E8-22 (Alternative Inventory Methods—Comprehensive) Tori Amos Corporation began operations on December 1, 2006. The only inventory transaction in 2006 was the purchase of inventory on December 10, 2006, at a cost of $20 per unit. None of this inventory was sold in 2006. Relevant information is as follows.
Ending inventory units
December 31, 2006 100
December 31, 2007, by purchase date
December 2, 2007 100
July 20, 2007 50 150
During the year the following purchases and sales were made:
Purchases Sales
March 15 300 units at $24 April 10 200
July 20 300 units at 25 August 20 300
September 4 200 units at 28 November 18 150
December 2 100 units at 30 December 12 200
The company uses the periodic inventory method.
Determine ending inventory using dollar-value LIFO. Assume that the December 2, 2007, purchase cost is the current cost of inventory. (Hint: The beginning inventory is the base layer priced at $20 per unit.)
Click here for the solution: Tori Amos Corporation began operations on December 1, 2006
Showing posts with label began. Show all posts
Showing posts with label began. Show all posts
Friday, April 15, 2016
The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2009
P11-5 Property, plant, and equipment and intangible assets; comprehensive
The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2009. The accounting department of Thompson has started the fixed-asset and depreciation schedule presented below. You have been asked to assist in completing this schedule. In addition to ascertaining that the data already on the schedule are correct, you have obtained the following information from the company's records and personnel:
a. Depreciation is computed from the first of the month of acquisition to the first of the month of disposition.
b. Land A and Building A were acquired from a predecessor corporation. Thompson paid $812,500 for the land and building together. At the time of acquisition, the land had a fair value of $72,000 and the building had a fair value of $828,000.
c. Land B was acquired on October 2, 2009, in exchange for 3,000 newly issued shares of Thompson's common stock. At the date of acquisition, the stock had a par value of $5 per share and a fair value of $25 per share. During October 2009, Thompson paid $10,400 to demolish an existing building on this land so it could construct a new building.
d. Construction of Building B on the newly acquired land began on October 1, 2010. By September 30, 2011, Thompson had paid $210,000 of the estimated total construction costs of $300,000. Estimated completion and occupancy are July 2012.
e. Certain equipment was donated to the corporation by the city. An independent appraisal of the equipment when donated placed the fair value at $16,000 and the residual value at $2,000.
f. Machine A's total cost of $110,000 includes installation charges of $550 and normal repairs and maintenance of $11,000. Residual value is estimated at $5,500. Machine A was sold on February 1, 2011.
g. On October 1, 2010, Machine B was acquired with a down payment of $4,000 and the remaining payments to be made in 10 annual installments of $4,000 each beginning October 1, 2011. The prevailing interest rate was 8%.
Required:
Supply the correct amount for each numbered item on the schedule. Round each answer to the nearest dollar.
Click here for the solution: The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2009
The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2009. The accounting department of Thompson has started the fixed-asset and depreciation schedule presented below. You have been asked to assist in completing this schedule. In addition to ascertaining that the data already on the schedule are correct, you have obtained the following information from the company's records and personnel:
a. Depreciation is computed from the first of the month of acquisition to the first of the month of disposition.
b. Land A and Building A were acquired from a predecessor corporation. Thompson paid $812,500 for the land and building together. At the time of acquisition, the land had a fair value of $72,000 and the building had a fair value of $828,000.
c. Land B was acquired on October 2, 2009, in exchange for 3,000 newly issued shares of Thompson's common stock. At the date of acquisition, the stock had a par value of $5 per share and a fair value of $25 per share. During October 2009, Thompson paid $10,400 to demolish an existing building on this land so it could construct a new building.
d. Construction of Building B on the newly acquired land began on October 1, 2010. By September 30, 2011, Thompson had paid $210,000 of the estimated total construction costs of $300,000. Estimated completion and occupancy are July 2012.
e. Certain equipment was donated to the corporation by the city. An independent appraisal of the equipment when donated placed the fair value at $16,000 and the residual value at $2,000.
f. Machine A's total cost of $110,000 includes installation charges of $550 and normal repairs and maintenance of $11,000. Residual value is estimated at $5,500. Machine A was sold on February 1, 2011.
g. On October 1, 2010, Machine B was acquired with a down payment of $4,000 and the remaining payments to be made in 10 annual installments of $4,000 each beginning October 1, 2011. The prevailing interest rate was 8%.
Required:
Supply the correct amount for each numbered item on the schedule. Round each answer to the nearest dollar.
Click here for the solution: The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2009
Wednesday, April 13, 2016
(Comprehensive Problem 1) Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 2010
Comprehensive Problem 1
Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 2010. The accounting cycle for Kelly Consulting for April, including financial statements was illustrated on page 157-168. During May, Kelly consulting entered the following transactions:
Check Figure: 8. Net Income $27,665
May 3. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $2,500.
5. Received cash from clients on account, $1,750.
9. Paid cash for a newspaper advertisement, $300.
13. Paid office station company for part of the debt incurred on april 5, $400.
15. Recorded services provided on account for the period May 1-15, $6,100.
16. paid part-time receptionist for two weeks' salary including the amount owed on April 30, $750.
17. Recorded cash from cash clients for fees earned during the period May 1-16, $8,200.
20. Purchased supplies on account, $400
21. Recorded services provided on account for the period May 16-20, $3,900.
25. Recorded cash from cash clients for fees earned for the period May 17-23, $5,100.
27. Received cash from clients on account, $9,500.
28. Paid part-time receptionist for two weeks salary, $750.
30. Paid telephone bill for May, $120.
31. Paid electricity bill for May $290.
31. Recorded cash from cash clients for fees earned for the period May 26-31, $3,875.
31. Recorded services provided on account for the remainder of May, $3,200.
31. Kelly withdrew $8,000 for personal use.
Instructions:
1. The chart of accounts for Kelly Consulting is shown on page 158, and the post-closing trial balance as of April 30, 2010 is shown on page 166. For each account in the post-closing trial balance, enter the balance in the appropriate balance column of a four column account. Date the balances May 1, 2010, and place a check mark in the posting reference column. Journalize each of the May transactions in a two column journal using Kelly Consulting's chart of accounts. (do not insert the account numbers in the journal at this time.)
