Fundamental Accounting Principles 22nd Edition

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, B-19 Procedural objectives: P1. Apply present value concepts to a single amount by using interest tables. B-2, B-3,

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 2. 12% n = 2 periods3. 3% n = 4 periods4. 1% n = 24 periods 2. 12% n = 2 periods3. 3% n = 4 periods4. 1% n = 24

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 assess advantages and disadvantages of activity-based costing 7,10,11 C-1, C-7 C-2, C-3, Procedural objectives: P1. Assign

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 on some reasonable basis. 2. In the first stage, service department costs are assigned to operating

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 cost Depreciation............................. 56,600 2,000 MH $28.30 per machine hourLine preparation....................... 46,000 250 setups $184.00 per setup Depreciation.............................

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 Product design $180,000/3,000 design hours = $60/des. hr.Obtaining license* $100,000/20,000 direct labor hours = $5/DLHCooking $270,000/1,000 batches = $270/batch Product design $180,000/3,000 design hours = $60/des. hr.Obtaining license* $100,000/20,000 direct labor hours = $5/DLHCooking $270,000/1,000

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 & supplies.......400 patients $45 per patient 18,000 Building cost........................... 600 sq. ft. $100 per sq. ft. 60,000Total

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 Gross profit per customer $72.60 $176.80Total customer service cost $81,000 number of customers 900 customers Customer service cost per

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 Labeling & Defects ($12,000 + $6,000)/120,000 cases $0.15/caseRecipe formulation $90,000/45 focus groups $2,000/groupHeat, light and water $27,000/1,500 machine hours $18/MHMaterial handling $65,000/8 container types $8,125/type Labeling & Defects

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 uses of, and opportunities in accounting. 2, 3, 4, 6, 7, 8, 9, 10, 11, 12, 23

Chapter 1 Accounting in Business QUESTIONS 1. The purpose of accounting is to provide decision makers with relevant and reliable information to help them make better decisions. Examples include information for peoplemaking investments, loans, and business plans. information to help them make better decisions. Examples include information for peoplemaking investments, loans, and business

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 b. E h. Ec. E i. Id. E j. Ee. I k. Ef. E l. I b. E h. Ec. E i. Id. E j. Ee. I k. Ef. E l. I b.

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 G 2. Financial statements reflect the assumption that the business continues operating.Going-concern assumption F 3. A company records the expenses incurred to generate the revenues reported.Matching (expense recognition) principle

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 ______ ______ $1,500 Bal. 58,500 + + 15,000 = + 75,000 1,500 c. _______ + 10,000 +$10,000 ______

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 as follows: Equity, December 31, 2014........................ $ ? Plus investment by owner......................... 6,500 Plus net income..........................................

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 Cleaning expense.............................. 750 Telephone expense............................ 300 Utilities expense................................. 280Advertising expense.......................... 80 Total expenses................................... 5 ,110 Net income................................................. $ 5 ,990 Cleaning expense.............................. 750 Telephone expense............................ 300 Utilities expense................................. 280Advertising

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 Salaries expense.............................. 1,400 Utilities expense .............................. 540 Total expenses.................................. 2 ,940Net income.................................................. $4 ,160 Salaries expense.............................. 1,400 Utilities expense .............................. 540 Total expenses.................................. 2 ,940Net income.................................................. $4 ,160 Salaries expense.............................. 1,400 Utilities expense .............................. 540 Total

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 Buys building by signing note payable + + 3 Buys store equip-ment for cash+/ 4 Provides ser-vices for cash+ + + +5 Pays cash for rent incurred 6 Incurs utilities costs on credit

Problem 1-7B (Continued) Part 3 Nikos 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 Telephone expense............................. 150 Total expenses.................................... 9 ,790Net income............................................... $ 7 ,135 Telephone expense............................. 150 Total expenses.................................... 9 ,790Net income............................................... $ 7 ,135

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 = + $80,000 2- 700 -$700 Bal. 79,300 = 80,000 -700 3- 1,000 + $5,000 + $4,000

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 the event of inflation. Case 2. Return: Expected winnings from your bet. Risk:

Comparative Analysis BTN 1-2 ($ millions) Apple Google 1. Total assets = Liabilities + Equity $207,000 $110,920 2. Return on assets $37,037 $12,920 [($207,000 + $176,064)/2] [($110,920 + $93,798)/2]19.3% 12.6% Liabilities + Equity $207,000 $110,920 2. Return on assets $37,037 $12,920 [($207,000 + $176,064)/2] [($110,920 + $93,798)/2]19.3% 12.6% Liabilities + Equity

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 computing the cost of plant asset. 10-15 10-3, 10-21 10-4, 10-6 computing the cost of plant asset. 10-15 10-3, 10-21 10-4,

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* x units produced Depreciation in period for PERIOD (In last year, depreciate to estimated salvage value; never depreciate below this amount.) **Cost

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 a useful life longer than one accounting period. and it has a useful life longer than

VISUAL #10-1 FORMULAS FOR DEPRECIATION METHODS 1. STRAIGHT LINE FHC* - Estimated salvage AnnualEstimated useful life Depreciation*Full Historical Cost = FHC* - Estimated salvage AnnualEstimated useful life Depreciation*Full Historical Cost = 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 Unitb)

Chapter 10 - Plant Assets, Natural Resources, and Intangibles Exercise 10-3 (20 minutes) Purchase price........................................................... $375,280 Closing costs............................................................. 20,100Total cost of acquisition............................................ $395,380 Closing costs............................................................. 20,100Total cost of acquisition............................................ $395,380 Closing costs............................................................. 20,100 Total cost of acquisition............................................ $395,380 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 15

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 a useful life longer than one accounting period. 2. The cost of a plant

Exercise 10-25 (20 minutes) (Amounts for this exercise are in euros millions) 1. Depreciation expense................................................... ................................................................................. 6,689 Accumulated depreciationProperty, plant andequipment........................................................... 6,689 To record depreciation on property, plant and equipment. Accumulated depreciationProperty, plant andequipment........................................................... 6,689 To record depreciation on property, plant and equipment. Accumulated depreciationProperty, plant and equipment........................................................... 6,689 To record depreciation on property, plant and

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 years depreciation = $43,500 x 20% = $8,700 Book value at beginning of second year = $43,500 - $8,700 = $34,800Second years depreciation = $34,800 x 20%

PROBLEM SET B Problem 10-1B (50 minutes) Part 1 Estimated Market Value Percent of Total Apportioned Cost Building.......................... $ 890,000 50% $ 900,000 Land................................ 427,200 24 432,000Land improvements....... 249,200 14 252,000Trucks............................. 213 ,600 12 216 ,000Total................................ $1 ,780,000 100% $1 ,800,000 Land................................ 427,200 24 432,000Land improvements....... 249,200 14 252,000Trucks............................. 213 ,600 12 216 ,000Total................................ $1 ,780,000 100% $1

Chapter 10 - Plant Assets, Natural Resources, and Intangibles Problem 10-2A (25 minutes) Cost of machine................................................................$257,500Less estimated salvage value......................................... 20,000Total depreciable cost......................................................$237,500 Cost of machine................................................................$257,500Less estimated salvage value......................................... 20,000Total depreciable cost......................................................$237,500 Cost of machine................................................................$257,500 Less estimated salvage value......................................... 20,000 Total depreciable cost......................................................$237,500 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 32,1884...................... 59

Problem 10-8B (20 minutes) 1. 2015 (a) Jan. 1 Leasehold....................................................................40,000 Cash....................................................................... 40,000 Jan. 1 Leasehold....................................................................40,000 Cash....................................................................... 40,000 Jan. 1 Leasehold....................................................................40,000 Cash....................................................................... 40,000 To record payment for sublease. (b) Jan. 1 Prepaid Rent...............................................................36,000 Cash....................................................................... 36,000 Jan. 1 Prepaid Rent...............................................................36,000 Cash....................................................................... 36,000 Jan. 1 Prepaid Rent...............................................................36,000 Cash....................................................................... 36,000 To record prepaid annual lease rental. (c) Jan. 3 Leasehold Improvements...........................................20,000 Cash.......................................................................

Chapter 10 - Plant Assets, Natural Resources, and Intangibles Problem 10-2B (25 minutes) Cost of machine............................................................$324,000Less estimated salvage value..................................... 30,000Total depreciable cost..................................................$294,000 Cost of machine............................................................$324,000Less estimated salvage value..................................... 30,000Total depreciable cost..................................................$294,000 Cost of machine............................................................$324,000 Less estimated salvage value..................................... 30,000 Total depreciable cost..................................................$294,000 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

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 $1,250 for the computer equipment. Annualizing (multiplying quarterly results by four) these three-monthtotals yield the following

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. 1 11-1, 11-14 11-1 11-5 C2. Identify and describe known current liabilities. 3, 4, 16, 17 11-2, 11-3, 11-14

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. liabilities and their characteristics. liabilities and their characteristics. 1 11-1, 11-14 11-1 11-5 C2. Identify and describe known current liabilities. 3,

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 companys operating cycle,whichever is longer. Any liability that is not current is considered to be long term.2. An estimated liability is an obligation to

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................................ 200,000Interest Expense............................ 1,500Interest Payable............................. 3,000Cash.......................................... 204,500 ($200,000 X 9% X 60/360 = $ 3,000 accrued interest)Maturity date:1/30/14 Notes Payable................................ 200,000Interest Expense............................ 1,500Interest

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 Tim V...................60,200 60,200 60,200 7,000 7,000 Steve S................87,000 87,000 87,000 7,000 7,000Ann T...................146,500 117,000 146,500 7,000 7,000Kathleen K..........106,900 106,900 106,900 7,000 7,000Michelle H...........117,000 117,000 117,000 7,000 7,000Lori K...................119,500 117,000

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 companys operating cycle, whichever is longer. Any liability that is not current is considered to be long term. 2. An estimated liability is an obligation to make

Problem 11-1A (Concluded) 5. 2014 Apr. 20 Merchandise Inventory........................................... 40,250 Accounts PayableLocust.............................. 40,250 Purchased merchandise on credit. May 19 Accounts PayableLocust.................................... 40,250 Cash................................................................... 5,250 Notes PayableLocust.................................... 35,000 Paid $5,250 cash and gave a 90-day, 10% note to extend due date on account. Cash................................................................... 5,250 Notes PayableLocust.................................... 35,000 Paid $5,250 cash and gave a

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 $ 6,000 $ 6,000 $ 6,000 $ 6,000 Tim V....................60,200 60,200 60,200 7,000 7,000 Steve S................87,000 87,000 87,000 7,000 7,000 Ann T...................146,500 117,000 146,500 7,000 7,000 Kathleen K...........106,900 106,900 106,900 7,000 7,000Michelle

Problem 11-6AA (Concluded) Apr. 15 FICASocial Security Taxes Payable............................................................ 3,472 FICAMedicare Taxes Payable...................................................................... 812 Employee Fed. Income Taxes Payable........................................................... 4,000 Cash.............................................................................................................. 8,284 To record payment of FICA & federal income taxes. FICAMedicare Taxes Payable...................................................................... 812 Employee Fed. Income Taxes Payable........................................................... 4,000 Cash.............................................................................................................. 8,284 To record payment of FICA & federal income

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 FICASocial Sec. Taxes Payable*........................................................ 5,493.20 FICAMedicare Taxes Payable**....................................................... 1,284.70 Employee Fed. Inc. Taxes Payable........................................................ 12,860.00 Employee Medical Insurance Payable.................................................. 1,340.00 Employee Union Dues Payable.............................................................. 840.00 Salaries Payable...................................................................................... 66,782.10 To record payroll for

Problem 11-6BA (50 minutes) June 15 FICASocial Security Taxes Payable................... 992 FICAMedicare Taxes Payable.................................................................... 232Employee Fed. Income Taxes Payable.................. 1,050 Cash.............................................................................................................. 2,274 To record payment of FICA & federal income taxes. FICAMedicare Taxes Payable.................................................................... 232Employee Fed. Income Taxes Payable.................. 1,050 Cash.............................................................................................................. 2,274 To record payment of FICA & federal income taxes.

Chapter 11 - Current Liabilities and Payroll Accounting Problem 11-1B (Concluded) 5. 2014 Apr. 22 Merchandise Inventory............................................ 5,000 Accounts PayableFox Products. . 5,000 Purchased merchandise on credit. May 23 Accounts PayableFox Products........................... 5,000 Cash..................................................................... 400 Notes PayableFox Products............................ 4,600 Paid $400 cash and gave a 60-day, 15% note to extend due date on account.July

4. The solution depends on the financial statement information accessed. Comparative Analysis BTN 11-2 1. AppleTimes interest earned ($ millions) Current Year One Year Prior Two Years Prior Net income................................................$37,037 $41,733 $25,922 Add income taxes..................................... 13,118 14,030 8,283 Add interest expense (actual for 2013; assumed for 2012 and 2011)............. 136 100 100 Income before taxes and interest............$50,291 $55,863 $34,305Times

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 FICA Medicare tax deduction (1.45%)...................................................................... 14.50Income tax deduction................................................................................................... 159.00Total deductions............................................................................................................ 235.50Net Pay.......................................................................................................................... $ 764.50*Employee has not

Chapter 11 - Current Liabilities and Payroll Accounting Ethics Challenge BTN 11-3 1. It is in Blys self-interest to maximize the amount of revenues less warranty expenses so as to maximize his personal bonus. Since Bly has some input into setting the warranty expense accrual percent, hepotentially faces an ethical dilemma. Specifically, the

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 organizations. 12-8 organizations. 12-8 organizations. 12-8 1, 2, 3, 4, 5, 8 12-1 12-1, 12-2 12-1, 12-2, 12-4, 12-7, Analytical objectives:Al. Compute partner return on equity

Chapter 12 - Accounting for Partnerships SOLUTION: ALTERNATE DEMONSTRATION PROBLEM CHAPTER 12 1. Proceeds from sale $85,000 Cost of other assets 106,000Loss on sale 21,000 Cost of other assets 106,000Loss on sale 21,000 Cost of other assets 106,000 Loss on sale 21,000 2. Sands Mell Rand Capital account balance prior to distribution of loss on sale of assets $1,200 $11,700

Exercise 12-5 (35 minutes) Kramer Knox Total 1. Net income................................................... $ 98,800 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 ,000Total salaries and interest.......................... 104 ,000Balance of income....................................... (5,200)Remainder equally($5,200)/2......................................................(2,600) (2,600) (5 ,200) Balance of income......................................._______ _______ $ 0Shares each partner....................................$53 ,400 $ 45 ,400 ($60,000 x 10%).........................................6,000 6,000($80,000

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 organized for the purpose of completing a specific business project, the partnershipends when the project is

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 (c) Salary allowance..................................................... $72,00040% x ($90,000 income - $72,000 salary)...................$ 7,20060% x ($90,000 income - $72,000 salary)..................._______ 10,800

Chapter 12 - Accounting for Partnerships Exercise 12-7 (10 minutes) Sept. 30 Mandy, Capital..........................................................100,000 Brittney, Capital.................................................. 100,000 To record admission of Brittney. Sept. 30 Mandy, Capital..........................................................100,000 Brittney, Capital.................................................. 100,000 To record admission of Brittney. Sept. 30 Mandy, Capital..........................................................100,000 Brittney, Capital.................................................. 100,000 To record admission of Brittney. Exercise 12-8 (25 minutes) 1. Nov. 1

PROBLEM SET B Problem 12-1B (45 minutes) Preliminary calculations Plan (a) & Plan (c) Percentages based on initial investments Bell = $104,000/$260,000 = 40%Green = $156,000/$260,000 = 60% Bell = $104,000/$260,000 = 40%Green = $156,000/$260,000 = 60% Bell = $104,000/$260,000 = 40% Green = $156,000/$260,000 = 60% Plan (b) Percentages based on time Bell = 0.333/1.333 = 25%Green = 1.000/1.333 =

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) Feb. 1 Benson, Capital........................................................138,000 Schmidt, Capital................................................. 138,000 To record admission of Schmidt. c)Feb. 1 Benson, Capital........................................................138,000 Cash..................................................................... 138,000 To record withdrawal of Benson with no bonus. d)Feb. 1

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 hand-built by Steve Wozniak. The Apple I went on sale in July 1976 andwas market-priced at $666.66 ($2,763 in 2014 dollars, adjusted

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 (b) $240,000 x ($144,000/$480,000)..................... $72,000$240,000 x ($216,000/$480,000)..................... $108,000 $240,000 x ($120,000/$480,000)....................._______ _______ $ 60,000Total allocated.............................................$72,000 $108,000 $ 60,000 $240 ,000 (b) $240,000 x ($144,000/$480,000)..................... $72,000$240,000 x

Chapter 12 - Accounting for Partnerships Comparative Analysis BTN 12-2 1. Apple was organized/founded in 1976, and Google was organized/founded in 1998 (although the research project that led toGoogle started in 1996 and the domain name was registered in 1997). organized/founded in 1998 (although the research project that led toGoogle started in 1996

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 13-1 13-5 C2. Explain characteristics of, and distribute dividends between common and preferred stock. 5, 6, 7,8, 9, 20,

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 the beginning retained earnings balance. d. Changes in Accounting Estimates do not result in prior period

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 $80 per share. Selected transactions are presented below. 2015 Feb. 19 Issued 45,000 shares of common stock

EXERCISES Exercise 13-1 (15 minutes) Characteristic Corporations 1. Owner authority and control......................One vote per share 2. Ease of formation.......................................Requires government approval 3. Transferability of ownership......................Readily transferred4. Ability to raise large amounts of capital...... High ability5. Duration of life............................................Unlimited6. Owner liability.............................................Limited7. Legal status................................................Separate legal entity8. Tax status of income..................................Corporate income is taxed and its cash dividends

Chapter 13 - Accounting for Corporations Chapter 13 Accounting for Corporations QUESTIONS 1. Organization expenses (costs) are incurred in creating a corporation. Examples include: legal fees, promoter fees, accountant fees, costs of printing stock certificates, and feespaid to obtain a state charter. legal fees, promoter fees, accountant fees, costs of printing stock certificates, and feespaid

