Bellrome Company is planning to replace an old machine with the following related information:
Book value P300,000
Remaining useful life 5 years
Current market value 150,000

Additional information:
 The replacement machine can be acquired at a list price of P500,000. A 5% cash discount is
available if the said machine is paid within 30 days from acquisition date. Freight and installation
costs is estimated at P75,000.
 Should the company decide not to acquire the new machine, it needs to repair the old one at a cost
of P50,000. Otherwise, additional cost of removing the old unit is estimated at P10,000.
 Additional gross working capital of P15,000 will be needed to support operation planned with the
new equipment.
 The new machine is estimated to reduce cash operating costs amounting to P150,000 per year
and is to be depreciated using the straight-line method over its useful life of 5 years.
 Bellrome is subject to a 30% income tax rate.

REQUIREMENTS:
a. What is the net initial cost of investment to be used in decision making?
b. What is the increase in annual net income?
c. What is the increase in annual net cash flows if the company replaces the machine?

Bond Investment Transactions

Journalize the entries to record the following selected bond investment transactions for Starks Products:

For a compound transaction, if an amount box does not require an entry, leave it blank.

a. Purchased for cash $108,000 of Iceline, Inc. 9% bonds at 100 plus accrued interest of $1,620, paying interest semiannually.

b. Received first semiannual interest payment.

c. Sold $72,000 of the bonds at 103 plus accrued interest of $820.

Stock Investment Transactions

On September 12, 3,700 shares of Aspen Company are acquired at a price of $32.00 per share plus a $185 brokerage commission. On October 15, a $0.80-per-share dividend was received on the Aspen Company stock. On November 10, 1,480.00 shares of the Aspen Company stock were sold for $27 per share less a $74 brokerage commission.

When required, round final answers to the nearest dollar. For a compound transaction, if an amount box does not require an entry, leave it blank.

Prepare the journal entries for the original purchase, the dividend, and the sale under the cost method.

Use the following information for the Exercises below.

[The following information applies to the questions displayed below.]

Laker Company reported the following January purchases and sales data for its only product.

The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 200 units, where 180 are from the January 30 purchase, 5 are from the January 20 purchase, and 15 are from beginning inventory.

Exercise 5-4 Perpetual: Income effects of inventory methods LO A1

Required:

1. Complete comparative income statements for the month of January for Laker Company for the four inventory methods. Assume expenses are $1,250, and that the applicable income tax rate is 40%. (Round your Intermediate calculations to 2 decimal places.)

During 2012 the company discovered the following accounting errors 1- the machine has been mistakenly depreciated based on 5 years instead of 6 years. In July 1 2009, XYZ corporation Acquired an equipment on July 1 2009 at cost of $16000 the estimated useful life for the machine 6 years and the residual value $1000. Company use SLM for depreciation. 2- Ending inventory for year 2009 was overstated by $ 1800 3- Ending inventory for year 2010 was understated by $2000 Company subject to income tax rate 40%. Show the dollar amount of the combined effect, if any, and the nature of the effect (overstatement or understatement or correct) of these accounting errors on the reporting value of the following financial statement items as in the following table:

F S items the combined impact on reporting value of FS items NI 2009 Total Assets Dec. 31 2010 Owners Equity Dec. 31 2010 Total Liabilities

Laker Company reported the following January purchases and sales data for its only product. Date Activities Units Acquired at Cost Units sold at Retail Jan. 1 Beginning inventory 230 units @ $ 15.50 = $ 3,565 Jan. 10 Sales 180 units @ $ 24.50 Jan. 20 Purchase 190 units @ $ 14.50 = 2,755 Jan. 25 Sales 220 units @ $ 24.50 Jan. 30 Purchase 360 units @ $ 14.00 = 5,040 Totals 780 units $ 11,360 400 units The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 380 units, where 360 are from the January 30 purchase, 5 are from the January 20 purchase, and 15 are from beginning inventory. Exercise 5-4 Perpetual: Income effects of inventory methods LO A1 Required: 1. Complete comparative income statements for the month of January for Laker Company for the four inventory methods. Assume expenses are $2,150, and that the applicable income tax rate is 40%. (Round your Intermediate calculations to 2 decimal places.) 2. Which method yields the highest net income?

