Syarikat Ali Sdn. Bhd. owned by Ali, began operations in May and completed the following transactions during that first month of operations.

May 1 Ali invested RM90,000 cash in the company for ordinary shares. 2 The company purchased RM25,000 in office equipment. It paid RM10,000 in cash and signed a note payable promising to pay the RM15,000 over the next three years.

2 The company rented office space and paid RM3,000 for the May rent 6 The company installed a new roof for a customer and immediately collected RM5,000.

7 The company paid a supplier RM2,000 for roofing materials used on the May 6 job.

8 The company purchased a RM2,500 copy machine for office use on credit.

9 The company completed work for additional customers on credit in the amount of RM16,000.

15 The company paid its employee salaries RM2,300 for the first half of the month.

17 The company installed a new roof for a customer and immediately collected RM2,400.

20 The company received RM10,000 in payments from the customers billed on May 9.

28 The company paid RM1,500 on the copy machine purchased on May 8. It will pay the remaining balance in June.

31 The company paid its employee salaries RM2,400 for the second half of the month.

31 The company paid a supplier RM5,300 for roofing materials used on the remaining jobs completed during May.

31 The company paid RM450 for this month’s utility bill.

Required:

a) Record the transactions of the business in a journal. Omits an explanation for each entry.

b) After analyzing these transactions, what is the ending cash balance? Use a T account to support your answer.

c) Prepare a trial balance at the end of the month.

Problem 11-14 Measures of Internal Business Process Performance [LO11-3]

DataSpan, Inc., automated its plant at the start of the current year and installed a flexible manufacturing system. The company is also evaluating its suppliers and moving toward Lean Production. Many adjustment problems have been encountered, including problems relating to performance measurement. After much study, the company has decided to use the performance measures below, and it has gathered data relating to these measures for the first four months of operations.

Management has asked for your help in computing throughput time, delivery cycle time, and MCE. The following average times have been logged over the last four months:

Required:

1-a. Compute the throughput time for each month.

1-b. Compute the delivery cycle time for each month.

1-c. Compute the manufacturing cycle efficiency (MCE) for each month.

2. Evaluate the company’s performance over the last four months.

3-a. Refer to the move time, process time, and so forth, given for month 4. Assume that in month 5 the move time, process time, and so forth, are the same as in month 4, except that through the use of Lean Production the company is able to completely eliminate the queue time during production. Compute the new throughput time and MCE.

3-b. Refer to the move time, process time, and so forth, given for month 4. Assume in month 6 that the move time, process time, and so forth, are again the same as in month 4, except that the company is able to completely eliminate both the queue time during production and the inspection time. Compute the new throughput time and MCE.

Three different traffic routes are tested for mean driving time. The entries in the table are the driving times in minutes on the three different routes. At the 0.05 level of significance, are the mean driving times similar regardless of routes?
Route 1: 30, 32, 27, 35
Route 2: 27, 29, 28, 36
Route 3: 16, 41, 22, 31

What statistical test are you going to run?

What is the null hypothesis?

What is the alternative hypothesis?

What is test statistic? Please answer with two decimal places.

What is the p-value? Please answer with two decimal places.

What is your conclusion based on the p-value and the level of significance?

What is the proper conclusion?

Which of the following transactions would have an immediate positive impact on ROE and ROIC (make them go up), ignoring depreciation, interest expense, and taxes?

a. The company purchases machinery using trade credit for $20,000.

b. The company collects $30,000 from customers on accounts receivable

c. The company pays off bank-notes payable for $10,000 by rolling short-term debt into long-term debt of 5-year bonds at the same interest rate.

d. The company sells common stock for $30,000.

e. None of the above.

Perez Manufacturing Company makes tents that it sells directly to camping enthusiasts through a mail-order marketing program. The company pays a quality control expert $114,000 per year to inspect completed tents before they are shipped to customers. Assume that the company completed 1,680 tents in January and 1,140 tents in February. For the entire year, the company expects to produce 20,000 tents.

