Fall Success Blueprint: Achieve Distinction with Expert Acco
40. Flexible budget, working backward. The Clarkson Company produces
Flexible budget, working backward. The Clarkson Company produces engine parts for car manufacturers. A new accountant intern at Clarkson has accidentally deleted the calculations on the company’s variance analysis calculations for the year ended December 31, 2009. The following table is what remains of the data.
If you want to use Excel to solve this exercise, go to the Excel Lab at www.prenhall.com/horngren/cost13e and download the template for Exercise 7-19.
1. Calculate all the required variances. (If your work is accurate, you will find that the total static-budget variance is $0.)
2. What are the actual and budgeted selling prices? What are the actual and budgeted variable costs per unit?
3. Review the variances you have calculated and discuss possible causes and potential problems. What is the important lesson learnedhere?
41. Auditting
points
You are engaged to perform an audit of the Giordani Corporation for the year ended December 31, 2011. You have decided to perform the following cutoff test for payables and accruals: Select all items greater than $25,000 for two business days before and after year-end from the purchases journal and ensure that all transactions are recorded in the proper period. |
During your firm's observation of Giordani's physical inventory you obtained the following cutoff information: the last receiving report number in 2011 was 49,745. Your audit work identified the following items for further investigation: |
Selection from the December 2011 Purchase Journal | ||||||
Date | RR# | Vendor Name | Amount | Explanation | ||
a. | 12/30 | 49,742 | Allen Chem. | $ | 29,875 | Chemicals purchased for manufacturing process. |
b. | 12/31 | none | Khan Consulting | $ | 45,000 | Payment for consulting services for the three-month period beginning December 1, 2011. The $45,000 was charged to consulting expenses. |
c. | 12/31 | 49,742 | Goff Materials | $ | 205,000 | Raw materials used in the manufacturing process. |
Selections from the January 2012 Purchase Journal | ||||||
Date | RR# | Vendor Name | Amount | Explanation | ||
d. | 1/01 | 49,746 | Temper Trucks | $ | 75,985 | Purchase of a new forklift. |
e. | 1/02 | 49,743 | Pack Products | $ | 42,000 | Paper products used in manufacturing process. |
f. | 1/02 | none | Telecom Inc. | $ | 32,450 | December 2011 telephone bill. |
Required: |
For each of the six items provided in the table above, consider whether there is evidence of proper cutoff of payables and accruals (i.e., the transaction is recorded in the proper period). If the item is not properly recorded, prepare the necessary adjusting entries at December 31, 2011. (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) |
General Journal | Debit | Credit | |
a. | (Click to select) Supplies Accounts receivable Accrued expenses No journal entry required Telephone expense Prepaid consulting expenses Consulting expenses Accounts payable | ||
(Click to select) Prepaid consulting expenses Accounts payable Consulting expenses Telephone expense Accounts receivable Accrued expenses No journal entry required Supplies | |||
b. | (Click to select) Telephone expense No journal entry required Prepaid consulting expenses Consulting expenses Accounts payable Supplies Accrued expenses Accounts receivable | ||
(Click to select) Prepaid consulting expenses Telephone expense Accounts receivable Supplies No journal entry required Consulting expenses Accrued expenses Accounts payable | |||
c. | (Click to select) Telephone expense Prepaid consulting expenses Accounts payable Accrued expenses No journal entry required Consulting expenses Supplies Accounts receivable | ||
(Click to select) Consulting expenses Accrued expenses Prepaid consulting expenses Supplies Accounts payable No journal entry required Accounts receivable Telephone expense | |||
d. | (Click to select) Telephone expense Consulting expenses No journal entry required Accounts payable Supplies Prepaid consulting expenses Accounts receivable Accrued expenses | ||
(Click to select) Accounts payable Prepaid consulting expenses No journal entry required Telephone expense Accrued expenses Supplies Consulting expenses Accounts receivable | |||
e. | (Click to select) Telephone expense Accounts payable Accrued expenses No journal entry required Accounts receivable Prepaid consulting expenses Supplies Consulting expenses | ||
(Click to select) Accounts payable Prepaid consulting expenses Consulting expenses Accounts receivable Telephone expense No journal entry required Supplies Accrued expenses | |||
f. | (Click to select) Accrued expenses Supplies Accounts payable Telephone expense No journal entry required Accounts receivable Consulting expenses Prepaid consulting expenses | ||
(Click to select) Supplies Prepaid consulting expenses Accounts payable Telephone expense Accounts receivable Consulting expenses No journal entry required Accrued expenses |
