ACC 100 Study Guide - Final Guide: Current Asset, Current Liability, Deferral
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I'll rate posting for sec times just do last parts likecost and balance sheet ( account balance and cost incurred ) that'sit ready question carefully then answer all last partthanks
Charles Maxwell is starting a cheesecake bakery, Able BakerCharlie Company, to produce and sell different flavored cheesecakesto restaurants and the general public. He has just begun his studyof accounting, and is a bit confused about the many types ofreports he has read about and how they will help him run hisbusiness. He asks you to help him clarify what the differencesbetween managerial accounting and financial accounting are. Heâsalso wondering how to set up his inventory, how to classify thecosts of his business, and how to fill in some missinginformation.
| Required: | |
| 1. | Choose whether thecharacteristics on the Managerial vs. Financial panel are mostoften associated with managerial accounting or financialaccounting. |
| 2. | Charles has provided some ofthe costs he expects to incur on the Cost Classification panel.Decide on the classifications that could be applied to each ofthese costs using the table provided. The cost object in each caseis the cheesecake. |
| 3. | Charles found some sampleincome statements and balance sheets on the Internet, and askedwhich of them might be most appropriate for a manufacturingbusiness like his. Review income statements A and B on the IncomeStatements panel, and balance sheets C and D on the Balance Sheetspanel. Determine which income statement and balance sheet would bemost appropriate for a manufacturing business like Able BakerCharlie. Then, on the Financial Statements panel, denote whichincome statement and balance sheet would be most appropriate for amanufacturing business. |
| 4. | At the end of February, afterthe second month of operations of Able Baker Charlie Company,Charles shows you the data heâs collected, but he was unable tofigure out some of the amounts. On the Costs and Balances panel,determine the missing amounts. Note: It may behelpful to use T accounts to map the flow of the amounts throughthe manufacturing accounts and solve for the missing dollarvalues. |
Managerial vs. Financial
Choose whether the following characteristics are most oftenassociated with managerial accounting or financial accounting.
Managerial Accounting | Financial Accounting | ||
|---|---|---|---|
| Primarily used for internal decision making | |||
| Generally Accepted Accounting Principles (GAAP) must beused | |||
| Prepared statements usually pertain to the company as a wholerather than individual departments or products | |||
| Information provided will often be subjective, such asestimated future results | |||
| Often prepared on an as-needed basis rather than at fixedintervals | |||
| Use principles of the Sustainability Accounting Standards Board(SASB) to provide sustainability information to external financialstatement users | |||
| Consideration of sustainability practices to contribute to thecompanyâs long-term success | |||
| Using eco-efficiency measures to reduce expenses |
Cost Classification
Charles has provided some of the costs he expects to incur asfollows. Decide on the classifications that could be applied toeach of these costs using the table provided. The cost object ineach case is the cheesecake.
Cost | Product | Period | Direct | Direct | Factory | Selling | Administrative | Direct | Indirect | Prime | Conversion | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
Cost | Cost | Materials | Labor | Overhead | Expense | Expense | Cost | Cost | Cost | Cost | ||
| Eggs used to make cheesecakes | ||||||||||||
| Bakerâs wages | ||||||||||||
| Delivery driver wages | ||||||||||||
| Depreciation of office computers | ||||||||||||
| Power to run the cheesecake ovens | ||||||||||||
| Presidentâs salary | ||||||||||||
| Sales commissions | ||||||||||||
| Factory supervisor salary |
Financial Statements
Charles found some sample income statements and balance sheetson the Internet, and asked which of them might be most appropriatefor a manufacturing business like his. Review income statements Aand B on the Income Statements panel, and balance sheets C and D onthe Balance Sheets panel. Determine which income statement andbalance sheet would be most appropriate for a manufacturingbusiness like Able Baker Charlie Company.
Which income statement is most appropriate for a manufacturingbusiness?
Income statement A
Income statement B
Which balance sheet is most appropriate for a manufacturingbusiness?
