Springfield Express is a luxury passenger carrier in Texas

Springfield Express is a luxury passenger carrier in Texas. All seats are first class, and the following data are available: Number of seats per passenger train car 90 Average load factor (percentage of seats filled) 70% Average full passenger fare $160 Average variable cost per passenger $70 Fixed operating cost per month $3,150,000 a. What is the break-even point in passengers and revenues per month? b. What is the break-even point in number of passenger train cars per month? c. If Springfield Express raises its average passenger fare to $ 190, it is estimated that the average load factor will decrease to 60 percent. What will be the monthly break-even point in number of passenger cars? d. (Refer to original data.) Fuel cost is a significant variable cost to any railway. If crude oil increases by $ 20 per barrel, it is estimated that variable cost per passenger will rise to $ 90. What will be the new break-even point in passengers and in number of passenger train cars? e. Springfield Express has experienced an increase in variable cost per passenger to $ 85 and an increase in total fixed cost to $ 3,600,000. The company has decided to raise the average fare to $ 205. If the tax rate is 30 percent, how many passengers per month are needed to generate an after-tax profit of $ 750,000? f. (Use original data). Springfield Express is considering offering a discounted fare of $ 120, which the company believes would increase the load factor to 80 percent. Only the additional seats would be sold at the discounted fare. Additional monthly advertising cost would be $ 180,000. How much pre-tax income would the discounted fare provide Springfield Express if the company has 50 passenger train cars per day, 30 days per month? g. Springfield Express has an opportunity to obtain a new route that would be traveled 20 times per month. The company believes it can sell seats at $ 175 on the route, but the load factor would be only 60 percent. Fixed cost would increase by $ 250,000 per month for additional personnel, additional passenger train cars, maintenance, and so on. Variable cost per passenger would remain at $ 70. 1. Should the company obtain the route? 2. How many passenger train cars must Springfield Express operate to earn pre-tax income of $ 120,000 per month on this route? 3. If the load factor could be increased to 75 percent, how many passenger train cars must be operated to earn pre-tax income of $ 120,000 per month on this route? 4. What qualitative factors should be considered by Springfield Express in making its decision about acquiring this route? Click here for the SOLUTION

PENN FOSTER Examination Number 06169300

FINANCIAL ACCOUNTING

PENN FOSTER Examination Number 06169300

Final Exam

Part A Number 1 SOLUTION
Part A Number 2 SOLUTION

Part B Number 1 SOLUTION
Part B Number 2 SOLUTION
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Part B Number 15

Kelvin Aerospace, Inc., manufactures parts such as rudder hinges for the aerospace industry

Kelvin Aerospace, Inc., manufactures parts such as rudder hinges for the aerospace industry. The company uses a job-order costing system with a predetermined plantwide overhead rate based on direct labor-hours. On December 16, 2008, the company's controller made a preliminary estimate of the predetermined overhead rate for the year 2009. The new rate was based on the estimated total manufacturing overhead cost of $3,402,000 and the estimated 63,000 total direct labor-hours for 2009:

Predetermined overhead rate =3,402,000
63,000 hours
= $54 per direct labor – hour

AND SO ON

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Eastern Manufacturing is involved with several situations that possibly involve contingencies

ACCOUNTING

P 13-6 Various contingencies

Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern’s fiscal year ends December 31, and the 2011 financial statements are issued on March 15, 2012.

a. Eastern is involved in a lawsuit resulting from a dispute with a supplier. On February 3, 2012, judgment was rendered against Eastern in the amount of $107 million plus interest, a total of $122 million. Eastern plans to appeal the judgment and is unable to predict its outcome though it is not expected to have a material adverse effect on the company.

b. In November 2010, the State of Nevada filed suit against Eastern, seeking civil penalties and injunctive relief for violations of environmental laws regulating hazardous waste. On January 12, 2012, Eastern reached a settlement with state authorities. Based upon discussions with legal counsel, the Company feels it is probable that $140 million will be required to cover the cost of violations. Eastern believes that the ultimate settlement of this claim will not have a material adverse effect on the company.

c. Eastern is the plaintiff in a $200 million lawsuit filed against United Steel for damages due to lost profits from rejected contracts and for unpaid receivables. The case is in final appeal and legal counsel advises that it is probable that Eastern will prevail and be awarded $100 million.

d. At March 15, 2012, the Environmental Protection Agency is in the process of investigating possible soil contamination at various locations of several companies including Eastern. The EPA has not yet proposed a penalty assessment. Management feels an assessment is reasonably possible, and if an assessment is made an unfavorable settlement of up to $33 million is reasonably possible.

Required:
1. Determine the appropriate means of reporting each situation. Explain your reasoning.
2. Prepare any necessary journal entries and disclosure notes.

