Select accounts from the chart of accounts of Boyden Company are shown below

P7-4A Select accounts from the chart of accounts of Boyden Company are shown below

101 cash 112 accounts receivable 120 merchandise inventory 126 supplies 157 equipment 201 accounts payable 401 sales 412 sales returns and allowances 414 sales discounts 505 cost of goods 726 salaries expense

The cost of all merchandise sold was 60% of the sales price. During January Boyden completed the following transactions

Jan 3 purchased merchandise on account from Wortham co.$10,000
Jan 4 purchased supplies for cash$ 80
Jan 4 sold merchandise on account to Millan $ 5,250 invoice no. 371 terms 1/10 n/30
Jan 5 returned $300 worth of damaged goods purchased on account from Wortham co. on January 3
Jan 6 made cash sales for the week totaling $ 3,150
Jan 8 purchased merchandise on account from Noyes co. $4,500
Jan 9 sold merchandise on account to Connor Corp $6,400 invoice no 372 terms 1/10, n/30
11 purchased merchandise on account from Betz co. $3,700
13 paid in full Wortham co. on account less a 2% discount
13 made cash sales for the week totaling $6,260
15 received payment from Connor Corp for invoice no. 372
15 paid semi-monthly salaries of $14,300 to employees
17 received payment from Milan for invoice no. 371
17 sold merchandise on account to bullock co $1,200 invoice no 373 terms 1/10 n/30
19 purchased equipment on account from Murphy Corp $5,500
20 cash sales for the week totaled $3,200
20 paid in full Noyes co, on account less a 2% discount
23 purchased merchandise on account from Wortham co $7,800
24 purchased merchandise on account from Fogetta Corp $5,100
27 made cash sales for the week totaling $4,230
30 Received payment from bullock co. for invoice no 373
31 paid semi- monthly salaries of $13,200 to employees
31 sold merchandise on account to Millam $9,330 invoice no. 374 terms 1/10 n/30

Boyden Company used the following journals:
1. Sales journal
2. Single column purchases journal
3. cash receipts with Columns for cash Dr, sales discounts, Dr account receivable Cr, sales CR, others accounts Cr and cost of goods sold Dr, merchandise inventory Cr, cash payment journals with columns for others accounts Dr, accounts payable Dr. Merchandise Inventory Cr and cash Cr general journal

Instructions:

Using the selected accounts provided:
1 record the January transactions in the appropriated journal noted
2 foot and cross foot all special journals
3. Show how posting would be made placing ledger accounts numbers and checkmarks as needed in the Journals 

TUTORIAL PREVIEW

BOYDEN COMPANY
Sales Journal
					COGS
		Inv.			Debit
Date	Account Debited	No.	Terms	Amount	Inv. Credit
4-Jan	Milam	371	1/10, n/30	5,250	3,150
9-Jan	Connor Corp.	372	1/10, n/30	6,400	3,840

 

File name: Boyden-Company.xls File type: application/vnd.ms-excel Price: $8

Williams-Santana, Inc., is a manufacturer of high-tech industrial

Williams-Santana, Inc., is a manufacturer of high-tech industrial parts that 

P20-12 Williams-Santana, Inc., is a manufacturer of high-tech industrial parts that was started in 2001 by two talented engineers with little business training. In 2013, the company was acquired by one of its major customers. As part of an internal audit, the following facts were discovered. The audit occurred during 2013 before any adjusting entries or closing entries were prepared.

a. A five-year casualty insurance policy was purchased at the beginning of 2011 for $35,000. The full amount was debited to insurance expense at the time.

b. Effective January 1, 2013, the company changed the salvage value used in calculating depreciation for its office building. The building cost $600,000 on December 29, 2002, and has been depreciated on a straight-line basis assuming a useful life of 40 years and a salvage value of $100,000. Declining real estate values in the area indicate that the salvage value will be no more than $25,000.

c. On December 31, 2012, merchandise inventory was overstated by $25,000 due to a mistake in the physical inventory count using the periodic inventory system.

d. The company changed inventory cost methods to FIFO from LIFO at the end of 2013 for both financial statement and income tax purposes. The change will cause a $960,000 increase in the beginning inventory at January 1, 2014.

e. At the end of 2012, the company failed to accrue $15,500 of sales commissions earned by employees during 2012. The expense was recorded when the commissions were paid in early 2013.

f. At the beginning of 2011, the company purchased a machine at a cost of $720,000. Its useful life was estimated to be 10 years with no salvage value. The machine has been depreciated by the double-declining balance method. Its carrying amount on December 31, 2012, was $460,800. On January 1, 2013, the company changed to the straight-line method.

g. Bad debt expense is determined each year as 1% of credit sales. Actual collection experience of recent years indicates that 0.75% is a better indication of uncollectible accounts. Management effects the change in 2013. Credit sales for 2013 are $4,000,000; in 2012 they were $3,700,000.

