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Accounting & Finance - Quiz Packet 18

Question 1
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What was Cowboy Ice Cream's sales volume variance, and was it favorable or unfavorable?

Question 2
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What was Cowboy Ice Cream's flexible budget variance and was it favorable or unfavorable?

Question 3
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What is Cowboy Ice Cream's expected contribution margin if their sales price is $4 per bar?

Question 4
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What is Cowboy Ice Cream's expected net income if their sales price is $4.25 per bar?

Question 5
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What price would you recommend that Cowboy Ice Cream charge for the ice cream bars in order to maximize their profit?

Question 1
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On January 1, Cowboy Ice Cream declared a $3,000 cash dividend to be paid on January 31 to shareholders of record on January 15.
What is the effect on Cowboy Ice Cream's financial statements on January 1? (Select all that apply)

Question 2
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On January 1, Cowboy Ice Cream declared a $3,000 cash dividend to be paid on January 31 to shareholders of record on January 15.
What is the effect on Cowboy Ice Cream's financial statements on January 31? (Select all that apply)

0.5 / 0.5 pts

From P8-23 in the packet, how much did Paid in Capital in Excess of Par increase from selling 6,000 shares of the $10 par common stock for $15 per share on January 5?

Question 5
0.4 / 0.5 pts

Discount Drugs (one of the three largest drug makers) just reported that is 2018 third quarter profits are essentially the same as the 2017 third quarter profits. In addition to this announcement, the same day, Discount Drugs also announced that the Food and Drug Administration has just approved a new drug to treat high blood pressure that Discount Drug developed. This new drug has been shown to be extremely effective and has few or no side effects. It will also be less expensive than the other drugs currently on the market.

Which of the following would you expect to be true on the day of these two announcements? (Select all that apply)

Question 6
0.5 / 0.5 pts

Last summer you saved a substantial portion of your earnings and began this school year with $5,000 in the bank. On August 1, you deposited the funds in an account that earns 3% interest and plan to withdraw a portion of the account balance each month that school is in session. If you withdraw $500 each month from August – December, what will your account balance be on December 31? Assume all withdrawals and deposits of interest occur on the last day of each month.

Question 1
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What is the net present value of the freezer?

Question 2
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What is the net present value of the stand?

Question 3
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Which of the following is how the present value index is calculated?

Question 1
0.5 / 0.5 pts

From E16-3, if Ms. Trevino accepts the $325,000, how much will it be worth in 5 years? Assume she earns a return of 8 percent per year and makes no withdrawals over the 5-year period

Question 2
0.5 / 0.5 pts

From E16-4, what is the maximum amount of cash the dean should be willing to pay for a copy machine?

From E16-5, what is the net present value of Monterey Company investing in two new vans?

Quiz Packets - Accounting & Finance

Question 1
0.5 / 0.5 pts

How much of the $625,000 purchase price for the land and building should Cowboy Ice Cream allocate to the land?

Question 2
0.5 / 0.5 pts

After Cowboy Ice Cream remodels the building, what is the total amount in the building account?

Question 3
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What amount of depreciation should Cowboy Ice Cream record for the building each year?

Question 4
0.5 / 0.5 pts

After purchasing and installing the freezer, what is the total amount that Cowboy Ice Cream should have in the equipment account?

Question 5
0.5 / 0.5 pts

What is the book value of the freezer at the end of year one?

Question 6
0.5 / 0.5 pts

On January 1, 2019, Pete Company purchases manufacturing equipment for $120,000. Installation and delivery costs totaled $8,000. Yearly maintenance costs on the equipment are expected to be $6,000. The expected useful life is 8 years with a salvage value of $12,000.

What amount should Pete Company have in its equipment account after the purchase?

Question 7
0.5 / 0.5 pts

On January 1, 2019, Pete Company purchases manufacturing equipment for $120,000. Installation and delivery costs totaled $8,000. Yearly maintenance costs on the equipment are expected to be $6,000. The expected useful life is 8 years with a salvage value of $12,000.

What amount of depreciation expense would Pete Company record in 2019?

Question 8
0.5 / 0.5 pts

On January 1, 2019, Pete Company purchases manufacturing equipment for $120,000. Installation and delivery costs totaled $8,000. Yearly maintenance costs on the equipment are expected to be $6,000. The expected useful life is 8 years with a salvage value of $12,000.

