Financial accounting scenario journal for my made up company.
Part A: The luggage department of ABC store has annual revenues of $1,000,000, variable costs of $300,000, direct fixed costs (like special store fixtures, and per square foot rent) of $500,000, and allocated indirect fixed costs of $400,000 (like management salaries and insurance). What would be the effect on total net income
The Big Foam Brewery Company has 30,000 shares of $10 par value common stock authorized and 20,000 shares issued and outstanding. On August 15, 2007, Big Foam Brewery Company purchased 1,000 shares of treasury stock for $16 per share. Big Foam Brewery Company uses the cost method to account for treasury stock. On September 14, 2
Jeff Able is a partner in the Willing and Able partnership. On June 1, 2008, Jeff transfers property to the partnership that has a fair market value of $60,000 and adjusted basis to Jeff of $10,000. Three weeks later, the Willing and Able partnership transfers $40,000 cash to Jeff. Willing and Able would not have transferred the
Elder Attorney had practiced law for several years and had accumulated $50,000 in accounts receivable. He reported his income for tax purposes under the cash receipts and disbursements method. Elder formed an equal partnership with Senior Counsel, Lawyers Unlimited, a cash-basis law partnership, and transferred his $50,000 accou
Joe Quick and Jane Reddy are equal partners in the Quick and Reddy partnership. On the first day of the current taxable year, Joe's adjusted basis in his partnership interest is $10,000 and Jane's adjusted basis is $2,000. During the year, Joe had withdrawals of $25,000 and Jane had withdrawals of $20,000. Given the following pa
At January 1, 2007, Horse Corporation reported retained earnings of $2,000,000. In 2007 Horse discovered that 2006 depreciation expense was inderstated by $500,000. In 2007, net income was $900,000 and dividends declared were $250,000. The tax rate os 40%. PRepare a 2007 retained earning statement.
Sales in units: planned 1,000, and the actual sales in units are not given. Selling price per unit: planned $6. actual $6.5. Variable cost per unit $4.0 for planned and actual. The manager calculation sales price variance is $600 Favorable. Find the actual units sold.
Sales in units: planned 1,000, actual 1020. Selling price per unit: planned $7. actual $6.9. Variable cost per unit $4.5 for planned and actual 1. Find sales price variance in absolute dollars 2. Find sales volume variance in absolute dollars 3. Is the price variance Favorable or unfavorable variance? 4. Is the volume var
Calculate operating income and net income: the following information is available from the accounting records of Spenser Co. for the year ended December 31, 2004: Selling, general and administrative expenses $51,000 Accounts payable 85,000 Extraordinary gain from lawsuit, ne
Our corporation was organized in July 15, 2015. It was authorized to emit 150.000 $25 common stocks of even value and 50.000 cumulative preferred stocks of 14% class A. The class A to of the Favorites the action has an established value of $50. The following transactions related to these actions happened. a. Emission of 55.000
Davis Company provides the following information budgeted for 2007. Sale price $50 by unit Cost to manufacture variable $32 by unit Fixed cost of manufacture $100,000 Fixed cost of sales and administrative $40,000 Davies predic
Engle Manufacturing Company established the following information of prices and costs: Sale Price $50 por unidad Variable cost of production $32 por unidad Fixed costs total of production $100,000 Fixed costs total of sale and administrative
A company has three product lines, one of which reflects the following results: Sales $215,000 - Variable expenses $125,000 = Contribution Margin $90,000 - Fixed Costs Expenses $140,000 = Net Loss $(50,000). If this product line is eliminated, 60% of the fixed expenses can be eliminated and the other 40% will be allocated to oth
You have been engaged to review the financial statements of Gottschalk Corporation. In the course of your examination you conclude that the bookkeeper hired during the current year is not doing good job. You notice a number of irregularities as follows: 1. Year-end wages payable of $3,400 were not recorded because the bookkee
