Langford Ltd. operates a chain of restaurants. The restaurants have performed very well, having established a reputation for affordable, value for money offerings and child-friendly facilities.
In seeking new growth opportunities, the company has embarked on a strategy of acquiring existing successful companies to supply key materials and ingredients to their restaurants. The rationale for this strategy is to secure supplies at more affordable prices as well as exploiting opportunities within these markets more generally.
With the growth of the company, it has become necessary to decentralize decision-making through the creation of two divisions, Supply Services and Restaurants. Each division is treated as an investment center with divisional managing directors being evaluated on the basis of annual return on investment (ROI). Each division in turn consists of a number of business units treated as profit centers for performance management.
Megaco (Pty) Ltd., which manufactures a variety of cheese products, has recently been acquired by Langford Ltd. Megaco’s main customer base is medium sized independent retailers, but it is looking to expand its market and thereby utilize its excess capacity.
A key ingredient of many of the restaurant meals is standard cheddar cheese which is procured centrally by the Restaurant division at a favourable price owing to volume discounts negotiated with the existing supplier.
In line with Langford’s acquisition strategy of securing restaurant supplies at more affordable prices; the Managing Director of Restaurant division have been encouraged to meet the Chief Executive Officer (CEO) of Megaco and discuss mutually beneficial ways of transacting internally. The restaurants currently purchase and use 2,500 kgs of cheddar cheese monthly and pay $12.00 per kg.
The Managing director of Restaurant division, together with Megaco’s CEO have met on two occasions and, although they recognized the benefit to the company as a whole from transacting internally, have not yet reached agreement on a transfer price for standard cheddar cheese.
Megaco currently sells the cheese to its existing customers at $15.00 per kg and its CEO is reluctant to reduce the price for the restaurants. However, in the interests of the company as a whole, he has offered to reduce his normal mark-up and hence discount the existing price by 10%. As he explained: ‘This is the best I can do, after all I have to cover my full costs and make a fair profit.' The Restaurant’s Managing Director was not prepared to accept this price and, although Langford Ltd.’s executive management team was disappointed that no deal had been struck, chose not to interfere.
Megaco’s standard cheddar cheese monthly manufacturing capacity and related costs are as follows:
|
Maximum capacity (kgs) |
12,000 |
|
Current utilization (kgs) |
8,000 |
|
Variable costs per kg: |
|
|
Product cost |
$6.00 |
|
Selling, administration and general expenses |
$3.00 |
|
Monthly fixed costs in respect of providing the maximum capacity: |
|
|
Production |
$15,000 |
|
Selling, administration and general expenses |
$5,000 |
Required:
In: Accounting
Windsor Construction Company began work on a $404,000
construction contract in 2020. During 2020, Windsor incurred costs
of $273,000, billed its customer for $232,000, and collected
$182,000. At December 31, 2020, the estimated additional costs to
complete the project total $163,660.
Prepare Windsor’s journal entry to record profit or loss, if any,
using (a) the percentage-of-completion method and (b) the
completed-contract method. (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. Round answers to 0
decimal places, e.g. 5,275.)
|
No. |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
(a) |
enter an account title to record the transaction using the percentage-of-completion method |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction using the percentage-of-completion method |
enter a debit amount |
enter a credit amount |
|
|
enter an account title to record the transaction using the percentage-of-completion method |
enter a debit amount |
enter a credit amount |
|
|
(b) |
enter an account title to record the transaction using the completed-contract method |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction using the completed-contract method |
enter a debit amount |
enter a credit amount |
In: Accounting
Tamarisk Construction Company began work on a $406,500 construction
contract in 2020. During 2020, Tamarisk incurred costs of $292,500,
billed its customer for $213,500, and collected $177,000. At
December 31, 2020, the estimated additional costs to complete the
project total $161,340.
Prepare Tamarisk’s journal entry to record profit or loss, if any,
using (a) the percentage-of-completion method and (b) the
completed-contract method. (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. Round answers to 0
decimal places, e.g. 5,275.)
|
No. |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
(a) |
enter an account title to record the transaction using the percentage-of-completion method |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction using the percentage-of-completion method |
enter a debit amount |
enter a credit amount |
|
|
enter an account title to record the transaction using the percentage-of-completion method |
enter a debit amount |
enter a credit amount |
|
|
(b) |
enter an account title to record the transaction using the completed-contract method |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction using the completed-contract method |
enter a debit amount |
enter a credit amount |
In: Accounting
Cullumber Construction Company began work on a $400,000
construction contract in 2020. During 2020, Cullumber incurred
costs of $250,000, billed its customer for $200,000, and collected
$170,000. At December 31, 2020, the estimated additional costs to
complete the project total $178,890.
Prepare Cullumber’s journal entry to record profit or loss, if any,
using (a) the percentage-of-completion method and (b) the
completed-contract method. (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. Round answers to 0
decimal places, e.g. 5,275.)
|
No. |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
(a) |
enter an account title to record the transaction using the percentage-of-completion method |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction using the percentage-of-completion method |
enter a debit amount |
enter a credit amount |
|
|
enter an account title to record the transaction using the percentage-of-completion method |
enter a debit amount |
enter a credit amount |
|
|
(b) |
enter an account title to record the transaction using the completed-contract method |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction using the completed-contract method |
enter a debit amount |
enter a credit amount |
In: Accounting
Windsor Construction Company began work on a $404,000
construction contract in 2020. During 2020, Windsor incurred costs
of $273,000, billed its customer for $232,000, and collected
$182,000. At December 31, 2020, the estimated additional costs to
complete the project total $163,660.
