Sara’s Salsa Company produces its condiments in two types: Extra
Fine for restaurant customers and Family Style for home use. Salsa
is prepared in department 1 and packaged in department 2. The
activities, overhead costs, and drivers associated with these two
manufacturing processes and the company’s production support
activities follow.
| Process | Activity | Overhead cost | Driver | Quantity | ||
| Department 1 | Mixing | $ | 5,800 | Machine hours | 2,200 | |
| Cooking | 12,900 | Machine hours | 2,200 | |||
| Product testing | 113,800 | Batches | 1,000 | |||
| $ | 132,500 | |||||
| Department 2 | Machine calibration | $ | 315,000 | Production runs | 500 | |
| Labeling | 20,000 | Cases of output | 145,000 | |||
| Defects | 9,000 | Cases of output | 145,000 | |||
| $ | 344,000 | |||||
| Support | Recipe formulation | $ | 82,000 | Focus groups | 40 | |
| Heat, lights, and water | 33,000 | Machine hours | 2,200 | |||
| Materials handling | 78,000 | Container types | 8 | |||
| $ | 193,000 | |||||
Additional production information about its two product lines
follows.
| Extra Fine | Family Style | |||
| Units produced | 33,000 | cases | 112,000 | cases |
| Batches | 330 | batches | 670 | batches |
| Machine hours | 900 | MH | 1,300 | MH |
| Focus groups | 30 | groups | 10 | groups |
| Container types | 6 | containers | 2 | containers |
| Production runs | 240 | runs | 260 | runs |
4. Using ABC, compute the total cost per case
for each product type if the direct labor and direct materials cost
is $9 per case of Extra Fine and $8 per case of Family Style.
(Round your intermediate calculations to 2 decimal places.
Round "Activity Rate" and "Overhead cost per unit" answers to 2
decimal places.)
In: Accounting
Sara’s Salsa Company produces its condiments in two types: Extra
Fine for restaurant customers and Family Style for home use. Salsa
is prepared in department 1 and packaged in department 2. The
activities, overhead costs, and drivers associated with these two
manufacturing processes and the company’s production support
activities follow.
| Process | Activity | Overhead cost | Driver | Quantity | ||
| Department 1 | Mixing | $ | 5,800 | Machine hours | 2,200 | |
| Cooking | 12,900 | Machine hours | 2,200 | |||
| Product testing | 113,800 | Batches | 1,000 | |||
| $ | 132,500 | |||||
| Department 2 | Machine calibration | $ | 315,000 | Production runs | 500 | |
| Labeling | 20,000 | Cases of output | 145,000 | |||
| Defects | 9,000 | Cases of output | 145,000 | |||
| $ | 344,000 | |||||
| Support | Recipe formulation | $ | 82,000 | Focus groups | 40 | |
| Heat, lights, and water | 33,000 | Machine hours | 2,200 | |||
| Materials handling | 78,000 | Container types | 8 | |||
| $ | 193,000 | |||||
Additional production information about its two product lines
follows.
| Extra Fine | Family Style | |||
| Units produced | 33,000 | cases | 112,000 | cases |
| Batches | 330 | batches | 670 | batches |
| Machine hours | 900 | MH | 1,300 | MH |
| Focus groups | 30 | groups | 10 | groups |
| Container types | 6 | containers | 2 | containers |
| Production runs | 240 | runs | 260 | runs |
5. If the market price is $18 per case of Extra
Fine and $12 per case of Family Style, determine the gross profit
per case for each product. (Round your intermediate
calculations and final answers to 2 decimal
places.)
In: Accounting
Swathmore Clothing Corporation grants its customers 30 days’
credit. The company uses the allowance method for its uncollectible
accounts receivable. During the year, a monthly bad debt accrual is
made by multiplying 2% times the amount of credit sales for the
month. At the fiscal year-end of December 31, an aging of accounts
receivable schedule is prepared and the allowance for uncollectible
accounts is adjusted accordingly.
