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Rembrandt Paint Company had the following income statement items for the year ended December 31, 2016 ($ in 000s): |
| Net sales | $ | 20,000 | Cost of goods sold | $ | 11,500 |
| Interest income | 220 | Selling and administrative expenses | 2,700 | ||
| Interest expense | 390 | Restructuring costs | 1,000 | ||
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In addition, during the year the company completed the disposal of its plastics business and incurred a loss from operations of $1.8 million and a gain on disposal of the component’s assets of $2.4 million. 600,000 shares of common stock were outstanding throughout 2016. Income tax expense has not yet been recorded. The income tax rate is 40% on all items of income (loss). |
| Required: |
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Prepare a multiple-step income statement for 2016, including EPS disclosures. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands except earnings per share. Round EPS answers to 2 decimal places.) |
In: Accounting
Sweet Dates Company offers a premium to its customers—a glass bowl (cost to Sweet Dates is $0.90) upon return of 40 coupons. Two coupons are placed in each box of dates sold. The company estimates, on the basis of past experience, that only 70% of the coupons will ever be redeemed. During 2016, 10 million boxes of dates are sold, for cash, at $0.30 each. Eight million coupons are redeemed during 2016. Sweet Dates purchased 360,000 glass bowls for the plan on January 1, 2016.
| 1. | Prepare the journal entries related to the sale of dates and the premium plan in 2016. |
| 2. | Show how the preceding items would be reported on the December 31, 2016, balance sheet. |
q2
On January 1, 2017, Fro-Yo Inc. began offering customers a cash rebate of $5.00 if the customer mails in 10 proof-of-purchase labels from its frozen yogurt containers. Based on historical experience, the company estimates that 20% of the labels will be redeemed. During 2017, the company sold 5,000,000 frozen yogurt containers at $1, cash, per container. From these sales, 800,000 labels were redeemed in 2017, 150,000 labels were redeemed in 2018, and the remaining labels were never redeemed.
| 1. | Prepare the journal entries related to the sale of frozen yogurt and the cash rebate offer for 2017 and 2018. |
| 2. | Next Level Assume that 300,000 labels were redeemed in 2018. Prepare the journal entries related to the cash rebate offer for 2018. |
In: Accounting
Parker, age 48, has a traditional Ira with a balance of $50,000. The $50,000 balance consists of $30,000 of contributions and earning of $20,000. This year Parker's marginal tax rate is 24%. Parker is convinced that his marginal tax rate will increase in the future. Parker decides to cash out his IRA and received $50,000 this year. He contributes $40,000 of these $50,000 to a Roth IRA. How much income tax and penalty must Parker pay this year?
-Income tax __
-Penalty __
In: Accounting
A mid-sized chain restaurant is considering growing their business and opening additional restaurants in new markets. One of the key factors in making this decision will be the level of interest rates over the next few years. It is estimated that there is a 30% chance that interest rates will go down by 2 percentage points, a 60% chance that they will stay the same, and a 10% chance that they will go up by 2 percentage points. The expansion options that they are considering and possible payoffs are shown in the table below.
Which alternative is best, based on expected value?