What amount of accumulated depreciation expense would Pete Company report on its December 31, 2021 balance sheet?

Question 9
0.5 / 0.5 pts

On January 1, 2019, Pete Company purchases manufacturing equipment for $120,000. Installation and delivery costs totaled $8,000. Yearly maintenance costs on the equipment are expected to be $6,000. The expected useful life is 8 years with a salvage value of $12,000.

What is the book value of the equipment on December 31, 2023?

Question 10
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On January 1, 2019, Pete Company purchases manufacturing equipment for $120,000. Installation and delivery costs totaled $8,000. Yearly maintenance costs on the equipment are expected to be $6,000. The expected useful life is 8 years with a salvage value of $12,000.

What amount of gain or loss would Pete Company record if it sold the equipment for $36,000 on January 1, 2025?

(Enter a gain as a positive number and a loss as a negative number.)

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Required information
[The following information applies to the questions displayed below.]


Wayland Custom Woodworking is a firm that manufactures custom cabinets and woodwork for business and residential customers. Students will have the opportunity to establish payroll records and to complete a month of payroll information for Wayland. Wayland Custom Woodworking is located at 1716 Nichol Street, Logan, Utah, 84321, phone number 435-555-9877. The owner is Mark Wayland. Wayland’s EIN is 91-7444533, and the Utah Employer Account Number is 999-9290-1. Wayland has determined it will pay their employees on a semimonthly basis. Federal income tax should be computed using the percentage method.


For Part 1 of this project, you will complete payroll for the entire fourth quarter (Q4) of 2018, which consists of the final six pay periods of the year. Once payroll has been completed for the fourth quarter, you will then file the annual tax forms for Wayland as well as prepare each employee's Form W-2 in Part 2.


The SUTA (UI) rate for Wayland Custom Woodworking is 2.6 percent on the first $34,300. The state withholding rate is 4.95 percent for all income levels and marital statuses, a table has been included to assist with calculations.


Rounding can create a challenge. For this project, the hourly rate for the individuals should be rounded to five decimal places. So take their salary and divide by 2,080 (52 weeks at 40 hours per week) for full-time, nonexempt employees. For nonexempt employees, such as Stevon Varden, Varden’s salary is $42,000 and is a nonexempt employee, so the calculation will be $42,000/2,080, which would give you $20.19231 per hour, and use this to compute the employee’s gross pay based on the number of hours worked. When a nonexempt employee has worked overtime hours for a given pay period, take their regular hourly rate and multiply it by 1.5, round the result to 5 decimal places, and multiply the new rate by their number of overtime hours.


For exempt employees', such as Anthony Chinson, an hourly rate rounded to five decimal places should be determined using the same method shown above, but gross pay should be determined by taking the exempt employee’s yearly salary and dividing it by 24, which is the number of payroll periods with a semimonthly frequency. For example, Chinson’s salary is $24,000 and is a full time employee. Chinson’s hourly rate is $11.53846 (determined by taking $24,000/2,080), but as he is an exempt employee, the calculation for his gross pay will be $24,000/24, which would give you $1,000. For pay periods that include paid holidays, ensure to distribute an exempt employee's regular pay accordingly to holiday pay based on the number of hours that consist of the holidays for that period.

After the gross pay has been calculated, round the result to only two decimal points prior to calculating taxes or other withholdings.

Employees are paid for the following holidays occurring during the final quarter:
• Thanksgiving day and the day after, Thursday and Friday November 22-23.
• Christmas, which is a Tuesday. Employees receive holiday pay for Monday, December 24, and Tuesday, December 25.

For the completion of this project, refer to the tax-related information in the table below. For federal withholding calculations, use the percentage method tables in Appendix C, which is provided below. For Utah state withholding calculations, use the Utah Schedule 3 tax tables linked below (ensure to use the appropriate Utah table based on each employee's marital status). Both 401(k) and insurance are pretax for federal income tax and Utah income tax.


