On January 1, 2019, Mancunian Corp. purchased 10% bonds, with a $200,000 face value, for $218,492.52. This price implies an 8% yield to Mancunian. The bonds pay interest on December 31 of each year. Mancunian uses the effective-interest method and classifies the bonds as available for sale securities.
The fair value of the bonds on December 31, 2019 equals $217,200. The fair value of the bonds on December 31, 2020 equals $208,340.
Prepare the journal entries to:
1. Record the purchase of the bonds on January 1, 2019.
2. Record receipt of interest on December 31, 2019.
3. Record the fair value adjustment on December 31, 2019.
4. Record receipt of interest on December 31, 2020.
5. Record the fair value adjustment on December 31, 2020.
6. Record the sale of these bonds on January 1, 2021 for $209,000. cash.
Please complete your answer on a separate piece of paper, then take a picture of your solution or scan it in, and upload the file below. Make sure you show all your work!!
In: Accounting
The following information is available for Labrador Ltd. for calendar 2022:
Cost of goods sold........................................................ 1,190,000
Income tax expense...................................................... 9,000
Interest expense............................................................ 30,000
Interest income.............................................................. 38,000
Operating expenses...................................................... 194,000
Sales............................................................................. $1,406,000
Instructions
(a) Use the above information to prepare a multiple-step statement of income for the year ended December 31, 2022.
(b) Calculate the gross profit margin and the profit margin for 2022.
In: Accounting
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Speed World Cycles sells high-performance motorcycles and motocross racers. One of Speed World's most popular models is the Kazomma 900 dirt bike. During the current year, Speed World purchased eight of these cycles at the following costs: |
| Purchase Date | Units Purchased | Unit Cost | Total Cost | |||||||
| July 1 | 2 | $ | 49,500 | $ | 99,000 | |||||
| July 22 | 3 | 50,000 | 150,000 | |||||||
| Aug. 3 | 3 | 51,000 | 153,000 | |||||||
| 8 | $ | 402,000 | ||||||||
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On July 28, Speed World sold four Kazomma 900 dirt bikes to the Vince Wilson racing team. The remaining four bikes remained in inventory at September 30, the end of Speed World's fiscal year. |
| Assume that Speed World uses a periodic inventory system. |
| a. |
Compute the cost of goods sold relating to the sale on July 28 and the ending inventory of Kazomma 900 dirt bikes at September 30, using the following cost flow assumptions: |
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| 1. | Weighted average cost | |
| 2. | FIFO | |
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Show the number of units and unit costs in each cost layer of the ending inventory. You may determine the cost of goods sold by deducting ending inventory from the cost of goods available for sale. (Omit the "$" sign in your response.) |
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In: Accounting
Mel's Hair Salon uses a perpetual inventory system, recorded the following inventory transactions for this year:
Purchases Sales
Units Unit Cost Units Selling Price/Unit
Apr 1 Beginning inventory 90 $ 16
25 Purchase 300 18
May 4 Purchase 130 20
16 Sale 240 $32
Jun 4 Purchase 100 24
Instructions
(a) Using the FIFO cost formula, calculate the cost of goods sold for the quarter ended June 30. Show calculations.
(b) Using the average cost formula, calculate the ending inventory at June 30. Show calculations and use unrounded numbers in your calculations but round to the nearest cent for presentation purposes in your answer.
In: Accounting
In late 2020, the Nicklaus Corporation was formed. The corporate charter authorizes the issuance of 5,000,000 shares of common stock carrying a $1 par value, and 1,000,000 shares of $5 par value, noncumulative, nonparticipating preferred stock. On January 2, 2021, 3,000,000 shares of the common stock are issued in exchange for cash at an average price of $10 per share. Also on January 2, all 1,000,000 shares of preferred stock are issued at $20 per share.
