E20-3 (Preparation of Pension Worksheet with Reconciliation) Using the information from Rebekah Company prepare a pension worksheet inserting January 1, 2008, balances, showing December 31, 2008, balances, the reconciliation schedule, and the journal entry recording pension expense.
Rebekah Company provides the following information about its defined benefit pension plan for the year 2008.
Service cost $ 90,000
Contribution to the plan $ 105,000
Prior service cost amortization $ 10,000
Actual and expected return on plan assets $64,000
Benefits paid $40,000
Accrued pension cost liability at January 1, 2008 $10,000
Plan assets at January 1, 2008 $ 640,000
Projected benefit obligation at January 1, 2008 $800,000
Unrecognized prior service cost balance at January 1, 2008 $150,000
Interest/discount (settlement) rate 10%
Click here for the solution: Using the information from Rebekah Company prepare a pension worksheet inserting January 1, 2008
Showing posts with label prepare. Show all posts
Showing posts with label prepare. Show all posts
Tuesday, November 10, 2015
Wednesday, October 14, 2015
Prepare a bank reconciliation for Jax-Mart based on the following information
INSTRUCTIONS: Prepare a bank reconciliation for Jax-Mart based on the following information:
• Balance per bank at 8/30/07, $3,465.50
• Balance per books at 8/30/07, $2,012.87
• Outstanding checks total $2,003.84
• A $1,148.21 deposit was made too late to appear on the bank statement
• The bank collected a $1500 note plus $120 in interest charges
• A check for $110 was returned with the bank statement, but was charged by the bank as $1,100
• A check for $86 was returned with the bank statement but was recorded in the books at $68
• Bank service charges were $15 for August.
Click here for the solution: Prepare a bank reconciliation for Jax-Mart based on the following information
• Balance per bank at 8/30/07, $3,465.50
• Balance per books at 8/30/07, $2,012.87
• Outstanding checks total $2,003.84
• A $1,148.21 deposit was made too late to appear on the bank statement
• The bank collected a $1500 note plus $120 in interest charges
• A check for $110 was returned with the bank statement, but was charged by the bank as $1,100
• A check for $86 was returned with the bank statement but was recorded in the books at $68
• Bank service charges were $15 for August.
Click here for the solution: Prepare a bank reconciliation for Jax-Mart based on the following information
Given the following information, prepare a statement of cash flows
Given the following information, prepare a statement of cash flows
Increase in accounts receivable $25
Increase in inventories 30
Operating income 75
Interest expense 25
Increase in accounts payable 25
Dividends 15
Increase in common stock 20
Increase in net fixed assets 23
Depreciation expense 12
Income taxes 17
Beginning cash 20
Click here for the solution: Given the following information, prepare a statement of cash flows
Increase in accounts receivable $25
Increase in inventories 30
Operating income 75
Interest expense 25
Increase in accounts payable 25
Dividends 15
Increase in common stock 20
Increase in net fixed assets 23
Depreciation expense 12
Income taxes 17
Beginning cash 20
Click here for the solution: Given the following information, prepare a statement of cash flows
Friday, September 25, 2015
Prepare entries to record the following transactions
1. Prepare entries to record the following transactions:
(a) a $5,000 cash investment made by the owner of a business.
(b) $1,700 in revenue earned on account.
(c) $2,500 of cash received in advance.
(d) $750 of advertising paid in advance.
(e) a $1,950 withdrawal
(f) the collection of $650 in cash on account.
(g) $275 of supplies purchased on account.
(h) $420 of utilities expense owed.
(i) a $215 cash payment made on account.
(j) $700 of revenue earned in cash.
2. Before any adjustments have been recorded, unearned rent has a normal balance of $57. If $18 of rent remains unearned at year end, prepare the the adjusting entry to record rental income earned.
3. On October 1 of the current year, a business prepaid $12 of property tax, in advance, for the next 12 months. As of December 31, it owed but had not yet recorded $6 in wages due in January of the following year. Prepare any adjusting and closing entries you think are needed at year end.
4. What would the normal balance be of a liability account a post closing trial balance? A revenue account? Drawing? Explain.
Click here for the solution: Prepare entries to record the following transactions
(a) a $5,000 cash investment made by the owner of a business.
(b) $1,700 in revenue earned on account.
(c) $2,500 of cash received in advance.
(d) $750 of advertising paid in advance.