2. Post the journal to a ledger of four-column accounts.
3. Prepare an unadjusted trail balance
4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts 5 and 6.
a. Insurance expired during May is $300.
b. Supplies on hand on May 31 are $600.
c. Depreciation of office equipment for May is $330.
d. Accrued receptionist salary on May 31 is $240.
e. Rent expired during May is $1,600.
f. Unearned fees on May 31 are $2,000
5. Enter the unadjusted trial balance on an end-of-period spreadsheet (worksheet) and complete the spreadsheet.
6. Journalize and post the adjusting entries.
7.Prepare an adjusted trial balance.
8. Prepare an income statement, a statement of owner's equity, and a balance sheet.
9. Prepare and post the closing entries. (Income summary is account #33 in the chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry.
10. Prepare a post-closing trial balance
Click here for the solution: (Comprehensive Problem 1) Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 2010
Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 2010. The accounting cycle for Kelly Consulting for April, including financial statements was illustrated on page 157-168. During May, Kelly consulting entered the following transactions:
Check Figure: 8. Net Income $27,665
May 3. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $2,500.
5. Received cash from clients on account, $1,750.
9. Paid cash for a newspaper advertisement, $300.
13. Paid office station company for part of the debt incurred on april 5, $400.
15. Recorded services provided on account for the period May 1-15, $6,100.
16. paid part-time receptionist for two weeks' salary including the amount owed on April 30, $750.
17. Recorded cash from cash clients for fees earned during the period May 1-16, $8,200.
20. Purchased supplies on account, $400
21. Recorded services provided on account for the period May 16-20, $3,900.
25. Recorded cash from cash clients for fees earned for the period May 17-23, $5,100.
27. Received cash from clients on account, $9,500.
28. Paid part-time receptionist for two weeks salary, $750.
30. Paid telephone bill for May, $120.
31. Paid electricity bill for May $290.
31. Recorded cash from cash clients for fees earned for the period May 26-31, $3,875.
31. Recorded services provided on account for the remainder of May, $3,200.
31. Kelly withdrew $8,000 for personal use.
Instructions:
1. The chart of accounts for Kelly Consulting is shown on page 158, and the post-closing trial balance as of April 30, 2010 is shown on page 166. For each account in the post-closing trial balance, enter the balance in the appropriate balance column of a four column account. Date the balances May 1, 2010, and place a check mark in the posting reference column. Journalize each of the May transactions in a two column journal using Kelly Consulting's chart of accounts. (do not insert the account numbers in the journal at this time.)
2. Post the journal to a ledger of four-column accounts.
3. Prepare an unadjusted trail balance
4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts 5 and 6.
a. Insurance expired during May is $300.
b. Supplies on hand on May 31 are $600.
c. Depreciation of office equipment for May is $330.
d. Accrued receptionist salary on May 31 is $240.
e. Rent expired during May is $1,600.
f. Unearned fees on May 31 are $2,000
5. Enter the unadjusted trial balance on an end-of-period spreadsheet (worksheet) and complete the spreadsheet.
6. Journalize and post the adjusting entries.
7.Prepare an adjusted trial balance.
8. Prepare an income statement, a statement of owner's equity, and a balance sheet.
9. Prepare and post the closing entries. (Income summary is account #33 in the chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry.
10. Prepare a post-closing trial balance
Click here for the solution: (Comprehensive Problem 1) Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 2010
Monday, March 21, 2016
Derrick Adkins Construction Company began operations in 2007
E18-10 (Long-Term Contract Reporting) Derrick Adkins Construction Company began operations in 2007. Construction activity for the first year is shown below. All contracts are with different customers, and any work remaining at December 31, 2007, is expected to be completed in 2008.
Project Total Contract Price Billings through 12/31/07 Cash Collections through 12/31/07 Contract Costs Incurred through 12/31/07 Estimated Additional Costs to Complete
1 $ 560,000 $ 360,000 $340,000 $450,000 $140,000
2 670,000 220,000 210,000 126,000 504,000
3 500,000 500,000 440,000 330,000 –0–
$1,730,000 $1,080,000 $990,000 $906,000 $644,000
Derrick Adkins Construction Company uses the completed-contract method. Determine the amount of income or loss to be reported for each of the three projects in 2007.
Click here for the solution: Derrick Adkins Construction Company began operations in 2007
Project Total Contract Price Billings through 12/31/07 Cash Collections through 12/31/07 Contract Costs Incurred through 12/31/07 Estimated Additional Costs to Complete
1 $ 560,000 $ 360,000 $340,000 $450,000 $140,000
2 670,000 220,000 210,000 126,000 504,000
3 500,000 500,000 440,000 330,000 –0–
$1,730,000 $1,080,000 $990,000 $906,000 $644,000
Derrick Adkins Construction Company uses the completed-contract method. Determine the amount of income or loss to be reported for each of the three projects in 2007.
Click here for the solution: Derrick Adkins Construction Company began operations in 2007
Thursday, January 14, 2016
Case Development began operations in December 2011
E16-25 Multiple tax rates; balance sheet classification
Case Development began operations in December 2011. When property is sold on an installment basis, Case recognizes installment income for financial reporting purposes in the year of the sale. For tax purposes, installment income is reported by the installment method. 2011 installment income was $600,000 and will be collected over the next three years. Scheduled collections and enacted tax rates for 2012-2014 are as follows:
2012 $150,000 30%
2013 250,000 40
2014 200,000 40
Pretax accounting income for 2011 was $810,000, which includes interest revenue of $10,000 from municipal bonds. The enacted tax rate for 2011 is 30%.
