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APPENDIX B PRESENT AND FUTURE VALUES IN ACCOUNTING Present Value of 1 Period s 3% 4% 5% 6% 7% 8% 9% 10% 12% 3 0.915 1 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 4 0.888 5 0.8548 0.8227 0.7921 […]

Appendix C INVESTMENTS AND INTERNATIONAL OPERATIONS True / False Questions 1. Long-term investments are usually held as an investment of cash for use in current operations. 2. Long-term investments can include funds earmarked for special purposes such as bond sinking […]

Appendix D ACCOUNTING FOR PARTNERSHIPS True /False Questions 1. A partnership has a limited life. 2. A partnership is an incorporated association of two or more people to pursue a business for profit as co-owners. Answer: False Blooms: Remember AACSB: […]

Appendix E ACCOUNTING WITH SPECIAL JOURNALS True / False Questions 1. Accounting information systems collect and process data from transactions and events, organize them in useful reports, and communicate results to decision makers. 2. Decision makers in practice do not […]

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 […]

Appendix B Time Value of Money QUICK STUDIES Quick Study B-1 (10 minutes) 1. 2% n = 8 periods 2. 12% n = 2 periods 3. 3% n = 4 periods 4. 1% n = 24 periods Quick Study B-2 […]

APPENDIX C 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 and between long-term investments and short-term investments. 1, 2, 5 C-1, […]

Appendix C 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 investments as a source of cash to […]

Exercise C-3 (20 minutes) 1. 2015 Dec. 31 Fair Value Adjustment—Trading …………………… 6,000 Unrealized Gain—Income ………………………… 6,000 To reflect an unrealized gain in fair values of trading securities. 2. The accounts in part (1) are reported on different financial statements. […]

Exercise C-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 […]

Problem C-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) 8,040 Long-Term AFS Securities (fair value) ………. $113,450 $71,325 $220,200 Part 3 2015 2016 2017 Realized gains (losses) Sale […]

Problem C-2B (40 minutes) Part 1 Feb. 6 Short–Term Investments—AFS (Nokia)………… 143,250 Cash …………………………………………………… 143,250 Purchased 3,400 shares of Nokia [(3,400 x $41.25) + $3,000]. 15 Short–Term Investments—AFS (T-bills) ……….. 20,000 Cash …………………………………………………… 20,000 Purchased U.S. Treasury bills. Apr. 7 […]

Problem C-6BA (60 minutes) Part 1 2015 May 26 Accounts Receivable—Fuji ……………………….…. 60,450 Sales …………………………………………………..….. 60,450 (6,500,000 yen x $0.0093/yen) June 1 Cash ……………………………………………………………………………… 64,800 Sales …………………………………………………..….. 64,800 July 25 Cash*…………………………..………………………………………………… 59,800 Foreign Exchange Loss …………………………….…………………… 650 Accounts Receivable—Fuji ………………….………. […]

Ethics Challenge — BTN C-3 1. Kasey’s bonus is not contingent on the classification of available–for– sale versus held-to-maturity. Designation of the bonds as available–for– sale debt securities will require that an entry be made to recognize the unrealized holding […]

APPENDIX D 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. 1, 2, 3, 4, 5, 8 D-1 D-1, D-2 D-1, D-2, […]

Exercise D-6 (25 minutes) 1a. 2015 Mar. 1 Cash ……………………………………………………………….. 82,500 Land ……………………………………………………………….. 60,000 Building ………………………………………………………….. 100,000 Long–Term Note Payable ……………………………. 92,500 Eckert, Capital ……………………………………………. 82,500 Kelley, Capital ……………………………………………. 67,500 To record initial capital investments. 1b. 2015 Oct. 20 Eckert, […]

Problem D-4B (Concluded) Part 2 a) Apr. 30 Cash ……………………………………………………………….. 300,000 Chip, Capital* ……………………………………………… 300,000 To record admission of Chip. * Supporting calculations $606,000 + $148,000 + $446,000 = $1,200,000 ($1,200,000 + $300,000) x 20% = $300,000 Thus, no bonus […]

Communicating in Practice — BTN D-4 — STUDY NOTES –— ORGANIZATIONS WITH PARTNERSHIP CHARACTERISTICS I. Limited Partnerships II. Limited Liability Partnerships III. S Corporations IV. Limited Liability Companies I. Limited Partnerships  These organizations are identified in its name with […]

APPENDIX E ACCOUNTING WITH SPECIAL JOURNALS 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 E-1, […]

Feb 28 Post to the customer and creditor accounts and post any amounts that should be posted as individual amounts to general ledger accounts. 28 Foot and crossfoot the journals and make the month–end postings. Required: 1. Open the following […]

Exercise E-10 (30 minutes) Part 1 ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER Anna Page Sara Reed Aaron Reckers 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 […]

Problem E-2A (Continued) Parts 2 and 3 (continued) ACCOUNTS RECEIVABLE LEDGER Page Alistair Date Explanation PR Debit Credit Balance Apr. 3 S3 4,000 4,000 13 R3 4,000 0 13 S3 5,100 5,100 23 R3 5,100 0 Paula Kohr Date Explanation […]

Problem E-1B (Continued) ACCOUNTS RECEIVABLE LEDGER Carlos Mantel Date Explanation PR Debit Credit Balance Nov. 10 S2 13,500 13,500 19 R2 13,500 0 22 S2 3,695 3,695 Cyd Rounder Date Explanation PR Debit Credit Balance Nov. 8 S2 6,550 6,550 […]

SERIAL PROBLEM – SP E Serial Problem (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. Jan. 13 Liu Corp. …………………………………………….. […]

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

Chapter 1 ACCOUNTING IN BUSINESS True / False Questions 1. Accounting is an information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization’s business activities. 2. Bookkeeping is the recording of transactions and […]

