ACC4115 Advanced Accounting Information Systems
1. PR 7-3b Bank reconciliation and entries The cash account for Stone Systems at July 31, 2016,... PR 7-3b Bank reconciliation and entries The cash account for Stone Systems at July 31, 2016, indicated a balance of $17,750. The bank statement indicated a balance of $33,650 on July 31, 2016. Comparing the bank statement and the accompanying canceled checks and memos with the records reveals the following reconciling items: a. Checks outstanding totaled $17,865. b. A deposit of $9,150, representing receipts of July 31, had been made too late to appear on the bank statement. c. The bank had collected $6,095 on a note left for collection. The face of the note was $5,750. d. A check for $390 returned with the statement had been incorrectly recorded by Stone Systems as $930. The check was for the payment of an obligation to Holland Co. for the purchase of office supplies on account. e. A check drawn for $1,810 had been incorrectly charged by the bank as $1,180. f. Bank service charges for July amounted to $80. Instructions 1. Prepare a bank reconciliation. 2. Journalize the necessary entries. The accounts have not been closed. 3. If a balance sheet were prepared for Stone Systems on July 31, 2014, what amount should be reported as cash? 2. DISCUSSION ACTIVITY List the four health care funding methods used in Canada. State the health... DISCUSSION ACTIVITY List the four health care funding methods used in Canada. State the health care funding method used in Ontario jurisdiction and describe the payroll implication, if any. 3. Stead Company produces a single product. Last year, the company"s net operating income computed by... Stead Company produces a single product. Last year, the company"s net operating income computed by the absorption costing method was $6,400, and its net operating income computed by the variable costing method was $9,100. The company"s unit product cost was $17 under variable costing and $20 under absorption costing. If the ending inventory consisted of 2,100 units, the beginning inventory in units must have been: A) 1,200 B) 2,100 C) 3,000 D) 4,800 4. 1. Describe and evaluate what Charles Schwab is doing. 2. How might the company’s culture of not... 1. Describe and evaluate what Charles Schwab is doing. 2. How might the company’s culture of not buying into hype and not taking excessive risks affect its organizational structural design? 3. What structural implications—good and bad—might Schwab’s intense focus on customer feedback have? 4. Do you think this arrangement would work for other types of organizations? Why or why not? The Charles Schwab Corporation (Charles Schwab) is a San Francisco-based financial services company. Like many companies in that industry, Charles Schwab struggled during the economic recession. Founded in 1971 by its namesake as a discount brokerage, the company has now “grown up” into a full-service traditional brokerage firm, with more than 300 offices in some 45 states and in London and Hong Kong. It still offers discount brokerage services, but also financial research, advice, and planning; retirement plans; investment management; and proprietary financial products including mutual funds, mortgages, CDs, and other banking products through its Charles Schwab Bank unit. However, its primary business is still making stock trades for investors who make their own financial decisions. The company has a reputation for being conservative, which helped it avoid the financial meltdown suffered by other investment firms. Founder Charles R. Schwab has a black bowling ball perched on his desk. “It’s a memento of the long-forgotten bubble of 1961, when shares of bowling-pin companies, shoemakers, ch 5. You have just been hired as the accountant for Fan-Tastic Sports Gear, a wholesaler of sporting g... You have just been hired as the accountant for Fan-Tastic Sports Gear, a wholesaler of sporting goods and apparel. The previous accountant left abruptly, and an accounting intern has been drafting the journal entries since January. You are examining the accounting records before finalizing the journal entries for the first quarter. Below are some accounts receivable transactions that you are reviewing. PAGE 11 JOURNAL DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 Jan. 17 Sales 9,700.00 2 Bad Debt Expense 9,700.00 3 17 Bad Debt Expense 9,700.00 4 Accounts Receivable-CJ’s Sports 9,700.00 5 21 Cash 10,700.00 6 Bad Debt Expense 2,200.00 7 Accounts Receivable-Four Seasons Sportswear 12,900.00 8 Feb. 15 Accounts Receivable-Healthy Running 3,000.00 9 Bad Debt Expense 500.00 10 Sales 3,500.00 11 Mar. 4 Accounts Receivable-Four Seasons Sportswear 2,200.00 12 Bad Debt Expense 2,200.00 13 4 Cash 2,200.00 14 Bad Debt Expense 2,200.00 15 13 Cash 5,540.00 16 Accounts Receivable-Barb’s Best Gear 5,540.00 17 31 Bad Debt Expense 20,870.00 18 Accounts Receivable-Healthy Running 5,250.00 19 Accounts Receivable-The Locker Room 4,100.00 20 Accounts Receivable-CJ’s Sports 2,780.00 21 Accounts Receivable-Get Your Gear 7,050.00 22 Accounts Receivable-Ready-2-Go 1,690.00 CHART OF ACCOUNTS Fan-Tastic Sports Gear General Ledger ASSETS 110 Cash 111 Petty Cash 121 Accounts Receivable-Healthy Running 122 Accounts Receivable-The Locker Room 123 Accounts Receivable-CJ’s Sports 124 Accounts Receivable-Get Your Gear 125 Accounts Receivable-Four Seasons Sportswear 126 Accounts Receivable-Ready-2-Go 127 Accounts Receivable-Barb’s Best Gear 131 Interest Receivable 132 Notes Receivable 141 Merchandise Inventory 145 Office Supplies 151 Prepaid Insurance 181 Land 193 Office Equipment 194 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Rama Gupta, Capital 311 Rama Gupta, Drawing 312 Income Summary REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Merchandise Sold 520 Sales Salaries Expense 521 Advertising Expense 523 Delivery Expense 524 Repairs Expense 529 Selling Expenses 530 Office Salaries Expense 531 Rent Expense 532 Depreciation Expense-Office Equipment 533 Insurance Expense 534 Office Supplies Expense 536 Credit Card Expense 537 Cash Short and Over 538 Bad Debt Expense 539 Miscellaneous Expense 710 Interest Expense Review the accounts receivable transactions shown in the general journal on the Fan-Tastic Sports Gear panel. Answer the questions below. 