(e) a $1,950 withdrawal
(f) the collection of $650 in cash on account.
(g) $275 of supplies purchased on account.
(h) $420 of utilities expense owed.
(i) a $215 cash payment made on account.
(j) $700 of revenue earned in cash.
2. Before any adjustments have been recorded, unearned rent has a normal balance of $57. If $18 of rent remains unearned at year end, prepare the the adjusting entry to record rental income earned.
3. On October 1 of the current year, a business prepaid $12 of property tax, in advance, for the next 12 months. As of December 31, it owed but had not yet recorded $6 in wages due in January of the following year. Prepare any adjusting and closing entries you think are needed at year end.
4. What would the normal balance be of a liability account a post closing trial balance? A revenue account? Drawing? Explain.
Click here for the solution: Prepare entries to record the following transactions
Dependable Drivers Driving School charges $250 per student to prepare and administer written and driving tests
E19-19 Impact on breakeven point if sale price, variable costs, and fixed costs change
Dependable Drivers Driving School charges $250 per student to prepare and administer written and driving tests. Variable costs of $100 per student include trainers’ wages, study materials, and gasoline. Annual fixed costs of $75,000 include the training facility and fleet of cars.
Requirements
1. For each of the following independent situations, calculate the contribution margin per unit and the breakeven point in units by first referring to the original data provided:
a. Breakeven point with no change in information.
b. Decrease sales price to $220 per student.
c. Decrease variable costs to $50 per student.
d. Decrease fixed costs to $60,000.
2. Compare the impact of changes in the sales price, variable costs, and fixed costs on the contribution margin per unit and the breakeven point in units.
Click here for the solution: Dependable Drivers Driving School charges $250 per student to prepare and administer written and driving tests
Dependable Drivers Driving School charges $250 per student to prepare and administer written and driving tests. Variable costs of $100 per student include trainers’ wages, study materials, and gasoline. Annual fixed costs of $75,000 include the training facility and fleet of cars.
Requirements
1. For each of the following independent situations, calculate the contribution margin per unit and the breakeven point in units by first referring to the original data provided:
a. Breakeven point with no change in information.
b. Decrease sales price to $220 per student.
c. Decrease variable costs to $50 per student.
d. Decrease fixed costs to $60,000.
2. Compare the impact of changes in the sales price, variable costs, and fixed costs on the contribution margin per unit and the breakeven point in units.
Click here for the solution: Dependable Drivers Driving School charges $250 per student to prepare and administer written and driving tests
Sunday, September 20, 2015
Prepare the missing adjusting entry
Prepare the missing adjusting entry. For each journal entry write Dr for debit and Cr for credit.
A) Unearned rent at 1/1/10 was $5,300 and at 12/31/10 was $6,000. The records indicate cash receipts from rental sources during 2010 amounted to $60,000, all of which was credited to Unearned Rent Account. Prepare the missing adjusting entry.
B) Data relating to the balances of various accounts affected by adjusting or closing entries appear below. (The entries which caused the changes in the balances are not given). Supply the missing journal entries which would logically account for the changes in the account balances. Interest receivable at 1/1/10 was $5,000. During 2010 cash received from debtors for interest on outstanding notes receivable amounted to $5,000. The 2010 income statement showed interest revenue in the amount of $4,900. Provide the missing adjusting entry that must have been made, assuming reversing entries are not made.
C) Accumulated depreciation-equipment at 1/1/10 was $200,000. At 12/31/10, the balance of the account was $320,000. During 2010, one piece of equipment was sold. The equipment had an original cost of $50,000 and was 1/2 depreciated when sold. Prepare the missing adjusting entry.
D) Allowance for doubtful accounts on 1/1/10 was $40,000. The balance in the allowance account on 12/31/10 after making the annual adjusting entry was $60,000 and during 2010 bad debts written off amounted to $30,000. Provide the missing adjusting entry.
E) Prepaid rent at 1/1/10 was $50,000. During 2010 rent payments of $110,000 were made and charged to "rent expense." The 2010 income statement shows as a general expense the item "rent expense" in the amount of $135,000. You are to prepare the missing adjusting entry that must have been made, assuming reversing entries are not made.
F) Retained Earnings at 1/1/10 was $0 and at 12/31/10 was $400,000. During 2010, cash dividend of $50,000 were paid and a stock dividend of $100,000 was issued. Both dividends were properly charged to retained earnings. Provide the missing closing entry.
