Finesse Co. buys and installs a machine on January 1, 2011, at a total cost of $92,750. Straight-line depreciation is taken each year for four years assuming a seven-year life and no salvage value. The machine is disposed of on July 1, 2015, during its fifth year of service. Prepare entries to record the partial year’s depreciation on July 1, 2015, and to record the disposal under the following separate assumptions: (1) the machine is sold for$35,000 cash and (2) Finesse receives an insurance settlement of $30,000 resulting from the total destruction of the machine in a fire.

Prince Distribution Inc. has an unfunded postretirement benefit plan. Medical care and life insurance benefits are provided to employees who render 10 years service and attain age 55 while in service. At the end of 2016, Jim Lukawitz is 31. He was hired by Prince at age 25 (6 years ago) and is expected to retire at age 62. The expected postretirement benefit obligation for Lukawitz at the end of 2016 is $50,000 and$54,000 at the end of 2017. Calculate the accumulated postretirement benefit obligation at the end of 2016 and 2017 and the service cost for 2016 and 2017 as pertaining to Lukawitz.

From the following Company T adjusted trial balance, prepare the following:

E. Post-Closing Trial Balance

$$\begin{array}{c} \textbf{Adjusted Trial Balance} \end{array}$$

$$\begin{array}{lcc} &\textbf{Debit}&\textbf{Credit}\\[5pt] \text{Cash}&\text{\$\hspace{5pt}24,000}\\ \text{Accounts Receivable}&\text{\hspace{10pt}14,900}\\ \text{Prepaid Insurance}&\text{\hspace{15pt}5,300}\\ \text{Land}&\text{\hspace{10pt}13,500}\\ \text{Accounts Payable}&&\text{\$\hspace{5pt}12,400}\\ \text{Salaries Payable}&&\text{\hspace{15pt}1,500}\\ \text{Common Stock}&&\text{\hspace{10pt}34,000}\\ \text{Retained Earnings}&&\text{\hspace{10pt}10,200}\\ \text{Dividends}&\text{\hspace{15pt}5,000}\\ \text{Service Revenue}&&\text{\hspace{10pt}56,300}\\ \text{Insurance Expense}&\text{\hspace{15pt}7,900}\\ \text{Salaries Expense}&\text{\hspace{10pt}39,000}\\ \text{Miscellaneous Expense}&\underline{\text{\hspace{15pt}4,800}}&\underline{\text{\hspace{39pt}}}\\ &\underline{\underline{\text{\$\hspace{1pt}114,400}}}&\underline{\underline{\text{\$\hspace{1pt}114,400}}}\\ \end{array}$$

Handy Hardware Corporation's unadjusted trial balance and accounting forms are given in the Working Papers.

Instructions:

1. Using the following information, journalize the adjusting entries for the current year ended December 31.

Adjustment Information, December 31

Estimated uncollectible accounts based on aging accounts receivable         $ 13,832.96 
Accrued interest income                                                          630.00 
Merchandise inventory                                                        162,569.00
Supplies inventory                                                             3,695.00
Value of prepaid insurance                                                     8,360.00
Annual depreciation expense equipment                                         13,034.00 
Accrued interest expense                                                         600.00 
Prepaid rent income earned                                                     4,000.00

$$\begin{matrix} \text{Estimated uncollectible accounts based} & \text{}\\ \text{on aging accounts receivable} & \text{\$ 3,796.00}\\ \text{Accrued interest income} & \text{80.00}\\ \text{Merchandise inventory} & \text{98,996.13}\\ \text{Supplies inventory} & \text{401.25}\\ \text{Jalue of prepaid insurance} & \text{600.00}\\ \text{Annual depreciation expense- equipment} & \text{7,345.00}\\ \text{Accrued interest expense} & \text{150.00}\\ \text{Prepaid rent income earned} & \text{2,000.00}\\ \end{matrix}$$

Journalize the income tax adjustment and post it to the T accounts.

Direct labor hours are estimated as 2,000 in Quarter 1; 2,100 in Quarter 2; 1,900 in Quarter 3; and 2,300 in Quarter 4. Prepare a manufacturing overhead budget using the information provided.

$$\begin{array}{lrlr} \text { Indirect material per hour } & \$ 1.00 & \text { Supervisory salaries } & \$ 17,000 \\ \text { Indirect labor per hour } & 1.25 & \text { Maintenance } & 5,000 \\ \text { Maintenance per hour } & 0.25 & \text { Property taxes and insurance } & 6,000 \\ \text { Utilities per hour } & 0.50 & \text { Depreciation } & 3,500 \end{array}$$

On January 14, the end of the first bi-weekly pay period of the year, Rockin Company’s payroll register displayed that its employees earned $14,000 of sales salaries. Withholdings from the employees’ salaries include FICA Social Security taxes at the rate of 6.2%, FICA Medicare taxes at the rate of 1.45%,$2,600 of federal income taxes, $309 of medical insurance deductions, and$120 of union dues. No employee earned more than $7,000 in this first period. Prepare the journal entry to record Rockin Company’s January 14 (employee) payroll expenses and liabilities.

