Scarica esame di financial e managerial accounting e più Prove d'esame in PDF di Ragioneria solo su Docsity! ACCOUNTING February 4, 2021 Exercise 1 Log Cabin Homes, Inc., uses a job cost system to account for its jobs, which are prefabricated houses. As of January 1, its records showed inventories as follows: Materials 100,000 Work in process (Jobs 22 and 23) 180,000 Finished goods (Job 21) 140,000 The work in process inventory consisted of two jobs: Job 22 Job 23 Direct Materials 36,000 40,000 Direct Labor 40,000 28,000 Manufacturing overhead 20,000 16,000 Total 96,000 84,000 In January the company had the following transactions: a. Materials purchased on account, $400,000. b. Direct materials used: Job No. 22, $60,000; Job No. 23, $120,000; Job No. 24, $180,000. c. Indirect materials used, $10,000. d. Direct labor costs: Job No. 22, $100,000; Job No. 23, $200,000; and Job No. 24, $80,000. e. Indirect labor costs, $80,000. f. Overhead is assigned to jobs at $100 per machine-hour. Job No. 22 used 530 machine- hours, Job No. 23 used 980 machine-hours, and Job No. 24 used 350 machine-hours in January. g. Job No. 22 and 23 were completed and transferred to Finished Goods Inventory. h. Job No. 21 and 22 were sold on account for $1,200,000, total. i. Manufacturing overhead costs incurred, other than indirect materials and indirect labor, were depreciation, $60,000, and heat, light, power, miscellaneous, $30,000 (to be paid next month). j. Selling and administrative expenses were $100,000. Required: 1. Calculate the Job Cost for each job. 2. Journalize the transactions described above, including the adjustment related to manufacturing overhead at the end of the year 3. Calculate the ending balance in Raw Materials Inventory, Work in Process Inventory, Finished Goods Inventory, and Cost of Goods Sold. 4. Prepare an income statement (cost of goods sold format). Exercise 2 Using the appropriate data among those presented below: 2 Change in FGI 54,400 Change in inv. of direct materials 19,200 Change in WIP -46,400 Current assets 362,000 Current liabilities 332,000 Depreciation 50,000 Direct labor 147,000 Income tax expense 19,200 Interest expenses 27,200 Inventories 121,700 Manufacturing overhead 229,000 Own work capitalized 12,200 Selling, general, and administrative costs 252,200 Prepaid insurance 28,000 Purchases of direct materials 224,100 Sales revenue 920,800 Unearned revenue 18,000 Determine the following values, clearly showing the calculations performed, and prepare the income statement of the firm (total output format): 1. Cost of goods sold 2. Gross profit from sales 3. Operating profit, explaining its purpose in assessing a firm’s profitability 4. EBITDA 5. Net profit after tax 6. Total output (value of production) 7. Acid test ratio, explaining its purpose in assessing a firm’s liquidity. Exercise 3 Turian Co. incurred the following transactions: a. On October 1, 2020, the company borrowed €500,000 from Citadel Bank, to be repaid one year later, on September 30, 2021, plus 7% interest. The bank agrees not to charge any early repayment penalties in case the firm decides to settle its debt before maturity. On July 1, 2021, Turian decided to repay it debt in full. Journalize all the entries related to the loan, from the date in which it is incurred to its repayment, including all the adjusting and closing entries at the end of 2020. The entries should be presented first by applying present value accounting, and then using future value accounting. Determine the present value of the loan at December 31, 2020, and the interest expense related to the loan for 2020 and 2021, under both present and future value accounting. b. On February 15, 2021, Turian sold €80,000 worth of products to Solar Electronics Co. (carried in the inventory for €52,500), receiving a 1-year note bearing interest at 8%. c. On September 15, 2021 the firm discounted its note receivable to Citadel Bank that applied an 11% discount rate to the transaction. d. On November 15, 2021, Turian purchased materials for €45,000, issuing a 7%, one-year note payable.
