BMGT411 Ethics and Professionalism in Accounting
1. An entity owns a number of farms that harvest produce seasonally. Approximately 80% of the entity’s... An entity owns a number of farms that harvest produce seasonally. Approximately 80% of the entity’s sales are in the period August to October. Because the entity’s business is seasonal, IAS 34 suggests (a) Additional notes be written in the interim reports about the seasonal nature of the business. (b) Disclosure of financial information for the latest and comparative 12-month period in addition to the interim report. (c) Additional disclosure in the accounting policy note. (d) No additional disclosure. 2. May 31 is a Wednesday, and employees are paid on Fridays. Hambone Consulting has two employees, who... Ken Ham started his own consulting firm, Hambone Consulting, on May 1, 2010. The trial balance at May 31 is as follows. HAMBONE CONSULTING Trial Balance May 31, 2010 Account Number Debit Credit 101 Cash $ 5,700 112 Accounts Receivable 6,000 126 Supplies 1,900 130 Prepaid Insurance 3,600 149 Office Furniture 10,200 201 Accounts Payable $ 4,500 209 Unearned Service Revenue 2,000 301 K. Ham, Capital 17,700 400 Service Revenue 7,500 726 Salaries Expense 3,400 729 Rent Expense 900 $31,700 $31,700 In addition to those accounts listed on the trial balance, the chart of accounts for Hambone Consulting also contains the following accounts and account numbers: No. 150 Accumulated Depreciation—Office Furniture, No. 212 Salaries Payable, No. 229 Travel Payable, No. 631Supplies Expense, No. 717 Depreciation Expense, No. 722 Insurance Expense, and No. 736 Travel Expense. Other data: 1. $900 of supplies have been used during the month. 2. Travel expense incurred but not paid on May 31, 2010, $250. 3. The insurance policy is for 2 years. 4. $400 of the balance in the unearned service revenue account remains unearned at the end of the month. 5. May 31 is a Wednesday, and employees are paid on Fridays. Hambone Consulting has two employees, who are paid $800 each for a 5-day work week. 6. The office furniture has a 5-year life with no salvage value. It is being depreciated at $170 per month for 60 months. 7. Invoices representing $1,200 of services performed during the month have not been recorded as of May 31. Instructions (a) Prepare the adjusting entries for the month of May. Use J4 as the page number for your journal. (b) Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance as beginning account balances and place a check mark in the posting reference column. (c) Prepare an adjusted trial balance at May 31, 2010. 3. P3-6A Alpha Graphics Company SA was organized on January 1, 2017. At the end of the 151 tuooA Proble January 1, 2017. At the end of the 151 tuooA Problems: Set B first 6 months of operations, the trial balance contained the accounts shown below. Prepare adjusting entries, adjusted trial balance, and financial statements using appendix. Debit Cash Accounts Receivable Equipmentno br Insurance Expense Salaries and Wages Expense 30,000 Supplies Expense Advertising Expense Rent Expense Utilities Expense 8,400 Notes Payable 14,000 45,000 Share Capital-Ordinary or2,880 Credit Accounts Payable 20,000 9,000 22,000 58,280 (LO 5, 6, 7, 8) eService Revenue 3,900 hub bo1,900 1,500 1,700 109,280 l odun en od €109,280 Analysis reveals the following additional data. 1 The 3,900 balance in Supplies Expense represents supplies purchased in January. At June 30, 680 of supplies 2 The note payable was issued on February 1. It is a 99%, 6-month note. 3. The balance in Insurance Expense is the premium on a onsld are on hand. 1-year policy, dated March 1, 2017. 4. Service revenues are credited to revenue when received. At June 30, service revenue of €1,100 is still not performed for the customer 5. Depreciation is 2,250 per year.IOSE aM (b) Adj. trial balance 111,155 (c) Net income 16,025 Ending retained earnings 16,025 Total assets 68,875 Instructions (a) Journalize the adjusting entries at June 30. (Assume adjustments are 6 months.) (b) Prepare (c) Prepare an income statement and a retained carnings statement for the 6 months ended June 30 and a statement of financial position at June 30. recorded every adjusted trial balance. an nibli 4. A person owned 400 shares of XYZ common stock which cost $20,000. XYZ then had a 2-for-1 stock... A person owned 400 shares of XYZ common stock which cost $20,000. XYZ then had a 2-for-1 stock split. After the split, the person sold 100 shares for $10,000. How much gain (or loss) resulted from the sale? 5. Which one of the following is least likely to be a success criteria?a. A target for the project to r Which one of the following is least likely to be a success criteria?a. A target for the project to receive zero change requests.b. The date by which the project is to be completed.c. Delivery of products that meet required specifications.d. The awarding of bonuses to senior management. 