On Jan 1, 2018, Rising Star purchased a crane for $ 1,200,000 and paid $200,000 as a downpyament while the balance will be paid over the next five years in installments of $100,000 every six months , starting July 1, 2018. The market rate on Jan 1, 2018 was 9%.
Requirements:
a. For the how much the company should recognize the
crane on Jan 1, 2018? Show your calculation along with your
accounting entry to recognize the purchase of the crane.
b. On Jan 1, 2020, the company will pay installment
payment of $100,000. How much of this payment represents a payment
of the principal and how much of it represents a payment of the
interest? Show your calculation (fill in the following table Jan 1
2018 – Jan 2020).
Date |
Cash Paid |
Interest Exp. |
P Payment |
Carrying Value |
1-Jan-18 |
$ - |
$ - |
$ - |
$ …………. |
1-Jul-18 |
||||
1-Jan-19 |
||||
1-Jul-19 |
||||
1-Jan-20 |
c. What is the total interest expense for the year
ended on Dec 31, 2018?
d. What will be the carrying value of the notes on Dec
31, 2019?
In: Accounting
Problem 2-2A Julia Dumars is a licensed CPA. During the first month of operations of her business, Julia Dumars, Inc., the following events and transactions occurred. May 1 Stockholders invested $22,700 cash in exchange for common stock. 2 Hired a secretary-receptionist at a salary of $1,200 per month. 3 Purchased $2,560 of supplies on account from Vincent Supply Company. 7 Paid office rent of $760 cash for the month. 11 Completed a tax assignment and billed client $2,400 for services performed. 12 Received $3,120 advance on a management consulting engagement. 17 Received cash of $1,310 for services performed for Orville Co. 31 Paid secretary-receptionist $1,200 salary for the month. 31 Paid 48% of balance due Vincent Supply Company. Julia uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126 Supplies, No. 201 Accounts Payable, No. 209 Unearned Service Revenue, No. 311 Common Stock, No. 400 Service Revenue, No. 726 Salaries and Wages Expense, and No. 729 Rent Expense.
1. Journalize the transactions. 2. Post to the ledger accounts. 3. Prepare a trial balance on May 31, 2015. JULIA DUMARS, INC. Trial Balance May 31, 2015
In: Accounting
Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $23.70 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below:
Activity Cost Pool | Activity Measure | Activity for the Year | |
Cleaning carpets | Square feet cleaned (00s) | 14,500 | hundred square feet |
Travel to jobs | Miles driven | 138,000 | miles |
Job support | Number of jobs | 1,800 | jobs |
Other (organization-sustaining costs and idle capacity costs) | None | Not applicable | |
The total cost of operating the company for the year is $353,000 which includes the following costs:
Wages | $ | 139,000 |
Cleaning supplies | 26,000 | |
Cleaning equipment depreciation | 14,000 | |
Vehicle expenses | 29,000 | |
Office expenses | 68,000 | |
President’s compensation | 77,000 | |
Total cost | $ | 353,000 |
Resource consumption is distributed across the activities as follows:
Distribution of Resource Consumption Across Activities | ||||||||||
Cleaning Carpets | Travel to Jobs | Job Support | Other | Total | ||||||
Wages | 77 | % | 12 | % | 0 | % | 11 | % | 100 | % |
Cleaning supplies | 100 | % | 0 | % | 0 | % | 0 | % | 100 | % |
Cleaning equipment depreciation | 66 | % | 0 | % | 0 | % | 34 | % | 100 | % |
Vehicle expenses | 0 | % | 76 | % | 0 | % | 24 | % | 100 | % |
Office expenses | 0 | % | 0 | % | 56 | % | 44 | % | 100 | % |
President’s compensation | 0 | % | 0 | % | 30 | % | 70 | % | 100 | % |
Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on.
Required:
1. Prepare the first-stage allocation of costs to the activity cost pools.
2. Compute the activity rates for the activity cost pools.
3. The company recently completed a 200 square foot carpet-cleaning job at the Flying N Ranch—a 59-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system.
4. The revenue from the Flying N Ranch was $47.40 (200 square feet @ $23.70 per hundred square feet). Calculate the customer margin earned on this job.
