On October 1, 2020, Sage Equipment Company sold a pecan-harvesting machine to Valco Brothers Farm, Inc. In lieu of a cash payment Valco Brothers Farm gave Arden a 2-year, $135,200, 8% note (a realistic rate of interest for a note of this type). The note required interest to be paid annually on October 1. Sage’s financial statements are prepared on a calendar-year basis. Assuming Valco Brothers Farm fulfills all the terms of the note, prepare the necessary journal entries for Sage Equipment Company for the entire term of the note. Assume that reversing entries are not made on January 1, 2021 and January 1, 2022

Sara’s Ice Cream Shop is closed for six months out of the year but has had the monthly sales amounts listed below for the last four years.

Asssuming that there is both seasonality and a trend, estimate monthly sales for each month of the coming year.

Consider the following information for Maynor Company, which uses a perpetual inventory system:

The company sold 57 units on May 1 and 52 units on October 28.

Required:

Calculate the company's ending inventory and cost of goods sold using the each of following inventory costing methods.

1. FIFO
2. LIFO
3. Weighted Average

Richard Jackson and Melissa Aaron own and operate the Midwest Office Supply store. The following transactions involving notes and interest were completed during the last three months of 2019:

October

3.Received a $8,886, 7 1/2%, 30-day note from Hansen Appliance in payment for

sale of merchandise.

7.Received a $12,000, 9%, 45-day note from Jefferson Book Company in payment

of an account receivable

9.Received a $12,775, 10%, 60-day note from Josh Martinez in payment for sale

of merchandise

11. Issued a 40-day, S12,400, 8% note to Lincoln Paper Products in payment of an account payable

14. Issued a 30-day, $12,000, 7 A% note to Akron Paper in payment of a purchase of account of merchandise

20. Discounted the October 9 note receivable at First Federal Bank at 14%.

November

2.Received principal and interest from Hansen Appliance in full payment of

October 3 note receivable.

13. Paid principal and interest to Akron Paper in full payment of October 14 note payable

20. Paid $6,000, plus interest to Lincoln Paper Products (see October 11); and Issued a new, 6400, 11%, 30-day note payable

21. Received $4,000, plus interest from Jefferson Book Company (see October ) and received a new, 8,000, 30-day, 10% note receivable.

24. Received a $11,000, 7 1/4%, 30-day note receivable from Michelle Davis in payment for for sale of merchandise

30. Discounted the November 24 note at First Federal Bank at 14%

December

6.Issued a $20,000, 8%, 90-day note to Apple Valley Supply in payment for a purchase of merchandise.

10.Received a $13,330, 8%, 90-day note from Ellis Furniture in payment for a sale

of merchandise.

20. Paid principal and interest to Lincoln Paper Products (see November 20) in full

payment of note payable.

21.Received principal and interest from Jefferson Book Company (see

November 21) in full payment of note receivable.

24.Michelle Davis dishonored the November 24 note. The bank bills Midwest

Office Supply for the maturity value of the note plus a $56 bank fee.

31.Michelle Davis' dishonored note is collected. She pays Midwest Office Supply

the maturity value of the note, the $56 bank fee, and interest at 11% on the

maturity value plus the bank fee

31. Prepared the necessary adjusting entry for notes receivable outstanding

31. Prepared the necessary adjusting entry for notes payable outstanding

The unadjusted trial balance for Grouper Corp. is shown below.

Assume the following adjustment data.

Prepare the adjusting entries for the items above. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Cash Budget

The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budgetinformation:

The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $8,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month.

Current assets as of September 1 include cash of $37,000, marketable securities of $53,000, and accounts receivable of $109,400 ($23,400 from July sales and $86,000 from August sales). Sales on account for July and August were $78,000 and $86,000, respectively. Current liabilities as of September 1 include $8,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $14,000 will be made in October. Bridgeport’s regular quarterly dividend of $8,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $36,000.

Required:

1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume 360 days per year for interest calculations.

Feedback

The primary source of estimated cash receipts is from cash sales and collections on account.

To estimate cash receipts from cash sales and collections on account, a schedule of collections from sales is prepared.

2. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?

The budget indicates that the minimum cash balance will not  be maintained in November. This situation can be corrected by borrowing  and/or by the sale  of the marketable securities, if they are held for such purposes. At the end of September and October, the cash balance will exceed  the minimum desired balance.

Cash Budget

The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information:

The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $9,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month.

Current assets as of September 1 include cash of $37,000, marketable securities of $53,000, and accounts receivable of $109,400 ($23,400 from July sales and $86,000 from August sales). Sales on account for July and August were $78,000 and $86,000, respectively. Current liabilities as of September 1 include $9,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $14,000 will be made in October. Bridgeport’s regular quarterly dividend of $9,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $36,000.

Required:

1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume 360 days per year for interest calculations.

Feedback

2. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?

The budget indicates that the minimum cash balance   be maintained in November. This situation can be corrected by   and/or by the   of the marketable securities, if they are held for such purposes. At the end of September and October, the cash balance will   the minimum desired balance

Cash Budget

The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information:

The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $8,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month.

