E8-16 (Compute FIFO, LIFO, Average-Cost-Periodic) Presented below is information related to Blowfish radios for Hootie Company for the month of July.
Date Transaction Units In Unit Cost Total Units Sold Sell Price Total
July 1 Balance 100 $4.10 $410
July 6 Purchase 800 $4.20 $3360
July 7 Sale 300 $7.00 $2100
July 10 Sale 300 $7.30 $2190
July 12 Purchase 400 $4.50 $1800
July 15 Sale 200 $7.40 $1480
July 18 Purchase 300 $4.60 $1380
July 22 Sale 400 $7.40 $2960
July 25 Purchase 500 $4.58 $2290
July 30 Sale 200 $7.50 $1500
2100 $9240 1400 $10,230
Instructions
a.) Assuming that the periodic inventory method is used, compute the inventory cost at July 31 under each of the following cost flow assumptions:
1.) FIFO
2.) LIFO
3.) Weighted-average round the average unit cost to the nearest one tenth of one cent
b.) Answer the following questions
1.) Which of the following methods used above all will yield the lowest figure for ending figure for gross profit for the income statement? Why?
2.) Which of the methods used above will yield the lowest figure for ending inventory for the balance sheet? Why?
Click here for the solution: Presented below is information related to Blowfish radios for Hootie Company for the month of July
Showing posts with label related. Show all posts
Showing posts with label related. Show all posts
Monday, March 21, 2016
Thursday, January 14, 2016
Presented below is information related to Bruce Van Company
Presented below is information related to Bruce Van Company.
Retained earnings, December 31, 2010 $ 650,000
Sales 1,400,000
Selling and administrative expenses 240,000
Hurricane loss (pre-tax) on plant (extraordinary item) 290,000
Cash dividends declared on common stock 33,600
Cost of goods sold 780,000
Gain resulting from computation error 520,000
on depreciation charge in 2009(pre-tax)
Other revenue 120,000
Other expenses 100,000
Instructions
Prepare in good form a multiple-step income statement for the year 2011. Assume a 30% tax rate and that 80,000 shares of common stock were outstanding during the year. Show EPS computations as well.
Click here for the solution: Presented below is information related to Bruce Van Company
Retained earnings, December 31, 2010 $ 650,000
Sales 1,400,000
Selling and administrative expenses 240,000
Hurricane loss (pre-tax) on plant (extraordinary item) 290,000
Cash dividends declared on common stock 33,600
Cost of goods sold 780,000
Gain resulting from computation error 520,000
on depreciation charge in 2009(pre-tax)
Other revenue 120,000
Other expenses 100,000
Instructions
Prepare in good form a multiple-step income statement for the year 2011. Assume a 30% tax rate and that 80,000 shares of common stock were outstanding during the year. Show EPS computations as well.
Click here for the solution: Presented below is information related to Bruce Van Company
Sunday, October 4, 2015
The Cycle Division of TravelVelocity Company has the following per unit data related to its most recent cycle called Roadbuster
ACC 560 Week 5 Assignment
E8-12 The Cycle Division of TravelVelocity Company has the following per unit data related to its most recent cycle called Roadbuster.
Selling price $2,200
Variable cost of goods sold
Body frame $300
Other variable costs 900 1,200
Contribution margin $1,000
Presently, the Cycle Division buys its body frames from an outside supplier. However TravelVelocity has another division, FrameBody, that makes body frames for other cycle companies. The Cycle Division believes that FrameBody's product is suitable for its new Roadbuster cycle. Presently, FrameBody sells its frames for $350 per frame.The variable cost for FrameBody is $250. The Cycle Division is willing to pay $275 to purchase the frames from FrameBody.
Instructions:
a) Assume that FrameBody has excess capacity and is able to meet all of the Cycle Division's needs. If the Cycle Division buys 1,000 frames from FrameBody, determine the following: (1) effect on the income of the Cycle Division; (2) effect on the income of FrameBody; and (3) effect on the income of TravelVelocity.
b)Assume that FrameBody does not have excess capacity and therefore would lose sales if the frames were sold to the Cycle Division. If the Cycle Division buys 1,000 frames from FrameBody, determine the following: (1) effect on the income of the Cycle Division; (2) effect on the income of FrameBody; and (3) effect on the income of TravelVelocity.
Click here for the solution: The Cycle Division of TravelVelocity Company has the following per unit data related to its most recent cycle called Roadbuster
E8-12 The Cycle Division of TravelVelocity Company has the following per unit data related to its most recent cycle called Roadbuster.
