chapter 7 lab -04
Bank Reconciliation and Entries
The cash account for Collegiate Sports Co. on November 1, 20Y9, indicated a balance of $81,145. During November, the total cash deposited was $293,150, and checks written totaled $307,360. The bank statement indicated a balance of $112,675 on November 30, 20Y9. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:
Checks outstanding totaled $41,840.
A deposit of $12,200, representing receipts of November 30, had been made too late to appear on the bank statement.
A check for $7,250 had been incorrectly charged by the bank as $2,750.
A check for $760 returned with the statement had been recorded by Collegiate Sports Co. as $7,600. The check was for the payment of an obligation to Ramirez Co. on account.
The bank had collected for Collegiate Sports Co. $7,385 on a note left for collection. The face of the note was $7,000.
Bank service charges for November amounted to $125.
A check for $2,500 from Hallen Academy was returned by the bank because of insufficient funds.
Required:
1. Prepare a bank reconciliation as of November 30, 20Y9.
| Collegiate Sports Co. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bank Reconciliation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
November 30,
20Y9
2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. For a compound entry, if an amount box does not require an entry, leave it blank.
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3. If a balance sheet were prepared for Collegiate
Sports Co. on November 30, 20Y9, what amount should be reported as
cash?
$____________________
In: Accounting
| Jan. | 10. | Purchased merchandise on account from Laine Co., $240,000, terms n/30. |
| Feb. | 9. | Issued a 30-day, 4% note for $240,000 to Laine Co., on account. |
| Mar. | 11. | Paid Laine Co. the amount owed on the note of February 9. |
| May | 1. | Borrowed $160,000 from Tabata Bank, issuing a 45-day, 5% note. |
| June | 1. | Purchased tools by issuing a $180,000, 60-day note to Gibala Co., which discounted the note at the rate of 5%. |
| 15. | Paid Tabata Bank the interest due on the note of May 1 and renewed the loan by issuing a new 45-day, 7% note for $160,000. (Journalize both the debit and credit to the notes payable account.) | |
| July | 30. | Paid Tabata Bank the amount due on the note of June 15. |
| 30. | Paid Gibala Co. the amount due on the note of June 1. | |
| Dec. | 1. | Purchased office equipment from Warick Co. for $400,000, paying $100,000 and issuing a series of ten 5% notes for $30,000 each, coming due at 30-day intervals. |
| 15. | Settled a product liability lawsuit with a customer for $260,000, payable in January. O’Donnel accrued the loss in a litigation claims payable account. | |
| 31. | Paid the amount due Warick Co. on the first note in the series issued on December 1. |
| Required: | |||||
| 1. | Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year. | ||||
| 2. | Journalize the adjusting entry for each of the following
accrued expenses at the end of the current year (refer to the Chart
of Accounts for exact wording of account titles):
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X
Chart of Accounts
| CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| O’Donnel Co. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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In: Accounting
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Solve the follwing problem. CHART OF ACCOUNTSBeartooth Co.General Ledger
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| Summit Company | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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The following selected transactions were completed during August between Summit Company and Beartooth Co.:
| Aug. | 1 | Summit Company sold merchandise on account to Beartooth Co., $48,000, terms FOB destination, 2/15, n/eom. The cost of the goods sold was $28,800. |
| 2 | Summit Company paid freight of $1,150 for delivery of merchandise sold to Beartooth Co. on August 1. | |
| 5 | Summit Company sold merchandise on account to Beartooth Co., $66,000, terms FOB shipping point, n/eom. The cost of the goods sold was $40,000. | |
| 9 | Beartooth Co. paid freight of $2,300 on August 5 purchase from Summit Company. | |
| 15 | Summit Company sold merchandise on account to Beartooth Co., $58,700, terms FOB shipping point, 1/10, n/30. Summit Company paid freight of $1,675, which was added to the invoice. The cost of the goods sold was $35,000. | |
| 16 | Beartooth Co. paid Summit Company for purchase of August 1. | |
| 25 | Beartooth Co. paid Summit Company on account for purchase of August 15. | |
| 31 | Beartooth Co. paid Summit Company on account for purchase of August 5. |
Journalize the August transactions for (1) Summit Company and (2) Beartooth Co. Refer to the Chart of Accounts of the appropriate company for exact wording of account titles.
