Hy and Lowe is a public firm that offers two primary services, auditing and tax return preparation

ACC 560 Week 3 Assignment

P4-5A Hy and Lowe is a public firm that offers two primary services, auditing and tax return preparation. A controversy has developed between the partners of the two service lines as to who is contributing the greater amount to the bottom line. The area of contention is the assignment of overhead. The tax partners argue for assigning overhead on the basis of 40% of direct labor dollars, while the audit partners argue for implementing activity-based costing. The partners agree to use next year's budgeted data for purposes of analysis and comparison. The following overhead data are collected to develop the comparison.

Activity Cost Pool Cost Driver Estimated Overhead Expected Use of Cost Drivers Expected Use of Cost Drivers per Service Audit Tax
Employee training Direct labor dollars $216,000 $1,800,000 $1,000,000 $800,000
Typing and secretarial Number of reports/forms 76,200 2,500 600 1,900
Computing Number of minutes 204,000 60,000 25,000 35,000
Facility rental Number of employees 142,500 40 22 18
Travel Per expense reports 81,300 Direct 56,000 25,300 $720,000

Instructions:
a. Using traditional product costing as proposed by the tax partners, compute the total overhead cost assigned to both services (audit and tax) of Hy and Lowe.
b. 1. Using activity-based costing, prepare a schedule showing the computations of the activity-based overhead rates (per cost driver).
2. Prepare a schedule assigning each activity's overhead cost pool to each service based on the use of the cost drivers.
c. Classify each of the activities as a value-added activity or a non-value added activity.
d. Comment on the comparative overhead cost for the two services under both traditional costing and ABC.

Click here for the solution: Hy and Lowe is a public firm that offers two primary services, auditing and tax return preparation

Los Lobos Ledger Preparation

1. Los Lobos Ledger Preparation

Review the following information:

12-31-2007 12-31-2006
Cash $ 35,000 $ 32,000
Accounts receivable 33,000 30,000
Allowance for doubtful accounts (1,300) (1,100)
Inventory 31,000 47,000
Property, plant, & equipment 100,000 95,000
Accumulated depreciation (16,500) (15,000)
Trade accounts payable (25,000) (15,500)
Income taxes payable (21,000) (29,100)
Deferred income taxes (5,300) (4,600)
8% callable bonds payable (45,000) (20,000)
Unamortized bond discount 4,500 5,000
Common stock (50,000) (40,000)
Additional paid-in capital (9,100) (7,500)
Retained earnings (25,200) (64,600)
Sales (558,300) (778,700)
Cost of goods sold  250,000 380,000
Selling expenses 141,500 172,000
General and administrative expenses 137,000 151,300
Interest expense 4,300 2,600
Income tax expense 20,400 61,200
$ - $ -

Additional information:
1. Los Lobos purchased $5,000 in equipment during 2007.
2. Los Lobos allocated one-third of its depreciation expense to selling expenses and the remainder to general and administrative expenses.
3. Bad debt expense for 2007 was $5,000, and write-offs of uncollectible accounts totaled $4,800.
4. $12,000 of the debt is current portion.

Cash Sales $72,600
Collections on Receivables 477,900
Purchases (219,500)
Purchase of Equipment (5,000)
Wages (150,700)
Payments to Suppliers (126,300)
Tax Payments (27,800)
Borrowing 30,000
Repayment of Debt (5,000)
Interest Payments (3,800)
Sale of Stock 11,600
Dividends (51,000)

Prepare a statement of cash flows using the direct and indirect methods.
Prepare a classified balance sheet.

Click here for the solution: Los Lobos Ledger Preparation

The following General Fund information is available for the preparation of the financial statements for the city of Eastern Shores for the year ended September 30, 2012

2-9 The following General Fund information is available for the preparation of the financial statements for the city of Eastern Shores for the year ended September 30, 2012:

Revenues:
Property taxes $27,000,000
Sales taxes 13, 216,000
Fees and fines 1,124,000
Licenses and permits 1,921,000
Intergovernmental 868,000
Investment earnings 654,000
Expenditures:
Current:
General government 8,192,000
Public safety 24,444,000
Public works 6,211,000
Health and sanitation 1,693,000
Culture and recreation 2,154,000
Debt service – principal 652,000
Debt service – interest 821,000
Proceeds of long-term, capital-related debt 2,210,000
Transfer to special revenue fund 1,119,000
Special item – proceeds from sale of land 821,000
Fund balance, October 1, 2011

From the information given above, prepare, in good form, a General Fund Statement of Revenue, Expenditures, and Changes in Fund Balances for the City of Eastern Shores General Fund for the Year Ended September 30, 2012.


