Wilson Products uses standard costing. It allocates manufacturing overhead (both variable and fixed) to products on the basis of

Response:

Refer to the explanation section

Clarification:

The disparity between the inventory count recorded and the actual count suggests that the goods in stock have either been sold or lost. For the sake of ongoing operations, it is presumed they have been sold. Accordingly, the journal entry to document the sale is -

December - 31       Cost of goods sold           Debit          45,000

                           ($415,000 - $370,000)

                                        Merchandise Inventory     Credit       45,000

                    (To record the sale of merchandise: adjusted)

Answer:

1.                                            Variable           Fixed

Cost of goods sold          70,000,000     30,000,000

Selling Expenses             12,000,000        4,000,000

Administrative Exp.           6,000,000         6,000,000

Total                                  88,000,000     40,000,000

Note:

Cost of goods sold: 70% variable and 30% fixed on 10,000,000 respectively

Selling expenses: 75% variable and 25% fixed on $16,000,000 respectively

Administrative expenses: 50% variable and 50% fixed on $12,000,000 respectively

2. Unit Variable cost = Total variable cost / Units produced

Total Variable cost          88,000,000

Units produced                  1,000,000

Unit variable cost                  88      

Unit Contribution margin = Selling Price - Variable cost per unit

Selling Price                    $188

- Variable cost per unit       $88

Unit Contribution margin   $100

3. Break even Point (Units) = Fixed cost / Contribution margin per unit

Fixed cost                                    40,000,000

Contribution margin per Unit           100    

4. Break even point (units) = Fixed cost / Contribution margin per unit

Fixed cost                                           40,000,000

Increased Fixed cost                           5,000,000

Total New fixed cost                          45,000,000

Contribution margin per unit                   100      

Break even point (units)                      450,000

5. Determined sales units = (New fixed cost + Desired Income) / Contribution margin

New Fixed Cost                45,000,000

Desired Income                60,000,000

                                         105,000,000

Contribution margin                100        

per unit

Determined sales units      1,050,000

6. Maximum Income from operation = Total New sales - Total New variable cost - Total Fixed cost

Sales                               188,000,000

Increased sales               11,280,000

Total New sales              199,289,000

Variable cost                    88,000,000

New Variable cost     5,280,000

Total New Variable cost   93,280,000

Total New Fixed cost       45,000,000

Maximum Income from   61,000,000

operation

Number of units = Increase in sales / Price per unit

New variable cost = Number of units * Unit variable cost

Increased sales                    11,280,000

Price per unit                            188    

Number of units                      60,000

Unit variable cost x                  88.00

New Variable cost                 5,280,000

7. Net income = Sales - Variable cost - New fixed cost

Sales                           188,000,000

Less: Variable cost      88,000,000

Less: New fixed cost   45,000,000

Net Income                  55,000,000

8. Option b. Supporting the proposal due to its potential to boost operational income.

Answer:

A. For the dividend, John incurred a cost of $0.00 since he was not listed as the shareholder of record by August 15th. As a result, the dividend allocation was made to the stock's former owner.

Explanation:

The settlement date refers to when the buyer officially takes ownership of the shares, typically occurring two days after the trade date.

Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.

Answer:

1. Create a statement for retained earnings.

Net income = $943,400

Retained earnings as of May 31, 2018 = $3,792,500

2. Construct a balance sheet, assuming a current portion of the note payable is $50,000.

Total Net Assets = Stockholder’s equity = $4,292,500

Explanation:

1. Create a statement for retained earnings.

The first step is preparing the income statement to find the net income as shown below:

Clairemont Co.

Income Statement

for the fiscal year ended May 31, 2018

Details                                                         $            

Sales                                                   11,343,000

Cost of goods sold                           (7,850,000)

Gross Income                                      3,493,000

Selling and Distribution expenses:

Sales salaries expense                        (916,000)

Advertising expense                           (550,000)

Depreciation expense - Store equipment        (140,000)

Miscellaneous selling expense            (38,000)

Administrative expenses:

Office salaries expense                     (650,000)

Rent expense                                        (94,000)

Insurance expense                               (48,000)

Depreciation expense - Office equipment   (50,000)

Office supplies expense                       (28,100)

Miscellaneous administrative expense         (14,500)  

Operating income                                964,400

Interest expense                                   (21,000)

Net income                                          943,400

Clairemont Co.

Retained Earnings Statement

for the fiscal year ended May 31, 2018

Details                                                             $            

Retained earnings at June 1, 2017         2,949,100

Net income for the year                            943,400

Dividends                                                  (100,000)

Retained earnings at May 31, 2018       3,792,500  

2. Construct a balance sheet, assuming a current portion of the note payable is $50,000.

Clairemont Co.

Balance sheet

for the fiscal year ended May 31, 2018

Details                                                     $                         $      

Fixed Assets

Office equipment                             830,000

Accumulated depreciation - office equip   (550,000)            280,000      

Store equipment                            3,600,000

Accumulated depreciation - store equip    (1,820,000)         1,780,000

Net Fixed Assets                                                        2,060,000

Current Assets

Cash                                                    240,000

Accounts receivable                          966,000

Inventory                                           1,690,000

Estimated returns inventory                 22,500

Office supplies                                       13,500

Prepaid insurance                                   8,000  

Total current assets                         2,940,000

Current Liabilities

Accounts payable                               (326,000)

Customer refunds payable                   (40,000)

Salaries payable                                     (41,500)

Note payable                                         (50,000)

Working Capital                                                               2,482,500

Long-term Liability

Note payable (300,000 - 50,000)                                 (250,000)

Net Total Assets                                                            4,292,500

Financed by:

Common stock                                                                 500,000

Retained earnings at May 31, 2018                                 3,792,500  

Stockholder’s Equity                                                     4,292,500

Note:

Since both the Total Net Assets and Stockholder’s equity are equal at $4,292,500, this indicates the financial statement is correctly prepared as both values are meant to coincide.