Raise Your Grades: Professional Support for Accounting Students

Published: 8 months ago

Raise Your Grades: Professional Support for Accounting Students

28. Springtime Paints makes quality paint in one production departme

Springtime Paints makes quality paint in one production department. Production begins with the blending of various chemicals, which are added at the beginning of the process, and ends with the canning of the paint. Canning occurs when the mixture reaches the 90 percent stage of completion. The gallon cans are then transferred to the Shipping Department for crating and shipment. Labor and overhead are added continuously throughout the process. Factory overhead is applied at the rate of $3 per direct labor hour.

Prior to May, when a change in the process was implemented, work in process inventories were insignificant. The change in process enables more production but results in large amounts of work in process. The company has always used the weighted average method to determine equivalent production and unit costs. Now production management is considering changing from the weighted average method to the first-in, first-out method.

The following data relate to actual production during May:

Work in process inventory, May 1

Direct material—chemicals ………………………………$45,100

Direct labor ($10 per hour) ……………………………….. 5,250

Factory overhead …………………………………………. 1,550

Costs for May

Direct material—chemicals …………………………… $228,900

Direct material—cans …………………………………….. 7,000

Direct labor ($10 per hour) ……………………………… 35,000

Factory overhead ………………………………………… 11,000

Units for May (Gallons)

Work in process inventory, May 1 (25% complete) ……………… 4,000

Sent to Shipping Department ……………………………………. 20,000

Started in May …………………………………………………… 21,000

Work in process inventory, May 31 (80% complete) ……………. 5,000

a. Prepare a cost of production report for May using the WA method.

b. Prepare a cost of production report for May using the FIFO method.

c. Discuss the advantages and disadvantages of using the WA method versus the FIFO method, and explain under what circumstances each method should be used.

29. Rental property

Use the following facts to answer problems

Alexa owns a condominium near Cocoa Beach in Florida. This year, she incurs the following expenses in connection with her condo:

Insurance $2,000

Mortgage interest 6,500

Property taxes 2,000

Repairs & maintenance 1,400

Utilities 2,500

Depreciation 14,500

During the year, Alexa rented out the condo for 100 days. She did not use the condo at all for personal purposes during the year. Alexa’s AGI from all sources other than the rental property is $200,000. Unless otherwise specified, Alexa has no sources of passive income.

61. Assuming Alexa receives $20,000 in gross rental receipts, answer the following questions:

a. What effect does the rental activity have on her AGI for the year?

b. Assuming that Alexa’s AGI from other sources is $90,000, what effect does the rental activity have on Alexa’s AGI? Alexa makes all decisions with respect to the property.

c. Assuming that Alexa’s AGI from other sources is $120,000, what effect does the rental activity have on Alexa’s AGI? Alexa makes all decisions with respect to the property.

d. Assume that Alexa’s AGI from other sources is $200,000. This consists of $150,000 salary, $10,000 of dividends, and $25,000 of long-term capital gain and net rental income from another rental property in the amount of $15,000.

What effect does the Cocoa Beach Condo rental activity have on Alexa’s AGI?

30. Gosnell Company produces two products: squares and circles. The projected income for the coming...

Gosnell Company produces two products: squares and circles. The projected income for the coming year, segmented by product line, follows:

The selling prices are $30 for squares and $50 for circles.

Required

1.    Compute the number of units of each product that must be sold for Gosnell Company to break even.

2.    Compute the revenue that must be earned to produce an operating income of 10 percent of sales revenues.

3.    Assume that the marketing manager changes the sales mix of the two products so that the ratio is three squares to five circles. Repeat Requirements 1 and 2.

4.    Refer to the original data. Suppose that Gosnell can increase the sales of squares with increased advertising. The extra advertising would cost an additional $45,000, and some of the potential purchasers of circles would switch to squares. In total, sales of squares would increase by 15,000 units, and sales of circles would decrease by 5,000 units. Would Gosnell be better off with this strategy?

