E4-16 Tharp and Kostrivas is a law firm that is initiating an activity-based costing system. Ben Tharp, the senior partner and strong supporter of ABC, has prepared the following list of activities performed by a typical attorney in a day at the firm. Classify each of the activities listed by Ben Tharp as value-added or non-value-added and defend your classification. How much was value-added and how much was non-value-added?
Activities Hours
Writing contracts and letters 1.0
Attending staff meetings 0.5
Taking depositions 1.0
Doing research 1.0
Traveling to/from court 1.0
Contemplating legal strategy 1.0
Eating lunch 1.0
Litigating a case in course 2.5
Entertaining a prospective client 2.0
Click here for the solution: Tharp and Kostrivas is a law firm that is initiating an activity-based costing system
Showing posts with label system. Show all posts
Showing posts with label system. Show all posts
Wednesday, April 13, 2016
Tuesday, November 10, 2015
Artic Appliances uses the periodic inventory system
PR 7-3A LIFO Periodic inventory by three methods
Artic Appliances uses the periodic inventory system. Details regarding the inventory of appliances at January 1, 2010, purchases invoices during the year, and the inventory count at December 31, 2010, are summarized as follows:
Inventory,
Purchases Invoices
Inventory Count,
Model January 1 1st 2nd 3rd December 31
BB900 27 at $213 21 at $215 18 at $222 18 at $225 30
C911 10 at 60 6 at 65 2 at 65 2 at 70 4
L100 6 at 305 3 at 310 3 at 316 4 at 317 4
N201 2 at 520 2 at 527 2 at 530 2 at 535 4
Q73 6 at 520 8 at 531 4 at 549 6 at 542 7
Z120 — 4 at 222 4 at 232 — 2
ZZRF 8 at 70 12 at 72 16 at 74 14 at 78 12
Instructions
1. Determine the cost of the inventory on December 31, 2010, by the first-in, first-out method. Present data in columnar form, using the following headings:
Model Quantity Unit Cost Total Cost
If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase.
2. Determine the cost of the inventory on December 31, 2010, by the last-in, first-out method, following the procedures indicated in (1).
3. Determine the cost of the inventory on December 31, 2010, by the average cost method, using the columnar headings indicated in (1).
4. Discuss which method (FIFO or LIFO) would be preferred for income tax purposes in periods of (a) rising prices and (b) declining prices.
Click here for the solution: Artic Appliances uses the periodic inventory system
Artic Appliances uses the periodic inventory system. Details regarding the inventory of appliances at January 1, 2010, purchases invoices during the year, and the inventory count at December 31, 2010, are summarized as follows:
Inventory,
Purchases Invoices
Inventory Count,
Model January 1 1st 2nd 3rd December 31
BB900 27 at $213 21 at $215 18 at $222 18 at $225 30
C911 10 at 60 6 at 65 2 at 65 2 at 70 4
L100 6 at 305 3 at 310 3 at 316 4 at 317 4
N201 2 at 520 2 at 527 2 at 530 2 at 535 4
Q73 6 at 520 8 at 531 4 at 549 6 at 542 7
Z120 — 4 at 222 4 at 232 — 2
ZZRF 8 at 70 12 at 72 16 at 74 14 at 78 12
Instructions
1. Determine the cost of the inventory on December 31, 2010, by the first-in, first-out method. Present data in columnar form, using the following headings:
Model Quantity Unit Cost Total Cost
If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase.
2. Determine the cost of the inventory on December 31, 2010, by the last-in, first-out method, following the procedures indicated in (1).
3. Determine the cost of the inventory on December 31, 2010, by the average cost method, using the columnar headings indicated in (1).
4. Discuss which method (FIFO or LIFO) would be preferred for income tax purposes in periods of (a) rising prices and (b) declining prices.
Click here for the solution: Artic Appliances uses the periodic inventory system
Monday, October 26, 2015
Easy Decorating uses a job order costing system to collect the costs of its interior decorating business
E2-13 Easy Decorating uses a job order costing system to collect the costs of its interior decorating business. Each client's consultation is treated as a separate job. Overhead is applied to each job based on the number of decorator hours incurred. Listed below are data for the current year.
Budgeted overhead $960,000
Actual overhead $982,800
Budgeted decorator hours 40,000
Actual decorator hours 40,500
The company uses Operating Overhead in place of Manufacturing Overhead.
Required:
a) Compute the predetermined overhead rate.
b) Prepare the entry to apply the overhead for the year.
c) Determine whether the overhead was under- or overapplied and by how much.
Click here for the solution: Easy Decorating uses a job order costing system to collect the costs of its interior decorating business
Budgeted overhead $960,000
Actual overhead $982,800
Budgeted decorator hours 40,000
Actual decorator hours 40,500
The company uses Operating Overhead in place of Manufacturing Overhead.
Required:
a) Compute the predetermined overhead rate.
b) Prepare the entry to apply the overhead for the year.
c) Determine whether the overhead was under- or overapplied and by how much.
Click here for the solution: Easy Decorating uses a job order costing system to collect the costs of its interior decorating business
Mabry Manufacturing Company uses a job order cost system in each of its three manufacturing departments
P2-4A Mabry Manufacturing Company uses a job order cost system in each of its three manufacturing departments. Manufacturing overhead is applied to jobs on the basis of direct labor cost in Department D, direct labor hours in Department E, and machine hours in Department K.
In establishing the predetermined overhead rates for 2008 the following estimates were made for the year.