Required:
1.Assuming no differences between accounting income and taxable income other than those described above, prepare the appropriate journal entry to record Case’s 2011 income taxes.
2.What is Case’s 2011 net income?
3.How should the deferred tax amount be classified in a classified balance sheet?
Click here for the solution: Case Development began operations in December 2011
Case Development began operations in December 2011. When property is sold on an installment basis, Case recognizes installment income for financial reporting purposes in the year of the sale. For tax purposes, installment income is reported by the installment method. 2011 installment income was $600,000 and will be collected over the next three years. Scheduled collections and enacted tax rates for 2012-2014 are as follows:
2012 $150,000 30%
2013 250,000 40
2014 200,000 40
Pretax accounting income for 2011 was $810,000, which includes interest revenue of $10,000 from municipal bonds. The enacted tax rate for 2011 is 30%.
Required:
1.Assuming no differences between accounting income and taxable income other than those described above, prepare the appropriate journal entry to record Case’s 2011 income taxes.
2.What is Case’s 2011 net income?
3.How should the deferred tax amount be classified in a classified balance sheet?
Click here for the solution: Case Development began operations in December 2011
Wednesday, November 11, 2015
Bandung Corporation began 2008 with $92,000 balance in Deferred Tax Liability account
E19-3 (One Temporary difference, Future Taxable Amounts, One Rate, No Beginning Deferred Taxes) Bandung Corporation began 2008 with $92,000 balance in Deferred Tax Liability account. At the end of 2008, the related cumulative difference amounts to $350,000 and it will reverse evenly over the next 2 years. Pretax accounting income for 2008 is $525,000, the tax rate for all years is 40% and taxable income for 2008 is $405,000.
Instructions
a.) Compute income taxes payable for 2008
b.) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2008.
c.) Prepare the income tax expense section of the income statement for 2008 beginning with the line "Income before income taxes"
Click here for the solution: Bandung Corporation began 2008 with $92,000 balance in Deferred Tax Liability account
Instructions
a.) Compute income taxes payable for 2008
b.) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2008.
c.) Prepare the income tax expense section of the income statement for 2008 beginning with the line "Income before income taxes"
Click here for the solution: Bandung Corporation began 2008 with $92,000 balance in Deferred Tax Liability account
Zero Mostel Company began operations on January 2, 2008
E13-5 (Compensated Absences) Zero Mostel Company began operations on January 2, 2008. It employs 9 individuals who work 8-hour days and are paid hourly. Each employee earns 10 paid vacation days and 6 paid sick days annually. Vacation days may be taken after January 15 of the year following the year in which they are earned. Sick days may be taken as soon as they are earned; unused sick days accumulate. Additional information is as follows.
Actual Hourly Vacation Days Used Sick Days Used
Wage Rate by each employee by each employee
2008 2009 2008 2009 2008 2009
$10 $11 0 9 4 5
Zero Mostel Company has chosen to accrue the cost of compensated absences at rates of pay in effect during the period when earned and to accrue sick pay when earned.
Instructions
a.) Prepare journal entries to record transactions related to compensated absences during 2008 and 2009.
b.) Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31, 2008 and 2009
Click here for the solution: Zero Mostel Company began operations on January 2, 2008
Actual Hourly Vacation Days Used Sick Days Used
Wage Rate by each employee by each employee
2008 2009 2008 2009 2008 2009
$10 $11 0 9 4 5
Zero Mostel Company has chosen to accrue the cost of compensated absences at rates of pay in effect during the period when earned and to accrue sick pay when earned.
Instructions
a.) Prepare journal entries to record transactions related to compensated absences during 2008 and 2009.
b.) Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31, 2008 and 2009
Click here for the solution: Zero Mostel Company began operations on January 2, 2008
Tuesday, November 10, 2015
Holder-Webb Company began operations on January 1, 2005, and uses the average cost method of pricing inventory
E22-2 (Change in Principle—Inventory Methods) Holder-Webb Company began operations on January 1, 2005, and uses the average cost method of pricing inventory. Management is contemplating a change in inventory methods for 2008. The following information is available for the years 2005–2007.
Net Income Computed Using
2005: Average Cost = $15,000 FIFO: $19,000 LIFO: $12,000
2006: Average Cost = $18,000 FIFO: $23,000 LIFO: $14,000
2007: Average Cost= $20,000 FIFO: $25,000 LIFO: $17,000
Instructions
(Ignore all tax effects.)
(a) Prepare the journal entry necessary to record a change from the average cost method to the FIFO method in 2008.
(b) Determine net income to be reported for 2005, 2006, and 2007, after giving effect to the change in accounting principle.
(c) Assume Holder-Webb Company used the LIFO method instead of the average cost method during the years 2005–2007. In 2008, Holder-Webb changed to the FIFO method. Prepare the journal entry necessary to record the change in principle.
Click here for the solution: Holder-Webb Company began operations on January 1, 2005, and uses the average cost method of pricing inventory
Net Income Computed Using
2005: Average Cost = $15,000 FIFO: $19,000 LIFO: $12,000
2006: Average Cost = $18,000 FIFO: $23,000 LIFO: $14,000
2007: Average Cost= $20,000 FIFO: $25,000 LIFO: $17,000
Instructions
(Ignore all tax effects.)
(a) Prepare the journal entry necessary to record a change from the average cost method to the FIFO method in 2008.
(b) Determine net income to be reported for 2005, 2006, and 2007, after giving effect to the change in accounting principle.
(c) Assume Holder-Webb Company used the LIFO method instead of the average cost method during the years 2005–2007. In 2008, Holder-Webb changed to the FIFO method. Prepare the journal entry necessary to record the change in principle.
