Logical Logistics Inc. (Logical Logistics or the “Company”) provides transportation and logistics services to customers throughout a network of offices in North America, South America, and Asia. The Company contracts fleets of shipping vessels, trucks, and aircraft to provide regional, long-haul, and international shipments of customer goods. In addition, the Company contracts warehouse operators across North America for use of their facilities as distribution centers that temporarily store goods in transit. The Company has entered into the following contracts with the vendors identified below.

Logical Logistics enters into a contract with See Boat Inc. (See Boat) to use its shipping vessels to transport customer goods from North America to Asia. See Boat has a fleet of 25 multi-use shipping vessels, each of which has the capacity to hold 1,000 shipping containers.

Logical Logistics enters into a contract with Fly-By-Air Inc. (Fly-By-Air) to use its aircraft to transport customer goods from South America to North America. Fly-By-Air has a fleet of 50 multi-use aircraft, each of which has the capacity to hold 500 shipping pallets of customer goods.

Logical Logistics enters into a contract with Trucking Co. Inc. (Trucking Co.) to use its trucks to transport customer goods from distribution centers to retail stores across North America. Trucking Co. has a fleet of 1,500 multi-use long-haul trucking carriers, each of which has the capacity to hold 100 shipping pallets of goods.

Logical Logistics enters into a contract with Warehouse Co. Inc. (Warehouse Co.) to store up to 18,000 shipping pallets of customer goods at one of Warehouse Co.’s locations. Warehouse Co. has the capacity to store 20,000 shipping pallets of goods.

The terms of the shipping contracts are as follows:

• See Boat

o The contract term is for the voyage to transport Logical Logistics’s cargo from Los Angeles to Shanghai. Logical Logistics does not have discretion to change the departure or arrival ports without a renegotiation of the contract fees.

o SB0829, a commercial shipping vessel in See Boat’s fleet, is dedicated to delivering Logical Logistics’s cargo for the term of the contract. See Boat cannot substitute SB0829 with another vessel in its fleet.

o The contract identifies the shipping containers and acceptable cargo (e.g., semiconductors) to be transported on the ship as well as the transportation route. Logical Logistics does not have discretion to change the identified cargo without renegotiating the contract fees.

o See Boat is responsible for the safe passage of the cargo, as well as operation and maintenance of SB0829. The crew determines the ship’s route, speeds, and date of departure from Los Angeles. In addition, Logical Logistics cannot, under any circumstances, replace See Boat’s crew.

• Fly-By-Air o The contract term is five years.

o FBA1231, a commercial aircraft in Fly-By-Air’s fleet, is dedicated to delivering Logical Logistics’s shipping pallets during the term of the contract.

o Logical Logistics determines (1) the airports from and to which goods are shipped and received and (2) the order in which deliveries are made to the airports. Fly-By-Air provides the aircraft’s pilot and crew, and Logical Logistics instructs Fly-By-Air accordingly.

o While Logical Logistics determines what cargo will be transported throughout the term of the contract, certain restrictions prevent the Company from shipping flammable materials.

o Logical Logistics has the right to send the aircraft regardless of whether its cargo levels meet the full storage capacity of the aircraft. If FBA1231 is below capacity, Fly-By-Air cannot use the excess storage space to ship products of its other customers.

• Trucking Co.

o The contract term is five years.

o Trucking Co. must deliver Logical Logistics’s shipments within three weeks of the Company’s notification that it has pallets of customer goods ready for shipping.

o Trucking Co. may choose any truck from its fleet to fulfill the shipping request.

o Logical Logistics may request shipment of 25 to 100 shipping pallets of goods in a single request. (Individual shipping requests generally do not exceed 50 shipping pallets.)

o Trucking Co. has the right to use any excess storage space to ship products of its other customers.

o Trucking Co. determines the shipment’s delivery date (within the threeweek period), as well as the shipping route.

• Warehouse Co.

o The contract term is 10 years.

o Logical Logistics can store up to 18,000 shipping pallets at one specified Warehouse Co. location. Logical Logistics will be charged for storage of 18,000 shipping pallets, regardless of the actual number of pallets stored, and Warehouse Co. cannot use any of Logical Logistics’s unused storage space for other storage needs.

o Warehouse Co. can use the remaining space in its warehouse for other storage needs.

o Warehouse Co. cannot relocate Logical Logistics’s inventory to another facility.

o Logical Logistics has the right to decide which shipping pallets are placed in storage and when they can be removed.

o Warehouse Co. provides the loading and unloading services for the warehouse activities, both of which are dependent on Logical Logistics’s decisions about which shipping pallets are placed in storage and when they can be removed.

