Chapter 3 – Problem PB3-4 Modified

Please answer the entire 8 steps of this question

PB3-4     Analyzing, JournaIizing and Interpreting Business Activities (LO 3-3, 3-5 & then some) -

The following items present a sample of business activities involving Dry Cleaner Corporation (DCC) for the year ended December 31^st. DCC provides cleaning services for individual customers and for employees of several large companies in the city.

Dec 1: DCC’s owner paid $10,000 cash to acquire 200 of DCC’s common shares.

Dec 2: DCC borrows $2,000 cash from BofA and signs a promissory note to repay the

principal and interest at 1% per annum on December 1, 2018.

Dec 3: DCC ordered cleaning supplies at a total cost of $2,000. The supplies are

expected to be received in early January.

                  Dec 4: DCC paid $1,500 cash to its landlord which consisted of December’s Rent of

                                                      $1,000 and a Security Deposit of $500.

Dec 7: Customers paid $200 cash to DCC to obtain DCC gift cards that they could use to

                                    obtain future cleaning services at no additional cost.

Dec 15: Customers paid $1,000 cash to DCC for cleaning services performed during the

first two weeks of December.

Dec 21: DCC ran advertising in the local newspaper today at a total cost of $500. DCC is

not required to pay for the advertising until January 21^st.

                  Dec 22: DCC paid $1,000 to the landlord for January rent.

                  Dec 23: DCC’s owner sold 20 of his own DSS common shares to a private investor, at a

selling price of $1,200.

                  Dec 28: DCC paid in full for the advertising run in the local newspaper on December 21^st.

                  Dec 29: The cleaning supplies ordered on December 3^rd were received today. DCC does

not have to pay for these supplies until January 29^th.

Dec 31: Today, DCC completed cleaning services for several large companies at a total price of $2,000. The companies are expected to pay for the services by January 31^st.

Required:

1.Analyze transactions Dec. 1^st thru Dec. 31st to determine their effects on the accounting equation, if any . Once you have determined the effects on the accounting equation prepare a journal entry (Hint – debits first and credits second). Use the format shown below.

2.Post your journal entries in Part 1 above to the T-Accounts. Use the format shown below.

3.Carryforward account balances from Part 2 to the worksheet for Part 3 – show account balances, indicated account type (i.e. asset, liability, equity, revenue or expense), does the account have a debit or credit balance and which financial statement does this account appear on (i.e. Income Statement, Statement of Retained Earnings or Balance Sheet)?

Part 3 - *Limited to Income Statement (I/S), Statement of Retained Earnings (SRE) & Balance Sheet (B/S)

4.Prepare a Trial Balance at 12/31/2017.

5.Prepare an Income Statement, Statement of Retained Earnings and a classified Balance Sheet.

6.What was the source of the company’s financing – Debt or Equity – show your work?

7.Prepare the Current Ratio and the Quick Ratio (aka Acid Test). Are the ratios good or bad? What standard did you use? New – Net Profit Ratio – compute.

8.Why could the financial statements be inaccurate? Hint - See Chapter 4 Topics for some ideas. Give a couple reasons.

Problem 3-04A

A review of the ledger of Gina Company at December 31, 2020, produces the following data pertaining to the preparation of annual adjusting entries.

Prepare the adjusting entries at December 31, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

1. A cosmetic product retailer needs to create a database to keep track of the information for its business operations. The company has a web site that posts all its products. The product information includes product ID, product name, description, and unit price. The company also needs to keep track of customers’ information, including customer names, their shipping addresses, and the email address. The company creates an account for each customer for identification and tracking purpose. A customer can purchase multiple products with different quantities in one order. The company’s products have many prospective customers. The company needs to keep track of information for all orders it received, including the order date, invoice number, and information about products purchased in an order such as IDs of products, and quantities, etc. Company’s products are stocked in several warehouses. So company also needs to keep track of the information about each warehouse such as its name, address, manager, telephone, etc. a. Create an E/R model for this scenario. In your E/R model you need to show the names of entities, names of attributes, keys and the name(s) of relationship(s). Also indicate maximum and minimum cardinalities You may hand-draw the ER model and insert its image here.

