Big Sky Sports sells hunting and fishing equipment and provides guided hunting and fishing trips. Big Sky Sports is owned and operated by Joe Flannery, a well-known sports enthusiast and hunter. Joe’s wife, Pam, owns and operates Glacier Boutique, a women’s clothing store. Joe and Pam have established a trust fund to finance their children’s college education. The trust fund is maintained by Kalispell State Bank in the name of the children, Trey and Brooke.

a. For each of the following transactions, identify which of the entities listed should record the transaction in its records:
Glacier Boutique
Kalispell State Bank
Big Sky Sports
None of the above

1. Pam deposited a $2,000 personal check in the trust fund at Kalispell State Bank.

2. Pam purchased two dozen spring dresses from a Spokane designer for a special spring sale.

3. Joe paid a breeder’s fee for an English Springer Spaniel to be used as a hunting guide dog.

4. Pam authorized the trust fund to purchase mutual fund shares.

5. Joe paid a local doctor for his annual physical, which was required by the workmen’s compensation insurance policy carried by Big Sky Sports.

6. Received a cash advance from customers for a guided hunting trip.

7. Pam paid her dues to the YWCA.

8. Pam donated several dresses from inventory for a local charity auction for the benefit of a women’s abuse shelter.

9. Joe paid for dinner and a movie to celebrate their thirtieth wedding anniversary.

10. Joe paid for an advertisement in a hunters’ magazine.

b. What is a business transaction?

Describe the differences between a flexible budget and a static budget. Use your own example to discuss how to compute and use Net Present Value (NPV), Internal Rate of Return (IRR), and payback period to evaluate a project in capital budgeting.

[For Indian companies]

I am planning to start my starup food delivery business in 2 weeks. Even though I have made a study on all these, I would like to get as much advice as possible.

What all registers should I keep so that I can keep track of all expenses and use that details for auditing purposes?

Bradley-Link’s December 31, 2018, balance sheet included the following items:

Note 8: Bonds (in part)
The 11.0% bonds were issued in 2005 at 97.0 to yield 10%. Interest is paid semiannually on June 30 and December 31. Each $1,000 bond is convertible into 50 shares of the Company’s no par common stock.

The 11.0% bonds were issued in 2009 at 105 to yield 10%. Interest is paid semiannually on June 30 and December 31. Each $1,000 bond was issued with 50 detachable stock warrants, each of which entitles the holder to purchase one share of the Company’s no par common stock for $25, beginning 2019.

On January 3, 2019, when Bradley-Link’s common stock had a market price of $32 per share, Bradley-Link called the convertible bonds to force conversion. 90% were converted; the remainder were acquired at the call price. When the common stock price reached an all-time high of $37 in December of 2019, 40% of the warrants were exercised.

Required:
1. Prepare the journal entries that were recorded when each of the two bond issues was originally sold in 2005 and 2009.
2. Prepare the journal entry to record (book value method) the conversion of 90% of the convertible bonds in January 2019 and the retirement of the remainder.
3. Assume Bradley-Link induced conversion by offering $150 cash for each bond converted. Prepare the journal entry to record (book value method) the conversion of 90% of the convertible bonds in January 2019.
4. Assume Bradley-Link induced conversion by modifying the conversion ratio to exchange 55 shares for each bond rather than the 50 shares provided in the contract. Prepare the journal entry to record (book value method) the conversion of 90% of the convertible bonds in January 2019.
5. Prepare the journal entry to record the exercise of the warrants in December 2019.

[For Indian companies]

Is the mail invoice enough as the invoice for a food delivery startup?

Is there a need of giving printed invoice for all customers?

Can we use that invoice for our auditing purposes?

Elaborate.

If the answer is a NO, elaborate the other options that can be chosen.

Pavone Corp. has prepared a preliminary cash budget for the third quarter as shown​ below:

​Subsequently, the marketing department revised its figures for cash collections. New data are as​ follows: $53,000 in​ July, $56,000 in​ August, and​ $43,000 in September. Based on the new​ data, calculate the new projected cash balance at the end of September.

A.

​$16,300

B.

​$19,500

C.

​$13,300

D.

​$12,000

Exercise 16-11 Indirect: Preparing statement of cash flows LO P1, P2, P3, A1

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

The following financial statements and additional information are reported.

Additional Information

1. A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash.
2. The only changes affecting retained earnings are net income and cash dividends paid.
3. New equipment is acquired for $59,600 cash.
4. Received cash for the sale of equipment that had cost $50,600, yielding a $2,200 gain.
5. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
6. All purchases and sales of inventory are on credit.

Exercise 16-11 Part 1

Required:

(1) Prepare a statement of cash flows for the year ended June 30, 2017, using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
(2) Compute the company's cash flow on total assets ratio for its fiscal year 2017.

PLEASE USE CHARTS I PROVIDED

On January 1, 20Y2, Hebron Company issued a $242,000, five-year, 11% installment note to Ventsam Bank. The note requires annual payments of $65,478, beginning on December 31, 20Y2.

