Kipling Company deposits all receipts and makes all payments by check

Kipling Company deposits all receipts and makes all payments by check. The following information is available from the cash records.

June 30 Bank Reconciliation
Balance per bank $ 7,000
Add: Deposits in transit 1,540
Deduct: Outstanding checks (2,000)
Balance per books $ 6,540
Month of July Results
Balance July 31 Per Bank $8,650 Per Books $9,250
July deposits Per bank 4,500 per books 5,810
July Checks per bank 4,000 per books 3,100
July note collected (not included in July deposits) per bank 1,500 per books—
July bank service charge per bank 15 per books—
July NSF check from a customer, returned by the per bank 335 per books —
(recorded by bank as a charge)

Instructions
(a) Prepare a bank reconciliation going from balance per bank and balance per book to correct cash balance.
(b) Prepare the general journal entry or entries to correct the Cash account

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Mucky Duck makes swimsuits and sells these suits directly to retailers

ACC 560 Week 5 Assignment

E8-3 Mucky Duck makes swimsuits and sells these suits directly to retailers. Although Mucky Duck has a variety of suits, it does not make the All-Body suit used by highly skilled swimmers. The market research department believes that a strong market exists for this type of suit. The department indicates that the All-Body suit would sell for approximately $110. Given its experience, Mucky Duck believes the All-Body suit would have the following manufacturing costs.

Direct materials $25
Direct labor 30
Manufacturing overhead 45
Total costs $100

Instructions:
a) Assume that Mucky Duck uses cost-plus pricing, setting the selling price 25% above its costs. What would be the price charged for the All-Body swimsuit?
b) Assume that Mucky Duck uses target costing. What is the price that Mucky Duck would charge the retailer for the All-Body swimsuit?
c) What is the highest acceptable manufacturing cost Mucky Duck would be willing to incur to produce the All-Body swimsuit, if it desired a profit of $25 per unit? (Assume target costing.)

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Gardner Company currently makes all sales on credit and offers no cash discount

Gardner Company currently makes all sales on credit and offers no cash discount. The firm is considering offering a 2% cash discount for payment within 15 days. The firm’s current average collection period is 60 days, sales are 40,000 units, selling price is $45 per unit, and variable cost per unit is $36. The firm expects that the change in credit terms will result in an increase in sales to 42,000 units, that 70% of the sales will take the discount, and that the average collection period will fall to 30 days. If the firm’s required rate of return on equal-risk investments is 25%, should the proposed discount be offered? (Note: Assume a 365-day year.)


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Toyco, a retail toy chain, honors two bank credit cards and makes daily deposits of credit card sales in two credit card bank accounts

12-42 Toyco, a retail toy chain, honors two bank credit cards and makes daily deposits of credit card sales in two credit card bank accounts. (Bank A and Bank B). Each day, Toyco batches its credit card sales slips, bank deposit slips and authorized sales return documents and sends them to data processing for data entry. Each week detailed computer printouts of the general ledger credit card cash accounts are prepared. Credit card banks have been instructed to make an automatic weekly transfer of cash to Toyco's general bank account. The credit card banks charge back deposits that include sales to holders of stolen or expired cards.

The auditor examining Toyco financial statements has obtained copies of the detailed general ledger cash account printouts, a summary of the bank statements and the manually prepared bank reconciliations, all for the week of December 31, as shown here. (see attachment)

Required:
Review the December 31 bank reconciliation and the related information contained in the following schedules and describe what actions the auditor should take to obtain satisfaction for each item on the bank reconciliation. Assume that all amounts are material and that all computations are accurate. Organize your answer sheet as follows, using the code contained on the bank reconciliation:

Code Number Actions to Be Taken by the Auditor to Gain Satisfaction


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David deposits all receipts and makes all payments by check

David deposits all receipts and makes all payments by check. The following information is available from the cash records:

MARCH 31 BANK RECONCILIATION

Balance per bank $26,746
Add: Deposits in transit 2,100
Deduct: Outstanding checks (3,800)
Balance per books $25,046

Month of April Results

Per Bank Per Books

Balance April 30 $27,995 $24,355
April deposits 8,864 14,889
April checks 12,200 16,080
April note collected 3,000 -0-
(not included in April deposits)
April bank service charge 35 -0-
April NSF check of a customer 900 -0-
returned by the bank
(recorded by bank as a charge)

Instructions
Calculate the amount of the April 30:
1. Deposits in transit
2. Outstanding checks


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(White Collar Crime) Helm Instruction Co. in Maumee, Ohio, makes custom electrical control systems

7-5A. White Collar Crime. Helm Instruction Co. in Maumee, Ohio, makes custom electrical control systems. In September 1998, Helm hired Patrick Walsh to work as comptroller. Walsh soon developed a close relationship with Richard Wilhelm, Helm’s president, who granted Walsh’s request to hire Shari Price as an assistant. Wilhelm was not aware that Walsh and Price were engaged in a extramarital affair. Over the next five years, Walsh and Price spent more than $200,000 of Helm’s money on themselves. Among other things, Walsh drew unauthorized checks on Helm’s accounts to pay his personal credit cards and issued to Price and himself unauthorized salary increases, overtime payments, and tuition reimbursement payments, altering Helm’s records to hide the payments. After an investigation, Helm officials confronted Walsh. He denied the affair with Price, claimed that his unauthorized use of Helm’s funds was an “interest-free loan,” and argued that it was less of a burden on the company to pay his credit cards than to give him the salary increases to which he felt he was entitled. Did Walsh commit a crime? If so, what crime did he commit? Discuss. [State v. Walsh, 113 Ohio App. 3d 1515, 866 N.E.2d 513 (6 Dist. 2007)]


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WoodGrain Technology makes home office furniture from fine hardwoods