In: Accounting
Question 1
The following are independent situations. Required For each of the two independent situations, identify two control weaknesses, and explain the implications of these weaknesses for the company’s accounting records. (4 marks for each situation). Prepare your answer in the following format:
Internal Control Weakness |
Implication for Company’s Accounting Records |
(Example only — no marks) The store does not use serially pre-numbered sales invoices. |
Sales invoices could be lost or omitted and sales would be understated. |
(Example only — no marks) Employees are not bonded. |
No implication for company’s records (implication for risk of loss) |
Situation 1
A finance company derives a large part of its business from financing retail purchases of furniture and electronic items, with terms generally over 2 or 3 years. Each day, there is a large volume of mail to process, which contains cheques, money orders, and customer correspondence. An account associate opens the mail, sorts the contents into payments or correspondence, and then prepares a payment listing. The account associate takes the cheques to the bank for deposit, but the payment listing is given to a separate person to enter into the computer. The manager spot-checks the total deposited in the bank to the payment listing to ensure that all funds are deposited. All cheques for purchases over $15,000 must be approved by 2 supervisory personnel. Given the small size of the office, this includes only the manager, the assistant manager, and the accountant. This restricts the number of signees who may be on vacation at any one time and creates a problem when one or, especially, two of these people are away from the office on business trips. The staff eventually came up with a win-win solution, based on the petty cash concept. The office manager keeps a cash box locked in her desk, containing three blank cheques, each one signed by one (but only one) of the three designated signees. When a cheque is needed and there aren’t two people with signing authority there to sign it, the office manager or her assistant has the available signee approve the amount and payee, and then sign the cheque to complete the control procedure.
Situation 2
Occasionally, the plant manager for a paper products manufacturer makes a deal with a supplier, presumably to get a good discount, and instructs the accounting staff to prepare a cheque in a hurry without the normal purchase order documentation that is supposed to be attached to the cheque stub. This allows the plant to have a just-in-time system for purchasing when a bargain is available from a supplier. Unfortunately, this also means that the regular purchase order may not be prepared and sent to the shipper/receiver in time for the goods, so the accounting department has to manually prepare a receiver’s memo with the information that is normally on a regular purchase order (e.g., description of goods, supplier’s name, quantity purchased) to let the shipper/receiver know that goods will be arriving for which the regular documentation may not be ready in time.
In: Accounting
Part 1
Prior to closing, Syracuse Company's accounting records showed the following balances:
Retained earnings$16,800 Service revenue 21,750 Interest revenue 1,800 Salaries expense 12,300 Operating expense 3,450 Interest expense 900 Dividends 2,700
After closing, Syracuse's retained earnings balance would be?
Part 2
Revenue on account amounted to $9,000. Cash collections of accounts receivable amounted to $8,100. Cash paid for expenses was $7,500. The amount of employee salaries accrued at the end of the year was $900. Cash flow from operating activities was
A)900
B)600
C)1500
D)8700
Part 3
The purpose of the accrual basis of accounting is to:
Match assets and liabilities in the proper period.
Report expenses when cash disbursements are made.
Report revenue when received.
Match revenues and expenses in the proper period.
Part 4
Earning revenue on account would be classified as a/an?
claims exchange transaction.
asset use transaction.
asset source transaction.
asset exchange transaction.
Part 5
Which of the following describes the effects of a claims exchange transaction on a company's financial statements?
Assets | = | Liab. | + | Equity | Rev. | - | Exp. | = | Net Inc. | Cash Flow | |
A. | NA | = | NA | + | NA | NA | - | NA | = | NA | +OA |
B. | + | = | + | + | NA | NA | - | NA | = | NA | +OA |
C. | NA | = | + | + | - | NA | - | + | = | - | NA |
D. | All of these could represent the effects of a claims exchange transaction. |
A) option A
B)option B
C) option C
D)option D
In: Accounting
CHAPTER 8: FINANCIAL PLANNING & BUDGETING |
|||||
Homework 3.4, Chapter8 |
|||||
Chelsea Clinic projected the following budget information for 2021: |
|||||
Total FFS Visits Volume |
70,000 |
visits |
|||
Payer Mix: |
|||||
Blue Cross |
60% |
||||
Highmark |
40% |
||||
Reimbursement Rates: |
|||||
Blue Cross |
$45 |
per visit |
|||
Highmark |
$50 |
per visit |
|||
Variable Costs |
|||||
Resource Inputs: |
|||||
Labor |
0.7 |
total hours |
|||
Supplies |
1.3 |
total units |
|||
Resource Input Prices: |
|||||
Labor |
$22.00 |
per hour |
|||
Supplies |
$1.25 |
per unit |
|||
Fixed Costs |
$800,000 |
||||
Using Exhibit 8.3 as a guide (excluding the capitated numbers since payers in this homework problem are all FFS) construct Chelsea Clinic's operating budget for 2021, including projections for volume, revenues, costs, and a P&L statement |
|||||
In: Accounting
As of December 31, 2016, the accounts of the Middletown Youth Center contained the following balances:
Accounts payable | $13,520 |
Cash | 126,500 |
Furniture and equipment, net of accumulated depreciation of $160,000 | 50,000 |
Inventory | 2,800 |
Investments | 178,000 |
Permanently restricted net assets | 100,000 |
Temporarily restricted net assets | 76,600 |
Unrestricted net assets | 167,180 |
During 2017, the following activities took place:
Total 362,440
Instructions
Use the Excel template for Question 41 that you downloaded from this module to prepare a statement of activities for the year ended December 31, 2017. In addition, discuss how the new accounting standards (ASC 958) could impact this statement.