Department
D E K
Manufacturing overhead $1,050,000 $1,500,000 $840,000
Direct labor costs $1,500,000 $1,250,000 $450,000
Direct labor hours 100,000 125,000 40,000
Machine hours 400,000 500,000 120,000
During January, the job cost sheets showed the following costs and production data.
Department
D E K
Direct materials used $140,000 $126,000 $78,000
Direct labor costs $120,000 $110,000 $37,500
Manufacturing overhead incurred $89,000 $124,000 $74,000
Direct labor hours 8,000 11,000 3,500
Machine hours 34,000 45,000 10,400
Required:
a) Compute the predetermined overhead rate for each department
b) Compute the total manufacturing costs assigned to jobs in January in each department
c) Compute the under- or overapplied overhead for each department at January 31
Click here for the solution: Mabry Manufacturing Company uses a job order cost system in each of its three manufacturing departments
In establishing the predetermined overhead rates for 2008 the following estimates were made for the year.
Department
D E K
Manufacturing overhead $1,050,000 $1,500,000 $840,000
Direct labor costs $1,500,000 $1,250,000 $450,000
Direct labor hours 100,000 125,000 40,000
Machine hours 400,000 500,000 120,000
During January, the job cost sheets showed the following costs and production data.
Department
D E K
Direct materials used $140,000 $126,000 $78,000
Direct labor costs $120,000 $110,000 $37,500
Manufacturing overhead incurred $89,000 $124,000 $74,000
Direct labor hours 8,000 11,000 3,500
Machine hours 34,000 45,000 10,400
Required:
a) Compute the predetermined overhead rate for each department
b) Compute the total manufacturing costs assigned to jobs in January in each department
c) Compute the under- or overapplied overhead for each department at January 31
Click here for the solution: Mabry Manufacturing Company uses a job order cost system in each of its three manufacturing departments
Saturday, October 17, 2015
Dacher Company uses a job order cost system
Dacher Company uses a job order cost system. The following data summarize the operations related to production for October:
a. Materials purchased on account, $450,000.
b. Materials requisitioned, $425,000, of which $4,500 was for general factory use.
c. Factory labor used, $385,000, of which $95,000 was indirect.
d. Other costs incurred on account were for factory overhead, $125,400; selling expenses, $87,500; and administrative expenses, $56,400.
e. Prepaid expenses expired for factory overhead were $12,500; for selling expenses, $14,500; and for administrative expenses, $8,500.
f. Depreciation of factory equipment was $25,300; of office equipment, $31,600; and of store equipment, $7,600.
g. Factory overhead costs applied to jobs, $261,500.
h. Jobs completed, $965,000.
i. Cost of goods sold, $952,400.
Journalize the entries to record the summarized operations.
Click here for the solution: Dacher Company uses a job order cost system
a. Materials purchased on account, $450,000.
b. Materials requisitioned, $425,000, of which $4,500 was for general factory use.
c. Factory labor used, $385,000, of which $95,000 was indirect.
d. Other costs incurred on account were for factory overhead, $125,400; selling expenses, $87,500; and administrative expenses, $56,400.
e. Prepaid expenses expired for factory overhead were $12,500; for selling expenses, $14,500; and for administrative expenses, $8,500.
f. Depreciation of factory equipment was $25,300; of office equipment, $31,600; and of store equipment, $7,600.
g. Factory overhead costs applied to jobs, $261,500.
h. Jobs completed, $965,000.
i. Cost of goods sold, $952,400.
Journalize the entries to record the summarized operations.
Click here for the solution: Dacher Company uses a job order cost system
Wednesday, October 14, 2015
Dewey and Cheatam is a law firm that is initiating an activity-based costing system
ACC 560 Week 3 Assignment
E4-16 Dewey and Cheatam is a law firm that is initiating an activity-based costing system. Jim Dewey, the senior partner and strong supporter of ABC, has prepared the following list of activities performed by a typical attorney in a day at the firm.
Classify each activity as either value-added or non-value-added.
Activity Hours
Writing contracts and letters 1.0
Attending staff meetings 0.5
Taking depositions 1.0
Doing research 1.0
Traveling to/from court 1.0
Contemplating legal strategy 1.0
Eating lunch 1.0
Litigating a case in court 2.5
Entertaining a prospective client 2.0
Instructions:
a) How much was value-added time
b) How much was non-value-added time
Click here for the solution: Dewey and Cheatam is a law firm that is initiating an activity-based costing system
E4-16 Dewey and Cheatam is a law firm that is initiating an activity-based costing system. Jim Dewey, the senior partner and strong supporter of ABC, has prepared the following list of activities performed by a typical attorney in a day at the firm.
Classify each activity as either value-added or non-value-added.
Activity Hours
Writing contracts and letters 1.0
Attending staff meetings 0.5
Taking depositions 1.0
Doing research 1.0
Traveling to/from court 1.0
Contemplating legal strategy 1.0
Eating lunch 1.0
Litigating a case in court 2.5
Entertaining a prospective client 2.0
Instructions:
a) How much was value-added time
b) How much was non-value-added time
Click here for the solution: Dewey and Cheatam is a law firm that is initiating an activity-based costing system
Monday, October 5, 2015
Circus City issued an 8%, 10-year $2,000,000 bond to build a monorail mass transit system
Problem 18-13 Preparing Government-wide Financial Statements
Circus City issued an 8%, 10-year $2,000,000 bond to build a monorail mass transit system. The city received $1,754,217 cash from the bond issuance on January 1, 2008. The bond yield is 10%. Interest is paid annually on December 31 of each year. Disclosure information about capital assets is reported below.
