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intermediate accounting
Accounting 9th edition Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett - Solutions
Big Beef BBQ Ltd sells a single product, a gas barbecue. The barbecue sells for $960 per unit. Annual fixed costs are $1536000, and the contribution margin rate is 40%.RequiredA. What are the variable costs per unit?B. How many units must the company sell to break even?C. What is the break-even
Use the same information for Energy Experiences Pty Ltd in exercise 11.7. The accountant can’t make decisions on the future of the company without your authority as manager, so he believes it is important to work through the possible solutions together so that you understand what you are
Energy Experiences Pty Ltd runs camps for school children and sporting clubs that provide 3 days of canoeing, horseriding, abseiling and skiing. As a graduate with a sports and recreation degree, you have eventually worked your way up to managing the camps. The accountant has presented you with the
RingTone Pty Ltd produces phones. The company prepared the following budgeted income statement:SalesCost of sales$25600001028000Gross profitExpenses1532000Selling expensesAdministrative expenses$260000110000 370000Profit$1162000The owner, Rhing Thonn, wants to use this income statement
Adam Leeman Ltd has determined total factory overhead costs at both minimum and maximum levels of production — 200 000 machine hours and 300 000 machine hours respectively. The total factory overhead, made up of variable costs, mixed costs and fixed costs, was $796 000 for
A sound cash management system has several advantages. Why is it beneficial to reduce collection time for accounts receivable?
‘The principle that receipts should be banked daily and all payments made by cheque or electronic transfer provides a sound basis for internal control over cash. But it breaks down immediately when cash is given to a junior employee to spend through the petty cash fund.’ Discuss this statement.
A manager of a small online business believes that now most of their transactions take place using electronic transfer of funds rather than cash or cheques they no longer need to do a bank reconciliation each month as almost all funds transfers are electronic anyway and go straight through the bank
After reading the concepts of a good system of internal control covered in this chapter, the owner of a small business was concerned that his internal control was not good. He counted the daily cash takings and prepared the deposit slip, and banked the takings intact each day. He also approved
Mark has done the accounts for his local basketball club for a number of years. You joined the club in the last year and as you have studied some accounting Mark has asked you to help him with the accounts. You note that when doing a bank reconciliation Mark changes the accounts of the basketball
Favero Ltd accumulates the following data concerning a mixed cost using kilometres as the activity level.MonthKilometres drivenTotal costJanuary8 000$16 550February7 500$15 550March8 500$17 550April8 200$16 950RequiredCompute the fixed and variable cost
Overton Pty Ltd is a private company that runs a coffee shop. Its owner, Carl, is concerned that the cash flows for the past year have deteriorated and has provided the following abridged versions of Overton Pty Ltd’s balance sheet and statement of cash flows.Overton Pty LtdBalance Sheetas at 30
Bill has been running his local homewares store for 4 decades and has built up a large following of loyal customers. Bill believes that the key to developing a loyal customer base is to be generous in giving credit, to let customers pay when they have the money, and have plenty of stock so that
The accountant for Schulz Ltd compiled the following figures in order to estimate budgeted cash payments for March and April 2016:Purchases for December $156 000Purchases for January
Kay’s Hardware Ltd’s budgeted monthly sales for January to June 2016 are given below. About 70% of the monthly sales are expected to be on credit. Approximately 60% of the credit sales are collected in the month of sale, 30% in the month following the sale, and 5% in the second month following
Hannah’s Handbags Pty Ltd is preparing a budget for the quarter ended 30 June 2016. Hannah estimates that approximately 70% the handbag sales will be for cash and the rest will be on credit. Of the credit sales, 20% of the money will be received in the month of sale, 40% will be received the
During October, Hair Styles Pty Ltd experiences the following transactions in establishing a petty cash fund.Oct. 1A petty cash fund is established with a cheque for $130 issued to the petty cash custodian.Oct. 31A count of the petty cash fund disclosed the following items: Currency
Cathy’s Consulting collected its latest bank statement on 1 July 2016. All entries appearing in the bank statement that had not been entered into the cash journals were entered therein. The cash journals were posted and the resulting balance of the Cash at Bank account in the ledger at 30 June
The following information relates to the cash position of Cathy Fraser, loan broker:1. Cash at Bank account balance as at 30 June 2016: $45 451 debit.2. Bank statement balance as at 30 June 2016: $47 512 credit.3. 30 June receipts amounting to $1820 have not been deposited.4. Cheques issued but not
Sandy Poglase, owner of Sandy’s Sandwiches, wants a bank reconciliation statement to be prepared for the month ended 31 March 2016 using the following information:1. Final balance in the Cash at Bank account in the ledger of Sandy’s Sandwiches (after all entries arising from the bank
Lisa Ceja is unable to reconcile the bank balance at 31 January. Lisa’s reconciliation is as follows.Cash balance per bank$3 660.20Add: NSF cheque590.00Less: Bank service charge 25.00Adjusted balance per bank$4 225.20Cash balance per books$3 875.20Less: Deposits
Julia Ross Company has the following internal control procedures over cash payments. Identify the internal control principle that is applicable to each procedure.1. Company cheques are prenumbered.2. The bank statement is reconciled monthly by an internal auditor.3.
