0. Case #3

BlueDot Company budgeted the following manufacturing overhead costs for the 2020 fiscal year.

Accounting & finance (support department) Human resources (support department) Industrial design (operating department) Production (operating department)

$500,000 $110,000 $315,000 $175,000

Budgeted services provided by the Accounting & Finance department:

Human resources 20% Industrial design 30% Production 50%

Budgeted services provided by the Human Resources department:

Accounting & finance 15% Industrial design 65% Production 20%

Required:

1. (A) Using the information provided above, allocate costs from the supporting departments

   to the operating departments using the Direct Method.

2. (B) Ignoring your calculations in (A), use the information provided above to allocate costs

   from the supporting departments to the operating departments using the Step Down

   method with the Accounting & Finance department allocating first.

3. (C) Ignoring your calculations in (A) and (B), use the information provided above to

   allocate costs from the supporting departments to the operating departments using the

   Step Down method with the Human Resources department allocating first.

4. (D) Ignoring your calculations in (A) to (C), use the information provided above to allocate

   costs from the supporting departments to the operating departments using the Reciprocal Method using either linear equations or repeated iterations.

Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2020 are as follows.

All sales are on account. Collections are expected to be 50% in the month of sale, 30% in the first month following the sale, and 20% in the second month following the sale. Sixty percent (60%) of direct materials purchases are paid in cash in the month of purchase, and the balance due is paid in the month following the purchase. All other items above are paid in the month incurred except for selling and administrative expenses that include $1,110 of depreciation per month.

Other data:

The company’s cash balance on January 1, 2020, is expected to be $66,600. The company wants to maintain a minimum cash balance of $55,500.

(a)

• Your Answer
• Correct Answer

Correct answer iconYour answer is correct.

Prepare schedules for (1) expected collections from customers and (2) expected payments for direct materials purchases for January and February.

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Solution

Attempts: 5 of 5 used

(b)

Partially correct answer iconYour answer is partially correct.

Prepare a cash budget for January and February in columnar form.

On December 21, 2020, you purchased 100 shares of ABC company at $11 per share. You plan to sell your shares on December 21, 2021 and are concerned about downside risk. A put option on ABC stock with an exercise price (K) of $40 is currently priced (P) at $2 per share. Also, two call options on ABC stock with exercise prices (K) of $40 and $65 are priced (C) at $2.5 and $1.50 per share, respectively. All options expire on December 21, 2021. What will be net profit/loss per share on a long straddle if the stock price is $10 per share?

Transfer the journal entries to T-accounts for the transactions below, compute closing amounts for the T-accounts, and construct a final balance sheet to answer the question.

Journal amounts in thousands

What is the final amount in Total Assets?

Please specify your answer in the same units as the balance sheet.

James is 49 years old and currently working in a multinational company. During 2019-2020 tax year he sold some of his assets and trying to work out his total capital gain.:

• He bought an investment property for $250,000 under a contract dated 24 June 2009. The contract provided a payment of a deposit of $75,000 on that date, with the balance of $175,000 to be paid on the settlement on 5 August 2009. He paid stamp duty of $25000 on 20 July 2009. On 5 August 2009, he received an account for solicitors’ fees of $5000, which was part of the settlement process. He paid this fee.

He sold the property on 15 October 2019 for $415,000. To process, the sale James incurred $1500 in solicitor’s fees.

• James sold some of his antique collections for $20000 which he purchased during the year 2002 for $8000.
• He also made a capital loss from selling some of his personal use assets. Total loss from these sales were $7000

Required:

Consider the above information given by James (Australian resident for tax purposes) and analyze his current position for capital gain tax. In your analysis, you MUST explain each of the above CGT events and its impact on the total capital gain calculation.

During 2020, Financial Holdings, a public company, purchased equity securities for trading purposes. At December 31, 2020, the securities for Financial Holdings were as follows:

The following transactions with respect to Financial Holdings’ investments occurred during 2021:

At December 31, 2021, the securities held by Financial Holdings were trading on the TSX at the following prices:

1) Show how the securities would be reported on Financial Holdings’ December 31, 2020, balance sheet.?

2)Record Financial Holdings’ 2021 transactions and any required adjusting journal entries at December 31, 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem. Round answer to 0 decimal places, e.g. 5,276.) ?

3)

Show how the investment income, gains, and losses would be reported on the statement of comprehensive income for the year ended December 31, 2021. (Ignore income tax) ?

Accounting Cycle Review 6 a- f
On December 1, 2020, Bonita Company had the account balances shown below.

