P2-3A Jack Shellenkamp owns and manages a computer repair service, which had the following trial balance on December 31, 2007 (the end of its fiscal year).
BYTE REPAIR SERVICE, INC.
Trial Balance
December 31, 2007
Cash $8,000
Accounts Receivable 15,000
Parts Inventory 13,000
Prepaid Rent 3,000
Shop Equipment 21,000
Accounts Payable $19,000
Common Stock 30,000
Retained Earnings 11,000
$60,000 $60,000
Summarized transactions for January 2008 were as follows:
1. Advertising costs, paid in cash, $1,000.
2. Additional repair parts inventory acquired on account $4,000.
3. Miscellaneous expenses, paid in cash, $2,000.
4. Cash collected from customers in payment of accounts receivable $14,000.
5. Cash paid to creditors for accounts payable due $15,000.
6. Repair parts used during January $4,000. (Hint: Debit this to Repair Parts Expense.)
7. Repair services performed during January: for cash $6,000; on account $9,000.
8. Wages for January, paid in cash, $3,000.
9. Dividends paid in January were $3,000.
Instructions
(a) Prepare journal entries to record each of the January transactions.
(b) Open T accounts for each of the accounts listed in the trial balance, and enter the opening balances for 2008. Post the journal entries to the accounts in the ledger.
(c) Prepare a trial balance as of January 31, 2008.
Click here for the solution: Jack Shellenkamp owns and manages a computer repair service, which had the following trial balance on December 31, 2007
Showing posts with label manages. Show all posts
Showing posts with label manages. Show all posts
Wednesday, October 14, 2015
Sunday, August 23, 2015
Sherene Nili manages a company that produces wedding gowns
Sherene Nili manages a company that produces wedding gowns. She produces both a custom product that is made to order and a standard product that is sold in bridal salons. Her accountant prepared the following forecasted income statement for March, which is a busy month:
…………………………………Custom Dresses……Standard Dresses…….Total
Number of dresses…………………….10……………...……20…………..…..…30
Sales revenue……………………..50,000………………25,000……….……75,000
Materials………………………….10,000……………..…8,000………….…18,000
Labor……………………………..20,000…………..……9,000……….……29,000
Machine depreciation…………..600…………….……300…………..……900
Rent………………………………..4,200…………..……2,800……..….……7,000
Heat and Light………………..1,000…………………600…………...….1,600
Other production costs………..........................................2,800
Marketing and administration……………………………………………..7,700
Total costs………………………………………………………………..……67,000
Operating profit…………………………………………………………………8,000
Ms. Nili already has orders for the 10 custom dresses reflect in the March forecasted income statement. The depreciation charges are for march used in the respective product lines. Machines depreciate at the rate of $1 per hour based on hours used, so these are variable cost. In March, cutting and sewing machines are expected to operate for 900 hours, of which 600 hours will be used to make custom dresses. The rent is for the building space, which has been leased for several years at $7,000 per month. The rent, heat, and light are allocated to the product lines based on the amount of floor space occupied.
A valued customer, who is a wedding consultant, has asked Ms. Nili for a special favor. This customer has a client who wants to get married in early April. Ms. Nili’s company is working at capacity and would have to give up some other business to make this dress. She can’t renege on custom orders already agreed to, but she can reduce the number of standard dresses produced in March to 10. Ms Nili would lose permanently the opportunity to make up the lost production of standard dresses because she has no unused capacity for the foreseeable future. The customer is willing to pay $25,000 for the special order. Materials and labor for the order will cost $6,000 and $10,000, respectively. The special order would require 140 hours of machine time. Ms. Nili’s company would save 150 hours of machine time from the standard dress business given up. Rent, heat and light, and other production cost would not be affected by the special order.
Question
1. Should Ms. Nili take the order? Explain?
2. What is the minimum price Ms. Nili should accept to take the special order?
3. What are the other factors, if any, besides price that she should consider?
Click here for the solution: Sherene Nili manages a company that produces wedding gowns
…………………………………Custom Dresses……Standard Dresses…….Total
Number of dresses…………………….10……………...……20…………..…..…30
Sales revenue……………………..50,000………………25,000……….……75,000
Materials………………………….10,000……………..…8,000………….…18,000
Labor……………………………..20,000…………..……9,000……….……29,000
Machine depreciation…………..600…………….……300…………..……900
Rent………………………………..4,200…………..……2,800……..….……7,000
Heat and Light………………..1,000…………………600…………...….1,600
Other production costs………..........................................2,800
Marketing and administration……………………………………………..7,700
Total costs………………………………………………………………..……67,000
Operating profit…………………………………………………………………8,000
Ms. Nili already has orders for the 10 custom dresses reflect in the March forecasted income statement. The depreciation charges are for march used in the respective product lines. Machines depreciate at the rate of $1 per hour based on hours used, so these are variable cost. In March, cutting and sewing machines are expected to operate for 900 hours, of which 600 hours will be used to make custom dresses. The rent is for the building space, which has been leased for several years at $7,000 per month. The rent, heat, and light are allocated to the product lines based on the amount of floor space occupied.
A valued customer, who is a wedding consultant, has asked Ms. Nili for a special favor. This customer has a client who wants to get married in early April. Ms. Nili’s company is working at capacity and would have to give up some other business to make this dress. She can’t renege on custom orders already agreed to, but she can reduce the number of standard dresses produced in March to 10. Ms Nili would lose permanently the opportunity to make up the lost production of standard dresses because she has no unused capacity for the foreseeable future. The customer is willing to pay $25,000 for the special order. Materials and labor for the order will cost $6,000 and $10,000, respectively. The special order would require 140 hours of machine time. Ms. Nili’s company would save 150 hours of machine time from the standard dress business given up. Rent, heat and light, and other production cost would not be affected by the special order.
Question
1. Should Ms. Nili take the order? Explain?
2. What is the minimum price Ms. Nili should accept to take the special order?
3. What are the other factors, if any, besides price that she should consider?
Click here for the solution: Sherene Nili manages a company that produces wedding gowns
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