6. BE2-1 Match the qualitative characteristics below with the following statements BE2-1 Match the qualitative characteristics below with the following statements. 1. Relevance 2. Faithful representation 3. Predictive value 4. Confirmatory value 5. Comparability 6. Completeness 7. Neutrality 8. Timeliness (a) Quality of information that permits users to identify similarities in and differences between two sets of economic phenomena. (b) Having information available to users before it loses its capacity to influence decisions. (c) Information about an economic phenomenon that has value as an input to the processes used by capital providers to form their own expectations about the future. (d) Information that is capable of making a difference in the decisions of users in their capacity as capital providers. (e) Absence of bias intended to attain a predetermined result or to induce a particular behavior. 7. P3.2A (LO 2,3,4) Financial Statement Hank's Hotel opened for business on May 1, 2020. Its trial opened for business on May 1, 2020. Its trial balance before adjustment on May 31 is as follows. Hank's Hotel Trial Balance May 31, 2020 Credit Account Number 101 126 Debit $ 3,400 2,080 2,400 12.000 60.000 15,000 Cash Supplies Prepaid Insurance Land Buildings Equipment Accounts Payable Unearned Rent Revenue Mortgage Payable Owner's Capital Rent Revenue Advertising Expense Salaries and Wages Expense Utilities Expense $ 4,700 3.300 40,000 41,380 10,300 301 429 610 726 732 600 3,300 900 $99.680 $99,680 In addition to those accounts listed on the trial balance, the chart of accounts for Hank's Hotel also contains the following accounts and account numbers: No. 142 Accumulated Depreciation Buildings, No. 150 Accu- mulated Depreciation Equipment. No. 212 Salaries and Wages Payable, No. 230 Interest Payable, No. 619 Depreciation Expense, No. 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense. Other data: 1. Prepaid insurance is a 1-year policy starting May 1, 2020. 2. A count of supplies shows $750 of unused supplies on May 31. 3. Annual depreciation is $3,600 on the buildings and $1,500 on equipment 4. The mortgage interest rate is 6%. (The mortgage was taken out on May 1.) 5. Two-thirds of the unearned rent revenue has been earned. 6. Salaries of $750 are accrued and unpaid at May 31. Instructions a. Journalize the adjusting entries on May 31. b. Prepare a ledger using the three-column form of account. Enter the trial balance amounts and post the adjusting entries. (Use Jl as the posting reference.) c. Prepare an adjusted trial balance on May 31. d. Prepare an income statement and an owner's equity statement for the month of May and a balance sheet at May 31. 8. Mason Company has two manufacturing departments—Machining and Assembly. The company considers a... Mason Company has two manufacturing departments—Machining and Assembly. The company considers all of its manufacturing overhead costs to be fixed costs. It provided the following estimates at the beginning of the year as well as the following information with respect to Jobs A and B: Estimated Data Machining Assembly Total Manufacturing overhead $ 2,250,000 $ 225,000 $ 2,475,000 Direct labor hours 15,000 150,000 165,000 Machine hours 150,000 10,000 160,000 Job A Machining Assembly Total Direct labor hours 5 10 15 Machine hours 11 2 13 Job B Machining Assembly Total Direct labor hours 4 5 9 Machine hours 12 3 15 Required: 1. If Mason Company uses a plantwide predetermined overhead rate with direct labor-hours as the allocation base, how much manufacturing overhead cost would be applied to Job A? Job B? (Round your answers to the nearest whole dollar amount.) 