Perfect Pizza had the following account balances at December 31, 2015:

During 2016, the following transactions occurred:

1.Purchases of ingredients and supplies (inventory) were $230,000, all on account.

2.Sales of pizzas for cash were $510,000, and sales of pizzas on account were $40,000.

3.The company paid $105,000 for wages and $25,000 for utilities expenses.

4.Payments for ingredients and supplies purchased on account totalled $220,000.

5.Collections from customers for sales on account totalled $50,000.

6.Ingredients and supplies valued at $225,000 were used in making pizzas.

7.A dividend of $15,000 was declared and paid at the end of the year.

Information for adjusting entries:

8.At the end of 2016, the amount of rent paid in advance was $1,500.

9.Wages owed to employees at the end of 2016 were $2,500.

10.The equipment had an estimated useful life of eight years, with no residual value.

11.The delivery vehicles had an estimated useful life of six years with a residual value of $8,000.

Required

a.  

Prepare journal entries for transactions 1 through 7. Create new accounts as necessary.

b.  

Prepare adjusting journal entries for adjustments 8 to 11.

c.  

Set up T accounts, enter the beginning balances from 2015, post the 2016 entries, and calculate the balance in each account.

d.

Prepare a statement of income for 2016.

e.  

Prepare the closing entries

The amounts of the assets and liabilities of Nordic Travel Agency at December 31, 2016, the end of the year, and its revenue and expenses for the year follow. The retained earnings were $600,000 on January 1, 2016, the beginning of the year. During the year, dividends of $42,000 were paid. Accounts payable $ 69,500 Accounts receivable 285,000 Cash 190,500 Common stock 70,000 Fees earned 912,500 Land 544,000 Miscellaneous expense 6,400 Rent expense 36,000 Supplies 5,500 Supplies expense 4,100 Utilities expense 28,500 Wages expense 510,000 Required: 1. Prepare an income statement for the year ended December 31, 2016. Refer to the Accounts given in the Instructions and to the lists of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. If a net loss is incurred, enter that amount as a negative number using a minus sign. A colon (:) will automatically appear if it is required. 2. Prepare a retained earnings statement for the year ended December 31, 2016. Refer to the Accounts given in the Instructions and to the lists of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. Enter all amounts as positive numbers. The word “Less” or “Add” is not needed in the Retained Earnings Statement. 3. Prepare a balance sheet as of December 31, 2016. Refer to the Accounts given in the Instructions and to the lists of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. 4. What item appears on both the retained earnings statement and the balance sheet?

Issued bonds with a face value of $390,000 at 97.63 plus accrued interest from March 1.

Record the payment of semiannual bond interest for the bond issued on June 1.

Record the amortization of the discount for the bond issued on June 1.

Recorded an adjusting entry to accrue the interest and to amortize the discount.

Closed the Bond Interest Expense account to the Income Summary account.

Reversed the adjusting entry made on December 31, 2016.

Paid the semiannual bond interest and amortized the discount on the outstanding bonds.

Total Manufacturing Cost, Income Statement, Unit Cost, and Selling Price Two inventors, recently

organized as Innovation, Inc., consult you regarding a planned new product. They have estimates of the

costs of materials, labor, overhead, and other expenses for 2016 but need to know how much to charge for

each unit to earn a profit in 2016 equal to 15% of their estimated total long-term investment of $400,000

(ignore income taxes). Their plans indicate that each unit of the new product requires the following:

Direct material

4 lb. of a material costing $5/lb.

Direct labor

2 hrs. of a metal former’s time at $11/hr.

0.6 hr. of an assembler’s time at $8/hr.

Major items of production overhead would be annual rent of $46,460 for a factory building, $28,660

rent for machinery, and $21,700 of indirect material. Other production overhead is estimated to be

$233,280. Selling expenses are an estimated 30% of total sales, and non-factory administrative expenses

are 20% of total sales.

The consensus at Innovation is that during 2016 10,000 units of product should be produced for

selling and another 2,000 units should be produced for the next year’s beginning inventory. Also, an

extra 3,000 pounds of material will be purchased as beginning inventory for the next year. Because

of the nature of the manufacturing process, all units started must be completed, so work in process

inventories are negligible.

Required

a. Incorporate the above data into a schedule of estimated total manufacturing costs and compute

the unit production cost for 2016.

b. Prepare an estimated income statement that would provide the target amount of profit for 2016.

c. What unit sales price should Innovation charge for the new product?

Quiz #10

Husky Company’s 2016 income statement and comparative balance sheets as of December 31 of 2016 and 2015 are shown below:

HUSKY COMPANY

Income Statement

For Year Ended December 31, 2016

Sales revenue…………………………………………………... $1,270,000

Cost of goods sold……………………………………………... $860,000

Wages expense………………………………………………… 172,000

Insurance expense…………………………………………….. 16,000

Depreciation expense………………………………………….. 34,000

Interest expense……………………………………………….. 18,000

Income tax expense…………………………………………… 58,000 1,158,000

Net income…………………………………………………….. $ 112,000

HUSKY COMPANY

Balance Sheets

Dec. 31, 2016 Dec. 31, 2015

Assets

Cash…………………………………………………………….. $ 22,000 $ 10,000

Accounts receivable……………………………………………. 82,000 64,000

Inventory……………………………………………………….. 180,000 120,000

Prepaid insurance……………………………………………..... 10,000 14,000

Plant assets…………………………………………………….. 500,000 390,000

Accumulated depreciation……………………………………... (136,000) (102,000)

Total assets……………………………………………………... $658,000 $496,000

Liabilities and Stockholders’ Equity

Accounts payable………………………………………………. $ 14,000 $ 20,000

Wages payable…………………………………………………. 18,000 12,000

Income tax payable…………………………………………….. 14,000 16,000

Bonds payable…………………………………………………. 260,000 150,000

Common stock…………………………………………………. 180,000 180,000

Retained earnings………………………………………………. 172,000 118,000

Total liabilities and stockholders’ equity………………………. $658,000 $496,000

Cash dividends of $58,000 were declared and paid during 2016. Plant assets were purchased for cash. Bonds were issued for cash. Bond interest is paid semiannually on June 30 and December 31. Accounts payable relate to merchandise purchases.

