Rainy Day Company manufactures a unique umbrella. The company began operations April 1, 2020. Its accountant quit the second week of operations, and the company is searching for a replacement. The company has decided to test the knowledge and ability of all candidates interviewing for the position. Each candidate will be provided with the information below and then asked to prepare a series of reports, schedules, budgets, and recommendations based on that information. The information provided to each candidate is as follows.
Cost Items and Account Balances
Administrative salaries $11,250
Advertising 15,250
Cash, April 1 –0–
Depreciation on factory building 1,500
Depreciation on office equipment 800
Insurance on factory building 1,500
Miscellaneous expenses—factory 1,000
Office supplies expense 300
Professional fees 500
Property taxes on factory building 400
Raw materials used 70,000
Rent on production equipment 6,000
Research and development 10,000
Sales commissions 40,000
Utility costs—factory 900
Wages—factory 70,000
Work in process, April 1 –0–
Work in process, April 30 –0–
Raw materials inventory, April 1 –0–
Raw materials inventory, April 30 –0–
Raw material purchases 70,000
Finished goods inventory, April 1 –0–
Production and Sales Data
Number of umbrellas produced 10,000
Expected sales in units for April
($40 unit sales price) 8,000
Expected sales in units for May 10,000
Desired ending inventory 20% of next month’s sales
Direct materials per finished unit 1 kilogram
Direct materials cost $7 per kilogram
Direct labor hours per unit .35
Direct labor hourly rate $20
Cash Flow Data
Cash collections from customers: 75% in month of sale and 25% the following month.
Cash payments to suppliers: 75% in month of purchase and 25% the following month.
Income tax rate: 45%.
Cost of proposed production equipment: $720,000.
Manufacturing overhead and selling and administrative costs are paid as incurred.
Desired ending cash balance: $30,000.
Question: Prepare the Cash Budget for the month of April 2020.
In: Accounting
Rainy Day Company manufactures a unique umbrella. The company began operations April 1, 2020. Its accountant quit the second week of operations, and the company is searching for a replacement. The company has decided to test the knowledge and ability of all candidates interviewing for the position. Each candidate will be provided with the information below and then asked to prepare a series of reports, schedules, budgets, and recommendations based on that information. The information provided to each candidate is as follows.
Cost Items and Account Balances
Administrative salaries $11,250
Advertising 15,250
Cash, April 1 –0–
Depreciation on factory building 1,500
Depreciation on office equipment 800
Insurance on factory building 1,500
Miscellaneous expenses—factory 1,000
Office supplies expense 300
Professional fees 500
Property taxes on factory building 400
Raw materials used 70,000
Rent on production equipment 6,000
Research and development 10,000
Sales commissions 40,000
Utility costs—factory 900
Wages—factory 70,000
Work in process, April 1 –0–
Work in process, April 30 –0–
Raw materials inventory, April 1 –0–
Raw materials inventory, April 30 –0–
Raw material purchases 70,000
Finished goods inventory, April 1 –0–
Production and Sales Data
Number of umbrellas produced 10,000
Expected sales in units for April
($40 unit sales price) 8,000
Expected sales in units for May 10,000
Desired ending inventory 20% of next month’s sales
Direct materials per finished unit 1 kilogram
Direct materials cost $7 per kilogram
Direct labor hours per unit .35
Direct labor hourly rate $20
Cash Flow Data
Cash collections from customers: 75% in month of sale and 25% the following month.
Cash payments to suppliers: 75% in month of purchase and 25% the following month.
Income tax rate: 45%.
Cost of proposed production equipment: $720,000.
Manufacturing overhead and selling and administrative costs are paid as incurred.
Desired ending cash balance: $30,000.
Question Determine the cost of producing an umbrella?
