On January 1, 2013, Avondale Lumber adopted the dollar-value LIFO inventory method

On January 1, 2013, Avondale Lumber adopted the dollar-value LIFO inventory method. The inventory value for its one inventory pool on this date was $295,000. An internally generated cost index is used to convert ending inventory to base year. Year-end inventories at year-end costs and cost indexes for its one inventory pool were as follows:

Year Ended Inventory Cost Index
December 31 Year-End Costs (Relative to Base Year)
2013 $ 382,130 1.03
2014 393,760 1.07
2015 447,120 1.08
2016 479,520 1.11

Required:

Calculate inventory amounts at the end of each year.

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The records of Parker Company indicate a July 31 cash balance of $10,400, which includes undeposited receipts for July 30 and 31

CP 8-5 Bank reconciliation and internal control

The records of Parker Company indicate a July 31 cash balance of $10,400, which includes undeposited receipts for July 30 and 31. The cash balance on the bank statement as of July 31 is $10,575. This balance includes a note of $2,250 plus $150 interest collected by the bank but not recorded in the journal. Checks outstanding on July 31 were as follows: No. 2670, $1,050; No. 3679, $675; No. 3690, $1,650; No. 5148, $225; No. 5149, $750; and No. 5151, $800. On July 25, the cashier resigned, effective at the end of the month. Before leaving on July 31, the cashier prepared the following bank reconciliation:

Cash balance per books, July 31 ……………………………… $10,400
Add outstanding checks:
No. 5148 ……………………………………………….. $225
5149 ……………………………………………….. 750
5151 ……………………………………………….. 800 1,675
$12,075
Less undeposited receipts ………………………………….. 1,500
Cash balance per bank, July 31 ………………………………. $10,575
Deduct unrecorded note with interest ………………………… 2,400
True cash, July 31………………………………………….. $ 8,175
Calculator Tape of Outstanding Checks:
0*
225
750
800
1,675*

Subsequently, the owner of Parker Company discovered that the cashier had stolen an unknown amount of undeposited receipts, leaving only $1,500 to be deposited on July 31. The owner, a close family friend, has asked your help in determining the amount that the former cashier has stolen.

1. Determine the amount the cashier stole from Parker Company. Show your computations in good form.
2. How did the cashier attempt to conceal the theft?
3. a. Identify two major weaknesses in internal controls, which allowed the cashier to steal the undeposited cash receipts.
b. Recommend improvements in internal controls, so that similar types of thefts of undeposited cash receipts can be prevented.

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Raintree Cosmetic Company sells its products to customers on a credit basis

Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company’s fiscal year-end. The 2012 balance sheet disclosed the following:

Current assets:
     Receivables, net of allowance for uncollectible accounts of $38,000 $ 472,000

During 2013, credit sales were $1,790,000, cash collections from customers $1,870,000, and $43,000 in accounts receivable were written off. In addition, $3,800 was collected from a customer whose account was written off in 2012. An aging of accounts receivable at December 31, 2013, reveals the following:

Percentage of Year-End Percent
  Age Group Receivables in Group Uncollectible
  0–60 days 65 % 4 %
  61–90 days 15 10
  91–120 days 15 30
  Over 120 days 5 50

1.

Prepare summary journal entries to account for the 2013 write-offs and the collection of the receivable previously written off. (If no entry is required for a particular event, select “No journal entry required” in the first account field.)

2.Prepare the year-end adjusting entry for bad debts according to each of the following situations:

a. Bad debt expense is estimated to be 3% of credit sales for the year.

b. Bad debt expense is estimated by computing net realizable value of the receivables. The allowance for uncollectible accounts is estimated to be 10% of the year-end balance in accounts receivable.

c. Bad debt expense is estimated by computing net realizable value of the receivables. The allowance for uncollectible accounts is determined by an aging of accounts receivable. (If no entry is required for a particular transaction, select “No journal entry required” in the first account field.)
3. For the above transactions, what would be the net amount of accounts receivable reported in the 2013 balance sheet?

a. Bad debt expense is estimated to be 3% of credit sales for the year.

b. Bad debt expense is estimated by computing net realizable value of the receivables. The allowance for uncollectible accounts is estimated to be 10% of the year-end balance in accounts receivable.

c. Bad debt expense is estimated by computing net realizable value of the receivables. The allowance for uncollectible accounts is determined by an aging of accounts receivable.

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Handy Home sells windows and doors in the ratio of 7:3 (windows:doors)

Handy Home sells windows and doors in the ratio of 7:3 (windows:doors). The selling price of each window is $105 and of each door is $255. The variable cost of a window is $65.00 and of a door is $177.50. Fixed costs are $538,125

1. determine the weighted-average contribution margin per unit

2. determine the break even point in units

3. Determine the number of units of each product that will be sold at the break even point

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Clauss Company transfers out 14,000 units and has 2,000 units

Clauss Company transfers out 14,000 units and has 2,000 units of ending work in process that are 25% complete. Materials are entered at the beginning of the process and there is no beginning work in process. Assuming unit materials costs of $3 and unit conversion costs of $5, what are the costs to be assigned to units transferred out and in ending work in process?

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Fuque Inc. uses the retail inventory method to estimate

Fuque Inc. uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to a single department for the month of October 2013.

Inventory, October 1, 2013
At cost………………………….. $ 52000
At retail…………………………. 78000
Purchases
At cost………………………….. 272000
At retail…………………………. 423000
Freight in……………………….. 16600
Purchase Returns
At cost………………………….. 5600
At retail………………………… 8000
Markups…………………………. 9000
MArkup Cancellation……………. 2000
Markdowns……………………… 3600
Normal Spoilage and breakage… 10000
Sales…………………………….. 390000

(A) Using the conventional retail method, prepare a schedule computing estimated lower of cost or market inventory for October 31, 2013.