At the end of 2020, accounts receivable were $596,000 and the
allowance account had a credit balance of $60,000. Accounts
receivable activity for 2021 was as follows:
| Beginning balance | $ | 596,000 | ||
| Credit sales | 2,730,000 | |||
| Collections | (2,593,000 | ) | ||
| Write-offs | (50,000 | ) | ||
| Ending balance | $ | 683,000 | ||
The company’s controller prepared the following aging summary of
year-end accounts receivable:
| Summary | ||||
| Age Group | Amount | Percent Uncollectible | ||
| 0−60 days | $ | 425,000 | 5 | % |
| 61−90 days | 91,000 | 14 | ||
| 91−120 days | 60,000 | 30 | ||
| Over 120 days | 107,000 | 41 | ||
| Total | $ | 683,000 | ||
Required:
1. Prepare a summary journal entry to record the
monthly bad debt accrual and the write-offs during the year.
2. Prepare the necessary year-end adjusting entry
for bad debt expense.
3-a. What is total bad debt expense for
2021?
3-b. How would accounts receivable appear in the
2021 balance sheet?
In: Accounting
Swathmore Clothing Corporation grants its customers 30 days’
credit. The company uses the allowance method for its uncollectible
accounts receivable. During the year, a monthly bad debt accrual is
made by multiplying 2% times the amount of credit sales for the
month. At the fiscal year-end of December 31, an aging of accounts
receivable schedule is prepared and the allowance for uncollectible
accounts is adjusted accordingly.
At the end of 2020, accounts receivable were $610,000 and the
allowance account had a credit balance of $74,000. Accounts
receivable activity for 2021 was as follows:
| Beginning balance | $ | 610,000 | ||
| Credit sales | 2,800,000 | |||
| Collections | (2,663,000 | ) | ||
| Write-offs | (57,000 | ) | ||
| Ending balance | $ | 690,000 | ||
The company’s controller prepared the following aging summary of
year-end accounts receivable:
| Summary | ||||
| Age Group | Amount | Percent Uncollectible | ||
| 0−60 days | $ | 460,000 | 4 | % |
| 61−90 days | 78,000 | 15 | ||
| 91−120 days | 67,000 | 26 | ||
| Over 120 days | 85,000 | 41 | ||
| Total | $ | 690,000 | ||
Required:
1. Prepare a summary journal entry to record the
monthly bad debt accrual and the write-offs during the year.
2. Prepare the necessary year-end adjusting entry
for bad debt expense.
3-a. What is total bad debt expense for
2021?
3-b. How would accounts receivable appear in the
2021 balance sheet?
In: Accounting
Swathmore Clothing
Corporation grants its customers 30 days’ credit. The company uses
the allowance method for its uncollectible accounts receivable.
During the year, a monthly bad debt accrual is made by multiplying
2% times the amount of credit sales for the month. At the fiscal
year-end of December 31, an aging of accounts receivable schedule
is prepared and the allowance for uncollectible accounts is
adjusted accordingly.
At the end of 2020, accounts receivable were $594,000 and the
allowance account had a credit balance of $58,000. Accounts
receivable activity for 2021 was as follows:
| Beginning balance | $ | 594,000 | ||
| Credit sales | 2,720,000 | |||
| Collections | (2,583,000 | ) | ||
| Write-offs | (49,000 | ) | ||
| Ending balance | $ | 682,000 | ||
The company’s
controller prepared the following aging summary of year-end
accounts receivable:
| Summary | ||||
| Age Group | Amount | Percent Uncollectible | ||
| 0−60 days | $ | 420,000 | 3 | % |
| 61−90 days | 90,000 | 13 | ||
| 91−120 days | 59,000 | 29 | ||
| Over 120 days | 113,000 | 40 | ||
| Total | $ | 682,000 | ||
Required:
1. Prepare a summary journal entry to record the
monthly bad debt accrual and the write-offs during the year.