Click here for the solution: Holder-Webb Company began operations on January 1, 2005, and uses the average cost method of pricing inventory
Monday, October 26, 2015
Ferris Company began 2011 with 6,000 units of its principal product
P 8-5 Various inventory costing methods
Ferris Company began 2011 with 6,000 units of its principal product. The cost of each unit is $8. Merchandise transactions for the month of January 2011 are as follows:
Purchases______________________
Date of Purchase Units Unit Cost* Total Cost
Jan. 10 5,000 $ 9 $ 45,000
Jan. 19 6,000 10 60,000
Totals 11,000 $105,000
*Includes purchase price and cost of freight.
Sales_____________
Date of Sale Units
Jan. 5 3,000
Jan. 12 2,000
Jan. 20 4,000
Total 9,000
8,000 units were on hand at the end of the month.
Calculate January’s ending inventory and cost of goods sold for the month using each of the following alternatives:
1. FIFO, periodic system
2. LIFO, periodic system
3. LIFO, perpetual system
4. Average cost, periodic system
5. Average cost, perpetual system
Click here for the solution: Ferris Company began 2011 with 6,000 units of its principal product
Ferris Company began 2011 with 6,000 units of its principal product. The cost of each unit is $8. Merchandise transactions for the month of January 2011 are as follows:
Purchases______________________
Date of Purchase Units Unit Cost* Total Cost
Jan. 10 5,000 $ 9 $ 45,000
Jan. 19 6,000 10 60,000
Totals 11,000 $105,000
*Includes purchase price and cost of freight.
Sales_____________
Date of Sale Units
Jan. 5 3,000
Jan. 12 2,000
Jan. 20 4,000
Total 9,000
8,000 units were on hand at the end of the month.
Calculate January’s ending inventory and cost of goods sold for the month using each of the following alternatives:
1. FIFO, periodic system
2. LIFO, periodic system
3. LIFO, perpetual system
4. Average cost, periodic system
5. Average cost, perpetual system
Click here for the solution: Ferris Company began 2011 with 6,000 units of its principal product
Friday, September 25, 2015
Case Development began operations in December 2011
E16-25 Multiple tax rates; balance sheet classification
Case Development began operations in December 2011. When property is sold on an installment basis, Case recognizes installment income for financial reporting purposes in the year of the sale. For tax purposes, installment income is reported by the installment method. 2011 installment income was $600,000 and will be collected over the next three years. Scheduled collections and enacted tax rates for 2012-2014 are as follows:
2012 $150,000 30%
2013 250,000 40
2014 200,000 40
Pretax accounting income for 2011 was $810,000, which includes interest revenue of $10,000 from municipal bonds. The enacted tax rate for 2011 is 30%.
Required:
1.Assuming no differences between accounting income and taxable income other than those described above, prepare the appropriate journal entry to record Case’s 2011 income taxes.
2.What is Case’s 2011 net income?
3.How should the deferred tax amount be classified in a classified balance sheet?
Click here for the solution: Case Development began operations in December 2011
Case Development began operations in December 2011. When property is sold on an installment basis, Case recognizes installment income for financial reporting purposes in the year of the sale. For tax purposes, installment income is reported by the installment method. 2011 installment income was $600,000 and will be collected over the next three years. Scheduled collections and enacted tax rates for 2012-2014 are as follows:
2012 $150,000 30%
2013 250,000 40
2014 200,000 40
Pretax accounting income for 2011 was $810,000, which includes interest revenue of $10,000 from municipal bonds. The enacted tax rate for 2011 is 30%.
Required:
1.Assuming no differences between accounting income and taxable income other than those described above, prepare the appropriate journal entry to record Case’s 2011 income taxes.
2.What is Case’s 2011 net income?
3.How should the deferred tax amount be classified in a classified balance sheet?
Click here for the solution: Case Development began operations in December 2011
Thursday, September 10, 2015
Stockman Co. began 2010 with three jobs in process
Stockman Co. began 2010 with three jobs in process:
Type of Cost
Job No. Direct Material Direct Labor Overhead Total
247 $77,200 $91,400 36,560 $205,160
251 176,600 209,800 83,920 470,320
253 145,400 169,600 67,840 382,840
Totals $399,200 $470,800 $188,320 $1,058,320
During 2010, the following transactions occurred:
1. The firm purchased and paid for $542,000 of raw material.
Factory payroll records revealed the following:
- Indirect labor incurred was $54,000.
- Direct labor incurred was $602,800 and was associated with the jobs as follows:
Job No. Direct Labor Cost
247 $ 17,400
251 8,800
253 21,000
254 136,600
255 145,000
256 94,600
257 179,400
3. Material requistion forms issued during the year revealed the following:
- Indirect material issued totaled $ 76,000
- Direct material issued totaled $ 466,400 and was associated with jobs follows:
Job No. Direct Material Cost 247 $ 12,400
251 6,200
253 16,800
254 105,200
255 119,800
256 72,800
257 133,200
4. Overhead is applied to jobs on the basis of direct labor cost. Managment budgeted overhead of $ 240,000 and total direct labor cost of $ 600,000 for 2010. Actual total factory overhead costs ( including indirect labor and indirect material for the year totaled $ 244,400.
5. Jobs #247 through #255 were completed and delivered to customers, who paid for the goods in cash. The revenue on these jobs was $ 2,264,774.
a. Journalize all preceding events.
b. Determine the ending balances for the jobs still in process.
c. Determine the cost of jobs sold, adjusted for underapplied or oveapplied overhead.
Click here for the solution: Stockman Co. began 2010 with three jobs in process
Type of Cost
Job No. Direct Material Direct Labor Overhead Total
247 $77,200 $91,400 36,560 $205,160
251 176,600 209,800 83,920 470,320
253 145,400 169,600 67,840 382,840
Totals $399,200 $470,800 $188,320 $1,058,320
During 2010, the following transactions occurred:
1. The firm purchased and paid for $542,000 of raw material.
Factory payroll records revealed the following:
- Indirect labor incurred was $54,000.