Balance sheet C
Balance sheet D
Income Statements
Income Statement A (scroll down for Income StatementB):
Sample Company A |
Income Statement |
For the Year Ended December 31, 20Y8 |
1 | Sales | $42,000.00 | |
2 | Beginning finished goods inventory | $5,250.00 | |
3 | Plus cost of goods manufactured | 6,400.00 | |
4 | Cost of finished goods available for sale | $11,650.00 | |
5 | Less ending finished goods inventory | 400.00 | |
6 | Cost of goods sold | 11,250.00 | |
7 | Gross profit | $30,750.00 | |
8 | Operating expenses: | ||
9 | Selling expenses | $6,400.00 | |
10 | Administrative expenses | 5,250.00 | |
11 | Total operating expenses | 11,650.00 | |
12 | Net income | $19,100.00 |
Income Statement B:
Sample Company B |
Income Statement |
For the Year Ended December 31, 20Y8 |
1 | Sales | $42,000.00 | |
2 | Beginning merchandise inventory | $5,250.00 | |
3 | Plus net purchases | 6,400.00 | |
4 | Merchandise available for sale | $11,650.00 | |
5 | Less ending merchandise inventory | 400.00 | |
6 | Cost of merchandise sold | 11,250.00 | |
7 | Gross profit | $30,750.00 | |
8 | Operating expenses: | ||
9 | Selling expenses | $6,400.00 | |
10 | Administrative expenses | 5,250.00 | |
11 | Total operating expenses | 11,650.00 | |
12 | Net income | $19,100.00 |
Balance Sheets
Balance Sheet C (scroll down for Balance SheetD):
Sample Company C |
Balance Sheet |
December 31, 20Y8 |
1 | Assets | ||
2 | Cash | $20,800.00 | |
3 | Accounts receivable (net) | 10,000.00 | |
4 | Merchandise inventory | 6,000.00 | |
5 | Supplies | 2,100.00 | |
6 | Land | 17,000.00 | |
7 | Total assets | $55,900.00 | |
8 | Liabilities | ||
9 | Accounts payable | $17,800.00 | |
10 | Stockholdersâ Equity | ||
11 | Common stock | $19,000.00 | |
12 | Retained earnings | 19,100.00 | |
13 | Total stockholdersâ equity | 38,100.00 | |
14 | Total liabilities and stockholdersâ equity | $55,900.00 |
Balance Sheet D:
Sample Company D |
Balance Sheet |
December 31, 20Y8 |
1 | Assets | ||
2 | Cash | $20,800.00 | |
3 | Accounts receivable (net) | 10,000.00 | |
4 | Inventories: | ||
5 | Finished goods | $2,000.00 | |
6 | Work in process | 1,500.00 | |
7 | Materials | 2,500.00 | 6,000.00 |
8 | Supplies | 2,100.00 | |
9 | Land | 17,000.00 | |
10 | Total assets | $55,900.00 | |
11 | Liabilities | ||
12 | Accounts payable | $17,800.00 | |
13 | Stockholdersâ Equity | ||
14 | Common stock | $19,000.00 | |
15 | Retained earnings | 19,100.00 | |
16 | Total stockholdersâ equity | 38,100.00 | |
17 | Total liabilities and stockholdersâ equity | $55,900.00 |
Costs and Balances
At the end of February, after the second month of operationsof Able Baker Charlie Company, Charles shows you the data heâscollected, but he was unable to figure out some of the amounts.Review the following data and fill in the missing amounts on thechart for Able Baker Charlie Company. Note: It maybe helpful to use T accounts to map the flow of the amounts throughthe manufacturing accounts and solve for the missing dollar values.It may also be helpful to review the steps for determining the costof materials used, total manufacturing cost incurred, and cost ofgoods manufactured.