Debit
Credit
Cash       $5,300       Accumulated Depreciation—Equipment       $1,300
Accounts Receivable       4,000       Accounts Payable       3,600
Inventory       2,760*       Owner’s Capital       30,160
Equipment       23,000                 
$35,060               $35,060

*(4,600 x $0.60)

The following transactions occurred during December:

Dec. 3       Purchased 4,800 units of inventory on account at a cost of $0.74 per unit.
5       Sold 5,300 units of inventory on account for $0.90 per unit. (Bonita sold 4,600 of the $0.60 units and 700 of the $0.74.)
7       Granted the December 5 customer $150 credit for 200 units of inventory returned costing $100. These units were returned to inventory.
17       Purchased 2,300 units of inventory for cash at $0.80 each.
22       Sold 3,600 units of inventory on account for $0.95 per unit. (Bonita sold 3,600 of the $0.74 units.)

Adjustment data:

1.       Accrued salaries payable $400.
2.       Depreciation $400 per month.

Correct answer.   Your answer is correct.
      
Journalize the December transactions and adjusting entries, assuming Bonita uses the perpetual inventory method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Date
Account Titles and Explanation
Debit
Credit
Entry field with correct answer
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Inventory
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3552
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Accounts Payable
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Entry field with correct answer
3552
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Accounts Receivable
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4770
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Sales Revenue
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4770
(To record sales revenue.)      
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Cost of Goods Sold
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3278
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Inventory
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3278
(To record cost of goods sold.)      
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Entry field with correct answer
Sales Returns and Allowances
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150
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Accounts Receivable
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150
(To record sales returns.)      
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Inventory
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100
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Cost of Goods Sold
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100
(To record cost of sales returns.)
Entry field with correct answer
Entry field with correct answer
Inventory
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1840
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Cash
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1840
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Accounts Receivable
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3420
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Sales Revenue
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Entry field with correct answer
3420
(To record sales revenue.)      
Entry field with correct answer
Entry field with correct answer
Cost of Goods Sold
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2664
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Entry field with correct answer
Inventory
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Entry field with correct answer
2664
(To record cost of goods sold.)      
Entry field with correct answer
Entry field with correct answer
Salaries and Wages Expense
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400
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Salaries and Wages Payable
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400
(To record accrued expense.)      
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Depreciation Expense
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400
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Accumulated Depreciation-Equipment
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400
(To record depreciation expense.)      

Correct answer.   Your answer is correct.
      
Prepare a classified balance sheet at December 31, 2020. (List Current Assets in order of liquidity.)

BONITA COMPANY
Balance Sheet
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Assets
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Cash
$Entry field with correct answer
3460
Entry field with correct answer
Accounts Receivable
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12040
Entry field with correct answer
Inventory
Entry field with correct answer
2310
Entry field with correct answer          
$Entry field with correct answer
17810
Entry field with correct answer                      
Entry field with correct answer
Equipment
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23000
Entry field with correct answer: Entry field with correct answer
Accumulated Depreciation-Equipment
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1700
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21300
Entry field with correct answer  
$Entry field with correct answer
39110
Liabilities and Owner’s Equity
Entry field with correct answer                      
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Accounts Payable
$Entry field with correct answer
7152
Entry field with correct answer
Salaries and Wages Payable
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400
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$Entry field with correct answer
7552
Entry field with correct answer                      
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Owner's Capital
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31558
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$Entry field with correct answer
39110

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Partially correct answer.   Your answer is partially correct. Try again.
      
(e)

Compute ending inventory and cost of goods sold under FIFO, assuming Bonita Company uses the periodic inventory system.

Ending Inventory      
$Entry field with incorrect answer
2100
Cost of Goods Sold      
$Entry field with incorrect answer
5842

(f)

Compute ending inventory and cost of goods sold under LIFO, assuming Bonita Company uses the periodic inventory system.

Ending Inventory      
$Entry field with correct answer
1800
Cost of Goods Sold      
$Entry field with incorrect answer
5842
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Sheffield Corp. has 149,910 shares of common stock outstanding. In 2020, the company reports income from continuing operations before income tax of $1,221,100. Additional transactions not considered in the $1,221,100 are as follows.

Analyze the above information and prepare an income statement for the year 2020, starting with income from continuing operations before income tax. Compute earnings per share as it should be shown on the face of the income statement. (Assume a total effective tax rate of 19% on all items, unless otherwise indicated.) (Round earnings per share to 2 decimal places, e.g. 1.47.)

Carla Vista Company has the following information available for September 2020.

Compute the unit contribution margin.

Prepare a CVP income statement that shows both total and per unit amounts.

Compute Carla Vista’ break-even point in units.

Prepare a CVP income statement for the break-even point that shows both total and per unit amounts.