Click here for the solution: Prepare the missing adjusting entry
A) Unearned rent at 1/1/10 was $5,300 and at 12/31/10 was $6,000. The records indicate cash receipts from rental sources during 2010 amounted to $60,000, all of which was credited to Unearned Rent Account. Prepare the missing adjusting entry.
B) Data relating to the balances of various accounts affected by adjusting or closing entries appear below. (The entries which caused the changes in the balances are not given). Supply the missing journal entries which would logically account for the changes in the account balances. Interest receivable at 1/1/10 was $5,000. During 2010 cash received from debtors for interest on outstanding notes receivable amounted to $5,000. The 2010 income statement showed interest revenue in the amount of $4,900. Provide the missing adjusting entry that must have been made, assuming reversing entries are not made.
C) Accumulated depreciation-equipment at 1/1/10 was $200,000. At 12/31/10, the balance of the account was $320,000. During 2010, one piece of equipment was sold. The equipment had an original cost of $50,000 and was 1/2 depreciated when sold. Prepare the missing adjusting entry.
D) Allowance for doubtful accounts on 1/1/10 was $40,000. The balance in the allowance account on 12/31/10 after making the annual adjusting entry was $60,000 and during 2010 bad debts written off amounted to $30,000. Provide the missing adjusting entry.
E) Prepaid rent at 1/1/10 was $50,000. During 2010 rent payments of $110,000 were made and charged to "rent expense." The 2010 income statement shows as a general expense the item "rent expense" in the amount of $135,000. You are to prepare the missing adjusting entry that must have been made, assuming reversing entries are not made.
F) Retained Earnings at 1/1/10 was $0 and at 12/31/10 was $400,000. During 2010, cash dividend of $50,000 were paid and a stock dividend of $100,000 was issued. Both dividends were properly charged to retained earnings. Provide the missing closing entry.
Click here for the solution: Prepare the missing adjusting entry
Friday, September 18, 2015
Prepare a trial balance from the following information for Learn a New Language, Inc. for December 31, 2012
3. Prepare a trial balance from the following information for Learn a New Language, Inc. for December 31, 2012.
Accounts payable $5,012
Common stock $9,692
Cash $3,928
Notes payable $1,439
Wages expense $777
Marketing expense $493
Equipment $8,345
Accounts receivable $1,142
Inventory $8,074
Sales $6,616
Click here for the solution: Prepare a trial balance from the following information for Learn a New Language, Inc. for December 31, 2012
Accounts payable $5,012
Common stock $9,692
Cash $3,928
Notes payable $1,439
Wages expense $777
Marketing expense $493
Equipment $8,345
Accounts receivable $1,142
Inventory $8,074
Sales $6,616
Click here for the solution: Prepare a trial balance from the following information for Learn a New Language, Inc. for December 31, 2012
Given the following information, prepare a balance sheet for Isaiah’s Tool Shed for the year ending December 31, 2012
6. Given the following information, prepare a balance sheet for Isaiah’s Tool Shed for the year ending December 31, 2012.
Cash $65,750 Retained Earnings $179,319
Common Stock $35,000 Equipment $27,500
Accounts Receivable $11,478 Accounts Payable $29,450
Land $30,000 Inventory $78,311
Prepaid Supplies $7,357 Income Taxes Payable $4,209
Office Computers $11,345 Other PPE $31,446
Accum. Depr. (all) $23,459 Prepaid Insurance $8,250
Click here for the solution: Given the following information, prepare a balance sheet for Isaiah’s Tool Shed for the year ending December 31, 2012
Cash $65,750 Retained Earnings $179,319
Common Stock $35,000 Equipment $27,500
Accounts Receivable $11,478 Accounts Payable $29,450
Land $30,000 Inventory $78,311
Prepaid Supplies $7,357 Income Taxes Payable $4,209
Office Computers $11,345 Other PPE $31,446
Accum. Depr. (all) $23,459 Prepaid Insurance $8,250
Click here for the solution: Given the following information, prepare a balance sheet for Isaiah’s Tool Shed for the year ending December 31, 2012
Tuesday, September 8, 2015
Prepare a table with the following headings for a monthly bank reconciliation dated September 30
ACC 225 Week 8
Exercise 8-6
Prepare a table with the following headings for a monthly bank reconciliation dated September 30:
For each item 1 through 12, place an x in the appropriate column to indicate whether the item should be added to or deducted from the book or bank balance, or whether it should not appear on the reconciliation. If the book balance is to be adjusted, place a Dr. or Cr. in the Adjust column to indicate whether the Cash balance should be debited or credited. At the left side of your table, number the items to correspond to the following list.
