Fundamental Accounting Principles 21st Edition

2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. B-1 2013 by McGraw-Hill Education. This is

2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. B-13 2013 by McGraw-Hill Education. This is

2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. C-1 2013 by McGraw-Hill Education. This is

2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. C-18 2013 by McGraw-Hill Education. This is

1-1 Answer: True Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 01-C1 Topic: What is Accounting? 1-1 Answer: True Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 01-C1 Topic: What is Accounting? 1-1

1-21 Answer: D Blooms: Understand AACSB: Analytic AICPA BB: Industry AICPA FN: Decision Making Difficulty: 2 Medium Learning Objective: 01-C1 Topic: Purpose of Accounting 1-21 Answer: D Blooms: Understand AACSB: Analytic AICPA BB: Industry AICPA FN: Decision Making Difficulty: 2 Medium Learning Objective: 01-C1 Topic: Purpose of Accounting 1-21

1-41 Answer: C Blooms: Apply AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 3 Hard Learning Objective: 01-A1 Topic: Accounting Equation Feedback: Assets = Liabilities + Owners Equity $700,000 = $200,000 + Owners Equity (or Claims of the Owners); Owners Equity = $500,000 1-41 Answer: C Blooms: Apply

1-61 172. Della's Donuts had cash inflows from operating activities of $27,000; cash outflows from investing activities of $22,000, and cash outflows from financing activities of $12,000. Calculate the net increase or decrease in cash. A. $61,000 increase. B. $37,000 increase. C. $7,000 decrease. D. $7,000 increase. E. $34,000

1-81 Answer: a. +A +E b. +A +L c. +A +E d. +A - A e. +A - A f. -A - E g. -A - L Blooms: Apply AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 3 Hard Learning Objective: 01-A1 Topic: Accounting Equation 1-81 Answer: a.

1-93 Blooms: Create AACSB: Analytic AICPA BB: Industry AICPA FN: Reporting Difficulty: 3 Hard Learning Objective: 01-P2 Topic: Financial Statements Blooms: Create AACSB: Analytic AICPA BB: Industry AICPA FN: Reporting Difficulty: 3 Hard Learning Objective: 01-P2 Topic: Financial Statements Blooms:

10-1 Answer: False Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 10-C1 Topic: Costs of Plant Assets 10-1 Answer: False Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 10-C1 Topic: Costs of Plant Assets

10-21 Answer: D Blooms: Apply AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 3 Hard Learning Objective: 10-C2 Topic: Change in Estimates 10-21 Answer: D Blooms: Apply AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 3 Hard Learning Objective: 10-C2 Topic: Change in Estimates 10-21 Answer: D

10-41 Answer: E Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 10-P3 Topic: Natural Resources 10-41 Answer: E Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 10-P3 Topic: Natural Resources 10-41 Answer: E Blooms:

10-65 Answer: Plant assets should be recorded at cost when acquired. Cost includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use. The cost of a lump-sum purchase is allocated among its individual assets based on their relative market (or estimated)

10-85 storm. Aug 25 Purchased used office equipment for $14,700 cash. Sales tax was $825, freight costs $250, and reconditioning costs $900, all of which were paid in cash. The estimated useful life of the equipment is 3 years and salvage value is $500. Oct 5 Purchased store equipment

10-100 196. Record the following events and transactions for Axle Company for the current year. 1. On January 2, Axle purchased a patent for $35,000 with a useful life of 10 years. Prepare the journal entry to amortize the patent at the end of the first year. 2. On

11-1 Answer: False Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 11-C1 Topic: Liabilities a 11-1 Answer: False Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 11-C1 Topic: Liabilities a 11-1 Answer: False Blooms:

11-21 Answer: C 11-21 Answer: C 11-21 Answer: C 63. The times interest earned ratio reflects: A. A company's ability to pay its operating expenses on time. B. A company's ability to pay interest even if sales decline. C. A company's profitability. D. The relation between income and

11-41 Answer: E Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 11-P5 Topic: Payroll Reports, Records and Procedures 11-41 Answer: E Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 11-P5 Topic: Payroll Reports, Records

11-61 Answer: 14.3 Blooms: Apply AACSB: Analytic AICPA BB: Resource Management AICPA FN: Risk Analysis Difficulty: 3 Hard Learning Objective: 11-A1 Topic: Times Interest Earned Ratio Feedback: Times Interest Earned Ratio = Income before Interest Expense and Income Taxes/Interest Expense Times Interest Earned Ratio = $5,698/$399 = 14.3 11-61 Answer:

11-75 Answer: May 31 Administrative Salaries Expense ....... ........ 2,000 Sales Salaries Expense ............................... 3,500 Shop Wages Expense ................................. 4,000 FICA-Social Security Taxes Payable ... 589 FICA-Medicare Taxes Payable ............ 138 Employee Federal Income Taxes Payable 1,300 Employee Medical Insurance Payable 415 Employee Union Dues Payable ............ 205 Salaries Payable

