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Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below:

Beech’s managers have made the following additional assumptions and estimates:

1. Estimated sales for July, August, September, and October will be $390,000, $410,000, $400,000, and $420,000, respectively.

2. All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.

3. Each month’s ending inventory must equal 30% of the cost of next month’s sales. The cost of goods sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.

4. Monthly selling and administrative expenses are always $54,000. Each month $7,000 of this total amount is depreciation expense and the remaining $47,000 relates to expenses that are paid in the month they are incurred.

5. The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30.

Required:

1. Prepare a schedule of expected cash collections for July, August, and September.

2-a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30.

2-b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September.

3. Prepare an income statement for the quarter ended September 30.

4. Prepare a balance sheet as of September 30

Describe in your own words the importance of the financial statement assertions.

FIFO and LIFO

Costs Under Perpetual Inventory System

The following units of an item were available for sale during the year:

Beginning inventory 47 units at $44

Sale 20 units at $68

First purchase 17 units at $47

Sale 33 units at $69

Second purchase 15 units at $48

Sale 7 units at $70

The firm uses the perpetual inventory system, and there are 19 units of the item on hand at the end of the year.

a. What is the total cost of the ending inventory according to FIFO?

b. What is the total cost of the ending inventory according to LIFO?

The following information is presented for the Worldwide Auditor's Association. For the year ended November 30, 2017, the organization had set a membership goal of 100,000 members with the following anticipated results (and actual results for the year-end). Worldwide Auditors' Association Revenues and Expenses For Year Ending November 30, 2017 ($ in thousands) Planned Actual Revenues $55,859.6 $55,054.0 Expenses Salaries 27,900.0 29,000.0 Other personnel costs 6,975.0 6,786.0 Occupancy costs 3,859.6 5,650.0 Reimbursement to local units 1,480.0 1,600.0 Other membership services 1,050.0 1,000.0 Printing and paper 525.0 640.0 Postage and shipping 220.0 242.0 General and administrative 1,090.0 1,076.0 Excess of revenues over expenses $12,760.0 $ 9,060.0 Additional information (PLANNED): • Membership dues were increased from $360 to $400 at the beginning of the year. • One-year subscriptions to Worldwide Auditor were anticipated to be 2,400 units. • Advertising revenue was budgeted at $320,000. Each magazine was budgeted at a cost of $36. • A total of 29,000 technical reports were anticipated at an average price of $80 with average costs of $22. • The budgeted one-day courses had an anticipated attendance of 33,000 with an average fee of $450. The two-day courses had an anticipated attendance of 3,000 with an average fee of $770 per person. • The organization began the year with net capital assets of $88,000,000 with a planned cost of capital of 9 percent. Additional 2017 information (ACTUAL): • Membership dues are $400 per year, of which $100 is considered to cover a one-year subscription to the association’s journal. Other benefits include membership in the association and unit affiliation. • One-year subscriptions to Worldwide Auditor are sold to nonmembers for $160 each. A total of 2,500 of these subscriptions were sold. In addition to subscriptions, the journal generated $400,000 in advertising revenue. The cost per magazine was $40. • A total of 30,000 technical reports were sold by the Books and Reports Department at an average unit selling price of $90. Average costs per publication were $24. • The association offers a variety of continuing education courses to both members and nonmembers. During 2017, the one-day course, which cost participants an average of $500 each, was attended by 31,300 people. A total of 1,985 people took two-day courses at a cost of $800 per person. • General and administrative expenses include all other costs incurred by the corporate staff to operate the association. • The organization has net capital assets of $90,060,000 and had an actual cost of capital of 9 percent. Required a. Prepare a balanced scorecard for IAA for November 2017 with calculated key performance indicators presented in two columns for planned performance and actual performance--include key financial, customer, and operating performance indicators. Include all zeros with figures. For example, 2017 Planned Total Revenues for $55,859.6 (thousand) is entered as $55,859,600 2017 Planned 2017 Actual Financial information Total revenues $Answer 55,859,600 $Answer 55,054,000 Total costs Answer 43,099,600 Answer 45,994,000 Journal advertising Answer 320,000 Answer 400,000 ROI (round to three decimal places) Answer 0.145 Answer 0.101 Residual income Income $Answer 12,760,000 $Answer 9,060,000 Minimum return Answer 7,920,000 Answer 8,105,400 Residual income $Answer 4,840,000 $Answer 954,600 Customer information Course attendance Answer 36,000 Answer 33,285 Technical reports sold Answer 29,000 Answer 30,000 Operating criteria Average cost per special publication $Answer 220 $Answer 242 Average cost per magazine $Answer 36 $Answer 40 Other personnel costs vs. salaries* Answer 0.25 Answer 0.234 *Compute as a ratio. Round three decimal places. b. Which of the evaluation areas you selected indicated success and which indicated failure? Success areas: 1. Answer 2. Answer 3. Answer Failure areas: 1. Answer 2. Answer 3. Answer