1. Bank service charge.
2. Checks written and mailed to payees on October 2.
3. Checks written by another depositor but charged against this company’s account.
4. Principal and interest on a note collected by the bank but not yet recorded by the company.
5. Special bank charge for collection of note in part 4 on this company’s behalf.
6. Check written against the company’s account and cleared by the bank; erroneously not recorded by the company’s recordkeeper.
7. Interest earned on the cash balance in the bank.
8. Night deposit made on September 30 after the bank closed.
9. Checks outstanding on August 31 that cleared the bank in September.
10. NSF check from customer returned on September 25 but not yet recorded by this company.
11. Checks written by the company and mailed to payees on September 30.
12. Deposit made on September 5 and processed by the bank on September 6.
Click here for the solution: Prepare a table with the following headings for a monthly bank reconciliation dated September 30
Exercise 8-6
Prepare a table with the following headings for a monthly bank reconciliation dated September 30:
For each item 1 through 12, place an x in the appropriate column to indicate whether the item should be added to or deducted from the book or bank balance, or whether it should not appear on the reconciliation. If the book balance is to be adjusted, place a Dr. or Cr. in the Adjust column to indicate whether the Cash balance should be debited or credited. At the left side of your table, number the items to correspond to the following list.
1. Bank service charge.
2. Checks written and mailed to payees on October 2.
3. Checks written by another depositor but charged against this company’s account.
4. Principal and interest on a note collected by the bank but not yet recorded by the company.
5. Special bank charge for collection of note in part 4 on this company’s behalf.
6. Check written against the company’s account and cleared by the bank; erroneously not recorded by the company’s recordkeeper.
7. Interest earned on the cash balance in the bank.
8. Night deposit made on September 30 after the bank closed.
9. Checks outstanding on August 31 that cleared the bank in September.
10. NSF check from customer returned on September 25 but not yet recorded by this company.
11. Checks written by the company and mailed to payees on September 30.
12. Deposit made on September 5 and processed by the bank on September 6.
Click here for the solution: Prepare a table with the following headings for a monthly bank reconciliation dated September 30
The controller of Dash Shoes Inc. instructs you to prepare a monthly cash budget for the next three months
PR 22-4A The controller of Dash Shoes Inc. instructs you to prepare a
monthly cash budget for the next three months. You are presented with
the following budget information:
June July August
Sales 120,000 150,000 200,000
Manufacturing costs 50,000 65,000 72,000
Selling & admin exp 35,000 40,000 45,000
Capital expenditures ---- --- 48,000
AND SO ON
INSTRUCTIONS:
1. Prepare a monthly cash budget and supporting schedules for June, July, and August 2010.
2. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?
Click here for the solution: The controller of Dash Shoes Inc. instructs you to prepare a monthly cash budget for the next three months
June July August
Sales 120,000 150,000 200,000
Manufacturing costs 50,000 65,000 72,000
Selling & admin exp 35,000 40,000 45,000
Capital expenditures ---- --- 48,000
AND SO ON
INSTRUCTIONS:
1. Prepare a monthly cash budget and supporting schedules for June, July, and August 2010.
2. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?
Click here for the solution: The controller of Dash Shoes Inc. instructs you to prepare a monthly cash budget for the next three months
Tuesday, August 18, 2015
Prepare journal entries to record the following transactions related to long-term bonds of Quirk Co
Prepare journal entries to record the following transactions related to long-term bonds of Quirk Co.
(a) On April 1, 2009, Quirk issued $500,000, 9% bonds for $537,868 including accrued interest. Interest is payable annually on January 1, and the bonds mature on January 1, 2019.
(b) On July 1, 2011 Quirk retired $150,000 of the bonds at 102 plus accrued interest. Quirk uses straight-line amortization.
Click here for the solution: Prepare journal entries to record the following transactions related to long-term bonds of Quirk Co
(a) On April 1, 2009, Quirk issued $500,000, 9% bonds for $537,868 including accrued interest. Interest is payable annually on January 1, and the bonds mature on January 1, 2019.