During 2021, the Nicklaus Corporation participated in three treasury stock transactions:
On November 1, 2021, the Nicklaus Corporation declares a $0.05
per share cash dividend on common stock and a $0.25 per share cash
dividend on preferred stock. Payment is scheduled for December 1,
2021, to shareholders of record on November 15, 2021. (Please note
that treasury stock are not eligible for dividends)
On December 2, 2021, the Nicklaus Corporation declares a 1% stock
dividend payable on December 28, 2021, to shareholders of record on
December 14. At the date of declaration, the common stock was
selling in the open market at $20 per share. The dividend will
result in 29,000 (0.01 × 2,900,000) additional shares being issued
to shareholders.
QUESTIONS:
1. Prepare journal entries to record these transactions.
2. Prepare the December 31, 2021, shareholders' equity section of the balance sheet for the Nicklaus Corporation. (Assume net income for 2021 was $6,500,000.)
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NICKLAUS CORPORATION |
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Balance Sheet - Shareholders' Equity Section |
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December 31, 2021 |
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Shareholders' equity |
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Preferred stock |
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Common stock |
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Paid-in capital—excess of par |
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Paid-in capital—share repurchase |
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Retained earnings |
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Less: Treasury stock |
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Total shareholders' equity |
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In: Accounting
You are required to prepare a Direct Material Budget for the second quarter (April to June) by considering a manufacturing company operating in Saudi Arabia as a sample study.
In: Accounting
Earlene’s Eyewear manufactures eyeglass frames. The company uses a standard cost system. Earlene has set the following standards for frame model 19841.
Direct Material 4.5 oz. plastic per frame at $3.65 per oz. $16.425 per frame
Direct Labor .8 hours at $28 per hour $22.40 per frame
In April, Earlene’s made 2,500 frames with a material cost of $48,000. Earlene’s Eyewear purchased 12,000 oz. of plastic but only used 10,000 oz. of plastic for frame 19841.
What is the Material Price Variance?
Which of the following could explain the material price variance calculated above?
a. Earlene’s Eyewear paid less per oz because the material was purchased in bulk to receive a discount.
b. Earlene’s Eyewear earned less per frame because more materials were purchased than used.
c. Earlene’s Eyewear earned more per frame because there were no machine breakdowns and fewer labor hours were required than planned.
d. Earlene’s Eyewear paid more per oz because the company decided to go with a higher quality material.
In: Accounting
Pinnacle Plus declared and paid a cash dividend of $9,100 in the current year. Its comparative financial statements, prepared at December 31, reported the following summarized information:
| Current Year | Previous Year | ||||||
| Income Statement | |||||||
| Sales Revenue | $ | 235,000 | $ | 199,000 | |||
| Cost of Goods Sold | 102,000 | 98,000 | |||||
| Gross Profit | 133,000 | 101,000 | |||||
| Operating Expenses | 61,000 | 53,000 | |||||
| Interest Expense | 6,500 | 6,500 | |||||
| Income before Income Tax Expense | 65,500 | 41,500 | |||||
| Income Tax Expense (30%) | 19,650 | 12,450 | |||||
| Net Income | $ | 45,850 | $ | 29,050 | |||
| Balance Sheet | |||||||
| Cash | $ | 102,125 | $ | 13,000 | |||
| Accounts Receivable, Net | 42,000 | 37,000 | |||||
| Inventory | 50,000 | 63,000 | |||||
| Property and Equipment, Net | 120,000 | 130,000 | |||||
| Total Assets | $ | 314,125 | $ | 243,000 | |||
| Accounts Payable | $ | 67,000 | $ | 32,500 | |||
| Income Tax Payable | 1,625 | 1,750 | |||||
| Note Payable (long-term) | 65,000 | 65,000 | |||||
| Total Liabilities | 133,625 | 99,250 | |||||
| Common Stock (par $10) | 105,000 | 105,000 | |||||
| Retained Earnings | 75,500 | 38,750 | |||||
| Total Liabilities and Stockholders’ Equity | $ | 314,125 | $ | 243,000 | |||
Required:
In: Accounting
Describe the format of an income statement prepared using the contribution margin approach.