Exercise 13-13 (30 minutes) 1. Net income....................................................................................$960,000 Less preferred dividends........................................................... (120,000)Net income available to common stockholders....................... $840,0002. Net income available to common stockholders.................... $840,000Divided by weighted-average outstanding shares................... 400,000Basic earnings per share........................................................... $ 2.10 Less preferred dividends........................................................... (120,000)Net income available to common stockholders....................... $840,0002. Net income available to common stockholders.................... $840,000Divided by weighted-average

Chapter 13 - Accounting for Corporations Exercise 13-3 (15 minutes) 1. Cash................................................................................... 35,000 Common Stock, $5 Par Value*................................... 20,000 Paid-In Capital in Excess of Par Value, Common Stock**..................................................... 15,000 Issued common stock for cash. *4,000 shares x $5 per share = $20,000 **$35,000 - $20,000 = $15,000 Paid-In Capital in Excess of

Problem 13-5A (40 minutes) 1. Market price = $85 per share (current stock exchange price given) 2. Computation of par values of stock Preferred: Paid-in amount / Number of shares = $50,000 / 1,000 = $50 Common: Paid-in amount / Number of shares = $80,000 / 4,000 = $20 Preferred: Paid-in amount

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) Equity applicable to common shares........................... $1,285,000 Book value of preferred stock ($300,000/10,000)......... $ 30.00 Book value of common

Reporting in Action BTN 13-1 (All shares in thousands.) 1. As of September 28, 2013, the shares of common stock issued and outstanding are 899,213 (see balance sheet). As of September 29, 2012,the number of shares of common stock issued and outstanding is939,208. outstanding are 899,213 (see balance sheet). As of September 29,

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 Plus two years dividends in arrears*.......... 5,000Preferred equity............................................. $ 60,000 Plus two years dividends in arrears*.......... 5,000Preferred equity............................................. $ 60,000 Plus two years dividends

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 entry for issuance of preferred stock to Marcello Cash.................................................................................86,000 Preferred Stock......................................................... 86,000 Issuance of $100 par 7%

Chapter 14 - Long-Term Liabilities Chapter 14 Long-Term LiabilitiesStudent Learning Objectives and Related Assignment Materials*Student Learning ObjectivesDiscussionQuestionsQuickStudiesExercises Problems Beyond theNumbersConceptual objectives: Long-Term LiabilitiesStudent Learning Objectives and Related Assignment Materials*Student Learning ObjectivesDiscussionQuestionsQuickStudiesExercises Problems Beyond theNumbersConceptual objectives: Long-Term Liabilities Student Learning Objectives and Related Assignment Materials* Student Learning Objectives Discussion Questions Quick Studies Exercises Problems Beyond the Numbers Conceptual objectives: C1. Explain the

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 semiannual interest payments to be made on June 30 and December 31 at a contract rate

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, discounted at 4.5% per period at 4.5% per period at 4.5% per period $200,000 x .6439 =

EXERCISES Exercise 14-1 (15 minutes) 1. Semiannual cash interest payment = $3,400,000 x 9% x 1/2 = $153,000 1. Semiannual cash interest payment = $3,400,000 x 9% x 1/2 = $153,000 1. Semiannual cash interest payment = $3,400,000 x 9% x 1/2 = $153,000 2. Journal entries 2015 (a) Jan. 1 Cash..............................................................................3,400,000 Bonds Payable........................................................ 3,400,000 Sold bonds at

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 company. A share of stock represents an ownership interest in the company. 3. Bonds can allow a companys

Exercise 14-11 (20 minutes) 2015 Jan. 1 Cash..............................................................................100,000 Notes Payable......................................................... 100,000 Borrowed $100,000 by signing a 7% installment note. Notes Payable......................................................... 100,000 Borrowed $100,000 by signing a 7% installment note. Notes Payable......................................................... 100,000 Borrowed $100,000 by signing a 7% installment note. 2015 Dec. 31 Interest Expense...........................................................7,000 Notes Payable...............................................................22,523 Cash......................................................................... 29,523 To record first installment

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*.................. $ 43,200 Par value at maturity....................... 180,000 Total repaid....................................... 223,200Less amount borrowed...................... (170,862)Total bond

Problem 14-2A (40 minutes) Part 1 2015 Jan. 1 Cash..............................................................................3,456,448 Discount on Bonds Payable.........................................543,552 Bonds Payable........................................................ 4,000,000 Discount on Bonds Payable.........................................543,552 Bonds Payable........................................................ 4,000,000 Discount on Bonds Payable.........................................543,552 Bonds Payable........................................................ 4,000,000 Sold bonds on stated issue date. Part 2 [Note: The semiannual amounts for (a), (b), and (c) below are the same throughout the

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 Dec. 31 Interest Expense.............................................................7,000Notes Payable.................................................................22,523 Cash........................................................................... 29,523 To record first installment payment.2016Dec. 31 Interest Expense.............................................................5,423Notes Payable.................................................................24,100 Cash........................................................................... 29,523 To record second installment payment. Dec. 31 Interest Expense.............................................................7,000Notes Payable.................................................................22,523 Cash........................................................................... 29,523

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

Chapter 14 - Long-Term Liabilities Problem 14-2A (40 minutes) Part 1 2015 Jan. 1 Cash.................................................................................3,456,448 Discount on Bonds Payable..........................................543,552 Bonds Payable.......................................................... 4,000,000 Sold bonds on stated issue date. Discount on Bonds Payable..........................................543,552 Bonds Payable.......................................................... 4,000,000 Sold bonds on stated issue date. Discount on Bonds Payable..........................................543,552 Bonds Payable.......................................................... 4,000,000 Sold bonds on stated issue date. Part

Problem 14-3B (40 minutes) Part 1 2015 Jan. 1 Cash..............................................................................4,192,932 Premium on Bonds Payable................................... 792,932 Bonds Payable........................................................ 3,400,000 Sold bonds on issue date at a premium. Premium on Bonds Payable................................... 792,932 Bonds Payable........................................................ 3,400,000 Sold bonds on issue date at a premium. Premium on Bonds Payable................................... 792,932 Bonds Payable........................................................ 3,400,000 Sold

Chapter 14 - Long-Term Liabilities Problem 14-8AB (Concluded) Part 4 2015 June 30 Bond Interest Expense..................................................11,687 Discount on Bonds Payable.................................... 3,562 Cash........................................................................... 8,125 To record six months interest and discount amortization. Discount on Bonds Payable.................................... 3,562 Cash........................................................................... 8,125 To record six months interest and discount amortization. Discount on Bonds Payable.................................... 3,562 Cash........................................................................... 8,125

Problem 14-9BB (45 minutes) Part 1 Ten payments of $14,400.......................... $144,000 Par value at maturity................................. 320 ,000 Total repaid................................................ 464,000Less amount borrowed............................. (332 ,988)Total bond interest expense..................... $131 ,012 Total repaid................................................ 464,000Less amount borrowed............................. (332 ,988)Total bond interest expense..................... $131 ,012 Total repaid................................................ 464,000 Less amount borrowed............................. (332 ,988) Total bond interest expense..................... $131 ,012 or: Ten payments of

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 Less amount borrowed............................. (3,010,000)Total bond interest expense..................... $3,790,000 or:Twenty payments of $170,000 ..................$3,400,000Plus discount............................................. 390,000 Total bond interest expense.....................$3,790,000 Less amount borrowed............................. (3,010,000)Total bond interest expense..................... $3,790,000 or:Twenty payments of $170,000 ..................$3,400,000Plus discount............................................. 390,000 Total bond interest

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 financing in that the county has a debt obligation requiring therepayment of principal and interest over time. Taxes may need to beraised to repay the lease

Problem 14-8BB (60 minutes) Part 1 2015 Jan. 1 Cash.................................................................................198,494 Discount on Bonds Payable..........................................41,506 Bonds Payable.......................................................... 240,000 Sold bonds on stated issue date. Discount on Bonds Payable..........................................41,506 Bonds Payable.......................................................... 240,000 Sold bonds on stated issue date. Discount on Bonds Payable..........................................41,506 Bonds Payable.......................................................... 240,000 Sold bonds on stated issue date. Part 2 Thirty payments of $7,200*........................ $ 216,000 Par

SERIAL PROBLEM SP 14 Serial Problem SP 14, Business Solutions (75 minutes) Part 1 Total equity = $119,393 Thus, total liabilities can be no more than its total equity x 0.8, or$119,393 x 0.8 = $95,514This implies that:Max. total liabilities Present liability balance = Max. that can be borrowed $95,514 $875 = $94,639

Chapter 15 - Investments and International Operations CHAPTER 15 INVESTMENTS ANDINTERNATIONAL OPERATIONSRelated Assignment MaterialsStudent Learning Objectives QuestionsQuickStudies* Exercises* Problems*Beyond theNumbersConceptual objectives: INVESTMENTS ANDINTERNATIONAL OPERATIONSRelated Assignment MaterialsStudent Learning Objectives QuestionsQuickStudies* Exercises* Problems*Beyond theNumbersConceptual objectives: INVESTMENTS AND INTERNATIONAL OPERATIONS Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Distinguish between debt and equity securities

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 May 31 Cash............................................................. 12,000Long-Term Investment--Investee Stock 12,000Dec 31 Long-Term Investment--Investee Stock... 20,000Earnings from Long-Term Investment--Investee Stock.......................................... 20,0002016Oct 1 Cash............................................................. 8,000 May 31 Cash............................................................. 12,000Long-Term Investment--Investee Stock 12,000Dec 31 Long-Term Investment--Investee Stock... 20,000Earnings from Long-Term

EXERCISES Exercise 15-1 (10 minutes) 1. Debt securities reflect a creditor relationship such as investments innotes, bonds, and certificates of deposit.2. Equity securities reflect an owner relationship such as shares of stockissued by companies. 1. Debt securities reflect a creditor relationship such as investments innotes, bonds, and certificates of deposit.2. Equity securities reflect

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 converted into cash quickly and (ii) management must intend to sell the investmentsas a source of cash to satisfy the needs of current operations (within one

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 $0.1352).......... 108,160 Foreign exchange gain........................................................$ 2,320Quarter ended September 30, 2015 June 30 balance sheet amount........................................... $108,160 Sept. 30 balance sheet amount (800,000 x $0.1368).......... 109,440 Foreign

Chapter 15 - Investments and International Operations Exercise 15-3 (20 minutes) 1. 2015 Dec. 31 Fair Value AdjustmentTrading......................... 6,000 Unrealized GainIncome.............................. 6,000To reflect an unrealized gain in fair values of Unrealized GainIncome.............................. 6,000To reflect an unrealized gain in fair values of Unrealized GainIncome.............................. 6,000 To reflect an unrealized gain in fair values of trading securities. 2.

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 Fair Value Adjustment............................... (3 ,650) (13 ,818) 8 ,040Long-Term AFS Securities (fair value)........... $113 ,450 $71 ,325 $220 ,200 Fair Value Adjustment............................... (3 ,650) (13 ,818) 8 ,040Long-Term AFS Securities (fair value)........... $113 ,450 $71 ,325 $220

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 September 30, 2015 June 30 balance sheet amount............................................ $108,160 Sept. 30 balance sheet

Problem 15-2B (40 minutes) Part 1 Feb. 6 Short-Term InvestmentsAFS (Nokia)............ 143,250 Cash........................................................... 143,250 Purchased 3,400 shares of Nokia [(3,400 x $41.25) + $3,000]. Cash........................................................... 143,250 Purchased 3,400 shares of Nokia [(3,400 x $41.25) + $3,000]. Cash........................................................... 143,250 Purchased 3,400 shares of Nokia [(3,400 x $41.25) + $3,000]. 15 Short-Term

Chapter 15 - Investments and International Operations Problem 15-4A (30 minutes) Part 1 1. Journal entries (assuming significant influence) 2015 Jan. 5 Long-Term InvestmentsKildaire..............................................1,560,000 Cash.....................................................................................1,560,000 Purchased Kildaire shares. Oct. 23 Cash...........................................................................................192,000 Long-Term InvestmentsKildaire........................................192,000 Received cash dividend (60,000 x $3.20).Dec. 31 Long-Term InvestmentsKildaire..............................................232,800 Earnings from Long-Term Investment.............................232,800 Record equity in investee earnings ($1,164,000 x 20%). Oct. 23

Serial Problem SP 15 Serial Problem, Business Solutions (35 minutes) Part 1 2016 April 16 Short-Term InvestmentsTrading (J&J)...................20,300 Cash................................................................ 20,300 Purchased Johnson & Johnson shares [(400 x $50) + $300]. Cash................................................................ 20,300 Purchased Johnson & Johnson shares [(400 x $50) + $300]. Cash................................................................ 20,300 Purchased Johnson & Johnson shares [(400 x

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 2,550 x $40.25 (rounded)......... $102,638Dell (1,200 x $39.50) + $1,255b......... 48,655 1,200 x $40.50.......................... 48,600Merck (2,500 x $72.50) + $2,890c..........

Chapter 15 - Investments and International Operations Serial Problem SP 15 Serial Problem, Business Solutions (35 minutes) Part 1 2016 April 16 Short-Term InvestmentsTrading (J&J)...................20,300 Cash.................................................................. 20,300 Purchased Johnson & Johnson shares [(400 x $50) + $300]. Cash.................................................................. 20,300 Purchased Johnson & Johnson shares [(400 x $50) + $300]. Cash.................................................................. 20,300 Purchased Johnson

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 activities, and describe how noncash investing and financing activities are disclosed 1, 2, 3, 5, 7, 8, 9,14 16-1, 16-20

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 Suppliers of goods and services Government for taxes and fines INVESTING ACTIVITIES Cash inflows from

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 period. It helps users to answer questions such as: How does a company obtain its cash?

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 Lenders for interest Charities Suppliers of goods and services Government for taxes and fines Collections on credit sales Borrowers for interest

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. Moores cash flows from operations are able to finance reinvestment in operating assets aswell as help in paying down some debt. Sykes is in the

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 period. It helps users to answer questions such as: How does a company obtain its cash?

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 Income statement items not affecting cash Depreciation expense................................................... 58,600 Gain on sale of plant assets.........................................

Chapter 16 - Reporting the Statement of Cash Flows Quick Study 16-19 (Concluded) Part 2 The companys operating cash flows are negative, $(1,750). This is not a good omen. However, much of this is attributed to a huge increase in inventory. Thus, an assessment of the saleable nature of that inventory, and why it isbeing

PROBLEM SET A Problem 16-1A (35 minutes) LANSING COMPANY Cash Flows from Operating ActivitiesIndirect 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 operating activities Income statement items not affecting cash Depreciation expense.......................................................$12,000 Changes in current operating assets

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)........... $664,000 Cash paid for inventory (Note 2)........................ (393,300) Cash paid for operating expenses (Note 3)...... (75,000)

PROBLEM SET B Problem 16-1B (35 minutes) SALT LAKE COMPANY Cash Flows from Operating ActivitiesIndirect 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 by operating activities Income statement items not affecting cash Depreciation expense......................................................$32,000 Changes in current operating

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 $40,900a good result. At the same time, the cash balance decreased by $23,700 (32%) during the year. Two major cash outflows are the retirement of debt ($50,125)and the dividend payment

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 paid for inventory (Note 2) .............................. (431,705) Cash paid for other operating expenses ................. (173,933) Cash paid for income taxes (Note 3) ....................... (93,200)

Chapter 16 - Reporting the Statement of Cash Flows Problem 16-3B (40 minutes) Part 1 GAZELLE CORPORATION Statement of Cash Flows For Year Ended December 31, 2015Cash flows from operating activities Net income..............................................................................$158,100 Adjustments to reconcile net income to net cash provided by operating activities For Year Ended December 31, 2015Cash flows from operating activities

Part 2 Adjusting Net Income to Cash Flow from Operating Activities Items to Add Items to Subtract a. Noncash expenses Noncash revenues b. Losses Gainsc. Decreases in current assets Increases in current assetsd. Increases in current liabilities Decreases in current liabilities b. Losses Gainsc. Decreases in current assets Increases in current assetsd. Increases in

Chapter 16 - Reporting the Statement of Cash Flows Comparative Analysis BTN 16-2 1. Apples cash flow on total assets ratio ($ millions) Current Year = Operating cash flows/Average total assets = $53,666 / [($207,000 + $176,064)/2] = $53,666 / $191,532 = 28.0% Prior Year = Operating cash flows/Average total assets= $50,856 / [($176,064 +

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. 1 17-1 17-1 17-8 C2. Describe standards for comparisons in analysis. 2, 3 17-2, 17-9 17-2 17-2 Analytical objectives: A1

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. 1 17-1 17-1 17-8 C2. Describe standards for comparisons in analysis. comparisons in analysis. comparisons in analysis. 2, 3 17-2, 17-9

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 receivableshort-term.............................. 7,700 3,200 Accounts receivable, net...................................... 42,000 64,000 Inventory................................................................ 58,800 87,680 Prepaid expenses.................................................. 1,680 3,520 Plant and equipment, net...................................... 232,120 274,400 Total assets............................................................ $354,200 $452,800 Current liabilities................................................... $ 56,000 $ 80,000 Mortgage payable.................................................. 70,000 80,000 Common

Exercise 17-8 (25 minutes) 1. Days' sales uncollected 2015: x 365 = 48.5 days2014: x 365 = 42.9 days$673,500$62,500 2015: x 365 = 48.5 days2014: x 365 = 42.9 days$673,500$62,500 2015: x 365 = 48.5 days 2014: x 365 = 42.9 days $673,500 $62,500 2. Accounts receivable turnover 2015: = 8.9 times2014: = 9.4 times($89,500 + $62,500)/2$532,000 2015: = 8.9

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 information about a company. Financial statements are an important part of financialreporting but they are less than the whole. information about a company. Financial statements are an important part of

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% Long-term investments................... 0.00 12.66 100.00Plant assets, net.............................. 166.67 160.00 100.00Total assets...................................... 131.71 116.19 100.00 Long-term investments................... 0.00 12.66 100.00Plant assets, net.............................. 166.67 160.00 100.00Total assets...................................... 131.71 116.19 100.00 Long-term investments................... 0.00