Lee runs a fruit stall at the local market and at the end of each day he banks the cash in the cash register. The cash register records each sale and can provide a total for each day but Lee believes that often the staff are too busy and do not always enter the sales in the register but simply put
Explain briefly the significance of each of the following in a comprehensive system of control over cash transactions:1. The segregation of cashier’s duties from other functions 2. The daily banking principle 3. The bank reconciliation statement4. The
On 30 June, Sophisticated Coffee had the following on its premises:1. 18 blank cheque forms2. a cheque for $275 received from a customer on 28 June but dated 1 July3. cheques dated 28–30 June for the total amount of $2384 received from customers on 30
Benjamin runs a cheese shop at the local shopping centre. Some months Benjamin seems to have more than enough cash to pay his bills when they are due. Other months Benjamin struggles to pay bills on time as he runs short of cash in the business’s bank account and has to use money from his
Lucerne Ltd sells feather quilts and has never used CVP analysis in its 4-year history. The manager provides you with the following sales and cost data for the first 4 years of operation:YearCosts of manufacturingNumber of
Tania’s Legal Services rents a photocopier. The company is charged a fixed annual rental plus a per-copy charge. If the company makes 120 000 copies per year, the overall per-copy cost is estimated to be $0.12. If 90 000 copies are made during a year, it is estimated that the cost per copy is
Gavini’s Café is run by Alex and Lara Gavini. They usually run the business with three staff and this is sufficient when there are up to 30 customers in the café. When the bookings for an evening are higher than 30 customers, the Gavinis hire an extra staff member for each extra 10 customers
‘Break-even analysis is all right if you have a one-product business, but it falls down badly if you want to derive a break-even point for several products.’ Discuss this statement.
Imagine you are the manager of a hotel. What are some of the fixed, variable and mixed costs of running the hotel and how could you use CVP relationships for profit planning?
As the marketing manager for a mobile phone company explain how CVP analysis could be useful in determining the best mix of price, volume, sales mix and advertising.
The owner–manager of a small business enterprise was heard to make the following remark: ‘Break-even analysis has little relevance for my business. I am not in business to break even, but to make profits.’ Do you agree with this statement? Explain your position.
Many airlines offer substantial discounts on some of their normal airfares. How can these discounts be justified on the basis of CVP relationships? Use relevant examples to explain your answer.
What type of cost behaviour describes the cost of operating a mobile phone?
‘In predicting the future profitability of a business there is a basic limitation in the standard form of income statement’. Discuss this statement.
Discuss the difficulties that would arise in CVP analysis if each of the six assumptions that underlie the analysis was totally unrealistic.
Fixed costs are not usually constant over all volumes of output. What are some of the factors that are likely to mean that fixed costs change over all volumes? Give an example.
‘It is reasonable to assume variable expenses approximate a straight line over the relevant range of operations (even if the overall variable expense line is curved)’. Discuss this statement.
