1. Coyote Loco, Inc., a distributor of salsa, has the following historical collection pattern for its credit sales.

70 percent collected in the month of sale.

15 percent collected in the first month after sale.

10 percent collected in the second month after sale.

4 percent collected in the third month after sale.

1 percent uncollectible.

The sales on account have been budgeted for the last seven months as follows:

Web Wizard, Inc., has provided information technology services for several years. The company uses the percentage of credit sales method to estimate bad debts for internal monthly reporting purposes. At the end of each quarter, the company adjusts its records using the aging of accounts receivable method. The company entered into the following selected transactions during the first quarter of 2017:

1. During January, the company provided services for $40,000 on credit.
2. On January 31, the company estimated bad debts using 1 percent of credit sales.
3. On February 4, the company collected $20,000 of accounts receivable.
4. On February 15, the company wrote off a $100 account receivable.
5. During February, the company provided services for $30,000 on credit.
6. On February 28, the company estimated bad debts using 1 percent of credit sales.
7. On March 1, the company loaned $2,400 to an employee who signed a 6 percent note, due in six months.
8. On March 15, the company collected $100 on the account written off one month earlier.
9. On March 31, the company adjusted for uncollectable accounts, based on the following aging analysis, which includes the preceding transactions (as well as others not listed). Prior to the adjustment, Allowance for Doubtful Accounts had an unadjusted credit balance of $1,200.
10. On March 31, the company accrued interest earned on the note.

1-a. For items (a) through (j), analyze the amount and effects on specific financial statement accounts and the overall accounting equation. (Enter any decreases to the account with a minus sign.)

-b. Prepare the journal entries for the above items. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
2. Show how the receivables related to these transactions would be reported in the current assets section of a classified balance sheet. (Amounts to be deducted should be indicated by a minus sign.)

3. Name the accounts related to Accounts Receivable and Note Receivable that would be reported on the income statement and indicate whether they would appear before or after Income from Operations.

Under applied over head
14,000
Finished goods inventory, beginning
310,000
Finished goods inventory, ending
380,000
Raw materials inventory, beginning
110,000
Raw materials inventory, ending
95,000
Work in process inventory, beginning
105,000
Work in process inventory, ending
85,000
Selling expenses
180,000
Manufacturing overhead Applied
490,000
Direct labor
390,000
Administrative expenses
385,000
Purchases of raw materials
295,000
Sales
2,885,000



Required:

1) Prepare a schedule of Cost of Goods Sold for the year in good form? (Use the table given in the answer box.

Based on the Cost of Goods schedule you prepared identify:
2a) The Product Costs

Based on the Cost of Goods schedule you prepared identify:
2b) The Period costs

Following are the transactions and adjustments that occurred during the first year of operations at Kissick Co.

a. Issued 192,000 shares of $5-par-value common stock for $960,000 in cash.

b. Borrowed $530,000 from Oglesby National Bank and signed a 11% note due in three years.

c. Incurred and paid $390,000 in salaries for the year.

d. Purchased $720,000 of merchandise inventory on account during the year.

e. Sold inventory costing $590,000 for a total of $900,000, all on credit.

f. Paid rent of $220,000 on the sales facilities during the first 11 months of the year.

g. Purchased $180,000 of store equipment, paying $55,000 in cash and agreeing to pay the difference within 90 days.

h. Paid the entire $125,000 owed for store equipment and $600,000 of the amount due to suppliers for credit purchases previously recorded.

i.Incurred and paid utilities expense of $37,000 during the year.

j. Collected $845,000 in cash from customers during the year for credit sales previously recorded.

k. At year-end, accrued $58,300 of interest on the note due to Oglesby National Bank.

l. At year-end, accrued $20,000 of past-due December rent on the sales facilities.

Required:

a. Prepare an income statement (ignoring income taxes) for Kissick Co.'s first year of operations and a balance sheet as of the end of the year. (Hint: You may find it helpful to prepare a T-account for the Cash account since it is affected by most of the transactions.)

b. Prepare a balance sheet as of the end of the year. (Hint: You may find it helpful to prepare a T-account for the Cash account since it is affected by most of the transactions.) (Amounts to be deducted and net loss should be indicated with minus sign.)

