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38. Instructions: Read the following scenario. Answer the questions that follow. Your answers should...
Instructions:
- Read the following scenario.
- Answer the questions that follow. Your answers should result in a 2-3 page submission.
- Reference back to your text book for guidance on how to think through the scenario.
Scenario:
Imagine you are the assistant controller in charge of general ledger accounting at Linbarger Company. Your company has a large loan from an insurance company. The loan agreement requires that the company’s cash account balance be maintained at $200,000 or more, as reported monthly. At June 30, the cash balance is $80,000. You give this update to Lisa Infante, the financial vice president. Lisa is nervous and instructs you to keep the cash receipts book open for one additional day for purposes of the June 30 report to the insurance company. Lisa says, “If we don’t get that cash balance over $200,000, we’ll default on our loan agreement. They could close us down, put us all out of our jobs!” Lisa continues, “I talked to Oconto Distributors (one of Linbarger’s largest customers) this morning. They said they sent us a check for $150,000 yesterday. We should receive it tomorrow. If we include just that one check in our cash balance, we’ll be in the clear. It’s in the mail!”
Questions
- What is the accounting problem that the Linbarger Company faces?
- What are the ethical considerations in this case? Provide rationale for why these are ethical considerations.
- What are the negative impacts that can happen if you do not follow Lisa Infante’s instructions to wait one more day to post the balance?
- Who will be negatively impacted if you do comply?Provide a rationale for why these individuals will be impacted.
- What is one alternative that you could pursue in this scenario?Support your recommendations with information you learned in this class.
39. Absorption versus variable costing Grunewald Company
Absorption versus variable costing Grunewald Company manufacturers a professional grade vacuum cleaner and began operations in 2011. For 2011, Grunewald budgeted to produce and sell 20,000 units. The company had no price, spending, or efficiency variances, and writes off production-volume variance to cost of goods sold. Actual data for 2011 are given as follows:
Required
1. Prepare a 2011 income statement for Grunewald Company using variable costing.
2. Prepare a 2011 income statement for Grunewald Company using absorption costing.
3. Explain the differences in operating incomes obtained in requirement 1 and requirement 2.
4. Grunewald’s management is considering implementing a bonus for the supervisors based on gross margin under absorption costing. What incentives will this create for the supervisors? What modifications could Grunewald management make to improve such a plan? Explainbriefly.
40. Arrange the following asset, liability, and equity titles in a table: Cash; Accounts Receivable;...
Swender Excavating Co., owned by Patrick Swender, began operations in July and completed these transactions during that first month of operations. July 1 P. Swender invested $60,000 cash in the company.
2 The company rented office space and paid $500 cash for the July rent.
3 The company purchased excavating equipment for $4,000 by paying $800 cash and agreeing to pay the $3,200 balance in 30 days.
6 The company purchased office supplies for $500 cash.
8 The company completed work for a customer and immediately collected $2,200 cash for the work.
10 The company purchased $3,800 of office equipment on credit.
15 The company completed work for a customer on credit in the amount of $2,400.
17 The company purchased $1,920 of office supplies on credit.
23 The company paid $3,800 cash for the office equipment purchased on July 10.
25 The company billed a customer $5,000 for work completed; the balance is due in 30 days.
28 The company received $2,400 cash for the work completed on July 15.
30 The company paid an assistant’s salary of $1,260 cash for this month.
31 The company paid $260 cash for this month’s utility bill.
31 P. Swender withdrew $1,200 cash from the company for personal use.
Required
1. Arrange the following asset, liability, and equity titles in a table: Cash; Accounts Receivable; Office Supplies; Office Equipment; Excavating Equipment; Accounts Payable; P. Swender,
Capital; P. Swender, Withdrawals; Revenues; and Expenses.
2. Use additions and subtractions to show the effects of each transaction on the accounts in the accounting equation. Show new balances after each transaction.
3. Use the increases and decreases in the columns of the table from part 2 to prepare an income statement, a statement of owner’s equity, and a statement of cash flows—each of these for the current month. Also prepare a balance sheet as of the end of the month.
4. Assume that the $4,000 purchase of excavating equipment on July 3 was financed from an owner investment of another $4,000 cash in the business (instead of the purchase conditions described in the transaction). Explain the effect of this change on total assets, total liabilities, and total equity.
41. accounting equation transactions
Great City Builders balance sheet data at May 31, 2012, and June 30, 2012, follow:
May 31, 2012
Total assets $177,000
Total liabilities 122,000
June 30, 2012
Total assets $213,000
Total liabilities 144,000
Following are three situations about owner’s investments and drawings of the business during June. For each situation, compute the amount of net income or net loss during June 2012.
a.The owner invested $6,000 in the business and made no withdrawals.
b.The owner made no investments. The owner withdrew cash of $10,000.
c. The company owner made investments of $18,000 and withdrew cash of $20,000.