Exercise 1-4 (10 minutes) 1. A 4. F 2. G 5. C 3. D Exercise 1-5 (20 minutes) a. Auditing professionals with competing audit clients are likely to learn valuable information about each client that the other clients would benefit […]

Problem 1-2A (Continued) Part 3 Company C First, calculate the beginning balance of equity: Dec. 31, 2014 Assets …………………………………………………. $24,000 Liabilities …………………………………………….. ( 9,000) Equity………………………………………………….. $15,000 Next, find the ending balance of equity by completing this table: Equity, December 31, […]

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 …………………………… 2,940 Net income ………………………………………….. […]

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

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 […]

Chapter 10 LONG-TERM LIABILITIES True / False Questions 1. The legal contract between the issuing corporation and the bondholders is called the bond indenture. 2. One of the similarities of bond and equity financing is that both dividends and equity […]

Exercise 10-2 (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 […]

Exercise 10-13B (30 minutes) 1. Discount = Par value – Issue price = $500,000 – $463,140 = $36,860 2. Total bond interest expense over the life of the bonds Amount repaid Six payments of $22,500* …………….……. $135,000 Par value at […]

Problem 10-3A (Concluded) Part 4 Semiannual Period–End Unamortized Premium Carrying Value 1/01/2015 ………………… $895,980 $4,895,980 6/30/2015 ………………… 866,114 4,866,114 12/31/2015 ………………… 836,248 4,836,248 6/30/2016 ………………… 806,382 4,806,382 12/31/2016 ………………… 776,516 4,776,516 Part 5 2015 June 30 Bond Interest Expense ………………………….. […]

Problem 10–9AB (Concluded) Part 3 2015 June 30 Bond Interest Expense ………………………….. 7,660 Premium on Bonds Payable ………………….………. 465 Cash ……………………………………………….……… 8,125 To record six months’ interest and premium amortization. 2015 Dec. 31 Bond Interest Expense ………………………….. 7,646 Premium on […]

Problem 10-4B (Concluded) Part 3 2015 June 30 Bond Interest Expense ………………………….. 13,101 Premium on Bonds Payable ………………….………. 1,299 Cash ……………………………………………….……… 14,400 To record six months’ interest and premium amortization. 2015 Dec. 31 Bond Interest Expense ………………………….. 13,101 Premium on […]

Problem 10–10BB (Concluded) Part 4 2015 June 30 Bond Interest Expense ………………………….. 24,680 Premium on Bonds Payable ………………….………. 4,570 Cash ……………………………………………….……… 29,250 To record six months’ interest and premium amortization. 2015 Dec. 31 Bond Interest Expense ………………………….. 24,452 Premium on […]

Taking It to the Net — BTN 10-5 1. Home Depot’s long–term liabilities as of February 2, 2014, follow: Long-term debt, excluding current installments …………. $14,691 million Other long-term liabilities ………………………………………….. 2,042 million Deferred income taxes ………………………………………………. 514 million 2 […]

CHAPTER 11 CORPORATE REPORTING AND ANALYSIS 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 11-1 11-1 11-5 C2. Explain characteristics […]

Chapter 11 CORPORATE REPORTING AND ANALYSIS True /False Questions 1. A corporation is a legal entity separate from its owners. 2. Corporations avoid many of the state regulations and controls that proprietorships and partnerships are subject to. Answer: False Blooms: […]

Exercise 11-3 (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 […]

Exercise 11–18 (Concluded) Part 2 ALEXANDER CORPORATION Statement of Retained Earnings For Year Ended December 31, 2016 Retained earnings, December 31, 2015 ……………………… $340,000 Plus net income ………………………………………………………. 52,000 392,000 Less: Cash dividends declared…………………………..……… (99,900) Treasury stock reissuances* ……………………………. (1,500)* […]

Problem 11-2B (Concluded) Part 2 BALTHUS CORP. Statement of Retained Earnings For Year Ended December 31, 2016 Retained earnings, December 31, 2015 ………………………. $2,160,000 Plus net income ………………………………………………………… 1,072,000 3,232,000 Less: Cash dividends declared …………………………………. (740,000) Treasury stock reissuances …………………………….. […]

Reporting in Action — BTN 11-1 (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 […]

CHAPTER 12 REPORTING 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, […]

Chapter 12 REPORTING CASH FLOWS True/False Questions 1. The primary purpose of the statement of cash flows is to report all major cash receipts (inflows) and cash payments (outflows) during a period. 2. The statement of cash flows reports and […]

Chapter 12 Reporting 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 […]

Quick Study 12-19 (Concluded) Part 2 The company’s operating cash flows are negative, $(1,750). This is not a good omen. However, much of this is attributed to a huge increase in inventory. Thus, an assessment of the saleable nature of […]

Exercise 12-12B (continued) Notes (1) Sales ………………………………………………………………………………………………… $678,000 Less increase in accounts receivable ……………………………………………….… (14,000) Cash received from customers …………………………………………………………… $664,000 (2) Cost of goods sold …………………………………………………………………………..… $411,000 Less decrease in inventory ………………………………………………………………… (22,700) Purchases ……………………………………………………………………………………….… 388,300 Plus decrease in […]

Problem 12-4AA (60 minutes) FORTEN COMPANY Spreadsheet for Statement of Cash Flows For Year Ended December 31, 2015 December 31, 2014 Analysis of Changes December 31, 2015 Debit Credit Balance sheet—debits Cash ……………………………………………..…. $ 73,500 $ 49,800 Accounts receivable ……………………..…. […]

Problem 12-3B (Continued) Part 2 Gazelle Corporation’s dividend payments of $53,600 represent 34% of the $158,100 net income for the year, and 41% of cash inflow provided by operations of $130,200. Further analysis reveals that investing activities used a modest […]

Comparative Analysis — BTN 12-2 1. Apple’s cash flow on total assets ratio ($ millions) Current Year = Operating cash flows/Average total assets = $53,666 / [($207,000 + $176,064)/2] = $53,666 / $191,532 = 28.0% Prior Year = Operating cash […]

