Exercise 6-21 Complete the accounting cycle using inventory transactions (LO6-2, 6-3, 6-5, 6-6, 6-7)

Skip to question

[The following information applies to the questions displayed below.]

On January 1, 2021, the general ledger of Big Blast Fireworks includes the following account balances:

The $43,000 beginning balance of inventory consists of 430 units, each costing $100. During January 2021, Big Blast Fireworks had the following inventory transactions:

The following information is available on January 31, 2021.

1. At the end of January, the company estimates that the remaining units of inventory are expected to sell in February for only $100 each.
2. The company estimates future uncollectible accounts. The company determines $5,300 of accounts receivable on January 31 are past due, and 35% of these accounts are estimated to be uncollectible. The remaining accounts receivable on January 31 are not past due, and 3% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.)
3. Accrued interest expense on notes payable for January. Interest is expected to be paid each December 31.
4. Accrued income taxes at the end of January are $13,600.

Exercise 6-21 Part 7

7. Analyze how well Big Blast Fireworks’ manages its inventory:

a-1. Calculate the inventory turnover ratio for the month of January. (Round your final answer to 1 decimal place)
  

a-2. If the industry average of the inventory turnover ratio for the month of January is 13.2 times, is the company managing its inventory more or less efficiently than other companies in the same industry?
  

multiple choice 1

• More

• Less

b-1. Calculate the gross profit ratio for the month of January. (Round your final answer to 1 decimal place)
  

b-2. If the industry average gross profit ratio is 33.0%, is the company more or less profitable per dollar of sales than other companies in the same industry?
  

multiple choice 2

• More

• Less

c. Is the company’s strategy to sell a higher volume of less expensive items or does the company appear to be selling a lower volume of more expensive items?
  

multiple choice 3

• Higher volume of less expensive

• Lower volume of more expensive

15. Consider an orange island economy that consists of only two companies: an orange company that produces oranges and an orange juice company that purchases oranges from the orange company to produce orange juice. Their income statements in 2015 are as follows:

Orange Company:

   Wages paid to employees                           $15,000

   Taxes paid to government                          $ 5,000

Sales revenue:

             Oranges sold to public                        $10,000

             Oranges sold to Juice Corp.                $25,000

Orange Juice Company:

   Wages paid to employees                           $10,000

   Taxes paid to government                          $ 2,000

   Juice boxes imported from China               $ 1,000

   Oranges purchased from orange corp.        $25,000

   Sales revenue                                              $40,000

1. Please calculate the 2015 GDP of this economy using Product approach, income approach and expenditure approach.
2. Suppose that, in addition to above transactions, the juice company imported juice boxes from China for $1000. Again, calculate the 2015 GDP of this economy using Product approach, income approach and expenditure approach.

A Company is selling two products A and B. It sells the two products at the prices of AED 190 and 230 respectively. The finance department estimated the fixed cost for both products A and B as AED 2400 and 2550 and the variable cost to make a unit of each product is AED 70 and 60 respectively.

1. Compute the number of units the company must sell to Break-Even from each product? Compute the total revenue at these Break-Even Points?
2. Compute the number of units the company sells at which the two products have the same total cost? Compute the company total revenue for this number of sold units?

If the company used new technology in redesigning product A and the total fixed cost reduced to AED 2250. The marketing department estimated the new selling price per unit to be AED 240 and that the company would be break-even if they sale 10 units of product A. Compute the variable cost per unit and the total variable cost of the newly designed product A?

15. Consider an orange island economy that consists of only two companies: an orange company that produces oranges and an orange juice company that purchases oranges from the orange company to produce orange juice. Their income statements in 2015 are as follows:

Orange Company:

   Wages paid to employees                           $15,000

   Taxes paid to government                          $ 5,000

Sales revenue:

             Oranges sold to public                        $10,000

             Oranges sold to Juice Corp.                $25,000

Orange Juice Company:

   Wages paid to employees                           $10,000

   Taxes paid to government                          $ 2,000

   Juice boxes imported from China               $ 1,000

   Oranges purchased from orange corp.        $25,000

   Sales revenue                                              $40,000

1. Please calculate the 2015 GDP of this economy using Product approach, income approach and expenditure approach.
2. Suppose that, in addition to above transactions, the juice company imported juice boxes from China for $1000. Again, calculate the 2015 GDP of this economy using Product approach, income approach and expenditure approach.