31. Lake Corporation’s accounting records showed the following investments at January 1, 2006

Items 1 through 3 are based on the following data:

Lake Corporation’s accounting records showed the following investments at January 1, 2006:

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Lake owns 1% of Kar and 30% of Aub. Lake’s directors constitute a majority of Aub’s directors. The Day lease, which commenced on January 1, 2004, is for ten years, at an annual rental of $48,000. In addition, on January 1, 2004, Day paid a nonrefundable deposit of $50,000, as well as a security deposit of $8,000 to be refunded upon expiration of the lease. The trademark was licensed to Barr Co. for royalties of 10% of sales of the trademarked items. Royalties are payable semiannually on March 1 (for sales in July through December of the prior year), and on September 1 (for sales in January through June of the same year).

During the year ended December 31, 2006, Lake received cash dividends of $1,000 from Kar, and $15,000 from Aub, whose 2006 net incomes were $75,000 and $150,000, respectively. Lake also received $48,000 rent from Day in 2006 and the following royalties from Barr:

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Barr estimated that sales of the trademarked items would total $20,000 for the last half of 2006.

In Lake’s 2006 income statement, how much should be reported for dividend revenue?

1. $16,000


2. $ 2,400


3. $ 1,000


4. $ 150

In Lake’s 2006 income statement, how much should be reported for royalty revenue?

1. $14,000


2. $13,000


3. $11,000


4. $ 9,000

In Lake’s 2006 income statement, how much should be reported for rental revenue?

1. $43,000


2. $48,000


3. $53,000


4. $53,800

32. The following data relate to product no. 89 of Des Moines Corporation: Direct material standard:...

The following data relate to product no. 89 of Des Moines Corporation:



Direct material standard: 5 square feet at $3.30 per square foot

Direct material purchased: 37,000 square feet at $3.60 per square foot

Direct material consumed: 36,400 square feet

Manufacturing activity: 7,200 units completed



Assume that the company computes variances at the earliest point in time.



A)The direct-material quantity variance is:



B)The direct-material price variance is:

33. Following are two income statements for Alexis Co. for the year ended December 31. The left colum...

Following are two income statements for Alexis Co. for the year ended December 31. The left column is prepared before any adjusting entries are recorded, and the right column includes the effects of adjusting entries. The company records cash receipts and payments related to unearned and prepaid items in balance sheet accounts ALEXIS CO Income Statements For Year Ended December 31 Unadjusted Adjusted Revenues $24,000 30,600 Fees earned Commissions earned 42,500 42,500 Total revenues 66,500 73,100 Expenses Depreciation expense-Computers 1,650 Depreciation expense office furniture 0 1,925 Salaries expense 12,500 15,195 Insurance expense Rent expense Office supplies expense 1,430 4,500 4,500 528 Advertising expense 3,000 3,000 Utilities expense 1,250 1,327 Total expenses 21,250 29,555 $45,250 43,545 Net income Analyze the statements and prepare the eight adjusting entries that likely were recorded. (Note: 30% of the $6,600 adjustment for Fees Earned has been earned but not billed, and the other 70% has been earned by performing services that were paid for in advance.)

34. ONAL ST 13. Which of the following is not a profitability ratio? A) Payout ratio B) Profit margin C)

Profit margin C) Times interest earmed D) Returm on common stockholders' equity ts of all 14. Swiss Clothing Store had a balance in the Accounts Receivable account of $920,000 at the beginning of the year and a balance of $980,000 at the end of the year. Net credit sales during the year amounted to $6,650,000. The average collection period of the receivables in terms of days was A) 53.7 days. B) 52.1 days. C) 30 days. D) 50.7 days. 15. Dean Corporation reported net income $58,000, net sales $500,000, and average assets $800,000 for 2017. The 2017 profit margin was: A) 5.8%. B) 11.6%. C) 62.5%. D) 160%. 16. The following information is available for Oakland Company: 2016 $ 460,000 320,000 1,600,000 1,060,000 170,000 2017 $ 430,000 Accounts receivable Inventory Net credit sales Cost of goods sold Net income 280,000 2,670,000 1,860,000 300,000 The accounts receivable turnover ratio for 2017 is A) 1.4 times. B) 6.2 times. C) 6.0 times. D) 5.8 times. 17. A successful grocery store would probably have A) a low inventory turnover. B) a high inventory turnover. C) zero profit margin. D) low volume. Page 3

