Fundamentals of Financial Accounting - BUSN3300

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Fundamentals of Financial Accounting - BUSN3300

15. 1. What changes in the work situation might account for the increase in productivity and the...

1. What changes in the work situation might account for the increase in productivity and the decrease in controllable rejects? 2. What might account for the drop in absenteeism and the increase in morale? 3. What were the major changes in the situation? Which changes were under the control of the manager? Which were controlled by workers? 4. What might happen if the workers went back to the old assembly line method? A group of 10 workers were responsible for assembling hotplates (instruments for heating solutions to a given temperature) for hospital and medical laboratory use. A number of different models of hotplates were being manufactured. Some had a vibrating device so that the solution could be mixed while being heated. Others heated only test tubes. Still others could heat solutions in a variety of different containers. With the appropriate small tools, each worker assembled part of a hotplate. The partially completed hotplate was placed on a moving belt, to be carried from one assembly station to the next. When the hotplate was completed, an inspector would check it over to ensure that it was working properly. Then the last worker would place it in a specially prepared cardboard box for shipping.

16. Javadi Company makes a single product that is subject to wide seasonal variations i

Javadi Company makes a single product that is subject to wide seasonal variations in demand. The company uses a job-order costing system and computes predetermined overhead rates on a quarterly basis using the number of units to be produced as the allocation base. Its estimated costs, by quarter, for the coming year are given below: Quarter First Second Third Fourth Direct materials $ 160,000 $ 80,000 $ 40,000 $ 120,000 Direct labor 80,000 40,000 20,000 60,000 Manufacturing overhead 240,000 216,000 204,000 ? Total manufacturing costs (a) 480,000 $ 336,000 264,000 $ ? Number of units to be produced (b) 160,000 80,000 40,000 120,000 Estimated unit product cost (a Af· b) $ 3.00 $ 4.20 $ 6.60 $ ? Management finds the variation in quarterly unit product costs to be confusing and difficult to work with. It has been suggested that the problem lies with manufacturing overhead because it is the largest element of total manufacturing cost. Accordingly, you have been asked to find a more appropriate way of assigning manufacturing overhead cost to units of product. Required: 1-a. Using the high-low method, estimate the fixed manufacturing overhead cost per quarter and the variable manufacturing overhead cost per unit. Fixed manufacturing overhead cost $______ per quarter Variable manufacturing overhead $ ______ per unit 1-b. Compute the total manufacturing overhead cost, total manufacturing cost and unit product cost for the fourth quarter. Total manufacturing overhead cost $ _______ Total manufacturing cost $_______ Unit product cost $ _________

17. PR 12-4A Entries for bonds payable and installment note transactions The following transactions...

PR 12-4A  Entries for bonds payable and installment note transactions

The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar  year:

2016

July 1.  Issued $74,000,000 of 20-year, 11% callable bonds dated July 1, 2016, at a  mar- ket (effective) rate of 13%, receiving cash of $63,532,267. Interest is payable semiannually on December 31 and June    30.

Oct. 1. Borrowed $200,000 by issuing a six-year, 6% installment note to Nicks Bank. The note requires annual payments of $40,673, with the first payment occurring on September 30,  2017.

Dec. 31. Accrued $3,000 of interest on the installment note. The interest is payable on the date of the next installment note payment.

31.  Paid the semiannual interest on the bonds. The bond discount amortization of

$261,693 is combined with the semiannual interest    payment.

31.    Closed the interest expense account.

2017

June 30.  Paid the semiannual interest on the bonds. The bond discount amortization of

$261,693 is combined with the semiannual interest    payment.

Sept. 30. Paid the annual payment on the note, which consisted of interest of $12,000 and principal of  $28,673.

Dec. 31. Accrued $2,570 of interest on the installment note. The interest is payable on the date of the next installment note payment.

31.  Paid the semiannual interest on the bonds. The bond discount amortization of

$261,693 is combined with the semiannual interest    payment.

31.  Closed  the  interest  expense account.

2018

June 30. Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $9,420,961 after payment of interest and amor- tization of discount have been recorded. (Record the redemption only.)

Sept. 30.  Paid  the  second  annual  payment  on  the  note,  which  consisted  of  interest of

$10,280 and principal of  $30,393.

Instructions

1.     Journalize the entries to record the foregoing transactions. Round all amounts to the nearest dollar.

2.     Indicate the amount of the interest expense in (a) 2016 and (b) 2017.

18. During the recent financial crisis, many financial managers and

During the recent financial crisis, many financial managers and corporate officers have been criticized for

(a) Poor decisions.