Click here for the solution: The following General Fund information is available for the preparation of the financial statements for the city of Eastern Shores for the year ended September 30, 2012

The following information is available for the preparation of the government-wide financial statements for the city of Northern Pines for the year ended June 30, 2012

2-8. The following information is available for the preparation of the government-wide financial statements for the city of Northern Pines for the year ended June 30, 2012:

Expenses:
General government $10,300,000
Public safety 22,900,000
Public works 11,290,000
Health and sanitation 6,210,000
Culture and recreation 4,198,000
Interest on long-term debt, governmental type 621,000
Water and sewer system 11,550,000
Parking system 419,000
Revenues:
Charges for services, general government 1,110,000
Charges for services, public safety 210,000
Operation grant, public safety 698,000
Charges for services, health and sanitation 2,555,000
Operating grant, health and sanitation 1,210,000
Charges for services, culture and recreation 2,198,000
Charges for services, water and sewer 12,578,000
Charges for services, parking system 398,000
Property taxes 27,112,000
Sales taxes 20,698,000
Investment earnings, business-type 319,000
Special item – gain on sale of unused land,
Governmental type 1,250,000
Transfer from governmental activities to
Business-type activities 688,000
Net assets, July 1, 2011, governmental activities 11,222,000
Net assets, July 1, 2011, business-type activities 22,333,000

From the previous information, prepare, in good form, a Statement of Activities for the city of Northern Pines for the year ended June 30, 2012. Northern Pines has no component units.


Click here for the solution: The following information is available for the preparation of the government-wide financial statements for the city of Northern Pines for the year ended June 30, 2012

(Preparation of a Balance Sheet) Presented below is the trial balance of John Nalezny Corporation at December 31, 2007

Exercise 5-12 (E5-12) (Preparation of a Balance Sheet) Presented below is the trial balance of John Nalezny Corporation at December 31, 2007.

AND SO ON

Instructions
Prepare a balance sheet at December 31, 2007, for John Nalezny Corporation. Ignore income taxes.

Click here for the solution: (Preparation of a Balance Sheet) Presented below is the trial balance of John Nalezny Corporation at December 31, 2007

(Balance Sheet Adjustment and Preparation) The adjusted trial balance of Side Kicks Company and other related information for the year 2007 are presented on the next page

Problem 5-3 (P5-3) (Balance Sheet Adjustment and Preparation) The adjusted trial balance of Side Kicks Company and other related information for the year 2007 are presented on the next page.

AND SO ON

Additional information:
1. The LIFO method of inventory value is used.
2. The cost and fair value of the long-term investments that consist of stocks and bonds is the same.
3. The amount of the Construction Work in Progress account represents the costs expended to date on a building in the process of construction. (The company rents factory space at the present time.) The land on which the building is being constructed cost $85,000, as shown in the trial balance.
4. The patents were purchased by the company at a cost of $40,000 and are being amortized on a straight-line basis.
5. Of the unamortized discount on bonds payable, $2,000 will be amortized in 2008.
6. The notes payable represent bank loans that are secured by long-term investments carried at $120,000. These bank loans are due in 2008.
7. The bonds payable bear interest at 8% payable every December 31, and are due January 1, 2018.
8. 600,000 shares of common stock of a par value of $1 were authorized, of which 500,000 shares were issued and outstanding. Instructions
Prepare a balance sheet as of December 31, 2007, so that all important information is fully disclosed.

Click here for the solution: (Balance Sheet Adjustment and Preparation) The adjusted trial balance of Side Kicks Company and other related information for the year 2007 are presented on the next page

(Preparation of a Corrected Balance Sheet) Uhura Company has decided to expand its operations

ACC 421  Week Four (Week 4)

Exercise 5-5 (E5-5) (Preparation of a Corrected Balance Sheet) Uhura Company has decided to expand its operations. The bookkeeper recently completed the balance sheet presented below in order to obtain additional funds for expansion.

AND SO ON

Instructions
Prepare a revised balance sheet given the available information. Assume that the accumulated depreciation balance for the buildings is $160,000 and for the office equipment, $105,000. The allowance for doubtful accounts has a balance of $17,000. The pension obligation is considered a long-term liability.

Click here for the solution: (Preparation of a Corrected Balance Sheet) Uhura Company has decided to expand its operations