Hrubec Products, Inc., operates a Pulp Division that manufactures wood pulp for use in the production of various paper goods. Revenue and costs associated with a ton of pulp follow:

Hrubec Products has just acquired a small company that manufactures paper cartons. This company will be treated as a division of Hrubec with full profit responsibility. The newly formed Carton Division is currently purchasing 31,000 tons of pulp per year from a supplier at a cost of $23 per ton, less a 10% purchase discount. Hrubec’s president is anxious for the Carton Division to begin purchasing its pulp from the Pulp Division if an acceptable transfer price can be worked out.

For (1) and (2) below, assume the Pulp Division can sell all of its pulp to outside customers for $23 per ton.

1. What is the lowest acceptable transfer price from the perspective of the Pulp Division? What is the highest acceptable transfer price from the perspective of the Carton Division? What is the range of acceptable transfer prices (if any) between the two divisions? Are the managers of the Carton and Pulp Divisions likely to voluntarily agree to a transfer price for 31,000 tons of pulp next year?

2. If the Pulp Division meets the price that the Carton Division is currently paying to its supplier and sells 31,000 tons of pulp to the Carton Division each year, what will be the effect on the profits of the Pulp Division, the Carton Division, and the company as a whole?

For (3)–(6) below, assume that the Pulp Division is currently selling only 59,000 tons of pulp each year to outside customers at the stated $23 price.

4-a. Suppose the Carton Division’s outside supplier drops its price (net of the purchase discount) to only $18 per ton. Should the Pulp Division meet this price?

4-b. If the Pulp Division does not meet the $18 price, what will be the effect on the profits of the company as a whole?

6. Refer to (4) above. Assume that due to inflexible management policies, the Carton Division is required to purchase 31,000 tons of pulp each year from the Pulp Division at $23 per ton. What will be the effect on the profits of the company as a whole?

On December 1, 2012, Bluemound Company had the following account balances.

During December, the company completed the following transactions.

Adjustment data:

1. Depreciation $200 per month.

2. Insurance expired $400.

Instructions

(a) Journalize the December transactions. (Assume a perpetual inventory system.)

(b) Enter the December 1 balances in the ledger T accounts and post the December transactions.

Use Cost of Goods Sold, Depreciation Expense, Insurance Expense, Salaries and Wages Expense, Sales Revenue, and Sales Discounts.

(c) The statement from Jackson County Bank on December 31 showed a balance of $21,994. A comparison of the bank statement with the Cash account revealed the following facts.

1. The bank collected a note receivable of $2,200 for Bluemound Company on December 15.

2. The December 31 receipts of $2,736 were not included in the bank deposits for December.

The company deposited these receipts in a night deposit vault on December 31.

3. Checks outstanding on December 31 totaled $1,210.

4. On December 31, the bank statement showed a NSF charge of $800 for a check received by the company from L. Shur, a customer, on account.

Prepare a bank reconciliation as of December 31 based on the available information

(d) Journalize the adjusting entries resulting from the bank reconciliation and adjustment data.

(e) Post the adjusting entries to the ledger T accounts.

(f) Prepare an adjusted trial balance.

(g) Prepare an income statement for December and a classified balance sheet at December 31.

3. The marketing research department for a company that manufacturers and sells notebook computers established the following revenue and cost functions:
R(x) = x(2000 – 60x)
C(x) = 4000 + 500x,
where x is thousands of computers, and R(x) and C(x) are in thousands of dollars. Both
functions have the domain 1 ≤ x ≤ 25.
(1) Form a profit function P, and graph R, C, and P in the same rectangular coordinate system.
(2) Discuss the relationship between the intersection points of the graphs of R and C and the x intercepts of P.
(3) Find the x intercepts of P to the nearest hundred computers. Find the break-even points.
(4) Refer to the graph drawn in part (1). Does the maximum profit appear to occur at the same output level as the maximum revenue? Are the maximum profit and maximum revenue equal? Explain.  

A survey has been conducted in canteen during the lunch time. The average number of customers arrived in a 5-minute interval is 8.

a) What is the probability that exactly 3 customers will arrive in a 2-minute interval?

b) What is the probability that less than 3 customers will arrive in a 4-minute interval?

c) What is the probability that more than 1 customers will arrive in a 30-second interval?

The adjusted trial balance for Turnquist Company is shown below. TURNQUIST COMPANY Trial Balance August 31, 2017 Before Adjustment After Adjustment Dr. Cr. Dr. Cr. Cash $10,100 $10,100 Accounts Receivable 8,600 10,000 Supplies 2,500 600 Prepaid Insurance 3,800 2,500 Equipment 14,300 14,300 Accumulated Depreciation-Equipment $ 3,600 $ 4,400 Accounts Payable 5,800 5,800 Salaries and Wages Payable 0 1,100 Unearned Rent Revenue 1,400 700 Owner’s Capital 15,600 15,600 Service Revenue 33,800 35,200 Rent Revenue 11,200 11,900 Salaries and Wages Expense 16,900 18,000 Supplies Expense 0 1,900 Rent Expense 15,200 15,200 Insurance Expense 0 1,300 Depreciation Expense 0 800 $71,400 $71,400 $74,700 $74,700 Prepare the income statement for the year. TURNQUIST COMPANY Income Statement $

1. Prepare Income statement for the year 2.Prepare owners Equity for the year 3.Prepare balance sheet at August 31 4.Liability and owners Equity

Why did the U.S. government decide to reopen the long-running trade dispute between Boeing
and Airbus in 2004? Do you think the U.S. position is reasonable? What about the EU’s
countercharges

Alternative Inventory Methods

Frate Company was formed on December 1, 2015, and uses the periodic inventory system. The following information is available from Frate's inventory records for Product Ply:

A physical inventory on March 31, 2016 shows 1,600 units on hand.

Required:

For each method, enter your answers in chronological order.

Prepare schedules to compute the ending inventory at March 31, 2016, under each of the following inventory methods:
1. FIFO

2. LIFO

3. Weighted average (For the weighted average method, round the average cost per unit to two decimal places.)

How does the Fall of Man relate to tragedies like 9/11 and disasters such as the Tsunami of 2004? Explain how your reaction to evil events has caused you to reassess your worldview.

Background Information Note the following:

• Acme Corporation is a publicly listed company

• ACME’s Fiscal year end is December 31

• In addition to the cash account being reconcile here; ACME has a separate Revolving Credit account.

  This is a revolving credit facility where interest is accrued on the average balance outstanding during the month. The interest amount is required to be paid on a monthly basis. The correct is amount calculated and taken from the account automatically by the bank.

• The facility has an annual interest rate of 4%

• Management has set-out in the Financial Statements that the average balance outstanding in this

  revolving credit facility is normally at around $ 150,000.

• The Audit Committee has also informed the Partner that the CRA audited ACME in the previous year

  and levied a penalty of $50,000 and has informed the Board that they plan continue their audit in the new year.

  Required

  Part 1

1. a) From the information provided in EXHIBIT A, perform and document a Bank Reconciliation. - 20 marks

2. b) From the Background info. provided above, identify potential errors and disclosure requirements - 5 marks

Part 2

1. a) Identify the financial assertions relating to the Cash account addressed by the Bank Reconciliation and explain how. – 5 marks

2. b) Identify what type of activity the Bank Reconciliation is. – 5 marks

3. c) Identify the 6 possible characteristics (of the activity above) and which apply to the Bank Rec. – 5 marks

BONUS
How would the Auditor test the identified characteristics. – 4 marks

EXHIBIT A

Budget Question:  

Gutierrez Company, a publicly held corporation, operates a regional chain of large drugstores. Each drugstore is operated by a general manager and a controller. The general manager is responsible for the day-to-day operations of the store, while the controller is responsible for the budget and other financial tasks. The general manager, Tracie Kappan, has been at Gutierrez Company for several years. Employee turnover is high at Gutierrez Company, just as it is in the retail industry in general. Kappan just hired a new controller, Min Yang.

Yang was asked to prepare the master budget. Each retail location prepares its master budget once a year and then submits that budget to company headquarters for approval. Once approved by headquarters, the master budget is used to evaluate the store’s performance. These performance evaluations directly affect the managers’ bonuses and whether additional company funds are invested in that location.

When Yang was almost done preparing the budget, Kappan instructed him to increase the amounts budgeted for labor and supplies by 20%. When asked why, Kappan responded that this budgetary cushion gives store management flexibility in running the store. For example, because company headquarters tightly controls operating funds and capital improvement funds, any extra money budgeted for labor and supplies can be used to replace store furnishings or to pay bonuses to help to retain good employees. She explains that the chance of getting extra funds from company headquarters is not good; this “cushion” is usually the only opportunity to replace store décor or to pay bonuses to key employees. Kappan also needs extra funds occasionally to make “under the table” payments to employees as incentives to work extra hours or to keep them from leaving for a higher-paying job.

Yang feels conflicted. He is eager to please Kappan, and he is wondering what he should do in this situation.

1. Who are the stakeholders in the scenario?

2. Who is responsible for the situation Min Yang is in? The Company or the General Manager? Why do you think that?

3. What would do if you were Min Yang?