The CFO of Logical Logistics recognizes that the new leasing standard contains certain provisions that may affect how the Company treats contracts of this nature.

Required: Analyze the information above, and prepare a memorandum addressing the impact (if any) of the new leasing standard on Logical Logistics’s arrangements for the following considerations:

2. Determine whether each contract conveys the right to control the use of the identified asset to Logical Logistics.

ABC Company employs a periodic inventory system and sells its inventory to customers for $23 per unit. ABC Company reported the following inventory information for the month of May:

May 1 Beginning inventory 4,200 units @ $9 cost per unit

May 6 Purchased 2,000 units @ $12 cost per unit

May 8 Sold 3,000 units

May 13 Purchased 2,500 units @ $6 cost per unit

May 18 Sold 1,900 units

May 21 Purchased 4,000 units @ $8 cost per unit

May 28 Sold 2,200 units

May 30 Purchased 2,300 units @ $17 cost per unit

ABC Company reported operating expenses of $26,100 for May and they had a tax rate of 34%.

A)Calculate the dollar amount of ending inventory shown on ABC Company's May 31 balance sheet using the FIFO method.

B)Calculate the amount of gross profit shown on ABC Company's income statement for May using the weighted average method.

C)Calculate the amount of net income shown on ABC Company's income statement for May using the LIFO method.

Logistical Logistics Inc. (Logistical Logistics or the “Company”) provides transportation and logistics services to customers throughout a network of offices in North America, South America, and Asia. The Company contracts fleets of shipping vessels, trucks, and aircraft to provide regional, long-haul, and international shipments of customer goods. In addition, the Company contracts warehouse operators across North America for use of their facilities as distribution centers that temporarily store goods in transit. Assume the Company has adopted the new leasing standard, ASC 842, Leases.

The Company has entered into the following contracts with the vendors identified below.

Logistical Logistics enters into a contract with See Boat Inc. (See Boat) to use its shipping vessels to transport customer goods from North America to Asia. See Boat has a fleet of 25 multi-use shipping vessels, each of which has the capacity to hold 1,000 shipping containers.

Logistical Logistics enters into a contract with Fly-By-Air Inc. (Fly-By-Air) to use its aircraft to transport customer goods from South America to North America. Fly-By-Air has a fleet of 50 multi-use aircraft, each of which has the capacity to hold 500 shipping pallets of customer goods.

Logistical Logistics enters into a contract with Trucking Co. Inc. (Trucking Co.) to use its trucks to transport customer goods from distribution centers to retail stores across North America.

Trucking Co. has a fleet of 1,500 multi-use long-haul trucking carriers, each of which has the capacity to hold 100 shipping pallets of goods.

Logistical Logistics enters into a contract with Warehouse Co. Inc. (Warehouse Co.) to store up to 18,000 shipping pallets of customer goods at one of Warehouse Co.’s locations. Warehouse Co. has the capacity to store 20,000 shipping pallets of goods.

The terms of the shipping contracts are as follows:

•    See Boat

• The contract term is for the voyage to transport Logistical Logistics’ cargo from Los Angeles to Shanghai. Logistical Logistics does not have discretion to change the departure or arrival ports without a renegotiation of the contract fees.
• SB0829, a commercial shipping vessel in See Boat’s fleet, is dedicated to delivering Logistical Logistics’ cargo for the term of the contract. See Boat cannot substitute SB0829 with another vessel in its fleet.
• The contract identifies the shipping containers and acceptable cargo (e.g., semiconductors) to be transported on the ship as well as the transportation route. Logistical Logistics does not have discretion to change the identified cargo without renegotiating the contract fees.

o   See Boat is responsible for the safe passage of the cargo, as well as operation and maintenance of SB0829. The crew determines the ship’s route, speeds, and date of departure from Los Angeles. In addition, Logistical Logistics cannot, under any circumstances, replace See Boat’s crew.

