The Moto Hotel opened for business on May 1, 2017. Here is its trial balance before adjustment on May 31.

Other data:

(a) Prepare a ledger using T-accounts. Enter the trial balance amounts and post the

adjusting entries.

(b) Prepare an adjusted trial balance on May 31.

(c) Prepare an income statement and a retained earnings statement for the month of May

and a classified balance sheet at May 31.

(d) Identify which accounts should be closed on May 31.

An electronics distributor sells a technology product with a very short lifecycle. The distributor orders the product from the manufacturer before observing demand and, due to the length of the supply chain, is unable to order more within the product life cycle. The manufacturer builds the product to order at a cost of $50 per unit and sells it to the distributor for $95 per unit. The distributor sells the product to its customers for $180 per unit. Demand for the product during its life cycle is expected to be normally distributed with a mean of 8,000 units and a standard deviation of 3,500. Any units left over at the end of life cannot be sold. In fact, due to hazardous materials used in the product, a fee of $5 per unit must be paid to properly dispose of any leftover units.

a. Using the single period (aka news vendor) model, what order quantity would maximize expected profit for the distributor? (Hint: think about what the price and cost would be from the distributor’s perspective.)

b. What order quantity would maximize expected profit for the supply chain (manufacturer plus distributor, i.e., the “globally optimal” order quantity)? (Hint: think about what the price and cost are for the overall supply chain.)

c. Suppose the manufacturer offers to reduce the price it charges the distributor to $55 in return for 15% of the distributor’s revenue from sales of the product. Explain why this type of revenue sharing contract is beneficial for the supply chain

Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company’s costs: Fixed Cost per Month Cost per Car Washed Cleaning supplies $ 0.40 Electricity $ 1,300 $ 0.07 Maintenance $ 0.15 Wages and salaries $ 4,300 $ 0.20 Depreciation $ 8,100 Rent $ 1,800 Administrative expenses $ 1,600 $ 0.03 For example, electricity costs are $1,300 per month plus $0.07 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.20 per car washed. The actual operating results for August appear below.

he actual operating results for August appear below.

Required:

Prepare a flexible budget performance report that shows the company’s revenue and spending variances and activity variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

An electronics distributor sells a technology product with a very short lifecycle. The distributor orders the product from the manufacturer before observing demand and, due to the length of the supply chain, is unable to order more within the product life cycle. The manufacturer builds the product to order at a cost of $50 per unit and sells it to the distributor for $95 per unit. The distributor sells the product to its customers for $180 per unit. Demand for the product during its life cycle is expected to be normally distributed with a mean of 8,000 units and a standard deviation of 3,500. Any units left over at the end of life cannot be sold. In fact, due to hazardous materials used in the product, a fee of $5 per unit must be paid to properly dispose of any leftover units.

a. Using the single period (aka news vendor) model, what order quantity would maximize expected profit for the distributor? (Hint: think about what the price and cost would be from the distributor’s perspective.)

b. What order quantity would maximize expected profit for the supply chain (manufacturer plus distributor, i.e., the “globally optimal” order quantity)? (Hint: think about what the price and cost are for the overall supply chain.)

c. Suppose the manufacturer offers to reduce the price it charges the distributor to $55 in return for 15% of the distributor’s revenue from sales of the product. Explain why this type of revenue sharing contract is beneficial for the supply chain

Milano Pizza is a small neighborhood pizzeria that has a small area for in-store dining as well as offering take-out and free home delivery services. The pizzeria’s owner has determined that the shop has two major cost drivers—the number of pizzas sold and the number of deliveries made. The pizzeria’s cost formulas appear below: Fixed Cost per Month Cost per Pizza Cost per Delivery Pizza ingredients $ 4.60 Kitchen staff $ 6,170 Utilities $ 740 $ 0.60 Delivery person $ 3.40 Delivery vehicle $ 760 $ 1.60 Equipment depreciation $ 504 Rent $ 2,130 Miscellaneous $ 860 $ 0.20 In November, the pizzeria budgeted for 1,950 pizzas at an average selling price of $20 per pizza and for 190 deliveries. Data concerning the pizzeria’s actual results in November appear below: Actual Results Pizzas 2,050 Deliveries 170 Revenue $ 41,680 Pizza ingredients $ 9,550 Kitchen staff $ 6,110 Utilities $ 950 Delivery person $ 578 Delivery vehicle $ 1,012 Equipment depreciation $ 504 Rent $ 2,130 Miscellaneous $ 868 Required: 1. Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for the pizzeria for November. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers it uses in its budgeting and performance reports—the number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 64 students enrolled in those two courses. Data concerning the company’s cost formulas appear below:

