Lafayette Corporation is a leading manufacturer of sports apparel, shoes, and equipment. The company’s 2021 financial statements contain the following information ($ in millions):

A note disclosed that the allowance for doubtful accounts had a balance of $23 million and $47 million at the end of 2021 and 2020, respectively. Bad debt expense for 2021 was $44 million. Assume that all sales are made on a credit basis.

Required

1. What is the amount of gross (total) accounts receivable due from customers at the end of 2021 and 2020?
2. Record the summary journal entry for Sales Revenue for 2021.
3. Record the journal entry to recognize Bad Debt Expense for 2021.
4. Write-offs of Accounts Receivable:
   1. What is the amount of bad debt write-offs during 2021?
   2. Record the journal entry for the bad debt write-offs for 2021.
5. Collections of Accounts Receivable:
   1. Analyze changes in the gross accounts receivable account to calculate the amount of cash received from customers during 2021.
   2. Record a summary journal entry to record collections of all receivables for 2021.

AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost formulas and actual results for the month of February: Fixed Component per Month Variable Component per Job Actual Total for February Revenue $ 277 $ 30,490 Technician wages $ 8,200 $ 8,050 Mobile lab operating expenses $ 4,700 $ 31 $ 8,260 Office expenses $ 2,700 $ 3 $ 2,910 Advertising expenses $ 1,550 $ 1,620 Insurance $ 2,870 $ 2,870 Miscellaneous expenses $ 970 $ 1 $ 395 The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,700 plus $31 per job, and the actual mobile lab operating expenses for February were $8,260. The company expected to work 120 jobs in February, but actually worked 128 jobs. Required: Prepare a flexible budget performance report showing AirQual Test Corporation’s revenue and spending variances and activity variances for February. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

PA10-3 Recording and Reporting Current Liabilities [LO 10-2] Lakeview Company completed the following two transactions. The annual accounting period ends December 31. On December 31, calculated the payroll, which indicates gross earnings for wages ($44,000), payroll deductions for income tax ($4,400), payroll deductions for FICA ($3,300), payroll deductions for American Cancer Society ($1,650), employer contributions for FICA (matching), and state and federal unemployment taxes ($385). Employees were paid in cash, but payments for the corresponding payroll deductions have not yet been made and employer taxes have not yet been recorded. Collected rent revenue of $5,325 on December 10 for office space that Lakeview rented to another business. The rent collected was for 30 days from December 12 to January 10 and was credited in full to Deferred Revenue. Required: 1. & 2. Prepare the journal entries to record payroll on December 31, the collection of rent on December 10 and adjusting journal entry on December 31. 3. Show how any of the liabilities related to these items should be reported on the company’s balance sheet at December 31

On September 1, Year 1, Company D received a $3,000 security deposit from the tenant on an office Company D had rented to a tenant for two years. This amount is expected to be returned to the tenant at lease end if no repairs are needed. The rental period started on September 1, Year 1. The rental agreement requires the tenant pay Company D $1,100 per month at the start of each month. Additionally, the lease agreement required the tenant to pay Company D at the start of the lease for the last month of the lease term. All payments occur as required.
Required:
$_________ Year 1 Rent Revenue
$_________ Any liabilities Company D might have related to this lease at Dec. 31, Year 1 [If
none, so state.]
$_________ Rent Receivable at Dec. 31, Year 1 [If none, so state]
Required:
$_________ Year 2 Rent Revenue
$_________ Any liabilities Company D might have related to this lease at Dec. 31, Year 2 [If
none, so state.]
$_________ Rent Receivable at Dec. 31, Year 2 [If none, so state.]
$_________ Cash received for rent on this office in Year 2

Brady Construction Company contracted to build an apartment complex for a price of $5,200,000. Construction began in 2018 and was completed in 2020. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars.

Brady Construction Company contracted to build an apartment complex for a price of $6,000,000. Construction began in 2018 and was completed in 2020. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars.

Required:
Complete the following table. (Do not round intermediate calculations. Enter answers in dollars. Round your final answers to the nearest whole dollar. Negative amounts should be indicated by a minus sign.)

Complete the following table.

                                Gross Profit (Loss) Recognized

                   Revenue Recognized Over Time             Revenue Recognized Upon Completion

Situation       2016       2017       2018                             2016       2017     2018       

1.

2.

3.

4.

5.

6.

Your audit team has set the following benchmarks and percentages for the calculation of materiality for the financial statement as a whole of a client you are auditing:

            Value                                                                          %

            Profit before tax                                                          5

            Profit after tax                                                      5 – 10

            Gross Profit                                                         0.5 – 1

            Revenue                                                             0.5 – 1

            Total Assets                                                         1 – 2

            Net Assets                                                            2 – 5

During the audit the following items listed (1 – 5) below were considered for their materiality, given that the client’s account values were: Revenue – GHS3.00m; Total Assets – GHS2.50m; Total Liabilities – GHS1.50m; Cost of Sales – GHS1.8m; Profit before tax – GHS0.40m; and Tax – GHS0.10m.:

1. An invoice for GHS18,000 worth of goods sold could not be found.

2. Goods purchased in December, GHS7,500, have been excluded from stocks.

3. Cost of electricity for the month of December, GHS10,000, has been omitted from the expenses.

4. An investment of GHS40,000 cannot be retrieved from a defunct Savings and Loans company.

5. A contingent liability of GHS15,000 has not been provided for nor noted.

Required: Determine the materiality of the items listed in Nos. 1- 5 above and explain your

decision.

***PLEASE SHOW WORK***

% of Completion

On May 1, 2013, Chapin Construction Company entered into a $4,000,000 fixed-price contract to build an apartment building.Expected completion date is November, 2014.Assume a zero balance in the cash account as of 5/1/2013.

Please fill in Journal Entries and the Financial Statements below.Data pertaining to the construction period are as follows:

PART 1

Budweiser is thinking about making wine…

• Expected sales per unit
  • 230,000 bottles sold in the first year. Sales revenue declines 10% per year (ie, sales growth = -10%)
• Proposed selling price per bottle = $5.10. Variable cost per bottle = $2
• Fixed costs = $230K/year in maintenance and labor
• Budweiser also expects to lose $300K pretax per year (revenue net of expenses) from beer sales as people switch from beer to wine
• Working capital necessary = $50K
• Wine-making equipment would cost $750K, plus $50K in modifications required on the assembly line (included in depreciable basis)
  • depreciated 5-year MACRS
• After five years, project ends as everyone realizes Budweiser wine is disgusting all remaining working capital recouped
  • wine-making equipment sold for $400,000
• Tax rate = 30%
• Assume any negative taxes can be treated as an immediate tax credit. (=treat negative taxes as a positive CF.)

Required return rate = 10%. Calculate the NPV and the IRR of the project. Should the company pursue this project?

Silver Company makes a product that is very popular as a Mother's Day gift. Thus, peak sales occur in May of each year, as shown in the company's sales budget for the second quarter given below:

From past experience, the company has learned that 30% of a month's sales are collected in the month of sale, another 60% are collected in the month following the sale, and the remaining 10% are collected in the second month following the sale. Bad debts are negligible and can be ignored. February sales totaled $330,000, and March sales totaled $360,000.

1. Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter.

2. Assume that the company will prepare a budgeted balance sheet as of June 30. Compute the accounts receivable as of that date.