E6-1 The San Marcos Inn is trying to determine its break-even point. The inn has 75 rooms that are rented at $50 a night. Operating costs are as follows: Costs Amount Salaries $8,500 per month Utilities 2,000 per month Depreciation 1,000 per month Maintenance 500 per month Maid service 5 per room Other costs 33 per room
(a) Determine the inn’s break-even point in 1. Number of rented rooms per month and 2. Dollars
(b) If the inn plans on renting an average of 50 rooms per day (assuming a 30-day month), what is 1. The monthly margin of safety in dollars and 2. The margin of safety ratio
Click here for the solution: (BA 225) The San Marcos Inn is trying to determine its break-even point
Showing posts with label determine. Show all posts
Showing posts with label determine. Show all posts
Wednesday, April 13, 2016
Tuesday, November 10, 2015
PowerSwitch, Inc: Determine ending inventories after flood; insurance claim letter
PowerSwitch, Inc: Determine ending inventories after flood; insurance claim letter
PowerSwitch, Inc. designs and manufactures switches used in telecommunications. Serious flooding throughout North Carolina affected PowerSwitch's facilities. Inventory was completely ruined, and the company's computer system, including all accounting records, was destroyed.
Before the disaster recovery specialists clean the buildings, Stephen Plum, the company controller, is anxious to salvage whatever records he can to support an insurance claim for the destroyed inventory. He is standing in what is left of the accounting department with Paul Lopez, the cost accountant.
"I didn't know mud could smell so bad, " Paul says. "What would I be looking for?" "Don't worry about beginning inventory numbers, " responds Stephen, "we'll get them from last year's annual report. We need first quarter cost data."
I was working on the first quarter results just before the storm hit, Paul says. Look, my reports still in my desk drawer. All I can make out is that for the first quarter, material purchases were $476,000 and direct labor, manufacturing overhead, and total manufacturing costs to account for were $505,000, $245,000, and $1,425,000, respectively. Wait, and cost of goods available for sale was $1,340,000."
"Great, "says Stephen. "I remember that sales for the period were approximately $1.7 million. Given our gross profit of 30%, thats all you should need." Paul is not sure about that, but decides to see what he can do with this information. The beginning inventory numbers are
Direct materials - $113,000
Work in process - $229,000
Finished goods - $154,000
He remembers a schedule he learned in college that may help him get started.
Requirements:
1. Determine the ending inventories of direct materials, work in process, and finished goods.
2. Draft an insurance claim letter for the controller, seeking reimbursment for the flood damage to inventory. PowerSwitch's insurance representative is Gary Ogleby, at Industrial Insurance Co., 1122 Main Street, Hartford, CT 06268. The policy number is #3454340-23. PowerSwitch address is 5 Research Triangle Way, Raleigh, NC 27698
Click here for the solution: PowerSwitch, Inc: Determine ending inventories after flood; insurance claim letter
PowerSwitch, Inc. designs and manufactures switches used in telecommunications. Serious flooding throughout North Carolina affected PowerSwitch's facilities. Inventory was completely ruined, and the company's computer system, including all accounting records, was destroyed.
Before the disaster recovery specialists clean the buildings, Stephen Plum, the company controller, is anxious to salvage whatever records he can to support an insurance claim for the destroyed inventory. He is standing in what is left of the accounting department with Paul Lopez, the cost accountant.
"I didn't know mud could smell so bad, " Paul says. "What would I be looking for?" "Don't worry about beginning inventory numbers, " responds Stephen, "we'll get them from last year's annual report. We need first quarter cost data."
I was working on the first quarter results just before the storm hit, Paul says. Look, my reports still in my desk drawer. All I can make out is that for the first quarter, material purchases were $476,000 and direct labor, manufacturing overhead, and total manufacturing costs to account for were $505,000, $245,000, and $1,425,000, respectively. Wait, and cost of goods available for sale was $1,340,000."
