Firm A uses a process-costing system. For September 2020, the company had the following activities:
| Beginning work-in-process inventory | 7,000 units |
| Units placed in production, current | 23,000 units |
| Good units completed | 25,000 units |
| Ending work-in-process inventory | 2,000 units |
| Direct material costs, beginning | $3,000 |
| Conversion costs, beginning | $2,000 |
| Direct material costs, current | $30,000 |
| Conversion costs, current | $10,000 |
Direct materials are placed into production at the beginning of the process. Beginning WIP is 100% complete as to direct materials and 30% complete as to conversion. All spoilage is detected at the end of the process. Normally, spoiled units are 10% of good units completed. Ending WIP is 60% completed as to conversion and 100% complete as to direct materials. The company decides to use the first-in, first-out (FIFO) method.
(26-1) Compute the physical units of normal spoilage and started and completed during current period. Then compute equivalent units for direct materials and conversion costs. (12 points)
(26-2) Summarize costs to account for and calculate cost per equivalent-unit for direct materials and conversion costs (Round cost per equivalent-unit calculations to the nearest hundredth). (4 points)
(26-3) Assign total costs (7 points)
(26-4) Calculate cost per good unit completed and normal spoilage rate. (4 points)
(26-5) Please briefly describe how does the job-costing system account for spoilage. (3 points)
(26-6) Please briefly explain why do we split completed units into completed units from beginning WIP and completed units from started and completed in current period under FIFO? (3 points)
In: Accounting
Scuttlebutt Publishers Corporation was incorporated on June 1, 2020. The company had the following transactions during June:
Part A
a. Issued common stock for $10,000 cash
b. Purchased equipment for $6,000 on credit
c. Purchased $750 of supplies on credit. These are expected to last three months (record as unused supplies)
d. Paid two months of newspaper advertising for $500 (record as prepaid advertising expense)
e. Collected $12,000 of three‐month subscription revenue for its ONLINE REVIEW magazine, effective June 1 (record as unearned subscription revenue)
f. Paid the following expenses in cash: telephone, $350; rent for
June, $500
g. Collected $5,000 revenue in cash from advertisers for the June edition of ONLINE REVIEW magazine
h. Paid half of the equipment purchased June 1
i. Paid $2,000 for supplies purchased
j. Paid the following expenses in cash: telephone, $250; salaries,
$3,000
k. Received a $200 bill for electricity used during the month
(recorded as Utilities Expense).
Required:
1. Create general ledger T‐accounts for the following: Cash, Prepaid Advertising, Unused Supplies, Equipment, Accounts Payable, Unearned Subscriptions Revenue, Common Stock, Other Revenue, Rent Expense, Salaries Expense, Supplies Expense, Telephone Expense, and Utilities Expense. General ledger account numbers are not needed. (These are created on the template already.)
2. Prepare journal entries to record the June transactions. Descriptions are not needed.
3. Post the entries to general ledger T‐accounts and calculate balances at June 30, 2020.
Part B
At June 30, the following additional information is available.
l. The June portion of advertising paid in transaction (c) has expired.
m. One month of the subscriptions revenue collected June 5 has been earned.
n. A physical count indicates that $100 of supplies is still on hand.
o. $200 of commission expense is owed on the June portion of the subscriptions revenue.
p. Two days of salary for June 29 and 30 are unpaid, amounting to $600.
q. The equipment purchased in transaction (b) has an estimated useful life of 5 years.
r. Income taxes payable at June 30 amount to $50.
Required:
4. Open additional general ledger T‐accounts for the following: Accumulated
Depreciation – Equipment, Salaries Payable, Income Taxes Payable,
Subscription Revenue, Advertising Expense, Commissions Expense,
Depreciation Expense – Equipment, and Income Taxes Expense. (These are already setup on the template.)
5. Prepare all necessary adjusting entries at June 30, 2020. General ledger account numbers and descriptions are not necessary, but show depreciation calculations.
6. Post the entries to the general ledger T‐accounts and calculate balances.
7. Prepare an adjusted trial balance at June 30.
8. Assume that the company’s year‐end is June 30. Prepare an income statement, statement of changes in equity, and balance sheet.
9. Prepare closing entries.
10. Prepare a post-closing trial balance.
In: Accounting
Marin Leasing Company signs a lease agreement on January 1, 2020, to lease electronic equipment to Cullumber Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement:
| 1. | Cullumber has the option to purchase the equipment for $21,500 upon termination of the lease. It is not reasonably certain that Cullumber will exercise this option. | |
| 2. | The equipment has a cost of $230,000 and fair value of $277,500 to Marin Leasing. The useful economic life is 2 years, with a residual value of $21,500. | |
| 3. | Marin Leasing desires to earn a return of 5% on its investment. | |
| 4. | Collectibility of the payments by Marin Leasing is probable. |
Click here to view factor tables.