| Rates down | Rates | Rates up | |
| 2 percent | unchanged | 2 percent | |
| Open 20 restaurants | ‑$200,000 | $90,000.00 | $150,000 |
| Open 10 restaurants | ‑$115,000 | $40,000.00 | $80,000.00 |
| Do nothing | -$70,000.00 | $0.00 | $5,000.00 |
In: Accounting
The Zef Radiator Company uses a normal-costing system with a single manufacturing overhead cost pool and machine-hours as the cost-allocation base. The following data are for 2017:
| Budgeted Manufacturing Overhead Costs | $ 4,875,000 |
| Overhead Allocation Base | machine-hours |
| Budgeted machine-hours | 75,000 |
| Manufacturing Overhead Costs Incurred | $ 5,125,000 |
| Actual machine-hours | 80,000 |
Machine-hours data and the ending balances (before proration of under- or overallocated overhead) are as follows:
| Actual Machine-Hours | 2017 End-of-Year Balance | |
| Cost of Goods Sold | 60,000 | $ 8,500,000 |
| Finished Goods Control | 12,000 | 1,000,000 |
| Work-in-Process Control | 8,000 | 500,000 |
Question:
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1. |
Compute the budgeted manufacturing overhead rate for 2017. | |
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2. |
Compute the under- or overallocated manufacturing
overhead of Zef Radiator in 2017. Dispose of this amount using the following: |
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a. |
Write-off to Cost of Goods Sold |
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b. |
Proration based on ending balances (before proration) in Work-in-Process Control, Finished Goods Control, and Cost of Goods Sold |
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c. |
Proration based on the overhead allocated in 2017 (before proration) in the ending balances of Work-in-Process Control, Finished Goods Control, and Cost of Goods Sold | |
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3. |
Which method do you prefer in requirement 2? Explain. |
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In: Accounting
Lamp Light Company maintains and repairs warning lights, such as those found on radio towers and lighthouses. Lamp Light Company prepared the following end-of-period spreadsheet at December 31, 2018, the end of the fiscal year:
| Lamp Light Company | ||||||
| End-of-Period Spreadsheet | ||||||
| For the Year Ended December 31, 2018 | ||||||
| Unadjusted Trial Balance | Adjustments | Adjusted Trial Balance | ||||
| Account Title | Dr. | Cr. | Dr. | Cr. | Dr. | Cr. |
| Cash | 10,800.00 | 10,800.00 | ||||
| Accounts Receivable | 38,900.00 | (a) 11,300.00 | 50,200.00 | |||
| Prepaid Insurance | 4,200.00 | (b) 3,000.00 | 1,200.00 | |||
| Supplies | 2,730.00 | (c) 2,250.00 | 480.00 | |||
| Land | 98,000.00 | 98,000.00 | ||||
| Building | 400,000.00 | 400,000.00 | ||||
| Accumulated Depreciation-Building | 205,300.00 | (d) 10,100.00 | 215,400.00 | |||
| Equipment | 101,000.00 | 101,000.00 | ||||
| Accumulated Depreciation-Equipment | 85,100.00 | (e) 6,680.00 | 91,780.00 | |||
| Accounts Payable | 15,700.00 | 15,700.00 | ||||
| Salaries and Wages Payable | (f) 4,900.00 | 4,900.00 | ||||
| Unearned Rent | 2,100.00 | (g) 1,300.00 | 800.00 | |||
| Common Stock | 75,000.00 | 75,000.00 | ||||
| Retained Earnings | 128,100.00 | 128,100.00 | ||||
| Dividends | 10,000.00 | 10,000.00 | ||||
| Fees Earned | 363,700.00 | (a) 11,300.00 | 375,000.00 | |||
| Rent Revenue | (g) 1,300.00 | 1,300.00 | ||||
| Salaries and Wages Expense | 163,100.00 | (f) 4,900.00 | 168,000.00 | |||
| Advertising Expense | 21,700.00 | 21,700.00 | ||||
| Utilities Expense | 11,400.00 | 11,400.00 | ||||
| Depreciation Expense-Building | (d) 10,100.00 | 10,100.00 | ||||
| Repairs Expense | 8,850.00 | 8,850.00 | ||||
| Depreciation Expense-Equipment | (e) 6,680.00 | 6,680.00 | ||||
| Insurance Expense | (b) 3,000.00 | 3,000.00 | ||||
| Supplies Expense | (c) 2,250.00 | 2,250.00 | ||||
| Miscellaneous Expense | 4,320.00 | 4,320.00 | ||||
| 875,000.00 | 875,000.00 | 39,530.00 | 39,530.00 | 907,980.00 | 907,980.00 | |
Required:
| 1. | Prepare an income statement for the year ended December 31, 2018. If a net loss has been incurred, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Use the list of Labels and Amount Descriptions for the correct wording of text items other than account names. You will not need to enter colons (:) on the income statement. |
| 2. | Prepare a retained earnings statement for the year ended December 31, 2018. If a net loss is incurred or dividends were paid, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Refer to the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Refer to the Chart of Accounts for exact wording of account titles. |
| 3. | Prepare a balance sheet as of December 31, 2018. Fixed assets must be entered in order according to account number. Be sure to complete the statement heading. Refer to the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Refer to the Chart of Accounts for exact wording of account titles. For those boxes in which you must enter subtracted or negative numbers use a minus sign. |
| 4. | Based upon the end-of-period spreadsheet, journalize the closing entries. Refer to the Chart of Accounts for exact wording of account titles. |
| 5. | Prepare a post-closing trial balance. |
In: Accounting
On February 1, 2018, Cromley Motor Products issued 6% bonds,
dated February 1, with a face amount of $55 million. The bonds
mature on January 31, 2022 (4 years). The market yield for bonds of
similar risk and maturity was 8%. Interest is paid semiannually on
July 31 and January 31. Barnwell Industries acquired $55,000 of the
bonds as a long-term investment. The fiscal years of both firms end
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 issued on February 1,
2018.