Selling price $2,200
Variable cost of goods sold
Body frame $300
Other variable costs 900 1,200
Contribution margin $1,000
Presently, the Cycle Division buys its body frames from an outside supplier. However TravelVelocity has another division, FrameBody, that makes body frames for other cycle companies. The Cycle Division believes that FrameBody's product is suitable for its new Roadbuster cycle. Presently, FrameBody sells its frames for $350 per frame.The variable cost for FrameBody is $250. The Cycle Division is willing to pay $275 to purchase the frames from FrameBody.
Instructions:
a) Assume that FrameBody has excess capacity and is able to meet all of the Cycle Division's needs. If the Cycle Division buys 1,000 frames from FrameBody, determine the following: (1) effect on the income of the Cycle Division; (2) effect on the income of FrameBody; and (3) effect on the income of TravelVelocity.
b)Assume that FrameBody does not have excess capacity and therefore would lose sales if the frames were sold to the Cycle Division. If the Cycle Division buys 1,000 frames from FrameBody, determine the following: (1) effect on the income of the Cycle Division; (2) effect on the income of FrameBody; and (3) effect on the income of TravelVelocity.
Click here for the solution: The Cycle Division of TravelVelocity Company has the following per unit data related to its most recent cycle called Roadbuster
Sunday, September 27, 2015
Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows
PR 10-6A Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows:
a. On December 31, the company determined that $20,000,000 of goodwill was impaired.
b. Governmental and legal costs of $675,000 were incurred on June 30 in obtaining a patent with an estimated economic life of 10 years. Amortization is to be for one-half year.
c. Timber rights on a tract of land were purchased for $1,665,000 on February 16. The stand of timber is estimated at 9,000,000 board feet. During the current year, 2,400,000 board feet of timber were cut and sold.
Instructions
1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items.
2. Journalize the adjusting entries to record the amortization, depletion, or impairment for each item.
Click here for the solution: Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows
a. On December 31, the company determined that $20,000,000 of goodwill was impaired.
b. Governmental and legal costs of $675,000 were incurred on June 30 in obtaining a patent with an estimated economic life of 10 years. Amortization is to be for one-half year.
c. Timber rights on a tract of land were purchased for $1,665,000 on February 16. The stand of timber is estimated at 9,000,000 board feet. During the current year, 2,400,000 board feet of timber were cut and sold.
Instructions
1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items.
2. Journalize the adjusting entries to record the amortization, depletion, or impairment for each item.
Click here for the solution: Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows
(Ethics Case) International Network Solutions provides products and services related to remote access networking
Ethics Case 19-7 International Network Solutions
International Network Solutions provides products and services related to remote access networking. The company has grown rapidly during its first 10 years of operations. As its segment of the industry has begun to mature, though, the fast growth of previous years has begun to slow. In fact, this year revenues and profits are roughly the same as last year.
One morning, nine weeks before the close of the fiscal year, Rob Mashburn, CFO, and Jessica Lane, controller, were sharing coffee and ideas in Lane's office.
Lane: About the Board meeting Thursday. You may be right. This may be the time to suggest a share buyback program.
Mashburn: To begin this year, you mean?
Lane: Right! I know Barber will be lobbying to use the funds for our European expansion. She's probably right about the best use of our funds, but we can always issue more notes next year. Right now, we need a quick fix for our EPS numbers.
Mashburn: Our shareholders are accustomed to increases every year.
Required:
1. How will a buyback of shares provide a “quick fix” for EPS?
2. Is the proposal ethical?
3. Who would be affected if the proposal is implemented?
Click here for the solution: (Ethics Case) International Network Solutions provides products and services related to remote access networking
International Network Solutions provides products and services related to remote access networking. The company has grown rapidly during its first 10 years of operations. As its segment of the industry has begun to mature, though, the fast growth of previous years has begun to slow. In fact, this year revenues and profits are roughly the same as last year.
One morning, nine weeks before the close of the fiscal year, Rob Mashburn, CFO, and Jessica Lane, controller, were sharing coffee and ideas in Lane's office.
Lane: About the Board meeting Thursday. You may be right. This may be the time to suggest a share buyback program.
Mashburn: To begin this year, you mean?
Lane: Right! I know Barber will be lobbying to use the funds for our European expansion. She's probably right about the best use of our funds, but we can always issue more notes next year. Right now, we need a quick fix for our EPS numbers.
Mashburn: Our shareholders are accustomed to increases every year.
