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Appendix B – Time Value of Money APPENDIX B TIME VALUE OF MONEY Related Assignment Materials Student Learning Objectives Quick Studies* Exercises* Conceptual objectives: C1. Describe the earning of interest and the concepts of present and future values. B-1 B-11, […]

Appendix B – Time Value of Money Appendix B Time Value of Money QUICK STUDIES Quick Study B-1 (10 minutes) 1. 2% n = 8 periods Quick Study B-2 (10 minutes) In Table B.1, where n = 15 and p […]

Appendix C – Activity-Based Costing APPENDIX C ACTIVITY-BASED COSTING Related Assignment Materials Student Learning Objectives Discussion Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Explain cost flows for activity based costing 1,3,4 Analytical objectives: A1. Identify and […]

Appendix C – Activity-Based Costing Appendix C Activity-Based Costing QUESTIONS 1. Manufacturing overhead costs cannot be directly traced to units of product like direct materials and direct labor. Assigning overhead costs to units of product requires some sort of allocation […]

Appendix C – Activity-Based Costing Exercise C-6 (30 minutes) Calculation of predetermined overhead rates to apply ABC Overhead Cost Category (Activity Cost Pool) Total Cost Total Amount of Cost Driver Predetermined Overhead Rate Supervision…………………………$ 5,400 $36,000 15% of direct labor […]

PROBLEM SET B Problem C-1B (45 minutes) 1. Wrapping $500,000/100,000 units = $5/unit Assembling* $400,000/20,000 direct labor hours = $20/DLH * The costs of Assembling and Obtaining business licenses should NOT be combined because they are different with respect to […]

Appendix C – Activity-Based Costing Exercise C-5 (continued) Part 3 Allocation of costs to the general surgery department using ABC GENERAL SURGERY Cost Driver Cost per Driver Unit Allocated Cost Professional salaries…………. 2,500 hours $160 per hr. $400,000 Patient services […]

Appendix C – Activity-Based Costing 2. Product A Product B Gross profit per unit $ 3.63 $35.36 x units purchased per customer A: 10,000 units/500 customers x 20 units B: 2,000 units/400 customers ________ x 5 units We see that […]

Appendix C – Activity-Based Costing Problem C-2B (concluded) 4. Mixing & Cooking ($4,500 + $11,250)/1,500 MH $10.50/MH Product testing $112,500/600 batches $187.50/batch Machine calibration $250,000/400 production runs $625/run Extra Fine Family Style Mixing & cooking 500 MH x $10.50………….….. $ […]

CHAPTER 1 ACCOUNTING IN BUSINESS Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives C1. Explain the purpose and importance of accounting 1, 5, 1-1 1-1, 1-4, 1-6 1-6 C2. Identify users and […]

Chapter 1 Accounting in Business QUESTIONS 1. The purpose of accounting is to provide decision makers with relevant and reliable 2. Technology reduces the time, effort, and cost of recordkeeping. There is still a demand for people who can design […]

QUICK STUDIES Quick Study 1-1 (10 minutes) 1. f. Technology 2. c. Recording 3. e. Recordkeeping (bookkeeping) Quick Study 1-2 (10 minutes) a. E g. E Quick Study 1-3 (10 minutes) a. The choice of an accounting method when more […]

Exercise 1-7 (10 minutes) Code Description Principle/Assumption H. 1. A company reports details behind financial statements that would impact users’ decisions. Full disclosure principle C 5. Every business is accounted for separately from its owner or owners. Business entity assumption […]

Chapter 01 – Accounting in Business .Exercise 1-13 (30 minutes) Assets =Liabilities +Equity Cash +Accounts Receivable +Equip- ment =Accounts Payable +M.Chen, Capital – M.Chen, With- drawals +Revenues –Expenses a. +$60,000 + $15,000 = + $75,000 b. – 1,500 ______ ______ […]

Chapter 01 – Accounting in Business Problem 1-2A (Concluded) Part 5 Company E First, compute the balance of equity as of December 31, 2015: Assets……………………………………………….… $113,000 Liabilities…………………………………..……….. (70 ,000) Equity…………………….…………………………… $ 43 ,000 Next, find the beginning balance of equity […]

Part 3 The Gram Co. Income Statement For Month Ended May 31 Revenues Consulting services revenue ……….. $11,100 Expenses Rent expense………………………………. $2,200 Salaries expense………………………….. 1,500 The Gram Co. Statement of Owner’s Equity For Month Ended May 31 G. Gram, Capital, […]

Problem 1-9A (Continued) Part 3 Sony Electric Income Statement For Month Ended December 31 Revenues Electrical fees earned…………………. $7,100 Expenses Rent expense……………….…….………. $1,000 Sony Electric Statement of Owner’s Equity For Month Ended December 31 S. Sony, Capital, December 1…………….…. $ […]

PROBLEM SET B Problem 1-1B (25 minutes) Balance Sheet Income Statement Statement of Cash Flows Transaction Total Assets Total Liab. Total Equity Net Income Operating Activities Financing Activities Investing Activities 1 Owner invests cash in business + + + 2 […]

Problem 1-7B (Continued) Part 3 Niko’s Maintenance Co. Income Statement For Month Ended June 30 Revenues Maintenance services revenue..…….. $16,925 Expenses Rent expense………………………………… $6,000 Salaries expense…………………………… 1,600 Advertising expense…………………..…. 1,150 Utilities expense……………………………. 890 Niko’s Maintenance Co. Statement of Owner’s Equity […]

Problem 1-9B (60 minutes) Parts 1 and 2 Assets = Liabilities + Equity Date Cash +Accounts Receivable +Office Supplies +Office Equipment +Roofing Equipment =Accounts Payable +R. Rivera, Capital – R. Rivera, With-draw als +Reve-nue s–Expen-se s July 1 + $80,000 […]

Problem 1-12BA (20 minutes) Case 1. Return: No return is generated. Risk: Moderate Risk. By hiding money at home a person risks loss by theft or fire. Also such a strategy might result in a loss of purchasing power in […]

Comparative Analysis — BTN 1-2 ($ millions) Apple Google 1. Total assets = 3. Revenues-Expenses = Net income =$37,037 =$12,920  Expenses = Expenses = $ 133,873 Expenses = $46,905 $170,910- Expenses $59,825 – Expenses 4. Analysis of return on […]

Chapter 10 – Plant Assets, Natural Resources and Intangibles CHAPTER 10 PLANT ASSETS, NATURAL RESOURCES AND INTANGIBLES Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Explain the cost principle for 1, […]

VISUAL #10-1 FORMULAS FOR DEPRECIATION METHODS 1. STRAIGHT LINE FHC* – Estimated salvage Annual Estimated useful life Depreciation *Full Historical Cost 2. UNITS OF PRODUCTION (Depreciable) a) FHC – Estimated salvage Cost per Predicted units of production Unit b) CPU* […]

Chapter 10 – Plant Assets, Natural Resources, and Intangibles Chapter 10 Plant Assets, Natural Resources, and Intangibles QUESTIONS 1. A plant asset is tangible; it is used in the production or sale of other assets or services; 2. The cost […]

VISUAL #10-1 FORMULAS FOR DEPRECIATION METHODS 1. STRAIGHT LINE 2. UNITS OF PRODUCTION (Depreciable) a) FHC – Estimated salvage Cost per Predicted units of production Unit b) CPU* x units produced Depreciation in period for PERIOD (In last year, depreciate […]

Chapter 10 – Plant Assets, Natural Resources, and Intangibles Exercise 10-3 (20 minutes) Purchase price………………………………………………….. $375,280 Allocation of total cost Appraised Value Percent of Total Applying % to Cost Apportioned Cost Land…………………………$157,040 40% $395,380 x .40 $158,152 Land improvements……. 58,890 […]

Chapter 10 – Plant Assets, Natural Resources, and Intangibles Chapter 10 Plant Assets, Natural Resources, and Intangibles QUESTIONS 1. A plant asset is tangible; it is used in the production or sale of other assets or services; and it has […]

Exercise 10-25 (20 minutes) (Amounts for this exercise are in euros millions) 1. Depreciation expense…………………………………………… ……………………………………………………………………… 6,689 2. Property, plant and equipment………………………………. ……………………………………………………………………… 11,061 Cash……………………………………………………………… 11,061 To record betterments (improvements) on property, plant and equipment. 3. Cash……………………………………………………………………. 700 Loss on […]

Chapter 10 – Plant Assets, Natural Resources, and Intangibles Exercise 10-6 (15 minutes) Double-declining-balance Double-declining-balance rate = (100% / 10 years) x 2 = 20% per year First year’s depreciation = $43,500 x 20% = $8,700 Exercise 10-7 (15 minutes) […]

PROBLEM SET B Problem 10-1B (50 minutes) Part 1 Estimated Market Value Percent of Total Apportioned Cost Building…………………….. $ 890,000 50% $ 900,000 2015 Jan. 1 Buildings……………………………………………………………..900,000 Land…………………………………………………………………….432,000 Land Improvements………………………………………………252,000 Trucks………………………………………………………………….216,000 Cash………………………………………………………………. 1,800,000 To record asset purchases. Part 2 Year […]

Chapter 10 – Plant Assets, Natural Resources, and Intangibles Problem 10-2A (25 minutes) Year Straight-LineaUnits-of-Productionb Double-Declining- Balancec 1…………………. $ 59,375 $110,000 $128,750 2…………………. 59,375 62,300 64,375 3…………………. 59,375 60,900 32,188 4…………………. 59 ,375 4 ,300 12 ,187 Totals………….. $237 ,500 […]

Problem 10-8B (20 minutes) 1. 2015 (a) To record payment for sublease. (b) Jan. 1 Prepaid Rent………………………………………………………36,000 Cash…………………………………………………………….. 36,000 To record prepaid annual lease rental. (c) Jan. 3 Leasehold Improvements…………………………………….20,000 Cash…………………………………………………………….. 20,000 To record costs of leasehold improvements. 2. 2015 […]

Chapter 10 – Plant Assets, Natural Resources, and Intangibles Problem 10-2B (25 minutes) Year Straight-LineaUnits-of-Productionb Double-Declining- Balancec 1…..…………… $ 58,800 $ 71,120 $129,600 2…..…………… 58,800 64,080 77,760 3…..…………… 58,800 63,400 46,656 4…..…………… 58,800 68,720 27,994 5…..…………… 58 ,800 26 ,680 […]

Chapter 10 – Plant Assets, Natural Resources, and Intangibles Serial Problem — SP 10 Serial Problem — SP 10, Business Solutions (45 minutes) 1. For the three months ended March 31, 2016, depreciation expense was $400 for office equipment and […]

Chapter 11 – Current Liabilities and Payroll Accounting CHAPTER 11 CURRENT LIABILITIES AND PAYROLL ACCOUNTING Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Describe current and long-term liabilities and their characteristics. […]

Chapter 11 – Current Liabilities and Payroll Accounting CHAPTER 11 CURRENT LIABILITIES AND PAYROLL ACCOUNTING Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Describe current and long-term 1 11-1, 11-14 11-1 […]

Chapter 11 – Current Liabilities and Payroll Accounting Chapter 11 Current Liabilities and Payroll Accounting QUESTIONS 4. The amount of the sale for the item only is $950 ($988/1.04). 5. The combined Social Security tax rate (assuming the maximum wage […]

Solution: Alternate Demonstration Problem Chapter Eleven Issuance: 11/1/13 Cash………………………………………… 200,000 Notes Payable……………..……… 200,000 Year end accrual: 12/31/13 Interest Expense………………………. 3,000 Interest Payable………….….…… 3,000 ($200,000 X 9% X 60/360 = $ 3,000 accrued interest) Maturity date: 1/30/14 Notes Payable…………………..……… 200,000 Interest […]

Exercise 11-9 (30 minutes) a. Employee Cumulative Pay Pay Subject to FICA Social Security Pay Subject to FICA Medicare Pay Subject to FUTA Taxes Pay Subject to SUTA Taxes Ken S……………….$ 6,000 $ 6,000 $ 6,000 $ 6,000 $ 6,000 […]

Chapter 11 – Current Liabilities and Payroll Accounting Chapter 11 Current Liabilities and Payroll Accounting QUESTIONS 1. A current liability is expected to be paid within one year or the company’s operating cycle, whichever is longer. Any liability that is […]

Problem 11-1A (Concluded) 5. 2014 Apr. 20 Merchandise Inventory……………………………………. 40,250 Accounts Payable—Locust………………………… 40,250 Purchased merchandise on credit. May 19 Accounts Payable—Locust……………………………… 40,250 July 8 Cash………………………………………………………………. 80,000 Notes Payable—National……………………………. 80,000 Borrowed cash with a 120-day, 9% note. Aug. 17 Interest Expense…………………………………………….. […]

Chapter 11 – Current Liabilities and Payroll Accounting Exercise 11-9 (30 minutes) a. Employee Cumulative Pay Pay Subject to FICA Social Security Pay Subject to FICA Medicare Pay Subject to FUTA Taxes Pay Subject to SUTA Taxes Ken S……………….$ 6,000 […]

Problem 11-6AA (Concluded) Apr. 15 FICASocial Security Taxes Payable…………………………………………………… 3,472 15 State Unemployment Taxes Payable…………………………………………………….. 2,800 Cash……………………………………………………………………………………………….. 2,800 To record payment of SUTA taxes [$2,240 + $560]. 30 Federal Unemployment Taxes Payable………………………………………………… 420 Cash……………………………………………………………………………………………….. 420 To record payment of FUTA […]

Chapter 11 – Current Liabilities and Payroll Accounting Problem 11-2A (25 minutes) Part 1 Jan. 8 Office Salaries Expense……………………………………………………….…….………22,760.00 Sales Salaries Expense…………………………………………………………………….…65,840.00 Part 2 Jan. 8 Payroll Taxes Expense………………………………………………………..….…….……10,853.50 FICA—Social Sec. Taxes Payable…………………………………………………. 5,493.20 FICA—Medicare Taxes Payable……………………………………….…….…… 1,284.70 State Unemployment […]

Problem 11-6BA (50 minutes) June 15 FICA—Social Security Taxes Payable………………. 992 30 Office Salaries Expense………………………………………………………………………… 3,800 Shop Salaries Expense…………………………………………………………………………. 4,200 FICA—Social Security Taxes Payable……………………………………………. 496 FICA—Medicare Taxes Payable…………………………………………………….. 116 Employee Fed. Income Taxes Payable……………………………………………. 1,050 Salaries Payable……………………………………………………………………………… 6,338 To record […]

Chapter 11 – Current Liabilities and Payroll Accounting Problem 11-1B (Concluded) 5. 2014 Apr. 22 Merchandise Inventory………………….……….………… 5,000 Accounts PayableFox Products. . 5,000 Purchased merchandise on credit. Paid note with interest. Nov. 12 Interest Expense………………………………………………. 400 Notes PayableSpring Bank.……………………………. 12,000 […]

4. The solution depends on the financial statement information accessed. Comparative Analysis — BTN 11-2 1. Apple—Times interest earned ($ millions) Current Year One Year Prior Two Years Prior Net income…………………………………………$37,037 $41,733 $25,922 Google—Times interest earned ($ millions) Current Year […]

Chapter 11 – Current Liabilities and Payroll Accounting Serial Problem — SP 11 Serial Problem — SP 11, Business Solutions (30 minutes) 1. Gross pay (8 days x $125 per day)………………..…….…….. $1,000.00 FICA Social Security tax deduction (6.2%)*……………………………………………….…… $ 62.00 […]

Chapter 11 – Current Liabilities and Payroll Accounting Ethics Challenge — BTN 11-3 1. It is in Bly’s self-interest to maximize the amount of revenues less warranty expenses so as to maximize his personal bonus. Since Bly 2. Although Bly […]

Chapter 12 – Accounting for Partnerships CHAPTER 12 ACCOUNTING FOR PARTNERSHIPS Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Identify characteristics of partnerships and similar 1, 2, 3, 4, 5, 8 […]

Chapter 12 – Accounting for Partnerships SOLUTION: ALTERNATE DEMONSTRATION PROBLEM CHAPTER 12 1. Proceeds from sale $85,000 2. Sands Mell Rand Capital account balance prior to distribution of loss on sale of assets $1,200 $11,700 $15,100 Distribution of loss (1/10 […]

Exercise 12-5 (35 minutes) Kramer Knox Total 1. Net income…………………………………………… $ 98,800 Salary allowances…………………………………$50,000 $ 40,000 90,000 Interest allowances 2. Net income…………………………………………… $ (16,800) Salary allowances…………………………………$50,000 $ 40,000 90,000 Interest allowances ($60,000 x 10%)…………………………………..6,000 6,000 ($80,000 x 10%)………………………………….. 8,000 8 […]

Chapter 12 – Accounting for Partnerships Chapter 12 Accounting for Partnerships QUESTIONS 1. Under the circumstances described, the death, bankruptcy, or legal inability of a partner to execute a contract ends a partnership. In addition, if a partnership is 2. […]

Problem 12-1A (Concluded) Income (Loss) Year 2 Sharing Plan Calculations Watts Lyon (a) 40% x $90,000 income……………………………………..$36,000 60% x $90,000 income…………………………………….. $54,000 (b) 33 1/3% x $90,000 income………………………………..$30,000 66 2/3% x $90,000 income……………………………….. $60,000 Income (Loss) Year 3 Sharing Plan […]

Chapter 12 – Accounting for Partnerships Exercise 12-7 (10 minutes) Exercise 12-8 (25 minutes) 1. Nov. 1 Cash…………………………………………………………………90,000 Madison, Capital………………………………….……… 90,000 To record admission of Madison [($510,000 + $90,000) x 15%]. 2. Nov. 1 Cash…………………………………………………………………120,000 Madison, Capital…………………………………………. 94,500 Main, Capital………………………………………………. […]

PROBLEM SET B Problem 12-1B (45 minutes) Preliminary calculations Plan (a) & Plan (c) Percentages based on initial investments Plan (b) Percentages based on time Bell = 0.333/1.333 = 25% Green = 1.000/1.333 = 75% Plan (c) & Plan (d) […]

Chapter 12 – Accounting for Partnerships Problem 12-4A (50 minutes) Part 1 a) Feb. 1 Benson, Capital…………………………..…….….…….……138,000 North, Capital……………………………………………… 138,000 To record admission of North. b) **($214,000 – $138,000) x 5/8 e) Feb. 1 Benson, Capital…………………………..…….….…….……138,000 Accumulated Depreciation—Equipment………..….. 23,200 Meir, […]

Reporting in Action — BTN 12-1 1. The founders of Apple are Steve Wozniak, Steve Jobs and Ron Wayne. Each Apple I personal computer kit was single-handedly designed and 2. At least two differences would be immediately apparent between Apple’s […]

Chapter 12 – Accounting for Partnerships Problem 12-3B (30 minutes) Part 1 Income (Loss) Sharing Plan Calculations Cook Xi Schwartz Total (a) $240,000/3…………………………………………….$80,000 $ 80,000 $ 80,000 $240 ,000 (c) Net income……….……….………………………… $240,000 Salary allowances………..……….……….……..$40,000 $ 30,000 $ 80,000 (150 […]

Chapter 12 – Accounting for Partnerships Comparative Analysis — BTN 12-2 1. Apple was organized/founded in 1976, and Google was 2. Apple’s initial public offering occurred in 1980. Google’s initial public offering occurred in 2004. 3. Apple and Google stock […]

Chapter 13 – Accounting for Corporations CHAPTER 13 ACCOUNTING FOR CORPORATIONS Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Identify characteristics of corporations and their organization. 1, 2, 3, 4 13-1 […]

