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1. Required information Problem 7-2A Estimating and reporting bad debts LO P2, P3 [The following informRequired information Problem 7-2A Estimating and reporting bad debts LO P2, P3 [The following information applies to the questions displayed below.] At December 31, 2018, Hawke Company reports the following results for its calendar year. $1,992,680 3,180,000 Cash sales Credit sales In addition, its unadjusted trial balance includes the following items. $963,540 debit 23,550 debit Accounts receivable Allowance for doubtful accounts Problem 7-2A Part 3 3. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2018, balance sheet assuming that an aging analysis estimates that 6% of year-end accounts receivable are uncollectible Current assets
2. Lewis Incorporated and Clark Enterprises report the following amounts for 2012....
Lewis Incorporated and Clark Enterprises report the following amounts for 2012. ____________________________________Lewis Clark Inventory (beginning)..........................$ 14,000.......$ 40,000 Inventory (ending).................................8,000.........50,000 Purchases..........................................120,000.......150,000 Purchase returns.....................................5,000........50,000 Required: 1. Calculate cost of goods sold for each company. 2. Calculate the inventory turnover ratio for each company. 3. Calculate the average days in inventory for each company. 4. Explain which company appears to be managing its inventory more efficiently.
3. 146.Gizmo Inc. purchased a one-year insurance policy on October 1 for $1,800. The adjusting entry on
146.Gizmo Inc. purchased a one-year insurance policy on October 1 for $1,800. The adjusting entry on December 31would be
DateDescriptionPost. Ref.DebitCredit
147.The supplies account had a beginning balance of $1,750. Supplies purchased during the period totaled $3,500. Atthe end of the period before adjustment, $350 of supplies were on hand. Prepare the adjusting entry for supplies.
148.On January 1, DogMart Company purchased a two-year liability insurance policy for $22,800 cash. The purchasewas recorded to Prepaid Insurance. Prepare the January 31 adjusting entry.
149.DogMart Company records depreciation for equipment. Depreciation for the period ending December 31 is $1,400for office equipmentand $2,650 for production equipment. Prepare the two entries to record the depreciation.
150.On March 1, a business paid $3,600 for a twelve-month liability insurance policy. On April 1, the business entered into a two-year rental contract for equipment at a total cost of $18,000. Determine the following amounts:
(a)insurance expense for the month of March
(b)prepaid insurance as of March 31
(c)equipment rent expense for the month of April
(d)prepaid equipment rental as of April 30
4. The following data are extracted from the books of M/s. Moonshine Industries Ltd. for the calendar...
The following data are extracted from the books of M/s. Moonshine Industries Ltd. for the calendar year 1994:
Rs
Opening stock of raw material 25,000
Purchases of raw material 85,000
Closing stock of raw material 40,000
Carriage inwards 5,000
Wages—direct 75,000
Wages—indirect 10,000
Other direct charges 15,000
Rent and rates—factory 5,000
Rent and rates—office 500
Indirect consumption of material 500
Depreciation—plant, etc. 1,500
Depreciation—office furniture 100
Salary—office 2,500
Salary—salespeople 2,000
Other factory expenses 5,700
Other office expenses 900
Managing director's remuneration 12,000
Other selling expenses 1,000
Travelling expenses of salespeople 1,100
Carriage and freight outwards 1,000
Sales 2,50,000
Advance income tax paid 15,000
Advertisement 2,000
Managing director's remuneration is to be allocated as follows: Rs 4,000 to factory, Rs 2,000 to office and Rs 6,000 to selling departments. From the aforementioned information, prepare (a) prime cost, (b) works cost, (c) cost of production, (d) cost of sales and (e) net profit.
5. Prepare a classified balance sheet assuming $35,000 of the notes payable are long-term. (c)...
At the end of its first month of operations, Watson Answering Service has the following unadjusted trial balance.
WATSON ANSWERING SERVICE
August 31, 2012
Trial Balance
Debit Credit
Cash $ 5,400
Accounts Receivable 2,800
Supplies 1,300
Prepaid Insurance 2,400
Equipment 60,000
Notes Payable $40,000
Accounts Payable 2,400
Owner’s Capital 30,000
Owner’s Drawings 1,000
Service Revenue 4,900
Salaries and Wages Expense 3,200
Utilities Expense 800
Advertising Expense 400
$77,300 $77,300
Other data:
1. Insurance expires at the rate of $200 per month.
2. $1,000 of supplies are on hand at August 31.