Problem 2-19 (Algo) Multiple Predetermined Overhead Rates; Applying Overhead [LO2-1, LO2-2, LO2-4]

High Desert Potteryworks makes a variety of pottery products that it sells to retailers. The company uses a job-order costing system in which departmental predetermined overhead rates are used to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Molding Department is based on machine-hours, and the rate in the Painting Department is based on direct labor-hours. At the beginning of the year, the company provided the following estimates:

Job 205 was started on August 1 and completed on August 10. The company's cost records show the following information concerning the job:

Required:

1. Compute the predetermined overhead rates used in the Molding Department and the Painting Department.

2. Compute the total overhead cost applied to Job 205.

3-a. What would be the total manufacturing cost recorded for Job 205?

3-b. If the job contained 30 units, what would be the unit product cost?

Using a regression model in excel to understand the factors that contribute to customer satisfaction and spending. Refer to the data provided to identify what variables are significant to predicting overall satisfaction. Develop and interpret the prediction equation and the coefficient of determination. Based on the data, what areas should the business focus on to improve customer satisfaction?

Question 2: Preparation and Presentation of the Income Statement

SHOW YOUR WORKING FOR EACH OF THE NUMBERED QUESTIONS

In your new position as chief financial officer for Gulf Barges Limited, the first task you have been assigned to complete is to prepare the income statement for the 12-month period ended June 30, 2022.

On your desk on your first day, the previous chief financial officer has left you valuable information to complete the task.

SHOW YOUR WORKING FOR EACH OF THE NUMBERED QUESTIONS

1 -Total revenue recorded by Gulf Barges Limited during the accounting period was $185,852,000. Included in the total revenue figure is Other Revenue totalling $21,050,000 and Interest Income totalling $2,453,000.

Following is a list of expenses incurred by the company.

2 -On January 1, 2022, the company sold a block of land held for investment and recognized a gain on the sale of $12,861,000.

3 -On April 1, 2022, the company sold equipment that resulted in a loss of $4,891,000.

4 -The company incurred finance interest charges during the accounting period of $14,890,000.

5 -The company is involved in joint venture operations. As a result of poor financial conditions, the company recorded a net loss of $15,069,000 from its share of the joint venture operations.

6 -From the operations of its associate firms, the company recorded a net gain of $4,287,000 for the financial period ended June 30, 2022.

7 -If the company reports a profit during the year, the effective corporate tax rate is 25%. If a loss is reported the effective tax rate is zero.

Required:

Using the information supplied, prepare an income statement for Gulf Barges Limited for the accounting period that conforms with IFRS IAS 1 requirements and recommendation. (Hint: Expenses should be classified by function (e.g., cost of goods sold) not nature. SHOW YOUR WORKING FOR EACH OF THE NUMBERED QUESTIONS

Provide journal entries to following question

Problem 11-4A (Part Level Submission)

On January 1, 2018, Crown Point Ltd., a private company, had the following shareholders’ equity accounts:

The following selected transactions occurred during 2018:

4. Listed below are the combined city – highway fuel consumption ratings (in miles per gallons) for different cars measured in old rating system and cars in a new rating system introduced in 2008 (based on data from USA today). A. Construct a 90 percent confidence interval of the difference in the ratings of cars. (Use 3 decimal places) (10 pts) Old Rating: 16 18 27 17 33 28 33 18 24 19 18 27 22 18 20 29 19 27 20 21 New Rating: 15 16 24 15 29 25 29 16 22 17 16 24 20 16 18 26 17 25 18 19 B. Based on the interval is there a reason to believe that there is a difference in the ratings of the two cars? C. Is there any significant difference in the old and new ratings of cars? Use appropriate hypothesis test to answer this question.