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B- What will be the effect on financial statements if an accrued revenue is not recorded at the end of the year? (4 Marks) C-
B- What will be the effect on financial statements if an accrued revenue is not recorded at the end of the year? (4 Marks) C- XYZ Company purchased an equipment on July 1, 2015 for $42,000. The equipment has an estimated useful life of five years and Barton expects to sell the equipment at the end of its life for $2,000. Required: 1) Calculate the annual depreciation for the Equipment. 2) Prepare the adjusting entry at Dec 31, 2015 3) Show the effect of the adjusting entry on a- The Income statement for year ended 2017 (6 Marks) b- The Balance sheet on Dec 31, 2017 Part 2 - Answer the following questions Question 2 (30 marks) A- ABC Company gathered the following information for the last six months: Month Electricity Cost Machine Hours January $24,400 13,900 February 30,300 17,600 March 29,000 16,800 April 22,340 13,200 May 19,900 11,600 June 14,900 6,600 Required: Using the high-low method, Answer the following questions (1) Calculate the estimated variable portion of Electricity costs per machine hour? (2) Calculate the estimated fixed Electricity cost each month? (3) If it is estimated that 10,000 machine hours will be run in July, what is the expected total Electricity cost for July? (10 marks) B- The student union of AAA University is planning a one-day trip to the coast. The trip expected costs are as follow: Dinner (per student) Program (per student) Rental of buses Entertainment Advertising $ 18 $ 2 $ 900 $3,800 $1,300 The student union would like to charge $35 per student for the trip. Required: 1. Calculate the contribution margin per student. 2. Calculate the number of students who must join the trip to achieve break-even. 3. How many students must join the trip to achieve a target net income of $1,500? (7 Marks) C-XYZ Company income statement for April 2019 is shown below: Sales (20,000 units) Variable expenses Contribution margin Fixed expenses Net income Total $300,000 180,000 120,000 70,000 $ 50,000 Per Unit $ 15,00 9.00 $ 6,00 Required: Calculate the revised net income if the selling price increases by $1,50 per unit, fixed expenses increase by $20,000, and the number of units sold decreases by 5%? (3 Marks) D. Management of Farah Corporation has asked your help as an intern in preparing some key reports for April , Direct labor cost was $52,000, direct material cost was $28,000, and manufacturing overhead was 60% of conversion cots. Required Calculate manufacturing overhead cost (5 marks) E- Sun Company and Moon Company are identical in all respects except that most of Sun company costs are variable, and most of Moon company costs are fixed. In case sales increase (for both companies), which of the two companies will tend to realize the greatest increase in its net income? Why? (5 marks) B Question 3 (30 marks) A- The following details relate to Hope Company that produces three products: Product Product Product A Selling price per unit 60 40 30 Variable costs per unit 36 30 12 A particular machine is the bottleneck. On that machine, 3 machine hours are required to produce each unit of Product A, 1 hour is required to produce each unit of Product B, and 2 hours are required to produce cach unit of Product C. Required: Rank the products from the most profitable to the least profitable use of the constrained resource (bottleneck) (6 Marks) B- Nour Corporation has budgeted for the following sales: July August September October November December $ 447,400 $ 582,400 $ 616,200 $ 891,200 $ 742,000 $ 702,000 Sales are collected as follows: 10% in the month of sale: 60% in the month following the sale, and the remaining 30% in the second month following the sale. Calculate the amounts of accounts receivable In Nour's budgeted balance sheet at December 31. Required: (4 Marks) AAA Company has estimated the following for the year 2019 for one of its products. (1) Sales Estimations Fourth Quarter First Quarter 1,000 Second Quarter 1,100 Expected Sales (Units) Selling Price Third Quarter 1,200 1,300 $ 25 $ 25 $ 25 $ 25 (ii) Inventory estimations Beginning inventory for first quarter: 200 units The company desires to have an ending inventory each quarter equal to 30% of the next quarter's sales. . The first quarter's sales for the following year 2020 is expected to be 1,700 units. Required: Prepare the Sales Budget and the Production Budget for 2019. (15 marks) D The following information has been take from a manufacturing company for the year 2019: Sales revenues 36,000 - opening inventory of materials 10,000 closing inventory of materials 8,000 - opening inventory of finished goods 6,000 - closing inventory of finished goods 4,000 cost of goods produced 26,000 Required: Calculate Cost of goods sold and gross profit for the year ended December 31, 2019, (5 Marks) [END OF QUESTIONS] [GOOD LUCK]
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