Required:
1. How will a buyback of shares provide a “quick fix” for EPS?
2. Is the proposal ethical?
3. Who would be affected if the proposal is implemented?
Click here for the solution: (Ethics Case) International Network Solutions provides products and services related to remote access networking
Presented is information related to Rogers Co. for the month of January 2008
E5-8 Presented is information related to Rogers Co. for the month of January 2008.
Ending inventory per perpetual records $21,600
Ending inventory actually on hand 21,000
Cost of goods sold 218,000
Freight-out 7,000
Insurance expense 12,000
Rent expense 20,000
Salary Expense 61,000
Sales Discounts 10,000
Sales Returns and Allowances 13,000
Sales 350,000
Instructions
(a) Prepare the necessary adjusting entry for inventory.
(b) Prepare the necessary closing entries.
Click here for the solution: Presented is information related to Rogers Co. for the month of January 2008
Ending inventory per perpetual records $21,600
Ending inventory actually on hand 21,000
Cost of goods sold 218,000
Freight-out 7,000
Insurance expense 12,000
Rent expense 20,000
Salary Expense 61,000
Sales Discounts 10,000
Sales Returns and Allowances 13,000
Sales 350,000
Instructions
(a) Prepare the necessary adjusting entry for inventory.
(b) Prepare the necessary closing entries.
Click here for the solution: Presented is information related to Rogers Co. for the month of January 2008
Sunday, September 20, 2015
Presented below is information related to Michelle Company
Presented below is information related to Michelle Company.
Retained earnings, December 31, 2010 $ 2,750,000
Sales 2,000,000
Selling and administrative expenses 240,000
Hurricane loss (pre-tax) on plant (extraordinary item) 250,000
Cash dividends declared on common stock 33,600
Cost of goods sold 960,000
Gain resulting from computation error 2,000,000
on depreciation charge in 2009 (pre-tax)
Other revenue 80,000
Other expenses 50,000
Instructions
Prepare in good form a multiple-step income statement for the year 2011. Assume a 30% tax rate and that 100,000 shares of common stock were outstanding during the year.
Click here for the solution: Presented below is information related to Michelle Company
Retained earnings, December 31, 2010 $ 2,750,000
Sales 2,000,000
Selling and administrative expenses 240,000
Hurricane loss (pre-tax) on plant (extraordinary item) 250,000
Cash dividends declared on common stock 33,600
Cost of goods sold 960,000
Gain resulting from computation error 2,000,000
on depreciation charge in 2009 (pre-tax)
Other revenue 80,000
Other expenses 50,000
Instructions
Prepare in good form a multiple-step income statement for the year 2011. Assume a 30% tax rate and that 100,000 shares of common stock were outstanding during the year.
Click here for the solution: Presented below is information related to Michelle Company
Tuesday, September 8, 2015
The following are two specific balance-related audit objectives in the audit of accounts payable
Auditing P 6-29 The following are two specific balance-related audit objectives in the audit of accounts payable. The list referred to is the list of accounts payable taken from the accounts payable master file. The total of the list equals the accounts payable balance on the general ledger.
1. All accounts payable included on the list represent amounts due to valid vendors.
2. There are no unrecorded accounts payable.
Required:
a. Explain the difference between these two specific balance-related audit objectives.
b. Which of these two specific balance-related audit objectives applies to the general balance-related audit objective of existence, and which one applies to completeness?
c. For the audit of accounts payable, which of these two specific balance-related audit objectives is usually be more important? Explain.
Click here for the solution: The following are two specific balance-related audit objectives in the audit of accounts payable
1. All accounts payable included on the list represent amounts due to valid vendors.
2. There are no unrecorded accounts payable.
Required:
a. Explain the difference between these two specific balance-related audit objectives.
b. Which of these two specific balance-related audit objectives applies to the general balance-related audit objective of existence, and which one applies to completeness?
c. For the audit of accounts payable, which of these two specific balance-related audit objectives is usually be more important? Explain.
Click here for the solution: The following are two specific balance-related audit objectives in the audit of accounts payable
The following are specific presentation and disclosure-related audit objectives applied to presentation
Auditing P 6-28 The following are specific presentation and
disclosure-related audit objectives applied to presentation and
disclosure for fixed assets (a through d) and management assertions (1
through 4).
Specific Presentation and Disclosure-Relatd Audit Objective
a. All required disclosures regarding fixed assets have been made.
b. Footnote disclosures related to fixed assets are clear and understandable.
c. Methods and useful lives disclosed for each category of fixed asset are accurate.
d. Disclosed fixed assets dispositions have occurred.
