Questions 4 through 10 that follow are based on the following December 31, 20X6 year-end account balances for XYZ Co. after adjusting entries had been prepared but before the books were closed for the year.     Using the attached information, prepare the adjusted trial balance on December 31, 20X6, prepare the income statement for the year ended December 31, 20X6, Prepare the statement of retained earnings for the year ended December 31, 20X6, Prepare the statement of financial position as of December 31, 20X6, Determine the working capital on December 31, 20X6,Determine the current ratio on December 31, 20X6,Determine the acid-test (quick) ratio on December 31, 20X6.

                Cash……………..…………………………….250,000

                Accounts receivable…………………….……..680,000

                Marketable securities…………………………...60,000

                Prepaid insurance……………………………….35,000

                Prepaid rent….………………………………….30,000

                Office equipment…………………………….....620,000

                Accumulated depreciation: equipment………...200,000

                Land……………………………………………750,000

                Accounts payable………………………………306,000

                Dividends payable……………………………… 50,000

                Interest payable…………………………………... 8,750

                Income tax payable……………………………...30,000

                Unearned client service revenue………………..180,000

                Notes payable (long-term).……………………..350,000

                Common stock………………………………….750,000

                Retained earnings….…………………………....315,200

                Dividends…………………………………….......75,000

                Client service revenue………………………...1,200,000

                Travel expense………………………………..…..28,000

                Office supplies expense…………………………..20,000

                Advertising expense………………………………45,000

                Salary expense…………………………………...400,000

                Utility expense………………………………….....40,000

                Depreciation expense: equipment…………………25,000

                Interest expense……………………………….…...17,500

                Insurance expense……………………………….....52,000

                Rent expense……………………………………..175,000

                Income tax expense………………………………..87,450

Berne Company (lessor) enters into a lease with Fox Company to lease equipment to Fox beginning January 1, 2016. The lease terms, provisions, and related events are as follows:

1. The lease term is 4 years. The lease is noncancelable and requires annual rental payments of $50,000 to be made at the end of each year.

2. The equipment costs $130,000. The equipment has an estimated life of 4 years and an estimated residual value at the end of the lease term of zero.

3. Fox agrees to pay all executory costs.

4. The interest rate implicit in the lease is 12%.

5. The initial direct costs are insignificant and assumed to be zero.

6. The collectibility of the rentals is reasonably assured, and there are no important uncertainties surrounding the amount of unreimbursable costs yet to be incurred by the lessor. Required: 1. Next Level Determine if the lease is a sales-type or direct financing lease from Berne’s point of view (calculate the selling price and assume that this is also the fair value). 2. Prepare a table summarizing the lease receipts and interest revenue earned by the lessor. 3. Prepare journal entries for Berne, the lessor, for the years 2016 and 2017.

Required:

On June 30, 2019, a fire completely destroyed the entire UFV facilities inventory warehouse. Luckily, the accountant had just taken the accounting records home so no accounting records were lost in the fire.   UFV wants to file an insurance claim as soon as possible for their lost inventory.

The accountant provides you with the following information:

             Purchases through June 30, 2019                             $870,500

             Net sales revenue through June 30, 2019               $1,361,700

You also determine that the opening inventory for the period was $625,000 and you calculate that the gross margin % for UFV has historically been 54% of net sales revenue.

1) Estimate the value of inventory destroyed using the gross margin method.

QUESTION 4                                                                                                                                    

The following transactions affecting RRD’s petty cash fund.

RRD Products established the fund on April 2 with an initial deposit of $400. Cash for the deposit came from the owner.

April    7   Reimbursed $180 to the owner for postage expenses.

          12   Paid $175 for freight charges related to purchase of inventory from ABC Co. in Calgary.

         17   The owner withdrew $15 and used the cash for personal expenses.

         30   The petty cash custodian noted that there was $24 in cash left in the fund at month end.

          30   Finance Administrator went to the bank and received $450 to be used for petty cash

1) Prepare the journal entry on April 30 for all transactions. No accounting has been done to date on any of the above transactions, to this petty cash fund.

On January 1, 2018, the following information was drawn from the accounting records of Carter Company: cash of $400; land of $2,400; notes payable of $700; and common stock of $1,540.

Required

1. a. Determine the amount of retained earnings as of January 1, 2018.

2. b. After looking at the amount of retained earnings, the chief executive officer (CEO) wants to pay a $500 cash dividend to the stockholders. Can the company pay this dividend?

3. c. As of January 1, 2018, what percentage of the assets were acquired from creditors?

4. d. As of January 1, 2018, what percentage of the assets were acquired from investors?

5. e. As of January 1, 2018, what percentage of the assets were acquired from retained earnings?

6. f. Create an accounting equation using percentages instead of dollar amounts on the right side of the equation.

7. g. During 2018, Carter Company earned cash revenue of $660, paid cash expenses of $380, and paid a cash dividend of $58. (Hint: It is helpful to record these events under an accounting equation before preparing the statements.)

8. g-1. Prepare an income statement dated December 31, 2018.

9. g-2. Prepare a statement of changes in stockholders’ equity dated December 31, 2018.

10. g-3. Prepare a balance sheet dated December 31, 2018.

11. g-4. Prepare a statement of cash flows dated December 31, 2018.

12. j. What is the balance in the Revenue account on January 1, 2019?

Problem 4-2

Presented below is the trial balance of Windsor Corporation at December 31, 2017.

