Long Comparative Balance Sheet December 31, 2020 and 2019 Assets Current Assets: Cash Accounts Receivable, net Merchandise Inventory Supplies Prepaid Rent Total Current Assets 2020 $100,000 S150.000 S140,000 $9,700 $30,000 S429.700 2019 $60,000 $100.000 $70,000 S500 $10,000 $240,500 Property. Plant, and Equipment: Equipment Less: Accumulated Depreciation - Equipment Total Property, Plant, and Equipment $400,000 (560,000) $340,000 S769,700 $220,000 ($50.000) $170,000 $410,500 Total Assets Liabilities and Stockholders' Equity Current Liabilities: Accounts Payable Unearned Revenue Salaries Payable Federal Income Taxes Payable Total Current Liabilities 2020 S150,000 $60,000 $40,000 2019 $95.000 $45,000 $22,000 $6,000 $168,000 $20,000 $270.000 Long Term Liabilities Note Payable $100,000 S370,000 0 $168,000 Total Liabilities $100,500 Stockholders' Equity Common Stock, STO Par Paid-In Capital in Excess of Par Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity $150,000 $$30,000 $219,700 $399,700 $769.700 $142.000 $242,300 $410,500 Lonnie's Longboards, Inc. Comparative Statement of Income For the Years Ended December 31, 2020 and 2019 Sales Cost of Goods Sold Gruss Margin Operating Expenses: 2020 $910,000 (S600.000) S310,000 2019 $600.000 (S420.000) S180,000 Salaries and Wages Expense Rent Expense Depreciation Expense Total Operating Expenses $ $100,000 $20,000 $10.000) $130,000 $50,000 Income from Operations Other: Gain on Sale of Equipment Interest Expense Increase (decrease) in Operating Income S105.000 $20.000 $15,000 $140,000 S170,000 $ $3,000 (S7,000) 184.000) S166,000 $44.780 S121.220 Income before Taxes Federal Income Taxes Net Income ($5,000 ($5,000) $45,000 ($13,500) $31.500 Lonnie's Longboards, Inc. Comparative Statement of Retained Earnings For the Years Ended December 31, 2020 and 2019 2020 2019 Retained Earnings, Beginning of Year $142.000 $120,000 Net Income $121.220 $31,500 Less: Dividends () (543,520) (59.500) Retained Earnings, End of Year $219,700 $142,000 1. Equipment with a cost of $77,600 on which $5,000 of depreciation has been recorded, was sold for cash. Additional equipment was purchased for cash and a note payable. 2. Stock was issued for cash. 3. The dividends were paid in cash CCOUNTING SOCIETY PART TWO INSTRUCTIONS MANUFACTURING PROCESS INFORMATION Lonnie Long, the CEO of Lonnie's Longboards, Inc. has begun a small manufacturing process that will manufacture longboards and then sell the longboards to merchandising companies. The manufacturing process starts with the cutting of the wood. Once the wood is inspected and approved then the items in the assembly kit are attached. This includes hardware, trucks, wheels and bearings. These items will be installed as the final step in the process. Once the longboards are completed, they are then transferred to finished goods. This is a process cost system and the company elects to use the FIFO method of accounting for product costs. Direct material-wood is added 100% at the beginning of the process. Direct material-assembly kit is added 100% as the last step in the manufacturing process. At the beginning of the accounting period, Lonnie estimates that production will be 100,000 longboards during the year. Estimated factory overhead is $155,000. This information is to be used to calculate the pre-determined overhead rate for the manufacturing overhead. Estimated and actual direct labor costs totaled $25,100. Actual factory overhead costs totaled $100,000. The following information is available concerning direct materials. Direct Materials-Wood Beginning inventory Purchase of wood The company starts 93,000 longboards 0-8 ply natural hard rock maple 9" x 48" 100,000 boards @ $27.50 a board Each longboard contains 1 - 8 ply natural hard rock maple board Direct Material-Assembly Kit Beginning inventory Purchase of assembly kits Used 86,000 Assembly kits this period. O assembly kits 100,000 assembly kits @ $41.00 per longboard The Work-in-Process account has the following information: Ending work in process inventory is 100% complete as to wood 25% complete as to conversion costs 0% complete as to assembly kits The Finished Goods account has the following Information: The finished goods inventory at January 1, 2020 had a balance of O longboards at a cost of $0 and on December 31, 2020 had an ending balance of 6,000 longboards. The selling price of the longboard is $85.00. Selling and Administrative Costs totaled $200,000; tax rate is 30%. 