Management Assertion about Presentation and Disclosure
1. Occurrence and rights and obligations
2. Completeness
3. Accuracy and valuation
4. Classification and understandability
Required:
For each specific presentation and disclosure-related audit objective, identify the appropriate management assertion. (Hint: See Table 6-5 on page 161.)
Click here for the solution: The following are specific presentation and disclosure-related audit objectives applied to presentation
Specific Presentation and Disclosure-Relatd Audit Objective
a. All required disclosures regarding fixed assets have been made.
b. Footnote disclosures related to fixed assets are clear and understandable.
c. Methods and useful lives disclosed for each category of fixed asset are accurate.
d. Disclosed fixed assets dispositions have occurred.
Management Assertion about Presentation and Disclosure
1. Occurrence and rights and obligations
2. Completeness
3. Accuracy and valuation
4. Classification and understandability
Required:
For each specific presentation and disclosure-related audit objective, identify the appropriate management assertion. (Hint: See Table 6-5 on page 161.)
Click here for the solution: The following are specific presentation and disclosure-related audit objectives applied to presentation
Rene Ritter opened a small grocery and related-products convenience store in 1987 with money she had saved working as an A&P store manager
Auditing P 6-31
Rene Ritter opened a small grocery and related-products convenience store in 1987 with money she had saved working as an A&P store manager. She named it Ritter Dairy and Fruits. Because of the excellent location and her fine management skills, Ritter Dairy and Fruits grew to three locations by 1992. By that time, she needed additional capital. She obtained financing through a local bank at 2 percent above prime, under the condition that she submit quarterly financial statements reviewed by a CPA firm approved by the bank. After interviewing several firms, she decided to use the firm of Gonzalez & Fineberg CPAs, after obtaining approval from the bank.
In 1996, the company had grown to six stores, and Rene developed a business plan to add another 10 stores in the next several years. Ritter's capital needs had also grown, so Rene decided to add two business partners who both had considerable capital and some expertise in convenience stores. After further discussions with the bank and continued conversations with the future business partners, she decided to have an annual audit and quarterly review don by Gonzalez & Fineberg, even though the additional cost was almost $15,000 annually. The bank agreed to reduce the interest rate on the $4,000,000 of loans to 1 percent above prime.
By 2001, things were going smoothly, with the two business partners heavily involved in day-to-day operations and the company adding two new stores each year. The company was growing steadily and was more profitable than they had expected. By the end of 2002, one of the business partners, Fred Worm, had taken over responsibility for accounting and finance operations, as well as some marketing. Annually, Gonzalez & Fineberg did an in-depth review of the accounting system, including internal controls, and reported their conclusions and recommendations to the board of directors. Specialists in the firm provided tax and other advice. The other partner, Ben Gold, managed most of the stores and was primarily responsible for building new stores. Rene was president and manages four stores.
In 2006, the three partners decided to go public to enable them to add more stores and modernize existing ones. The public offering was a major success, resulting in $25 million in new capital and nearly 1,000 shareholders. Ritter Dairy and Fruits added stores rapidly under the three managers, and the company remained highly profitable under the leadership of Ritter, Worm, and Gold.
Rene retired in 2009 after a highly successful career. During the retirement celebration, she thanked her business partners, employees, and customers. She also added a special thanks to the bank management for their outstanding service and to Gonzalez & Fineberg for being partners in the best and most professional sense of the word. She mentioned their integrity, commitment, high-quality service in performing their audits and reviews, and considerable tax and business advice for more than two decades.
Required:
a. Explain why the bank imposed a requirement of a quarterly review of the financial statements as a condition of obtaining the loan at 2 percent above prime. Also explain why the bank didn't require an audit and why the bank demanded the right to approve which CPA firm was engaged.
b. Explain why Ritter Dairy and Fruits agreed to have an audit performed rather than a review, considering the additional annual cost of $15,000.
c. What did Rene mean when she referred to Gonzalez & Fineberg as partners? Does the CPA firm have an independence problem?
d. What benefit does Gonzalez & Fineberg provide to stockholders, creditors, and management in performing the audit and related services?
e. What are the responsibilities of the CPA firm to stockholders, creditors, management, and other users?
