Janes Company provided the following information on intangible assets:

1. A patent was purchased from the Lou Company for $1,700,000 on January 1, 2019. Janes estimated the remaining useful life of the patent to be 10 years. The patent was carried on Lou’s accounting records at a net book value of $550,000 when Lou sold it to Janes.
2. During 2021, a franchise was purchased from the Rink Company for $700,000. The contractual life of the franchise is 10 years and Janes records a full year of amortization in the year of purchase.
3. Janes incurred research and development costs in 2021 as follows:
   

Materials and supplies	$	160,000
Personnel		200,000
Indirect costs		80,000
Total	$	440,000

4. Effective January 1, 2021, based on new events that have occurred, Janes estimates that the remaining life of the patent purchased from Lou is only five more years.

Required:
1. Prepare the entries necessary for years 2019 through 2021 to reflect the above information.
2. Prepare a schedule showing the intangible asset section of Janes’s December 31, 2021, balance sheet.

Entry 1: Record the purchase of a patent.

Entry 2: Record amortization on the patent.

Entry 3: Record amortization on the patent.

Entry 4: Record the purchase of a franchise.

Entry 5: Record amortization of franchise.

Entry 6: Record research and development expenses.

Entry 7: Record amortization on the patent after change in useful life.

Cash Budget

Cash budgeting for Nichole Mango, a merchandising firm, is performed on a quarterly basis. The company is planning its cash needs for the third quarter of 2017, and the following information is available to assist in preparing a cash budget. Budgeted income statements for July through October 2017 are as follows:

                                                                               July              August            September       October

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $22,000        $28,000           $32,000            $40,000

Cost of goods sold  . . . . . . . . . . . . . . . . . . . . (11,000)          (15,000)            (17,000)          (21,000)

Gross profit. . . . . . . . . . . . . . . . . . . . . . . . . . .   11,000            13,000               15,000               19,000

Less other expenses

Selling  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       3,300              4,000                    4,400              5,200

Administrative. . . . . . . . . . . . . . . . . . . . . .          3,600             5,000                   4,200                 4,600

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (6,900)         (9,000)                 (8,600)              (9,800)

Net income. . . . . . . . . . . . . . . . . . . . . . . . . . .      $4,100        $4,000                   $6,400               $9,200

Additional information follows:

1. Other expenses, which are paid monthly, include $2,000 of depreciation per month.

2. Sales are 40 percent for cash and 60 percent on credit.

3. Credit sales are collected 25 percent in the month of sale, 65 percent one month after sale, and 10 percent two months after sale. May sales were $16,000, and June sales were $17,000.

4. Merchandise is paid for 50 percent in the month of purchase; the remaining 50 percent is paid in the following month. Accounts payable for merchandise at June 30 totaled $7,000.

5. The company maintains its ending inventory levels at 20 percent of the cost of goods to be sold in the following month. The inventory at June 30 is $2,200.

6. An equipment note of $6,000 per month is being paid through August.

7. The company must maintain a cash balance of at least $6,000 at the end of each month. The cash balance on June 30 is $6,100.

8. The company can borrow from its bank as needed. Borrowings and repayments must be in multiples of $100. All borrowings take place at the beginning of a month, and all repayments are made at the end of a month. When the principal is repaid, interest on the repayment is also paid. The interest rate is 12 percent per year.

Required

a. Prepare a monthly schedule of budgeted operating cash receipts for July, August, and September.

b. Prepare a monthly purchases budget and a schedule of budgeted cash payments for purchases for

July, August, and September.

c. Prepare a monthly cash budget for July, August, and September. Show borrowings from the company’s bank and repayments to the bank as needed to maintain the minimum cash balance.

Sultan Company uses an activity-based costing system.

At the beginning of the year, the company made the following estimates of cost and activity for its five activity cost pools:

   

Activity Cost Pool	Activity Measure	Expected Overhead Cost		Expected         Activity
Labor-related	Direct labor-hours	$	380,000	38,000	DLHs
Purchase orders	Number of orders	$	11,935	217	orders
Parts management	Number of part types	$	79,500	106	part types
Board etching	Number of boards	$	93,000	1,860	boards
General factory	Machine-hours	$	240,500	18,500	MHs

    

Required:
1.	Compute the activity rate for each of the activity cost pools.