SawPro Company, owned and operated by Heather Moore, opened for business in 2015. The company sells a single model of commercial grade chain saws that it purchases from the manufacturer. Heather’s customers, primarily businesses offering landscaping and tree-services, purchase saws on account, with payment typically due within thirty-days.  

The following transactions occurred during the calendar year ending December 31, 2018:

1. Acquired equipment that automated sharpening chain saw blades. Instead of paying cash, Heather signed an agreement with a lease financing company. The equipment was delivered, installed, and ready for service on March 1, 2018. Terms of the lease require twenty-four equal monthly payments of $270, with the first payment due at signing on March 1st. The annual rate is 4.75 percent. Heather made all payments on the dates required. The fair value of the equipment is $6,500 with an expected service life of thirty months. Heather has the option to purchase the equipment for $250 at the end of the lease term; she expects to exercise that option. (Note: use the old rule percent’s to determine whether the lease is financing or operating).

Post a journal entry of this transaction!

For each of the following independent situations, assume that any amounts would be material.

     (I) Indicate the TYPE of appropriate audit report; A. unqualified, B. qualified or adverse, C. qualified or disclaimer, D. Disclaimer, E. Qualified only, or F. Other. INDICATE the situation involved, i.e "Accounting situation", and DISCUSS the situation.

    (II) State whether an explanatory paragraph [i.e. PCAOB audit] would be included, and if so, what would be included in the explanatory paragraph.

   (III) For an UNQUALIFIED auditor's report, if the wording would be changed, indicate how it would be changed [Relates to Shared Report].

   (iv) The auditor agrees to any accounting change, if the change is proper GAAP.

1. The company uses an appraiser's estimate of current Replacement Cost to report the value of previously acquired land owned by the company.  It is felt this is more recent information

2. The controller requested that the auditor not send accounts receivable confirmations to its largest customers. The auditors used alternative procedures to ascertain the existence of the receivables

3. The company uses Lower of Cost or Market rather than Historic Cost to value inventory. It is felt that this is more recent information.  

Question:

Prepare a preliminary PickPOCIT project management organization chart and show how it interfaces with the ISI organization structure. In 300 to 350 words describe a) The primary roles and responsibilities of the key project management staff, b) The expectations the project manager has of project staff, c) The expectations the project manager has of functional managers and d) The methods of communication that would be employed with each. Be as specific as you can with names of people and organizational units in ISI.

|Article:

