Date of loan: 1/1/2005

Terms of loan repayment: 20 annual payments beginning 12/31/2005

The payment is X in the first 10 years, and 50% of X in the second 10 years

Interest rate: 5%, effective annually

Compute the ratio Y of the principal repaid in the 10th payment to the principal repaid in the 11th payment.

Rose Company makes bottles. The followings are the extracted information:

The Company charges the customers based on cost-plus pricing approach

You required to calculate the TOTAL REVENUE if all units are sold given the rule is:   

20% mark up on all variable cost and 25% mark up on all fixed manufacturing cost

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $23.40 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, a simple system consisting of four activity cost pools seemed to be adequate. The activity cost pools and their activity measures appear below:

The total cost of operating the company for the year is $352,000, which includes the following costs:

Resource consumption is distributed across the activities as follows:

Distribution of Resource Consumption Across Activities  

Job support consists of receiving calls from potential customers at the home office, scheduling
jobs, billing, resolving issues, and so on.

Required:

1. Prepare the first-stage allocation of costs to the activity cost pools.

2. Compute the activity Rates for the activity cost pools. (Round your answer to 2 decimal places)

3. The company recently completed a 4 hundred square foot carpet-cleaning job at the Flying N ranch—a 54.00-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system. (Round your intermediate and final answers to 2 decimal places.)

4. The revenue from the Flying N ranch was $93.60 (4 hundred square feet at $23.40 per hundred square feet). Prepare a report showing the margin from this job. (Round your intermediate calculations and final answers to 2 decimal places.)

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $23.35 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, a simple system consisting of four activity cost pools seemed to be adequate. The activity cost pools and their activity measures appear below:

The total cost of operating the company for the year is $348,000, which includes the following costs:

Resource consumption is distributed across the activities as follows:

Distribution of Resource Consumption Across Activities

Job support consists of receiving calls from potential customers at the home office, scheduling
jobs, billing, resolving issues, and so on.

Required:

1. Prepare the first-stage allocation of costs to the activity cost pools.

2. Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.)

3. The company recently completed a 4 hundred square foot carpet-cleaning job at the Flying N ranch—a 58.00-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system. (Round your intermediate and final answers to 2 decimal places.)

4. The revenue from the Flying N ranch was $93.40 (4 hundred square feet at $23.35 per hundred square feet). Prepare a report showing the margin from this job. (Round your intermediate calculations and final answers to 2 decimal places.)

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $22.50 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, a simple system consisting of four activity cost pools seemed to be adequate. The activity cost pools and their activity measures appear below:

The total cost of operating the company for the year is $353,000, which includes the following costs:

Resource consumption is distributed across the activities as follows:

Distribution of Resource Consumption Across Activities

Job support consists of receiving calls from potential customers at the home office, scheduling
jobs, billing, resolving issues, and so on.

Required:

1. Prepare the first-stage allocation of costs to the activity cost pools.

2. Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.)

3. The company recently completed a 6 hundred square foot carpet-cleaning job at the Flying N ranch—a 51.00-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system. (Round your intermediate and final answers to 2 decimal places.)

4. The revenue from the Flying N ranch was $135.00 (6 hundred square feet at $22.50 per hundred square feet). Prepare a report showing the margin from this job. (Round your intermediate calculations and final answers to 2 decimal places.)

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $23.25 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below:

The total cost of operating the company for the year is $349,000 which includes the following costs:

Resource consumption is distributed across the activities as follows:

Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on.

Required:

1. Prepare the first-stage allocation of costs to the activity cost pools.

2. Compute the activity rates for the activity cost pools

3. The company recently completed a 800 square foot carpet-cleaning job at the Flying N Ranch—a 59-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system.

4. The revenue from the Flying N Ranch was $186.00 (800 square feet @ $23.25 per hundred square feet). Calculate the customer margin earned on this job.