Click here for the solution: Rene Ritter opened a small grocery and related-products convenience store in 1987 with money she had saved working as an A&P store manager
Rene Ritter opened a small grocery and related-products convenience store in 1987 with money she had saved working as an A&P store manager. She named it Ritter Dairy and Fruits. Because of the excellent location and her fine management skills, Ritter Dairy and Fruits grew to three locations by 1992. By that time, she needed additional capital. She obtained financing through a local bank at 2 percent above prime, under the condition that she submit quarterly financial statements reviewed by a CPA firm approved by the bank. After interviewing several firms, she decided to use the firm of Gonzalez & Fineberg CPAs, after obtaining approval from the bank.
In 1996, the company had grown to six stores, and Rene developed a business plan to add another 10 stores in the next several years. Ritter's capital needs had also grown, so Rene decided to add two business partners who both had considerable capital and some expertise in convenience stores. After further discussions with the bank and continued conversations with the future business partners, she decided to have an annual audit and quarterly review don by Gonzalez & Fineberg, even though the additional cost was almost $15,000 annually. The bank agreed to reduce the interest rate on the $4,000,000 of loans to 1 percent above prime.
By 2001, things were going smoothly, with the two business partners heavily involved in day-to-day operations and the company adding two new stores each year. The company was growing steadily and was more profitable than they had expected. By the end of 2002, one of the business partners, Fred Worm, had taken over responsibility for accounting and finance operations, as well as some marketing. Annually, Gonzalez & Fineberg did an in-depth review of the accounting system, including internal controls, and reported their conclusions and recommendations to the board of directors. Specialists in the firm provided tax and other advice. The other partner, Ben Gold, managed most of the stores and was primarily responsible for building new stores. Rene was president and manages four stores.
In 2006, the three partners decided to go public to enable them to add more stores and modernize existing ones. The public offering was a major success, resulting in $25 million in new capital and nearly 1,000 shareholders. Ritter Dairy and Fruits added stores rapidly under the three managers, and the company remained highly profitable under the leadership of Ritter, Worm, and Gold.
Rene retired in 2009 after a highly successful career. During the retirement celebration, she thanked her business partners, employees, and customers. She also added a special thanks to the bank management for their outstanding service and to Gonzalez & Fineberg for being partners in the best and most professional sense of the word. She mentioned their integrity, commitment, high-quality service in performing their audits and reviews, and considerable tax and business advice for more than two decades.
Required:
a. Explain why the bank imposed a requirement of a quarterly review of the financial statements as a condition of obtaining the loan at 2 percent above prime. Also explain why the bank didn't require an audit and why the bank demanded the right to approve which CPA firm was engaged.
b. Explain why Ritter Dairy and Fruits agreed to have an audit performed rather than a review, considering the additional annual cost of $15,000.
c. What did Rene mean when she referred to Gonzalez & Fineberg as partners? Does the CPA firm have an independence problem?
d. What benefit does Gonzalez & Fineberg provide to stockholders, creditors, and management in performing the audit and related services?
e. What are the responsibilities of the CPA firm to stockholders, creditors, management, and other users?
Click here for the solution: Rene Ritter opened a small grocery and related-products convenience store in 1987 with money she had saved working as an A&P store manager
Sunday, September 6, 2015
Data related to the expected sales of snowboards and skis for Winter Sports Inc. for the current year
PR 21-5A Data related to the expected sales of snowboards and skis for Winter Sports Inc. for the current year, which is typical of recent years, are as follows:
Snowboards $250.00 $170.00 40%
Skis 340.00 160.00 60%
The estimated fixed costs for the current year are $420,000.
INSTRUCTIONS:
1. Determine the estimated units of sales of the overall product necessary to reach the break even point for the current year.
2. Based on the break even sales (units) in part (1), determine the unit sales of both snowboards and skis for the current year.
3. Assume that the sales mix was 60% snowboards and 40% skis. Compare the break even point with that in part (1). Why is it so different?
Click here for the solution: Data related to the expected sales of snowboards and skis for Winter Sports Inc. for the current year
Snowboards $250.00 $170.00 40%
Skis 340.00 160.00 60%
The estimated fixed costs for the current year are $420,000.
INSTRUCTIONS:
1. Determine the estimated units of sales of the overall product necessary to reach the break even point for the current year.
2. Based on the break even sales (units) in part (1), determine the unit sales of both snowboards and skis for the current year.
3. Assume that the sales mix was 60% snowboards and 40% skis. Compare the break even point with that in part (1). Why is it so different?
Click here for the solution: Data related to the expected sales of snowboards and skis for Winter Sports Inc. for the current year
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
Saturday, August 15, 2015
Presented below is information related to McKenna Company
E9-18 (Retail Inventory Method) Presented below is information related to McKenna Company.