- Direct labor incurred was $602,800 and was associated with the jobs as follows:
Job No. Direct Labor Cost
247 $ 17,400
251 8,800
253 21,000
254 136,600
255 145,000
256 94,600
257 179,400
3. Material requistion forms issued during the year revealed the following:
- Indirect material issued totaled $ 76,000
- Direct material issued totaled $ 466,400 and was associated with jobs follows:
Job No. Direct Material Cost 247 $ 12,400
251 6,200
253 16,800
254 105,200
255 119,800
256 72,800
257 133,200
4. Overhead is applied to jobs on the basis of direct labor cost. Managment budgeted overhead of $ 240,000 and total direct labor cost of $ 600,000 for 2010. Actual total factory overhead costs ( including indirect labor and indirect material for the year totaled $ 244,400.
5. Jobs #247 through #255 were completed and delivered to customers, who paid for the goods in cash. The revenue on these jobs was $ 2,264,774.
a. Journalize all preceding events.
b. Determine the ending balances for the jobs still in process.
c. Determine the cost of jobs sold, adjusted for underapplied or oveapplied overhead.
Click here for the solution: Stockman Co. began 2010 with three jobs in process
Sunday, September 6, 2015
McEntire Corporation began operations on January 1, 2007
McEntire Corporation began operations on January 1, 2007. During its first 3 years of operations, McEntire reported net income and declared dividends as follows.
Year - Net Income - Dividends declared
2007 - $40,000 - $ -0
2008 -125,000 -50,000
2009 - 160,000 - 50,000
The following information relates to 2010.
Income before income tax $220,000
Prior period adjustment: understatement of 2008 depreciation expense (before taxes) $ 25,000
Cumulative decrease in income from change in inventory methods (before taxes) $ 45,000
Dividends declared (of this amount, $25,000 will be paid on Jan. 15, 2011) $100,000
Effective tax rate 40%
Instructions
(a) Prepare a 2010 retained earnings statement for McEntire Corporation.
(b) Assume McEntire Corp. restricted retained earnings in the amount of $70,000 on December 31, 2010. After this action, what would McEntire report as total retained earnings in its December 31, 2010, balance sheet?
Click here for the solution: McEntire Corporation began operations on January 1, 2007
Year - Net Income - Dividends declared
2007 - $40,000 - $ -0
2008 -125,000 -50,000
2009 - 160,000 - 50,000
The following information relates to 2010.
Income before income tax $220,000
Prior period adjustment: understatement of 2008 depreciation expense (before taxes) $ 25,000
Cumulative decrease in income from change in inventory methods (before taxes) $ 45,000
Dividends declared (of this amount, $25,000 will be paid on Jan. 15, 2011) $100,000
Effective tax rate 40%
Instructions
(a) Prepare a 2010 retained earnings statement for McEntire Corporation.
(b) Assume McEntire Corp. restricted retained earnings in the amount of $70,000 on December 31, 2010. After this action, what would McEntire report as total retained earnings in its December 31, 2010, balance sheet?
Click here for the solution: McEntire Corporation began operations on January 1, 2007
Wednesday, September 2, 2015
Courtside Concepts Co. began business on January 2, 2011
24th Edition
Courtside Concepts Co. began business on January 2, 2011. Salaries were paid to employees on the last day of each month, and social security tax, Medicare tax, and federal income tax were withheld in the required amounts. An employee who is hired in the middle of the month receives half the monthly salary for that month. All required payroll tax reports were filed, and the correct amount of payroll taxes was remitted by the company for the calendar year. Early in 2012, before the Wage and Tax Statements (Form W-2) could be prepared for distribution to employees and for filing with the Social Security Administration, the employees' earnings records were inadvertently destroyed.
None of the employees resigned or were discharged during the year, and there were no changes in salary rates. The social security tax was withheld at the rate of 6.0% and Medicare tax at the rate of 1.5% on salary. Data on dates of employment, salary rates, and employees' income taxes withheld, which are summarized as follows, were obtained from personnel records and payroll records:
Instructions
1. Calculate the amounts to be reported on each employee's Wage and Tax Statement (Form W-2) for 2011 arranging the data in the following form:
Employee Gross Earnings Federal Income Tax Withheld Social Security Tax Withheld Medicare Tax Withheld
2. Calculate the following employer payroll taxes for the year: (a) social security; (b) Medicare; (c) state unemployment compensation at 4.6% on the first $10,000 of each employee's earnings; (d) federal unemployment compensation at 0.8% on the first $10,000 of each employee's earnings; (e) total.
Click here for the solution: Courtside Concepts Co. began business on January 2, 2011
Courtside Concepts Co. began business on January 2, 2011. Salaries were paid to employees on the last day of each month, and social security tax, Medicare tax, and federal income tax were withheld in the required amounts. An employee who is hired in the middle of the month receives half the monthly salary for that month. All required payroll tax reports were filed, and the correct amount of payroll taxes was remitted by the company for the calendar year. Early in 2012, before the Wage and Tax Statements (Form W-2) could be prepared for distribution to employees and for filing with the Social Security Administration, the employees' earnings records were inadvertently destroyed.
None of the employees resigned or were discharged during the year, and there were no changes in salary rates. The social security tax was withheld at the rate of 6.0% and Medicare tax at the rate of 1.5% on salary. Data on dates of employment, salary rates, and employees' income taxes withheld, which are summarized as follows, were obtained from personnel records and payroll records:
Instructions
1. Calculate the amounts to be reported on each employee's Wage and Tax Statement (Form W-2) for 2011 arranging the data in the following form:
Employee Gross Earnings Federal Income Tax Withheld Social Security Tax Withheld Medicare Tax Withheld
2. Calculate the following employer payroll taxes for the year: (a) social security; (b) Medicare; (c) state unemployment compensation at 4.6% on the first $10,000 of each employee's earnings; (d) federal unemployment compensation at 0.8% on the first $10,000 of each employee's earnings; (e) total.