Required

Prepare the operating section of cash flow using the indirect method. Interest expense or income is always operating.

Quiz #11

Using Quiz # 10 above - prepare the entire cash flow statement (operating, investing, and financing) using the indirect method

Problem 2-6A Condensed balance sheet and income statement data for Blossom Company are presented as follows.

Blossom Company Balance Sheets December 31

Assets 2017 and 2016 (respectively)

Cash $ 30,700 $ 22,700

Receivables (net) 82,100 74,100

Other current assets 102,100 85,100

Long-term investments 62,000 60,000

Property, plant, and equipment (net) 522,100 482,100

Total assets $ 799,000 724,000

Liabilities and Stockholders’ Equity

Current liabilities $ 77,700 $ 72,700

Long-term liabilities 92,100 102,100

Common stock 342,100 312,100

Retained earnings 287,100 237,100

Total liabilities and stockholders’ equity $ 799,000 $ 724,000

Blossom Company Income Statements For the Years Ended December 31 2017 2016

Sales revenue $789,000 $691,000

Cost of goods sold 440,000 400,000

Operating expenses (including income taxes) 240,000 220,000

Net income $ 109,000 $ 71,000

Additional information:

Net cash from operating activities $123,800 $58,700

Cash used for capital expenditures $47,700 $38,000

Dividends paid on common shares $59,000 $17,700

Weighted-average number of shares outstanding 33,000 30,000

Compute these values and ratios for 2016 and 2017. (Round Earnings per share to 2 decimal places, e.g. $2.78 and Current Ratio and Debt to assets ratio to 1 decimal place, e.g. 15.2. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) 2017 2016

2016 & 2017

(a) Earnings per share.

(b) Working capital.

(c) Current ratio.

(d) Debt to assets ratio.

(e) Free cash flow.

Harmony Express Company ofers a defined-benefit pension plan to all its employees. At December 31, 2015 the fair-value of the plan assets, which equal the market-related asset value, was $600,000and the Projected Benefit Obligation was also $600,000. On January 1, 2016, as part of the union agreement, Harmony Express Company granted $75,000 in retroactive benefits to all employees for their prior years' service when the average remaining service life of employee base was 10 years. The actuary provided the following information related to the plan for 2016 through 2018:

I. Fill the following table to compute the pension expense for each year. Show all components of pension expense.

II. Determine the beggining and the ending balance of projected benefit obligation and plan assets. Calculate the funded status for the plan for each year.

III. Record the journal entries to record the pension expense for each year:

1. The University is interested in determining if the number of people coming to work by pedal bicycle has changed from 2016 to 2017. Over the course of a week (Mon-Sun) they count the number of cyclists who enter campus at the North campus cycle path entrance between 8am-10am each day. The University have data from the same week in 2016. The counts for each day of the week for 2016 and 2017 are given in Table:

   	Mon	Tues	Wed	Thurs	Fri	Sat	Sun
   2016	243	175	255	187	241	53	32
   2017	254	242	250	263	235	51	35

   1. Describe one positive and one negative aspect of the University's sampling strategy
   2. Explain why a paired approach is appropriate for this test
   3. Write down appropriate null and alternative hypotheses for this test.
   4. Calculate the mean and variance of the differences di=xi-yi.
   5. What assumptions are required to conduct your hypothesis test from (c), does this data satisfy them?
   6. Using your answer to part (d), or otherwise, calculate a 90% confidence interval for the difference in the average number of cyclists.
   7. Using your answer to part (f), or otherwise, test your hypothesis from (c)  at the 10% level. You should clearly state the conclusion of your test.
   8. From Table 1 it looks like Tuesday and Thursday have the largest difference from one year to the next.  Why is it wrong to now testing the hypothesis  “2017 has more cyclists on Tuesdays and Thursdays than in 2016”?

Please explain part h) more details, thanks a lot.

Changes in Shareholders' Equity

On January 1, 2016, the Osgood Film Studios reported the following alphabetical list of shareholders' equity items:

During 2016, the company sold 3,100 shares of common stock for $13 per share and 430 shares of preferred stock for $137 per share. It also earned income of $82,000 and paid dividends of $7 per share on the preferred stock and $2.50 per share on the common stock outstanding at the end of 2016.

Required:

Prepare Osgood's statement of shareholders' equity (include retained earnings) for 2016.

Return on Equity in Presence of Large Treasury Stock Balance

NJ Simpson Inc. reported the following equity accounts in its 2017 balance sheet. Stock prices for the past three year-ends of 2017, 2016, and 2015 are: $244.80, $196.96, and $136.34, respectively.

The income statement for NJ Simpson Inc. reports the following.

a. Compute return on equity for 2017 and 2016, under the following assumptions.

Traditional definition of equity.

With adding back treasury stock to equity.

Using market value of equity instead of book value.

Round answers to one decimal place (ex: 0.2345 = 23.5%)