Dixie Showtime Movie Theaters, Inc., owns and operates a chain of cinemas in several markets in the southern U.S. The owners would like to estimate weekly gross revenue as a function of advertising expenditures. Data for a sample of eight markets for a recent week follow.

Companies in the U.S. car rental market vary greatly in terms of the size of the fleet, the number of locations, and annual revenue. In 2011, Hertz had 320,000 cars in service and annual revenue of approximately $4.2 billion. The following data show the number of cars in service (1000s) and the annual revenue ($millions) for six smaller car rental companies (Auto Rental News website, August 7, 2012).

1. Develop a scatter diagram with the number of cars in service as the independent variable. See page 208 of the course packet.
2. What does the scatter diagram developed in part a indicate about the relationship between the two variables?
3. Calculate the intercept and the slope for the estimated regression equation. Show your work with a table as on page 175 of the course packet. You may use Excel to construct the table and calculate the values in the table. Don’t use Excel’s statistical functions or Data Analysis.
4. Write the regression model and the estimated regression equation.
5. Explain the meaning of the estimated intercept and slope in part c.
6. Fox Rent-A-Car has 11,000 cars in service. Use the estimated regression equation developed in part d to predict annual revenue for Fox Rent-A-Car.
7. Calculate SST, SSR, and SSE. Show your work with a table as on page 182 of the course packet. You may use Excel to construct the table and calculate the values in the table.
8. Using part g, calculate the coefficient of the determination and explain its meaning.
9. Enter the data in Excel and use Data Analysis to get the regression results. See pages 208 – 209 of the course packet and pages 680 – 681 of the textbook.
10. Use the regression printout from Excel in part i to find the values of b0, b1, SST, SSR, SSE, and R2.
11. Calculate the sample covariance and the sample correlation. Show your work with a table as on page 25 of the course packet. You may add one more column to the table in part c to get this table.
12. Based on the sample correlation in part k, what does it tell you about the relationship between the two variables?
13. Show the relationship between the sample correlation and the coefficient of determination.

The Smith Engineering Company began operations on December 1, 2017. The unadjusted trial balance of the Smith Engineering Company as of December 31, 2017 is found on the trial balance tab. The following information is required to prepare the necessary adjusting entries for the Smith Engineering Company found in chapter 3.

1) The balance in Prepaid insurance represents a 24-month policy that went into effect on December 1, 2017. Review the unadjusted balance in Prepaid insurance, and prepare the necessary adjusting entry, if any.

2) Based on a physical count, supplies on hand total $3,300. Review the unadjusted balance in Supplies, and prepare the necessary adjusting entry, if any.

3) The equipment is expected to have a 4-year useful life, and be worth about $9,000 at the end of four years. Review the unadjusted balance in Accumulated depreciation, and prepare the necessary adjusting entry, if any.

4) On December 26, the client paid a $3,600 60-day fee in advance, covering December 27 to February 24. Review the unadjusted balance in Unearned Consulting Revenue, and prepare the necessary adjusting entry, if any.

5) Smith Engineering's sole employee earns $80 per day for a five-day workweek beginning on Monday and ending on Friday. The employee was last paid on Friday, December 26. Review the unadjusted balance in Salaries payable, and prepare the necessary adjusting entry, if any.

6) In the second week of December, Smith Engineering agreed to provide 30 days of consulting services to a local fitness club for a fixed fee of $2,940. The terms of the initial agreement call for Smith Engineering to provide services from December 12, 2017, through January 10, 2018, or 30 days of service. The club agrees to pay Smith Engineering $2,940 on January 10, 2018, when the service period is complete. Review the unadjusted balance in Consulting revenue, and prepare the necessary adjusting entry, if any.

Prepare the required adjusting and closing entries for the Smith Engineering Company.

Prepare a general journal, income statement, and balance sheet.

Unadjusted

The board of directors of Metlock Corporation is considering whether or not it should instruct the accounting department to shift from a first-in, first-out (FIFO) basis of pricing inventories to a last-in, first-out (LIFO) basis. The following information is available.

Prepare a condensed income statement for the year on both bases for comparative purposes.

Curtiss Construction Company, Inc., entered into a fixed-price contract with Axelrod Associates on July 1, 2018, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,540,000. Curtiss concludes that the contract does not qualify for revenue recognition over time. The building was completed on December 31, 2020. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows:

At 12-31-2018

At 12-31-2019

At 12-31-2020

Percentage of completion

10

%

60

%

100

%

Costs incurred to date

$

368,000

$

2,898,000

$

4,889,000

Estimated costs to complete

3,312,000

1,932,000

0

Billings to Axelrod, to date

729,000

2,350,000

4,540,000

Required:
1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years.
2. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute gross profit or loss to be recognized in each of the three years.
3. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute the amount to be shown in the balance sheet at the end of 2018 and 2019 as either cost in excess of billings or billings in excess of costs.

