Central University uses $123,000 of a particular toner cartridge for laser printers in the student computer labs each year. The purchasing director of the university estimates the ordering cost at $45 and thinks that the university can hold this type of inventory at an annual storage cost of 0.83 of the purchase price. The purchase price of each cartridge is $4.00/unit.   How many times per year should the purchasing director place an order to minimize the total annual cost of purchasing and carrying?

*to two decimal places

Discussion Forum - Compensation

As you are likely aware, executive compensation varies tremendously in the U.S. So, in this interactivity, we’re going to research their past and current compensation schedules.

It was reported in the news that the average pay for most university presidents was around $250,000 per year, but that a few earned much more. For example, the president of Yale University received more than $1 million in 2012.

Discuss why you would (or would not) pay university presidents as much as or more than many corporate CEOs.

The Enron scandal, revealed in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company and de facto dissolution of Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world. Enron shareholders filed a $40 billion lawsuit after the company's stock price, which achieved a high of US $90.75 per share in mid-2000, dropped to less than $1 by the end of November 2001.
The company had lost the majority of its customers and had ceased operating. Employees and shareholders received limited returns in lawsuits, despite losing billions in pensions and stock prices. The US Securities and exchange commission began an investigation. Many executives at Enron were indicted for a variety of charges and were later sentenced to prison. Enron's $63.4 billion in assets made it the largest corporate bankruptcy in U.S. history.
a. Explain, what causes the reasons for the collapse of Enron? What will be the significant impact on financial accounting standards, auditing rules, and institutional structures such as FASB and the Securities Exchange Commission?
b. What precautions/measures should be taken by the management to save Enron from bankruptcy?
Your answer should be around 400 words for each question.

The Enron scandal, revealed in October 2001, eventually led to the bankruptcy of the Enron
Corporation, an American energy company and de facto dissolution of Arthur Andersen, which
was one of the five largest audit and accountancy partnerships in the world. Enron shareholders
filed a $40 billion lawsuit after the company's stock price, which achieved a high of US $90.75
per share in mid-2000, dropped to less than $1 by the end of November 2001.
The company had lost the majority of its customers and had ceased operating. Employees and
shareholders received limited returns in lawsuits, despite losing billions in pensions and stock
prices. The US Securities and exchange commission began an investigation. Many executives at
Enron were indicted for a variety of charges and were later sentenced to prison. Enron's $63.4
billion in assets made it the largest corporate bankruptcy in U.S. history.
a. Explain, what causes the reasons for the collapse of Enron? What will be the significant impact
on financial accounting standards, auditing rules, and institutional structures such as FASB and
the Securities Exchange Commission?
b. What precautions/measures should be taken by the management to save Enron from
bankruptcy?
Your answer should be around 400 words for each question.

Stevens Ltd is the leading retailer of Gym equipment. The following information occurred during May 2020. Stevens Ltd had an opening inventory balance of $8,400,000.

May:

1            Returned to the suppliers $80,000 of the opening inventory and received cash.

12          Purchased additional inventory on credit from the supplier for $12,000,000.

18          Sold inventory for $6,000,000 cash (Cost price to Stevens Ltd $2,400,000).

19          Paid the suppliers the account from 12 May.

31          The closing stocktake at year-end revealed an inventory balance of $17,800,000.

Required:

1. Record the above information for the month of May 2020 in the general journal using the perpetual inventory method. Narrations are not required. Ignore GST.

2. Record the above information for the month of May 2020 in the general journal using the physical inventory method. Narrations are not required. Ignore GST.

3. Present the Income Statement extract for Stevens Ltd using the periodic inventory method for the month ended 31 May 2020.

4. Briefly explain two advantages of the perpetual inventory method for Stevens Ltd.

Question 2: Revised depreciation – betterment

Nova Scotia Telecom Company had a truck that was purchased on July 7, 2018, for $36000. The PPE subledger shows the following information regarding the truck:

A customized tool carrier was constructed and permanently fitted to the truck on July 3, 2020 at a cost of $9600 cash. The tool carrier adds to the economic value of the truck. It will be used for the truck’s remaining life and have a zero-residual value. The useful life and residual value of the truck did not change as a result of the addition of the tool carrier.

Required:
1. Record the installation of the tool carrier assuming it is a component of the truck
2. Calculate depreciation on the truck and its new component, the tool carrier for the company’s December 31, 2020 year ends
3. Calculate the book value of the truck at December 31, 2020 and 2021

P18.8 (LO 2, 3) (Time Value, Gift Cards, Discounts) Presented below are two independent revenue arrangements for Colbert Company.

Instructions
Respond to the requirements related to each revenue arrangement.

Colbert sells 20 nonrefundable $100 gift cards for 3D printer paper on March 1, 2020. The paper has a standalone selling price of $100 (cost $80). The gift cards expiration date is June 30, 2020. Colbert estimates that customers will not redeem 10% of these gift cards. The pattern of redemption is as follows.

Redemption Total
March 31
50%
April 30
80%
June 30
85%
Prepare the 2020 journal entries related to the gift cards at March 1, March 31, April 30, and June 30.

In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2020. Information related to the contract is as follows:

Westgate recognizes revenue over time according to percentage of completion.

Required:

1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. (Do not round intermediate calculations. Loss amounts should be indicated with a minus sign.)

Omaha LLC had the following inventory amounts:

12/31/2019 3/31/2020

Raw materials 3052 3135  

WIP 3771 3804

Finished goods 2251 2175

During Q1 2020, the company transferred $4294 of raw materials. to WIP. In addition, the firm incurred the following costs during the quarter: direct labor of $2584, variable manufacturing overhead of $2180, fixed manufacturing overhead of $2190, variable non-manufacturing overhead of $2027, and fixed non-manufacturing overhead of $2607. Omaha uses full absorption costing.

a.How much raw materials did Omaha purchase in Q1 2020?

b.How much is Omaha's cost of goods manufactured?

c.Notwithstanding your answer to the prior question, assume the cost of goods manufactured is $9525. How is much is the cost of goods sold?

An analysis of the accounts of Roberts Company reveals the following manufacturing cost data for the month ended June 30, 2020.

Costs incurred: raw materials purchases $ 57,250, direct labor $ 51,410, manufacturing overhead $22,900. The specific overhead costs were: indirect labor $ 6,160, factory insurance $ 4,610, machinery depreciation $ 4,920, machinery repairs $ 2,230, factory utilities $ 3,210, and miscellaneous factory costs $ 1,770. Assume that all raw materials used were direct materials.

(a) Prepare the cost of goods manufactured schedule for the month ended June 30, 2020.

(b) Show the presentation of the ending inventories on the June 30, 2020, balance sheet.