Chapter 17 - Analysis of Financial Statements Exercise 17-7 (25 minutes) 1. Current ratio 2015: = 1.88 to 1 2014: = 2.52 to 12013: = 2.87 to 1$75,250$37,800 + $50,200 + $54,000 + $5,000 2014: = 2.52 to 12013: = 2.87 to 1$75,250$37,800 + $50,200 + $54,000 + $5,000 2014: = 2.52 to 1 2013:

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 Gross profit............................................... 45.23 48.09 53.96Selling expenses.......................................11.41 11.92 12.52Administrative expenses.......................... 8.43 8.80 10.92Total expenses.......................................... 19.84 20.72 23.44Income before taxes.................................25.39 27.36 30.53Income taxes............................................. 3.04 3.56 3.69Net income................................................ 22.34%

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 December 31, 2014: $37,924 / $19,960 = 1.9 to 1December 31, 2013: $51,748 / $20,300 = 2.5 to 1 December 31, 2014: $37,924 / $19,960 = 1.9 to 1December

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 = $44,000 - $14,052 = $29,948Gross margin ratio = $29,948 / $44,000 = 68.1 % = $44,000 - $14,052 = $29,948Gross margin ratio = $29,948 /

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% 89.5% 100.0% Cost of goods sold............... 72.6 76.3 77.4 82.6 89.5 92.1 100.0 Gross profit........................... 59.2 66.7

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) l. Loss from operating a discontinued segment......................(120,000) (30,000) (90,000) n. Correction of overstatement of prior years expense...........48,000 12,000 36,000p. Loss

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 role of ethics in, managerial accounting. 1, 2, 3, 13 18-1 18-1, 18-14 18-1, 18-3, 18-5, 18-7, 18-8,

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 role of ethics in, managerial accounting. 1, 2, 3, 13 18-1 18-1, 18-14 18-1, 18-3, 18-5, 18-7, 18-8,

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 direct materials and the factory overhead costs were totaled for you on a separate schedule.. Raw

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 individualproducts or batches of product. However, not all indirect costs are fixed.Some, like indirect materials, are variable. support the production process rather than

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, which is a quantitative expression of a companys long-run and short-run plans. Thebudget is

Exercise 18-10 (20 minutes) Garcon Company Pepper Company 1. PRIME COSTS Direct materials Beginning raw materials inventory................. $ 7,250 $ 9,000 Raw materials purchases................................ 33,000 52,000 Raw materials available for use...................... 40,250 61,000 Less ending raw materials inventory.............. 5,300 7,200 Direct materials used....................................... 34,950 53,800Direct labor.......................................................... 19,000 35,000 Total prime costs.................................................$53,950$88,800 Raw materials purchases................................ 33,000

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 or batches of product. However, not all indirect costs are fixed. Some, like indirect materials,

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 4. Accounting staff salaries$35,000...... 35,000 $35,000 5. Drum stands (1,000 stands purchased)$26,000...................... 26,000

Chapter 18 - Managerial Accounting Concepts and Principles Exercise 18-12 (25 minutes) Account Balance Sheet Income Statement Schedule of COGM Overhead Report Accounts receivable.............................. Computer supplies used in office........ Beginning finished goods inventory... Beginning work in process inventory.............................................. Accounts receivable.............................. Computer supplies used in office........ Beginning finished goods inventory... Beginning work in process inventory.............................................. Accounts receivable.............................. Computer supplies used in

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 Wages of assembly workers 30,000 2.00 Labeling 3,750 0.25 Total variable production costs 35,250 2.35Fixed production costs Cost of

Chapter 18 - Managerial Accounting Concepts and Principles Problem 18-3A (Continued) Part 2 LEONE COMPANY Income Statement For Year Ended December 31, 2015 Sales................................................................................ $4,462,500 Cost of goods sold Finished goods inventory, December 31, 2014.........$ 167,350 Cost of goods manufactured......................................1,935,650 Goods available for sale..............................................2,103,000 Less finished goods inventory, December 31, 2015....... 136,490 Finished goods inventory,

Comparative Analysis BTN 18-2 1. The purpose of Apples audit committee is to: a. Assist the Board in oversight and monitoring of: i. the Corporations financial statements and other financial information provided to shareholders and others; ii. compliance with legal, regulatory, and public disclosure requirements;iii. the independent auditors, including theirqualifications and independence;iv. the system of

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 for sale................................................................. 350,000 Less merchandise inventory, December 31, 2015....................... 150,000 Cost of goods sold..........................................................................

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, 19-14 19-1 19-1, 19-2, 19-4, 19-5, 19-6, 19-7, 19-9 C2. Explain job cost sheets and how they are

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, 19-14 19-1 19-1, 19-2, 19-4, 19-5, 19-6, 19-7, 19-9 C2. Explain job cost sheets and how they

VISUAL #19-1 Tracing Product Costs Through a Cost Accounting System Work in Process Finished Goods Materials Inventory Inventory Inventory(1) Buy Send (2) (2) Direct (7) Goods (7) Cost of (8) Goods(Cr. A/P) materials material completed Finished Soldto factory costs Goods(4) Directlaborcosts(6) OverheadcostsFactory Overhead Factory Payroll Cost of Goods Sold(2) Indirect (6) Overhead (3) Labor

Exercise 19-4 (15 minutes) 1. Rate = = = 130% Rate = = = 130% Rate = = = 130% 2.Direct materials................................................................................ $15,350 Exercise 19-5 (20 minutes)Estimated overhead costsEstimated direct labor $747,500$575,000$600,000$1,500,000Overhead costsDirect material costs 2.Direct materials................................................................................ $15,350 Exercise 19-5 (20 minutes)Estimated overhead costsEstimated direct labor $747,500$575,000$600,000$1,500,000Overhead costsDirect material costs 2. Direct materials................................................................................ $15,350 Exercise

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 and job or job lot are necessary. Also, since job order cost accounting is a perpetualsystem, we need

Exercise 19-16 (30 minutes) 1. Overhead rate = Total overhead costs / Total direct labor costs = $1,800,000 / $3,000,000 = 60% = $1,800,000 / $3,000,000 = 60% = $1,800,000 / $3,000,000 = 60% 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

Chapter 19 - Job Order Costing Exercise 19-4 (15 minutes) 1. Rate = = = 130%Estimated overhead costs$747,500 1. Rate = = = 130%Estimated overhead costs$747,500 1. Rate = = = 130% Estimated overhead costs $747,500 2. Direct materials.................................................................................. $15,350 Direct labor......................................................................................... 3,200Factory overhead ($3,200 x 130%)................................................... 4,160Total cost of Job No. 13-56................................................................ $22,710 Direct labor......................................................................................... 3,200Factory overhead ($3,200 x

Problem 19-2A (75 minutes) Part 1 a. Dec. 31 Work in Process Inventory...........................................28,800 Raw Materials Inventory......................................... 28,800 To record direct materials costs for Jobs 402 and 404 ($10,200 + 18,600). Raw Materials Inventory......................................... 28,800 To record direct materials costs for Jobs 402 and 404 ($10,200 + 18,600). Raw Materials Inventory......................................... 28,800 To

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. Work in Process Inventory*...........................................3,106 Raw Materials Inventory.......................................... 3,106 To record raw materials used in production. * The amount of raw materials used in production is computed from the Raw MaterialsInventory

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 #426 250 250 62,500450 250#35 135 250 33,750315 250#37 70 250 17,50245 250 #426 250 250 62,500450 250#35 135 250 33,750315 250#37 70 250 17,50245 250 #426 250 250 62,50 0 450 250 #35 135 250 33,75 0 315 250 #37 70 250

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............. $ 84,000Total cost............. $131,700Job No. 137Job No. 139Materials.............. $ 32,000Materials.............. $ 22,400Labor................... 10,500Labor................... 39,000Overhead............. 21,000Overhead............. 78,000Total cost............. $ 63,500 Total cost............. $139,400Job No.

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 Work in process inventory................................51,200 Finished goods inventory.................................. 9,000 71,900Prepaid rent......................................................... 3,000Total assets......................................................... $180,900Liabilities and equityAccounts payable............................................... $ 10,500Wages payable....................................................Notes payable......................................................16,000 13,500Total liabilities..................................................... 40,000Common stock.................................................... 30,000Retained earnings ($87,000 + $23,900)................... 110,900 Total stockholders' equity..................................

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 Factory overhead applied................................................... 109,000Total manufacturing costs................................................. 677,000Add work in process August 31 (Jobs 114 & 115)............. 83,000Total cost of work in process............................................. 760,000 Factory overhead applied...................................................

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...... 49,664Factory overhead applied............... 50,400Overapplied overhead..................... $ (736) Indirect materials.......................... 864 Indirect labor................................. 12,000 Total actual factory overhead...... 49,664Factory overhead applied............... 50,400Overapplied overhead..................... $

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.........................................................................330,000 165,000 627.........................................................................175,000 87,500628.........................................................................420,000 210,000629.........................................................................184,000 92,000630......................................................................... 10,000 5,000 627.........................................................................175,000 87,500628.........................................................................420,000 210,000629.........................................................................184,000 92,000630......................................................................... 10,000 5,000 627.........................................................................175,000 87,500 628.........................................................................420,000 210,000 629.........................................................................184,000 92,000 630......................................................................... 10,000 5,000 Total.......................................................................$1,473,000 $736,500 c. Overapplied or underapplied overhead

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 Inventory change..............................Increase Increase Decrease Operating cash flow effect from inventory change.............................. Decrease of $973 Decrease of $15 Increase of $275 Google Current Year One Year Prior Two Years Prior Inventory change..............................Increase Decrease

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 source documents. 3, 6, 9 2-1 2-1 2-6 2-3, 2-4, 2-6, 2-9 C2. Describe an account and its use in

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 source documents. 3, 6, 9 2-1 2-1 2-6 2-3, 2-4, 2-6, 2-9 C2. Describe an account and its use

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 amounting to $5,400 from customers. 16. Purchased supplies on account, $100. 17. Paid for

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 15 Cash 5 4 0 0 00 Service Fees Earned 5 4 0 0 00 16 Supplies 1 0 0 00 15 Cash

EXERCISES Exercise 2-1 (10 minutes) 4 a. Prepare and analyze the trial balance. 1 b. Analyze each transaction from source documents. 2 c. Record relevant transactions in a journal. 3 d. Post journal information to ledger accounts. 1 b. Analyze each transaction from source documents. 2 c. Record relevant transactions in

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. b. Common liability accounts: accounts payable, notes payable, and unearnedrevenue, wages payable, and taxes payable.c. Common equity accounts: owner, capital

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 Salaries expense.................................. 5,600Telephone expense.............................. 860Miscellaneous expenses...................... 520Total expenses...................................... 16 ,530Net income................................................. $ 10 ,470 Salaries expense.................................. 5,600Telephone expense.............................. 860Miscellaneous expenses...................... 520Total expenses...................................... 16 ,530Net income................................................. $ 10 ,470 Salaries expense.................................. 5,600 Telephone expense.............................. 860 Miscellaneous expenses...................... 520 Total expenses......................................

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 Payments on accounts in October (debits)....................................( ?) Ending accounts payable (credit)................................................... $132,500Payments on accounts in October (debits).................................... $300 ,500 Payments on accounts in October (debits)....................................( ?) Ending accounts payable (credit)...................................................

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 7,000Accounts Receivable.........................106 7,000Collected cash on account.l. Wages Expense..........................................601 1,200Cash....................................................101 1,200Paid assistants wages.m. Accounts Payable......................................201 1,150Cash.................................................101 1,150Paid amount due on account.n. Repairs Expense........................................604 925Cash.................................................101 925Paid

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 debit to Rent Expense is posted as a $1,340 debit. $2,260 Credit Rent Expense Rent Expense is understated by $2,260 b. $6,500 credit to Cash is posted twice as twocredits to Cash.$6,500 Credit Cash Cash

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 Office equipment....................................... 50,900Automobiles.............................................. 16,500Building...................................................... 160,000Land........................................................... 40,000Accounts payable...................................... $ 5,600 Notes payable............................................ 170,000 H. Venedict, Capital .................................. 101,500 H. Venedict, Withdrawals.......................... 2,800 Fees earned............................................... 14,250 Salaries expense....................................... 3,600 Utilities expense........................................ 635 .............................................................................Total........................................................... $291 ,350 $291

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 Office equipment........................................ 6,150 Drafting equipment.................................... 80,000 Building....................................................... 55,000 Land............................................................. 49,000 Accounts payable....................................... $ 1,333 Notes payable............................................. 53,200 J. Aracel, Capital......................................... 165,000 Office equipment........................................ 6,150 Drafting equipment....................................

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 8 G1 3,400 28,90013 G1 3,100 25,80019 G1 1,800 24,00022 G1 5,200 29,20028 G1 5,300 23,90030 G1 831 23,069 8 G1 3,400 28,90013 G1 3,100 25,80019 G1 1,800 24,00022 G1 5,200 29,20028 G1 5,300

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 Y. Min, Capital............................................. 18,000 Y. Min, Withdrawals.................................... 3,329 Engineering fees earned............................ 36,000 Rent expense.............................................. 7 ,540 . Totals........................................................... $66 ,900 $66 ,900 Y. Min, Capital............................................. 18,000 Y. Min, Withdrawals.................................... 3,329 Engineering

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 17 805 42,055 20 1,728 40,327 22 1,400 41,727 31 875 40,852 31 3,600 37,252 Nov. 1

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 Computer equipment.................................... 34,500 Building.......................................................... 34,500 Land............................................................... 22,000 Accounts payable......................................... $ 580Notes payable................................................ 20,700B. Grechus, Capital....................................... 100,750B. Grechus, Withdrawals............................. 6,230 Computer equipment.................................... 34,500 Building.......................................................... 34,500 Land............................................................... 22,000 Accounts payable.........................................

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 R. Gould, Capital.................................................. 15,000 R. Gould, Withdrawals......................................... 5,200 Consulting fees earned ....................................... 20,400 Operating expenses ............................................ 7 ,658 Totals..................................................................... $47 ,650 $47 ,650 R. Gould, Capital..................................................

Reporting in Action BTN 2-1 1. Apple reports ($ millions): $83,451 in liabilities at September 28, 2013.$57,854 in liabilities at September 29, 2012. $83,451 in liabilities at September 28, 2013.$57,854 in liabilities at September 29, 2012. $83,451 in liabilities at September 28, 2013. $57,854 in liabilities at September 29, 2012. 2. Apple reports ($

Chapter 20 - Process Costing CHAPTER 20 PROCESS COSTING Related Assignment Materials Student Learning Objectives DiscussionQuestionsQuickStudies*Exercises* Problems* Beyond theNumbersConceptual objectives: C1. Explain process operations and the way they differ from job order operations. 2, 3, 15,16 20-1, 20-3 20-1, 20-2, 20-3 20-2, 20-3, 20-4, 20-5, 20-6, 20-9 C2. Define equivalent units and explain their

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 process costing system is likely appropriate include chemicals, cleaning fluids,mail processing, and oil refinement. Examples where a

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 3,000 units x 100% 3,0003,000 units x 20% _____ 600Total equivalent units 10,400 8,800 3,000 units x 100% 3,0003,000 units x 20% _____ 600Total equivalent units 10,400 8,800 3,000 units x 100% 3,000 3,000 units x

Problem 20-6B (Concluded) 4. Assignment of costs to output of departmentFIFO Costs of goods transferred out Cost of beginning work in process inventory........... Direct materials.......................................................... $ 99,075 Conversion................................................................. 53,493 $ 152,568 Direct materials.......................................................... $ 99,075 Conversion................................................................. 53,493 $ 152,568 Direct materials.......................................................... $ 99,075 Conversion................................................................. 53,493 $ 152,568 Costs to complete

Problem 20-1B (Continued) d. June 30 Work in Process Inventory............................................350,000 Factory Payroll Payable .......................................... 350,000 Used direct labor. e. June 30 Factory Overhead...........................................................50,000 Factory Payroll Payable .......................................... 50,000 Used indirect labor.f.June 30 Factory Payroll Payable ................................................400,000 Cash .......................................................................... 400,000 Paid payroll cost. June 30 Factory Overhead...........................................................50,000 Factory Payroll Payable .......................................... 50,000 Used indirect labor.f.June

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 Conversion (11,000 EUP x $21.75 per EUP)........................ 239,250 $271,150Costs of ending Work in Process Direct materials (8,000 EUP x $2.90 per EUP)..................... 23,200 Conversion (3,200 EUP x $21.75 per EUP).......................... 69,600

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 Direct materials................................................................. $ 7,500 Conversion......................................................................... 49,840 $ 57,340Costs incurred this period Direct materials................................................................. 112,500 Conversion......................................................................... 616,000 728,500Total costs to account for................................................... $785,840Unit cost informationUnits to account

Reporting in Action BTN 20-1 1. These costs are part of getting the products that Apple sells to its customers and costs to fulfill warranties to its customers. Appleconsiders these costs to be as much a cost of its products as theactual cost to make the items themselves. customers and costs to

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 per EUP........................................ $ 0.96 perEUP$ 5.46 perEUP Cost per EUP........................................ $ 0.96 perEUP$ 5.46 perEUP Cost per EUP........................................ $ 0.96 per EUP $ 5.46 per EUP Cost assignment and reconciliationCosts transferred outCost of beginning work in process........................................ $

Comprehensive Problem (Concluded) Part 4 (Using weighted-average) Factory Payroll Payable Acct. No. 212 Date Explanation Debit Credit Balance (c) Direct labor 202,500 202,500(c)Indirect labor25,000227,250 (c) Direct labor 202,500 202,500(c)Indirect labor25,000227,250 (c) Direct labor 202,500 202,500 (c) Indirect labor 25,000 227,250 (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 Acct.

