On October 10, the stockholders’ equity of Sherman Systems appears as follows. Common stock–$10 par value, 81,000 shares authorized, issued, and outstanding $ 810,000 Paid-in capital in excess of par value, common stock 261,000 Retained earnings 936,000 Total stockholders’ equity $ 2,007,000 1. Prepare journal entries to record the following transactions for Sherman Systems. Purchased 5,900 shares of its own common stock at $34 per share on October 11. Sold 1,225 treasury shares on November 1 for $40 cash per share. Sold all remaining treasury shares on November 25 for $29 cash per share. 2. Prepare the stockholders' equity section after the October 11 treasury stock purchase.

Use the following table to answer questions:

1. Using a two month moving average, what is the forecast for October?
   1. 142
   2. 143
   3. 144
   4. 145

2. Using a 3 month weighted moving average where the latest month has a weight of 0.5 and the month before that 0.3 and the oldest month has a weight of 0.2, what is the forecast for October?
   1. 142
   2. 143
   3. 144
   4. 145

3. The Forecast for May was 141. Using an alpha of 0.3, what is the forecast for October using exponential smoothing (round your answer to the nearest integer)?
   1. 142
   2. 143
   3. 144
   4. 145

Mr. Hippo owns 50,000 shares of East West Corporation common​stock, which it purchased on March​ 8, 2011​, for $1,000,000. On October​ 3, 2019​, Hippo purchases an additional 30,000 shares for $540,000. On October​ 12, 2019​, he sells the original 50,000 shares for $925,000. On November​ 1, 2019​, he purchases an additional 5,000 shares for $80,000. a. What is Mr. Hippo's recognized gain or loss as a result of the sale on October​ 12, 2019​? b. What are the basis and the holding period of the stock he continues to​ hold? c. How would your answers to Parts a and b change if the stock Hippo purchases during 2019 is East West ​nonvoting, nonconvertible, preferred stock instead of East West common​stock?

Prepare a cash budget, properly labeled and in good accounting order, for October based on the following:

Forecast sales

July                 $150,000           Credit sales are 40% of total sales and are collected

August           $170,000            as follows: 20% one month after the sale, 30%

Sept.              $180,000           two months after the sale and 50% three months

Oct                 $190,000           after the sale

Accounts payable are paid as follows: 70% one month after the purchase and 30% two months after the purchase.   Rent is $1,500 per month and utilities are $700 per month.

In October, the firm will have an insurance payment due of $450.

Expected Accounts Payable

August                     $170,000                  

Sept                         $175,000                  

Oct.                          $180,000

Beginning cash for October is $3,200

Splish Splash Arts offers music and dance lessons. Splish Splash prepares annual financial statements and has a December 31, 2017, year-end.

a) On september 1, collects 15,000 cash for dance lessons running from September 1, 2017 to december 31, 2017.

b) October 1, Collects 5,000 (2,500 per month) cash to rent it's performance stage for the full month of December 2017 and January 2018

c) October 1, 2017 collects 8,000 cash for four months of music lessons. The lessons run from October 1, 2017 to January 31, 2018.

Required: For each transaction, record the initial journal entry and the adjusting entry required on December 31, ,2017.

Transaction Analysis Activity

Steamy Stacks, Inc. sells toy trains. Steamy Stacks began business on October 1 by issuing (selling) 10,000 shares of no par common stock. for $10 per share. The issuance of common stock represents investment by owners. Steamy Stacks uses the accrual method of accounting.

During the month of October, the following transactions occurred:

   10/1     Issued 10,000 shares of no par common stock for $10 per share.

   10/1     Paid rent of $1,500 for office and retail space for month of October.

10/5     Purchase 500 toy trains for $25 each. The trains were received by Steamy Stacks and payment is due on November 5.

10/10   Sold 150 trains for $45 each. The trains were delivered and cash was received.

            HINT: Remember to ‘match’ expenses to revenue they helped to generate…

10/16   Paid $3,000 wages to employees. Employees are paid on the 1^st and 16^th of each month for the periods ending on the 15^th and last day of month, respectively. For simplicity, assume all payments equal $3,000.

10/17   Sold 300 trains for $45 each. The trains were delivered. Payment is due on Nov. 17.

10/20   Ordered Christmas Steamy Stacks advertisement. The advertisements are scheduled to run the last week of November. The advertising agency required 40% payment with the order and the total charge was $1,300. Paid $520.

10/22 Received order for 125 trains to be delivered December 10.

10/31   Paid a cash dividend of $ .10 per share of common stock.

