The following were selected from among the transactions completed by Babcock Company during November of the current year:
| Nov. | 3 | Purchased merchandise on account from Moonlight Co., list price $93,000, trade discount 25%, terms FOB destination, 2/10, n/30. |
| 4 | Sold merchandise for cash, $34,100. The cost of the merchandise sold was $22,080. | |
| 5 | Purchased merchandise on account from Papoose Creek Co., $43,650, terms FOB shipping point, 2/10, n/30, with prepaid freight of $750 added to the invoice. | |
| 6 | Returned $15,000 ($20,000 list price less trade discount of 25%) of merchandise purchased on November 3 from Moonlight Co. | |
| 8 | Sold merchandise on account to Quinn Co., $15,270 with terms n/15. The cost of the merchandise sold was $8,940. | |
| 13 | Paid Moonlight Co. on account for purchase of November 3, less return of November 6. | |
| 14 | Sold merchandise on VISA, $229,890. The cost of the merchandise sold was $153,500. | |
| 15 | Paid Papoose Creek Co. on account for purchase of November 5. | |
| 23 | Received cash on account from sale of November 8 to Quinn Co. | |
| 24 | Sold merchandise on account to Rabel Co., $51,300, terms 1/10, n/30. The cost of the merchandise sold was $33,280. | |
| 28 | Paid VISA service fee of $3,410. | |
| 30 | Paid Quinn Co. a cash refund of $5,610 for returned merchandise from sale of November 8. The cost of the returned merchandise was $3,180. |
Required:
| Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles. |
| CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 10
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In: Accounting
Exercise 12-4 Prepare a Statement of Cash Flows [LO12-1, LO12-2]
| The following changes took place last year in Pavolik Company’s balance sheet accounts: |
| Asset and Contra-Asset Accounts | Liabilities and Equity Accounts | ||||||
| Cash | $ | 28 | D | Accounts payable | $ | 86 | I |
| Accounts receivable | $ | 32 | I | Accrued liabilities | $ | 32 | D |
| Inventory | $ | 74 | D | Income taxes payable | $ | 37 | I |
| Prepaid expenses | $ | 27 | I | Bonds payable | $ | 268 | I |
| Long-term investments | $ | 29 | D | Common stock | $ | 128 | D |
| Property, plant, and equipment | $ | 515 | I | Retained earnings | $ | 106 | I |
| Accumulated depreciation | $ | 106 | I | ||||
| D = Decrease; I = Increase. |
|
Long-term investments that had cost the company $29 were sold during the year for $62, and land that had cost $61 was sold for $32. In addition, the company declared and paid $26 in cash dividends during the year. Besides the sale of land, no other sales or retirements of plant and equipment took place during the year. Pavolik did not retire any bonds during the year or issue any new common stock. |
| The company’s income statement for the year follows: |
| Sales | $ | 1,260 | ||
| Cost of goods sold | 558 | |||
| Gross margin | 702 | |||
| Selling and administrative expenses | 500 | |||
| Net operating income | 202 | |||
| Nonoperating items: | ||||
| Loss on sale of land | $ | (29) | ||
| Gain on sale of investment | 33 | 4 | ||
| Income before taxes | 206 | |||
| Income taxes | 74 | |||
| Net income | $ | 132 | ||
| The company’s beginning cash balance was $144 and its ending balance was $116. |
| Required: |
| 1. |
Using the indirect method, determine the net cash provided by / used in operating activities for the year. (List any deduction in cash and cash outflows as negative amounts.) |
| 2. |
Prepare a statement of cash flows for the year. (List any deduction in cash and cash outflows as negative amounts.) |
In: Accounting
Question 4 [20 marks] Analyze if the statements that are presented below are True or False. You MUST justify your answer to get credit. Answers without justification (even if they are correct) will be given zero marks.
(a) In any Pareto-optimal allocation of a two-good economy, each consumer has to consume a positive amount of both goods.
(b) A monopolist never produces on the elastic segment of its average revenue curve.
(c) If a firm’s production exhibits increasing returns to scale, then the firm’s marginal costs are decreasing and below its average costs.
(d) Maroon Theater practices third-degree price discrimination and sells tickets to three groups of customers: students, regular customers and senior citizens. The inverse demand of the three groups is linear. Furthermore, the students’ and senior citizens’ elasticities of demand for tickets are −4 and −3, respectively. Because the price charged to regular customers is greater than the price charged to senior citizens, we know with certainty that the ticket price for students will be lower than the ticket price for regular customers.
In: Economics
Jordan, Inc., is a leading manufacturer of sports apparel,
shoes, and equipment. The company’s 2015 financial statements
contain the following information (in millions):
| 2015 | 2014 | ||||
| Balance sheets: | |||||
| Accounts receivable, net | $ | 3,832 | $ | 3,847 | |
| Income statements: | |||||
| Sales revenue | $ | 27,328 | $ | 25,346 | |
A note disclosed that the allowance for uncollectible accounts had
a balance of $117 million and $104 million at the end of 2015 and
2014, respectively. Bad debt expense for 2015 was $45 million.
Assume that all sales are made on a credit basis.
Required:
1. What is the amount of gross (total) accounts
receivable due from customers at the end of 2015 and 2014?
2. What is the amount of bad debt write-offs
during 2015?
3. Analyze changes in the gross accounts
receivable account to calculate the amount of cash received from
customers during 2015.