Chapter Outline Notes 2. Prior Period Adjustments a. Corrections of material errors made in prior periods. b. Include arithmetic mistakes, unacceptable accounting, and missed facts. c. Reported in statement of retained earnings as corrections (net of income tax effects) to […]

ALTERNATE DEMONSTRATION PROBLEM Chapter Thirteen Uzi Company received a charter granting the right to issue 200,000 shares of $1 par value common stock and 10,000 shares of 8% cumulative and nonparticipating, $50 par value preferred stock that is callable at […]

EXERCISES Exercise 13-1 (15 minutes) Characteristic Corporations 1. Owner authority and control………………….One vote per share 2. Ease of formation…………………………………Requires government approval Exercise 13-2 (15 minutes) 1. Feb. 20 Cash……………………………………………………………….152,000 Common Stock, $2 Par Value*…………………….. 38,000 Paid-In Capital in Excess of […]

Chapter 13 – Accounting for Corporations Chapter 13 Accounting for Corporations QUESTIONS 1. Organization expenses (costs) are incurred in creating a corporation. Examples include: 2. Organization expenses (costs) are reported as expenses when incurred—as part of operating expenses—because the amount […]

Exercise 13-13 (30 minutes) 1. Net income…………………………………………………………………………$960,000 Exercise 13-14 (15 minutes) Stock Market Value per Share Divided by Earnings per Share Price-Earnings Ratio 1…………. $176.40 $12.00 = 14.7 2…………. 96.00 10.00 = 9.6 3…………. 93.75 7.50 = 12.5 4…………. 250.00 […]

Chapter 13 – Accounting for Corporations Exercise 13-3 (15 minutes) 1. Cash……………………………………………………………..………… 35,000 Common Stock, $5 Par Value*…………………………….. 20,000 2. Organization Expenses……………………………………….…… 40,000 Common Stock, $1 Stated Value…………………………. 2,000 Paid-In Capital in Excess of Stated Value, Common Stock…………………………………….…………. 38,000 Issued […]

Problem 13-5A (40 minutes) 1. Market price = $85 per share (current stock exchange price given) 2. Computation of par values of stock 3. Book values with no dividends in arrears Book value per preferred share = par value (when […]

Chapter 13 – Accounting for Corporations Exercise 13-16 (20 minutes) 1. Total stockholders’ equity………………………………..…….. $1,585,000 Less equity applicable to preferred shares Call price ($30 x 10,000)……………….……..……………..… $300,000 Cumulative dividends in arrears (none).……………….. 0 (300,000) 2. Total stockholders’ equity………………………………..…….. $1,585,000 Less […]

Reporting in Action — BTN 13-1 (All shares in thousands.) 1. As of September 28, 2013, the shares of common stock issued and The weighted-average common shares used in calculating earnings per share are disclosed on its statement of income. […]

Chapter 13 – Accounting for Corporations Problem 13-5A (Concluded) 5. Book values with call price and two years’ dividends in arrears Preferred stock Preferred stock call price (1,000 x $55)……. $ 55,000 *2 years’ dividends = 2 x ($50,000 x […]

Chapter 13 – Accounting for Corporations SERIAL PROBLEM — SP 13 Serial Problem — SP 13, Business Solutions (25 minutes) 1a. Journal entry for issuance of common stock to Cicely Cash………………………………………………………………………86,000 Common Stock…………………………………..……..…….. 86,000 Issuance of common stock. 1b. Journal […]

Chapter 14 – Long-Term Liabilities Chapter 14 C1. Explain the types and payment patterns of notes. 1 14-11 14-10, 14-11, 14-20 14-6 C2. Explain and compute the present value of an amount to be paid at a future date. (Appendix […]

Alternate Demonstration Problem Chapter Fourteen Note: Instructor can choose the interest amortization method. Solution one demonstrates the straight line method and solution two demonstrates the effective interest method. ABC Company issued $200,000 face value bonds on January 1, 2015, with […]

Chapter 14 – Long-Term Liabilities Solution One: Alternate Demonstration Problem Using Straight Line Interest Method of Amortization Chapter Fourteen 1. Calculation of cash received upon issuance of bonds (issue price): Present value of $200,000 to be received in 10 periods, […]

EXERCISES Exercise 14-1 (15 minutes) 2. Journal entries 2015 (a) Jan. 1 Cash……………………………………………………………………3,400,000 Bonds Payable……………………………………………….. 3,400,000 Sold bonds at par. (b) June 30 Bond Interest Expense………………………………………….153,000 Cash………………………………………………………………. 153,000 Paid semiannual interest on bonds. (c) Dec. 31 Bond Interest Expense………………………………………….153,000 Cash………………………………………………………………. […]

Chapter 14 – Long-Term Liabilities Chapter 14 Long-Term Liabilities QUESTIONS 1. Notes payable generally involve borrowing from a single creditor, whereas bonds payable are usually sold to many different lenders (bondholders). 2. A bond is a liability of the issuing […]

Exercise 14-11 (20 minutes) 2015 Jan. 1 Cash……………………………………………………………………100,000 2015 Dec. 31 Interest Expense…………………………………………………..7,000 Notes Payable………………………………………………………22,523 Cash………………………………………………………………. 29,523 To record first installment payment. 2016 Dec. 31 Interest Expense…………………………………………………..5,423 Notes Payable………………………………………………………24,100 Cash………………………………………………………………. 29,523 To record second installment payment. 2017 Dec. 31 Interest […]

Chapter 14 – Long-Term Liabilities Exercise 14-2 (30 minutes) 1. Discount = Par value – Issue price = $180,000 – $170,862 = $9,138 2. Total bond interest expense over the life of the bonds Amount repaid Six payments of $7,200*……………… […]

Problem 14-2A (40 minutes) Part 1 2015 Jan. 1 Cash……………………………………………………………………3,456,448 Sold bonds on stated issue date. Part 2 [Note: The semiannual amounts for (a), (b), and (c) below are the same throughout the bonds’ life because this company uses straight-line […]

Chapter 14 – Long-Term Liabilities Exercise 14-11 (20 minutes) 2015 Jan. 1 Cash………………………………………………………………………100,000 Notes Payable…………………………………………..….….. 100,000 Borrowed $100,000 by signing a 7% installment note. 2015 2017 Dec. 31 Interest Expense…………………………………………………….3,736 Notes Payable………………………………………………..………25,787 Cash………………………………………………………………… 29,523 To record third installment payment. 2018 […]

Problem 14-8AB (Concluded) Part 4 2015 June 30 Bond Interest Expense………………………………………….11,687 2015 Dec. 31 Bond Interest Expense………………………………………….11,830 Discount on Bonds Payable…………………………….. 3,705 Cash………………………………………………………………. 8,125 To record six months’ interest and discount amortization. Discount on Bonds Payable…………………………….. 3,562 Cash………………………………………………………………. 8,125 To […]

Chapter 14 – Long-Term Liabilities Problem 14-2A (40 minutes) Part 1 2015 Jan. 1 Cash………………………………………………………………………3,456,448 Part 2 [Note: The semiannual amounts for (a), (b), and (c) below are the same throughout the bonds’ life because this company uses straight-line amortization.] […]

Problem 14-3B (40 minutes) Part 1 2015 Jan. 1 Cash……………………………………………………………………4,192,932 Part 2 (a) Cash Payment = $3,400,000 x 10% x 6/12 year = $170,000 (b) Premium = $4,192,932 – $3,400,000 = $792,932 Straight-line premium amortization= $792,932/20 semiannual periods = $ […]

Chapter 14 – Long-Term Liabilities Problem 14-8AB (Concluded) Part 4 2015 June 30 Bond Interest Expense……………………….….…….….…….11,687 2015 Dec. 31 Bond Interest Expense……………………….….…….….…….11,830 Discount on Bonds Payable……………………….….…. 3,705 Cash………………………………………………………………… 8,125 To record six months’ interest and discount amortization. Problem 14-9AB (45 […]

Problem 14-9BB (45 minutes) Part 1 Ten payments of $14,400…………………….. $144,000 Par value at maturity…………………………… 320 ,000 or: Ten payments of $14,400…………………….. $144,000 Less premium……………………………………. (12 ,988) Total bond interest expense………………… $131 ,012 Part 2 Semiannual Interest Period-End (A) Cash […]

Problem 14-2B (Concluded) Part 3 Twenty payments of $170,000…………..….. $3,400,000 Par value at maturity………………………….… 3,400,000 Total repaid…………………………….…..………. 6,800,000 Part 4 (Semiannual amortization: $390,000/20 = $19,500) Semiannual Period-End Unamortized Discount Carrying Value 1/01/2015………………… $390,000 $3,010,000 6/30/2015………………… 370,500 3,029,500 12/31/2015………………… 351,000 3,049,000 […]

Ethics Challenge — BTN 14-3 1. The ethics of the Traverse County officials are questionable. The financial impact of the leasing arrangement is the same as bond In reality, the taxpayers of Traverse County reacted very negatively to the actions […]

Problem 14-8BB (60 minutes) Part 1 2015 Jan. 1 Cash………………………………………………………………………198,494 Part 2 Thirty payments of $7,200*….……………….. $ 216,000 Par value at maturity………………………….… 240,000 Total repaid…………………………….……….….. 456,000 Less amount borrowed………….……………. (198,494) Total bond interest expense..………………. $ 257,506 *$240,000 x 0.06 x […]

SERIAL PROBLEM — SP 14 Serial Problem — SP 14, Business Solutions (75 minutes) Part 1 Total equity = $119,393 Part 2 Assume the secured loan is taken, then the percent of assets financed by: a. Debt ($875 + $94,639) […]

Chapter 15 – Investments and International Operations CHAPTER 15 C1. Distinguish between debt and equity securities and between long-term investments and short-term investments. 1, 2, 5 15-1, 15-2 15-1, 15-11 15-5, 15-6 C2. Describe how to report equity securities with […]

Chapter 15 – Investments and International Operations Solution: Alternate Demonstration Problem Chapter 15 Part 1 2015 Jan 1 Long-Term Investment–Investee Stock… 150,000 Cash…………………………………………….… 150,000 Long-Term Investment–Investee Stock 8,000 Dec 31 Long-Term Investment–Investee Stock… 16,000 Earnings from Long-Term Investment –Investee Company…………………….………. […]

EXERCISES Exercise 15-1 (10 minutes) 3. Short-term investments are securities that (1) management intends to convert to cash within one year or the operating cycle, whichever is longer, and (2) are readily convertible to cash. 4. Long-term investments in securities […]

Chapter 15 – Investments and International Operations Chapter 15 Investments and International Operations QUESTIONS 1. To be classified as current assets, investments must be (i) capable of being operating cycle, whichever is longer). 2. Short-term investments in trading securities are […]

Exercise 15-16A (25 minutes) Quarter ended June 30, 2015 May 8 recorded amount (800,000 x $0.1323)…………………. $105,840 June 30 balance sheet amount (800,000 x $0.1352)………. 108,160 Foreign exchange gain……………………………………………….. $ 2,320 Quarter ended September 30, 2015 June 30 balance sheet […]

Chapter 15 – Investments and International Operations Exercise 15-3 (20 minutes) 1. 2015 Dec. 31 Fair Value Adjustment—Trading……………..…….. 6,000 trading securities. 2. The accounts in part (1) are reported on different financial statements. i. The $6,000 debit balance in the […]

Problem 15-3A (Concluded) Part 2 12/31/2015 12/31/2016 12/31/2017 Long-Term AFS Securities (cost)………………. $117,100 $85,143 $212,160 Part 3 2015 2016 2017 Realized gains (losses) Sale of Johnson & Johnson shares……. $ 2,235 Sale of Mattel shares…………………………. (5,080) Sale of Sara Lee […]

Chapter 15 – Investments and International Operations Exercise 15-16A (25 minutes) Quarter ended June 30, 2015 May 8 recorded amount (800,000 x $0.1323).………………… $105,840 June 30 balance sheet amount (800,000 x $0.1352)……….. 108,160 Foreign exchange gain……………………………………..…………. $ 2,320 Quarter ended […]

Problem 15-2B (40 minutes) Part 1 Feb. 6 Short-Term Investments—AFS (Nokia)………… 143,250 15 Short-Term Investments—AFS (T-bills)……….. 20,000 Cash………………………………………………….. 20,000 Purchased U.S. Treasury bills. Apr. 7 Short-Term Investments—AFS (Dell)…………… 48,655 Cash………………………………………………….. 48,655 Purchased 1,200 shares of Dell [(1,200 x $39.50) + […]

Chapter 15 – Investments and International Operations Problem 15-4A (30 minutes) Part 1 1. Journal entries (assuming significant influence) 2015 Jan. 5 Long-Term Investments—Kildaire…………………………….…………1,560,000 Cash……………………………………………………………………….…1,560,000 Purchased Kildaire shares. 2016 Oct. 15 Cash…………………………………………………………………………….…156,000 Long-Term Investments—Kildaire……………………….…………156,000 Record cash dividend (60,000 x $2.60). […]

Serial Problem — SP 15 Serial Problem, Business Solutions (35 minutes) Part 1 2016 April 16 Short-Term Investments—Trading (J&J)……………….20,300 30 Short-Term Investments—Trading (Starbucks)……. 4,650 Cash………………………………………………………. 4,650 Purchased Starbucks shares [(200 x $22) + $250]. Part 2 Adjusting entry at June […]

Chapter 15 – Investments and International Operations Problem 15-2B (Concluded) Part 2 Comparison of Cost and Fair Values of AFS Portfolio Unrealized Cost Fair Value Gain (Loss) Nokia (2,550 x $41.25) + $2,250a………. $107,437 $340,232 $298,738 $41,494 a Brokerage fee […]

Chapter 15 – Investments and International Operations Serial Problem — SP 15 Serial Problem, Business Solutions (35 minutes) Part 1 2016 April 16 Short-Term Investments—Trading (J&J)……………….20,300 30 Short-Term Investments—Trading (Starbucks)…….. 4,650 Cash……………………………………………………..…. 4,650 Purchased Starbucks shares [(200 x $22) + […]

Chapter 16 – Reporting the Statement of Cash Flows CHAPTER 16 REPORTING THE STATEMENT OF CASH FLOWS Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Distinguish between operating, investing, and financing […]

VISUAL #16-1 CLASSIFYING ACTIVITIES IN THE STATEMENT OF CASH FLOWS OPERATING ACTIVITIES Cash inflows from Cash outflows to Customers for cash sales Collections on credit sales Borrowers for interest Dividends received Lawsuit settlements Salaries and wages Lenders for interest Charities […]

Chapter 16 – Reporting the Statement of Cash Flows Chapter 16 Reporting the Statement of Cash Flows QUESTIONS 1. The purpose of the cash flow statement is to report all major cash receipts (inflows) and cash payments (outflows) during a […]

VISUAL #16-1 CLASSIFYING ACTIVITIES IN THE STATEMENT OF CASH FLOWS OPERATING ACTIVITIES Cash inflows from Cash outflows to Customers for cash sales Salaries and wages INVESTING ACTIVITIES Cash inflows from Cash outflows to Selling investments in securities Selling (discounting) notes […]

Quick Study 16-17 (10 minutes) 1. Moore is probably in the strongest position of the three competing companies on the basis of the statement of cash flows. Moore’s cash flows 2. Sykes’s cash flow on total assets ratio is slightly […]

Chapter 16 – Reporting the Statement of Cash Flows Chapter 16 Reporting the Statement of Cash Flows QUESTIONS 1. The purpose of the cash flow statement is to report all major cash receipts (inflows) and cash payments (outflows) during a […]

Exercise 16-11 (40 minutes) Part 1 IKIBAN, INC. Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2015 Cash flows from operating activities Net income……………………………………………………………..$ 99,510 Adjustments to reconcile net income to net cash provided by operating activities […]

Chapter 16 – Reporting the Statement of Cash Flows Quick Study 16-19 (Concluded) Part 2 The company’s operating cash flows are negative, $(1,750). This is not a good omen. However, much of this is attributed to a huge increase in […]

PROBLEM SET A Problem 16-1A (35 minutes) LANSING COMPANY Cash Flows from Operating Activities—Indirect Method For Year Ended December 31, 2015 Cash flows from operating activities Net income………………………………………………………………….. $ 6,000 Adjustments to reconcile net income to net cash provided by […]

Chapter 16 – Reporting the Statement of Cash Flows Exercise 16-12B (40 minutes) Part 1 IKIBAN, INC. Statement of Cash Flows (Direct Method) For Year Ended June 30, 2015 Cash flows from operating activities Cash received from customers (Note 1)……….. […]

PROBLEM SET B Problem 16-1B (35 minutes) SALT LAKE COMPANY Cash Flows from Operating Activities—Indirect Method For Year Ended December 31, 2015 Cash flows from operating activities Net income………………………………………………………………….. $ 20,000 Adjustments to reconcile net income to net cash provided […]

Chapter 16 – Reporting the Statement of Cash Flows Problem 16-3A (Concluded) Part 2 Forten Company’s operations provide a positive net cash inflow of $40,900—a good result. At the same time, the cash balance decreased by $23,700 (32%) Helping fund […]

Problem 16-8BB (35 minutes) SATU COMPANY Statement of Cash Flows For Year Ended December 31, 2015 Cash flows from operating activities Cash received from customers (Note 1) ……………… $756,438 Cash flows from investing activities Cash paid for equipment …………………………………… (30,250) […]

Chapter 16 – Reporting the Statement of Cash Flows Problem 16-3B (40 minutes) Part 1 GAZELLE CORPORATION Statement of Cash Flows Income statement item not affecting cash Depreciation expense……………………….….…….….….…….….38,600 Loss on disposal of equipment…………………………….….…… 2,100 Changes in current assets and […]

Part 2 Adjusting Net Income to Cash Flow from Operating Activities Items to Add Items to Subtract a. Noncash expenses Noncash revenues b. Losses Gains c. Decreases in current assets Increases in current assets d. Increases in current liabilities Decreases […]

Chapter 16 – Reporting the Statement of Cash Flows Comparative Analysis — BTN 16-2 1. Apple’s cash flow on total assets ratio ($ millions) Current Year = Operating cash flows/Average total assets = $53,666 / [($207,000 + $176,064)/2] = $53,666 […]

Chapter 17 – Analysis of Financial Statements CHAPTER 17 ANALYSIS OF FINANCIAL STATEMENTS Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Explain the purpose and identify the building blocks of analysis. […]

Chapter 17 – Analysis of Financial Statements CHAPTER 17 ANALYSIS OF FINANCIAL STATEMENTS Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Explain the purpose and identify the building blocks of analysis. […]

Alternate Demonstration Problem Chapter Seventeen Following are data from the statements of two companies selling similar products: Current Year-End Balance Sheets Sled Company Zip Company Cash……………………………………………………………… $ 11,900 $ 20,000 Notes receivable—short-term……….……………….. 7,700 3,200 Accounts receivable, net……………………………….. 42,000 64,000 Inventory………………………………………………………. […]

Exercise 17-8 (25 minutes) 1. Days’ sales uncollected 2. Accounts receivable turnover 2015: = 8.9 times 2014: = 9.4 times ($89,500 + $62,500)/2 $532,000 3. Inventory turnover ($62,500 + $50,200)/2 $411,225 ($82,500 + $54,000)/2 2015: = 4.2 times 2014: = […]

Chapter 17 – Analysis of Financial Statements Chapter 17 Analysis of Financial Statements QUESTIONS 1. Financial reporting includes the entire process of preparing and issuing financial 2. With comparative statements, financial statement items for two or more successive accounting periods […]