The master budget is the company’s plan for achieving their goals. The process has a distinct starting and ending point. In looking at the sales budget, the sales budget dictates what the other areas in the budget should look like. As the head of the sales area, what steps should be taken to ensure the budget is developed in a realistic way?

If bonuses are based on the sales, you as the sales manager want to ensure you and your team will receive the maximum bonus. How would you develop the sales budget? What effect could this have on the other areas of the budget?

discretionary fixed cost

Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost.

Last year, the company sold 44,000 of these balls, with the following results:

Required:

1. Compute (a) last year's CM ratio and the break-even point in balls, and (b) the degree of operating leverage at last year’s sales level.

2. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls?

3. Refer to the data in (2) above. If the expected change in variable expenses takes place, how many balls will have to be sold next year to earn the same net operating income, $123,000, as last year?

4. Refer again to the data in (2) above. The president feels that the company must raise the selling price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement 1a), what selling price per ball must it charge next year to cover the increased labor costs?

5. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40.00%, but it would cause fixed expenses per year to double. If the new plant is built, what would be the company’s new CM ratio and new break-even point in balls?

6. Refer to the data in (5) above.

a. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $123,000, as last year?

b. Assume the new plant is built and that next year the company manufactures and sells 44,000 balls (the same number as sold last year). Prepare a contribution format income statement and Compute the degree of operating leverage.

Kitchenware, Inc., sells two types of water pitchers, plastic and glass. Plastic pitchers cost the company $15 and are sold for $30. Glass pitchers cost $24 and are sold for $45. All other costs are fixed at $982,800 per year. Current sales plans call for 14,000 plastic pitchers and 42,000 glass pitchers to be sold in the coming year.

a. How many pitchers of each type must be sold to break even in the coming year?

b. Kitchenware, Inc., has just received a sales catalog from a new supplier that is offering plastic pitchers for $13. What would be the new breakeven point if managers switched to the new supplier?

Suppose a company can replace the packing material it currently uses with a biodegradable packing material. The company believes this move to biodegradable packing materials will be well-received by the general public. However, the biodegradable packing materials are more expensive than the current packing materials and the contribution margin ratios of the related products will drop. What are the arguments for the company to use the biodegradable packing materials? What are the arguments for the company to not use the biodegradable materials?

Sunny Ltd., a hand sanitizer manufacturer, has prepared its financial statements for the year ended at December 31, 2019. On February 28, 2020, the board of directors authorized to issue the financial statements to shareholders. The following events have occurred:

1. On December 1, 2019, the board of directors decided to issue $50,000,000, 9% convertible bonds for the purpose of expanding business in other countries. The conversion rate is fixed at 50 shares for bond with face value of $1,000. The convertible bonds are offered to the public on January 15, 2020. The market interest rate for a similar bond without conversion option is at 12%.

2. On October 23, 2019, Sunny signed a contract to sell 10,000 hand sanitizer to a local store at a price of $200 each. However, due to the increase in the cost of materials, the estimated cost of making one hand sanitizer has been increased to $250. Sunny has to deliver the hand sanitizer to its customer on January 30, 2020.

3. Under the terms of the sales contract, Sunny undertakes to recall its new formulated sanitizer, for its manufacturing defects within six months from the date of sale. The accountants estimated that 5% of the sanitizer will be returned for refund. In January 2020, Sunny discovered a serious problem in the manufacturing process of the new formulated sanitizer. Because of this, Sunny expected that 20% of the sanitizer sold in 2019 will be returned for refund.

4. On December 15, 2019, a group of customers reported that the hand sanitizer that they bought in 2019 caused them have serious skin infection problems. They filed a lawsuit against Sunny on December 20, 2019. The company’s attorney said that it was probable that Sunny would be liable for the case. However, the amount of damage could not be estimated.

5. On February 12, 2020, the above lawsuit case was settled for the amount of $2,500,000.

6. Sunny has retail stores in China doing poorly. On February 15, 2020, Sunny estimated that those stores might report a loss of $1,500,000 in 2020.