Formatting Example | |||||
City of Mayberry | |||||
Statement of Activities | |||||
For the Year Ended December 31, 2017 | |||||
Unrestricted | Temporarily Restricted | Permanently Restricted | Total | ||
Revenues | |||||
Contributions | $ 485,000.00 | $ 51,611.00 | $ 536,611.00 | ||
Investment Income | $ 9,522.00 | $ 9,522.00 | |||
Total Revenues | $ 494,522.00 | $ 51,611.00 | $ 546,133.00 | ||
In: Accounting
Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2018. Power Drive has the following transactions affecting stockholders’ equity in 2018.
March 1 Issues 46,000 additional shares of $1 par value common
stock for $43 per share.
May 10 Purchases 4,100 shares of treasury stock for $46 per share.
June 1 Declares a cash dividend of $1.05 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.)
July 1 Pays the cash dividend declared on June 1.
October 21 Reissues 2,050 shares of treasury stock purchased on May 10 for $51 per share.
Power Drive Corporation has the following beginning balances in its
stockholders’ equity accounts on January 1, 2018: Common Stock,
$100,000; Additional Paid-in Capital, $3,600,000; and Retained
Earnings, $1,100,000. Net income for the year ended December 31,
2018, is $510,000.
Prepare the stockholders’ equity section of the balance sheet for Power Drive Corporation as of December 31, 2018 and answer the following questions.
a) Determine the amount of common stock to be reported on the December 31 balance sheet.
b) Determine the amount of additional paid-in capital to be reported on the December 31 balance sheet.
c) Determine the amount of total paid-in capital to be reported on the December 31 balance sheet.
d) Determine the amount of total stockholders’ equity to be reported on the December 31 balance sheet.
In: Accounting
CASE QUESTIONS
1.Why does a country like Venezuela impose capital controls?
2.In the case of Venezuela, what is the difference between the gray
market and the black market?
3.Create a financial analysis of Santiago’s choices. Use it to
recommend a solution to his problem.
In: Accounting
We also had income from some investments. We received interest and dividends from a few places. Can you tell me if those are reported on a 1099 form? If so, I may have to request this from my bank. We own our home and paid the typical homeowner’s expenses. What expenses will you need from us relating to our home? Are there any other questions you have for us, such as other deductions we can take?
Just curious: this tax "stuff" is so much information to remember. How do you ever stay on top of all of these tax rules? Please let us know what other information you will need from us and what documents you will need us to send over to you. Thank you in advance
Identify what additional documents the clients need to provide in order for you to do their taxes.
Identify applicable deductions and credits available for the clients.
Differentiate types of income and expenditures.
Explain how you utilized the IRS website for staying current in the identification and application of appropriate tax codes and laws.
In: Accounting
Prepare a statement of functional expenses for the following entity using the following information.
Charlie Counseling Center was incorporated as a not for profit entity 10 years ago. It’s adjusted trial balance as of June 30, 2018 is:
Charlie Counseling Center |
||
Adjusted (Pre-Closing) Trial Balance |
||
as of June 30, 2018 |
||
Debit |
Credit |
|
Cash and cash equivalents |
126,500 |
|
Pledges receivable |
41,000 |
|
Estimated uncollectible pledges |
4,100 |
|
Inventory - supplies |
2,800 |
|
Long-term investments, at fair value |
178,000 |
|
Capital assets, net of accumulated depreciation |
90,000 |
|
Accounts payable |
20,520 |
|
Unrestricted net assets |
196,500 |
|
Donor restricted net assets |
190,500 |
|
Contributions - unrestricted |
348,820 |
|
Contributions - restricted |
38,100 |
|
Investment Income - Unrestricted |
9,200 |
|
Net assets released from restrictions - Donor Restricted |
22,000 |
|
Net assets released from restrictions - Unrestricted |
22,000 |
|
Salaries and Fringe Benefits Expense |
288,410 |
|
Occupancy and Utility Expense |
38,400 |
|
Supplies Expense |
6,940 |
|
Printing and Publishing Expense |
4,190 |
|
Telephone and Postage Expense |
3,500 |
|
Unrealized Gain on Investments |
2,000 |
|
Depreciation Expense |
30,000 |
|
Totals |
831,740 |
831,740 |
Salaries and fringe benefits were allocated to program services and supporting services in the following percentages:
Counseling services 40
Professional training 20
Community Service 10
Management and General 20
Fund Raising 10.