Loan of $10000 with interest at j₄ = 12%, is to be amortized by equal payments at the end of each quarter over a period of 30 quarters. Using the Retrospective Method, Determine the outstanding balance at the end of 12 quarters.

7017.04

14257.61

7016.84

During the first month of operations ended May 31, Big Sky Creations Company produced 56,000 designer cowboy boots, of which 52,450 were sold. Operating data for the month are summarized as follows:

During June, Big Sky Creations produced 48,900 designer cowboy boots and sold 52,450 cowboy boots. Operating data for June are summarized as follows:

Labels, June 30, Cost of goods sold, Fixed costs, For the Month Ended June 30, For the Month Ended May 31, May 31, Variable cost of goods sold,

Amount Descriptions:Contribution margin, Contribution margin ratio, Cost of goods manufactured, Fixed manufacturing costs, Fixed selling and administrative expenses, Gross profit, Operating income, Inventory, June 1, Inventory, May 31, Operating loss, Manufacturing margin, Planned contribution margin, Sales, Sales mix, Selling and administrative expenses, Total cost of goods sold, Total fixed costs, Total variable cost of goods sold, Variable cost of goods manufactured, Variable selling and administrative expenses

Summary Problem—Four-Variance Breakdown of the Total Overhead Variance; Journal Entries ACME manufacturing is a low-cost producer of a single, commodity product: RGL-01. Standard overhead cost information for one unit of this product is presented below:

Standard number of machine hours per unit produced 0.5

Standard variable overhead rate per machine hour $30.00

Budgeted fixed overhead (for the year) $300,000

Practical capacity, in units (annual basis) 10,000

Budgeted output for the coming year, in units 8,000

Normal capacity, in units (per year) 9,000

Actual production for the year (in units) 9,200

Actual overhead costs incurred during the year:

Fixed overhead $288,000

Variable overhead $142,600

Actual number of machine hours per unit for work done this period 0.49

Required

Calculate the fixed overhead application rate per machine hour (rounded to 2 decimal places) using (a) budgeted output, (b) normal capacity, and (c) practical capacity.

What is the total overhead application rate per machine hour (rounded to 2 decimal places) for each of the three choices identified in requirement 1?

What is the total overhead variance for the year when the overhead application rate per machine hour is determined under each of the following options: (a) budgeted output, (b) normal capacity, and (c) practical capacity? [Round answers to nearest whole number, and indicate whether each variance is favorable (F) or unfavorable (U).]

What is causing the results you observe in requirement 3?

What is the Overhead Efficiency Variance (= Variable Overhead Efficiency Variance) for the year when the overhead application rate per machine hour is determined under each of the following options: (a) budgeted output, (b) normal capacity, and (c) practical capacity? [Round answers to nearest whole number, and indicate whether each variance is favorable (F) or unfavorable (U).]

Provide an interpretation of the results reported in requirement 5.

What is the total Overhead Spending Variance for the year under each of the following assumptions regarding the denominator activity level used to set the overhead application rate for the year: (a) budgeted output, (b) normal capacity, and (c) practical capacity? Round answers to nearest whole dollar, and state whether each variance is favorable (F) or unfavorable (U).

Break down the Total Overhead Spending Variance (as determined in requirement 7) into: (a) a Fixed Overhead Spending Variance, and (b) a Variable Overhead Spending Variance. Round answers to nearest whole dollar, and state whether each variance is favorable (F) or unfavorable (U).

Provide an interpretation of the results reported in requirements 7 and 8. Calculate the Production Volume Variance when the overhead application rate per machine hour is determined under each of the following options: (a) budgeted output, (b) normal capacity, and (c) practical capacity. Round answers to nearest whole dollar, and state whether each variance is favorable (F) or unfavorable (U).

Provide an interpretation of the results reported in requirement 10.

Summary analysis: Prepare a four-variance analysis of the total overhead variance for the period under each of the following options for determining the fixed overhead application rate: (a) budgeted output, (b) normal capacity, and (c) practical capacity.

Provide summary journal entries at the end of the year to (a) record all four overhead cost variances (calculated above, in requirement 12) and (b) to close the variances to Cost of Goods Sold (CGS). Assume that variances were determined using “practical capacity” as the denominator volume level for establishing the fixed overhead application rate and the total overhead application rate. Also assume that the company uses a single account, Factory Overhead, to record overhead costs.