Cost Retail
Beginning inventory $ 58,000 $100,000
Purchases (net) 122,000 200,000
Net markups 20,000
Net markdowns 30,000
Sales 186,000
Instructions
(a) Compute the ending inventory at retail.
(b) Compute a cost-to-retail percentage (round to two decimals) under the following conditions.
(1) Excluding both markups and markdowns.
(2) Excluding markups but including markdowns.
(3) Excluding markdowns but including markups.
(4) Including both markdowns and markups.
(c) Which of the methods in (b) above (1, 2, 3, or 4) does the following?
(1) Provides the most conservative estimate of ending inventory.
(2) Provides an approximation of lower-of-cost-or-market.
(3) Is used in the conventional retail method.
(d) Compute ending inventory at lower-of-cost-or-market (round to nearest dollar).
(e) Compute cost of goods sold based on (d).
(f) Compute gross margin based on (d).
Click here for the solution: Presented below is information related to McKenna Company
Cost Retail
Beginning inventory $ 58,000 $100,000
Purchases (net) 122,000 200,000
Net markups 20,000
Net markdowns 30,000
Sales 186,000
Instructions
(a) Compute the ending inventory at retail.
(b) Compute a cost-to-retail percentage (round to two decimals) under the following conditions.
(1) Excluding both markups and markdowns.
(2) Excluding markups but including markdowns.
(3) Excluding markdowns but including markups.
(4) Including both markdowns and markups.
(c) Which of the methods in (b) above (1, 2, 3, or 4) does the following?
(1) Provides the most conservative estimate of ending inventory.
(2) Provides an approximation of lower-of-cost-or-market.
(3) Is used in the conventional retail method.
(d) Compute ending inventory at lower-of-cost-or-market (round to nearest dollar).
(e) Compute cost of goods sold based on (d).
(f) Compute gross margin based on (d).
Click here for the solution: Presented below is information related to McKenna Company
Monday, August 3, 2015
Information related to plant assets, natural resources, and intangibles at the end of 2011 for Spain Company is as follows
BE9-13 Information related to plant assets, natural resources, and intangibles at the end of 2011 for Spain Company is as follows: buildings $1,100,000; accumulated depreciation—buildings $650,000; goodwill $410,000; coal mine $500,000; accumulated depletion—coal mine $108,000.
Prepare a partial balance sheet of Spain Company for these items.
Click here for the solution: Information related to plant assets, natural resources, and intangibles at the end of 2011 for Spain Company is as follows
Prepare a partial balance sheet of Spain Company for these items.
Click here for the solution: Information related to plant assets, natural resources, and intangibles at the end of 2011 for Spain Company is as follows
Saturday, July 25, 2015
Below are transactions related to Impala Company
E10-12 (Entries for Asset Acquisition, Including Self-Construction) Below are transactions related to Impala Company.
(a) The City of Pebble Beach gives the company 5 acres of land as a plant site. The market value of this land is determined to be $81,000.
(b) 14,000 shares of common stock with a par value of $50 per share are issued in exchange for land and buildings. The property has been appraised at a fair market value of $810,000, of which $180,000 has been allocated to land and $630,000 to buildings. The stock of Impala Company is not listed on any exchange, but a block of 100 shares was sold by a stockholder 12 months ago at $65 per share, and a block of 200 shares was sold by another stockholder 18 months ago at $58 per share.
(c) No entry has been made to remove from the accounts for Materials, Direct Labor, and Overhead the amounts properly chargeable to plant asset accounts for machinery constructed during the year. The following information is given relative to costs of the machinery constructed.
Materials used $12,500
Factory supplies used 900
Direct labor incurred 16,000
Additional overhead (over regular) caused by construction of machinery, excluding factory supplies used 2,700 Fixed overhead rate applied to regular manufacturing operations 60% of direct labor cost
Cost of similar machinery if it had been purchased from outside suppliers 44,000
Prepare journal entries on the books of Impala Company to record these transactions.
Click here for the solution: Below are transactions related to Impala Company
(a) The City of Pebble Beach gives the company 5 acres of land as a plant site. The market value of this land is determined to be $81,000.
(b) 14,000 shares of common stock with a par value of $50 per share are issued in exchange for land and buildings. The property has been appraised at a fair market value of $810,000, of which $180,000 has been allocated to land and $630,000 to buildings. The stock of Impala Company is not listed on any exchange, but a block of 100 shares was sold by a stockholder 12 months ago at $65 per share, and a block of 200 shares was sold by another stockholder 18 months ago at $58 per share.
