Problem 3-8 (Algo) Balance sheet; errors; missing amounts [LO3-2, 3-3]

The following incomplete balance sheet for the Sanderson Manufacturing Company was prepared by the company’s controller. As accounting manager for Sanderson, you are attempting to reconstruct and revise the balance sheet.

Additional information ($ in 000s):

1. Certain records that included the account balances for the patent and shareholders’ equity items were lost. However, the controller told you that a complete, preliminary balance sheet prepared before the records were lost showed a debt to equity ratio of 1.1. That is, total liabilities are 110% of total shareholders’ equity. Retained earnings at the beginning of the year was $7,400. Net income for 2021 was $2,400 and $800 in cash dividends were declared and paid to shareholders.
2. Management intends to sell the investments in the next six months.
3. Interest on both the notes and the bonds is payable annually.
4. The notes payable are due in annual installments of $1,850 each.
5. Deferred revenue will be recognized as revenue equally over the next two fiscal years.
6. The common stock represents 600,000 shares of no par stock authorized, 420,000 shares issued and outstanding.
   

Required:
Prepare a complete, corrected, classified balance sheet. (Amounts to be deducted should be indicated by a minus sign.)

rev: 01_30_2020_QC_CS-195439, 02_13_2020_QC_CS-200385

Sara sells two types of cakes from home. The total fixed cost for every month is budgeted at 200 BD. The labor cost per unit is equal to 2 BD. Sara sells 150 cake every month. The selling prices is 15 BD. The ingredient cost is 4 BD per cake.
Sara wants to know what price she must charge to generate enough revenue to cover her costs. With Break-Even Analysis, Sara can compare different pricing options and calculate how many units sold will lead to profitability. She needs to calculate the contribution margin which equal to selling price minus the variable costs. Contribution margin shows the revenue earned per unit, after deducting variable costs and needs to be enough to cover the company's fixed costs. Sara needs to calculate the following:

1) Break-Even Price, to determine the price needs to be set to generate enough revenue to cover her costs. Break-Even Price equal to 1 / ((1 - Total Variable Costs Percent per Unit) * (Total Fixed Costs per Unit)). Where Variable Costs Percent per Unit = Total Variable Costs / (Total Variable + Total Fixed Costs). Then determine how changes in unit sold and cost per unit affect Break-Even Price, unit sold between 100 and 200 in 10 increments and Cost per unit between 3.5 and 6.5 in 0.5 increments.

2) Break-Even Units Sold, to determine the number of units that need to be sold to achieve the break-even point. To calculate the Break-Even Units Sold, we divide the total fixed costs by the contribution margin for each unit sold. Then determine how changes in unit sold and cost per unit affect Break-Even Unit, price between 7 and 17 in 1 increments and Cost per unit between 3.5 and 6.5 in 0.5 increments

I need it to be solved using modeling , sensitivity analysis and financial excel functions with excel or written.

The city of Detroit, Michigan, filed for Chapter 9 bankruptcy on July 18, 2013, which was the largest municipal bankruptcy filing in U.S. history by the amount of the debt. It caused a big turbulence in the communities involved and questions rose as to how the management and accounting system could have helped the city to prevent or alleviate the financial tragedy. From the teaching perspective, the bankruptcy serves as a realistic example to discuss debt levels, property tax collections, dysfunctional city services and other related issues. For this purpose, two basic articles are assigned to the class for them to research the financial crisis and learn how the city has been trying to evolve from the crisis. Also, students are required to obtain copies of the 2012 and 2014 CAFR to compare the financial condition of the city before and after the bankruptcy. Other resources are allowed as they are pertinent to the research but need to be correctly cited. Finally, a research report and presentation are required to address the following questions comprehensively.

1) Describe and discuss five major factors that have led to the city’s bankruptcy. How are the problems specifically related to our class contents?

2) How much total liabilities did the city have before and after the bankruptcy? What are the major types of liabilities?

3) Describe how the federal government, local governments, and the community are trying to save and revive the city. Are these actions working?

4) Describe the recent property tax issue faced by the city and how it impacts the city’s budget and financial condition.

5) Study the 2014 financial statements carefully, then calculate the property tax revenue as a percentage of the total revenue in the governmental funds. What is the largest and second largest revenue sources for the city’s general fund?