3 (a). Following is the aging schedule of Zahir Company as of December 31, 2019.    (Marks 6)                                                                  

The company has estimated 2%, 4%, 20%, 30% and 50% of bad debts in each time category of the account receivables.

You are required to:

1. Compute the amount of estimated uncollectable account.
2. Record the adjusting entry assuming that Allowance for Bad Debts currently has           OMR 6.300 credit balance.
3. Record the adjusting entry assuming that Allowance for Bad Debts currently has        OMR 600 debit balance.

(ii) Record the adjusting entry assuming that Allowance for bad debts currently has

     OMR 6,300 credit balance.

General Journal

3. Record the adjusting entry assuming that ‘Allowance for bad debts currently has   

        OMR 600 debit balance.

General Journal

On January 2, 2011 Stevens, Inc. was indebted to First Bank under a $12 million, 10% unsecured note. The note was signed January 2, 2005, and was due December 31, 2014. Annual interest was last paid on December 31, 2009. Stevens negotiated a restructuring of the terms of the debt agreement due to financial difficulties.

Required:

Prepare all journal entries for Stevens, Inc. to record the restructuring and any remaining transactions relating to the debt under each independent assumption.

a. First Bank agreed to settle the debt in exchange for land which cost Stevens $8,500,000 and has a fair market value of $10,000,000.

b. First Bank agreed to (1) forgive the accrued interest from last year (2) reduce the remaining four interest payments to $600,000 each, and (3) reduce the principal to $9,000,000.

Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company’s costs:

For example, electricity costs are $1,200 per month plus $0.09 per car washed. The company actually washed 8,400 cars in August and collected an average of $6.40 per car washed.

Required:

Prepare the company’s flexible budget for August.

Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington State that explosively erupted in 1982. Data concerning the company’s operations in July appear below:

The company measures its activity in terms of flights. Customers can buy individual tickets for overflights or hire an entire plane for an overflight at a discount.

Required:

1. Prepare a flexible budget performance report for July that includes revenue and spending variances and activity variances. (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.)

The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers it uses in its budgeting and performance reports—the number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 62 students enrolled in those two courses. Data concerning the company’s cost formulas appear below:

For example, administrative expenses should be $3,900 per month plus $45 per course plus $6 per student. The company’s sales should average $880 per student.

The company planned to run four courses with a total of 62 students; however, it actually ran four courses with a total of only 54 students. The actual operating results for September appear below:

Required:

Prepare a flexible budget performance report that shows both revenue and spending variances and activity variances for September. (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.)

The density of aluminum metal is 2.70 g/mL, the atomic mass 26.98 g/mol, the radius of an aluminum atom is 143 picometer and the packing density is 74% theory. Compute Avogardo's number from these data and briefly outline your reasoning/strategy.

Enter two valid BCD numbers. Show the result in seven segment display and LED

How to do this using the components dip switch, Two BCD adders 74ls83, And gates, OR gates, 74 ls47 decoder, 7 segment display and LED

Suppose you have been hired as a financial consultant to Defense Electronics, Inc. (DEI), a large, publicly traded firm that is the market share leader in radar detection systems (RDSs). The company is looking at setting up a manufacturing plant overseas to produce a new line of RDSs. This will be a five-year project. The company bought some land three years ago for $3.9 million in anticipation of using it as a toxic dump site for waste chemicals, but it built a piping system to safely discard the chemicals instead. The land was appraised last week for $4.7 million. In five years, the aftertax value of the land will be $5.1 million, but the company expects to keep the land for a future project. The company wants to build its new manufacturing plant on this land; the plant and equipment will cost $31.52 million to build. The following market data on DEI’s securities is current:

DEI uses G.M. Wharton as its lead underwriter. Wharton charges DEI spreads of 9 percent on new common stock issues, 7 percent on new preferred stock issues, and 5 percent on new debt issues. Wharton has included all direct and indirect issuance costs (along with its profit) in setting these spreads. Wharton has recommended to DEI that it raise the funds needed to build the plant by issuing new shares of common stock. DEI’s tax rate is 38 percent. The project requires $1,150,000 in initial net working capital investment to get operational. Assume Wharton raises all equity for new projects externally.