The contract term is five years

o   FBA1231, a commercial aircraft in Fly-By-Air’s fleet, is dedicated to delivering Logistical Logistics’ shipping pallets during the term of the contract.

o   Logistical Logistics determines (1) the airports from and to which goods are shipped and received and (2) the order in which deliveries are made to the airports. Fly-By-Air provides the aircraft’s pilot and crew, and Logistical Logistics instructs Fly-By-Air accordingly.

o   While Logistical Logistics determines what cargo will be transported throughout the term of the contract, certain restrictions prevent the Company from shipping flammable materials.

o   Logistical Logistics has the right to send the aircraft regardless of whether its cargo levels meet the full storage capacity of the aircraft. If FBA1231 is below capacity, Fly-By-Air cannot use the excess storage space to ship products of its othercustomers.

•    Trucking Co.

• The contract term is five years.
• Trucking Co. must deliver Logistical Logistics’ shipments within three weeks of the Company’s notification that it has pallets of customer goods ready for shipping.
• Trucking Co. may choose any truck from its fleet to fulfill the shipping request.
• Logistical Logistics may request shipment of 25 to 100 shipping pallets of goods in a single request. (Individual shipping requests generally do not exceed 50 shipping pallets.)
• Trucking Co. has the right to use any excess storage space to ship products of its other customers.
• Trucking Co. determines the shipment’s delivery date (within the three-week period), as well as the shipping route.

•    Warehouse Co.

• The contract term is 10 years.

Logistical Logistics can store up to 18,000 shipping pallets at one specified Warehouse Co. location. Logistical Logistics will be charged for storage of 18,000 shipping pallet

• regardless of the actual number of pallets stored, and Warehouse Co. cannot use any of Logistical Logistics’ unused storage space for other storageneeds.
• Warehouse Co. can use the remaining space in its warehouse for other storage needs.
• Warehouse Co. cannot relocate Logistical Logistics’ inventory to another facility.
• Logistical Logistics has the right to decide which shipping pallets are placed in storage and when they can be removed.
• Warehouse Co. provides the loading and unloading services for the warehouse activities, both of which are dependent on Logistical Logistics’ decisions about which shipping pallets are placed in storage and when they can be removed.

The CFO of Logistical Logistics recognizes that the new leasing standard contains certain provisions that may affect how the Company treats contracts of this nature.

Note that you have been provided with Handout 1, which contains the risks of material misstatement (RoMMs) matrix, and Handout 2, which is Logistical Logistics’ control matrix.

Handout 1

Handout 2

Penny Cookie Company offers credit terms to its customers. At the end of Year 1, accounts receivable totaled $120,000. The allowance method is used to account for uncollectible accounts. The allowance for uncollectible accounts had a credit balance of $12,000 at the beginning of Year 1 and $6,200 in receivables were written off during the year as uncollectible. Also, $600 in cash was received in December from a customer whose account previously had been written off. The company estimates bad debts by applying a percentage of 6% to accounts receivable at the end of the year.

1. (NOT REQUIRED) Prepare journal entries to record the write-off of receivables, the collection of $600 for previously written off receivables, and the year-end adjusting entry for bad debt expense.(NOT REQUIRED)

2. (ANSWER THIS) What numbers are used to calculate the ending balance of allowance for doubtful accounts? (ANSWER THIS)

XYZ Company sells electronic parts. Most transactions with customers are immediately paid with cash or check. However, XYZ has five major customers that can purchase on credit. These approved customers routinely buy on credit. The terms of the credit provide that payment must occur within 30 days, and each customer has a maximum credit limit of RO. 10,000.

The following information is about each of the 5 credit customers’ transactions during month of May:

Instructions:

1. Prepare a subsidiary accounts receivable ledger account for each of XYZ’s customers.

2. Prepare the general ledger Accounts Receivable “control” account. Be sure the total in this account reconciles to the sum of the individual balances in the subsidiary ledgers.

3. What is the purpose of a subsidiary ledger? What other control accounts might be supported by subsidiary ledgers? (To answer this part, words must be at least 100 words).                                                                                                                                  (1.5 Marks)
4. Review XYZ’s subsidiary ledgers and identify which customer should be put on close watch and monitor for being irresponsible, and which customer has exceeded their credit limit. Justify. (To answer this part, words must be at least 100 words).                          (1.5 Marks)

ABC Company employs a periodic inventory system and sells
its inventory to customers for $29 per unit. ABC Company
had the following inventory information available for
the month of May:

May 1    Beginning inventory 2,400 units @ $14 cost per unit
May 8    Sold 1,100 units
May 13   Purchased 1,400 units @ $11 cost per unit
May 18   Sold 1,200 units
May 21   Purchased 800 units @ $19 cost per unit
May 28   Sold 500 units
May 30   Purchased 1,700 units @ $10 cost per unit

During May, ABC Company had operating expenses of $15,400 and
had an income tax rate of 43%.

