Answer all questions:

1) Purchases = $92,000

Materials Inventory, Beginning = $6000

Materials Inventory, Ending = $8000

Direct Labor = $25,000

Factory Overhead = $37,000

Work In Process, Beginning = $22,000

Work in Process, Ending = $18,500

Finished Goods Inventory, Beginning = $21,000

Finished Goods Inventory, Ending = $25,000

Sales = $257,000

Selling and Administrative Expenses = 479,000

Required: Which of the above accounts would appear on an Income Statement ?

2) Refer to #1. Which of the above accounts would appear on a Statement of Cost of Goods Manufactured ?

3) Refer to #1. Compute total manufacturing costs

4) Refer to #1. Compute prime costs at end of period

5) Refer to #1. Compute conversion costs

Salmont Corporation uses the FIFO method in its process costing system. The company reported 29,000 equivalent units of production for materials last month. The company's beginning work in process inventory consisted of 8,000 units, 30% complete with respect to materials. The ending work in process inventory consisted of 6,000 units, 60% complete with respect to materials. The number of units started during the month was:

• 27,800 units

• 27,800 units

• 29,400 units

• 25,800 units

Darden Corporation uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 19,800 units in its beginning work in process inventory that were 10% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $20,700. An additional 93,000 units were started into production during the month. There were 26,000 units in the ending work in process inventory of the Welding Department that were 70% complete with respect to conversion costs. A total of $845,880 in conversion costs were incurred in the department during the month. The cost per equivalent unit for conversion costs for the month is closest to:

• $10.800

• $8.253

• $9.981

• $10.086

Service Department Charges

In divisional income statements prepared for Demopolis 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 $55,044, and the Purchasing Department had expenses of $28,160 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records:

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

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. Do not round your interim calculations, round your answers to two decimal places, if required.

The net present value (NPV) and internal rate of return (IRR) methods of investment analysis are interrelated and are sometimes used together to make capital budgeting decisions.

Consider the case of Blue Hamster Manufacturing Inc.:

Last Tuesday, Blue Hamster Manufacturing Inc. lost a portion of its planning and financial data when both its main and its backup servers crashed. The company’s CFO remembers that the internal rate of return (IRR) of Project Delta is 11.3%, but he can’t recall how much Blue Hamster originally invested in the project nor the project’s net present value (NPV). However, he found a note that detailed the annual net cash flows expected to be generated by Project Delta. They are:

The CFO has asked you to compute Project Delta’s initial investment using the information currently available to you. He has offered the following suggestions and observations:

1.Given the data and hints, Project Delta’s initial investment is ?

2. its NPV is ? (rounded to the nearest whole dollar).

A project’s IRR will   if the project’s cash inflows increase, and everything else is unaffected.

Jacob is a member of WCC (an LLC taxed as a partnership). Jacob was allocated $90,000 of business income from WCC for the year. Jacob’s marginal income tax rate is 37 percent. The business allocation is subject to 2.9 percent of self-employment tax and 0.9 percent additional Medicare tax. (Round your intermediate calculations to the nearest whole dollar amount.)

a. What is the amount of tax Jacob will owe on the income allocation if the income is not qualified business income?

b. What is the amount of tax Jacob will owe on the income allocation if the income is qualified business income (QBI) and Jacob qualifies for the full QBI deduction?

How can a business identify which products it makes have the highest margin, and therefore seek to concentrate more on the sale of those products vs other products they also may sell? For example, how could a restaurant gather/use this information to determine which specific items to try to target in selling to customers?

Problem 21A-1 a-c

The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Swifty Company, a lessee.

The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment.

Prepare an amortization schedule that would be suitable for the lessee for the lease term.

Prepare all of the journal entries for the lessee for 2017 and 2018 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee’s annual accounting period ends on December 31

Suppose Swifty received a lease incentive of $5,000 from Faldo Leasing to enter the lease. How would the initial measurement of the lease liability and right-of-use asset be affected?

What if Swifty prepaid rent of $5,000 to Faldo?

