Advanced Accounting Topics: Navigating Complex Assignments
1. The cost of merchandise averages 40% of its selling price. The company’s policy is to maintain an...
Items 1 and 2 are based on the following information:
Operational budgets are used by a retail company for planning and controlling its business activities. Data regarding the company’s monthly sales for the last 6 months of the year and its projected collection patterns are shown below.
The cost of merchandise averages 40% of its selling price. The company’s policy is to maintain an inventory equal to 25% of the next month’s forecasted sales. The inventory balance at cost is $80,000 as of June 30.
Forecasted Sales | ||
July | $775,000 | |
August | 750,000 | |
September | 825,000 | |
October | 800,000 | |
November | 850,000 | |
December | 900,000 | |
Types of Sales | ||
Cash sales | 20 | % |
Credit sales | 80 | % |
Collection Pattern for Credit Sales | ||
In the month of sale | 40 | % |
In the first month following the sale | 57 | % |
Uncollectible | ||
3 | % |
The budgeted cost of the company’s purchases for the month of August would be
CIA adapted
- $302,500
- $305,000
- $307,500
- $318,750
The company’s total cash receipts from sales and collections on account that would be budgeted for the month of September would be
- $757,500
- $771,000
- $793,800
- $856,500
2. On May 15, Wild Quest Clothiers borrowed some money on a 4-month note to provide cash during the...
On May 15, Wild Quest Clothiers borrowed some money on a 4-month note to provide cash during the slow season of the year. The interest rate on the note was 8%. At the time the note was due, the amount of interest owed was $480. Instructions
(a) Determine the amount borrowed by Wild Quest.
(b) Independent of your answer in part (a), assume the amount borrowed was $18,500. What was the interest rate if the amount of interest owed was $555?
(c) Prepare the entry for the initial borrowing and the repayment for the facts in part (a).
3. Do the following events represent business transactions? Explain your answer in each case
Do the following events represent business transactions? Explain your answer in each case.
(a) A computer is purchased on account.
(b) A customer returns merchandise and is given credit on account.
(c) A prospective employee is interviewed.
(d) The owner of the business withdraws cash from the business for personal use.
(e) Merchandise is ordered for delivery next month.
4. PR 7-1A The beginning inventory of Merchandise at Waldo Co. and data on purchases and sales for a...
PR 7-1A FIFO Perpetual Inventory
The beginning inventory of Merchandise at Waldo Co. and data on purchases and sales for a three-month period are as follows:
Date Transaction Number of Units Per Unit Total
March 3 Inventory 60 $1500 $90,000
8 Purchase 120 1800 216,000
11 Sale 80 5000 400,000
30 Sale 50 5000 250,000
April 8 Purchase 100 2000 200,000
10 Sale 60 5000 300,000
19 Sale 30 5000 150,000
28 Purchase 100 2200 220,000
May 5 Sale 60 5250 315,000
16 Sale 80 5250 420,000
21 Purchase 180 2400 432,000
28 Sale 90 5250 472,500
Instructions
1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3, using the first-in, first-out method.
2. Determine the total sales and the total cost of merchandise sold for the period. Journalize the entries in the sales and cost of merchandise sold accounts. Assume that all sales were on account.
3. Determine the gross profit from sales for the period.
4. Determine the ending inventory cost.
5. ACCT 214
On August 8, 2013, Holly purchased a residential apartment building. The cost basis assigned to the building is $800,000. Holly also owns another residential apartment building that she purchased on June 15, 2013, with a cost basis of $500,000.
Click here to access the depreciation tables.
a.Calculate Holly's total depreciation deduction for the apartments for 2013 using MACRS
6. Laker Company reported the following January purchases and sales data for its only product.
Laker Company reported the following January purchases and sales data for its only product. /The following Information apple to the questions displayed below:1 es Laker Company reported the following January purchases end sales deta for its only product. Units sold at Retail Units Acquired at Cost Activities Jan. 1 Beginning Inventory 200 units $12.50 $2,500 Jan. 10 Sales 60 units $21.50 30 units 0 $11.50 495 Jan. 20 Purchase 140 units $21.50 Jan. 25 Sales Jan. 30 Purchase 300 units 11.00 3.300 7295 630 units 300 units Totals The company uses a periodic inventory system. For specific identification, ending inventory consists of 330 units, where 300 are from the January 30 purchase, 5 are from the January 20 purchase, and 25 are from beginning inventory. value: Required information 5.00 points Required 1. Complete the table to determine the cost assigned to ending inventory and to cost of goods sold using specific identification. (Round cost per unit to 2 decimal places.) Cost of Goods Available for sale Specific Identification Cost of Goods Sold Ending Inventory of units Cost per Cost of Goods of units Cost cost of units cost per Ending unit of, in sold inventory Beginning inventory Purchases Jan. 20
7. A management professor once said that for successful management, studying the present was most...
A management professor once said that for successful management, studying the present was most important, studying the past was next, and studying the future was least important. Do you agree? Why?