AND SO ON
Required:
Using the information above, prepare the statement of activities and the statement of net assets on a government-wide basis (using full accrual accounting). The beginning fund balance in the government-wide Statement of Net Assets is $2,686,283.
Click here for the solution: Circus City issued an 8%, 10-year $2,000,000 bond to build a monorail mass transit system
Circus City issued an 8%, 10-year $2,000,000 bond to build a monorail mass transit system. The city received $1,754,217 cash from the bond issuance on January 1, 2008. The bond yield is 10%. Interest is paid annually on December 31 of each year. Disclosure information about capital assets is reported below.
AND SO ON
Required:
Using the information above, prepare the statement of activities and the statement of net assets on a government-wide basis (using full accrual accounting). The beginning fund balance in the government-wide Statement of Net Assets is $2,686,283.
Click here for the solution: Circus City issued an 8%, 10-year $2,000,000 bond to build a monorail mass transit system
Tuesday, September 15, 2015
Crede Manufacturing Company uses a standard cost accounting system
P11-4A Crede Manufacturing Company uses a standard cost accounting
system. In 2005, 33,000 units were produced. Each unit took several
pounds of direct materials and 11/3 standard hours of direct labor at a
standard hourly rate of $12.00. Normal capacity was 42,000 direct labor
hours. During the year, 132,000 pounds of raw materials were purchased
at $0.90 per pound. All pounds purchased were used during the year.
Instructions
(a) If the materials price variance was $3,960 unfavorable, what was the standard materials price per pound?
(b) If the materials quantity variance was $2,871 favorable, what was the standard materials quantity per unit?
(c) What were the standard hours allowed for the units produced?
(d) If the labor quantity variance was $8,400 unfavorable, what were the actual direct labor hours worked?
(e) If the labor price variance was $4,470 favorable, what was the actual rate per hour?
(f) If total budgeted manufacturing overhead was $327,600 at normal capacity, what was the predetermined overhead rate per direct labor hour?
(g) What was the standard cost per unit of product?
(h) How much overhead was applied to production during the year?
(i) If the standard fixed overhead rate was $2.50, what was the overhead volume variance?
(j) If the overhead controllable variance was $3,000 favorable, what were the total variable overhead costs incurred? (Assume that the overhead controllable variance relates only to variable costs.)
(k) Using selected answers above, what were the total costs assigned to work in process?
Click here for the solution: Crede Manufacturing Company uses a standard cost accounting system
Instructions
(a) If the materials price variance was $3,960 unfavorable, what was the standard materials price per pound?
(b) If the materials quantity variance was $2,871 favorable, what was the standard materials quantity per unit?
(c) What were the standard hours allowed for the units produced?
(d) If the labor quantity variance was $8,400 unfavorable, what were the actual direct labor hours worked?
(e) If the labor price variance was $4,470 favorable, what was the actual rate per hour?
(f) If total budgeted manufacturing overhead was $327,600 at normal capacity, what was the predetermined overhead rate per direct labor hour?
(g) What was the standard cost per unit of product?
(h) How much overhead was applied to production during the year?
(i) If the standard fixed overhead rate was $2.50, what was the overhead volume variance?
(j) If the overhead controllable variance was $3,000 favorable, what were the total variable overhead costs incurred? (Assume that the overhead controllable variance relates only to variable costs.)
(k) Using selected answers above, what were the total costs assigned to work in process?
Click here for the solution: Crede Manufacturing Company uses a standard cost accounting system
Tuesday, September 8, 2015
A few years ago, Largo Industries implemented an inventory auditing system at an installed cost of $175,000
A few years ago, Largo Industries implemented an inventory auditing system at an installed cost of $175,000. Since then, it has taken depreciation deductions totaling $124,250. What is the system's current book value? If Largo sold the system for $110,000 how much recaptured depreciation would result?
Click here for the solution: A few years ago, Largo Industries implemented an inventory auditing system at an installed cost of $175,000
Click here for the solution: A few years ago, Largo Industries implemented an inventory auditing system at an installed cost of $175,000
An internal control system consists of all policies and procedures used to protect assets, ensure reliable accounting
ACC 225 Week 8
Quick Study Exercise 8-1
An internal control system consists of all policies and procedures used to protect assets, ensure reliable accounting, promote efficient operations, and urge adherence to company policies.
1. What is the main objective of internal control procedures, and how is it achieved?
2. Why should recordkeeping for assets be separated from custody over the assets?
3. Why should the responsibility for a transaction be divided between two or more individuals or departments?
Click here for the solution: An internal control system consists of all policies and procedures used to protect assets, ensure reliable accounting
Quick Study Exercise 8-1
An internal control system consists of all policies and procedures used to protect assets, ensure reliable accounting, promote efficient operations, and urge adherence to company policies.
1. What is the main objective of internal control procedures, and how is it achieved?
2. Why should recordkeeping for assets be separated from custody over the assets?
3. Why should the responsibility for a transaction be divided between two or more individuals or departments?
Click here for the solution: An internal control system consists of all policies and procedures used to protect assets, ensure reliable accounting
Finlon Upholstery, Inc. uses a job-order costing system to accumulate manufacturing costs
Finlon Upholstery, Inc. uses a job-order costing system to accumulate manufacturing costs. The company's work-in-process on December 31, 20x1, consisted of one job (no. 2077), which was carried on the year-end balance sheet at $156,800. There was no finished-goods inventory on this date.