35. Lakeland Chemical manufactures a product called Zing. Direct materials are added at the beginning of

Lakeland Chemical manufactures a product called Zing. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work-in-process inventory is 50% complete with respect to conversion; the ending work-in-process inventory is 10% complete. The following data pertain to May: Units Work in process, May 1 21,100 Units started during May 65,200 Units completed and transferred out 78,500 Work in process, May 31 7,800 Total Direct Materials Conversion Costs Costs: Work in process, May 1 $ 44,300 $ 17,700 $ 26,600 Costs incurred during May 298,100 74,100 224,000 Totals $ 342,400 $ 91,800 $ 250,600 Using the weighted-average method of process costing, the equivalent units of conversion activity total:

36. The trial balance of Woods Company includes the following balance The trial balance of Woods Company

The trial balance of Woods Company includes the following balance

The trial balance of Woods Company includes the following balance sheet accounts. Identify the accounts that might require adjustment. For each account that requires adjustment, indicate (1) the type of adjusting entry (prepaid expense, unearned revenue, accrued revenue, or accrued expense) and (2) the related account in the adjusting entry.



(a) Accounts Receivable.



(b) Prepaid Insurance.



(c) Equipment.



(d) Accumulated Depreciation-Equipment.



(e) Notes Payable.



(f) Interest Payable.



(g) Unearned Service Revenue.



 

The trial balance of Woods Company includes the following balance

37. Enchanted Forest, a large campground in South Carolina, adjusts its accounts monthly. Most guests...

Enchanted Forest, a large campground in South Carolina, adjusts its accounts monthly. Most guests of the campground pay at the time they check out, and the amounts collected are credited to Camper Revenue. The following information is available as a source for preparing the adjusting entries at December 31; Enchanted Forest invests some of its excess cash in certificates of deposit (CD_s) with its local bank. Accrued interest revenue on its CDs at December 31 is $ 400. None of the interest has yet been (Debit interest Receivable.) A six-month bank loan in the amount of $12,000 has been obtained on September 1, Interest is to be computed at an annual rate of 8.5 percent and is payable when the loan becomes due. Depreciation on buildings owned by the campground is based on a 25 years life. The original cost of the buildings was $600,000. The Accumulated Depreciation; Buildings account has a credit balance of $310,000 at December 31, prior to the adjusting entry process. The straight-line method of depreciation is used. Management signed an agreement to let Boy Scout Troop 538 of Lewisburg. use the campground in June of next year. The agreement specifies that the Boy Scouts will pay a daily rate of per campsite, with a clause providing a minimum total charge of $1, 475. Salaries earned by campground employees that have not yet been paid amount to $1, 250. As of December 31, Enchanted Forest has earned $2, 400 of revenue from current campers who will not be they check out. (Debit Camper Revenue Receivable.) Several lakefront campsites are currently being on a long-term basis by a group of senior citizens. Six month's rent of $5, 400 was collected in advance and credited to Unearned Camper Revenue on October 1 of the current year. A but to carry campers to and from town and the airport had been rented the first week of December at a daily rate of $40. At December 31, no rental payment has been made, although the campground has had use of the bus for 25 days. Unrecorded income Taxes Expense accrued in December amounts to $8, 400. This amount will not be paid January 15.

38. Mcgraw Hill Connect Chapter 10 help

39. Hollowell Audio, Inc.