# Misc. Four Accounting Problems

\$21.00

Category:

## Description

Exercise 179
Lucas Recycle plans to produce 3,000 recycle bins during April. Each bin requires 2.4 pounds of plastic and .25 hours of direct labor. Plastic costs \$1.80 per pound. Lucas pays it employees \$14.00 per hour. Manufacturing overhead is applied at a rate of 200% of direct labor costs. Lucas has 500 pounds of plastic in beginning inventory and wants to have 600 pounds in ending inventory.
Instructions
A. How many pounds of plastic should Lucas plan to buy during April?
B. How much should Lucas budget for direct labor for April?
C. How much manufacturing overhead will be charged to each recycle bin in April?
D. What is the cost per unit of the bins produced in April?

Ex. 189
The Lion Division of NFL has been requested to prepare a quarterly budgeted income statement for 2011. The regional manager expects that sales in the first quarter of 2011 will increase in volume by 10% over the same quarter of the preceding year and will then increase by 5% for each succeeding quarter in 2011.
The corporate head office has requested that the regional manager maintain an inventory in dollars equal to 16% of the next quarter’s sales. Quarterly purchases average 45% of quarterly sales. Budgeted ending inventory on December 31, 2010 is \$8,000. Quarterly salaries are \$7,200 plus 10% of sales. All salaries are classified as sales salaries. Other quarterly expenses are estimated to be as follows:
Rent expense \$4,400
Depreciation on office equipment \$2,000
Utilities expense \$1,800
Miscellaneous expenses 2% of sales
The income statement information for the first quarter of 2010 was as follows:
Sales \$150,000
Cost of goods sold 66,000
Instructions
Prepare a budgeted quarterly income statement for the first quarter of 2011. (Show computations.)
Solution Ex. 189
NFL – Lion Division
Budgeted Income Statement
For the Quarter Ending March 31, 2011

Ex. 193
Ponce Bank has asked Lucas and Lorenzo for a budgeted balance sheet for the year ended December 31, 2011. The following information is available:
1. The cash budget shows expected cash balance of \$26,000 at December 31, 2011.
2. The 2011 sales budget shows total annual sales of \$500,000. All sales are made on account and accounts receivable at December 31, 2011 are expected to be 8% of annual sales.
3. The merchandise purchases budget shows a budgeted cost of goods sold for 2011 of \$210,000 and ending merchandise inventory of \$21,000. 20% of the ending inventory is expected to have not yet been paid at December 31, 2011.
4. The December 31, 2010 balance sheet includes the following balances: Equipment \$127,000, Accumulated Depreciation \$52,000, Common Stock \$68,000, and Retained Earnings \$21,000.
5. The budgeted income statement for 2011 includes the following: depreciation on equipment \$6,000, federal income taxes \$21,000 and net income \$41,800. The income taxes will not be paid until 2012.
6. In 2011, management does not expect to purchase additional equipment or to declare any dividends. It does expect to pay all operating expenses, other than depreciation, in cash.
Instructions
Prepare an unclassified budgeted balance sheet at December 31, 2011.
Solution Ex. 193
Lucas and Lorenzo
Budgeted Balance Sheet
December 31, 2011
Assets
Liabilities and Stockholdersâ€™ Equity

Ex. 196
La Tripleta Company needs a cash budget for the month of April, 2012. The companyâ€™s controller has provided you with the following information and assumptions:
a. The April 1, 2012 cash balance is expected to be \$11,000.
b. All sales are on account. Credit sales are collected over a three-month periodâ€”50 percent in the month of sale, 35 percent in the month following sale, and 15 percent in the second month following sale. Actual sales for February and March were \$100,000 and \$90,000, respectively. Aprilâ€™s sales are budgeted at \$110,000.
c. Marketable securities are expected to be sold for \$25,000 during the month of April.
d. The controller estimates that direct materials totaling \$44,000 will be purchased during April. Sixty percent of a monthâ€™s raw materials purchases are paid in the month of purchase with the remaining 40 percent paid in the following month. Accounts payable for March purchases total \$9,000, which will be paid in April.
e. During April, direct labor costs are estimated to be \$19,000.
f. Manufacturing overhead is estimated to be 40 percent of direct labor costs, Further, the controller estimates that approximately 10 percent of the manufacturing overhead is depreciation on the factory building and equipment.
g. Selling and administrative expenses are budgeted at \$22,000Â

## Reviews

There are no reviews yet.

# Misc. Four Accounting Problems

\$19.00

Category:

## Description

1. Do IFRS and US GAAP differ related to determining whether an asset is impaired? If so, explain.

2. On January 1, 2006, Thompson Company purchased manufacturing equipment for \$2.1 million. The equipment has a useful life of seven years and no residual value. Thompson Company plans to depreciate the equipment on a straight-line basis.
On January 1, 2010, the equipmentâ€™s fair value (net of accumulated depreciation) has increased to \$2.4 million. Assuming Thompson Company follows the revaluation model, what is Thompsonâ€™s depreciation expense in 2006-2012? How would depreciation expense differ using US GAAP?

3. The information provided below is related to equipment owned by Collier
Company at December 31, 2007.
Cost \$5,000,000
Accumulated Depreciation 2,000,000
Expected future net cash flows (undiscounted) 3,000,000
Expected future net cash flows (discounted) 2,700,000
Fair value 2,500,000
Remaining useful life of asset 3 Years

What is the impairment loss for Collier Company under a) IFRS and b) US GAAP?

4. An asset was purchased on January 1, 2006 for \$1,000,000 with a useful life of 10 years and no salvage value. The company accounts for the asset under IFRS using the cost model. During the year, the asset is deemed impaired and written down by \$400,000. Assuming the asset increases in value to \$800,000, what is the carrying value of the asset on December 31, 2007? Assuming the asset increases in value to \$900,000, what is the carrying value of the asset on December 31, 2007? How would the reversal of impairment be treated under US GAAP?

## Reviews

There are no reviews yet.