(B) A department store using the conventional retail inventory method estimates the cost of its ending inventory as $60000. An accurate physical count reveals only $47000 of inventory at lower of cost or market. List the factors that may have caused the difference between the computed inventory and the physical count.

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Huron Company produces a commercial cleaning compound known as Zoom

Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:

Standard Quantity or Hours Standard Price
or Rate
Standard
Cost
  Direct materials 6.00 pounds $ 2.30 per pounds $ 13.80
  Direct labor 0.50 hours $ 10.00 per hour $ 5.00

During the most recent month, the following activity was recorded:

a. 11,000 pounds of material were purchased at a cost of $2.10 per pound.

b. All of the material purchased was used to produce 1,500 units of Zoom.

c. 500 hours of direct labor time were recorded at a total labor cost of $6,500.

Required:

1. Compute the materials price and quantity variances for the month. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance).)

2. Compute the labor rate and efficiency variances for the month. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance).)

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Mr. Carter is the manager of Simmons Farm and Seed Company

Mr. Carter is the manager of Simmons Farm and Seed Company, a wholesaler of fertilizer, seed, and other farm supplies. The company has been successful in recent years primarily because of great customer service—flexible credit terms, customized orders (quantities, seed mix, etc), and on-time delivery, among others. Budgeted net income for the coming year will be $120,000, based on the following data:

Sales $1,500,000

Variable costs other than shipping 1,095,000

Shipping costs 135,000

Fixed Costs 150,000

After the determination of the budget, Carter received notice from Simmons’ principal shipping agent that it was about to increase its rates by 10%. This carrier handles 90% of Simmons’ total shipping volume. Paying the increased rate will result in failure to meet the budgeted income level. Mr. Carter is considering two alternatives.

First, it is possible to use another carrier whose rates are 5% less than the old carrier’s original rate. The old carrier, however, is a subsidiary of a major customer; shifting to a new carrier will almost certainly result in loss of that customer and sales amounting to $70,000. Assume that prior to the recent rate increase, the shipping costs of the principal carrier and the other carriers were the same, and that costs of the other carriers are not expected to change.

As a second alternative, Simmons can purchase its own trucks thereby reducing its shipping costs to 85% of the original rate. The new trucks would have an expected life of 10 years, no salvage value and would be depreciated on a straight line basis. Additional fixed costs (excluding depreciation) would be $2,000.

REQUIRED:

1. Using cost-volume-profit analysis and the data provided, determine the maximum amount that Mr. Carter can pay for the trucks and still expect to attain budgeted net income.

2. At what price for the truck would Mr. Carter be indifferent between purchasing the new trucks and using a new carrier?

3. Mr. Carter has decided to use a new carrier, but now is worried its apparent lack of reliability may adversely affect sales volume. Determine the dollar amount of sales that Simmons can lose because of lack of reliability before any benefit from switching carriers is lost completely.

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The Painting Department of the Garner Manufacturing Company has the following production

The Painting Department of the Garner Manufacturing Company has the following production and manufacturing cost data for September.

Production: Beginning inventory 4,000 units; units started into production 16,000; ending inventory of 5,000 units 20% complete as to conversion costs.

Manufacturing Costs: Beginning work in process inventory of $80,000, comprised of $49,000 of materials and $31,000 of conversion costs. Materials added during the month, $231,000; labor and overhead applied during the month, $94,400 and $50,600, respectively.

Instructions

(a) Compute the equivalent units of production for materials and conversion costs for the month of September.

(b) Compute the unit costs for materials and conversion costs.

(c) Determine the costs to be assigned to the units transferred out and ending work in process.

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PM Auto Company sells car parts to customers. The company’s fiscal year-end is december 31

PM Auto Company sells car parts to customers. The company’s fiscal year-end is December 31. The December 31,2015, unadjusted trial balance appears below.

Cash—–22,000

Accounts Receivable—–35,000

supplies—27,000

prepaid insurance— 24,000

equipment—–95,000

accumulated depreciation— 37,000

accounts payable—-12,000

salaries payable—–0

utilities payable—-0

interest payable—–0

income taxes payable—-5,000

notes payable—-35,000

common stock –35,000

retained earnings —10,000

dividends—–3,000

parts revenue—–247,000

cost of goods sold—–50,000

salaries expense—-108,000

depreciation expense—-0

insurance exoense—–0

supplies expense——-0

utilities expense—–12,000

interest expense——0

income taxes expense——5,000

Additional information necessary to prepare the year-end adjusting entries appears below. The Adjusting entries is where i need the most help.

a. Depreciation on the machines for the year is 10,000

b. employee salaries are paid every two weeks. The last pay period ended on December 23. Salaries earned from December 24 through December 31,2015 are 4000.

c. On September 1, 2015, Pm Auto borrows 35,000 from a local bank and signs a note. The note requires interest to be paid annually on august 31 at 9%. The principal is due in five years,

d. On march 1, 2015, the company purchases insurance for 24,000 for a one-year policy to cover possible injury to mechanics. The entire 24,000 was debited to prepaid insurance at the time of the purchase.

e.5,000 of supplies remains on hand at December 31,2015

f. on December 30, PM auto receives a utility bill of 2,200 for the month. The bill will not be paid until early January 2016, and no entry was recorded when the bill was received

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