12-1 Answer: True Blooms: Remember AACSB: Communication AICPA BB: Legal AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 12-C1 Topic: Characteristics of Partnerships 12-1 Answer: True Blooms: Remember AACSB: Communication AICPA BB: Legal AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 12-C1 Topic: Characteristics of Partnerships 12-1 Answer:

12-21 Answer: B 12-21 Answer: B 12-21 Answer: B Blooms: Understand AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 2 Medium Learning Objective: 12-P2 Topic: Allocation of Income and Loss Blooms: Understand AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 2 Medium Learning Objective: 12-P2 Topic: Allocation

12-41 Answer: Four steps are involved in the liquidation process: (1) Record the sale of noncash assets for cash and any gain or loss from their liquidation; (2) Allocate any gains or losses from liquidation to the partners' capital accounts using their income-and-loss sharing ratio; (3) Liabilities of the partnership

12-54 Blooms: Apply AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 3 Hard Learning Objective: 12-P4 Topic: Liquidation of a Partnership 12-54 Blooms: Apply AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 3 Hard Learning Objective: 12-P4 Topic: Liquidation of a Partnership 12-54 Blooms: Apply AACSB: Analytic AICPA

13-1 Chapter 13 ACCOUNTING FOR CORPORATIONS True /False Questions 1. A corporation is a legal entity separate from its owners. Answer: True Blooms: Remember AACSB: Communication AICPA BB: Legal AICPA FN: Reporting Difficulty: 1 Easy Learning Objective: 13-C1 Topic: Corporations Answer: True Blooms: Remember

13-21 Answer: B Blooms: Remember AACSB: Communication AICPA BB: Legal AICPA FN: Measurement Difficulty: 1 Easy Learning Objective: 13-C1 Topic: Corporations 13-21 Answer: B Blooms: Remember AACSB: Communication AICPA BB: Legal AICPA FN: Measurement Difficulty: 1 Easy Learning Objective: 13-C1 Topic: Corporations 13-21 Answer: B Blooms: Remember AACSB: Communication

13-41 Answer: A Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 13-P2 Topic: Recording Stock Dividends 13-41 Answer: A Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 13-P2 Topic: Recording Stock Dividends 13-41 Answer:

13-61 Answer: Dawls Corporation Statement of Retained Earnings For the Year Ended December 31 Retained earnings, December 31 (prior year) $3,000,000 Plus net income .. 800,000 Less: Stock dividend (500,000 shares * 5% * $8) $(200,000) Cash dividend (525.000 shares * $0.30) .. (157,500) (357,500) Retained earnings, December 31 (current

13-77 Answer: (a) Mar. 25 Retained Earnings (20,000 shares * $2/share) 40,000 Common Dividend Payable. 40,000 Apr. 20 Common Dividend Payable 40,000 Cash 40,000 Dec. 31 Income Summary 52,000 Retained Earnings 52,000 (b) Retained earnings, January 1 $ 75,000 Plus net income 52,000 $127,000 Less dividends declared (40,000) ) Retained

14-1 Answer: False Blooms: Understand AACSB: Communication AICPA BB: Legal AICPA FN: Decision Making Difficulty: 2 Medium Learning Objective: 14-A2 Topic: Assessing Debt Features and Their Implications 14-1 Answer: False Blooms: Understand AACSB: Communication AICPA BB: Legal AICPA FN: Decision Making Difficulty: 2 Medium Learning Objective: 14-A2 Topic: Assessing

14-21 Answer: B 14-21 Answer: B 14-21 Answer: B 67. The contract between the bond issuer and the bondholders, which identifies the rights and obligations of the parties, is called a(n): A. Debenture. B. Bond indenture. C. Mortgage. D. Installment note. E. Mortgage contract. Answer: B Blooms:

14-41 113. A company issued 5-year, 7% bonds with a par value of $100,000. The market rate when the bonds were issued was 6.5%. The company received $101,137 cash for the bonds. Using the effective interest method, the amount of recorded interest expense for the first semiannual interest

14-62 Answer: Periods Payments Present value of 1 at 10% Present value of payments 1 $25,000 0.9091 $22,727.50 2 15,000 0.8264 12,396.00 3 5,000 0.7513 3,756.50 Total cash received $38,880.00 14-62 Answer: Periods Payments Present value of 1 at 10% Present value of payments 1 $25,000 0.9091 $22,727.50 2

14-75 Answer: 7/1 Bond Interest Expense ...................................... 32,714.40 Premium on Bonds ............................................ 3,285.60 Cash ......................................................... 36,000.00 Cash payment: $720,000 * 10% * year = $36,000.00 Interest expense: $817,860 * 8% * year = $32,714.40 Premium amortized: $36,000.00 - $32,714.40 = $3,285.60 Blooms: Apply AACSB: Analytic AICPA BB: Industry AICPA

2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 15-1 2013 by McGraw-Hill Education. This

2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 15-21 2013 by McGraw-Hill Education. This

2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 15-41 2013 by McGraw-Hill Education. This

2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 15-61 2013 by McGraw-Hill Education. This

Answer: Apr. 18 Short-Term Investments AFS 132,850 Cash [(5,000 * $26.50) + $350] 132,850 May 01 Long-Term Investments HTM 200,000 Cash 200,000 Jun. 10 Short-Term Investments AFS 193,325 Cash [(4,000 * $48.25) + $325] 193,325 Nov. 01 Cash (200,000 * .07 * 1/2) 7,000 Interest Revenue 7,000 Nov. 15

16-1 Answer: False Blooms: Remember AACSB: Communication AICPA BB: Resource Management AICPA FN: Measurement Difficulty: 1 Easy Learning Objective: 16-C1 Topic: Measurement of Cash Flows 16-1 Answer: False Blooms: Remember AACSB: Communication AICPA BB: Resource Management AICPA FN: Measurement Difficulty: 1 Easy Learning Objective: 16-C1 Topic: Measurement of Cash Flows

16-21 Answer: D 16-21 Answer: D 16-21 Answer: D 69. If a company borrows money from a bank, the interest paid on this loan should be reported on the statement of cash flows as a(n): A. Operating activity. B. Investing activity. C. Financing activity. D. Noncash investing and financing

16-41 110. The accountant for Robinson Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year $156,000 Cash dividends declared for the year $ 46,000 Proceeds from the sale

16-61 Answer: By separating cash flows into three categories, the statement of cash flows allows users to focus their analysis on specific areas of importance. The operating section of the statement reveals the net effect of cash inflows and cash outflows from the core activities of a business which directly

16-81 Answer: (a) Increase in inventory = $21,200 - $15,600 = $ 5,600 Cost of purchases = $165,600 + $5,600 = $171,200 Decrease in accounts payable = $32,400 - $27,400 = $ 5,000 Cash paid for purchases of merchandise = $171,200 + $5,000 = $176,200 (b) Decrease in accounts receivable

16-95 Answer: (1) Crockett Company Cash flows from operating activities: Net income $ 51,500 Adjustments to reconcile net income to net cash provided by operating activities: Increase in accounts receivable (32,000 ) Decrease in merchandise inventory 14,000 Decrease in prepaid expenses 9,200 Increase in accounts payable 13,500 Depreciation expense 45,000

17-1 Answer: True Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 17-C1 Topic: Financial Statement Analysis 17-1 Answer: True Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 17-C1 Topic: Financial Statement Analysis 17-1 Answer:

17-21 Answer: C Blooms: Understand AACSB: Communication AICPA BB: Industry AICPA FN: Measurement Difficulty: 2 Medium Learning Objective: 17-C2 Topic: Comparison Standards in Analysis 17-21 Answer: C Blooms: Understand AACSB: Communication AICPA BB: Industry AICPA FN: Measurement Difficulty: 2 Medium Learning Objective: 17-C2 Topic: Comparison Standards in Analysis 17-21 Answer:

17-41 A. 36.4% for Year 2 and 41.1% for Year 1. B. 55.0% for Year 2 and 56.0% for Year 1. C. 119.4% for Year 2 and 100.0% for Year 1. D. 117.2% for Year 2 and 100.0% for Year 1. E. 65.1% for Year 2 and 64.6% for

17-8 Answer: 2016 2015 2014 2013 2012 Sales 139.0% 130.0% 122.0% 112.0% 100% Cost of goods sold. 134.6% 125.9% 120.0% 110.4% 100% Gross profit. 147.2% 137.5% 125.6% 115.1% 100% 17-8 Answer: 2016 2015 2014 2013 2012 Sales 139.0% 130.0% 122.0% 112.0% 100% Cost of goods sold. 134.6% 125.9% 120.0% 110.4%

17-25 Answer: (a) Current assets = ($40,000 + $35,000 + $60,000) $135,000 Current liabilities 64,000 Working capital $71,000 (b) Acid-test ratio: ($40,000 + $35,000)/$64,000 = 1.17 (c) Current ratio: $135,000/$64,000 = 2.11 (d) Debt ratio: ($64,000 + $72,000)/$285,000 = .48 (e) Equity ratio: ($100,000 + $49,000)/$285,000 = .52 (f) Debt-to-equity

2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 18-1 2013 by McGraw-Hill Education. This is

2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 18-21 2013 by McGraw-Hill Education. This is

2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 18-41 2013 by McGraw-Hill Education. This is

18-60 Answer: The differences include: (1) Users and decision makers Financial accounting focuses on external decision makers and managerial accounting focuses on internal decision makers. (2) Purpose of information External users of financial accounting information must often decide whether to invest in, or lend to a company or whether to

18-76 Beginning raw materials inventory _______ ______ Ending raw materials inventory _______ ______ Raw material purchases _______ ______ Depreciation of factory building _______ ______ Cost of goods manufactured _______ ______ Answer: Cost of Goods Cost of Goods Manufactured Sold Beginning finished goods inventory 0 + Ending finished

19-1 Answer: False Blooms: Understand AACSB: Communication AICPA BB: Industry AICPA FN: Measurement Difficulty: 2 Medium Learning Objective: 19-C1 Topic: Features of Job Order Production 19-1 Answer: False Blooms: Understand AACSB: Communication AICPA BB: Industry AICPA FN: Measurement Difficulty: 2 Medium Learning Objective: 19-C1 Topic: Features of Job Order Production

19-21 64. A source document that production managers use to request materials for production and that is used to assign materials costs to specific jobs or to overhead is a: A. Job cost sheet. B. Production order. C. Materials requisition. D. Materials purchase order. E. Receiving report. Answer:

19-41 Answer: C Blooms: Apply AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 3 Hard Learning Objective: 19-P3 Topic: Flow of Overhead Costs in Job Order Cost Accounting Feedback: OH rate = $396,000/$220,000 = 180% Applied = $224,000 * 1.8 = $403,200; $413,200 - $403,200 = $10,000 underapplied 19-41

19-67 Answer: Direct labor in goods in process inventory . $12,000 Factory overhead in goods in process inventory ($12,000 * .125) 1,500 Total factory overhead and direct labor .. 13,500 Total cost in goods in process inventory . $36,000 Factory overhead and direct labor ... 13,500 Direct materials . $22,500

19-79 Answer: Dec. 31 Factory Overhead 9,000 Cost of Goods Sold . 9,000 19-79 Answer: Dec. 31 Factory Overhead 9,000 Cost of Goods Sold . 9,000 19-79 Answer: Dec. 31 Factory Overhead 9,000 Cost of Goods Sold . 9,000 Factory equipment rental 100,000 (a) Calculate

2-1 Answer: True Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 02-C1 Topic: Processing Transactions 2-1 Answer: True Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 02-C1 Topic: Processing Transactions 2-1

2-21 Answer: C Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 02-C4 Topic: Debits and Credits 2-21 Answer: C Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 02-C4 Topic: Debits and Credits

2-41 Answer: C Blooms: Apply AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 3 Hard Learning Objective: 02-P2 Topic: Trial Balance Feedback: Total Debits on Trial Balance = Cash + Accounts Receivable + Rent Expense + Insurance Expense + Supplies + Sam, Withdrawals Total Debits on Trial Balance

2-61 Answer: Type of Account Normal Balance 2-61 Answer: Type of Account Normal Balance 2-61 Answer: Type of Account Normal Balance 149. Indicate whether a debit or credit entry would be made to record the following changes in each account. a. To decrease Cash

2-81 Blooms: Apply AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 3 Hard Learning Objective: 02-P1 Learning Objective: 02-P2 Topic: Recording Transactions and Posting Entries Topic: Trial Balance Blooms: Apply AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 3 Hard Learning Objective: 02-P1 Learning Objective:

20-1 Chapter 20 PROCESS COST ACCOUNTING 1. The managers of process manufacturing systems focus on the series of processes needed to complete the production of products. Answer: True Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 20-C1

20-21 Answer: True Blooms: Understand AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 2 Medium Learning Objective: 20-P4 Topic: Transfers of Goods upon Completion and Selling 20-21 Answer: True Blooms: Understand AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 2 Medium Learning Objective: 20-P4 Topic: Transfers

20-41 Answer: B Blooms: Apply AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 3 Hard Learning Objective: 20-P2 Topic: Flow of Direct Labor Costs 20-41 Answer: B Blooms: Apply AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 3 Hard Learning Objective: 20-P2 Topic: Flow of Direct

20-61 Direct labor and overhead added 3,750 1.80 6,750 Total costs to process $ 20,600 Goods started and completed Direct materials added 40,000 $2.25 $ 90,000 Direct labor and overhead added 40,000 1.80 72,000 Total costs to process $162,000 Total costs transferred to finished goods $182,600 Cost

20-75 Answer: Direct Direct Factory Equivalent Units of Production Materials Labor Overhead Units completed and transferred out 50,000 50,000 50,000 Units of ending goods in process 9,600 6,000 6,000 Equivalent units of production 59,600 56,000 56,000 Materials EUP = 12,000 units * 80% Labor & Overhead EUP = 12,000

21-1 Answer: False Blooms: Understand AACSB: Communication AICPA BB: Resource Management AICPA FN: Measurement Difficulty: 2 Medium Learning Objective: 21-C1 Topic: Different Types of Cost Behavior 21-1 Answer: False Blooms: Understand AACSB: Communication AICPA BB: Resource Management AICPA FN: Measurement Difficulty: 2 Medium Learning Objective: 21-C1 Topic: Different Types of

21-21 Blooms: Apply AACSB: Analytic AICPA BB: Resource Management AICPA FN: Measurement Difficulty: 3 Hard Learning Objective: 21-C2 Topic: Applications of Cost-Volume-Profit Analysis Blooms: Apply AACSB: Analytic AICPA BB: Resource Management AICPA FN: Measurement Difficulty: 3 Hard Learning Objective: 21-C2 Topic: Applications of Cost-Volume-Profit Analysis

21-41 Answer: D Feedback: 3 units of M at $7 each $21 1 unit of N at $4 each.. 4 2 units of O at $6... 12 $37 Selling price of a composite unit.... 3 units of M at [$7 - 3] contribution margin per unit $12 1 unit of

21-66 Answer: To cover the cost increase, the increased fixed costs must be countered with an increase in contribution margin. Specifically: Sales increase * Contribution margin ratio = Increased contribution margin Sales increase * .40 = $5,000 Sales increase = $5,000/.40 = $12,500 Blooms: Apply AACSB: Analytic AICPA BB: Resource

21-79 Answer: 5 units of Product A @ $30 per unit = $1503 units of Product B @ $40 per unit = 1201 unit of Product C @ $50 per unit = 50 Selling price of a composite unit ..................... $3205 units of Product A @ $14 per unit =

22-1 Answer: True Blooms: Remember AACSB: Communication AICPA BB: Resource Management AICPA FN: Measurement Difficulty: 1 Easy Learning Objective: 22-C1 Topic: Important and Benefits of Budgeting Topic: Process of Budget Administration 22-1 Answer: True Blooms: Remember AACSB: Communication AICPA BB: Resource Management AICPA FN: Measurement Difficulty: 1 Easy Learning Objective:

22-21 Answer: E 22-21 Answer: E 22-21 Answer: E 63. A plan that lists dollar amounts to be received from disposing of plant assets and dollar amounts to be spent on purchasing additional plant assets is called a: A. Cash budget. B. Capital expenditures budget. C. Rolling budget. D.

22-41 Answer: A Feedback: Required production for May: For sales 280 units For ending inventory (60% * 300) 180 units Less beginning inventory (60% * 280) (168)units To produce 292 units Required production for June: For sales 300 units For ending inventory (60% * 240) 144 units Less beginning inventory

22-65 January February March Sales budget: Sales in Units 1,200 1,000 1,600 Price per unit * $25 * $25 * $25 Dollar Sales $30,000 $25,000 $40,000 Cash receipts table: Cash sales (40% of current mo. sales) $ 12,000 $ 10,000 $ 16,000 Credit sales from prior month 10,000 18,000 15,000

22-77 Answer: Sweeny Co. Cash Budget For the Month of May Beginning cash balance .. $ 40,000 Cash receipts from sales (a) 145,500 Total $185,500 Cash disbursements: Payments for merchandise (b) $109,160 Payroll . 14,280 Advertising . 5,700 Rent 1,500 Interest ($16,000 * 1%) .. 160 Total cash disbursements $130,800

23-1 Answer: True Blooms: Remember AACSB: Communication AICPA BB: Resource Management AICPA FN: Measurement Difficulty: 1 Easy Learning Objective: 23-C1 Topic: Standard Costs and Their Usefulness 23-1 Answer: True Blooms: Remember AACSB: Communication AICPA BB: Resource Management AICPA FN: Measurement Difficulty: 1 Easy Learning Objective: 23-C1 Topic: Standard Costs and

23-21 60. Kyle, Inc. has collected the following data on one of its products. The direct materials quantity variance is: Direct materials standard (4 lbs. @ $1/lb.) $4 per finished unit Total direct materials cost varianceunfavorable $13,750 Actual direct materials used 150,000 lbs. Actual finished units produced

23-41 95. Bok Companys output for the current period was assigned a $200,000 standard direct materials cost. The direct materials variances included a $5,000 favorable price variance and a $3,000 unfavorable quantity variance. What is the actual total direct materials cost for the current period? A. $208,000. B.

23-12 Answer: Budget Actual Variance Units 21,000 21,000 Sales $630,000 $651,000 $ 21,000F Variable costs: Direct materials 210,000 231,000 21,000U Direct labor .. 168,000 168,000 0 Variable overhead 63,000 73,500 10,500U Variable operating expenses 42,000 39,500 2,500F Total variable costs .. $483,000 $512,000 $29,000U Contribution margin $147,000 $139,000 $ 8,000U

23-29 AH * SR 50,660 hours * $17/hr. $861,220 SH * SR 50,000** hours * $17/hr. 850,000 Direct labor efficiency variance $ 11,220 U **25,000 units * 2 hours/unit = 50,000 hours b. Goods in Process Inventory 228,750 Direct Material Price Variance 3,800 Direct Material Quantity Variance

24-1 Answer: False Blooms: Remember AACSB: Communication AICPA BB: Resource Management AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 24-P1 Topic: Responsibility Report 24-1 Answer: False Blooms: Remember AACSB: Communication AICPA BB: Resource Management AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 24-P1 Topic: Responsibility Report 24-1 Answer:

24-21 Answer: A Feedback: Per $660 Product Lb. lb. Total % allocated A 200 $8/lb. $1,600 50% $330 B 100 $16/lb. 1,600 50% 330 Total $3,200 $660 24-21 Answer: A Feedback: Per $660 Product Lb. lb. Total % allocated A 200 $8/lb. $1,600 50% $330 B 100 $16/lb. 1,600 50%

24-41 Answer: C Feedback: $200,000 20%$1,000,000= Blooms: Apply AACSB: Analytic AICPA BB: Resource Management AICPA FN: Measurement Difficulty: 3 Hard Learning Objective: 24-P3 Topic: Departmental Income Statements and Contribution Reports 24-41 Answer: C Feedback: $200,000 20%$1,000,000= Blooms: Apply AACSB: Analytic AICPA BB: Resource Management AICPA FN: Measurement Difficulty: 3 Hard

24-61 __________ (1) Investment center __________ (2) Performance report __________ (3) Cost center __________ (4) Departmental contribution to overhead __________ (5) Profit center __________ (6) Responsibility accounting system Answer: 1. B; 2. D; 3. E; 4. F; 5. A; 6. C Answer: 1. B; 2. D;

24-76 Depreciation (75% and 25%)........... 10,350 3,450 Maintenance (75% and 25%)........... 22,050 7,350 Office expenses (60% and 40%)...... 42,660 28,440 Total indirect expenses..................... $105,274 $ 53,226 Net income............................................ $ 97,330 $ 55,570 Depreciation (75% and 25%)........... 10,350 3,450 Maintenance (75% and 25%)........... 22,050 7,350 Office expenses (60% and 40%)......

25-1 Answer: False Blooms: Remember AACSB: Analytic AICPA BB: Resource Management AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 25-P4 Topic: Internal Rate of Return 25-1 Answer: False Blooms: Remember AACSB: Analytic AICPA BB: Resource Management AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 25-P4 Topic: Internal Rate

25-21 Answer: C 25-21 Answer: C 25-21 Answer: C 54. Marsden manufactures a cat food product called Special Export. Marsden currently has 10,000 bags of Special Export on hand. The variable production costs per bag are $1.80 and total fixed costs are $10,000. The cat food can be

25-41 Answer: C Feedback: Incremental cost = Purchase price less cost savings; $45 ($10 + $24 + (55% * $16) = $2.20 25-41 Answer: C Feedback: Incremental cost = Purchase price less cost savings; $45 ($10 + $24 + (55% * $16) = $2.20 25-41 Answer: C Feedback: Incremental

25-61 Answer: Per Unit For 1,000 Units Variable costs of producing the special order: Direct materials $ 10 $10,000 Direct labor 16 16,000 Variable overhead 4 4,000 Total variable costs $30,000 Additional fixed cost 2,000 Total incremental costs $32,000 Desired profit 3,000 Required revenue $35,000 Required revenue per unit ($35,000/1,000)

25-73 Answer: Present value of net Net cash flows* Present value factor cash flows Years 1 3 $18,000 2.4018 $43,232 Initial investment .. (45,000) Net present value... $ (1,768) *Annual cash flows = $3,000 + $15,000 = $18,000 Blooms: Apply AACSB: Analytic AICPA BB: Resource Management AICPA FN: Decision Making

2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 3-1 2013 by McGraw-Hill Education. This is

2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 3-21 2013 by McGraw-Hill Education. This is

2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 3-41 2013 by McGraw-Hill Education. This is

2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 3-61 2013 by McGraw-Hill Education. This is

2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 3-81 2013 by McGraw-Hill Education. This is

2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 3-94 2013 by McGraw-Hill Education. This is

4-1 Answer: True Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 04-C1 Topic: Closing Process 4-1 Answer: True Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 04-C1 Topic: Closing Process 4-1 Answer: True Blooms:

4-21 Answer: A Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Reporting Difficulty: 1 Easy Learning Objective: 04-C3 4-21 Answer: A Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Reporting Difficulty: 1 Easy Learning Objective: 04-C3 4-21 Answer: A Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA

4-41 115. Permanent accounts include all of the following except: A. Accumulated Depreciation - Equipment. B. Prepaid Rent. C. Unearned Consulting Revenue. D. Accounts Payable. E. Depreciation Expense - Equipment. Answer: E Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 04-C1

4-61 Answer: 4-61 Answer: 4-61 Answer: 144. The calendar year-end adjusted trial balance for Acosta Co. follows: ACOSTA CO. Adjusted Trial Balance December 31 Cash $ 100,000 Accounts receivable 7,000 Prepaid rent 15,000 Prepaid Insurance 9,000 Office supplies 3,300 Office equipment 8,000 Accumulated depreciationEquipment

4-80 Answer: a. Dec. 31 Salaries Expense ................. 3,500 Salaries Payable... 3,500 b. Jan. 1 Salaries Payable ................. 3,500 Salaries Expense.. 3,500 Blooms: Apply AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 3 Hard Learning Objective: 04-P4 Topic: Reversing Entries 4-80 Answer: a. Dec. 31 Salaries Expense ................. 3,500

5-1 Answer: True Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 05-C1 Topic: Merchandising Companies and Activities 5-1 Answer: True Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 05-C1 Topic: Merchandising Companies and Activities

5-21 Answer: B Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 05-C2 Topic: Merchandise Inventory 5-21 Answer: B Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 05-C2 Topic: Merchandise Inventory 5-21 Answer: B Blooms:

5-41 114. An account used in the periodic inventory system that is not used in the perpetual inventory system is A. Merchandise Inventory B. Sales C. Sales Returns and Allowances D. Accounts Payable E. Purchases Answer: E Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty:

5-61 Answer: Part 1 Trico Duco Unico Cash $ 9,800 $10,500 $26,500 Short-term investments 6,400 8,200 12,500 Accounts receivable 12,500 8,500 14,350 Merchandise inventory 30,150 40,000 40,150 Prepaid expense 900 6,750 2,450 Total current assets $59,750 $73,950 $95,950 Accounts payable $19,400 $13,750 $26,800 Salary payable 1,200 3,500 6,250 Other current

5-78 Answer: June 10 Purchases. 9,000 Accounts Payable. 9,000 12 Accounts Payable... 600 Purchases Returns and Allow.. 600 19 Accounts Payable... 8,400 Cash.. 8,232 Purchases Discounts ($8,400 x .02).. 168 5-78 Answer: June 10 Purchases. 9,000 Accounts Payable. 9,000 12 Accounts Payable... 600 Purchases Returns and Allow.. 600 19 Accounts

6-1 Answer: True Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Measurement Difficulty: 1 Easy Learning Objective: 06-C1 Topic: Merchandise Inventory 6-1 Answer: True Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Measurement Difficulty: 1 Easy Learning Objective: 06-C1 Topic: Merchandise Inventory 6-1 Answer: True Blooms: Remember AACSB:

6-21 Answer: E Blooms: Apply AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 3 Hard Learning Objective: 06-C1 Topic: Merchandise Inventory Feedback: Start with beginning inventory of $412,000. The information in the first bullet point was handled correctly since inventory should include consigned goods for which the subject company

6-41 Answer: C Blooms: Apply AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 3 Hard Learning Objective: 06-P1 Topic: Inventory Computations in a Perpetual System Feedback: Purchases Cost of goods sold Balance Unit Unit Date Units cost Total Units cost Total Units Unit cost Total June 1 15 $20

6-61 2013. 2013 2012 Net sales $647,500 $582,000 Cost of goods sold 388,500 360,840 Ending inventory 77,700 79,380 A. 8.33 B. 5.00 C. 4.95 D. 4.54 E. 7.33 Answer: C Blooms: Apply AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 3 Hard Learning Objective: 06-A3 Topic:

6-81 Answer: Date Units Purchases Total Units Sales Total Units Balance Total Unit cost Unit cost Unit cost 1/1 100 $10 $1,000 1/5 40 $12 $480 100 $10 $1,000 40 $12 480 140 $1,480 1/10 60 $10 $600 40 $10 $ 400 40 $12 480 80 $ 880 1/15 70

6-93 Blooms: Apply AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 3 Hard Learning Objective: 06-P4 Topic: Retail Inventory Method 6-93 Blooms: Apply AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 3 Hard Learning Objective: 06-P4 Topic: Retail Inventory Method 6-93 Blooms: Apply AACSB: Analytic AICPA BB: Industry

7-1 Answer: False Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 07-C1 Topic: Principles of Accounting Information Systems 7-1 Answer: False Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 1 Easy Learning Objective: 07-C1 Topic: Principles of Accounting

7-21 66. Output devices include all of the following except: A. Printers. B. Monitors. C. LCD projectors. D. Web communications. E. Bar code readers. Answer: E Blooms: Understand AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Difficulty: 2 Medium Learning Objective: 07-C1 Topic: Accounting Information Systems Answer: E Blooms:

7-41 Blooms: Understand AACSB: Analytic AICPA BB: Industry AICPA FN: Decision Making Difficulty: 2 Medium Learning Objective: 07-C1 Topic: Accounting Information Systems 7-41 Blooms: Understand AACSB: Analytic AICPA BB: Industry AICPA FN: Decision Making Difficulty: 2 Medium Learning Objective: 07-C1 Topic: Accounting Information Systems 7-41 Blooms: Understand AACSB: Analytic AICPA