Current assets as of September 1 include cash of $41,000, marketable securities of $59,000, and accounts receivable of $121,100 ($26,100 from July sales and $95,000 from August sales). Sales on account for July and August were $87,000 and $95,000, respectively. Current liabilities as of September 1 include $8,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $16,000 will be made in October. Bridgeport’s regular quarterly dividend of $8,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $40,000.

Required:

1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume 360 days per year for interest calculations.

Feedback

The primary source of estimated cash receipts is from cash sales and collections on account.

To estimate cash receipts from cash sales and collections on account, a schedule of collections from sales is prepared.

2. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?

The budget indicates that the minimum cash balance will not  be maintained in November. This situation can be corrected by borrowing  and/or by the sale  of the marketable securities, if they are held for such purposes. At the end of September and October, the cash balance will exceed  the minimum desired balance.

Assignment #2

Question #4

National Distributors Ltd is a manufacturing company whose annual financial performance is determined by preparing its final accounts at the end of the financial period which ends on October 31st each. The following Trial Balance was extracted from the company’s books on October 31, 2016:

Trial Balance

Notes:

1. On October 31, 2016, $200,000 due for motor vehicle repairs was still unpaid; interest receivable for $300,000 was not booked to the account and $100,000 was owed for commission.
2. Inventory on October 31, 2016 were as follows: Direct raw materials $3,700,000; work-in-progress $4,700,000; finished goods $6,600,000.
3. The provision for bad and doubtful debts should be moved to 2.5% of debtors while the company has a policy in place that adds 10% mark up to its cost of production.
4. Rent is apportioned 3/5 to the factory while seventy percent of the electricity usage is for the factory; 40% of insurance charges are for the office while the motor vehicles are used equally between the office and the factory.
5. Depreciation is to be charged as follows: machinery 10% reducing balance; motor vehicles 20% reducing balance; furniture and office equipment 10% straight line.

Required:

1. Prepare Manufacturing, Trading and Profit and Loss Accounts for the year ending October 31, 2016.                                                                                                
2. Prepare a Balance Sheet as at October 31, 2016.                                          

1. Financial Statements and Closing Entries

   The Gorman Group is a financial planning services firm owned and operated by Nicole Gorman. As of October 31, 20Y9, the end of the fiscal year, the accountant for The Gorman Group prepared an end-of-period spreadsheet, part of which follows:

   The Gorman Group End-of-Period Spreadsheet For the Year Ended October 31, 20Y9
   	Adjusted Trial Balance
   Account Title	Dr.	Cr.
   Cash	$12,380
   Accounts Receivable	26,940
   Supplies	4,210
   Prepaid Insurance	9,090
   Land	96,000
   Buildings	344,000
   Accumulated Depreciation-Buildings		112,200
   Equipment	249,000
   Accumulated Depreciation-Equipment		146,100
   Accounts Payable		31,870
   Salaries Payable		3,160
   Unearned Rent		1,430
   Common Stock		143,000
   Retained Earnings		266,030
   Dividends	23,900
   Service Fees		454,470
   Rent Revenue		4,800
   Salaries Expense	325,810
   Depreciation Expense-Equipment	17,700
   Rent Expense	14,800
   Supplies Expense	10,480
   Utilities Expense	9,470
   Depreciation Expense-Buildings	6,320
   Repairs Expense	5,220
   Insurance Expense	2,860
   Miscellaneous Expense	4,880
   	1,163,060	1,163,060

   Required:

   1. Prepare an income statement.

   The Gorman Group Income Statement For the Year Ended October 31, 20Y9
   Revenues:
   	$
   Total revenues		$
   Expenses:
   	$
   Total expenses
   		$

   Prepare a statement of stockholders’ equity. During the year, no additional Common stock was issued. If an amount box does not require an entry, leave it blank. If a Net loss is incurred or dividends were paid, enter that amount as a negative number using a minus sign.

   The Gorman Group Statement of Stockholders’ Equity For the Year Ended October 31, 20Y9
   	Common stock	Retained earnings	Total
   	$	$	$
   	$	$	$

   Prepare a balance sheet.

   The Gorman Group Balance Sheet October 31, 20Y9
   Assets				Liabilities
   Current assets:				Current liabilities:
   		$			$
   				Total liabilities		$
   Total current assets			$
   Property, plant, and equipment:				Stockholders' Equity
   		$			$
   	$
   	$
   Total property, plant, and equipment				Total stockholders' equity
   Total assets			$	Total liabilities and stockholders' equity		$

   2. Journalize the entries that were required to close the accounts at October 31. If an amount box does not require an entry, leave it blank.

   Date	Account	Debit	Credit
   20Y9 Oct. 31
   20Y9 Oct. 31

   3. If the balance of Retained earnings had instead increased $33,500 after the closing entries were posted, and the dividends remained the same, what would have been the amount of Net income or Net loss? Enter all amounts as positive numbers.
   $  

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