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Foundations of Accounting I Project: Donna's Entertainment is a merchandising business

ACCOUNTING

Foundations of Accounting I
Accounting Project
Written by: Karen Pitsch

Comprehensive Problem

Donna’s Entertainment is a merchandising business. Their account balances as of November 30, 2012 (unless otherwise indicated), are as follows:

110 Cash $ 73,920
112 Accounts Receivable 34,250
113 Allowance for Doubtful Accounts 11,000
115 Merchandise Inventory 123,900
116 Prepaid Insurance 3,750
117 Store Supplies 2,850

AND SO ON

During December, the last month of the accounting year, the following transactions were completed:

Dec. 1. Issued check number 2632 for the December rent, $2,600.
3. Purchased three TV C units on account from Prince Co., terms 2/10, n/30, FOB shipping point, $11,100.
4. Issued check number 2633 to pay the transportation changes on purchase of December 3, $400. (NOTE: Do not include shipping and purchase discounts to the Inventory Control sheet for this project.)
6. Sold four TV A and four TV B on account to Albert Co., invoice 891, terms 2/10, n/30, FOB shipping point.
10. Sold two projector systems for cash.

AND SO ON

Check Figures for Accounting Project:
Cash Receipts Journal; Cash Column: 97,939
Unadjusted Trial Balance Total: 1,080,620
Net Income: 264,350
Post Closing Trial Balance: 347,490

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The following defined pension data of Rydell Corp. apply to the year 2010

The following defined pension data of Rydell Corp. apply to the year 2010. For 2010, prepare a pension worksheet for Rydell Corp. that shows the journal entry for pension expense and the year-end balances in the related pension accounts.
Projected benefit obligation, 1/1/10 (before amendment) $560,000
Plan assets, 1/1/10 546,200
Pension liability 13,800
On January 1, 2010, Rydell Corp., through plan amendment,
grants prior service benefits having a present value of 120,000

Settlement rate 9%
Service cost 58,000
Contributions (funding) 65,000
Actual (expected) return on plan assets 52,280
Benefits paid to retirees 40,000
Prior service cost amortization for 2010 17,000

Instructions:
For 2010, prepare a pension worksheet for Rydell Corp. that shows the journal entry for pension expense and the year-end balances in the related pension accounts.

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Q1 Which of the following is true regarding the Budgetary Comparison Schedule

ACCOUNTING

1. Which of the following is true regarding the Budgetary Comparison Schedule?

2. Assume encumbrances do not expire at year-end. $15,000 was encumbered during the prior year for a computer and the actual cost of the computer in the current year is $12,000. How does this affect unreserved fund balance?

3. Which of the following items would typically not need an encumbrance?

4. Which of the following is not considered Required Supplementary Information (RSI)?

5. Fiduciary funds are to use the:

6. Level "A" GAAP for The University of Virginia, a public institution, would be established by the:

7. Which of the following is true regarding the composition of the Comprehensive Annual Financial Report (CAFR)?

8. Under the modified accrual basis of accounting, revenues should be recognized when they are:

9. The Governmental Accounting Standards Board has been given authority to establish accounting and financial reporting standards for:

10. Which of the following is true regarding the government-wide Statement of Activities?

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2-9 The following General Fund information is available for the preparation of the financial statements for the city of Eastern Shores for the year

ACCOUNTING

2-9 The following General Fund information is available for the preparation of the financial statements for the city of Eastern Shores for the year ended September 30, 2012:

Revenues:
Property taxes $27,000,000
Sales taxes 13, 216,000
Fees and fines 1,124,000
Licenses and permits 1,921,000
Intergovernmental 868,000
Investment earnings 654,000
Expenditures:
Current:
General government 8,192,000
Public safety 24,444,000
Public works 6,211,000
Health and sanitation 1,693,000
Culture and recreation 2,154,000
Debt service – principal 652,000
Debt service – interest 821,000
Proceeds of long-term, capital-related debt 2,210,000
Transfer to special revenue fund 1,119,000
Special item – proceeds from sale of land 821,000
Fund balance, October 1, 2011

From the information given above, prepare, in good form, a General Fund Statement of Revenue, Expenditures, and Changes in Fund Balances for the City of Eastern Shores General Fund for the Year Ended September 30, 2012.

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2-8 The following information is available for the preparation of the government-wide financial statements for the city of Northern Pines for the year

ACCOUNTING

2-8. The following information is available for the preparation of the government-wide financial statements for the city of Northern Pines for the year ended June 30, 2012:

Expenses:
General government $10,300,000
Public safety 22,900,000
Public works 11,290,000
Health and sanitation 6,210,000
Culture and recreation 4,198,000
Interest on long-term debt, governmental type 621,000
Water and sewer system 11,550,000
Parking system 419,000
Revenues:
Charges for services, general government 1,110,000
Charges for services, public safety 210,000
Operation grant, public safety 698,000
Charges for services, health and sanitation 2,555,000
Operating grant, health and sanitation 1,210,000
Charges for services, culture and recreation 2,198,000
Charges for services, water and sewer 12,578,000
Charges for services, parking system 398,000
Property taxes 27,112,000
Sales taxes 20,698,000
Investment earnings, business-type 319,000
Special item – gain on sale of unused land,
Governmental type 1,250,000
Transfer from governmental activities to
Business-type activities 688,000
Net assets, July 1, 2011, governmental activities 11,222,000
Net assets, July 1, 2011, business-type activities 22,333,000

From the previous information, prepare, in good form, a Statement of Activities for the city of Northern Pines for the year ended June 30, 2012. Northern Pines has no component units.