     

2.	The expected activity for the year was distributed among the company’s four products as follows:

  

	Expected Activity
Activity Cost Pool	Product A	Product B	Product C	Product D
Labor-related (DLHs)	5,400	24,700	3,800	4,100
Purchase orders (orders)	51	35	48	83
Parts management (part types)	35	14	42	15
Board etching (boards)	590	730	540	0
General factory (MHs)	2,600	8,600	2,000	5,300

  

Using the ABC data, determine the total amount of overhead cost assigned to each product.

Duncan Street Company (DSC), a British company, is considering establishing an operation in the United States to assemble and distribute smart speakers. The initial investment is estimated to be 25,000,000 British pounds (GBP), which is equivalent to 30,000,000 U.S. dollars (USD) at the current exchange rate. Given the current corporate income tax rate in the United States, DSC estimates that total after-tax annual cash flow in each of the three years of the investment’s life would be US$10,000,000, US$12,000,000, and US$15,000,000, respectively. However, the U.S. national legislature is considering a reduction in the corporate income tax rate that would go into effect in the second year of the investment’s life and would result in the following total annual cash flows: US$10,000,000 in year 1, US$14,000,000 in year 2, and US$18,000,000 in year 3. DSC estimates the probability of the tax rate reduction occurring at 50 percent. DSC uses a discount rate of 12 percent in evaluating potential capital investments. Present value factors at 12 percent are as follows: Period PV Factor 1. . . . . . 0.893 2. . . . . . 0.797 3. . . . . . 0.712 The U.S. operation will distribute 100 percent of its after-tax annual cash flow to DSC as a dividend at the end of each year. The terminal value of the investment at the end of three years is estimated to be US$25,000,000. The U.S. withholding tax on dividends is 5 percent; repatriation of the investment’s terminal value will not be subject to U.S. withholding tax. Neither the dividends nor the terminal value received from the U.S. investment will be subject to British income tax. Exchange rates between the GBP and USD are forecasted as follows: Year 1 GBP 0.74 = USD 1.00 Year 2 GBP 0.70 = USD 1.00 Year 3 GBP 0.60= USD 1.00 Required:

A. Determine the expected net present value of the potential U.S. investment from a parent company perspective.

Required information

Problem 6-3B Record transactions and prepare a partial income statement using a perpetual inventory system (LO6-2, 6-5)

[The following information applies to the questions displayed below.]

At the beginning of June, Circuit Country has a balance in inventory of $2,700. The following transactions occur during the month of June.

June		2		Purchase radios on account from Radio World for $2,400, terms 1/15, n/45.
June		4		Pay cash for freight charges related to the June 2 purchase from Radio World, $340.
June		8		Return defective radios to Radio World and receive credit, $200.
June		10		Pay Radio World in full.
June		11		Sell radios to customers on account, $4,400, that had a cost of $2,900.
June		18		Receive payment on account from customers, $3,400.
June		20		Purchase radios on account from Sound Unlimited for $3,500, terms 3/10, n/30.
June		23		Sell radios to customers for cash, $5,000, that had a cost of $3,300.
June		26		Return damaged radios to Sound Unlimited and receive credit of $500.
June		28		Pay Sound Unlimited in full.

Problem 6-3B Part 1

Required:
1. Assuming that Circuit Country uses a perpetual inventory system, record the transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow:

   

	Direct Labor-Hours per unit	Annual Production
Rims	0.70	22,000 units
Posts	0.70	79,000 units

   

Additional information about the company follows:

a. Rims require $17 in direct materials per unit, and Posts require $14.

b. The direct labor wage rate is $19 per hour.

c. Rims are more complex to manufacture than Posts and they require special equipment.

d. The ABC system has the following activity cost pools:

     

		Estimated Activity
Activity Cost Pool	Activity Measure	Estimated Overhead Cost		Rims	Posts	Total
Machine setups	Number of setups	$	27,650	80	120	200
Special processing	Machine-hours	$	119,290	1,000	0	1,000
General factory	Direct labor-hours	$	616,000	8,000	36,000	44,000

4.

value:
5.00 points

Required information

Required:
1.	Compute the activity rate for each activity cost pool. (Round your final answers to 2 decimal places.)