WoodGrain Technology makes home office furniture from fine hardwoods. The company uses a job-order costing system and predetermined overhead rates to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Preparation Department is based on machine-hours, and the rate in the Fabrication Department is based on direct materials cost. At the beginning of the year, the company’s management made the following estimates for the year:

Department
Preparation Fabrication
Machine-hours . . . . . . . . . . . . . . . . . 80,000 21,000
Direct labour-hours. . . . . . . . . . . . . . 35,000 65,000
Direct materials cost. . . . . . . . . . . . . $190,000 $400,000
Direct labour cost . . . . . . . . . . . . . . . 280,000 530,000
Manufacturing overhead cost . . . . . . 416,000 720,000

Job 127 was started on April 1 and completed on May 12. The company’s cost records show the following information on the job:

Department
Preparation Fabrication
Machine-hours . . . . . . . . . . . . . . . . . 350 70
Direct labour-hours. . . . . . . . . . . . . . 80 130
Direct materials cost. . . . . . . . . . . . . $940 $1,200
Direct labour cost . . . . . . . . . . . . . . . 710 980

Required:
1. Compute the predetermined overhead rate used during the year in the Preparation Department. Compute the rate used in the Fabrication Department.
2. Compute the total overhead cost applied to job 127.
3. What would be the total cost recorded for job 127? If the job contained 25 units, what would be the unit product cost?
4. At the end of the year, the records of WoodGrain Technology revealed the following actual cost and operating data for all jobs worked on during the year:
Department
Preparation Fabrication
Machine-hours . . . . . . . . . . . . . . . . . 73,000 24,000
Direct labour-hours. . . . . . . . . . . . . . 30,000 68,000
Direct materials cost. . . . . . . . . . . . . $165,000 $420,000
Manufacturing overhead cost . . . . . . 390,000 740,000

What was the amount of underapplied or overapplied overhead in each department at the end of the year?


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Fouch Company makes 30,000 units per year of a part it uses in the products it manufactures

Fouch Company makes 30,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows:

Direct Materials-------------------------------$15.70
Direct Labor-----------------------------------$17.50
Variable Manufacturing Overhead-------$ 4.50
Fixed Manufacturing Overhead----------$14.60
----------
Unite Product Cost--------------------------$52.30
----------

An outside supplier has offered to sell the company all of these parts it needs for $51.90 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $219,000 per year.

If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $6.20 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products.

Required:
i. How much of the unit product cost of $52.30 is relevant in the decision of whether to make or buy the part?
ii. What is the net total dollar advantage (disadvantage) of purchasing the part rather than making it?
iii. What is the maximum amount the company should be willing to pay an outside supplier per unit for the part if the supplier commits to supplying all 30,000 units required each year?

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Innova Corporation makes a commercial-grade cooking griddle

E8-4 Innova Corporation makes a commercial-grade cooking griddle. The following information is available for Innova Corporation’s anticipated annual volume of 30,000 units.

Per Unit Total
Direct materials $17
Direct labor $ 8

Variable manufacturing overhead $11
Fixed manufacturing overhead $360,000
Variable selling and administrative expenses $ 4
Fixed selling and administrative expenses $150,000
The company uses a 40% markup percentage on total cost

Instructions
(a) Compute the total cost per unit.
(b) Compute the target selling price.

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Inman Manufacturing Company makes a product that it sells for $ 60 per unit

P11-28 Determining the break- even point and preparing a contribution margin income statement

Inman Manufacturing Company makes a product that it sells for $ 60 per unit. The company incurs variable manufacturing costs of $ 24 per unit. Variable selling expenses are $ 12 per unit, annual fixed manufacturing costs are $ 189,000, and fixed selling and administrative costs are $ 141,000 per year.

Required
Determine the break- even point in units and dollars using the following approaches.
a. Equation method.
b. Contribution margin per unit.
c. Contribution margin ratio.
d. Confirm your results by preparing a contribution margin income statement for the break-even sales volume.

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Ashley runs a small business in Boulder, Colorado, that makes snow skis

Ashley runs a small business in Boulder, Colorado, that makes snow skis. She expects the business to grow substantially over the next three years. Because she is concerned about their product liability and is planning to take the company public in 2014, she is currently considering incorporating the business. Financial data are as follows.

2013 2014 2015
Sales Revenue 150,000 320,000 600,000
Tax-Free Interest Income 5000 8000 15,000
Deductible cash expenses 30,000 58,000 95,000
Tax depreciation 25,000 20,000 40,000

a) Compute the present value of the future cash flows for 2013-2015 assuming that Ashley incorporates the business and pays all after-tax income as dividends (for Ashleys dividends that qualify for the 15% rate)

b) Compute the present value of the future cash flows for 2013 to 2015 assuming that Ashley continues to operate the business as a sole proprietorship

c) Should Ashley incorporate the business this year?

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Blackmon Manufacturing Company makes a product that it sells for $50 per unit

Problem 11-28 Determining the Break-even Point and Preparing a Contribution Margin Income Statement

Blackmon Manufacturing Company makes a product that it sells for $50 per unit. The company incurs variable manufacturing costs of $14 per unit. Variable selling expenses are $6 per unit, annual fixed manufacturing costs are $189,000, and fixed selling and administrative costs are $141,000 per year.

a. Determine the break even point in units and dollars
b. Confirm your results by preparing a contribution margin income statement for the break-even sales volume.

Check:
a. 11,000 units
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Awtrey Quilting Company makes blankets that it markets through a variety of department stores

Problem 13-23 Effect of Order Quantity on Special Order Decision

Awtrey Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in batches of 1,000 units. Awtrey made 20,000 blankets during the prior accounting period. The cost of producing the blankets is summarized here.

AND SO ON

Check:
a. Relevant Cost per Unit: $53

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