COMPREHENSIVE PROBLEM 2 (CP2): Guitar Universe, Inc
Guitar Universe, Inc., is a popular source of musical instruments for
professional and amateur musicians. The company's accountants make
necessary adjusting entries monthly, and they make all closing entries
annually. Guitar Universe is growing rapidly and prides itself on having
no long-term liabilities.
The company has provided the following trial balance dated December 31, 2009:
AND SO ON
Click here for the solution: Comprehensive Problem 2 (CP2): Guitar Universe, Inc
Showing posts with label musical. Show all posts
Showing posts with label musical. Show all posts
Sunday, September 13, 2015
Thursday, September 10, 2015
Garison Music Emporium carries a wide variety of musical instruments, sound reproduction equipment, recorded music, and sheet music
P13-12 (Warranties and Premiums) Garison Music Emporium carries a wide variety of musical instruments, sound reproduction equipment, recorded music, and sheet music. Garison uses two sales promotion techniques— warranties and premiums— to attract customers.
Musical instruments and sound equipment are sold with a one- year warranty for replacement of parts and labor. The estimated warranty cost, based on past experience, is 2% of sales. The premium is offered on the recorded and sheet music. Customers receive a coupon for each dollar spent on recorded music or sheet music. Customers may exchange 200 coupons and $ 20 for a CD player. Garison pays $ 32 for each CD player and estimates that 60% of the coupons given to customers will be redeemed.
Garison’s total sales for 2010 were $ 7,200,000—$ 5,700,000 from musical instruments and sound reproduction equipment and $ 1,500,000 from recorded music and sheet music. Replacement parts and labor for warranty work totaled $ 164,000 during 2010. A total of 6,500 CD players used in the premium program were purchased during the year and there were 1,200,000 coupons redeemed in 2010.
The accrual method is used by Garison to account for the warranty and premium costs for financial reporting purposes. The balances in the accounts related to warranties and premiums on January 1, 2010, were as shown below.
Inventory of Premium CD Players $ 37,600
Estimated Premium Claims Outstanding 44,800
Estimated Liability from Warranties 136,000
Instructions
Garison Music Emporium is preparing its financial statements for the year ended December 31, 2010. Determine the amounts that will be shown on the 2010 financial statements for the following:
(1) Warranty Expense
(2) Estimated Liability from Warranties
(3) Premium Expense
(4) Inventory of Premium CD Players
(5) Estimated Premium Claims Outstanding
Click here for the solution: Garison Music Emporium carries a wide variety of musical instruments, sound reproduction equipment, recorded music, and sheet music
Musical instruments and sound equipment are sold with a one- year warranty for replacement of parts and labor. The estimated warranty cost, based on past experience, is 2% of sales. The premium is offered on the recorded and sheet music. Customers receive a coupon for each dollar spent on recorded music or sheet music. Customers may exchange 200 coupons and $ 20 for a CD player. Garison pays $ 32 for each CD player and estimates that 60% of the coupons given to customers will be redeemed.
Garison’s total sales for 2010 were $ 7,200,000—$ 5,700,000 from musical instruments and sound reproduction equipment and $ 1,500,000 from recorded music and sheet music. Replacement parts and labor for warranty work totaled $ 164,000 during 2010. A total of 6,500 CD players used in the premium program were purchased during the year and there were 1,200,000 coupons redeemed in 2010.
The accrual method is used by Garison to account for the warranty and premium costs for financial reporting purposes. The balances in the accounts related to warranties and premiums on January 1, 2010, were as shown below.
Inventory of Premium CD Players $ 37,600
Estimated Premium Claims Outstanding 44,800
Estimated Liability from Warranties 136,000
Instructions
Garison Music Emporium is preparing its financial statements for the year ended December 31, 2010. Determine the amounts that will be shown on the 2010 financial statements for the following:
(1) Warranty Expense
(2) Estimated Liability from Warranties
(3) Premium Expense
(4) Inventory of Premium CD Players
(5) Estimated Premium Claims Outstanding
Click here for the solution: Garison Music Emporium carries a wide variety of musical instruments, sound reproduction equipment, recorded music, and sheet music
Digital Tunes Inc. is in the business of developing, promoting, and selling musical talent on compact disc (CD)
PR 19-5A Digital Tunes Inc. is in the business of developing, promoting, and selling musical talent on compact disc (CD). The company signed a new group, called Smashing Britney, on January 1, 2010. For the first six months of 2010, the company spent $4,000,000 on a media campaign for Smashing Britney and $1,200,000 in legal costs. The CD production began on February 1, 2010.
Digital Tunes uses a job order cost system to accumulate costs associated with a CD title. The unit direct materials cost for the CD is:
Blank CD…………. $1.80
Jewel case………….. 0.60
Song lyric insert…… 0.60
The production process is straightforward. First, the blank CDs are brought to a production area where the digital soundtrack is copied onto the CD. The copying machine requires one hour per 2,400 CDs.
After the CDs are copied, they are brought to an assembly area where an employee packs the CD with a jewel case and song lyric insert. The direct labor cost is $0.25 per unit.
The CDs are sold to record stores. Each record store is given promotional materials, such as posters and aisle displays. Promotional materials cost $40 per record store. In addition, shipping costs average $0.25 per CD.
Total completed production was 1,000,000 units during the year. Other information is as follows:
Number of customers (record stores)………………….. 42,500
Number of CDs sold………………………………….. 850,000
Wholesale price (to record store) per CD…………………. $16
Factory overhead cost is applied to jobs at the rate of $1,200 per copy machine hour. There were an additional 25,000 copied CDs, packages, and inserts waiting to be assembled on December 31, 2010.
Instructions
1. Prepare an annual income statement for the Smashing Britney CD, including supporting calculations, from the information above.
2. Determine the balances in the work in process and finished goods inventory for the Smashing Britney CD on December 31, 2010.
Click here for the solution: Digital Tunes Inc. is in the business of developing, promoting, and selling musical talent on compact disc (CD)
Digital Tunes uses a job order cost system to accumulate costs associated with a CD title. The unit direct materials cost for the CD is:
Blank CD…………. $1.80
Jewel case………….. 0.60
Song lyric insert…… 0.60
The production process is straightforward. First, the blank CDs are brought to a production area where the digital soundtrack is copied onto the CD. The copying machine requires one hour per 2,400 CDs.
After the CDs are copied, they are brought to an assembly area where an employee packs the CD with a jewel case and song lyric insert. The direct labor cost is $0.25 per unit.
The CDs are sold to record stores. Each record store is given promotional materials, such as posters and aisle displays. Promotional materials cost $40 per record store. In addition, shipping costs average $0.25 per CD.
Total completed production was 1,000,000 units during the year. Other information is as follows:
Number of customers (record stores)………………….. 42,500
Number of CDs sold………………………………….. 850,000
Wholesale price (to record store) per CD…………………. $16
Factory overhead cost is applied to jobs at the rate of $1,200 per copy machine hour. There were an additional 25,000 copied CDs, packages, and inserts waiting to be assembled on December 31, 2010.
Instructions
1. Prepare an annual income statement for the Smashing Britney CD, including supporting calculations, from the information above.
2. Determine the balances in the work in process and finished goods inventory for the Smashing Britney CD on December 31, 2010.
Click here for the solution: Digital Tunes Inc. is in the business of developing, promoting, and selling musical talent on compact disc (CD)
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