Click here for the solution: Courtside Concepts Co. began business on January 2, 2011
Sunday, August 23, 2015
Beech Corporation, an accrual basis taxpayer, was organized and began business on July 1, 2010
Beech Corporation, an accrual basis taxpayer, was organized and began business on July 1, 2010. During 2010, the corporation incurred the following expenses:
State fees for incorporation $ 500
Legal and accounting fees incident to organization 1,800
Expenses for the sale of stock 2,100
Organizational meeting expenses 750
Assuming that Beech Corporation does not elect to expense but chooses to amortize organizational expenditures over 15 years, calculate the corporation's deduction for its calendar tax year 2010.
Click here for the solution: Beech Corporation, an accrual basis taxpayer, was organized and began business on July 1, 2010
State fees for incorporation $ 500
Legal and accounting fees incident to organization 1,800
Expenses for the sale of stock 2,100
Organizational meeting expenses 750
Assuming that Beech Corporation does not elect to expense but chooses to amortize organizational expenditures over 15 years, calculate the corporation's deduction for its calendar tax year 2010.
Click here for the solution: Beech Corporation, an accrual basis taxpayer, was organized and began business on July 1, 2010
Comprehensive Problem 5: Essence of Persia, Inc., began operations on January 1, 2010
Comprehensive Problem 5: Essence of Persia, Inc., began operations on January 1, 2010. The company produces a hand and body lotion in an eight-ounce bottle called Eternal Beauty. The lotion is sold wholesale in 12-bottle cases for $80 per case. There is a selling commission of $16 per case. The January direct materials, direct labor, and factory overhead costs are as follows:
Part A—Break-Even Analysis
The management of Essence of Persia, Inc., wishes to determine the number of cases required to break even per month. The utilities cost, which is part of factory overhead, is a mixed cost. The following information was gathered from the first six months of operation regarding this cost:
Instructions
1. Determine the fixed and variable portion of the utility cost using the high-low method.
2. Determine the contribution margin per case.
3. Determine the fixed costs per month, including the utility fixed cost from part (1).
4. Determine the break-even number of cases per month.
Part B—August Budgets
During July of the current year, the management of Essence of Persia, Inc., asked the controller to prepare August manufacturing and income statement budgets. Demand was expected to be 1,400 cases at $80 per case for August. Inventory planning information is provided as follows:
Finished Goods Inventory:
Materials Inventory:
There was negligible work in process inventory assumed for either the beginning or end of the month; thus, none was assumed. In addition, there was no change in the cost per unit or estimated units per case operating data from January.
Instructions
5. Prepare the August production budget.
6. Prepare the August direct materials purchases budget.
7. Prepare the August direct labor budget.
8. Prepare the August factory overhead budget.
9. Prepare the August budgeted income statement, including selling expenses.
Part C—August Variance Analysis
During September of the current year, the controller was asked to perform variance analyses for August. The January operating data provided the standard prices, rates, times, and quantities per case. There were 1,500 actual cases produced during August, which was 200 more cases than planned at the beginning of the month. Actual data for August were as follows:
The prices of the materials were different than standard due to fluctuations in market prices. The standard quantity of materials used per case was an ideal standard. The Mixing Department used a higher grade labor classification during the month, thus causing the actual labor rate to exceed standard. The Filling Department used a lower grade labor classification during the month, thus causing the actual labor rate to be less than standard.
Instructions
10. Determine and interpret the direct materials price and quantity variances for the three materials.
11. Determine and interpret the direct labor rate and time variances for the two departments.
12. Determine and interpret the factory overhead controllable variance.
13. Determine and interpret the factory overhead volume variance.
14. Why are the standard direct labor and direct materials costs in the calculations for parts (10) and (11) based on the actual 1,500-case production volume rather than the planned 1,300 cases of production used in the budgets for parts (6) and(7)?
Click here for the solution: Comprehensive Problem 5: Essence of Persia, Inc., began operations on January 1, 2010
Part A—Break-Even Analysis
The management of Essence of Persia, Inc., wishes to determine the number of cases required to break even per month. The utilities cost, which is part of factory overhead, is a mixed cost. The following information was gathered from the first six months of operation regarding this cost:
Instructions
1. Determine the fixed and variable portion of the utility cost using the high-low method.
2. Determine the contribution margin per case.
3. Determine the fixed costs per month, including the utility fixed cost from part (1).
4. Determine the break-even number of cases per month.
Part B—August Budgets
During July of the current year, the management of Essence of Persia, Inc., asked the controller to prepare August manufacturing and income statement budgets. Demand was expected to be 1,400 cases at $80 per case for August. Inventory planning information is provided as follows:
Finished Goods Inventory:
Materials Inventory:
There was negligible work in process inventory assumed for either the beginning or end of the month; thus, none was assumed. In addition, there was no change in the cost per unit or estimated units per case operating data from January.
Instructions
5. Prepare the August production budget.
6. Prepare the August direct materials purchases budget.
7. Prepare the August direct labor budget.
8. Prepare the August factory overhead budget.
9. Prepare the August budgeted income statement, including selling expenses.
Part C—August Variance Analysis
During September of the current year, the controller was asked to perform variance analyses for August. The January operating data provided the standard prices, rates, times, and quantities per case. There were 1,500 actual cases produced during August, which was 200 more cases than planned at the beginning of the month. Actual data for August were as follows:
The prices of the materials were different than standard due to fluctuations in market prices. The standard quantity of materials used per case was an ideal standard. The Mixing Department used a higher grade labor classification during the month, thus causing the actual labor rate to exceed standard. The Filling Department used a lower grade labor classification during the month, thus causing the actual labor rate to be less than standard.
Instructions
10. Determine and interpret the direct materials price and quantity variances for the three materials.
11. Determine and interpret the direct labor rate and time variances for the two departments.
12. Determine and interpret the factory overhead controllable variance.
13. Determine and interpret the factory overhead volume variance.
14. Why are the standard direct labor and direct materials costs in the calculations for parts (10) and (11) based on the actual 1,500-case production volume rather than the planned 1,300 cases of production used in the budgets for parts (6) and(7)?