"Great, "says Stephen. "I remember that sales for the period were approximately $1.7 million. Given our gross profit of 30%, thats all you should need." Paul is not sure about that, but decides to see what he can do with this information. The beginning inventory numbers are
Direct materials - $113,000
Work in process - $229,000
Finished goods - $154,000
He remembers a schedule he learned in college that may help him get started.
Requirements:
1. Determine the ending inventories of direct materials, work in process, and finished goods.
2. Draft an insurance claim letter for the controller, seeking reimbursment for the flood damage to inventory. PowerSwitch's insurance representative is Gary Ogleby, at Industrial Insurance Co., 1122 Main Street, Hartford, CT 06268. The policy number is #3454340-23. PowerSwitch address is 5 Research Triangle Way, Raleigh, NC 27698
Click here for the solution: PowerSwitch, Inc: Determine ending inventories after flood; insurance claim letter
Monday, October 26, 2015
Based on the following income statement and balance sheet for Rashid Corporation, determine the cash flows from operating activities using the indirect method
Based on the following income statement and balance sheet for Rashid Corporation, determine the cash flows from operating activities using the indirect method.
Rashid Corporation
Income Statement
For Year ended Dec. 31, 2009
Sales 504,000
Cost of goods sold 327,600
Depreciation expense 42000
other operating expenses 125500 (495100)
other gains (losses):
Gain on sale of equipment 7200
Income before taxes 16100
Income tax expense (4800)
Net income 11,300
Rashid Corporation
Balance Sheets
For Year ended Dec. 31, 2009
2009 2008
Assets
Cash 64650 55800
Accounts Receivable 21000 29000
Inventory 58000 52100
Equipment 240000 222000
Accumulated depreciation (106000) (96000)
Total assets 277650 262900
Liabilities:
Accounts Payable 28400 23700
Income taxes payable 1050 1200
Total Liabilities 29450 24900
Equity
Common Stock 106000 106000
Capital in excess of par value 18000 18000
Retained earnings 124200 114000
Total equity 248200 238000
Click here for the solution: Based on the following income statement and balance sheet for Rashid Corporation, determine the cash flows from operating activities using the indirect method
Rashid Corporation
Income Statement
For Year ended Dec. 31, 2009
Sales 504,000
Cost of goods sold 327,600
Depreciation expense 42000
other operating expenses 125500 (495100)
other gains (losses):
Gain on sale of equipment 7200
Income before taxes 16100
Income tax expense (4800)
Net income 11,300
Rashid Corporation
Balance Sheets
For Year ended Dec. 31, 2009
2009 2008
Assets
Cash 64650 55800
Accounts Receivable 21000 29000
Inventory 58000 52100
Equipment 240000 222000
Accumulated depreciation (106000) (96000)
Total assets 277650 262900
Liabilities:
Accounts Payable 28400 23700
Income taxes payable 1050 1200
Total Liabilities 29450 24900
Equity
Common Stock 106000 106000
Capital in excess of par value 18000 18000
Retained earnings 124200 114000
Total equity 248200 238000
Click here for the solution: Based on the following income statement and balance sheet for Rashid Corporation, determine the cash flows from operating activities using the indirect method
Wednesday, September 23, 2015
For each of the following depreciable assets, determine the missing amount (?)
E11-5 Depreciation methods; solving for unknowns
For each of the following depreciable assets, determine the missing amount (?). Abbreviations for depreciation methods are SL for straight line, SYD for sum-of-the-years' digits, and DDB for double-declining balance.
Asset Cost Residual Value Service of Life Depreciation Method Depreciation (Yr 2)
A ? $20,000 5 DDB $24,000
B $40,000 ? 8 SYD 7,000
C 65,000 5,000 ? SL 6,000
D 230,000 10,000 10 ? 22,000
E 200,000 20,000 8 150% DB ?
Click here for the solution: For each of the following depreciable assets, determine the missing amount (?)
For each of the following depreciable assets, determine the missing amount (?). Abbreviations for depreciation methods are SL for straight line, SYD for sum-of-the-years' digits, and DDB for double-declining balance.