For example, administrative expenses should be $3,900 per month plus $42 per course plus $5 per student. The company’s sales should average $870 per student.

The company planned to run four courses with a total of 64 students; however, it actually ran four courses with a total of only 60 students. The actual operating results for September appear below:

Required:

1. Prepare the company’s planning budget for September.

2. Prepare the company’s flexible budget for September.

3. Calculate the revenue and spending variances for September.

Problem 4-34 Multiple Products, Break-Even Analysis, Operating Leverage Carlyle Lighting Products produces two different types of lamps: a floor lamp and a desk lamp. Floor lamps sell for $30, and desk lamps sell for $20. The projected income statement for the coming year follows: Check figures: 2. $277,778 4. Break-even revenue = $294,118 OBJECTIVE 0 0 Sales Less: Variable costs Contribution margin Less: Fixed costs Operatingincome $600 ,000 400,000 200,000 150,000 $ 50,000 The owner of Carlyle estimates that 60 percent of the sales revenues will be produced by floor lamps and the remaining 40 percent by desk lamps. Floor lamps are also responsible for 60 per- cent of the variable expenses. Of the fixed expenses, one-third are common to both products, and one-half are directly traceable to the floor lamp product line. Required: I. Compute the sales revenue that must be earned for Carlyle to break even. 2. Compute the number of floor lamps and desk lamps that must be sold for Carlyle to break even . 3. Compute the degree of operating leverage for Carlyle Lighting Products. Now assume that the actual revenues will be 40 percent higher than the projected revenues. By what percentage will profits increase with this change in sales volume? 4. CONCEPTUAL CONNECTION What is the theory behind the operating leverage concept?

skip 5 last one unadjusted trial balance do rest thanks

All Journals and General Ledger; Trial Balance

The transactions completed by AM Express Company during March, the first month of the fiscal year, were as follows:

Required:

1. The following accounts are setup in the general ledger as of March 1. Using the information below, enter the balances for each account.

2. Journalize the transactions for March using the required journal(s). Assume that the daily postings to the individual accounts in the accounts payable subsidiary ledger and the accounts receivable subsidiary ledger have been made.

2a. Journalize the transactions for March using the purchases journal (with columns for Accounts Payable, Maintenance Supplies, Office Supplies, and Other Accounts). Assume that the daily postings to the individual accounts in the accounts payable subsidiary ledger and the accounts receivable subsidiary ledger have been made.

If no entry is required, type "No entry required" and leave the amount boxes blank.

If an amount box does not require an entry, leave it blank.

2b. Journalize the transactions for March using the cash receipts journal. Assume that the daily postings to the individual accounts in the accounts payable subsidiary ledger and the accounts receivable subsidiary ledger have been made.

If an amount box does not require an entry, leave it blank.

2c. Journalize the transactions for March using the single-column revenue journal. Assume that the daily postings to the individual accounts in the accounts payable subsidiary ledger and the accounts receivable subsidiary ledger have been made.

2d. Journalize the transactions for March using the cash payments journal. Assume that the daily postings to the individual accounts in the accounts payable subsidiary ledger and the accounts receivable subsidiary ledger have been made.

If an amount box does not require an entry, leave it blank.

2e. Journalize the transactions for March using the two-column general journal. Assume that the daily postings to the individual accounts in the accounts payable subsidiary ledger and the accounts receivable subsidiary ledger have been made.

If an amount box does not require an entry, leave it blank.