Established in 1964, Nike Inc. (Nike) is one of the world’s leading designer, marketer and distributor of athletic footwear, apparel, equipment and accessories for sports and other fitness activities. The wholly owned subsidiaries of Nike include Converse Inc, Bauer Inc., Cole Haan, Hurley International LLC, and Exeter Brands Group LLC. In January 2006, Fortune magazine listed Nike as one of the 100 best companies to work for in the US. 2005 was a record year for sales and profitability at Nike. The company's revenues grew to $13.740 billion from $9.489 billion in 2001 and $12.253 billion in 2004. Footwear revenues were up by 11%, whereas apparel and equipment revenues grew by 10% and 15% respectively. Accurate demand forecasting was cited as one of the primary reasons for this success. But the situation was quite different in 2001. That year, Nike spent $40 million on a demand projection model developed by i2 Technologies Inc. (i2) but its profits for spring (Jan-March) 2001 were around $48 million below forecasts, at $97 million.

Nike had a well-set demand forecasting system that had been performing quite well throughout the 1980s. In this system, orders from retailers were placed six months ahead of delivery. Once these orders were placed, Nike would pass them to their contract manufacturers in the Far East. The system was running fine until Nike made the transition from being the 12th largest shoe manufacturer (in 1984) to the undisputed leader in the footwear industry (by the mid-1990s). As a result of this transition, its manufacturing schedules became more complex. The company’s manufacturing schedules became busier and shipping dates tighter as the number of customers increased considerably. With 27 order management systems around the globe in 1998, Nike’s supply chain began to fragment. It became extremely difficult for Nike to make demand forecasts using its existing system.

Nike then decided to implement a new demand forecasting and supply chain management system provided by i2. The software solution was supposed to reduce the inventory for rubber, canvas and other materials that Nike required to manufacture shoes. Also, i2’s solution was expected to help Nike align production to focus on its more popular selling brands. Though the problems started to manifest within the very first few months of implementation of the demand forecasting solution, Nike and i2 tracked the problems down and tried to develop ways around them. The i2 software technicians tried to overcome the problems by changing operational procedures or by writing new software. But by the time modifications were made, the inventory problem had already started. Nike was over-manufacturing some products while struggling to meet the customer demand on other products. Because of Nike’s excessive reliance on the automated projections, it ended up ordering $90 million worth of shoes, such as the Air Garnett II, which were selling very poorly, from suppliers across the globe. On the other hand, there was also a shortfall of $80 million to $100 million on popular models, like the Air Force One.

Nike – Failure in Demand Forecasting To control the damage, Nike filled the back orders that had not been supplied and made moves to dispose of the excess inventory through discount distribution channels like Nike’s outlet stores. It even had to dump the excess shoes at ‘bargain basement prices. It took about 6 to 9 months for Nike to overcome the problem of incorrect proportions in its inventory, and more than two years to make up the financial loss. The inaccurate forecasts and losses they entailed resulted in a sharp fall in Nike’s share prices, and the company’s image as an innovative user of technology was tarnished. It cost Nike more than $100 million in lost sales, lowered its stock prices by about 20%, and led to a series of legal battles.

Experts across the globe analyzed the reasons for the huge mismatch between demand and supply. According to Karen Peterson, a Gartner Inc analyst, “i2's relative inexperience in

delivering supply-chain systems for the apparel and footwear industry and Nike's demands put the project at risk from the get-go.”6 This probably led to the software solution's inappropriate demand forecasting. But, most of the analysts had a different perspective. They opined that Nike was too busy with other costly projects like ERP and SAP at that point of time. Further, since Nike was going through a boom, the increasing sales and volume of work coupled with the added burden of a new software, and hence a new mode of demand forecasting, led to the failure of the system altogether.

Despite the fact that Nike issued public statements against i2, it continued to use i2 as its sole supplier of demand forecasting software for Nike’s small but growing apparel business (it stopped using i2's demand planner for short and medium-range planning for sneaker’s). Nike gradually shifted its demand planning to SAP and ERP systems, which depended more on orders and invoices than predictive algorithms. Learning from experience, Nike combined the earlier demand forecasting techniques that were chiefly based on intuition with the modern integrated computerized system so that a reasonable logical result could be obtained. In the words of Roland Wolfram, Nike’s vice president of operations and technology, “Demand planning strategy was and will be a mixture of art and technology.” The company also decided to give more importance to the opinions of retailer’s for demand forecasting. Phil Knite, CEO of Nike, said, ‘I think it will be profitable in the long run.” Nike also converted its supply chain from 'make-to-sell' to 'make-to order'. These continuous efforts of Nike to mend the damage bore results and the company regained its image and posted record sales in 2005.