2. Assume that Mason Company uses departmental predetermined overhead rates. The Machining Department is allocated based on machine-hours and the Assembly Department is allocated based on direct labor-hours. How much manufacturing overhead cost would be applied to Job A? Job B? (Round your intermediate calculations and final answers to 2 decimal places.) 9. A job order cost sheet for Lowry Company is shown below. A job order cost sheet for Lowry Company is shown below. Job No. 92 For 2,000 Units Date Direct Materials Direct Labor Manufacturing Overhead Beg. bal. Jan. 1 5,000 6000 5100 8 6,000 12 8000 6400 25 2,000 27 4000 3200 13000 18000 14700 Cost of completed job: Direct materials $13,000 Direct labor 18,000 Manufacturing overhead 14,700 Total cost $45,700 Unit cost ($45,700 2,000) $22.85 (a) On the basis of the foregoing data, answer the following questions. (1) What was the balance in Work in Process Inventory on January 1 if this was the only unfinished job? (2) If manufacturing overhead is applied on the basis of direct labor cost, what overhead rate was used in each year? (b) Prepare summary entries at January 31 to record the current year’s transactions pertaining to Job No. 92. 10. IAS 40 INVESTMENT PROPERTY what are the Positive/Negative international critique with respect to the Standard (perceived strengths) 11. Hrubec Products, INC., operates a Pulp Division that manufactures... Hrubec Products, Inc., operates a Pulp Division that manufactures wood pulp for use in the production of various paper goods. Revenue and costs associated with a ton of pulp follow: Selling price $23 Expenses: Variable $13 Fixed (based on a capacity of 102,000 tons per year) 6 19 Net operating income $4 ________________________________________ Hrubec Products has just acquired a small company that manufactures paper cartons. This company will be treated as a division of Hrubec with full profit responsibility. The newly formed Carton Division is currently purchasing 30,000 tons of pulp per year from a supplier at a cost of $23 per ton, less a 10% purchase discount. Hrubec's president is anxious for the Carton Division to begin purchasing its pulp from the Pulp Division if an acceptable transfer price can be worked out." For Requirement 1 through 2 below, assume that the Pulp Division can sell all of its pulp to outside customers for $23 per ton. Requirement 1: (a) What is the minimum transfer price for Pulp Division? Minimum transfer price $______________ (b) What is the maximum transfer price that Carton Division is ready to pay? Maximum transfer price $_________ Requirement 2: If the Pulp Division meets the price that the Carton Division is currently paying to its supplier and sells 30,000 tons of pulp to the Carton Division each year, what will be the effect on the profits of the Pulp Division, the Carton Division, and the company as a whole? a. Profits of the Pulp Division will decrease by $__________ b. Profits of the Carton Division will remains unchanged by $_________ c. Profits of the company as a whole will decrease by $______________ For Requirement 3 through 6 below, assume that the Pulp Division is currently selling only 62,000 tons of pulp each year to outside customers at the stated $23 price. Requirement 3: (a) What is the minimum transfer price for Pulp Division? Minimum transfer price $___________ (b) What is the range of transfer price the manager's of both divisions should agree? From $________ to $_______ Requirement 4: (b) How much potential profit will the Pulp Division lose if the $18 price is not met? Profit of the comapny will decrease by $______________ Requirement 6: Refer to Requirement 4 above. Assume that due to inflexible management policies, the Carton Division is required to purchase 30,000 tons of pulp each year from the Pulp Division at $23 per ton. What will be the effect on the profits of the company as a whole? A. The Pulp Division will have an increase in profit by $__________ B. The Carton Division will have a decrease in profit by $________ C. The company as a whole will have an increase in profit by $__________. 12. On July 1, 2019, Pat Glenn established Half Moon Realty. Pat completed the following transactions... On July 1, 2019, Pat Glenn established Half Moon Realty. Pat completed the following transactions during the month of July: 1. Opened a business bank account with a deposit of $34,000 from personal funds. 2. Purchased office supplies on account, $3,400. 3. Paid creditor on account, $2,150. 4. Earned sales commissions, receiving cash, $34,680. 