1) Skysong Corporation issued $620,000 of 9% bonds on November
1, 2017, for $656,123. The bonds were dated November 1, 2017, and
mature in 8 years, with interest payable each May 1 and November 1.
Skysong uses the effective-interest method with an effective rate
of 8%.
Prepare Skysong’s December 31, 2017, adjusting entry.
2)On January 1, 2017, Skysong Corporation issued $450,000 of 7%
bonds, due in 8 years. The bonds were issued for $478,264, and pay
interest each July 1 and January 1. The effective-interest rate is
6%.
Prepare the company’s journal entries for (a) the January 1
issuance, (b) the July 1 interest payment, and (c) the December 31
adjusting entry. Skysong uses the effective-interest method.
In: Accounting
Given the following information for Macro Drive Inc.
2017 |
|
Selling and administrative expenses |
150,000 |
Depreciation expense |
280,000 |
Interest expense |
140,000 |
Sales |
1,400,000 |
Taxes |
135,500 |
Cost of Goods Sold |
500,000 |
In: Accounting
At the beginning of the school year, Priscilla Wescott decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the spring semester tuition, which is the same as the fall tuition. The following information relates to the budget:
Cash balance, September 1 (from a summer job) | $6,220 |
Purchase season football tickets in September | 80 |
Additional entertainment for each month | 220 |
Pay fall semester tuition in September | 3,400 |
Pay rent at the beginning of each month | 300 |
Pay for food each month | 170 |
Pay apartment deposit on September 2 (to be returned December 15) | 400 |
Part-time job earnings each month (net of taxes) | 770 |
a. Prepare a cash budget for September, October, November, and December. Enter all amounts as positive values except cash decrease which should be indicated with a minus sign.
Priscilla Wescott | ||||
Cash Budget | ||||
For the Four Months Ending December 31 | ||||
September | October | November | December | |
Estimated cash receipts from: | ||||
$ | $ | $ | $ | |
Total cash receipts | $ | $ | $ | $ |
Less estimated cash payments for: | ||||
$ | ||||
$ | $ | $ | ||
Total cash payments | $ | $ | $ | $ |
Cash increase (decrease) | $ | $ | $ | $ |
Cash balance at end of month | $ | $ | $ | $ |
Feedback
b. Are the four monthly budgets that are
presented prepared as static budgets or flexible budgets?
Static
c. What are the budget implications for Priscilla Wescott?
Priscilla can see that her present plan will not provide sufficient cash. If Priscilla did not budget but went ahead with the original plan, she would be $ short at the end of December, with no time left to adjust.
In: Accounting
X- Cell Limited is in the process of evaluating a project which will allow the firm to branch into a new product line. The projected cash flow for its new product line is as follows:
Year |
Cash flows |
0 |
(153,000) |
1 |
78,000 |
2 |
67,000 |
3 |
49,000 |
In: Accounting
Thermal Rising, Inc., makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider model, but also makes custom-designed paragliders. Management has designed an activity-based costing system with the following activity cost pools and activity rates:
Activity Cost Pool | Activity Rate | ||
Supporting direct labor | $ | 18 | per direct labor-hour |
Order processing | $ | 196 | per order |
Custom design processing | $ | 259 | per custom design |
Customer service | $ | 422 | per customer |
Management would like an analysis of the profitability of a particular customer, Big Sky Outfitters, which has ordered the following products over the last 12 months:
Standard Model |
Custom Design |
|||
Number of gliders | 13 | 3 | ||
Number of orders | 1 | 3 | ||
Number of custom designs | 0 | 3 | ||
Direct labor-hours per glider | 29.50 | 33.00 | ||
Selling price per glider | $ | 1,650 | $ | 2,360 |
Direct materials cost per glider | $ | 474 | $ | 584 |
The company’s direct labor rate is $22 per hour.
Required:
Using the company’s activity-based costing system, compute the customer margin of Big Sky Outfitters. (Round your intermediate calculations and final answer to the nearest whole dollar amount. Loss amounts should be entered with a minus sign.)
Fogerty Company makes two products—titanium Hubs and Sprockets. Data regarding the two products follow:
Direct Labor-Hours per Unit |
Annual Production |
||
Hubs | 0.70 | 25,000 | units |
Sprockets | 0.30 | 57,000 | units |
Additional information about the company follows:
Hubs require $29 in direct materials per unit, and Sprockets require $15.
The direct labor wage rate is $12 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) | $ | 26,910 | 115 | 92 | 207 |
Special processing (machine-hours) | $ | 111,000 | 3,700 | 0 | 3,700 |
General factory (organization-sustaining) | $ | 342,400 | 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.
