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Selected transactions completed by Equinix Products Inc. during the fiscal year ending December 31, 2012, were as follows Answer

Comprehensive Problem 4
Part 1:
Selected transactions completed by Equinix Products Inc. during the fiscal year ending December 31, 2012, were as follows:
1. Journalize the selected transactions.
If no entry is required, select “No Entry Required” from the dropdown and leave the amount boxes blank. For a compound transaction, if an amount box does not require an entry, leave it blank.
a. Issued 12,500 shares of $25 par common stock at $32, receiving cash.
b. Issued 2,000 shares of $100 par preferred 5% stock at $105, receiving cash.
c. Issued $400,000 of 10-year, 6% bonds at 105, with interest payable semiannually.
d. Declared a quarterly dividend of $0.45 per share on common stock and $1.25 per share on preferred stock. On the date of record, 85,000 shares of common stock were outstanding, no treasury shares were held, and 17,000 shares of preferred stock were outstanding.
e. Paid the cash dividends declared in (d).
f. Purchased 5,500 shares of Kress Corp. at $22 per share, plus a $275 brokerage commission. The investment is classified as an available-for-sale investment.
g. Purchased 6,500 shares of treasury common stock at $35 per share.
h. Purchased 36,000 shares of Lifecare Co. stock directly from the founders for $18 per share. Lifecare has 112,500 shares issued and outstanding. Everyday Products Inc. treated the investment as an equity method investment.
i. Declared a 2% stock dividend on common stock and a $1.25 quarterly cash dividend per share on preferred stock. On the date of declaration, the market value of the common stock was $40 per share. On the date of record, 85,000 shares of common stock had been issued, 6,500 shares of treasury common stock were held, and 17,000 shares of preferred stock had been issued.
j. Issued the stock certificates for the stock dividends declared in (h) and paid the cash dividends to the preferred stockholders.
k. Received $24,500 dividend from Lifecare Co. investment in (h).

l. Purchased $62,000 of Nordic Wear Inc. 10-year, 6% bonds, directly from the issuing company at par value, plus accrued interest of $550. The bonds are classifed as a held-to-maturity long-term investment.
m. Sold, at $42 per share, 2,600 shares of treasury common stock purchased in (g).
n. Received a dividend of $0.65 per share from the Kress Corp. investment in (f).
o. Sold 500 shares of Kress Corp. at $26.50, including commission.
p. Recorded the payment of semiannual interest on the bonds issued in (c) and the amortization of the premium for six months. The amortization was determined using the straight-line method.
q. Accrued interest for three months on the Nordic Wear Inc. bonds purchased in (l).
r. Lifecare Co. recorded total earnings of $205,000. Everyday Products recorded equity earnings for its share of Lifecare Co. net income.
s. The fair value for Kress Corp. stock was $18.50 per share on December 31, 2012. The investment is adjusted to fair value using a valuation allowance account. Assume Valuation Allowance for Available-for-Sale Investments had a beginning balance of zero.

Comprehensive Problem 4
Part 2:
Note: You must complete part 1 before part 2.
After all of the transactions for the year ended December 31, 2012, had been posted [including the transactions recorded in part (1) and all adjusting entries], the data below were taken from the records of Everyday Products Inc.
On your own paper, in the working papers, or using a spreadsheet, prepare the following:
a. Prepare a multiple-step income statement for the year ended December 31, 2012, concluding with earnings per share. In computing earnings per share, assume that the average number of common shares outstanding was 84,000 and preferred dividends were $85,000. (Round earnings per share to the nearest cent.) Save your calculations and enter the requested amounts below.
b. Prepare a retained earnings statement for the year ended December 31, 2012. Save your calculations and enter the requested amounts below.
c. Prepare a balance sheet in report form as of December 31, 2012. Save your calculations and enter the requested amounts below.

