Below is the 2009 contribution income statement of a company.

Contribution Income Statement For Year Ended December 31, 2009
Sales (12,000 units)		$1,440,000
Less variable costs
Cost of goods sold	$480,000
Selling and administrative	132,000	(612,000)
Contribution margin		828,000
Less fixed costs
Manufacturing overhead	510,000
Selling and administrative	220,000	(730,000)
Net income		$98,000

During the coming year, the company expects an increase in variable manufacturing costs of $8 per unit and in fixed manufacturing costs of $72,000.

(a) If sales for 2010 remain at 12,000 units, what price should Colgate charge to obtain the same profit as last year?
$______

(b) Management believes that sales can be increased to 16,000 units if the selling price is lowered to $109. What would be the excepted profit (or loss) as a result of this action? Use a negative sign with your answer, if appropriate.
______

(c) After considering the expected increases in costs, what sales volume is needed to earn a profit of $98,000 with a unit selling price of $109?
_____

Munchener Corp.’s unadjusted trial balance includes the following balances:

                                                                                                                             Dr.                                                             Cr.

                                                    Accounts receivable                       $150,000                                                                                 

                                                    Allowance for doubtful accounts                                                                                                                             $    3,500

                                                    Sales (all on credit)                                                                                                                               720,000

                                                    Sales returns and allowances           30,000                                                                                          

Required

1. Prepare the entries for estimated bad debts assuming that doubtful accounts are estimated to be (a) 5% of gross accounts receivable and (b) 2% of net sales.

2. Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of $3,500 instead of a credit balance.

Federal Semiconductors issued 11% bonds, dated January 1, with a face amount of $830 million on January 1, 2018. The bonds sold for $767,557,868 and mature on December 31, 2037 (20 years). For bonds of similar risk and maturity the market yield was 12%. Interest is paid semiannually on June 30 and December 31. Federal determines interest at the effective rate. Federal elected the option to report these bonds at their fair value. On December 31, 2018, the fair value of the bonds was $750 million as determined by their market value in the over-the-counter market. Assume the fair value of the bonds on December 31, 2019 had risen to $756 million. Required: Complete the below table to record the following journal entries. 1. & 2. Prepare the journal entry to adjust the bonds to their fair value for presentation in the December 31, 2018, balance sheet, and adjust the bonds to their fair value for presentation in the December 31, 2019, balance sheet. Federal determined that one-half of the increase in fair value was due to a decline in general interest rates.

How much needs to be invested today if your goal is to have $100,000 five years from today? The return on the investment is expected to be 10% and will be compounded semi-annually. (Use Table 1) (Round "PV Factor" to 4 decimal places and final answer to nearest dollar amount.)

$61,390

$62,090

$66,667

$50,000

2.

The following is a partial list of account balances from the books of Probst Enterprise at the end of 2010:

Accounts payable	$ 20,500
Accounts receivable	12,300
Accrued interest on short-term note payable	1,200
Cash	6,500
Wages payable	1,300
Income taxes payable	1,900
Inventory	10,000

    
Based solely upon these balances, what is the quick ratio? (Round your final answer to 2 decimal places.)

0.76

1.15

0.26

0.79

3.

SRJ Corporation had the following transactions:

• The accrual of interest expense on a six-month note payable.
• Collected cash for services to be provided within the next six months.
• The accrual of revenue.

Which of the above transactions resulted in an increase in working capital?

The accrual of interest expense.

Collecting cash for services to be provided in the future.

The accrual of revenue.

Both the accrual of revenue and the collection of cash for future services.

4.

The following is a partial list of account balances from the books of Probst Enterprise at the end of 2010:

Accounts payable	$ 20,500
Accounts receivable	12,300
Accrued interest on short-term note payable	1,200
Cash	6,500
Wages payable	1,300
Income taxes payable	1,900
Inventory	10,000

    
Based solely upon these balances, what is the quick ratio? (Round your final answer to 2 decimal places.)

0.76

1.15

0.26

0.79

Fischer Card Shop is a small retail shop. Fischer's balance sheet at year-end 2014 is as follows. The following information details transactions and adjustments that occurred during 2015.

1. Sales total $145,850 in 2015; all sales were cash sales.
2. Inventory purchases total $76,200 in 2015; at December 31, 2015, inventory totals $14,500. Assume all purchases are made on account.
3. Accounts payable totals $4,100 at December 31, 2015.
4. Annual store rent for $24,000 and was paid on March 1, 2015, covering the next 12 months. The balance in prepaid rent at December 31, 2014, was the balance remaining from the advance rent payment in 2014.
5. Wages are paid every other week on Friday; during 2015, Fischer paid $12,500 cash for wages. At December 31, 2015, Fischer owed employees unpaid and unrecorded wages of $350.
6. Depreciation on equipment totals $1,700 in 2015.

