The following were selected from among the transactions completed by Babcock Company during November of the current year: Nov. 3 Purchased merchandise on account from Moonlight Co., list price $93,000, trade discount 30%, terms FOB destination, 2/10, n/30. 4 Sold merchandise for cash, $35,370. The cost of the merchandise sold was $23,670. 5 Purchased merchandise on account from Papoose Creek Co., $44,400, terms FOB shipping point, 2/10, n/30, with prepaid freight of $810 added to the invoice. 6 Returned $13,300 ($19,000 list price less trade discount of 30%) of merchandise purchased on November 3 from Moonlight Co. 8 Sold merchandise on account to Quinn Co., $17,080 with terms n/15. The cost of the merchandise sold was $10,010. 13 Paid Moonlight Co. on account for purchase of November 3, less return of November 6. 14 Sold merchandise on VISA, $246,980. The cost of the merchandise sold was $152,530. 15 Paid Papoose Creek Co. on account for purchase of November 5. 23 Received cash on account from sale of November 8 to Quinn Co. 24 Sold merchandise on account to Rabel Co., $52,400, terms 1/10, n/30. The cost of the merchandise sold was $31,410. 28 Paid VISA service fee of $3,220. 30 Paid Quinn Co. a cash refund of $6,020 for returned merchandise from sale of November 8. The cost of the returned merchandise was $3,390. Required: Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles.

1- What information is provided in the operating cash receipts portion of the cash budget?

2 - What information is provided in the operating cash payments portion of the cash budget?

3 - Describe the use of Pivot Tables in Excel. Cite 2 examples of how Pivot Tables can be used in decision making by management.

4 - How can financial ratios help to identify the financial strength of a company? Give at least 2 examples of financial ratios that are indicative of a company's liquidity and efficiency.

Explaining the importance of the professional use of specialized audit tools (Attributes Sampling, Monetary Unit Sampling, and Data Analytics Tools).

Growing Pains at Groupon Case

9. Groupon’s management needed significant cash to fund its growth. It had three options:(A) seek private investment, (B) sell the company to Yahoo! or Google, or (C) go public.

a. Contrast the financial reporting challenges across the three options.

b. In March 2012, Groupon’s auditors noted a material weakness in the company internal controls related to ‘‘deficiencies in the financial statement close process.’’ Would this disclosure have been made if Groupon had chosen options (A) or (B)?

Income Statement

Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 54,900 units will be produced, with the following total costs:

Next year, Pietro expects to purchase $126,500 of direct materials. Projected beginning and ending inventories for direct materials and work in process are as follows:

Next year, Pietro expects to produce 54,900 units and sell 54,200 units at a price of $18.00 each. Beginning inventory of finished goods is $38,500, and ending inventory of finished goods is expected to be $30,000. Total selling expense is projected at $26,500, and total administrative expense is projected at $114,000.

Required:

1. Prepare an income statement in good form. Round the percent to four decimal places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as 88.35.

2. What if the cost of goods sold percentage for the past few years was 44.85 percent? Management's reaction might be:

Cost of Goods Manufactured and Sold

Anglin Company, a manufacturing firm, has supplied the following information from its accounting records for the last calendar year:

Required:

1. Prepare a cost of goods manufactured statement.

2. Prepare a cost of goods sold statement.

Bramble Company, a manufacturer of ballet shoes, is experiencing a period of sustained growth. In an effort to expand its production capacity to meet the increased demand for its product, the company recently made several acquisitions of plant and equipment. Rob Joffrey, newly hired in the position of fixed-asset accountant, requested that Danny Nolte, Bramble’s controller, review the following transactions.

Transaction 1: On June 1, 2017, Bramble Company purchased equipment from Wyandot Corporation. Bramble issued a $30,800, 4-year, zero-interest-bearing note to Wyandot for the new equipment. Bramble will pay off the note in four equal installments due at the end of each of the next 4 years. At the date of the transaction, the prevailing market rate of interest for obligations of this nature was 9%. Freight costs of $417 and installation costs of $460 were incurred in completing this transaction. The appropriate factors for the time value of money at a 9% rate of interest are given below. Future value of $1 for 4 periods 1.41

Future value of an ordinary annuity for 4 periods 4.57

Present value of $1 for 4 periods 0.71

Present value of an ordinary annuity for 4 periods 3.24

Transaction 2: On December 1, 2017, Bramble Company purchased several assets of Yakima Shoes Inc., a small shoe manufacturer whose owner was retiring. The purchase amounted to $216,000 and included the assets listed below. Bramble Company engaged the services of Tennyson Appraisal Inc., an independent appraiser, to determine the fair values of the assets which are also presented below.

Yakima Book Value Fair Value

Inventory $62,000 $52,000

Land 40,500 77,000

Buildings 75,200 121,000

$177,700 $250,000

During its fiscal year ended May 31, 2018, Bramble incurred $7,230 for interest expense in connection with the financing of these assets.

Transaction 3: On March 1, 2018, Bramble Company exchanged a number of used trucks plus cash for vacant land adjacent to its plant site. (The exchange has commercial substance.) Bramble intends to use the land for a parking lot.

The trucks had a combined book value of $32,390, as Bramble had recorded $19,130 of accumulated depreciation against these assets. Bramble’s purchasing agent, who has had previous dealings in the secondhand market, indicated that the trucks had a fair value of $42,140 at the time of the transaction. In addition to the trucks, Bramble Company paid $19,720 cash for the land.