References

eBook & Resources

WorksheetLearning Objective: 03-02 Compute activity rates for an activity-based costing system.

Difficulty: 2 MediumLearning Objective: 03-03 Compute product costs using activity-based costing.

Check my work

5.

value:
5.00 points

Required information

2.	Determine the unit product cost of each product according to the ABC system. (Do not round intermediate calculation. Round your final answers to 2 decimal places.)

On January 1, 2016, when its $30 par value common stock was selling for $80 per share, Monty Corp. issued $11,100,000 of 8% convertible debentures due in 20 years. The conversion option allowed the holder of each $1,000 bond to convert the bond into five shares of the corporation’s common stock. The debentures were issued for $11,988,000. The present value of the bond payments at the time of issuance was $9,435,000, and the corporation believes the difference between the present value and the amount paid is attributable to the conversion feature. On January 1, 2017, the corporation’s $30 par value common stock was split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2018, when the corporation’s $15 par value common stock was selling for $135 per share, holders of 30% of the convertible debentures exercised their conversion options. The corporation uses the straight-line method for amortizing any bond discounts or premiums. a. Prepare the entry to record the exercise of the conversion option, using the book value method.

1. Entries into T accounts and Trial Balance

   Connie Young, an architect, opened an office on October 1, 2019. During the month, she completed the following transactions connected with her professional practice:

   1. Transferred cash from a personal bank account to an account to be used for the business, $36,000.
   2. Paid October rent for office and workroom, $2,400.
   3. Purchased used automobile for $32,800, paying $7,800 cash and giving a note payable for the remainder.
   4. Purchased office and computer equipment on account, $9,000.
   5. Paid cash for supplies, $2,150.
   6. Paid cash for annual insurance policies, $4,000.
   7. Received cash from client for plans delivered, $12,200.
   8. Paid cash for miscellaneous expenses, $815.
   9. Paid cash to creditors on account, $4,500.
   10. Paid $5,000 on note payable.
   11. Received invoice for blueprint service, due in November, $2,890.
   12. Recorded fees earned on plans delivered, payment to be received in November, $18,300.
   13. Paid salary of assistants, $6,450.
   14. Paid gas, oil, and repairs on automobile for October, $1,020.

   Required:

   1. Record the above transactions (in chronological order) directly in the following T accounts, without journalizing. Cash; Accounts Receivable; Supplies; Prepaid Insurance; Automobiles; Equipment; Accounts Payable; Notes Payable; Connie Young, Capital; Professional Fees; Salary Expense; Blueprint Expense; Rent Expense; Automobile Expense; Miscellaneous Expense. To the left of each amount entered in the accounts, select the appropriate letter to identify the transaction.

   2. Determine account balances of the T accounts. Accounts containing a single entry only (such as Prepaid Insurance) do not need a balance.

   Cash
   c.		c.
   Bal.

   Accounts Receivable

   Supplies

   Prepaid Insurance

   Automobiles

   Equipment

   Accounts Payable
   		Bal.

   Notes Payable
   		Bal.

   Connie Young, Capital

   Professional Fees
   		Bal.

   Salary Expense

   Blueprint Expense

   Rent Expense

   Automobile Expense

   Miscellaneous Expense

   Feedback

   1. and 2. First, identify what account is used and then what type of account is used. Every account is either an asset, liability, capital, withdrawal, revenue, or expense account. Every transaction involves at least two accounts. Then determine whether the account increases or decreases. Each increase or decrease is recorded as a debit or credit in the T-accounts, following the rules of debit and credit. Net debits against credits to determine the balance and double-check to see if it is a normal balance for that account classification.

   3. Prepare an unadjusted trial balance for Connie Young, Architect, as of October 31, 2019. If an amount box does not require an entry, leave it blank.

   Connie Young, Architect
   Unadjusted Trial Balance
   October 31, 2019
   	Debit Balances	Credit Balances

   Feedback

   3. The trial balance lists the ending balance of each account in a corresponding Debit or Credit column. The trial balance column totals should be equal.

