Reference no: EM131766389

Problem 1 - Based on the following income statement and balance sheet for Rashid Corporation, determine the cash flows from operating activities using the indirect method.

Rashid Corporation Income Statement For Year Ended December 31, 2007
Sales		$504,000
Cost of goods sold	$327,600
Depreciation expense	42,000
Other operating expenses	125,500	(495,100)
Other gains (losses):
Gain on sale of equipment		7,200
Income before taxes		$16,100
Income tax expense		(4,800)
Net income		$11,300

 

Rashid Corporation Balance Sheets At December 31
Assets	2007	2006
Cash	$64,650	$55,800
Accounts receivable	21,000	29,000
Inventory	58,000	52,100
Equipment	240,000	222,000
Accumulated depreciation	(106,000)	(96,000)
Total assets	$277,650	$262,900
Liabilities:
Accounts payable	$28,400	$23,700
Income taxes payable	1,050	1,200
Total liabilities	$29,450	$24,900
Equity:
Common stock	$106,000	$106,000
Contribution Capital in excess of par value	18,000	18,000
Retained earnings	124,200	114,000
Total equity	$248,200	$238,000
Total liabilities and equity	$277,650	$262,900

Problem 2 - On August 1, 2007, a company issues bonds with a par value of $600,000. The bonds mature in 10 years, and pay 6% annual interest, payable each February 1 and August 1. The bonds sold at $632,000. The company uses the straight-line method of amortizing bond premiums. The company's year-end is December 31. Prepare the general journal entry to record the interest accrued at December 31, 2007.

Problem 3 - In preparing a budget for the last three months of the current year, Urban Company is planning the units of merchandise it must order each month. The company's policy is to have 15% of the next month's sales in its inventory at the end of each month. Projected sales for October, November, and December are 27,000 units, 29,500 units, and 32,500 units, respectively. How many units must be ordered in November?

Problem 4 - The following information describes production activities of the Central Corp.:

Raw material used	16,000 lbs. at $4.05 per lb.
Factory payroll	5,545 hours for a total of $72,085

30,000 units were completed during the year

Budgeted standards for each unit produced:

1/2 lb. of raw material at $4.15 per lb.

10 minutes of direct labor at $12.50 per hour

Compute the direct materials price and quantity and the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.

Problem 5 - RC Corp. 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.