If a fraudster does not have legitimate access to check stock, what are three ways blank checks can be fraudulently obtained? What measures could an organization take to prevent the three ways you mention?

Monica Orgeta, president and owner of Star Enterprises, applied for a $250,000 loan from Carmel National Bank. The bank requested financial statements from Star Enterprises as a basis for granting the loan. Monica has told her accountant to provide the bank with a balance sheet. Monica has decided to omit the other financial statements because there was a net loss during the past year.

-Is Monica behaving in a professional manner by omitting some of the financial statements?

-What types of information about their businesses would owners be willing to provide bankers?

-What types of information would owners not be willing to provide?

-What common interests are shared by bankers and business owners?

-As the loan officer for Carmel National Bank, would you accept only the balance sheet in considering lending funds to Star or any business?

On 1/1/2011, Shamrock Corporation issued a 10-year $2,950,000 bond with stated interest rate of 8%. Interests were payable annually on 12/31. The bond was issued for $3,157,196 cash. Shamrock used the effective interest method to amortize any bond discount/ premium using.

a. what is the interest rate for the bond?

b. Prepare journal entries on 1/1/2011 and 12/31/2011 for shamrock

c. After paying interests due on 12/31/2015, Shamrock recalled 70% of the bond at 101. Call expenses totaled $5,500. Prepare journal entries for the interest payment and retirement of the bond on 12/31/2015.

d. Assume that everything else is the same except that Shamrock amortizes any bond discount/premium using the straight-line method. redo item (c.) above.

Gruman Company purchased a machine for $198,000 on January 2, 2016. It made the following estimates:

In 2016, Gruman uses the machine for 2,000 hours and produces 40,000 units. In 2017, Gruman uses the machine for 1,200 hours and produces 30,000 units. If required, round your final answers to the nearest dollar.

1. Compute the depreciation for 2016 and 2017 under each of the following methods:

1. Straight-line method

   2016	$
   2017	$

2. Sum-of-the-years'-digits method

   2016	$
   2017	$

3. Double-declining-balance method

   2016	$
   2017	$

4. Activity method based on hours worked

   2016	$
   2017	$

5. Activity method based on units of output

   2016	$
   2017	$

2. For each method, what is the book value of the machine at the end of 2016? At the end of 2017?

1. Straight-line method

   2016	$
   2017	$

2. Sum-of-the-years'-digits method

   2016	$
   2017	$

3. Double-declining-balance method

   2016	$
   2017	$

4. Activity method based on hours worked

   2016	$
   2017	$

5. Activity method based on units of output

   2016	$
   2017	$

3. If Gruman used a service life of 8 years or 15,000 hours and a residual value of $9,000 , what would be the effect on the following under the straight-line, sum-of-the-years'-digits, and double-declining-balance depreciation methods?

Depreciation expense

1. Straight-line method

   2016	$
   2017	$

2. Sum-of-the-years'-digits method

   2016	$
   2017	$

3. Double-declining-balance method

   2016	$
   2017	$

Book value

1. Straight-line method

   2016	$
   2017	$

2. Sum-of-the-years'-digits method

   2016	$
   2017	$

3. Double-declining-balance method

   2016	$
   2017	$

#9

Pharoah Company issued 2,500, 9%, 5-year, $1,000 bonds dated January 1, 2019, at 100. Interest is paid each January 1.

a. Prepare the journal entry to record the sale of these bonds on January 1, 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

b. Prepare the adjusting journal entry on December 31, 2019, to record interest expense. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

c. Prepare the journal entry on January 1, 2020, to record interest paid. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

The cloudy afternoon mirrored the mood of the conference of division managers. Claude Meyer, assistant to the controller for Hunt Manufacturing, wore one of the gloomy faces that were just emerging from the conference room. “Wow, I knew it was bad, but not that bad,” Claude thought to himself. “I don’t look forward to sharing those numbers with shareholders.”

The numbers he discussed with himself were fourth-quarter losses which more than offset the profits of the first three quarters. Everyone had known for some time that poor sales forecasts and production delays had wreaked havoc on the bottom line, but most were caught off guard by the severity of damage.