Chapter 13 ANALYSIS OF FINANCIAL STATEMENTS True / False Questions 1. Financial statement analysis is the application of analytical tools to general-purpose financial statements and related data for making business decisions. 2. Financial statement analysis lessens the need for expert […]

Exercise 13-8 (25 minutes) 1. Days’ sales uncollected 2015: x 365 = 48.5 days 2014: x 365 = 42.9 days $673,500 $62,500 2. Accounts receivable turnover 2015: = 8.9 times 2014: = 9.4 times $532,000 3. Inventory turnover 2015: = […]

Problem 13-2A (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 12.66 100.00 Plant assets, net …………………………. 166.67 […]

Problem 13-2B (60 minutes) Part 1 Current ratio: December 31, 2015: $54,860 / $22,370 = 2.5 to 1 December 31, 2014: $32,660 / $19,180 = 1.7 to 1 December 31, 2013: $36,300 / $16,500 = 2.2 to 1 Part 2 […]

SERIAL PROBLEM — SP 13 Serial Problem — SP 13, Business Solutions (45 minutes) 1. Gross margin with services revenue Gross margin = Total revenue – Cost of goods sold = $44,000 – $14,052 = $29,948 Gross margin ratio = […]

CHAPTER 14 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, […]

Chapter 14 MANAGERIAL ACCOUNTING CONCEPTS AND PRINCIPLES True/False Questions 1. Managerial accounting is an activity that helps managers determine costs of products and services, plan future activities, and compare actual to planned results. 2. Control is the process of setting […]

Chapter 14 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 company’s […]

EXERCISES Exercise 14-1 (10 minutes) Primary Information Source Financial Managerial Financial Managerial Managerial Managerial Financial Managerial 5. Plan the budget for next quarter 6. Measure profitability of an individual store 7. Prepare financial reports according to GAAP 8. Determine location […]

Exercise 14-12 (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 ……………………………………..  Cash……………………………………………….  Depreciation expense—Factory […]

Problem 14-3A (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 […]

Problem 14-4B (40 minutes) Part 1 Unit and dollar amounts of raw materials inventory in blades Beginning inventory, December 31, 2014 2,500 $20 $50,000 Purchases during 2015 45,000 20 900,000 Inventory available for production 47,500 20 950,000 Less: Inventory transferred […]

CHAPTER 15 JOB ORDER COSTING AND ANALYSIS 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 15-1, 15-14 15-1 15-1, 15-2, […]

VISUAL #15–1 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 Sold to […]

Chapter 15 JOB ORDER COSTING AND ANALYSIS True/False Questions 1. Cost accounting systems accumulate costs and then assigns them to products or services. 2. A company that uses a cost accounting system normally has only two inventory accounts: Finished Goods […]

Exercise 15-7 (30 minutes) 1. Cost of direct materials used Beginning raw materials inventory………………………………..…………. $ 43,000 Plus purchases …………………………………………………………….…………. 210,000 Raw materials available ………………………………………………..…….. 253,000 Less ending raw materials inventory …………………………….…………. (52,000) Total raw materials used ………………………………………………………. 201,000 Less indirect […]

PROBLEM SET A Problem 15-1A (80 minutes) Part 1 Total manufacturing costs and the costs assigned to each job 306 307 308 April Total From March Direct materials …………………. $ 29,000 $ 35,000 Direct labor ………………….……. 20,000 18,000 Applied overhead* […]

Problem 15-4A (35 minutes) Part 1 a. Predetermined overhead rate = = = 60% b. Overhead costs charged to jobs Direct Applied Job No. Labor Overhead (60%) 201 ………………………………………………………………. $ 604,000 $ 362,400 202 ………………………………………………………………. 563,000 337,800 203 ………………………………………………………………. 298,000 […]

Problem 15–2B (Continued) Part 3 (Concluded) * Raw materials inventory Balance per trial balance ………………………………………………………. $26,000 Less: Amounts recorded for Jobs 603 and 604 ………….………………. (12,200) Less: Indirect materials …………………………………………….………… (2,100) Ending balance ……………………………………………………….………………….. $11,700 ** Work in process inventory […]

Problem 15–5B (Continued) j. The ending balance in Factory Overhead is computed as: Actual Factory Overhead Miscellaneous overhead ………….. $36,800 Indirect materials …………………….. 864 Indirect labor …………………………… 12,000 Total actual factory overhead …… 49,664 Factory overhead applied …………… 50,400 Overapplied […]

Chapter 16 PROCESS COSTING AND ANALYSIS True / False Questions 1. The managers of process operations focus on the series of repetitive processes, or steps, resulting in a noncustomized product or service. 2. Manufacturers that utilize process operations produce large […]

Quick Study 16-23 (10 minutes) 1. Raw Materials Inventory ……………………………………….. 62,000 Cash ……………………………………………………………….. 62,000 Purchase of raw materials inventory. 2. Work in Process Inventory ………………………………..….. 50,000 Raw Materials Inventory ………………………………….. 50,000 Direct materials used in production. Quick Study 16-24 (10 […]

Exercise 16–11 (continued) 2. Cost assignment and reconciliation – FIFO Cost of 60,000 units from beginning inventory Beginning inventory $ 167,066 Materials to complete (24,000 EUP x $2.58 per EUP) 61,920 Conversion to complete (36,000 EUP x $2.16 per EUP) […]

Exercise 16–19 (Continued) Key to solution of flowchart (1) Beginning work in process in punching $ 7,500 Direct materials added $ 60,000 Direct labor added 12,000 Factory overhead added 15,000 Total manufacturing costs added 87,000 Total costs in process in […]

Problem 16-3A (75 minutes) Part 1 Weighted average Units Fast Co. – units Units in Beg. inventory 30,000 Beg. Inv 30,000 Units started 140,000 Started 140,000 Units in ending inventory (20,000) 170,000 150,000 Trfr-out Units transferred out 150,000 End. Inv […]

