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Tasya [4]
3 years ago
7

On June 30, 2018, Campbell Company’s total current assets were $500,500 and its total current liabilities were $276,500. On July

1, 2018, Campbell issued a long-term note to a bank for $41,200 cash. Required Compute Campbell’s working capital before and after issuing the note. Compute Campbell’s current ratio before and after issuing the note.
Business
1 answer:
Schach [20]3 years ago
7 0

Answer:

(i) $224,000; $224,000

(ii) 1.81; 1.71

Explanation:

(i) Working capital

Before issue of note = Total current assets - Total current liability

                                  = $500,500 - $276,500

                                  = $224,000

After issue of note:

= [Total current assets + cash] - [Total current liability + short-term note]

= [$500,500 + $41,200] - [$276,500 + $41,200]

= $541,700 - $317,700

= $224,000

(ii) Current ratio

Before issue of note:

= Total current assets ÷ Total current liability

= $500,500 ÷ $276,500

= 1.81

After issue of note:

= [Total current assets + cash] ÷ [Total current liability + short-term note]

= [$500,500 + $41,200] ÷ [$276,500 + $41,200]

= $541,700 ÷ $317,700

= 1.71

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Becker Bikes manufactures tricycles. The company expects to sell 520 units in May and 650 units in June. Beginning and ending fi
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Answer:

The budgeted variable overhead for May is $5,335

The budgeted variable overhead for June is $7,260

The budgeted fixed overhead for both May and June is $11,500 per month

Explanation:

First we have to determine how many tricycles does Becker Bikes expects to manufacture during May and June:

May:

beginning inventory May           180

expected sales May                   520

ending inventory May                 145

Becker is planning to manufacture 485 tricycles (= 520 + 145 -180)

June:

beginning inventory May           145

expected sales May                   650

ending inventory May                 155

Becker is planning to manufacture 660 tricycles (= 650 + 155 -145)

The budgeted variable overhead for May = 485 tricycles x $11 per tricycle = $5,335

The budgeted variable overhead for June = 660 tricycles x $11 per tricycle = $7,260

The fixed overhead for both May and June is $11,500 per month

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d) $100,000

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Forest Components makes aircraft parts. The following transactions occurred in July. Purchased $16,950 of materials on account.
horrorfan [7]

Answer:

Forest Components

Journal Entries:

1. Debit Materials Inventory $16,950

Credit Accounts Payable $16,950

To record the purchase of materials on account.

2. Debit Work in Process Inventory $16,780

Credit Materials Inventory $16,780

To record the issue of materials to the production department.

3. Debit Manufacturing Overhead $1,340

Credit Materials Inventory $1,340

To record the issue of materials to the service department.

4. Debit Accounts Payable $16,950

Credit Cash Account $16,950

To record the payment for the materials purchased on account.

5. Debit Materials Inventory $2,020

Credit Work In Process $2,020

To record the record of materials.

6. Debit Work in Process $32,500

Credit Factory Wages $32,500

To record the direct labor cost.

7. Debit Manufacturing Overhead $17,250

Credit Accounts Payable $17,250

To record the purchase of miscellaneous items for the plant.

8. Debit Manufacturing Overhead $36,700

Credit Depreciation Expense $36,700

To record depreciation expense on manufacturing plant.

9. Debit Work In Process $30,875

Credit Manufacturing Overhead $30,875

To apply overhead for the month.

b. T-accounts:

Materials Inventory

Accounts Titles         Debit    Credit

Balance                    $12,320

Accounts Payable   $14,930

Work in Process         2,020

Work in Process Inventory    $16,780

Balance                                  $12,490

Work-in-Process Inventory

Accounts Titles         Debit    Credit

Balance                    $11,755

Materials Inventory   16,780

Materials Inventory                $2,020

Factory Wages        32,500

Overhead                30,875

Finished Goods Inventory    79,330

Balance                                  10,560

Manufacturing Overhead

Accounts Titles                 Debit    Credit

Materials Inventory         $1,340

Accounts Payable           17,250

Depreciation Expense   36,700

Work In Process                         $30,875

Finished Goods Inventory

Accounts Titles         Debit    Credit

Balance                   $2,700

Work in Process     79,330

Cost of goods sold                75,100

Balance                                 $6,930

Cost of Goods Sold

Accounts Titles         Debit    Credit

Finished Goods      75,100

Explanation:

a) Data and Calculations:

Materials Inventory                 ?         $12,490

Work-in-Process Inventory     ?           10,560

Finished Goods Inventory $2,700       6,930

Cost of Goods Sold                ?         75,1000

Predetermined overhead rate = $412,870/$434,600 = $0.95

Overhead applied = $30,875 ($0.95 * $32,500)

5 0
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