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Cash
Accounts Receivable
Patent
Acounts Payable
Allowance for Doubtful Accounts
Rachel Bell, Capital
PE 121B
Cash
Inventory
Land
$
36,000
$
42,000
$
175,000
Notes Payable
Austin Fisher, Capital
PE 122A
Distributed to Orr and Graham:
Annual salary
Interest
Remaining income
Orr
(1)
(3)
Ex. 121
Cash
Accounts Receivable*
Merchandise Inventory
Equipment
Allowance for Doubtful Accounts
Beyonce Sheffield, Capital
*$146,000 $5,000
PE 123A
A Land
Tony Vale, Capital
Jordan Henry, Capital
($125,000 $80,000) 50%.
PE 124B
Equity of Hiro
Marones contribution
Total equity after admitting Marone
Marones equity interest
Marones equity after admission
Marones contribution
Bonus paid to Marone
Ex. 1210
a. and b.
May Cheng, Capital
Michael Cross, Capital
$207,000 1/3.
Note: The sale to Cross is not a transaction of the partnership, so the sales
price is not considered in this journal entry.
PE 125A
Morgans equity prior to liquidation
Realization of asset sales
Book value of assets
($32,000 + $60,000 + $10,00)
Gain on liquidation
Morgans share of gain (50% $18,000)
Morgans cash distribution
PE 126A
A Barns equity prior to liquidation
Realization of asset sales
Book value of assets*
* $105,000 + $55,000
Loss on liquidation
Ex. 1220
Oliver
Capital balances before realization
Division of gain on realization
[($67,000 $63,000) 2]
Ex. 1223
Nettles
Capital balances after realization
Distribution of partner deficiency
Capital balances after deficiency
distribution
PE 127A
=
A
2014
2015
PE 127B
=
2014
2015
Ex. 1226
A
Income Summary
Angel Alvarez, Capital
Emma Allison, Capital
Angel Alvarez, Capital
Emma Allison, Capital
Angel Alvarez, Drawing
Emma Allison, Drawing
Net Income
Withdrawls during the year
Capital, December 31, 2014
Graham
Total
(2)
(4)
333,200
40%
-
, so the sales
Barns deficiency;
Ansari
Total
$
King
Tanaka
* $15,000 2/3
** $15,000 1/3
$
$
$
($15,400,0000
The number of
growth in revenue
es; thus, the revenue
firm is more
ces between
3025
24%
,800,000
umber of
e in revenue
s; thus, the
ars. The firm
ff resources
z, Capital
n, Capital
ez, Drawing
on, Drawing
z and Allison
rtnership
Equity 31,
nded December
2014
Emma Allison
Total
$
$
$
$
HOW MUCH DO
WE OWE
Income
owe
Prior yr arrears
Paid or available
A-B
Common Stock
Total Available
+C/PF shares
+D/ CS Shares
PF (
shares)
CS (
shares)
% owed /stock
Year 1
Year 2
# of Shares
Amout owed
$
Year 3
Year 4
Given
A
B
A-B=C
C*.40
Income-Tax
Net Income Prerred Stock
Available/shares
A
B
A-B=C
C*.40
Income-Tax
Available/shares
PE 131A
Year 1
Year 2
Amount distributed
Preferred dividend (40,000 shares)
Common dividend (50,000 shares)
* $18,000 + $48,000
*
$
2% of $60 =$1.20@40,000=$48,000 $
checkbook
paid
$
Balance
Balance forward (arrears) $
48,000
-
$
NONE
$30k/40k
48,000
$
$
PE 131B
Year 1
Amount distributed
Preferred dividend (16,000 shares)
Common dividend (80,000 shares)
* $2,400 + $6,400
1% of $40 =$.40@16,000=$6,400
paid
checkbook
Balance
Balance forward (arrears)
$
$
$
$
Year 2
6,400
(6,400)
-
Page 27 of 210
$
$
$
$
$
PE 13-2A
PE 132B
Page 28 of 210
$
$
EX 13-1
Year 1
Amount distributed
Preferred dividend (30,000 shares)
Common dividend (125,000 shares) $
Year 2
2% of $90 =$1.80@30,000=$54,000
paid
$
$
Arrears (owed) $
$
$
$
$
$
$
$
$
$24k/30k
Page 29 of 210
PE 13-3A
PE 13-4A
Ex 13-9
Page 30 of 210
PE 13-5A
PE 13-6A
Page 31 of 210
PE 13-7A
Ex 13-11
A)
Page 32 of 210
B)
C)
Crystal Lake may have purchased the stock to support the market price of
the stock, to provide shares for resale to employees, or for reissuance to
employees as a bonus according to stock purchase agreements.