3. Monthly depreciation on the equipment is $900.
4. Interest of $500 on the notes payable has accrued during August.
Instructions
(a) Prepare a worksheet.
(b) Prepare a classified balance sheet assuming $35,000 of the notes payable are long-term. (c) Journalize the closing entries.
6. QuestionM
Which of the following uses three types of participants: decision makers, staff personnel, and respondents?
Executive opinions Sales force composite Delphi method Consumer surveys Time series analysis
7. Shown below are the T-accounts relating to equipment that was purchased for cash by a company on...
Shown below are the T-accounts relating to equipment that was purchased for cash by a company on the first day of the current year. The equipment was depreciated on a straight-line basis with an estimated useful life of 10 years and a salvage value of $100. Part of the equipment was sold on the last day of the current year for cash proceeds.
Instructions Prepare the journal entries to record the following and derive the missing amounts:
(a) Purchase of equipment on January 1. What was the cash paid?
(b) Depreciation recorded on December 31. What was the depreciation expense?
(c) Sale of part of the equipment on December 31. What was the gain on disposal?
8. Calla Company produces skateboards that sell for $59 per unit. The company currently has the capa...
Calla Company produces skateboards that sell for $59 per unit. The company currently has the capacity to produce 90,000 skateboards per year, but is selling 81, 900 skateboards per year. Annual costs for 81, 900 skateboards follow. A new retail store has offered to buy 8, 100 of its skateboards for $54 per unit. The store is in a different market from Calla's regular customers and would not affect regular sales. A study of its costs in anticipation of this additional business reveals the following: Direct materials and direct labor are 100% variable. 40 percent of overhead is fixed at any production level from 81, 900 units to 90,000 units: the remaining 60% of annual overhead costs are variable with respect to volume. Selling expenses are 70% variable with respect to number of units sold, and the other 30% of selling expenses are fixed. There will be an additional $2.9 per unit selling expense for this order. Administrative expenses would increase by a $810 fixed amount. Required: Prepare a three-column comparative income statement that reports the following: a. Annual income without the special order. b. Annual income from the special order. c. Combined annual income from normal business and the new business.
9. “Internal control is concerned only with enhancing the accuracy of the accounting records.” Do you...
“Internal control is concerned only with enhancing the accuracy of the accounting records.” Do you agree? Explain.
10. Intangible Amortization Presented below is selected information
Intangible Amortization Presented below is selected information for Palmiero Company.
1. Palmiero purchased a patent from Vania Co. for $1,500,000 on January 1, 2008. The patent is being amortized over its remaining legal life of 10 years, expiring on January 1, 2018. During 2010, Palmiero determined that the economic benefits of the patent would not last longer than 6 years from the date of acquisition. What amount should be reported in the balance sheet for the patent, net of accumulated amortization, at December 31, 2010?
2. Palmiero bought a franchise from Dougherty Co. on January 1, 2009, for $350,000. The carrying amount of the franchise on Dougherty’s books on January 1, 2009, was $500,000. The franchise agreement had an estimated useful life of 30 years. Because Palmiero must enter a competitive bidding at the end of 2018, it is unlikely that the franchise will be retained beyond 2018. What amount should be amortized for the year ended December 31, 2010?
3. On January 1, 2008, Palmiero incurred organization costs of $275,000. What amount of organization expense should be reported in 2010?
4. Palmiero purchased the license for distribution of a popular consumer product on January 1, 2010, for $150,000. It is expected that this product will generate cash flows for an indefinite period of time. The license has an initial term of 5 years but by paying a nominal fee, Palmiero can renew the license indefinitely for successive 5-year terms. What amount should be amortized for the year ended December 31, 2010? Answer the questions asked about each of the factual situations.
11. Which of the following items are liabilities of Karl Jewelry Stores?
Which of the following items are liabilities of Karl Jewelry Stores?
(a) Cash.
(b) Accounts payable.
(c) Owner’s drawings.
(d) Accounts receivable.
(e) Supplies.