Journalize the entries to record the following transactions. Refer to the Chart of Accounts for exact wording of account titles.

a. Journalize the entries to record the transactions for the year 20Y2. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

b. Journalize the entries to record the transactions for the year 20Y5. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 15

JOURNAL

ACCOUNTING EQUATION

On January 1, 2018, Ithaca Corp. purchases Cortland Inc. bonds that have a face value of $150,000. The Cortland bonds have a stated interest rate of 6%. Interest is paid semiannually on June 30 and December 31, and the bonds mature in 10 years. For bonds of similar risk and maturity, the market yield on particular dates is as follows (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. Calculate the price Ithaca would have paid for the Cortland bonds on January 1, 2018 (ignoring brokerage fees).
2. Prepare all appropriate journal entries related to the bond investment during 2018, assuming Ithaca accounts for the bonds as a held-to-maturity investment. Ithaca calculates interest revenue at the effective interest rate as of the date it purchased the bonds.
3. Prepare all appropriate journal entries related to the bond investment during 2018, assuming that Ithaca chose the fair value option when the bonds were purchased, and that Ithaca determines fair value of the bonds semiannually. Ithaca calculates interest revenue at the effective interest rate as of the date it purchased the bonds.

On January 4, 2018, Runyan Bakery paid $324 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lavery's operations. Runyan chose the fair value option to account for this investment. Runyan received dividends of $2.00 per share on December 15, 2018, and Lavery reported net income of $160 million for the year ended December 31, 2018. The market value of Lavery's common stock at December 31, 2018, was $31 per share. On the purchase date, the book value of Lavery's net assets was $800 million and:

The fair value of Lavery's depreciable assets, with an average remaining useful life of six years, exceeded their book value by $80 million.

The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill.

Required:
1-a. Prepare all appropriate journal entries related to the investment during 2018, assuming Runyan accounts for this investment under the fair value option, and accounts for the Lavery investment in a manner similar to what it would use for securities for which there is not significant influence.
1-b. Calculate the effect of these journal entries on 2018 net income, and the amount at which the investment is carried in the December 31, 2018, balance sheet.
2-a. Prepare all appropriate journal entries related to the investment during 2018, assuming Runyan accounts for this investment under the fair value option, but uses equity method accounting to account for Lavery’s income and dividends, and then records a fair value adjustment at the end of the year that allows it to comply with GAAP.
2-b. Calculate the effect of these journal entries on 2018 net income, and the amount at which the investment is carried in the December 31, 2018, balance sheet.

2. The vertical analysis indicates that the costs other than selling expenses (cost of goods sold and administrative expenses)   as a percentage of sales. As a result, net income as a percentage of sales  . The sales promotion campaign appears to have been  . While selling expenses as a percent of sales   slightly, the   cost was more than made up for by   sales.

Marigold Corp. uses flexible budgets. At normal capacity of 7000 units, budgeted manufacturing overhead is: $21000 variable and $270000 fixed. If Marigold Corp. had actual overhead costs of $295200 for 9000 units produced, what is the difference between actual and budgeted costs?

MB’s School of Beauty calls you because their beginning balance is off in their reconciliation window for their checking account. You log in and see that there are many transactions that were changed/deleted on the last couple of months' reconciliations. She likes to do as much she can on her own. Which of the following next steps would you take?

A. Enter a journal entry to Opening Balance Equity to compensate for the difference

B. Advise her to use the Undo button to undo the reconciliation and re-reconcile the account

C. Undo the previous months' reconciliations for her so that she can re-reconcile each month

D. Advise her to complete the reconciliation as normal, then use the auto-adjustment feature to balance the reconciliation

E. Re-enter the changed/deleted transactions and manually reconcile them in the register, then advise her to complete the current month’s reconciliation as usual

Lubricants, Inc., produces a special kind of grease that is widely used by race car drivers. The grease is produced in two processing departments—Refining and Blending. Raw materials are introduced at various points in the Refining Department.

The following incomplete Work in Process account is available for the Refining Department for March:

The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $7,500; direct labor, $3,600; and overhead, $21,800.

Costs incurred during March in the Blending Department were: materials used, $45,000; direct labor, $16,300; and overhead cost applied to production, $117,000.

Required:

1. Prepare journal entries to record the costs incurred in both the Refining Department and Blending Department during March. Key your entries to the items (a) through (g) below.

Raw materials used in production.

Direct labor costs incurred.

Manufacturing overhead costs incurred for the entire factory, $686,000. (Credit Accounts Payable.)

Manufacturing overhead was applied to production using a predetermined overhead rate.

Units that were complete with respect to processing in the Refining Department were transferred to the Blending Department, $682,000.

Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $750,000.

Completed units were sold on account, $1,460,000. The Cost of Goods Sold was $650,000.

2. Post the journal entries from (1) above to T-accounts. The following account balances existed at the beginning of March. (The beginning balance in the Refining Department’s Work in Process is given in the T-account shown above.)

Weston Products manufactures an industrial cleaning compound that goes through three processing departments—Grinding, Mixing, and Cooking. All raw materials are introduced at the start of work in the Grinding Department. The Work in Process T-account for the Grinding Department for May is given below:

The May 1 work in process inventory consisted of 44,000 pounds with $64,680 in materials cost and $23,320 in conversion cost. The May 1 work in process inventory was 100% complete with respect to materials and 30% complete with respect to conversion. During May, 355,000 pounds were started into production. The May 31 inventory consisted of 123,000 pounds that were 100% complete with respect to materials and 60% complete with respect to conversion. The company uses the weighted-average method in its process costing system.

Required:

1. Compute the Grinding Department's equivalent units of production for materials and conversion in May.

2. Compute the Grinding Department's costs per equivalent unit for materials and conversion for May.

3. Compute the Grinding Department's cost of ending work in process inventory for materials, conversion, and in total for May.

4. Compute the Grinding Department's cost of units transferred out to the Mixing Department for materials, conversion, and in total for May.