Required

3. If the cost objective is to determine the cost per tent, is the expert’s salary a direct or an indirect cost?

4. How much of the expert’s salary should be allocated to tents produced in January and February?

Which of the following statements regarding float is MOST true?

A. A net disbursement float is generally preferred over a net collection float.

B. To maximize the potential benefits of net float, firms should pay bills electronically, but request that customers pay by cheque.

C. A disadvantage of a disbursement float is that less bank funds are available to earn interest.

D. If Company A writes cheques to Company B, with an average processing delay of 10 days, this transaction would increase Company B's disbursement float, but decrease company A's collection float.

Wally’s Widget Company (WWC) incorporated near the end of 2011. Operations began in January of 2012. WWC prepares adjusting entries and financial statements at the end of each month. Balances in the accounts at the end of January are as follows: Cash $ 21,470 Unearned Revenue (25 units) $ 5,300 Accounts Receivable $ 12,500 Accounts Payable (Jan Rent) $ 3,200 Allowance for Doubtful Accounts $ (1,850) Notes Payable $ 15,500 Inventory (30 units) $ 2,400 Contributed Capital $ 6,900 Retained Earnings – Feb 1, 2012 $ 3,620 • WWC establishes a policy that it will sell inventory at $165 per unit. • In January, WWC received a $5,300 advance for 25 units, as reflected in Unearned Revenue. • WWC’s February 1 inventory balance consisted of 30 units at a total cost of $2,400. • WWC’s note payable accrues interest at a 12% annual rate. • WWC will use the FIFO inventory method and record COGS on a perpetual basis. February Transactions 02/01 Included in WWC’s February 1 Accounts Receivable balance is a $1,700 account due from Kit Kat, a WWC customer. Kit Kat is having cash flow problems and cannot pay its balance at this time. WWC arranges with Kit Kat to convert the $1,700 balance to a note, and Kit Kat signs a 6-month note, at 9% annual interest. The principal and all interest will be due and payable to WWC on August 1, 2012. 02/02 WWC paid a $600 insurance premium covering the month of February. The amount paid is recorded directly as an expense. 02/05 An additional 170 units of inventory are purchased on account by WWC for $12,750 – terms 2/15, n30. 02/05 WWC paid Federal Express $510 to have the 170 units of inventory delivered overnight. Delivery occurred on 02/06. 02/10 Sales of 140 units of inventory occurred during the period of 02/07 – 02/10. The sales terms are 2/10, net 30. 02/15 The 25 units that were paid for in advance and recorded in January are delivered to the customer. 02/15 20 units of the inventory that had been sold on 2/10 are returned to WWC. The units are not damaged and can be resold. Therefore, they are returned to inventory. Assume the units returned are from the 2/05 purchase. 02/16 WWC pays the first 2 weeks wages to the employees. The total paid is $2,700. 02/17 Paid in full the amount owed for the 2/05 purchase of inventory. WWC records purchase discounts in the current period rather than as a reduction of inventory costs. 02/18 Wrote off a customer’s account in the amount of $1,950. 02/19 $6,400 of rent for January and February was paid. Because all of the rent will soon expire, the February portion of the payment is charged directly to expense. 02/19 Collected $9,900 of customers’ Accounts Receivable. Of the $9,900, the discount was taken by customers on $7,500 of account balances; therefore WWC received less than $9,900. 02/26 WWC recovered $590 cash from the customer whose account had previously been written off (see 02/18). 02/27 A $900 utility bill for February arrived. It is due on March 15 and will be paid then. 02/28 WWC declared and paid a $850 cash dividend. Adjusting Entries: 02/29 Record the $2,700 employee salary that is owed but will be paid March 1. 02/29 WWC decides to use the aging method to estimate uncollectible accounts. WWC determines 8% of the ending balance is the appropriate end of February estimate of uncollectible accounts. 02/29 Record February interest expense accrued on the note payable. 02/29 Record one month’s interest earned Kit Kat’s note (see 02/01).