Finlon applies manufacturing overhead to production on the basis of direct-labor cost. (The budgeted direct-labor cost is the company's practical capacity, in terms of direct-labor hours, multiplied by the budgeted direct-labor rate.) Budgeted totals for 20x2 for direct labor and manufacturing overhead are $4,200,000 and $5,460,000, respectively. Actual results for the year follow.
Direct Materials Used $5,600,000.00
Direct Labor $4,350,000.00
Indirect Material Used $65,000.00
Indirect Labor $2,860,000.00
Factory Depreciation $1,740,000.00
Factory Insurance $59,000.00
Factory Utilities $830,000.00
Selling and Administrative Expenses $2,160,000.00
Total $17,664,000.00
Job no. 2077 was completed in January 20x2; there was no work in process at year-end. All jobs produced during 20x2 were sold with the exception of job no. 2143, which contained direct material costs of $156,000 and direct-labor charges of $85,000. The company charges any under- or overapplied overhead to Cost of Goods Sold.
Directions:
1 Calculate the companies predetermined overhead application rate.
2.Calculate the additions to the work-in-process inventory account for the direct material used, direct labor and manufacturing overhead.
3.Calculate the finished goods inventory for the 12/31/x2 balance sheet.
4.Calculate the over-applied or under applied overhead at year end.
5.Explain if it is appropriate to include the selling and administrative expenses within cost of goods sold.
Click here for the solution: Finlon Upholstery, Inc. uses a job-order costing system to accumulate manufacturing costs
Finlon applies manufacturing overhead to production on the basis of direct-labor cost. (The budgeted direct-labor cost is the company's practical capacity, in terms of direct-labor hours, multiplied by the budgeted direct-labor rate.) Budgeted totals for 20x2 for direct labor and manufacturing overhead are $4,200,000 and $5,460,000, respectively. Actual results for the year follow.
Direct Materials Used $5,600,000.00
Direct Labor $4,350,000.00
Indirect Material Used $65,000.00
Indirect Labor $2,860,000.00
Factory Depreciation $1,740,000.00
Factory Insurance $59,000.00
Factory Utilities $830,000.00
Selling and Administrative Expenses $2,160,000.00
Total $17,664,000.00
Job no. 2077 was completed in January 20x2; there was no work in process at year-end. All jobs produced during 20x2 were sold with the exception of job no. 2143, which contained direct material costs of $156,000 and direct-labor charges of $85,000. The company charges any under- or overapplied overhead to Cost of Goods Sold.
Directions:
1 Calculate the companies predetermined overhead application rate.
2.Calculate the additions to the work-in-process inventory account for the direct material used, direct labor and manufacturing overhead.
3.Calculate the finished goods inventory for the 12/31/x2 balance sheet.
4.Calculate the over-applied or under applied overhead at year end.
5.Explain if it is appropriate to include the selling and administrative expenses within cost of goods sold.
Click here for the solution: Finlon Upholstery, Inc. uses a job-order costing system to accumulate manufacturing costs
Bluma Co. uses a perpetual inventory system and both an accounts receivable and an accounts payable subsidiary ledger
Bluma Co. uses a perpetual inventory system and both an accounts
receivable and an accounts payable subsidiary ledger. Balances related
to both the general ledger and the subsidiary ledger for Bluma are
indicated in the working papers. Presented below are a series of
transactions for Bluma Co. for the month of January. Credit sales terms
are 2/10, n/30. The cost of all merchandise sold was 60% of the sales
price.
Jan. 3 Sell merchandise on account to B. Richey $3,100, invoice no. 510, and to J. Forbes $1,800, invoice no. 511.
5 Purchase merchandise from S. Vogel $5,000 and D. Lynch $2,200, terms n/30.
7 Receive checks from S. LaDew $4,000 and B. Garcia $2,000 after discount period has lapsed.
8 Pay freight on merchandise purchased $235.
9 Send checks to S. Hoyt for $9,000 less 2% cash discount, and to D. Omara for $11,000 less 1% cash discount.
9 Issue credit of $300 to J. Forbes for merchandise returned.
10 Summary daily cash sales total $15,500.
11 Sell merchandise on account to R. Dvorak $1,600, invoice no. 512, and to S. LaDew $900, invoice no. 513.
12 Pay rent of $1,000 for January.
13 Receive payment in full from B. Richey and J. Forbes less cash discounts.
15 Withdraw $800 cash by M. Bluma for personal use.
15 Post all entries to the subsidiary ledgers.
16 Purchase merchandise from D. Omara $18,000, terms 1/10, n/30; S. Hoyt $14,200, terms 2/10, n/30; and S. Vogel $1,500, terms n/30.
17 Pay $400 cash for office supplies.
18 Return $200 of merchandise to S. Hoyt and receive credit.
20 Summary daily cash sales total $20,100.
21 Issue $15,000 note, maturing in 90 days, to R. Moses in payment of balance due.
21 Receive payment in full from S. LaDew less cash discount.
22 Sell merchandise on account to B. Richey $2,700, invoice no. 514, and to R. Dvorak $1,300, invoice no. 515.
22 Post all entries to the subsidiary ledgers.
23 Send checks to D. Omara and S. Hoyt in full payment less cash discounts.
25 Sell merchandise on account to B. Garcia $3,500, invoice no. 516, and to J. Forbes $6,100, invoice no. 517.
27 Purchase merchandise from D. Omara $14,500, terms 1/10, n/30; D. Lynch $1,200, terms n/30; and S. Vogel $5,400, terms n/30.