   4. Determine the net income or net loss for October.
      $

   Feedback

   4. Recall that Revenue - Expenses = Net Income (Loss).

   Feedback

   Incorrect

Jan sold her house on December 31 and took a $15,000 mortgage as part of the payment. The 10-year mortgage has a 7% nominal interest rate, but it calls for semiannual payments beginning next June 30. Next year Jan must report on Schedule B of her IRS Form 1040 the amount of interest that was included in the two payments she received during the year.

a. What is the dollar amount of each payment Jan receives? Round your answer to the nearest cent. $

b. How much interest was included in the first payment? Round your answer to the nearest cent. $

How much repayment of principal was included? Round your answer to the nearest cent. $

How do these values change for the second payment?

I. The portion of the payment that is applied to interest declines, while the portion of the payment that is applied to principal increases.

II. The portion of the payment that is applied to interest increases, while the portion of the payment that is applied to principal decreases.

III. The portion of the payment that is applied to interest and the portion of the payment that is applied to principal remains the same throughout the life of the loan.

IV. The portion of the payment that is applied to interest declines, while the portion of the payment that is applied to principal also declines.

V.The portion of the payment that is applied to interest increases, while the portion of the payment that is applied to principal also increases.

c.How much interest must Jan report on Schedule B for the first year? Round your answer to the nearest cent.

Will her interest income be the same next year?   

I. interest will increase in each successive year

II. interest will remain the same in each successive year

III. receive no interest in each successive year only return of capital

IV. interest will decline in each successive year

V. receive interest only after 10 years mortgage paid off.

d. If the payments are constant, why does the amount of interest income change over time?

I. As the loan is amortized (paid off), the beginning balance, hence the interest charge, increases and the repayment of principal increases.

II.As the loan is amortized (paid off), the beginning balance, hence the interest charge, declines and the repayment of principal increases.

III. As the loan is amortized (paid off), the beginning balance, hence the interest charge, declines and the repayment of principal declines.

IV. As the loan is amortized (paid off), the beginning balance, hence the interest charge, increases and the repayment of principal declines.

V.As the loan is amortized (paid off), the beginning balance declines, but the interest charge and the repayment of principal remain the same.

what is the basic accounting equation?

What are the main benefits of a journal?

What is “posting”? What is the recording process of transactions?

What are the limitations of the trial balance (e.g., E3-19)?

Cant seem to figure out what is wrong here?

On December 31, after adjustments, Gonzalez Company's ledger contains the following account balances: 101 Cash $ 94,400 Dr. 111 Accounts Receivable 35,600 Dr. 121 Supplies 8,000 Dr. 131 Prepaid Rent 81,200 Dr. 141 Equipment 128,000 Dr. 142 Accumulated Depreciation—Equip. 4,000 Cr. 202 Accounts Payable 17,000 Cr. 301 Emilio Gonzalez, Capital (12/1/2019) 131,240 Cr. 302 Emilio Gonzalez, Drawing 16,400 Dr. 401 Fees Income 327,200 Cr. 511 Advertising Expense 11,600 Dr. 514 Depreciation Expense—Equip. 2,000 Dr. 517 Rent Expense 9,200 Dr. 519 Salaries Expense 77,600 Dr. 523 Utilities Expense 15,440 Dr. Required: Post the closing entries to the general ledger accounts. Hint: Be sure to enter beginning balances.

Emilio Gonzalez, Capital Account No. 301 Emilio Gonzalez, Drawing Account No. 302 Date Debit Credit Balance Date Debit Credit Balance Dec 31, 2019 Dec 31, 2019 Dec 31, 2019 16,400 (16,400) Dec 31, 2019 16,400 (16,400) Dec 31, 2019 211,360 194,960 Income Summary Account No. 399 Fees Income Account No. 401 Date Debit Credit Balance Date Debit Credit Balance Dec 31, 2019 $115,840 (115,840) Dec 31, 2019 Dec 31, 2019 $327,200 211,360 Dec 31, 2019 327,200 -327200 Dec 31, 2019 211,360 0 Advertising Expense Account No. 511 Depreciation Expense—Equipment Account No. 514 Date Debit Credit Balance Date Debit Credit Balance Dec 31, 2019 Dec 31, 2019 Dec 31, 2019 11,600 (11,600) Dec 31, 2019 2,000 (2,000) Rent Expense Account No. 517 Salaries Expense Account No. 519 Date Debit Credit Balance Date Debit Credit Balance Dec 31, 2019 Dec 31, 2019 Dec 31, 2019 9,200 -9200 Dec 31, 2019 77,600 (77,600) Utilities Expense Account No. 523 Date Debit Credit Balance Dec 31, 2019 Dec 31, 2019 15,440 (15,440)