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Traber Electronics is a small privately owned retailer of electronic equipment and household appliances

ACCOUNTING

Problem 2-37 Traber Electronics is a small privately owned retailer of electronic equipment and household appliances. Traber Electronics is required to provide audited financial statements as part of a due diligence investigation in consideration of a potential acquisition of Traber by a public company. In the interest of time, Traber appointed the audit firm of Makins & Howell, CPAs, without a formal proposal process. Makins & Howell immediately accepted the audit engagement in early October and agreed to the November 1 deadline for the auditor’s report.

Katie Kammins, CPA, was recently promoted to in-charge auditor for Makins & Howell and was assigned to the Traber audit along with Joel Misten, the firm’s university intern. Prior to her assignment to the Traber audit, all of Katie’s audit experience was in the health-care industry. Because most of Katie’s health-care clients had June 30 year ends, Katie was available in October to work on the Traber engagement.

Katie and Joel got right to work. Katie informed Joel that there was no time to test controls, so she instructed him as to the proper procedures for proving the mathematical accuracy of the accounting journals and ledgers and tying the totals to the financial statements. No footnotes or other supplemental disclosures accompanied the financial statements, and there were no prior-year financial statements to be used as a basis of comparison, which helped expedite the audit process.

While Joel was busy with the mathematical tie-ins, Katie analyzed the company’s sales and inventories because these were the most significant revenue and asset accounts. For sales, Katie reviewed the monthly sales reports and learned that several large contracts had been accounted for on the percentage of completion method. Although she wasn’t sure about the propriety of the profits recognized, Katie held a series of discussions with Traber’s controller, who assured Katie that the profits had been recorded in accordance with generally accepted accounting principles.

For inventories, Katie observed the items in the retail store, noting the reasonableness of their descriptions and saleable condition. She was not present when Traber Electronics conducted its annual physical count of the inventory. She did not examine the inventory at the company’s warehouse because it represented less than half of the value of the asset account.

One week before the deadline, Makins & Howell provided its standard audit report, which included an unqualified opinion on Traber’s financial statements.

Required:
Refer to each of the 10 GAAS and indicate how the actions of Makins & Howell or its employees resulted in violations of these standards.

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BC Company uses a job order cost accounting system. During the month of April, the following events occurred

ACCOUNTING

BC Company uses a job order cost accounting system. During the month of April, the following events occurred:

(a) Purchased raw materials on credit, $32,000.
(b) Raw materials requisitioned: $25,800 as direct materials and $10,500 indirect materials.
(c) Paid factory payroll for the month totaling $37,700 which includes $8,200 indirect labor.
(d) Assigned the factory payroll to jobs and overhead.

Make the necessary journal entries to record the above transactions and events.

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Your professor has asked you to complete a research paper concerning the link between the auditing profession and financial reporting standard setters

ACCOUNTING

Problem 1-34 Your professor has asked you to complete a research paper concerning the link between the auditing profession and financial reporting standard setters and regulators.

Required:
For each independent situation, determine which regulating or standard-setting body you should research:
(a) The entity that sets accounting standards for the government sector.
(b) The entity that decides what is required to become a licensed CPA and conduct work as a CPA.
(c) The entity that sets standards for audits of publicly traded companies.
(d) The entity that sets financial reporting standards in the U.S.
(e) The entity that prepares and administers the Uniform CPA Exam.
(f) The entity that has ultimate authority over public company reports as well as accounting and reporting standards.

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During 2010, Jester Corporation had the following transactions and events

ACCOUNTING

E14-6 During 2010, Jester Corporation had the following transactions and events.

1.Declared a cash dividend.
2.Issued par value common stock for cash at par value.
3.Completed a 2-for-1 stock split in which $10 par value stock was changed to $5 par value stock.
4.Declared a small stock dividend when the market value was higher than par value.
5.Made a prior period adjustment for overstatement of net income.
6.Issued the shares of common stock required by the stock dividend declaration in item no. 4 above.
7.Paid the cash dividend in item no. 1 above.
8.Issued par value common stock for cash above par value.

Instructions
Indicate the effect(s) of each of the foregoing items on the subdivisions of stockholders' equity. Present your answer in tabular form with the following columns (Capital Stock, Additional, Retained earnings). Use (I) for increase, (D) for decrease, and (NE) for no effect. Item no. 1 is given as an example.

1. Capital Stock = NE, Additional = NE, Retained earnings = D.

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On October 31, the stockholders’ equity section of Huth Company consists of common stock $300,000 and retained earnings $900,000

ACCOUNTING

On October 31, the stockholders’ equity section of Huth Company consists of common stock $300,000 and retained earnings $900,000. Huth is considering the following two courses of action:

(1) Declaring a 5% stock dividend on the 30,000, $10 par value shares outstanding, or
(2) Effecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price is $14 per share.

Instructions
Prepare a tabular summary of the effects of the alternative actions on the components of stockholders’ equity, outstanding shares, and par value per share. Use the following column headings: Before Action, After Stock Dividend, and After Stock Split

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