Refer to the 2013 financial report of JB Hi-Fi Limited on its website, www.jbhifi.com.au, and answer the following questions.1. How is ‘cash’ defined in the financial statements?2. Did the total of cash held by JB Hi-Fi Limited increase or decrease over the period? By how much?3. Is the balance
You are the assistant accountant at Krispies Co. Ltd, a distributor of snack foods. Krispies has a large loan from a bank, and part of the loan agreement stipulates that the company must maintain a Cash at Bank account balance of at least $75 000, reviewed monthly by the bank manager. At 31 March
The Leaning Tower of Metropolis is a tall structure attached to the top of the highest building in the city with a lift in the centre to take paying customers to a viewing platform at the top of the tower. On payment of the appropriate fee for an adult, concession or child customer, the cashier in
Based on the Herald Sun article, how would you help Ninette decide on ways to improve the cash flow of the hotel?Your friend Ninette Nobis was a tourism management student when you were at university together and is now a manager of an upmarket hotel in the Exquisite Hotels chain. Because of the
Ken Dunlop of Dunlop’s Dishes wishes to prepare a cash budget for the 6 months ending 30 June 2017 so he can arrange for overdraft drawings facilities, if required. The following information is available:1. The business has consistently marked up its goods so as to realise a gross margin of 40%
Prickly Pear Ltd wishes to prepare a cash budget for the first quarter of 2016. In response to your request for past and projected financial data, you receive the following:Projected sales (excludes GST):November 2015December 2015January 2016February 2016March 2016April 2016May
The owner of Smith Hardware has completed a bank reconciliation and cannot get the bank’s records to agree with the cash records of his business. He concludes that internal control has somehow failed and cash is being misappropriated. He asks you to check the records and confirm or otherwise his
Brockbank Builders Ltd is preparing a cash budget for May and June of 2016. Past records reveal that 20% of all credit sales are collected during the month of sale, 60% in the month following the sale, 10% in the second month following the sale and 10% in the third month following the sale. The
The following transactions and events relate to the petty cash fund (imprest amount $200) of Honshu Ltd (all amounts include GST): 1. Paid $27.50 delivery charges on inventory purchased. 2. Paid $44 (part payment) for the repair of computer
As the accountant for Sam & Ben’s Ice Cream you are required to perform a bank reconciliation at the end of June 2016. The bank reconciliation statement for the previous month is set out below:Bank Reconciliation Statementas at 31 May 2016Balance as per bank statementAdd: Outstanding
As accountant for J. Stojanovic & Son, you are required to perform a bank reconciliation at the end of June 2016. The bank reconciliation statement for the previous month is set out below:Bank Reconciliation Statementas at 31 May 2016Balance as per bank statementAdd: Outstanding
The March 2016 bank statement of Tong’s Toyworld has just been received from its bankers. The following information is available:1. The March bank column totals of the cash receipts and cash payments journals are, respectively, $21546 and $24108 before taking into account any of the items
The bank reconciliation statement of Feng Zhen Liu on 21 June 2016 was as shown below.FENG ZHEN LIUBank Reconciliation Statementas at 21 June 2016Balance as per bank statementAdd: Unpresented cheques: No. 172
The following information was available from records and the bank statement of Baldacchino Services Ltd, on 31 May.The date and the amount of each deposit as recorded during May were as follows:DateAmountDateAmountMay 2 5
Information about Bond Ltd’s cash position for the month of December is presented below:1. The general ledger Cash at Bank account had a balance of $21 200 on 30 November.2. The cash receipts journal showed total cash receipts of $292 704 for December.3. The cash payments journal showed total
Information about the cash position for Cavanagh’s Charter Tours Pty Ltd for the month of June is presented below:1. The general ledger Cash at Bank account had a balance of $12 600 on 31 May.2. The cash receipts journal showed total cash receipts of $45 796 for June.3.
The following information has been extracted from the cash records of Wheeler Ltd and shows four independent situations. Assume there were no direct bank debits or credits on the bank statement and that all outstanding deposits and unpresented cheques in one month appeared on the bank statement in
The daily sales for Sunny Fruit & Vegetable Shop during the week ended 5 April 2016 were as follows:Total sales(including GST)Sales on accountBankedApril 2016Monday 1Tuesday 2Wednesday 3Thursday 4Friday
During the week ended 12 September 2016 the daily sales for Calum’s Chocolaterie were as follows:Total sales (including GST)Sales on accountBankedSeptember 2016Monday 8Tuesday 9Wednesday 10Thursday 11Friday