42. Billie Whitehorse, the plant manager of Travel Free's Indiana plant, is responsible for all of th...
Billie Whitehorse, the plant manager of Travel Free's Indiana plant, is responsible for all of that plant's costs other than her own salary. The plant has two operating departments and one service department. The camper and trailer operating departments manufacture different products and have their own managers. The office department, which Whitehorse also manages, provides services equally to the two operating departments. A budget is prepared for each operating department and the office department. The company's responsibility accounting system must assemble information to present budgeted and actual costs in performance reports for each operating department manager and the plant manager Each performance report includes only those costs that a particular operating department manager can control raw materials, wages, supplies used, and equipment depreciation. The plant manager is responsible for the department managers' salaries, utilities, building rent, office salaries other than her own, and other office costs plus all costs controlled by the two operating department managers. The annual departmental budgets and actual costs for the two operating departments fo Budget Actual Campers Trailers Combined Campers Trailers Combined Raw materials 195,600 277,400 473,000 194,700 $274,600 469,300 Employee wages 104,750 205.400 310.150 106.800 206.200 313.000 52,300 Dept. manager salary 43.400 95.700 44.500 53.900 98.400 Supplies used 33.400 91.200 124,600 31.400 91.600 123.000 126,500 188,300 Depreciation-Equip 62,000 188.500 61.800 126.500 Utilities 4.600 5.400 10.000 4.800 6.500 11.300 Building rent 6.600 9.100 15.700 6.000 8.800 14.800 135,500 66,550 133,100 Office department costs 67.750 67,750 66.550 Totals 518,100 835,050 1,353,150 $516,550 $834,650 1,351,200 The office department's annual budget and its actual costs follow. Budget Actual Plant manager salary 81,000 91,000 Other office salaries 42.500 26.400 Other office costs 12.000 15.700 Totals $135,500 $133,100
43. Oscar's Red Carpet Store maintains a checking account with Academy Bank. Oscar's sells carpet eac...
Oscar's Red Carpet Store maintains a checking account with Academy Bank. Oscar's sells carpet each day but makes bank deposits only once per week. The following provides information from the company's cash ledger for the month ending February 28, 2018. Amount No. Date Amount 2,600 Checks: 4,600 Deposits: 2/4 32 322 248 2,200 650 2/18 3.100 323 2/12 2,400 2/25 4,000 324 2/19 2100 2/26- 1,500 Cash receipts 325 2/27 450 2/28 326 2/28 950 13,400 327 2/28 ,800 Balance on February 1 6700 $12,950 Receipts 13,400 Disbursements (12,950) 7150 Balance on February 28 Information from February's bank statement and company records reveals the following additional information: a. The ending cash balance recorded in the bank statement is $11770. b. Cash receipts of $1,500 from 2/26-2/28 are outstanding. c. Checks 325 and 327 are outstanding. d. The deposit on 2/11 includes a customer's check for $450 that did not clear the bank INSF check). e. Check 323 was written for $2,800 for advertising in February. The bank properly recorded the check for this amount. f An automatic withdrawal for Oscars February rent was made on February 4 for $1,300. g. Oscars checking account earns interest based on the average daily balance. he amount of interest earned for February is $190. h. In January, one of Oscars suppliers, Titanic Fabrics, borrowed $5,800 from Oscar. On February 24, Titanic paid $5,950 ($5,800 borrowed amount plus $150 interest directly to Academy Bank in payment for January's borrowing. i. Academy Bank charged service fees of $120 to Oscar's for the month.
44. Threet’s Repair Shop was started on May 1 by Erica
Threet’s Repair Shop was started on May 1 by Erica Threet. A summary of May transactions is presented below.
1. Invested $10,000 cash to start the repair shop.
2. Purchased equipment for $5,000 cash.
3. Paid $400 cash for May office rent.
4. Paid $500 cash for supplies.
5. Incurred $250 of advertising costs in the Beacon News on account.
6. Received $6,100 in cash from customers for repair service.
7. Withdrew $1,000 cash for personal use.
8. Paid part-time employee salaries $2,000.
9. Paid utility bills $170.
10. Provided repair service on account to customers $750.
11. Collected cash of $120 for services billed in transaction (10).
Instructions
(a) Prepare a tabular analysis of the transactions, using the following column headings: Cash, Accounts Receivable, Supplies, Equipment, Accounts Payable, Owner’s Capital, Owner’s Drawings, Revenues, and Expenses.
(b) From an analysis of the owner’s equity columns, compute the net income or net loss for May.
45. present worth analysis
what amount of money deposited 50 years ago at 8% interest rate would provide a perpetual payment of$10,000 a year beginning of this year? ( i'm not sure how this is related to PW analysis, and what does "perpetual" mean in this case, please show all the steps, thank you )
46. Vostick Filter Company is a distributor of air filters to retail stores. It buys its filters from...
Vostick Filter Company is a distributor of air filters to retail stores. It buys its filters from several manufacturers. Filters are ordered in lot sizes of 1,000, and each order costs $40 to place. Demand from retail stores is 20,000 filters per month, and carrying cost is $0.10 a filter per month.
a. What is the optimal order quantity with respect to so many lot sizes (that is, what multiple of 1,000 units should be ordered)?
b. What would be the optimal order quantity if the carrying cost were cut in half to $0.05 a filter per month?
c. What would be the optimal order quantity if ordering costs were reduced to $10 per order?