Problem 17-2A (Concluded) Part 3 KORBIN COMPANY Balance Sheet Data in Trend Percents December 31, 2015, 2014, and 2013 2015 2014 2013 Assets Current assets…………………………… 101.24% 73.29% 100.00% Liabilities and Equity Current liabilities……………………….. 112.32% 98.33% 100.00% Common stock………………………….. 120.00 120.00 […]

Chapter 17 – Analysis of Financial Statements Exercise 17-7 (25 minutes) 1. Current ratio 2015: = 1.88 to 1 2. Acid-test ratio 2015: = 0.93 to 1 2014: = 1.30 to 1 2013: = 1.72 to 1 $75,250 $37,800 + […]

Part 2 BLUEGRASS CORPORATION Common-Size Comparative Income Statements For Years Ended December 31, 2015, 2014, and 2013 2015 2014 2013 Sales………………………………………………….100.00% 100.00% 100.00% Cost of goods sold……………………………… 54.77 51.91 46.04 * Some totals do not reconcile due to rounding. Gross […]

Chapter 17 – Analysis of Financial Statements Problem 17-2A (60 minutes) Part 1 Current ratio: December 31, 2015: $52,390 / $22,800 = 2.3 to 1 Part 2 KORBIN COMPANY Common-Size Comparative Income Statements For Years Ended December 31, 2015, 2014, […]

SERIAL PROBLEM — SP 17 Serial Problem — SP 17, Business Solutions (45 minutes) 1. Gross margin with services revenue Gross margin = Total revenue – Cost of goods sold Gross margin without services revenue Gross margin = Net (goods) […]

Chapter 17 – Analysis of Financial Statements PROBLEM SET B Problem 17-1B (120 minutes) Part 1 TRIPOLY COMPANY Income Statement Trends For Years Ended December 31, 2015-2009 2015 2014 2013 2012 2011 2010 2009 Sales…..………………….….……. 65.1% 70.9% 73.3% 79.1% 86.0% […]

Chapter 17 – Analysis of Financial Statements Problem 17-6BA (60 minutes) Part 1 Effect of income taxes (debits or losses in parentheses) Pretax 25% Tax Effect After-Tax e. Loss on hurricane damage…………..…………………..………(64,000) (16,000) (48,000) (45,000) Part 2 Income from continuing […]

Chapter 18 – Managerial Accounting Concepts and Principles CHAPTER 18 MANAGERIAL ACCOUNTING CONCEPTS AND PRINCIPLES Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Explain the purpose and nature of, and the […]

Chapter 18 – Managerial Accounting Concepts and Principles CHAPTER 18 MANAGERIAL ACCOUNTING CONCEPTS AND PRINCIPLES Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Explain the purpose and nature of, and the […]

Alternate Demo Problem Eighteen Using the following information for Superior Manufacturing Company, prepare a manufacturing statement and an income statement for the year ended December 31, 2015. (Assume a 25% income tax.) Further assume that all raw materials used were […]

EXERCISES Exercise 18-1 (10 minutes) Exercise 18-2 (20 minutes) Most fixed costs are indirect. Fixed costs normally are resources acquired to For example, as production increases, the total cost of the laces consumed in production increases. These laces might be […]

Chapter 18 – Managerial Accounting Concepts and Principles Chapter 18 Managerial Accounting Concepts and Principles QUESTIONS 1. The managerial accountant plays an important role in preparing the information necessary for effective planning and control decisions. One example is the budget, […]

Exercise 18-10 (20 minutes) Garcon Company Pepper Company 1. PRIME COSTS Direct materials Beginning raw materials inventory…………….. $ 7,250 $ 9,000 2. CONVERSION COSTS Direct labor…………………………………………………. Factory overhead $19,000 $35,000 Rental cost on factory equipment………………. 27,000 22,750 Factory utilities………………………………………… 9,000 […]

Chapter 18 – Managerial Accounting Concepts and Principles EXERCISES Exercise 18-1 (10 minutes) Exercise 18-2 (20 minutes) Most fixed costs are indirect. Fixed costs normally are resources acquired to support the production process rather than being traceable to individual products […]

PROBLEM SET A Problem 18-1A (45 minutes) Part 1 Cost classification and amounts Costs Variable Fixed Product Period 1. Plastic for casing—$17,000……………… $17,000 $17,000 2. Wages of assembly workers—$82,000…. 82,000 82,000 3. Property taxes on factory—$5,000……. $ 5,000 5,000 Part […]

Chapter 18 – Managerial Accounting Concepts and Principles Exercise 18-12 (25 minutes) Account Balance Sheet Income Statement Schedule of COGM Overhead Report Cash……….……………….………..…..….…….  Depreciation expense—Factory building………………………………..…..…..  Depreciation expense—Office building………………………………..…..…..  Direct labor……….……………….………..…..  Ending work in process inventory……. […]

Problem 18-1B (continued) Part 2 Maxwell Calculation of Manufacturing Cost per BD For Year Ended December 31, 2015 Item Total cost (at 15,000 units) Per unit cost * Variable production costs Plastic for BDs $ 1,500 $ 0.10 Part 3 […]

Chapter 18 – Managerial Accounting Concepts and Principles Problem 18-3A (Continued) Part 2 LEONE COMPANY Income Statement For Year Ended December 31, 2015 Sales…………………………………………………………………….. $4,462,500 Cost of goods sold Cost of goods sold………………….…….….…….…….……. 1,966,510 Gross profit from sales………………….…….…….….……… 2,495,990 Operating […]

Comparative Analysis — BTN 18-2 1. The purpose of Apple’s audit committee is to: a. Assist the Board in oversight and monitoring of: i. the Corporation’s financial statements and other financial information provided to shareholders and others; ii. compliance with […]

Chapter 18 – Managerial Accounting Concepts and Principles Problem 18-5B (40 minutes) Part 1 MERCHANDISING BUSINESS TEEMART Partial Income Statement For Year Ended December 31, 2015 Cost of goods sold Merchandise inventory, December 31, 2014……………………….…..$100,000 Merchandise purchases……………………………………………………….. 250,000 Goods available […]

Chapter 19 – Job Order Costing CHAPTER 19 JOB ORDER COSTING Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Describe important features of job order production. 10, 11, 12, 13 19-1, […]

Chapter 19 – Job Order Costing CHAPTER 19 JOB ORDER COSTING Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Describe important features of job order production. 10, 11, 12, 13 19-1, […]

VISUAL #19-1 Tracing Product Costs Through a Cost Accounting System Work in Process Finished Goods (5) Other factory OH costs incurred (Cr varies) 19-8 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written […]

Exercise 19-4 (15 minutes) 1. 2. Direct materials…………………………………………………………………….. $15,350 Exercise 19-5 (20 minutes) Estimated overhead costs Estimated direct labor $747,500 $575,000 $600,000 $1,500,000 Overhead costs Direct material costs Direct labor…………………………………………………………………………… 3,200 Factory overhead ($3,200 x 130%)………………………………………….. 4,160 Total cost of […]

Chapter 19 – Job Order Costing Chapter 19 Job Order Costing QUESTIONS 1. Factory overhead is not identified with specific units (jobs) or batches (job lots). Therefore, to assign costs, estimates of the relation between factory overhead cost 2. Several […]

Exercise 19-16 (30 minutes) 1. Overhead rate = Total overhead costs / Total direct labor costs 2. Total cost of work in process inventory………………………….. $ 71,000 Deduct: Direct labor……………………………………………………… (20,000) Deduct: Factory overhead ($20,000 x 60%)…………………….. (12,000) Direct materials……………………………………………………………. $ […]

Chapter 19 – Job Order Costing Exercise 19-4 (15 minutes) 2. Direct materials…………………………………………………………….………… $15,350 Direct labor…………………………………………………………………….………. 3,200 Factory overhead ($3,200 x 130%)……………………………….………….. 4,160 Total cost of Job No. 13-56………………………………………………………. $22,710 Exercise 19-5 (20 minutes) 1. Rate = = = 40% […]

Problem 19-2A (75 minutes) Part 1 a. Dec. 31 Work in Process Inventory…………………………………….28,800 b. Dec. 31 Work in Process Inventory…………………………………….59,800 Wages Payable……………………………………………….. 59,800 To record direct labor costs for Jobs 402 and 404 ($36,000 + $23,800). c. Dec. 31 Work […]

Chapter 19 – Job Order Costing Exercise 19-19 (15 minutes) (1) Raw Materials Inventory……………………..………………….3,108 Accounts Payable…………………………………………….. 3,108 To record raw material purchases. (2) The amount of materials purchased is almost equal to the amount of materials used in production. This […]

Problem 19-5A (Continued) MATERIALS LEDGER CARD Item Material M Received Issued Date Receivin g Report Unit s Unit Pric e Total Price Requi- sition Unit s Unit Pric e Total Price Unit s Unit Pric e May 1 200 250 […]

Chapter 19 – Job Order Costing Problem 19-3A (70 minutes) Part 1 JOB COST SHEETS Job No. 136 Job No. 138 Materials………….. $ 48,000 Materials………….. $ 19,200 Labor…………..….. 12,000 Labor…………..….. 37,500 Overhead……..….. 24,000 Overhead……..….. 75,000 Total cost ……..….. $ 84,000 […]

Problem 19-2B (Concluded) Part 4 (Concluded) CAVALLO MFG. Balance Sheet December 31, 2015 Assets Cash…………………………………………………………… $ 64,000 Accounts receivable……………………………………. 42,000 Inventories Raw materials inventory………………………………$11,700 Part 5 The $2,100 error would cause the costs for Job 604 to be understated. Since […]

Chapter 19 – Job Order Costing Problem 19-1B (Continued) Part 3 PEREZ MFG. Schedule of Cost of Goods Manufactured For Month Ended September 30 Direct materials used…………………………………………….…… $350,000 Direct labor used………………………………………………….……. 218,000 Deduct work in process, September 30 (Job 116)………… […]

Problem 19-5B (Continued) j. The ending balance in Factory Overhead is computed as: Actual Factory Overhead Miscellaneous overhead………….. $36,800 Indirect materials…………………….. 864 Indirect labor…………………………… 12,000 Total actual factory overhead…… 49,664 Factory overhead applied…………… 50,400 Overapplied overhead………………… $ (736) SERIAL PROBLEM— […]

Chapter 19 – Job Order Costing Problem 19-4B (35 minutes) Part 1 a. Predetermined overhead rate = = = 50% b. Overhead costs charged to jobs Direct Applied Job No. Labor Overhead (50%) 625…………………………………………..…………….…….$ 354,000 $177,000 626…………………………………………..…………….…….330,000 165,000 Total…………………………………………………..…………$1,473,000 $736,500 […]

Chapter 19 – Job Order Costing Comparative Analysis — BTN 19-2 1. Actual inventory changes and operating cash flow effects as found on the cash flow statement (amounts are in $millions) Apple Current Year One Year Prior Two Years Prior […]

Chapter 02 – Analyzing and Recording Transactions CHAPTER 2 ANALYZING AND RECORDING TRANSACTIONS Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Explain the steps in processing transactions and the role of […]

Chapter 02 – Analyzing and Recording Transactions CHAPTER 2 ANALYZING AND RECORDING TRANSACTIONS Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Explain the steps in processing transactions and the role of […]

Alternate Demonstration Problem Chapter Two Record the following transactions of Speedy Computer Service, owned by Bill Smith, for the month of March 2015. March 1. Bill Smith invested $3,000 cash in his business. 15. Bill provided services and received cash […]

Solution: Alternate Demonstration Problem Chapter Two GENERAL JOURNAL DATE ACCOUNT TITLES AND EXPLANATION P.R. DEBIT CREDIT March 1 Cash 3 0 0 0 00 Bill Smith, Capital 3 0 0 0 00 Accounts Payable 1 0 0 00 17 Gas […]

EXERCISES Exercise 2-1 (10 minutes) 4 a. Prepare and analyze the trial balance. Exercise 2-2 (10 minutes) a. 5 “Three” d. 1 “Asset” b. 2 “Equity” e. 3 “Account” c. 4 “Liability” Exercise 2-3 (5 minutes) a. 1 “Chart” b. […]

Chapter 02 – Analyzing and Recording Transactions Chapter 2 Analyzing and Recording Transactions QUESTIONS 1. a. Common asset accounts: cash, accounts receivable, notes receivable, prepaid expenses (rent, insurance, etc.), office supplies, store supplies, equipment, building, and land. 2. A note […]

Exercise 2-16 (15 minutes) HELP TODAY Income Statement For Month Ended August 31 Revenues Consulting fees earned…………………… $ 27,000 Expenses Rent expense…………………………………. $ 9,550 Exercise 2-17 (15 minutes) HELP TODAY Statement of Owner’s Equity For Month Ended August 31 C. […]

Chapter 02 – Analyzing and Recording Transactions Exercise 2-6 (15 minutes) a. Beginning accounts payable (credit)…………..…………………..…..…. $152,000 Purchases on account in October (credits)…………….….….…..…… 281,000 b. Beginning accounts receivable (debit)…………..…………………….…. $102,500 Sales on account in October (debits)……………..….…..….….…..…… ? Collections on account […]

Problem 2-2A (Part 1 Continued) i. Accounts Receivable……………………………106 22,000 Engineering Fees Earned………………402 22,000 Billed client for completed work. j. Equipment Rental Expense…………………..602 1,333 Accounts Payable…………………………201 1,333 Incurred equipment rental expense. k. Cash……………………………………………………101 7,000 Accounts Receivable…………………….106 7,000 Collected cash on account. […]

Chapter 02 – Analyzing and Recording Transactions Exercise 2-20 (20 minutes) Description (1) Difference between Debit and Credit Columns (2) Column with the Larger Total (3) Identify account(s) incorrectly stated (4) Amount that account(s) is overstated or understated a. $3,600 […]

Problem 2-4A (Concluded) Part 3 HV CONSULTING Trial Balance September 30 Debit Credit Cash …………………………………………………. $ 12,665 Accounts receivable…………………………… 2,250 Office supplies…………………………………… 2,000 Problem 2-5A (90 minutes) Part 1 NETTLE DISTRIBUTION Balance Sheet December 31, 2014 Assets Liabilities Cash………………………… $ […]

Chapter 02 – Analyzing and Recording Transactions Problem 2-2A (Concluded) Part 3 ARACEL ENGINEERING Trial Balance June 30 Debit Credit Cash………………………………………………….… $ 22,945 Accounts receivable.…………………………… 29,000 Prepaid insurance…………..…………………… 3,000 J. Aracel, Withdrawals…………………………. 9,480 Engineering fees earned………………………. 42,200 Wages expense……………………………………. 2,400 […]

Part 2 Cash Acct. No. 101 Date Explanation PR Debit Credit Balance Nov. 1 G1 30,000 30,000 2 G1 4,500 25,500 Accounts Receivable Acct. No. 106 Date Explanation PR Debit Credit Balance Nov. 12 G1 10,200 10,200 22 G1 5,200 […]

Problem 2-6A (35 minutes) Part 1 MIN ENGINEERING Trial Balance May 31 Debit Credit Cash………………………………………………….… $37,641 Office supplies…………………………………….. 890 Prepaid insurance…………..……….………….. 4,600 Office equipment…………………………….…… 12,900 Accounts payable………………………………… $12,900 Part 2: Likely transactions (following order of trial balance). 1. Purchased $890 […]

Serial Problem, Business Solutions (Continued) Part 2 General Ledger accounts Cash Acct. No. 101 Date Explanation PR Debit Credit Balance Oct. 1 45,000 45,000 2 3,300 41,700 5 2,220 39,480 8 1,420 38,060 15 4,800 42,860 38,264 Accounts Receivable Acct. […]

Problem 2-2B (Concluded) Part 3 SOFTWORKS Trial Balance April 30 Debit Credit Cash …………………………………..……….……….. $ 17,262 Accounts receivable……………………..……….. 9,350 Prepaid insurance……………………………..…… 5,000 Office equipment……………………………………. 6,700 Fees earned………………………………..….……… 19,050 Wages expense……………………….….…………. 3,600 Computer rental expense…………………….…. 580 Advertising expense………………………………. 750 Repairs expense…………….………….………….. […]

Problem 2-6B (35 minutes) Part 1 GOULD SOLUTIONS Trial Balance April 30 Debit Credit Cash ………………………………………………………….… $19,982 Office supplies …………………………………………….. 760 Prepaid rent ……………………..……….…………….….. 1,800 Office equipment …………………………………….…… 12,250 Accounts payable…………………………………………. $12,250 Part 2: Likely transactions (following order of trial […]

Reporting in Action — BTN 2-1 1. Apple reports ($ millions): 2. Apple reports ($ millions): $207,000 in assets at September 28, 2013. $176,064 in assets at September 29, 2012. 3. ($ millions): As of September 28, 2013 Debt Ratio […]

Chapter 20 – Process Costing CHAPTER 20 PROCESS COSTING Related Assignment Materials 20-15, 20-18 C3. Describe accounting for production activity and preparation of a process costing summary using weighted average 14 20-7, 20-12, 20-16, 20-18, 20-19, 20-20, 20-27 20-12, 20-13, […]

Chapter 20 – Process Costing Chapter 20 Process Costing QUESTIONS 1. The main deciding factor in choosing between a job order costing system or a process costing system is the type of product or service. Examples where a 3. Yes, […]

Solution: Alternate Demo Problem Twenty Weighted-average Method Direct Materials Direct Labor and Factory Overhead Units completed this period* 7,400 7,400 Equivalent units in ending inventory *Beginning inventory units of 400 + units started and completed 7,000 Solution: Alternate Demo Problem […]

Problem 20-6B (Concluded) 4. Assignment of costs to output of department—FIFO Costs of goods transferred out Cost of beginning work in process inventory……….. Costs to complete beginning work in process Direct materials (37,500 EUP x $2.50 per EUP)…….. 93,750 Conversion […]

Problem 20-1B (Continued) d. June 30 Work in Process Inventory…………………………….……….350,000 Factory Payroll Payable ……………………………..……. 350,000 Used direct labor. e. g. June 30 Factory Overhead ………………………………………………….170,500 Other Accounts ……………………………………………….. 170,500 Incurred other overhead costs. h. June 30 Work in Process Inventory…………………………….……….262,500 […]

Comprehensive Problem (Continued) (Using weighted-average) Cost assignment and reconciliation Costs transferred out Direct materials (11,000 EUP x $2.90 per EUP)……………….$ 31,900 Part 3 — Journal entries (Using weighted-average) g. Finished Goods Inventory …………………………………….271,150 Work in Process Inventory………………………………. 271,150 Transferred goods […]

Problem 20-5B (80 minutes) Part 1 SWITCH COMPANY Process Cost Summary – FIFO Method For Month Ended January 31 Costs Charged to Production Costs of beginning work in process 0 Total units to account for…………….260,00 0 Total units accounted for……… […]

Reporting in Action — BTN 20-1 1. These costs are part of getting the products that Apple sells to its 2. These costs would either be expensed as cost of sales or as selling and administrative expenses. Thus, net income […]

Problem 20-7B (Continued) Cost per EUP Direct Materials Conversion Costs incurred this period..……………. $ 223,200 $1,233,960 ÷ EUP……………………………………….……. ÷ 232,500 ÷ 226,000 Cost assignment and reconciliation Costs transferred out Cost of beginning work in process………..………..…………..…. $ 114,520 Cost to complete […]