4. Analyze changes in net accounts receivable to
calculate the amount of cash received from customers during
2015.
In: Accounting
Minta Corporation is a leading manufacturer of sports apparel,
shoes, and equipment. The company’s 2017 financial statements
contain the following information ($ in millions):
| 2017 | 2016 | ||||
| Balance sheets: | |||||
| Accounts receivable, net | $ | 4,667 | $ | 4,231 | |
| Income statements: | |||||
| Sales revenue | $ | 37,140 | $ | 35,166 | |
A note disclosed that the allowance for uncollectible accounts had
a balance of $37 million and $61 million at the end of 2017 and
2016, respectively. Bad debt expense for 2017 was $58 million.
Assume that all sales are made on a credit basis.
Required:
1. What is the amount of gross (total) accounts
receivable due from customers at the end of 2017 and 2016?
2. What is the amount of bad debt write-offs
during 2017?
3. Analyze changes in the gross accounts
receivable account to calculate the amount of cash received from
customers during 2017.
4. Analyze changes in net accounts receivable to
calculate the amount of cash received from customers during
2017.
In: Accounting
Minta Corporation is a leading manufacturer of sports apparel,
shoes, and equipment. The company’s 2017 financial statements
contain the following information ($ in millions):
| 2017 | 2016 | ||||
| Balance sheets: | |||||
| Accounts receivable, net | $ | 4,282 | $ | 3,846 | |
| Income statements: | |||||
| Sales revenue | $ | 36,055 | $ | 34,081 | |
A note disclosed that the allowance for uncollectible accounts had
a balance of $30 million and $54 million at the end of 2017 and
2016, respectively. Bad debt expense for 2017 was $51 million.
Assume that all sales are made on a credit basis.
Required:
1. What is the amount of gross (total) accounts
receivable due from customers at the end of 2017 and 2016?
2. What is the amount of bad debt write-offs
during 2017?
3. Analyze changes in the gross accounts
receivable account to calculate the amount of cash received from
customers during 2017.
4. Analyze changes in net accounts receivable to
calculate the amount of cash received from customers during
2017.
In: Accounting
Minta Corporation is a leading manufacturer of sports apparel,
shoes, and equipment. The company’s 2017 financial statements
contain the following information ($ in millions):
| 2017 | 2016 | ||||
| Balance sheets: | |||||
| Accounts receivable, net | $ | 4,282 | $ | 3,846 | |
| Income statements: | |||||
| Sales revenue | $ | 36,055 | $ | 34,081 | |
A note disclosed that the allowance for uncollectible accounts had
a balance of $30 million and $54 million at the end of 2017 and
2016, respectively. Bad debt expense for 2017 was $51 million.
Assume that all sales are made on a credit basis.
Required:
1. What is the amount of gross (total) accounts
receivable due from customers at the end of 2017 and 2016?
2. What is the amount of bad debt write-offs
during 2017?
3. Analyze changes in the gross accounts
receivable account to calculate the amount of cash received from
customers during 2017.
4. Analyze changes in net accounts receivable to
calculate the amount of cash received from customers during
2017.
In: Accounting
Explain the advantages of purchasing an exchange traded fund over common stock and the difference between a mutual fund and an exchange traded fund.
In: Finance
Romsen Manufacturing, Inc., a producer of precision machine
parts, uses a predetermined
overhead rate to apply overhead. Overhead is applied on the basis
of machine
hours in the Drilling Department and on the basis of direct hours
in the Assembly
Department. At the beginning of 2006, the following estimates are
provided for the
coming year:
| Drilling | Assembly | |
| Direct Labor Hours | 20,000 | 200,000 |
| Machine Hours | 280,000 | 20,000 |
| Inspection Hours | 4,000 | 8,000 |
| Direct Labor Cost | $380,000 | $1,800,000 |
| Overhead Cost | $600,000 | $392,000 |
Actual results reported for 2006 are as follows:
| Drilling | Assembly | |
| Direct Labor Hours | 42,000 | 196,000 |
| Machine Hours | 288,000 | 22,000 |
| Inspection Hours | 4,000 | 8,000 |
| Direct Labor Cost | $168,000 | $882,400 |
| Overhead Cost | $602,000 | $412,000 |
Required
1. Compute the predetermined overhead rates for each
department.
2. Compute the applied overhead for the year 2006. What is the
underapplied or
overapplied overhead for each department? For the firm?
3. Suppose a job used 4,000 machine hours in drilling and 1,600
direct labor hours
in assembly. If the job size is 8,000 units, what is the overhead
cost per unit?
In: Accounting
Answer both questions using chart
Lock-Tite Company
Jobs Report – Traditional OH allocation (Direct Labor Dollars)
Year Ending December 31
|
JV28 |
BY92 |
ZF14 |
||||
|
Sales Revenue |
132,800 |
99,600 |
92,960 |
Calculated in 7e) |
||
|
Job Costs: |
||||||
|
Direct Material |
26,560 |
19,920 |
13,280 |
From 7a) |
||
|
Direct Labor |
7,842 |
5,882 |
5,882 |
From 7b) |
||
|
Overhead |
4,313 |
3,235 |
3,235 |
From 7c) |
||
|
Total Job Costs |
38,715 |
29,037 |
22,397 |
|||
|
Gross Margin |
70.85 |
70.85 |
75.91 |
|||
|
Gross Margin % |
53% |
71% |
82% |
In: Accounting