Montoure Company uses a perpetual inventory system. It entered into the following calendar-year purchases and sales transactions

Date

Activities

Units Acquired at Cost

Units Sold at Retail

Jan.

1

Beginning inventory

600

units

@ $60 per unit

Feb.

10

Purchase

480

units

@ $57 per unit

Mar.

13

Purchase

120

units

@ $42 per unit

Mar.

15

Sales

785

units

@ $80 per unit

Aug.

21

Purchase

180

units

@ $65 per unit

Sept.

5

Purchase

470

units

@ $63 per unit

Sept.

10

Sales

650

units

@ $80 per unit

Totals

1,850

units

1,435

units

Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, units sold consist of 600 units from beginning inventory, 380 from the February 10 purchase, 120 from the March 13 purchase, 130 from the August 21 purchase, and 205 from the September 5 purchase. (Round your average cost per unit to 2 decimal places.)

Compute gross profit earned by the company for each of the four costing methods

EZ-Seat, Inc., manufactures two types of reclining chairs, Standard and Ergo. Ergo provides support for the body through a complex set of sensors and requires great care in manufacturing to avoid damage to the material and frame. Standard is a conventional recliner, uses standard materials, and is simpler to manufacture. EZ-Seat’s results for the last fiscal year are shown in the statement below.

EZ-SEAT, INC. Income Statement
	Ergo			Standard			Total
Sales revenue	$	2,000,000		$	5,000,000		$	7,000,000
Direct materials		600,000			1,500,000			2,100,000
Direct labor		400,000			500,000			900,000
Overhead costs
Administration								540,000
Production setup								435,000
Quality control								304,000
Distribution								738,000
Operating profit							$	1,983,000

EZ-Seat currently uses labor costs to allocate all overhead, but management is considering implementing an activity-based costing system. After interviewing the sales and production staff, management decides to allocate administrative costs on the basis of direct labor costs but to use the following bases to allocate the remaining costs:

		Activity Level
Activity Base	Cost Driver	Ergo	Standard
Setting up	Number of production runs	50	100
Performing quality control	Number of inspections	190	190
Distribution	Number of units shipped	1,800	6,400

Required:

a. Complete the income statement using the preceding activity bases. (Do not round intermediate calculations.)

	Account Ergo Standard Total Sales revenue $2,000,000 $5,000,000 $7,000,000 Direct materials $600,000 $1,500,000 $2,100,000 Direct labor 400,000 500,000 900,000 Overhead costs: Administration 540,000 Production setup 435,000 Quality control 304,000 Distribution 738,000 Total overhead costs 2,017,000 Operating profit (loss) $1,000,000 $3,000,000 $1,983,000

c. Restate the income statement for EZ-Seat using direct labor costs as the only overhead allocation base. (Do not round intermediate calculations.)

	Account Ergo Standard Total Sales revenue $2,000,000 $5,000,000 $7,000,000 Direct materials 600,000 1,500,000 2,100,000 Direct labor 400,000 500,000 900,000 Overhead costs 0 Operating profit (loss) $1,000,000 $3,000,000 $4,000,000

Thanks for your help!

Cheese Ahead Frankie’s Homemade Cheese Shop (“Frankie’s”) signed an advertising agreement with Simmons Boards (“Owner”) for billboard advertising rights along Route 33 in the town of Hampton. Frankie’s has the right to select and display advertising copy on billboard panels numbered 10 and 12 (panel numbers correspond to designated billboard locations) for a 3-year period from Jan. 1, 20X1, to Dec. 31, 20X3. In consideration for these rights, Frankie’s agrees to pay $10,000 in year 1, $12,000 in year 2, and $13,000 in year 3. Assume that Frankie’s is required to pay the annual fee on Jan. 1 of each contract year. Assuming Frankie’s incremental borrowing rate is 5%, what are the entries Frankie should record at inception of the contract, then at the end of years 1, 2, and 3?

Mervin March and George Gamble are equal partners. On January 1, 2018, each had an adjusted basis in the partnership of $10,000. During 2018, the partnership borrowed $15,000, for which the partners are liable, and had an operating loss for the year of $20,000. What is the basis of each partner's interest at the end of 2018?

Campaign Printing has two service departments, S1 and S2, and two production departments, P1 and P2.