1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. 2. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute gross profit or loss to be recognized in each of the three years. (Leave no cells blank - be certain to enter "0" wherever required. Loss amounts should be indicated with a minus sign.)

Show less

Year

Req 1 Gross Profit (Loss) Recognized ("Upon Completion")

Req 2 Gross Profit (Loss) Recognized ("Over Time")

2018

$0

$86,000

2019

$(290,000)

$(376,000)

2020

$(59,000)

$(86,000)

Total project profit (loss)

$(349,000)

$(376,000)

Req 3

2.Assuming Curtiss recognizes revenue over time according to percentage of completion, compute the amount to be shown in the balance sheet at the end of 2018 and 2019 as either cost in excess of billings or billings in excess of costs.

Balance Sheet (Partial)

2018

2019

Current assets:

Costs less loss in excess of billings

Current liabilities:

Billings in excess of costs and profit

$275,000

Please calculate Costs less loss in excess of billings in 2019.

308 Chapter 11 CASE STUDYCase stUDYCollege and professional sports are economy boosters for their host cities. The stream of revenue to the local economy generated by excited fans comes from the sale of tickets, hotel room rentals, car rentals, restaurant meals served, gasoline sales, park-ing fees, and vendor sales. The sales become even greater when a team is winning.Cities such as Lincoln, Nebraska; Columbus, Ohio; Tallahassee, Florida; and Baton Rouge, Louisiana count on the revenue generated by sell-out crowds during the college football season. Stadiums that hold from 82,000 to 102,000 fans provide an eco-nomic windfall for the college com-munities where they are located.Some fans of professional sports teams, such as the Chicago Cubs and Green Bay Packers, are loyal no mat-ter how well their team is performing. These faithful fans provide a steady flow of revenue to the sports program and surrounding communities.College World Series Wars?Cities that host major sporting events understand the financial benefits. Omaha, Nebraska, appreciates the millions of dollars poured into the city during the annual College World Series. Zesto’s, a popular fast-food restaurant, has truckloads of food rolling in each day to meet the demands of customers from all over the United States.The event has been voted the Best Annual Local Event and ranks as the third-most important state tourist attraction, according to a survey conducted by Omaha Magazine. The revenue from this two-week event has attracted the attention of other cities, such as Oklahoma City, that would like the opportunity to host the event in the future. Economic experts estimate that the College World Series generates more than $40 million for the Omaha economy. It is no wonder that other cities would like to host thisevent.Omaha tore down Rosenblatt Stadium, the former home of the College World Series, to build the new $131-million TD Ameritrade Park Omaha that has 24,505 seats. Omaha must continue to demonstrate top-notch hospitality so that the College World Series event planners continue to choose Omaha as its host city.Think Critically

1. Why is it important for Omaha to continue hosting the College World Series? Consider both financial and nonfinancial benefits.

2. What are some of the greatest sources of revenue for cities that are home to popular college and professional sports teams?

3. How can hosting a major event like the College World Series help a city develop a national image? Explain your answer.

4. List ten good food items for ven-dors to sell at the College World Series

Chapter 2, #4

Pastina Company sells various types of pasta to grocery chains as private label brands. The company's reporting year-end is December 31. The unadjusted trial balance as of December 31, 2021, appears below.   

Information necessary to prepare the year-end adjusting entries appears below.

1. Depreciation on the office equipment for the year is $10,300.
2. Employee salaries are paid twice a month, on the 22nd for salaries earned from the 1st through the 15th, and on the 7th of the following month for salaries earned from the 16th through the end of the month. Salaries earned from December 16 through December 31, 2021, were $900.
3. On October 1, 2021, Pastina borrowed $50,600 from a local bank and signed a note. The note requires interest to be paid annually on September 30 at 12%. The principal is due in 10 years.
4. On March 1, 2021, the company lent a supplier $20,600 and a note was signed requiring principal and interest at 8% to be paid on February 28, 2022.
5. On April 1, 2021, the company paid an insurance company $6,600 for a two-year fire insurance policy. The entire $6,600 was debited to prepaid insurance.
6. $560 of supplies remained on hand at December 31, 2021.
7. A customer paid Pastina $2,300 in December for 900 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue.
8. On December 1, 2021, $1,200 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022 at $600 per month. The entire amount was debited to prepaid rent.