2. Prepare the necessary year-end adjusting entry
for bad debt expense.
3-a. What is total bad debt expense for
2021?
3-b. How would accounts receivable appear in the
2021 balance sheet?
In: Accounting
14.
Sara’s Salsa Company produces its condiments in two types: Extra
Fine for restaurant customers and Family Style for home use. Salsa
is prepared in department 1 and packaged in department 2. The
activities, overhead costs, and drivers associated with these two
manufacturing processes and the company’s production support
activities follow.
| Process | Activity | Overhead cost | Driver | Quantity | ||
| Department 1 | Mixing | $ | 5,200 | Machine hours | 1,600 | |
| Cooking | 10,800 | Machine hours | 1,600 | |||
| Product testing | 113,200 | Batches | 500 | |||
| $ | 129,200 | |||||
| Department 2 | Machine calibration | $ | 285,000 | Production runs | 750 | |
| Labeling | 10,500 | Cases of output | 155,000 | |||
| Defects | 5,000 | Cases of output | 155,000 | |||
| $ | 300,500 | |||||
| Support | Recipe formulation | $ | 97,000 | Focus groups | 50 | |
| Heat, lights, and water | 34,000 | Machine hours | 1,600 | |||
| Materials handling | 72,000 | Container types | 8 | |||
| $ | 203,000 | |||||
Additional production information about its two product lines
follows.
| Extra Fine | Family Style | |||
| Units produced | 27,000 | cases | 128,000 | cases |
| Batches | 270 | batches | 230 | batches |
| Machine hours | 600 | MH | 1,000 | MH |
| Focus groups | 40 | groups | 10 | groups |
| Container types | 6 | containers | 2 | containers |
| Production runs | 270 | runs | 480 | runs |
4. Using ABC, compute the total cost per case for each product type if the direct labor and direct materials cost is $10 per case of Extra Fine and $9 per case of Family Style. (Round your intermediate calculations to 2 decimal places. Round "Activity Rate" and "Overhead cost per unit" answers to 2 decimal places.)
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In: Accounting
Swathmore Clothing Corporation grants its customers 30 days’
credit. The company uses the allowance method for its uncollectible
accounts receivable. During the year, a monthly bad debt accrual is
made by multiplying 2% times the amount of credit sales for the
month. At the fiscal year-end of December 31, an aging of accounts
receivable schedule is prepared and the allowance for uncollectible
accounts is adjusted accordingly.
At the end of 2017, accounts receivable were $606,000 and the
allowance account had a credit balance of $70,000. Accounts
receivable activity for 2018 was as follows:
| Beginning balance | $ | 606,000 | ||
| Credit sales | 2,780,000 | |||
| Collections | (2,643,000 | ) | ||
| Write-offs | (55,000 | ) | ||
| Ending balance | $ | 688,000 | ||
The company’s controller prepared the following aging summary of year-end accounts receivable:
| Summary | ||||
| Age Group | Amount | Percent Uncollectible | ||
| 0–60 days | $ | 450,000 | 3 | % |
| 61–90 days | 74,000 | 13 | ||
| 91–120 days | 65,000 | 24 | ||
| Over 120 days | 99,000 | 39 | ||
| Total | $ | 688,000 | ||
Required:
1. Prepare a summary journal entry to record the
monthly bad debt accrual and the write-offs during the year.
2. Prepare the necessary year-end adjusting entry
for bad debt expense.
3-a. What is total bad debt expense for
2018?
3-b. How would accounts receivable appear in the
2018 balance sheet?
In: Accounting
Swathmore Clothing Corporation grants its customers 30 days’
credit. The company uses the allowance method for its uncollectible
accounts receivable. During the year, a monthly bad debt accrual is
made by multiplying 2% times the amount of credit sales for the
month. At the fiscal year-end of December 31, an aging of accounts
receivable schedule is prepared and the allowance for uncollectible
accounts is adjusted accordingly.