(f) Equipment.
(g) Salaries and wages payable.
(h) Service revenue.
(i) Rent expense.
12. Which one of the following is not a feature of process costing?
Which one of the following is not a feature of process costing?
a. equivalent production
b. classification of costs into fixed and variable
c. duration of work in long
d. emergence of more than one product
13. What two arguments tend to justify classifying all costs as either fixed or variable even though...
What two arguments tend to justify classifying all costs as either fixed or variable even though individual costs might not behave exactly as classified?
14. Master budget. Which of the following statements is correct regarding the components of the...
Master budget. Which of the following statements is correct regarding the components of the master budget?
a. The cash budget is used to create the capital budget.
b. Operating budgets are used to create cash budgets.
c. The manufacturing overhead budget is used to create the production budget.
d. The cost of goods sold budget is used to create the selling and administrative expense budget.
15. Wexpro, Inc., produces several products from processing 1 ton of clypton, a rare mineral....
Wexpro, Inc., produces several products from processing 1 ton of clypton, a rare mineral. Material and processing costs total $53,000 per ton, one-fourth of which is allocated to product X15. Eight thousand three hundred units of product X15 are produced from each ton of clypton. The units can either be sold at the split-off point for $10 each, or processed further at a total cost of $7,100 and then sold for $13 each.
Required:
1. What is the financial advantage (disadvantage) of further processing product X15?
16. At the beginning of the current season, the ledger of Village Tennis Shop showed Cash $2, 500; Me...
At the beginning of the current season, the ledger of Village Tennis Shop showed Cash $2, 500; Merchandise Inventory $1, 700; and Angie Wilbert, Capital $4, 200. The following transactions were completed during April. Purchased racquets and balls from Denton Co.$740, terms 3/10, n/30. Paid freight on Denton Co purchase $60. Sold merchandise to members $900, terms n/30. Received credit of $40 from Denton Co. for a racquet that was returned. Purchased tennis shoes from Newbee Sports for cash $300. Paid Denton Co. in full. Purchased tennis shirts and shorts from Venus's Sportswear $600, terms 2/10, n/60. Received cash refund of $50 from Newbee Sports for damaged merchandise that was returned. Paid freight on Venus's Sportswear purchase $30. Sold merchandise to members $1,000, terms n/30. Received $500 in cash from members in settlement of their accounts. Paid Venus's Sportswear in full. Granted an allowance of $30 to members for tennis clothing that did not fit properly. Received cash payments on account from members $500.
17. The following contains the various steps of the financial reporting process. Place these steps in...
The following contains the various steps of the financial reporting process. Place these steps in the proper order and indicate whether each step is a function of the TPS, GLS, or FRS.• Record transaction in special journal• Make adjusting entries• Capture the transaction• Prepare the post-closing trial balance• Prepare the adjusted trial balance• Prepare the financial statements• Journalize and post the adjusting entries• Post to the subsidiary ledger• Post to the general ledger• Journalize and post the closing entries• Prepare the unadjusted trial balanceView Solution:
The following contains the various steps of the financial report
18. From a particular joint process, Watkins Company produces three products, X, Y, and Z.Each product...
From a particular joint process, Watkins Company produces three products, X, Y, and Z.Each product may be sold at the point of split-off or processed further. Additional processing
requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. In 19x1, all three products were processed beyond split-off. Joint production costs for the year were $60,000. Sales values and costs needed to evaluate Watkins's 19x1 production policy follow:
Additional Costs and Sales Values
If Processed Further
Units Sales Values Sales Added
Product Produced at Split-Off Values Costs
X 6,000 $25,000 $42,000 $9,000
Y 4,000 41,000 45,000 7,000
Z 2,000 24,000 32,000 8,000
Joint costs are allocated to the products in proportion to the relative physical volume of
output. Which of the products X, Y, and Z should Watkins subject to additional processing in
order to maximize profits?
19. During 2008, Bascom Bakery paid out $33,525 of common dividends.
During 2008, Bascom Bakery paid out $33,525 of common dividends. It ended the year with $197,500 of retained earnings versus the prior year’s retained earnings of $159,600. How much net income did the firm earn during the year?
a. $71,425
b. $74,996
c. $78,746
d. $82,683
e. $86,818
20. Hi, Please help. Thanks. Almeda Products, Inc. uses a job order costing system. Inventory balance...
Hi,
Please help. Thanks.