1. How does the company appear to be handling uncollectible receivables? a. aging of accounts receivable method b. allowance method c. direct write-off method d. percent of sales method 2. You have made the observations listed below during your review of the accounting records. In deciding whether Fan-Tastic Sports Gear is handling uncollectible receivables appropriately, which of these observations are key factors in your decision? Check all that apply. a. Most of the company’s sales are on account. b. The company sells primarily to smaller businesses, who are more likely to have cash flow problems. c. An analysis of the company’s accounts receivable shows more accounts will be uncollectible than last year. d. Bad debt is a rising expense. e. Company sales last year were $3,000,000 and are expected to increase by $360,000 this year. f. Collection agencies are routinely used. 3. After making the observations listed in (2) above, you have recommended that Fan-Tastic Sports Gear use the ____? to record bad debt expense. 1. Assume that Fan-Tastic Sports Gear will be using the allowance method this year. Select any items(s) from the list below that should be added to the existing chart of accounts. Check all that apply. a. Balance of Aging Accounts b. Estimate for Uncollectible Accounts c. Total Credit Sales d. Net Realizable Value of Receivables e. Allowance for Doubtful Accounts 2. Finalize the journal entries shown on the Fan-Tastic Sports Gear panel and make any necessary changes. Refer to the Chart of Accounts for the exact wording of account titles. You may also use any items from the list above, if needed. PAGE 11 JOURNAL DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Fan-Tastic Sports Gear recorded $3,000,000 of sales last year and projects sales to increase by $360,000 in the current year. Last year, 80% of sales were on account, with over 300 customer accounts. Bad debt expense was $26,187. 1. Assume that Fan-Tastic Sports Gear used the allowance method last year, and the allowance account at the end of the year had a debit balance of $2,190. The company estimated uncollectible accounts expense using the percent of credit sales method and expected 0.75% of credit sales to be uncollectible. What is the amount of the adjusting entry to provide for doubtful accounts on December 31? Round all calculations to the nearest dollar. 2. How much higher (lower) would Fan-Tastic Sports Gear’s net income have been under the allowance method assumption in (1) above than under the direct write-off method? ____ ? by ____? 3. Using the allowance method, the net realizable value of the receivables would appear on which financial statement? _____? 6. Activity-based costing The job costing system at Smith’s Custom Activity-based costing The job costing system at Smith’s Custom Framing has five indirect cost pools (purchasing, material handling, machine maintenance, product inspection, and packaging). The company is in the process of bidding on two jobs; Job 215, an order of 15 intricate personalized frames, and Job 325, an order of 6 standard personalized frames. The controller wants you to compare overhead allocated under the current simple job-costing system and a newly-designed activity-based job-costing system. Total budgeted costs in each indirect cost pool and the budgeted quantity of activity driver are as follows: Information related to Job 215 and Job 325 follows. Job 215 incurs more batch-level costs because it uses more types of materials that need to be purchased, moved, and inspected relative to Job 325. Job 215 Job 325 Number of purchase orders 25 8 Number of material moves 10 4 Machine-hours 40 60 Number of inspections 9 3 Units produced 15 6 1. Compute the total overhead allocated to each job under a simple costing system, where overhead is allocated based on machine-hours. 2. Compute the total overhead allocated to each job under an activity-based costing system using the appropriate activity drivers. 3. Explain why Smith’s Custom Framing might favor the ABC job-costing system over the simple job-costing system, especially in its biddingprocess. 7. An accounting time period that is one year in length, but does An accounting time period that is one year in length, but does not begin on January 1, is referred to as a. a fiscal year. b. an interim period. c. the time period assumption. d. a reporting period. 3. Adjustments would not be necessary if financial statements were prepared to reflect net income from a. monthly operations. b. fiscal year operations. c. interim operations. d. lifetime operations. 