| Data forFebruary | |
|---|---|
| Decrease in materialsinventory | $3,300 |
| Materials inventory on Feb. 28 | 50% of materials inventory on Jan.31 |
| Direct materials purchased | $12,600 |
| Direct materials used | 3 times the direct laborincurred |
| Total manufacturing costs incurredin period | $29,400 |
| Total manufacturing costs incurredin period | 70% of Cost of GoodsManufactured |
| Total manufacturing costs incurredin period | $7,000 less than Cost of GoodsSold |
| Account | Account Balances | Costs Incurred | ||
|---|---|---|---|---|
| Jan.31 | Feb.28 | |||
| Materials Inventory | DirectMaterials Used | |||
| Work inProcess Inventory | $27,000 | DirectLabor Incurred | ||
| FinishedGoods Inventory | $16,000 | FactoryOverhead Incurred | ||
| Cost ofGoods Sold | ||||
Sendelbach Corporation is a U.S.-based organization with operations throughout the world. One of its subsidiaries is headquartered in Toronto. Although this wholly owned company operates primarily in Canada, it engages in some transactions through a branch in Mexico. Therefore, the subsidiary maintains a ledger denominated in Mexican pesos (Ps) and a general ledger in Canadian dollars (C$). As of December 31, 2017, the subsidiary is preparing financial statements in anticipation of consolidation with the U.S. parent corporation. Both ledgers for the subsidiary are as follows:
| Main OperationâCanada | |||||
| Debit | Credit | ||||
| Accounts payable | C$ | 41,555 | |||
| Accumulated depreciation | 42,000 | ||||
| Buildings and equipment | C$ | 182,000 | |||
| Cash | 41,000 | ||||
| Common stock | 65,000 | ||||
| Cost of goods sold | 218,000 | ||||
| Depreciation expense | 8,400 | ||||
| Dividends, 4/1/17 | 34,000 | ||||
| Gain on sale of equipment, 6/1/17 | 6,500 | ||||
| Inventory | 94,000 | ||||
| Notes payableâdue in 2020 | 84,000 | ||||
| Receivables | 83,000 | ||||
| Retained earnings, 1/1/17 | 150,590 | ||||
| Salary expense | 38,000 | ||||
| Sales | 327,000 | ||||
| Utility expense | 10,500 | ||||
| Branch operation | 7,745 | ||||
| Totals | C$ | 716,645 | C$ | 716,645 | |
| Branch OperationâMexico | |||||
| Debit | Credit | ||||
| Accounts payable | Ps | 67,500 | |||
| Accumulated depreciation | 40,000 | ||||
| Building and equipment | Ps | 55,000 | |||
| Cash | 66,500 | ||||
| Depreciation expense | 3,500 | ||||
| Inventory (beginningâincome statement) | 38,000 | ||||
| Inventory (endingâincome statement) | 35,500 | ||||
| Inventory (endingâbalance sheet) | 35,500 | ||||
| Purchases | 72,000 | ||||
| Receivables | 36,000 | ||||
| Salary expense | 10,500 | ||||
| Sales | 139,000 | ||||
| Main office | 35,000 | ||||
| Totals | Ps | 317,000 | Ps | 317,000 | |
Additional Information
The Canadian subsidiaryâs functional currency is the Canadian dollar, and Sendelbachâs reporting currency is the U.S. dollar. The Canadian and Mexican operations are not viewed as separate accounting entities.
The building and equipment used in the Mexican operation were acquired in 2007 when the currency exchange rate was C$0.21 = Ps 1.
Purchases of inventory were made evenly throughout the fiscal year.
Beginning inventory was acquired evenly throughout 2016; ending inventory was acquired evenly throughout 2017.
The Main Office account on the Mexican records should be considered an equity account. This balance was remeasured into C$7,745 on December 31, 2017.
Currency exchange rates for 1 Ps applicable to the Mexican operation follow:
| Weighted average, 2016 | C$ | 0.26 |
| January 1, 2017 | 0.28 | |
| Weighted average rate for 2017 | 0.30 | |
| December 31, 2017 | 0.31 | |
The December 31, 2016, consolidated balance sheet reported a cumulative translation adjustment with a $51,950 credit (positive) balance.
The subsidiaryâs common stock was issued in 2004 when the exchange rate was $0.44 = C$1.
The subsidiaryâs December 31, 2016, retained earnings balance was C$150,590, an amount that has been translated into U.S.$70,363.
The applicable currency exchange rates for 1 C$ for translation purposes are as follows:
| January 1, 2017 | US$ | 0.70 |
| April 1, 2017 | 0.69 | |
| June 1, 2017 | 0.68 | |
| Weighted average rate for 2017 | 0.67 | |
| December 31, 2017 | 0.65 | |
Remeasure the Mexican operationâs account balances into Canadian dollars. (Note: Back into the beginning net monetary asset or liability position.)
Prepare financial statements (income statement, statement of retained earnings, and balance sheet) for the Canadian subsidiary in its functional currency, Canadian dollars.
Translate the Canadian dollar functional currency financial statements into U.S. dollars so that Sendelbach can prepare consolidated financial statements.
Complete this question by entering your answers in the tabs below.
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Req A
Remeasure the Mexican operationâs account balances into Canadian dollars. (Note: Back into the beginning net monetary asset or liability position.) (Input all amounts as positive values.)
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b. Prepare financial statements (income statement, statement of retained earnings, and balance sheet) for the Canadian subsidiary in its functional currency, Canadian dollars.
c. Translate the Canadian dollar functional currency financial statements into U.S. dollars so that Sendelbach can prepare consolidated financial statements.
(Round U.S. Dollar values to 2 decimal places. Amounts to be deducted and losses should be indicated with a minus sign.)
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