Companies report all amounts related to other comprehensive income net of tax. Net of tax means that the amount of income (or loss) reported includes any income tax effects. Companies do not include the income tax expense (or benefit) related to items included in other comprehensive income in the
Pfizer Inc, is a U.S, company that manufactures and distributes pharmaceutical and consumer healthcare products that are similar to those sold by Johnson & Johnson. In the following, we present Johnson & Johnson's profitability ratios computed in Example 5B.1 in the chapter appendix. Use
Pfizer Inc, is a US company that manufactures and distributes pharmaceutical and consumer healthcare products that are similar to those sold by Johnson & Johnson. Use the excerpts of Johnson & Johnson's and Pfizer's income statements to answer the following questions:a. Compute each line
The CFO of First Things Computing, Inc, (FTC) prepared the following net income statement for the year ended December 31, 2019.FTC had 15,000 common shares outstanding for the entire year. It had no preferred stock or dilutive securities. Thus, its earnings per share (EPS) is computed simply as
Clockers, lnc, committed to sell a division on March 22, 2018. It sold the division on June 14, 2020. Income from operating this division was $3,240,000, $1,005,000, and $332,000 in 2018, 2019 and 2020, respectively. On December 31, 2018, the carrying value of the division was $10,000,000 and the
Use the following excerpt from Dragonfly Corporation's balance sheer and its income statement to compute Dragonfly's profit margin and return on assets for 2018 and 2019. Comment on Dragonfly's profitability and changes in profitability from 2018 10 2019. Dragonfly's total assets at the end of 2017
Bluebird Products, Inc, provided the following information from its current-year trial balance.Bluebird issued $345,000 of no-par common stock on June 30 of the current year. The company is subject to a 40% income tax rate. The beginning balance in common stock was $1,456,000. Prepare a statement
Ciara's Cookie Company provided the following account balances from its year-end trial balance.During the year, Ciara issued no -par common stock. The proceeds of the new issue were $25,000. The company is subject to a 40% income tax rate. The beginning balance in common stock was $456,000.Prepare
Elegant Homes Corporation provided the following statement of net income on December 31, 2018, before the disposal of a business segment. The income statement includes the results of operations of Elegant's mobile home division. The company made a commitment to dispose of the mobile home division
Complete the following vertical analyses of Dragonfly Corporation's income statement. What line item is the largest percent of sales in 2019? How has it changed from 2018 to 2019? As of percent of sa les (in millions) 2019 2018 2019 2018 $ 61,890 $ 63,762 Sales Cost of Goods Sod 33,092 30.096 Gross
Complete the following horizontal analyses of Dragonfly Corporation's income statement. What was the largest percentage increase in expenses? What was the largest percentage decrease in expenses? What would explain the changes? Percent (in millions) 2019 2018 Change Change $63,762 33,092 $61,890
Using the information provided in E4-14:Data from E4-14.MPS, Inc, has the following unadjusted account balances as of December 31, 2018, the company's year-end:• Cash: $430,000• Accounts Receivable: $2,000• Prepaid Insurance: $14,000• Prepaid Rent: $22,000• Equipment: $60,000•
Magic Cleaning Services (MCS) has a fiscal year-end of December 31. It is the first year of operations. At of year-end, MCS has the following unadjusted trial balance:Addition, it has not adjusted for the following transactions:All of the prepaid rent expired by the end of the year.The building was
Thomas and Associates, a law firm, accrued $4,000 for four days of wages on December 31. On January 7, it paid two weeks of wages, totaling $10,000, to employees. The company·s fiscal year-end is December 31. Prepare the journal entries for the accrued wages on December 31, the reversing entry at
Using the information in E4-22, prepare the post-closing trial balance for Diane's Dairy Sales & Delivery.Data from E4-22.Diane's Dairy Sales & Delivery finished its first year of operations on December 31, 2018. After adjusting journal entries, the company presented the following adjusted
Coftee's Company committed to a plan on October 1 of the current year to discontinue its beverage segment. Income from operating the segment was $1,250,000 for January through September and $727,000 for October through November. Coftee sold the segment on November 30 for a loss of $168,000.
Jojo, Inc, held a discontinued operation as of December 31, 2018. The operating loss from the discontinued operation was $500,000 for the period. As of December 31, 2018, the net assets of the discontinued operations had decreased in fair value by $272,000. Jojo's tax rate is 30%. Prepare the
Using the information provided in BE5-7, prepare a multiple-step income statement for the current year. Car Corporation Trial Balance ISelected Accounts) For the Year Ended December 33 Credit Account Debit $ 1,345 Dvidends Sales $123.750 D vidend Income 560 Interest Income 1,000 Ga non Disposal of
How is a company's profit margin calculated?
