MD University College ACCOUNTING Acct 321 Logan Township acquired its water system from a private company on June
Question # 00271747
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Updated on: 05/04/2016 05:51 AM Due on: 06/03/2016
Logan Township acquired its water system from a private company on June 1. No
receivables were acquired with the purchase. Therefore, total accounts receivable on
June 1 had a zero balance.
Logan plans to bill customers in the month following the month of sale, and 70% of the
resulting billings will be collected during the billing month. In the next following month,
90% of the remaining balance should be collectable. The remaining uncollectible
amounts will relate to citizens who have moved away. Such amounts are never
expected to be collected and will be written off.
Water sales during June are estimated at $4,000,000, and expected to increase 30% in
July. August sales will be 10% less than July sales.
(a)
For each dollar of sales, how much is expected to be collected?
(b)
Estimate the monthly cash collections for June, July, August, and September.
(c)
As of the end of August, how much will be the estimated amount of
receivables from which future cash flows are anticipated?
Name:
Date:
B-21.02
Section:
(a)
(b)
June
July
August
September
June
July
August
Total
Receivables
(c)
B-21.03
Scalia Systems manufactures rugged handheld computers for use in adverse working
environments. Scalia tries to maintain inventory at 40% of the following month's
expected unit sales. Scalia began the year with 8,000 units in stock, based on the
following unit sales projections prepared by the sales manager:
January
20,000
February
25,000
March
25,000
April
22,000
Prepare a schedule of planned unit production for January through March.
Name:
Date:
B-21.03
Section:
Planned production in units:
January
Estimated units sold
B-21.04
Prepare a direct materials purchasing plan for January, February, and March, based on
the following facts:
Lana Gonzales owns a business that assembles ceiling fan units. Each fan requires one
motor system and four blades. Motors cost $40 each, and blades are $3.50 each. Lana
is able to reliably obtain motors as needed, and does not maintain them in inventory.
However, blades are stocked in inventory sufficient to produce 30% of the following
month's expected production. Planned production is as follows:
January
10,000
February
12,000
March
15,000
April
11,000
In accordance with the stocking plan, January's beginning inventory included 12,000
blades.
Name:
Date:
B-21.04
Section:
Direct materials purchasing plan:
January
Scheduled production
Raw materials needed:
Motors (1 per unit)
Fan blades needed
10,000
February
12,000
March
15,000
B-21.05
Nolan Johnson is CFO for a newly formed furniture manufacturing company. Below is the anticipated monthly
production for the first year of operation, and beyond. Nolan is interested in learning which of the first twelve
months will require cash outlays of more than $100,000 toward the purchase of lumber. Each unit requires 20 board
feet of lumber at $5.80 per board foot. All lumber is purchased in the month prior to its expected use. Lumber
purchases are paid for 10% in the month of purchase, 40% in the month following the month of purchase, and 50% in
the second month following the month of purchase.
Month
Units
January
0
February
800
March
500
April
1,200
May
700
June
900
July
300
August
600
September
800
October
1,300
November
400
December
400
January
600
Which months will require cash outlays in excess of the $100,000 amount? Does the production in any given month
necessarily correspond to the cash flow for that same month? What are the business implications of your
observation?
Name:
Date:
B-21.05
Section:
Anticipated cash payments:
CASH PAYMENTS
Purchasing
Activity
Units
January
0
February
800
March
500
April
1,200
May
700
June
900
July
300
August
600
September
800
October
1,300
November
400
December
400
January
600
Total Board
Feet
(20 per
unit)
Total Cost of
Lumber
($5.80 per
foot)
Paid in
Month
(10%)
Paid in Month
Relating to
Prior Month
(40%)
Paid in Month
Relating to
Two Months
Prior
(50%)
Total
B-21.07
The chief financial officer for Cast In Stone concrete products had previously established a
line of credit with a local bank that enables Cast In Stone to borrow 80% of the company's
inventory balance. The company currently has 1,000 units in stock, and is performing "on
budget." The budget anticipated that direct labor cost would be $15 per hour, and factory
overhead is applied to production based on $7.50 per direct labor hour. Each unit requires
2.5 labor hours and 800 pounds of direct material. The direct material costs $0.10 per
pound.
Determine the amount of credit available under the borrowing agreement.
Name:
Date:
B-21.07
Section:
Amount available under line of credit:
Units
Total available under line of credit
Per Unit Cost
Per Unit
Total
I-22.03
Nyman Painting Contractors specializes in providing painting services to support
residential remodeling projects.
Nyman bids jobs based on the following cost
assumptions:
1 gallon of paint will cover 450 square feet of interior wall space.
300 square feet can be painted in 1 hour.
1 gallon of paint costs $25.
1 hour of direct labor costs $17.
The Sanchez residence was recently repainted. The job consisted of 18,000
square feet of interior wall space. Nyman received a $1 per gallon discount,
and a total of $984 was expended for paint. Nyman paid $1,107 for direct labor.
The painters took exactly 61.5 hours to paint the residence.
(a)
Calculate variances for direct material and direct labor.
(b)
Prepare journal entries to record the acquisition and utilization of materials and
labor (variances are recorded into the accounts).
Name:
Date:
Section:
(a)
Materials variances:
Actual Material Cost
Standard Material Cost
I-22.03(a)
Name:
Date:
Section:
Labor variances:
Actual Labor Cost
Standard Labor Cost
I-22.03(a)
Name:
Date:
I-22.03(b)
Section:
GENERAL JOURNAL
Date
Accounts
Debit
Credit
receivables were acquired with the purchase. Therefore, total accounts receivable on
June 1 had a zero balance.
