On January 1, 2013, Phantom Company acquires $312,100 of Spiderman Products, Inc (A+ Guaranteed)

On January 1, 2013, Phantom Company acquires $312,100 of Spiderman Products, Inc., 9% bonds at a price of $296,847. The interest is payable each December 31, and the bonds mature December 31, 2015. The investment will provide Phantom Company a 11.00% yield. The bonds are classified as held-to-maturity.

Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the straight-line method. (Round answers to 0 decimal places, e.g. 2,500.)

Schedule of Interest Revenue and Bond Discount Amortization
Straight-line Method
Bond Purchased to Yield
Date Cash
Received
Interest
Revenue
Bond Discount
Amortization
Carrying Amount
of Bonds
1/1/13 $
12/31/13 $ $ $  
12/31/14        
12/31/15

 

Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the effective-interest method. (Round answers to 0 decimal places, e.g. 2,500.)

Schedule of Interest Revenue and Bond Discount Amortization
Effective-Interest Method
Bond Purchased to Yield
Date Cash
Received
Interest
Revenue
Bond Discount
Amortization
Carrying Amount
of Bonds
1/1/13 $
12/31/13 $ $ $  
12/31/14        
12/31/15

 

c. Prepare the journal entry for the interest receipt of December 31, 2014, and the discount amortization under the straight-line method.

d. Prepare the journal entry for the interest receipt of December 31, 2014, and the discount amortization under the effective-interest method.

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Nombre Company managemnet predicts $560,000.00 of variable costs (A+ Guaranteed)

Nombre Company managemnet predicts $560,000.00 of variable costs. $860,000. of foxed costs, and a pretax income of $328,000.00 in the next period. Management also predicts that the contribition margin per unit will be $66.00.

1) Compute the total expected dollar sales for next period

Sales

Variable costs

Contribution Margin

Fixed Costs

pretax Income

2) Compute the number of units expected to be sold next period.

fixed costs plus pertax income

Contribition margin per unit.

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Consolidated financial statements are being prepared for Behemoth Corporation (A+ Guaranteed)

Consolidated financial statements are being prepared for Behemoth Corporation and its two wholly-owned subsidiaries that have intercompany loans of $50,000 and intercompany profits of $100,000. How much of these intercompany loans and profits should be eliminated?

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Lemon Company spends $5.2 in variable costs for each product produced (A+ Guaranteed)

Lemon Company spends $5.2 in variable costs for each product produced. Fixed manufacturing overhead costs are $103707 a year. This year, they produced 10,000 units. What is the average cost per unit produced?

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Hillary Hornes is admitted to the partnership of Reagan & Navon (A+ Guaranteed)

Hillary Hornes is admitted to the partnership of Reagan & Navon. Prior to her admission, the partnership books show Georgia Reagan’s capital balance at $105,000 and Carlos Navon’s at $75,000. Assume Reagan and Navon share profits and losses equally.

Requirements:
1. Compute each partner’s equity on the books of the new partnership under the following plans:
a. Hornes pays $105,000 for Navon’s equity. Hornes pays Navon directly.
b. Hornes contributes $75,000 to acquire a 1/4 interest in the partnership.
c. Hornes contributes $110,000 to acquire a 1/4 interest in the partnership.
2. Journalize the entries for admitting the new partner under plan a, b, and c.

Requirement 1: Compute each partner’s equity on the books of the new partnership under the following plans: a. Hornes pays $105,000 for Navon’s equity. Hornes pays Navon directly.

Begin by computing the partner’s equity base for plan a. Hornes pays $105,000 for Navon’s equity. Hornes pays Navon directly.

Reagan Navon Hornes
Partnership capital before admission of Hornes
Effect on capital balance as a result of admission of Hornes
Partnership capital after admission of Hornes

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Avery, Inc., is a wholesale distributor supplying a wide range (A+ Guaranteed)

Avery, Inc., is a wholesale distributor supplying a wide range of moderately priced sporting equipment to large chain stores. About 60 percent of Avery’s products are purchased from other companies, and the remainder of the products are manufactured by Avery. The company has a plastics department that is currently manufacturing molded fishing tackle boxes. Avery is able to manufacture and sell 8,000 tackle boxes annually, making full use of its direct labor capacity at avail-able workstations.

The following table presents the selling price and costs associated with Avery’s tackle boxes: Selling price $ 86.00 Costs per box: Molded plastic $ 8.00 Hinges, latches, handle 9.00 Direct labor ($ 15/ hour) 18.75 Manufacturing overhead 12.50 Selling and administrative cost 17.00* 65.25 Profit per box $ 20.75 * Includes $ 6 per unit of fixed distribution costs.

