Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales.

The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $84,000 of manufacturing overhead for an estimated activity level of $40,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows:

During the year, the following transactions were completed:

Raw materials purchased for cash, $ 165,000.

Raw materials used in production, $141,000 (materials costing $125,000 were charged directly to jobs; the remaining materials were indirect).

Cash paid to employees as follows:

Cash paid for rent during the year was $18,900 ($13,600 of this amount related to factory operations, and the remainder related to selling and administrative activities).

Cash paid for utility costs in the factory, $19,000.

Cash paid for advertising, $13,000.

Depreciation recorded on equipment, $21,000. ($15,000 of this amount related to equipment used in factory operations; the remaining $6,000 related to equipment used in selling and administrative activities.)

Manufacturing overhead cost was applied to jobs, $ ? .

Goods that had cost $226,000 to manufacture according to their job cost sheets were completed.

Sales for the year (all paid in cash) totaled $509,000. The total cost to manufacture these goods according to their job cost sheets was $220,000.

Required:

1. Prepare journal entries to record the transactions for the year.

2. Prepare T-accounts for each inventory account, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these T-accounts (don’t forget to enter the beginning balances in your inventory accounts).

3A. Is Manufacturing Overhead underapplied or overapplied for the year?

3B. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.

4. Prepare an income statement for the year. All of the information needed for the income statement is available in the journal entries and T-accounts you have prepared.

Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales.

The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $115,000 of manufacturing overhead for an estimated activity level of $50,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows:

During the year, the following transactions were completed:

Raw materials purchased for cash, $ 162,000.

Raw materials used in production, $149,000 (materials costing $124,000 were charged directly to jobs; the remaining materials were indirect).

Cash paid to employees as follows:

Cash paid for rent during the year was $18,700 ($13,800 of this amount related to factory operations, and the remainder related to selling and administrative activities).

Cash paid for utility costs in the factory, $16,000.

Cash paid for advertising, $13,000.

Depreciation recorded on equipment, $21,000. ($16,000 of this amount related to equipment used in factory operations; the remaining $5,000 related to equipment used in selling and administrative activities.)

Manufacturing overhead cost was applied to jobs, $ ? .

Goods that had cost $226,000 to manufacture according to their job cost sheets were completed.

Sales for the year (all paid in cash) totaled $518,000. The total cost to manufacture these goods according to their job cost sheets was $219,000.

Required:

1. Prepare journal entries to record the transactions for the year.

2. Prepare T-accounts for each inventory account, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these T-accounts (don’t forget to enter the beginning balances in your inventory accounts).

3A. Is Manufacturing Overhead underapplied or overapplied for the year?

3B. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.

4. Prepare an income statement for the year. All of the information needed for the income statement is available in the journal entries and T-accounts you have prepared.

Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales.

The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $85,000 of manufacturing overhead for an estimated activity level of $50,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows:

During the year, the following transactions were completed:

Raw materials purchased for cash, $ 163,000.

Raw materials used in production, $143,000 (materials costing $129,000 were charged directly to jobs; the remaining materials were indirect).

Cash paid to employees as follows:

Cash paid for rent during the year was $18,800 ($13,100 of this amount related to factory operations, and the remainder related to selling and administrative activities).

Cash paid for utility costs in the factory, $17,000.

Cash paid for advertising, $14,000.

Depreciation recorded on equipment, $25,000. ($16,000 of this amount related to equipment used in factory operations; the remaining $9,000 related to equipment used in selling and administrative activities.)

Manufacturing overhead cost was applied to jobs, $ ? .

Goods that had cost $227,000 to manufacture according to their job cost sheets were completed.

Sales for the year (all paid in cash) totaled $518,000. The total cost to manufacture these goods according to their job cost sheets was $217,000.

Required:

1. Prepare journal entries to record the transactions for the year.

2. Prepare T-accounts for each inventory account, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these T-accounts (don’t forget to enter the beginning balances in your inventory accounts).

