Pope’s Garage had the following accounts and amounts in its financial statements on December 31, 2013. Assume that all balance sheet items reflect account balances at December 31, 2013, and that all income statement items reflect activities that occurred during the year then ended.
| Accounts receivable | $ | 31,600 |
| Depreciation expense | 11,900 | |
| Land | 25,900 | |
| Cost of goods sold | 86,500 | |
| Retained earnings | 63,700 | |
| Cash | 10,000 | |
| Equipment | 70,500 | |
| Supplies | 5,700 | |
| Accounts payable | 22,600 | |
| Service revenue | 29,400 | |
| Interest expense | 3,200 | |
| Common stock | 6,000 | |
| Income tax expense | 22,425 | |
| Accumulated depreciation | 41,000 | |
| Long-term debt | 37,000 | |
| Supplies expense | 13,100 | |
| Merchandise inventory | 26,600 | |
| Sales revenue | 175,000 |
| a. | Calculate the total current assets at December 31, 2013. |
| b. | Calculate the total liabilities and stockholders’ equity at December 31, 2013. |
| c. | Calculate the earnings from operations (operating income) for the year ended December 31, 2013. |
| d. | Calculate the net income (or loss) for the year ended December 31, 2013. |
| e. | What was the average income tax rate for Pope’s Garage for 2013? |
| f. |
If $18,500 of dividends had been declared and paid during the year, what was the January 1, 2013, balance of retained earnings? |
In: Accounting
Susan stared in her glass of beer. This was the first time she was in charge of the whole consulting project. Making it a success was a must. Her client was a medium-sized television station. In a drive to cut costs, they were considering to outsource sales. Susan had just participated in the board meeting in which the key contender presented its proposal. The board had a positive impression but wanted to hear Susan's reaction. According to the sales company's proposal, they would be compensated on a variable basis. In particular, they proposed the following scheme: • 10% on the first $400 million in sales • 5% on sales above $400 million The sales company argued that their sales force was much more effective: for similar clients, their revenue generated per dollar spent on sales was more than two times higher than what the client currently achieved. The client had about $500 million in advertising sales and had no other sources of revenue. Their fixed cost was $420 million, which went mainly to the purchasing of television programs and to general overhead. Finally, they had $80 million in sales expenses, all of which was variable (in function of the number of ads sold).
Case Questions: (1) If you were Susan, would you advise your client to accept the proposal? (2) If not, what counteroffer might you propose?
In: Operations Management
| Insurance expense | $10,000 |
| Sales returns and allowances | 22,400 |
| Bad debt expense | 6,000 |
| Accounts payable | 81,000 |
| Accounts receivable | 108,590 |
| Allowance for doubtful accounts | 8,500 |
| Accumulated depreciation – equipment | 27,740 |
| Depreciation expense | 1,200 |
| Interest revenue | 2,100 |
| Cash | 80,970 |
| Common stock (10,000 shares outstanding) | 100,000 |
| Cost of goods sold | 598,550 |
| Dividends declared | 18,000 |
| Equipment | 139,450 |
| General expenses | 114,250 |
| Dividends payable | 2,000 |
| Sales discounts | 23,000 |
| Interest expense | 5,600 |
| Paid-in capital in excess of par | 110,000 |
| Marketable Securities | 12,000 |
| Merchandise inventory | 154,250 |
| Prepaid insurance | 11,225 |
| Salaries expense | 42,100 |
| Retained earnings | ? |
| Dividend Revenue | 10,000 |
| Salaries Payable | 12,350 |
| Sales | 983,900 |
| Selling expenses | 139,210 |
|
The selling expenses and general expense categories above are a combination of numerous accounts not needed to be listed separately (they are mainly composed of senior executives’ salaries and other compensation items). If you do not know if an account is selling or general/admin. then split the dollar amount 50/50 between the 2 categories. This only matters in the preparation of the multi-step income statement. Needed A Single Step income statement Multiple-step income statement Statement of retained earnings |
In: Accounting
1. If a firm moves from one point on a production isoquant to another point on the same isoquant, which of the following will certainly not happen?
options:
1-) A change in the level of output
2-) A change in the marginal products of the inputs
3-) A change in the rate of technical substitution
4-) A change in profitability
5-) All of these.
2. When Farmer Bob applies N pounds of fertilizer per acre, the marginal product of fertilizer is 1 − [1/N] bushels of corn. If the price of corn is $1 per bushel and the price of fertilizer is $0.75 per pound, then how many pounds of fertilizer per acre should Farmer Bob use in order to maximize his profits?
1-) 12
2-) 25
3-) 50
4-) 75
5-) None of these are correct.
3.A profit maximizing monopolist sets:
1-) average cost equal to price
2-) marginal cost equal to price
3-) price equal to marginal revenue
4-) marginal cost equal to marginal revenue
4. If the production function is f(L, K) = aL +2aK where a > 0 is a constant, L is for Labor and K is for Kapital, then the ratio of Marginal Product of Labor to Marginal Product of Capital is:
1-) 1/2
2-) 1
3-) 5
4-) 2
None of these are correct.