Calculate the dollar amount of ending inventory shown on ABC's
May 31 balance sheet using the FIFO method.

Amara Ltd was founded on 1st January 2019. Amara sells bed frames to customers. The company has adopted a periodic inventory system together with the average cost cost-flow assumption (AVCO) to determine the Cost of Goods Sold for the year. The company’s inventory transactions for its first year of operation to December 31st, 2019 are as follows:

Required:

(a) What amount will Amara Ltd report as its Inventory balance in the Current Asset section of its Balance Sheet? What amount will Amara report as Cost of Goods Sold for the year ended 2019 financial year? (Show all workings)

(b) If Amara Ltd had adopted First-In First-Out (FIFO) as its cost flow assumption on 1st January 2019, what Cost of Goods Sold figure would have been reported in its Statement of Financial Performance for the 2019 financial year? (Show all workings)

(c) Management is aware of another cost-flow assumption; Last-In First-Out (LIFO). Which of the three cost-flow assumptions; AVCO, FIFO or LIFO will yield the highest Gross Profit Margin for the 2019 year if 80% of Sales are on credit?

There is no specific methods required.

Pasti Berhad values advertise and sell residential property on behalf of its customers. The company has been in business for only a short time and is preparing a cash budget for the first four months of the year 2020. The expected sales of residential properties are as follows.

The average price of each property is RM180,000 and Pasti Berhad charges a fee of 3% of the value of each property sold. Pasti Berhad receives 1% in the month of sale and the remaining 2% in the month after sale. The company has ten employees who are paid monthly. The average salary per employee is RM36,000 per year. If more than 20 properties are sold each month, each employee will be paid in that month a bonus of RM1,500 for each additional property sold.

Variable expenses are incurred at the rate of 50% of the value of each property sold and these expenses are paid in the month of sale. Fixed overheads of RM44,300 per month are paid in the month in which they arise. Pasti Berhad pays interest every three months on a loan of RM200,000 at a rate of 6% per year. The last interest payment in each year is paid in December.

Outstanding tax liability of RM95,800 is due to be paid in April. In the same month, Pasti Berhad intends to dispose of surplus vehicles, with a net book value of RM15,000, for RM20,000. The cash balance at the start of January 2020 is expected to be a deficit of RM40,000.

Required:
a) Prepare a monthly cash budget for the period from January to April. Your budget must clearly indicate each item of income and expenditure, and the opening and closing monthly cash balances.
b) Discuss the factors to be considered by Pasti Berhad in planning ways to invest any cash surplus forecast by its cash budgets.
c) Discuss the TWO (2) advantages and TWO (2) disadvantages to Pasti Berhad of using overdraft finance to fund any cash shortages forecast by its cash budgets.

The Dash Cell Phone Company charges customers a basic rate of $5 per month to send text messages. Additional rates are as follows:

• The first 100 messages per month, regardless of message length, are included in the basic bill.
• An additional three cents are charged for each text message after the 100th message, up to and including 300 messages.
• An additional two cents are charged for each text message after the 300th message.
• Federal, state, and local taxes add a total of 14 percent to each bill.

Design a flowchart or pseudocode for the following:

a. A program that accepts the following data about one customer's messages: area code (three digits), phone number (seven digits), and number of text messages sent. Display all the data, including the month-end bill both before and after taxes are added.

b. A program that continuously accepts data about text messages until a sentinel value is entered, and displays all the details.

c. A program that continuously accepts data about text messages until a sentinel value is entered, and displays details only about customers who send more than 100 text messages.

d. A program that continuously accepts data about text messages until a sentinel value is entered, and displays details only about customers whose total bill with taxes is over $10.

e. A program that prompts the user for a three-digit area code from which to select bills. Then the program continuously accepts text message data until a sentinel value is entered, and displays data only for messages sent from the specified area code.