Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company’s fiscal year-end. The 2020 balance sheet disclosed the following:

During 2021, credit sales were $1,815,000, cash collections from customers $1,895,000, and $52,000 in accounts receivable were written off. In addition, $4,300 was collected from a customer whose account was written off in 2020. An aging of accounts receivable at December 31, 2021, reveals the following:

Required:
1. Prepare summary journal entries to account for the 2021 write-offs and the collection of the receivable previously written off.

• 1

  Record accounts receivable written off during the year 2021.

• 2

  Record entry to reinstate an account receivable previously written off.

• 3

  Record collection of an account receivable previously written off.

2. Prepare the year-end adjusting entry for bad debts according to each of the following situations:

1. Bad debt expense is estimated to be 2% of credit sales for the year.
2. Bad debt expense is estimated by adjusting the allowance for uncollectible accounts to the balance that reduces the carrying value of accounts receivable to the amount of cash expected to be collected. The allowance for uncollectible accounts is estimated to be 10% of the year-end balance in accounts receivable.
3. Bad debt expense is estimated by adjusting the allowance for uncollectible accounts to the balance that reduces the carrying value of accounts receivable to the amount of cash expected to be collected. The allowance for uncollectible accounts is determined by an aging of accounts receivable.

• 1

  Bad debt expense is estimated to be 2% of credit sales for the year.

• 2

  Bad debt expense is estimated by computing net realizable value of the receivables. The allowance for uncollectible accounts is estimated to be 10% of the year-end balance in accounts receivable.

• 3

  Bad debt expense is estimated by computing net realizable value of the receivables. The allowance for uncollectible accounts is determined by an aging of accounts receivable.

3. For situations (a)−(c) in requirement 2 above, what would be the net amount of accounts receivable reported in the 2021 balance sheet?

Net account receivable reported

A.

B.

C.

The Best of Italy Pizza Restaurant make pizza for in-house and on-line customers. The company has two direct-cost categories: direct materials and direct manufacturing labor. Variable manufacturing overhead is allocated to products on the basis of standard direct manufacturing labor-hours. Following is some budget data for the Best of Italy Pizza: Direct manufacturing labor use 0.42 hours per pizza Variable manufacturing overhead $4.00 per direct manufacturing labor-hour The Best of Italy Pizza Company provides the following additional data for the year ended December 31, 2019: Planned (budgeted) output 54,000 pizza Actual production 43,200 pizza Direct manufacturing labor 14,429 hours Actual variable manufacturing overhead $86,000 The Best of Italy Company also allocates fixed manufacturing overhead to products on the basis of standard direct manufacturing labor-hours. For 2019, fixed manufacturing overhead was budgeted at $3.00 per direct manufacturing labor-hour. Actual fixed manufacturing overhead incurred during the year was $73,000. Required: 1. Prepare a variance analysis of variable manufacturing overhead. 2. Discuss the variances you have calculated and give possible explanations for them. 3. Prepare a variance analysis of fixed manufacturing overhead cost. 4. Is fixed overhead under-allocated or over-allocated? By what amount? 5. Comment on your results. Discuss the variances and explain what may be driving them.

The Best of Italy Pizza Restaurant make pizza for in-house and on-line customers. The company has two direct-cost categories: direct materials and direct manufacturing labor. Variable manufacturing overhead is allocated to products on the basis of standard direct manufacturing labor-hours. Following is some budget data for the Best of Italy Pizza:

The Best of Italy Pizza Company provides the following additional data for the year ended December 31, 2019:

The Best of Italy Company also allocates fixed manufacturing overhead to products on the basis of standard direct manufacturing labor-hours. For 2019, fixed manufacturing overhead was budgeted at $3.00 per direct manufacturing labor-hour. Actual fixed manufacturing overhead incurred during the year was $73,000.

Required:

1.      Prepare a variance analysis of variable manufacturing overhead.

2.      Discuss the variances you have calculated and give possible explanations for them.

3.      Prepare a variance analysis of fixed manufacturing overhead cost.

4.      Is fixed overhead under-allocated or over-allocated? By what amount?

5.      Comment on your results. Discuss the variances and explain what may be driving them.

1. Suppose that in manufacturing a very sensitive electronic component, a company and its customers have tolerated a 2% defective rate. Recently, however, several customers have been complaining that there seem to be more defectives than in the past. Given that the company has made recent modifications to its manufacturing process, it is wondering if in fact the defective rate has increased from 2%. For quality assurance purposes, you decide to randomly select 1,000 of these electronic components before they are shipped to customers. Of the 1,000 components, you find 25 that are defective. Assume that the company produces a very large number of these components on any given day. ( please type response if possible, written responses can be difficult to read)

1. (1 point) Set up an appropriate hypothesis to test whether or not the defect rate has increased.