42. Jan Petri is the owner and operator of you’re the
Jan Petri is the owner and operator of you’re the One, a motivational consulting business. At the end of its accounting period, December 31, 2011 You’re the one has assets of $575,000 and liabilities of $125,000. Using the accounting equation, determine the following amounts.
a. Owner’s equity, as of December 31, 2011.
b. Owners equity, as of December 31, 2012, assuming that assets increased by $85,000 and liabilities increased by $30,000 during 2012.
43. 9.26 The time it takes for a statistics professor to mark his midterm test is normally distributed..
9.26 The time it takes for a statistics professor to mark his midterm test is normally distributed with a mean of 4.8 minutes and a standard deviation of 1.3 minutes. There are 60 students in the professor’s class. What is the probability that he needs more than 5 hours to mark all the midterm tests? (The 60 midterm tests of the students in this year’s class can be considered a random sample of the many thousands of midterm tests the professor has marked and will mark.) 9.27 Refer to Exercise 9.26. Does your answer change if you discover that the times needed to mark a midterm test are not normally distributed?
44. EX 8-20 Entries for notes receivable Master Designs Decorators issued a 180-day, 6% note for...
EX 8-20 Entries for notes receivable
Master Designs Decorators issued a 180-day, 6% note for $75,000, dated May 14, 2016, to Morgan Furniture Company on account.
a. Determine the due date of the note.
b. Determine the maturity value of the note.
c. Journalize the entries to record the following: (1) receipt of the note by Morgan Furniture and (2) receipt of payment of the note at maturity.
45. 1. Low Carb Diet Supplement Inc. has two divisions. Division A has a profit of $156,000 on sales...
1.Low Carb Diet Supplement Inc. has two divisions. Division A has a profit of $156,000 on sales of $2,010,000. Division B is only able to make $28,800 on sales of $329,000. Based on the profit margins (return on sales), which division is superior?
46. Which of the following is not true regarding depreciation? Question 12 options Depreciation expen...
Which of the following is not true regarding depreciation? Question 12 options Depreciation expense reflects the decrease in market value each year Depreciation expense does not measure changes in market value. Depreciation allocates the cost of a fixed asset over its estimated life. Depreciation is an allocation not a valuation method.
47. 1 Providing application software via a web browser is known as __________. 2 PowerPoint is an...
1 Providing application software via a web browser is known as __________.
2 PowerPoint is an example of __________ software.
3 A __________ converts source code into machine language instructions
4 __________ is available for free and with its source code which can be modified.
5 MySQL is an example of __________.
48. Cash budget : basic Farmer Delight corporation reported sales of $350,00 in june , $380,00 in july,
Cash budget : basic Farmer Delight corporation reported sales of $350,00 in june, $380,00 in july, and $390,000 in agust The forecats for sepetember, october, november are $385,000, $418,000, and $429,000, respectively The initial cash balance on september is $150,000 and minimum of $8,000 should be kept Use the given information to compile a cash budget for the months of september, october, and november
1 Farmer Delight predict that 5% of its sales will never be collected, 30% of its sales will be cash sales, and the remaining 65% will be collected in the following month
2 Farmers delight recevies other monthly income of $3,000
3 The actual or expected purchase are $150,000, $120,000, and $115,000 for the months of september to november, respectively, and 50% are paid in cash while the remainder is paid in following month The purchases for agust were $ 120,000
4 Monthly rent is $3,500 chargeable only in october and november
5 Wages and salaris are 12 % of the previous months sales
6 Cash dividends of $4,600 are declared and will be paid in september
7 Long-term loan repayment of principal and interest of $4,700 is due in october
8 Additional equipment costing $8,500 is ordered and scheduled to be paid for in cash in november
9 Taxes of $8,250 are due in november
49. 1. A call option on Canadian dollars with a strike price of $.60 is purchased by a speculator for...
1. A call option on Canadian dollars with a strike price of $.60 is purchased by a speculator for a premium of $.06 per unit. Assume there are 50,000 units in this option contract. If the Canadian dollar’s spot rate is $.65 at the time the option is exercised, what is the net pro?t per unit and for one contract to the speculator? What would the spot rate need to be at the time the option is exercised for the speculator to break even? What is the net pro?t per unit to the seller of this option?
50. What is WE’s Estimated warranty payable at the end of 2012?
Wells Electric (WE) owed Estimated warranty payable of $1,200 at the end of 2011. During 2012, WE made sales of $120,000 and expects product warranties to cost the company 3% of the sales. During 2012, WE paid $2,300 for warranties. What is WE’s Estimated warranty payable at the end of 2012?
a. $2,300
b. $2,500
c. $3,600
d. $4,800