A physical count of inventory on December 31 resulted in an inventory amount of $67,720; thus, cost of goods sold for 2017 is $648,720.

a) Prepare a single-step income statement. 30,372 shares of common stock were outstanding the entire year. (Round earnings per share to 2 decimal places, e.g. 1.48.)

b)Prepare a retained earnings statement. Assume that the only changes in retained earnings during the current year were from net income and dividends. (List items that increase retained earnings first.)

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 63 students enrolled in those two courses. Data concerning the company’s cost formulas appear below: Fixed Cost per Month Cost per Course Cost per Student Instructor wages $ 2,940 Classroom supplies $ 270 Utilities $ 1,220 $ 55 Campus rent $ 4,800 Insurance $ 2,000 Administrative expenses $ 3,600 $ 42 $ 5 For example, administrative expenses should be $3,600 per month plus $42 per course plus $5 per student. The company’s sales should average $850 per student. The company planned to run four courses with a total of 63 students; however, it actually ran four courses with a total of only 57 students. The actual operating results for September appear below: Actual Revenue $ 50,650 Instructor wages $ 11,040 Classroom supplies $ 16,860 Utilities $ 1,850 Campus rent $ 4,800 Insurance $ 2,140 Administrative expenses $ 3,509 Required: Prepare a flexible budget performance report that shows both revenue and spending variances and activity variances for September. (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 following is the ending balances of accounts at December 31, 2021, for the Weismuller Publishing Company.

Additional information:

1. Prepaid expenses include $122,000 paid on December 31, 2021, for a two-year lease on the building that houses both the administrative offices and the manufacturing facility.
2. Investments include $31,000 in Treasury bills purchased on November 30, 2021. The bills mature on January 30, 2022. The remaining $111,000 is an investment in equity securities that the company intends to sell in the next year.
3. Deferred revenue represents customer prepayments for magazine subscriptions. Subscriptions are for periods of one year or less.
4. The notes payable account consists of the following:

1. a $41,000 note due in six months.
2. a $101,000 note due in six years.
3. a $63,000 note due in three annual installments of $21,000 each, with the next installment due August 31, 2022.

5. The common stock account represents 401,000 shares of no par value common stock issued and outstanding. The corporation has 802,000 shares authorized.

Required:
Prepare a classified balanced sheet for the Weismuller Publishing Company at December 31, 2021.

East Company has the following ledger accounts and adjusted balances as of December 31, 2020. All accounts have normal balances. East’s income tax rate is 20%. East has 300,000 shares of $10 par Common Stock authorized and 85,000 shares of Common Stock outstanding.

         Accounts Payable…………………………….   87,750

         Accounts Receivable………………………… 707,100

         Accumulated Depreciation-Building………… 168,750

         Accumulated Depreciation-Equipment………. 140,000

         Administrative Expenses…………………….   150,000

         Allowance for Doubtful Accounts……………   67,500

         Bonds Payable……………………………….. 600,000

         Building……………………………………..1,687,500

         Cash…………………………………………. 97,750

         Common Stock……………………………...   900,000

         Cost of Goods Sold………………………….1,282,500

         Dividends……………………………………   75,000

         Equipment…………………………………… 652,500

         Income from Operations of Division Y…….. 135,000

         (Division Y is a component of East Company)

         Interest Revenue……………………………..   90,000

         Inventory……………………………………...945,000

         Land (held for future use)...…………………. 675,000

         Land (used for building)…………………….. 371,250

         Loss from Sale of Division Y……………….. 270,000

         (Division Y is a component of East Company)

         Loss on Sale of Land……...…………………. 33,750

         Mortgage Payable …………..………………. 813,550*

         Paid-In Capital in Excess of Par…………….. 594,000

         Premium on Bonds Payable……………...…    15,000

         Prepaid Insurance……………………………. 33,750**

         Retained Earnings, January 1, 2019………… 843,750

         Sales Discounts………………………………. 43,500

         Sales Returns and Allowances……………….112,500

         Sales Revenue……………………………...3,453,750

         Selling Expenses……………………………. 416,750

         Trademark……………………………………101,250

         Treasury Stock………………………………. 90,000

*$50,000 of the principal comes due in 2019.

**Two years insurance paid in advance.

Instructions:

Use this information to prepare a multiple-step income statement, a retained earnings statement, and a classified balance sheet.

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 $3,500 per month plus $42 per course plus $4 per student. The company’s sales should average $900 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 54 students. The actual operating results for September appear below:

Required:

Prepare a flexible budget performance report that shows both revenue and spending variances and activity variances for September. (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.)

SOME OF MY NUMBERS ARE WRONG, PLEASE HELP!!!!

(a) Magnus, a lawyer working for a large firm and earning $60,000 per year is contemplating setting up his own law practice. He estimates that renting an office would cost $10,000 per year, hiring a legal secretary would cost $20,000 per year, renting the required office equipment would cost $15,000 per year and purchasing the required supplies, paying for electricity, telephone and so forth would cost another $5,000. Magnus estimated that his total revenues for the year would be $100,000 and he is indifferent between keeping his present occupation with the large law firm and opening his own law office.

(i) How much would be the explicit cost of Magnus for running his own law office?

(ii) How much would the accounting costs be?

(iii) How much would the implicit cost be?

(iv) How much would the economic costs be?

(v) Should Magnus (the lawyer) go ahead and start his own practice?

(b) A profit maximizing firm in a competitive market is currently producing 50 units of output. It has average revenue of $2, total variable cost of $80 and a total fixed cost of $60. As the manager, you are required to advise management on what to do.

(i) Use a graph to demonstrate the circumstances that would prevail in a competitive market.

(ii) Identify costs, revenue, and the economic losses or profits on your graph.

(iii)Determine whether this firm will shut down, exit or choose to remain in the market.

(iv)Explain your answer.