Problem 16-7A (Concluded) Part 3 If equivalent units of production for a production department’s ending inventory for October are understated, then total equivalent units of production is also understated. This means the cost per equivalent unit for October is overstated […]

Problem 16-5B (Concluded) Cost per EUP Direct Materials Conversion Costs incurred this period ……………… $ 112,500 $ 616,000 ÷ EUP ……………………………………………. ÷ 232,500 ÷ 226,000 Cost per EUP (rounded) …………………… $0.484 per EUP $2.726 per EUP Cost assignment and reconciliation […]

Comprehensive Problem (Continued) Part 4 (Using weighted-average) General ledger accounts Raw Materials Inventory Acct. No. 132 Date Explanation Debit Credit Balance June 30 Balance 25,000 (a) Purchases 125,000 150,000 (b) Usage 62,440 87,560 Work in Process Inventory Acct. No. 133 […]

Ethics Challenge — BTN 16-3 MEMORANDUM TO: FROM: DATE: SUBJECT: Instructor note: The student’s 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 […]

CHAPTER 17 ACTIVITY-BASED COSTING AND ANALYSIS Related Assignment Materials Student Learning Objectives Discussion Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Distinguish among the plant wide overhead rate method, the departmental overhead rate method, and the activity-based […]

Chapter 17 Activity-Based Costing and Analysis True / False Questions 1. In competitive markets, the price of a given product is established through the forces of supply and demand. 2. Product costs consist of direct labor, direct materials, manufacturing overhead, […]

Exercise 17–16 (15 minutes) 1. Overhead rate: €630,000/270,400 DLH = €2.33/DLH Wine glasses: 254,000 DLH x €2.33/DLH = €591,820 €591,820/211,000 units = €2.80/unit Vases: 16,400 DLH x €2.33/DLH = €38,212 €38,212/17,000 units = €2.25/unit 2. Overhead rate: €630,000/1,000 set–ups = […]

Problem 17-5A (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/case Recipe formulation $90,000/45 focus groups $2,000/group Heat, light and […]

Problem 17-5B (concluded) 5. Pup Tent Pop-Up Tent Selling price $65.00 $200.00 Manufacturing cost per unit 58.46 113.87 Gross profit per unit $ 6.54 $ 86.13 Both product lines are profitable without any cost cutting. The ABC cost assignment method […]

Chapter Outline C. Sensitivity Analysisknowing the effects of changing some estimates used in CVP analysis by substituting new estimated amounts (in total or per unit as appropriate) in the related formula can be helpful in making predictions. Can also use […]

Chapter 18 COST BEHAVIOR AND COST–VOLUME-PROFIT ANALYSIS True/False Questions 1. Total variable costs change in proportion to changes in volume of activity. 2. Variable costs per unit increase proportionately with increases in volume of activity. Answer: False Blooms: Remember AACSB: […]

Chapter 18 Cost Behavior and 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 completed units) are treated as […]

Exercise 18-6 (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 […]

Exercise 18-25 (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 […]

Problem 18-7A (50 minutes) Part 1 BREAK–EVEN ANALYSIS ASSUMING USE OF SAME MATERIALS Step 1: Compute break-even in composite units—Use equation in Exhibit 18.29 Break-even in composite units = Fixed costs/Contribution margin per composite unit = $250,000 / $122* = […]

Problem 18-6B (45 minutes) Part 1 Instructor note: Use the equation in Exhibit 18.12 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: […]

CHAPTER 19 VARIABLE COSTING AND PERFORMANCE REPORTING Student Learning Objectives and Related Assignment Materials* Student Learning Objectives Discussion Questions Quick Studies Exercises Problems** (A & B set) Beyond the Numbers Conceptual objectives: C1. Describe how absorption costing can result in […]

Chapter 19 Variable Costing and Analysis True / False Questions 1. Product costs consist of direct labor, direct materials, and overhead. TRUE AACSB: Analytical Thinking AICPA: BB Industry AICPA: FN Measurement Accessibility: Keyboard Navigation Blooms: Remember difficulty: 1 Easy Learning […]

EXERCISES Exercise 19-1 (15 minutes) Part 1 Cost per unit of finished goods using absorption costing: Direct materials ………………………………………………………………………. $15 per unit Direct labor ………………………………………………………………………….…. 16 per unit Variable overhead ($80,000/20,000 units) …………………………………. 4 per unit Fixed overhead ($160,000/20,000 units) […]

Exercise 19-10 (15 minutes) Reconciliation of variable costing income to absorption costing income: Year 1 Year 2 Year 3 Variable costing income……………………….…. $110,000 $114,400 $118,950 Fixed overhead in ending inventory* …….……………………. 3,000 1,750 2,000 Fixed overhead in beginning inventory* .………………………… […]

Problem 19-3B (30 minutes) Part 1 Yes, it is possible for the company to report a net income by increasing its production to 300,000 lbs. and storing the excess inventory. The following absorption costing income statement shows this. CHEM-MELT Income […]

CHAPTER 2 ACCOUNTING FOR BUSINESSTRANSACTIONS 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 […]

Chapter 2 ANALYZING FOR BUSINESS TRANSACTIONS True /False Questions 1. The first step in the processing of a transaction is to analyze the transaction and source documents. 2. Preparation of a trial balance is the first step in processing a […]

Exercise 2-8 (30 minutes) Cash Photography Equipment Aug. 1 6,500 Aug. 2 2,100 Aug. 1 33,500 20 3,331 5 880 31 675 Common Stock Balance 6,176 Aug. 1 40,000 Office Supplies Photography Fees Earned Aug. 5 880 Aug. 20 3,331 […]

