Challenging Business Problems with Detailed Answers
The before-tax income for Ivanhoe Co. for 2020 was $104,000 and $81,200 for 2021. However, the accountant noted that the following errors had been made: 1. Sales for 2020 included amounts of $39,000 which had been received in cash during 2020, but for which the related products were delivered in 2021. Title did not pass to the purchaser until 2021. 2. The inventory on December 31, 2020, was understated by $9,400. 3. The bookkeeper in recording interest expense for both 2020 and 2021 on bonds payable made the following entry on an annual basis.Interest Expense 14,400 Cash 14,400 The bonds have a face value of $240,000 and pay a stated interest rate of 6%. They were issued at a discount of $16,000 on January 1, 2020, to yield an effective-interest rate of 7%. 4. Ordinary repairs to equipment had been erroneously charged to the Equipment account during 2020 and 20221. Repairs in the amount of $8,600 in 2021 and $9,300 in 2022 were so charged. The company applies a rate of 10% to the balance in the Equipment account at the end of the year in its determination of depreciation charges. Prepare a schedule showing the determination of corrected income before taxes for 2020 and 2021.
You have a team of four employees. Liam, the financial analyst, is from Ireland, and he knows everything there is to know about protecting and growing donations. Destiny, the events planner, is from Charleston, South Carolina, and she is a genius at handling all the details of a fundraiser. Andry is from Madagascar, and he writes all of the content for your fundraising letters and website. Finally, Marjorie is from Berkeley, California, and she prepares profiles of potential donors and makes suggestions about what types of fundraising events might appeal to them.Although all of your employees are very good at what they do, the group has had some problems in the past. Andry and Marjorie have decided that they will write no more than one discrete piece of work per day, even if they are capable of writing more. If Andry writes more than one part of a website, Marjorie torments him by sending him a stream of instant messages questioning his mental abilities. Destiny and Marjorie tend to disagree about what kinds of events will appeal to donors, and they have had some heated arguments in the past. Marjorie usually wins these fights, which is making Destiny very resentful. Liam has told you that the group needs a strong leader who will make sure that the organization's goals are met. After reading about the history of management in your textbook, you find yourself particularly fascinated by the human relations approach to management. The theories seem so modern, but could they really be used in today's world? You decide to put them to the test. Liam's idea that a strong leader could pull the group together is very similar to Chester Barnard's concept of _________ in organizations. Finally, you consider how to start solving the problems in the organization. What would Mary Parker Follett recommend you do in this situation? Check all that apply: a) Try to understand why Andry and Marjorie feel that one piece of writing per day is an acceptable work output. Be a role model in establishing new productivity norms, but recognize that your actions may not have much of an impact on them. b) Get Destiny and Marjorie into one room. Have them present their visions of what a fundraising event should be, and then brainstorm with them to find ways to achieve both of their goals. c) Remember that you must have power with, not over, your team. So when you ask Andry and Marjorie to write more, be sure to give them facts and information they need to understand the reason for your request. d) Be sure that your orders are understood and that your employees have the ability to carry them out. Match your directions with the overall strategy of the organization; at the same time, help people achieve their personal goals.
Byrd Company produces one product, a putter called GO-Putter. Byrd uses a standard cost system and determines that it should take one hour of direct labor to produce one GO-Putter. The normal production capacity for this putter is 120,000 units per year. The total budgeted overhead at normal capacity is $1,080,000 comprised of $420,000 of variable costs and $660,000 of fixed costs. Byrd applies overhead on the basis of direct labor hours. During the current year, Byrd produced 74,000 putters, worked 98,300 direct labor hours, and incurred variable overhead costs of $133,200 and fixed overhead costs of $612,000.Required:a. Compute the predetermined variable overhead rate and the predetermined fixed overhead rate.b. Compute the applied overhead for Byrd for the year.c. Compute the total overhead variance.
Mar. 29 Received a $30,000, 60-day, 5% note dated March 29 from Karie Platt on account. Apr. 30. Received a $24,000, 60-day, 8% note dated April 30 from Jon Kelly on account. May 28. The note dated March 29 from Karie Platt is dishonored, and the customers account is charged for the note, including interest. June 29. The note dated April 30 from Jon Kelly is dishonored, and the customers account is charged for the note, including interest. Aug. 26. Cash is received for the amount due on the dishonored note dated March 29 plus interest for 90 days at 8% on the total amount debited to Karie Platt on May 28. Oct. 22. Wrote off against the allowance account the amount charged to Jon Kelly on June 29 for the dishonored note dated April 30. Journalize the above transactions in the accounts of Missouri Gaming Co., which operates a riverboat casino
Based on the following Information and the post-closing trial Balance that follow, prepare a balance sheet in report form at December 31 of the current year: The Merchandise inventory is stated at cost by the LIFO method. The product warrant payable is a current liability. Vacation pay payable: Current liability $7,140 Long-term liability 3,360 The unfunded pension liability is a long-term liability. Notes Payable: Current liability $70,000 Long-term liability 630,000 Kornett Company POST-CLOSING TRIAL BALANCE December 31, 2016 Petty cash 4,500 Cash 243,960 Notes Receivable 100,000 Accounts Receivable 470,000 Allowance for Doubtful Accounts 16,000 Merchandise Inventory 320,000 Interest Receivable 1,875 Prepaid Insurance 45,640 Office Supplies 13,400 Land 654,925 Buildings 900,000 Accumulated Depreciation-Buildings 36,000 Office Equipment 246,000 Accumulated Depreciation- 44,000Office Equipment Store Equipment 112,000 Accumulated Depreciation-Store 5,000Equipment Mineral Rights 546,000 Accumulated Depletion 30,000 Patents 42,000 Social Security Tax payable 25,470 Medicare Tax payable 4,710 Employees federal Income Tax payable 40,000 State Unemployment Tax Payable 270 Federal Unemployment Tax payable 40 Salaries Payable 157,000 Accounts Payable 131,600 Interest Payable 28,000 Product Warrenty Payable 76,000 Vacation Pay Payable 10,500 Unfunded Pension Liability 50,700 Notes Payable 700,000 J. Kornett, Capital 2,345,010 3,700,300 3,700,300
Yorks outstanding stock consists of 80,000 shares of noncumulative 6.5% preferred stock with a $5 par value and also 250,000 shares of common stock with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends.2016 total cash dividends $15,500 2018 total cash dividends $225,0002017 total cash dividends 24,000 2019 total cash dividends 375,000Determine the amount of dividends paid each year to each of the two classes of stockholders: preferred and common. Also compute the total dividends paid to each class for the four years combined. Per Value Dividend Rate Dividend Per Number of Preferred Per Preferred Share Preferred Share Preferred Share Dividend Annual Preferred Dividend: Total Cash Paid to Paid to Dividends inDividend Paid Preferred Common Arrears at year-end 2016 15,5002017 24,0002018 225,000 2019 375,000Total: $639,500