In: Accounting
|
Example Company Balance Sheet December 31, 2019 and 2020 |
Example Company Income Statment For Year Ended December 31, 2020 |
|||||
| 2019 | 2020 | 2020 | ||||
| Assets | Sales | 873,252 | ||||
| Current Assets | Cost of Goods Sold | 192,075 | ||||
| Cash | 976 | 233 | Gross Margin | 681,177 | ||
| Accounts Recievable | 890 | 278 | ||||
| Allowance for Doubtful Accounts | (155) | (40) | EXPENSES | |||
| Investment in Bonds | 1 | 171 | Bad Debt | 328 | ||
| Inventories | 285 | 540 | Depreciation | 66,337 | ||
| Prepaid expenses | 153 | 32 | Other | 608,253 | ||
| Interest Receivable | 930 | 216 | TOTAL EXPENSES | 674,918 | ||
| Total Current Assets | 3,080 | 1,430 | Operating Income | 6,259 | ||
| Interest INcome | 36 | |||||
| Property, Plant, and Equiptment | 48,598 | 311,456 | Interest Expense | (732) | ||
| Less Accumulated Depreciation | 21,282 | 37,664 | Capital gain (Loss) on disposal of PP&E | 643 | ||
| Property, Plant, and Equiptment, net | 27,316 | 273,792 | Net income before taxes | 6,206 | ||
| TOTAL ASSETS | 30,396 | 275,222 | Income Tax Expense | 1,405 | ||
| LIABILITIES | Net INcome | 4,801 | ||||
| Current Liabilities | ||||||
| Notes PAyable | 9,868 | 8,409 | ||||
| Accounts Payable | 321 | 828 | ||||
| Accured Liabilities | 19 | 406 | ||||
| Accured Interest | 213 | 732 | ||||
| Income Taxes Payble | 12 | 755 | ||||
| Current Portion of Long Term Debt | 171 | 397 | ||||
| Total Current Liabilites | 10,604 | 11,527 | ||||
| Long Term Liabilities | ||||||
| Long term debt, net of current protion | 2,052 | 250,525 | ||||
| TOTAL LIABILITIES | 12,656 | 262,052 | ||||
| STOCKHOLDERS EQUITY | ||||||
| Common Stock | 78 | 163 | ||||
| Additional Paid in Captial | 339 | 709 | ||||
| Retained Earnings | 17,323 | 12,298 | ||||
| Total Stockholders Equity | 17,740 | 13,170 | ||||
| Total Liabilities and Stockholders Equity | 30,396 | 275,222 | ||||
Proceeds from the sale of capital assets for 2020 are $16,000
A. Prepare the Cash Flow Statement
B. Prepare the Reconciliation of net income to net cash flow from operations balances to net cash flow from operations in the basic statement
C. calculate the purchases of fixed assets
In: Accounting
Alex Company reported the following information for
2020.
| Alex
Company Comparative Balance Sheets December 31 |
||||||||
| Assets | 2020 | 2019 |
Change Increase/Decrease |
|||||
| Cash | $59,000 | $36,000 | $23,000 | Increase | ||||
| Accounts receivable | 62,000 | 22,000 | 40,000 | Increase | ||||
| Inventory | 44,000 | –0– | 44,000 | Increase | ||||
| Prepaid expenses | 6,000 | 4,000 | 2,000 | Increase | ||||
| Land | 55,000 | 70,000 | 15,000 | Decrease | ||||
| Buildings | 200,000 | 200,000 | –0– | |||||
| Accumulated depreciation—buildings | (21,000) | (14,000) | 7,000 | Increase | ||||
| Equipment | 183,000 | 68,000 | 115,000 | Increase | ||||
| Accumulated depreciation—equipment | (28,000) | (10,000) | 18,000 | Increase | ||||
| Totals | $560,000 | $376,000 | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Accounts payable | $43,000 | $40,000 | $3,000 | Increase | ||||
| Accrued expenses payable | –0– | 10,000 | 10,000 | Decrease | ||||
| Bonds payable | 100,000 | 150,000 | 50,000 | Decrease | ||||
| Common stock ($1 par) | 230,000 | 60,000 | 170,000 | Increase | ||||
| Retained earnings | 187,000 | 116,000 | 71,000 | Increase | ||||
| Totals | $560,000 | $376,000 | ||||||
| Alex
Company Income Statement For the Year Ended December 31, 2020 |
||||
| Sales revenue | $941,000 | |||
| Cost of goods sold | $475,000 | |||
| Operating expenses | 231,000 | |||
| Interest expense | 12,000 | |||
| Loss on disposal of plant assets | 2,000 | 720,000 | ||
| Income before income taxes | 221,000 | |||
| Income tax expense | 65,000 | |||
| Net income | $156,000 | |||
Additional information:
| 1. | Operating expenses include depreciation expense of $40,000. | |
| 2. | Land was sold at its book value for cash. | |
| 3. | Cash dividends of $85,000 were declared and paid in 2020. | |
| 4. | Equipment with a cost of $166,000 was purchased for cash. Equipment with a cost of $51,000 and a book value of $36,000 was sold for $34,000 cash. | |
| 5. | Bonds of $50,000 were redeemed at their face value for cash. | |
| 6. | Common stock ($1 par) of $170,000 was issued for cash. |
Use this information to Prepare a statement of cash flows using the
indirect method. (Show amounts that decrease cash flow
with either a - sign e.g. -15,000 or in parenthesis e.g.
(15,000).)