PE 13-16
Stockholder's Equity
Page 33 of 210
Ex 13-17
PE 13-8A
Page 34 of 210
A)
B)
The increase in the earnings per share from $18.60 to $21.18 indicates a
favorable trend in the companys profitability.
Ex 13-23
Page 35 of 210
Year 3
$
$
48,000
-
$
$
Year 3
*
$
$
$
$
$
6,400
6,400
6,400
Page 36 of 210
$
$
112,000
45,000
Page 37 of 210
Year 3
Year 4
$
$
$
$
$
$
$
$
$
$
$
$
Page 38 of 210
Page 39 of 210
Page 40 of 210
Page 41 of 210
Page 42 of 210
Page 43 of 210
Page 44 of 210
Enter answers in dollars and cents, rounding to the nearest whole cent.
PE 14-1B
Objective 1
Bonds
Income Tax
Bonds
Income Tax
1
2
3
4
$
$
$
$
Dividends
# of Shares
# of Shares
($3,000,000/$30)
$
6,000,000
$
4,000,000
6
7
6,000,000
840,000
5,000,000
900,000
Bonds
Income Tax
Bonds
Income Tax
Dividends
# of Shares
# of Shares
1
2
3
4
5
6
7
$
4,000,000
$
1,600,000
$
2,500,000
$
1,750,000
($3,000,000/$25)
$
4,000,000
$
2,500,000
Ex 14-1
Objective 1
Effect of Financing on Earnings per Share
Rhett Co., which produces and sells biking equipment, is financed as follows:
Determine the earnings per share of common stock, assuming that the income before bond inte
(a) $15,000,000, (b) $17,500,000, and (c) $20,000,000.
Enter answers in dollars and cents, rounding to the nearest whole cent.
$
$
$
$
$
$
15,000,000
2,250,000
12,750,000
5,100,000
7,650,000
4,500,000
$
$
$
$
$
$
$
$
$
$
$
$
$
$
3,150,000
1,500,000
2.10
17,500,000
2,250,000
15,250,000
6,100,000
9,150,000
4,500,000
4,650,000
1,500,000
3.10
20,000,000
2,250,000
17,750,000
7,100,000
10,650,000
4,500,000
6,150,000
1,500,000
4.10
PE 14-2A
Objective 2/3
Issuing Bonds at a Discount
On the first day of the fiscal year, a company issues a $2,000,000, 8%, five-year bond that pays
of $80,000 ($2,000,000 8% ), receiving cash of $1,920,873.
Cash
Discount on Bonds Payable
$
$
1,920,873
79,127
Bonds Payable
2,000,000
$
$
7,913
80,000
3,000,000
PE 14-3A
Objective 2/3
Interest Expense
Discount on Bonds Payable (1)
Cash
(1)
879,113
+$79,127 / 10 payments
PE 14-2B
Objective 2/3
Cash
Discount on Bonds Payable
Bonds Payable
$
$
2,889,599
110,401
PE 14-3B
Objective 2/3
Interest Expense
Discount on Bonds Payable (1)
Cash
(1)
+$110,401 / 10 payments
PE 14-4A
Objective 2/3
Cash
Premium on Bonds Payable
Bonds Payable
PE 14-5A
Objective 2/3
Interest Expense
Premium on Bonds Payable (1)
Cash
176,040
$
$
11,040
165,000
(1)
+$110,401 / 10 payments
PE 14-4B
Objective 2/3
Cash
Premium on Bonds Payable
Bonds Payable
PE 14-5B
Objective 2/3
Interest Expense
Premium on Bonds Payable (1)
Cash
(1)
E 14-6
+$308,869 / 10 payments
Objective 2/3
a)
1 Cash
Discount on Bonds Payable
Bonds Payble
$
$
10,504,541
1,495,459
2 Interest Expense
Cash
480,000
3 Interest Expense
Cash
480,000
4 Interest Expense
$
Discount on Bonds Payable
b.