14 Page ETA APRA CCOUNTING SOCIET OCIETY Using a spreadsheet and based on the information provided in the next section, complete the following requirements: 1. Determine the predetermined overhead rate. 2. Determine the total number of longboards to account for. 3. Prepare an equivalent unit's schedule. The schedule should follow the format below; you may add additional information if you would like. Whole Units (Actual) Equivalent Units Direct Materials Direct Material Wood Assembly Kits XXX XXX Conversion Costs XXX Beginning XXX Start/Completed XXX XXX XXX XXX Completed/Transferred Out XXX XXX XXX XXX Ending XXX XXX XXX XXX 4. Determine the total cost for the wood and the unit amount for the wood for one longboard. 5. Determine the total cost for the assembly kits and the unit cost for each assembly kit. 6. Determine the total conversion cost and the conversion cost per longboard. 7. Determine the total equivalent per longboard. 8. Prepare a Cost of Production report. This report should show all costs transferred into Work-in-Process and the costs transferred to Finished Goods. This process uses FIFO costing. 9. Determine the amounts for the following. a) Ending Work-in-Process Inventory in Units AND Dollars b) Ending Finished Goods Inventory in Units AND Dollars c) Cost of Goods Sold d) Over/Under Applied Manufacturing Overhead e) Gross Margin f) Income from Operations g) Net Income 10. Prepare the necessary Journal Entries related to the manufacturing cycle for this accounting period. Prepare journal entries for the accounting period. Use the account numbers in the chart of accounts, below, instead of the accounts names when writing the journal entries. Long Comparative Balance Sheet December 31, 2020 and 2019 Assets Current Assets: Cash Accounts Receivable, net Merchandise Inventory Supplies Prepaid Rent Total Current Assets 2020 $100,000 S150.000 S140,000 $9,700 $30,000 S429.700 2019 $60,000 $100.000 $70,000 S500 $10,000 $240,500 Property. Plant, and Equipment: Equipment Less: Accumulated Depreciation - Equipment Total Property, Plant, and Equipment $400,000 (560,000) $340,000 S769,700 $220,000 ($50.000) $170,000 $410,500 Total Assets Liabilities and Stockholders' Equity Current Liabilities: Accounts Payable Unearned Revenue Salaries Payable Federal Income Taxes Payable Total Current Liabilities 2020 S150,000 $60,000 $40,000 2019 $95.000 $45,000 $22,000 $6,000 $168,000 $20,000 $270.000 Long Term Liabilities Note Payable $100,000 S370,000 0 $168,000 Total Liabilities $100,500 Stockholders' Equity Common Stock, STO Par Paid-In Capital in Excess of Par Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity $150,000 $$30,000 $219,700 $399,700 $769.700 $142.000 $242,300 $410,500 Lonnie's Longboards, Inc. Comparative Statement of Income For the Years Ended December 31, 2020 and 2019 Sales Cost of Goods Sold Gruss Margin Operating Expenses: 2020 $910,000 (S600.000) S310,000 2019 $600.000 (S420.000) S180,000 Salaries and Wages Expense Rent Expense Depreciation Expense Total Operating Expenses $ $100,000 $20,000 $10.000) $130,000 $50,000 Income from Operations Other: Gain on Sale of Equipment Interest Expense Increase (decrease) in Operating Income S105.000 $20.000 $15,000 $140,000 S170,000 $ $3,000 (S7,000) 184.000) S166,000 $44.780 S121.220 Income before Taxes Federal Income Taxes Net Income ($5,000 ($5,000) $45,000 ($13,500) $31.500 Lonnie's Longboards, Inc. Comparative Statement of Retained Earnings For the Years Ended December 31, 2020 and 2019 2020 2019 Retained Earnings, Beginning of Year $142.000 $120,000 Net Income $121.220 $31,500 Less: Dividends () (543,520) (59.500) Retained Earnings, End of Year $219,700 $142,000 1. Equipment with a cost of $77,600 on which $5,000 of depreciation has been recorded, was sold for cash. Additional equipment was purchased for cash and a note payable. 