Dave Merrill vacationed at Lake Tahoe last winter. Unfortunately, he broke his ankle while skiing and spent two days at the Sierra University Hospital. Merrill's insurance company received a $4,400
bill for his two-day stay.
One item that caught Merrill's attention was an $11.75 charge for a roll of cotton. Merrill
is a salesman for Johnson & Johnson and knows that the cost to the hospital of the roll of cotton is between $2.15 to $2.95. He asked for a breakdown of the $11.75 charge. The accounting office of the hospital sent him the followinginformation:
|
a. |
Invoiced cost of cotton roll |
$2.35 |
|
b. |
Cost of processing paperwork for purchase |
0.58 |
|
c. |
Supplies-room management fee |
0.75 |
|
d. |
Operating-room and patient-room handling costs |
1.59 |
|
e. |
Administrative hospital costs |
1.14 |
|
f. |
University teaching-related costs |
0.60 |
|
g. |
Malpractice insurance costs |
1.25 |
|
h. |
Cost of treating uninsured patients |
2.89 |
|
i. |
Profit component |
0.60 |
|
Total |
$11.75 |
Merrill believes the overhead charge is outrageous. He comments, "There was nothing I could do about it. When they come in and dab your stitches, it's not as if you can say, 'Keep your cotton roll. I brought my own.'"
|
1. |
Compute the overhead rate Sierra University Hospital charged on the cotton roll. Begin by determining the formula, then calculate the overhead rate. |
|
2. |
What criteria might Sierra use to justify allocation of the overhead items b-i in the preceding list? Examine each item separately and match it to the appropriate criteria. |
|
3. |
What should Merrill do about the $11.75 charge for the cotton roll? |
In: Accounting
Question provided us with Adjusted, Unadjusted and Post-closing trial balance sheets. With this information listed below please fill in:
The Mobility Solutions Company began operations on December 1, 2019. The unadjusted trial balance of the Mobility Solutions Company as of December 31, 2019 is found on the trial balance tab. The following information is required to prepare the necessary adjusting entries for the Mobility Solutions Company found in chapter 3.
1) The balance in Prepaid insurance represents a 24-month policy that went into effect on December 1, 2019. Review the unadjusted balance in Prepaid insurance, and prepare the necessary adjusting entry, if any.
2) Based on a physical count, supplies on hand total $4,650. Review the unadjusted balance in Supplies, and prepare the necessary adjusting entry, if any.
3) The equipment is expected to have a 4-year useful life, and be worth about $10,000 at the end of four years. Review the unadjusted balance in Accumulated depreciation, and prepare the necessary adjusting entry, if any.
4) On December 26, the client paid a $9,000 60-day fee in advance, covering December 27 to February 24. Review the unadjusted balance in Unearned Consulting Revenue, and prepare the necessary adjusting entry, if any.
5) Mobility Solutions's sole employee earns $160 per day for a five-day workweek beginning on Monday and ending on Friday. The employee was last paid on Friday, December 26. Review the unadjusted balance in Salaries payable, and prepare the necessary adjusting entry, if any.
6) In the second week of December, Mobility Solutions agreed to provide 30 days of consulting services to a local fitness club for a fixed fee of $3,900. The terms of the initial agreement call for Mobility Solutions to provide services from December 12, 2019, through January 10, 2020, or 30 days of service. The club agrees to pay Mobility Solutions $3,900 on January 10, 2020, when the service period is complete. Review the unadjusted balance in Consulting revenue, and prepare the necessary adjusting entry, if any.
Prepare the required adjusting and closing entries for the Mobility Solutions Company.
1 The balance in Prepaid insurance represents a 24-month policy that went into effect on December 1, 2019. Review the unadjusted balance in Prepaid insurance, and prepare the necessary adjusting entry, if any.
2Based on a physical count, supplies on hand total $4,650. Review the unadjusted balance in Supplies, and prepare the necessary adjusting entry, if any.
3The equipment is expected to have a 4-year useful life, and be worth about $10,000 at the end of four years. Review the unadjusted balance in Accumulated depreciation, and prepare the necessary adjusting entry, if any.
4On December 26, the client paid a $9,000 60-day fee in advance, covering December 27 to February 24. Review the unadjusted balance in Unearned Consulting Revenue, and prepare the necessary adjusting entry, if any.
5Mobility Solutions's sole employee earns $160 per day for a five-day workweek beginning on Monday and ending on Friday. The employee was last paid on Friday, December 26. Review the unadjusted balance in Salaries payable, and prepare the necessary adjusting entry, if any.
6In the second week of December, Mobility Solutions agreed to provide 30 days of consulting services to a local fitness club for a fixed fee of $3,900. The terms of the initial agreement call for Mobility Solutions to provide services from December 12, 2019, through January 10, 2020, or 30 days of service. The club agrees to pay Mobility Solutions $3,900 on January 10, 2020, when the service period is complete. Review the unadjusted balance in Consulting revenue, and prepare the necessary adjusting entry, if any.
7Prepare the journal entry necessary to close the revenue account(s).
8Prepare the journal entry necessary to close the expense account(s).