In each of the following independent cases determine the amount of charitable contributions allowed the individual before consideration of any percentage limitations. A. Charitable Chubbs contributed an item of inventory from his sole proprietorship to a public charity for its use. The fair market value of the asset was $800
Problem 9-22 "Kitchen Rite" Kitchen Rite is considering outsourcing the production of a steel chassis that is used in a kitchen appliance' Two thousand chassis are produced per month. An outside vendor will supply an identical chassis for $9.90. The chassis is manufactured in two steps. A stamping press punches out the part fro
Rick's Bags manufactures both golf bags and tennis totes. Fixed manufacturing overhead is budgeted to be $187,200, variable manufacturing overhead is budgeted to be $1.10 per direct labor hour, and fixed selling and administration costs are budgeted to be $346,000. Each golf bag is expected to use 2.5 direct labor hours and each
MacGiver Brass is a brass plating firm with sales of $8 million and profits before taxes of $625,000. MacGiver has a loan outstanding at its local bank for working capital purposes. As the loan officer reviewing MacGiver's loan application, you are charged with making a recommendation as to whether the $608,000 loan should be r
The Densain Water plant in Naples, Florida, bottles purified and flavored waters in a variety of sizes (20, 36, 48, and 64 ounces) for sale through vending machines and retail stores. Volume is measured as bottled ounces. The plant's annual budgeted fixed manufacturing overhead amounts to $1.8 million, and variable manufacturin
Doug Maltbee formed a lawn service business as a summer job. To start the business on May 1, he deposited $1,000 in a new bank account in the name of the proprietorship. The $1,000 consisted of a $600 loan from his father and $400 of his own money. Doug rented lawn equipment, purchased supplies, and hired fellow students to mow
The solution discusses Cole furniture's EBIT. Last year Cole Furnaces had $5,000,000 in operating income (EBIT). The company had a net depreciation expense of $1,000,000 and an interest expense of $1,000,000; its corporate tax rate was 40%. The company has $14,000,000 in operating current assets and $4,000,000 in operating cu
The Quilt Shoppe is an all equity firm that has 2,500 shares of stock outstanding at a market price of $20 a share. Company management has decided to issue $10,000 worth of debt and use the funds to repurchase shares of the outstanding stock. The interest rate on the debt will be 8.5 percent. What are the earnings per share at t
Question 7: (10 points) Exercise 5-5 (Appendix 5A) Least-Squares Regression [LO5] EZ Rental Car offers rental cars in an off-airport location near a major tourist destination in Florida. Management would like to better understand the behavior of the company's costs. One of those costs is the cost of washing cars. The comp
Holton Company makes three products in a single facility. Data concerning these products follow: Products A B C
You recently were hired as an accountant for Northern Pacific Manufacturing. One of your responsibilities is to develop and maintain a standard costing system for overhead as well as materials and labor standard for the company. During a recent planning meeting, the company's production manager expressed concern regarding the
Jerston Company has an annual plant capacity of 3,000 units. Data concerning this product are given below: Annual sales at regular selling prices ............. 2500 units Manufacturing cost: Variable ................................................................$20 per unit Fixed (annual) ............
You have $42,180.53 in a brokerage account and you plan to deposit an additional $5000 at the end of every future year until your account totals $250,000. You expect to earn 12% annually on the account. How many years will it take to reach your goal?
Dr. Stephanie White, the Chief Administrator of Uptown Clinic, a community mental health agency, is concerned about the dilemma of coping with reduced budgets next year and into the foreseeable future, but increasing demand for services. In order to plan for reduced budgets, she must first identify where costs can be cut or redu
P 3-4 Just One, Inc, has two mutually exclusive investment projects, P and Q, shown below. Suppose the market interest rate is 10 percent? Project Initial Investment Year 1 Year 2 IRR NPV (r = 10%) P -$200.00 $140.00 $128.25 22.4% $33.26 Q -100.00 80.00 56.25 25.0 19.2