Because Avery believes that it could sell 12,000 tackle boxes, the company has looked into the possibility of purchasing the tackle boxes from another manufacturer. Craig Products, a supplier of quality products, could provide up to 9,000 tackle boxes per year at a per unit price of $ 68. Variable selling and administrative costs of $ 4 per unit will be incurred if the tackle boxes are purchased from Craig Products. Bart Johnson, Avery’s product manager, has suggested that the company could make better use of its plastics department by purchasing the tackle ­boxes and manufacturing skateboards.

To support his position, Johnson has a market study that indicates an expanding market for skateboards and a need for additional suppliers. Johnson believes that Avery could expect to sell 17,500 skateboards annually at a price of $ 45.00 per skateboard. Johnson’s estimate of the costs to manufacture the skateboards is as follows: Selling price per skateboard $ 45.00 Costs per skateboard: Molded plastic $ 5.50 Wheels, plastic 7.00 Direct labor ($ 15/ hour) 7.50 Manufacturing overhead 5.00 Selling and administrative cost 9.00* 34.00 Profit per skateboard $ 11.00 * Includes $ 6 per unit of fixed distribution costs. In the plastics department, Avery uses direct ­labor hours as the base for applying manufacturing overhead. Included in the manufacturing overhead for the current year is $ 50,000 factory wide, fixed manufacturing overhead that has been allocated to the plastics department.

A. Define the problem faced by Avery on the basis of the facts as presented.

B. What options are available to Avery in solving the problem?

C. Rank the options in order of preference on the basis of quantitative factors.

D. What qualitative factors should Avery consider in the decision?

E. Should Avery consider the potential liability that comes with selling skateboards? It has been shown that skateboards are responsible for 25 deaths per year and more than 500 serious accidents. Would that change your decision to make skateboards?

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ABC Airlines has calculated the total costs (fixed and variable) – A+ Guaranteed

ABC Airlines has calculated the total costs (fixed and variable) for the passenger service flights between Los Angeles, California and Orlando, Florida. The two methods used were the high-low method and the least squared method. Compare and contrast these two methods. Which one is the most reliable? What affect does an outlier have on the high-low method? Which method would you recommend to ABC?

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The comparative financial statement of new World Piano Company for 20X3,20X2, and 20X1 (A+ Guaranteed)

The comparative financial statement of new World Piano Company for 20X3,20X2, and 20X1 included the following selected data:

2003 2002 2003
In Millions

Cash $67 $66 $62
Short Term Investments $93 $101 $69
Recivables, net of allowance for doubtful
accounts of $7, $6, $4 respectively $206 $154 $197
Inventories $408 $383 $341
prepaid expenses $32 $31 $25
________________________________
total current assets $806 $735 $694
total current liabilities $440 $416 $388

Income Statement:
Net Sales $2,071 $2,005 $1,944

1. Compute these ratios for 2003 and 2002
A – Current Ratio
B – Acid-test Ratio
C – Days’ sales in receivables

2. Write a memo explaining to top management which ratio values showed improvement from 2002 to 2003 and which ratio values deteriorated. State whether the overall trend is favorable or unfavorable for the company and give the reason for your evaluation.

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Products Gamma and Delta are joint products (A+ Guaranteed)

Products Gamma and Delta are joint products. The joint production cost of the product is $800. Gamma has a market value of $500 at the split-off point. If Gamma is further processed at an additional cost of $600, its market value is $1,400. Product Delta has a market value of $1,100 at the split-off point. If Product Delta is further processed at an additional cost of $300, its market value is $1,400. Using the relative sales method, calculate the joint product cost that would be allocated to Gamma and Delta. How do you know of one of the products should be further processed?

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David Fire and Chip Ice form a partnership, investing $56,000 and $112,000 respectively (A+ Guaranteed)

David Fire and Chip Ice form a partnership, investing $56,000 and $112,000 respectively. Determine their shares of net income or net loss for each of the following situations:

a. Net loss is $84,000 and the partners have no written partnership agreement.

b. Net income is $126,000, and the partnership agreement states that the partners share profits and losses on the basis of their capital contributions.

c. Net income is $138,000. The first $84,000 is shared on the basis of partner capital contributions. The next $42,000 is based on partner service with Fire receiving 40% and Ice receiving 60%. The remainder is shared equally.

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