what is the revenue recognition principle and expense recognition principle?

what is the accrual-basis accounting and the cash-basis accounting?

Adjusting entries-

When and why should adjusting entries be prepared?

What are the benefits of the adjusted-trial balance?

Samantha is a forty percent partner in Stevens LLC. Her tax basis in her partnership interest is $57,000. She received a non-liquidating distribution of real property (§1231 property to the partnership) with a fair market value of $100,000 and a tax basis of $65,000. Following the distribution, the partnership had remaining assets as follows: Basis FMV Cash $ 10,000 $ 10,000 Real Estate (§1231 Property): Tract 1 54,000 70,000 Tract 2 65,000 45,000 Tract 3 71,000 95,000 $200,000 $220,000 i. Assume the LLC has a §754 election in effect. What will be the amount of the basis adjustment under §734(b)? ii. How will the basis adjustment be allocated among the partnership’s remaining properties?

Howarth Manufacturing Company purchased equipment on June 30, 2017, at a cost of $175,000. The residual value of the equipment was estimated to be $10,000 at the end of a five-year life. The equipment was sold on March 31, 2021, for $48,000. Howarth uses the straight-line depreciation method for all of its plant and equipment. Partial-year depreciation is calculated based on the number of months the asset is in service.

Required:
1. Prepare the journal entry to record the sale.
2. Assuming that Howarth had instead used the double-declining-balance method, prepare the journal entry to record the sale.

Diego Company manufactures one product that is sold for $71 per unit in two geographic regions—the East and West regions. The following information pertains to the company’s first year of operations in which it produced 54,000 units and sold 49,000 units. Variable costs per unit: Manufacturing: Direct materials $ 22 Direct labor $ 12 Variable manufacturing overhead $ 3 Variable selling and administrative $ 5 Fixed costs per year: Fixed manufacturing overhead $ 864,000 Fixed selling and administrative expenses $ 586,000 The company sold 36,000 units in the East region and 13,000 units in the West region. It determined that $280,000 of its fixed selling and administrative expenses is traceable to the West region, $230,000 is traceable to the East region, and the remaining $76,000 is a common fixed cost. The company will continue to incur the total amount of its fixed manufacturing overhead costs as long as it continues to produce any amount of its only product.

1. What is the company’s net operating income (loss) under absorption costing?

2. What is the amount of the difference between the variable costing and absorption costing net operating incomes (losses)?

3. What is the company’s break-even point in unit sales?

4. If the sales volumes in the East and West regions had been reversed, what would be the company’s overall break-even point in unit sales? 5. What would have been the company’s variable costing net operating income (loss) if it had produced and sold 49,000 units? 6. What would have been the company’s absorption costing net operating income (loss) if it had produced and sold 49,000 units? 7. If the company produces 5,000 fewer units than it sells in its second year of operations, will absorption costing net operating income be higher or lower than variable costing net operating income in Year 2? 8. Prepare a contribution format segmented income statement that includes a Total column and columns for the East and West regions. 9. Diego is considering eliminating the West region because an internally generated report suggests the region’s total gross margin in the first year of operations was $46,000 less than its traceable fixed selling and administrative expenses. Diego believes that if it drops the West region, the East region's sales will grow by 5% in Year 2. Using the contribution approach for analyzing segment profitability and assuming all else remains constant in Year 2, what would be the profit impact of dropping the West region in Year 2? 10. Assume the West region invests $44,000 in a new advertising campaign in Year 2 that increases its unit sales by 20%. If all else remains constant, what would be the profit impact of pursuing the advertising campaign?