Asset Cost Residual Value Service of Life Depreciation Method Depreciation (Yr 2)
A ? $20,000 5 DDB $24,000
B $40,000 ? 8 SYD 7,000
C 65,000 5,000 ? SL 6,000
D 230,000 10,000 10 ? 22,000
E 200,000 20,000 8 150% DB ?
Click here for the solution: For each of the following depreciable assets, determine the missing amount (?)
Monday, August 31, 2015
Large Land Photo Shop has asked you to determine whether the company's ability to pay current liabilities and total liabilities improved or deteriorated during 2012
E15-18 Large Land Photo Shop has asked you to determine whether the company's ability to pay current liabilities and total liabilities improved or deteriorated during 2012. To answer this question, you gather the following data:
2012 2011
Cash $ 58,000 $ 57,000
Short-term investments 31,000 —
Net receivables 110,000 132,000
Inventory 247,000 297,000
Total assets 585,000 535,000
Total current liabilities 255,000 222,000
Long-term note payable 46,000 48,000
Income from operations 180,000 153,000
Interest expense 52,000 39,000
Requirement
• 1.Compute the following ratios for 2012 and 2011:
o a.Current ratio
o b.Acid-test ratio
o c.Debt ratio
o d.Debt to equity ratio
Click here for the solution: Large Land Photo Shop has asked you to determine whether the company's ability to pay current liabilities and total liabilities improved or deteriorated during 2012
2012 2011
Cash $ 58,000 $ 57,000
Short-term investments 31,000 —
Net receivables 110,000 132,000
Inventory 247,000 297,000
Total assets 585,000 535,000
Total current liabilities 255,000 222,000
Long-term note payable 46,000 48,000
Income from operations 180,000 153,000
Interest expense 52,000 39,000
Requirement
• 1.Compute the following ratios for 2012 and 2011:
o a.Current ratio
o b.Acid-test ratio
o c.Debt ratio
o d.Debt to equity ratio
Click here for the solution: Large Land Photo Shop has asked you to determine whether the company's ability to pay current liabilities and total liabilities improved or deteriorated during 2012
Tuesday, August 18, 2015
Determine the basis of stock in the hands of the shareholder in each of the following instances
47. Determine the basis of stock in the hands of the shareholder in each of the following instances. Assume that the 80% rule is met in all cases.
a. Contribution of property with a basis of $1,000 and a FMV of $1,400.
b. Contribution of property with a basis of $3,000 and a FMV of $3,800. The stockholder also received $500 cash from the corporation as part of the stock transaction.
c. Contribution of property with a basis of $8,200 and a FMV of $12,500. The stockholder also received property with a FMV of $1,700 from the corporation as part of the stock transaction.
d. Contribution of a building with a FMV of $200,000, a mortgage (assumed by the corporation) of $100,000, and a basis of $125,000.
e. Contribution of a building with a FMV of $1,700,000, a mortgage (assumed by the corporation) of $1,000,000, and a basis of $635,000
Click here for the solution: Determine the basis of stock in the hands of the shareholder in each of the following instances
a. Contribution of property with a basis of $1,000 and a FMV of $1,400.
b. Contribution of property with a basis of $3,000 and a FMV of $3,800. The stockholder also received $500 cash from the corporation as part of the stock transaction.
c. Contribution of property with a basis of $8,200 and a FMV of $12,500. The stockholder also received property with a FMV of $1,700 from the corporation as part of the stock transaction.
d. Contribution of a building with a FMV of $200,000, a mortgage (assumed by the corporation) of $100,000, and a basis of $125,000.
e. Contribution of a building with a FMV of $1,700,000, a mortgage (assumed by the corporation) of $1,000,000, and a basis of $635,000
Click here for the solution: Determine the basis of stock in the hands of the shareholder in each of the following instances
Using the information from Problem 47, determine the basis of the property contributed in the hands of the corporation in each instance
48. Using the information from Problem 47, determine the basis of the property contributed in the hands of the corporation in each instance. Assume that the 80% rule is met in all cases.