149,546
c.
The bonds sell for less than their face amount because the market rate of interest is greater t
interest. Investors are not willing to pay the full face amount for bonds that pay a lower contrac
rate they could earn on similar bonds (market rate).
PE 14-6A
Objective 2/3
Bonds Payable
900,000
Bonds Payable
Premium on Bonds Payable
Gain on Redemption of Bonds
Cash
$
$
42,000
$
$
87,000
855,000
$
$
77,000
490,000
PE 14-6B
Objective 2/3
500,000
67,000
E 14-8
Objective 2/3
2014
1-Apr Cash
Bonds payable
2014
1-Oct Interest Expense
Cash
40,000,000*.08*6/12
2018
40,000,000*1.04=41,600,000
E 14-9
Objective 2/3
2014
1-Mar Cash
Bonds payable
2014
1-Sep Interest Expense
Cash
30,000,000*.10*6/12
2014
1-Sep Bonds Payable
Gain on redemption of Bonds
Cash*
* 30,000,000 @ 0.98
PE 14-7A
Objective 4/5/6
Cash
a)
Notes Payable
(issued Installment notes for cash)
b)
Interest Expense
Note payble
Cash
$
(Paid principle and interest on installment notes)
PE 14-7B
Objective 4/5/6
Cash
a)
Notes Payable
b)
Interest Expense
Note payble
Cash
$
(paid principle and interest on installment notes)
E 14-11
Objective 4/5/6
2014
1-Jan Cash
Notes Payable
2014
31-Dec Interest Expense
Notes payable
Cash
2017
31-Dec Interest Expense
Notes Payble *
Cash
$46,813-$10,665
E 14-12
Objective 4/5/6
31,
31,
31,
31,
January 1
Carrying
Amount
Note Payment
(Cash Paid)
2014
2015
2016
2017
$
b)
$
$
$
$
$
Interest Expense
(6% of January 1
Note Carrying Amount)
(6% of $125,000)
(6% of $96,426)
(6% of $66,138)
(6% of $34,032)
-
2014
1-Jan Cash
Notes Payable
c)
2014
31-Dec Interest Expense
Notes payable
Cash
2015
31-Dec Interest Expense
Notes Payble
Cash
2016
31-Dec Interest Expense
Notes Payble
Cash
2017
31-Dec Interest Expense
Notes Payble
Cash
PE 14-8A
Objective 4/5/6
Interest Expense
a)
2014 $
3,200,000
$
$
320,000
320,000
2013 $
3,600,000
$
$
300,000
300,000
The number of times interest charges are earned has decreased from 13.0 in 2013 to 11.0 in 20
earnings to pay interest, the decline in this ratio may cause concern among debtholders.
PE 14-8B
Objective 4/5/6
a)
2014 $
5,544,000
$
$
440,000
440,000
2013 $
4,400,000
$
$
400,000
400,000
The number of times interest charges are earned has increased from 12.0 in 2013 to
13.6 in 2014. The increase in this ratio increases debtholders confidence in the companys ability to make its interest payments.
E 14-14
Objective 4/5/6
E 14-15
Objective 4/5/6
Ex 14-17
Appendix 1
($751,314.80)
###
(1,000,000)
Ex 14-18
Appendix 1
677,442
Ex 14-19
Appendix 1
7,500,000
10
0.07
inancing plans:
hole cent.
$
(1) $
$
(2) $
$
$
$
Plan 1
1,200,000
360,000
840,000
336,000
504,000
504,000
$
(3) $
$
(4) $
$
(5) $
$
Plan 2
1,200,000
300,000
900,000
360,000
540,000
300,000
240,000
(6)
504,000/300,0000
$
1.68
6%
40%
6%
40%
$
$
$
inancing plans:
me.