6) For fiscal year 2014, what are the three largest expenditures in the governmental funds? Calculate their percentages to the total expenditure of the governmental funds.

7) Both the governmental funds and enterprise funds have deficits (the difference between assets and liabilities is negative). How can you explain this, and what has the city done to improve these cumulative deficits?

8) Are there other observations and comments for the city that you would like to present?

QUESTION 5. Account balances from the ledger of Summer Company on December 31, 2018, are as follows:

Accounts Payable .................................................................................. $ 23,000

Accounts Receivable ............................................................................. 38,000

Accumulated Depreciation--Equipment ................................................. 64,000

Allowance for Doubtful Accounts ........................................................... 2,000

Patent .................................................................................................... 8,400

Capital Stock, $10 par ........................................................................... 100,000

Cash ...................................................................................................... 60,260

Inventory ................................................................................................ 105,000

Sales Supplies Inventory ....................................................................... 900

Interest Expense .................................................................................... 6,600

Inventory, December 31, 2017 .............................................................. 104,850

Contributed Capital in Excess of Par Value ........................................... 15,000

Long-Term Note Receivable, 14% ......................................................... 12,000

Mortgage Payable, 12% ......................................................................... 60,000

Investment Revenue ......... .................................................................... 1,120

Accumulated Depreciation-Equipment ................................................... 64,000

Rent Revenue ........................................................................................ 3,000

Retained Earnings, December 31, 2017 ................................................ 32,440

Sales ...................................................................................................... 700,000

Cost of Goods Sold ................................................................................ 380,000

Selling Expenses ................................................................................... 164,400

General and Administrative Expenses .................................................. 55,000

Equipment ............................................................................................. 180,000

Adjustments required on December 31, 2018:

(a) Estimated bad debt loss rate is 1/4 percent of credit sales. Credit sales for the year amounted to $200,000.

(b) Interest on the long-term note receivable was last collected August 31, 2018.

(c) Estimated life of the equipment is 10 years, with a residual value of $20,000. Allocate 10 percent of depreciation expense to general and administrative expense and the remainder to selling expenses. Use straight-line depreciation.

(d) Estimated economic life of the patent is 14 years (from January 1, 2018) with no residual value. Straight-line amortization is used. Depreciation expense is classified as selling expense.

(e) Interest on the mortgage payable was last paid on November 30, 2018.

(f) On June 1, 2018, the company rented some office space to a tenant for one year and collected $3,000 rent in advance for the year; the entire amount was credited to rent revenue on this date.

(g) On December 31, 2018, the company received a statement for calendar year 2018 property taxes amounting to $1,300. The payment is due February 15, 2019. Assume that the payment will be made on February 15, 2019.

The following income statement items appeared on the adjusted trial balance of Schembri Manufacturing Corporation for the year ended December 31, 2018 ($ in 000s): sales revenue, $18,300; cost of goods sold, $7,700; selling expenses, $1,450; general and administrative expenses, $950; interest revenue, $230; interest expense, $320. Income taxes have not yet been recorded. The company’s income tax rate is 20% on all items of income or loss. These revenue and expense items appear in the company’s income statement every year. The company’s controller, however, has asked for your help in determining the appropriate treatment of the following nonrecurring transactions that also occurred during 2018 ($ in 000s). All transactions are material in amount. Investments were sold during the year at a loss of $370. Schembri also had unrealized gains of $470 for the year on investments. One of the company’s factories was closed during the year. Restructuring costs incurred were $1,800. During the year, Schembri completed the sale of one of its operating divisions that qualifies as a component of the entity according to GAAP. The division had incurred a loss from operations of $710 in 2018 prior to the sale, and its assets were sold at a gain of $1,700. In 2018, the company’s accountant discovered that depreciation expense in 2017 for the office building was understated by $350. Negative foreign currency translation adjustment for the year totaled $420. Required: 1. Prepare Schembri’s single, continuous multiple-step statement of comprehensive income for 2018, including earnings per share disclosures. One million shares of common stock were outstanding at the beginning of the year and an additional 200,000 shares were issued on July 1, 2018. 2. Prepare a separate statement of comprehensive income for 2018. Prepare Schembri’s single, continuous multiple-step statement of comprehensive income for 2018, including earnings per share disclosures. One million shares of common stock were outstanding at the beginning of the year and an additional 200,000 shares were issued on July 1, 2018. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands. Round EPS answers to 2 decimal places.)

