The Cottonwood Company for sales volumes of $300,000, $350,000, and $400,000, based on the following data:

Required:

Labels and Amount Descriptions

Selling Expense Budget

Prepare a monthly flexible selling expense budget for Cottonwood Company for December, 2016. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading.

The Village of Hawksbill issued $4,500,000 in 5 percent general obligation, tax-supported bonds on July 1, 2016, at 101. A fiscal agent is not used. Resources for principal and interest payments are to come from the General Fund. Interest payment dates are December 31 and June 30. The first of 20 annual principal payments is to be made June 30, 2017. Hawksbill has a calendar fiscal year.

1. A capital projects fund transferred the premium (in the amount of $52,500) to the debt service fund.
2. On December 31, 2016, funds in the amount of $112,500 were received from the General Fund and the first interest payment was made.
3. The books were closed for 2016.
4. On June 30, 2017, funds in the amount of $285,000 were received from the General Fund, and the second interest payment (112,500) was made along with the first principal payment ($225,000)
5. On December 31, 2017, funds in the amount of $106,875 were received from the General Fund and the third interest payment was made (also in the amount of $106,875).
6. The books were closed for 2017.

Required

a. Prepare journal entries to record the events above in the debt service fund.

b. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the debt service fund for the year ended December 31, 2016.

c. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the debt service fund for the year ended December 31, 2017.

Marino's Frozen Pizza Inc. has determined from its production budget the following estimated production volumes for 12'' and 16'' frozen pizzas for June 2016: Units 12" Pizza 16" Pizza Budgeted production volume 15,200 25,200 There are three direct materials used in producing the two types of pizza. The quantities of direct materials expected to be used for each pizza are as follows: 12" Pizza 16" Pizza Direct materials: Dough 0.90 lb. per unit 1.50 lbs. per unit Tomato 0.60 1.00 Cheese 0.80 1.30 In addition, Marino's has determined the following information about each material: Dough Tomato Cheese Estimated inventory, June 1, 2016 530 lbs. 210 lbs. 270 lbs. Desired inventory, June 30, 2016 560 lbs. 200 lbs. 300 lbs. Price per pound $1.1 $2.4 $3.3 Prepare June's direct materials purchases budget for Marino's Frozen Pizza Inc. When required, enter unit prices to the nearest cent. Marino's Frozen Pizza Inc. Direct Materials Purchases Budget For the Month Ending June 30, 2016 Dough Tomato Cheese Total Units required for production: 12" pizza 16" pizza Total Total units to be purchased Unit price x $ x $ x $ Total direct materials to be purchased $ $ $ $

Alpha Technologies designs, manufactures and markets an extensive line of PC cards. The company sells these cards primarily to original equipment manufacturers (OEMs) for industrial and commercial applications in a market with intense competition. In fact, many OEM companies ran into financial difficulty in 2016 because of intense competition. The following selected data is taken from the company’s financial statements:

Partial Consolidated Balance Sheet (unaudited)   December 31, 2016        December 31, 2015

Current Assets

Cash & Cash Equivalents                                                   $6,181,520                      $970,446

Available-for-Sale Securities                                              $4,932,763

Accounts Receivable (net of Allowance for

     Doubtful Accounts of $148,300 and $139,200

     At December 31, 2016 and 2015, respectively)     $12,592,231                    $3,932,170

Inventories                                                                       $18,229,317                    $8,609,492

Other Current Assets                                                       $18,229,317                    $8,609,492

Total Current Assets                                                        $60,165,148                   $22,121,600

Partial Income Statement (unaudited)          Year                      Year                      Year

                                                                          Ended                    Ended                    Ended

                                                                     12/31/2016            12/31/2015            12/31/2014

Sales                                                           $37,847,681          $12,445,015           $8,213,236

Cost of Goods Sold                                    $15,895,741          $6,832,927         $4,523,186

Gross Margin                                             $21,951,940          $5,612,088         $3,690,050

Part I:

Determine the red flags that exist in these financial statements. Describe the scenarios that might contain these symptoms.

Part II:

Based upon the red flags and the scenarios identified above, determine the nature and extent of possible financial statement fraud, paying close attention to sales, cost of goods sold and the allowance for doubtful accounts receivable.

Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2017 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 $1,182 of depreciation per month.

Other data:

The company’s cash balance on January 1, 2017, is expected to be $70,920. The company wants to maintain a minimum cash balance of $59,100.

QUESTION

Prepare a cash budget for January and February in columnar form. (Do not leave any answer field blank. Enter 0 for amounts.)