In: Accounting
QUESTION TWO
Class I |
Class II |
Class III |
Class IV |
Sh. |
Sh. |
Sh. |
Sh. |
875,000 |
2,500,000 |
1,750,000 |
3,725,000 |
Disposals during the year.
Class I |
Class II |
Class III |
Class IV |
900,000 |
125,000 |
- |
90,000 |
The new hotel building was brought to use on 1.9.2019
Required
In: Accounting
Bramble Company owns 9,000 acres of timberland purchased in 2006 at a cost of $1,540 per acre. At the time of purchase, the land without the timber was valued at $440 per acre. In 2007, Bramble built fire lanes and roads, with a life of 30 years, at a cost of $92,400. Every year, Bramble sprays to prevent disease at a cost of $3,300 per year and spends $7,700 to maintain the fire lanes and roads. During 2008, Bramble selectively logged and sold 770,000 board feet of timber, of the estimated 3,850,000 board feet. In 2009, Bramble planted new seedlings to replace the trees cut at a cost of $110,000.
A. Determine the depreciation expense and the cost of timber sold related to depletion for 2008. (Round intermediate calculations to 5 decimal places, e.g. 1.54687 and final answers to 0 decimal places, e.g. 5,125.)
B. Bramble has not logged since 2008. If Bramble logged and sold 990,000 board feet of timber in 2019, when the timber cruise (appraiser) estimated 5,500,000 board feet, determine the cost of timber sold related to depletion for 2019. (Round intermediate calculations to 5 decimal places, e.g. 1.54687 and final answers to 0 decimal places, e.g. 5,125.)
In: Accounting
In: Accounting
Define the triple bottom line and give examples of each of the “three Ps.” (2–3 paragraphs)
In: Accounting
Nelson Corporation, which has only one product, has provided the following data concerning its most recent month of operations:
Selling price | $ | 120 |
Units in beginning inventory | 330 | |
Units produced | 6,010 | |
Units sold | 6,090 | |
Units in ending inventory | 250 | |
Variable costs per unit: | ||
Direct materials | $ | 42 |
Direct labor | $ | 24 |
Variable manufacturing overhead | $ | 2 |
Variable selling and administrative | $ | 17 |
Fixed costs: | ||
Fixed manufacturing overhead | $ | 108,180 |
Fixed selling and administrative | $ | 97,440 |
The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.
Required:
a. Prepare a contribution format income statement for the month using variable costing.
b. Prepare an income statement for the month using absorption costing.
In: Accounting
Special-Order Pricing. Barry is conscientious about the quality of his meals, and he has a regular crowd of 400 patrons for his $9.90 lunch. His variable cost for each meal is about $3.10, and he figures his fixed costs, on a daily basis, are about $2,300. From time to time, bus-tour groups with 50 patrons stop by. He has welcomed them because he has capacity to seat 500 diners in the average lunch period, and his cooking and wait staff can easily handle the additional load. The tour operator generally pays for the entire group on a single check to save the wait staff and cashier the additional time. Due to competitive conditions in the tour business, the operator is now asking Barry to lower the price to $4.60 per meal for each of the 50 bus-tour members. (Round your answers to 2 decimal places.)
1-a. What is the incremental profit (loss) per bus-tour meal?
1-b. Should Barry accept the bus-tour offer?
2-a. What is the incremental profit (loss) for each meal if the tour company were willing to guarantee 200 patrons (or four bus loads) at least once a month for $3.90 per meal?
2-b. Is the offer financially attractive?
In: Accounting
The controller of Dash Shoes Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budgetinformation:
March | April | May | ||||
Sales | $129,000 | $156,000 | $206,000 | |||
Manufacturing costs | 54,000 | 67,000 | 74,000 | |||
Selling and administrative expenses | 37,000 | 42,000 | 45,000 | |||
Capital expenditures | _ | _ | 49,000 |
The company expects to sell about 10% of its merchandise for cash. Of sales on account, 65% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $8,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in July, and the annual property taxes are paid in November. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month.
Current assets as of March 1 include cash of $49,000, marketable securities of $70,000, and accounts receivable of $149,050 ($113,000 from February sales and $36,050 from January sales). Sales on account for January and February were $103,000 and $113,000, respectively. Current liabilities as of March 1 include a $65,000, 12%, 90-day note payable due May 20 and $8,000 of accounts payable incurred in February for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. It is expected that $3,900 in dividends will be received in March. An estimated income tax payment of $19,000 will be made in April. Dash Shoes' regular quarterly dividend of $8,000 is expected to be declared in April and paid in May. Management desires to maintain a minimum cash balance of $38,000.