Ethics Challenge BTN 20-3 MEMORANDUM TO: FROM: DATE: SUBJECT: Instructor note: The students solution will vary depending on the industry, product, and process chosen. It will also depend on the sources obtained.The memorandum should initially identify an industry (say, steel), a product(say, cans), and a process (say, forming). Generally, there are at least three approaches

Quick Study 20-20 (10 minutes) The ending balance in Work in Process InventoryCutting is $7,100 and the ending balance in Work in Process InventoryBinding is $17,042, as computed below. Work in ProcessCutting Beg. Inventory 3,445 Dir. materials 8,240 Conversion 11,100 22,785 15,685 Transferred to BindingEnd. Inventory 7,100 Dir. materials 8,240 Conversion 11,100 22,785

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 process costing system is likely appropriate include chemicals, cleaning fluids, mailprocessing, and oil refinement. Examples where a

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 Cost per equivalent unit of production $2.65 $2.15 Costs incurred this period 850,368 649,296

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 production.........................$1.02 per EUP $1.35 per EUP Quick Study 20-16 (20 minutes) Assignment of costs to output of departmentFIFOCosts of units transferred outCost 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 Direct labor................................................ 1,200,000 360,000Overhead applied (80% & 150% of labor)...... 960,000 540,000 Total costsWeaving............................. 2,700,000 Less ending inventoryWeaving.......... (330,000)TRANSFERRED TO SEWING (a).......................

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 Goods completed (80,000 EUP x 100%).................................... 80,000Ending work in process (16,000 EUP x 100%).......................... 16,000Total EUP...................................................................................... 96,000 Goods completed (80,000 EUP x 100%)....................................

Exercise 20-20 (30 minutes) 1. Units to account for Units Accounted For Beginning work in process..................... 2,000 Completed & transferred out............................................................................................23,000 Units started this period.........................28,000 Ending work in process................................................................................................... 7,000 Total units to account for........................30,000 Total units accounted for................................................................................................. 30,000 Units started this period.........................28,000 Ending work in process................................................................................................... 7,000 Total units to account

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 Costs of beginning work in process ($18,550 + $2,280)........................... $ 20,830Costs incurred this period ($357,500 + $188,670)..................................... 546,170Total costs to account for............................................................................ $567,000 Costs of beginning work in process ($18,550

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.......................... Direct materials (180,000 x 100%).................. 180,000Conversion (180,000 x 30%)........................... _______ 54,000Total equivalent units of production.................... 880,000 754,000 Direct materials

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 Conversion (17,000 x $25.92 per EUP)..................... 440,640 $572,390Costs of ending work in process Direct materials (5,000 EUP x $7.75 per EUP)......... 38,750 Conversion (1,750 EUP x $25.92 per EUP)..............

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 Conversion....................................................................... 221,940 $ 241,740Costs incurred this period Direct materials................................................................ 496,800 Conversion....................................................................... 2,165,940 2,662,740 Total costs to account for................................................. $2,904,480 Conversion....................................................................... 221,940 $ 241,740Costs incurred

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. 2. Factory Overhead...........................................................20,000 Factory Payroll Payable........................................... 20,000 Incurred indirect labor costs.3. Factory Payroll Payable.................................................95,000 Cash........................................................................... 95,000 Paid factory payroll 2. Factory Overhead...........................................................20,000 Factory Payroll Payable........................................... 20,000 Incurred indirect labor costs.3. Factory

Problem 20-7A (Continued) Cost per EUP Direct Materials Conversio n Costs incurred this period.................. $ 248,400 $1,082,970 EUP................................................... 21,600 22,920 Cost per EUP....................................... $11.50 perEUP$47.25 perEUP EUP................................................... 21,600 22,920 Cost per EUP....................................... $11.50 perEUP$47.25 perEUP EUP................................................... 21,600 22,920 Cost per EUP....................................... $11.50 per EUP $47.25 per EUP Cost assignment and reconciliation Costs transferred out Cost of beginning

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 Direct materials (20,000 x 100%)...... 20,000 EUP Conversion (20,000 x 80%)................ __________ 16,000 EUP Equivalent units of production 170,000 EUP 166,000 EUP Cost per EUPDirectMaterials Conversion Direct materials

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 Conversion....................................................................... 49,840Costs incurred this period $ 57,340 Direct materials................................................................ 112,500 Conversion....................................................................... 616,000 728,500Total costs to account for................................................. $785,840 Conversion....................................................................... 49,840Costs incurred this

Problem 20-6A (45 minutes) 1. Units in beginning inventory......................................... 37,500 Units started and completed......................................... 150,000Total units transferred to finished goods.................... 187,500 Units started and completed......................................... 150,000Total units transferred to finished goods.................... 187,500 Units started and completed......................................... 150,000 Total units transferred to finished goods.................... 187,500 2. Equivalent units of productionFIFO Direct Equivalent units of productionFIFO Materials Conversion Units to

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. 1,2, 3, 5, 10, 12, 19 21-1, 21-2, 21-1, 21-2, 21-3 21-1, 21-3,

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 packaging machine for $4,000 per year, which will reduce variable cost by $1 per unit. Alternative

Solution: Alternate Demo Problem Twenty-One Problem #1 (a) Break-even point (in units) = Fixed costs/CM per unit $32,000/($40 per unit - $24 per unit) = 2,000 units2,000 units x $40 per unit = $80,000 dollars $32,000/($40 per unit - $24 per unit) = 2,000 units2,000 units x $40 per unit = $80,000 dollars $32,000/($40 per

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 per unit: Change in cost = $6,100 - $2,500 = $3,600 = $1.50

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 example, direct materials and direct labor (when the workers are paid for completedunits) are treated as variable costs with respect to the number of units produced. example, direct materials and

Exercise 21-23 (25 minutes) 1. Selling price per composite unit 5 Easy returns @ $50 each............................................................ $ 250 3 Moderate returns @ $125 each.................................................. 3752 Business returns @ $275 each..................................................Selling price per composite unit................................................... 550$1,175 3 Moderate returns @ $125 each.................................................. 3752 Business returns @ $275 each..................................................Selling price per composite unit................................................... 550$1,175 3 Moderate

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 following estimate of variable costs per unit: Change in cost = $6,100 - $2,500

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 costs**.......................................................... 1,920,000 300,000 Contribution margin................................................... 480,000 2,100,000Fixed costs................................................................. 125,000 1,475,000Income before taxes.................................................. 355,000 625,000Income taxes (32%)....................................................

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 2. If sales decrease by 5%, then pretax income will decrease by 4.0 x 5%, or 20%. This means pretax income will decrease by $108,000 x 20%, or$21,600. Pretax

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 = $200,000 / 20%*= $1,000,000 = $200,000 / 20%*= $1,000,000 = $200,000 / 20%* = $1,000,000 *To compute contribution margin ratio Sales price per unit ($750,000 / 20,000).......................................................................$37.50Variable costs per

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 unitsUse equation in Exhibit 21.29 Break-even in composite units = Fixed costs/Contribution margin per composite unit = $250,000 / $122* = 2,050 composite units (rounded up to next whole

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 chairs @ $500 per unit.................................................................. 1,000 Selling price per composite unit.....................................................$4,750 2 chairs @ $500 per unit.................................................................. 1,000 Selling price per composite unit.....................................................$4,750 2 chairs @ $500 per unit.................................................................. 1,000 Selling

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 Existing Strategy: = $950,000 / 55%*= $1,727,273 (rounded to the next dollar) New Strategy: = $950,000 / 55%*= $1,727,273 (rounded to the next

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 benefits of budgeting and the process of budget administration.9, 12, 13, 14 22-7 benefits of budgeting and the process of budget administration.9, 12, 13,

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 17,000 85,000 May 22,000 110,000 June 30,000 150,000 The company sells all items on account and expects collections of accounts receivable

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 _______ _______ Total cash available....................................... 219,000 263,000 334,200Cash disbursements Payments on accounts payable**............... 80,000 188,000 186,000

Problem 22-3B (50 minutes) Part 1 HCS MFG. Budgeted Income Statement For Months of July, August, and September, 2015 July August SeptemberSales*.........................................................$1,265,000 $1,391,500 $1,530,650Cost of goods sold*.................................. 660,000 726,000 798,600Gross profit............................................... 605,000 665,500 732,050Expenses July August SeptemberSales*.........................................................$1,265,000 $1,391,500 $1,530,650Cost of goods sold*.................................. 660,000 726,000 798,600Gross profit............................................... 605,000 665,500 732,050Expenses July August September Sales*.........................................................$1,265,000 $1,391,500 $1,530,650 Cost of goods sold*..................................

Problem 22-6B (50 minutes) SONY STEREO Cash Budgets For April, May, and June April May June Beginning balance.......................................... $ 3,000 $ 53,000 $ 44,000Cash receipts Collection on accounts receivable*............ 136,000 210,000 290,200 Receipts from bank loan.............................. 80,000 _______ _______ Total cash available........................................ 219,000 263,000 334,200 Beginning balance.......................................... $ 3,000 $ 53,000 $ 44,000Cash receipts Collection

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 profit............................................... 15,600 17,800 20,000 Expenses Sales commissions (10%)...................... 6,960 7,555 8,150Advertising ($3,000 x 1.10).................... 3,300 3,300 3,300Other fixed expenses............................. 6,000

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 Collection of prior months receivables (60% x $150,000)................ 90,000Total cash receipts.............................................................................. $158,000 Collection of prior months receivables (60% x $150,000)................ 90,000Total cash receipts.............................................................................. $158,000 Collection of prior months receivables (60% x

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 organization, and 3) providing a basis for deciding whether actual performance isacceptable (through benchmarking). Budgeting also

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 0.50Total labor hours needed............................ 221 285 272 Labor rate (per hour)................................... x $16 x $16 x $16Labor cost.................................................... $3,536 $4,560 $4,352

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 Collection of prior months receivables (60% x $150,000)................. 90,000Total cash receipts................................................................................. $158,000 Collection of prior months receivables (60% x $150,000)................. 90,000Total cash receipts................................................................................. $158,000 Collection of prior months receivables (60% x

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 Total cash available 119,000 141,000 180,000 Cash disbursements (113,000) (99,900) (127,400)Interest expense (2% per month) 0 (480) (268)Preliminary cash balance 6,000 40,620 52,332 Additional loan (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 Total labor hours needed............................. 221 285 272 Labor rate (per hour).................................... x $16 x $16 x $16Labor cost..................................................... $3,536 $4,560 $4,352

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 Administrative expenses (8% of sales).................................5,760 5,280Rent expense.......................................................................... 7,400 7,400 Total cash disbursements.....................................................$34,760 $38,480 Administrative expenses (8% of sales).................................5,760 5,280Rent expense.......................................................................... 7,400 7,400 Total cash disbursements.....................................................$34,760 $38,480 Administrative expenses (8% of sales).................................5,760 5,280 Rent expense..........................................................................

Exercise 20-21 (15 minutes) PTO MANUFACTURING COMPANY Cash Budget For Month Ended September 30 Beginning cash balance................................................$ 40,000 Cash receipts from sales.............................................. 255,000Total cash available....................................................... $295,000Cash disbursementsDirect materials ........................................................... 99,500 Direct labor................................................................... 40,000 Cash receipts from sales.............................................. 255,000Total cash available....................................................... $295,000Cash disbursementsDirect materials ........................................................... 99,500 Direct labor................................................................... 40,000 Cash receipts from sales.............................................. 255,000 Total cash available....................................................... $295,000 Cash disbursements Direct

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 receipts (from part 1)......................... 57,800 67,200 73,600 Total cash available .................................... 72,800 82,200 99,104 Cash receipts (from part 1)......................... 57,800 67,200 73,600 Total cash available .................................... 72,800 82,200 99,104 Cash receipts (from part

Exercise 22-29 (10 minutes) HECTOR COMPANY Budgeted Cash Disbursements For August and September August Sept. Payments for merchandise*....................................................$14,400 $19,200Selling expenses (10% of sales).............................................7,200 6,600Administrative expenses (8% of sales)..................................5,760 5,280Rent expense............................................................................ 7,400 7,400Total cash disbursements.......................................................$34,760 $38,480 Payments for merchandise*....................................................$14,400 $19,200Selling expenses (10% of sales).............................................7,200 6,600Administrative expenses (8% of sales)..................................5,760 5,280Rent expense............................................................................ 7,400 7,400Total cash disbursements.......................................................$34,760 $38,480 Payments

Problem 22-4A (Concluded) Supporting Footnotes Note C Beginning receivables......................................................... $ 342,248 Credit sales........................................................................... 1,001,701Less collections................................................................... (1,010,049)Ending receivables.............................................................. $ 333,900 Credit sales........................................................................... 1,001,701Less collections................................................................... (1,010,049)Ending receivables.............................................................. $ 333,900 Credit sales........................................................................... 1,001,701 Less collections................................................................... (1,010,049) Ending receivables.............................................................. $ 333,900 Note D Beginning raw materials inventory.................................... $ 98,500 Purchases of raw materials................................................ 581,500Less materials used in production**................................. (600,000)Ending raw materials inventory*........................................ $ 80,000*Also

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 Cash sales (20% of sales) ........................... 12,800 16,000 9,600 Collections of prior months receivables...... 45,000 51,200 64,000 Total cash receipts ......................................$57,800 $67,200 $73,600

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 6,000Depreciation*............................................. 6,000 7,000 7,300 20,300Total expenses..........................................$20,000 $21,000 $21,300 $62,300 Maintenance..............................................2,000 2,000 2,000 6,000Depreciation*............................................. 6,000 7,000 7,300 20,300Total expenses..........................................$20,000 $21,000 $21,300 $62,300 Maintenance..............................................2,000 2,000 2,000 6,000 Depreciation*............................................. 6,000 7,000 7,300 20,300 Total

Problem 22-4A (Concluded) Supporting Footnotes Note C Beginning receivables....................................................... $ 342,248 Credit sales........................................................................ 1,001,701 Less collections................................................................. (1,010,049)Ending receivables............................................................ $ 333,900Note DBeginning raw materials inventory.................................. $ 98,500Purchases of raw materials.............................................. 581,500Less materials used in production**................................ (600,000) Less collections................................................................. (1,010,049)Ending receivables............................................................ $ 333,900Note DBeginning raw materials inventory.................................. $ 98,500Purchases of raw materials.............................................. 581,500Less materials used in production**................................

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 August 2015........................................................19,000 17.00 323,000September 2015..................................................20,000 17.00 340,000Total for the first quarter....................................60,000 $1,020,000 August 2015........................................................19,000 17.00 323,000September 2015..................................................20,000 17.00 340,000Total for the first quarter....................................60,000 $1,020,000 August 2015........................................................19,000 17.00 323,000 September 2015..................................................20,000 17.00 340,000 Total for the first quarter....................................60,000 $1,020,000 Part

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*.............................................. 6,000 7,000 7,300 20,300Total expenses...........................................$20,000 $21,000 $21,300 $62,300 Depreciation*.............................................. 6,000 7,000 7,300 20,300Total expenses...........................................$20,000 $21,000 $21,300 $62,300 Depreciation*.............................................. 6,000 7,000 7,300 20,300 Total expenses...........................................$20,000 $21,000 $21,300 $62,300 * Depreciation

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 reproduction or distribution without the prior written consent of McGraw-HillEducation. Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

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 costs based on a flexible budget; named because it refers to activities

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 @ $8/hr 16 Total prime costs $28 In November, the company produced 1,000 tables. Actual production costs and

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 Unit Sales of 8,000 Sales................................... $400.00 $2,400,000 $2,800,000 $3,200,000 Variable costs Direct materials................ 40.00 240,000 280,000 320,000 Direct labor....................... 70.00 420,000 490,000 560,000 Production supplies......... 25.00 150,000 175,000 200,000 Sales commissions.......... 20.00

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 differences in revenues and variable costs that can occur simply because actual volumeis different from budgeted volume. This is a serious limitation when evaluating(benchmarking)

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

Chapter 23 - Flexible Budgets and Standard Costs EXERCISES Exercise 23-1 (20 minutes) Item Cost a. Bike frames Variable b. Screws for assembly Variable c. Repair expense for tools (If these costs are only remotely related to volume, they may be better classified as fixed)Variable d. Direct labor (If employees receive monthly salaries, this

Exercise 23-22 (25 minutes) Preliminary calculations: Variable overhead rate per DL hour = $32,000/32,000 = $1 per hour Fixed overhead rate per DL hour = $48,000/32,000 = $1.50 per hour Standard number of DL hours = 9,000 units x 4 = 36,000 Fixed overhead rate per DL hour = $48,000/32,000

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 Direct Materials Quantity Variance................................ 24,000 Raw Materials Inventory................................................. 266,200 To record materials price and quantity variances.* This price variance can alternatively be computed and recorded when the direct materials are purchased.

Problem 23-3A (Continued) Part 4 Direct labor variances Preliminary computations Actual hours used: 30,500 hours (given) Standard hours: 15,000 units x 2 hrs./unit = 30,000 hoursActual rate: $17.25/hr. (given)Standard rate: $17.00/hr. (given) Standard hours: 15,000 units x 2 hrs./unit = 30,000 hoursActual rate: $17.25/hr. (given)Standard rate: $17.00/hr. (given) Standard hours: 15,000 units x 2

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 Controllable Variance Budget Results Variances* Variable overhead costs Indirect materials.....................................$16,875 $15,000 $1,875 FIndirect labor............................................27,000 26,500 500 FPower........................................................6,750 6,750 0Maintenance.............................................

Problem 23-2B (Continued) Part 2 (a) Analysis of sales variance Total Per unit Budgeted sales.............................................................$3,600,000 $150.00 Actual sales.................................................................. 3,648,000 152.00Sales variance (favorable)...........................................$ 48,000 $ 2.00 Actual sales.................................................................. 3,648,000 152.00Sales variance (favorable)...........................................$ 48,000 $ 2.00 Actual sales.................................................................. 3,648,000 152.00 Sales variance (favorable)...........................................$ 48,000 $ 2.00 Interpretation: The sales variance is favorable because the actual price was higher than planned. (b) Analysis

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. Actual price: $5.10/lb. (given)Standard price: $5.00/lb. (given)Direct material cost variancesActual units at actual cost [91,000 lbs. @ $5.10]......................................$464,100Standard

Problem 23-6BA (Concluded) Part 2 Under management by exception, the manager would first identify the largest variances, attempt to uncover their causes, and then implementactions aimed at correcting them. The smaller variances would be tackledafter the major problems were dealt with, if at all. largest variances, attempt to uncover their causes, and then

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 Budget for Unit Sales of 24,000 Sales...................................... $150.00 $2,700,000 $3,600,000 Variable costs Direct materials................. 60.00 1,080,000 1,440,000 Direct labor........................ 13.00 234,000 312,000 Machinery repairs.............. 2.85 51,300 68,400 Utilities...............................

