Record the entry for sale of merchandise on account to Fabulous Felines

A).October 1: Sold $10,000 of merchandise on account, 1/10, n/30 to Fabulous Felines.

PROBLEM: Record the entry for sale of merchandise on account to Fabulous Felines.

B) November 1: Accepted a $10,000, 90-day, 10% promissory note from Fabulous Felines in exchange for its account receivable.

PROBLEM: Record the entry for acceptance of promissory note in exchange of accounts receivable from Fabulous Felines.

C) December 31: Accrued interest on the note. Round to the nearest whole dollar amount.

PROBLEM:Record the entry for sale of merchandise on account to Fabulous Felines.Record the entry for acceptance of promissory note in exchange of accounts receivable from Fabulous Felines.Record the entry for interest accrued on promissory note received from Fabulous Felines.

D) January 31: Received payment in full of principal and interest on the note from Fabulous Felines.

PROBLEM: Record the entry for sale of merchandise on account to Fabulous Felines.Record the entry for acceptance of promissory note in exchange of accounts receivable from Fabulous Felines.Record the entry for interest accrued on promissory note received from Fabulous Felines.Record the entry for payment received from Fabulous Felines towards promissory note along with interest.

I have an issue of not always capturing the point

I have an issue of not always capturing the point being made in particular articles. Can you kindly summarize the main points being made in the article “Apples and oranges” (http://www.economist.com/blogs/schumpeter/2013/03/accounting)?

The company expects to produce a total of 20,000 units

Sneetch Inc. purchased a star-making machine on January 1, 2014. The cost of the machine was $17,000. Its estimated residual value was $2,000 at the end of an estimated 10-year life. The company expects to produce a total of 20,000 units.

a. Calculate depreciation expense for 2014 and 2015 using the straight-line method.

b. Calculate depreciation expense for 2014 and 2015 using the double-declining balance method.

c. Calculate the depreciation expense for 2014 and 2015 using the units-of-production method. The company produced 1,500 units in 2014 and 2,200 units in 2015. (Do not round your Depreciation rate per unit.)

cash basis federal income tax

Marr Corp rental revenue of $2,210,000 in its cash basis federal income tax for the year ended November 30, for year 2. Additional information is as follows:

Rents receivable year 2: $1,060,000

Rents receivable year 1: $800,000

Uncollectible rents written off during the fiscal year: $30,000

Under the accrual basis, Marr should report rental revenue of:

a. 1,920,000

b. 1,980,000

c. 2,440,000

d. 2,550,000

The income statement and selected balance sheet

The income statement and selected balance sheet information for Fudnuddler Corporation for the year ended December 31, 2011 is presented below.

Income Statement

Sales Revenue $300,000

Expenses:

Cost of Goods Sold 180,000

Depreciation Expense 20,000

Salaries Expense 30,000

Rent Expense 12,000

Insurance Expense 12,000

Interest Expense 11,000

Utilities Expense 10,000

Net Income $25,000

Selected Balance Sheet Accounts

2010 2011

Accounts receivables 15,000 10,000

Merchandise Inventory 20,000 22,000

Prepaid rent 1,000 0

Accounts Payable 11,000 14,000

Salaries Payable 2,000 3,000

Prepare the cash flows from operating activities section of the 2011 statement of cash flows using the indirect method.

Fill in the missing stockholder

The market price of a share of common stock at the time of issuance was $19.50, while the market price of a preferred share of stock at the time of issuance was $32. The company paid $12.50 for its treasury stock. Fill in the missing stockholders’ equity information below.

Stockholders’ equity:

Preferred stock, $2.00 par value, 1,000,000 authorize; 300,000 issued ………… (a)

Additional paid-in capital………………………………………………………………………………(b)

Common stock, $3.00 par value, 40,000,000 authorized; 25,600,000 issuedξξ (C )

Additional paid-in capital ………………………………………(d)

Retaining earnings………………………………………………305,683,000………(e)

Less: treasury stock, at cost (10,000 shares)………………………………… (f)

Total Stockholders’ equity…………………………………………………….(g)

Date on the special guidelines the GASB has declared

To make sure you are up to date on the special guidelines the GASB has declared, your manager asked you to research GASB Statement No. 56. He also asked you to show him, side by side, how government accounting journal entries might differ from for-profit journal entries in these similar events.

* When was GASB Statement No. 56 initiated?

* In your own words, what is the essence of the new ruling?

* Why did the GASB probably deem it as being necessary?

* How might GASB Statement No. 56 change the activities of any accountant performing governmental accounting?

Create journal entries for all of the following situations.

1. On 10/1/2010, a for-profit Company A provides $100,000 of service to Company B. Company B plans to pay their bill 90 days later.

Create the journal entry when the service is provided.

Create the journal entry when the cash is received.

2. On 12/1/2010, the city’s recreation department receives a government grant of $100,000 specifically to use for next year’s park upgrades, which will begin on 1/1/2011.