3. Post the appropriate individual entries to the general ledger.

4. Total each of the columns of the special journals, and post the appropriate totals to the general ledger; insert the account balances.

If an amount box does not require an entry, leave it blank.

5. Prepare a trial balance.

If an amount box does not require an entry, leave it blank.

Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a sales commission of 17% for all items sold. Barbara Cheney, Pittman’s controller, has just prepared the company’s budgeted income statement for next year.

Pittman Company

Budgeted Income Statement

For the Year Ended December 31

Sales                                                             $                                         16,600,000

Manufacturing expenses:                                                    

Variable              $                                         7,300,000                       

Fixed overhead                                           2,420,000                        9,720,000

Gross margin                                                                                         6,880,000

Selling and administrative expenses:                                               

Commissions to agents                            2,822,000                       

Fixed marketing expenses                        140,000*                        

Fixed administrative expenses                1,900,000                        4,862,000

Net operating income                                                                          2,018,000

Fixed interest expenses                                                                       560,000

Income before income taxes                                                              1,458,000

Income taxes (40%)                                                                              583,200

Net income                                                                              $            874,800

Primarily depreciation on storage facilities. As Barbara handed the statement to Karl Vecci, Pittman’s president, she commented, “I went ahead and used the agents’ 17% commission rate in completing these statements, but we’ve just learned that they refuse to handle our products next year unless we increase the commission rate to 22%.” “That’s the last straw,” Karl replied angrily. “Those agents have been demanding more and more, and this time they’ve gone too far. How can they possibly defend a 22% commission rate?” “They claim that after paying for advertising, travel, and the other costs of promotion, there’s nothing left over for profit,” replied Barbara. “I say it’s just plain robbery,” retorted Karl. “And I also say it’s time we dumped those guys and got our own sales force. Can you get your people to work up some cost figures for us to look at?” “We’ve already worked them up,” said Barbara. “Several companies we know about pay a 7.7% commission to their own salespeople, along with a small salary. Of course, we would have to handle all promotion costs, too. We figure our fixed expenses would increase by $2,822,000 per year, but that would be more than offset by the $3,652,000 (22% × $16,600,000) that we would avoid on agents’ commissions.”

The breakdown of the $2,822,000 cost follows: Salaries: Sales manager $ 120,000 Salespersons 700,000 Travel and entertainment 480,000 Advertising 1,522,000 Total $ 2,822,000

“Super,” replied Karl. “And I noticed that the $2,822,000 is just what we’re paying the agents under the old 17% commission rate.” “It’s even better than that,” explained Barbara. “We can actually save $85,000 a year because that’s what we’re having to pay the auditing firm now to check out the agents’ reports. So our overall administrative expenses would be less.” “Pull all of these numbers together and we’ll show them to the executive committee tomorrow,” said Karl. “With the approval of the committee, we can move on the matter immediately.”

Required: 1. Compute Pittman Company’s break-even point in dollar sales for next year assuming: (Enter your answer in whole dollars and not in thousands. Round CM ratio to 3 decimal places and final answers to the nearest dollar amount.)

a. The agents’ commission rate remains unchanged at 17%.

b. The agents’ commission rate is increased to 22%.

c. The company employs its own sales force.

2. Assume that Pittman Company decides to continue selling through agents and pays the 22% commission rate. Determine the volume of sales that would be required to generate the same net income as contained in the budgeted income statement for next year. (Enter your answer in whole dollars and not in thousands. Round CM ratio to 3 decimal places.)

3. Determine the volume of sales at which net income would be equal regardless of whether Pittman Company sells through agents (at a 22% commission rate) or employs its own sales force. (Enter your answer in whole dollars and not in thousands. Round CM ratio to 3 decimal places.) 4. Compute the degree of operating leverage that the company would expect to have on December 31 at the end of next year assuming:

a. The agents’ commission rate remains unchanged at 17%. (Round your answer to 2 decimal places.)

b. The agents’ commission rate is increased to 22%. (Round your answer to 2 decimal places.)

c. The company employs its own sales force