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. @ $4.00].................................. 4,200,000 Direct material cost variance.................................................................................$ 50,000 U Direct Materials Price and Quantity Variances Actual Cost AQ x AP

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 identify bases for allocating indirect expenses to departments 1,2,3,4,5, 6,7,8,9,11, 15,16 24-4, 24-5, 24-6 24-1, 24-8 C2. Appendix 24A--Explain transfer pricing

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 they would have avoided the loss from the sale of the those potatoes. JACK AND

Quick Study 24-11 (continued) Investment turnover = Sales / Average invested assets 1.5 = $10,400,000 / Average invested assets 1.5 = $10,400,000 / Average invested assets 1.5 = $10,400,000 / Average invested assets Thus, Average invested assets = $10,400,000 / 1.5 = $6,933,333 Average invested assets = $10,400,000 / 1.5 = $6,933,333 Average invested assets = $10,400,000 /

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 often needed so that the responsibilities for the activities of a unit do not overwhelm

Exercise 24-8 (15 minutes) 1. Location Net income Average assets Return on investment Location A.......................$160,000 $1,000,000 16%Location B.......................$108,000 $ 600,000 18% Location A.......................$160,000 $1,000,000 16%Location B.......................$108,000 $ 600,000 18% 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%, compared to 16% at

Chapter 24 - Performance Measurement and Responsibility Accounting Quick Study 24-15 (10 minutes) a . Process time..............................................................................15.0 minutes Inspection time..........................................................................2.0 minutes Move time...................................................................................6.4 minutesWait time.....................................................................................36.6 minutesManufacturing cycle time.........................................................60.0 minutes Move time...................................................................................6.4 minutesWait time.....................................................................................36.6 minutesManufacturing cycle time.........................................................60.0 minutes Move time...................................................................................6.4 minutes Wait time.....................................................................................36.6 minutes Manufacturing cycle time.........................................................60.0 minutes b. Manufacturing cycle efficiency (15.0 min./ 60.0 min.)............ 0.25 Quick Study 24-16A (10 minutes) Without

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) Building rent.................................. 15,000 14,000 (1,000)Other office salaries..................... 32,500 30,100 (2,400)Other office costs......................... 25,000 23,000 (2,000)Camper department...................... 392,000 392,500 500Trailer department......................... 695,000 696,200 1,200Total...............................................$1,263,500

Chapter 24 - Performance Measurement and Responsibility Accounting Exercise 24-8 (15 minutes) 1. Location Net income Average assetsinvestment Location Net income Average assetsinvestment Location Net income Average assets investment Return on Location A.......................$160,000 $1,000,000 16%Location B.......................$108,000 $ 600,000 18% Location A.......................$160,000 $1,000,000 16%Location B.......................$108,000 $ 600,000 18% Location A.......................$160,000 $1,000,000 16% Location B.......................$108,000 $ 600,000 18% 2. The

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 Building rent.......................... 80,000 82,300 2,300Other office salaries.............. 40,000 35,200 (4,800)Other office costs.................. 21,000 29,800 8,800Refrigerator department........ 638,000 626,700 (11,300)Dishwasher

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% Luxury products.................... 791 4,507 17.55%Active cosmetics.................. 278 1,386 20.06% Luxury products.................... 791 4,507 17.55%Active cosmetics.................. 278 1,386 20.06% Luxury products.................... 791 4,507 17.55% Active cosmetics..................

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: Customer, internal process, innovation and learning, and financial.The customer perspective focuses on measuring what customersthink of their experiences with the company. The

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% $194,400 No. 2...............................300,000 32.0 129,600No. 3............................... 187,500 20.0 81,000Total...............................$937,500 100.0% $405,000 No. 2...............................300,000 32.0 129,600No. 3............................... 187,500 20.0 81,000Total...............................$937,500 100.0% $405,000 No.

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 No. 2...............................500,000 34.7 242,900No. 3............................... 40,000 2.8 19,600Total...............................$1,440,000 100.0% $700,000 No. 2...............................500,000 34.7 242,900No. 3............................... 40,000 2.8 19,600Total...............................$1,440,000 100.0% $700,000 No. 2...............................500,000 34.7 242,900 No. 3............................... 40,000 2.8 19,600 Total...............................$1,440,000

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 using relevant costs. 11, 12, 13, 15 25-16, 25-17, 25-18, 25-19, 25-20,

Chapter Outline I. Managerial Decision Scenariosconsider 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. Historical costs are not relevant to this decision. 3. Incremental or additional costs (also called

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 Annual cash savings before tax 59,000Less: annual depreciation expense 20,000Increase in net income before tax 39,000Less: Increase in annual income tax @ 40% 15,600Increase

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) 91,945,600Less: Amount to be invested.............................................. (80,000,000)Net present value of investment.........................................11,945,600 2. Present value of cash inflows (16,000,000 x 5.7466) 91,945,600Less: Amount to be invested.............................................. (80,000,000)Net present

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 the process of planning the acquisition or sale of plant assets. 3. Capital budgeting decisions are

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 3 1 25000 600004 2 35500 500005 3 60500 400008 Formula for IRR =IRR(C1:C5) =IRR(D1:D5) 3 1 25000 600004

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 Year 3..................................................................... 70,000 170,000Year 4..................................................................... 125,000 295,000Year 5..................................................................... 35,000 330,000 Year 3..................................................................... 70,000 170,000Year 4..................................................................... 125,000 295,000Year 5..................................................................... 35,000 330,000 Year 3..................................................................... 70,000 170,000 Year 4..................................................................... 125,000 295,000 Year 5..................................................................... 35,000

Exercise 25-26 (20 minutes) ALTERNATIVE A: INCREASE OR (DECREASE) IN NET INCOME Cost to buy new machine..........................................................................$(115,000) Cash received to trade in old machine..................................................... 52,000Reduction in variable manufacturing costs*............................................ 85,000Total change in net income....................................................................... $ 22,000*(36,000 - $19,000) X 5 years Cash received to trade in old machine..................................................... 52,000Reduction in variable manufacturing

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..................................................................... 96,000 0.7118 68,333 Totals.....................................................................$288,000 $230,582Amount invested.................................................. (228,000)Net present value................................................. $ 2,582 Totals.....................................................................$288,000 $230,582Amount invested.................................................. (228,000)Net present value................................................. $ 2,582 Totals.....................................................................$288,000 $230,582 Amount invested.................................................. (228,000) Net present

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 Maximum possible output of G = = 880 units per mo. Maximum possible output of G = = 880 units per mo. Maximum possible output of G = = 880

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 new product Direct materials...................................................... (480,000) (480,000) Direct labor............................................................. (672,000) (672,000) Overhead excluding depr. on new asset.............. (336,000) (336,000) Depreciation

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 Amount invested......................................... (240,000)Net present value......................................... $ 90,879 Amount invested......................................... (240,000)Net present value......................................... $ 90,879 Amount invested......................................... (240,000) Net present value......................................... $ 90,879 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 can be sold. This means the company can produce 700 units of Product G, and

SERIAL PROBLEM SP 25 Serial Problem, Business Solutions (50 minutes) COMPUTING NET CASH FLOWS FROM NET INCOME Net income Cash flows Sales..............................................................................$375,000 $375,000 Materials, labor & overhead......................................... (200,000) (200,000)Depreciation*................................................................ (50,000)Selling and administrative........................................... (37,500) (37,500)Pretax income............................................................... 87,500 Income taxes (30%)...................................................... (26,250) (26,250)Net income....................................................................$ 61,250Net cash flows.............................................................. $111,250** * Depreciation expense = $300,000 /

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 3.3121 $330,879 Amount invested.......................................... (240,000)Net present value.......................................... $ 90,879 Amount invested.......................................... (240,000)Net present value.......................................... $ 90,879 Amount invested.......................................... (240,000) Net present value.......................................... $ 90,879 PROJECT B

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.......................................................................................... 27,000 Store supplies used........................................................................... 5,600 Depreciation of store equipment...................................................... 21,000 Sales salaries...................................................................................... 59,800*Rent expense...................................................................................... 27,600Bad debts expense............................................................................. 21,000Office salary........................................................................................ 13,000*Insurance expense............................................................................. 4,690Miscellaneous

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 and the time period principle. 3 3-1 3-3, 3-4 3-2 3-1, 3-3, 3-4, 3-5, 3-8, 3-9 C2. Explain accrual accounting

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 the period ACCOUNTS MUST BE ADJUSTED TO FOLLOW PRINCIPLES 3-1 Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without

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 accrual basis reports revenues when they are earned. The cash basis reportsexpenses when cash is paid while the accrual basis reports expenses when

VISUAL #3-1 ACCRUAL BASIS ACCOUNTING (Follows GAAP) requires that the Income Statement(for a period)reportALL REVENUES EARNED in period (Collected or Not)Minus ALL EXPENSES INCURRED in period (Paid or Not)Equals Net Income or Net Loss for the periodACCOUNTS MUST BE ADJUSTED TO FOLLOW PRINCIPLESGAAPRevenueRecognitionGAAPExpenseRecognition(or Matching)GAAPExpenseRecognition orMatchingGAAPPeriodicity Income Statement(for a period)reportALL REVENUES EARNED in period (Collected or

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 ExpenseComputers..................... 1,600Accumulated Depreciation-Computers........ 1,600To record depreciation on computers.31 Depreciation ExpenseOffice Furniture.............. 1,850Accumulated DepreciationOffice Furniture.... 1,850

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 Professional library................................................ 35,000Accumulated depreciationProfessional library.... $ 17,200 Equipment............................................................... 80,000Accumulated depreciationEquipment............... 28,200Accounts payable................................................... 26,000Salaries payable..................................................... 400Unearned training fees........................................... 7,500T. Wells, Capital...................................................... 90,000T. Wells, Withdrawals............................................. 50,000Tuition fees earned................................................. 131,400Training fees

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 of December 31................................ 1,200 Insurance expense for two months....................................... 410 Prepaid insurance as of December 31.................................. 2,050Consulting

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 Office equipment................120,000 120,000Accumulated depreciation Office equipment...................$ 20,000 (d) 10,000 $30,000Accounts payable.............. 26,000 (e) 6,000 32,000Interest payable.................. (f) 2,150 2,150Salaries payable................. (g) 16,000 16,000Unearned

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 ...................................................... 8,000 Accumulated depreciationOffice equipment....... $ 400 Computer equipment ............................................... 20,000Accumulated depreciationComputer equipment. 1,250Accounts payable .................................................... 1,100Wages payable ......................................................... 500Unearned computer services

Reporting in Action BTN 3-1 1. The revenue recognition principle requires that revenue be recorded when realized or realizable and earned, not before and not after. Mostcompanies earn revenue when they provide services and products tocustomers. when realized or realizable and earned, not before and not after. Mostcompanies earn revenue when they

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 furthest from maturity to nearest to maturity.Quick Study 3-19 (10 minutes)Profit margin = $48,025 / $425,000 = 11.3% furthest from maturity to nearest to maturity.Quick Study 3-19

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 accrual basis reports revenues when they are earned. The cash basis reportsexpenses when cash is paid while the accrual basis reports expenses

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. 6 Cash..................................................................... 7,500Unearned Fees............................................. 7,500Received fees for work to be done for Haru.12 Unearned Fees.................................................... 3,000Fees Earned................................................. 3,000Completed work for Solana.18 Cash..................................................................... 8,500Unearned Fees............................................. 8,500Received fees

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 fromfurthest from maturity to nearest to maturity. b. Under IFRS, financial statements normally present liabilities fromfurthest from maturity to nearest to maturity. b. Under IFRS, financial statements normally

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........... 84,000 84,000 Accumulated depreciation Office equipment...... $ 14,000 (d) 6,000 $ 20,000 Accounts payable.......... 9,100 (e)

Exercise 3-11A (30 minutes) a. Dec. 1 Supplies Expense................................................... 2,000 Cash.................................................................. 2,000 Purchased supplies. b. Dec. 2 Insurance Expense................................................. 1,540Cash.................................................................. 1,540Paid insurance premiums.c.Dec. 15 Cash......................................................................... 13,000Remodeling Fees Earned............................... 13,000Received fees for work to be done.d.Dec. 28 Cash......................................................................... 3,700Remodeling Fees Earned............................... 3,700 Dec. 2 Insurance Expense................................................. 1,540Cash.................................................................. 1,540Paid insurance premiums.c.Dec. 15 Cash......................................................................... 13,000Remodeling Fees Earned............................... 13,000Received fees for

Problem 3-3A (Concluded) WELLS TECHNICAL INSTITUTE Balance Sheet December 31, 2015 Assets Cash................................................................................. $ 34,000 Accounts receivable...................................................... 7,500 Teaching supplies.......................................................... 2,800 Prepaid insurance.......................................................... 9,600 Professional library........................................................ $35,000 Cash................................................................................. $ 34,000 Accounts receivable...................................................... 7,500 Teaching supplies.......................................................... 2,800 Prepaid insurance.......................................................... 9,600 Professional library........................................................ $35,000 Cash................................................................................. $ 34,000 Accounts receivable...................................................... 7,500 Teaching supplies.......................................................... 2,800 Prepaid insurance..........................................................

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. 1 Prepaid Insurance............................................... 3,600Cash............................................................. 3,600Paid insurance for one year. 30 Cash..................................................................... 8,500Unearned Service Fees............................... 8,500Received fees in advance. 1 Prepaid Insurance............................................... 3,600Cash.............................................................

Problem 3-3B (90 minutes) Parts 1 and 2 Cash Accounts Payable Bal. 60,000 Bal. 11,200 Accounts Receivable Salaries Payable Unadj. Bal. 0Unadj. Bal. 0 (f) 5,750 (g) 450Adj. Bal. 5,750 Adj. Bal. 450 Teaching Supplies Unearned Training FeesUnadj. Bal. 70,000 Unadj. Bal. 28,600 (b) 50,000 (e) 28,600Adj. Bal. 20,000 Adj. Bal. 0 Unadj.

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 22 1,400 028 5,208 5,208Nov. 8 5,668 10,87618 2,208 8,66824 3,950 12,618Dec. 4 3,950 8,66828 3,000 5,668 22 1,400 028 5,208 5,208Nov. 8 5,668 10,87618 2,208 8,66824 3,950 12,618Dec.

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. 1 Prepaid Insurance................................................ 3,600Cash............................................................... 3,600Paid insurance for one year. 30 Cash....................................................................... 8,500Unearned Service Fees................................ 8,500Received fees in advance.May 1 Prepaid Advertising.............................................. 4,450Cash...............................................................

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 expenses when cash is paid while the accrual basis reports expenses when they areincurred and matched with revenues they generated. expenses

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 Nov. 2 4,633 16,0418 5,668 21,70924 3,950 25,659Dec. 20 5,625 31,284 Nov. 2 4,633 16,0418 5,668 21,70924 3,950 25,659Dec. 20 5,625 31,284 Nov. 2 4,633 16,041 8 5,668 21,709 24 3,950

Quick Study 3-15 (15 minutes) Accounts Debited and Credited Financial Statement a. Debit Unearned Revenue Balance Sheet Credit Revenue Earned Income Statement b. Debit Wages Expense Income StatementCredit Wages Payable Balance Sheetc. Debit Accounts Receivable Balance SheetCredit Revenue Earned Income Statementd. Debit Insurance Expense Income StatementCredit Prepaid Insurance Balance Sheete. Debit Depreciation Expense Income

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, 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

Chapter 04 - Completing the Accounting Cycle CHAPTER 4 COMPLETING THE ACCOUNTING CYCLE Related Assignment MaterialsStudent Learning Objectives QuestionsQuickStudies* Exercises* Problems*Beyond theNumbersConceptual objectives: COMPLETING THE ACCOUNTING CYCLE Related Assignment MaterialsStudent Learning Objectives QuestionsQuickStudies* Exercises* Problems*Beyond theNumbersConceptual objectives: COMPLETING THE ACCOUNTING CYCLE Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1.

