour cost of $30,000, variable manufacturing overhead of $11,500, and fixed manufacturing overhead of $8,000. Standard variable overhead per unit is expected to be $12.50 per unit (5 hours at $2.50 per hour). Fixed overhead standard is expected to be $7.50 per unit (5 hours at $1.50 per hour). Based on the above calculate the FMOH efficiency variance. If an unfavourable variance enter amount as a negative.

2.

Jones Incorporated uses direct labour hours as its basis for overhead allocation. Jones produces 1,000 units of product this month, utilizing 5,050 direct labour hours in the process. In incurring 5,050 direct labour hours this month, Jones incurred direct labour cost of $30,000, variable manufacturing overhead of $11,500, and fixed manufacturing overhead of $8,000. Standard variable overhead per unit is expected to be $12.50 per unit (5 hours at $2.50 per hour). Fixed overhead standard is expected to be $7.50 per unit (5 hours at $1.50 per hour). Based on the above calculate the FMOH spending variance. If an unfavourable variance enter amount as a negative.

3. Jones Incorporated uses direct labour hours as its basis for overhead allocation. Jones produces 1,000 units of product this month, utilizing 5,050 direct labour hours in the process. In incurring 5,050 direct labour hours this month, Jones incurred direct labour cost of $30,000, variable manufacturing overhead of $11,500, and fixed manufacturing overhead of $8,000. Standard variable overhead per unit is expected to be $12.50 per unit (5 hours at $2.50 per hour). Fixed overhead standard is expected to be $7.50 per unit (5 hours at $1.50 per hour) Based on the above calculate the VMOH efficiency variance. If an unfavourable variance enter amount as a negative.

4. Jones Incorporated uses direct labour hours as its basis for overhead allocation. Jones produces 1,000 units of product this month, utilizing 5,050 direct labour hours in the process. In incurring 5,050 direct labour hours this month, Jones incurred direct labour cost of $30,000, variable manufacturing overhead of $11,500, and fixed manufacturing overhead of $8,000. Standard variable overhead per unit is expected to be $12.50 per unit (5 hours at $2.50 per hour). Fixed overhead standard is expected to be $7.50 per unit (5 hours at $1.50 per hour).

Based on the above calculate the VMOH spending variance. If an unfavourable variance enter amount as a negative.

Central Adventures

Fatima Hopkins, the CEO of Central Adventures, is having difficulties with all three of her top management level employees. With one manager making questionable decisions, another threatening to leave, and the third likely ‘in the red’, Fatima is hoping there is a simple answer to all her difficulties. She is asking you (her accountant) for some advice on how to proceed.

Central Adventures owns and operates three amusement parks in Michigan: Funland, Waterworld, and Treetops. Central Adventures has a decentralized organizational structure, where each park is run as an investment center. Park managers meet with the CEO at least once annually to review their performance, where each park manager’s performance is measured by their park’s return on investment (ROI). The park manager then receives a bonus equal to 10% of their base salary for every ROI percentage point above the cost of capital.

Fatima’s first difficulty is with the Funland park. Funland is an outdoor theme park, with twelve roller coaster rides and several other attractions. This park has first opened 1965, and most of the rides have been in operation for 20+ years. Attendance at this park has been relatively stable over the past ten years. The park manager of Funland, Janet Lieberman, recently shared with Fatima a proposal to replace one of their older rides with a new roller coaster, a hybrid steel and wood roller coaster with a 90 degree, 200 foot drop and three inversions. The proposal indicated that the ride would cost $8,000,000 with an estimated life of 20 years. In addition, this new style of coaster would require additional maintenance and insurance, costing $125,000 each year. However, it projected that this new attraction would boost attendance, earning the park an additional $1,190,000 per year in revenues. Janet ultimately decided not to invest in this new attraction. Fatima (doing a quick mental calculation) saw that the investment had a payback period of eight years—much shorter than the life of the roller coaster—and is perplexed at Janet’s decision.

The second dilemma concerns the Waterworld park. Waterworld is an indoor water park, operating year-round. Run by park manager David Copperfield, Waterworld was built in 2016 and has increased attendance by 20% every year since. David recently sent you an email complaining that, based on the current bonus payout schedule, Janet Lieberman’s bonus last year was significantly higher than his. He points to the increasing attendance, and says that his park is being punished for having opened so recently (his park assets are much more recent than the roller coasters at Funland). He currently has an employment offer from another company at the same base pay rate, which he says he will accept if his performance is not appropriately acknowledged. Fatima needs to look at the relative performance across parks to determine how to proceed with David.

Central Treetops includes a high ropes course and has a series of ziplines that criss-cross over the Chippewa River. For many years, it was a popular venue for corporate team-building activities, so it is equipped with a main indoor facility with cafeteria and overnight guest rooms. This park has lost popularity in recent years, and has been ‘in the red’ for the past two years. If the park is not profitable this year, you will need to decide whether to close it - permanently. Included in the ‘Fixed COGS’ for Treetops is a $86,000 mortgage payment on the land and 9,351,510closed. Incidentally, you recently had a conversation with the regional head of the YMCA, who would like to open a summer camp in the central Michigan region. If you decided to close Treetops, you are fairly certain that you could lease that land to the YMCA for $250,000 annually.

A partial report of this year’s financial results for Central Adventures shows the following:

The ‘Selling and administrative costs’ are all incurred directly by each park, and are determined at the beginning of each year (that is, they do not change with the number of tickets sold). In addition to the information above, there are $2,542,920 in corporate costs, which are currently allocated evenly between the three parks. These costs are primarily due to employee benefits costs, which are billed at the corporate level. If the Treetops park is closed, the allocated corporate costs would decrease by $12,000. Central Adventures has a cost of capital of 12 percent (and Fatima uses the cost of capital as their required rate of return) and are subject to 18% income taxes.

Fatima needs to evaluate this year’s performance results before she can make any decisions. Is David’s complaint about the performance evaluation metrics valid? Is that also affecting management decisions in the form of Janet’s rejection of the proposed new rollercoaster? And is the company better off without Treetops? She sets off to the company accountant’s office to help get some answers.

Required:

Write your response in the form of a 1-2 page memo to Fatima Hopkins, from the perspective of the company accountant. Be sure to include all your financial analyses, clearly showing your calculations, to support your conclusions. Be sure to include the following points in your memo, and provide the appropriate financial analysis(es) to support your conclusions.

a.     Create a segmented income statement for Central Adventures.

b.     Calculate the current annual ROI, residual income and EVA for the three parks.

c.     Evaluate Janet Lieberman’s (the Funland park manager) decision. Explain why it was/was not in Central Adventure’s overall best interest for Funland to reject the new rollercoaster.

How are price and quantity variances computed? Why are separate price and quantity variances useful to an organization?