Occupancy and utility, supplies, printing and publishing, and telephone and postage expenses were allocated to the programs in the same manner as salaries and fringe benefits. Depreciation expense was equally split among all five functional expense categories.
Prepare a statement of functional expenses from the information provided. Tell me if the program expense ratio is good relative to Charity Navigator's recommended 80% threshold.
In: Accounting
- Flamingo Company borrows $30,000 using a five-year, long-term installment note payable. The rate on the note is 5 percent and Flamingo agrees to make monthly payments of $566.14. When Flamingo records its first payment on the note payable, what will the journal entry look like (without the numbers).
Debit Cash
Debit Interest Expense
Credit Notes Payable
Debit Interest Expense
Credit Notes Payable
Credit Cash
Debit Notes Payable
Credit Cash
Credit Interest Payable
Debit Interest Expense
Debit Notes Payable
Credit Cash
- Relish Company incurs the following costs associated with the purchase of a new machine:
Purchase Price $20,000
Sales Tax 1,500
Manufacturer testing to ensure proper functioning 500
Shipping costs for the machine paid by Relish Company 200
What is the total cost Relish will capitalize when recording the asset?
1. $20,500
2. $22,200
3. $20,000
4. $22,000
- On January 1, 2017, Jenks Company purchased the copyright to Jackson Computer tutorials for $216,000. It is estimated that the copyright will have a useful life of 5 years and no salvage value. Assuming Jenks has a year-end of December 31, the amount of Amortization Expense recognized for year 2017 should be:
$20,000
$21,600
$43,200
$40,000
- On November 6, 2019, Julio paid $650 cash for his airplane ticket home for Christmas break. He leaves Bozeman on December 16, 2019. How would the airline record the transaction where they receive cash from Julio?
Debit Cash 650
Credit Deferred Ticket Revenue 650
Debit Deferred Ticket Revenue 650
Credit Cash 650
Debit Ticket Revenue 650
Credit Deferred Ticket Revenue 650
Debit Cash 650
Credit Ticket Revenue 650
- Which of the following expenditures should be expensed (debited to an expense account)?
The replacement of an engine on an airplane.
An oil change for a delivery vehicle.
The addition of a garage to a home.
A refrigeration system added to a tractor-trailer.
- Goodwill is:
The value of a business as a whole, over and above the value of its net identifiable assets.
Recorded when created internally through advertising expenses.
Only recorded by the seller of a business.
Amortized over the greater of its estimated life or forty years.
In: Accounting
She Shed. Corp has these business events occurred during the past two years, affecting intangible assets.
1. Purchased a concession license for $20,000 on July 1, 2017. The license gives She Shed exclusive rights to sell its sheds in the tri-state region and will expire on July 1, 2025.
2. Purchased a patent on January 2, 2018, for $40,000 with an estimated five-year useful life.
3. Costs incurred to develop an exclusive Internet connection process as of June 1, 2018, were $45,000. The process has an indefinite life.
4. On April 1, 2018, She Shed purchased a small circuit board manufacturer for $350,000. Goodwill recorded in the transaction was $90,000.
5. On July 1, 2018, legal fees for successful defense of the patent purchased on January 2, 2018, were $11,400.This did not extend the original life of the patent.
6. Research and development costs for employee wages were $75,000 as of December 1, 2018.
7. Due to pending lawsuits, the patent’s useful life declines to three years.
8. At December 31, 2018, an impairment test on the license purchased in 2017 reveals (a) the estimated net cash flows from the license will be $13,000, and (b) the fair value of the license is $7,000.
9. The small circuit board manufacturer is expecting free cash flows in excess of $500,000 over the next three years
(a) Prepare the journal entries to record all these events.
(b) Show the proper presentation of intangible assets on the balance sheet at December 31, 2017 and December 31, 2018.
In: Accounting
What some Opportunities and Threats in the financial industry?
In: Accounting
For a process shown below, what is the Activity Efficiency (AE) for unprimed flow?
Operation A | Operation B | Operation C | Operation D | |
C/T mins | 2 | 4 | 8 | 6 |
Shift time mins | 480 |
78.5%
73.3%
60.9%
69.7%
In: Accounting