he controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budgetinformation:

The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $10,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month.

Current assets as of September 1 include cash of $41,000, marketable securities of $59,000, and accounts receivable of $121,100 ($26,100 from July sales and $95,000 from August sales). Sales on account for July and August were $87,000 and $95,000, respectively. Current liabilities as of September 1 include $10,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $16,000 will be made in October. Bridgeport’s regular quarterly dividend of $10,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $40,000.

Required:

1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume 360 days per year for interest calculations.

The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information:

The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $8,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month.

Current assets as of September 1 include cash of $40,000, marketable securities of $57,000, and accounts receivable of $118,500 ($93,000 from July sales and $25,500 from August sales). Sales on account for July and August were $85,000 and $93,000, respectively. Current liabilities as of September 1 include $8,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $15,000 will be made in October. Bridgeport’s regular quarterly dividend of $8,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $39,000.

Required:

1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume 360 days per year for interest calculations.

Cash Budget

The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information:

The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $8,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month.

Current assets as of September 1 include cash of $47,000, marketable securities of $66,000, and accounts receivable of $137,400 ($108,000 from July sales and $29,400 from August sales). Sales on account for July and August were $98,000 and $108,000, respectively. Current liabilities as of September 1 include $8,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $18,000 will be made in October. Bridgeport’s regular quarterly dividend of $8,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $46,000.

Required:

1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume 360 days per year for interest calculations.

The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information:

The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $7,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month.

Current assets as of September 1 include cash of $38,000, marketable securities of $55,000, and accounts receivable of $112,300 ($24,300 from July sales and $88,000 from August sales). Sales on account for July and August were $81,000 and $88,000, respectively. Current liabilities as of September 1 include $7,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $15,000 will be made in October. Bridgeport’s regular quarterly dividend of $7,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $37,000.

Required:

1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume 360 days per year for interest calculations.

Heart of the City Electrical Supplies are merchandisers of household fixtures & fittings. The business began the last quarter of 2017 (October to December) with 25 Starburst Wall Clocks at a total cost of $153,000. The following transactions took place during the quarter. October 10 100 clocks were purchased on account at a cost of $6,225 each. In addition, Heart paid $120 cash on each clock to have the inventory shipped from the vendor’s warehouse to their warehouse October 31 During the month 90 clocks were sold at a price of $8,300 each. (20 of these clocks sold were on account to a long-standing customer of the business) November 1 A new batch of 60 clocks was purchased at a total cost of $406,500 November 10 5 of the clocks purchased on November 1 were returned to the supplier, as they were damaged November 30 The sales for November were 58 clocks which yielded total sales revenue of $428,000 December 2 Owing to increased demand, a further 110 clocks were purchased at a cost of $7,400 each and these were subject to a trade discount of 2% each. December 6 William Paul, a customer to whom 8 clocks were sold at the start of the first business day in November, returned 2 of the clocks, as they did not match his specifications. December 31 117 clocks were sold during December at a unit selling price of $9,220. December 31 An actual inventory count was carried out which revealed that there were 22 Starburst wall clocks in the store room. Unless otherwise stated, assume that all purchases are on account and all sales are for cash. Required: i) Prepare a perpetual inventory record for this merchandise, using the last in, first out (LIFO) method of inventory valuation, to determine the company’s cost of goods sold for the quarter and the value of ending inventory. ii) Given that selling & distribution and administrative costs for the quarter were $96,800 and $134,400 respectively, prepare an income statement for Heart of the City Electrical Supplies for the period ended December 31, 2017 iii) State the journal entries necessary to record the transactions on October 10 and October 31, assuming the company uses a: -Periodic inventory system -Perpetual inventory system

On October 1, 2018, Jay Crowley established Affordable Realty, which completed the following transactions during the month: Jay Crowley transferred cash from a personal bank account to an account to be used for the business in exchange for Common Stock, $27,000. Paid rent on office and equipment for the month, $4,870. Purchased supplies on account, $1,440. Paid creditor on account, $530. Earned sales commissions, receiving cash, $22,140. Paid automobile expenses (including rental charge) for month, $1,350, and miscellaneous expenses, $910. Paid office salaries, $2,830. Determined that the cost of supplies used was $800. Paid dividends, $1,310. Required: 1. Journalize entries for transactions (a) through (i) (in chronological order), using the following account titles: Cash, Supplies, Accounts Payable, Common Stock, Dividends, Sales Commissions, Rent Expense, Office Salaries Expense, Automobile Expense, Supplies Expense, Miscellaneous Expense. For a compound transaction, if an amount box does not require an entry, leave it blank. a. b. c. d. e. f. g. h. i. 2. Prepare T accounts, using the account titles in (1). Post the journal entries to these T accounts, selecting the appropriate letter to the left of each amount to identify the transactions. Determine the account balances of the T accounts (when required), after all posting is complete. Accounts containing a single entry only (such as Common Stock) do not need a balance. Cash Bal. Supplies Bal. Accounts Payable Bal. Common Stock Dividends Sales Commissions Rent Expense Office Salaries Expense Automobile Expense Supplies Expense Miscellaneous Expense 3. Prepare an unadjusted trial balance as of October 31, 2018. List all accounts in the order of Assets, Liabilities, Stockholders’ equity, Revenues, and Expenses. For those boxes in which no entry is required, leave the box blank. Affordable Realty Unadjusted Trial Balance October 31, 2018 Debit Balances Credit Balances 4. As a result of the January transactions (a-i), determine the following: a. Amount of total revenue recorded in the ledger. $ b. Amount of total expenses recorded in the ledger. $ c. Amount of net income for October. $ 5. Determine the increase or decrease in retained earnings for October. $