3A. Is Manufacturing Overhead underapplied or overapplied for the year?

3B. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.

4. Prepare an income statement for the year. All of the information needed for the income statement is available in the journal entries and T-accounts you have prepared.

Required:

Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $103,500 of manufacturing overhead for an estimated activity level of $45,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows: Raw materials $ 10,000 Work in process $ 4,200 Finished goods $ 8,100 During the year, the following transactions were completed: Raw materials purchased for cash, $ 168,000. Raw materials used in production, $145,000 (materials costing $124,000 were charged directly to jobs; the remaining materials were indirect). Cash paid to employees as follows: Direct labor $ 175,000 Indirect labor $ 324,900 Sales commissions $ 20,000 Administrative salaries $ 40,000 Cash paid for rent during the year was $18,800 ($13,300 of this amount related to factory operations, and the remainder related to selling and administrative activities). Cash paid for utility costs in the factory, $15,000. Cash paid for advertising, $11,000. Depreciation recorded on equipment, $21,000. ($15,000 of this amount related to equipment used in factory operations; the remaining $6,000 related to equipment used in selling and administrative activities.) Manufacturing overhead cost was applied to jobs, $ ? . Goods that had cost $228,000 to manufacture according to their job cost sheets were completed. Sales for the year (all paid in cash) totaled $505,000. The total cost to manufacture these goods according to their job cost sheets was $220,000. Required: 1. Prepare journal entries to record the transactions for the year. 2. Prepare T-accounts for each inventory account, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these T-accounts (don’t forget to enter the beginning balances in your inventory accounts). 3A. Is Manufacturing Overhead underapplied or overapplied for the year? 3B. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. 4. Prepare an income statement for the year. All of the information needed for the income statement is available in the journal entries and T-accounts you have prepared.

Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. All of the company’s transactions with customers, employees, and suppliers are conducted in cash; there is no credit. The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $330,000 of manufacturing overhead for an estimated activity level of $200,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows:

Required:

South River Chemical manufactures a product called Zbek. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work in process inventory is 60% complete with respect to conversion; the ending inventory work in process inventory is 20% complete. The following data pertain to May:

Units

Work in process, May 1    15,000

Units started during May 60,000

Units completed and transferred out    68,000

Work in process, May 31    7,000

   Direct Materials    Conversion Cost Total Costs

Cost:

Work in Process, May 1 $16,500 $24,750    $41,250

Costs incurred during May 72,000    162,630    234,630

Totals $88,500 $187,380    $275,880

Compute the following amounts:
1. Using the weighted-average method of process costing, determine the equivalent units for direct material and conversion. (Please show your work.)

2. What is the cost per unit of direct material and conversion activity? (Please show your work.)

3. Determine the cost of the goods completed and transferred out during May. (Please show your work.)

4. Determine the cost of the ending work in process on May 31. (Please show your work.)

Transit Airlines provides regional jet service in the Mid-South. The following is information on liabilities of Transit at December 31, 2018. Transit’s fiscal year ends on December 31. Its annual financial statements are issued in April.

1. Transit has outstanding 7.6% bonds with a face amount of $79 million. The bonds mature on July 31, 2027. Bondholders have the option of calling (demanding payment on) the bonds on July 31, 2019, at a redemption price of $79 million. Market conditions are such that the call option is not expected to be exercised.

2. A $21 million 9% bank loan is payable on October 31, 2024. The bank has the right to demand payment after any fiscal year-end in which Transit’s ratio of current assets to current liabilities falls below a contractual minimum of 1.9 to 1 and remains so for 6 months. That ratio was 1.75 on December 31, 2018, due primarily to an intentional temporary decline in parts inventories. Normal inventory levels will be reestablished during the sixth week of 2019.

3. Transit management intended to refinance $42 million of 7% notes that mature in May of 2019. In late February 2019, prior to the issuance of the 2018 financial statements, Transit negotiated a line of credit with a commercial bank for up to $38 million any time during 2019. Any borrowings will mature two years from the date of borrowing.