Federal Withholding Allowance (less 401(k), Section 125) $172.90 per allowance claimed
Federal Unemployment Rate (employer only) (less Section 125) 0.6% on the first $7,000 of wages
Semimonthly Federal Percentage Method Tax Table Appendix C Page 393 Table #3
State Unemployment Rate (employer only) (less Section 125) 2.6% on the first $34,300 of wages
State Withholding Rate (less 401(k), Section 125) See Utah Schedule 3, Table 1 or use the Excel Version of Schedule 3
________________________________________

October 1:
Wayland Custom Woodworking (WCW) pays its employees according to their job classification. The following employees comprise Wayland’s staff:


Employee Number Name and Address Payroll information
00-Chins Anthony Chinson Married, 1 Withholding allowance
530 Sylvann Avenue Exempt
Logan, UT 84321 $24,000/year + commission
435-555-1212 Start Date: 10/1/2018
Job title: Account Executive SSN: 511-22-3333

00-Wayla Mark Wayland Married, 5 withholding allowances
1570 Lovett Street Exempt
Logan, UT 84321 $75,000/year
435-555-1110 Start Date: 10/1/2018
Job title: President/Owner SSN: 505-33-1775

01-Peppi Sylvia Peppinico Married, 7 withholding allowances
291 Antioch Road Exempt
Logan, UT 84321 $43,500/year
435-555-2244 Start Date: 10/1/2018
Job title: Craftsman SSN: 047-55-9951

01-Varde Stevon Varden Married, 2 withholding allowances
333 Justin Drive Nonexempt
Logan, UT 84321 $42,000/year
435-555-9981 Start Date: 10/1/2018
Job title: Craftsman SSN: 022-66-1131

02-Hisso Leonard Hissop Single, 4 withholding allowances
531 5th Street Nonexempt
Logan, UT 84321 $49,500/year
435-555-5858 Start Date: 10/1/2018
Job title: Purchasing/Shipping SSN: 311-22-6698

00-Succe Student Success Single, 1 withholding allowance
1650 South Street Nonexempt
Logan, UT 84321 $36,000/year
435-556-1211 Start Date: 10/1/2018
Job title: Accounting Clerk SSN: 555-55-5555


The departments are as follows:
Department 00: Sales and Administration
Department 01: Factory workers
Department 02: Delivery and Customer service

You have been hired as of October 1 as the new accounting clerk. Your employee number is 00-SUCCE. Your name is Student Success. Your address is 1650 South Street, Logan, UT 84321. Your phone number is 435-556-1211, you were born July 16, 1985, your Utah driver's license number is 887743 expiring in 7/16/2019, and your Social Security number is 555-55-5555. You are considered a nonexempt employee, have one withholding allowance, and paid a rate of $36,000 per year.
The balance sheet for WCW as of September 30, 2018, is as follows:

Wayland Custom Woodworking
Balance Sheet
September 30, 2018
Assets Liabilities & Equity
Cash $ 1,125,000.00 Accounts Payable $ 112,490.00
Supplies 27,240.00 Salaries and Wages Payable
Office Equipment 87,250.00 Federal Unemployment Tax Payable
Inventory 123,000.00 Social Security Tax Payable
Vehicle 25,000.00 Medicare Tax Payable
Accumulated Depreciation, Vehicle State Unemployment Tax Payable
Building 164,000.00 Employee Federal Income Tax Payable
Accumulated Depreciation, Building Employee State Income Tax Payable
Land 35,750.00 401(k) Contributions Payable
Total Assets 1,587,240.00 Employee Medical Premiums Payable
Notes Payable 224,750.00
Utilities Payable
Total Liabilities 337,240.00
Owners' Equity 1,250,000.00
Retained Earnings -
Total Equity 1,250,000.00
Total Liabilities and Equity 1,587,240.00
________________________________________

Voluntary deductions for each employee are as follows:

Name Deduction
Chinson Insurance: $50/paycheck
401(k): 3% of gross pay
Wayland Insurance: $75/paycheck
401(k): 6% of gross pay
Peppinico Insurance: $75/paycheck
401(k): $50 per paycheck
Varden Insurance: $50/paycheck
401(k): 4% of gross pay
Hissop Insurance: $75/paycheck
401(k): 3% of gross pay
Student Insurance: $50/paycheck
401(k): 3% of gross pay
________________________________________

For additional instructions on how to navigate and work through through Part 1 of this project, please download the student project guide here.
Required:
2. Complete the payroll process for Wayland Custom Woodworking's fourth quarter pay periods. Please note that for pay periods after October 15, you must carry the current ending year to date (YTD) amounts as they appear from the prior pay period from each employee's Employee Earnings Records form (EERF) to the rows titled "Prior Period YTD". Amounts from the current pay period will be auto-populated to the employee EERFs once you complete the payroll register, and will be combined with the prior period YTD amounts to determine the new current ending YTD amounts.