(c) Set up T-accounts, including beginning balances, and post the journal entries to those T-accounts on the appropriate line.
After all transactions are recorded, compute the balance for each account in the appropriate column.

Fischer Card Shop Balance Sheet December 31, 2014
Cash		$8,500	Accounts payable	$5,200
Inventories		12,000	Wages payable	100
Prepaid rent		3,800	Total current liabilities	5,300
Total current assets		24,300	Total equity (includes retained earnings)	23,500
Equipment	$7,500		Total liabilities and equity	$28,800
Less Accumulated depreciation	3,000
Equipment, net		4,500
Total assets		$28,800

SnapShot Company, a commercial photography studio, has just completed its first full year of operations on December 31, 2015. General ledger account balances before year-end adjustments follow; no adjusting entries have been made to the accounts at any time during the year. Assume that all balances are normal.

Cash	$2,150	Accounts Payable	$1,910
Accounts Receivable	3,800	Unearned Photography Fees	2,600
Prepaid Rent	12,600	Common Stock	24,000
Prepaid Insurance	2,970	Photography Fees Earned	34,480
Supplies	4,250	Wages Expense	11,000
Equipment	22,800	Utilities Expense	3,420

An analysis of the firm's records discloses the following.

1. Photography services of $925 have been rendered, but customers have not yet paid or been billed. The firm uses the account Fees Receivable to reflect amounts due but not yet billed.
2. Equipment, purchased January 1, 2015, has an estimated life of 10 years.
3. Utilities expense for December is estimated to be $400, but the bill will not arrive or be paid until January of next year.
4. The balance in Prepaid Rent represents the amount paid on January 1, 2015, for a 2-year lease on the studio.
5. In November, customers paid $2,600 cash in advance for photos to be taken for the holiday season. When received, these fees were credited to Unearned Photography Fees. By December 31, all of these fees are earned.
6. A 3-year insurance premium paid on January 1, 2015, was debited to Prepaid Insurance.
7. Supplies available at December 31 are $1,520.
8. At December 31, of $375 has been incurred but not paid or recorded.

(d) Set up T-accounts, enter the balances above, and post the adjusting entries to them.

Abbeville Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 90 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows:

Standard wage per hr.	$15.00
Standard labor time per faucet	40 min.
Standard number of lb. of brass	3 lb.
Standard price per lb. of brass	$2.40
Actual price per lb. of brass	$2.50
Actual lb. of brass used during the week	14,350 lb.
Number of faucets produced during the week	4,800
Actual wage per hr.	$14.40
Actual hrs. for the week	3,240 hrs

a. Determine the A detailed estimate of what a product should cost.standard cost per unit for direct materials and direct labor. Round the cost per unit to two decimal places.

Direct materials standard cost per unit	$
Direct labor standard cost per unit	$
Total standard cost per unit	$

b. Determine the direct materials Price variance is the difference between the actual and standard prices, multiplied by the actual quantity.price variance, direct materials The cost associated with the difference between the standard quantity and the actual quantity of direct materials used in producing a commodity.quantity variance, and total direct materials The difference between actual cost and the flexible budget at actual volumes.cost variance. Round your answers to two decimal places, if necessary. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Price variance

$

Quantity variance

$

Total direct materials cost variance

$

c. Determine the direct labor The cost associated with the difference between the standard rate and the actual rate paid for direct labor used in producing a commodity.rate variance, direct labor The cost associated with the difference between standard and actual hours of direct labor spent for producing a commodity.time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Rate variance

$

Time variance

$

Total direct labor cost variance

$

National Orthopedics Co. issued 8% bonds, dated January 1, with a face amount of $600,000 on January 1, 2018. The bonds mature on December 31, 2021 (4 years). For bonds of similar risk and maturity the market yield was 10%. Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:
1. Determine the price of the bonds at January 1, 2018.
2. Prepare the journal entry to record their issuance by National on January 1, 2018.
3. Prepare an amortization schedule that determines interest at the effective rate each period.
4. Prepare the journal entry to record interest on June 30, 2018.
5. Prepare the appropriate journal entries at maturity on December 31, 2021.

When Patey Pontoons issued 6% bonds on January 1, 2018, with a face amount of $680,000, the market yield for bonds of similar risk and maturity was 11%. The bonds mature December 31, 2021 (4 years). Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:
1. Determine the price of the bonds at January 1, 2018.
2. Prepare the journal entry to record their issuance by Patey on January 1, 2018.
3. Prepare an amortization schedule that determines interest at the effective rate each period.
4. Prepare the journal entry to record interest on June 30, 2018.
5. What is the amount related to the bonds that Patey will report in its balance sheet at December 31, 2018?
6. What is the amount related to the bonds that Patey will report in its income statement for the year ended December 31, 2018? (Ignore income taxes.)
7. Prepare the appropriate journal entries at maturity on December 31, 2021.