The Jiayin Li Corporation, which is a technology company, was formed on January 1 of the current year. Transactions completed during the first year of operation follow.January 1: Issued 1,000,000 shares of common stock for $15,000,000, which is the par value of the stock.January 10: Acquired
The Umbro Company, which is a fitness center, was formed on January 2 of the current year. Transactions completed during the first year of operation are presented below.January 2: Issued 900,000 shares of common stock for $15,000,000, which is the par value of the stock.January 10: Acquired
Sherlock Locksmiths, Inc, has the following adjusted trial balance for the year ended December 31, 2018.Requireda. Journalize and post the necessary closing entries. Omit explanations.b. Prepare a post-closing trial balance as of December 31. Sherlock Locksmiths. Inc. Adjusted Trial Balance At
Using the information in P4-6 and P4-7, perform the following steps for Tides Tea Company:Data from P4-6Tides Tea Company began operations on January 1, 2018. During the first year of business, the company had the following transactions:• January 18: The owners invested $200,000 (the par value
The post-closing trial balance for Heron Consulting Services, inc, at December 31 of the prior year is presented here. The company respond the following transactions during the current year:January 2: Heron took out a 5%, 2-year note payable in the amount of $3,000 to pay for operating
Using the information provided in P4-6, perform the following steps for Tides Tea Company:Data from P4-6Tides Tea Company began operations on January 1, 2018. During the first year of business, the company had the following transactions:• January 18: The owners invested $200,000 (the par value
Tides Tea Company began operations on January 1, 2018. During the first year of business, the company had the following transactions:• January 18: The owners invested $200,000 (the par value of the stock) into the business and acquired 40,000 shares of common stock in return.• February 1:
Using the information in P4-3 and P4-4, perform the following steps for Herman and Sons':Data from P4-3Herman and Sons' Law Offices opened on January 1, 2018. During the first year of business, the company had the following transactions:• January 2: The owners invested $250,000 (the par value of
Using the information provided in P4-3, perform the following steps:Data from P4-3Herman and Sons' Law Offices opened on January 1, 2018. During the first year of business, the company had the following transactions:• January 2: The owners invested $250,000 (the par value of the stock) into the
Diane's Dairy Sales & Delivery finished its first year of operations on December 31, 2018. After adjusting journal entries, the company presented the following adjusted trial balance.Using this trial balance, prepare Diane's necessary entries to close out temporary accounts at year-end. Omit
Using the information provided in E4-6, prepare Dover Direct Insurance Agency's unadjusted trial balance a t June 30, 2018.Data from E4-6.The Dover Direct Insurance Agency began operations on June 1, 2018. In the month of June, the following transactions occurred:June 2: Dover Direct's owner
Hartman Housewares Company began the current year with the following account balances:Cash ....................................................... $70,000Accounts Receivable ............................ 25,000Supplies .................................................
G&S Auto Body, Inc. started 2018 with the following balances:Cash ........................................................ $ 40,000Accounts Receivable .............................. 100,000Equipment ..............................................
Using the information provided in E4-7, prepare CC&C's t-accounts for all relevant accounts for the year ended December 31, 2018. Post journal entries in E4-7 to the general ledger.Data from E4-7Cakes & Crumbs Bakery (CC&C) ended its first year of operations on December 31, 2018. During
Cakes & Crumbs Bakery (CC&C) ended its first year of operations on December 31, 2018. During 2018. the following transactions occurred:January 10: The owners of CC&C invested $200,000 (the par value of the stock) and acquired 20,000 shares of common stock.March 15: CC&C purchased
Using the information provided in E4-5, post Dover Direct Insurance Agency's journal entries to the general ledger for all relevant accounts for the month ended June 30, 2018.You do not need to provide explanations.Data from E4-5The Dover Direct Insurance Agency began operations on June 1, 2018. In
The Dover Direct Insurance Agency began operations on June 1, 2018. In the month of June, the following transactions occurred:June 2: Dover Direct's owner invested $80,000 (the par value of the stock) cash and acquired 4,000 shares of common stock.June 8: Dover Direct purchased $8,000 of office
Using the information provided in E4-3, prepare Master Mind's t-accounts for each transaction.Data from E4-3.Master Mind Games, Inc, is a new corporation started on January 1, 2018. The following transactions occurred during the first year of operations.a. On January 1, the owners invested a total
Master Mind Games. Inc. is a new corporation started on January 1. 2018. The following transactions occurred during the first year of operations.a . On January 1 , the owners invested a total of $50,000 (the par value of the stock) t o start the company. In exchange, the corporation issued the
‘Although the process of bank reconciliation provides a measure of control over cash in a business entity, bank reconciliation is useless unless it operates within a framework which incorporates essential elements of a good internal control system.’ Discuss this statement.
For company X, Y and Z, fill in the missing data. Each company is independent.Income statementCompany XCompany YCompany ZSales$320 000(5)120 000Beginning finished goods(2)49 0007800Cost of goods manufactured197 700(6)61 350Ending finished goods24 00026 200(9)Cost of sales(1)784 00060 000Gross
Marko is studying for a marketing degree at university and when he graduates he would like to work for an international marketing firm. Explain to Marko how an understanding of cost accounting would help him to succeed in his intended career.
Describe the flow of costs in a job order cost accounting system. Use a relevant example to illustrate your answer.
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