27 Post all entries to the subsidiary ledgers.
28 Pay $200 cash for office supplies.
31 Summary daily cash sales total $21,300.
31 Pay sales salaries $4,300 and office salaries $3,800.
Instructions
(a) Record the January transactions in a sales journal, a single-column purchases journal, a cash receipts journal as shown on page 313, a cash payments journal as shown on page 318, and a two-column general journal.
(b) Post the journals to the general ledger.
(c) Prepare a trial balance at January 31, 2010, in the trial balance columns of the worksheet. Complete the worksheet using the following additional information.
1. Office supplies at January 31 total $900.
2. Insurance coverage expires on October 31, 2010.
3. Annual depreciation on the equipment is $1,500.
4. Interest of $50 has accrued on the note payable.
TB totals $202,900; Adj. T/B totals $203,075
(d) Prepare a multiple-step income statement and an owner's equity statement for January and a classified balance sheet at the end of January.
Net income $20,755; total assets $143,505
(e) Prepare and post adjusting and closing entries.
(f) Prepare a post-closing trial balance, and determine whether the subsidiary ledgers agree with the control accounts in the general ledger.
PCTB $145,130
Click here for the solution: Bluma Co. uses a perpetual inventory system and both an accounts receivable and an accounts payable subsidiary ledger
Jan. 3 Sell merchandise on account to B. Richey $3,100, invoice no. 510, and to J. Forbes $1,800, invoice no. 511.
5 Purchase merchandise from S. Vogel $5,000 and D. Lynch $2,200, terms n/30.
7 Receive checks from S. LaDew $4,000 and B. Garcia $2,000 after discount period has lapsed.
8 Pay freight on merchandise purchased $235.
9 Send checks to S. Hoyt for $9,000 less 2% cash discount, and to D. Omara for $11,000 less 1% cash discount.
9 Issue credit of $300 to J. Forbes for merchandise returned.
10 Summary daily cash sales total $15,500.
11 Sell merchandise on account to R. Dvorak $1,600, invoice no. 512, and to S. LaDew $900, invoice no. 513.
12 Pay rent of $1,000 for January.
13 Receive payment in full from B. Richey and J. Forbes less cash discounts.
15 Withdraw $800 cash by M. Bluma for personal use.
15 Post all entries to the subsidiary ledgers.
16 Purchase merchandise from D. Omara $18,000, terms 1/10, n/30; S. Hoyt $14,200, terms 2/10, n/30; and S. Vogel $1,500, terms n/30.
17 Pay $400 cash for office supplies.
18 Return $200 of merchandise to S. Hoyt and receive credit.
20 Summary daily cash sales total $20,100.
21 Issue $15,000 note, maturing in 90 days, to R. Moses in payment of balance due.
21 Receive payment in full from S. LaDew less cash discount.
22 Sell merchandise on account to B. Richey $2,700, invoice no. 514, and to R. Dvorak $1,300, invoice no. 515.
22 Post all entries to the subsidiary ledgers.
23 Send checks to D. Omara and S. Hoyt in full payment less cash discounts.
25 Sell merchandise on account to B. Garcia $3,500, invoice no. 516, and to J. Forbes $6,100, invoice no. 517.
27 Purchase merchandise from D. Omara $14,500, terms 1/10, n/30; D. Lynch $1,200, terms n/30; and S. Vogel $5,400, terms n/30.
27 Post all entries to the subsidiary ledgers.
28 Pay $200 cash for office supplies.
31 Summary daily cash sales total $21,300.
31 Pay sales salaries $4,300 and office salaries $3,800.
Instructions
(a) Record the January transactions in a sales journal, a single-column purchases journal, a cash receipts journal as shown on page 313, a cash payments journal as shown on page 318, and a two-column general journal.
(b) Post the journals to the general ledger.
(c) Prepare a trial balance at January 31, 2010, in the trial balance columns of the worksheet. Complete the worksheet using the following additional information.
1. Office supplies at January 31 total $900.
2. Insurance coverage expires on October 31, 2010.
3. Annual depreciation on the equipment is $1,500.
4. Interest of $50 has accrued on the note payable.
TB totals $202,900; Adj. T/B totals $203,075
(d) Prepare a multiple-step income statement and an owner's equity statement for January and a classified balance sheet at the end of January.
Net income $20,755; total assets $143,505
(e) Prepare and post adjusting and closing entries.
(f) Prepare a post-closing trial balance, and determine whether the subsidiary ledgers agree with the control accounts in the general ledger.
PCTB $145,130
Click here for the solution: Bluma Co. uses a perpetual inventory system and both an accounts receivable and an accounts payable subsidiary ledger
Wednesday, September 2, 2015
BC Company uses a job order cost accounting system
BC Company uses a job order cost accounting system. During the month of April, the following events occurred:
(a) Purchased raw materials on credit, $32,000.
(b) Raw materials requisitioned: $25,800 as direct materials and $10,500 indirect materials.
(c) Paid factory payroll for the month totaling $37,700 which includes $8,200 indirect labor.
(d) Assigned the factory payroll to jobs and overhead.
Make the necessary journal entries to record the above transactions and events.
Click here for the solution: BC Company uses a job order cost accounting system
(a) Purchased raw materials on credit, $32,000.