Required:

For each situation:

1. Identify whether it represents an accounting change or an error. If an accounting change, identify the type of change.

2. Prepare any journal entry necessary as a direct result of the change or error correction as well as any adjusting entry for 2013 related to the situation described. (Ignore tax effects.)

3. Briefly describe any other steps that should be taken to appropriately report the situation.

 TUTORIAL PREVIEW

a. This is a correction of an error.

To correct the error:

Prepaid insurance ($35,000 ÷ 5 yrs x 3 yrs: 2013–2015) ............. 21,000
    Retained earnings* ...............................................................  ...............   21,000

         *$35,000 – [$35,000 ÷ 5 years x 2 years: 2011–2012]

File name: P20-12 Williams-Santana, Inc.docx     File type: doc PRICE: $8

Described below are six independent and unrelated situations involving

Each change occurs during 2013 before any adjusting entries or closing entries were prepared. Assume the tax rate for each company is 40% in all years. Any tax effects should be adjusted through the deferred tax liability account.

P20-8 Described below are six independent and unrelated situations involving accounting changes. Each change occurs during 2013 before any adjusting entries or closing entries were prepared. Assume the tax rate for each company is 40% in all years. Any tax effects should be adjusted through the deferred tax liability account.

a. Fleming Home Products introduced a new line of commercial awnings in 2012 that carry a one-year warranty against manufacturer's defects. Based on industry experience, warranty costs were expected to approximate 3% of sales. Sales of the awnings in 2012 were $3,500,000. Accordingly, warranty expense and a warranty liability of $105,000 were recorded in 2012. In late 2013, the company's claims experience was evaluated and it was determined that claims were far fewer than expected: 2% of sales rather than 3%. Sales of the awnings in 2013 were $4,000,000 and warranty expenditures in 2013 totaled $91,000.

b. On December 30, 2009, Rival Industries acquired its office building at a cost of $1,000,000. It was depreciated on a straight-line basis assuming a useful life of 40 years and no salvage value. However, plans were finalized in 2013 to relocate the company headquarters at the end of 2017. The vacated office building will have a salvage value at that time of $700,000.

c. Hobbs-Barto Merchandising, Inc., changed inventory cost methods to LIFO from FIFO at the end of 2013 for both financial statement and income tax purposes. Under FIFO, the inventory at January 1, 2014, is $690,000.

d. At the beginning of 2010, the Hoffman Group purchased office equipment at a cost of $330,000. Its useful life was estimated to be 10 years with no salvage value. The equipment was depreciated by the sum-of-the-years'-digits method. On January 1, 2013, the company changed to the straight-line method.

e. In November 2011, the State of Minnesota filed suit against Huggins Manufacturing Company, seeking penalties for violations of clean air laws. When the financial statements were issued in 2012, Huggins had not reached a settlement with state authorities, but legal counsel advised Huggins that it was probable the company would have to pay $200,000 in penalties. Accordingly, the following entry was recorded:

Loss—litigation ................................................ 200,000

Liability—litigation  ........................................                     200,000

Late in 2013, a settlement was reached with state authorities to pay a total of $350,000 in penalties.

f. At the beginning of 2013, Jantzen Specialties, which uses the sum-of-the-years'-digits method, changed to the straight-line method for newly acquired buildings and equipment. The change increased current year net earnings by $445,000.

Required:

For each situation:

1. Identify the type of change.

2. Prepare any journal entry necessary as a direct result of the change as well as any adjusting entry for 2011 related to the situation described.

3. Briefly describe any other steps that should be taken to appropriately report the situation.

TUTORIAL PREVIEW

a. This is a change in estimate.

No entry is needed to record the change

2013 adjusting entry:

Warranty expense (2% x $4,000,000).................................     80,000
    Estimated warranty liability ...............................                   80,000

File name: P20-8 Described below are.docx     File type: doc PRICE: $8

In 2013, the Marion Company purchased land containing a mineral mine for

P20-7 In 2013, the Marion Company purchased land containing a mineral mine for $1,600,000. Additional costs of $600,000 were incurred to develop the mine. Geologists estimated that 400,000 tons of ore would be extracted. After the ore is removed, the land will have a resale value of $100,000.