2. Stock was issued for cash. 3. The dividends were paid in cash CCOUNTING SOCIETY PART TWO INSTRUCTIONS MANUFACTURING PROCESS INFORMATION Lonnie Long, the CEO of Lonnie's Longboards, Inc. has begun a small manufacturing process that will manufacture longboards and then sell the longboards to merchandising companies. The manufacturing process starts with the cutting of the wood. Once the wood is inspected and approved then the items in the assembly kit are attached. This includes hardware, trucks, wheels and bearings. These items will be installed as the final step in the process. Once the longboards are completed, they are then transferred to finished goods. This is a process cost system and the company elects to use the FIFO method of accounting for product costs. Direct material-wood is added 100% at the beginning of the process. Direct material-assembly kit is added 100% as the last step in the manufacturing process. At the beginning of the accounting period, Lonnie estimates that production will be 100,000 longboards during the year. Estimated factory overhead is $155,000. This information is to be used to calculate the pre-determined overhead rate for the manufacturing overhead. Estimated and actual direct labor costs totaled $25,100. Actual factory overhead costs totaled $100,000. The following information is available concerning direct materials. Direct Materials-Wood Beginning inventory Purchase of wood The company starts 93,000 longboards 0-8 ply natural hard rock maple 9" x 48" 100,000 boards @ $27.50 a board Each longboard contains 1 - 8 ply natural hard rock maple board Direct Material-Assembly Kit Beginning inventory Purchase of assembly kits Used 86,000 Assembly kits this period. O assembly kits 100,000 assembly kits @ $41.00 per longboard The Work-in-Process account has the following information: Ending work in process inventory is 100% complete as to wood 25% complete as to conversion costs 0% complete as to assembly kits The Finished Goods account has the following Information: The finished goods inventory at January 1, 2020 had a balance of O longboards at a cost of $0 and on December 31, 2020 had an ending balance of 6,000 longboards. The selling price of the longboard is $85.00. Selling and Administrative Costs totaled $200,000; tax rate is 30%. 14 Page ETA APRA CCOUNTING SOCIET OCIETY Using a spreadsheet and based on the information provided in the next section, complete the following requirements: 1. Determine the predetermined overhead rate. 2. Determine the total number of longboards to account for. 3. Prepare an equivalent unit's schedule. The schedule should follow the format below; you may add additional information if you would like. Whole Units (Actual) Equivalent Units Direct Materials Direct Material Wood Assembly Kits XXX XXX Conversion Costs XXX Beginning XXX Start/Completed XXX XXX XXX XXX Completed/Transferred Out XXX XXX XXX XXX Ending XXX XXX XXX XXX 4. Determine the total cost for the wood and the unit amount for the wood for one longboard. 5. Determine the total cost for the assembly kits and the unit cost for each assembly kit. 6. Determine the total conversion cost and the conversion cost per longboard. 7. Determine the total equivalent per longboard. 8. Prepare a Cost of Production report. This report should show all costs transferred into Work-in-Process and the costs transferred to Finished Goods. This process uses FIFO costing. 9. Determine the amounts for the following. a) Ending Work-in-Process Inventory in Units AND Dollars b) Ending Finished Goods Inventory in Units AND Dollars c) Cost of Goods Sold d) Over/Under Applied Manufacturing Overhead e) Gross Margin f) Income from Operations g) Net Income 10. Prepare the necessary Journal Entries related to the manufacturing cycle for this accounting period. Prepare journal entries for the accounting period. Use the account numbers in the chart of accounts, below, instead of the accounts names when writing the journal entries