Click here for the solution: Using the information from Problem 47, determine the basis of the property contributed in the hands of the corporation in each instance
Click here for the solution: Using the information from Problem 47, determine the basis of the property contributed in the hands of the corporation in each instance
Friday, August 14, 2015
Determine the size of the M1 money supply using the following information
1. Determine the size of the M1 money supply using the following information.
Currency plus traveler’s checks $25 million
Negotiable CDs $10 million
Demand deposits $13 million
Other checkable deposits $12 million
Click here for the solution: Determine the size of the M1 money supply using the following information
Currency plus traveler’s checks $25 million
Negotiable CDs $10 million
Demand deposits $13 million
Other checkable deposits $12 million
Click here for the solution: Determine the size of the M1 money supply using the following information
Tuesday, August 4, 2015
Thibodeaux Limousine Corporation is trying to determine a predetermined manufacturing overhead
Thibodeaux Limousine Corporation is trying to determine a predetermined manufacturing overhead. Estimated overhead for the upcoming year is $776,000. Budgeted machine hours are 105,000 hours, and budgeted labor hours are 17,500 hours at a rate of $10.00 per hour. Compute the predetermined overhead rate based on:
(a) Direct labor dollars
(b) Direct labor hours
(c) Machine hours
Click here for the solution: Thibodeaux Limousine Corporation is trying to determine a predetermined manufacturing overhead
(a) Direct labor dollars
(b) Direct labor hours
(c) Machine hours
Click here for the solution: Thibodeaux Limousine Corporation is trying to determine a predetermined manufacturing overhead
Saturday, August 1, 2015
Apply the controlled and affiliated group rules to determine whether a parent-subsidiary controlled group
Apply the controlled and affiliated group rules to determine whether a parent-subsidiary controlled group or an affiliated group exists in each of the following independent situations. Circle Y for yes and N for no.
Situation Parent- Subsidiary Controlled Group? Affiliated Group?
Throughout the year, Parent owns 65% of the stock of SubCo. Y N Y N
Parent owns 70% of SubCo. The other 30% of SubCo stock is owned by Senior, a wholly owned subsidiary of Parent. Y N Y N
For 11 months, Parent owns 75% of the stock of SubCo. For the last month of the tax year, Parent owns 100% of the SubCo stock. Y N Y N
Click here for the solution: Apply the controlled and affiliated group rules to determine whether a parent-subsidiary controlled group
Situation Parent- Subsidiary Controlled Group? Affiliated Group?
Throughout the year, Parent owns 65% of the stock of SubCo. Y N Y N
Parent owns 70% of SubCo. The other 30% of SubCo stock is owned by Senior, a wholly owned subsidiary of Parent. Y N Y N
For 11 months, Parent owns 75% of the stock of SubCo. For the last month of the tax year, Parent owns 100% of the SubCo stock. Y N Y N
Click here for the solution: Apply the controlled and affiliated group rules to determine whether a parent-subsidiary controlled group
Sunday, July 19, 2015
In each of the following independent situations, determine the gift tax that was due and the decedent’s final estate tax liability
In each of the following independent situations, determine the gift tax that was due and the decedent’s final estate tax liability (net of any unified tax credit). Decedent
Dana Alice Ken
Year of death 2003 2004 2012
Taxable estate $900,000 $1,700,000 $1,400,000
Post-1976 taxable gifts -
Made in 2000 900,000 - -
Made in 2001 - 800,00 -
Made in 2011 - - 5,200,000
Click here for the solution: In each of the following independent situations, determine the gift tax that was due and the decedent’s final estate tax liability
Dana Alice Ken
Year of death 2003 2004 2012
Taxable estate $900,000 $1,700,000 $1,400,000
Post-1976 taxable gifts -
Made in 2000 900,000 - -
Made in 2001 - 800,00 -
Made in 2011 - - 5,200,000
Click here for the solution: In each of the following independent situations, determine the gift tax that was due and the decedent’s final estate tax liability
Wednesday, July 15, 2015
For each individual situation, determine the amount that should be reported as cash
E7-2 (Determine Cash Balance) Presented below are a number of independent situations.