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 to theIncome Summary account, (iii) close the Income Summary account to the ownerscapital account,

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. Post To transfer the amounts from journal entries to the individual accounts affected by the recorded transaction During the

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 statements would not be ready by the time of the meeting. She could explain that delayin financial statement preparation is

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 entry process. For Apples fiscal year-end September 28, 2013, itsrevenue items consist of ($ millions): Net Sales of $170,910 and Otherincome of

Exercise 4-5 (10 minutes) Income Summary balance after closing revenues and expenses: Revenues: $70,000 + $7,000................................................... = $77,000 Cr. Expenses: $38,000 + $8,000 + $4,600............. = - 50,600 Dr.Credit balance................................................. = $26,400 Cr. Expenses: $38,000 + $8,000 + $4,600............. = - 50,600 Dr.Credit balance................................................. = $26,400 Cr. Expenses: $38,000 + $8,000 + $4,600............. = -

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 to the Income Summary account, (iii) close the Income Summary account to the ownerscapital account,

Exercise 4-13 (15 minutes) Current assets: Cash............................................................................... $ 8,000 Accounts receivable...................................................... 17,500 Office supplies.............................................................. 3 ,000 Total current assets...................................................... $28 ,500 Accounts receivable...................................................... 17,500 Office supplies.............................................................. 3 ,000 Total current assets...................................................... $28 ,500 Accounts receivable...................................................... 17,500 Office supplies.............................................................. 3 ,000 Total current assets...................................................... $28 ,500 Current

Exercise 4-5 (10 minutes) Income Summary balance after closing revenues and expenses: Revenues: $70,000 + $7,000............................ = $77,000 Cr. Expenses: $38,000 + $8,000 + $4,600............. = - 50,600 Dr.Credit balance................................................... = $26,400 Cr. Expenses: $38,000 + $8,000 + $4,600............. = - 50,600 Dr.Credit balance................................................... = $26,400 Cr. Expenses: $38,000 + $8,000 + $4,600............. = -

Problem 4-1A (Continued) Part 7continued 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 10 2,400 24,80014 1,600 23,20024 8,000 31,200 28 1,600 29,60029 350 29,25030 750 28,50030 1,500 27,000 10 2,400 24,80014 1,600 23,20024 8,000 31,200 28 1,600

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: Accounts payable........................................................... $12,000 Interest payable.............................................................. 4 ,000 Total current liabilities.................................................... $16 ,000 Accounts payable........................................................... $12,000 Interest payable.............................................................. 4 ,000 Total current liabilities.................................................... $16 ,000

Problem 4-4A (75 minutes) Part 1 TYBALT CONSTRUCTION Income Statement For Year Ended December 31, 2015 Revenues Professional fees earned.................................. $97,000 Rent earned....................................................... 14,000 Dividends earned.............................................. 2,000 Interest earned.................................................. 2 ,100 Total revenues................................................... $115,100 Rent earned....................................................... 14,000 Dividends earned.............................................. 2,000 Interest earned.................................................. 2 ,100 Total revenues................................................... $115,100 Rent earned....................................................... 14,000

Problem 4-1A (Continued) J. Nozomi, Capital Acct. No. 301 Date Explanation PR Debit Credit Balance April 1 50,000 50,00030 Closing 2,197 52,19730 Closing 1,500 50,697J. Nozomi, Withdrawals Acct. No. 302Date Explanation PR Debit Credit BalanceApril 30 1,500 1,500 30 Closing 1,500 0Commissions Earned Acct. No. 405Date Explanation PR Debit Credit BalanceApril 24

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 Cash...................................................... 1,500To record payroll. Cash...................................................... 1,500To record payroll. Cash...................................................... 1,500 To record payroll. 15 Interest Expense......................................... 2,250 Cash...................................................... 2,250To record interest payment. Cash...................................................... 2,250To record interest payment. Cash...................................................... 2,250 To record interest payment.

Problem 4-5A (90 minutes) Part 1 KARISE REPAIRS Income Statement For Year Ended December 31, 2015 Repair fees earned..................................... $90,950 Expenses Depreciation expenseEquipment........ $ 5,000 Wages expense......................................... 37,500 Insurance expense................................... 800 Rent expense............................................ 10,600 Office supplies expense.......................... 3,600 Utilities expense....................................... 2 ,700 Total expenses......................................... 60 ,200 Net income.................................................. $30 ,750 Rent

Problem 4-1B (Concluded) Office Supplies Expense Acct. No. 650 Date Explanation PR Debit Credit Balance July 31 Adjusting 875 875 31 Closing 875 0 July 31 Adjusting 875 875 31 Closing 875 0 July 31 Adjusting 875 875 31 Closing 875 0 Repairs Expense Acct. No. 684 Date Explanation PR Debit Credit Balance July

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.................................................... 1,525 128 Prepaid insurance............................................... 6,800 173 Buildings.............................................................. 150,000 174 Accumulated depreciationBuildings............... $ 1,500209 Salaries payable.................................................. 100301 L. Plume, Capital................................................. 180,000 302 L. Plume, Withdrawals........................................ 2,000 128 Prepaid insurance...............................................

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 Dividends Earned........................................ 1,000Interest Earned............................................ 1,320 Income Summary................................. 66,420 To close the revenue accounts. Dividends Earned........................................ 1,000Interest Earned............................................ 1,320 Income Summary................................. 66,420

Problem 4-2B (Continued) Part 3 POWER DEMOLITION COMPANY Income Statement For Year Ended April 30, 2015 Demolition fees earned........................................ $187,000 Expenses Depreciation expenseEquipment................... $ 7,000 Wages expense................................................... 43,400 Interest expense................................................. 3,600 Insurance expense............................................. 10,600 Rent expense...................................................... 16,200 Supplies expense............................................... 8,100 Property taxes expense..................................... 10,250 Repairs expense................................................. 4,700 Utilities expense................................................. 5

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.................................................................... 825Office equipment........................................................... 8,000Accumulated depreciationOffice equipment............ $ 400 Computer equipment..................................................... 20,000Accumulated depreciationComputer equipment..... 1,250 Accounts payable.......................................................... 1,100 Wages payable............................................................... 500 Unearned computer services revenue......................... 1,500S. Rey, Capital................................................................

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) 4,150 3,450 Machinery................................ 50,000 50,000Accumulated depreciation Machinery.............................. 20,000 (f) 3,800 23,800 Interest payable....................... (c) 800 800 Salaries payable..................... (a)

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 company. 1, 2, 3, 4 5-1, 5-18 5-1, 5-3, 5-13 5-3, 5-5, 5-6, 5-7, 5-8 C2. Identify and explain

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. Bal. + COST + Cost of Goods Sold Dr. Bal. Merchandise Inventory + Sales Discount Dr. Bal. Dr. Bal. + + EXPENSE Delivery Expense Dr. Bal. + VISUAL #5-4 ACCOUNTS USED IN BASIC MERCHANDISING

Chapter 5 Accounting for Merchandising Operations QUESTIONS 1. Merchandising companies report Merchandise Inventory on the balance sheet, service companies do not. Also, merchandising companies report both Sales (ofgoods) and Cost of Goods Sold on the income statement, while service companiesdo not. service companies do not. Also, merchandising companies report both Sales (ofgoods) and Cost

Chapter 05 - Accounting for Merchandising Operations VISUAL #5-1 THE OUTDOOR STORE Income Statement For the Year Ended December 31, 20xx Sales revenuesSales ............................................................. $700,000 Less: Sales returns and allowances............... $ 5,000Sales discounts.................................... 3,000 8,000 Net sales........................................................... $692,000 Sales revenuesSales ............................................................. $700,000 Less: Sales returns and allowances............... $ 5,000Sales discounts.................................... 3,000 8,000 Net sales........................................................... $692,000

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................. 38,000 1,950 43,750 32,000 6,600 Merch. inv. (end.)........ (11 ,950) (3 ,000) (9

Interpretation: Case X has the highest acid-test ratio and a healthy current ratio. Since Case X has enough current assets to cover its current liabilities by more than twotimes and enough liquid assets to cover its current liabilities by more than onetime, Case X appears to be in the best position to

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................. 38,000 1,950 43,750 32,000 6,600 Merch. inv. (end.)........ (11 ,950) (3 ,000)

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 Cost of goods sold.............................................. $74,500 Selling expenses................................................. 54,500 General and administrative expenses............... 32 ,500 Total expenses.................................................... 161 ,500 Net income............................................................. $ 49 ,850 Cost of goods sold.............................................. $74,500 Selling

Exercise 5-12 (10 minutes) Multiple-Step Income Statement Sales Related Information Only Sales (gross)................................................................ $200,000Less: Sales discounts............................................. $ 4,000Sales returns and allowances..................... 16 ,000 Sales (gross)................................................................ $200,000Less: Sales discounts............................................. $ 4,000Sales returns and allowances..................... 16 ,000 Sales (gross)................................................................ $200,000 Less: Sales discounts............................................. $ 4,000 Sales returns and allowances..................... 16 ,000 20,000 Net sales....................................................................... 180,000 Exercise

Problem 5-2B (Concluded) July 17 Cash................................................................. 9,457 Sales Discounts*............................................. 193 Accounts ReceivableBrill..................... 9,650 Collected receivable within discount period. *($11,500 - $1,850) x 2% 20 Accounts PayableRupert*........................... 12,700 Merchandise Inventory**......................... 122 Cash.......................................................... 12,578 Paid payable within discount period. *$14,200 + $500 - $2,000 = $12,700 **($14,200 - $2,000) x 1% = $122 21 Accounts ReceivableBrown........................ 11,000Sales......................................................... 11,000Sold goods

Chapter 05 - Accounting for Merchandising Operations Problem 5-2A (Concluded) Aug. 15 Cash.................................................................... 4,508 Sales Discounts*................................................ 92 Accounts ReceivableLaird..................... 4,600 Collected receivable within 2% discount period. *[($5,200 - $600) x 2%] 18 Accounts PayableWaters.............................. 4,840Merchandise Inventory *............................ 47Cash............................................................. 4,793Paid payable within discount period*(1% x $4,700). 19 Accounts ReceivableTux............................... 4,800Sales............................................................ 4,800 18 Accounts PayableWaters.............................. 4,840Merchandise Inventory

SERIAL PROBLEM SP 5 Serial Problem SP 5, Business Solutions (150 minutes) Part 1 Journal entries Jan. 4............................................................................Wages Expense 623 ............................................................................125............................................................................Wages Payable 210 ............................................................................500................................................................................Cash 101 ................................................................................625Paid employee. 623 ............................................................................125............................................................................Wages Payable 210 ............................................................................500................................................................................Cash 101 ................................................................................625Paid employee. 623 ............................................................................125 ............................................................................Wages Payable 210 ............................................................................500 ................................................................................Cash 101 ................................................................................625 Paid employee. 5............................................................................Cash 101 25,000 ................................................................................S. Rey, Capital 301 ................................................................................25,000 Additional investment by owner. 7............................................................................Merchandise Inventory............................................................................119

PROBLEM SET B Problem 5-1B (40 minutes) May 2 Merchandise Inventory...................................... 10,000 Accounts PayableHavel......................... 10,000 Purchased goods on credit, terms 1/15, n/30. 4 Accounts ReceivableHeather........................ 11,000Sales............................................................ 11,000Sold goods on credit, terms 2/10, n/60. 4 Cost of Goods Sold........................................... 5,600Merchandise Inventory.............................. 5,600To record cost of the May 4 sale. 4 Accounts ReceivableHeather........................ 11,000Sales............................................................ 11,000Sold 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 Alexs Engineering Co............. 0 0 106.2 Wildcat Services...................... 2,800 2,800 106.3 Easy Leasing........................... 9,047 9,047 106.4 IMF Co...................................... 5,220 5,220 106.5 Liu Corporation....................... 0 0 106.6 Gomez Co................................ 0 0 106.7 Delta Co.................................... 0 0 106.8 KC,

Problem 5-5B (Concluded) Part 4 Current assets Cash ........................................................................... $ 7,400 Merchandise inventory ............................................. 21,300 Store supplies ........................................................... 3,700 Prepaid insurance ..................................................... 3 ,800* Total current assets................................................... $ 36,200 Current liabilities.......................................................... $ 18,000 Current ratio ($36,200 / $18,000)..................................... 2.01 Store supplies ........................................................... 3,700 Prepaid insurance ..................................................... 3 ,800*

Serial Problem SP 5 (Continued) S. Rey, Capital Acct. No. 301 Date Explanation PR Debit Credit Balance Dec. 31 Balance 80,360Jan. 5 25,000 Dec. 31 Balance 80,360Jan. 5 25,000 Dec. 31 Balance 80,360 Jan. 5 25,000 105,360 S. Rey, Withdrawals Acct. No. 302 Date Explanation PR Debit Credit Balance Feb. 15 4,800 4,800 Computer Services Revenue Acct. No. 403

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: Sales Returns and Allowances................ 200Accounts Receivable...................... 200 Also, if the item is returned to inventory

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, 12, 16 6-1, 6-23 6-1 6-8 C2. Identify the costs of merchandise inventory. 3, 15, 17 6-2, 6-23

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 50 @ 16 = 800 Goods available for sale 300 $3 ,690 Sold a total of 230

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 goods sold first. (b) LIFO: The cost of the last (most recent) items purchased ininventory flow to cost of goods sold first. goods

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 100 @ 13 = 1,300 Jan 25 Purchase 50 @ 16 = 800 Goods available for sale 300

Quick Study 6-22B (15 minutes) Goods available for sale Inventory, January 1.....................................................................$190,000 Cost of goods purchased (net).................................................... 352,000 Goods available for sale (at cost)................................................542,000 Net sales at retail............................................................................ $685,000Estimated cost of goods sold [$685,000 x (1 - 44%)]......................... (383,600)Estimated September 5 inventory destroyed...............................$158,400 Cost of goods purchased (net).................................................... 352,000 Goods available

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 goods sold first. (b) LIFO: The cost of the last (most recent) items purchased ininventory flow to cost of goods sold

Exercise 6-13 (20 minutes) 2014 Inventory turnover 2014 Days' Sales in Inventory $426,650/[($92,500 + $87,750)/2] $87,750/$426,650 x 365 days = 75.1 days = 4.7 times $426,650/[($92,500 + $87,750)/2] $87,750/$426,650 x 365 days = 75.1 days = 4.7 times $426,650/[($92,500 + $87,750)/2] $87,750/$426,650 x 365 days = 75.1 days = 4.7 times 2015

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 Goods available for sale (at cost).................................................542,000Net sales at retail.............................................................................. $685,000Estimated cost of goods sold [$685,000 x (1 - 44%)].......................... (383,600)Estimated September 5 inventory destroyed................................$158,400 Goods available

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 @ $27.00= $ 5,400 600 @ $45.00 400 @ $42.00 = $49,200200 @ $27.00(avg.

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= $ 5,400 600 @ $45.00 400 @ $42.00 = $49,200 200 @ $27.00 3/15 200 @ $27.00

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 $7,310,000Sales..................................................................... $5,595,800 Less: Sales returns............................................ (42,800Net sales............................................................... $5,553,000Ending inventory at retail ($7,310,000 - $5,553,000) $1,757,000Cost-to-retail ratio: $3,845,060/$7,310,000

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 @ $350 122,500May 17.................................................. 80 units @ $450 36,000 May 25.................................................. 100 units @ $458 45,800Units available..................................... 680 units May 6................................................... 350 units @ $350

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 Sales....................................................................... $5,595,800 Less: Sales returns............................................. (42,800Net sales................................................................. $5,553,000Ending inventory at retail ($7,310,000 - $5,553,000) $1,757,000 Sales....................................................................... $5,595,800 Less:

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 48,720 Cost of purchases...................................... 261,280 261,280 261,280Cost of goods available for sale................ 310,000 310,000 310,000Inventory, Dec. 31,

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 May 17................................................... 80 units @ $450 36,000May 25................................................... 100 units @ $458 45,800Units available...................................... 680 unitsCost of goods available for sale......... $249,300 May

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 identification cost flow assumption requires units sold be assigned their actual cost. Total cost of goods sold is tallied

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 48,720 Cost of purchases....................................... 261,280 261,280 261,280 Cost of goods available for sale................ 310,000 310,000 310,000 Inventory, Dec. 31,

Appendix 7A - Accounting Information Systems Appendix 7APERIODIC 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 1 Krause, Inc.................. 5/01 n/30 10,100 10,100 14 Store Supplies/ Chang Co.................5/14 n/30 240 24017 Monder 5/17 n/30 260 260

Problem 7-5AA (Concluded) Part 4 WISET COMPANY Trial Balance April 30 Debit Credit Cash................................................................$ 35,847 Inventory........................................................ 125,000Office supplies............................................... 1,400Store supplies................................................ 830Store equipment............................................ 12,125Accounts payable.......................................... $ 25,730 Inventory........................................................ 125,000Office supplies............................................... 1,400Store supplies................................................ 830Store equipment............................................ 12,125Accounts payable.......................................... $ 25,730 Inventory........................................................ 125,000 Office supplies............................................... 1,400 Store supplies................................................ 830 Store equipment............................................ 12,125 Accounts payable.......................................... $ 25,730 Long-term notes payable.............................. 110,000 B. Wiset, Capital............................................ 100,000 Purchases...................................................... 39,425 Purchases

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 14 Kim Nettle.......................................921 5,100 29 Ruth Blake......................................922 17,500 30 Ashton Moore.................................923 16,820 31 Totals.............................................. 74,670 (106/413) 14 Kim Nettle.......................................921

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 22 Carlos Mantel.......................................442 3,695 24 Tori Tripp.............................................443 4,280 30 Totals................................................... 33,275 (106/413) 22 Carlos Mantel.......................................442 3,695 24 Tori Tripp.............................................443 4,280 30 Totals................................................... 33,275

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, 3, 4, 5, 6 7-1, 7-2 7-3 C2. Explain the goals and uses of special journals. 7, 9, 10, 11,

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 7-3 C2. Explain the goals and uses of special journals. 7, 9, 10, 11, 12 7-3, 7-4, 7-7,

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 for a cash purchase of inventory $ 75,000. 2 Sold inventory costing $500 on credit to

Problem 7-4BA (Continued) Parts 2 and 3 GENERAL LEDGER Cash Acct. No. 101 Date Explanation PR Debit Credit Balance June 30 100,000July 31 R3 253,137 353,137 June 30 100,000July 31 R3 253,137 353,137 June 30 100,000 July 31 R3 253,137 353,137 Accounts Receivable Acct. No. 106 Date Explanation PR Debit Credit Balance July 31 S3 74,670 74,67031 R3

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 18 Cyd Rounder..........................................Invoice, 11/8...........................................................................6,419 131 6,550 19 Carlos Mantel.........................................Invoice, 11/10.........................................................................13,230 270 13,500 25 Tori Tripp................................................Invoice, 11/15.........................................................................5,145 105 5,250 30 Sales......................................................Cash sales............................................................................. 16,703 ___ _____ 16,703 _____ 18

Appendix 7A - Accounting Information Systems Appendix 7APERIODIC 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 1 Krause, Inc.................. 5/01 n/30 10,100 10,100 14 Store Supplies/ Chang Co................5/14 n/30 240 24017 Monder Company...................5/17 n/30 260 260 14

Problem 7-5AA (Continued) Parts 2 and 3continued ACCOUNTS PAYABLE LEDGER Custer, Inc. Date Explanation PR Debit Credit Balance Apr. 3 P3 1,480 1,4806 G3 80 1,400 Apr. 3 P3 1,480 1,4806 G3 80 1,400 Apr. 3 P3 1,480 1,480 6 G3 80 1,400 Grant Company Date Explanation PR Debit Credit Balance Apr. 17 P3 13,750 13,75023 G3 750 13,00026

Chapter 7 Accounting Information Systems QUESTIONS 1. The five components of an accounting system are: source documents, input devices, information processors, information storage, and output devices. devices, information processors, information storage, and output devices. devices, information processors, information storage, and output devices. 2. Source documents contain data about business transactions or events that are put into

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 Carl Cole 713 1,650.00 1,000.00 24 Carl Cole 714 835.00 475.00 26 Gary Glen 715 775.00 375.0028 Totals

Chapter 07 - Accounting Information Systems Exercise 7-10 (30 minutes) Part 1 ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER Anna Page Sara Reed Aaron Reckers May171,850 May 20 350 May102,940 May 6 3,880 May171,850 May 20 350 May102,940 May 6 3,880 May 17 1,850 May 20 350 May 10 2,940 May 6 3,880 25 1,340 Part 2 GENERAL LEDGER Accounts Receivable Sales Sales Returns and Allowances May10,010 May350 May10,010

Problem 7-2A (Continued) Parts 2 and 3 GENERAL LEDGER Cash Acct. No. 101 Date Explanation PR Debit Credit Balance Mar. 31 85,000Apr. 30 R3 213,863 298,863 Mar. 31 85,000Apr. 30 R3 213,863 298,863 Mar. 31 85,000 Apr. 30 R3 213,863 298,863 Accounts Receivable Acct. No. 106 Date Explanation PR Debit Credit Balance Apr. 30 S3 37,470 37,47030 R3 27,600

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 $ 450 13.8% Skating Group............ 19 16 63 52 33.0% Specialty Footwear....... 32 29 165 146 20.6% Other Specialty........... 21 14 47

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 Carlos Mantel.....................................440 13,500 8,500 15 Tori Tripp............................................441 5,250 2,450 22 Carlos Mantel.....................................442 3,695 2,060 24 Tori Tripp............................................443 4,280 2,130 15

Problem 7-2A (Concluded) Part 4 (continued) WISET COMPANY Schedule of Accounts Receivable April 30 Paula Kohr.................................................. $3,170 Nic Nelson................................................... 6,700Total accounts receivable.......................... $9,870 Nic Nelson................................................... 6,700Total accounts receivable.......................... $9,870 Nic Nelson................................................... 6,700 Total accounts receivable.......................... $9,870 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 addition is correct.