Exercise 2-21 (15 minutes) a. The debit column is correctly stated because the erroneous debit (to Accounts Payable) is deducted from an account with a (larger assumed) credit balance. b. The credit column is understated by $37,900 because Accounts Payable […]

Problem 2-3A (90 minutes) Part 1 Mar. 1 Cash …………………………………………………….. 101 150,000 Office Equipment …………………………………. 163 22,000 Common Stock ……………………………… 307 172,000 Owner invested cash and equipment for stock. 2 Prepaid Rent ………………………………………… 131 6,000 Cash ……………………………………………… 101 6,000 Prepaid […]

PROBLEM SET B Problem 2-1B (90 minutes) Part 1 Sept. 1 Cash …………………………………………………. 101 38,000 Office Equipment ………………………………. 163 15,000 Common Stock…………………………… 307 53,000 Owner invested in the business for stock. 2 Prepaid Rent …………………………………….. 131 9,000 Cash ………………………………………….. 101 […]

Problem 2-3B (Continued) Common Stock Acct. No. 307 Date Explanation PR Debit Credit Balance Nov. 1 G1 45,000 45,000 Dividends Acct. No. 319 Date Explanation PR Debit Credit Balance Nov. 28 G1 5,300 5,300 Services Revenue Acct. No. 403 Date […]

Serial Problem, Business Solutions (Continued) Prepaid Insurance Acct. No. 128 Date Explanation PR Debit Credit Balance Oct. 5 2,220 2,220 Prepaid Rent Acct. No. 131 Date Explanation PR Debit Credit Balance Oct. 2 3,300 3,300 Office Equipment Acct. No. 163 […]

CHAPTER 20 MASTER BUDGETS AND PERFORMANCE 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. 1, 2, […]

Chapter Outline 1. Selling Expense Budget a. Based on sales volume (either dollars or units depending how rate is given) b. Plan listing the type and amounts of selling expenses expected during budget period. c. Created to provide sufficient selling […]

Chapter 20 MASTER BUDGETS AND PERFORMANCE PLANNING True / False Questions 1. Personnel who will have performance evaluated according to the budget standards should not be consulted and involved in preparing the budget. 2. A budget can be an effective […]

Chapter 20 Master Budgets and Performance 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 […]

Serial Problem — SP 20 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 […]

Quick Study 20-19 (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 month’s receivables (60% x $150,000)…………….. 90,000 Total cash receipts …………………………………………………………………….. […]

Exercise 20-9 (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 […]

Exercise 20-22 (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 […]

Exercise 20–30 (continued) CASTOR, INC. Cash Receipts Budget For April, May, and June April May June Sales …………………………………………………..… $32,000 $40,000 $24,000 Less ending accts. receivable (50%) ……… 16,000 20,000 12,000 Cash receipts from Cash sales (50% of sales) …………………..… 16,000 […]

Problem 20-4A (130 minutes) Part 1 ZIGBY MANUFACTURING Sales Budgets April, May, and June 2015 Budgeted Units Budgeted Unit Price Budgeted Total Dollars April 2015 ………………………………………………….…. 20,500 $23.85 $ 488,925 May 2015 …………………………………………………..…. 19,500 23.85 465,075 June 2015 ………………………………………………….…. 20,000 […]

Problem 20-7A (Continued) Part 4 Cash payments on product purchases (for June and July) From purchases in Total % Paid June July May …………………………………….….. $308,000 40% $123,200 June ……………………………………….. 638,000 60 382,800 …………………………………..….. 40 $255,200 July …………………………………….….. 523,600 60 ________ […]

Problem 20-2B (continued) (2) A1 MANUFACTURING Cash Budget For July, August, and September July August Sept. Beginning cash balance* …………………….… $12,900 $12,600 $24,371 Cash receipts (from part 1) ………………….… 59,680 66,840 74,200 Total cash available ……………………………… 72,580 79,440 98,571 Cash […]

Problem 20-6B (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 ………………………… […]

CHAPTER 21 FLEXIBLE BUDGETS AND STANDARD COSTS Related Assignment Materials Student Learning Objectives Discussion Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Define standard costs and explain how standard cost information is useful for management by exception […]

Chapter Outline Appendix 21A I. Expanded Overhead Variances A. Computing Overhead Cost Variancesassume predetermined rate is based on relation between standard overhead and standard labor hours. 1. Framework uses classifications of overhead costs as either variable or fixed 2. Exhibit […]

Chapter 21 FLEXIBLE BUDGETS AND STANDARD COSTS True / False Questions 1. Standard costs can be used by management to assess the reasonableness of actual costs incurred. 2. Standard material costs, standard labor costs, and standard overhead costs can be […]

Chapter 21 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 volume is different from budgeted volume. This […]

EXERCISES Exercise 21-1 (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 […]

Exercise 21-15 (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) ……………………… 64,000 Direct materials price variance (unfavorable) ………………………….. $ […]

Exercise 21-22 (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 […]

Problem 21-3A (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 hours Actual rate: $17.25/hr. (given) Standard rate: $17.00/hr. (given) Direct labor cost variances Actual units […]

Problem 21-2B (60 minutes) Part 1 TOHONO COMPANY Flexible Budget Performance Report For Year Ended December 31, 2015 Flexible Actual Budget Results Variances* Sales (24,000 units) …………………….. $3,600,000 $3,648,000 $48,000 F Variable costs Direct materials ………………………… 1,440,000 1,400,000 40,000 F […]

Problem 21-6BA (45 minutes) Part 1 June 30* Work in Process Inventory ………………………….. 130,000 Direct Materials Quantity Variance ……….…………………. 5,000 Direct Materials Price Variance ………………………….. 1,500 Raw Materials Inventory ………………………….. 123,500 To record materials costs, including the favorable quantity and […]

CHAPTER 22 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 […]

Chapter 22 PERFORMANCE MEASUREMENT AND RESPONSIBILITY ACCOUNTING True / False Questions 1. Evaluation of the performance of an investment center involves only financial measures. 2. Profit center managers are evaluated on their ability to generate revenues in excess of costs. […]