The data for May were as follows:

		Services provided to:
Activity	Pre-allocation Costs	S1	S2	P1	P2
S1	$90,000		10%	40%	50%
S2	$60,000	20%		55%	25%
	Pre-allocation Costs
P1	$360,000
P2	$520,000

Required:

Allocate service departments costs (S1 & S2) to the production departments (P1 & P2) using reciprocal method

1. Set up linear equations to solve for the total costs incurred in S1 and S2. (Note: if you use repeated iteration, you won’t get any points!!!)
2. Determine total costs for each department by first solving the equations from part i. and then performing the necessary allocation. (note: round to the nearest integer)

8) What type of investments can be classified as “Hold to Maturity” and how are they reported/valued on the balance sheet.

9) What type of investments can be classified as “Trading” or “Available for Sale”? How are they reported/valued on the balance sheet?

10) How/where are unrealized gains/losses reported for a) Trading securities, b)Available for sale securities?

11) How/where are realized gains/losses reported for a) Trading securities, b)Available for sale securities?

12) Explain the difference between Level 1, Level 2 and Level 3 fair value measurements.

Apply the Concepts

A pediatric ward in a metropolitan hospital has the following information:

Resources	Cost of Resources				Activities	Nursing hours
Supervision		$80,000			Supervising nurses		2,000
Supplies and uniforms		40,000			Treating patients		5,000
Salaries		500,000			Providing hygienic care		4,000
Computer		15,000			Responding to requests		6,000
Monitor		30,000			Monitoring patients		3,000
Total		$665,000					20,000

• Monitors are used only for the monitoring activity
• The one computer is used 1,200 hours for supervisory work and 800 hours for monitoring work
• The nursing resources (supplies, uniforms, and labor) are assigned to activities using nursing hours. The nursing supervisor spends 100 percent of her time on supervision.

Required:

1.	Fill in the following table that represents the work distribution matrix for the pediatric ward (if an amount is zero, enter "0"):
	Percentage of Time on Each Activity Activity Supervisor Nurses Supervising nurses % % Treating patient % % Providing hygienic care % % Responding to requests % % Monitoring patients % %
2.	Select all resources where driver tracing is used to assign costs to activities:
3.	Calculate the cost of each activity:
	Activities Cost Supervising nurses $ Treating patients Providing hygienic care Responding to requests Monitoring patients
4.	Select all the activities that are secondary activities:
5.	Calculate the final cost of each activity below, assuming the cost of secondary activities is assigned to primary activities in proportion to the labor content of primary activities (if an amount is zero, enter "0"; round to the nearest dollar):
	Activities Final cost Supervising nurses $ Treating patients Providing hygienic care Responding to requests Monitoring patients

You have conducted several interviews with department supervisors who oversee the acquisition/payment process. The following is a summary of your discussions. Use this narrative to prepare a system flowchart to depict Plume’s acquisition/payment system.

checks are issued by the cash disbursements department. When the payment
authorization is received from accounts payable, the information is entered and used to
update the accounts payable and cash disbursements master files. A check is then
generated (with 1 copy). A copy of the check is filed with the payment authorization by
date. The check is then forwarded to the Treasurer. Additionally, a weekly cash
disbursements report is generated and is forwarded to the controller department.
The Treasurer verifies the check information by looking up the authorization
information in the accounts payable system. If the check information is correct, the
treasurer signs the check and sends it to the vendor. If there are any discrepancies, the
check is forwarded to the Controller.

Splish Company invests $10,400,000 in 5% fixed rate corporate bonds on January 1, 2017. All the bonds are classified as available-for-sale and are purchased at par. At year-end, market interest rates have declined, and the fair value of the bonds is now $11,078,000. Interest is paid on January 1.

Prepare journal entries for Splish Company to (a) record the transactions related to these bonds in 2017, assuming Splish does not elect the fair option; and (b) record the transactions related to these bonds in 2017, assuming that Splish Company elects the fair value option to account for these bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.	Date	Account Titles and Explanation	Debit	Credit
(a)	Jan. 1, 2017Dec. 31, 2017
	Jan. 1, 2017Dec. 31, 2017
		(To record interest revenue)
		(To record fair value adjustment)

No.	Date	Account Titles and Explanation	Debit	Credit
(b)	Jan. 1, 2017Dec. 31, 2017
	Jan. 1, 2017Dec. 31, 2017
		(To record interest revenue)
		(To record fair value adjustment)

a) Must consideration always be present to render a promise enforceable?

b) Does the magnitude of consideration matter? Explain.

c) how have the common law courts in some cases permitted a debtor to enforce a creditor’s gratuitous promise to reduce a debt?