Prepare Windsor’s journal entry to record profit or loss, if any,
using (a) the percentage-of-completion method and (b) the
completed-contract method. (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. Round answers to 0
decimal places, e.g. 5,275.)
|
No. |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
(a) |
enter an account title to record the transaction using the percentage-of-completion method |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction using the percentage-of-completion method |
enter a debit amount |
enter a credit amount |
|
|
enter an account title to record the transaction using the percentage-of-completion method |
enter a debit amount |
enter a credit amount |
|
|
(b) |
enter an account title to record the transaction using the completed-contract method |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction using the completed-contract method |
enter a debit amount |
enter a credit amount |
In: Accounting
Pronghorn Company reported 2020 net income of $152,900. During
2020, accounts receivable increased by $13,760 and accounts payable
increased by $9,604. Depreciation expense was $44,000.
Prepare the cash flows from operating activities section of the
statement of cash flows. (Show amounts that decrease
cash flow with either a - sign e.g. -15,000 or in parenthesis e.g.
(15,000).)
|
PRONGHORN COMPANY |
||
|---|---|---|
|
select an opening section name Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in Cash |
||
|
select an item Decrease in Accounts ReceivableIncrease in Accounts PayableDecrease in Accounts PayableDepreciation ExpenseNet IncomeIncrease in Accounts Receivable |
$enter a dollar amount |
|
|
Adjustments to reconcile net income to |
||
|
select a subsection name Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in Cash |
||
|
select an item Increase in Accounts PayableIncrease in Accounts ReceivableDepreciation ExpenseNet IncomeDecrease in Accounts ReceivableDecrease in Accounts Payable |
$enter a dollar amount |
|
|
select an item Decrease in Accounts ReceivableNet IncomeIncrease in Accounts PayableIncrease in Accounts ReceivableDepreciation ExpenseDecrease in Accounts Payable |
enter a dollar amount |
|
|
select an item Increase in Accounts ReceivableDepreciation ExpenseNet IncomeIncrease in Accounts PayableDecrease in Accounts PayableDecrease in Accounts Receivable |
enter a dollar amount |
|
|
enter a subtotal of the adjustments |
||
|
select a closing section name Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash Used by Financing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Used by Operating ActivitiesNet Decrease in CashNet Increase in Cash |
$enter a total amount for the section |
|
In: Accounting
Marin Construction Company began work on a $424,000 construction contract in 2020. During 2020, Marin incurred costs of $279,500, billed its customer for $204,500, and collected $170,500. At December 31, 2020, the estimated additional costs to complete the project total $150,500. Prepare Marin’s journal entry to record profit or loss, if any, using (a) the percentage-of-completion method and (b) the completed-contract method. (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. Round answers to 0 decimal places, e.g. 5,275.)
In: Accounting
You are asked to carry out the accounting of the company
1. Prepare with the information the opening entry in the General Journal,
2. Analyze the transactions recorded in the general journal
3. Transfer all information to Major General
4. Prepare the trial balance
The company reports the following assets and obligations:
Accounts Payable amount to B / .16,600.00
Has documents to pay for B / .7,000.00
The inventory of merchandise is B / .125,500.00
In the box they have B / 88,800.00
Also a bank loan payable B / .29,000.00
They have office furniture for 15,000.00
The bank account sum is B / .65,000.00
27,000.00 is the amount of the office equipment
And accounts receivable total B / .68,000.00
THE FOLLOWING TRANSACTIONS WERE DONE:
On 6/24/2020 We bought a car for B / .12,500.00 on credit
On 6/24/2020 A payment was made to accounts payable for B / .1,000.00
On 06/22/2020 the sum of B / 500.00 was paid to a bank loan
On 06/22/2020 Bank B / 88,000.00 was deposited
On 6/23/2020 We received credit to accounts receivable for B / 23,000.00
In: Accounting
The information below relates to ABC Company for the year ended 30 June 2020.
Sales revenue 352,000
Accrued wages 15,000
Bank balance 1 July 2019 ($22,000)
Cash paid to suppliers 192,200
Cash receipts from customers 294,000
Payments to employees and for expenses 25,000
Bank loan received 6,600
Property taxes paid 20,000
Depreciation of equipment 45,600
Interest received 20,500
Cash received from sale of share market investments 55,000
Cash paid to purchase computer hardware 40,000
Issued shares in exchange for block of land 100,000
Dividends paid 29,000
Interest paid 30,000
Net profit after tax 76,000
Required:
a) Prepare ABC Statement of Cash Flows for the year ended 30 June
2020.
b) What is the most important section in ABC's Statement of Cash
Flow? Explain.
In: Accounting
| Acme Company Balance Sheet As of January 5, 2020 (amounts in thousands) |
|||
|---|---|---|---|
| Cash | 8,400 | Accounts Payable | 2,800 |
| Accounts Receivable | 4,700 | Debt | 3,400 |
| Inventory | 4,200 | Other Liabilities | 900 |
| Property Plant & Equipment | 17,200 | Total Liabilities | 7,100 |
| Other Assets | 2,800 | Paid-In Capital | 6,700 |
| Retained Earnings | 23,500 | ||
| Total Equity | 30,200 | ||
| Total Assets | 37,300 | Total Liabilities & Equity | 37,300 |
Update the balance sheet above to reflect the transactions below, which occur on January 6, 2020
1. Borrow $52,000 from a bank
2. Purchase equipment for $48,000 in cash
What is the final amount in Cash?
Note: Transaction amounts are provided in dollars but the balance sheet units are thousands of dollars.
Please specify your answer in the same units as the balance sheet (i.e., enter the number from your updated balance sheet).
In: Accounting