Inventory Specialists, Inc (ISI)
Introduction:
Inventory Specialists, Inc (ISI) is a high-technology company, privately owned and operated for profit. The company was founded about ten years ago by Sid Jones and a small group of experienced software designers who left the Southern Software Co. to set up a small company to produce leading edge inventory management software. The software produced by Jones and his associates are at the high end in quality and advanced design, and have become well known for being very stable, user friendly, and intuitive. The company's highly responsive and effective customer support has earned an increasing demand for its products. The company gradually expanded to include hardware, and three years ago decided to change its name to ISI and enter the inventory management market in areas where innovative engineering, rapid response, and affordable products are required. This venture succeeded beyond Jones’ expectations, and at this juncture the company has a staff of 250 employees and has recently acquired new quarters with space for further growth. Operations The company's gross business is about $95 million per year, one-half of which is expended in-house and the other half goes for subcontracted services. About 80% of the company's work is for commercial concerns, with the remaining 20% involving state and local government contracts. Commercial programs are generally acquired by competitive bidding in response to a published Request for Proposal (RFP). The contracts ISI has won have been generally of the Fixed Price, Cost Plus Fixed Fee, or Cost Plus Incentive Fee types, depending on the degree of risk involved. ISI is a fully integrated operation including hardware/software development and test laboratories, computing facilities, technical information services and administrative support. Personnel Sid Jones is President and Chief Executive Officer of ISI. His early associates, Rich Reynolds and Gerald Garcia are Vice President for Engineering and Vice President for Business, respectively. Three years ago, Victoria Valley joined the company as Vice President for Programs after 15 years of program management and marketing experience with General Software, Inc. Jean Stapleton, Director of Product Operations, is involved in most management decisions because of her seniority and key function. Of the company's 250 employees some 200 are software and hardware developers and skilled technicians. About 50% of the personnel are engaged in hardware and software development engineering operations; 25% in product integration and test operations; 5% in technical program management; 15% in administrative support and 5% in staff functions. The company is a matrix organization. Program managers are primarily responsible for the accomplishment of the technical work and delivery of the product within budget and schedule, and for interfacing with the customer. Software Development and Product Operation managers are responsible for the actual development and production of the product and for its technical capability and integrity. General Organization The top-level organization of ISI, showing the principal staff and operating functions that report to the Office of the President, is depicted in Figure 1. Because the company is relatively small, the management and staff operations are correspondingly limited. Top management consists of the President and three Vice Presidents, responsible for engineering, business operations, and programs, respectively. At the staff level, the Directors of Quality Control and Human Resources report directly to the President. The Programs Office, managed by Jim Sams, houses the program managers for current major tasks, and reports to the VP for Programs. The marketing function, which in larger organizations is handled by a Director of Marketing and staff, is the responsibility of the VP for Programs. There is no Chief Counsel at the staff level; legal advice is obtained when needed from a consulting legal firm. At the operating level, the VP for Software doubles as the Director of Software Development, while the VP for Business serves as Director of Administrative Operations. These ‘duplicate listings’ are indicated by an asterisk (*). The Director of Product Operations reports to the President. The majority of ISI stock is held by the officers of the company. The President, Vice Presidents and the Director of Product Operations serve as the Management Committee, shown in Figure 1a, which meets semi monthly to report on their respective operations and to advise on program areas. Figure 1. Top-Level Organization of ISI Figure 1a. ISI Management Committee Administrative and Product Operations The organization of the Administrative Operations Department, headed by Gerald Garcia, is shown in Figure 2. It consists of two groups: Financial Services, managed by Ruth Simms and Support Services, managed by Stephen Lota. The former is responsible for contracts and purchasing, accounting, payroll and management information, while the latter handles shipping and receiving, office services, plant services and computer support services. All operations are integrated by extensive use of information networking, with a tradition of teamwork and service. purchasing, accounting, payroll and management information, while the latter handles shipping and receiving, office services, plant services and computer support services. President and CEO Sid Jones VP Software/Hardware Development Rich Reynolds * Director, Software/Hardware Development Rich Reynolds Systems Test Group ETG Quality Control Group ETQ Software Development Group ETS Product Improvement Group ETI Hardware Group ETH Chief Architect ECA Architecture Group ECAG VP Business Gerald Garcia * Director, Administrative Ops Gerald Garcia Financial Services Group AFG Support Services Group ASG VP Programs Victoria Valley Manager, Programs Office Jim Sams Director, Product Operations Jean Stapleton Integration and Test Group PIT Installation Group PFF Customer Service (PCS) Director, Quality Control Dana Deming Director, Human Resourses Alli Apple President and CEO Sid Jones Director, Product Operations Jean Stapleton VP Programs Victoria Valley VP Engineering Rich Reynolds VP Business Gerald Garcia purchasing, accounting, payroll and management information, while the latter handles shipping and receiving, office services, plant services and computer support services. All operations are integrated by extensive use of information networking, with a tradition of teamwork and service. Figure 2. ISI Administrative Operations The Product Operations Department organization is illustrated in Figure 3. The Planning, Scheduling and Documentation Staff plans and oversees the flow of work in the department. The Integration and Test Group, managed by Priyanka Moorjani, is responsible for testing components built in-house or contracted out, assembling them, conducting system tests and performing the appropriate quality assurance functions. Director, Administrative Ops Gerald Garcia Financial Services Froup (AFG) Contracts and Purchasing Accounting Payroll Management Information Ruth Simms Support Services Group (ASG) Shipping and Receiving Office Services Plant Services Computer Services Stephen Lota Figure 3. ISI Product Operations Hardware and Software Engineering Department The Hardware and Software Engineering Department is the largest operating unit of the company with a staff of 130. As seen in Figure 4, it is organized into six groups under the leadership of the Software Development Director, Rich Reynolds. Figure 4. ISI Engineering Department Director, Product Ops Jean Stapleton Integration and Test Group (PIT) Integration Quality Control Software/Hardware Test Installation Group (PFF) Product Installation Product Training Customer Service (PCS) Planning, Scheduling, and Documentation Staff Director Software/Hardware Development Rich Reynolds Systems Test Group (ETG) Quality Control Group (ETQ) Software Development Group (ETS) Product Improvement Group (ETI) Hardware Group (ETH) Chief Architect (ECA) Architecture Group (ECAG) The Architecture Group (ECAG) is comprised of 10 people and is led by Pete Handle. They are responsible for choosing a standard way of pursuing application development and creating, defining, or choosing an application framework for the applications. They are also responsible for recognizing potential reuse in software and hardware applications by observing and understanding the broader system environment; creating component designs; subdivide a complex application, during the design phase, into smaller, more manageable pieces; grasp the functions of each component within the application; understand the interactions and dependencies among components; and communicate these concepts to developers. They also lead the development of functional requirements, interface definitions, and preparation of technical proposals. The 20-member Systems Test Group (ETG), led by Estelle Aker, conducts testing on a complete, integrated system to evaluate the system's compliance with its specified requirements. ETG testing takes, as its input, all of the "integrated" software and hardware components that have successfully passed integration testing and also the software system itself integrated with any applicable hardware system(s). The purpose of integration testing is to detect any inconsistencies between the software units that are integrated together (called assemblages) or between any of the assemblages and the hardware. The eight four person Quality Control Group (ETQ), led by Hector Zapata, is responsible for software and hardware quality control to check whether the project follows its standards processes, and procedures, and that the project produces the desired internal and external (deliverable) products. The Software Development Group (ETS) is led by Robert Burns. This group of 60 people develops the SUS software products which involves writing and mainlining source code and is involved between the conception of the desired software through to the final manifestation of the software. The Product Improvement Group (ETI) is led by Susan Bettersome. This 19-person group is involved in research, new development, prototyping, modification, reuse, re-engineering, maintenance, and other activities that result in new software products. The Hardware Group (ETH) is led by Dave Morrill. This 10-person group is involved in research, new development, prototyping, modification, reuse, re-engineering, maintenance, and other activities that result in new products that require hardware.