Create the journal entry made when the cash is received.

Create the journal entry to be made on 1/1/2011.

3. A for-profit retail store buys $200,000 of inventory on 9/1/2010.

Create the proper journal entry to show purchase of this inventory.

4. A local city park buys $200,000 of food merchandise for later resale. It uses the purchase method to account for inventory.

Create the proper journal entry for when this purchase is made.

5. A nonprofit organization receives a $250,000 donation on 12/1/2011, but the donor specifically wants it spent in 2012.

Create the journal entry or entries to show the proper recording of revenue (this may require more than on journal entry).

Create the subsequent journal entry to show spending of the funds.

The government to implement this new Statement

Discuss with your new accountant your opinion on the merits of GASB Statement No. 56.

Is it really worthwhile for the government to implement this new Statement? Why/why not?

Consolidated Balance Sheets

Consolidated Balance Sheets (partial), Consolidated Statements of Operations (partial), and Inventory

COMP 8-1. Complete the requirement for each of the following independent cases:

Case A. Dr. Pepper Snapple Group, Inc., is a leading integrated brand owner, bottler, and distributor of nonalcoholic beverages in the United States, Canada, and Mexico, Key brands include Dr. Pepper, Snapple, 7-UP, Mott’s juices, A&W root beer, Canada Dry ginger ale, Schweppes ginger ale, and Hawaiian Punch, among others.

The following represents selected data from recent financial statements of Dr. Pepper Snapple Group (dollars in millions):

DR PEPPER SNAPPLE GROUP, INC.

Consolidated Balance Sheets (partial)

(in millions) December 31, 2008 December 31, 2007

Assets

Current Assets:

Cash and cash equivalents $214 $ 67

Accounts receivable (net of allowances

of $13 and $20, respectively) 532 538

Consolidated Statements of Operations (partial)

For the Year Ended

December 31

_________________________

(in millions) 2008 2007 2006

Net Sales $5,710 $5,695 $4,700

Net (loss) income $ (312) $ 497 $ 510

The company also reported bad debt expense of $5 million in 2008, $11 million in 2007, and $7 million in 2006.

1. Record the company’s write-offs of uncollectible accounts for 2008.

2. Assuming all sales were on credit, what amount of cash did Dr. Pepper Snapple Group collect from customers in 2008?

3. Compute the company’s net profit margin for the three years presented. What does the trend suggest to you about Dr. Pepper Snapple Group?

Case B. Samuda Enterprises uses the aging approach to estimate bad debt expense. At the end of 2011, Samuda reported a balance in accounts receivable of $620,000 and estimated that $12,400 of its accounts receivable would likely be uncollectable. The allowance for doubtful accounts has a $1,500 debit balance at year-end (that is, more was written off during the year than the balance in the account).

1. What amount of bad debt expense should be recorded for 2011?

2. What amount will be reported on the 2011 balance sheet for accounts receivable?

Case C. At the end of 2012, the unadjusted trial balance of Territo, Inc. indicated $5,840,000 in Accounts Receivable, a credit balance of $9,200 in Allowance for Doubtful Accounts, and Sales Revenue (all on credit) of $160,450,000. Based on knowledge that the current economy is in distress, Territo increased in bad debt rate estimate to 0.3 percent on credit sales.

1. What amount of bad debt expense should be recorded for 2012?

2. What amount will be reported on the 2012 balance sheet for accounts receivable?

Case D. Steward Company reports the following inventory records for November 2010:

Inventory

Date Activity #of Units Cost/Unit

November 1 Beginning balance 100 $18

November 4 Purchase 300 $19

November 7 Sale (@ $50 per unit) 200

November 13 Purchase 500 $21

November 22 Sale (@ $50 per unit) 500

Selling, administrative, and depreciate expenses for the month were $16,000. Stewart’s tax rate is 30 percent.

1. Calculate the cost of ending inventory and the cost of goods sold under each of the following methods:

a. First-in, first-out

b. Last-in, first out

c. Weighted average

2. Based on your answers in requirement (1)

a. What is the gross profit percentage under the FIFO method?

b. What is the net income under the LIFO method?

c. Which method would you recommend to Stewart for tax and financial reporting purposes? Explain your recommendation.

3. Stewart applied the lower cost of market method to value its inventory for reporting purposes at the end of the month. Assuming Stewart used the FIFO method and that inventory had a market replacement value of $19.50 per unit, what would Stewart report on the balance sheet for inventory? Why?

Case E. Matson Company purchased the following on January 1, 2011:

Office equipment at a cost of $50,000 with an estimated useful life to the company of three years and a residual value of $15,000. The company uses the double-declining-balance method of depreciation for the equipment.

Factory equipment at an invoice price of $820,000 plus shipping costs of $20,000. The equipment has an estimated useful life of 100,000 hours and no residual value. The company uses the units-of-production method of depreciation for the equipment.