300,000
$
$
$
$
360,000
336,000
300,000
360,000
3.00 $
20.00
20.00
300,000
300,000
200,000
(7)
200,000
240,000/200,000
$
1.20
income
$
(1) $
$
(2) $
$
$
960,000
400,000
$
(3) $
$
(4) $
$
(5) $
$
(7)
2.40
$
$
$
$
$
400,000
640,000
250,000
700,000
300,000
400,000
250,000
(6)
$
$
$
10%
40%
10%
40%
2.50
10.00
10.00
Plan 1
2,000,000
400,000
1,600,000
640,000
960,000
Plan 2
2,000,000
250,000
1,750,000
700,000
1,050,000
300,000
750,000
250,000
3.00
4%
1,920,873
80,000
10.00
(648,872)
12,000,000
480,000
480,000
149,546
960,000
$
$
149,546
1,109,546
(46,813)
of Installemnt Notes
D
Decrease in
Notes Payables
(B-C)
$
$
$
$
$
-
E
Dec 31 Carrying
Amount (A-D)
$
$
$
$
terest Expense
B
A
D
G
o
o
d
B
A
D
0.1
751315
3
$
0.07
200000
(677,442)
(751,315)
(677,442)
You want $7,500 in 4 years. You will earn 6% interest. What do you need to invest today
A
4,500
5,941
C
D
7,950
(5,941)
You want to buy a house in 10 years for $200,000. If you think you can earn 10%, how mu
closest answer.)
A
65,109
77,109
C
D
82,209
(77,109)
If a want to buy a car in 3 years for 10,000 and you expect interest rate of 6% per year, h
A
7,596
8,096
C
D
8,396
(8,396)
You invest $2,000 in IRA's each year for 5 years. If interest on these IRA's is 4%, how mu
A
10,000
10,833
8,904
(10,833)
If you deposit $2,500 each year into an account paying 10% interest, how much will you
A
100,000
1,106,481
C
D
1,150,500
(1,106,481)
If you want to have $10,000 in 3 years and you can earn 8%, how much would you have t
A
7,938
25,771
C
D
12,597
(7,938)
If you think you can sell an asset for $25,000 in five years and you think the appropriate
will to pay for the asset today?
A
25,000
19,588
C
D
21,500
(19,588)
You borrow $50,000 and will make monthly payments for 2 years at 12% interest. How m
A
2,354
29,584
C
D
3,984
(2,354)
You invest $8,000 at 6% interest, which will be compounded semiannually. How much wi
A
9,528
9,552
11,348
(9,552)
10 How much will $25,000 be worth in five years if interest is 12% compounded quarterly?
A
25,000
28,100
45,153
(45,153)
u can earn 10%, how much do you need to invest today ? (Pick the
st rate of 6% per year, how much will the money will you need today?
se IRA's is 4%, how much will you have at the end of those 5 years?
u think the appropriate discount rate is 5%, how much would you be
ompounded quarterly?
PE 16-6A
Sales
Deduct increase in accounts receivable
Cash received from customers
PE 16-6B
Sales
__+__decrease in accounts receivable
Cash received from customers
PE 16-7A
Cost of merchandise sold
____ decrease in inventories
____ decrease in accounts payable
Cash paid for merchandise
PE 16-7B
Cost of merchandise sold
____ increase in inventories
_____ increase in accounts payable
Cash paid for merchandise
E16-20
E16-22
Computations:
1. Sales
____decrease in accounts receivable
Cash received from customers
2. Cost of merchandise sold
___: Increase in inventories
___: Decrease in accounts payable
Cash payments for merchandise
3. Operating expenses other than depreciation
_____: Decrease in prepaid expenses
_____: Increase in accrued expenses payable.
Cash payments for operating expenses
4. Income tax expense
____decrease in income tax payable
Cash payments for income taxes
(2)
(3)
(4)
b. The direct method __________ reports cash receipts and payments. The cash received
______the cash payments is the ______________________________. Individual
cash receipts and payments are reported in the Cash Flows from Operating
Activities section.
The indirect method adjusts _____________________ net income for revenues and expenses
that ______________ involve the receipt or payment of cash to arrive at cash flows from
operating activities.