Required:
1. Prepare a monthly cash budget and supporting schedules for March, April, and May. Input all amounts as positive values except overall cash decrease and deficiency which should be indicated with a minus sign. Assume 360 days per year for interest calculations.
Dash Shoes Inc. | |||
Cash Budget | |||
For the Three Months Ending May 31, 2016 | |||
March | April | May | |
Estimated cash receipts from: | |||
Cash sales | $ | $ | $ |
Collection of accounts receivable | |||
Dividends | |||
Total cash receipts | $ | $ | $ |
Estimated cash payments for: | |||
Manufacturing costs | $ | $ | $ |
Selling and administrative expenses | |||
Capital expenditures | |||
Other purposes: | |||
Note payable (including interest) | |||
Income tax | |||
Dividends | |||
Total cash payments | $ | $ | $ |
Cash increase or (decrease) | $ | $ | $ |
Cash balance at beginning of month | |||
Cash balance at end of month | $ | $ | $ |
Minimum cash balance | |||
Excess or (deficiency) | $ | $ | $ |
In: Accounting
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2017 and reports a balance sheet at December 31, 2016 as follows:
Endless Mountain Company | ||||||
Balance Sheet | ||||||
December 31, 2016 | ||||||
Assets | ||||||
Current assets: | ||||||
Cash | $ | 46,200 | ||||
Accounts receivable (net) | 260,000 | |||||
Raw materials inventory (4,500 yards) | 11,250 | |||||
Finished goods inventory (1,500 units) | 32,250 | |||||
Total current assets | $ | 349,700 | ||||
Plant and equipment: | ||||||
Buildings and equipment | 900,000 | |||||
Accumulated depreciation | (292,000 | ) | ||||
Plant and equipment, net | 608,000 | |||||
Total assets | $ | 957,700 | ||||
Liabilities and Stockholders’ Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 158,000 | ||||
Stockholders’ equity: | ||||||
Common stock | $ | 419,800 | ||||
Retained earnings | 379,900 | |||||
Total stockholders’ equity | 799,700 | |||||
Total liabilities and stockholders’ equity | $ | 957,700 | ||||
The company’s chief financial officer (CFO), in consultation with various managers across the organization has developed the following set of assumptions to help create the 2017 budget:
Required:
1. Calculate the following budgeted figures for 2017:
a. The total fixed cost.
b. The variable cost per unit sold.
c. The contribution margin per unit sold.
d. The break-even point in unit sales and dollar sales.
e. The margin of safety.
f. The degree of operating leverage
In: Accounting
Tamar Co. manufactures a single product in one department. All
direct materials are added at the beginning of the manufacturing
process. Conversion costs are added evenly throughout the process.
During May, the company completed and transferred 32,200 units of
product to finished goods inventory. Its 5,000 units of beginning
work in process consisted of $201,500 of direct materials and
$440,104 of conversion costs. It has 3,400 units (100% complete
with respect to direct materials and 80% complete with respect to
conversion) in process at month-end. During the month, $688,500 of
direct material costs and $3,680,456 of conversion costs were
charged to production.
Assume that Tamar uses the FIFO method to account for its process
costing system.
1. Prepare the company’s process cost summary for May using the FIFO method. (Round "Cost per EUP" to 2 decimal places.)
2. Prepare the journal entry dated May 31 to transfer the cost of completed units to finished goods inventory.
In: Accounting
Mango & Associates expects the below departments to make the following income for the upcoming year. Dept. M Dept. N Dept. O Dept. P Dept. T Total Sales $ 67,000 $ 37,000 $ 60,000 $ 46,000 $ 32,000 $ 242,000 Expenses Avoidable 11,800 38,800 23,600 16,000 41,400 $ 131,600 Unavoidable 53,400 15,000 4,600 31,800 12,600 $ 117,400 Total expenses 65,200 53,800 28,200 47,800 54,000 249,000 Net income (loss) $ 1,800 $ (16,800 ) $ 31,800 $ (1,800 ) $ (22,000 ) $ (7,000 ) Recompute & prepare departmental income statements (which should include a combined total column) for Mango & Associates taking each of the following separate scenarios into consideration. Part 1 Mango & Associates' management decided to get rid of departments with expected net losses. Part 2 Mango & Associates' management decided to get rid of departments with sales dollars that are less than avoidable expenses.
In: Accounting