To aid in the extraction, Marion built various structures and small storage buildings on the site at a cost of $150,000. These structures have a useful life of 10 years. The structures cannot be moved after the ore has been removed and will be left at the site. In addition, new equipment costing $80,000 was purchased and installed at the site. Marion does not plan to move the equipment to another site, but estimates that it can be sold at auction for $4,000 after the mining project is completed

In 2013, 50,000 tons of ore were extracted and sold. In 2014, the estimate of total tons of ore in the mine was revised from 400,000 to 487,500. During 2014, 80,000 tons were extracted.

Required:

1. Compute depletion and depreciation of the mine and the mining facilities and equipment for 2013 and 2014. Marion uses the units-of-production method to determine depreciation on mining facilities and equipment.

2. Compute the book value of the mineral mine, structures, and equipment as of December 31, 2014.

SOLUTION PREVIEW

Requirement 1

Cost of mineral mine:

Purchase price	$1,600,000
Development costs	600,000
	$2,200,000

File name: P20-7 Marion Company.docx     File type: doc PRICE: $6

The Cecil-Booker Vending Company changed its method of valuing inventory

P20-1 Change in inventory costing methods; comparative income statements

P20-1 The Cecil-Booker Vending Company changed its method of valuing inventory from the average cost method to the FIFO cost method at the beginning of 2011. At December 31, 2010, inventories were $120,000 (average cost basis) and were $124,000 a year earlier. Cecil-Booker's accountants determined that the inventories would have totaled $155,000 at December 31, 2010, and $160,000 at December 31, 2009, if determined on a FIFO basis. A tax rate of 40% is in effect for all years.

One hundred thousand common shares were outstanding each year. Income from continuing operations was $400,000 in 2010 and $525,000 in 2011. There were no extraordinary items either year.

Required:

1. Prepare the journal entry to record the change in accounting principle. (All tax effects should be reflected in the deferred tax liability account.)

2. Prepare the 2011–2010 comparative income statements beginning with income from continuing operations. Include per share amounts.

SOLUTION PREVIEW

Requirement 1

To record the change:

Inventory ($155,000 – 120,000)                                 35,000


File name: P20-1 The Cecil-Booker Vending Company.docx    File type: doc PRICE: $6

On October 15, 2012, the board of directors of Ensor Materials Corporation

P19-1 On October 15, 2012, the board of directors of Ensor Materials Corporation approved a stock option plan for key executives. On January 1, 2013, 20 million stock options were granted, exercisable for 20 million shares of Ensor's $1 par common stock. The options are exercisable between January 1, 2016, and December 31, 2018, at 80% of the quoted market price on January 1, 2013, which was $15. The fair value of the 20 million options, estimated by an appropriate option pricing model, is $6 per option.
Two million options were forfeited when an executive resigned in 2014. All other options were exercised on July 12, 2017, when the stock's price jumped unexpectedly to $19 per share.

Required:
1. When is Ensor's stock option measurement date?
2. Determine the compensation expense for the stock option plan in 2013. (Ignore taxes.)
3. What is the effect of forfeiture of the stock options on Ensor's financial statements for 2014 and 2015?
4. Is this effect consistent with the general approach for accounting for changes in estimates? Explain.
5. How should Ensor account for the exercise of the options in 2017? (Enter your answers in millions. Round your answers to the nearest dollar amount. Omit the "$" sign in your response.)

Problem 19-1

TUTORIAL PREVIEW

Requirement 2

              $   6                       estimated fair value per option
        x       20 million           options granted
        =   $120 million           fair value of award

                                                                                                        

The total compensation is to be allocated to expense over the 3-year service (vesting) period: 2013 - 2015

File name: P19-1 Ensor Materials.doc   File type: doc PRICE: $7

On May 1, 2011, Newby Corp. issued $600,000, 9%, 5-year bonds at

On May 1, 2011, Newby Corp. issued $600,000, 9%, 5-year bonds at face value. The bonds were dated May 1, 2011, and pay interest semiannually on May 1 and November 1.

Financial statements are prepared annually on December 31.

Instructions

(a) Prepare the journal entry to record the issuance of the bonds.