Question 2
Colter Company prepares monthly cash budgets. Relevant data from operating budgets for
2017 are as follows.
January February
Sales $360,000 $400,000
Direct materials purchases 120,000 125,000
Direct labour 90,000 100,000
Manufacturing overhead 70,000 75,000
Selling and administrative expenses 79,000 85,000
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 $1,000 of
depreciation per month.
Other data:
? Credit sales: November 2016, $250,000; December 2016, $320,000.
? Purchases of direct materials: December 2016, $100,000.
? Other receipts: January—collection of December 31, 2016, notes receivable $15,000;
February—proceeds from sale of securities $6,000.
? Other disbursements: February—payment of $6,000 cash dividend.
The company's cash balance on January 1, 2017, is expected to be $60,000. The company
wants to maintain a minimum cash balance of $50,000.
Required
(a) Prepare schedules for (1) expected collections from customers and (2) expected

payments for direct materials purchases for January and February.
(b) Prepare a cash budget for January and February in columnar form.

On October 29, 2016, Lobo Co. began operations by purchasing razors for resale. Lobo uses the perpetual inventory method. The razors have a 90-day warranty that requires the company to replace any nonworking razor. When a razor is returned, the company discards it and mails a new one from Merchandise Inventory to the customer. The company's cost per new razor is $13 and its retail selling price is $70 in both 2016 and 2017. The manufacturer has advised the company to expect warranty costs to equal 6% of dollar sales. The following transactions and events occurred.

2016

Nov. 11 Sold 60 razors for $4,200 cash.

Nov. 30 Recognized warranty expense related to November sales with an adjusting entry.

Dec. 9 Replaced 12 razors that were returned under the warranty.

Dec. 16 Sold 180 razors for $12,600 cash.

Dec. 29 Replaced 24 razors that were returned under the warranty.

Dec. 31 Recognized warranty expense related to December sales with an adjusting entry.

2017

Jan. 5 Sold 120 razors for $8,400 cash.

Jan.17 Replaced 29 razors that were returned under the warranty.

Jan. 31 Recognized warranty expense related to January sales with an adjusting entry.

Prepare journal entries to record above transactions and adjustments for 2016.

Marino's Frozen Pizza Inc. has determined from its production budget the following estimated production volumes for 12'' and 16'' frozen pizzas for June 2016:

There are three direct materials used in producing the two types of pizza. The quantities of direct materials expected to be used for each pizza are as follows:

In addition, Marino's has determined the following information about each material:

Prepare June's direct materials purchases budget for Marino's Frozen Pizza Inc. When required, enter unit prices to the nearest cent.

On July 1, 2016, Killearn Company acquired 120,000 of the outstanding shares of Shaun Company for $15 per share. This acquisition gave Killearn a 20 percent ownership of Shaun and allowed Killearn to significantly influence the investee's decisions.

As of July 1, 2016, the investee had assets with a book value of $7 million and liabilities of $148,000. At the time, Shaun held equipment appraised at $581,000 above book value; it was considered to have a seven-year remaining life with no salvage value. Shaun also held a copyright with a five-year remaining life on its books that was undervalued by $1,235,000. Any remaining excess cost was attributable to goodwill. Depreciation and amortization are computed using the straight-line method. Killearn applies the equity method for its investment in Shaun.

Shaun's policy is to declare and pay a $1 per share cash dividend every April 1 and October 1. Shaun's income, earned evenly throughout each year, was $566,000 in 2016, $593,400 in 2017, and $643,600 in 2018.

In addition, Killearn sold inventory costing $114,600 to Shaun for $191,000 during 2017. Shaun resold $123,500 of this inventory during 2017 and the remaining $67,500 during 2018.

Determine the equity income to be recognized by Killearn during each of these years.

Compute Killearn's investment in Shaun Company's balance as of December 31, 2018.

A. Equity Income 2016 __________

B. Equity Income 2017 __________

C. Equity Income 2018 __________

D. Investment in Sahun __________

1) Prepare entries to record the following events and transactions for Tulia Township for the year 2016.

                  a.   The Township adopted a budget calling for appropriations of $360,000. The estimated revenues (all property taxes) were $340,000.

                  b.   The Township sent property tax bills amounting to $340,000 to property owners.

                  c.   Property owners paid $335,000 of property taxes to the Township.

                  d.   A purchase order of $25,000 was sent to a vendor of supplies.

                  e.   The supplies ordered in transaction d. were received in good order and the accompanying invoice of $24,000 was approved.

2) Following is the adjusted trial balance for the General Fund of the Township of Florida on June 30, 2016, the end of the fiscal year.

Based on this information, prepare:

            1.   closing entries

            2.   the statement of revenues, expenditures, and changes in fund balance for the year

            2.   the balance sheet at June 30, 2016. (Classify the fund balance as Unassigned.)