Comprehensive Problem (Concluded) Part 4 (Using weighted-average) Factory Payroll Payable Acct. No. 212 Date Explanation Debit Credit Balance (d) Payment 227,250 0 Sales Acct. No. 413 Date Explanation Debit Credit Balance (h) July sales 625,000 625,000 Cost of Goods Sold […]

Ethics Challenge — BTN 20-3 MEMORANDUM TO: FROM: DATE: SUBJECT: expanding one’s knowledge about a particular industry, product, and process—students are likely to have additional insights. (1) First, the professional should read a quality trade journal in the selected industry. […]

Quick Study 20-20 (10 minutes) The ending balance in Work in Process Inventory—Cutting is $7,100 and the ending balance in Work in Process Inventory—Binding is $17,042, as computed below. Work in Process—Cutting Beg. Inventory 3,445 Work in Process—Binding Beg. Inventory […]

Chapter 20 – Process Costing Chapter 20 Process Costing QUESTIONS 1. The main deciding factor in choosing between a job order costing system or a process costing system is the type of product or service. Examples where a 2. The […]

Exercise 20-9 (20 minutes) 1. Cost per EUP Cost per equivalent unit – weighted-average Direct Materials Conversion Costs of beginning inventory $118,472 $48,594 Costs incurred this period 850,368 649,296 Total costs $968,840 $697,890 ÷ Equivalent units of production 365,600 324,600 […]

Chapter 20 – Process Costing Quick Study 20-15 (5 minutes) Cost per equivalent unit – FIFO Direct Materials Conversion Costs incurred this period………………………………………. $10,404 $12,285 ÷ Equivalent units of production (from QS 20-14)…….. 10,200 9,100 Cost per equivalent unit of […]

Exercise 20-14 (30 minutes) Part 1: Cost of goods transferred and cost of goods sold Weaving Sewing Finished Department Department Goods Beginning inventory……………………………. $ 300,000 $ 570,000 $1,266,000 Direct materials………………………………….. 240,000 75,000 Total costs—Sewing …………………………………. 3,915,000 Less ending inventory—Sewing ………… […]

Chapter 20 – Process Costing Exercise 20-4 (30 minutes) 1. Beginning inventory is 100% complete with respect to materials. Ending inventory is 100% complete with respect to materials. EUP for Materials Units of Product 2. Beginning inventory is 40% complete […]

Exercise 20-20 (30 minutes) 1. Units to account for Units Accounted For Beginning work in process………………… 2,000 Completed & transferred out………………………………………………………………………………..23,000 2. and 3. Equivalent Units of Production (EUP) Direct Materials Conversion Units completed and transferred out…………….. 23,000 EUP 23,000 […]

Chapter 20 – Process Costing Exercise 20-12 (30 minutes) ASHAD COMPANY Process Cost Summary – Weighted Average Method For Month Ended July 31 Costs Charged to Production Unit Information Units to Account For Units Accounted For Beginning work in process……………….. […]

Problem 20-2A (50 minutes) Part 1 (a) and (b) Equivalent units with respect to direct materials and conversion Direct Equivalent units of production (EUP) Materials Conversion Units completed and transferred out………………. 700,000 700,000 Units of ending Work in Process…………………….. Part […]

Chapter 20 – Process Costing Exercise 20-16 (continued) Cost assignment and reconciliation Costs transferred out Direct materials (17,000 EUP x $7.75 per EUP)……. $131,750 Exercise 20-17 (40 minutes) OSLO COMPANY Process Cost Summary – Weighted Average Method For Month Ended […]

Problem 20-5A (80 minutes) Part 1 TAMAR CO. Process Cost Summary – FIFO Method For Month Ended May 31 Costs Charged to Production Costs of beginning work in process Direct materials……………………………………………………….$ 19,800 Unit cost information Units to account for Units […]

Chapter 20 – Process Costing Exercise 20-22 (10 minutes) 1. Work in Process Inventory……………………..…….…….….75,000 Factory Payroll Payable……………………………..…….. 75,000 Incurred direct labor costs. Exercise 20-23 (5 minutes) 1. Factory Overhead …………………………………………..……..38,750 Cash …………………………………………………………….…. 38,750 Incurred and paid overhead costs. 2. Work […]

Problem 20-7A (Continued) Cost per EUP Direct Materials Conversio n Costs incurred this period……………… $ 248,400 $1,082,970 Cost assignment and reconciliation Costs transferred out Cost of beginning Work in Process…………………….. $ 120,870 Cost to complete beginning Work in Process Direct […]

Problem 20-3A (concluded) Equivalent units of production Direct Materials Conversion Units completed & transferred out….. 150,000 EUP 150,000 EUP Units of ending work in process Cost of beginning work in process….. $17,100 $67,200 Costs incurred this period..…….…..…. 144,400 862,400 Total […]

Problem 20-4B (80 minutes) Part 1 SWITCH CO. Process Cost Summary – Weighted Average Method For Month Ended January 31 Costs Charged to Production Costs of beginning work in process Direct materials………………………………………………………. $ 7,500 Unit cost information Units to account […]

Problem 20-6A (45 minutes) 1. Units in beginning inventory………………………………….. 37,500 2. Equivalent units of production—FIFO Direct Equivalent units of production—FIFO Materials Conversion Units to complete beginning Work in Process Direct materials (37,500 x 40%)…………….……….……. 15,000 Conversion (37,500 x 60%)……………………………..…… 22,500 […]

Chapter 21 – Cost-Volume-Profit Analysis CHAPTER 21 COST-VOLUME-PROFIT ANALYSIS Related Assignment Materials Student Learning Objectives Discussion Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Describe different types of cost behavior in relation to production and sales volume. […]

Alternate Demo Problem Twenty-One Problem #1 Trimble Company sells an electronic toy for $40. The variable cost is $24 per unit and the fixed cost is $32,000 per year. Management is considering the following changes: Alternative #1 Lease a new […]

Solution: Alternate Demo Problem Twenty-One Problem #1 (a) Break-even point (in units) = Fixed costs/CM per unit (or) Break-even point (in dollars) = Fixed costs/CM ratio $32,000/[($40 per unit –$16 per unit)/$40 per unit] = $80,000 $80,000 dollars/$40 per unit […]

Exercise 21-6 (20 minutes) The scatter diagram and line of estimated cost behavior appear below. Selecting 0 and 2,400 units sold as the activity levels yields $2,500 as the estimate of fixed costs and the following estimate of variable costs […]

Chapter 21 – Cost-Volume-Profit Analysis Chapter 21 Cost-Volume-Profit Analysis QUESTIONS 1. A variable cost is one that varies proportionately with the volume of activity. For 2. Variable costs per unit stay the same (remain constant) when output volume changes. This […]

Exercise 21-23 (25 minutes) 1. Selling price per composite unit 5 Easy returns @ $50 each…………………………………………………… $ 250 2. Variable costs per composite unit 5 Easy returns @ $30 each…………………………………………………… $ 150 3 Moderate returns @ $75 each……………………………………………. 225 2 […]

Chapter 21 – Cost-Volume-Profit Analysis Exercise 21-6 (20 minutes) The scatter diagram and line of estimated cost behavior appear below. Selecting 0 and 2,400 units sold as the activity levels yields $2,500 as the estimate of fixed costs and the […]

Problem 21-5A (Continued) Part 3 Forecasted contribution margin income statements for each product assuming sales increase to 60,000 units with no change in unit sales price HENNA CO. Forecasted Contribution Margin Income Statement Product T Product O Sales*………………………………………………………………..$2,400,000 $2,400,000 Variable […]

Chapter 21 – Cost-Volume-Profit Analysis Exercise 21-25 (10 minutes) 1. Degree of operating leverage = Total contribution margin Pretax income = $432,000/$108,000 = 4.0 3. If sales decrease by 5%, a total of 9,120 (computed as 9,600 x 95%) units […]

Problem 21-4B (75 minutes) Part 1 Instructor note: Use the equation in Exhibit 21.12 2015 break-even in dollar sales = Fixed costs / Contribution margin ratio *To compute contribution margin ratio Sales price per unit ($750,000 / 20,000)……………………………………………………………..$37.50 Variable costs […]

Chapter 21 – Cost-Volume-Profit Analysis Problem 21-7A (50 minutes) Part 1 BREAK–EVEN ANALYSIS ASSUMING USE OF SAME MATERIALS Step 1: Compute break-even in composite units—Use equation in Exhibit 21.29 Break-even in composite units = Fixed costs/Contribution margin per composite unit […]

SERIAL PROBLEM — SP 21 Serial Problem, Business Solutions (50 minutes) 1. Selling price per composite unit 3 desk units @ $1,250 per unit………………………………………………..$3,750 2. Variable costs per composite unit 3 desk units @ $750 per unit…………………………………………………..$2,250 2 chairs @ […]

Chapter 21 – Cost-Volume-Profit Analysis Problem 21-6B (45 minutes) Part 1 Instructor note: Use the equation in Exhibit 21.12 Break-even in dollar sales = Fixed costs / Contribution margin ratio *To compute contribution margin ratio Sales price per unit Existing […]

Chapter 22 – Master Budgets and Planning CHAPTER 22 MASTER BUDGETS AND PLANNING Related Assignment Materials Student Learning Objectives Discussion Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Describe the importance and 1, 2, 3, 4, 5, […]

Alternate Demo Problem Twenty-Two ABC Company started business on January 1, 20xx. The company estimated that sales for the first six months would be as follows: Month Units Dollars January 10,000 $ 50,000 February 8,000 40,000 March 15,000 75,000 April […]

Problem 22-6B (50 minutes) SONY STEREO Cash Budgets For April, May, and June April May June Beginning balance………………………………….. $ 3,000 $ 53,000 $ 44,000 Cash receipts Collection on accounts receivable*………… 136,000 210,000 290,200 Receipts from bank loan……………………….. 80,000 _______ _______ […]

Problem 22-3B (50 minutes) Part 1 HCS MFG. Budgeted Income Statement For Months of July, August, and September, 2015 Sales commissions (10%)…………………. 126,500 139,150 153,065 Advertising ($200,000 x 1.25)……………. 250,000 250,000 250,000 Store rent…………………………………………. 24,000 24,000 24,000 Administrative salaries…………………….. 40,000 […]

Problem 22-6B (50 minutes) SONY STEREO Cash Budgets For April, May, and June April May June Cash disbursements Payments on accounts payable**…………… 80,000 188,000 186,000 Payroll………………………………….….….…….….. 16,000 17,000 18,000 Rent……………………………………..….…….….….. 6,000 6,000 6,000 Other expenses………………………….…….….… 64,000 8,000 7,000 Repayment on […]

Serial Problem — SP 22 Serial Problem, Business Solutions (50 minutes) Part 1 BUSINESS SOLUTIONS Budgeted Income Statements For Months of April, May, and June April May June Sales*……………………………………………..…. $69,600 $75,550 $81,500 Cost of goods sold**……………..…………… 54,000 57,750 61,500 Gross […]

Quick Study 22-19 (10 minutes) GUITAR SHOPPE Cash Receipts Budget For Month Ended September 30 Cash receipts from September cash sales (40% x $170,000)……….. $ 68,000 Quick Study 22-20 (10 minutes) MUSIC WORLD Cash Receipts Budget For Month Ended September […]

Chapter 22 – Master Budgets and Planning Chapter 22 Master Budgets and Planning QUESTIONS 1. A budget helps managers control and monitor a business by 1) communicating plans to employees, 2) coordinating the activities of different parts of the 2. […]

Exercise 22-9 (15 minutes) 1. RAD CO. Direct Labor Budget For April, May, and June April May June Budgeted production (units)………………….. 442 570 544 2. RAD CO. Factory Overhead Budget For April, May, and June April May June Total labor […]

Quick Study 22-19 (10 minutes) GUITAR SHOPPE Cash Receipts Budget For Month Ended September 30 Cash receipts from September cash sales (40% x $170,000)………… $ 68,000 Quick Study 22-20 (10 minutes) MUSIC WORLD Cash Receipts Budget For Month Ended September […]

Exercise 22-22 (30 minutes) Mike’s Motors Corp. Cash Budget For July, August, and September July August September Beginning cash balance $34,000 $30,000 $30,000 Cash receipts 85,000 111,000 150,000 Loan balance Loan balance, Beg. of month $0 $24,000 $13,380 Additional loan […]

Exercise 22-9 (15 minutes) 1. RAD CO. Direct Labor Budget For April, May, and June April May June Budgeted production (units)..…….…….……. 442 570 544 Direct labor hours per unit……….……………. x 0.50 x 0.50 x 0.50 2. RAD CO. Factory Overhead […]

Exercise 22-29 (10 minutes) HECTOR COMPANY Budgeted Cash Disbursements For August and September August Sept. Payments for merchandise*…………………………………………..$14,400 $19,200 Selling expenses (10% of sales)……………………………………..7,200 6,600 **Equals prior month’s purchases. Note that depreciation expense is excluded since it is a non-cash […]

Exercise 20-21 (15 minutes) PTO MANUFACTURING COMPANY Cash Budget For Month Ended September 30 Beginning cash balance……………………………..…….……$ 40,000 Other expenses…………………………………………….…….. 60,000 Accrued taxes…………………………………….…….…….….. 10,000 Interest on bank loan……………………………………….….. 1,000 Total cash disbursements………………………..….…….….. 210,500 Ending cash balance…………………….…….…….…….……. $ 84,500 *($80,000 x […]

Problem 22-2A (continued) (2) BUILT-TIGHT Cash Budget For July, August, and September July August Sept. Beginning cash balance*………………………. $15,000 $15,000 $25,504 Cash disbursements Payments for direct materials………………… 16,160 13,440 13,760 Payments for direct labor……………………… 4,040 3,360 3,440 Payments for overhead…………………………. […]

Exercise 22-29 (10 minutes) HECTOR COMPANY Budgeted Cash Disbursements For August and September August Sept. **Equals prior month’s purchases. Note that depreciation expense is excluded since it is a non-cash expense. Exercise 22-30 (25 minutes) CASTOR, INC. Cash Budget For […]

Problem 22-4A (Concluded) Supporting Footnotes Note C Beginning receivables………………………………………………… $ 342,248 Note D Beginning raw materials inventory……………………………… $ 98,500 Purchases of raw materials………………………………………… 581,500 Less materials used in production**…………………………… (600,000) Ending raw materials inventory*…………………………………. $ 80,000 *Also equals 4,000 units […]

Problem 22-2A (30 minutes) (1) BUILT-TIGHT Cash Receipts Budget For July, August, and September July August Sept. Sales…………………………………….…….…….….. $64,000 $80,000 $48,000 Less ending accts. receivable (80%)………. 51,200 64,000 38,400 Cash receipts from Problem 22-2A (continued) (2) BUILT-TIGHT Cash Budget For […]

Problem 22-8A (Continued) Part 4 DIMSDALE SPORTS CO. General and Administrative Expense Budgets January, February, and March 2016 January February March Total Salaries………………………………………………$12,000 $12,000 $12,000 $36,000 * Depreciation expense calculations Annual Amount January February March Total Equipment owned on 12/31/2015…………………. […]

Problem 22-4A (Concluded) Supporting Footnotes Note C Beginning receivables…………………………………………..….. $ 342,248 Credit sales…………………………………………………..…..…….. 1,001,701 Ending raw materials inventory*….……………………………. $ 80,000 *Also equals 4,000 units @ $20 = $80,000 **30,000 units x $20 per unit Note E Beginning finished goods inventory….…..………………….. […]

Problem 22-4B (130 minutes) Part 1 NABAR MANUFACTURING Sales Budgets July, August, and September 2015 Budgeted Units Budgeted Unit Price Budgeted Total Dollars July 2015…………………………………………………….21,000 $17.00 $ 357,000 Part 2 NABAR MANUFACTURING Production Budget July, August, and September 2015 July […]

Problem 22-8A (Continued) Part 4 DIMSDALE SPORTS CO. General and Administrative Expense Budgets January, February, and March 2016 January February March Total Salaries……………………..…….….…….….…….$12,000 $12,000 $12,000 $36,000 Maintenance………………….….…….….…….…2,000 2,000 2,000 6,000 * Depreciation expense calculations Annual Amount January February March Total […]

Chapter 23 – Flexible Budgets and Standard Costs CHAPTER 23 FLEXIBLE BUDGETS AND STANDARD COSTS Related Assignment Materials Student Learning Objectives Discussion Questions Quick Studies* Exercises* Problems* Beyond the Numbers 23-1 Copyright © 2015 McGraw-Hill Education. All rights reserved. No […]

Chapter Outline 1. To help identify factors causing the overhead cost variance managers will analyze the variance separately for controllable and volume variances. a. The controllable variance is the difference between the actual overhead costs incurred and the budgeted overhead […]

Alternate Demo Problems Twenty-Three Problem #1 XYZ Company manufactures tables. A standard cost card for the manufacture of one table shows the following: Standard Cost per Table: Direct material: 4 sq. ft. @ $3/sq. ft. $12 Direct labor: 2 hours […]

Exercise 23-2 (30 minutes) TEMPO COMPANY Flexible Budgets For Quarter Ended March 31, 2015 Flexible Budget Flexible Flexible Flexible Variable Amount per Unit* Total Fixed Cost Budget for Unit Sales of 6,000 Budget for Unit Sales of 7,000 Budget for […]

Chapter 23 – Flexible Budgets and Standard Costs Chapter 23 Flexible Budgets and Standard Costs QUESTIONS 1. Fixed budget performance reports have limited usefulness because they do not reflect 2. The primary purpose of a flexible budget is to help […]

Exercise 23-15 (25 minutes) Part 1 Direct materials price variance: Actual cost of direct materials used (16,000 x $4.05)…………………………$ 64,800 Direct materials quantity variance: Actual quantity used x Standard price (16,000 x $4.00)……………………..$ 64,000 Standard quantity x Standard price (15,000* […]

Chapter 23 – Flexible Budgets and Standard Costs EXERCISES Exercise 23-1 (20 minutes) Item Cost a. Bike frames Variable b. Screws for assembly Variable g. Incoming shipping expenses* Variable h. Taxes on property Fixed i. Office supplies (This item can […]

Exercise 23-22 (25 minutes) Preliminary calculations: Variable overhead rate per DL hour = $32,000/32,000 = $1 per hour Part 1 Total actual overhead (given) ………………………… $81,700 Flexible budget overhead Variable ($1 per hour x 36,000 hours)…………………. $36,000 Fixed (given)……………………………………………………. 48,000 […]

Chapter 23 – Flexible Budgets and Standard Costs Exercise 23-14A (25 minutes) 1. Work in Process Inventory…………………………………….…….….288,000 Direct Materials Price Variance*……………………………………….2,200 2. Direct Materials Quantity Variance…………………….…….………24,000 Direct Materials Price Variance……………………….…….… 2,200 Cost of Goods Sold………………………………………………… 21,800 To close the materials […]

Problem 23-3A (Continued) Part 4 Direct labor variances Preliminary computations Actual hours used: 30,500 hours (given) Direct labor cost variances Actual units at actual cost [30,500 hrs. @ $17.25]………………………………………$526,125 Standard units at standard cost [30,000 hrs. @ $17.00]……………………………… 510,000 Direct […]

Chapter 23 – Flexible Budgets and Standard Costs Exercise 23-21 (continued) Part 3 JAMES CORP. Overhead Variance Report For Month Ended May 31 Volume Variance Expected production level…………………………………………….80% of capacity Production level achieved………………………………….….……..90% of capacity Volume variance……………………………………………..…….….….$5,550 (favorable) Flexible Actual […]