4. Management usually desires _________ financial statements and the Canada Revenue Agency requires all businesses to file __________ tax returns. a. annual, annual b. monthly, annual c. quarterly, monthly d. monthly, monthly 5. Which of the following assumptions requires that businesses prepare adjusting entries before completing their financial statements? a. Going concern assumption b. Time period assumption c. Economic entity assumption d. Monetary unit assumption 6. In general, the shorter the time period, the difficulty of making the proper adjustments to accounts a. is increased. b. is decreased. c. is unaffected. d. depends on if there is a profit or loss. 7. Which of the following is not a common time period chosen by businesses as their accounting period? a. Daily b. Monthly c. Quarterly d. Annually `8. Which of the following time periods would not be referred to as an interim period? a. Monthly b. Quarterly c. Semi-annually d. Annually 9. The fiscal year of a business is usually determined by a. the Canada Revenue Agency. b. the Tax Act. c. the business. d. provincial securities and exchange commissions. 10. The revenue recognition principle dictates that revenue should be recognized in the accounting records a. when cash is received. b. when it is earned. c. at the end of the month. d. in the period that income taxes are paid. Submitted: 1229 days and 7 hours ago. Category: Homework Value: $9 An accounting time period that is one year in length, but does not begin on January 1, is referred to as a. a fiscal year. b. an interim period. c. the time period assumption. d. a reporting period. 3. Adjustments would not be necessary if financial statements were prepared to reflect net income from a. monthly operations. b. fiscal year operations. c. interim operations. d. lifetime operations. 4. Management usually desires _________ financial statements and the Canada Revenue Agency requires all businesses to file __________ tax returns. a. annual, annual b. monthly, annual c. quarterly, monthly d. monthly, monthly 5. Which of the following assumptions requires that businesses prepare adjusting entries before completing their financial statements? a. Going concern assumption b. Time period assumption c. Economic entity assumption d. Monetary unit assumption 6. In general, the shorter the time period, the difficulty of making the proper adjustments to accounts a. is increased. b. is decreased. c. is unaffected. d. depends on if there is a profit or loss. 7. Which of the following is not a common time period chosen by businesses as their accounting period? a. Daily b. Monthly c. Quarterly d. Annually `8. Which of the following time periods would not be referred to as an interim period? a. Monthly b. Quarterly c. Semi-annually d. Annually 9. The fiscal year of a business is usually determined by a. the Canada Revenue Agency. b. the Tax Act. c. the business. d. provincial securities and exchange commissions. 10. The revenue recognition principle dictates that revenue should be recognized in the accounting records a. when cash is received. b. when it is earned. c. at the end of the month. d. in the period that income taxes are paid. 8. Your healthy 63-year-old neighbor is about to retire and comes to you for advice. From talking with... Your healthy 63-year-old neighbor is about to retire and comes to you for advice. From talking with her, you find out she was planning on taking all the money out of her company"s retirement plan and investing it in bond mutual funds and money market funds. What advice should you give her? 9. Missing records, computing inventory costs. Ron Howard recently took over as the controller of... Missing records, computing inventory costs. Ron Howard recently took over as the controller of Johnson Brothers Manufacturing. Last month, the previous controller left the company with little notice and left the accounting records in disarray. Ron needs the ending inventory balances to report first-quarter numbers. For the previous month (March 2017) Ron was able to piece together the following information: Calculate the cost of: 1. Finished-goods inventory, 3/31/2017 2. Work-in-process inventory, 3/31/2017 3. Direct materials inventory, 3/31/2017 10. The following table provides data for output (real GDP) and saving. a. Fill in the missing numbe... The following table provides data for output (real GDP) and saving. a. Fill in the missing numbers (gray shaded cells) in the table. In the table, round your answers to 3 decimal places. If you are entering any negative numbers be sure to include a negative 11. Lin Corporation has a single product whose selling price is $120 and whose variable expense is $80.. Lin Corporation has a single product whose selling price is $120 and whose variable expense is $80 per unit. The company’s monthly fixed expense is $50,000 1. Using the equation method, solve for the unit sales that are required to earn a target profit of $10,000 2. Using the format method, solve for the unit sales that are required to earn a target profit of $15,000 Mauro Products distributes a single product, a woven basket whose selling prices are $15 and whose variable expense is $12 per unit. The company’s monthly fixed expense is $4,200. 1. Solve for the company’s breakeven point in unit sales using the equation method. 2. Solve for the companies breakeven point in sales dollars using the equation method and the CM ratio. 3. Solve for the company’s breakeven point in unit sales using the format method 4. Solve for the company’s breakeven point in sales dollars using the format method and the cm ration.