8. Given the accounting equation, answer each of the following ques
Given the accounting equation, answer each of the following questions.
(a) The liabilities of Buerhle Company are $120,000 and the owner’s equity is $232,000. What is the amount of Buerhle Company’s total assets?
(b) The total assets of Buerhle Company are $190,000 and its owner’s equity is $91,000. What is the amount of its total liabilities?
(c) The total assets of Buerhle Company are $800,000 and its liabilities are equal to one half of its total assets. What is the amount of Buerhle Company’s owner’s equity?
9. Tim is the vice president of western operations for Maroon Oil Company and is stationed in San...
LO.2 Tim is the vice president of western operations for Maroon Oil Company and is stationed in San Francisco. He is required to live in an employer-owned home, which is three blocks from his company office. The company-provided home is equipped with high-speed Internet access and several telephone lines. Tim receives telephone calls and e-mails that require immediate attention any time of day or night because the company’s business is spread all over the world. A full-time administrative assistant resides in the house to assist Tim with the urgent business matters. Tim often uses the home for entertaining customers, suppliers, and employees. The fair market value of comparable housing is $9,000 per month. Tim is also provided with free parking at his company’s office. The value of the parking is $350 per month. Calculate the amount associated with the company-provided housing and free parking that Tim must include in his gross income.
10. Using your accounting knowledge, fill in the blanks in the following separate income statements a...
Using your accounting knowledge, fill in the blanks in the following separate income statements a through e. Identify any negative amount by putting it in parentheses.
11. Nicole's Getaway Spa (NGS) has been so successful that Nicole has decided to expand her spa by se...
Nicole's Getaway Spa (NGS) has been so successful that Nicole has decided to expand her spa by selling merchandise. She sells things such as nail polish, at-home spa kits, cosmetics, and aromatherapy items. Nicole uses a perpetual inventory system and is starting to realize all of the work that is created when inventory is involved in a business. The following transactions were selected from among those completed by NGS in August.
|
12. Misha bought a machine for £39,000, which she expects to have a useful life of four years and a res
Misha bought a machine for £39,000, which she expects to have a useful life of four years and a residual value of £4,000 at the end of that time. If depreciation is to be provided on the straight-line basis, the net book value after two years will be:a)£17,500.b)£19,500.c)£21,500.d)£30,250.
13. Which ONE of the following factors could explain a favourable direct material usage variance?A. More
Which ONE of the following factors could explain a favourable direct material usage variance?A. More staff were recruited to inspect for quality, resulting in a higher rejection rate.B. When estimating the standard product cost, usage of material had been set using ideal standards.C. The company had reduced training of production workers as part of a cost reduction exercise.D. The material price variance was adverse.
14. Case Study 1 Green Grass is a small, family-operated company whose core service is in...
Case Study 1
Green Grass is a small, family-operated company whose core service is in horticultural care and lawn care for customers in the local city. The owner of the company is the father of the family. He has used the company to cover the costs of his children’s college education. At the same time, he has been able to give his children some work experience and an opportunity to earn their own money to pay for school. The com- pany has grown steadily over the last few years, and the owner has hired many employees outside of the family to be able to keep up with the demand of the increasing number of customers. The company is run from a small office building, and there is only one employee running the operations in the company office. The fa- ther had usually been in charge of this aspect of the company, but now leaves the responsibility to his trusted friend, who has experience in accounting and information systems. This employee is in charge of scheduling the routes of all the employees and is re- sponsible for payments, receipts, and balancing the books.
The company performs two major operations. First, it provides lawn care using insecticides, fertilizer, and weed killers. Eight employees are responsible for this activity. They each drive a truck and are responsible for collecting money from the customers they serve. They are also responsible for loading and mixing che- micals in the tanks they use during the day. The second part of the operation is the lawn mowing care. Usually, a four-man crew is responsible for all the machines they use, and they are responsible for taking care of the lawns on their daily schedule. This is where the owner has hired his children to work, and the whole team is usually made up of younger workers than the team that works with the chemicals.
Over the years, Green Grass has experienced small growth and success. Profits have increased steadily as the company has picked up new clients. However, the owner noticed that last year’s accounts were different. The revenues increased a marginal amount, while the
expenses for the company increased more than they should have. The owner has noticed that his interac- tions with his friend in the office have been fewer. Also, his employees have been finishing their routes later in the day than they had in previous years.