47. Sylvestor Systems borrows $ 110,000 cash on May 15, 2013, by signing a 60-day, 12% note. 1. On what.
Sylvestor Systems borrows $ 110,000 cash on May 15, 2013, by signing a 60-day, 12% note. 1. On what date does this note mature? 2. Suppose the face value of the note equals $ 110,000, the principal of the loan. Prepare the journal en-tries to record (a) Issuance of the note and (b) Payment of the note at maturity.
48. Chaz Corporation has taxable income in 2018 of $452,000 for purposes of computing the §179...
Chaz Corporation has taxable income in 2018 of $452,000 for purposes of computing the §179 expense and acquired the following assets during the year:
Assume that the qualified improvement property has satisfied the conditions mentioned under Section 179(f)(2).
Placed in | |||
Asset | Service | Basis | |
Office furniture | September 12 | $ | 781,000 |
Computer equipment | February 10 | 906,000 | |
Delivery truck | August 21 | 53,000 | |
Qualified improvement property | September 30 | 1,507,000 | |
Total | $ | 3,247,000 | |
What is the maximum total depreciation deduction that Chaz may deduct in 2018? (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) (Round your answer to the nearest whole dollar amount.)
49. 1. Which of the following is not an assumption of the MM theory for irrelevance of dividends? (a)...
1. Which of the following is not an assumption of the MM theory for irrelevance of dividends? (a) Irrational investors (b) No tax discrimination on capital gains and dividends (c) No transaction costs (d) No flotation costs
2. According to Walter’s model, the value of the share is………………….. proportion to the D/P ratio (a) in inverse (b) in direct (c) not related at all (d) in linear
3. The test of adequate acceptable opportunities for the firm while considering its dividend policy is the relation between…………………….. and ………………… .
4. If the cost of capital of the firm (k) is higher than the rate of return (r), the firm will retain its earnings as it would lead to the reduction of its cost of capital. (True/False)
5. MM theory of irrelevance of dividends is applicable only to firms which have a constant investment policy. (True/False)
6. According to MM theory, the market price of the share will remain unchanged even after the payment of dividends (True/False)
50. Ex. 266 On March 1, Jordan Company borrows $150,000 from Ottawa State Bank by signing a 6-month, 8%,
Ex. 266
On March 1, Jordan Company borrows $150,000 from Ottawa State Bank by signing a 6-month, 8%, interest-bearing note.
Instructions
Prepare the necessary entries below associated with the note payable on the books of Jordan Company.
(a)Prepare the entry on March 1 when the note was issued.
(b)Prepare any adjusting entries necessary on June 30 in order to prepare the semi-annual financial statements. Assume no other interest accrual entries have been made.
(c)Prepare the adjusting entry at August 31 to accrue interest.
(d)Prepare the entry to record payment of the note at maturity.
Ex. 267
Wellington Company had the following transactions involving notes payable.
Nov. 1, 2012Borrows $120,000 from Olathe State Bank by signing a 3-month, 10% note.
Dec. 31, 2012Prepares the adjusting entry.
Feb. 1, 2013Pays principal and interest to Olathe State Bank.
Instructions
Prepare journal entries for each of the transactions.
Ex. 268
Flores Company publishes a monthly sports magazine, Hunting Preview. Subscriptions to the magazine cost $25 per year. During October 2012, Flores sells 18,000 subscriptions beginning with the November issue. Flores prepares financial statements quarterly and recognizes subscription revenue earned at the end of the quarter. The company uses the accounts Unearned Subscriptions and Subscription Revenue.
Instructions
(a)Prepare the entry in October for the receipt of the subscriptions.
(b)Prepare the adjusting entry at December 31, 2012, to record subscription revenue earned in December 2012.
(c)Prepare the adjusting entry at March 31, 2013, to record subscription revenue earned in the first quarter of 2013.
Ex. 269
English Company billed its customers a total of $1,575,000 for the month of November. The total includes a 5% state sales tax.
Instructions
(a)Determine the proper amount of revenue to report for the month.
(b)Prepare the general journal entry to record the revenue and related liabilities for the month.
Ex. 270
Hibbett Company does not segregate sales and sales taxes on its cash register. Its register total for the month is $291,500, which includes a 6% sales tax.
Instructions
Compute sales taxes payable, and make the entry to record sales and sales taxes payable.