Later that night he sat alone in his office, scanning and rescanning the preliminary financial statements on his computer monitor. Suddenly his mood brightened. “This may work,” he said aloud, though no one could hear. Fifteen minutes later he congratulated himself, “Yes!”

The next day he eagerly explained his plan to Susan Barr, controller of Hunt for the last six years. The plan involved $300 million in convertible bonds issued three years earlier.

Meyer: By swapping stock for the bonds, we can eliminate a substantial liability from the balance sheet, wipe out most of our interest expense, and reduce our loss. In fact, the book value of the bonds is significantly more than the market value of the stock we’d issue. I think we can produce a profit.

Barr: But Claude, our bondholders are not inclined to convert the bonds.

Meyer: Right. But, the bonds are callable. As of this year, we can call the bonds at a call premium of 1%. Given the choice of accepting that redemption price or converting to stock, they’ll all convert. We won’t have to pay a cent. And, since no cash will be paid, we won’t pay taxes either.

1. What would be the impact of following up on Claude’s plan? Who would be affected if the plan is implemented? Who would benefit? Who would be injured? Consider people or related parties both inside and outside of the company.

2. Do you perceive an ethical dilemma? Use at least one of “The Ethical Guidelines”.

3. Should Susan follow Claude’s suggestion? Why or why not?

Required information

[The following information applies to the questions displayed below.]

The following data refer to Twisto Pretzel Company for the year 20x1.

3. Prepare the company’s income statement for 20x1.

Determine the amount of sales (units) that would be necessary under Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 103,950 units at a price of $51 per unit during the current year. Its income statement for the current year is as follows: Sales $5,301,450 Cost of goods sold 2,618,000 Gross profit $2,683,450 Expenses: Selling expenses $1,309,000 Administrative expenses 1,309,000 Total expenses 2,618,000 Income from operations $65,450 The division of costs between fixed and variable is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative expenses 50% 50% Management is considering a plant expansion program that will permit an increase of $408,000 in yearly sales. The expansion will increase fixed costs by $40,800, but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs for the current year. Enter the final answers rounded to the nearest dollar. Total variable costs $ Total fixed costs $ 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Enter the final answers rounded to two decimal places. Unit variable cost $ Unit contribution margin $ 3. Compute the break-even sales (units) for the current year. Enter the final answers rounded to the nearest whole number. units 4. Compute the break-even sales (units) under the proposed program for the following year. Enter the final answers rounded to the nearest whole number. units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $65,450 of income from operations that was earned in the current year. Enter the final answers rounded to the nearest whole number. units 6. Determine the maximum income from operations possible with the expanded plant. Enter the final answer rounded to the nearest dollar. $ 7. If the proposal is accepted and sales remain at the current level, what will the income or loss from operations be for the following year? Enter the final answer rounded to the nearest dollar. $ Income 8. Based on the data given, would you recommend accepting the proposal? In favor of the proposal because of the reduction in break-even point. In favor of the proposal because of the possibility of increasing income from operations. In favor of the proposal because of the increase in break-even point. Reject the proposal because if future sales remain at the current level, the income from operations will increase. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales. Choose the correct answer. b Feedback 1. Multiply the percentages for fixed and variable costs by each cost. 2. a. Divide the total variable costs by number of units. 2. b. Sales price per unit minus variable costs per unit equals contribution margin per unit. 3. Fixed costs divided by unit contribution margin equals break-even point. 4. Fixed costs under the proposed program divided by contribution margin equals new break-even point. 5. (Fixed costs + Target profit) divided by unit contribution margin equals sales units. 6. Determine the increase in units by dividing the sales increase by the price per unit. Add the additional revenue and additional fixed costs when calculating: Sales minus fixed and variable costs equals income from operations. 7. Subtract the additional fixed costs from the operating income. 8. Consider the break-even point and the sales needed for the proposed level. Learning Objective 2, Learning Objective 3. Check My Work Previous