(b) For each of the three transactions described above, determine the value at which Bramble Company should record the acquired assets. (Round intermediate calculations to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places e.g. 58,971.)

Cost of Goods Manufactured

Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 50,000 units will be produced, with the following total costs:

Next year, Pietro expects to purchase $115,000 of direct materials. Projected beginning and ending inventories for direct materials and work in process are as follows:

Required:

1. Prepare a statement of cost of goods manufactured.

2. What if the ending inventory of direct materials increased by $2,600? Indicate the affect that this would have on the items listed below:

1. On November 30, the end of the first month of operations, Weatherford Company prepared the following income statement, based on the The reporting of the costs of manufactured products, normally direct materials, direct labor, and factory overhead, as product costs.absorption costing concept:

   Weatherford Company Absorption Costing Income Statement For the Month Ended November 30
   Sales (5,900 units)			$123,900
   Cost of goods sold:
   Cost of goods manufactured (7,000 units)	$105,000
   Inventory, November 30 (1,000 units)	(15,000)
   Total cost of goods sold			90,000
   Gross profit			$33,900
   Selling and administrative expenses			19,330
   Income from operations			$14,570

   Assume the fixed manufacturing costs were $21,000 and the fixed selling and administrative expenses were $9,470.

   Prepare an income statement according to the variable costing concept. Round all final answers to whole dollars.

   Sales		$
   Variable cost of goods sold:
   Variable cost of goods manufactured	$
   Inventory, November 30
   Total variable cost of goods sold
   Manufacturing margin		$
   Variable selling and administrative expenses
   Contribution margin		$
   Fixed costs:
   Fixed manufacturing costs	$
   Fixed selling and administrative expenses
   Total fixed costs
   Income from operations

Vertical Analysis of Income Statement

Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:

a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.

b. The vertical analysis indicates that the cost of goods sold as a percent of sales ___ by 5 percentage points, while selling expenses ___ by 2 percentage points, and administrative expenses ___ by 1 percentage points. Thus, net income as a percent of sales ___ by 2 percentage points.

Ratio of Liabilities to Stockholders' Equity and Times Interest Earned

The following data were taken from the financial statements of Hunter Inc. for December 31 of two recent years:

The income before income tax was $1,044,000 and $913,500 for the current and previous years, respectively.

a. Determine the ratio of liabilities to stockholders' equity at the end of each year. Round to one decimal place.

b. Determine the times interest earned ratio for both years. Round to one decimal place.

c. The ratio of liabilities to stockholders' equity has   and the times interest earned ratio has ___ from the previous year. These results are the combined result of a ___ income before income taxes and   interest expense in the current year compared to the previous year.

Profitability Ratios

The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 20Y7, 20Y6, and 20Y5:

The 20Y7 net income was $23,430, and the 20Y6 net income was $15,975. No dividends on common stock were declared between 20Y5 and 20Y7. Preferred dividends were declared and paid in full in 20Y6 and 20Y7.

a. Determine the return on total assets, the return on stockholders' equity, and the return on common stockholders’ equity for the years 20Y6 and 20Y7. Round percentages to one decimal place.

b. The profitability ratios indicate that the company's profitability has  . Since the rate of return on total assets is  the return on stockholders' equity in both years, there must be   leverage from the use of debt.

Direct Materials Usage Variances: Direct Materials Mix and Yield Variances

Energy Products Company produces a gasoline additive, Gas Gain. This product increases engine efficiency and improves gasoline mileage by creating a more complete burn in the combustion process.

Careful controls are required during the production process to ensure that the proper mix of input chemicals is achieved and that evaporation is controlled. If the controls are not effective, there can be a loss of output and efficiency.

The standard cost of producing a 500-liter batch of Gas Gain is $135.00. The standard direct materials mix and related standard cost of each chemical used in a 500-liter batch are as follows:

The quantities of chemicals purchased and used during the current production period are shown in the following schedule. A total of 160 batches of Gas Gain were manufactured during the current production period. Energy Products determines its cost and chemical usage variations at the end of each production period.

Required:

Compute the total direct materials usage variance, and then break down this variance into its mix and yield components. Do not round intermediate computations and round final answers to the nearest cent. (CMA adapted)

Jane Botosan operates a bed and breakfast hotel in a resort area near Lake Michigan. Depreciation on the hotel is $60,000 per year. Jane employs a maintenance person at an annual salary of $41,000 and a cleaning person at an annual salary of $24,000. Real estate taxes are $10,700 per year. The rooms rent at an average price of $128 per person per night including breakfast. Other costs are laundry and cleaning service at a cost of $10.7 per person per night and the cost of food which is $5.1 per person per night.

A) Determine the sales revenue Jane needs to break even.

B) Determine the number of rentals Jane needs to earn a target net income of $50,000.

C) Jane is considering changing the business strategy. She considers installing additional cleaning machines which will decrease laundry and cleaning service per person per night by $3. However, fixed depreciation cost will increase by $4,010. Determine the number of rentals Jane needs to break even if the changes are made.

D) Determine the number of rentals at which Jane would be indifferent between the current and proposed business models. (Hint: Consider net income figures.)

You are a Supplier: A retailer requests to purchase supplies on credit from your company. You have no prior experience with this retailer. The retailer’s current ratio is 2.1, its acid-test ratio is 0.5, and inventory makes up most of its current assets. Do you extend credit?

You are the Financial Officer: Your company has a 36% gross margin ratio and a 17% net profit margin ratio. Industry averages are 44% for gross margin and 16% for net profit margin. Do these comparative results concern you?