A COMPREHENSIVE ACCOUNTING CYCLE PROBLEM - NEED ASAP! THANK YOU

On December 1, 2018, John and Maggie Driscoll formed Cape Clear Island, LLC. They began operations using the following accounts:

Cash

Accounts Receivable

Prepaid Rent

Unexpired Insurance

Office Supplies

Rental Equipment

Accumulated Depreciation:

    Rental Equipment

Notes Payable

Accounts Payable

Interest Payable

Salaries Payable

Dividends Payable

Unearned Rental Fees

Income Taxes Payable

Capital Stock

Retained Earnings

Dividends

Income Summary

Rental Fees Earned

Salaries Expense

Maintenance Expense

Utilities Expense

Rent Expense

Office Supplies Expense

Depreciation Expense

Interest Expense

Income Taxes Expense

The LLC performs adjusting entries monthly. Closing entries are performed annually on December 31.

During December, the LLC entered into the following transactions:

Dec. 1      Issued to John and Maggie Driscoll 20,000 shares of capital stock in exchange for a total of $200,000 cash.

Dec. 1      Purchased for $240,000 the equipment formally owned by a competitor named Achill, LLP. Paid $140,000 cash and issued a one year note payable for $100,000. The note, plus all 12 months of accrued interest, are due November 30, 2019.

Dec. 1     Paid $12,000 to Corrigan Realty, LLP as three months’ advance rent on the rental yard and office formerly occupied by Achill, LLP.

Dec. 4       Purchased office supplies on account from the Castlebar Office Company for $1,000. Payment due in 30 days. (These supplies are expected to last for several months.)

Dec. 8       Received $8,000 cash as advance payment on equipment rental from McGinty Construction Company.

Dec. 12     Paid salaries for the first two weeks in December of $5,200.

Dec. 15    Excluding the McGinty advance, equipment rental fees earned during the first 15 days of December amounted to $18,000, of which $12,000 was received in cash.

Dec. 17     Purchased on account from Donegal, LLP, $600 in parts needed to repair a rental tractor. Payment is due in 10 days.

Dec. 23    Collected $2,000 of the accounts receivable recorded on December 15.

Dec. 26     Rented a backhoe to Dever Landscaping at a price of $250 per day, to be paid when the backhoe is returned. Dever Landscaping expects to keep the backhoe for about two or three weeks.

Dec. 26    Paid biweekly salaries, $5,200.

Dec. 27    Paid the account payable to Donegal, LLP, $600.

Dec. 28    Declared a dividend of 10 cents per share, payable on January 15, 2019.

Dec. 29    Cape Clear Island, LLC was named, along with Dever Landscaping and Westport Construction as a co-defendant in a $25,000 lawsuit filed. Dever Landscaping had left the rented backhoe in a fenced construction site owned by Westport Construction. After working hours on December 26, kids had climbed the fence to play on parked construction equipment. While playing on the backhoe, one fell and broke his arm. The extent of the company’s legal and financial responsibility for this accident, if any, cannot be determined at this time.

Dec. 29     Purchased a 12-month public liability insurance policy for $9,600. This policy protects the company against liability for injuries and property damage caused by its equipment. However, the policy goes into effect on January 1, 2019, and affords no coverage for the injuries sustained by the kids on December 26.

Dec. 31    Received a bill from Corraun Utilities for the month of        December for $700. Payment is due in 30 days.

Dec. 31     Equipment rental fees earned during the second half of December amounted to $20,000, of which $15,600 was received in cash.

Data for Adjusting Entries:

1. The advance payment of rent on December 1 covered a period of three months.

2. The annual interest rate on the note payable to Achill, LLP is 6 percent.

3. The rental equipment is being depreciated by the straight-line method over a period of 8 years.

4. Office supplies on hand at December 31 are estimated at $600.

5. During December, the company earned $3,700 of the rental fees paid in advance by McGinty Construction Company on December 8.

6. As of December 31, six days’ rent on the backhoe rented to Dever Landscaping on December 26 has been earned.

7. Salaries earned by employees since the last payroll date (December 26) amounted to $1,400 at month-end.

8. It is estimated that the company is subject to a combined federal, state and local income tax rate of 45 percent of income before income taxes (total revenue minus all expenses other than income taxes). These taxes will be payable in 2019.

Instructions:

1. Perform the following steps of the accounting cycle for the month of December:

1. Record in the general journal the December transactions and post to the appropriate ledger accounts.

2. Prepare the unadjusted trial balance on a 10-column worksheet for the year ended December 31. See example on page 134 (Exhibit 3B.1) in our text book.