(b) Raw materials requisitioned: $25,800 as direct materials and $10,500 indirect materials.
(c) Paid factory payroll for the month totaling $37,700 which includes $8,200 indirect labor.
(d) Assigned the factory payroll to jobs and overhead.
Make the necessary journal entries to record the above transactions and events.
Click here for the solution: BC Company uses a job order cost accounting system
Saturday, August 15, 2015
Brewster Company began operations on January 1, 2010, adopting the conventional retail inventory system
E9-22 (Retail Inventory Method—Conventional and LIFO) Brewster Company began operations on January 1, 2010, adopting the conventional retail inventory system. None of the company’s merchandise was marked down in 2010 and, because there was no beginning inventory, its ending inventory for 2010 of $41,100 would have been the same under either the conventional retail system or the LIFO retail system.
On December 31, 2011, the store management considers adopting the LIFO retail system and desires to know how the December 31, 2011, inventory would appear under both systems. All pertinent data regarding purchases, sales, markups, and markdowns are shown below. There has been no change in the price level.
Cost Retail
Inventory, Jan. 1, 2011 $ 41,100 $ 60,000
Markdowns (net) 13,000
Markups (net) 22,000
Purchases (net) 150,000 191,000
Sales (net) 167,000
Instructions
Determine the cost of the 2011 ending inventory under both (a) the conventional retail method and (b) the LIFO retail method.
Click here for the solution: Brewster Company began operations on January 1, 2010, adopting the conventional retail inventory system
On December 31, 2011, the store management considers adopting the LIFO retail system and desires to know how the December 31, 2011, inventory would appear under both systems. All pertinent data regarding purchases, sales, markups, and markdowns are shown below. There has been no change in the price level.
Cost Retail
Inventory, Jan. 1, 2011 $ 41,100 $ 60,000
Markdowns (net) 13,000
Markups (net) 22,000
Purchases (net) 150,000 191,000
Sales (net) 167,000
Instructions
Determine the cost of the 2011 ending inventory under both (a) the conventional retail method and (b) the LIFO retail method.
Click here for the solution: Brewster Company began operations on January 1, 2010, adopting the conventional retail inventory system
Friday, August 14, 2015
Birmingham Bowling Ball Company (BBBC) uses a job-order costing system to accumulate manufacturing costs
Birmingham Bowling Ball Company (BBBC) uses a job-order costing system to accumulate manufacturing costs. The company’s work-in-process on December 31, 20x3, consisted of one job (no. 3088), which was carried on the year-end balance sheet at $78,400. There was no finished-goods inventory on this date.
BBBC applies manufacturing overhead to production on the basis of direct-labor cost. Budgeted totals for 20x4 for direct labor and manufacturing overhead are $2,100,000 and $2,730,000, respectively.
Actual results for the year follow.
Direct material used................................. $2,800,000
Direct labor ................................................. 2,175,000
Indirect material used ................................... 32,500
Indirect labor ............................................. 1,430,000
Factory depreciation..................................... 870,000
Factory insurance .......................................... 29,500
Factory utilities ............................................ 415,000
Selling and administrative expenses ...... 1,080,000
Total ............................................ $8,832,000
Job no. 3088 was completed in January 20x4; there was no work in process at year-end. All jobs produced during 20x4 were sold with the exception of job no. 3154, which contained direct material costs of $78,000 and direct-labor charges of $42,500. BBBC charges any under- or over applied overhead to Cost of Goods Sold.
1. Determine the company’s predetermined overhead application rate.
2. Determine the additions to the Work-in-Process Inventory account for direct material used, direct labor, and manufacturing overhead.
3. Compute the amount BBBC would disclose as finished-goods inventory on the December 31, 20x4, balance sheet.
4. Prepare the journal entry needed to record the year’s completed production.
5. Compute the amount of under- or over-applied overhead at year-end, and prepare the necessary journal entry to record its disposition.
6. Determine BBBC’s 20x4 cost of goods sold.
7. Would it be appropriate to include selling and administrative expenses in either manufacturing overhead or cost of goods sold? Briefly explain.
Click here for the solution: Birmingham Bowling Ball Company (BBBC) uses a job-order costing system to accumulate manufacturing costs
BBBC applies manufacturing overhead to production on the basis of direct-labor cost. Budgeted totals for 20x4 for direct labor and manufacturing overhead are $2,100,000 and $2,730,000, respectively.
Actual results for the year follow.
Direct material used................................. $2,800,000
Direct labor ................................................. 2,175,000
Indirect material used ................................... 32,500
Indirect labor ............................................. 1,430,000
Factory depreciation..................................... 870,000
Factory insurance .......................................... 29,500
Factory utilities ............................................ 415,000
Selling and administrative expenses ...... 1,080,000
Total ............................................ $8,832,000
Job no. 3088 was completed in January 20x4; there was no work in process at year-end. All jobs produced during 20x4 were sold with the exception of job no. 3154, which contained direct material costs of $78,000 and direct-labor charges of $42,500. BBBC charges any under- or over applied overhead to Cost of Goods Sold.
1. Determine the company’s predetermined overhead application rate.
2. Determine the additions to the Work-in-Process Inventory account for direct material used, direct labor, and manufacturing overhead.
3. Compute the amount BBBC would disclose as finished-goods inventory on the December 31, 20x4, balance sheet.
4. Prepare the journal entry needed to record the year’s completed production.
5. Compute the amount of under- or over-applied overhead at year-end, and prepare the necessary journal entry to record its disposition.
6. Determine BBBC’s 20x4 cost of goods sold.
7. Would it be appropriate to include selling and administrative expenses in either manufacturing overhead or cost of goods sold? Briefly explain.
Click here for the solution: Birmingham Bowling Ball Company (BBBC) uses a job-order costing system to accumulate manufacturing costs
Thursday, August 13, 2015
The SIMPLEX financial system is characterized by a required reserves ratio of 11 percent
P5-5 The SIMPLEX financial system is characterized by a required reserves ratio of 11 percent; initial excess reserves are $1 million, and there are no currency or other leakages.
a. What would be the maximum amount of checkable deposits after deposit expansion, and what would be the money multiplier?
b. How would your answer in (a) change if the reserve requirement had been 9 percent?
Click here for the solution: The SIMPLEX financial system is characterized by a required reserves ratio of 11 percent
a. What would be the maximum amount of checkable deposits after deposit expansion, and what would be the money multiplier?
b. How would your answer in (a) change if the reserve requirement had been 9 percent?
Click here for the solution: The SIMPLEX financial system is characterized by a required reserves ratio of 11 percent
ABBIX has a complex financial system with the following relationships
P5-11 (Challenge Problem) ABBIX has a complex financial system with the following relationships:
The ratio of required reserves to total deposits is 15 percent, and the ratio of noncheckable deposits to checkable deposits is 40 percent. In addition, currency held by the nonbank public amounts to 20 percent of checkable deposits. The ratio of government deposits to checkable deposits is 8 percent. Initial excess reserves are $900 million.
a. Determine the M1 multiplier and the maximum dollar amount of checkable deposits.
b. Determine the size of the M1 money supply.
c. What will happen to ABBIX’s money multiplier if the reserve requirement decreases to 10 percent while the ratio of noncheckable deposits to checkable deposits falls to 30 percent? Assume the other ratios remain as originally stated.
d. Based on the information in (c), estimate the maximum dollar amount of checkable deposits, as well as the size of the M1 money supply.
e. Assume that ABBIX has a target M1 money supply of $2.8 billion. The only variable that you have direct control over is the required reserves ratio. What would the required reserves ratio have to be to reach the target M1 money supply amount? Assume the other original ratio relationships hold.
f. Now assume that currency held by the nonbank public drops to 15 percent of checkable deposits and that ABBIX’s target money supply is changed to $3.0 billion. What would the required reserves ratio have to be to reach the new target M1 money supply amount? Assume the other original ratio relationships hold.
Click here for the solution: ABBIX has a complex financial system with the following relationships
The ratio of required reserves to total deposits is 15 percent, and the ratio of noncheckable deposits to checkable deposits is 40 percent. In addition, currency held by the nonbank public amounts to 20 percent of checkable deposits. The ratio of government deposits to checkable deposits is 8 percent. Initial excess reserves are $900 million.
a. Determine the M1 multiplier and the maximum dollar amount of checkable deposits.
b. Determine the size of the M1 money supply.
c. What will happen to ABBIX’s money multiplier if the reserve requirement decreases to 10 percent while the ratio of noncheckable deposits to checkable deposits falls to 30 percent? Assume the other ratios remain as originally stated.
d. Based on the information in (c), estimate the maximum dollar amount of checkable deposits, as well as the size of the M1 money supply.
e. Assume that ABBIX has a target M1 money supply of $2.8 billion. The only variable that you have direct control over is the required reserves ratio. What would the required reserves ratio have to be to reach the target M1 money supply amount? Assume the other original ratio relationships hold.
f. Now assume that currency held by the nonbank public drops to 15 percent of checkable deposits and that ABBIX’s target money supply is changed to $3.0 billion. What would the required reserves ratio have to be to reach the new target M1 money supply amount? Assume the other original ratio relationships hold.
Click here for the solution: ABBIX has a complex financial system with the following relationships
Iridium Corp. has spent $3.5 billion over the past decade developing a satellite, based telecommunication system
Iridium Corp. has spent $3.5 billion over the past decade developing a satellite, based telecommunication system. It is currently trying to decide whether to spend an additional $350 million on the project. The firm expects that this outlay will finish the project and will generate cash flow of $15 million per year over the next 5 years. The competitor has offered $450 million for the satellites already in orbit. Classify the firm’s outlays as sunk costs or opportunity costs, and specify the relevant cash flows.
Click here for the solution: Iridium Corp. has spent $3.5 billion over the past decade developing a satellite, based telecommunication system
Click here for the solution: Iridium Corp. has spent $3.5 billion over the past decade developing a satellite, based telecommunication system
Saturday, July 11, 2015
A progressive tax system is one in which higher-income people pay ____ than lower-income people
1) A progressive tax system is one in which higher-income people pay ____ than lower-income people.
2) ____ would be considered taxable income.
3) You have up to three years after mailing your tax return to file an amended tax return (1040X).
a. True
b. False
4) Connie is a 20 year old college student who earned $8,000 and spent it all on her support during the year. Her parents may claim her as a tax dependent as long as
5) You would typically not include ____ in your gross income.
6) A tax audit is a(n)
7) The main objective of tax planning is to maximize the amount of money you keep by minimizing the amount of taxes you pay.
a. True
b. False
8) Molly and Justin are considering contributing $5,000 to their favorite, tax deductible charity. This contribution will bring their total itemized deductions to $20,000. Assuming they are in the 28% marginal tax bracket, how much will they save in taxes by contributing this $5,000 to charity?