In: Accounting
CHART OF ACCOUNTSBeartooth Co.General Ledger
| ASSETS | |
|---|---|
| 110 | Cash |
| 120 | Accounts Receivable |
| 125 | Notes Receivable |
| 130 | Inventory |
| 131 | Estimated Returns Inventory |
| 140 | Office Supplies |
| 141 | Store Supplies |
| 142 | Prepaid Insurance |
| 180 | Land |
| 192 | Store Equipment |
| 193 | Accumulated Depreciation-Store Equipment |
| 194 | Office Equipment |
| 195 | Accumulated Depreciation-Office Equipment |
| LIABILITIES | |
|---|---|
| 211 | Accounts Payable-Summit Company |
| 216 | Salaries Payable |
| 218 | Sales Tax Payable |
| 219 | Customer Refunds Payable |
| 221 | Notes Payable |
| EQUITY | |
|---|---|
| 310 | Common Stock |
| 311 | Retained Earnings |
| 312 | Dividends |
| 313 | Income Summary |
| REVENUE | |
|---|---|
| 410 | Sales |
| 610 | Interest Revenue |
| EXPENSES | |
|---|---|
| 510 | Cost of Goods Sold |
| 521 | Delivery Expense |
| 522 | Advertising Expense |
| 524 | Depreciation Expense-Store Equipment |
| 525 | Depreciation Expense-Office Equipment |
| 526 | Salaries Expense |
| 531 | Rent Expense |
| 533 | Insurance Expense |
| 534 | Store Supplies Expense |
| 535 | Office Supplies Expense |
| 536 | Credit Card Expense |
| 539 | Miscellaneous Expense |
| 710 | Interest Expense |
CHART OF ACCOUNTSSummit CompanyGeneral Ledger
| ASSETS | |
|---|---|
| 110 | Cash |
| 121 | Accounts Receivable-Beartooth Co. |
| 125 | Notes Receivable |
| 130 | Inventory |
| 131 | Estimated Returns Inventory |
| 140 | Office Supplies |
| 141 | Store Supplies |
| 142 | Prepaid Insurance |
| 180 | Land |
| 192 | Store Equipment |
| 193 | Accumulated Depreciation-Store Equipment |
| 194 | Office Equipment |
| 195 | Accumulated Depreciation-Office Equipment |
| LIABILITIES | |
|---|---|
| 210 | Accounts Payable |
| 216 | Salaries Payable |
| 218 | Sales Tax Payable |
| 219 | Customer Refunds Payable |
| 221 | Notes Payable |
| EQUITY | |
|---|---|
| 310 | Common Stock |
| 311 | Retained Earnings |
| 312 | Dividends |
| 313 | Income Summary |
| REVENUE | |
|---|---|
| 410 | Sales |
| 610 | Interest Revenue |
| EXPENSES | |
|---|---|
| 510 | Cost of Goods Sold |
| 521 | Delivery Expense |
| 522 | Advertising Expense |
| 524 | Depreciation Expense-Store Equipment |
| 525 | Depreciation Expense-Office Equipment |
| 526 | Salaries Expense |
| 531 | Rent Expense |
| 533 | Insurance Expense |
| 534 | Store Supplies Expense |
| 535 | Office Supplies Expense |
| 536 | Credit Card Expense |
| 539 | Miscellaneous Expense |
| 710 |
Interest Expense |
The following selected transactions were completed during August between Summit Company and Beartooth Co.:
| Aug. | 1 | Summit Company sold merchandise on account to Beartooth Co., $48,000, terms FOB destination, 2/15, n/eom. The cost of the goods sold was $28,800. |
| 2 | Summit Company paid freight of $1,150 for delivery of merchandise sold to Beartooth Co. on August 1. | |
| 5 | Summit Company sold merchandise on account to Beartooth Co., $66,000, terms FOB shipping point, n/eom. The cost of the goods sold was $40,000. | |
| 9 | Beartooth Co. paid freight of $2,300 on August 5 purchase from Summit Company. | |
| 15 | Summit Company sold merchandise on account to Beartooth Co., $58,700, terms FOB shipping point, 1/10, n/30. Summit Company paid freight of $1,675, which was added to the invoice. The cost of the goods sold was $35,000. | |
| 16 | Beartooth Co. paid Summit Company for purchase of August 1. | |
| 25 | Beartooth Co. paid Summit Company on account for purchase of August 15. | |
| 31 | Beartooth Co. paid Summit Company on account for purchase of August 5. |
Journalize the August transactions for (1) Summit Company and (2) Beartooth Co. Refer to the Chart of Accounts of the appropriate company for exact wording of account titles.