REQUIREMENTS:

1. Record transactions on worksheet according to the accrual method of accounting.
2. Prepare a multi-step income statement for the month of October.
3. Prepare a statement of stockholders equity as of October 31.
4. Prepare a classified balance sheet for Steamy Stacks as of October 31.

Bugatti Company has a September 30 fiscal year end and prepares adjusting entries on an annual basis. The trial balance included the following selected accounts:

Prepare and post adjusting, closing, reversing, and cash transaction entries.

Additional information for its September 30, 2021, year-end adjustments:

1. Bugatti has a two-year, 3.5% note receivable for $50,000 that was issued on April 1, 2021. Interest is payable every six months, on October 1 and April 1. Principal is payable at maturity. Bugatti collected the correct amount on October 1, 2021.
2. Accrued salaries as at September 30, 2021, were $2,400. Payroll totalling $3,000 was paid on October 2, 2021.
3. Bugatti has a five-year, 5% note payable for $80,000 issued in 2019. Interest is payable quarterly on January 31, April 30, July 31, and October 31 each year. Bugatti paid the correct amounts in 2021.
4. Depreciation expense for the year ended September 30, 2021, was $4,250.

Instructions

a. Prepare T accounts and record the September 30, 2021, balances.

b. Prepare and post adjusting journal entries for items 1 to 4 above.

c. Prepare entries to close these revenue and expense accounts. Post to the T accounts. (Note: Do not post to the Income Summary account.)

d. Prepare and post reversing journal entries on October 1, 2021, as appropriate.

e. Prepare and post the journal entries to record the cash transactions that occurred in October 2021. It is not necessary to post to the cash account.

Prior to the first month of operations ending October 31 Marshall Inc. estimated the following operating results:

The company is evaluating a proposal to manufacture 22,400 units instead of 20,000 units, thus creating an Inventory, October 31 of 2,400 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses.

a. 1. Prepare an estimated income statement, comparing operating results if 20,000 and 22,400 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank or enter “0”.

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a. 2. Prepare an estimated income statement, comparing operating results if 20,000 and 22,400 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank or enter “0”.

Making Business Decisions: Analyzing Apple’s Inventory Turnover Ratio

You are considering an investment in the common stock of Apple Inc. The following information is from the financial statements included in Form 10-K for fiscal years 2015 and 2014 (in millions of dollars):

The following information is from the financial statements included in Form 10-K for fiscal years 2015 and 2014 for Hewlett-Packard Company (in millions of dollars):

Use 360 days a year.

Required:

1. Calculate the inventory turnover ratios for Apple Inc. and Hewlett-Packard Company for the years ending September 26, 2015 and October 31, 2015, respectively. If required, round your answers to one decimal place.

2. Which company appears to be performing better?
A. Helett-Packard

B. Apple Inc.

3. Assume Company A has an inventory turnover ratio of 52.8 times and Company B has inventory turnover ratio of 12.6. Based on this information, which of the following statement is correct?

A. Company A is performing better, when it comes to inventory management.

B. Company B is performing better, when it comes to inventory management.

C. Company A sells its product every 6.2 days.

D. Company B sells its products every 4.9 days.

Burlington Clock Works manufactures fine, handcrafted clocks. The firm uses a job-order costing system, and manufacturing overhead is applied on the basis of direct-labor hours. Estimated manufacturing overhead for the year is $240,000. The firm employs 10 master clockmakers, who constitute the direct-labor force. Each of these employees is expected to work 2,000 hours during the year, which represents each employee’s practical capacity. The following events occurred during October.

a. The firm purchased 3,000 board feet of mahogany veneer at $11 per board foot.

b. Twenty brass counterweights were requisitioned for production. Each weight cost $23.

c. Five gallons of glue were requisitioned for production. The glue cost $20 per gallon. Glue is treated as an indirect material.

d. Depreciation on the clockworks building for October was $8,000.

e. A $400 utility bill was paid in cash.

f. Time cards showed the following usage of labor:

   Job number G60: 12 grandfather’s clocks, 1,000 hours of direct labor

   Job number C81: 20 cuckoo clocks, 700 hours of direct labor

   The master clockmakers (direct-labor personnel) earn $20 per hour.

g. The October property tax bill for $910 was received but has not yet been paid in cash.

h. The firm employs laborers who perform various tasks such as material handling and shop cleanup. Their wages for October amounted to $2,500.

i. Job number G60, which was started in July, was finished in October. The total cost of the job was $14,400.

j. Nine of the grandfather’s clocks from job number G60 were sold in October for $1,500 each.

Prepare journal entries to record the events described above