PE16-8A
2014
PE16-8B
Net cash flow from operating activities
Less: Investments in fixed assets to replace existing capacity
Free cash flow
* 80% $427,000
** 80% $378,000
E16-24
Cash flows from investment in PPE
Replacement percentage
Cash paid for maintaining property, plant, and equipment
Cash flows from operating activities
Less cash paid for maintaining property, plant, and equipment
Free cash flow
b. Free cash flow is often used to measure the financial strength of a business. The
more free cash flow that a business has, the easier it will be for the company to
pay the interest on the loan and repay the loan principal. Sweeters free cash flow
is $381,500, which is very strong.
E16-25
Recent Fiscal Year End (000's)
Cash flows from investment in PPE
Replacement percentage
Cash paid for maintaining PPE
Cash flows from operating activities
Less cash paid for maintaining PPE
b. Free cash flow is often used to measure the financial strength of a business. The
more free cash flow that a business has, the easier it will be for the company to
pay the interest on the loan and repay the loan principal.
c. Yes. Nikes free cash flow is extremely strong, and is 3.7 times greater than the
capital expenditures necessary to maintain capacity.
(1423/389=3.7)
(1)
2013
**
ness. The
ash flow
ness. The
than the
Subtract (-)
Accounts Receivable
Inventory
Prepaid Expense
Accounts Payable
Accrued Expense Payable
Income Tax Payable
Operating -0
Accounts Receivable
Inventory
Prepaid Expense
Accounts Payable
Accrued Expense Payable
Income Tax Payable
Financing - F
Accounts Receivable - O
Investories - O
Investments - I
Land - I
Equiptment - I
Accumulated Depreciation O and I
#########
Add (+)
Accounts Receivable
Inventory
Accounts Payable
Operating Expense
Interest Expense
Income Tax Payable
Prepaid
Investing - I
Accounts Payable -O
Accrued Expenses - O
Dividends Payable - F
Common Stock - F
Paid-in Capital -F
Retained Earnings - O and F
Inventory____________
PE 17-1B
PE 17-2A
Sales
Cost of goods sold
Gross profit
PE 17-2B
Sales
Cost of goods sold
Gross profit
PE 17-3A
a)
b)
PE 17-3B
a)
b)
PE 17-4A
a)
b)
PE 17-5A
a)
Inventory Turnover = Cost of Goods Sold Average I
Inventory Turnover = _________________________
Inventory Turnover = 7.0
b)
PE 17-6A
a)
b)
PE 17-7A
PE 17-8A
PE 17-9A
Rate Earned on Total Assets =
Rate Earned on Total Assets =
PE 17-10A
a)
b)
PE 17-11A
a)
Earnings per Share on Common Stock =
b)
Price-Earnings Ratio =
Price-Earnings Ratio =
Price-Earnings Ratio =
Amount
Percentage
($850,000 $850,000)
($493,000 $850,000)
($357,000 $850,00)
Amount
Percentage
Current Liabilities
50,000 + $60,000) $150,000
($1,200,000 $1,200,000)
($780,000 $1,200,000)
($420,000 $1,200,000)
ckholders Equity =
ckholders Equity =
ckholders Equity =
__________________________________
1.2
harges are Earned = Income Before Income Tax + Interest Expense/ Interest Ex
_________________________________
11.0
14.0%
Net Income
ders Equity =
ders Equity =
_____________________________
ders Equity =
15.0%
Stockholders' Equity =
16.0%
ommon Stock =
ommon Stock =
_______________________________
ommon Stock =
$1.60
_____________________
12.5
% (6.4/40)
6.4/80)
r 11% (11/100)
7% (8.680/124)
$850,000)
$850,000)
$850,00)
0 $1,200,000)
$1,200,000)
$1,200,000)
Goods Sold
BILITIES