3. Prepare the necessary adjusting entries for December.

4. Post the December adjusting entries to the appropriate ledger accounts.

5. Complete the 10-column worksheet for the year ended December 31.

b. In professional format, prepare an Income Statement and Statement of Shareholders’ Equity for the year ended December 31, and a Balance Sheet as of December 31.

c. Prepare required footnote disclosures to accompany the December 31 financial statements. Your solution should include a separate footnote addressing each of the following areas: (1) depreciation policy, (2) maturity dates of major liabilities, and (3) potential liability due to pending litigation. Look at the Facebook annual report’s footnotes posted to our Black Board homepage.

d. Prepare closing entries and post to ledger accounts.

e. Prepare an after closing trial balance as of December 31.

f. During December, this company’s cash balance has fallen from $200,000. Does it appear headed for insolvency in the near future? Explain your reasoning.

g. Would it be ethical for Maggie Driscoll to maintain the accounting records for this company, or must they be maintained by someone who is independent of the organization?

Yes No Are you placed under pressure to meet demanding work targets or deadlines? If yes, is the pressure a result of external sources or your own disorganisation? Has there been consistency in workload recently? (this is preferable to sudden increases in workload or working overtime) Have work pauses been taken as appropriate? Is the chair easily adjusted from a seated position? Can you get close to the workstation without impediment? Is the seat height adjustable so that your thighs are parallel to the floor, with feet resting on the floor or a footrest? Is the backrest height-adjusted to fit into the small of your back and adequately support your spine? Is the backrest angle-adjusted so that you are sitting upright while typing? Are your forearms parallel with the floor or slightly angled downward? Is the desk height adjustable? If yes, is the adjustment easily operated? If no, do you have a footrest? If there is a footrest, is it large enough to support both feet and allow a change of position? When sitting tall and looking straight ahead, are you looking at the top edge of the screen? Is the screen at a comfortable reading distance? Are all characters in the display easily legible and the image stable? Can the position and contrast of the screen be adjusted by the user? Is the keyboard detached from the screen to ensure a comfortable working position? Is the keyboard thin enough for comfortable positioning of the arms (it should be less than 30mm thick at the home row of keys)? Is the keyboard matte finished to prevent irritation from glare and reflection? Are all commonly used items within easy reach (normal arm reach with minimal truck movement)? Is there sufficient space for large documents, completed work or writing? Is there sufficient space for CAD furniture, equipment and hardcopy materials? Is the workstation designed to prevent undue twisting of the neck and trunk? Do you find the lighting satisfactory? Do you find the noise level conducive to concentration? Do you find the temperature and airflow in the room comfortable?

Service Department Charges

In divisional income statements prepared for LeFevre Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $39,208, and the Purchasing Department had expenses of $19,430 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records:

		Residential		Commercial		Government Contract
Sales		$406,000		$538,000		$1,236,000
Number of employees:
	Weekly payroll (52 weeks per year)	225		60		65
	Monthly payroll	36		47		34
Number of purchase
	requisitions per year	2,800		2,000		1,900

a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division.

	Residential	Commercial	Government Contract	Total
Number of payroll checks:
Weekly payroll
Monthly payroll
Total
Number of purchase requisitions per year:

b. Using the activity base information in (a), determine the annual amount of payroll and purchasing costs charged back to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services. If required, round your answers to two decimal places. Do not round your interim calculations, round your answers to two decimal places, if required.

Service department charge rates:
Payroll Department	$ payroll distribution
Purchasing Department	$ per requisition

	Residential	Commercial	Government Contract	Total
Service department charges:
Payroll Department	$	$	$	$
Purchasing Department
Total	$	$	$

c. Residential's service department charge is ___ than the other two divisions because Residential is a ____ user of service department services. Residential has many employees on a weekly payroll, which translates into a ___ number of check-issuing transactions.

A company produces a product which has a standard variable production cost of $8 per unit made up as

follows:

                                                               $ Per Unit

Direct material                                 $4.60 (2kg X $2.30 per kg)

Direct labour                                     $2.10 (0.7 hours x $3.00 per hour)

Variable overhead                          $1.3

Fixed manufacturing costs are treated as period costs. The following information is available for the period just ended,

Variable manufacturing cost of sales (at standard cost)                                  $263,520

Opening stock of finished goods (at standard cost)                                         $120,800

Closing stock of finished goods (at standard cost)                                          $146,080

Direct material price variance                                                                          $2,571 U

Raw materials used in manufacture (at actual cost)                                        $170,310

Direct labour rate variance                                                                               $4,760 U

Direct labour efficiency variance                                                                      $3,240 F

Required:

(a)   Determine for the period ended.

(i)              The total actual direct labour cost, and

(ii)              The actual cost per kg of raw material used.

(b)   Outline the possible causes of the raw materials variances