Lettie just got her driver's license. Her friends soon nicknamed her "Leadfoot" because she is always going 80 mph on the freeway even though the speed limit is 65 mph. a. At this speed, how long will it take her to travel 50 miles? b. How long would it take her if she drove the 50 miles at 65 mph? c. Speeding tickets carry fines of about $200 and usually increase the cost of insurance. If Lettie gets a ticket on this trip, then what would be her cost per minute of time saved?

Ramel Corporation's unadjusted trial balance and accounting forms are given in the Working Papers.

Instructions:

13. Journalize the reversing entries using page 17 of a general journal.

Adjustment Information, December 31

Estimated uncollectible accounts based on aging accounts receivable         $ 11,020.00
Accrued interest income                                                          160.00
Merchandise inventory                                                        581,489.16 
Supplies inventory                                                               620.01
Value of prepaid insurance                                                     4,000.00
Annual depreciation expense-office equipment                                  10,960.00 
Annual depreciation expense-store equipment                                   10,120.00
Accrued interest expense                                                         625.00
Prepaid rent income earned                                                     6,000.00

Assuming the following Adjusted Trial Balance, recreate the Post-Closing Trial Balance that would result after all closing journal entries were made and posted:

$$\begin{array}{c} \textbf{Adjusted Trial Balance} \end{array}$$

$$\begin{array}{lcc} &\textbf{Debit}&\textbf{Credit}\\[5pt] \text{Cash}&\text{\$\hspace{1pt}17,900}\\ \text{Accounts Receivable}&\text{\hspace{10pt}9,900}\\ \text{Supplies}&\text{\hspace{10pt}1,600}\\ \text{Prepaid Insurance}&\text{\hspace{10pt}2,500}\\ \text{Salaries Payable}&&\text{\$\hspace{5pt}8,600}\\ \text{Common Stock}&&\text{\hspace{5pt}10,000}\\ \text{Retained Earnings}&&\text{\hspace{10pt}2,800}\\ \text{Dividends}&\text{\hspace{10pt}4,000}\\ \text{Service Fee Revenue}&&\text{\hspace{5pt}37,050}\\ \text{Salaries Expense}&\text{\hspace{5pt}16,900}\\ \text{Supplies Expense}&\text{\hspace{10pt}4,200}\\ \text{Insurance Expense}&\underline{\text{\hspace{10pt}1,450}}&\underline{\text{\hspace{34pt}}}\\ &\underline{\underline{\text{\$\hspace{1pt}58,450}}}&\underline{\underline{\text{\$\hspace{1pt}58,450}}}\\ \end{array}$$

Imagine you are a provider of portfolio insurance. You are establishing a four-year program. The portfolio you manage is currently worth 100 million dollars, and you promise to provide a minimum return of 0 %. The equity portfolio has a standard deviation of 25 % per year, and T-bills pay 5 % per year. Assume for simplicity that the portfolio pays no dividends (or that all dividends are reinvested).

a. What fraction of the portfolio should be placed in bills? What fraction in equity?

b. What should the manager do if the stock portfolio falls by 3 % on the first day of trading?

Rapid Delivery, Inc. is considering the purchase of an additional delivery vehicle for $\$ 38,000$ on January $1$, $2010$. The truck is expected to have a five-year life with an expected residual value of $\$ 5,000$ at the end of five years. The expected additional revenues from the added delivery capacity are anticipated to be $\$ 60,000$ per year for each of the next five years. A driver will cost $\$ 43,000$ in $2010$ , with an expected annual salary increase of $\$ 2,000$ for each year thereafter. The insurance for the truck is estimated to cost $\$ 4,000$ per year.

Is the additional truck a good investment based on your analysis?

Jerrod Company owns a machine with a cost of $305,000 and an accumulated depreciation of$45,000 that can be sold for $231,000, less a 5% sales commission. Alternatively, the machine can be leased by Jerrod Company for three years for a total of$243,000, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Jerrod Company on the machine would total $16,900 over the three years. Prepare a differential analysis on January 12, 2014, as to whether Jerrod Company should lease (Alternative 1) or sell (Alternative 2) the machine.

$$\begin{matrix} \text{Estimated uncollectible accounts based} & \text{}\\ \text{on aging accounts receivable} & \text{\$ 3,697.32}\\ \text{Accrued interest income} & \text{137.50}\\ \text{Merchandise inventory} & \text{45,058.15}\\ \text{Supplies inventory} & \text{126.00}\\ \text{Jalue of prepaid insurance} & \text{1,535.80}\\ \text{Annual depreciation expense- equipment} & \text{2,250.00}\\ \text{Accrued interest expense} & \text{277.58}\\ \text{Prepaid rent income earned} & \text{1,000.00}\\ \end{matrix}$$

Journalize the income tax adjustment and post it to the T accounts.