P3-24   Parent Company and Consolidated Balances

Exacto Company reported the following net income and dividends for the years indicated:

year     net income       dividends

20X5    $35000           $12,000

20X6    45,000             20,000

20X7    30,000             14,000

True Corporation acquired 75 percent of Exacto’s common stock on January 1, 20X5. On that date, the fair value of Exacto’s net assets was equal to the book value. True uses the equity method in accounting for its ownership in Exacto and reported a balance of $259,800 in its investment account on December 31, 20X7.

Required

a. What amount did True pay when it purchased Exacto’s shares?

b. What was the fair value of Exacto’s net assets on January 1, 20X5?

c. What amount was assigned to the NCI shareholders on January 1, 20X5?

d. What amount will be assigned to the NCI shareholders in the consolidated balance sheet prepared at December 31, 20X7?

USE:    Www.AdvancedStudyGuide.com

Go to GoogleLinks to an external site. or any other search engine and search "Payroll Security". Answer the following questions:

a) Why does a payroll system need security or controls?

b) List three controls that you would want to have on your payroll system.

Myers Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows.

Indirect labor		$1.00
Indirect materials		0.70
Utilities		0.40

Fixed overhead costs per month are Supervision $4,000, Depreciation $1,200, and Property Taxes $800. The company believes it will normally operate in a range of 7,000–10,000 direct labor hours per month.

Assume that in July 2020, Myers Company incurs the following manufacturing overhead costs.

Variable Costs				Fixed Costs
Indirect labor		$8,800		Supervision		$4,000
Indirect materials		5,800		Depreciation		1,200
Utilities		3,200		Property taxes		800

(a) Prepare a flexible budget performance report, assuming that the company worked 9,000 direct labor hours during the month. (List variable costs before fixed costs.)

(b) Prepare a flexible budget performance report, assuming that the company worked 8,500 direct labor hours during the month. (List variable costs before fixed costs.)

Problem 11-22 Special Order Decisions [LO11-4]

Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 44,000 Rets per year. Costs associated with this level of production and sales are given below:

	Unit				Total
Direct materials	$	20			$	880,000
Direct labor		10				440,000
Variable manufacturing overhead		3				132,000
Fixed manufacturing overhead		5				220,000
Variable selling expense		4				176,000
Fixed selling expense		6				264,000
Total cost	$	48			$	2,112,000

The Rets normally sell for $53 each. Fixed manufacturing overhead is $220,000 per year within the range of 36,000 through 44,000 Rets per year.

Required:

1. Assume that due to a recession, Polaski Company expects to sell only 36,000 Rets through regular channels next year. A large retail chain has offered to purchase 8,000 Rets if Polaski is willing to accept a 16% discount off the regular price. There would be no sales commissions on this order; thus, variable selling expenses would be slashed by 75%. However, Polaski Company would have to purchase a special machine to engrave the retail chain’s name on the 8,000 units. This machine would cost $16,000. Polaski Company has no assurance that the retail chain will purchase additional units in the future. What is the financial advantage (disadvantage) of accepting the special order? (Round your intermediate calculations to 2 decimal places.)

2. Refer to the original data. Assume again that Polaski Company expects to sell only 36,000 Rets through regular channels next year. The U.S. Army would like to make a one-time-only purchase of 8,000 Rets. The Army would pay a fixed fee of $1.40 per Ret, and it would reimburse Polaski Company for all costs of production (variable and fixed) associated with the units. Because the army would pick up the Rets with its own trucks, there would be no variable selling expenses associated with this order. What is the financial advantage (disadvantage) of accepting the U.S. Army's special order?

3. Assume the same situation as described in (2) above, except that the company expects to sell 44,000 Rets through regular channels next year. Thus, accepting the U.S. Army’s order would require giving up regular sales of 8,000 Rets. Given this new information, what is the financial advantage (disadvantage) of accepting the U.S. Army's special orde

Name and define three bank off-balance sheet items. Provide examples (one for each) of how each of these items can give rise to changes on the financial statements (statement of condition or statement of income)

For each item listed below, indicate whether you feel it relates to financial or managerial accounting. Explain your reasoning behind your answer for each item.

a. Projected net income for next quarter by division

b. Defective goods produced as a percentage of all goods produced

c. Income statement for the most current year, prepared in accordance with U.S. GAAP.

d. Monthly sales broken down by geographic region

e. Production department budget for the next quarter.

f. Balance sheet at the end of the current year, prepared in accordance with U.S. GAAP.

Please be sure to explain the reasoning.