(b) On July 1, 2011 Quirk retired $150,000 of the bonds at 102 plus accrued interest. Quirk uses straight-line amortization.
Click here for the solution: Prepare journal entries to record the following transactions related to long-term bonds of Quirk Co
Thursday, August 13, 2015
At the beginning of the 2010 school year, Britney Logan decided to prepare a cash budget for the months of September, October, November, and December
At the beginning of the 2010 school year, Britney Logan decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the soring semester tuition, which is the same as the fall tuition. The following information relates to the budget:
Cash balance, September 1(from a summer job) $7,000
Purchase season football tickets in September 100
Additional entertainment for each month 250
Pay fall semester tuition on September 3 3,800
Pay rent at the beginning of each month 350
Pay for food each month 200
Pay apartment deposit on September 2(to be returned Dec 15) 500
Part-time job earnings each month (net of taxes) 900
a. Prepare a cash budget for September, October, November, and December.
b. Are the four monthly budgets that are presented prepared as static budgets or flexible budgets?
c. What are the budget implications for Britney Logan?
Click here for the solution: At the beginning of the 2010 school year, Britney Logan decided to prepare a cash budget for the months of September, October, November, and December
Cash balance, September 1(from a summer job) $7,000
Purchase season football tickets in September 100
Additional entertainment for each month 250
Pay fall semester tuition on September 3 3,800
Pay rent at the beginning of each month 350
Pay for food each month 200
Pay apartment deposit on September 2(to be returned Dec 15) 500
Part-time job earnings each month (net of taxes) 900
a. Prepare a cash budget for September, October, November, and December.
b. Are the four monthly budgets that are presented prepared as static budgets or flexible budgets?
c. What are the budget implications for Britney Logan?
Click here for the solution: At the beginning of the 2010 school year, Britney Logan decided to prepare a cash budget for the months of September, October, November, and December
Wednesday, July 15, 2015
Werth Company asks you to review its December 31, 2010, inventory values and prepare the necessary adjustments to the books
E8-5 (Inventoriable Costs—Error Adjustments) Werth Company asks you to review its December 31, 2010, inventory values and prepare the necessary adjustments to the books. The following information is given to you.
1. Werth uses the periodic method of recording inventory. A physical count reveals $234,890 of inventory on hand at December 31, 2010.
2. Not included in the physical count of inventory is $10,420 of merchandise purchased on December 15 from Browser. This merchandise was shipped f.o.b. shipping point on December 29 and arrived in January. The invoice arrived and was recorded on December 31.
3. Included in inventory is merchandise sold to Bubbey on December 30, f.o.b. destination. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale on account for $12,800 on December 31. The merchandise cost $7,350, and Bubbey received it on January 3.
4. Included in inventory was merchandise received from Dudley on December 31 with an invoice price of $15,630. The merchandise was shipped f.o.b. destination. The invoice, which has not yet arrived, has not been recorded.
5. Not included in inventory is $8,540 of merchandise purchased from Minsky Industries. This merchandise was received on December 31 after the inventory had been counted. The invoice was received and recorded on December 30.
6. Included in inventory was $10,438 of inventory held by Werth on consignment from Jackel Industries.
7. Included in inventory is merchandise sold to Sims f.o.b. shipping point. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale for $18,900 on December 31. The cost of this merchandise was $11,520, and Sims received the merchandise on January 5.
8. Excluded from inventory was a carton labeled “Please accept for credit.” This carton contains merchandise costing $1,500 which had been sold to a customer for $2,600. No entry had been made to the books to reflect the return, but none of the returned merchandise seemed damaged.
Instructions
(a) Determine the proper inventory balance for Werth Company at December 31, 2010.
(b) Prepare any correcting entries to adjust inventory to its proper amount at December 31, 2010. Assume the books have not been closed.
Click here for the solution: Werth Company asks you to review its December 31, 2010, inventory values and prepare the necessary adjustments to the books
1. Werth uses the periodic method of recording inventory. A physical count reveals $234,890 of inventory on hand at December 31, 2010.
2. Not included in the physical count of inventory is $10,420 of merchandise purchased on December 15 from Browser. This merchandise was shipped f.o.b. shipping point on December 29 and arrived in January. The invoice arrived and was recorded on December 31.