4. Transit is involved in a lawsuit resulting from a dispute with a food caterer. On February 13, 2019, judgment was rendered against Transit in the amount of $48 million plus interest, a total of $49 million. Transit plans to appeal the judgment and is unable to predict its outcome though it is not expected to have a material adverse effect on the company.

Required: 1. How should the 7.6% bonds be classified by Transit among liabilities in its balance sheet?

2. How should the 9% bank loan be classified by Transit among liabilities in its balance sheet?

3. How should the 7% notes be classified by Transit among liabilities in its balance sheet? 4. How should the lawsuit be reported by Transit?

5. Calculate the total current liabilities, total long-term liabilities, and total liabilities of a classified balance sheet for Transit Airlines at December 31, 2018. Transit's accounts payable and accruals were $53 million.

Complete this question by entering your answers in the tabs below.

• Req 1 to 4
• Req 5

How should the 7.6% bonds, 9% bank loan and 7% notes be classified by Transit among liabilities in its balance sheet. How should the lawsuit be reported by Transit? (Enter your answers in millions.)

Calculate the total current liabilities, total long-term liabilities, and total liabilities of a classified balance sheet for Transit Airlines at December 31, 2018. Transit's accounts payable and accruals were $53 million. (Enter your answers in millions.)

Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $85,000 of manufacturing overhead for an estimated activity level of $50,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows: Raw materials $ 10,400 Work in process $ 4,200 Finished goods $ 8,500 During the year, the following transactions were completed: Raw materials purchased on account, $ 163,000. Raw materials used in production, $143,000 (materials costing $129,000 were charged directly to jobs; the remaining materials were indirect). Costs for employee services were incurred as follows: Direct labor $ 162,000 Indirect labor $ 198,900 Sales commissions $ 21,000 Administrative salaries $ 41,000 Rent for the year was $18,200 ($13,600 of this amount related to factory operations, and the remainder related to selling and administrative activities). Utility costs incurred in the factory, $19,000. Advertising costs incurred, $15,000. Depreciation recorded on equipment, $25,000. ($15,000 of this amount related to equipment used in factory operations; the remaining $10,000 related to equipment used in selling and administrative activities.) Record the manufacturing overhead cost applied to jobs. Goods that had cost $227,000 to manufacture according to their job cost sheets were completed. Sales for the year (all paid in cash) totaled $502,000. The total cost to manufacture these goods according to their job cost sheets was $217,000. Required: 1. Prepare journal entries to record the transactions for the year. 2. Prepare T-accounts for each inventory account, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these T-accounts (don’t forget to enter the beginning balances in your inventory accounts). 3A. Is Manufacturing Overhead underapplied or overapplied for the year? 3B. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. 4. Prepare an income statement for the year. All of the information needed for the income statement is available in the journal entries and T-accounts you have prepared.

Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold mine in South Dakota. Dan Dority, the company’s geologist, has just finished his analysis of the mine site. He has estimated that the mine would be productive for eight years, after which the gold would be completely mined. Dan has taken an estimate of the gold deposits to Alma Garrett, the company’s financial officer. Alma has been asked by Seth to perform an analysis of the new mine and present her recommendation on whether the company should open the new mine.

Alma has used the estimates provided by Dan to determine the revenues that could be expected from the mine. She has also projected the expense of opening the mine and the annual operating expenses. If the com- pany opens the mine, it will cost $850 million today, and it will have a cash outflow of $120 million nine years from today in costs associated with closing the mine and reclaiming the area surrounding it. The expected cash flows each year from the mine are shown in the table that follows. Bullock has a 12 percent required return on all of its gold mines.

1. Construct a spreadsheet to calculate the payback period, internal rate of return, modified internal rate

of return, and net present value of the proposed mine.

2. Based on your analysis, should the company open the mine?