2-a. Prepare amortization schedules that indicate
Cromley’s effective interest expense for each interest period
during the term to maturity.
2-b. Prepare amortization schedules that indicate
Barnwell’s effective interest revenue for each interest period
during the term to maturity.
3. Prepare the journal entries to record the
issuance of the bonds by Cromley and Barnwell’s investment on
February 1, 2018.
4. Prepare the journal entries by both firms to
record all subsequent events related to the bonds through January
31, 2020.
In: Accounting
Bartolo Delivery has two divisions, air express and ground service, that share the common costs of the company’s communications network, which are $8,000,000 a year. You have the following information about the two divisions and the common communications network:
| Calls (thousands) | Time on Network (hours) | |||||
| Air express | 490,000 | 350,000 | ||||
| Ground service | 210,000 | 1,050,000 | ||||
Required:
a. What is the communications network cost that is charged to each division if the number of calls is used as the allocation basis?
b. What is the communications network cost to each division using time on network as the allocation basis?
In: Accounting
Based on the movie The Accountant, perform an internet search for what they did with Artificial Intelligence.
Required:
Answer the following questions:
In: Accounting
Q3. Explain the importance of observing physical inventory during an audit.
In: Accounting
Calculates the tax benefits of switching the business to a s corporation for each of the stakeholders involved and the business entity
For a s corporation lets say the company Is worth $100 million dollars and $17.5 million in revenue.
Bob owns 50% of the company
Mark owns 20% of the company
Tony owns 25% but his selling his portion of the company
Steve owns 5 %
tax benefits of switching the business to a s corporation?
In: Accounting
Using Activity based costing, why are indirect costs allocated while direct costs are not allocated?
In: Accounting
What is a favorable variance and what is an unfavorable variance? How do you calculate them? Is a favorable variance always a bad thing and is an unfavorable variance always a good thing? Why or why not?
In: Accounting
Fogerty Company makes two products—titanium Hubs and Sprockets. Data regarding the two products follow:
| Direct Labor-Hours per Unit |
Annual Production |
||
| Hubs | 0.80 | 22,000 | units |
| Sprockets | 0.40 | 57,000 | units |
Additional information about the company follows:
Hubs require $35 in direct materials per unit, and Sprockets require $12.
The direct labor wage rate is $15 per hour.
Hubs require special equipment and are more complex to manufacture than Sprockets.
The ABC system has the following activity cost pools:
| Estimated | Activity | ||||
| Activity Cost Pool (Activity Measure) | Overhead Cost | Hubs | Sprockets | Total | |
| Machine setups (number of setups) | $ | 21,600 | 120 | 96 | 216 |
| Special processing (machine-hours) | $ | 253,000 | 4,600 | 0 | 4,600 |
| General factory (organization-sustaining) | $ | 222,800 | NA | NA | NA |
Required:
1. Compute the activity rate for each activity cost pool.
2. Determine the unit product cost of each product according to the ABC system.
he activity rate for each activity cost pool.
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In: Accounting
Gabe and Dana are married and file jointly. For 2019, Gabe earned $150,000 and Dana earned $20,000 working part time as a party planner. They have two young children, a 4-year old son, Mike, and a 6-year old daughter, Chrissy. In order to work, they paid the following for day care to have their children watched and cared for:
|
Best Beginning Day Care |
$4,000 |
|
Bay Child Care & Housekeeping |
2,000 |
|
Mrs. Goetz (Dana's mother) |
1,000 |
How much was their child and dependent care tax credit for 2019?
In: Accounting