(b) Prepare the adjusting entry to record the accrual of interest on December 31, 2011.

(c) Show the balance sheet presentation on December 31, 2011.

(d) Prepare the journal entry to record payment of interest on May 1, 2012, assuming no accrual

of interest from January 1, 2012, to May 1, 2012.

(e) Prepare the journal entry to record payment of interest on November 1, 2012.

(f) Assume that on November 1, 2012, Newby calls the bonds at 102. Record the redemption of

the bonds.

(a)

2011

May 1 Cash                                                                            600,000

Bonds Payable                                                                         600,000

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How would you describe the accounting procedures for notes payable and accounts payable?

How would you describe the accounting procedures for notes payable and accounts payable?

Week Three DQ 2

Due Day 4

Please post a 150-300-word response to the following discussion question by clicking on Reply.

How would you describe the accounting procedures for notes payable and accounts payable?

TUTORIAL PREVIEW

(2) usually require the borrower to pay interest and frequently are issued to meet short-term financing needs.

(3) are issued for varying periods of time 

File name: Week Three DQ 2.docx    File type: doc PRICE: $6

What is the straight-line method of amortizing discount and premium on bonds payable?

Week Three DQ 1

Please post a 150-300-word response to the following discussion question by clicking on Reply.

What is the straight-line method of amortizing discount and premium on bonds payable? Provide an explanation of the process.

TUTORIAL PREVIEW

For example, a company sold $500,000, 10-year, 10% bonds on January 1, 2013, for $480,000. Interest is payable on January 1.

The bond discount would be ($500,000 - $480,000) $20,000.

The bond discount amortized over 10 amortization periods is ($20,000/ 10)  $2,000

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Precision Manufacturing Inc. (PMI) makes two type of industrial component

Precision Manufacturing Inc. (PMI) makes two type of industrial component parts – the EX300 and the TX500. An absorption costing income statement for the most recent period is shown below:

Precision Manufacturing Inc.

 Income Statement

Sales  …………………………………………………….. $ 1, 700, 000

Cost of goods sold……………………………………1, 200, 000

Gross margin……………………………………………500, 000

Selling and administrative expenses…………550, 000

Net operating loss ………………………………….. $( 50, 000)

PMI produced and sold 60,000 units of EX300 at a price of $20 per unit and 12, 500 units of TX500 at a price of $40 per unit. The company’s traditional cost system allocated manufacturing overhead to products using a plantwide overhead rate and direct labor dollar as the allocation base. Additional information relating to the company’s two product lines is shown below:

                                                            EX300                         TX500                         Total
Direct materials…………………         $ 366, 325       $ 162, 550       $ 528, 875
Direct labor……………………….       $ 120, 000       $ 42, 500         162, 500
Manufacturing overhead…..                                                                508, 625
Cost of goods sold……………..                                                                      $ 1, 200,000

The company has created an activity-based costing system to evaluate the profitability of its products. PMI’s ABC implementation team concluded that $50,000 and $100,000 of the company’s advertising expenses could directly traced to EX300 and TX500, respectively. The remainder of the selling and administrative expenses was organization – sustaining in nature. The ABC team also distributed the company’s manufacturing overhead to four activities as shown below:                                                                                                                                                              Activity

Manufacturing

Activity cost Pool (and activity measure)         Overhead         EX 300                        TX 500                        Total
Machining (machine-hours)…………………   $198, 250        90,000                        62,500             152,500
Setups (setup hours)……………………………  150, 000       75                    300                  375
Product-sustaining costs……………………… 100, 000          1                      1                      2
Other ( organization-sustaining costs)              60, 375                        NA                   NA                   NA

Total manufacturing overhead cost……..        $ 508, 625

REQUIRED:
1. Using Exhibit 6-12 as a guide, compute the product margins for the EX300 and TX500 under the company’s traditional costing system.

2. Using Exhibit 6-10 as a guide, compute the product margins for EX300 and TX500 under the activity-based costing system.

3. Using Exhibit 6-13 as a guide, prepare a quantitative comparison of the traditional and activity-based cost assignments. Explain why the traditional and activity – based cost assignments differ. 

TUTORIAL PREVIEW

The product margins using the traditional approach would be computed as follows:

	EX300	TX500	Total
Sales	$1,200,000	$500,000	$1,700,000
Direct materials	366,325	162,550	528,875

File name: P6-17 Precision Manufacturing .doc   File type: doc PRICE: $10