3. Included in inventory is merchandise sold to Bubbey on December 30, f.o.b. destination. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale on account for $12,800 on December 31. The merchandise cost $7,350, and Bubbey received it on January 3.
4. Included in inventory was merchandise received from Dudley on December 31 with an invoice price of $15,630. The merchandise was shipped f.o.b. destination. The invoice, which has not yet arrived, has not been recorded.
5. Not included in inventory is $8,540 of merchandise purchased from Minsky Industries. This merchandise was received on December 31 after the inventory had been counted. The invoice was received and recorded on December 30.
6. Included in inventory was $10,438 of inventory held by Werth on consignment from Jackel Industries.
7. Included in inventory is merchandise sold to Sims f.o.b. shipping point. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale for $18,900 on December 31. The cost of this merchandise was $11,520, and Sims received the merchandise on January 5.
8. Excluded from inventory was a carton labeled “Please accept for credit.” This carton contains merchandise costing $1,500 which had been sold to a customer for $2,600. No entry had been made to the books to reflect the return, but none of the returned merchandise seemed damaged.
Instructions
(a) Determine the proper inventory balance for Werth Company at December 31, 2010.
(b) Prepare any correcting entries to adjust inventory to its proper amount at December 31, 2010. Assume the books have not been closed.
Click here for the solution: Werth Company asks you to review its December 31, 2010, inventory values and prepare the necessary adjustments to the books
Tuesday, July 7, 2015
(Cash Budget) The Controller of Santa Fe Housewares Inc. instructs you to prepare a monthly cash budget for the next three months
PR22-4A Cash Budget
The Controller of Santa Fe Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information:
March April May
Sales 70,000 84,000 92,000
Manufacturing cost 32,000 39,000 42,500
Selling and administrative expenses 12,000 18,000 21,000
Capital expenditures 20,000
The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in full in the month following the sale and the remainder the following month. Depreciation, insurance, and property tax expense represent $3,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in July, and the annual property taxes are paid in November. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of August 1 include cash of $10,000, marketable securities of $40,000, and accounts receivable of $75,600 ($60,000 from February sales and $15,600 from January sales).Sales on account for January and February were $52,000 and $60,000, respectively.
Current liabilities as of August 1 include s $12,000, 15%, 90-day note payable due May 20 and $4,000 of accounts payable incurred in July for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. It is expected that $1,800 in dividends will be received in March. An estimated income tax payment of $16,000 will be made in April. Santa Fe's regular quarterly dividend of $3,000 is expected to be declared in April and paid in May. Management desires to maintain a minimum cash balance of $30,000.
Instructions:
1. Prepare a monthly cash budget and supporting schedules for August, September, and October. Input all amounts as positive values except overall cash decrease and deficiency which should be indicated with a minus sign. Assume 360 days per year for interest calculation.
2. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?
Click here for the solution: (Cash Budget) The Controller of Santa Fe Housewares Inc. instructs you to prepare a monthly cash budget for the next three months
The Controller of Santa Fe Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information:
March April May
Sales 70,000 84,000 92,000
Manufacturing cost 32,000 39,000 42,500
Selling and administrative expenses 12,000 18,000 21,000
Capital expenditures 20,000
The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in full in the month following the sale and the remainder the following month. Depreciation, insurance, and property tax expense represent $3,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in July, and the annual property taxes are paid in November. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of August 1 include cash of $10,000, marketable securities of $40,000, and accounts receivable of $75,600 ($60,000 from February sales and $15,600 from January sales).Sales on account for January and February were $52,000 and $60,000, respectively.
Current liabilities as of August 1 include s $12,000, 15%, 90-day note payable due May 20 and $4,000 of accounts payable incurred in July for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. It is expected that $1,800 in dividends will be received in March. An estimated income tax payment of $16,000 will be made in April. Santa Fe's regular quarterly dividend of $3,000 is expected to be declared in April and paid in May. Management desires to maintain a minimum cash balance of $30,000.
Instructions:
1. Prepare a monthly cash budget and supporting schedules for August, September, and October. Input all amounts as positive values except overall cash decrease and deficiency which should be indicated with a minus sign. Assume 360 days per year for interest calculation.
2. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?