(b) Lack of ethical behavior.

(c) Large salaries.

(d) Lucrative severance packages worth millions of dollars.

(e) Extravagant lifestyles. Is this criticism justified? Justify your opinion.

19. The following factors describe a potential audit client. For each factor, indicate whether it is

The following factors describe a potential audit client. For each factor, indicate whether it is indicative of poor corporate governance. Explain the reasoning for your assessment. Finally, identify the risks associated with each factor.

a. The company is in the financial services sector and has a large number of consumer loans, including mortgages, outstanding.

b. The CEO’s and CFO’s compensation is based on three components: (a) base salary, (b) bonus based on growth in assets and profits, and (c) significant stock options.

c. The audit committee meets semiannually. It is chaired by a retired CFO who knows the company well because she had served as the CFO of a division of the firm. The other two members are local community members—one is the president of the Chamber of Commerce and the other is a retired executive from a successful local manufacturing firm.

d. The company has an internal auditor who reports directly to the CFO and makes an annual report to the audit committee.

e. The CEO is a dominating personality—not unusual in this environment. He has been on the job for six months and has decreed that he is streamlining the organization to reduce costs and centralize authority (most of it in him).

f. The company has a loan committee. It meets quarterly to approve, on an ex-post basis, all loans over $300 million (top 5% for this institution).

g. The previous auditor has resigned because of a dispute regarding the accounting treatment and fair value assessment of some of the loans.

20. Which of the following is not true of the general journal? Select one: A. It is a record of origi...

Which of the following is not true of the general journal? Select one: A. It is a record of original entry B. It reflects the entire effect of a transaction in one place C. It receives postings of dollar amounts from the general ledger D. It shows transactions recorded in chronological order E. None of the above

21. From the following details relating to the accounts of Grow More Ltd, prepare a Cash Flow Statement:

From the following details relating to the accounts of Grow More Ltd, prepare a Cash Flow Statement:

1. Depreciation @ 25% was charged on the opening value of Plant and Machinery.


2. During the year, an old machine costing 50,000 (WDV – 20,000) was sold for Rs. 35,000.


3. Rs. 50,000 was paid towards income tax during the year.

The building under construction was not subject to any depreciation.

22. bad debt expense / uncollectible account

when the allowance method of recognizing bad debt expense is used the entry to record the write off of a specific uncollectible account would decrease ?



a. allowance for doubtful accounts

b. net income

c. net realizable value of accounts receivable

d. working capital

23. Compute Chavez Company's current ratio using the above information.

Compute Chavez Company's current ratio using the above information.

24. Harry & Co purchased books in July. The books were sold to customers in August. Harry & C...

Harry & Co purchased books in July. The books were sold to customers in August. Harry & Co received the final cash payments in September. According to the revenue-recognition principle, when should revenue be recorded? July both August and September August September

25. Selected T-accounts of Moore Company are given below for the

Selected T-accounts of Moore Company are given below for the just completed year:





Required:

1. What was the cost of raw materials put into production during the year?

2. How much of the materials in (1) above consisted of indirect materials?

3. How much of the factory labor cost for the year consisted of indirect labor?

4. What was the cost of goods manufactured for the year?

5. What was the cost of goods sold for the year (before considering underapplied or overapplied overhead)?

6. If overhead is applied to production on the basis of direct labor cost, what rate was in effect during the year?

7. Was manufacturing overhead underapplied or overapplied? By how much?

8. Compute the ending balance in the Work in Process inventory account. Assume that this balance consists entirely of goods started during the year. If $8,000 of this balance is direct labor cost, how much of it is direct materials cost? Manufacturing overheadcost?

26. What is Sandy's net pay after FIT, Social Security tax, state income tax, and Medicare have been...

The Victorville, California, Daily Press stated that the San Bernardino County Fair hires about 150 people during fair time. Their wages range from $6.75 to $8.00. California has a state income tax of 9%. Sandy Denny earns $8.00 per hour; George Barney earns $6.75 per hour. They both worked 35 hours this week. Both are married; however, Sandy claims 2 exemptions and George claims 1 exemption. Assume a rate of 6.2% on $106,800 for Social Security and 1.45% for Medicare. (a) What is Sandy's net pay after FIT, Social Security tax, state income tax, and Medicare have been taken out? (b) What is George's net pay after the same deductions? (c) How much more is Sandy's net pay versus George's net pay? Round to the nearest cent.