ders' Equity
s Equity
tanding
E 18-1
a. Direct Material
b. Direct Material
c. Direct Material
d. Direct Material
E 18-2
a. Direct Material
b. Direct Material
c. Direct Material
d. Direct Material
e. Direct Material
E 18-4
a
b
c
d
e
f
g
h
i
Product
Product
Product
Product
Product
Product
Product
Product
Product
Cost
Cost
Cost
Cost
Cost
Cost
Cost
Cost
Cost
----------
Period
Period
Period
Period
Period
Period
Period
Period
Period
Cost
Cost
Cost
Cost
Cost
Cost
Cost
Cost
Cost
E 18-5
a improve--- direct
b increases--- decreases
c period --- product
d cost of goods sold---- work in progress invento
PE 18-5A
a) Work in process inventory, January 1
Cost of direct materials used in production
Direct labor
Factory overhead
Total manufacturing costs incurred during January
Total manufacturing costs
Factory Overhead
Factory Overhead
Factory Overhead
Factory Overhead
e. Direct Material
f. Direct Material
g. Direct Material
h. Direct Material
Factory Overhead
Factory Overhead
Factory Overhead
Factory Overhead
Factory Overhead
f. Direct Material
g. Direct Material
h. Direct Material
i. Direct Material
j. Direct Material
ry, January 1
used in production
j
k
l
m
n
o
p
q
Product
Product
Product
Product
Product
Product
Product
Product
Cost
Cost
Cost
Cost
Cost
Cost
Cost
Cost
---------
Period
Period
Period
Period
Period
Period
Period
Period
Cost
Cost
Cost
Cost
Cost
Cost
Cost
Cost
e prime-- conversion
f costs-- expense
g direct cost-- cost objects
entory, January 31
red
y, January 1
red
vailable for sale
ntory, January 31
proving
uct
uct
uct
uct
uct
uct
uct
uct
Cost
Cost
Cost
Cost
Cost
Cost
Cost
Cost
---------
Period
Period
Period
Period
Period
Period
Period
Period
Cost
Cost
Cost
Cost
Cost
Cost
Cost
Cost
-- conversion
- expense
cost-- cost objects
70,000
Material
72,000*$8= $576,000
Feb
Job 60
Job 61
19
32,000* $7 = $224,000
37,000*$8= $296,000
Total
520,000
PE 19-1B
Aug
Material
12,000*$14= $168,000
Feb
Job 40
Job 42
Total
PE 19-2A
19
Work in Progress
5,000* $8 = $40,000
6,200*$14= $86,800
126,800
Feb
Job 60
Job 61
Total
19
837,000
PE 19-2B
Work in Progress
Job 40
Job 42
Total
186,200
PE 19-3A
Factory Overhead
PE 19-3B
Factory Overhead
E 19-4
Work In Process
E 19-6
Work In Process
Factory Overhead
`
E 19-7
Work In Process
Supporting Calculations:
Hourly
Job
Rate
Frank Davis
Miles Coultrain
John Morgan
501
$35
$420
560
300
40
30
PE 19-4A
Direct overhead
a:
$
b:
Job 60
Job 61
c.
Dircect Hours
15,000
18,000
Work in Process
Factory Overhead
PE 19-4B
Direct overhead
a:
b:
Dircect Hours
3,500
4,200
Job 40
Job 42
c.
Work in Process
Factory Overhead
PE 19-5A
Job -Material (19-1)
Units-materal
60 $
224,000 $
32,000
61 $
296,000 $
37,000
Units-hours
60 $
360,000 $
15,000
61 $
477,000 $
18,000
overhead
60 $
82,500 $
15,000
61 $
99,000 $
18,000
Job 60
a:
Direct Materials
direct Labor
Factory Overhead
82,500
b:
Cost
Job 60
Job 61
PE 19-5B
Job -Material (1940 $
42 $
$
Units-materal
40,000 $
5,000
86,800 $
6,200
$
Units-hours
87,500 $
3,500
98,700 $
4,200
$
overhead
31,500 $
3,500
37,800 $
4,200
a:
Job 60
Direct Materials
40,000
direct Labor
Factory Overhead
b:
Job 60
Job 61
Cost
$
$
$
$
E 19-9
a.
Factory 1
Per machine hour
b.
c.
Factory 2
Per machine hour
Factory 1:
Work In Process
Factory Over
(24.00 X 3,050)
Factory 2:
Work In Process
(41.00 X 2,000)
d.