In: Economics
Blendit (BLD) just developed new universal titanium replacement mixer blades. These replacement blades can be used in most mixers currently on the market. BLD is selling these blades with a right of return for 30 days. On January 15, management believes it is probable that 10% of the titanium blades sold will be returned. This belief is based on significant experience in estimating returns on other mixer blades BLD has developed and sold in the past. BLD estimates the cost of processing any returned blades will be insignificant. On January 15,Chef's Toolbox (CTX0 purchases and pays for 40 blades at a cost of $20 each. The cost to manufacture each blade was $14. On January 31, BLD's assessment of potential returns had not changed from its assessment on January 15. Requirements: · Review ASC 606-10-05-04, ASC 606-10-32-2 through 12, ASC 606-10-55-22 through 28 · Prepare a detailed explanation of each of the five steps of revenue recognition. Include references to the guidance to support your proposed accounting. Show any calculations you make to support your journal entries. · Record all accounting entries for BLD for the month of January based on the new guidance on revenue recognition in ASC 606
In: Accounting
In: Economics
Financial Statement Creation – Use the information below to create B/S, I/S and Statement of Retained Earnings after adjusting for the four additional activities below
|
Accounts Receivable |
$ |
7,500 |
|
Accounts Payable |
650 |
|
|
Cash |
2,700 |
|
|
Service Revenue |
16,500 |
|
|
Common Stock, $2 par, 10,000 authorized |
2,000 |
|
|
Common Stock, add’l pd in capital |
7,000 |
|
|
Equipment, at cost |
12,900 |
|
|
Accumulated depreciation |
2,300 |
|
|
Depreciation Expense |
700 |
|
|
Land |
5,800 |
|
|
Notes Payable, Due 2021 |
8,000 |
|
|
Investment Securities |
1,200 |
|
|
Prepaid Rent |
1,400 |
|
|
Rent Expense |
2,400 |
|
|
Retained Earnings, January 1, 2018 |
5,850 |
|
|
Salaries and Wages Expense |
8,000 |
|
|
Unearned revenue |
300 |
|
At year-end, the company accountant realizes that the following transactions have to be recorded:
In: Accounting
EZ-Tax is a tax accounting practice with partners and
staff members. Each billable hour of partner time has a $580
budgeted price and $290 budgeted variable cost. Each billable hour
of staff time has a budgeted price of $130 and a budgeted variable
cost of $80. For the most recent year, the partnership budget
called for 8,400 billable partner-hours and 33,700 staff-hours.
Actual results were as follows:
Partner
revenue$4,492,000 7,900hoursStaff
revenue$4,315,000 33,000hours
Required:
a. Compute the sales price
variance. (Indicate the effect of each variance by
selecting "F" for favorable, or "U" for unfavorable. If there is no
effect, do not select either option.)
b. Compute the total sales activity
variance. (Do not round intermediate calculations. Indicate
the effect of each variance by selecting "F" for favorable, or "U"
for unfavorable. If there is no effect, do not select either
option.)
c. Compute the total sales mix
variance. (Do not round intermediate calculations. Indicate
the effect of each variance by selecting "F" for favorable, or "U"
for unfavorable. If there is no effect, do not select either
option.)
d. Compute the total sales quantity
variance. (Do not round intermediate calculations. Indicate
the effect of each variance by selecting "F" for favorable, or "U"
for unfavorable. If there is no effect, do not select either
option.)
In: Accounting
Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company’s costs:
| Fixed Cost per Month |
Cost per Car Washed |
||||
| Cleaning supplies | $ | 0.80 | |||
| Electricity | $ | 1,000 | $ | 0.07 | |
| Maintenance | $ | 0.15 | |||
| Wages and salaries | $ | 4,700 | $ | 0.30 | |
| Depreciation | $ | 8,300 | |||
| Rent | $ | 2,100 | |||
| Administrative expenses | $ | 1,500 | $ | 0.03 | |
For example, electricity costs are $1,000 per month plus $0.07 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.90 per car washed.
The actual operating results for August appear below.
| Lavage Rapide Income Statement For the Month Ended August 31 |
||
| Actual cars washed | 8,300 | |
| Revenue | $ | 58,680 |
| Expenses: | ||
| Cleaning supplies | 7,060 | |
| Electricity | 1,544 | |
| Maintenance | 1,470 | |
| Wages and salaries | 7,520 | |
| Depreciation | 8,300 | |
| Rent | 2,300 | |
| Administrative expenses | 1,646 | |
| Total expense | 29,840 | |
| Net operating income | $ | 28,840 |
Required:
Complete the flexible budget performance report that shows the company’s activity variances and 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.) PLEASE SHOW WORK
In: Accounting
Munoz Glass Company makes stained glass lamps. Each lamp that it sells for $316.50 per lamp requires $16.80 of direct materials and $71.40 of direct labor. Fixed overhead costs are expected to be $195,000 per year. Munoz Glass expects to sell 1,000 lamps during the coming year. Selling and administrative expenses were zero.
Prepare income statements using absorption costing, assuming that Munoz Glass makes 1,000, 1,250, and 1,500 lamps during the year. (Do not round intermediate calculations.)
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Prepare income statements using variable costing, assuming that Munoz Glass makes 1,000, 1,250, and 1,500 lamps during the year. (Do not round intermediate calculations.)
|
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In: Accounting