If required, only use the minus sign to indicate net loss before income tax, net loss, or a deficit balance in retained earnings.
Gross profit $
Total Selling expenses $
Total Administrative expenses $
Total operating expenses $
Income from operations $
Net Other expenses and income $
Income tax $
Net income $
Earnings per common share (rounded to the nearest cent) $
Retained earnings, January 1, 2012 $
Total current assets $
Investment in Nordic Wear Inc. bonds $
Total property, plant, and equipment $
Total assets $
Total current liabilities $
Net Long-term liabilities $
Total liabilities $
Total Paid-in capital Preferred 5% stock $
Total Paid-in capital Common stock, $25 par $
Total paid-in capital $
Retained earnings, December 31, 2012 $
Total stockholders’ equity $

P.S. Some of the data in the solution/Tutorial may vary from the question listed above. The questions vary all the times. Please treat this as a solution guide only and develop your own solution.

 

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From the first e-Activity, examine the best practices found in the video on inventory management Answer

Part 1

From the first e-Activity, examine the best practices found in the video on inventory management. The video link: https://www.youtube.com/watch?v=C8Z3IApWCNQ

From the second e-Activity, choose two service companies that manage inventory and compare and contrast their inventory management systems. Use the Internet to research service or product companies; take a note on how they manage their inventories. (U.S. COMPANIES) Be prepared to discuss

Based on your evaluation of both inventory management systems from Part 2 of this discussion, propose suggestions to management that would ultimately lead to improve operations.

Discussion.

From the first e-Activity, examine the best practices found in the video on inventory management.

From the second e-Activity, choose two service companies that manage inventory and compare and contrast their inventory management systems.

Based on your evaluation of both inventory management systems from Part 2 of this discussion, propose suggestions to management that would ultimately lead to improve operations.

 

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There are three factories on the Momiss River. Each emits two types of pollutants, labeled P1 and P2, into the river Answer

There are three factories on the Momiss River. Each emits two types of pollutants, labeled P1 and P2, into the river. If the waste from each factory is processed, the pollution in the river can be reduced. It costs $1500 to process a ton of factory 1 waste, and each ton processed reduces the amount of P1 by 0.10 ton and the amount of P2 by 0.45 ton. It costs $1000 to process a ton of factory 2 waste, and each ton processed reduces the amount of P1 by 0.20 and the amount of P2 by 0.25 ton. It costs $2000 to process a ton of factory 3 waste, and each ton processed reduces the amount of P1 by 0.40 ton and the amount of P2 by 0.30 ton. The state wants to reduce the amount of P1 in the river by at least 30 tons and the amount of P2 by at least 40 tons. a. Use solver to determine how to minimize the cost of reducing pollution by the desired amounts. Are the LP assumptions (proportionally, additively, divisibility) reasonable in this problem? b. use SolverTable to investigate the effects of increases in the minimal reductions required by the state. Specifically, see what happens to the amounts of waste processed at the three factories and the total cost if both requirements (currently 30 and 40 tons, respectively) are increased by the same percentage. Revise your model so that you can use SolverTable to investigate these changes when the percentage increase varies from 10% to 100% in increments of 10%. Do the amounts processed at the three factories and the total cost change in a linear manner?

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P. 5-4 The following is an excerpt from a note to the financial statements of the city of Dallas Answer

Option #1: Government and Not-For-Profit Accounting Portfolio #1

Your portfolio project will provide specific answers to questions that follow. Apply what you have learned in this course to your answers to these questions in a microsoft word document.

1. 5-4: Generally accepted modified accrual accounting practices pertaining to inventories may not fulfill the objectives of financial reporting. (80 points)

Scenario 2: The following is an excerpt from a note to the financial statements of the city of Dallas (dates changed):

The city prepares its annual appropriated general fund, debt service fund, and proprietary operating funds budgets on a basis (budget basis) which differs from generally accepted accounting principles (GAAP basis). The major differences between the budget and GAAP bases are that encumbrances are recorded as the equivalent of expenditures (budget) rather than a commitment of fund balance (GAAP) in the governmental funds.