Factory 1:
Factory 2:
E 19-10
The estimated shop overhead is determined as follows:
Shop and repair equipment depreciation
Shop supervisor salaries
Shop property taxes
Shop supplies
Total shop overhead
The engine parts and shop labor are direct to the jobs and are not included in the
and administrative expenses that are not included in the shop overhead but are tr
240,000
30,000 hours
PE 19-6A
24,400,000
PE 19-6B
$
3,085,000
Prob 19-1B
a
Material
Accounts Pay
Work in Process
Factory Overhead
Materials
Work in Process
Factory Overhead
Materials
Factory Overhead
selling expense
Administrative expense
Accounts payable
Factory Overhead
selling expense
Administrative expense
Accounts payable
Factory Overhead
Depreciation Exp-Office Equip
Depreciation Exp-Office building
Accumulated Dep-Build/equip
Work in Process
Factory Over
finished goods
Factory Over
finished g
Accounts Payable
Progress
Materials
Materials
Progress
erhead
Material
Accumulated
Depreaciation Factory
61,000
erhead
Material
Wages Payable
Accumulated
Depreaciation Factory
ocess
Materials
ocess
erhead
Materials
ocess
Materials
17,500
ly Rate Hours)
Direct
Labor
Job
Job
(sum of
502
503
job costs)
$490
400
360
$385
480
420
$1,295
1,440
1,080
$3,815
cost
Rate / hour
erhead
cost
$
810,000
Rate / hour
erhead
rate/unit
$
7.00
8.00
rate/unit
$
24.00
26.50
rate/unit
$
5.50
5.50
Job 61
99,000
Units
25,000
32,000
$
$
rate/unit
8.00
14.00
$
$
rate/unit
25.00
23.50
$
$
rate/unit
9.00
9.00
Job 61
Units
10,000
11,000
cost
42,000
machine hours
cost
21,000
machine hours
ocess
Factory Overhead
(24.00 X 3,050)
ocess
$
(41.00 X 2,000)
underapplied) ($74,480-73,200)
overapplied) ($77,500-82,000)
82,000
obs and are not included in the shop overhead rate. The advertising and administrative expenses are selling
in the shop overhead but are treated as period expenses.
termined by dividing the shop direct labor cost by the direct labor rate, as follows:
= 30,000 hours
($475000* $48.00)
($185,000* $15.00)
Accounts Payable
ocess
erhead
Materials
ocess
erhead
Materials
erhead
pense
ative expense
Accounts payable
erhead
pense
ative expense
Accounts payable
Factory Overhead
Factory Overhead
finished goods
erhead
on Exp-Office Equip
on Exp-Office building
ulated Dep-Build/equip
ocess
oods
ods sold
or hours
or hours
Indirect
Labor
$105
160
120
$385
r rate, as follows:
Variable
Variable
Variable
Variable
Variable
Variable
Variable
Variable
E 21-5
a
b
c
d
e
f
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
PE 21-1A
A)
Variable
Variable
Variable
Variable
Variable
Variable
+ High
- Low
$
+ High
OR
- Low
PE 21-2A
a.
b.
c.
PE 21-2B
Sales
Variable costs
Contribution margin
Fixed costs
Income from operations
a.
b.
Sales
Variable costs
Contribution margin
Fixed costs
Income from operations
E 21-9
a.
Sales
Variable Cost
Contribution margin
Contribution Margin Raio =
b.
Sales
Contribution margin ratio
Contribution margin
Less fixed cost
Income from operations
E 21-6
Components Produced
Total Cost:
Total Variable Cost
Total Fixed Cost
Total Cost
Cost per unit:
Total Variable Cost per unit (a)
Total Fixed Cost per unit (b)
Total Cost per unit
Supporting Calculations:
a. $0.40 ($160,000 400,000 units)
b. $0.60 ($240,000 400,000 units)
d. $192,000 ($0.40 480,000)
e. $240,000 (fixed costs do not change with volume)
g.
$0.40 ($192,000 480,000 units; variable costs per unit d
h. $0.50 ($240,000 480,000 units)
j. $240,000 ($0.40 600,000 units)
k. $240,000 (fixed costs do not change with volume)
m. $0.40 ($240,000 600,000 units; variable costs per unit do not change
n. $0.40 ($240,000 600,000 units)
PE 21-3A
a.
b.
PE 21-3B
b.
PE 21-4A
b.