Problem 23-2B (Continued) Part 2 (a) Analysis of sales variance Total Per unit Budgeted sales…………………………………………………….$3,600,000 $150.00 Interpretation: The sales variance is favorable because the actual price was higher than planned. (b) Analysis of direct materials variance Total Per unit Budgeted […]

Chapter 23 – Flexible Budgets and Standard Costs Problem 23-3A (Continued) Part 3 Direct Materials Variances Preliminary computations Actual material used: 91,000 lbs. (given) Standard quantity of materials: 15,000 units x 6 lb./unit = 90,000 lb. Direct Materials Price and […]

Problem 23-6BA (Concluded) Part 2 Under management by exception, the manager would first identify the The largest variance amounts occur for the materials quantity variance, the materials price variance, the direct labor efficiency variance, and the volume and controllable overhead […]

Chapter 23 – Flexible Budgets and Standard Costs Problem 23-1B (Continued) Part 2 TOHONO COMPANY Flexible Budgets For Year Ended December 31, 2015 Flexible Budget Flexible Flexible Variable Amount per Unit Total Fixed Cost Budget for Unit Sales of 18,000 […]

Chapter 23 – Flexible Budgets and Standard Costs Problem 23-4B (50 minutes) Part 1 Direct Materials Variances Direct materials cost variances Actual units at actual cost [1,000,000 lbs. @ $4.25]…………………………..……..….$4,250,000 Standard units at standard cost [1,050,000 lbs. @ $4.00]………………..…..……… 4,200,000 […]

Chapter 24 – Performance Measurement and Responsibility Accounting CHAPTER 24 PERFORMANCE MEASUREMENT AND RESPONSIBILITY ACCOUNTING Related Assignment Materials Student Learning Objectives Discussion Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Distinguish between direct and indirect expenses and […]

Alternate Demo Problem Chapter Twenty-Four Jack and Susan Roberts own a farm that produces potatoes. Based on a review of the income statement shown below, Jack remarked that they should have fed the No. 3 potatoes to the pigs; then […]

Quick Study 24-11 (continued) Investment turnover = Sales / Average invested assets Thus, Average invested assets = $10,400,000 / 1.5 = $6,933,333 Quick Study 24-12 (10 minutes) Profit margin = $ 516,000 / $2,420,000 = 21.3% Return on investment (assets) […]

Chapter 24 – Performance Measurement and Responsibility Accounting Chapter 24 Performance Measurement and Responsibility Accounting QUESTIONS 1. Many companies are divided into departments when they become too large to be effectively managed as single units. This division into departments is […]

Exercise 24-8 (15 minutes) 1. Location Net income Average assets Return on investment 2. The recommendation is to pursue Location B because its return on investment (assets) is 18%, compared to 16% at Location A. Moreover, given the normal return […]

Chapter 24 – Performance Measurement and Responsibility Accounting Quick Study 24-15 (10 minutes) a . Process time……………………………………………………..……….……15.0 minutes Inspection time………………………………………………….………….…2.0 minutes b. Manufacturing cycle efficiency (15.0 min./ 60.0 min.)………… 0.25 Quick Study 24-16A (10 minutes) Without excess capacity, a market-based […]

Problem 24-1A (Continued) c. Responsibility Accounting Performance Report Plant Manager, Indiana Plant For the Year Budgeted Actual Over (Under) Amount Amount Budget Controllable Costs Dept. manager salaries……………..$ 95,000 $ 97,500 $ 2,500 Utilities……………………………………. 9,000 8,300 (700) Part 2 The plant […]

Chapter 24 – Performance Measurement and Responsibility Accounting Exercise 24-8 (15 minutes) 1. Return on Location A…………………..$160,000 $1,000,000 16% Location B…………………..$108,000 $ 600,000 18% 2. The recommendation is to pursue Location B because its return on investment (assets) is 18%, […]

Problem 24-1B (Continued) c. Responsibility Accounting Performance Report Plant Manager, Chicago Plant For the Month of April Budgeted Actual Over (Under) Amount Amount Budget Controllable Costs Dept. manager salaries………. $ 104,000 $ 101,500 $ (2,500) Utilities…………………………….. 48,000 55,200 7,200 Part […]

Chapter 24 – Performance Measurement and Responsibility Accounting Exercise 24-21 (20 minutes) (1) Profit margin = Income/Sales Investment center Income* Sales* Profit margin Professional products..…….. € 552 €2,717 20.32% Consumer products………….. 1,765 9,530 18.52% *In € millions The professional products […]

SERIAL PROBLEM — SP 24 Serial Problem, Business Solutions (20 minutes) 1. The balanced scorecard is a system of performance measures that requires managers to think of their company from four perspectives: 2. Below are some examples of balanced scorecard […]

Chapter 24 – Performance Measurement and Responsibility Accounting Problem 24-5AB (60 minutes) Part 1 Allocations of joint costs on the basis of sales values Tree pruning and care: $405,000 Grade Sales Value Percent of Total Allocated Cost No. 1……………………….…$450,000 48.0% […]

Problem 24-5BB (60 minutes) Part 1 Allocations of joint cost on the basis of sales values Land preparation, seeding, and cultivating: $700,000 Grade Sales Value Percent of Total Allocated Cost No. 1……………………….…$ 900,000 62.5% $437,500 Harvesting, sorting, and grading: $40,000 […]

Chapter 25 – Capital Budgeting and Managerial Decisions CHAPTER 25 CAPITAL BUDGETING AND MANAGERIAL DECISIONS Related Assignment Materials Conceptual objectives: C1. Describe the importance of relevant costs for short-term decisions. 25-15 25-16 25-9 Analytical objectives: A1. Evaluate short-term managerial decisions […]

Chapter Outline I. Managerial Decision Scenariosconsider each decision task discussed below independent from the others. A. Additional Business 1. Effect on net income must be considered when deciding whether to accept or reject an order; reject if loss results. 2. […]

Solution: Alternate Demo Problem Twenty-Five 1. First, calculate annual net cash flow: Determine increase in after-tax net income: Labor savings: 10,000 hours @ $5.50 per hour $55,000 Other operating savings 4,000 2. The rate of return on average investment equals […]

Quick Study 25-27 (15 minutes) 1. Payback period of investment = €80,000,000 / €16,000,000 = 5 years 2. Present value of cash inflows (€16,000,000 x 5.7466) €91,945,600 Less: Amount to be invested………………………………………. (80,000,000) Net present value of investment…………………………………..€11,945,600 EXERCISES Exercise […]

Chapter 25 – Capital Budgeting and Managerial Decisions Chapter 25 Capital Budgeting and Managerial Decisions QUESTIONS 1. Capital budgeting decisions require careful analysis because they are generally the most difficult and risky decisions that management faces. 2. Capital budgeting is […]

Exercise 25-13 (20 minutes) Using Excel, Project X1 (X2) has an internal rate of return of 20.34% (12.99%). Project X1 Project X2 A B C D 1 Initial investment -80000 -120000 2Annual cash flows, end of period Both of these […]

Chapter 25 – Capital Budgeting and Managerial Decisions EXERCISES Exercise 25-1 (20 minutes) Annual Net Cumulative Cash Flows Cash Flows Year 1…………………………………………………………… $ 60,000 $ 60,000 Year 2…………………………………………………………… 40,000 100,000 Cost of investment………………………………………………………….….……$180,000 Paid back in years 1-3……………………………………………………………… 170,000 Paid […]

Exercise 25-26 (20 minutes) ALTERNATIVE A: INCREASE OR (DECREASE) IN NET INCOME Cost to buy new machine………………………………………………………………..$(115,000) ALTERNATIVE B: INCREASE OR (DECREASE) IN NET INCOME Cost to buy new machine………………………………………………………………..$(125,000) Cash received to trade in old machine…………………………………………….. 52,000 Reduction in […]

Chapter 25 – Capital Budgeting and Managerial Decisions Exercise 25-14 (continued) PROJECT C2 Net Cash Flows Present Value of 1 at 12% Present Value of Net Cash Flows Year 1……………………………………………………………$ 96,000 0.8929 $ 85,718 Year 2……………………………………………………………96,000 0.7972 76,531 Year 3…………………………………………………………… […]

Problem 25-5A (Continued) Part 3 Sales Mix Recommendation with Second Shift. If the second shift is added, the maximum possible output of G will double However, this level of output exceeds the company’s market constraint of 600 units of G […]

Chapter 25 – Capital Budgeting and Managerial Decisions PROBLEM SET A Problem 25-1A (50 minutes) Part 1 Annual straight-line depreciation = = $115,000 Part 2 Net Net Cash Income Flow Expected annual sales of new product……………….$1,840,000 $1,840,000 Expected costs of […]

Problem 25-2B (Continued) Part 4 PROJECT A Present Value of Net Cash Flows Present Present Value of Value of Net Cash Flows 1 at 8% Annuity Net Cash Flows Years 1-4……………………………………………… $99,900 3.3121 $330,879 PROJECT B Present Value of Net […]

Chapter 25 – Capital Budgeting and Managerial Decisions Problem 25-5A (Continued) Part 4 Sales Mix Recommendation. By incurring additional marketing cost, the company can relax the market constraint for sales of Product G up to the point where 700 units […]

SERIAL PROBLEM — SP 25 Serial Problem, Business Solutions (50 minutes) COMPUTING NET CASH FLOWS FROM NET INCOME Net income Cash flows Sales……………………………………………………………………$375,000 $375,000 1. Payback period = = 2.7 years 2. Accounting rate of return = = 40.8% *Average […]

Chapter 25 – Capital Budgeting and Managerial Decisions Problem 25-2B (Continued) Part 4 PROJECT A Present Value of Net Cash Flows Present Present Value of Value of Net Cash Flows 1 at 8% Annuity Net Cash Flows Years 1-4……………………………………….…….… $99,900 […]

Chapter 25 – Capital Budgeting and Managerial Decisions Problem 25-6B (Continued) Part 2 ESME COMPANY Forecasted Annual Income Statement Under Plan to Eliminate Department Z Sales………………………………………………………………….…….…….…….….. $700,000 Cost of goods sold…………………………………………………….…….….……. 461,300 Gross profit from sales……………………………………………….….…….…… 238,700 Operating expenses Advertising……………………………………………………………………………… […]

Chapter 03 – Adjusting Accounts and Preparing Financial Statements CHAPTER 3 ADJUSTING ACCOUNTS AND PREPARING FINANCIAL STATEMENTS Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Explain the importance of periodic reporting […]

VISUAL #3-1 ACCRUAL BASIS ACCOUNTING (Follows GAAP) requires that the Income Statement (for a period) report ALL REVENUES EARNED in period (Collected or Not) Minus ALL EXPENSES INCURRED in period (Paid or Not) Equals Net Income or Net Loss for […]

Chapter 03 – Adjusting Accounts and Preparing Financial Statements Chapter 3 Adjusting Accounts and Preparing Financial Statements QUESTIONS 1. The cash basis of accounting reports revenues when cash is received while the 2. The accrual basis of accounting generally provides […]

VISUAL #3-1 ACCRUAL BASIS ACCOUNTING (Follows GAAP) requires that the 3-1 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Income Statement (for a period) report ALL REVENUES EARNED […]

Exercise 3-8 (25 minutes) Dec. 31 Accounts Receivable…………………………………….. 2,100 Fees Earned……………………………………………. 2,100 To record earned but unbilled fees (30% x $7,000). 31 Unearned Fees………………………………………………. 4,900 Fees Earned……………………………………………. 4,900 To record earned fees collected in advance (70% x $7,000). 31 Depreciation […]

Problem 3-3A (Continued) Part 3 WELLS TECHNICAL INSTITUTE Adjusted Trial Balance December 31, 2015 Debit Credit Cash……………………………………………………………… $ 34,000 Accounts receivable……………………………………….. 7,500 Teaching supplies …………………………………………. 2,800 Prepaid insurance………………………………………….. 9,600 Prepaid rent…………………………………………………… 0 Utilities expense…………………………………………….. 6,400 _______ Totals …………………………………………………………….. $345,700 $345,700 […]

Part 3 There are no differences between the two methods in terms of the amounts that appear on the financial statements. In both cases, the financial statements reflect the following: Advertising expense for two months……………………………… $ 600 Prepaid advertising as […]

Problem 3-4B (45 minutes) — Part 1 Account Unadjusted Trial Balance Adjustments Adjusted Trial Balance Cash…………………………….$ 45,000 $ 45,000 Accounts receivable……….. 60,000 (a) 6,660 66,660 Office supplies………………. 40,000 (b) 23,000 17,000 Prepaid insurance………….. 8,200 (c) 4,600 3,600 Totals…………………………..$475,800 $475,800 $80,610 […]

Serial Problem, SP 3 (Continued) Part 3 BUSINESS SOLUTIONS Adjusted Trial Balance December 31, 2015 Debit Credit Cash ……………………………………………………………….. $ 48,372 Accounts receivable ………………………………………… 5,668 Computer supplies …………………………………………… 580 Prepaid insurance ……………………………………………. 1,665 Prepaid rent …………………………………………………….. 825 Office equipment ……………………………………………… […]

Reporting in Action — BTN 3-1 1. The revenue recognition principle requires that revenue be recorded 2. Apple provides information on revenue recognition in its Note 1 titled “Summary of Significant Accounting Policies.” It reports that “The Company recognizes revenue […]

Quick Study 3-18 (10 minutes) a. Under IFRS, financial statements normally present assets from least liquid to most liquid. b. Under IFRS, financial statements normally present liabilities from Interpretation: For each dollar that the company records as revenue, it earns […]

Chapter 03 – Adjusting Accounts and Preparing Financial Statements Chapter 3 Adjusting Accounts and Preparing Financial Statements QUESTIONS 1. The cash basis of accounting reports revenues when cash is received while the 2. The accrual basis of accounting generally provides […]

Exercise 3-12A (25 minutes) a. Initial credit recorded in the Unearned Fees account July 1 Cash…………………………………………………………… 3,000 Unearned Fees……………………………………… 3,000 Received fees for work to be done for Solana. b. Initial credit recorded in the Fees Earned account July 1 […]

Quick Study 3-18 (10 minutes) a. Under IFRS, financial statements normally present assets from least liquid to most liquid. Quick Study 3-19 (10 minutes) Profit margin = $48,025 / $425,000 = 11.3% Interpretation: For each dollar that the company records […]

Problem 3-4A (45 minutes) — Part 1 Account Unadjusted Trial Balance Adjustments Adjusted Trial Balance Cash……………………….. $ 34,000 $ 34,000 Accounts receivable…… 14,000 (a) 8,000 22,000 Office supplies………….. 16,000 (b) 14,000 2,000 Prepaid insurance……… 8,540 (c) 5,580 2,960 Office equipment……….. […]

Exercise 3-11A (30 minutes) a. Dec. 1 Supplies Expense…………………………..…….….…….. 2,000 Cash………………………………………………………… 2,000 Purchased supplies. b. Received fees for work to be done. e. Dec. 31 Supplies……………………………………………..….….…… 1,840 Supplies Expense…………………………………….. 1,840 Adjust expenses for unused supplies. f. Dec. 31 Prepaid Insurance…………………………………………… […]

Problem 3-3A (Concluded) WELLS TECHNICAL INSTITUTE Balance Sheet December 31, 2015 Assets Accumulated depreciation—Professional library……. (17 ,200) 17,800 Equipment…………………………………………………….…….… 80,000 Accumulated depreciation—Equipment.……….……….. (28 ,200) 51 ,800 Total assets………………………………………………….……….. $123 ,500 Liabilities Accounts payable………………………………………………….. $ 26,000 Salaries payable………………………………..…….………….… 400 Unearned training […]

Problem 3-6BA (40 minutes) Part 1 Method that records prepaid expenses and unearned revenues in balance sheet accounts Apr. 1 Prepaid Consulting Fees……………………………… 2,450 Cash……………………………………………………. 2,450 Paid for future consulting services. May 1 Prepaid Advertising…………………………………….. 4,450 Cash……………………………………………………. 4,450 Paid for […]

Problem 3-3B (90 minutes) Parts 1 and 2 Cash Accounts Payable Bal. 60,000 Bal. 11,200 Accounts Receivable Salaries Payable Prepaid Insurance C. Alonzo, Capital Unadj. Bal. 19,000 Bal. 71,500 (a) 9,500 Adj. Bal. 9,500 C. Alonzo, Withdrawals Prepaid Rent Bal. […]

Serial Problem, SP 3 (Continued) Accounts Receivable Acct. No. 106 Date Explanation PR Debit Credit Balance Oct. 6 4,800 4,800 12 1,400 6,200 15 4,800 1,400 Computer Supplies Acct. No. 126 Date Explanation PR Debit Credit Balance Oct. 3 1,420 […]

Problem 3-6BA (40 minutes) Part 1 Method that records prepaid expenses and unearned revenues in balance sheet accounts Apr. 1 Prepaid Consulting Fees…………….………………… 2,450 Cash………………………………………………..……. 2,450 Paid for future consulting services. Paid for future advertising. 23 Cash …………………………………………………………… 10,450 Unearned […]

Chapter 3 Adjusting Accounts and Preparing Financial Statements QUESTIONS 1. The cash basis of accounting reports revenues when cash is received while the accrual basis reports revenues when they are earned. The cash basis reports 2. The accrual basis of […]

Serial Problem, SP 3 (Continued) Computer Services Revenue Acct. No. 403 Date Explanation PR Debit Credit Balance Oct. 6 4,800 4,800 12 1,400 6,200 28 5,208 11,408 Depreciation Expense—Office Equipment Acct. No. 612 Date Explanation PR Debit Credit Balance Dec. […]

Quick Study 3-15 (15 minutes) Accounts Debited and Credited Financial Statement a. Debit Unearned Revenue Balance Sheet Credit Revenue Earned Income Statement Quick Study 3-16 (15 minutes) The answer is 2. Explanation: Insurance premium error: Understates expenses (and overstates assets) […]

Chapter 04 – Completing the Accounting Cycle CHAPTER 4 COMPLETING THE ACCOUNTING CYCLE Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Explain why temporary accounts are closed each period. 2, 3, […]

Chapter 04 – Completing the Accounting Cycle CHAPTER 4 C1. Explain why temporary accounts are closed each period. 2, 3, 4, 5 4-5 4-5 4-1 4-1, 4-4 C2. Identify steps in the accounting cycle. 8 4-8 4-11 4-1 4-3, 4-8 […]

Chapter 04 – Completing the Accounting Cycle Chapter 4 Completing the Accounting Cycle QUESTIONS 1. The four-step closing entry process is: (i) close the revenue (and gain) accounts to 2. Closing entries affect temporary accounts: revenues, expenses, withdrawals, and income […]

Chapter 04 – Completing the Accounting Cycle VISUAL #4-1 THE ACCOUNTING CYCLE STEPS PURPOSE TIMING 1. Analyze transactions To determine accounts to be debited and credited During the period 2. Journalize To record the daily transactions During the period 3. […]

Ethics Challenge — BTN 4-3 1. There are several courses of action that Tamira could have taken. Two possibilities follow: a. She could have consulted with the president and told him that finalized financial b. The estimation decision was not […]

Reporting in Action — BTN 4-1 1. The revenue items from its income statement must be identified, and those would be credited to Income Summary as step 1 in the closing 2. The total expenses that would be debited to […]

Exercise 4-5 (10 minutes) Income Summary balance after closing revenues and expenses: Revenues: $70,000 + $7,000…………………………………………… = $77,000 Cr. K. Capri, Capital balance after all closing entries: Beginning balance…………………………. $20,000 Plus net income…………………………….. 26,400 46,400 Less withdrawals…………………………… 12,000 Ending balance……………………………… […]