In: Accounting
ABC Co. and XYZ Co. are identical firms in all respects except for their capital structure. ABC is all equity financed with $750,000 in stock. XYZ uses both stock and perpetual debt; its stock is worth $375,000 and the interest rate on its debt is 10 percent. Both firms expect EBIT to be $73,000. Ignore taxes.
A) You own $56,250 worth of XYZ’s stock. What rate of return are you expecting?
B) Calculate the cash flows and rate of return by investing in ABC and using homemade leverage, how could you generate exactly the same returns?
C) What is the cost of equity for ABC? What is it for XYZ?
D) What is the WACC for ABC? For XYZ? What do you conclude?
In: Finance
Diamond Co. is offering agreements for both clients. The agreements can be easily met by Co. however the profits for both agreements are uncertain
Data as follows:
Customer X Y
Module Type C15 C16
Agreement Quantity 1,000 unit 2,000 units
Material cost/unit $15 $20
Agreement worth ($) $27,000 $100,000
Casting hours 50 300
Lot Size 100 units 50 units
Casting time/ Lot 5 hours 7.5 hours
Annual Budgeted overheads as follows:
Activity Cost Driver Cost driver volume/yr Cost pool
Production
Management Agreements 20 $125,000
Assessment Lot 150 $75,000
Casting Casting hours 2,000 $150,000
Required:
(a) Calculate the profit for each job using Absorption costing (Traditional Costing). Absorb overheads using Casting hours. (Marks 6)
(b) Calculate the activity based costs and profits for each contract. (Marks 8)
(c) After a through analysis in part (a) suggest what could be done to make contract profitable. (Marks 2)
In: Accounting
Use this information for Carmen Co. to answer the question that follow. Carmen Co. can further process Product J to produce Product D. Product J is currently selling for $21.85 per pound and costs $16.85 per pound to produce. Product D would sell for $41.40 per pound and would require an additional cost of $9.50 per pound to produce. What is the differential cost of producing Product D?
a.$7.60 per pound
b.$9.50 per pound
c.$5.70 per pound
d.$11.40 per pound
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Yasmin Co. can further process Product B to produce Product C. Product B is currently selling for $31 per pound and costs $27 per pound to produce. Product C would sell for $57 per pound and would require an additional cost of $24 per pound to produce. What is the differential cost of producing Product C?
a.$24 per pound
b.$27 per pound
c.$31 per pound
d.$57 per pound
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Sage Company is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $14.00 per unit. The unit cost for the business to make the part is $21.00, including fixed costs and $10.00, excluding fixed costs. If 34,785 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it?
a.$486,990 cost decrease
b.$139,140 cost decrease
c.$243,495 cost increase
d.$139,140 cost increase
In: Accounting
As we respire, we release CO 2. The CO 2 comes from ________.
a. drinking water
b. the air
c. the breakdown of sugar in our food
d. sunlight
Which function below is performed by eukaryotic cells but not prokaryotic cells?
a. internal digestion of cellular garbage by membrane-bound organelles called lysosomes
b. production of proteins coded by DNA
c. regulation of cell function by changes in the activity of genes
d. reproduction
A small group of 25 predatory birds populates an island. By chance, three members of the population have superior sight, which gives these birds a significant advantage in capturing prey. After hundreds of generations, the population on the island has risen to 1,500 and all of the birds have superior sight compared to the same species on other islands. This is an example of ________.
a. order
b. evolution
c. regulation
d. energy utilization
A scientist notices that a warning light has been triggered on a piece of equipment that he is using. This is a(n) ______.