|
|
||||
In: Accounting
The financial statements of Lowz Company appear below:
| LOWZ COMPANY Comparative Balance Sheet December 31 |
|||||||||
| 2020 | 2019 | ||||||||
| Assets | |||||||||
| Cash | $36,000 | $23,000 | |||||||
| Accounts receivable | 25,000 | 34,000 | |||||||
| Merchandise Inventory | 32,000 | 15,000 | |||||||
| Property, plant, and equipment | 50,000 | 78,000 | |||||||
| Accumulated depreciation | (21,000 | ) | (24,000 | ) | |||||
| Total | $122,000 | $126,000 | |||||||
| Liabilities and Stockholder's Equity | |||||||||
| Accounts payable | $18,000 | $23,000 | |||||||
| Income taxes payable | 9,000 | 8,000 | |||||||
| Bonds payable | 8,000 | 33,000 | |||||||
| Common stock | 28,000 | 24,000 | |||||||
| Retained earnings | 59,000 | 38,000 | |||||||
| Total | $122,000 | $126,000 | |||||||
| LOWZ COMPANY Income Statement For the Year Ended December 31, 2020 |
|||||
| Sales | $400,000 | ||||
| Cost of goods sold | 270,000 | ||||
| Gross profit | 130,000 | ||||
| Operating expenses | 45,000 | ||||
| Income from operations | 85,000 | ||||
| Interest expense | 5,000 | ||||
| Income before income taxes | 80,000 | ||||
| Income tax expense | 24,000 | ||||
| Net income | $56,000 | ||||
| The following additional data were provided: | ||
| 1. | Dividends declared and paid were $35,000. | |
| 2. | During the year, equipment was sold for $17,000 cash. This equipment cost $28,000 originally and had a book value of $17,000 at the time of sale. | |
| 3. | All depreciation expense is in the operating expenses. | |
| 4. | All sales and purchases are on account. | |
| 5. | Accounts payable pertain to merchandise suppliers. | |
| 6. | All operating expenses except for depreciation were paid in cash. | |
Prepare a statement of cash flows for Lowz Company using the direct
method. (Show amounts that decrease cash flow with
either a - sign e.g. -15,000 or in parenthesis e.g.
(15,000).)
In: Accounting
|
Lake Incorporated purchased all of the outstanding stock of Huron Company paying $952,000 cash. Lake assumed all of the liabilities of Huron. Book values and fair values of acquired assets and liabilities were: |
| Book Value | Fair Value | |
| Current assets (net) | $131,400 | $124,100 |
| Property, plant, equip. (net) | 613,000 | 755,000 |
| Liabilities | 150,700 | 176,000 |
| Lake would record goodwill of: |
Multiple Choice
$358,300.
$72,900.
$248,900.
$0.
In: Accounting
|
At the beginning of 2014, Robotics Inc. acquired a manufacturing facility for $12.6 million. $9.6 million of the purchase price was allocated to the building. Depreciation for 2014 and 2015 was calculated using the straight-line method, a 25-year useful life, and a $1.6 million residual value. In 2016 the company switched to the double-declining-balance depreciation method. |
|
What is depreciation on the building for 2016? (Do not round intermediate calculations. Enter your answer in whole dollars.) |
In: Accounting
1)
Destin Corporation has $250,000 of debt maturing next year on September 30, 2017. The company borrows $50,000 from Wells Fargo by issuing a 4 year, 5% note on January 1, 2017. The company has the intent and ability to use this money to retire some of the debt when it matures. If the December 31, 2016 financial statements are to be issued March 1, 2017, how would the above debt be classified on the December 31, 2016 balance sheet? Include amounts.
2) On September 30, 2017, one of Mr. Rogers tenants moved out and left the apartment a complete mess. Due to the cleaning costs incurred, the former tenant forfeited its refundable deposit of $400. Record Mr. Rogerss journal entry for the tenant's forfeiture. Do not forget journal entry descriptions.
3)
Best Goods Grocery sold $275,000 in groceries on June 15, 2017, and collected 6% sales tax from its customers. Prepare the journal entry for the above sale. Do not forget journal entry descriptions. Show your calculation!
In: Accounting
Oxalite Inc: A Cautionary Tail (Which is a fictional company)
For discussion purposes, treat Oxalite, Inc. as a public company. Based on this assumption, reflect on the following:
a. What were some internal control deficiencies and even material weaknesses? How would they have been discovered? What would be the implications for Sarbanes-Oxley Section 404 compliance?
b. Analyze this case using the COSO Fraud Risk Management Guide Principles 1,2 and 5 relating to the COSO internal control components of control environment, risk assessment, and monitoring.
2. How could the external auditors have helped avoid this adverse corporate governance outcome?
3. How could the internal audit function have helped evaluate the design and operating effectiveness of internal controls?
4.mr. n.g shankar, cae of the aditya birla group, a large conglomerate in india and a former member of the internal audit standards board of the IIA, has remarked,"Poor culture leads to organizational disaster." In what way was his observation justified in the case of Oxalite, Inc?
In: Accounting
Site Management Solutions, Inc. of Columbia Maryland, is a data center design and management consulting firm. Site Management Solutions employees sign an initial two-year employment commitment and the most promising employees are given extended job tours overseas. Since overseas experience is highly desirable, giving the employees a chance to command much higher salaries, prior to being posted overseas employees agree to work for a specified additional time upon their return to Maryland. Jeff worked for Site Management Solutions, but then he quit and formed a competing company which he called Data Center Design, Inc. His new company contacted Site Management Solutions employees by phone, offering higher salaries and bonuses if they would come work for Data Center Design. At least 10 former Site Management Solutions employees, several of whom had recently returned from overseas, left their jobs without completing their contractual obligations and went to work for Data Center Design. Site Management Solutions sued. What did it claim, and what should be the result?
In: Economics