Almeda Products, Inc. uses a job order costing system. Inventory balances on April 1 were raw materials, $32,000; work in process, $20,000; and finished goods, $48.000
Additional information are as follows:
a. Raw materials purchased $170,000.
b. Raw materials issued from storeroom to production $180,000; 80% direct and 20% indirect.
c. Direct labor $200,000; indirect labor $82,000; and selling and administrative salaries $90,000.
d. Utility costs incurred in the factory, $65,000. Advertising costs $100,000
e. Insurance Expense $20,000; 90% factory related and 10% selling and administrative related.
f. Depreciation Expense $180,000; 85% for factory assets and 15% for selling and administrative assets
g. Predetermined overhead rate is 175% of direct labor cost. Cost of goods manufactured was $700,000
h. Sales for the year, $1,000,000; cost of the goods sold, $720,000.
Required:
1. Compute for the under- or over-applied overhead for the year. Is it under-applied or over-applied?
2. Compute for the ending balance of raw materials, work in process and finished goods.
3. The company under- or over-applied overhead to cost of goods sold. Prepare an income statement.
21. Ms. Punam is interested in a fixed annual income. She is offered three possible annuities.
Ms. Punam is interested in a fixed annual income. She is offered three possible annuities. If she could earn 8 per cent on her money elsewhere, which of the following alternatives, if any, would she choose? Why? (i) Pay Rs 80,000 now in order to receive Rs 14,000 at the end of each year for the next 10 years. (ii) Pay Rs 1,50,000 now in order to receive Rs 14,000 at the end of each year for the next 20 years. (iii) Pay Rs 1,20,000 now in order to receive Rs 14,000 at the end of each year for the next 15 years.
22. Preble Company manufactures one product. Its variable manufacturing overhead is applied to...
Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct materials: 5 pounds at $8.00 per pound $ 40.00 Direct labor: 2 hours at $14 per hour 28.00 Variable overhead: 2 hours at $5 per hour 10.00 Total standard cost per unit $ 78.00
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Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct materials: 5 pounds at $8.00 per pound $ 40.00 Direct labor: 2 hours at $14 per hour 28.00 Variable overhead: 2 hours at $5 per hour 10.00 Total standard cost per unit $ 78.00 The planning budget for March was based on producing and selling 25,000 units. However, during March the company actually produced and sold 30,000 units and incurred the following costs: a. Purchased 160,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production. b. Direct laborers worked 55,000 hours at a rate of $15.00 per hour. c. Total variable manufacturing overhead for the month was $280,500. PLEASE ANSWER ALL 1. What raw materials cost would be included in the company’s planning budget for March? 7. What direct labor cost would be included in the company’s planning budget for March? 9. What is the labor rate variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).) 10. What is the labor efficiency variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).) 11. What is the labor spending variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).) 12. What variable manufacturing overhead cost would be included in the company’s planning budget for March? 13. What variable manufacturing overhead cost would be included in the company’s flexible budget for March? 14. What is the variable overhead rate variance for March? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect...
23. Naylor Company had $210,000 of net income in 2013 when
Naylor Company had $210,000 of net income in 2013 when the selling price per unit was $150, the variable costs per unit were $90, and the fixed costs were $570,000. Management expects per unit data and total fixed costs to remain the same in 2014. The president of Naylor Company is under pressure from stockholders to increase net income by $52,000 in 2014.
Instructions
(a) Compute the number of units sold in 2013.
(b) Compute the number of units that would have to be sold in 2014 to reach the stockholders’ desired profit level.
(c) Assume that Naylor Company sells the same number of units in 2014 as it did in 2013. What would the selling price have to be in order to reach the stockholders’ desired profit level?
24. During the month of July, direct labor cost totaled $12,000 and direct labor cost was 30% of prime cost
During the month of July, direct labor cost totaled $12,000 and direct labor cost was 30% of prime cost. If total manufacturing costs during July were $86,000, the manufacturing overhead was:
a. $46,000
b. $40,000
c. $28,000
d. $74,000