a. question
b. observation
c. prediction
d. hypothesis
A single-celled eukaryotic organism that is neither a consumer nor a decomposer and does not have a cell wall would most likely by classified in __________.
a. the kingdom Animalia
b. the domain Archaea
c. one of the kingdoms of Protista
d. the kingdom Plantae
Local farmers think that a commonly used pesticide is responsible for the increase in appearance of frogs with an additional appendage. To test this hypothesis, frogs are injected with a small amount of pesticide. The frogs are allowed to produce offspring to test the effect of the pesticide. Which of the following would be the BEST controlled experiment?
a. One group is injected with pesticide, and one group has the pesticide rubbed on their skin.
b. One group is injected with pesticide, and one group is not injected with anything.
c. One group is injected with water, and one group is injected with pesticide.
Which sequence lists organisms in the order of producer, consumer, and decomposer?
a. bird, earthworm, algae
b. algae, earthworm, bird
c. earthworm, algae, bird
d. algae, bird, earthworm
Organism is to population as population is to ___________.
a. community
b. cell
c. biosphere
d. ecosystem
In: Biology
1. Selected financial information for Black Co. and for Blue Co. for 2017 and 2016 follow: Black Co. Blue Co. 2017 2016 2017 2016 Net Income $65,000 $60,000 $25,000 $28,000 Income tax expense 18,200 17,000 5,000 5,500 Net sales 2,500,000 2,300,000 650,000 680,000 Total assets 500,000 490,000 200,000 210,000 Current assets 99,000 130,000 120,000 110,000 Operating assets 470,000 450,000 190,000 190,000 Operating liabilities 175,000 150,000 50,000 56,000 Weighted average shares Outstanding 85,000 85,000 75,000 75,000 Current liabilities 75,000 100,000 100,000 100,000 Total liabilities 350,000 350,000 75,000 74,000 Stockholder’s equity 150,000 140,000 115,000 136,000 Interest expense 5,000 6,000 1,500 1,000 Income before tax 83,200 77,000 30,000 33,500 Cash flow from operations 75,000 110,000 110,000 120,000 Cash paid for investments 74,000 100,000 70,000 60,000 Compute the following for both companies for 2017: a. Return on net operating assets. The effective tax rate for both companies is 37%. b. Net operating profit margin and net operating asset turnover. c. Return on equity. d. Financial leverage (FLEV) and spread. e. Are both companies using leverage effectively? Explain your answer. f. Compute basic earnings per share for both companies. g. Interpret the ROA versus ROE and EPS for both companies. h. Compute the current ratios. i. Compute times interest earned ratios. j. Compute free cash flow to total debt for both companies. k. Which firm would you invest in? Why?
In: Finance
On January 1, Year 6, Magnus Co. leased a machine to Fisher Co. The machine was acquired by Magnus on January 1, Year 1, for $200,000. The useful life of the machine was 20 years with no salvage value, and it was depreciated by Magnus using the straight-line method. The lease term is 10 years, and the present value of the lease payments to be made over the lease term was $90,000. Annual equal lease payments of $14,647 are payable at the end of each year starting December 31, Year 6. The discount rate for the lease is 10%. Fisher depreciates all of its assets using the straight-line method. Assume that both the remaining economic life of the machine and the salvage value did not change as a result of the lease.
For each of the following independent situations, enter in the designated cells below the appropriate amounts for the carrying amount of the right-of-use asset that should be reported in Fisher’s December 31, Year 6, balance sheet. Enter all amounts as positive values. Round all amounts to the nearest whole number. If no entry is necessary, enter a zero (0) or leave the cell blank.
|
Situation |
Carrying amount |
| 1. The ownership of the machine will transfer to Fisher at the end of the lease term. | |
| 2. The lease was classified as an operating lease. | |
| 3. At the inception of the lease, the present value of the minimum lease payments was 95% of the fair value of the machine. | |
| 4. The lease contained a purchase option at the end of the lease term that Fisher is reasonably certain to exercise. The present value of the lease payments includes the exercise price of the option, and the discount rate of the lease is 12%. |
In: Accounting