On January 1, 2012, P Company purchased 95% of the outstanding common stock of S Company for $160,000. At that time, Sessions' stockholders' equity consisted of common stock, $120,000; other contributed capital, $10,000; and retained earnings, $23,000. Any difference between the implied value of the company and the book value is attributable to goodwill. On December 31, 2012, the two companies' trial balances were as follows:
| P | S | ||||
| Cash | 62,000 | 30,000 | |||
| Accounts Receivable | 32,000 | 29,000 | |||
| Inventory | 30,000 | 16,000 | |||
| Investment in Sessions Company | 165,700 | - | |||
| Plant and Equipment | 105,000 | 82,000 | |||
| Land | 29,000 | 34,000 | |||
| Dividends Declared | 20,000 | 20,000 | |||
| Cost of Goods Sold | 130,000 | 40,000 | |||
| Operating Expenses | 20,000 | 14,000 | |||
| Total Debits | 593,700 | 265,000 | |||
| Accounts Payable | 19,000 | 12,000 | |||
| Other Liabilities | 10,000 | 20,000 | |||
| Common Stock | 180,000 | 120,000 | |||
| Other Contributed Capital | 60,000 | 10,000 | |||
| Retained Earnings, 1/1 | 40,000 | 23,000 | |||
| Sales | 260,000 | 80,000 | |||
| Equity in earnings of Sessions | 24,700 | - | |||
| Total Credits | 593,700 | 265,000 |
PERFORM USING COST METHOD, THEN PERFORM USING EQUITY METHOD
Step 1.Prepare a T-Account to keep track of P's Investment in S. Record the date of acquisision entry.
Step 2:Prepare the Computation and Allocation of Difference Schedule.
Step 3: Prepare the investment elimination entries as of the date of acquisition and year after acquisition.
Step 4: Prepare the consolidating financial statement workpaper.
In: Accounting
1.) What is the total property tax bill for your house in Ohio with a market value of $125,000? Note the following and show your calculations in the space below:
You are eligible for the $25,000 homestead exemption
The city in which you live has a millage rate of 70.
Don’t forget residential taxable value is 35% of assessed value in Ohio!
Assuming the exact same scenario as above;
2.) Research online to identify a proposed levy (present or past) that would impact property taxes. The levy can be in any state over the last 5 years BUT still assume the scenario in Q1 for the sake of simplicity/practice. Identify:
A. The source:
B. A summary of the issue (location, proponents, why pursuing), 100-250 words:
C. The proposed levy’s impact on property taxes:
D. How the levy would impact YOUR property taxes for the property in Q1:
In: Accounting
Question 3 You are the accountant for FreeWheels Ltd, a tandem bicycle manufacturer that is located in Coffs Harbour and has customers in Australia and the USA. Their estimated current sales volume is 6,000 units per month and based on this level of production, the company has budgeted the following costs and prices per unit: Manufacturing Costs per unit (Based on production of 6,000 units per month) Direct Material Cost $75.00 Direct Labour Cost 35.00 Variable Factory Overhead 10.00 Fixed Factory Overhead 20.00 Total Manufacturing Cost 140.00 Selling & Administrative Costs Variable Selling and Administrative Cost 25.00 Fixed Selling and Administrative Cost 20.00 45.00 Total Cost Per Unit 185.00 Selling Price Per Unit $370.00 Cycle World Ltd is an overseas company that sells bicycles all over the world, with the majority of their market in China and India. They have approached FreeWheels about obtaining a quote for a special one-off order as they would like to purchase 25,000 bikes. As this will be a special order sale, there will be no costs incurred for variable selling and administrative costs and no additional fixed costs will be incurred. This order is because their existing supplier has suffered substantial earthquake damage to their premises, but the CEO of Cycle World Ltd also hinted to your CEO that if they are satisfied with the product, this might not be the last deal between the two businesses. Required: 1. Given this knowledge, what amount should FreeWheels Ltd. bid for this contract in each of the following circumstances: a) The FreeWheels’s annual factory capacity is 100,000 units. b) The FreeWheels’s annual factory capacity is 90,000 units. (To fulfil the order, you may have to pull the product from your regular production). 2. Assuming that the annual factory capacity is 100,000 units, prepare a report for your CEO explaining your justification for the bid price that you came up with in 1 a). Discuss the possible opportunities and potential disadvantages with accepting this contract with Cycle World. Give both quantitative and qualitative support to your discussion.
In: Accounting
3. Nacho Company is a retailer of durable, light-weight backpack bag and consistently known for their high-quality and innovation. The firm is considering dropping the Pink backpack product and only to sell the traveler backpack. Nacho Company allocates fixed costs (both corporate and selling/administrative) to products based on sales revenue. When the president of the company saw the product-line income statements (presented below), he agreed that the Pink product should be dropped. If this is done, sales of traveller are expected to increase by 20% next year; the firm's cost structure will remain the same.
|
Traveller |
Pink |
|||||||||
|
Sales |
$ |
20,000 |
$ |
32,000 |
||||||
|
Cost of goods sold (all variable) |
9,000 |
16,000 |
||||||||
|
Gross margin |
11,000 |
16,000 |
||||||||
|
Operating Expenses: |
||||||||||
|
Fixed corporate costs |
6,000 |
9,000 |
||||||||
|
Variable selling and administrative expenses |
2,200 |
5,900 |
||||||||
|
Fixed selling and administrative expenses |
1,200 |
1,800 |
||||||||
|
Total Operating Expenses |
9,400 |
16,700 |
||||||||
|
Operating income (loss) |
$ |
1,600 |
$ |
(700 |
) |
|||||
Required:
1. Find the expected change in annual operating income by dropping the Pink product and selling only the traveler product. Show calculations to support your answer.
2. What strategic factors should be considered?
In: Accounting
What is the difference between current earnings and profits and accumulated earnings and profits?
In: Accounting
I need an adjusted trial balance for this question. Here are the instructions, the journal, and the unadjusted trial balance.
Palisade Creek Co. is a merchandising business that uses the perpetual inventory system. The account balances for Palisade Creek Co. as of May 1, 2019 (unless otherwise indicated), are as follows:
| 110 | Cash | $ 83,600 |
| 112 | Accounts Receivable | 233,900 |
| 115 | Merchandise Inventory | 624,400 |
| 116 | Estimated Returns Inventory | 28,000 |
| 117 | Prepaid Insurance | 16,800 |
| 118 | Store Supplies | 11,400 |
| 123 | Store Equipment | 569,500 |
| 124 | Accumulated Depreciation-Store Equipment | 56,700 |
| 210 | Accounts Payable | 96,600 |
| 211 | Customers Refunds Payable | 50,000 |
| 212 | Salaries Payable | — |
| 310 | Lynn Tolley, Capital, June 1, 2018 | 685,300 |
| 311 | Lynn Tolley, Drawing | 135,000 |
| 410 | Sales | 5,069,000 |
| 510 | Cost of Merchandise Sold | 2,823,000 |
| 520 | Sales Salaries Expense | 664,800 |
| 521 | Advertising Expense | 281,000 |
| 522 | Depreciation Expense | — |
| 523 | Store Supplies Expense | — |
| 529 | Miscellaneous Selling Expense | 12,600 |
| 530 | Office Salaries Expense | 382,100 |
| 531 | Rent Expense | 83,700 |
| 532 | Insurance Expense | — |
| 539 | Miscellaneous Administrative Expense | 7,800 |
During May, the last month of the fiscal year, the following transactions were completed:
Record the following transactions on page 20 of the journal. Refer to the Chart of Accounts for exact wording of account titles.
| May | 1 | Paid rent for May, $5,000. |
| 3 | Purchased merchandise on account from Martin Co., terms 2/10, n/30, FOB shipping point, $36,000. | |
| 4 | Paid freight on purchase of May 3, $600. | |
| 6 | Sold merchandise on account to Korman Co., terms 2/10, n/30, FOB shipping point, $68,500. The cost of the merchandise sold was $41,000. | |
| 7 | Received $22,300 cash from Halstad Co. on account. | |
| 10 | Sold merchandise for cash, $54,000. The cost of the merchandise sold was $32,000. | |
| 13 | Paid for merchandise purchased on May 3. | |
| 15 | Paid advertising expense for last half of May, $11,000. | |
| 16 | Received cash from sale of May 6. | |
| 19 | Purchased merchandise for cash, $18,700. | |
| 19 | Paid $33,450 to Buttons Co. on account. | |
| 20 | Paid Korman Co. a cash refund of $13,230 for returned merchandise from sale of May 6. The invoice amount of the returned merchandise was $13,500, and the cost of the returned merchandise was $8,000. |
Record the following transactions on page 21 of the journal. Refer to the Chart of Accounts for exact wording of account titles.
| May | 20 | Sold merchandise on account to Crescent Co., terms 1/10, n/30, FOB shipping point, $110,000. The cost of the merchandise sold was $70,000. |
| 21 | For the convenience of Crescent Co., paid freight on sale of May 20, $2,300. | |
| 21 | Received $42,900 cash from Gee Co. on account. | |
| 21 | Purchased merchandise on account from Osterman Co., terms 1/10, n/30, FOB destination, $88,000. | |
| 24 | Returned damaged merchandise purchased on May 21, receiving a credit memo from the seller for $5,000. | |
| 26 | Refunded cash on sales made for cash, $7,500. The cost of the merchandise returned was $4,800. | |
| 28 | Paid sales salaries of $56,000 and office salaries of $29,000. | |
| 29 | Purchased store supplies for cash, $2,400. | |
| 30 | Sold merchandise on account to Turner Co., terms 2/10, n/30, FOB shipping point, $78,750. The cost of the merchandise sold was $47,000. | |
| 30 | Received cash from sale of May 20 plus freight paid on May 21. | |
| 31 | Paid for purchase of May 21, less return of May 24 |
| Date | Accounts | debit | Credit |
| May-01 | Rent expense | 5000 | |
| cash | 5000 | ||
| May-03 | Inventory | 35280 | |
| Accounts Payable-Martin Co. | 35280 | ||
| May-04 | Inventory | 600 | |
| Cash | 600 | ||
| May-06 | Accounts receivable | 67130 | |
| Sales | 67130 | ||
| Cost of goods sold | 41000 | ||
| Inventory | 41000 | ||
| May-07 | Cash | 22300 | |
| Accounts Receivable-Halstad co. | 22300 | ||
| May-10 | Cash | 54000 | |
| sales | 54000 | ||
| Cost of goods sold | 32000 | ||
| inventory | 32000 | ||
| May-13 | Accounts payable-Martin Co. | 35280 | |
| cash | 35280 | ||
| May-15 | Advertising expense | 11000 | |
| cash | 11000 | ||
| May-16 | Cash | 67130 | |
| Accounts receivable-Korman Co. | 67130 | ||
| May-19 | Inventory | 18700 | |
| cash | 18700 | ||
| May-19 | Accounts payable-Buttons Co. | 33450 | |
| cash | 33450 | ||
| May-20 | Customers refunds payable | 13230 | |
| cash | 13230 | ||
| Inventory | 8000 | ||
| Estimated returns inventory | 8000 | ||
| May-20 | Accounts receivable-Crescent Co. | 108900 | |
| sales | 108900 | ||
| Cost of goods sold | 70000 | ||
| inventory | 70000 | ||
| May-21 | Accounts receivable-Crescent Co. | 2300 | |
| cash | 2300 | ||
| May-21 | Cash | 42900 | |
| Accounts receivable-gee Co. | 42900 | ||
| May-21 | inventory | 87120 | |
| accounts payable-Osterman Co. | 87120 | ||
| May-24 | Accounts payable-Osterman Co. | 4950 | |
| inventory | 4950 | ||
| May-26 | Customers refunds payable | 7500 | |
| cash | 7500 | ||
| Inventory | 4800 | ||
| Estimated returns inventory | 4800 | ||
| May-28 | Sales Salaries Expense | 56000 | |
| Office Salaries Expense | 29000 | ||
| cash | 85000 | ||
| May-29 | Store Supplies | 2400 | |
| cash | 2400 | ||
| May-30 | Accounts receivable-Turner Co. | 77175 | |
| sales | 77175 | ||
| Cost of goods sold | 47000 | ||
| inventory | 47000 | ||
| May-30 | Cash | 111200 | |
| Accounts receivable-Crescent Co. | 111200 | ||
| May-31 | Accounts payable-Osterman Co. | 82170 | |
| Cash | 82170 |
| Adjusting Entries | |||
| May 31 | |||
| a. | Cost of Merchandise Sold | 13,950 | |
| Merchandise Inventory | 13,950 | ||
| b. | Insurance Expense | 12,000 | |
| Prepaid Insurance | 12,000 | ||
| c. | Store Supplies Expense | 9,800 | |
| Store Supplies | 9,800 | ||
| d. | Depreciation Expense | 14,000 | |
| Accumulated Depreciation: Store Equipment | 14,000 | ||
| e. | Sales Salaries Expense | 7,000 | |
| Office Salaries Expense | 6,600 | ||
| Salaries Payable | 13,600 | ||
| f. | Estimated Refunds Inventory | 35,000 | |
| Cost of Merchandise Sold | 35,000 | ||
| g. | Customer Returns and Allowances | 60,000 | |
| Customer Refunds Payable | 60,000 | ||
Create an adjusting trail balance.
In: Accounting
When is the unrelated business tax assessed on an exempt organization
In: Accounting
Benjamin Company had the following results of operations for the
past year:
| Sales (11,300 units at $19) | $ | 214,700 | |||||
| Direct materials and direct labor | $ | 56,500 | |||||
| Overhead (20% variable) | 11,300 | ||||||
| Selling and administrative expenses (all fixed) | 13,560 | (81,360 | ) | ||||
| Operating income | $ | 133,340 | |||||
A foreign company (whose sales will not affect Benjamin’s market)
offers to buy 2,825 units at $15.20 per unit. In addition to
variable manufacturing costs, selling these units would increase
fixed overhead by $960 and selling and administrative costs by
$780. Assuming Benjamin’s productive capacity is 11,300 units per
year and accepts the offer, its profits will:
Decrease by $10,735.
Decrease by $12,475.
Decrease by $ 122,605.
Increase by $ 8,995.
Increase by $ 3,605.
In: Accounting
1. On June 3, a company sells merchandise with price of $2,000 (Terms: 2/10, net 60. Instructions: Prepare all the seller’s journal entries related to this sale and customer payments for both the Gross and Net methods under the following three mutually exclusive cases.
Case 1: Customer settles entire receivable on June 12
Case 2: Customer settles entire receivable on July 29
Case 3: Customer settles ½ of receivable on June 12 and ½ of receivable on July 29
In: Accounting
Budgeting is an essential activity organization. managers should relate budgeting with the company's vision, mission, strategy and long term and prepare a budget as a form of refined annual plan that detailed the firms route towards achieving the projected annual performance. Debat the above statement.
In: Accounting
On 1 January 2018, Bae Limited issued a convertible bond with a par value of $100,000 for $120,000.
The bonds are convertible into 12,000 ordinary shares of Jan.
The bond has a 5-year life with a stated interest of 10% per annum. Interest
payment is made each year on 31 December, starting from 31 December 2018.
The market interest rate on 1 January 2018 for a similar non-convertible bond is
8% per annum.
On 1 January 2018, the liability component of the bond is computed to be $107,986.
On 31 December 2019, after the interest has been recorded, Jan Limited
repurchases the bond for $111,000 cash. At that time the fair value of the liability component is $108,000.
Date
Cash paid. Interest expense. Premium amortised Carrying amount of liability
1 January 2018. $107,986
31 December 2018 $10,000 $8,639 $1,361 $106,625
31 December 2019. $10,000. $8,530 $1,470 $105,155
1.Prepare the journal entry to record the issuance of the convertible bond on 1 January 2018.
2. Calculate the loss on repurchase for the liability component of the bond on 31 December 2019.
3. Calculate the adjustment on the equity component of the bond on 31 December 2019.
4. Prepare the journal entries to record the repurchase of bonds on 31 December 2019.
In: Accounting
Can Costing Accounting works be taken over by the book keeper in the accounting record process? is Cost Accounting works indispensable in a manufacturing concern. Debate the above statement
In: Accounting
Why might ethical corporate behavior actually lead to higher profitability (and not the opposite)?
In: Accounting
In: Accounting
EMD Corporation manufactures two products, Product S and Product W. Product W is of fairly recent origin, having been developed as an attempt to enter a market closely related to that of Product W. Product W is the more complex of the two products, requiring 3 hours of direct labor time per unit to manufacture compared to 2 hour of direct labor time for Product S. Product W is produced on an automated production line.
Overhead is currently assigned to the products on the basis of direct-labor-hours. The company estimated it would incur $1,072,715 in manufacturing overhead costs and produce 15,000 units of Product W and 75,000 units of Product S during the current year. Unit cost for materials and direct labor are:
| Product S | Product W | ||||||
| Direct material | $ | 18 | $ | 30 | |||
| Direct labor | 11 | 15 | |||||
Required:
a-1. Compute the predetermined overhead rate under the current method of allocation.
a-2. Determine the unit product cost of each product for the current year.
b. The company's overhead costs can be attributed to four major activities. These activities and the amount of overhead cost attributable to each for the current year are given below:
| Total Activity | |||||
| Activity Cost Pool | Total Cost | Product S | Product W | Total | |
| Machine setups required | $ | 531,570 | 1,370 | 2,400 | 3,770 |
| Purchase orders issued | 53,703 | 508 | 155 | 663 | |
| Machine-hours required | 301,280 | 7,960 | 10,870 | 18,830 | |
| Maintenance requests issued | 186,162 | 711 | 922 | 1,633 | |
| $ | 1,072,715 | ||||
Using the data above and an activity-based costing approach, determine the unit product cost of each product for the current year.
predetermined overhead rate?
Determine the unit product cost of each product for the current year. (Round your answers to 2 decimal places.)
S?
W?
Using the data above and an activity-based costing approach, determine the unit product cost of each product for the current year.
S?
W?
In: Accounting