Click here for the solution: Comprehensive Problem 5: Essence of Persia, Inc., began operations on January 1, 2010
Friday, August 21, 2015
Lee Corporation, a U.S. company, began operations on January 1, 2004
Lee Corporation, a U.S. company, began operations on January 1, 2004. During its first 3 years of operations, Lee reported net income and declared dividends as follows:
Year Net Income Dividends Declared
2004 $40,000 $0
2005 125,000 50,000
2006 160,000 50,000
The following information relates to 2007:
* Income before income tax: $240,000
* Prior period adjustment: understatement of 2005 depreciation expense (before taxes): $ 25,000
* Cumulative decrease in income from change in inventory methods (before taxes): $35,000
* Dividends declared: $100,000 ($75,000 paid in 2007, $25,000 to be paid in 2008)
* Effective tax rate: 40%
Additional information:
Common stock issued (par) $16,250
Additional paid-in capital $146,250
Treasury stock $70,000
Shares issued 32,500
Lee acquired a Canadian subsidiary whose sole asset is a piece of land. Lee acquired the subsidiary on 12/31/04 for the exact value of the land, CA$100,000. Lee owns 100% of the subsidiary.
Deliverables:
In the attached Excel worksheet complete the following:
Section 1 – FOREIGN CURRENCY TRANSLATION:
1. Go to www.x-rates.com and use the historic lookup feature to determine exchange rates on 12/31/04, 12/31/05, 12/31/06 and 12/31/07.
2. Enter the exchange rate factors in the “Factor” column of the Foreign Currency Translation table
3. Apply the factors using the appropriate formulate to convert investment from CAD to USD
4. Calculate the annual and cumulative adjustments
Section 2 – STATEMENT OF CHANGES IN OWNERS’ EQUITY
1. 2(a) Prepare the entries to:
a. Correct the understatement of depreciation expense
b. Record the cumulative effect of change in inventory methods
c. Record the dividends declared
2. 2(b) Complete the statement of changes in owners’ equity
Click here for the solution: Lee Corporation, a U.S. company, began operations on January 1, 2004
Year Net Income Dividends Declared
2004 $40,000 $0
2005 125,000 50,000
2006 160,000 50,000
The following information relates to 2007:
* Income before income tax: $240,000
* Prior period adjustment: understatement of 2005 depreciation expense (before taxes): $ 25,000
* Cumulative decrease in income from change in inventory methods (before taxes): $35,000
* Dividends declared: $100,000 ($75,000 paid in 2007, $25,000 to be paid in 2008)
* Effective tax rate: 40%
Additional information:
Common stock issued (par) $16,250
Additional paid-in capital $146,250
Treasury stock $70,000
Shares issued 32,500
Lee acquired a Canadian subsidiary whose sole asset is a piece of land. Lee acquired the subsidiary on 12/31/04 for the exact value of the land, CA$100,000. Lee owns 100% of the subsidiary.
Deliverables:
In the attached Excel worksheet complete the following:
Section 1 – FOREIGN CURRENCY TRANSLATION:
1. Go to www.x-rates.com and use the historic lookup feature to determine exchange rates on 12/31/04, 12/31/05, 12/31/06 and 12/31/07.
2. Enter the exchange rate factors in the “Factor” column of the Foreign Currency Translation table
3. Apply the factors using the appropriate formulate to convert investment from CAD to USD
4. Calculate the annual and cumulative adjustments
Section 2 – STATEMENT OF CHANGES IN OWNERS’ EQUITY
1. 2(a) Prepare the entries to:
a. Correct the understatement of depreciation expense
b. Record the cumulative effect of change in inventory methods
c. Record the dividends declared
2. 2(b) Complete the statement of changes in owners’ equity
Click here for the solution: Lee Corporation, a U.S. company, began operations on January 1, 2004
Monday, August 17, 2015
Dover Company began operations in 2012 and determined its ending inventory at cost and at the lower of cost or market at December 31, 2012 and December 31, 2013
E9-4 Dover Company began operations in 2012 and determined its ending inventory at cost and at the lower of cost or market at December 31, 2012 and December 31, 2013 . This information is presented below.
Cost lower of cost or market
12/31/12 $346,000 $322,000
12/31/12 410,000 390,000
a) Prepare the journal entries required at December 31,2012 and December 31,2013 assuming that the inventory is recorded at lower of cost or market and a perpetual inventory system. Assume the cost of goods sold method with no allowance used.
b) Prepare journal entries required at December 31, 2012 and December 31,2013 assuming that the inventory is recorded at lower of cost or market and a perpetual inventory system. Assume the loss method with an allowance used.
c) Which of the 2 methods above provides the higher net income in each year?
Click here for the solution: Dover Company began operations in 2012 and determined its ending inventory at cost and at the lower of cost or market at December 31, 2012 and December 31, 2013
Cost lower of cost or market
12/31/12 $346,000 $322,000
12/31/12 410,000 390,000
a) Prepare the journal entries required at December 31,2012 and December 31,2013 assuming that the inventory is recorded at lower of cost or market and a perpetual inventory system. Assume the cost of goods sold method with no allowance used.
b) Prepare journal entries required at December 31, 2012 and December 31,2013 assuming that the inventory is recorded at lower of cost or market and a perpetual inventory system. Assume the loss method with an allowance used.
c) Which of the 2 methods above provides the higher net income in each year?
Click here for the solution: Dover Company began operations in 2012 and determined its ending inventory at cost and at the lower of cost or market at December 31, 2012 and December 31, 2013
Saturday, August 15, 2015
Brewster Company began operations on January 1, 2010, adopting the conventional retail inventory system
E9-22 (Retail Inventory Method—Conventional and LIFO) Brewster Company began operations on January 1, 2010, adopting the conventional retail inventory system. None of the company’s merchandise was marked down in 2010 and, because there was no beginning inventory, its ending inventory for 2010 of $41,100 would have been the same under either the conventional retail system or the LIFO retail system.