Chapter 22 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 […]

Quick Study 22–19 (5 minutes) Average invested assets = (€12,888 + €13,099) / 2 = €12,944 (rounded) Return on investment (assets) = €3,385 / €12,944 = 26.05% (rounded) ©2016 by McGraw–Hill Education. This is proprietary material solely for authorized instructor […]

Exercise 22-11 (20 minutes) (1) Investment center Operating income Average assets* Return on investment Beverage ……………….…. $349 $2,628 13.28% Cheese ………………….…. 634 4,428 14.32% (2) Investment center Operating income Sales Profit margin Beverage ……………….…. $349 $2,681 13.02% Cheese ………………….…. 634 […]

Problem 22-2A (Continued) Value–based costs are allocated to departments in two steps (i) Compute market value of each floor Floor Square Footage Value per Sq. Ft. Total First floor ………………..………… 4,000 $30 $120,000 Second floor ……………………… 4,000 20 80,000 Total […]

Problem 22-2B (Continued) (ii) Allocate the $400,000 to each floor based on its percent of market value Floor Market Value % of Total Allocated Cost Cost per Sq. Ft. First floor ………………..………… $300,000 60% $240,000 $32.00 Second floor ……………………… 150,000 […]

Reporting in Action — BTN 22-1 1. Apple revenues by product line ($ in millions) September 28, 2013 September 29, 2012 September 24, 2011 Total revenues ……………………………………… $170,910 $156,508 $108,249 iPhone* (53%) ………………………………….…… 90,583 82,949 57,373 iPad and iPod (21%) […]

CHAPTER 23 RELEVANT COSTING FOR MANAGERIAL DECISIONS Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Describe the importance of relevant costs for short-term decisions. 23-1,23-2, 23-3, 23-4, 23-5, 23-7, 23-8 23-5 […]

Chapter 23 Relevant Costing for Managerial Decisions 1. An opportunity cost is the potential benefit lost by taking a specific action when two or more alternative choices are available. 2. A sunk cost will change with a future course of […]

Chapter 23 Relevant Costing for Managerial Decisions QUESTIONS 1. The five steps are: (1) define the decision task, (2) identify alternative courses of action, (3) collect relevant information and evaluate each alternative, (4) select the preferred course of action, and […]

Exercise 23-6 (15 minutes) Scrap Rework Sale of scrapped/reworked units ……………..…… $55,000 $187,000 Less out–of-pocket costs to rework ………….…… Less opportunity cost of not making new units (22,000 @ $2.50) ……………………………..…… —- —- (99,000) (55,000) Total ………………………………………………………. $55,000 $ 33,000 […]

Problem 23-4A (30 minutes) Alternative 1: Sell to a second-hand shop Incremental revenue (5,000 x $6.00) …………………………………………. $ 30,000 Incremental cost ……………………………………………………………………… 0 Incremental income …………………………………………………………………. $ 30,000 Alternative 2: Disassemble and sell to a recycler Incremental revenue (5,000 x […]

Problem 23-3B (30 minutes) Part 1 INCREMENTAL COST OF MAKING TH1 Variable costs: Direct materials (400,000 units x $1.20 per unit) ………………………….. $ 480,000 Direct labor (400,000 units x $1.50 per unit) ………………………….. 600,000 Variable overhead (2,400,000* x 25%) …………………………………..………… […]

SERIAL PROBLEM — SP 23 Serial Problem, Business Solutions (50 minutes) Desks Chairs Selling price per unit ……………………………………………………… $ 1,125 $ 375 Variable costs per unit …………………………………………………… 500 200 Contribution margin per unit ………………………………..………… $ 625 $ 175 Direct labor […]

CHAPTER 24 CAPITAL BUDGETING AND INVESTMENT ANALYSIS Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Analytical objectives: A1. Analyze a capital investment project using break-even time. 24 24-15 24-16 24-5, 24-6 Procedural objectives: P1. […]

Chapter 24 CAPITAL BUDGETING AND INVESTMENT ANALYSIS True / False Questions 1. Capital budgeting is the process of analyzing alternative long-term investments and deciding which assets to acquire or sell. 2. If the internal rate of return (IRR) of an […]

Exercise 24-5 (20 minutes) a. Payback period = = = 2.21 years where Annual after-tax income ………………………………………………………. $150,000 Plus depreciation* …………………………………………………………….….. 85,000 Annual net cash flow ………………………………………………………..….. $235,000 *Annual depreciation = = $85,000 b. Payback period = = = 3.62 […]

Problem 24-1A (Continued) Part 4 Accounting rate of return = = 21.56% * Average investment Asset cost ………………………………………………………………..…….. $480,000 Final year’s book value ……………………………………………..…….. 20,000 Sum ……………………………………………………………………………….. $500,000 Average (Sum /2) ………………………………………………………. $250,000 Part 5 Present Value of Net Cash […]

PROBLEM SET B Problem 24-1B (50 minutes) Part 1 Annual straight-line depreciation = = $70,000 Part 2 Net Net Cash Income Flow Expected annual sales of new product ………………..… $1,150,000 $1,150,000 Expected annual costs of new product Direct materials ………………………………………………..… […]

Problem 24-6B (Concluded) Part 5 While the total cash flows are identical to those in Problem 24-5B, the cash flows are reversed, with the largest cash flows coming in the early years of the project. This will shorten the payback […]

CHAPTER 3 ADJUSTING ACCOUNTS FOR 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 role of accrual accounting. 1, 2, 3, 20 3-1, […]

Chapter Outline B. Work sheet Applications and Analysis – does not substitute for financial statements. It is a tool used at the end of the period to help organize data and prepare financial statements. XI. Appendix 3C—Reversing Entries A. Accounting […]

Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 3-17 Alternate Demonstration Problem #1 Chapter Three On July 1, 2015, Howard M. Tenant, Inc., rents office space from John […]