Answer the following questions

What was the forecasting approach practiced at Nike prior to implementing i2’s demand forecasting and supply chain management system? What reasons prompted Nike to change its demand forecasting techniques? What was the outcome of this change?

What were the likely reasons that resulted in such a huge gap between demand and supply at Nike? What, in your opinion, could have been done to avoid this situation?

The following transactions occurred during 2020 (the company uses a perpetual inventory system with FIFO):

1) Jan 4 Stockholders invested an additional $10,000 cash in the business in exchange for common stock

2) Jan 4 Purchased 20 rabbits at $50 each on account from Jelly Bean Farms.

3) Jan 4 Established a $200 petty change fund

4) Jan 5 Sold 6 rabbits for $200 each to Mr. Karrot, terms 2/10, n/30.

5) Jan 6 Sold 12 rabbits at $200 each for cash

6) Jan 8 Paid wages of $240

7) Jan 9 Mr. Karrot returned one rabbit because they originally ordered only 5.

8) Jan 12 Purchased equipment on account for $2,000

9) Jan 14 Received payment in full from Mr. Karrot

10) Jan 15 Purchased 10 rabbits at $52 each on account from Easter Industries, terms 1/10, n/30.

11) Jan 15 Paid utility bill of $120

12) Jan 16 Returned 2 rabbits to Easter Industries because they were defective.

13) Jan 17 Sold 8 rabbits for $245 each for cash

14) Jan 18 Paid tax bill from 2019.

15) Jan 18 Performed the service of rabbit grooming ($800 worth); we received the cash in 2019

16) Jan 19 Paid Accounts Payable in full from 2019

17) Jan 20 Received $2,200 cash from customers paying on their accounts

18) Jan 21 Received a bill from the local radio station for advertising in the amount of $400

19) Jan 22 Purchased 20 rabbits for $55 each on account from Eggs & Chicks Company; terms 2/5, n/30

20) Jan 23 Paid freight costs from Eggs & Chicks Company of $10.

21) Jan 25 Sold 10 rabbits to Bunny Tail Corporation for $260 each on account; terms 3/10, n/30

22) Jan 26 Received payment in full from Bunny Tail Corporation

23) Jan 27 Sold 10 rabbits to customers on credit for $260 each.

24) Jan 28 Paid Eggs & Chicks Company for the purchase on Jan 22

25) Jan 29 Petty cash was replenished and had the following receipts: gas receipt for $20, postage stamps for $39, Office Depot receipt for $16, miscellaneous receipt for $30, travel receipts for $40

26) Jan 30 Performed a physical inventory count and count only 1 rabbit on hand.

27) Jan 30 Bank statement arrives today and there is a $20 bank service charge as well as a $120 NSF check.

28) Jan 31 One month’s prepaid insurance needs to be expensed for January ($1,200 is for the whole year)

29) Jan 31 Depreciate one month’s worth of the building and equipment (Using straight line method; building has a useful life of 20 years, equipment has a useful life of 5 years and no salvage value)

30) Jan 31 The estimated bad debt expense under the percentage of sales basis is $120.

31) Jan 31 Paid dividends of $500

What would the journal entries be for Jan 16,18,19,30 and 31st??? Numbers 12, 14, 15, 16, 26, 27, 29, 30?

(1) Equity transactions.

Presented below is information related to Chen Company:

(1) The company is granted a charter that authorizes issuance of 20,000 shares of $45 par value preferred stock and 50,000 shares of no-par common stock.

(2) 12,500 shares of common stock are issued to the founders of the corporation for land valued by the board of directors at $225,000. The board establishes a stated value of $6 a share for the common stock.

(3) 7,250 shares of preferred stock are sold for cash at $63 per share.

(4) The company issues 145 shares of common stock to its attorneys for costs associated with starting the company. At that time, the common stock was selling at $74 per share.

Instructions Prepare the general journal entries necessary to record these transactions. How would the journal entries change if there was no par value listed on the common stock?