Click here for the solution: (Cash Budget) The Controller of Santa Fe Housewares Inc. instructs you to prepare a monthly cash budget for the next three months
Monday, June 29, 2015
Prepare the journal entries to record the following transactions in an Investment Trust Fund for Seggen County during the calendar year 2013
(Journal Entries for an Investment Trust Fund) Prepare the journal
entries to record the following transactions in an Investment Trust Fund
for Seggen County during the calendar year 2013.
1. Turtle Creek and Pineview contributed $60,000 and $40,000,
respectively, to an Investment Trust Fund operated by Seggen County
during 2013.
2. Investments totaling $75,000 were purchased.
3. Income from the investments during the year totaled $8,000.
4. The fund paid $1,500 to the county for investment management fees.
5. The investments increased in value by $3,000.
6. Income of $10,000 was paid to the two cities, based on the relative amount of their initial investment.
Prepare a debt amortization schedule for a bond issued at discount
Prepare a debt amortization schedule for a bond issued at discount.
Assume that the bond matures in 12 years with market interest rate at
time of issue—10% annually and 5% semiannually. The stated interest rate
is 8%. The interest is paid semiannually.
Click here for the solution: Prepare a debt amortization schedule for a bond issued at discount
Click here for the solution: Prepare a debt amortization schedule for a bond issued at discount
Wednesday, June 24, 2015
Balance sheet accounts for Joyner Company contained the following amounts at the end of Years 1 and 2
Problem 15–9 Prepare a Statement of Cash Flows (Indirect Method); Free Cash Flow
Balance sheet accounts for Joyner Company contained the following amounts at the end of Years 1 and 2:
Debit Balance Accounts Year 2 Year 1
Cash $4,000 $21,000
A/R $250,000 $170,000
Inventory $310,000 $260,000
Prepaid Exp $7,000 $14,000
Loan to Hymas Company $40,000 $-
Plant & Equp $510,000 $400,000
Total Debits $1,121,000 $865,000
Credit Balance Accounts
Accum Depreciation $132,000 $120,000
A/P $310,000 $250,000
Accrued Liabilities $20,000 $30,000
Bonds Payable $190,000 $70,000
Deferred Income Taxes $45,000 $42,000
Common Stock $300,000 $270,000
Retained Earnings $124,000 $83,000
Total Credits $1,121,000 $865,000
The company’s income statement for Year 2 follows:
Sales . . . . . . . . . . . . . . . . . . . $900,000
Cost of goods sold . . . . . . . . . 500,000
Gross margin . . . . . . . . . . . . . 400,000
Selling and administrative
expenses . . . . . . . . . . . . . . 328,000
Net operating income . . . . . . . 72,000
Gain on sale of equipment . . . 8,000
Income before taxes . . . . . . . . 80,000
Income taxes . . . . . . . . . . . . . 24,000
Net income . . . . . . . . . . . . . . . $ 56,000
Equipment that had cost $40,000 and on which there was accumulated depreciation of $30,000 was sold during Year 2 for $18,000. Cash dividends totaling $15,000 were declared and paid during Year 2.
Required:
1. Using the indirect method, compute the net cash provided by operating activities for Year 2.
2. Prepare a statement of cash flows for Year 2.
3. Compute the free cash f ow for Year 2.
4. Briefly explain why cash declined so sharply during the year.
Click here for the solution: Balance sheet accounts for Joyner Company contained the following amounts at the end of Years 1 and 2
Balance sheet accounts for Joyner Company contained the following amounts at the end of Years 1 and 2:
Debit Balance Accounts Year 2 Year 1
Cash $4,000 $21,000
A/R $250,000 $170,000
Inventory $310,000 $260,000
Prepaid Exp $7,000 $14,000
Loan to Hymas Company $40,000 $-
Plant & Equp $510,000 $400,000
Total Debits $1,121,000 $865,000
Credit Balance Accounts
Accum Depreciation $132,000 $120,000
A/P $310,000 $250,000
Accrued Liabilities $20,000 $30,000
Bonds Payable $190,000 $70,000
Deferred Income Taxes $45,000 $42,000
Common Stock $300,000 $270,000
Retained Earnings $124,000 $83,000
Total Credits $1,121,000 $865,000
The company’s income statement for Year 2 follows:
Sales . . . . . . . . . . . . . . . . . . . $900,000
Cost of goods sold . . . . . . . . . 500,000
Gross margin . . . . . . . . . . . . . 400,000
Selling and administrative
expenses . . . . . . . . . . . . . . 328,000
Net operating income . . . . . . . 72,000
Gain on sale of equipment . . . 8,000
Income before taxes . . . . . . . . 80,000
Income taxes . . . . . . . . . . . . . 24,000
Net income . . . . . . . . . . . . . . . $ 56,000
Equipment that had cost $40,000 and on which there was accumulated depreciation of $30,000 was sold during Year 2 for $18,000. Cash dividends totaling $15,000 were declared and paid during Year 2.