I. (a) On October 1, Sam wrote to Byron, “I offer to sell you my pickup truck for $10,000 all cash payable on November 15, and will have it ready for delivery to you on November 15. This offer expires on October 20. [signed] Sam.” Byron received the letter on October 2. On October 17, Byron sent the following letter to Sam: “I am very much interested in your offer, but I am a little short of cash. I accept your offer to buy your truck for $10,000, and I will pay $5,000 cash on November 15 and the balance of $5,000 on December 15.” Because of a delay in mail delivery, Sam did not receive Byron’s letter of October 17 until October 21. On November 15, Byron came to take delivery of the pickup truck and tendered $5,000 to Sam. Sam refused to let Byron have the pickup truck. Does Byron have the legal right to receive the pickup truck? If so, what should Byron do to receive it? Explain fully.

(b) Assume that the facts in part (a) are the same, except that there was no delay in mail delivery and Sam received Byron’s letter of October 17 on October 19. Now does Byron have the legal right to receive the pickup truck? Explain whether the different date on which Sam received the letter of October 17 changes the situation and, if so, why.

II. (a) Owen owned a wooden house and hired Camila, a carpenter, to do carpentry repair work on the house. The agreed price was $5,000, to be paid on completion of the work. After Camila finished the work and sent Owen her invoice, Owen discovered Camila had not replaced some rotten wooden siding on the house that had been there since before she started working on the house. An estimate from another contractor showed that replacing the rotten siding would cost an additional $1,250. Owen told Camila that she (Camila) was supposed to have replaced the rotten siding as part of her contract and refused to pay her the $5,000. Camila told Owen that her contract did not cover this work and demanded payment of the $5,000. Owen then sent a check for $4,000 to Camila with an letter that said, “I don’t like to get into this kind of a dispute. I am enclosing my check for $4,000 in full payment for your carpentry and painting.” Camila receives the letter and the check. What should Camila do if she wants to try to recover the $1,000 balance she believes that Owen still owes? Explain fully.

(b) In part (a), assume that there was no rotten siding and no dispute over the amount owed, but Owen did not pay. Two months after payment was due, Owen wrote to Camila, “I am facing some financial problems. I’ll pay you $4,000 if you will accept it in full payment.” Camila wrote back, “Since I have given up hope of getting the full amount out of you, I’ll take the $4,000 in full payment.” Owen paid the $4,000. Later, Camila sues Owen for the $1,000 balance. May she recover? Explain fully.

III. On March 1, Susan, a self-employed investment advisor and Certified Financial Planner, sent a signed written letter to Jill, “I have decided to buy a new and faster computer for my business. I offer to sell you my two-year-old Lenovo computer for $500. This offer is good for four months.” Jill received Susan’s letter on March 3. On June 10, Susan sent a second signed written letter to Jill: “I haven’t heard from you about buying my computer. I guess you are not interested, so I am withdrawing my offer of March 1.” Jill received Susan’s second letter on June 12. On June 15, Jill wrote to Susan, “I accept your offer of March 1.” Susan tells Jill that they do not have a contract and she refuses to give Jill the two-year-old computer when Jill tenders $500. Jill sues Susan for breach of contract. Judgment for whom (who wins the lawsuit)? Explain fully.

Gaelic Industries Inc. is an athletic footware company that began operations on January 1, 2016. The following transactions relate to debt investments acquired by Gaelic Industries Inc., which has a fiscal year ending on December 31:

Record these transactions on page 10

Record these transactions on page 11

Required:

Chart of Accounts

Journal

1. Journalize the entries to record the transactions. Be sure to enter the year as part of the date for the first entry on each page. Refer to the information given and the Chart of Accounts provided for the exact wording of the answer choices for text entries. In your computations, round per share amounts to two decimal places.

PAGE 10PAGE 11

JOURNAL

Final Question

2. If the bond portfolio is classified as available for sale, what impact would this have on financial statement disclosure?

If the bonds are classified as available-for-sale securities, then the portfolio of bonds would need to be to be . This would be accomplished by using a valuation allowance account and an unrealized gain (loss) account as part of . If the fair value were than the cost of the bond portfolio, the two accounts would be positive, and thus added to investments and stockholders’ equity, respectively. If the fair value were than the cost of the bond portfolio, the two accounts would be negative , and thus subtracted from investments and stockholders’ equity, respectively.

Soto Industries Inc. is an athletic footware company that began operations on January 1, Year 1. The following transactions relate to debt investments acquired by Soto Industries Inc., which has a fiscal year ending on December 31:

Record these transactions on page 10

Record these transactions on page 11

Required:

1a. Journalize the entries to record Year 1 transactions. Refer to the information given and the Chart of Accounts provided for the exact wording of the answer choices for text entries.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

1b. Journalize the entries to record Year 2 transactions. Refer to the information given and the Chart of Accounts provided for the exact wording of the answer choices for text entries.

PAGE 11

JOURNAL

ACCOUNTING EQUATION

2. If the bond portfolio is classified as available for sale, what impact would this have on financial statement disclosure?

If the bonds are classified as available-for-sale securities, then the portfolio of bonds would need to be __________. This would be accomplished by using a valuation allowance account and an unrealized gain (loss) account as part of ________________ . If the fair value were ____________ than the cost of the bond portfolio, the two accounts would be positive and, thus, added to investments and stockholders’ equity, respectively. If the fair value were ________________ than the cost of the bond portfolio, the two accounts would be negative and, thus, subtracted from investments and stockholders’ equity, respectively.

What are the principal issues in the debate about fiscal co-ordination in Europe?