For example, if the year to date gross pay for Anthony Chinson is $5,000 after the October 31 pay period, you would take this amount and add it to the appropriate input box for gross pay on the "Prior Period YTD" row for their November 15 EERF.

Additionally, you must carry the ending balance from each account in the prior period General Ledger to the following period's General Ledger to the input boxes titled "Ending account balance from the prior period" before posting the payroll journal entries from the current period to the Ledger.

For additional instructions on how to carry information from one pay period to another, along with a guided walkthrough example of this process, refer to the project user guide in the project information section above.

October 15

October 15 is the end of the first pay period for the month of October. Employee pay will be disbursed on October 20, 2018. Any time worked in excess of 88 hours during this pay period is considered overtime for nonexempt employees. Remember that the employees are paid on a semimonthly basis.

• Complete the Employee Gross Pay tab.
• Complete the Payroll Register for October 15.
• Refer to the Employee Earnings Record Forms for each employee for the current YTD amounts after you have completed the October 15 Payroll Register. Amounts from the current period are auto-populated from the Payroll Register.
• Complete the General Journal entries for the October 15 payroll.
• Post the journal entries to the General Ledger.

October 31
October 31 is the end of the final pay period for the month. Employee pay will be disbursed on November 5, 2018. Compute the employee pay below. Update the Employees' Earnings Records for the period's pay and update the YTD amount. Any time worked in excess of 96 hours during this pay period is considered overtime for nonexempt employees. Remember that the employees are paid semi-monthly.

• Complete the Employee Gross Pay tab.
• Complete the Payroll Register for October 31.
• You must update the Employee Earnings Record Forms for each employee with the ending YTD amounts from October 15 (the prior pay period) in the "Prior Period YTD" rows. Amounts from the current period are auto-populated from the Payroll Register on the row for October 31.
• Complete the General Journal entries for the October 31 payroll.
• Update the General Ledger with the ending ledger balances from the October 15 pay period ledger accounts first, and then post the journal entries from the current period to the General Ledger.

November 15
Compute the pay for each employee. Update the Employee Earnings record for the period’s pay and the new YTD amount. Employee pay will be disbursed on November 21, 2018. Any hours exceeding 88 during this pay period are considered overtime for nonexempt employees. Remember that the employees are paid semimonthly.

• Complete the Employee Gross Pay tab.
• Complete the Payroll Register for November 15.
• You must update the Employee Earnings Record Forms for each employee with the ending YTD amounts from October 31 (the prior pay period) in the "Prior Period YTD" rows. Amounts from the current period are auto-populated from the Payroll Register on the row for November 15.
• Complete the General Journal entries for the November 15 payroll.
• Update the General Ledger with the ending ledger balances from the October 31 pay period ledger accounts first, and then post the journal entries from the current period to the General Ledger.

November 30
Compute the Net Pay for each employee. Employee pay will be disbursed on December 5, 2018. Update the Employees' Earnings Record with the November 30 pay and the new YTD amount.
The company is closed and pays for the Friday following Thanksgiving. The employees will receive holiday pay for Thanksgiving and the Friday following. All the hours over 88 are eligible for overtime for nonexempt employees as they were worked during the non-holiday week.

• Complete the Employee Gross Pay tab.
• Complete the Payroll Register for November 30.
• You must update the Employee Earnings Record Forms for each employee with the ending YTD amounts from November 15 (the prior pay period) in the "Prior Period YTD" rows. Amounts from the current period are auto-populated from the Payroll Register on the row for November 30.
• Complete the General Journal entries for the November 30 payroll.
• Update the General Ledger with the ending ledger balances from the November 15 pay period ledger accounts first, and then post the journal entries from the current period to the General Ledger.