At the end of 2017, accounts receivable were $588,000 and the
allowance account had a credit balance of $52,000. Accounts
receivable activity for 2018 was as follows:
| Beginning balance | $ | 588,000 | ||
| Credit sales | 2,690,000 | |||
| Collections | (2,553,000 | ) | ||
| Write-offs | (46,000 | ) | ||
| Ending balance | $ | 679,000 | ||
The company’s controller prepared the following aging summary of year-end accounts receivable:
| Summary | ||||
| Age Group | Amount | Percent Uncollectible | ||
| 0–60 days | $ | 405,000 | 3 | % |
| 61–90 days | 96,000 | 10 | ||
| 91–120 days | 56,000 | 26 | ||
| Over 120 days | 122,000 | 37 | ||
| Total | $ | 679,000 | ||
Required:
1. Prepare a summary journal entry to record the
monthly bad debt accrual and the write-offs during the year.
2. Prepare the necessary year-end adjusting entry
for bad debt expense.
3-a. What is total bad debt expense for
2018?
3-b. How would accounts receivable appear in the
2018 balance sheet?
In: Accounting
Swathmore Clothing Corporation grants its customers 30 days’ credit. The company uses the allowance method for its uncollectible accounts receivable. During the year, a monthly bad debt accrual is made by multiplying 2% times the amount of credit sales for the month. At the fiscal year-end of December 31, an aging of accounts receivable schedule is prepared and the allowance for uncollectible accounts is adjusted accordingly. At the end of 2017, accounts receivable were $598,000 and the allowance account had a credit balance of $62,000. Accounts receivable activity for 2018 was as follows: Beginning balance $ 598,000 Credit sales 2,740,000 Collections (2,603,000 ) Write-offs (51,000 ) Ending balance $ 684,000 The company’s controller prepared the following aging summary of year-end accounts receivable: Summary Age Group Amount Percent Uncollectible 0–60 days $ 430,000 4 % 61–90 days 92,000 15 91–120 days 61,000 20 Over 120 days 101,000 35 Total $ 684,000
Required: 1. Prepare a summary journal entry to record the monthly bad debt accrual and the write-offs during the year.
2. Prepare the necessary year-end adjusting entry for bad debt expense.
3-a. What is total bad debt expense for 2018?
3-b. How would accounts receivable appear in the 2018 balance sheet?
In: Accounting
Swathmore Clothing Corporation grants its customers 30 days’
credit. The company uses the allowance method for its uncollectible
accounts receivable. During the year, a monthly bad debt accrual is
made by multiplying 2% times the amount of credit sales for the
month. At the fiscal year-end of December 31, an aging of accounts
receivable schedule is prepared and the allowance for uncollectible
accounts is adjusted accordingly.
At the end of 2017, accounts receivable were $596,000 and the
allowance account had a credit balance of $60,000. Accounts
receivable activity for 2018 was as follows:
| Beginning balance | $ | 596,000 | ||
| Credit sales | 2,730,000 | |||
| Collections | (2,593,000 | ) | ||
| Write-offs | (50,000 | ) | ||
| Ending balance | $ | 683,000 | ||
The company’s controller prepared the following aging summary of year-end accounts receivable:
| Summary | ||||
| Age Group | Amount | Percent Uncollectible | ||
| 0–60 days | $ | 425,000 | 5 | % |
| 61–90 days | 91,000 | 14 | ||
| 91–120 days | 60,000 | 30 | ||
| Over 120 days | 107,000 | 41 | ||
| Total | $ | 683,000 | ||
Required:
1. Prepare a summary journal entry to record the
monthly bad debt accrual and the write-offs during the year.
2. Prepare the necessary year-end adjusting entry
for bad debt expense.
3-a. What is total bad debt expense for
2018?
3-b. How would accounts receivable appear in the
2018 balance sheet?
In: Accounting