Chapter 3 Adjusting Accounts for Financial Statements True/False Questions 1. A company’s fiscal year must correspond with the calendar year. 2. Interim financial statements report a company’s business activities for a one-year period. Answer: False Blooms: Remember AACSB: Communication AICPA […]

Serial Problem, SP 3 (Continued) [Instructor Note: Ledger includes all entries from prior three months. The Working Papers shorten the solution by showing account balances as of November 30.] General Ledger Cash Acct. No. 101 Date Explanation PR Debit Credit […]

Ethics Challenge — BTN 3-3 1. GAAP requires that annual deprecation be accumulated in a contra– asset account, called Accumulated Depreciation. While property, plant, and equipment is often shown at its net value on the balance sheet the cost of […]

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 Statement Credit Wages Payable Balance Sheet c. Debit Accounts Receivable Balance Sheet Credit […]

Exercise 3-6 (20 minutes) adidas AG Balance Sheet December 31, 2013 (Euros in millions) Assets Noncurrent assets Intangible assets …………………………………………… € 148 Tangible and other assets ……………………………… 304 Other noncurrent assets ………………………………… 3,476 Total noncurrent assets …………………………………. 3,928 Current assets […]

Problem 3-5A (50 minutes) Part 1 CHIARA COMPANY Income Statement For Year Ended December 31, 2015 Revenues Fees earned ………………………………………. $484,000 Interest earned …………………………………… 24,000 Total revenues …………………………………… $508,000 Expenses Depreciation expense—Automobiles ….. 26,000 Depreciation expense—Equipment …….. 18,000 Salaries expense […]

Problem 3-6A (Continued) Common Stock Acct. No. 307 Date Explanation PR Debit Credit Balance April 1 50,000 50,000 Retained Earnings Acct. No. 318 Date Explanation PR Debit Credit Balance April 30 Closing 2,197 2,197 30 Closing 1,500 697 Dividends Acct. […]

Problem 3-6B (Continued) Part 3 SAFE STORAGE CO. Unadjusted Trial Balance July 31, 2015 No. Account Title Debit Credit 101 Cash …………………………………………………………… $ 22,850 106 Accounts receivable …………………………………… 0 124 Office supplies ……………………………………………. 2,400 128 Prepaid insurance ………………………………………. 7,200 173 […]

Problem 3-8B (75 minutes) Part 1 ANARA CO. Income Statement For Year Ended December 31, 2015 Revenues Professional fees earned …………………………….. $59,600 Rent earned ………………………………………………… 4,500 Dividends earned ……………………………………….. 1,000 Interest earned ……………………………………………. 1,320 Total revenues ……………………………………………. $66,420 Expenses Depreciation […]

CHAPTER 4 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 4-1, 4-18 […]

Alternate Demonstration Problem #1 Chapter Four The following data was taken from ledger account balances and supplementary data for the Whisk Company. Whisk Company uses periodic inventory method to account for its inventory. Merchandise inventory, beginning ………………………………………… $ 20,000 Merchandise […]

Chapter 4 ACCOUNTING FOR MERCHANDISING OPERATIONS True /False Questions 1. Merchandise inventory refers to products that a company owns and intends to sell to customers. 2. A service company earns net income by buying and selling merchandise. Answer: False Blooms: […]

EXERCISES Exercise 4-1 (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 […]

Exercise 4-12 (10 minutes) Multiple–Step Income Statement — Sales Related Information Only Sales (gross) ……………………………………………………… $200,000 Less: Sales discounts …………………………………….. $ 4,000 Sales returns and allowances ………………… 16,000 20,000 Net sales ……………………………………………………………. 180,000 Exercise 4-13 (20 minutes) The employee’s oversight […]

PROBLEM SET B Problem 4-1B (40 minutes) May 2 Merchandise Inventory ………………………………. 10,000 Accounts Payable—Havel ……………………. 10,000 Purchased goods on credit, terms 1/15, n/30. 4 Accounts Receivable—Heather ………………….. 11,000 Sales…………………………..………………………. 11,000 Sold goods on credit, terms 2/10, n/60. 4 Cost […]

Problem 4-5B (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) ………………………………. […]

Comparative Analysis — BTN 4-2 1. Apple Google ($ millions) Current Prior Current Prior Net sales ……………… $170,910 $156,508 $59,825 $50,175 Cost of sales ………… 106,606 87,846 25,858 20,634 Gross margin ……….. $ 64,304 $ 68,662 $33,967 $29,541 Gross margin […]

CHAPTER 5 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 5-1, 5-23 5-1 5-8 C2. Identify […]

Chapter 5 INVENTORIES AND COST OF SALES True / False Questions 1. Goods in transit are automatically included in inventory regardless of whether title has passed to the buyer. 2. Goods on consignment are goods shipped by their owner, called […]

EXERCISES Exercise 5-1 (10 minutes) 1. The title will pass at “destination” which is Harlow Company’s receiving dock. Harris should show the $12,500 in its inventory at year– end as Harris retains title until the goods reach Harlow Company. 2. […]

Exercise 5-15A (20 minutes) Periodic Inventory Ending Inventory Cost of Goods Sold a. Specific Identification (50 x $2.80) + (10 x $2.00) ………………………………. $160.00 $2,540.00 [Goods Available] – $160.00 [Ending Inventory] ……. $2,380.00 b. Weighted Average ($2,540.00/1,000 = $2.54) (60 […]

Problem 5-10AB (25 minutes) WAYWARD COMPANY Estimated Inventory at March 31 Goods available for sale Inventory, January 1 …………………………………….… $ 302,580 Cost of goods purchased ……………………………..… 941,040 Goods available for sale ……………………………….… 1,243,620 Less estimated cost of goods sold Sales […]

