Pleasant View Farms raises beef cattle and measures its output on the number of cows sold. The firm managers provided the following fixed and variable costs estimates that they use for budgeting purposes and the actual results for the year:

                Fixed Element per year Variable Element per Cow sold   Actual Total for May                                                      

Sales                                     2,000.00                 57,000.00                                                        

Wages     10,000.00                           100.00                15,000.00                                                        

Feed          10,000.00                           500.00                24,500.00                                                        

Rent            4,000.00                             6,000.00                                                        

Insurance                  2,000.00                             10.00                  2,290.00                                                        

Property Tax            6,000.00                             6,500.00                                                        

When preparing its planning budget, the farm estimated that it would sell 25 cows during the year; however, during 2020 the farm actually sold 29 cows.                                                                                      

                Planning               Activity Variance              U/F        Flex        Revenue/Spend Variance             U/F        Actuals

Activity                                                                                                

Sales/Revenues                                                                                               

Less expenses                                                                                                                                                                                 

Net Income   

Requirements:                                                                                                 

1              Complete the table above to show the planning budget, flex budget, actuals and all variances, denoting favorable or unfavorable.

6.             What was the projected net income of the Flex budget?                                                               
7.            What is the revenue variance?                                                                 
8.            What is the expense for Feed in the Planning Budget?                                                                   

                i.              Which, if any, expenses had favorable variances?                                                                                  

           j.                 Which expenses were deemed only variable?     

1 Lehman Brothers is a very well-known financial firm that has filed for Chapter 11 bankruptcy protection during 2008/2009 financial crisis. Then the economic situation was so bad the 135 years old firm that survived during 1930 great depression was unable to survive and ceased the operation and never return to market. In your ECON 200 class, you learnt the conditions at which the firms enter and exit from the market. Using a graph describes how and when in a perfectly competitive market the firms that are experiencing economic losses exit from the market. In the graph you may use costs and revenue curves

2 On the other hand, the General Motors went on a different direction. General Motors was founded in 1908 and one hundred years old company. Following the financial crisis in 2008/2009, General Motors filed for chapter 11 bankruptcy protection. After support from the US government and restructuring, the business operation was able to re-enter the market. In your ECON 200 class you learnt the conditions at which the firms enter and exit from the market. Using a graph describes how and when in a perfectly competitive market the firms that are experiencing economic losses close the operation and reenter to the market. In the graph you may use costs and revenue curves.

On January 1, 2017, the ledger of Sheridan Company contains the following liability accounts.

During January, the following selected transactions occurred.

1. Journalize the January transactions

2. Journalize the adjusting entries at January 31 for (1) the outstanding notes payable, and (2) estimated warranty liability, assuming warranty costs are expected to equal 7% of sales of the new product sold January 20.

3. Prepare the current liabilities section of the balance sheet at January 31, 2017. Assume no change in accounts payable.

Having gone through the principles II class, imagine you are an intern at Floro agro florists and its
end year. The Warehouse Manager is overwhelmed with work and realizes that you can just be
the perfect person to help him with inventory related issues after he realizes a glitch in some
year’s records. The information for the years in question has been provided as follows;
2018 2019 2020
Current Assets 1,000 1,250 1,750
Non-Current Assets 5,000 6,250 8,750
Total Assets 6,000 7,500 10,500
Long term Liabilities 2,000 2,500 3,500
Revenue 1,000 1,250 1,750
Cost of Sales 40% on cost for all the Years
Assume that ending Inventory was overstated by K1, 500 in 2018 and Understated by K10, 000
ends of 2019.
Required
a. Calculate the Cost of goods sold for the years 2018, 2019, and 2020
b. Calculate the Owners Equity value for the years 2018, 2019 and 2020
c. Calculate the correct values for the below listed items in 2018 and 2019 indicating the effect
with an explanation.
i. Current Assets
ii. Non-current Assets
iii. Total Assets
iv. Long term Liabilities
v. Owners Equity
vi. Revenue
vii. Cost of sales
viii. Gross Profit

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 $1,300 per month plus $0.09 per car washed. The company expects to wash 8,100 cars in August and to collect an average of $6.20 per car washed.

The actual operating results for August appear below.

Required:

Prepare a flexible budget performance report that shows the company’s revenue and spending variances and activity variances for August. (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.)

Exercise 9-4 Prepare a Flexible Budget Performance Report [LO9-4]

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.)

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 $0.15 per car washed. The company expects to wash 9,000 cars in August and to collect an average of $4.90 per car washed.

The actual operating results for August are as follows:

Required:

Calculate the company's revenue and spending variances for August. (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. Do not round intermediate calculations.)

Given the following information for Maynor Company in 2011, calculate the company's ending inventory, cost of goods sold and gross profit, using the following inventory costing methods, assuming the company uses a periodic inventory system: (Note: The sum of cost of goods sold and ending inventory might not add up due to rounding.)

Winx Company began operations at the beginning of 2018.

The following information is available for this company:

• Pretax financial income for 2018 is $300,000.

• Differences between the 2018 income statement and tax return include:

- Depreciation on property, plant and equipment for financial reporting purposes was $20,000 lower than for tax purposes.

- Gross profit on construction contracts using the percentage-of-completion method equaled $82,000 in the company’s books. Gross profit on construction contracts for tax purposes was $67,000.

- Warranty expense accrued for financial reporting purposes was $39,000. Warranty deductions per the tax return amounted to $34,000.

- Revenue received in advance was recorded at $150,000 for tax purposes. Only $120,000 was earned for financial reporting purposes.

- A $7,000 fine paid for violation of pollution laws was deducted in computing pretax financial income.

- Interest revenue recognized on an investment in tax-exempt municipal bonds amounted to $11,000.

• The applicable tax rate is 20%.

• Taxable income is expected for the next few years.

Instructions:

a) For each of the differences above, calculate the dollar amount of the difference and identify if it is a temporary difference or permanent difference.

b) Compute taxable income for 2018.

c) Compute the deferred tax assets and liabilities at December 31, 2018 that relate to the temporary differences described above.