In: Accounting
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Selected sales and operating data for three divisions of
different structural engineering firms are |
| Division A | Division B | Division C | |||||||
| Sales | $ | 7,000,000 | $ | 11,000,000 | $ | 10,100,000 | |||
| Average operating assets | $ | 1,750,000 | $ | 5,500,000 | $ | 2,525,000 | |||
| Net operating income | $ | 427,000 | $ | 1,111,000 | $ | 338,350 | |||
| Minimum required rate of return | 20.00 | % | 20.20 | % | 17.00 | % | |||
| Required: | |
| 1. |
Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. (Round your Turnover answers to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) |
Division a Margin turnover roi
division b
division c
| 2. |
Compute the residual income (loss) for each division. (Loss amounts should be indicated by a minus sign. Round your Required Rate of Return percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) |
avg operating income
required rate of return
required operating income
actual operating income
required operating income above
required income loss)
| 3. |
Assume that each division is presented with an investment opportunity that would yield a 22% rate of return. |
| a. |
If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? |
Division a
division b
division c
| b. |
If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? |
Division a
division b
division c
In: Accounting
What is the significance of Income Statement, Balance Sheet, Owner's Equity and Statement of Cash Flows, and what does each financial statement tell us about a business entity?
In: Accounting
Hudson Co. reports the contribution margin income statement for 2017.
| HUDSON CO. | |||
| Contribution Margin Income Statement | |||
| For Year Ended December 31, 2017 | |||
| Sales (9,900 units at $225 each) | $ | 2,227,500 | |
| Variable costs (9,900 units at $180 each) | 1,782,000 | ||
| Contribution margin | $ | 445,500 | |
| Fixed costs | 342,000 | ||
| Pretax income | $ | 103,500 | |
Assume the company is considering investing in a new machine that will increase its fixed costs by $42,000 per year and decrease its variable costs by $9 per unit. Prepare a forecasted contribution margin income statement for 2018 assuming the company purchases this machine.
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If the company raises its selling price to $240 per unit.
1. Compute Hudson Co.'s contribution margin per
unit.
2. Compute Hudson Co.'s contribution margin
ratio.
3. Compute Hudson Co.'s break-even point in
units.
4. Compute Hudson Co.'s break-even point in sales
dollars.
The marketing manager believes that increasing advertising costs by $84,000 in 2018 will increase the company’s sales volume to 11,300 units. Prepare a forecasted contribution margin income statement for 2018 assuming the company incurs the additional advertising costs.
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In: Accounting
RECIPROCAL METHOD: University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing). Management has decided to allocate maintenance costs on the basis of machine-hours in each department and personnel costs on the basis of labor-hours worked by the employees in each.
The following data appear in the company records for the current period:
| Maintenance | Personnel | Printing | Developing | |||||||||
| Machine-hours | — | 1,000 | 1,000 | 3,000 | ||||||||
| Labor-hours | 500 | — | 500 | 2,000 | ||||||||
| Department direct costs | $ | 5,000 | $ | 12,000 | $ | 15,000 | $ | 10,000 | ||||
Required:
Allocate the service department costs using the RECIPROCAL METHOD. (Matrix algebra is not required because there are only two service departments.) (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.)
In: Accounting
Shadee Corp. expects to sell 560 sun visors in May and 380 in June. Each visor sells for $21. Shadee’s beginning and ending finished goods inventories for May are 70 and 50 units, respectively. Ending finished goods inventory for June will be 60 units. Each visor requires a total of $4.50 in direct materials that includes an adjustable closure that the company purchases from a supplier at a cost of $2.00 each. Shadee wants to have 27 closures on hand on May 1, 16 closures on May 31, and 20 closures on June 30 and variable manufacturing overhead is $2.00 per unit produced. Suppose that each visor takes 0.80 direct labor hours to produce and Shadee pays its workers $8 per hour. Additional information: Selling costs are expected to be 11 percent of sales. Fixed administrative expenses per month total $1,300. Required: Complete Shadee's budgeted income statement for the months of May and June. (Note: Assume that fixed overhead per unit is $1.30.) (Do not round your intermediate calculations. Round your answers to 2 decimal places.)
In: Accounting
In: Accounting