Chapter 04 – Completing the Accounting Cycle Chapter 4 Completing the Accounting Cycle QUESTIONS 1. The four-step closing entry process is: (i) close the revenue (and gain) accounts to the Income Summary account, (ii) close the expense (and loss) accounts […]

Exercise 4-13 (15 minutes) Current assets: Cash……………………………………………………………………. $ 8,000 Current liabilities: Accounts payable…………………………………………………. $12,000 Interest payable……………………………………………………. 4 ,000 Total current liabilities………………………………………….. $16 ,000 Current ratio = = = 1.78 $28,500 Current assets Interpretation: Wilson Trucking Company’s current ratio of 1.78 […]

Exercise 4-5 (10 minutes) Income Summary balance after closing revenues and expenses: Revenues: $70,000 + $7,000..…………………….. = $77,000 Cr. K. Capri, Capital balance after all closing entries: Beginning balance…………..……………… $20,000 Plus net income……………………………… 26,400 46,400 Less withdrawals……….…………………… 12,000 Ending balance………………………………. […]

Problem 4-1A (Continued) Part 7—continued Ledger as of April 30 Cash Acct. No. 101 Date Explanation PR Debit Credit Balance April 1 30,000 30,000 2 1,800 28,200 3 1,000 27,200 Accounts Receivable Acct. No. 106 Date Explanation PR Debit Credit […]

Exercise 4-13 (15 minutes) Current assets: Cash…………………………………………………………….……….. $ 8,000 Accounts receivable………………………………….…………… 17,500 Office supplies……………………………………..…….…………. 3 ,000 Total current assets…………………………………..…….…….. $28 ,500 Current liabilities: Current ratio = = = 1.78 Interpretation: Wilson Trucking Company’s current ratio of 1.78 exceeds the industry […]

Problem 4-4A (75 minutes) Part 1 TYBALT CONSTRUCTION Income Statement For Year Ended December 31, 2015 Revenues Professional fees earned……………………………. $97,000 Expenses Depreciation expense—Building…………………. 11,000 Depreciation expense—Equipment…………….. 6,000 Wages expense…………………………………………. 32,000 Interest expense………………………………………… 5,100 Insurance expense…………………………………….. 10,000 Rent expense…………………………………………….. 13,400 […]

Problem 4-1A (Continued) J. Nozomi, Capital Acct. No. 301 Date Explanation PR Debit Credit Balance 30 Closing 9,750 0 Depreciation Expense–Computer Equipment Acct. No. 612 Date Explanation PR Debit Credit Balance April 30 Adjusting 500 500 30 Closing 500 0 […]

Problem 4-6AA (Concluded) Part 4 Instructor note: Entries are shown without an account reference column because no posting is required. 2016 Jan. 4 Salaries Expense…………………………………. 1,500 15 Interest Expense………………………………….. 2,250 Cash……………………………………………… 2,250 To record interest payment. 31 Cash…………………………………………………… 19,300 Member […]

Problem 4-5A (90 minutes) Part 1 KARISE REPAIRS Income Statement For Year Ended December 31, 2015 Repair fees earned…………..…….…….….….. $90,950 Expenses Depreciation expense—Equipment…….. $ 5,000 Wages expense………………………………….. 37,500 Insurance expense………………..…….….…. 800 4-1 Copyright © 2015 McGraw-Hill Education. All rights reserved. […]

Problem 4-1B (Concluded) Office Supplies Expense Acct. No. 650 Date Explanation PR Debit Credit Balance Repairs Expense Acct. No. 684 Date Explanation PR Debit Credit Balance July 29 950 950 31 Closing 950 0 Telephone Expense Acct. No. 688 Date […]

Problem 4-1B (Continued) Part 4 SAFE STORAGE CO. Adjusted Trial Balance July 31, 2015 No. Account Title Debit Credit 101 Cash………………………………………….…………….…. $ 22,850 106 Accounts receivable…………………..…………….…. 1,150 124 Office supplies…………………..…….…………….…… 1,525 401 Storage fees earned………………………………..…… 10,950 606 Depreciation expense–Buildings..……………….. 1,500 […]

Problem 4-4B (Continued) Part 2 Closing entries (all dated December 31, 2015) Instructor note: Entries are shown without an account reference column because no posting is required. (1) Professional Fees Earned……………………… 59,600 Rent Earned…………………………………………. 4,500 (2) Income Summary………………………………….. 37,530 Depreciation […]

Problem 4-2B (Continued) Part 3 POWER DEMOLITION COMPANY Income Statement For Year Ended April 30, 2015 Demolition fees earned………………………….……… $187,000 Expenses Depreciation expense–Equipment………………. $ 7,000 Wages expense…………………………………………… 43,400 Interest expense…………………………………………. 3,600 Insurance expense……………………………………… 10,600 POWER DEMOLITION COMPANY Statement of Owner’s […]

Serial Problem, SP 4 (Continued) Part 2 BUSINESS SOLUTIONS Post-Closing Trial Balance December 31, 2015 Debit Credit Cash…………………………………………………………………….. $ 48,372 Accounts receivable……………………………………………… 5,668 Computer supplies……………………………………………….. 580 Prepaid insurance…………………………………………………. 1,665 Prepaid rent………………………………………………………….. 825 Office equipment………………………………………………….. 8,000 Accumulated depreciation—Office equipment………… $ 400 […]

Problem 4-6BA (40 minutes) Part 1 SOLUTIONS CO. Work Sheet For Year Ended December 31, 2015 Unadjusted Trial Balance Adjustments Adjusted Trial Balance Dr. Cr. Dr. Cr. Dr. Cr. Cash……….…………….…..….….. 10,000 10,000 Accounts receivable……..….…. (e) 2,450 2,450 Supplies……………………………. 7,600 (b) […]

Chapter 05 – Accounting for Merchandising Operations CHAPTER 5 ACCOUNTING FOR MERCHANDISING OPERATIONS Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Describe merchandising activities and identify income components for a merchandising […]

VISUAL #5-3 ACCOUNTS USED IN BASIC MERCHANDISING TRANSACTIONS WITH A PERPETUAL INVENTORY SYSTEM ASSETS LIABILITIES REVENUES & CONTRA-REV. Cash Accounts Payable Sales Dr. Bal. Cr. Bal. Cr. Bal. + + + Accounts Receivable Sales Returns & Allowance Dr. Bal. Dr. […]

Chapter 5 Accounting for Merchandising Operations QUESTIONS 1. Merchandising companies report Merchandise Inventory on the balance sheet, 2. Additional accounts of a merchandising company likely include Merchandise Inventory, Sales (of goods), Cost of Goods Sold, Sales Discounts, and Sales Returns […]

Chapter 05 – Accounting for Merchandising Operations VISUAL #5-1 THE OUTDOOR STORE Income Statement For the Year Ended December 31, 20xx Cost of goods sold Inventory, January 1………………………………….. 40,300 Purchases……..……….……………………..…..…..… 462,000 Less: Purchase discounts …………..$12,000 Purchase returns and allowances..…..…..……..…..… 6,400 […]

EXERCISES Exercise 5-1 (30 minutes) Note: The original missing numbers are blocked. (a) (b) (c) (d) (e) Sales………………………. $62,000 $43,500 $46,000 $79,000 $25,600 Cost of goods sold Merch. inv. (beg.)…….. 8,000 17,050 7,500 8,000 4,560 Explanations: a. Find merchandise inventory […]

Interpretation: Case X has the highest acid-test ratio and a healthy current ratio. Since Case More specifically, Case Y exhibits superior ability to meet current year obligations using the current ratio and Case X has the superior ability to meet […]

EXERCISES Exercise 5-1 (30 minutes) Note: The original missing numbers are blocked. (a) (b) (c) (d) (e) Sales……….………..….…. $62,000 $43,500 $46,000 $79,000 $25,600 Cost of goods sold Merch. inv. (beg.)…….. 8,000 17,050 7,500 8,000 4,560 Total cost of merch. purchases….…………. […]

Chapter 05 – Accounting for Merchandising Operations Problem 5-3A (Concluded) 4. Single-step income statement VALLEY COMPANY Income Statement For Year Ended August 31, 2015 Net sales………………………………………………………. $211,350 Expenses Problem 5-4A (30 minutes) Part 1 Closing entries Aug. 31 Sales …………………………………………………… […]

Exercise 5-12 (10 minutes) Multiple-Step Income Statement — Sales Related Information Only 20,000 Net sales…………………………………………………………….. 180,000 Exercise 5-13 (20 minutes) The employee’s oversight in omitting these goods from the physical count would cause the cost of the physical count of […]

Problem 5-2B (Concluded) July 17 Cash……………………………………………………….. 9,457 Sales Discounts*……………………………………… 193 Accounts Receivable—Brill………………… 9,650 Collected receivable within discount period. *($11,500 – $1,850) x 2% 20 Accounts Payable—Rupert*……………………… 12,700 Merchandise Inventory**……………………. 122 Cash…………………………………………………. 12,578 Paid payable within discount period. *$14,200 + $500 […]

Chapter 05 – Accounting for Merchandising Operations Problem 5-2A (Concluded) Aug. 15 Cash………………………………………..……….……….. 4,508 Sales Discounts*…………………………………….….. 92 Accounts Receivable—Laird…………..….… 4,600 Collected receivable within 2% discount period. *[($5,200 – $600) x 2%] Sold goods on credit, terms 1/10, n/30. 19 Cost […]

SERIAL PROBLEM — SP 5 Serial Problem — SP 5, Business Solutions (150 minutes) Part 1 Journal entries Jan. 4………………………………………………………………….Wages Expense 5………………………………………………………………….Cash 101 25,000 ……………………………………………………………………..S. Rey, Capital 301 ……………………………………………………………………..25,000 Additional investment by owner. 7………………………………………………………………….Merchandise Inventory ………………………………………………………………….119 5,800 ……………………………………………………………………..Accounts Payable 201 […]

PROBLEM SET B Problem 5-1B (40 minutes) May 2 Merchandise Inventory……………………………….. 10,000 Accounts Payable—Havel….……….……….. 10,000 Purchased goods on credit, terms 1/15, n/30. 5 Merchandise Inventory…………………………..…… 250 Cash………………………………………………….… 250 Paid freight on incoming goods. 9 Cash……………………………………….….………….….. 2,500 Sales…………………………………….……….……. 2,500 Sold goods […]

Serial Problem — SP 5 (Continued) Part 3 BUSINESS SOLUTIONS Partial Work Sheet March 31, 2016 Acct. No. Account Title Una dju ste d Tria l Bal anc e Adjustments Adjusted Trial Balance 101 Cash…………………………………… 68,05 7 68,057 106.1 Alex’s […]

Problem 5-5B (Concluded) Part 4 Current assets Cash ……………………………………………..…….…………… $ 7,400 Merchandise inventory ………………………………….….. 21,300 *$6,600 – $2,800 = $3,800 Quick assets (Cash in this case)…………………….……. $ 7,400 Current liabilities…………………………………………………. $ 18,000 Acid-test ratio ($7,400 / $18,000)………………………..…….. 0.41 Net Sales……………………………………………………….……. […]

Serial Problem — SP 5 (Continued) S. Rey, Capital Acct. No. 301 Date Explanation PR Debit Credit Balance 105,360 S. Rey, Withdrawals Acct. No. 302 Date Explanation PR Debit Credit Balance Feb. 15 4,800 4,800 Computer Services Revenue Acct. No. […]

Ethics Challenge, BTN 5-3 — (Concluded) 2. The merchandising company accounts for sales returns using a contra revenue account called Sales Returns and Allowances. A dress returned with a sales bill of $200 would be accounted for as follows: Communicating […]

Chapter 06 – Inventories and Cost of Sales CHAPTER 6 INVENTORIES AND COST OF SALES Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Identify the items making up merchandise inventory. 2, […]

VISUAL #6-1 Schedule of Cost of Goods Available Units Cost Total Jan. 1 Beginning Inventory 60 @ $10 = $ 600 Jan. 7 Purchase 90 @ 11 = 990 Jan. 15 Purchase 100 @ 13 = 1,300 Jan 25 Purchase […]

Chapter 06 – Inventories and Cost of Sales Chapter 6 Inventories and Cost of Sales QUESTIONS 1. (a) FIFO: The cost of the first (earliest) items purchased in inventory flow to cost of 2. Merchandise inventory is disclosed on the […]

Chapter 06 – Inventories and Cost of Sales VISUAL #6-1 Schedule of Cost of Goods Available Units Cost Total Jan. 1 Beginning Inventory 60 @ $10 = $ 600 Jan. 7 Purchase 90 @ 11 = 990 Jan. 15 Purchase […]

Quick Study 6-22B (15 minutes) Goods available for sale Inventory, January 1……………………………………………………………$190,000 Quick Study 6-23 (10 minutes) a. Both IFRS and U.S. GAAP provide broad and similar guidance on the accounting for items and costs making up merchandise inventory. Specifically, […]

Chapter 06 – Inventories and Cost of Sales Chapter 6 Inventories and Cost of Sales QUESTIONS 1. (a) FIFO: The cost of the first (earliest) items purchased in inventory flow to cost of 2. Merchandise inventory is disclosed on the […]

Exercise 6-13 (20 minutes) 2014 Inventory turnover 2014 Days’ Sales in Inventory 2015 Inventory turnover 2015 Days’ Sales in Inventory $643,825/[($87,750 + $97,400)/2] = 7.0 times $97,400/$643,825 x 365 days = 55.2 days Analysis comment: It appears that during a […]

Chapter 06 – Inventories and Cost of Sales Quick Study 6-22B (15 minutes) Goods available for sale Inventory, January 1……………………………………………………………..$190,000 Cost of goods purchased (net)…………………………….…….….…….. 352,000 Quick Study 6-23 (10 minutes) a. Both IFRS and U.S. GAAP provide broad and […]

Problem 6-3A (Continued) 3c. Weighted Average Date Goods Purchased Cost of Goods Sold Inventory Balance 1/1 600 @ $45.00 = $27,000 2/10 400 @ $42.00= $16,800 600 @ $45.00 400 @ $42.00 = $43,800 (avg. cost is $43.80) 3/13 200 […]

Problem 6-3A (Continued) 3b. LIFO perpetual Date Goods Purchased Cost of Goods Sold Inventory Balance 1/1 600 @ $45.00 = $27,000 2/10 400 @ $42.00= $16,800 600 @ $45.00 400 @ $42.00 = $43,800 3/13 200 @ $27.00= $ 5,400 […]

Problem 6-9AB (25 minutes) Part 1 ALASKA COMPANY Estimated Inventory December 31 At Cost At Retail Goods available for sale Beginning inventory……………………………………. $ 469,010 $ 928,950 Cost of goods purchased……………………………. 3,376,050 6,381,050 Part 2 Estimated physical inventory at cost: $1,686,900 […]

Problem 6-3B (40 minutes) 1. Compute cost of goods available for sale and units available for sale Beginning inventory……………………… 150 units @ $300 $ 45,000 Cost of goods available for sale…….. $249,300 2. Units in ending inventory Units available (from […]

Problem 6-9AB (25 minutes) Part 1 ALASKA COMPANY Estimated Inventory December 31 At Cost At Retail Goods available for sale Beginning inventory…………………………………….. $ 469,010 $ 928,950 Cost of goods purchased…………..…..………..….. 3,376,050 6,381,050 Goods available for sale …………..………………….. $3,845,060 $7,310,000 Cost-to-retail […]

Problem 6-8BA (30 minutes) Part 1 SHEPARD COMPANY Income Statements Comparing FIFO, LIFO, and Weighted Average For Year Ended December 31, 2015 FIFO LIFO Weighted Average Sales……………………………………………………. $400,000 $400,000 $400,000 Cost of goods sold Inventory, Dec. 31, 2014……………………….. 48,720 48,720 […]

Problem 6-3B (40 minutes) 1. Compute cost of goods available for sale and units available for sale Beginning inventory……..……………….. 150 units @ $300 $ 45,000 May 6……………………………….…………… 350 units @ $350 122,500 2. Units in ending inventory Units available (from […]

Teamwork in Action — BTN 6-6 Concepts and procedures to illustrate in expert presentation: Specific Identification Expert: (a) and (b) Concept: Purchases are always recorded at the actual specific costs. The specific (a) and (b) Procedures: Date Goods Purchased Cost […]

Problem 6-8BA (30 minutes) Part 1 SHEPARD COMPANY Income Statements Comparing FIFO, LIFO, and Weighted Average For Year Ended December 31, 2015 FIFO LIFO Weighted Average Sales……………………………………………………… $400,000 $400,000 $400,000 Cost of goods sold Inventory, Dec. 31, 2014……….………….……. 48,720 48,720 […]

Appendix 7A – Accounting Information Systems Appendix 7A—PERIODIC Accounting Information Systems QUICK STUDIES Quick Study 7-11A (20 minutes) PURCHASES JOURNAL Date Account Date of Invoice Terms PR Account s Payable Cr. Purchases Dr. Office Supplies Dr. Other Accounts Dr. May […]

Problem 7-5AA (Concluded) Part 4 WISET COMPANY Trial Balance April 30 Debit Credit Cash…………………………………………………..…..$ 35,847 Long-term notes payable………………………… 110,000 B. Wiset, Capital…………………….……….……… 100,000 Purchases……………………….….…….…….…….. 39,425 Purchases returns and allowances…………. 750 Purchases discounts……………….……….……. 546 Sales salaries expense……….……….…….…… 21,500 Advertising expense………….…….……….……. 899 […]

PROBLEM SET B Problem 7-4BA (70 minutes) Parts 1 and 2 SALES JOURNAL Page 3 Date Account Debited Invoice Number PR Accounts Receivable Dr. Sales Cr. July 5 Kim Nettle……………………..………….918 19,200 6 Ruth Blake…………………….………….919 7,500 13 Ashton Moore……………………..…….920 8,550 CASH […]

Problem 7-6BA (100 minutes) Parts 1 and 2 SALES JOURNAL Page 2 Date Account Debited Invoice Number PR Accounts Receivable Dr. Sales Cr. Nov. 8 Cyd Rounder…..………..…..…..…..…..…439 6,550 10 Carlos Mantel………………..……………….440 13,500 15 Tori Tripp..…………………………………….441 5,250 PURCHASES JOURNAL Page 2 […]

Chapter 07 – Accounting Information Systems CHAPTER 7 ACCOUNTING INFORMATION SYSTEMS Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Identify the fundamental principles and components of accounting information systems. 1, 2, […]

CHAPTER 7 ACCOUNTING INFORMATION SYSTEMS Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Identify the fundamental principles and components of accounting information systems. 1, 2, 3, 4, 5, 6 7-1, 7-2 […]

Chapter 07 – Accounting Information Systems Alternate Demonstration Problem Chapter 7 Bedrock Company completed these transactions during February of the current year: Feb 1 Owner, F. Stone invested $100,000 cash in the business. 1 Sent Flint Company check No. 413 […]

Problem 7-4BA (Continued) Parts 2 and 3 GENERAL LEDGER Cash Acct. No. 101 Date Explanation PR Debit Credit Balance Accounts Receivable Acct. No. 106 Date Explanation PR Debit Credit Balance July 31 S3 74,670 74,670 31 R3 40,350 34,320 Inventory […]

Problem 7-6BA (Continued) CASH RECEIPTS JOURNAL Page 2 Date Account Credited Explanation PR Cash Dr. Sales Discount Dr. Accounts Receivable Cr. Sales Cr. Other Accts. Cr. Nov. 2 L.T. Notes Pay…………………………………..Note to bank……………………………………………………………….. 251/88,500 88,500 15 Sales………………………………………………Cash sales………………………………………………………………….. 18,170 18,170 […]

Appendix 7A – Accounting Information Systems Appendix 7A—PERIODIC Accounting Information Systems QUICK STUDIES Quick Study 7-11A (20 minutes) PURCHASES JOURNAL Date Account Date of Invoice Terms PR Account s Payable Cr. Purchases Dr. Office Supplies Dr. Other Accounts Dr. May […]

Problem 7-5AA (Continued) Parts 2 and 3—continued ACCOUNTS PAYABLE LEDGER Custer, Inc. Date Explanation PR Debit Credit Balance Grant Company Date Explanation PR Debit Credit Balance Apr. 17 P3 13,750 13,750 23 G3 750 13,000 26 D3 13,000 0 Hal’s […]

Chapter 7 Accounting Information Systems QUESTIONS 1. The five components of an accounting system are: source documents, input 2. Source documents contain data about business transactions or events that are put into the accounting system and processed. Examples of source […]

Solution: Alternate Demonstration Problem Chapter 7 SALES JOURNAL Date Account Debited Invoice Number PR Accts Rec Dr Sales Cr Cost of Goods Sold Debit Inventory Credit Feb. 2 Dale Dent 711 800.00 500.00 4 Gary Glen 712 1,250.00 850.00 11 […]

Chapter 07 – Accounting Information Systems Exercise 7-10 (30 minutes) Part 1 ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER Anna Page Sara Reed Aaron Reckers 25 1,340 Part 2 GENERAL LEDGER Accounts Receivable Sales Sales Returns and Allowances May 10,010 May 350 May […]

Problem 7-2A (Continued) Parts 2 and 3 GENERAL LEDGER Cash Acct. No. 101 Date Explanation PR Debit Credit Balance Accounts Receivable Acct. No. 106 Date Explanation PR Debit Credit Balance Apr. 30 S3 37,470 37,470 30 R3 27,600 9,870 Inventory […]

Chapter 07 – Accounting Information Systems Exercise 7-11 (20 minutes) Segment Income (in $ mil.) Segment Assets (in $ mil.) Segment Return on Assets Segment 2015 2014 2015 2014 2015 Specialty Skiing Group………….. $ 72 $ 68 $ 591 $ […]

PROBLEM SET B Problem 7-1B (100 Minutes) Parts 1 and 2 SALES JOURNAL Page 2 Date Account Debited Invoice Number PR Accounts Receivable Dr. Sales Cr. Cost of Goods Sold Dr. Inventory Cr. Nov. 8 Cyd Rounder………………………………..439 6,550 3,910 10 […]

Problem 7-2A (Concluded) Part 4 (continued) WISET COMPANY Schedule of Accounts Receivable April 30 Paula Kohr.….….….………………………………. $3,170 Part 5 Analysis component To find the error(s), first re-add the account balances on the schedule of accounts receivable to confirm that the […]

Problem 7-3B (80 minutes) Parts 1 and 3 PURCHASES JOURNAL Page 3 Date Account Date of Invoice Terms PR Accounts Payable Cr. Inventory Dr. Office Supplies Dr. Other Accounts Dr. July 1 Teton Company……………………………….6/30 2/10, n/30 6,500 6,500 7 Store […]

Problem 7-1B (Concluded) Part 3 GRASSLEY COMPANY Trial Balance November 30 Debit Credit Cash…………………………………….……….………….….$100,207 Accounts receivable…………………………………….. 7,975 Accounts payable…………………..………….………… $ 5,635 Long-term notes payable……………………….…….. 88,500 C. Grassley, Capital………………………………………. 40,000 Sales………………………………………………………..….. 68,148 Sales discounts……………………………………………. 506 Costs of goods sold..….………………………………..38,250 Sales salaries […]

Comprehensive Problem, Colo Company (Continued) Part 2 COLO COMPANY Work Sheet for Month Ended May 31, 2015 Unadjusted Trial Balance Adjustments Income Statement Balance Sheet or State-ment of Owner’s Equity Account Debit Credit Debit Credit Debit Credit Debit Credit Cash……………………………………………….. […]

Serial Problem, Business Solutions (Concluded) Part 3 GENERAL JOURNAL Page 2 2016 Jan. 5 Cash……………………………………………….…………101 25,000 S. Rey, Capital……………….…………..………301 25,000 Additional investment by owner. * An optional additional entry for Jan. 20 is to debit “Loss from Defective Merchandise” and […]

Comprehensive Problem, Colo Company (Continued) Part 3—continued COLO COMPANY Statement of Owner’s Equity For Month Ended May 31, 2015 Jenny Colo, Capital, April 30, 2015……………. $308,085 Plus: Net income…………………………………….. 31,647 339,732 Less: Withdrawals by owner…………………….. (7,000) Jenny Colo, Capital, May […]

Comprehensive Problem, Colo Company (Continued) Part 2—continued Utilities Expense Acct. No. 690 Date Explanation PR Debit Credit Balance May 26 D2 1,283 1,283 31 G2 1,283 0 Income Summary Acct. No. 901 Date Explanation PR Debit Credit Balance ACCOUNTS RECEIVABLE […]

Chapter 08 – Cash and Internal Control CHAPTER 8 CASH AND INTERNAL CONTROL Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Define internal control and its purpose and principles. 1, 2, […]

Chapter 08 – Cash and Internal Control CHAPTER 8 CASH AND INTERNAL CONTROL Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Define internal control and its purpose and principles. 1, 2, […]

Chapter 08 – Cash and Internal Controls Chapter 8 Cash and Internal Controls QUESTIONS 1. The seven broad principles are: Establish responsibilities; Maintain adequate records; 2. Internal control procedures become especially critical when the manager of a business can no […]

Chapter 08 – Cash and Internal Control VISUAL #8-1 BANK RECONCILIATION Reasons for discrepancies between bank statement balance and checkbook balance: Handle as follows: Unrecorded deposits Add to Bank Balance Outstanding checks Deduct from Bank Balance Bank service charges Deduct […]

Exercise 8-6 (20 minutes) 1. To establish a petty cash fund. 2. Jan. 8 Postage Expense………………………………………….. 74 Merchandise Inventory*…………………………………. 29 Delivery Expense………………………………………….. 16 Miscellaneous Expenses……………………………….. 43 Cash……………………………………………………….. 162 To reimburse the petty cash fund. *Transportation-in costs are included in Merchandise […]

Problem 8-4A (30 minutes) Part 1 BRANCH COMPANY Bank Reconciliation July 31, 2015 Bank statement balance….. $27,233 Book balance………………………………………………………………………….$27,497 Add Add 38,747 collection charge………………………………………………………………… 7,955 35,452 Deduct Deduct Checks No. 3031….$1,482 NSF check………….$ 805 3065…. 382 Service charge……. 25 3069…. […]

Chapter 08 – Cash and Internal Controls Exercise 8-6 (20 minutes) 1. Jan. 1 Petty Cash…………………………………………….…….…. 200 Cash………………………………………………….……… 200 To establish a petty cash fund. 2. Jan. 8 Postage Expense………………………………………….… 74 Merchandise Inventory*…………………….…….……… 29 3. Jan. 8 Postage Expense………………………………………….… 74 […]

Part 3 In a banking context, a debit memo is notification from the bank that it has debited the depositor’s account. Since the depositor’s account is a liability of the bank (a credit balance account), the debit notification means the […]

Chapter 08 – Cash and Internal Controls Problem 8-4A (Concluded) Part 3 a. If the company’s Cash account balance of $27,497 is listed on the bank reconciliation as $27,947 then: b. The bank’s collection of the $8,000 note less the […]

Communicating in Practice — BTN 8-4B Memorandum To: “Owner” From: “Consultant” Date: __________ Subject: Advice on monitoring purchase discounts [Instructor’s Note: The response should acknowledge the owner’s concern and recommend the net method of recording purchases. It should explain how […]

Chapter 08 – Cash and Internal Controls Problem 8-5B (Concluded) Part 3 There are several possible reasons why some prenumbered checks are missing from the sequence of canceled checks returned with a bank statement. Reasons include: (1) Some of the […]

Chapter 09 – Accounting for Receivables CHAPTER 9 ACCOUNTING FOR RECEIVABLES Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Describe accounts receivable and how they occur and are recorded. 1 9-1, […]

Chapter 09 – Accounting for Receivables CHAPTER 9 ACCOUNTING FOR RECEIVABLES Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Describe accounts receivable and how they occur and are recorded. 1 9-1, […]

Chapter 09 – Accounting for Receivables Chapter 9 Accounting for Receivables QUESTIONS 1. When customers use credit cards, the selling companies can avoid having to directly evaluate the credit standing of their customers. They also avoid the risk of bad […]

VISUAL #9-2 PROMISSORY NOTE (6) $2,000.00 April 15, 2011 (1) Amount Date For value received, I promise to pay to the order of Plexi-Plus Supply Co. (2) Tobay, New York (7) Two thousand and no/100 ——————-Dollars on June 14, 2011 […]

Exercise 9-6 (Concluded) b. Dec. 31 Bad Debts Expense…………………………………….. 8,220 Allowance for Doubtful Accounts……………. 8,220 To record estimated bad debts.* c. Dec. 31 Bad Debts Expense…………………………………….. 11,920 Allowance for Doubtful Accounts……………. 11,920 To record estimated bad debts.* *Unadjusted balance………………………………$ 100 […]

Problem 9-3A (35 minutes) Part 1 Calculation of the estimated balance of the allowance for uncollectibles Not due: $830,000 x .0125 = $10,375 Part 2 Dec. 31 Bad Debts Expense…………………………………….. 27,150 Allowance for Doubtful Accounts……………. 27,150 To record estimated bad […]

Chapter 09 – Accounting for Receivables Exercise 9-8 (20 minutes) Feb. 1 Allowance for Doubtful Accounts…………….………….. 6,800 Accounts Receivable—Oakley Co…..……………… 900 Accounts Receivable—Brookes Co…………….….. 5,900 To write off specific accounts. Exercise 9-9 (25 minutes) a. Expense is 3.0% of credit […]

Problem 9-5B (Concluded) June 15 Notes Receivable—R. Solon…………………………. 2,000 June 21 Notes Receivable—J. Felton…………………………. 9,500 Accounts Receivable—J. Felton………………. 9,500 To record note received on account. Aug. 14 Cash……………………………………………………………. 2,034 Interest Revenue*……………………………………. 34 Notes Receivable—R. Solon…………………….. 2,000 To record cash received […]

Chapter 09 – Accounting for Receivables Problem 9-4A (Concluded) 2015 e. Accounts Receivable…………………………………….…. 1,525,634 Sales………………………………………………………….. 1,525,634 To record sales on account. Cost of Goods Sold……………………..……….………….…..1,250,000 Merchandise Inventory……………………………………. 1,250,000 To record cost of sales. *Beginning receivables…..…….…………….. $ 657,934 Credit sales…….………….………..…………… 1,525,634 […]

Chapter 09 – Accounting for Receivables SERIAL PROBLEM — SP 9 Serial Problem — SP 9, Business Solutions (50 minutes) 1. a. Bad debts expense is recorded as 1% of total revenues: $44,000 x .01 = $440. 2016 Mar. 31 […]

1) During March, the production department of a process operations system completed and transferred to finished goods 25,000 units that were in process at the beginning of March and 110,000 that were started and completed in March. March’s beginning inventory […]

1) Part of the budgeting process is summarizing the financial statement effects on the budgeted income statement and the budgeted balance sheet. 2) Personnel who will have performance evaluated according to the budget standards should not be consulted and involved […]

1) Plimpton Sales uses special journals to record business transactions. Plimpton sells office equipment. The company completed the following transactions a through j. Identify the journal in which each transaction should be recorded. a. Paid an installment on a bank […]

1) Dividend yield shows the annual amount of cash dividends distributed to common shares relative to the stock’s market price. 2) A work sheet contains all of the balances for each account and therefore may be used as a substitute […]

1) Deacon Company provides you with following information related to payroll transactions for the month of May. Prepare journal entries to record the transactions for May. a. Recorded the May payroll using the payroll register information given above. b. Recorded […]

1) Callable preferred stock gives a corporation the option of exchanging preferred shares into common shares at a specified rate. 2) When no-par stock is not assigned a stated value, the total amount received is recorded in the Common Stock […]

1) The cost of an intangible asset is systematically allocated to depreciation expense over its estimated useful life. 2) Equity securities giving an investor significant influence over an investee are always considered short-term investments. Answer: FALSE 3) Raw materials that […]

1) A company purchased two new delivery vans for a total of $250,000 on January 1, Year 1. The company paid $40,000 cash and signed a $210,000, 3-year, 8% note for the remaining balance. The note is to be paid […]

1) A ____________________ is a signed agreement to pay a specified amount of money either on demand or at a definite future date. 2) ______________________ financial statements show the financial position, results of operations, and cash flows of all entities […]

1) A patent is an exclusive right granted to its owner to manufacture and sell a patented device or to use a process for 20 years. 2) When using the equity method for investments in equity securities, the investor records […]

1) Incidental costs for acquiring merchandise inventory, such as import duties, freight, storage, and insurance, should not be added to the cost of inventory. 2) In a make or buy decision, management should focus on costs that are the same […]

1) Recording of a stock dividend results in a liability being recorded. 2) Budget preparation is best determined in a top-down managerial approach. Answer: FALSE 3) A ratio expresses a mathematical relation between two quantities and can be expressed as […]

1) Shaw Corporation reported stockholders’ equity on December 31 of the prior year as follows: The following selected transactions occurred during the current year: Prepare a statement of retained earnings as of December 31 of the current year. Answer: 2) […]

1) Most managers stress the importance of understanding and predicting cash flows for business decisions. 2) When computing payback period, the year in which a capital investment is made is year 1. Answer: FALSE 3) Stocks with a price-earnings ratio […]

1) Based on the following trial balance for Barry€s Automotive Shop, prepare an income statement, statement of owner€s equity, and a balance sheet. Barry made no additional investments in the company during the year. Answer: 2) On January 1, a […]

1) McCarthy Company has inventory of 8 units at a cost of $200 each on October 1. On October 2, it purchased 20 units at $205 each. 11 units are sold on October 4. Using the FIFO perpetual inventory method, […]

1) A manufacturer’s cost of goods manufactured is the sum of direct materials, direct labor, and factory overhead costs incurred in producing products. 2) Overapplied overhead is the amount by which overhead applied to jobs using the predetermined overhead rate […]

1) A company’s prime costs total $4,500,000 and its conversion costs total $5,500,000. If direct materials are $2,000,000, calculate the overhead costs: A.$2,500,000. B.$3,500,000. C.$2,000,000. D.$1,000,000. E.$3,000,000. 2) Hunter Sailing Company exchanged an old sailboat for a new one. The […]

1) A debit entry is always an increase in the account. 2) Predetermined overhead rates are calculated at the end of the accounting period once the actual amount of factory overhead is known. Answer: FALSE 3) Bonds and long-term notes […]

1) The amount of federal income tax withheld from employee pay depends on the employee’s annual earnings rate and the number of withholding allowances claimed by the employee. 2) The full disclosure principle requires that noncash investing and financing activities […]

1) Factory overhead is often collected and summarized in a subsidiary factory overhead ledger. 2) If at the time of partnership liquidation, a partner has a $5,000 capital deficiency and pays the partnership $5,000 out of personal assets to cover […]

1) Division M makes a part that it sells to customers outside of the company. Data concerning this part appear below: Division O of the same company would like to use the part manufactured by Division M in one of […]

1) The direct method for computing and reporting net cash flows from operating activities involves adjusting the net income figure to obtain net cash provided or used by operating activities. 2) Incremental costs should be considered in a make or […]

1) The task of preparing a budget should be the sole task of the most important department in an organization. 2) Separation of duties involves dividing responsibility for a transaction or a series of related transactions between two or more […]

1) The most useful allocation basis for the departmental costs of an advertising campaign for a storewide sale is likely to be: A.Floor space of each department. B.Relative number of items each department had on sale. C.Number of customers to […]

1) An investing company that owns _________ of another (investee) company’s voting stock (but not more than 50%) is presumed to have a significant influence over the investee. 2) The Skyview Company uses a sales journal, purchases journal, cash receipts […]

1) A flexible budget expresses variable costs on a per unit basis and fixed costs on a total basis. 2) If the purchase price of retired stock exceeds the net amount removed from paid-in capital, the excess is debited to […]

1) U.S. Government Treasury bonds provide low return and low risk to investors. 2) A high level of expected risk suggests a low price-earnings (PE) ratio. Answer: TRUE 3) The primary objective of managerial accounting is to provide general purpose […]

1) Sales Discounts is added to the Sales account when computing a company’s net sales. 2) The file of job cost sheets for completed but undelivered jobs equals the balance in the Work in Process Inventory account. Answer: FALSE 3) […]

1) A company invests $10,000 at 7% compounded annually. At the end of the second year, the company should have $11,400 in the fund. 2) Budgets are long term financial plans that generally cover more than a one-year period. Answer: […]

1) A common rule of thumb is that a company’s acid-test ratio should have a value near or higher than 1 to conclude that a company is unlikely to face near-term liquidity problems. 2) Since the process cost summary describes […]

1) The business entity principle means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold. 2) Using the retail inventory method, if the cost to retail ratio is 70% and ending […]

1) When the attitude of continuous improvement exists throughout an organization, every manager and employee is challenged to continuously experiment with new and improved business practices. 2) Activity-based costing can be especially effective in situations where many different types of […]

1) Stock is attractive to investors because stockholders are not liable for the corporation’s actions and debts and because stock is easily transferred. 2) Cash registers, check protectors, time clocks and personal identification scanners are examples of technologies that can […]

1) Revising an estimate of the useful life or salvage value of a plant asset is referred to as a change in accounting estimate and is reflected in the current, and future financial statements. 2) Assume that the M & […]

1) Companies promoting continuous improvement strive to achieve practical standards rather than ideal standards. 2) In process costing, indirect materials are always classified as factory overhead, even if they are linked with a specific production process or department. Answer: FALSE […]

1) Departmental contribution to overhead is the same as gross profit generated by that department. 2) Stated value stock is no-par stock that is assigned a value per share by the corporation’s board of directors. Answer: TRUE 3) Vertical analysis […]

1) What are the rights generally granted to common stockholders? 2) Forrest’s Cycle Shop uses a perpetual inventory accounting system and had the following transactions during the month of July: Prepare the required journal entries that Forrest’s Cycle Shop must […]

1) Payroll is an example of a contingent liability for the employer. 2) Working capital is computed as current liabilities minus current assets. Answer: FALSE 3) While companies strive to achieve ideal standards, reality implies that some loss of materials […]

1) A proxy is a document that gives a designated agent the right to vote a shareholder’s stock. 2) A noncash investing transaction should be disclosed in either a footnote or at the bottom of the statement of cash flows. […]

1) The number of shares that a corporation’s charter allows it to sell is referred to as: A.Issued stock. B.Outstanding stock. C.Common stock. D.Preferred stock. E.Authorized stock. 2) Basic bank services do not include: A.Bank accounts. B.Bank deposits. C.Checking. D.Electronic […]

1) What does the days’ sales in raw materials inventory ratio reveal? 2) The investment center return on investment is ________________ divided by ________. Answer: investments center net income; investment center average invested assets answers must appear in this order […]