(c) No entry has been made to remove from the accounts for Materials, Direct Labor, and Overhead the amounts properly chargeable to plant asset accounts for machinery constructed during the year. The following information is given relative to costs of the machinery constructed.
Materials used $12,500
Factory supplies used 900
Direct labor incurred 16,000
Additional overhead (over regular) caused by construction of machinery, excluding factory supplies used 2,700 Fixed overhead rate applied to regular manufacturing operations 60% of direct labor cost
Cost of similar machinery if it had been purchased from outside suppliers 44,000
Prepare journal entries on the books of Impala Company to record these transactions.
Click here for the solution: Below are transactions related to Impala Company
Sunday, July 19, 2015
Briefly describe some of the similarities and differences between U.S. GAAP and iGAAP related to the accounting for pensions
1. Briefly describe some of the similarities and differences between U.S. GAAP and iGAAP related to the accounting for pensions.
2. At the beginning of the year of adoption of Statement of Financial Accounting Standards No. 106, a transition amount is computed as the excess of the
expected postretirement benefit obligation over the fair value of plan assets or vice versa.
accumulated postretirement benefit obligation over the fair value of plan assets or vice versa.
expected postretirement benefit obligation over the fair value of plan assets, but not vice versa.
accumulated postretirement benefit obligation over the fair value of plan assets, but not vice versa.
Click here for the solution: Briefly describe some of the similarities and differences between U.S. GAAP and iGAAP related to the accounting for pensions
2. At the beginning of the year of adoption of Statement of Financial Accounting Standards No. 106, a transition amount is computed as the excess of the
expected postretirement benefit obligation over the fair value of plan assets or vice versa.
accumulated postretirement benefit obligation over the fair value of plan assets or vice versa.
expected postretirement benefit obligation over the fair value of plan assets, but not vice versa.
accumulated postretirement benefit obligation over the fair value of plan assets, but not vice versa.
Click here for the solution: Briefly describe some of the similarities and differences between U.S. GAAP and iGAAP related to the accounting for pensions
Where can authoritative iGAAP related to the accounting for pensions be found?
Where can authoritative iGAAP related to the accounting for pensions be found?
Click here for the solution: Where can authoritative iGAAP related to the accounting for pensions be found?
Click here for the solution: Where can authoritative iGAAP related to the accounting for pensions be found?
Wednesday, July 15, 2015
Presented below is information related to Martin Company
E8-25 (Dollar-Value LIFO) Presented below is information related to Martin Company.
Ending Inventory Price
Date (End-of-Year Prices) Index
December 31, 2007 $ 80,000 100
December 31, 2008 111,300 105
December 31, 2009 108,000 120
December 31, 2010 122,200 130
December 31, 2011 147,000 140
December 31, 2012 176,900 145
Instructions
Compute the ending inventory for Martin Company for 2007 through 2012 using the dollar-value LIFO method.
Click here for the solution: Presented below is information related to Martin Company
Ending Inventory Price
Date (End-of-Year Prices) Index
December 31, 2007 $ 80,000 100
December 31, 2008 111,300 105
December 31, 2009 108,000 120
December 31, 2010 122,200 130
December 31, 2011 147,000 140
December 31, 2012 176,900 145
Instructions
Compute the ending inventory for Martin Company for 2007 through 2012 using the dollar-value LIFO method.
Click here for the solution: Presented below is information related to Martin Company
Allegro Supply Company, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and to Machinery and Equipment
E10-5 (Treatment of Various Costs) Allegro Supply Company, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and to Machinery and Equipment.
Abstract company’s fee for title search $ 520
Architect’s fees 3,170
Cash paid for land and dilapidated building thereon 92,000
Removal of old building $20,000
Less: Salvage 5,500 14,500
Interest on short-term loans during construction 7,400
Excavation before construction for basement 19,000
Machinery purchased (subject to 2% cash discount, which was not taken) 65,000
Freight on machinery purchased 1,340
Storage charges on machinery, necessitated by noncompletion of building when machinery was delivered 2,180
New building constructed (building construction took 6 months from date of purchase of land and old building) 485,000
Assessment by city for drainage project 1,600
Hauling charges for delivery of machinery from storage to new building 620
Installation of machinery 2,000
Trees, shrubs, and other landscaping after completion of building (permanent in nature) 5,400
Instructions
Determine the amounts that should be debited to Land, to Buildings, and to Machinery and Equipment. Assume the benefits of capitalizing interest during construction exceed the cost of implementation. Indicate how any costs not debited to these accounts should be recorded.