Part 1
Prepare the journal entries on the books of Marin Leasing to reflect the payments received under the lease and to recognize income for the years 2020 and 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places e.g. 5,275.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|
|---|---|---|---|---|
|
enter an account title for the journal entry on January 1 2020 |
enter a debit amount |
enter a credit amount |
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enter an account title for the journal entry on January 1 2020 |
enter a debit amount |
enter a credit amount |
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enter an account title for the journal entry on January 1 2020 |
enter a debit amount |
enter a credit amount |
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enter an account title for the journal entry on January 1 2020 |
enter a debit amount |
enter a credit amount |
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1/1/2012/31/2012/31/21 1/1/2012/31/2012/31/21 |
enter an account title |
enter a debit amount |
enter a credit amount |
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enter an account title |
enter a debit amount |
enter a credit amount |
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enter an account title |
enter a debit amount |
enter a credit amount |
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1/1/2012/31/2012/31/21 1/1/2012/31/2012/31/21 |
enter an account title |
enter a debit amount |
enter a credit amount |
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enter an account title |
enter a debit amount |
enter a credit amount |
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enter an account title |
enter a debit amount |
enter a credit amount |
eTextbook and Media
List of Accounts
Part 2
Assuming that Cullumber exercises its option to purchase the equipment on December 31, 2021, prepare the journal entry to record the sale on Marin Leasing’s books. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
12/31/21 |
enter an account title for the journal entry on December 31 2021 |
enter a debit amount |
enter a credit amount |
|
enter an account title for the journal entry on December 31 2021 |
enter a debit amount |
enter a credit amount |
In: Accounting
On January 1, 2020, Ayayai Company purchased 8% bonds having a maturity value of $360,000, for $390,329.57. The bonds provide the bondholders with a 6% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Ayayai Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.
Prepare the journal entry at the date of the bond purchase. (Enter answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Jan. 1, 2020 |
enter an account title to record the transaction on January 1, 2020 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on January 1, 2020 |
enter a debit amount |
enter a credit amount |
eTextbook and Media
List of Accounts
Prepare a bond amortization schedule. (Round answers to 2 decimal places, e.g. 2,525.25.)
|
Schedule of Interest Revenue and Bond Premium
Amortization |
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|---|---|---|---|---|---|---|---|---|---|
|
|
Cash |
Interest |
Premium |
Carrying Amount |
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1/1/20 |
$enter a dollar amount rounded to 2 decimal places |
$enter a dollar amount rounded to 2 decimal places |
$enter a dollar amount rounded to 2 decimal places |
$enter a dollar amount rounded to 2 decimal places |
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1/1/21 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
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1/1/22 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
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1/1/23 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
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1/1/24 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
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1/1/25 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
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eTextbook and Media
List of Accounts
Prepare the journal entry to record the interest revenue and the amortization at December 31, 2020. (Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31, 2020 |
enter an account title to record the transaction on December 31, 2020 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on December 31, 2020 |
enter a debit amount |
enter a credit amount |
|
|
enter an account title to record the transaction on December 31, 2020 |
enter a debit amount |
enter a credit amount |
eTextbook and Media
List of Accounts
Prepare the journal entry to record the interest revenue and the
amortization at December 31, 2021. (Round answers to 2
decimal places, e.g. 2,525.25. Credit account titles are
automatically indented when amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the
account titles and enter 0 for the amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31, 2021 |
enter an account title to record the transaction on December 31, 2021 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on December 31, 2021 |
enter a debit amount |
enter a credit amount |
|
|
enter an account title to record the transaction on December 31, 2021 |
enter a debit amount |
enter a credit amount |
eTextbook and Media
In: Accounting
Presented below are selected transactions at Blue Spruce Company
for 2020.
| Jan. | 1 | Retired a piece of machinery that was purchased on January 1, 2010. The machine cost $62,400 on that date. It had a useful life of 10 years with no salvage value. | |
| June | 30 | Sold a computer that was purchased on January 1, 2017. The computer cost $42,900. It had a useful life of 5 years with no salvage value. The computer was sold for $15,100. | |
| Dec. | 31 | Discarded a delivery truck that was purchased on January 1, 2016. The truck cost $35,340. It was depreciated based on a 6-year useful life with a $3,000 salvage value. |
Journalize all entries required on the above dates, including
entries to update depreciation, where applicable, on assets
disposed of. Blue Spruce Company uses straight-line depreciation.
(Assume depreciation is up to date as of December 31, 2019.)
(Credit account titles are automatically indented when
amount is entered. Do not indent manually. Record journal entries
in the order presented in the problem. If no entry is required,
select "No Entry" for the account titles and enter 0 for the
amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|
|
Jan. 1June 30Dec. 31 |
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Jan. 1June 30Dec. 31 |
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(To record depreciation to date of disposal) |
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(To record sale of computer) |
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Jan. 1June 30Dec. 31 |
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(To record depreciation to date of disposal) |
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Dec. 31 |
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(To record retirement of truck) |
In: Accounting
On January 1, 2020, Archer Company issued ten-year bonds with a face value of $10,000,000 and a stated interest rate of 4%, payable semiannually on June 30 and December 31. The bonds were sold to yield 3%.