December 15
Compute the net pay and update the Employees' Earnings Record with the December 15 pay and the new YTD information. Employee pay will be disbursed on December 20, 2018. Any hours worked in excess of 80 hours during this pay period are considered overtime for nonexempt employees.


• Complete the Employee Gross Pay tab.
• Complete the Payroll Register for December 15 Pay. Employee pay will be disbursed on December 20, 2018.
• You must update the Employee Earnings Record Forms for each employee with the ending YTD amounts from November 30 (the prior pay period) in the "Prior Period YTD" rows. Amounts from the current period are auto-populated from the Payroll Register on the row for December 15.
• Complete the General Journal entries for the December 15 payroll.
• Update the General Ledger with the ending ledger balances from the November 15 pay period ledger accounts first, and then post the journal entries from the current period to the General Ledger.


December 31
The final pay period of the year will not be paid to employees until January 4, 2019. The company will accrue the wages for the final pay period only. Since the pay period is complete, there will not be a reversing entry for the accrual. As a result, paychecks will not be issued for this pay period since they will be paid in the following year and reflected on the Employee Earnings Record forms for each employee when paid. The remainder of the employer liability will be paid with the final filing for the year.


The company pays for the day of Christmas and the day after for 2018. Employees will be paid for both Monday and Tuesday as holiday pay. Standard time for the pay period was 88 hours, but employees worked extra hours on Saturday during the week of 12/24-12/28. Reminder, holidays and vacations are not included as hours worked for calculation of overtime.

• Complete the Employee Gross Pay tab.
• Complete the Payroll Register for December 31.
• Complete the General Journal entries for the December 31 payroll.
• Update the General Ledger with the ending ledger balances from the December 15 pay period ledger accounts first, and then post the journal entries from the current period to the General Ledger.

Required information
[The following information applies to the questions displayed below.]


Wayland Custom Woodworking is a firm that manufactures custom cabinets and woodwork for business and residential customers. Students will have the opportunity to establish payroll records and to complete a month of payroll information for Wayland. Wayland Custom Woodworking is located at 1716 Nichol Street, Logan, Utah, 84321, phone number 435-555-9877. The owner is Mark Wayland. Wayland’s EIN is 91-7444533, and the Utah Employer Account Number is 999-9290-1. Wayland has determined it will pay their employees on a semimonthly basis. Federal income tax should be computed using the percentage method.


For Part 1 of this project, you will complete payroll for the entire fourth quarter (Q4) of 2018, which consists of the final six pay periods of the year. Once payroll has been completed for the fourth quarter, you will then file the annual tax forms for Wayland as well as prepare each employee's Form W-2 in Part 2.


The SUTA (UI) rate for Wayland Custom Woodworking is 2.6 percent on the first $34,300. The state withholding rate is 4.95 percent for all income levels and marital statuses, a table has been included to assist with calculations.


Rounding can create a challenge. For this project, the hourly rate for the individuals should be rounded to five decimal places. So take their salary and divide by 2,080 (52 weeks at 40 hours per week) for full-time, nonexempt employees. For nonexempt employees, such as Stevon Varden, Varden’s salary is $42,000 and is a nonexempt employee, so the calculation will be $42,000/2,080, which would give you $20.19231 per hour, and use this to compute the employee’s gross pay based on the number of hours worked. When a nonexempt employee has worked overtime hours for a given pay period, take their regular hourly rate and multiply it by 1.5, round the result to 5 decimal places, and multiply the new rate by their number of overtime hours.


For exempt employees', such as Anthony Chinson, an hourly rate rounded to five decimal places should be determined using the same method shown above, but gross pay should be determined by taking the exempt employee’s yearly salary and dividing it by 24, which is the number of payroll periods with a semimonthly frequency. For example, Chinson’s salary is $24,000 and is a full time employee. Chinson’s hourly rate is $11.53846 (determined by taking $24,000/2,080), but as he is an exempt employee, the calculation for his gross pay will be $24,000/24, which would give you $1,000. For pay periods that include paid holidays, ensure to distribute an exempt employee's regular pay accordingly to holiday pay based on the number of hours that consist of the holidays for that period.

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