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 Supp./Plaine Inc............................7/7 n/10, EOM 125/1,250 1,250 9Store Equip./Charms Supply..................... 7/8 n/10, EOM 165/38,220 38,220 17 Drake Company.....................................7/17 2/10, n/30 7,200 7,200 20 Office Supp./Charms Supply..................... 7/19 n/10,

Problem 7-1B (Concluded) Part 3 GRASSLEY COMPANY Trial Balance November 30 Debit Credit Cash......................................................................$100,207 Accounts receivable............................................ 7,975 Inventory............................................................... 36,540Office supplies..................................................... 459Store supplies...................................................... 1,040Office equipment..................................................4,136 Inventory............................................................... 36,540Office supplies..................................................... 459Store supplies...................................................... 1,040Office equipment..................................................4,136 Inventory............................................................... 36,540 Office supplies..................................................... 459 Store supplies...................................................... 1,040 Office equipment..................................................4,136 Accounts payable................................................ $ 5,635 Long-term notes payable.................................... 88,500 C. Grassley, Capital.............................................. 40,000 Sales...................................................................... 68,148Sales discounts.................................................... 506Costs of goods sold............................................38,250Sales salaries expense........................................ 13,170 _______Totals.....................................................................$202,283 $202,283 Sales......................................................................

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 Owners Equity Account Debit Credit Debit Credit Debit Credit Debit Credit Cash........................................................ 135,911 135,911 Accounts receivable.............................. 18,200 18,200 Merchandise inventory......................... 189,519 189,519 Office supplies....................................... 793 (c) 289 504 Store supplies........................................ 3,301 (b)

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. 11 Accounts ReceivableAlexs Eng. Co...........106.1 5,500Unearned Computer Services Revenue.........236 1,500Computer Services Revenue..................403 7,000Completed work on project.20*Sales Returns and Allowances........................414 500 Accounts ReceivableLiu Corp............106.5 500Customer returned defective goods. 11 Accounts ReceivableAlexs Eng. Co...........106.1 5,500Unearned

Comprehensive Problem, Colo Company (Continued) Part 3continued COLO COMPANY Statement of Owners 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 31, 2015................. $332,732 COLO COMPANY Balance Sheet May 31, 2015 Assets Current assets Cash............................................................. $135,911 Accounts receivable.................................... 18,200 Merchandise inventory............................... 189,519 Office

Comprehensive Problem, Colo Company (Continued) Part 2continued 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 May 31 G2 124,775 124,77531 G2 156,422 31,64731 G2 31,647 0 May 31 G2 124,775 124,77531 G2 156,422

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, 3, 4, 6 8-1, 8-11 8-1, 8-2 8-1 8-3, 8-5, 8-6 8-7, 8-8 C2. Define cash and

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, 3, 4, 6 8-1, 8-11 8-1, 8-2 8-1 8-3, 8-5, 8-6 8-7, 8-8 C2. Define cash and cash

Chapter 08 - Cash and Internal Controls Chapter 8 Cash and Internal Controls QUESTIONS 1. The seven broad principles are: Establish responsibilities; Maintain adequate records; Insure assets and bond key employees; Separate recordkeeping from custody of assets;Divide responsibilities for related transactions; Apply technology controls; Performregular and independent reviews. Insure assets and bond key employees; Separate recordkeeping

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 from Book Balance Debit memos Deduct from Book Balance Credit memos Add to Book Balance NSF checks Deduct from Book Balance Interest

Exercise 8-6 (20 minutes) 1. Jan. 1 Petty Cash............................................................. 200 Cash................................................................. 200 Jan. 1 Petty Cash............................................................. 200 Cash................................................................. 200 Jan. 1 Petty Cash............................................................. 200 Cash................................................................. 200 To establish a petty cash fund. 2. Jan. 8 Postage Expense.................................................. 74 Merchandise Inventory*........................................ 29Delivery Expense.................................................. 16Miscellaneous Expenses...................................... 43 Cash................................................................. 162 Merchandise Inventory*........................................ 29Delivery Expense.................................................. 16Miscellaneous Expenses...................................... 43 Cash.................................................................

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 Deposit of July 31........... 11,514 Proceeds of note less Deposit of July 31........... 11,514 Proceeds of note less Deposit of July 31........... 11,514 Proceeds of note less 38,747 collection charge........................................................................... 7,955

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 Delivery Expense.................................................... 16Miscellaneous Expenses....................................... 43 Cash................................................................... 162 To reimburse the petty cash fund.*Transportation-in costs are included in Merchandise Inventory under a perpetual system. Delivery

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 bank has reduced the depositor's account balance. Conversely, a credit memo is a notification that

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: (i) The final balance that results from adjusting the bank statementbalance will not be affected by the error; and(ii) The final balance that

Communicating in Practice BTN 8-4B Memorandum To: Owner From: Consultant Date: __________ Subject: Advice on monitoring purchase discounts [Instructors Note: The response should acknowledge the owners concern and recommend the net method of recording purchases. It should explain how this method results in the recording of Discounts Lost, which will flow through to the income statement, thus providing

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 checks in the numbered sequence may have cleared the bank in a previous period and were

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, 9-13 9-1, 9-2 9-1, 9-4 9-5, 9-7, 9-8, 9-9 C2. Describe a note receivable, the computation of its maturity

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, 9-13 9-1, 9-2 9-1, 9-4 9-5, 9-7, 9-8, 9-9 C2. Describe a note receivable, the computation of its maturity date and

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 debts and often are paid cash from the credit card company more quickly than if

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 (3) plus interest at the annual rate of 9 percent. (4) Scott Cooke (5) for Tobay Surfer Inc. Alternate Demonstration

Exercise 9-6 (Concluded) b. Dec. 31 Bad Debts Expense............................................ 8,220 Allowance for Doubtful Accounts................ 8,220 To record estimated bad debts.* *Unadjusted balance....................................$ 3,600 credit Estimated balance....................................... 11,820 creditRequired adjustment...................................$ 8,220 credit *Unadjusted balance....................................$ 3,600 credit Estimated balance....................................... 11,820 creditRequired adjustment...................................$ 8,220 credit *Unadjusted balance....................................$ 3,600 credit Estimated balance....................................... 11,820 credit Required adjustment...................................$ 8,220

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 1 to 30: 254,000 x .0200 = 5,08031 to 60: 86,000 x .0650 = 5,59061 to 90: 38,000 x .3275 = 12,445Over 90: 12,000 x .6800 = 8,160$41,650 credit

Chapter 09 - Accounting for Receivables Exercise 9-8 (20 minutes) Feb. 1 Allowance for Doubtful Accounts.............................. 6,800 Accounts ReceivableOakley Co....................... 900 Accounts ReceivableBrookes Co..................... 5,900 To write off specific accounts. June 5 Accounts ReceivableOakley................................... 900 Allowance for Doubtful Accounts........................ 900 To reinstate an account.June 5 Cash.............................................................................. 900 Accounts ReceivableOakley............................. 900 To record cash

Problem 9-5B (Concluded) June 15 Notes ReceivableR. Solon............................... 2,000 Accounts ReceivableR. Solon.................... 2,000 To record note received on account. Accounts ReceivableR. Solon.................... 2,000 To record note received on account. Accounts ReceivableR. Solon.................... 2,000 To record note received on account. June 21 Notes ReceivableJ. Felton............................... 9,500 Accounts ReceivableJ. Felton................... 9,500 To record

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. f. Allowance for Doubtful Accounts.......................... 27,800 Accounts Receivable......................................... 27,800 To record write-off of accounts.g. Cash.......................................................................... 1,204,600 Accounts Receivable......................................... 1,204,600 To record

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 Bad Debts Expense............................................... 440 Allowance for Doubtful Accounts.................. 440 To record estimated bad debts. 1. b. Bad

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 units were 100% complete with respect to materials and 55%

1) Part of the budgeting process is summarizing the financial statement effects on the budgeted income statement and the budgeted balance sheet. Answer: TRUE Answer: TRUE Answer: TRUE 2) Personnel who will have performance evaluated according to the budget standards should not be consulted and involved in preparing the budget. Answer: FALSE Answer: FALSE Answer: FALSE 3) Product

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 loan. b. Purchased inventory on credit. c. Paid cash to a creditor. d. Sold

1) Dividend yield shows the annual amount of cash dividends distributed to common shares relative to the stock's market price. Answer: TRUE Answer: TRUE Answer: TRUE 2) A work sheet contains all of the balances for each account and therefore may be used as a substitute for the set of financial statements. Answer: FALSE Answer: FALSE Answer:

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 the employer's payroll taxes resulting from the May payroll. The company had

1) Callable preferred stock gives a corporation the option of exchanging preferred shares into common shares at a specified rate. Answer: FALSE Answer: FALSE Answer: FALSE 2) When no-par stock is not assigned a stated value, the total amount received is recorded in the Common Stock account. Answer: TRUE Answer: TRUE Answer: TRUE 3) An accelerated depreciation method

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

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 in three annual end-of-year payments of $81,487 each, with the

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

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. Answer: TRUE Answer: TRUE Answer: TRUE 2) When using the equity method for investments in equity securities, the investor records the receipt of cash dividends as revenue. Answer: FALSE Answer:

1) Incidental costs for acquiring merchandise inventory, such as import duties, freight, storage, and insurance, should not be added to the cost of inventory. Answer: FALSE Answer: FALSE Answer: FALSE 2) In a make or buy decision, management should focus on costs that are the same under the two alternatives. Answer: FALSE Answer: FALSE Answer: FALSE 3) On

1) Recording of a stock dividend results in a liability being recorded. Answer: FALSE Answer: FALSE Answer: FALSE 2) Budget preparation is best determined in a top-down managerial approach. Answer: FALSE Answer: FALSE Answer: FALSE 3) A ratio expresses a mathematical relation between two quantities and can be expressed as a percent, rate, or proportion. Answer: TRUE Answer: TRUE Answer: TRUE 4)

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: Answer: Answer: 2) Goods that are in transit and were shipped FOB shipping

1) Most managers stress the importance of understanding and predicting cash flows for business decisions. Answer: TRUE Answer: TRUE Answer: TRUE 2) When computing payback period, the year in which a capital investment is made is year 1. Answer: FALSE Answer: FALSE Answer: FALSE 3) Stocks with a price-earnings ratio less than 20 to 25 are likely to

1) Based on the following trial balance for Barrys Automotive Shop, prepare an income statement, statement of owners equity, and a balance sheet. Barry made no additional investments in the company during the year. Answer: Answer: Answer: 2) On January 1, a company issued 10%, 10-year bonds with a par value

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, what is the value of inventory after the October 4 sale? A.$3,485. B.$3,445. C.$3,500. D.$3,472. E.$3,461. Answer:

1) A manufacturer's cost of goods manufactured is the sum of direct materials, direct labor, and factory overhead costs incurred in producing products. Answer: TRUE Answer: TRUE Answer: TRUE 2) Overapplied overhead is the amount by which overhead applied to jobs using the predetermined overhead rate exceeds the overhead incurred during a period. Answer: TRUE Answer:

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. Answer: E Overhead Costs = Conversion Costs - (Prime Costs - Direct Materials Costs) Overhead Costs = $5,500,000 - ($4,500,000 - $2,000,000) = $3,000,000 Answer: E Overhead Costs = Conversion

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

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. Answer: TRUE Answer: TRUE Answer: TRUE 2) The full disclosure principle requires that noncash investing and financing activities be disclosed in the financial statements. Answer: TRUE Answer: TRUE Answer:

1) Factory overhead is often collected and summarized in a subsidiary factory overhead ledger. Answer: TRUE Answer: TRUE Answer: TRUE 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 the deficiency, then that partner is entitled to

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 its products. Division O currently purchases a similar part made by

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. Answer: FALSE Answer: FALSE Answer: FALSE 2) Incremental costs should be considered in a make or buy decision. Answer: TRUE Answer: TRUE Answer: TRUE 3) Payments on an

1) The task of preparing a budget should be the sole task of the most important department in an organization. Answer: FALSE Answer: FALSE Answer: FALSE 2) Separation of duties involves dividing responsibility for a transaction or a series of related transactions between two or more individuals or departments. Answer: TRUE Answer: TRUE Answer: TRUE 3) Cost concepts

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 enter each department. D.An equal amount of cost for each department. E.Proportion of sales of

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. Answer: 20% or more Answer: 20% or more Answer: 20% or more 2) The Skyview Company uses a sales journal, purchases journal, cash

1) A flexible budget expresses variable costs on a per unit basis and fixed costs on a total basis. Answer: TRUE Answer: TRUE Answer: TRUE 2) If the purchase price of retired stock exceeds the net amount removed from paid-in capital, the excess is debited to Retained Earnings. Answer: TRUE Answer: TRUE Answer: TRUE 3) Minimum legal capital

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

1) Sales Discounts is added to the Sales account when computing a company's net sales. Answer: FALSE Answer: FALSE Answer: FALSE 2) The file of job cost sheets for completed but undelivered jobs equals the balance in the Work in Process Inventory account. Answer: FALSE Answer: FALSE Answer: FALSE 3) Management by exception means that managers focus on

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. Answer: FALSE $10,000 + ($10,000 * 7%) + [($10,000 + ($10,000 * 7%)) * 7%] = $11,449 or $10,000 * 1.07 * 1.07 = $11,449 Answer: FALSE $10,000

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. Answer: TRUE Answer: TRUE Answer: TRUE 2) Since the process cost summary describes the activities of a production department for a

1) The business entity principle means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold. Answer: FALSE Answer: FALSE Answer: FALSE 2) Using the retail inventory method, if the cost to retail ratio is 70% and ending inventory at retail is $145,000, then estimated 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. Answer: TRUE Answer: TRUE Answer: TRUE 2) Activity-based costing can be especially effective in situations where many different types of products are manufactured in the same department or

1) Stock is attractive to investors because stockholders are not liable for the corporation's actions and debts and because stock is easily transferred. Answer: TRUE Answer: TRUE Answer: TRUE 2) Cash registers, check protectors, time clocks and personal identification scanners are examples of technologies that can improve internal control. Answer: TRUE Answer: TRUE Answer: TRUE 3) The main

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. Answer: TRUE Answer: TRUE Answer: TRUE 2) Assume that the M & L partnership agreement gave March 60% and Ludwig

1) Companies promoting continuous improvement strive to achieve practical standards rather than ideal standards. Answer: FALSE Answer: FALSE Answer: FALSE 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 Answer: FALSE Answer: FALSE 3) The sequence of the budgets within the

1) Departmental contribution to overhead is the same as gross profit generated by that department. Answer: FALSE Answer: FALSE Answer: FALSE 2) Stated value stock is no-par stock that is assigned a value per share by the corporation's board of directors. Answer: TRUE Answer: TRUE Answer: TRUE 3) Vertical analysis is used to reveal patterns in data covering

1) What are the rights generally granted to common stockholders? Answer: Common stockholders generally have the right to vote at stockholders' meetings; sell or otherwise dispose of their stock; receive the same dividend, if any on each common share of the corporation; purchase their proportional share of any common stock later

1) Payroll is an example of a contingent liability for the employer. Answer: FALSE Answer: FALSE Answer: FALSE 2) Working capital is computed as current liabilities minus current assets. Answer: FALSE Answer: FALSE Answer: FALSE 3) While companies strive to achieve ideal standards, reality implies that some loss of materials usually occurs with any process. Answer: TRUE Answer: TRUE Answer: TRUE 4)

1) A proxy is a document that gives a designated agent the right to vote a shareholder's stock. Answer: TRUE Answer: TRUE Answer: TRUE 2) A noncash investing transaction should be disclosed in either a footnote or at the bottom of the statement of cash flows. Answer: TRUE Answer: TRUE Answer: TRUE 3) The series of activities that

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. Answer: E Answer: E Answer: E 2) Basic bank services do not include: A.Bank accounts. B.Bank deposits. C.Checking. D.Electronic funds transfer. E.Petty cash management. Answer: E Answer: E Answer: E 3) Alliance Company's budgets production of 24,000 units in January and

1) What does the days' sales in raw materials inventory ratio reveal? Answer: Days' Sales in raw materials inventory reveals how much raw materials inventory is available in terms of the number of days' sales. Answer: Days' Sales in raw materials inventory reveals how much raw materials inventory is available in terms

1) Changes in accounting estimates are accounted for in current and future periods. Answer: TRUE Answer: TRUE Answer: TRUE 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 Answer: FALSE Answer: FALSE 3) Cumulative preferred stock has a right to

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

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. Answer: FALSE Answer: FALSE Answer: FALSE 2) Even if the end of an accounting period occurs between the signing of a note payable and its maturity date, the matching principle

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

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 of net cash used. D.$259,000 of net cash used. E.$280,000 of net cash provided. Answer: A Answer: A Answer:

1) Process costing is applied to operations with repetitive production and customized products. Answer: FALSE Answer: FALSE Answer: FALSE 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 the month of the sale and 70% the following

1) Explain the impact, if any, on depreciation when estimates that determine depreciation change. Answer: Depreciation is revised when changes in estimates such as salvage value and useful life occur. If the asset's useful life and/or salvage value changes, the remaining depreciable cost is allocated over the remaining revised useful life

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

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. Answer: B Accounts Receivable Turnover = Net Sales/Average Accounts Receivable Accounts Receivable Turnover = $8,600/$890 = 9.7 Answer: B Accounts Receivable Turnover = Net Sales/Average Accounts Receivable

1) In a process costing system, factory labor costs incurred in a reporting period are presented on the income statement as Factory Labor Expense. Answer: FALSE Answer: FALSE Answer: FALSE 2) Graphical analysis of the balance sheet can be useful in assessing sources of financing. Answer: TRUE Answer: TRUE Answer: TRUE 3) Term bonds are scheduled for maturity

1) The time period assumption assumes that an organization's activities can be divided into specific time periods such as months, quarters, or years. Answer: TRUE Answer: TRUE Answer: TRUE 2) The inventory turnover ratio is computed by dividing cost of goods sold by average merchandise inventory. Answer: TRUE Answer: TRUE Answer: TRUE 3) Callable bonds can be exchanged

1) Companies with many employees rarely use a special payroll bank account from which to pay employees. Answer: FALSE Answer: FALSE Answer: FALSE 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. Answer: FALSE Answer: FALSE Answer: FALSE 3) Long-term investments include investments in

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 profit per unit on its sale? Answer: Answer: Answer: 2) Define

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. During its first year, the machine produces 64,500 units of product.