Instructions
For each individual situation, determine the amount that should be reported as cash. If the item(s) is not reported as cash, explain the rationale.
1. Checking account balance $925,000; certificate of deposit $1,400,000; cash advance to subsidiary of $980,000; utility deposit paid to gas company $180.
2. Checking account balance $600,000; an overdraft in special checking account at same bank as normal checking account of $17,000; cash held in a bond sinking fund $200,000; petty cash fund $300; coins and currency on hand $1,350.
3. Checking account balance $590,000; postdated check from customer $11,000; cash restricted due to maintaining compensating balance requirement of $100,000; certified check from customer $9,800; postage stamps on hand $620.
4. Checking account balance at bank $37,000; money market balance at mutual fund (has checking privileges) $48,000; NSF check received from customer $800.
5. Checking account balance $700,000; cash restricted for future plant expansion $500,000; short-term Treasury bills $180,000; cash advance received from customer $900 (not included in checking account balance); cash advance of $7,000 to company executive, payable on demand; refundable deposit of $26,000 paid to federal government to guarantee performance on construction contract.
Click here for the solution: At the end of 2010 Sorter Company has accounts receivable of $900,000 and an allowance for doubtful accounts of $40,000
Instructions
For each individual situation, determine the amount that should be reported as cash. If the item(s) is not reported as cash, explain the rationale.
1. Checking account balance $925,000; certificate of deposit $1,400,000; cash advance to subsidiary of $980,000; utility deposit paid to gas company $180.
2. Checking account balance $600,000; an overdraft in special checking account at same bank as normal checking account of $17,000; cash held in a bond sinking fund $200,000; petty cash fund $300; coins and currency on hand $1,350.
3. Checking account balance $590,000; postdated check from customer $11,000; cash restricted due to maintaining compensating balance requirement of $100,000; certified check from customer $9,800; postage stamps on hand $620.
4. Checking account balance at bank $37,000; money market balance at mutual fund (has checking privileges) $48,000; NSF check received from customer $800.
5. Checking account balance $700,000; cash restricted for future plant expansion $500,000; short-term Treasury bills $180,000; cash advance received from customer $900 (not included in checking account balance); cash advance of $7,000 to company executive, payable on demand; refundable deposit of $26,000 paid to federal government to guarantee performance on construction contract.
Click here for the solution: At the end of 2010 Sorter Company has accounts receivable of $900,000 and an allowance for doubtful accounts of $40,000
Friday, May 29, 2015
4-4A Eaton Enterprises uses the wage-bracket method to determine federal income tax withholding on its employees
4-4A Eaton Enterprises uses the wage-bracket method to determine federal
income tax withholding on its employees. Find the amount to withhold
from the wages paid each employee.
Employee
Marital Status
No. of Withholding Allowances
Payroll Period
W = Weekly
S = Semimonthly
M = Monthly
D = Daily
Wage
Amount to Be Withheld
Hal Bower M 1 W $1,350
Ruth Cramden S 1 W 590
Gil Jones S 3 W 675
Teresa Kern M 6 M 4,090
Ruby Long M 2 M 2,730
Katie Luis M 8 S 955
Susan Martin S 1 D 96
Jim Singer S 4 S 2,610*
Martin Torres M 4 M 3,215
* Must use percentage method.
Click here for the solution: 4-4A Eaton Enterprises uses the wage-bracket method to determine federal income tax withholding on its employees
Employee
Marital Status
No. of Withholding Allowances
Payroll Period
W = Weekly
S = Semimonthly
M = Monthly
D = Daily
Wage
Amount to Be Withheld
Hal Bower M 1 W $1,350
Ruth Cramden S 1 W 590
Gil Jones S 3 W 675
Teresa Kern M 6 M 4,090
Ruby Long M 2 M 2,730
Katie Luis M 8 S 955
Susan Martin S 1 D 96
Jim Singer S 4 S 2,610*
Martin Torres M 4 M 3,215
* Must use percentage method.
Click here for the solution: 4-4A Eaton Enterprises uses the wage-bracket method to determine federal income tax withholding on its employees
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