A patent at a cost of $300,000 with an estimated useful life of 15 years. The company uses the straight-line method of amortization for intangible assets with no residual value.

1. Prepare a partial depreciation schedule for 2011, 2012, and 2013 for the following assets (round your answers to the nearest dollar):

a. Office equipment

b. Factory equipment. The company used the equipment for 8,000 hours in 2011, 9,200 hours in 2012, and 8,900 hours in 2013.

2. On January 1, 2014, Matson altered its corporate strategy dramatically. The company sold the factory equipment for $700,000 in cash. Record the entry related to the sale of the factory equipment.

3. On January 1, 2014, when the company changed its corporate strategy, its patent had estimated future cash flows of $210,000 and a fair value of $190,000. What would the company report on the income statement (account and amount) regarding the patent on January 2, 2014? Explain your answer.

Equity-method reporting even though the investor

In what types of situations could it be appropriate to use equity-method reporting even though the investor does not hold voting common stock of the investee? Explain.

The essence of the new ruling

* When was GASB Statement No. 56 initiated?

* In your own words, what is the essence of the new ruling?

* Why did the GASB probably deem it as being necessary?

* How might GASB Statement No. 56 change the activities of any accountant performing governmental accounting?

Division bonuses are based on return on investment (ROI)

Kirsi Products is decentralized. Division bonuses are based on return on investment (ROI), and so division managers are very careful about their ROI. Operating results for the company’s East Division for last year are given below when the company’s overall ROI was 18%:

Sales $ 25,200,000

Variable expenses 14,000,000

Contribution margin 11,200,000

Fixed expenses 9,158,800

Net operating income $ 2,041,200

Divisional operating assets $ 5,600,000

East Division has an opportunity to add a new product line with an investment of $3,000,000 with the following expected results:

Sales $ 9,300,000

Variable expenses 65% of sales

Fixed expenses $ 2,604,000

Compute the East Division’s ROI for last year and if the new product line is added.

2. If you were in the East Division’s manager, would you accept or reject the new product line?

3. Why do you suppose Krisi Products is anxious for the East Division to add the new product line?

4. Suppose that Krisi Product’s minimum required rate of return on operating assets is 15% and that bonuses are based on residual income.

a. Compute the East Division’s residual income for last year and after the new product line is added.

b. Under these circumstances, if you were East Division’s manager would you accept or reject the new product line?

The machine that the bakery

Doughboy Bakery would like to buy a new machine for putting icing and other toppings on pastries. These are now put on by hand. The machine that the bakery is considering costs $81,000 new. It would last the bakery for nine years but would require a $6,000 overhaul at the end of the fifth year. After nine years, the machine could be sold for $4,000.

The bakery estimates that it will cost $11,000 per year to operate the new machine. The present manual method of putting toppings on the pastries costs $31,000 per year. In addition to reducing operating costs, the new machine will allow the bakery to increase its production of pastries by 2,000 packages per year. The bakery realizes a contribution margin of $0.40 per package. The bakery requires a 5% return on all investments in equipment. (Ignore income taxes.)

Required:

1. What are the annual net cash inflows that will be provided by the new machine?

2. Compute the new machine’s net present value. Use the incremental cost approach.

Basic financial statements

Explain the purpose of each of the 4 basic financial statements? How do managers and employees use them? How about investors and creditors?

Intel operates

Get a copy of the 2010 Intel Annual Report from http://www.intc.com/annualsArchive.cfm . Using the annual report, answer the following questions:

a. Describe the type of business in which Intel operates.

b. Read the letters from the CEO and the chairman and discuss any information learned from this letter that might be useful to an analyst.

c. What type of audit opinion was given for the financial statements and the interŒ_nal financial controls of Intel? Explain the key items discussed in the audit report.

d. Read the Management Discussion and Analysis (MD&A). Discuss whether the items that should be addressed in the MD&A are included. Support your answer with examples from the Intel MD&A.

e. After reading the MD&A, discuss the future prospects of Intel. Do you have any concerns? If so, describe those concerns.

Case 2.1

(a) Prepare a common-size balance sheet for Intel for all years presented.

(b) Describe the types of assets Intel owns. Which assets are the most significant to the company? Using the notes to the financial statements, discuss the accounting methods used to value assets. What other information can be learned about the asset accounts from the notes? Have there been significant changes to the asset structure from 2009 to 2010?

(c) Analyze the accounts receivable and allowance accounts.

(d) Describe the types of liabilities Intel has incurred. Which liabilities are the most significant to the company? Have there been significant changes to the liability and equity structure from 2009 to 2010?

(e) Describe the commitments and contingencies of Intel.

(t) Under which classification(s) are deferred taxes listed? What item is the most

significant component of deferred taxes?

(g) What equity accounts are included on the balance sheet of Intel?

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