1. What are some of the fraud opportunities within Green Grass?
2. What symptoms of fraud exist, and what symptoms
should the owner look for if he believes fraud may be occurring?
3. What steps should be taken to make sure fraud does
not occur, and what are the costs associated with these steps?
15. Falcetto Company acquired equipment on January 1, 2011, for $12,
Falcetto Company acquired equipment on January 1, 2011, for $12,000. Falcetto elects to value this class of equipment using revaluation accounting. This equipment is being depreciated on a straight-line basis over its 6-year useful life. There is no residual value at the end of the 6-year period. The appraised value of the equipment approximates the carrying amount at December 31, 2011 and 2013. On December 31, 2012, the fair value of the equipment is determined to be $7,000.
Instructions
(a) Prepare the journal entries for 2011 related to the equipment.
(b) Prepare the journal entries for 2012 related to the equipment.
(c) Determine the amount of depreciation expense that Falcetto will record on the equipment in 2013.
16. P5.6 Optimal Pricing. In an effort to reduce excess end-of-the-model-year inventory, Harrison...
P5.6 Optimal Pricing. In an effort to reduce excess end-of-the-model-year inventory, Harrison Ford offered a 2.5% discount off the average list price of Focus SE sedans sold during the month of August. Customer response was enthusiastic, with unit sales rising by 10% over the previous month’s level.
A. Calculate the point price elasticity of demand for Harrison Ford Focus SE sedans.
B. Calculate the profit-maximizing price per unit if Harrison Ford has an average wholesale cost of $10,000 and incurs marginal selling costs of $875 per unit.
17. Scott Company purchased merchandise with an invoice price of $3,000 and credit terms of 1/10,...
Scott Company purchased merchandise with an invoice price of $3,000 and credit terms of 1/10, n/30. Assuming a 360 day year, what is the implied annual interest rate inherent in the credit terms?
18. Intermediate Accounting Question
On June 30, 2013, the Esquire Company sold some merchandise to a customer for $30,000 and agreed to accept as payment a noninterest-bearing note with an 8% discount rate requiring the payment of $30,000 on March 31, 2014. The 8% rate is appropriate in this situation. |
Required: |
1. | Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold), the December 31, 2013 interest accrual, and the March 31, 2014 collection. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.) A?· Record the sale of merchandise. A?· Record the interest revenue on December 31. A?· Record the interest revenue on March 31. Record the cash collection. |
2. | What is the effective interest rate on the note? (Round your answer to 3 decimal places.) |
19. Cherry Blossom Products Inc. produces and sells yoga-training products: how-to DVDs and a basic e...
Cherry Blossom Products Inc. produces and sells yoga-training products: how-to DVDs and a basic equipment set (blocks, strap, and small pillows). Last year, Cherry Blossom Products sold 13,500 DVDs and 4,500 equipment sets. Information on the two products is as follows:
DVDs | Equipment Sets | |
Price | 8 | 25 |
Variable cost per unit | 4 | 15 |
Total fixed cost is $78,840.
Suppose that in the coming year, the company plans to produce an extra-thick yoga mat for sale to health clubs. The company estimates that 9,000 mats can be sold at a price of $19 and a variable cost per unit of $12. Total fixed cost must be increased by $26,280 (making total fixed cost $105,120). Assume that anticipated sales of the other products, as well as their prices and variable costs, remain the same.
1. What is the sales mix of DVDs, equipment sets, and yoga mats? (2:1:4 , 2:4:1 , 1:1:4, 3:1:2, 4:1:2)
2. Compute the break-even quantity of each product.
3a. Prepare an income statement for Cherry Blossom Products for the coming year.
3b. What is the overall contribution margin ratio? Use the contribution margin ratio to compute overall break-even sales revenue. (Note: Round the contribution margin ratio to the nearest whole percent; round the break-even sales revenue to the nearest dollar.)
4. Compute the margin of safety for the coming year in sales dollars.
20. Lendell Company has these comparative balance sheet data: Additional information for 2017: 1. Net...
Lendell Company has these comparative balance sheet data:
Additional information for 2017:
1. Net income was $25,000.
2. Sales on account were $375,000. Sales returns and allowances amounted to $25,000.
3. Cost of goods sold was $198,000.
4. Net cash provided by operating activities was $48,000.
5. Capital expenditures were $25,000, and cash dividends were $10,000.
Instructions
Compute the following ratios at December 31, 2017.
(a) Current ratio.
(b) Accounts receivable turnover.
(c) Average collection period.
(d) Inventory turnover.
(e) Days in inventory.
(f) Free cash flow.