2. (1 point) Before proceeding to test your hypothesis, check that all assumptions and conditions are satisfied for such a test.

3. (2 points) Conduct the test using a .05 level of significance (alpha) and state your decision about whether or not you believe that the defect rate has increased.

4. (1 point) What would be the minimum number of defectives in a random sample of 1,000 would you need to find in order to statistically decide that the defect rate exceeds .02 (again, assuming a .05 level of significance).            

Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company’s fiscal year-end. The 2017 balance sheet disclosed the following:

During 2018, credit sales were $1,785,000, cash collections from customers $1,865,000, and $42,000 in accounts receivable were written off. In addition, $3,700 was collected from a customer whose account was written off in 2017. An aging of accounts receivable at December 31, 2018, reveals the following:

Required:

1. Prepare summary journal entries to account for the 2018 write-offs and the collection of the receivable previously written off.
2. Prepare the year-end adjusting entry for bad debts according to each of the following situations:

Bad debt expense is estimated to be 2% of credit sales for the year.

Bad debt expense is estimated by computing net realizable value of the receivables. The allowance for uncollectible accounts is estimated to be 10% of the year-end balance in accounts receivable.

Bad debt expense is estimated by computing net realizable value of the receivables. The allowance for uncollectible accounts is determined by an aging of accounts receivable.

3. For situations (a)–(c) in requirement 2 above, what would be the net amount of accounts receivable reported in the 2018 balance sheet?

Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company’s fiscal year-end. The 2017 balance sheet disclosed the following:

During 2018, credit sales were $1,795,000, cash collections from customers $1,875,000, and $44,000 in accounts receivable were written off. In addition, $3,900 was collected from a customer whose account was written off in 2017. An aging of accounts receivable at December 31, 2018, reveals the following:

Required:

1. Prepare summary journal entries to account for the 2018 write-offs and the collection of the receivable previously written off.
2. Prepare the year-end adjusting entry for bad debts according to each of the following situations:

Bad debt expense is estimated to be 4% of credit sales for the year.

Bad debt expense is estimated by computing net realizable value of the receivables. The allowance for uncollectible accounts is estimated to be 10% of the year-end balance in accounts receivable.

Bad debt expense is estimated by computing net realizable value of the receivables. The allowance for uncollectible accounts is determined by an aging of accounts receivable.

3. For situations (a)–(c) in requirement 2 above, what would be the net amount of accounts receivable reported in the 2018 balance sheet?

Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company’s fiscal year-end. The 2020 balance sheet disclosed the following:

During 2021, credit sales were $1,780,000, cash collections from customers $1,860,000, and $41,000 in accounts receivable were written off. In addition, $3,600 was collected from a customer whose account was written off in 2020. An aging of accounts receivable at December 31, 2021, reveals the following:

Required:
1. Prepare summary journal entries to account for the 2021 write-offs and the collection of the receivable previously written off.
2. Prepare the year-end adjusting entry for bad debts according to each of the following situations:

1. Bad debt expense is estimated to be 4% of credit sales for the year.
2. Bad debt expense is estimated by adjusting the allowance for uncollectible accounts to the balance that reduces the carrying value of accounts receivable to the amount of cash expected to be collected. The allowance for uncollectible accounts is estimated to be 10% of the year-end balance in accounts receivable.
3. Bad debt expense is estimated by adjusting the allowance for uncollectible accounts to the balance that reduces the carrying value of accounts receivable to the amount of cash expected to be collected. The allowance for uncollectible accounts is determined by an aging of accounts receivable.

3. For situations (a)−(c) in requirement 2 above, what would be the net amount of accounts receivable reported in the 2021 balance sheet?

Early the following year (2020), the Company is told that one of its customers declared bankruptcy & cannot pay the $8,000 it owes. The $8,000 was part of the Company’s Accounts Receivable balance at December 31, 2019 (see preceding fact pattern immediately above). Prepare the adjusting journal entry to write off the $8,000 receivable (Remember, the Company uses the Allowance Method).

The Bartonia Company manufactures grommets in Georgia and sell them directly to industrial customers in Georgia, Florida, and South Carolina. The company’s profit for last year was $20,000,000. The company has its manufacturing plant and headquarters in Georgia, warehouses in South Carolina and Florida, and sales forces in each state. Here are some of its financial statistics:

1. Suppose each state uses a simple three-factor apportionment formula. What share of company profit would each state tax?

2. Make that same calculation, but suppose each state double-weights the sales factor.

3. Make the calculation with each using only the sales factor.

4. Assume now that GA adopts the single sales factor and the other states use double-weighted sales.

5. Assume now that South Carolina adopts the single sales factor and the other states use double-weighted sales.

6. Explain why manufacturing firms in some states have pressed for use of the single sales factor. Why have nationwide business organizations not made this switch an issue?

Please answer all parts.