9) A couple will usually incur a lower tax liability if they choose "married, filing jointly" rather than "married, filing a separately."
a. True
b. False
10) Mr. and Mrs. McMurray have three children ages 3, 6, and 12 for which they paid $6,000 in child care expenses this year. Assume the McMurray's tax liability is initially calculated to be $10,000. Then apply a 20% tax credit for child care expenses within limits normally allowed. How much will their final tax liability be?
11) Tax avoidance is legal, tax evasion is illegal.
a. True
b. False
12) Which of the following cannot be adjustment(s) to gross income on the 1040 form?
13) Tax-deferred income is better than tax-free income.
a. True
b. False
14) Russ and Lois got married December 30. Since they were single for most of the year, however, they can legally file as married taxpayers in the year of the wedding.
a. True
b. False
15) Alimony received is included in gross income for the receiver and a tax deduction for the payer.
a. True
b. False
16) For tax purposes, head-of-household refers to
17) Buddy Slaton has only one itemized deduction item, the $3,000 he gave to his church. His standard deduction this year is $5,450, and he is in the 15% marginal tax bracket. How much will his contribution to the church save Buddy in taxes this year?
18) Pete and Pam are married with four dependent children. Pete and Pam can legally file using which of the following filing statuses?
19) If you do not wish to itemize deductions, you can use the
20) ____ income is gross income less tax deductions and payments for insurance and retirement savings.
21) The standard deduction is a blanket deduction that depends on the taxpayers
22) A declaration of estimated taxes is made by filing
23) Itemized non-business expenses do not include
24) You are preparing your own tax return. The least costly source for answering your questions would be
25) You have no employer provided pension plan; your IRA contributions are treated as
26) The total amount that you owe for income tax in one year is your tax
27) Which of the following can be adjustment(s) to gross income on the 1040 form?
28) Ben and Jack both earned $60,000 this year. Ben (age 30) is married with two children, and Jack (age 68) is single with no dependents. Which of the following is true regarding the amount of Social Security taxes they will pay?
29) The tax rate on capital gains for most people is
30) Murray (age 68, single) just sold his home of 35 years so that he could relocate nearer his grandchildren. He realized a $400,000 capital gain on the home. How much of this gain will Murray have to pay taxes on?
Click here for the solution: TV commercials, newspaper and magazine ads, the tools that carry and deliver the “image” of a marketed product or service, are known as its
2) ____ would be considered taxable income.
3) You have up to three years after mailing your tax return to file an amended tax return (1040X).
a. True
b. False
4) Connie is a 20 year old college student who earned $8,000 and spent it all on her support during the year. Her parents may claim her as a tax dependent as long as
5) You would typically not include ____ in your gross income.
6) A tax audit is a(n)
7) The main objective of tax planning is to maximize the amount of money you keep by minimizing the amount of taxes you pay.
a. True
b. False
8) Molly and Justin are considering contributing $5,000 to their favorite, tax deductible charity. This contribution will bring their total itemized deductions to $20,000. Assuming they are in the 28% marginal tax bracket, how much will they save in taxes by contributing this $5,000 to charity?
9) A couple will usually incur a lower tax liability if they choose "married, filing jointly" rather than "married, filing a separately."
a. True
b. False
10) Mr. and Mrs. McMurray have three children ages 3, 6, and 12 for which they paid $6,000 in child care expenses this year. Assume the McMurray's tax liability is initially calculated to be $10,000. Then apply a 20% tax credit for child care expenses within limits normally allowed. How much will their final tax liability be?
11) Tax avoidance is legal, tax evasion is illegal.
a. True
b. False
12) Which of the following cannot be adjustment(s) to gross income on the 1040 form?
13) Tax-deferred income is better than tax-free income.
a. True
b. False
14) Russ and Lois got married December 30. Since they were single for most of the year, however, they can legally file as married taxpayers in the year of the wedding.
a. True
b. False
15) Alimony received is included in gross income for the receiver and a tax deduction for the payer.
a. True
b. False
16) For tax purposes, head-of-household refers to
17) Buddy Slaton has only one itemized deduction item, the $3,000 he gave to his church. His standard deduction this year is $5,450, and he is in the 15% marginal tax bracket. How much will his contribution to the church save Buddy in taxes this year?
18) Pete and Pam are married with four dependent children. Pete and Pam can legally file using which of the following filing statuses?
19) If you do not wish to itemize deductions, you can use the
20) ____ income is gross income less tax deductions and payments for insurance and retirement savings.
21) The standard deduction is a blanket deduction that depends on the taxpayers
22) A declaration of estimated taxes is made by filing
23) Itemized non-business expenses do not include
24) You are preparing your own tax return. The least costly source for answering your questions would be
25) You have no employer provided pension plan; your IRA contributions are treated as
26) The total amount that you owe for income tax in one year is your tax
27) Which of the following can be adjustment(s) to gross income on the 1040 form?
28) Ben and Jack both earned $60,000 this year. Ben (age 30) is married with two children, and Jack (age 68) is single with no dependents. Which of the following is true regarding the amount of Social Security taxes they will pay?
29) The tax rate on capital gains for most people is
30) Murray (age 68, single) just sold his home of 35 years so that he could relocate nearer his grandchildren. He realized a $400,000 capital gain on the home. How much of this gain will Murray have to pay taxes on?
Click here for the solution: TV commercials, newspaper and magazine ads, the tools that carry and deliver the “image” of a marketed product or service, are known as its
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