5. Paid rent on office and equipment for the month, $6,800. 6. Withdrew cash for personal use, $11,000. 7. Paid automobile expenses (including rental charge) for the month, $3,260, and miscellaneous expenses, $1,560. 8. Paid office salaries, $4,090. 9. Determined that the cost of supplies on hand was $1,140; therefore, the cost of supplies used was $2,260. Required: 1. Indicate the effect of each transaction and the balances after each transaction. For those boxes in which no entry is required, leave the box blank. If required, enter negative values as negative numbers. Assets = Liabilities + Owner's Equity Cash + Supplies = Accounts Payable + Pat Glenn, Capital - Pat Glenn, Drawing + Sales Commissions - Rent Expense - Office Salaries Expense - Auto Expense - Supplies Expense - Miscellaneous Expense a. b. Bal. c. Bal. d. Bal. e. Bal. f. Bal. g. Bal. h. Bal. i. Bal. 13. During the month, Fisher Company"s Work in Process inventory account was credited for $120,500,... Fisher Company uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs. The following information about Fisher Company"s Work in Process inventory account has been provided for the month of May: May 1 balance $26,000 Debits during May: Direct Materials $40,000 Direct Labor $50,000 Manufacturing Overhead $37,500 During the month, Fisher Company"s Work in Process inventory account was credited for $120,500, which represented the Cost of Goods Manufactured for the month. Only one job remained in process on May 31; this job had been charged with $9,600 of applied overhead cost. The amount of direct materials cost in the unfinished job would be: A) $10,600 B) $16,700 C) $12,800 D) $23,400 14. You were recently hired by the Andrews CEO as a consultant to evaluate the performance of the Chief. You were recently hired by the Andrews CEO as a consultant to evaluate the performance of the Chief Financial Officer (CFO). As part of that process, you interview the CFO's direct reports (employees). Although they indicate that the CFO is technically competent, one individual told you stories about the CFO's verbal abuse with employees. Given this information, what would be the most effective next step in the process? Select: 1 Inform the human resources department that there is a potential problem. Tell the CEO about what you have uncovered and ask for her permission to speak about it with the CFO. Focus on the CFO’s work performance since his personal behavior is inappropriate in the workplace. Collect more information about the extent to which this reported behavior is impacting others. 15. A common measure of liquidity is a. ratio of net sales to assets. b. dividend... A common measure of liquidity is a. ratio of net sales to assets. b. dividends per share of common stock. c. receivable turnover. d. profit margin. 16. At the beginning of the current season on April 1, the ledger of At the beginning of the current season on April 1, the ledger of Ilana Pro Shop showed Cash $3,000; Inventory $4,000; and Owner’s Capital $7,000. These transactions occurred during April 2012. Apr. 5 Purchased golf bags, clubs, and balls on account from Zuleikha Co. $1,200, FOB shipping point, terms 2/10, n/60. 7 Paid freight on Zuleikha Co. purchases $50. 9 Received credit from Zuleikha Co. for merchandise returned $100. 10 Sold merchandise on account to members $600, terms n/30. 12 Purchased golf shoes, sweaters, and other accessories on account from Libby Sportswear $450, terms 1/10, n/30. 14 Paid Zuleikha Co. in full. 17 Received credit from Libby Sportswear for merchandise returned $50. 20 Made sales on account to members $600, terms n/30. 21 Paid Libby Sportswear in full. 27 Granted credit to members for clothing that had flaws $35. 30 Received payments on account from members $600. The chart of accounts for the pro shop includes Cash, Accounts Receivable, Inventory, Accounts Payable, Owner’s Capital, Sales Revenue, Sales Returns and Allowances, Purchases, Purchase Returns and Allowances, Purchase Discounts, and Freight-in. Instructions (a) Journalize the April transactions using a periodic inventory system. (b) Using T accounts, enter the beginning balances in the ledger accounts and post the April transactions. (c) Prepare a trial balance on April 30, 2012. (d) Prepare an income statement through gross profit, assuming merchandise inventory on hand at April 30 is $4,824.