Click here for the solution: Allegro Supply Company, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and to Machinery and Equipment
Abstract company’s fee for title search $ 520
Architect’s fees 3,170
Cash paid for land and dilapidated building thereon 92,000
Removal of old building $20,000
Less: Salvage 5,500 14,500
Interest on short-term loans during construction 7,400
Excavation before construction for basement 19,000
Machinery purchased (subject to 2% cash discount, which was not taken) 65,000
Freight on machinery purchased 1,340
Storage charges on machinery, necessitated by noncompletion of building when machinery was delivered 2,180
New building constructed (building construction took 6 months from date of purchase of land and old building) 485,000
Assessment by city for drainage project 1,600
Hauling charges for delivery of machinery from storage to new building 620
Installation of machinery 2,000
Trees, shrubs, and other landscaping after completion of building (permanent in nature) 5,400
Instructions
Determine the amounts that should be debited to Land, to Buildings, and to Machinery and Equipment. Assume the benefits of capitalizing interest during construction exceed the cost of implementation. Indicate how any costs not debited to these accounts should be recorded.
Click here for the solution: Allegro Supply Company, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and to Machinery and Equipment
Answer the following questions related to Dubois Inc
P6-7 (Time Value Concepts Applied to Solve Business Problems) Answer the following questions related to Dubois Inc.
(a) Dubois Inc. has $600,000 to invest. The company is trying to decide between two alternative uses of the funds. One alternative provides $80,000 at the end of each year for 12 years, and the other is to receive a single lump sum payment of $1,900,000 at the end of the 12 years. Which alternative should Dubois select? Assume the interest rate is constant over the entire investment.
(b) Dubois Inc. has completed the purchase of new Dell computers. The fair market value of the equipment is $824,150. The purchase agreement specifies an immediate down payment of $200,000 and semiannual payments of $76,952 beginning at the end of 6 months for 5 years. What is the interest rate, to the nearest percent, used in discounting this purchase transaction?
(c) Dubois Inc. loans money to John Kruk Corporation in the amount of $800,000. Dubois accepts an 8% note due in 7 years with interest payable semiannually. After 2 years (and receipt of interest for 2 years), Dubois needs money and therefore sells the note to Chicago National Bank, which demands interest on the note of 10% compounded semiannually. What is the amount Dubois will receive on the sale of the note?
(d) Dubois Inc. wishes to accumulate $1,300,000 by December 31, 2020, to retire bonds outstanding. The company deposits $200,000 on December 31, 2010, which will earn interest at 10% compounded quarterly, to help in the retirement of this debt. In addition, the company wants to know how much should be deposited at the end of each quarter for 10 years to ensure that $1,300,000 is available at the end of 2020. (The quarterly deposits will also earn at a rate of 10%, compounded quarterly.) (Round to even dollars.)
Click here for the solution: Answer the following questions related to Dubois Inc
(a) Dubois Inc. has $600,000 to invest. The company is trying to decide between two alternative uses of the funds. One alternative provides $80,000 at the end of each year for 12 years, and the other is to receive a single lump sum payment of $1,900,000 at the end of the 12 years. Which alternative should Dubois select? Assume the interest rate is constant over the entire investment.
(b) Dubois Inc. has completed the purchase of new Dell computers. The fair market value of the equipment is $824,150. The purchase agreement specifies an immediate down payment of $200,000 and semiannual payments of $76,952 beginning at the end of 6 months for 5 years. What is the interest rate, to the nearest percent, used in discounting this purchase transaction?
(c) Dubois Inc. loans money to John Kruk Corporation in the amount of $800,000. Dubois accepts an 8% note due in 7 years with interest payable semiannually. After 2 years (and receipt of interest for 2 years), Dubois needs money and therefore sells the note to Chicago National Bank, which demands interest on the note of 10% compounded semiannually. What is the amount Dubois will receive on the sale of the note?
(d) Dubois Inc. wishes to accumulate $1,300,000 by December 31, 2020, to retire bonds outstanding. The company deposits $200,000 on December 31, 2010, which will earn interest at 10% compounded quarterly, to help in the retirement of this debt. In addition, the company wants to know how much should be deposited at the end of each quarter for 10 years to ensure that $1,300,000 is available at the end of 2020. (The quarterly deposits will also earn at a rate of 10%, compounded quarterly.) (Round to even dollars.)
Click here for the solution: Answer the following questions related to Dubois Inc
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