Logan plans to bill customers in the month following the month of sale, and 70% of the
resulting billings will be collected during the billing month. In the next following month,
90% of the remaining balance should be collectable. The remaining uncollectible
amounts will relate to citizens who have moved away. Such amounts are never
expected to be collected and will be written off.
Water sales during June are estimated at $4,000,000, and expected to increase 30% in
July. August sales will be 10% less than July sales.
(a)
For each dollar of sales, how much is expected to be collected?
(b)
Estimate the monthly cash collections for June, July, August, and September.
(c)
As of the end of August, how much will be the estimated amount of
receivables from which future cash flows are anticipated?
Name:
Date:
B-21.02
Section:
(a)
(b)
June
July
August
September
June
July
August
Total
Receivables
(c)
B-21.03
Scalia Systems manufactures rugged handheld computers for use in adverse working
environments. Scalia tries to maintain inventory at 40% of the following month's
expected unit sales. Scalia began the year with 8,000 units in stock, based on the
following unit sales projections prepared by the sales manager:
January
20,000
February
25,000
March
25,000
April
22,000
Prepare a schedule of planned unit production for January through March.
Name:
Date:
B-21.03
Section:
Planned production in units:
January
Estimated units sold
B-21.04
Prepare a direct materials purchasing plan for January, February, and March, based on
the following facts:
Lana Gonzales owns a business that assembles ceiling fan units. Each fan requires one
motor system and four blades. Motors cost $40 each, and blades are $3.50 each. Lana
is able to reliably obtain motors as needed, and does not maintain them in inventory.
However, blades are stocked in inventory sufficient to produce 30% of the following
month's expected production. Planned production is as follows:
January
10,000
February
12,000
March
15,000
April
11,000
In accordance with the stocking plan, January's beginning inventory included 12,000
blades.
Name:
Date:
B-21.04
Section:
Direct materials purchasing plan:
January
Scheduled production
Raw materials needed:
Motors (1 per unit)
Fan blades needed
10,000
February
12,000
March
15,000
B-21.05
Nolan Johnson is CFO for a newly formed furniture manufacturing company. Below is the anticipated monthly
production for the first year of operation, and beyond. Nolan is interested in learning which of the first twelve
months will require cash outlays of more than $100,000 toward the purchase of lumber. Each unit requires 20 board
feet of lumber at $5.80 per board foot. All lumber is purchased in the month prior to its expected use. Lumber
purchases are paid for 10% in the month of purchase, 40% in the month following the month of purchase, and 50% in
the second month following the month of purchase.
Month
Units
January
0
February
800
March
500
April
1,200
May
700
June
900
July
300
August
600
September
800
October
1,300
November
400
December
400
January
600
Which months will require cash outlays in excess of the $100,000 amount? Does the production in any given month
necessarily correspond to the cash flow for that same month? What are the business implications of your
observation?
Name:
Date:
B-21.05
Section:
Anticipated cash payments:
CASH PAYMENTS
Purchasing
Activity
Units
January
0
February
800
March
500
April
1,200
May
700
June
900
July
300
August
600
September
800
October
1,300
November
400
December
400
January
600
Total Board
Feet
(20 per
unit)
Total Cost of
Lumber
($5.80 per
foot)
Paid in
Month
(10%)
Paid in Month
Relating to
Prior Month
(40%)
Paid in Month
Relating to
Two Months
Prior
(50%)
Total
B-21.07
The chief financial officer for Cast In Stone concrete products had previously established a
line of credit with a local bank that enables Cast In Stone to borrow 80% of the company's
inventory balance. The company currently has 1,000 units in stock, and is performing "on
budget." The budget anticipated that direct labor cost would be $15 per hour, and factory
overhead is applied to production based on $7.50 per direct labor hour. Each unit requires
2.5 labor hours and 800 pounds of direct material. The direct material costs $0.10 per
pound.
Determine the amount of credit available under the borrowing agreement.
Name:
Date:
B-21.07
Section:
Amount available under line of credit:
Units
Total available under line of credit
Per Unit Cost
Per Unit
Total
I-22.03
Nyman Painting Contractors specializes in providing painting services to support
residential remodeling projects.
Nyman bids jobs based on the following cost
assumptions:
1 gallon of paint will cover 450 square feet of interior wall space.
300 square feet can be painted in 1 hour.
1 gallon of paint costs $25.
1 hour of direct labor costs $17.
The Sanchez residence was recently repainted. The job consisted of 18,000
square feet of interior wall space. Nyman received a $1 per gallon discount,
and a total of $984 was expended for paint. Nyman paid $1,107 for direct labor.
The painters took exactly 61.5 hours to paint the residence.
(a)
Calculate variances for direct material and direct labor.
(b)
Prepare journal entries to record the acquisition and utilization of materials and
labor (variances are recorded into the accounts).
Name:
Date:
Section:
(a)
Materials variances:
Actual Material Cost
Standard Material Cost
I-22.03(a)
Name:
Date:
Section:
Labor variances:
Actual Labor Cost
Standard Labor Cost
I-22.03(a)
Name:
Date:
I-22.03(b)
Section:
GENERAL JOURNAL
Date
Accounts
Debit
Credit
-
Rating:
/5
Solution: MD University College ACCOUNTING Acct 321 Logan Township acquired its water system from a private company on June