Lunar Artistry Company needs to purchase new etching and finishing equipment. The owners hope to finance the costly equipment with cash on hand and a short term loan from Erie Bank. The CFO of Lunar Artistry Company has recently completed the sales forecast. She projects sales to increase by 10% each month over the previous month sales for the first quarter with the remaining months remaining constant.

The controller has been asked to prepare the master monthly budget for the first quarter 2021. In the process, the controller has accumulated the following information:

1. Projected Sales for December 2020 are $500,000. Credit sales are 80% of total sales with immediate cash sales as the other 20%. Of the credit sales, cash is collected 20% in the month of the sale and the remainder in the month following the sale.
2. Lunar’s cost of goods sold is generally 60% of the current month sales. All inventory is purchased on account. 40% of inventory purchases are paid for in the month of purchase with the remaining 60% paid the month following the purchase.
3. The controller has determined additional monthly expenses to be as follows:
   1. Salaries                       $55,000 Paid monthly
   2. Advertising                 $20,000 Paid Monthly
   3. Property Taxes            $ 2,900 Paid Feb 28 and Aug 31
   4. Sales Commissions    1.2% of monthly sales
4. The owners of Lunar Artistry Company have selected etching and finishing equipment costing $175,000. They plan to pay cash for the equipment. If they do not have enough cash, assuming the company can maintain a $25,000 balance, the owners will take a short term loan from Erie Bank. The CFO has stated the current interest rate on short term loans is 6% and she anticipates the need for a six-month loan. Interest on short-term loans is payable monthly.
5. Interest is paid each March 31 and September 30 on the Mortgage Payable. The interest rate on the mortgage is 4%
6. The board of directors intends to declare a $40,000 dividend at the end of the first quarter.

REQUIRED:

1. Using the Excel template, complete the purchase budget, cash disbursement budget and cash budget.

*PLEASE SHOW EXCEL FORMULAS*

Additional Information:

Projected BS Tab from Excel Template:

Sales Budget Tab from Excel Template: