1. Describe the factors that determine whether expenditure relating to property, plant and equipment already in use should be capitalized.

2. Describe how to account for the gain or loss on the sale of property, plant and equipment.

Problem 11-16 Multiple Products, Materials, and Processes [LO11-1, LO11-2] Monte Rosa Corporation produces two products, Alpha8s and Zeta9s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materials, X342 and Y561. The company uses a standard cost system, with the following standards for each product (on a per unit basis):

	Raw Material			Standard Labor Time
Product	X342	Y561		Sintering	Finishing
Alpha8	1.8 kilos	2.0 liters		0.20 hours	0.80 hours
Zeta9	3.0 kilos	4.5 liters		0.35 hours	0.90 hours

Information relating to materials purchased and materials used in production during May follows: Material Purchases Purchase Cost Standard Price Used in Production     X342 14,000 kilos $51,800 $3.50 per kilo 8,500 kilos     Y561 15,000 liters $19,500 $1.40 per liter 13,000 liters

The following additional information is available:
a.	The company recognizes price variances when materials are purchased.
b.	The standard labor rate is $20.00 per hour in Sintering and $19.00 per hour in Finishing.
c.	During May, 1,200 direct labor-hours were worked in Sintering at a total labor cost of $27,000, and 2,850 direct labor-hours were worked in Finishing at a total labor cost of $59,850.
d.	Production during May was 1,500 Alpha8s and 2,000 Zeta9s.

    

Required:
1.	Complete the standard cost card for each product, showing the standard cost of direct materials and direct labor. (Round your answers to 2 decimal places.)

  

Standard Quantity or Hours Standard Price or Rate Standard Cost Alpha8: Direct materials-X342 1.80 kilos $3.50 per kilo $6.30 Direct materials-Y561 2.00 liters $1.40 per liter 2.80 Direct labor-Sintering 0.20 hours $20.00 per hour 4.00 Direct labor-Finishing 0.80 hours $19.00 per hour 15.20 Total $28.30 Zeta9: Direct materials-X342 3.00 kilos $3.50 per kilo $10.50 Direct materials-Y561 4.50 liters $1.40 per liter 6.30 Direct labor-Sintering 0.35 hours $20.00 per hour 7.00 Direct labor-Finishing 0.90 hours $19.00 per hour 17.10 Total $40.90

2.	Compute the materials quantity and price variances for each material. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Round your answers to 2 decimal places.)

	Direct Materials Variances—Material X342: Standard Rate − Actual Rate × Actual Quantity = Variance Materials price variance 0 − × = Variance Materials quantity variance Direct Materials Variances—Material Y561: − × = Variance Materials price variance − × = Variance Materials quantity variance

3.	Compute the direct labor efficiency and rate variances for each operation. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Round your answers to 2 decimal places.)

	Direct Labor Variances—Sintering:    −    ×    = Variance Labor rate variance − × = Variance Labor efficiency variance Direct Labor Variances—Finishing: − × = Variance Labor rate variance − × = Variance Labor efficiency variance

Bass hunt is a local outdoor store that competes with other outdoor stores.

They are proposing two marketing plans follow (consider them independent of each other)

Plan 1: They sell a deer tree stand. they take a standard tree and modify it to make it work.

- They sold 80 stands during 2018 for $400 each

- the stands are warrantied for 3 years (manufacture defects)

- the company's purchase cost per stand is $250 and they spent another $3,000 modifying the 80 stands.

- in addition to the sale of the stand, they sold extended warranties for 20 stands that added 2 years to the period.

- the extended warranty was sold for $250 each

- the company estimates that they will incur $2,600 of total cost servicing the 3 year standard warranty for the 80 stands sold during 2018.

Plan 2: they have a customer royalty program that "rewards" customer with one point for every $10 purchase.

- each point is redeemable for $1.00 off any purchase from the store in the next two years.

- during 2018, customers bought $100,000 of products and earned 10,000 points.

- the standalone selling price of the products was $100,000

- based on previous data, they expect 9,400 of the points to be redeemed from the 10,000

Required:

A- prepare journal entries for the 2018 sale of tree stands and warranty.

B- The company incurred $350 of warranty cost during 2018 relating with 2018 sales. prepare journal entry to record the incurrence of these costs and prepare any 12/31/18 adjusting entries.

C- prepare journal entries related to bonus point sales for 2018.

D- How much will the company recognize additional revenue in 2019 assuming 4,600 of the 2018 points are redeemed.

Can you use Excel for time value of money computations such as NPV or IRR? If so, what are the functions?

Please no handwritten answers

I work for a company that uses accrual-based accounting, not that I'm directly dealing with the accrual accounts. I have an understanding of my role, accounts receivable, and how it plays into accruals. However, it does appear people outside of finance do sometimes struggle with the concept and with helping to keep finance aware of actions that need reporting, such things like offering a customer a special promotion for future sales not yet recorded.
When reading about the comparisons between US and International accounting practices, I again reflect on my personal experiences at work. I have heard of people within our organization refer to GAAP but not International Financial Reporting Standards (IFRS). We have three international offices, three different entities within our organization. I will be asking around at work to determine if the company prepares two separate financial statements due to having both have US and international business.
Our finance department is just finishing our yearly audit. I've learned the audit is heavily reviewing our US-based practices but also reviewing of our international. My question is how does the audit process differ between US and International, especially when the company being audited consist of both?

Classify the following quality costs as prevention costs, appraisal costs, internal failure costs, or external failure costs:

1. Internal audit to ensure that quality guidelines and processes are being followed

2. Repairing products in the field
3. Providing engineering assistance to selected suppliers to improve their product quality

4. Correcting a design error discovered during product development

5. Settling a bodily injury law suit caused by a defective product

6. Customer complaint department
7. Quality control circles

8. Continuing supplier verification

9 Redesigning a product to eliminate a product defect

10 Lost sales because of product quality concerns

ACTG 4650

Assignment 7

Due April 16

Answer the questions associated with each of the following scenarios.  The companies in each scenario are publicly traded, have a calendar year and entered into the agreements in 2018.

1.         Company A entered into a two-year contract with a customer to maintain the    customer’s fleet of delivery vehicles.  Company A receives payments from the            customer at regularly scheduled intervals during the contract and provides             monthly maintenance services needed to keep the vehicles in working order.       How should Company A recognize revenue on this contract? What is the         justification for your answer?

2.         Company B enters into a contract to manufacture equipment for a customer.  The equipment is manufactured at Company B’s plant and is under Company B’s control while it is being built.  The customer makes a 20% deposit at the inception of the contract.  Periodic payments from the customer over the life of the contract equal an additional 30% of the contract price.  The remaining 50% of the contract price is due upon   delivery of the equipment. Company B expects the customer to make all required payments. If the customer terminates the contract, Company B is entitled to keep all amounts received but has no claim for further payments.   How should Company B recognize revenue on this contract? What is the justification for your answer?

3.         Company C enters into a contract to build a building for a customer.  The             contract price is $3,000,000 and contains incentive bonuses of $25,000 for    eachweek the building is completed prior to the target date for completion.  There      are also $25,000 penalties for each week work goes on beyond the target date.     The customer is a governmental entity which is required to get all new buildings            inspected prior to taking possession. The contract contains a $50,000 bonus if the             building passes the initial inspection.  Explain how Company C should determine     the transaction price associated with this contract.

4.         Company D enters into a contract with a customer to sell Products W, Z, Y, and Z             for a price of $150,000.  None of these products are sold together in smaller        bundles. Company D regularly sells product W for $40,000 and Product X for          $50,000.  Company D is aware that other companies sell Product Y for $20,000.         Product Z is a new product and there are no other companies selling this          product.  Company D knows that Product Z costs them $40,000 to produce and their normal markup on other similar products is 25% of cost.  How should           Company D allocate the transaction price to the performance obligations of this      contract? What is thejustification for your answer?

Waterway Inc., a greeting card company, had the following statements prepared as of December 31, 2017.

WATERWAY INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016
		12/31/17			12/31/16
Cash		$5,900			$6,900
Accounts receivable		61,400			51,200
Short-term debt investments (available-for-sale)		34,700			18,000
Inventory		40,200			59,700
Prepaid rent		5,000			4,100
Equipment		152,700			130,200
Accumulated depreciation—equipment		(35,400	)		(25,000	)
Copyrights		45,700			49,900
Total assets		$310,200			$295,000
Accounts payable		$46,300			$40,400
Income taxes payable		3,900			6,000
Salaries and wages payable		8,100			3,900
Short-term loans payable		8,100			10,100
Long-term loans payable		60,200			69,400
Common stock, $10 par		100,000			100,000
Contributed capital, common stock		30,000			30,000
Retained earnings		53,600			35,200
Total liabilities & stockholders’ equity		$310,200			$295,000

WATERWAY INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2017
Sales revenue				$335,075
Cost of goods sold				175,200
Gross profit				159,875
Operating expenses				120,100
Operating income				39,775
Interest expense		$11,400
Gain on sale of equipment		2,000		9,400
Income before tax				30,375
Income tax expense				6,075
Net income				$24,300

Additional information:

1.		Dividends in the amount of $5,900 were declared and paid during 2017.
2.		Depreciation expense and amortization expense are included in operating expenses.
3.		No unrealized gains or losses have occurred on the investments during the year.
4.		Equipment that had a cost of $20,100 and was 70% depreciated was sold during 2017.

Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Sarasota Inc., a greeting card company, had the following statements prepared as of December 31, 2017.

SARASOTA INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016
		12/31/17			12/31/16
Cash		$6,100			$7,100
Accounts receivable		62,400			51,000
Short-term debt investments (available-for-sale)		34,700			18,100
Inventory		40,400			60,300
Prepaid rent		4,900			4,000
Equipment		154,100			130,600
Accumulated depreciation—equipment		(34,900	)		(24,800	)
Copyrights		46,400			49,800
Total assets		$314,100			$296,100
Accounts payable		$46,500			$40,200
Income taxes payable		4,000			6,000
Salaries and wages payable		8,100			4,100
Short-term loans payable		7,900			10,100
Long-term loans payable		59,600			68,400
Common stock, $10 par		100,000			100,000
Contributed capital, common stock		30,000			30,000
Retained earnings		58,000			37,300
Total liabilities & stockholders’ equity		$314,100			$296,100

SARASOTA INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2017
Sales revenue				$339,800
Cost of goods sold				176,500
Gross profit				163,300
Operating expenses				120,500
Operating income				42,800
Interest expense		$11,300
Gain on sale of equipment		2,000		9,300
Income before tax				33,500
Income tax expense				6,700
Net income				$26,800

Additional information:

1.		Dividends in the amount of $6,100 were declared and paid during 2017.
2.		Depreciation expense and amortization expense are included in operating expenses.
3.		No unrealized gains or losses have occurred on the investments during the year.
4.		Equipment that had a cost of $20,100 and was 70% depreciated was sold during 2017.

Prepare a statement of cash flows using the direct method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

web> X Company is a merchandiser and prepares monthly financial statements. The following is its balance sheet at the beginning of July: Balance Sheet July 1 Assets Equities Cash $50,676 Accounts Payable $65,758 Accounts Receivable 33,728 Notes Payable 31,613 Inventory 80,609 Prepaid Rent 6,118 Paid-In Capital 252,133 Equipment 241,894 Retained Earnings 63,521 Total Assets $413,025 Total Equities $413,025 The following summary transactions occurred during July: Sold stock to investors for $45,000. Borrowed $21,000 from a bank and paid off a $14,000 bank loan. Bought $8,729 of merchandise from suppliers, paying $3,219 and promising to pay the rest in August. Bought equipment for $36,100 from a manufacturer, paying $4,100 and promising to pay the rest in September. Paid $4,402 to suppliers that it bought merchandise from in June. Sold merchandise, receiving $16,551 cash and promises from customers to pay $4,839; the merchandise that was sold cost $10,695 and was purchased earlier in July. Paid $562 for rent in advance. Received $3,762 from customers who purchased merchandise last month. Paid wages and other miscellaneous expenses totaling $5,610. Note: Ignore adjusting entries. 4. What was the cash balance on July 31? A: $33,588 B: $44,672 C: $59,413 D: $79,020 E: $105,096 F: $139,778 G: $185,904 H: $247,253 Tries 0/3 5. What were total equities on July 31? A: $503,218 B: $669,280 C: $890,142 D: $1,183,889 E: $1,574,573 F: $2,094,182 G: $2,785,262 H: $3,704,398 Tries 0/3 6. What was Net Income in July? A: $3,823 B: $5,085 C: $6,763 D: $8,995 E: $11,963 F: $15,911 G: $21,162 H: $28,145

Cost of Goods Manufactured for a Manufacturing Company Two items are omitted from each of the following three lists of cost of goods manufactured statement data. Determine the amounts of the missing items, identifying them by letter. Work in process inventory, August 1 $2,300 $18,600 (e) Total manufacturing costs incurred during August 15,200 (c) 108,800 Total manufacturing costs (a) $217,600 $118,100 Work in process inventory, August 31 3,300 45,700 (f) Cost of goods manufactured (b) (d) $99,200

Production and Direct Labor Cost Budgets

Two-Leg Company manufactures slacks and jeans under a variety of brand names, such as Dockers^® and 501 Jeans^®. Slacks and jeans are assembled by a variety of different sewing operations. Assume that the sales budget for Dockers and 501 Jeans shows estimated sales of 21,610 and 38,720 pairs, respectively, for May. The finished goods inventory is assumed as follows:

	Dockers		501 Jeans
May 1 estimated inventory	970		1,090
May 31 desired inventory	360		1,370

Assume the following direct labor data per 10 pairs of Dockers and 501 Jeans for four different sewing operations:

	Direct Labor per 10 Pairs
	Dockers		501 Jeans
Inseam	21	minutes	14	minutes
Outerseam	25		17
Pockets	8		10
Zipper	12		7
Total	66	minutes	48	minutes

a. Prepare a production budget for May. Prepare the budget in two columns: Dockers^® and 501 Jeans^®. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Two-Leg Company
Production Budget
For Month Ending May 31 (assumed data)
	Dockers	501 Jeans
Expected units to be sold
Total units available
Total units to be produced

b. Prepare the May direct labor cost budget for the four sewing operations, assuming a $12 wage per hour for the inseam and outerseam sewing operations and a $18 wage per hour for the pocket and zipper sewing operations. Prepare the direct labor cost budget in four columns: inseam, outerseam, pockets, and zipper.

Two-Leg Company
Direct Labor Cost Budget
For Month Ending May 31 (assumed data)
	Inseam	Outerseam	Pockets	Zipper	Total
Dockers
501 Jeans
Total minutes
Total direct labor hours
Direct labor rate	x $	x $	x $	x $
Total direct labor cost	$	$	$	$	$

Finch Boot Co. sells men’s, women’s, and children’s boots. For each type of boot sold, it operates a separate department that has its own manager. The manager of the men’s department has a sales staff of nine employees, the manager of the women’s department has six employees, and the manager of the children’s department has three employees. All departments are housed in a single store. In recent years, the children’s department has operated at a net loss and is expected to continue to do so. Last year’s income statements follow:

	Men’s Department				Women’s Department				Children’s Department
Sales	$	660,000			$	480,000			$	170,000
Cost of goods sold		(268,500	)			(178,800	)			(99,875	)
Gross margin		391,500				301,200				70,125
Department manager’s salary		(58,000	)			(47,000	)			(27,000	)
Sales commissions		(112,200	)			(81,600	)			(30,900	)
Rent on store lease		(27,000	)			(27,000	)			(27,000	)
Store utilities		(10,000	)			(10,000	)			(10,000	)
Net income (loss)	$	184,300			$	135,600			$	(24,775	)

Required

1. a. Calculate the contribution margin. Determine whether to eliminate the children’s department.

2. b-1. Calculate the net income for the company as a whole with the children's department.

3. b-2. Confirm the conclusion you reached in Requirement a by preparing income statements for the company without the children’s department.

4. c. Eliminating the children’s department would increase space available to display men’s and women’s boots. Suppose management estimates that a wider selection of adult boots would increase the store’s net earnings by $38,000. Would this information affect the decision that you made in Requirement a?

Depletion

A coal mine was acquired at a cost of $1,500,000 and estimated to contain 6,000,000 tons of ore. During the year, 100,000 tons were mined and sold. Prepare the journal entry for the year's depletion expense. If an amount box does not require an entry, leave it blank.

A silver mine was acquired at a cost of $3,000,000 and estimated to contain 750,000 tons of ore. During the year, 125,000 tons were mined and sold. Prepare the journal entry for the year's depletion expense. If an amount box does not require an entry, leave it blank.

Prepare the entries using a general journal.

there are 2 entries per journal

On January 1, 2018, Sans Serif Publishers leased printing equipment from First Lease Corp. First LeaseCorp purchased the equipment from Compudec Corporation at a cost of $479,079.

The lease agreement specifies six annual payments of $92,931 beginning 1/1/18, the beginning of the lease, and at December 31 from 2018 through 2022. On December 31, 2023, at the end of the 6 year lease, and at the end of the six-year lease term, the equipment is expected to be worth $75,000, and San Serif has the option to purchase it for $60,000 on that date. The residual value after 7 years is zero. First LeaseCorp routinely acquires electronic equipment for lease to other firms. The interest rate in these financing arrangements is 10%.  

Exercise of Purchase Option (12/31/23)

Sans Serif Publishers (Lessee) Dr. Interest Expense (10% * $54,542) $5,458

Dr. Lease Payable (difference) $54,542  

Cr. Cash $60,000

CompuDec Corporation (Lessor)

Dr. Cash (exercise price) $60,000

Cr. Lease Receivable (account balance) $54,542

Cr. Interest revenue (10% * outstanding balance) $5,458

($54,542 is the balance of lease payable after all periodic lease payments have been made)

Since the lessee takes the BPO at the end of the lease, from the lessor's point of view, how come the journal doesn't have a debit entry saying "cash $60,000" and the lessor having a credit journal entry saying "equipment $60,000). This question comes from page 859 and 860 illustrations 15-14 and 15-14A in the Intermediate Accounting 9th edition by the authors Spiceland, Nelson, and Thomas.