Electronics Inc. buys and sells photocopy equipment that are used in businesses across Ontario. The company follow IFRS. Unit selling prices range from $10,000 to $100,000.

• Electronic Inc. delivers the photocopy equipment on October 15th, 2020, and completes the installation of the photocopy equipment on November 1^st, 2020.
• On December 31^st Centennial College pays for 2 months of maintenance services. The following December 31^st Centennial College pays for 10 months of maintenance services.

On November 15^th Centennial College informs Electronic Inc. that they will be not be able to pay their account that is due. The two parties enter into an agreement that the account will be converted into a non-interest bearing promissory note to be repaid in one year from now. The maturity value of the note is $67,098. Centennial College borrows fund at a rate of 6%. Electronic Inc. has various loans at 5% interest. The company’s year end is December 31^st.

1. List the performance obligations?
2. Explain when the revenue should be recognized for each performance obligation under IFRS. Support your answer by explaining why it should be recognized at the time you selected.
3. Prepare the journal entries for 2020 and 2021. If there is no entry be sure to state no entry. Hint remember to allocate the revenue among the different performance obligations and then use this information when you prepare the journal entries.
4. If the company followed ASPE when should the revenue be recognized for the sale of the photocopy system and why? Be sure to list the criteria and apply it to the question. Hint use RCMP for criteria.
5. Peer evaluation

Exercise 10-8

On December 31, 2016, Splish Inc. borrowed $4,260,000 at 12% payable annually to finance the construction of a new building. In 2017, the company made the following expenditures related to this building: March 1, $511,200; June 1, $852,000; July 1, $2,130,000; December 1, $2,130,000. The building was completed in February 2018. Additional information is provided as follows.

(A) Determine the amount of interest to be capitalized in 2017 in relation to the construction of the building.

Refer to Sombertown Hospital’s financial statements below for calculating the ratios requested in Questions 1-5.

Sombertown Hospital

Statement of Operations

For the Year Ended December 31, 2018

Revenues, Gains, Other Support

Net patient service revenue     $      4,500,000

Other revenue                                     600,000

      Total Revenue                           5,100,000

Expenses

Nursing Services                             3,600,000

Administrative Services                     600,000

Depreciation                                       300,000

Other Expenses                                  150,000

      Total Expenses                          4,650,000

Operating Income                              450,000

Investment Income                             150,000

Excess of revenues over expenses     600,000

Increase in Unrestricted Net Assets$ 600,000

Sombertown Hospital

Balance Sheet

As of December 31, 2018 (2017 omitted)

Assets

Current Assets

Cash and cash equivalents      $         150,000

Net patient receivables                    1,050,000

      Total Current Assets                 1,200,000

Properties and Equipment

Gross properties and equipment   $ 2,700,000

Less accumulated depreciation       1,425,000

      Net Properties and Equipment 1,275,000

      Total Assets                      $      2,475,000

Liabilities and Net Assets

Current Liabilities

Accounts Payable                               600,000

Salaries Payable                                 150,000

      Total Current Liabilities               750,000

Notes Payable                                    600,000

Unrestricted Net Assets                  1,125,000

Total Liabilities and Net Assets$ 2,475,000

Question # 1

What is Megatropolis Hospital’s operating margin?

Question # 2

What is Megatropolis Hospital’s days in accounts receivable?

Question # 3

What is Megatropolis Hospital’s long-term debt to net assets ratio?

Question # 4

What is Megatropolis Hospital’s age of plant?

Question # 5

What is Megatropolis Hospital’s days of cash on hand?

Question # 6

What are the four phases of management control?

Question # 7

Management has studied work patterns in the housekeeping department and estimates the number of hours to be worked as follows. Hours worked = (1,600 hours per month) + (0.50 × RVUs). For the coming month, management expects RVUs to be 6,000. What should budgeted labor for the month be?

Question # 8

Last year the price for thermometer covers in a pediatrician’s office was $.06 each. This year, the covers cost $.08 each. If the office purchased 20,000 thermometer covers this year, what is the price variance?