The city accounts for inventories on the purchases basis. One of the city’s departments, which is accounted for in the general fund, budgeted $195,000 in supplies expenditures for fiscal 2015. It began the 2015 fiscal year with $30,000 of supplies on hand. It also had $12,000 of supplies on order. During the year it ordered an additional $180,000 of supplies, received (and paid for in cash) $185,000 of supplies, and consumed $178,000 of supplies.

Instructions:

Prepare all journal entries, consistent with GAAP, including budgetary and encumbrance entries that the department should make in 2015.

Indicate the accounts and amounts related to supplies that the city would report on its year-end statement of revenues, expenditures, and changes in fund balance and balance sheet.

By how much did the department over- or under-spend its supplies budget (on a budget basis)?

Comment on the extent to which the city’s statement provides a basis to:

Assess the ‘‘true’’ economic costs associated with supplies

Determine whether the city adhered to budgetary spending mandates

Suppose that in the last quarter of the year, department officials realized that the department was about to overspend its supplies budget. They therefore ceased placing new orders for supplies. However, they imposed no restrictions on the use of supplies and thereby allowed the supplies inventory to decline to near zero.

What impact would these cost-cutting measures have on supplies expenditures as reported in an actual-to budget comparison (on a budget basis)?

What impact would the year-end measures have on reported supplies expenditures (per GAAP)? Would your response be different if the city accounted for supplies on the consumption basis?

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Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled Answer

“Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparing the master budget for the first quarter:
As of December 31, (the end of the prior quarter), the company’s general ledger showed the following account balances:
Cash $48,000 (debit)
Accounts receivable $224,000 (debit)
Inventory $60,000 (debit)
Buildings and equipment, net $370,000 (debit)
Accounts payable $93,000 (credit)
Capital stock $500,000 (credit)
Retained earnings $109,000 (credit)
Actual sales for December and budgeted sales for the next four months are as follows: December $280,000, January $400,000, February $600,000, March $300,000 and April $200,000.
Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at December 31 are a result of December credit sales.
The company’s gross margin is 40% of sales. (In other words, cost of goods sold is 60% of sales.)
Monthly expenses are budgeted as follows: salaries and wages, $27,000 per month; advertising, $70,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $42,000 per quarter.
Each month’s ending inventory should equal 25% of the following month’s cost of goods sold.
One half of the month’s inventory purchases is paid for in the month of purchase; the other half is paid in the following month.
During February, the company will purchase a new copy machine for $1,700 cash. During March, other equipment will be purchased for cash at a cost of $84,500.
During January, the company will declare and pay $45,000 in cash dividends.
Management wants to maintain a minimum cash balance of $30,000. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.
Required:
Using the data above, complete the following statements and schedules for the first quarter:
Schedule of expected cash collections
Schedule of Expected Cash Collections
January February March Quarter
Cash sales $80,000
Credit sales $224,000
Total Collections $304,000
Merchandise purchases budget:
Merchandise Purchases Budget
January February March Quarter
Budgeted Cost of Goods Sold $240,000* $360,000
Add desired ending inventory $90,000**
Total needs $330,000
Less beginning inventory $60,000
Required purchases $270,000
*$400,000 sales x 60% cost ratio = $240,000
** $360,000 x 25% = $90,000
Schedule of Expected Cash Disbursements-Merchandise Purchases
January February March Quarter
December purchases $93,000 $93,000
January purchases $135,000 $135,000 $270,000
February purchases
March purchases
Total disbursements $228,000
Complete the following:
Schedule of Expected Cash Disbursements-Selling and Administrative Expenses
January February March Quarter
Salaries and wages $27,000
Advertising $70,000
Shipping $20,000
Other expenses $12,000
Total disbursements $129,000
Complete the following cash budget:
Cash Budget
January February March Quarter
Cash balance, beginning $48,000
Add cash collections $304,000
Total cash available $352,000
Less cash disbursements
For inventory $228,000
For selling and admin expenses $129,000
For purchase of equipment ——
For cash dividends $45,000
Total cash disbursements $402,000
Excess (deficiency) of cash ($50,000)
Financing needed
Cash balance, ending

 

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