1. Assets total $100,000 and liabilities total $20,000. What is the equity of the business?  
   1. $800  
   2. $8,000  
   3. $80,000  
   4. $88,000
   5. None of the above
2. If during the accounting period the assets decreased by $10,000, and equity increased by $2,000, then how did liabilities change?  

1. Increased by $12,000  
2. Increased by $8,000  
3. Decreased by $12,000
4. Decreased by $8,000  
5. Decreased by $6,000

3. If during the accounting period the assets increased by $14,000, and equity increased by $4,000, then how did liabilities change?  

1. Increased by $10,000  
2. Increased by $4,000  
3. Decreased by $4,000
4. Decreased by $10,000  
5. Decreased by $18,000

4. Purchasing equipment on account will have what effect on the accounting equation?  

1. Increase in equipment and a decrease in equity  
2. Increase in equipment and an increase in equity  
3. Increase in equipment and an increase in liabilities  
4. Increase in equipment and a decrease in liabilities  
5. None of the above

5. Services rendered for which cash has not yet been received will have what effect on the components of the accounting equation?  

1. Increase in accounts receivable and a decrease in equity  
2. Increase in accounts receivable and an increase in equity  
3. Decrease in accounts receivable and an increase in equity  
4. Increase in fees earned and a decrease in equity  
5. Decrease in accounts receivable and a decrease in equity

6. Problem #1 Professor Quark opens his own company, Electronic Tutorial Services, and completes the following transactions in June:

• 6/1 Quark invests $12,000 into the business.
• 6/3 Purchased $1,800 of equipment on account.
• 6/4 Paid $360 for a two-year insurance policy.
• 6/6 Purchased office supplies for cash, $300.
• 6/9 Purchased a new computer for $7,500. Paid $1,500 cash agreed to pay the remainder in 30 days.
• 6/10 Billed student Fiona Smith $40 for tutorial services that were performed.
• 6/14 Paid for the equipment purchased on June 3rd.
• 6/25 Received $35 cash from student Bert Bantrum for tutorial services performed.
• 6/30 Student billed on June 10 pays the amount due to Quark.
• 6/30 Quark withdraws $500 for personal use.

Required: Prepare the journal entries to record these transactions. How much cash did Professor Quark have at the end of June?

7. Problem #2 Maria Sanchez started the Merry Mowers lawncare business. She began operations on May 1st and completed the following transactions, which included her initial investment of $8,000 cash. After these transactions, the ledger included the following accounts with normal balances.

• Cash $ 9,440     
• Office Supplies 500        
• Equipment 3,000     
• Accounts Payable 500        
• Notes Payable 2,000     
• Maria Sanchez, Capital 8,000     
• Lawncare Revenue 3,200     
• Gas and Oil Expense 210        

Required: Prepare a balance sheet and income statement for this business at the end of May.

8. Problem #3 Below are accounts listed for September for PC Partners, a company that installs/repairs home computers for customers. The business is owned by Ed Connor. The accounts are listed in alphabetical order. For the month of September, prepare an income statement and a balance sheet.

ACCOUNT BALANCE

Accounts Payable 4,200

Accounts Receivable 8,480

Advertising expense 420

Capital (Ed Connor) at 08/31/04 56,000

Cash 35,460

Entertainment Expense 600

Equipment 15,700

Installation Revenue 15,600

Miscellaneous Revenue 800

Photocopying Expense 150

Rent Expense 1,300

Repair Revenue 8,650

Supplies 8,400

Truck 8,500

Unearned Revenue 760

9. At the end of the accounting period, the business had $4,500 of office supplies on hand. At the beginning of the period, the amount of supplies on hand was $3,000. If the business purchased $12,000 of office supplies during the year, what amount of office supplies were used during year?

1. $16,500  
2. $14,250  
3. $10,500  
4. $ 9,750  
5. None of the above

10. Zach LLP wrote a check to pay an advertising bill for services for the next month. What is the entry?
    1. Debit – Loan Note Payable, Credit – Cash
    2. Debit – Cash, Credit – Account Payable
    3. Debit – Prepaid Advertising, Credit – Cash
    4. Debit – Cash, Credit – Advertising Expense