5. Prepare closing entries. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to nearest whole dollar.)

1. revenue accounts

2. expense accounts

3. dividend accounts

The Smith Engineering Company began operations on December 1, 2017. The unadjusted trial balance of the Smith Engineering Company as of December 31, 2017 is found on the trial balance tab. The following information is required to prepare the necessary adjusting entries for the Smith Engineering Company found in chapter 3.

1) The balance in Prepaid insurance represents a 24-month policy that went into effect on December 1, 2017. Review the unadjusted balance in Prepaid insurance, and prepare the necessary adjusting entry, if any.

2) Based on a physical count, supplies on hand total $3,300. Review the unadjusted balance in Supplies, and prepare the necessary adjusting entry, if any.

3) The equipment is expected to have a 4-year useful life, and be worth about $9,000 at the end of four years. Review the unadjusted balance in Accumulated depreciation, and prepare the necessary adjusting entry, if any.

4) On December 26, the client paid a $3,600 60-day fee in advance, covering December 27 to February 24. Review the unadjusted balance in Unearned Consulting Revenue, and prepare the necessary adjusting entry, if any.

5) Smith Engineering's sole employee earns $80 per day for a five-day workweek beginning on Monday and ending on Friday. The employee was last paid on Friday, December 26. Review the unadjusted balance in Salaries payable, and prepare the necessary adjusting entry, if any.

6) In the second week of December, Smith Engineering agreed to provide 30 days of consulting services to a local fitness club for a fixed fee of $2,940. The terms of the initial agreement call for Smith Engineering to provide services from December 12, 2017, through January 10, 2018, or 30 days of service. The club agrees to pay Smith Engineering $2,940 on January 10, 2018, when the service period is complete. Review the unadjusted balance in Consulting revenue, and prepare the necessary adjusting entry, if any.

Prepare the required adjusting and closing entries for the Smith Engineering Company.

Prepare a general journal, income statement, and balance sheet.

Unadjusted

Variable cost (per pound)

Direct materials $3.75

Direct manufacturing labor 8.00

Variable overhead (manufacturing, marketing, distribution and customer service) 2.05

Total variable cost per bowl $13.80

Fixes costs

Manufacturing $12,000

Marketing, distribution, and customer service 214,800

Total fixed cost $226,800

Selling price $30

Expected sales, 19,500 units $585,000

Income tax rate 40%

S.L. Brook and​ Company, a manufacturer of quality handmade walnut​ bowls, has had a steady growth in sales for the past 5 years.​ However, increased competition has led Mr. Brooks, the​ president, to believe that an aggressive marketing campaign will be necessary next year to maintain the​ company's present growth. To prepare for next​ year's marketing​ campaign, the​ company's controller has prepared and presented Mr. Brooks with the following data for the current​ year, 2017​:

Requirement 1. What is the projected net income for 2017​?

Compute the target net income for 2017 using the above formula. The Net Income is: ?

Requirement 2. What is the breakeven point in units for 2017​?

Compute how many bowls are needed to break even using this formula ​(Enter applicable values to the nearest​ cent, $X.XX.)

Requirement 3. Mr. Brooks has set the revenue target for 2018 at a level of$ 690,000 (or 23,000 ​bowls). He believes an additional marketing cost of $19,440 for advertising in 2018​, with all other costs remaining ​constant, will be necessary to attain the revenue target. What is the net income for 2018 if the additional $19,440 is spent and the revenue target is​ met?

Requirement 4. What is the breakeven point in revenues for 2018 if the additional $19,440 is spent for​ advertising? ​(Do not round any of your​ calculations.)

Requirement 5. If the additional $19,440 is​ spent, what are the required 2018 revenues for 2018 net income to equal 20172017 net​ income?

Using the basic formula determined in requirement​ 1, compute the required number of units​ first, then the required revenue. ​(Do not round any of your​ calculations.)

Requirement 6. At a sales level of 23,000 units, what maximum amount can be spent on advertising if a 2018 net income of $75,516 is​ desired? ​(Do not round any of your​ calculations.) Use the basic formula determined in requirement 1.

Identifying a Contract

Consider each of the following scenarios:

Required:

1. Determine if a contract exists for each of the scenarios.

2. If it is determined that a contract exists but the seller believes it is probable that it will not collect the expected consideration, how does this affect the seller's ability to recognize revenue?

If it is probable that the seller will not collect the expected consideration in exchange for goods or services that it has promised to transfer to the customer, any amounts that the seller does not expect to collect will the transaction price. This adjusted transaction price will be the starting point to apply the remaining steps of the revenue recognition model.

Check My Work1 more Check My Work uses remaining.