9Prepare the journal entry to close Income Summary.
10Prepare the journal entry to close R. Walsh, Withdrawals.
Unadjusted
| Mobility Solutions | ||
| Trial Balance | ||
| December 31, 2017 | ||
| Account Title | Debit | Credit |
|---|---|---|
| Cash | 23,505 | |
| Supplies | 6,200 | |
| Prepaid insurance | 2,400 | |
| Equipment | 34,000 | |
| Accounts payable | 8,200 | |
| Unearned consulting revenue | 9,000 | |
| R. Walsh, Capital | 46,000 | |
| R. Walsh, Withdrawals | 900 | |
| Consulting revenue | 8,500 | |
| Rental revenue | 450 | |
| Salaries expense | 2,720 | |
| Rent expense | 2,100 | |
| Utilities expense | 325 | |
| Total | 72,150 |
72,150 |
Post-closing
| Mobility Solutions | ||
| Trial Balance | ||
| December 31, 2019 | ||
| Account Title | Debit | Credit |
|---|---|---|
| Cash | 23,505 | |
| Accounts receivable | 2,600 | |
| Supplies | 4,650 | |
| Prepaid insurance | 2,400 | |
| Equipment | 34,000 | |
| Accumulated depreciation - Equipment | 500 | |
| Accounts payable | 8,200 | |
| Salaries payable | 480 | |
| Unearned consulting revenue | 8,250 | |
| R. Walsh, Capital | 46,000 | |
| R. Walsh, Withdrawals | 900 | |
| Consulting revenue | 3,650 | |
| Rental revenue | 450 | |
| Depreciation expense | 500 | |
| Salaries expense | 3,200 | |
| Rent expense | 2,100 | |
| Supplies expense | 1,550 | |
| Utilities expense | 325 | |
| Total | 75,730 | 67,530 |
In: Accounting
lIn Year 1, Jeff and Kim Jenson (married filing a joint return) have $200,000 of taxable income before considering the following transactions:
a. On March 2, Year 1, they sold a painting (art) for $100,000 that was purchased 15 years ago for $90,000.
b. A $12,000 loss on 11/1, Year 1 sale of bonds (acquired on 5/12, 5 years ago);
c. A $4,000 gain on 12/12, Year 1 sale of IBM stock (acquired on 2/5, Year 1);
d. A $17,000 gain on the 10/17, Year 1 sale of rental property. Of the $17,000 gain, $8,000 is reportable as gain subject to the 25% maximum rate and the remaining $9,000 is subject to the 15% maximum rate (the property was acquired on 8/2, 6 years ago. The acquiring date was after 1986);
e. A $12,000 loss on 12/20, Year 1 sale of bonds (acquired on 1/18, Year 1);
f. A $7,000 gain on 8/27, Year 1 sale of BH stock (acquired on 7/30, 10 years ago); and
g. A $11,000 loss on 6/14, Year 1 sale of QuikCo. Stock (acquired on 3/20, 5 years ago).
1) What is the amount and character of each transaction?
2) Complete the required netting procedures and calculate the Jenson's Year 1 taxable income after considering the above transactions.
3). What is Jenson’s Year 1 additional tax liability as a result of the above transactions?
In: Accounting
On 12/31/20 Josh leased computer equipment from Ryan with a 4 year lease. Lease Payments of $10,000 are due on 12/31 and start on 12/31/2020. Josh used 3% interest rate to account for the lease. The useful life of the equipment is 8 years. Assume the fair value is $45,000. Both companies have a 12/31 year end. THIS IN AN OPERATING LEASE.
1. Record the journal entries for Ryan for 2020 and 2021.
2. Show the lease on Ryan B/S AND I/S for 2021.
In: Accounting
Rose is a single mother (whose child lives with her all year round and is her dependent). She files her tax return as Head of Household. Her 2020 income from wages is $475,650. She has “net long-term capital gains” of $85,000. Total 2020 gross income is $560,650. Rose is under 65 years of age and does not itemize her deductions. What is Rose's total federal income tax? Show work.
A) $112,829
B) $123,344.
C) $138,644
D) $149,701
In: Accounting
Compute the amount that a $20,000 investment today would
accumulate to at the end of 10 years, 8% interest compounded quarterly.
$ __________
Part (b) Fran wants to retire at the end of this year (2020). Her
life expectancy is 35 years from her retirement. She has
come to you, her CPA, to learn how much she should deposit
on December 31, 2020 to be able to withdraw $100,000 at the
end of each year for the next 35 years, assuming the amount
on deposit will earn 8% interest annually.
$ __________
In: Accounting
Should US consumers increase spending by more than the
increase in personal income?
Instruction: You could use an example from your
life or another example to relate to this topic.
In: Economics
In: Economics
The jersey numbers of 11 players randomly selected from the football team. Find the range , variance and standard devation for the given sample data and what the result tell us? 29,51,46,90,32,1,16,44,99,10,49
In: Statistics and Probability
1. How does a tariff lead to production cost inefficiencies?
2. What would happen to the US standard of living if the United States withdrew completely from international trade?
In: Economics