7-61 Answer: Sales Journal Date Account Debited Invoice Number PR Accounts Receivable Dr. Sales Cr. Cost of Goods Sold Dr. Inventory Cr. 8/4 Coe Co. 245 4,000 2,320 8/5 Delta Co. 246 3,000 1,740 Purchases Journal Date Account Date of Invoice Terms PR Accounts Payable Cr. Inventory Dr. Office Supplies

7-77 Answer: a. Cash receipts b. Purchases c. Cash disbursements d. Sales e. Cash receipts f. Cash disbursements g. Cash receipts h. Purchases i. General j. Sales Blooms: Understand AACSB: Analytic AICPA BB: Industry AICPA FN: Decision Making Difficulty: 2 Medium Learning Objective: 07-P1 Topic: Special Journals 7-77 Answer: a.

8-1 Chapter 8 CASH AND INTERNAL CONTROLS 1. A properly designed internal control system is a key part of systems design, analysis, and performance. Answer: True Blooms: Remember AACSB: Technology AICPA BB: Industry AIPCA BB: Leveraging Technology AICPA FN: Leveraging Technology Difficulty: 1 Easy Learning

8-21 70. Internal control policies and procedures have limitations including: A. Human error. B. Human fraud. C. Cost-benefit principle. D. Collusion. E. All of the options are limitations. Answer: E Blooms: Understand AACSB: Technology AICPA BB: Industry AICPA BB: Leveraging Technology AICPA FN: Leveraging Technology Difficulty: 2 Medium Learning

8-41 Answer: C Blooms: Apply AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 3 Hard Learning Objective: 08-P3 Topic: Bank Reconciliation Feedback: $794 - $749 = $45 8-41 Answer: C Blooms: Apply AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 3 Hard Learning Objective: 08-P3 Topic: Bank Reconciliation

8-61 Answer: Aug. 17 Cash.. 965 Sales 957 Cash over and short 8 8-61 Answer: Aug. 17 Cash.. 965 Sales 957 Cash over and short 8 8-61 Answer: Aug. 17 Cash.. 965 Sales 957 Cash over and short 8 155. Marbel had $2,816 million in sales

8-75 Answer: Jan. 2 Merchandise Inventory ........................................ 19,600 Accounts Payable ($20,000 * 0.98) .............. 19,600 4 Accounts Payable ($4,000 * 0.98) ....................... 3,920 Merchandise Inventory ................................. 3,920 12 Merchandise Inventory ........................................ 14,550 Accounts Payable ($15,000 * 0.97) .............. 14,550 12 Discounts Lost ($16,000 * 0.02) .......................... 320 Accounts Payable .........................................

9-1 Answer: False Blooms: Understand AACSB: Communication AICPA BB: Industry AICPA FN: Reporting Difficulty: 2 Medium Learning Objective: 09-C1 Topic: Accounts Receivable 9-1 Answer: False Blooms: Understand AACSB: Communication AICPA BB: Industry AICPA FN: Reporting Difficulty: 2 Medium Learning Objective: 09-C1 Topic: Accounts Receivable 9-1 Answer: False Blooms: Understand AACSB:

9-21 67. A company receives a 10%, 90-day note for $1,500. The total interest due on the maturity date is: A. $ 50.00 B. $150.00. C. $ 75.00. D. $ 37.50. E. $ 87.50. Answer: D Blooms: Apply AACSB: Analytic AICPA BB: Industry AICPA FN: Measurement Difficulty: 3 Hard

9-41 107. Darby uses the allowance method to account for uncollectible accounts. Its year-end unadjusted trial balance shows Accounts Receivable of $104,500, allowance for doubtful accounts of $665 (credit) and sales of $925,000. If uncollectible accounts are estimated to be .5% of sales, what is the amount of the

9-65 Answer: a. Dec. 31 Bad Debts Expense................................................................. 9,300 Allowance for Doubtful Accounts*..................................... 9,300 *($780,000 - $160,000) * .015 b. Dec. 31 Bad Debts Expense................................................................. 8,000 Allowance for Doubtful Accounts**................................... 8,000 **Required balance ($190,000 * 5%)..................................... $9,500 Balance before adjusting entries ($8,300-$6,800).................... 1,500 Required adjustment................................................................ $8000 Blooms: Apply AACSB: Analytic

9-77 Blooms: Apply AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA FN: Measurement AIPCA FN: Reporting Difficulty: 3 Hard Learning Objective: 09-C1 Learning Objective: 09-P2 Topic: Accounts Receivable Topic: Allowance Method 9-77 Blooms: Apply AACSB: Analytic AACSB: Communication AICPA BB: Industry AICPA FN: Measurement AIPCA FN: Reporting Difficulty: 3 Hard