27. Superior Company provided the following data for the year ended December 31 (all raw materials are u

Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials): $ 218,000 $ 264,000 Selling expenses Purchases of raw materials Direct labor Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead cost $ 153,000 $ 370,000 $ 353,000 Inventory balances at the beginning and end of the year were as follows: Raw materials Work in process Finished goods Beginning of Year End of Year $ 58,000 $ 33,000 ? $ 33,000 $ 36,000 The total manufacturing costs for the year were $675,000; the cost of goods available for sale totaled $745,000; the unadjusted cost of goods sold totaled $669,000; and the net operating income was $40,000. The company's underapplied or overapplied overhead is closed to Cost of Goods Sold. Required: Prepare schedules of cost of goods manufactured and cost of goods sold and an income statement. (Hint: Prepare the income statement and schedule of cost of goods sold first followed by the schedule of cost of goods manufactured.) Income Statement COGS Schedule COGM Schedule Prepare an income statement for the year. Superior Company Income Statement Selling and administrative expenses: Prepare a schedule of cost of goods sold. Superior Company Schedule of Cost of Goods Sold Adjusted cost of goods sold Prepare a schedule of cost of goods manufactured. Superior Company Schedule of Cost Goods Manufactured Direct materials: Total raw materials available Raw materials used in production Total manufacturing costs Cost of goods manufactured

28. Multiple Choice Questions 1. Goods on consignment should be included in the inventory of: a. The...

Multiple Choice Questions 1. Goods on consignment should be included in the inventory of: a. The consignor but not the consignee b. Both the consignor and the consignee c. The consignee but not the consignor d. Neither the consignor nor the consignee 2. The following items were included in Venicio Corporation’s inventory account on December 31, 2016: Merchandise out on consignment, at sales price, including 40% markup on selling price ............... $14,000 Goods purchased, in transit, shipped FOB shipping point .............. 1 2,000 Goods held on consignment by Venicio ...... 9,000 What amount should Venicio report as inventory at December 31, 2016? a. $21,000 b. $20,400 c. $26,000 d. $35,000 3. During 2016, R Corp., a manufacturer of chocolate candies, contracted to purchase 100,000 pounds of cocoa beans at $1.00 per pound, delivery to be made in the spring of 2017. Because a record harvest is predicted for 2017, the price per pound for cocoa beans had fallen to $0.80 by December 31, 2016. Of the following journal entries, the one that would properly reflect in 2016 the effect of the commitment of R Corp. to purchase the 100,000 pounds of cocoa is: 4. Dixon Menswear Shop purchased shirts from Colt Company on May 28, 2016, and received an invoice with a list price amount of $5,000 and payment terms of 2/10, n/30. Dixon uses the net method to record purchases. Dixon should record purchases of: a. $4,000 b. $4,900 c. $5,000

29. 1. Panjim's 2005 cash flow from operations is:...

1. Panjim's 2005 cash flow from operations is:

A net outflow of $90,000

A net inflow of $90,000

A net inflow of $85,000

A net outflow of $85,000

2. Panjim's 2005 cash flow from investing activities is:

A net outflow of $7,000

A net inflow of $3,000

A net inflow of $7,000

A net outflow of $3,000

3. Panjim's 2005 cash flow from financing activities is:

A net outflow of $91,000

A net inflow of $86,000

A net outflow of $86,000

A net inflow of $91,000

4. Panjim recorded an interest expense of $6,000 for 2005. Which one of the following line items would be included in the operating section of the Panjim's 2005 indirect method statement of cash flows?

Add increase in interest payable...$1,000

Subtract increase in interest payable...($1,000)

Add increase in interest payable...$6,000

Subtract decrease in interest payable...($5,000)

30. Job costing; actual, normal and variation from normal costing,

Job costing; actual, normal and variation from normal costing, Chirac & Partners, a Quebec-based public accounting partnership, specializes in audit services, Its job-costing system has a single direct-cost category (professional labor) and a single indirect-cost pool (audit support, which contains all costs of the Audit Support Department). Audit support costs are allocated to individual jobs using actual professional labor-hours. Chirac & Partners employs 10 professionals to perform audit services.



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 4-28.

1. Compute the direct-cost rate and the indirect-cost rate per professional labor-hour for 2009 under

(a) actual costing, (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct costs.

2. Chirac’s 2009 audit of Pierre & Co. was budgeted to take 110 hours of professional labor time. The actual professional labor time spent on the audit was 120 hours. Compute the cost of the Pierre & Co audit using (a) actual costing, (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct costs. Explain any differences in the jobcost