1) Changes in accounting estimates are accounted for in current and future periods. 2) Material amounts of under- or overapplied factory overhead are always closed entirely to Cost of Goods Sold at the end of an accounting period. Answer: FALSE […]

1) Comparative financial statements are reports that show financial amounts in side by side columns on a single statement for analysis purposes. 2) A cash-based measure to help business decision makers estimate the amount and timing of cash flows is […]

1) Period costs for a manufacturing company, such as selling and administrative expenses, are recorded directly to Work In Process Inventory when they are incurred. 2) Even if the end of an accounting period occurs between the signing of a […]

1) Budgeting is an informal plan for future business activities. 2) Obligations not due within one year or the company’s operating cycle, whichever is longer, are reported as current liabilities. Answer: FALSE 3) An out-of-pocket cost requires a future outlay […]

1) In preparing a company’s statement of cash flows for the most recent year, the following information is available: Net cash flows from investing activities for the year were: A.$234,000 of net cash used. B.$120,000 of net cash provided. C.$340,000 […]

1) Process costing is applied to operations with repetitive production and customized products. 2) A company’s history indicates that 20% of its sales are for cash and the remaining 80% are on credit. Collections on credit sales are 30% in […]

1) Explain the impact, if any, on depreciation when estimates that determine depreciation change. 2) An employer has an employee benefit package that includes employer-paid health insurance and an employer-paid retirement program. During March, the employer paid $5,500 for health […]

1) The means of recording purchases under the assumption that the cash discount for prompt payment will be taken is called the _________________________. 2) A company reported net income of $78,000 and had 15,000 common shares outstanding throughout the current […]

1) Pepperdine reported net sales of $8,600 million, net income of $126 million and average accounts receivable of $890 million. Its accounts receivable turnover is: A.37.8. B.9.7. C.68.3. D.7.1. E.51.7. 2) The F. Mercury, Capital account has a credit balance […]

1) In a process costing system, factory labor costs incurred in a reporting period are presented on the income statement as Factory Labor Expense. 2) Graphical analysis of the balance sheet can be useful in assessing sources of financing. Answer: […]

1) The time period assumption assumes that an organization’s activities can be divided into specific time periods such as months, quarters, or years. 2) The inventory turnover ratio is computed by dividing cost of goods sold by average merchandise inventory. […]

1) Companies with many employees rarely use a special payroll bank account from which to pay employees. 2) If a long-term investment in an equity security gives the investor significant influence over the investee, the investment is classified as available-for-sale. […]

1) The production of one unit of Product BJM used $27.50 of direct materials and $21.00 of direct labor. The unit sold for $76.00 and was assigned overhead at a rate of 30% of labor costs. What is the gross […]

1) Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. The machine’s useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. […]

1) On October 17 of the current year, a company determined that a customer’s account receivable was uncollectible and that the account should be written off. Assuming the allowance method is used to account for bad debts, what effect will […]

1) The lower of cost or market requiring inventory to be reported at market value if it is lower than cost is an example of applying the conservatism constraint. 2) The internal rate of return method of evaluating capital investments […]

1) Outstanding checks, deposits in transit, deductions for bank fees, additions for interest, and errors are all factors that can cause the bank statement balance for a checking account to be different from the company’s checking account balance. 2) A […]

1) Federal laws prohibit the selling of accounts receivables to factors. 2) A profit center generates revenue, incurs costs, and has the authority to make significant investing decisions. Answer: FALSE 3) Hybrid systems contain features of both process and job […]

1) Chen Service applied overhead on the basis of direct labor costs during the current year. Overhead applied was $16,500. Actual overhead incurred was $17,200. (a) Prepare a journal entry to remove this difference assuming that it is not material. […]

1) The master budget process usually ends with: A.The production budget. B.The sales budget. C.The selling expense budget. D.The budgeted balance sheet. E.The overhead budget. 2) Ultimate Sportswear has $100,000 of 8% noncumulative, nonparticipating, preferred stock outstanding. Ultimate Sportswear also […]

1) Kline Company accrued wages of $7,350 that were earned by employees unpaid at the end of 2014. Assuming Kline uses reversing entries, which of the following entries is appropriate for reversing the accrued wages at the beginning of 2015? […]

1) Hamasaki Company owns 30% of CDW Corp. stock. Hamasaki received $6,500 in cash dividends from its investment in CDW. The entry to record receipt of these dividends includes a debit to Cash for $6,500 and a credit to Long-Term […]

1) An asset’s cost includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use. 2) All plant assets, including land, are depreciated. Answer: FALSE 3) An employee earnings report is a […]

1) Explain the way in which costs flow through the merchandise inventory account to a merchandiser’s income statement. 2) What is the purpose of a good financial statement analysis report? What are the key components? Answer: A good financial statement […]

1) The equity method with consolidation is used to account for long-term investments in equity securities with controlling influence. 2) Owner’s withdrawals are not reported on a business’s income statement. Answer: TRUE 3) If a company is comparing its financial […]

1) Debt guarantees are usually disclosed as a contingent liability. 2) An owner’s withdrawal account normally has a debit balance. Answer: TRUE 3) One application of internal control when taking a physical count of inventory is the use of pre-numbered […]

1) In activity-based costing, there are a number of activity cost pools, which consist of activities that belong to the same process and/or are caused by the same cost driver. 2) When using the equity method, receipt of cash dividends […]

1) Briefly describe both the payback period method and the net present value method of comparing investment alternatives. 2) Explain the difference between a large stock dividend and a small stock dividend. In addition, explain how to record these two […]

1) A trend percent, or index number, is calculated by dividing the analysis period amount by the base period amount and multiplying the result by 100. 2) Most companies do not take a physical count of inventory each year, but […]

1) The FASB requires a reconciliation of net income to net cash provided or used by operating activities when the direct method is used (which can be reported in the notes). 2) In producing oat bran, the joint cost of […]

1) Northington, Inc. is preparing the company’s statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from financing activities: A.($168,000). B.$200,000. C.$168,000. D.($191,700). E.$191,700. 2) Which of the following […]

1) If Department L uses $53,000 of direct labor and Department M uses $21,000 of direct labor, the following journal entry would be recorded using a process costing system: 2) If Grayson Manufacturing incurred $17,400 for direct labor in the […]

1) Promissory notes cannot be transferred from party to party because they are nonnegotiable. 2) Total asset cost plus depreciation expense equals book value. Answer: FALSE 3) A note payable can be used to extend the payment due on an […]

1) For legal reasons, it is not advisable to accept a note receivable in exchange for an overdue account receivable. 2) As a general rule, revenues should not be recognized in the accounting records when earned, but rather when cash […]

1) The sales budget for Modesto Corp. shows that 20,000 units of Product A and 22,000 units of Product B are going to be sold for prices of $10 and $12, respectively. The desired ending inventory of Product A is […]

1) The decision to accept an additional volume of business should be based on a comparison of the revenue from the additional business with the sunk costs of producing that revenue. 2) If all columns of a completed work sheet […]

1) Select the correct statement from the following: A.Profit margin reflects a company’s ability to produce net sales from total assets. B.Total asset turnover reflects the percent of net income in each dollar of net sales. C.Return on total assets […]

1) The monetary unit assumption means that all companies doing business in the United States must express transactions and events in U.S. dollars. 2) A system of performance measures, including nonfinancial measures, used to assess company and division manager performance […]

1) Lattimer Company had the following results of operations for the past year: A foreign company whose sales will not affect Lattimer’s market offers to buy 5,000 units at $7.50 per unit. In addition to existing costs, selling these units […]

1) Any cash dividends received from equity securities are recorded as Dividend Expense. 2) If net present values are used to evaluate two investments that have equal costs and equal total cash flows, the one with more cash flows in […]

1) A reverse stock split increases the market value per share and the par value per share of stock. 2) Plant assets can be disposed of by discarding, selling, or exchanging them. Answer: TRUE 3) Period costs are incurred by […]

1) Pravis Corporation owns 30% of Kuster Corporation. Pravis Corporation received $9,000 in cash dividends from Kuster Corporation. The entry to record receipt of these dividends is: A.Debit Cash, $9,000; credit Long-Term Investments, $9,000. B.Debt Long-Term Investment, $9,000; credit Cash, […]

1) When preparing the operating activities section of the statement of cash flows using the indirect method, non-operating gains are added to net income. 2) Participating preferred stock has a feature that allows its holders to share with common shareholders […]

1) Market prospects are the ability to provide financial rewards sufficient to attract and retain financing. 2) If the exchange rate for Canadian and U.S. dollars is 0.7382 to 1, this implies that 2 Canadian dollars can be purchased for […]

1) A department that incurs costs without directly generating revenues is a: A.Service center. B.Production center. C.Profit center. D.Cost center. E.Performance center. 2) A college uses advisors who work with all students in all divisions of the college. The most […]

1) Match the following terms with the definitions. A. Volume variance B. Fixed budget C. Standard costs D. Variance analysis E. Price variance F. Flexible budget G. Quantity variance H. Controllable variance I. Management by exception J. Cost variance 2) […]

1) A company produces two boat models, Flyer and Skimmer. Both products are being considered for major investment projects next year. Relevant data follow: Required: Use the payback period to evaluate these two investment projects. 2) On January 1, a […]

1) All of the following statements regarding uncertainty in liabilities are true except: A.Liabilities can involve uncertainty in whom to pay. B.A company can create a liability with a known amount even when the holder of the note may not […]

1) Dividing stockholders’ equity applicable to common shares by the number of common shares outstanding yields the book value per common share. 2) Part of the decision to accept additional business should be based on a comparison of the incremental […]

1) Freeman Co. had net sales of $4.2 million and ending accounts receivable of $0.8 million. Its days’ sales uncollected equals: A.5.3 days. B.69.5 days. C.19.2 days. D.11.5 days. E.292 days. 2) Which of the following transactions or events should […]

1) The FIFO method of computing equivalent units focuses on production activity in the current period only. 2) Additions to land that increase the usefulness of the land such as parking lots, fences, and lighting are not depreciated. Answer: FALSE […]

1) A ____________________ contains features of both process and job order costing systems. 2) On May 1 of the current year, a company paid $200,000 to purchase 7%, 10-year bonds with a par value of $200,000; interest is paid semiannually […]

1) A company sells sofas with a 6-month warranty. In January, the company sold 100,000 sofas at $1,750 each; and 500 sofas needed repairs during that same month. The total repairs amounted to $85,000 costs from the upholstery materials inventory. […]

1) Soo Lin began an Internet Consulting practice and completed these transactions during April of the current year: Show the effects of the above transactions on the accounting equation of Soo Lin, Consultant. Use the following format for your answers. […]

1) Evaluation of company performance does not include analysis of (1) past and current performance, (2) current financial position, and (3) future performance and risk. 2) Product costs are capitalized as inventory on the balance sheet and period costs are […]

1) The legal contract between the issuing corporation and the bondholders is called the bond indenture. 2) The cost of fees for insuring the title and any accrued property taxes are included in the cost of land. Answer: TRUE 3) […]

1) One of the major benefits of formal budgeting is the positive effect it can have on employee attitudes if applied correctly. 2) A Company had net sales of $23,000 million, and its average account receivables were $5,700 million. Its […]

1) The depreciation method that produces larger depreciation expense during the early years of an asset’s life and smaller expense in the later years is a(an): A.Accelerated depreciation method. B.Book value depreciation method. C.Straight-line depreciation method. D.Units-of-production depreciation method. E.Unrealized […]

1) A stock dividend does not reduce a corporation’s assets or its stockholders’ equity. 2) When the number of withholding allowances claimed on Form W-4 increases, the amount of income tax withheld decreases. Answer: TRUE 3) If two projects have […]

1) The use of debt is sometimes described as financial leverage because debt can have the effect of increasing the return on equity. 2) The direct materials section of a job cost sheet shows the materials costs assigned to a […]

1) Another name for a static budget is a variable budget. 2) A corporation is a legal entity separate from its owners. Answer: TRUE 3) It is acceptable to record prepayment of expenses as debits to expense accounts if an […]

1) Employers must pay FICA taxes twice the amount of the FICA taxes withheld from their employees. 2) In a process costing system, factory overhead costs can be allocated to production departments by using a predetermined overhead allocation rate. Answer: […]

1) Joint costs can be allocated either using a physical basis or a value basis. 2) The payment of cash dividends to shareholders is classified as a financing activity. Answer: TRUE 3) Both financial and managerial accounting affect user’s decisions […]

1) Which of the following accounts is not included in the calculation of a company’s ending owner’s equity? A.Revenues. B.Expenses. C.Withdrawals. D.Owner investments. E.Cash. 2) The formula to compute annual straight-line depreciation is: A.Depreciable cost divided by useful life in […]

1) In a job order costing system, indirect labor costs are debited to the Factory Overhead account. 2) A premium on bonds occurs when bonds carry a contract rate greater than the market rate at issuance. Answer: TRUE 3) Accounting […]

1) Division A makes a part that it sells to customers outside of the company. Data concerning this part appear below: Division B of the same company would like to use the part manufactured by Division A in one of […]

1) If a department that applies process costing starts the reporting period with 50,000 physical units that were 25% complete with respect to direct materials and 40% complete with respect to direct labor, it must add 12,500 equivalent units of […]

1) A lease is a contractual agreement between a lessor and a lessee that grants the lessee the right to use the asset for a period of time in return for cash payment(s) to the lessor. 2) The sales commission […]

1) When a partner leaves a partnership, the present partnership ends, but the business can still continue to operate. 2) A pension plan is a contractual agreement between an employer and its employees to provide benefits to employees after they […]

1) The following information is available for the year ended December 31: The amount of raw materials used in production for the year is: A.$76,400. B.$95,500. C.$72,500. D.$74,900. E.$70,100. 2) Comparative calendar-year financial data for a company are shown below. […]

1) A company has the following per unit original costs and replacement costs for its inventory. LCM is applied to individual items. Part A: 50 units with a cost of $5, and replacement cost of $4.50 Part B: 75 units […]

1) The following information is available regarding Grace Smit’s capital account in Enterprise Consulting Group, a general partnership, for a recent year: What is Smit’s partner return on equity during the year in question? A.36.6% B.34.7% C.10.8% D.11.4% E.55.7% 2) […]

1) Enterprise resource planning software packages include the programs that manage a company’s vital operations such as accounting, order taking, and manufacturing. 2) If an owner’s capital account had a $10,000 credit balance at the beginning of the period, and […]

1) A company is evaluating the purchase of a machine for $750,000 with a six-year useful life and no salvage value. The company uses straight-line depreciation and it assumes that the annual net cash flow from using the machine will […]

2) Lucia Company reported cost of goods sold for Year 1 and Year 2 as follows: Lucia Company made two errors: 1) ending inventory at the end of Year 1 was understated by $15,000 and 2) ending inventory at the […]

1) MOB Corp. maintains an internet-based general ledger. Overhead is applied on the basis of direct labor costs. Its bookkeeper accidentally deleted most of the entries that had been recorded for January. A printout of the general ledger (in T-account […]

1) According to the cost principle, it is necessary for managers to report an approximation of an asset’s market value upon purchase. 2) A budget performance report shows budgeted amounts, actual amounts, and differences between budgeted and actual amounts. Answer: […]

1) Flagstaff Company has budgeted production units of 7,900 for July and 8,100 for August. The direct materials requirement per unit is 2 ounces. The company has determined that it wants to have safety stock of direct materials on hand […]

1) A trademark is an exclusive right granted to its owner to publish and sell a musical, literary, or artistic work during the life of the creator plus 70 years. 2) When the contract rate is above the market rate, […]

1) Direct costs are incurred for the benefit of more than one cost object. 2) An example of a controllable cost is equipment depreciation expense. Answer: FALSE 3) The responsibility for coordinating the preparation of a master budget should be […]

1) When analyzing the changes on a spreadsheet used to prepare a statement of cash flows, the cash flows from financing activities generally affect: A.Net income, current assets, and current liabilities. B.Noncurrent assets. C.Noncurrent liability and equity accounts. D.Both noncurrent […]

1) Costs that the manager does not have the power to determine or at least significantly affect are: A.Variable costs. B.Uncontrollable costs. C.Indirect costs. D.Direct costs. E.Joint costs. 2) Tate Company’s 2015 income statement and changes in selected balance sheet […]

1) In process costing, direct labor includes only the labor that is applied directly to individual units of product. 2) If a production department has 100 equivalent units of production with respect to direct materials in a given reporting period, […]

1) Match each of the following transactions with the applicable internal control principle that is being violated listed. A. Establish responsibility B. Maintain adequate records C. Insure assets and bond employees D. Separate recordkeeping from custody of assets E. Divide […]

1) Addams, Inc., is preparing its master budget for the second quarter. The following sales and production data have been forecasted: Finished goods inventory on March 31: 120 units Raw materials inventory on March 31: 450 pounds Desired ending inventory […]

1) Both the direct and indirect methods yield the identical net cash flow amount provided or used by operating activities. 2) Planning involves defining an organization’s ideas, goals, and actions. Answer: TRUE 3) Direct expenses require allocation across departments because […]

1) The purchases journal is used to record purchases of merchandise on credit. 2) Both financial and managerial accounting rely on accepted principles that are enforced through an extensive set of rules and guidelines. Answer: FALSE 3) Product costs can […]

1) Actual factory overhead incurred in a job costing system is debited to a Factory Overhead general ledger account and credited to various other accounts. 2) Dividend yield is defined as the annual cash dividends per share divided by the […]

1) The factor for the present value of an annuity for 6 years at 10% is 4.3553. This implies that an annuity of six $2,000 payments at 10% would equal $8,710.60. 2) According to IRS guidelines, companies may use FIFO […]

1) The Form W-2 must be given to employees before January 31 following the year covered by the Form W-2. 2) Within the same flexible budget performance report, it is impossible to have both favorable and unfavorable variances. Answer: FALSE […]

1) A premium on common stock: A.Occurs when a corporation sells its stock for more than par or stated value. B.Is the difference between par value and issue price when the amount paid is below par. C.Represents profit from issuing […]

1) A procedure called direct posting of sales invoices involves posting sales directly to the customer accounts in the accounts receivable ledger, making a period end journal entry, and avoiding the use of the sales journal. 2) FUTA requires employers […]

1) Apply the retail method to the following company information to calculate the cost of the ending inventory for the current period. 2) A company ages its accounts receivables to determine its end of period adjustment for bad debts. At […]

1) Activity cost pools are not a necessary part of the allocation of overhead costs using activity-based costing. 2) If a U.S. company’s credit sale to an international customer allows payment to be made in a foreign currency, the sale […]

1) Slate Corporation had the following balances in its stockholders’ equity accounts at December 31, 2015: The following transactions occurred during 2016: Based on the above information, prepare a statement of stockholders’ equity for 2016. Use the form below. Answer: […]

1) Manufacturers usually have three inventories: raw materials, work in process, and finished goods. 2) Notes receivable are classified as current liabilities regardless of the time to maturity. Answer: FALSE 3) Debt securities are recorded at cost when purchased. Answer: […]

1) The payback period method of evaluating an investment fails to consider cash inflows after the point where an investment’s costs are fully recovered. 2) A purchase of land in exchange for shares of stock is disclosed at the bottom […]

1) Four factors come together in production activity: beginning work in process inventory, raw materials, direct labor, and factory overhead. 2) Cost accounting information is helpful to management for pricing decisions but has no effect on controlling costs. Answer: FALSE […]

1) Cash equivalents are investments that are readily converted to known amounts of cash and mature within three months. 2) Vertical analysis is the comparison of a company’s financial condition and performance across time. Answer: FALSE 3) A rolling budget […]