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 this write-off have on the company's net income and total

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. Answer: TRUE Answer: TRUE Answer: TRUE 2) The internal rate of return method of evaluating capital investments cannot be used with uneven cash flows. Answer: FALSE Answer:

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. Answer: TRUE Answer: TRUE Answer: TRUE 2) A flexible budget expresses all costs on a per

1) Federal laws prohibit the selling of accounts receivables to factors. Answer: FALSE Answer: FALSE Answer: FALSE 2) A profit center generates revenue, incurs costs, and has the authority to make significant investing decisions. Answer: FALSE Answer: FALSE Answer: FALSE 3) Hybrid systems contain features of both process and job order operations. Answer: TRUE Answer: TRUE Answer: TRUE 4) Bond interest paid

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. (b) Instead, assume actual overhead incurred was $24,000. Describe (without computations) the

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. Answer: D Answer: D Answer: D 2) Ultimate Sportswear has $100,000 of 8% noncumulative, nonparticipating, preferred stock outstanding. Ultimate Sportswear also has $500,000 of common stock outstanding. In the company's first year of operation,

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? A.Debit Wages Expense $7,350; credit Cash $7,350. B.Debit Wages Expense $7,350; credit

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 Investments for $6,500. Answer: TRUE Answer: TRUE Answer: TRUE 2) In a process costing

1) An asset's cost includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use. Answer: TRUE Answer: TRUE Answer: TRUE 2) All plant assets, including land, are depreciated. Answer: FALSE Answer: FALSE Answer: FALSE 3) An employee earnings report is a cumulative record of each employee's hours worked, gross

1) Explain the way in which costs flow through the merchandise inventory account to a merchandiser's income statement. Answer: Beginning inventory plus the net cost of purchases is the merchandise available for sale. As inventory is sold, its cost is recorded in cost of goods sold on the income statement. What

1) The equity method with consolidation is used to account for long-term investments in equity securities with controlling influence. Answer: TRUE Answer: TRUE Answer: TRUE 2) Owner's withdrawals are not reported on a business's income statement. Answer: TRUE Answer: TRUE Answer: TRUE 3) If a company is comparing its financial condition or performance to a base amount, it is

1) Debt guarantees are usually disclosed as a contingent liability. Answer: TRUE Answer: TRUE Answer: TRUE 2) An owner's withdrawal account normally has a debit balance. Answer: TRUE Answer: TRUE Answer: TRUE 3) One application of internal control when taking a physical count of inventory is the use of pre-numbered inventory tickets. Answer: TRUE Answer: TRUE Answer: TRUE 4) A cost center

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. Answer: TRUE Answer: TRUE Answer: TRUE 2) When using the equity method, receipt of cash dividends increases the carrying (book) value of an investment

1) Briefly describe both the payback period method and the net present value method of comparing investment alternatives. Answer: The payback period method evaluates alternative investment opportunities based on the expected amount of time to recover the initial investment. This method does not consider the time value of money and ignores cash

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. Answer: TRUE Answer: TRUE Answer: TRUE 2) Most companies do not take a physical count of inventory each year, but rather rely on inventory records to determine the

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). Answer: TRUE Answer: TRUE Answer: TRUE 2) In producing oat bran, the joint cost of milling the oats into bran, oatmeal, and animal

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. Answer: C -$100,000 + $300,000 - $32,000 = $168,000 Answer: C -$100,000 + $300,000 - $32,000 = $168,000 Answer: C -$100,000 + $300,000

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: Answer: TRUE Answer: TRUE Answer: TRUE 2) If Grayson Manufacturing incurred $17,400 for direct labor in the assembly department and $10,300 for direct labor in

1) Promissory notes cannot be transferred from party to party because they are nonnegotiable. Answer: FALSE Answer: FALSE Answer: FALSE 2) Total asset cost plus depreciation expense equals book value. Answer: FALSE Answer: FALSE Answer: FALSE 3) A note payable can be used to extend the payment due on an account payable. Answer: TRUE Answer: TRUE Answer: TRUE 4) If the predetermined

1) For legal reasons, it is not advisable to accept a note receivable in exchange for an overdue account receivable. Answer: FALSE Answer: FALSE Answer: FALSE 2) As a general rule, revenues should not be recognized in the accounting records when earned, but rather when cash is received. Answer: FALSE Answer: FALSE Answer: FALSE 3) Conversion cost per

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 20% higher than its beginning inventory of 2,000 units. The beginning

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. Answer: FALSE Answer: FALSE Answer: FALSE 2) If all columns of a completed work sheet balance, you can be sure that no errors

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 can be separated into gross margin ratio and price-earnings ratio. D.High returns on total

1) The monetary unit assumption means that all companies doing business in the United States must express transactions and events in U.S. dollars. Answer: FALSE Answer: FALSE Answer: FALSE 2) A system of performance measures, including nonfinancial measures, used to assess company and division manager performance is: A.Hurdle rate. B.Return on investment. C.Balanced scorecard. D.Residual income. E.Investment turnover. Answer: C Answer:

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 would add a $0.25 selling cost for export fees. If Lattimer

1) Any cash dividends received from equity securities are recorded as Dividend Expense. Answer: FALSE Answer: FALSE Answer: FALSE 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 the early years has the higher net present

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

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, $9000. C.Debit Cash, $9,000; credit Interest Revenue, $9,000. D.Debit Unrealized Gain-Equity, $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. Answer: FALSE Answer: FALSE Answer: FALSE 2) Participating preferred stock has a feature that allows its holders to share with common shareholders in any dividends paid in excess of the

1) Market prospects are the ability to provide financial rewards sufficient to attract and retain financing. Answer: FALSE Answer: FALSE Answer: FALSE 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 $1.48 U.S. dollars. Answer: TRUE $2 * 0.7382 =

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. Answer: D Answer: D Answer: D 2) A college uses advisors who work with all students in all divisions of the college. The most useful allocation basis for the salaries of these employees would likely be: A.number of

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 Answer: A-3, B-10, C-5, D-9, E-2, F-4, G-6, H-8, I-7, J-1 Answer: A-3, B-10, C-5, D-9, E-2, F-4, G-6, H-8, I-7, J-1 Answer: A-3,

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. Answer: Payback period = 2 years + ($114,000/$170,000) = 2.67 yearsSkimmer: Payback period = $380,000/$130,000 per year =

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 be known until the maturity date. C.A company can have an obligation of

1) Dividing stockholders' equity applicable to common shares by the number of common shares outstanding yields the book value per common share. Answer: TRUE Answer: TRUE Answer: TRUE 2) Part of the decision to accept additional business should be based on a comparison of the incremental (differential) costs of the added production with the additional

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. Answer: B Days' Sales Uncollected Ratio = Ending Accounts Receivable/Net Sales * 365 Days' Sales Uncollected Ratio = $0.8 million/$4.2 million * 365 = 69.5

1) The FIFO method of computing equivalent units focuses on production activity in the current period only. Answer: TRUE Answer: TRUE Answer: TRUE 2) Additions to land that increase the usefulness of the land such as parking lots, fences, and lighting are not depreciated. Answer: FALSE Answer: FALSE Answer: FALSE 3) Electronic funds transfers (EFTs) are decreasingly used by

1) A ____________________ contains features of both process and job order costing systems. Answer: hybrid costing system Answer: hybrid costing system Answer: hybrid costing system 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 on May

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. It is estimated that 2% of all units sold will

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. The first item is shown as an example. Increase = I Decrease

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. Answer: FALSE Answer: FALSE Answer: FALSE 2) Product costs are capitalized as inventory on the balance sheet and period costs are expenses on the income statement. Answer: TRUE Answer: TRUE Answer: TRUE 3) Goods

1) The legal contract between the issuing corporation and the bondholders is called the bond indenture. Answer: TRUE Answer: TRUE Answer: TRUE 2) The cost of fees for insuring the title and any accrued property taxes are included in the cost of land. Answer: TRUE Answer: TRUE Answer: TRUE 3) A sunk cost will change with a future

1) One of the major benefits of formal budgeting is the positive effect it can have on employee attitudes if applied correctly. Answer: TRUE Answer: TRUE Answer: TRUE 2) A Company had net sales of $23,000 million, and its average account receivables were $5,700 million. Its accounts receivable turnover is 0.24. Answer: FALSE Accounts Receivable

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 depreciation method. Answer: A Answer: A Answer: A 2) T. Andrews contributed $14,000 in to the T & B

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

1) The use of debt is sometimes described as financial leverage because debt can have the effect of increasing the return on equity. Answer: TRUE Answer: TRUE Answer: TRUE 2) The direct materials section of a job cost sheet shows the materials costs assigned to a job, but the direct labor section only shows

1) Another name for a static budget is a variable budget. Answer: FALSE Answer: FALSE Answer: FALSE 2) A corporation is a legal entity separate from its owners. Answer: TRUE Answer: TRUE Answer: TRUE 3) It is acceptable to record prepayment of expenses as debits to expense accounts if an adjusting entry is made at the end of

1) Employers must pay FICA taxes twice the amount of the FICA taxes withheld from their employees. Answer: FALSE Answer: FALSE Answer: FALSE 2) In a process costing system, factory overhead costs can be allocated to production departments by using a predetermined overhead allocation rate. Answer: TRUE Answer: TRUE Answer: TRUE 3) Long-term investments are usually held as

1) Joint costs can be allocated either using a physical basis or a value basis. Answer: TRUE Answer: TRUE Answer: TRUE 2) The payment of cash dividends to shareholders is classified as a financing activity. Answer: TRUE Answer: TRUE Answer: TRUE 3) Both financial and managerial accounting affect user's decisions and actions. Answer: TRUE Answer: TRUE Answer: TRUE 4) Stockholders' equity consists

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. Answer: E Answer: E Answer: E 2) The formula to compute annual straight-line depreciation is: A.Depreciable cost divided by useful life in units. B.(Cost plus salvage value) divided by the useful life in years. C.(Cost minus salvage value)

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

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 its products. Division B currently purchases a similar part made by an

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 direct materials and 20,000 equivalent units of direct labor to

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. Answer: TRUE Answer: TRUE Answer: TRUE 2) The sales commission incurred based on units of product sold during the

1) When a partner leaves a partnership, the present partnership ends, but the business can still continue to operate. Answer: TRUE Answer: TRUE Answer: TRUE 2) A pension plan is a contractual agreement between an employer and its employees to provide benefits to employees after they retire. Answer: TRUE Answer: TRUE Answer: TRUE 3) The price at which

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. Answer: C Beginning Raw Materials + Purchases - Ending Raw Materials = Raw Materials Used $21,500 + $74,000 - $23,000 = $72,500 Answer: C Beginning Raw Materials + Purchases

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 with a cost of $6, and replacement cost of $6.50 Part C: 160

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% Answer: A Smit's Ending Equity = Beginning Equity = Share of Income - Distributions Smit's Ending Equity =

1) Enterprise resource planning software packages include the programs that manage a company's vital operations such as accounting, order taking, and manufacturing. Answer: TRUE Answer: TRUE Answer: TRUE 2) If an owner's capital account had a $10,000 credit balance at the beginning of the period, and during the period, the owner invests an additional

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 be received uniformly throughout each year. In calculating the accounting

Answer: Answer: Answer: 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 end of Year 2 was overstated by $6,000.

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 form) showed the following: DR CR DR CR m) n) o) A

1) According to the cost principle, it is necessary for managers to report an approximation of an asset's market value upon purchase. Answer: FALSE Answer: FALSE Answer: FALSE 2) A budget performance report shows budgeted amounts, actual amounts, and differences between budgeted and actual amounts. Answer: TRUE Answer: TRUE Answer: TRUE 3) Cash flow amounts and their timing

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 at the end of each month to complete 20% of

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. Answer: FALSE Answer: FALSE Answer: FALSE 2) When the contract rate is above the market rate, a bond sells at a discount. Answer: FALSE Answer: FALSE Answer:

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

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 assets and noncurrent liabilities. E.Equity accounts only. Answer: C Answer: C Answer: C 2) On April 12, Hong Company

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. Answer: B Answer: B Answer: B 2) Tate Company's 2015 income statement and changes in selected balance sheet accounts are given below. Calculate the company's net cash provided or used by

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

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 responsibility for related transactions F. Apply technological controls G. Perform regular and independent reviews _____ 1> Cashiers have

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 each month: Finished goods: 30% of next month's sales Raw materials: 25% of next month's

1) Both the direct and indirect methods yield the identical net cash flow amount provided or used by operating activities. Answer: TRUE Answer: TRUE Answer: TRUE 2) Planning involves defining an organization's ideas, goals, and actions. Answer: TRUE Answer: TRUE Answer: TRUE 3) Direct expenses require allocation across departments because they cannot be readily traced to one department. Answer: FALSE Answer:

1) The purchases journal is used to record purchases of merchandise on credit. Answer: TRUE Answer: TRUE Answer: TRUE 2) Both financial and managerial accounting rely on accepted principles that are enforced through an extensive set of rules and guidelines. Answer: FALSE Answer: FALSE Answer: FALSE 3) Product costs can be classified as one of three types: direct

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. Answer: TRUE Answer: TRUE Answer: TRUE 2) Dividend yield is defined as the annual cash dividends per share divided by the market price per share of a company's stock. Answer:

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. Answer: TRUE $2,000 * 4.3553 = $8,711 Answer: TRUE $2,000 * 4.3553 = $8,711 Answer: TRUE $2,000 * 4.3553 = $8,711 2) According

1) The Form W-2 must be given to employees before January 31 following the year covered by the Form W-2. Answer: TRUE Answer: TRUE Answer: TRUE 2) Within the same flexible budget performance report, it is impossible to have both favorable and unfavorable variances. Answer: FALSE Answer: FALSE Answer: FALSE 3) The management concept of customer orientation motivates

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 stock. D.Represents capital gain on sale of stock. E.Is prohibited in most states. Answer: A Answer: A Answer:

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. Answer: TRUE Answer: TRUE Answer: TRUE 2) FUTA requires employers to pay a federal unemployment tax on all

1) Apply the retail method to the following company information to calculate the cost of the ending inventory for the current period. Answer: Answer: Answer: 2) A company ages its accounts receivables to determine its end of period adjustment for bad debts. At the end of the current year, management estimated

1) Activity cost pools are not a necessary part of the allocation of overhead costs using activity-based costing. Answer: FALSE Answer: FALSE Answer: FALSE 2) If a U.S. company's credit sale to an international customer allows payment to be made in a foreign currency, the sale transaction is recorded using the exchange rate on

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: Answer: Answer: *(20,000 - 1,000 + 2,000) shares * $0.50/share = $10,500 *(20,000 -

1) Manufacturers usually have three inventories: raw materials, work in process, and finished goods. Answer: TRUE Answer: TRUE Answer: TRUE 2) Notes receivable are classified as current liabilities regardless of the time to maturity. Answer: FALSE Answer: FALSE Answer: FALSE 3) Debt securities are recorded at cost when purchased. Answer: TRUE Answer: TRUE Answer: TRUE 4) A partnership may allocate salary allowances

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. Answer: TRUE Answer: TRUE Answer: TRUE 2) A purchase of land in exchange for shares of stock is disclosed at the bottom of the statement of cash flows or in

1) Four factors come together in production activity: beginning work in process inventory, raw materials, direct labor, and factory overhead. Answer: TRUE Answer: TRUE Answer: TRUE 2) Cost accounting information is helpful to management for pricing decisions but has no effect on controlling costs. Answer: FALSE Answer: FALSE Answer: FALSE 3) The raw materials inventory turnover is raw

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