7. In May 2019, Sunny had legal disputes with Coco Limited. Unable to reach out-of-court settlement with Coco, Sunny sued Coco for compensation for damages in August 2018. In November 2019, Sunny heard good news about the lawsuit in which the company sued Coco. Sunny’s lawyer is confident that the company will win the case and will receive about $120,000 in compensation for damages from Coco in early 2020. Sunny recognized the gain and receivable from litigation of $120,000 in year 2019.

8. On March 1, 2020, a customer owing $600,000 to Sunny filed for bankruptcy. The financial statements include an allowance for doubtful debts pertaining to this customer only of $30,000.

Required: For each of the above event, state the correct accounting treatments in accordance with Hong Kong Accounting Standards for the year ended at December 31, 2019. If it is an event after the reporting period, identify whether it is an adjusting or non-adjusting event. Give reasons for your answer.

Minden Company introduced a new product last year for which it is trying to find an optimal selling price. Marketing studies suggest that the company can increase sales by 5,000 units for each $2 reduction in the selling price. The company’s present selling price is $94 per unit, and variable expenses are $64 per unit. Fixed expenses are $834,900 per year. The present annual sales volume (at the $94 selling price) is 25,700 units.

Required:

1. What is the present yearly net operating income or loss?

2. What is the present break-even point in unit sales and in dollar sales?

3. Assuming that the marketing studies are correct, what is the maximum annual profit that the company can earn? At how many units and at what selling price per unit would the company generate this profit?

4. What would be the break-even point in unit sales and in dollar sales using the selling price you determined in (3) above (e.g., the selling price at the level of maximum profits)?

1. Barker Industries issued 3 000 $1,000 bonds at 105. Each bond contains 20 detachable stock warrants that allow the bondholder to purchase a share of Barker's common stock for $50. Immediately after the issue, the warrants were selling for $4 each and the bonds without the warrants were selling for $ 985. How much will be credited to Additional Paid-in Capital -Stock Warrants? (Round intermediate calculations to four decimal places and your final answer to the nearest dollar.) Use the proportional method. Answer is $236, 619. Just want to know how to calculate.

2. Harrison Corporation borrowed $ 33 000 from F&M Bank on June 1 of the current year. The bank required 6% interest. Interest will be paid when the nine-month note becomes due. What is the interest expense for the current year? (Do not round intermediate calculations. Only round your final answer to the nearest dollar.)

correct answer : $1155. Just want to know how to calculate.

3. Neil Corporation issued 5,000 $1,000 bonds at 103. Each bond contains 15 detachable stock warrants that allow the bondholder to purchase a share of Neil's common stock for $50. Immediately after the issue, the bonds without the warrants were selling for $1,007. The stock warrants had no readily determinable value. How much will be credited to Additional Paid-in Capital-Stock Warrants? Correct answer: 115,000. Just want to know how to calculate.

Thank you!!

“The ordering of the three sections of the statement of cash flows is ‘backwards’ for start-up firms, but it is more appropriate for businesses once they are up and running.” Explain.

Wubben, Inc. manufactures two products. It currently has 2,000 hours of direct labor and 1,000 hours of machine time available per month. The table below lists the contribution margin, labor and machine time requirements, and demand for each product.

(T or F ) If Wubben maximized profit, then the firm will manufacture 1,000 units of Product 1 and 2,000 units of Product B per month.

Woo Ltd. recently conducted an extensive review of its accounting and reporting policies. The following accounting changes are an outgrowth of that review:

1. Woo acquired a machine at a cost of $400,000 in 2016. The machine has been depreciated on a straight-line basis with no residual value since it was acquired. During 2019, it was decided that the benefits from the machine would be consumed over a total of 13 years rather than the 20-year useful life now being used to depreciate its cost.

2. At the beginning of 2019, Woo changed its method of valuing inventory from the FIFO cost method to the weighted-average cost method. At December 31, 2018 and 2017, Woo’s inventories were as follow:

3. Woo‘s income tax rate is 20%.

4. Woo reports net income for 2019 and 2018 for the following amounts:

5. The retained earnings of Woo as at December 31, 2018 and 2017 before adjusting the     effect from the changes in inventory valuation method are as follow:

6. Dividends declared during 2019 and 2018 were $100,000 and $500,000, respectively.

Required:

1. Prepare the journal entries needed in 2019 related to each change.   

Prepare the statements of changes in equity (in part) for the year ended at 31 December 2019 after the adjustments (including comparative figure for 2018) in accordance with HKAS 8.