Required:
1. Using the indirect method, compute the net cash provided by operating activities for Year 2.
2. Prepare a statement of cash flows for Year 2.
3. Compute the free cash f ow for Year 2.
4. Briefly explain why cash declined so sharply during the year.
Click here for the solution: Balance sheet accounts for Joyner Company contained the following amounts at the end of Years 1 and 2
Wednesday, June 17, 2015
Use the following information to prepare a multistep income statement and a classified balance sheet for Reza Equipment Co. for 2010
Problem 5-24 Multistep Income Statement and Balance Sheet
Use the following information to prepare a multistep income statement and a classified balance sheet for Reza Equipment Co. for 2010. (Hint: Some of the items will not appear on either
and ending retained earnings must be calculated.)
AND SO ON
Check:
Total Current Assets: $250,300
Total Current Liabilities: $109,600
Click here for the solution: Use the following information to prepare a multistep income statement and a classified balance sheet for Reza Equipment Co. for 2010
Use the following information to prepare a multistep income statement and a classified balance sheet for Reza Equipment Co. for 2010. (Hint: Some of the items will not appear on either
and ending retained earnings must be calculated.)
AND SO ON
Check:
Total Current Assets: $250,300
Total Current Liabilities: $109,600
Click here for the solution: Use the following information to prepare a multistep income statement and a classified balance sheet for Reza Equipment Co. for 2010
Tuesday, June 16, 2015
During 2010 the controller of the Ryel Company asked you to prepare correcting journal entries for the following three situations
Problem 11-14 (P11-14) Changes and Corrections of Depreciation
During 2010 the controller of the Ryel Company asked you to prepare correcting journal entries for the following three situations:
1. Machine A was purchased for $50,000 on January 1, 2005. Straight-line depreciation has been recorded for 5 years, and the Accumulated depreciation account has a balance of $25,000. The estimated residual value remains at $5,000, but the service life is now estimated to be one year longer than estimated originally.
2. Machine B was purchased for $40,000 on January 1, 2008. It had an estimated residual value of $5,000 and an estimated service life of 10 years. It has been depreciated under the double-declining-balance method for two years. Now, at the beginning of the third year, Ryel has decided to change to the straight-line method.
3. Machine C was purchased for $20,000 on January 1, 2009. Double-declining-balance depreciation has been recorded for one year. The estimated residual value of the machine is $2,000 and the estimated service life is five years. The computation of the depreciation erroneously included the estimated residual value.
Prepare the necessary correcting journal entries for each situation. Also prepare the journal entry necessary for each situation to record the depreciation for 2010. (Assume that the debit is to Depreciation Expense.)
Click here for the solution: During 2010 the controller of the Ryel Company asked you to prepare correcting journal entries for the following three situations
During 2010 the controller of the Ryel Company asked you to prepare correcting journal entries for the following three situations:
1. Machine A was purchased for $50,000 on January 1, 2005. Straight-line depreciation has been recorded for 5 years, and the Accumulated depreciation account has a balance of $25,000. The estimated residual value remains at $5,000, but the service life is now estimated to be one year longer than estimated originally.
2. Machine B was purchased for $40,000 on January 1, 2008. It had an estimated residual value of $5,000 and an estimated service life of 10 years. It has been depreciated under the double-declining-balance method for two years. Now, at the beginning of the third year, Ryel has decided to change to the straight-line method.
3. Machine C was purchased for $20,000 on January 1, 2009. Double-declining-balance depreciation has been recorded for one year. The estimated residual value of the machine is $2,000 and the estimated service life is five years. The computation of the depreciation erroneously included the estimated residual value.
Prepare the necessary correcting journal entries for each situation. Also prepare the journal entry necessary for each situation to record the depreciation for 2010. (Assume that the debit is to Depreciation Expense.)
Click here for the solution: During 2010 the controller of the Ryel Company asked you to prepare correcting journal entries for the following three situations
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