PE 21-4B
a.
b.
PE 21-7A
Margin of
Safety =
Margin of
Safety =
Sales
Margin of
PE 21-7B
Margin of
Safety =
Margin of
Safety
P 21-1B
Variable Cost
a
b
c
d
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
Mixed
Mixed
Mixed
Mixed
Mixed
Mixed
Mixed
Mixed
9 Fixed
10 Fixed
11 Fixed
12 Fixed
13 Fixed
14 Fixed
15 Fixed
g
h
i
j
k
Fixed
Fixed
Fixed
Fixed
Fixed
Units
30,000
10,000
20,000
Units Cost
*(23)
(30,000
690,000
*(23)
(10,000
$
230,000
00 $300,000) $480,000
$528,000) $660,000
Sales
40%
400,000
480,000
(d)
(f)
(g)
(h)
(i)
h volume)
units; variable costs per unit do not change with changes in volume)
h volume)
costs per unit do not change with changes in volume)
0 ($110 $60)
00 ($75 $45)
00 ($80 $55)
ak-Even Point
ak-Even Point
Mixed Cost
Variable
Variable
Variable
Variable
Variable
Variable
Variable
Variable
Variable
Variable
Variable
Variable
Mixed
Mixed
Mixed
Mixed
Mixed
Mixed
Mixed
nges in volume)
600,000
(j)
(k)
(l)
(m)
(n)
(o)
Ch 22- Budgeting
PE 22-1A
PE 211A Variable cost:
Direct labor (7,300 hours $19.00* per hour)
Fixed cost:
Property tax
Total department costs
* $123,500 6,500 hours
PE 22-1B
PE 211B Variable cost:
Direct labor (600 hours $14.50* per hour)
Fixed cost:
Equipment depreciation
Total department costs
* $9,280 640 hours
PE 22-2A
PE 22-2B
Expected units to be sold
Plus desired ending inventory, December 31,2014
Total
Less estimated beginning inventory, January 1, 2014
Total units to be produced
PE 22-3A
Square yards required for production:
Diaries (191,900 7 sq. yd.)
Plus desired ending inventory, December 31, 2014
Total
Less estimated beginning inventory, January 1, 2014
Total square yards to be purchased
Unit price (per sq. yd.)
Total direct materials to be purchased
PE 22-3B
PE 22-4A
Hours required for assembly:
Diaries (191,900 X 9 min.)
Convert minutes to hours
Assembly hours
Hourly rate
Total direct labor cost
PE 22-4B
Hours required for assembly:
Candles (74,200 X 12 min.)
Convert minutes to hours
Assembly hours
Hourly rate
Total direct labor cost
PE 22-5A
Finished goods inventory, January 1, 2014
Work in process inventory, January 1, 2014
Direct materials:
Direct materials inventory, January 1, 2014
(29,100 $0.80)
Direct materials purchases (from PE 223A)
Cost of direct materials available for use
Less direct materials inventory,
December 31, 2014 (32,900 $0.80)
Cost of direct materials placed in production
PE 22-5B
Finished goods inventory, January 1, 2014
E 22-6
unit Sales
Volume
E 22-7
Audit Department
Staff
Partners
Total
Tax Department:
Staff
Partners
Total
Small Business Acct Dept
Staff
Partners
Total
Total Professional Fees Earned
PE 22-6A
Collections from June sales (70% $320,000)
Collections from July sales (30% $350,000)
Total receipts from sales on account
PE 22-6B
Payments for March purchases (90% $11,900)
Payments for April purchases (10% $12,700)
Total payments for purchases on account
PE 22-6B
Note: Insurance, property taxes, and depreciation are expenses that do not result in cash pay
1,2014
ry 1, 2014
1,2014
ry 1, 2014
1, 2014
1, 2014
ry 1, 2014
Soundlab INC.
Sales Budget
Month Ending November 30, 2014
Total Sales
$
$
170
170
$
$
280
280
rom Sales
Soundlab INC.
Production Budget
Month Ending November 30, 2014
units
Model DL
Model XL
Billable Hours
Hourly Rate
Total Revenue
$
$
150
320
$
$
150
320
$
$
150
320
July
April
March
April
May