Instructions
1-Calculate the issue price of the bonds.
2-Record the bond issuance
3-Record the first interest payment and use the straight line method to amortize the discount or premium.
In: Accounting
Pearl Inc., a greeting card company, had the following
statements prepared as of December 31, 2020.
|
PEARL INC. |
||||||
|---|---|---|---|---|---|---|
|
12/31/20 |
12/31/19 |
|||||
|
Cash |
$6,100 |
$7,100 |
||||
|
Accounts receivable |
62,400 |
51,000 |
||||
|
Short-term debt investments (available-for-sale) |
34,700 |
18,100 |
||||
|
Inventory |
40,400 |
60,300 |
||||
|
Prepaid rent |
4,900 |
4,000 |
||||
|
Equipment |
154,100 |
130,600 |
||||
|
Accumulated depreciation—equipment |
(34,900 |
) |
(24,800 |
) |
||
|
Copyrights |
46,400 |
49,800 |
||||
|
Total assets |
$314,100 |
$296,100 |
||||
|
Accounts payable |
$46,500 |
$40,200 |
||||
|
Income taxes payable |
4,000 |
6,000 |
||||
|
Salaries and wages payable |
8,100 |
4,100 |
||||
|
Short-term loans payable |
7,900 |
10,100 |
||||
|
Long-term loans payable |
59,600 |
68,400 |
||||
|
Common stock, $10 par |
100,000 |
100,000 |
||||
|
Contributed capital, common stock |
30,000 |
30,000 |
||||
|
Retained earnings |
58,000 |
37,300 |
||||
|
Total liabilities & stockholders’ equity |
$314,100 |
$296,100 |
||||
|
PEARL INC. |
||||
|---|---|---|---|---|
|
Sales revenue |
$339,800 |
|||
|
Cost of goods sold |
176,500 |
|||
|
Gross profit |
163,300 |
|||
|
Operating expenses |
120,500 |
|||
|
Operating income |
42,800 |
|||
|
Interest expense |
$11,300 |
|||
|
Gain on sale of equipment |
2,000 |
9,300 |
||
|
Income before tax |
33,500 |
|||
|
Income tax expense |
6,700 |
|||
|
Net income |
$26,800 |
|||
Additional information:
| 1. | Dividends in the amount of $6,100 were declared and paid during 2020. | |
| 2. | Depreciation expense and amortization expense are included in operating expenses. | |
| 3. | No unrealized gains or losses have occurred on the investments during the year. | |
| 4. | Equipment that had a cost of $20,100 and was 70% depreciated was sold during 2020. |
Prepare a statement of cash flows using the indirect method.
(Show amounts that decrease cash flow with either a -
sign e.g. -15,000 or in parenthesis e.g.
(15,000).)
In: Accounting
Presented below is information related to equipment owned by
Novak Company at December 31, 2020.
| Cost | $11,250,000 | |
| Accumulated depreciation to date | 1,250,000 | |
| Expected future net cash flows | 8,750,000 | |
| Fair value | 6,000,000 |
Novak intends to dispose of the equipment in the coming year. It is
expected that the cost of disposal will be $25,000. As of December
31, 2020, the equipment has a remaining useful life of 4 years.
Prepare the journal entry (if any) to record the impairment of
the asset at December 31, 2020. (If no entry is
required, select "No entry" for the account titles and enter 0 for
the amounts. Credit account titles are automatically indented when
amount is entered. Do not indent manually.)
| Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31 |
enter an account title to record the transaction on December 31, 2017 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on December 31, 2017 |
enter a debit amount |
enter a credit amount |
Prepare the journal entry (if any) to record depreciation
expense for 2021. (If no entry is required, select "No
entry" for the account titles and enter 0 for the amounts. Credit
account titles are automatically indented when amount is entered.
Do not indent manually.)
|
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|
|
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
The asset was not sold by December 31, 2021. The fair value of
the equipment on that date is $6,625,000. Prepare the journal entry
(if any) necessary to record this increase in fair value. It is
expected that the cost of disposal is still $25,000.
(If no entry is required, select "No entry" for the
account titles and enter 0 for the amounts. Credit account titles
are automatically indented when amount is entered. Do not indent
manually.)
| Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31 |
enter an account title to record the transaction on December 31, 2018 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on December 31, 2018 |
enter a debit amount |
enter a credit amount |
In: Accounting
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(a) State the total monthly budgeted cost
formula. (Round cost per unit to 2 decimal places, e.g.
1.25.) In September, 65,000 units were produced. Prepare the budget report using flexible budget data, assuming (1) each variable cost was 10% higher than its actual cost in August, and (2) fixed costs were the same in September as in August. (List variable costs before fixed costs.) |
In: Accounting
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In: Accounting