On December 31, 2011, the store management considers adopting the LIFO retail system and desires to know how the December 31, 2011, inventory would appear under both systems. All pertinent data regarding purchases, sales, markups, and markdowns are shown below. There has been no change in the price level.
Cost Retail
Inventory, Jan. 1, 2011 $ 41,100 $ 60,000
Markdowns (net) 13,000
Markups (net) 22,000
Purchases (net) 150,000 191,000
Sales (net) 167,000
Instructions
Determine the cost of the 2011 ending inventory under both (a) the conventional retail method and (b) the LIFO retail method.
Click here for the solution: Brewster Company began operations on January 1, 2010, adopting the conventional retail inventory system
On December 31, 2011, the store management considers adopting the LIFO retail system and desires to know how the December 31, 2011, inventory would appear under both systems. All pertinent data regarding purchases, sales, markups, and markdowns are shown below. There has been no change in the price level.
Cost Retail
Inventory, Jan. 1, 2011 $ 41,100 $ 60,000
Markdowns (net) 13,000
Markups (net) 22,000
Purchases (net) 150,000 191,000
Sales (net) 167,000
Instructions
Determine the cost of the 2011 ending inventory under both (a) the conventional retail method and (b) the LIFO retail method.
Click here for the solution: Brewster Company began operations on January 1, 2010, adopting the conventional retail inventory system
Saturday, August 1, 2015
In 2010, Steinrotter Construction Corp. began construction work under a 3-year contract
E18-5 (Analysis of Percentage-of-Completion Financial Statements) In 2010, Steinrotter Construction Corp. began construction work under a 3-year contract. The contract price was $1,000,000. Steinrotter uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of cost incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2010, follow.
Balance Sheet
Accounts receivable-construction contract billings $18,000
Construction in progress $65,000
Less: Contract billings 61,500
Cost of uncompleted contract in excess of billings 3,500
Income Statement
Income (before tax) on the contract recognized in 2010 $19,500
Instructions
(a) How much cash was collected in 2010 on this contract?
(b) What was the initial estimated total income before tax on this contract?
Click here for the solution: In 2010, Steinrotter Construction Corp. began construction work under a 3-year contract
Balance Sheet
Accounts receivable-construction contract billings $18,000
Construction in progress $65,000
Less: Contract billings 61,500
Cost of uncompleted contract in excess of billings 3,500
Income Statement
Income (before tax) on the contract recognized in 2010 $19,500
Instructions
(a) How much cash was collected in 2010 on this contract?
(b) What was the initial estimated total income before tax on this contract?
Click here for the solution: In 2010, Steinrotter Construction Corp. began construction work under a 3-year contract
Monday, June 29, 2015
Holden Graham started The Graham Co., a new business that began operations on May 1
Holden Graham started The Graham Co., a new business that began operations on May 1. The Graham Co. completed the following transactions during its first month of operations.
H. Graham invested $45,000 cash in the company in exchange for its common stock.
The company rented a furnished office and paid $2,300 cash for May's rent.
The company purchased $1,890 of office equipment on credit.
The company paid $790 cash for this month's cleaning services.
The company provided consulting services for a client and immediately collected $5,400
The company provided $2,600 of consulting services for a client on credit.
The company paid $750 cash for an assistant's salary for the first half of this month.
The company received $2,600 cash payment for the services provided on May 12.
The company provided $3,700 of consulting services on credit.
The company received $3,700 cash payment for the services provided on May 22.
The company paid $1,890 cash for the office equipment purchased on May 3.
The company purchased $85 of advertising in this month's (May) local paper on credit payment is due June 1.
The company paid $750 cash for an assistant's salary for the second half of this month
The company paid $350 cash for this month's telephone bill.
The company paid $300 cash icr this month's utilities.
The company paid $1,500 cash in dividends to the owner (sole shareholder).
Required:
2. Enter the amount of each transaction on individual items of the accounting equation.
3.1 Prepare Holden Graham Company's income statement for May.
3.2 Prepare Holden Graham company's statement of Retained Earnings for May.
3.3 Prepare Holden Graham Company's Balance Sheet for May 31.
3.4 Prepare Holden Graham Company's statemant of Cash Flows For Month Ended May 31
Click here for the solution: Holden Graham started The Graham Co., a new business that began operations on May 1
H. Graham invested $45,000 cash in the company in exchange for its common stock.
The company rented a furnished office and paid $2,300 cash for May's rent.
The company purchased $1,890 of office equipment on credit.
The company paid $790 cash for this month's cleaning services.
The company provided consulting services for a client and immediately collected $5,400
The company provided $2,600 of consulting services for a client on credit.
The company paid $750 cash for an assistant's salary for the first half of this month.
The company received $2,600 cash payment for the services provided on May 12.
The company provided $3,700 of consulting services on credit.
The company received $3,700 cash payment for the services provided on May 22.
The company paid $1,890 cash for the office equipment purchased on May 3.
The company purchased $85 of advertising in this month's (May) local paper on credit payment is due June 1.
The company paid $750 cash for an assistant's salary for the second half of this month
The company paid $350 cash for this month's telephone bill.
The company paid $300 cash icr this month's utilities.
The company paid $1,500 cash in dividends to the owner (sole shareholder).
Required:
2. Enter the amount of each transaction on individual items of the accounting equation.
3.1 Prepare Holden Graham Company's income statement for May.
3.2 Prepare Holden Graham company's statement of Retained Earnings for May.
3.3 Prepare Holden Graham Company's Balance Sheet for May 31.
3.4 Prepare Holden Graham Company's statemant of Cash Flows For Month Ended May 31
Click here for the solution: Holden Graham started The Graham Co., a new business that began operations on May 1
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