On October 1, 2019, Santana Rey launched a computer services company called Business Solutions, which provides consulting services, computer system installations, and custom program development. Rey adopts the calendar year for reporting purposes and expects to prepare the company’s first set of financial statements on December 31, 2017. The company’s initial chart of accounts follows.

Required:

1. Prepare journal entries in the General Journal to record each of the above transactions for Business Solutions. file:///D:/UAFS/Serial%20Problem%202%20Workpapers%20General%20Journal.pdf

2. Post the journal entries from requirement #1 to the General Ledger . file:///D:/UAFS/Serial%20Problem%202%20Workpapers%20General%20Ledger%20Trial%20Balance.pdf

3. Prepare a trial balance as of the end of November on the worksheet labeled Trial Balance in #2

On October 1, 2021, a company sells $800 of gift cards to customers. The gift cards expire one year from the date of sale. By October 1, 2022, $750 of the gift cards have been redeemed and the sales recorded at the time of redemption. What entry, if any, should the company record on October 1, 2022?

A) Debit Sales Revenue, $50; credit Cash, $50. B) Debit Cash, $750; credit Sales Revenue, $750. C) Debit Deferred Revenue, $50; credit Sales Revenue, $50. D) No journal entry is necessary.

Moon Star Company obtained two notes receivable during the year of 2019. The details of the notes are as follows:

October 3, 2019          Sold goods for $24,000 on account to a customer (Sun Company) and received 8% note. The note was due on October 18, 2019.

December 5, 2019      Received 13% note for $15,000 to replace account receivable from a customer (Strong Company). The note was due on January 5, 2020.

1. Compute maturity value of the note receivable received on October 3 (Show supporting calculations.)
2. Journalize the collection of the note which was due on October 18, 2019.
3. Journalize the adjusting entry at December 31, 2019 to record accrued interest.
4. Compute total interest revenue earned on the note receivable received on December 5, 2019 (Show supporting calculations.)
5. Journalize the collection of the note which was due on January 5, 2020.

Bula Investments acquired $240,000 of Effenstein Corp., 8% bonds at their face amount on October 1, 20Y1. The bonds pay interest on October 1 and April 1. On April 1, 20Y2, Bula sold $90,000 of Effenstein Corp. bonds at 102.

Journalize the entries to record the following selected transactions:

Do not round interim calculations. Round final answers to nearest dollar. If an amount box does not require an entry, leave it blank.

a. The initial acquisition of the Effenstein Corp. bonds on October 1, 20Y1.

b. The adjusting entry for 3 months of accrued interest earned on the Effenstein Corp. bonds on December 31, 20Y1.

c. The receipt of semiannual interest on April 1, 20Y2.

d. The sale of $90,000 of Effenstein Corp. bonds on April 1, 20Y2, at 102.

e. The receipt of the face value of the remaining bonds at their maturity on October 1, 20Y8.

MCO Leather manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost of $3 per pound and 0.7 direct labor hours at a rate of $16 per hour. Variable manufacturing overhead is charged at a rate of $3 per direct labor hour. Fixed manufacturing overhead is $18,000 per month. The company’s policy is to end each month with direct materials inventory equal to 30% of the next month’s materials requirement. At the end of August the company had 3,280 pounds of direct materials in inventory. The company’s production budget reports the following.

(1) Prepare direct materials budgets for September and October.
(2) Prepare direct labor budgets for September and October.
(3) Prepare factory overhead budgets for September and October.

MCO Leather manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost of $4 per pound and 0.7 direct labor hours at a rate of $12 per hour. Variable manufacturing overhead is charged at a rate of $2 per direct labor hour. Fixed manufacturing overhead is $13,000 per month. The company’s policy is to end each month with direct materials inventory equal to 40% of the next month’s materials requirement. At the end of August the company had 2,880 pounds of direct materials in inventory. The company’s production budget reports the following. Production Budget September October November Units to be produced 4,800 7,100 6,400 (1) Prepare direct materials budgets for September and October. (2) Prepare direct labor budgets for September and October. (3) Prepare factory overhead budgets for September and October.

MCO Leather Goods manufactures leather purses. Each purse requires 3 pounds of direct materials at a cost of $4 per pound and 0.7 direct labor hours at a rate of $14 per hour. Variable manufacturing overhead is charged at a rate of $2 per direct labor hour. Fixed manufacturing overhead is $17,000 per month. The company’s policy is to end each month with direct materials inventory equal to 20% of the next month’s materials requirement. At the end of August the company had 4,180 pounds of direct materials in inventory. The company’s production budget reports the following.

(1) Prepare direct materials budgets for September and October.
(2) Prepare direct labor budgets for September and October.
(3) Prepare factory overhead budgets for September and October.

Schedule of Cash Payments

Excel Learning Systems Inc. was organized on September 30, 2016. Projected selling and administrative expenses for each of the first three months of operations are as follows:

Depreciation, insurance, and property taxes represent $37,000 of the estimated monthly expenses. The annual insurance premium was paid on September 30, and property taxes for the year will be paid in June. The company expects that 68% of the remainder of the expenses will be paid in the month in which they are incurred, with the balance to be paid in the following month.

Prepare a schedule indicating cash payments for selling and administrative expenses for October, November, and December.

The following data relates to Merrick Ltd., a single product company who manufactures vaccines:

Variances for October:

DIRECT MATERIAL QUANTITY VARIANCE 2400 UNFAVORABLE

MATERIALS VARIANCE (TOTAL) 600 FAVORABLE

DIRECT LABOR EFFICIENCY VARIANCE 9000 FAVORABLE

Actual materials and labor costs for October:

Materials and labor standards to manufacture one unit of vaccine:

Merrick Ltd. manufactured and sold 1,400 units of vaccines during October. There were no materials and finished goods inventories at the start and end of the October.

Required:

1. Compute standard price per pound of materials.
2. Compute standard quantity of materials allowed for actual production.
3. Compute standard quantity of direct materials allowed for one unit of product.
4. Compute actual direct labor cost per hour for October.
5. Compute direct labor rate variance and indicate whether it is favorable or unfavorable.