Problem 5-3B (Continued) 3d. Specific Identification Date Goods Purchased Cost of Goods Sold Inventory Balance May 1 150 @ $300 = $ 45,000 May 6 350 @ $350 = $122,500 150 @ $300 350 @ $350 = $167,500 May 9 […]

Serial Problem — SP 5, Business Solutions (concluded) 2. Per Unit Total Total LCM Applied Inventory Items Units Cost Market Cost Market To Items Office productivity …….. 3 $ 76 $ 74 $228 $222 $222 Desktop publishing …… 2 103 […]

Teamwork in Action (Continued) LIFO Expert: (a) and (b) Concept: Purchases are always recorded at actual costs. The LIFO cost flow assumption requires (i) units sold be assigned the most recent cost—total cost of goods sold is tallied based on […]

CHAPTER 6 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 6-1, 6-11 6-1, 6-2 […]

Chapter 6 CASH AND INTERNAL CONTROLS True/False Questions 1. A properly designed internal control system is a key part of systems design, analysis, and performance. 2. The use of internal controls provides a guarantee against losses due to operating activities. […]

Exercise 6-6 (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 ………………………………………….… 16 Miscellaneous Expenses ………………………………… 43 Cash […]

Problem 6-4A (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 statement balance will not be affected by […]

Reporting in Action — BTN 6-1 1. ($ in millions) Balance September 28, 2013 Cash and equivalents as % of: Balance September 29, 2012 Cash and equivalent s as % of: Cash and cash equivalents …………… $ 14,259 — $ […]

CHAPTER 7 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 7-1, 7-13 7-1, 7-2 7-1, 7-4 7-5, […]

VISUAL # 7-1 METHODS OF ACCOUNTING FOR BAD DEBTS DIRECT WRITE-OFF METHOD Accounts for bad debts from an uncollectible account receivable at the time account is determined to be uncollectible. ALLOWANCE METHOD At the end of each accounting period, bad […]

Exercise 7-8 (20 minutes) Feb. 1 Allowance for Doubtful Accounts ……………………..…. 6,800 Accounts Receivable—Oakley Co ……………….…. 900 Accounts Receivable—Brookes Co …………….…. 5,900 To write off specific accounts. June 5 Accounts Receivable—Oakley ………………………….. 900 Allowance for Doubtful Accounts ………………..…. 900 To […]

Problem 7-5A (75 minutes) Part 1 2014 Dec. 16 Notes Receivable—D. Todd ………………………….. 10,800 Accounts Receivable—D. Todd ………………. 10,800 To record note received on account. 31 Interest Receivable ………………………………………. 36 Interest Revenue ……………………………………. 36 To record interest earned [$10,800 x […]

SERIAL PROBLEM — SP 7 Serial Problem — SP 7, 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 […]

Chapter 8 ACCOUNTING FOR LONG-TERM ASSETS True / False Questions 1. Plant assets refer to nonphysical assets that are used in the operations of a business. 2. Plant assets are used in operations and have useful lives that extend over […]

Exercise 8-9 (30 minutes) Straight–line depreciation Income before Depreciation Depreciation Expense* Net Income Year 1 …….. $ 88,500 $ 38,960 $ 49,540 Year 2 …….. 88,500 38,960 49,540 Year 3 …….. 88,500 38,960 49,540 Year 4 …….. 88,500 38,960 49,540 […]

Problem 8-3A (45 minutes) Part 1 Land Building 2 Building 3 Land Improve- ments 1 Land Improvements 2 Purchase price* ……….……… $1,612,000 $598,000 $390,000 Demolition ……………………… 328,400 Land grading …………..……… 175,400 New building…………………… $2,202,000 New improvements ….……… _________ _______ _________ […]

Problem 8-5B (40 minutes) 2014 Jan. 1 Machinery ………………………………………………………. 114,270 Cash ………………………………………………………….….. 114,270 To record costs of machinery ($107,800 +$6,470). Dec. 31 Depreciation Expense—Machinery …………………..….. 17,425 Accumulated Depreciation—Machinery ………….. 17,425 To record depreciation [($114,270-$9,720)/6]. 2015 Dec. 31 Depreciation Expense—Machinery …………………..….. […]

Ethics Challenge — BTN 8-3 1. When managers acquire new assets a number of decisions relative to depreciation must be made. Specifically, the asset must be assigned a useful life, a salvage value, and a method of depreciation. 2. When […]

CHAPTER 9 ACCOUNTING FOR CURRENT LIABILITIES 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 9-1, 9-14 9-1 9-5 C2. Identify and describe […]

Chapter 9 ACCOUNTING FOR CURRENT LIABILITIES True / False Questions 1. A liability is a probable future payment of assets or services that a company is presently obligated to make as a result of past transactions or events. 2. Obligations […]

Exercise 9-9 (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 […]

Problem 9-3A (60 minutes) 1. Each employee’s FICA withholdings for Social Security Dahlia Trey Kiesha Chee Total Maximum base ………….. $117,000 $117,000 $117,000 $117,000 Earned through 8/18 ….. 115,900 116,100 7,100 1,050 Yet under maximum …… $ 1,100 $ 900 […]

Comprehensive Problem Bug–Off Exterminators (100 minutes) Part 1 a. Correct ending balance of cash and the amount of the omitted check Balance per bank ………………………….. $15,100 Plus deposit in transit …………………..… 2,450 Less outstanding checks ………………… (1,800) Reconciled balance ………………………… […]

Ethics Challenge — BTN 9-3 1. It is in Bly’s self-interest to maximize the amount of revenues less warranty expenses so as to maximize his personal bonus. Since Bly has some input into setting the warranty expense accrual percent, he […]

Chapter 7 Accounting for Receivables True/False Questions 1. A receivable is an amount due from another party. 2. Credit sales are recorded by crediting an Accounts Receivable. Answer: False Blooms: Remember AACSB: Communication AICPA BB: Industry AICPA FN: Measurement Difficulty: […]