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The just-in-time costing system waits until the units are completed to record the cost of production. An annuity is a stream of equal cash payments made at equal time intervals. TRUE AICPA Functional: Measurement PE Question Type: Concept Developing efficiency […]

On January 1, 2015, the Accounts Receivable of Linda, Inc. had a debit balance of $180,000. During January, the company provided services for $700,000 on account. The company collected $230,000 from its customers on account in January. What was the […]

Extra compensation items that are not paid directly to an employee are called ________. A) bonuses B) benefits C) wages D) commissions Lightfoot Company sells its product for $55 and has variable cost of $30 per unit. The total fixed […]

In selecting machine usage as the primary cost driver for the Production Department, management feels that there is a direct relationship between the number of machine hours used and the amount of overhead costs incurred. The current ratio is calculated […]

A production cost report provides inventory and cost of goods sold data that are needed for the balance sheet. A current ratio that has increased from the prior period indicates an improvement in the company’s ability to pay its current […]

Which of the following decisions will most likely involve the use of activity-based management? A) decisions related to the financing of an investment using equity or debt B) decisions related to the expansion operations in a particular geographic location C) […]

An operational budget is a short-term financial plan that coordinates activities needed to achieve short-term goals. A retailer purchases goods from a manufacturer and sells them to customers. TRUE AICPA Functional: Measurement PE Question Type: Concept H2 : What Are […]

Felix Skateboards Company uses the indirect method to prepare the statement of cash flows. Refer to the following income statement: Felix Company Income Statement Year Ended December 31, 2017 Additional information provided by the company includes the following: 1. Current […]

Net income (loss) is the difference between the total debits and the total credits in the income statement columns of the worksheet. Capitalizing a cost involves crediting the asset account. FALSE AICPA Functional: Measurement PE Question Type: Concept H2 : […]

Cash in the bank is more liquid than a petty cash fund. In practice, most companies face complex situations. In these cases, a spreadsheet can help in preparing the statement of cash flows. TRUE AICPA Functional: Measurement PE Question Type: […]

Which of the following securities typically pays interest? A) equity securities B) preferred stocks C) corporate bonds D) significant interest investment Manhattan Enterprises manufactures cookware sets and sells the sets to department stores. Manhattan expects to sell 2,400 cookware sets […]

Which of the following statements is true of the just-in-time costing system? A) It increases the need for suppliers to deliver raw materials on time. B) It records summary journal entries before the units are purchased. C) It results in […]

Direct labor costs are accumulated in the Manufacturing Overhead account. For a centralized company, the major planning and controlling decisions are made by top management. TRUE AICPA Functional: Measurement PE Question Type: Concept The terms of payment for a note […]

When a company is using the direct write-off method, and an account is written off, the journal entry consists of a ________. A) debit to Accounts Receivable and a credit to Cash B) credit to Accounts Receivable and a debit […]

Ending inventory equals the cost of goods available for sale less beginning inventory. The two major types of receivables are interest receivable and taxes receivable. FALSE AICPA Functional: Measurement PE Question Type: Concept H2 : Types of Receivables A manufacturer […]

Knowing the unit cost per item helps managers set appropriate selling prices. When a manufacturing company uses a standard cost system, Work-in-Process Inventory is debited at standard input quantities and standard costs. TRUE AICPA Functional: Measurement PE Question Type: Concept […]

Accounting is the information system that measures business activities, processes the information into reports, and communicates the results to decision makers. Revenue center responsibility reports show all costs incurred by the department and are useful when management needs to know […]

The return on investment formula focuses on the amount of operating income earned before considering other revenue and expense items, such as interest expense. The accounting rate of return is calculated by dividing the average annual operating income by the […]

When preparing the report to analyze a proposed quality improvement program, which of the following are included in the costs to continue without the quality improvement program? A) prevention and appraisal B) prevention and internal failure C) internal and external […]

Generally Accepted Accounting Principles (GAAP) require every organization to prepare reversing entries. The accounting rate of return also is known as the average rate of return or annual rate of return. TRUE AICPA Functional: Decision modeling PE Question Type: Concept […]

The return on investment of a company is a measure of profitability and efficiency. Absorption costing is required by the Generally Accepted Accounting Principles (GAAP) for financial statements issued to investors, creditors, and other external users. TRUE AICPA Functional: Measurement […]

Regardless of the type of plant asset disposal, the first step is to bring the depreciation up to date. The income statement also is called the statement of financial position. FALSE AICPA Functional: Measurement PE Question Type: Concept H2 : […]

The California Fitness Company completed the flexible budget analysis for the second quarter, which is given below. Which of the following statements would be a correct analysis of the flexible budget variance for variable costs? A) decrease in sales price […]

All available-for-sale investments are reported as long-term assets on the balance sheet. Mumbai Travel Services provided the following information: Direct labor rate: $40 per hour Predetermined overhead allocation rate for indirect costs: $22 per direct labor hour If Mumbai Travel […]

On June 30, Caroline, Inc. finished Job 750 with total job costs of $4,400 and transferred the costs to Finished Goods Inventory. On July 6, Caroline completed the sale of the goods from Job 750 to a customer for $6,000 […]

Spirit Company makes special equipment used in cell towers. Each unit sells for $400. Spirit produces and sells 12,500 units per year. They have provided the following income statement data: A foreign company has offered to buy 85 units for […]

A quarterly report filed with the Securities and Exchange Commission is called a Form 10-K. Performance evaluation systems provide top management with a framework for maintaining control over the entire organization. TRUE AICPA Functional: Measurement PE Question Type: Concept A […]

Sand Corporation manufactures two styles of lamps—a Bedford Lamp and a Lowell Lamp. The following per unit data are available: Total fixed costs are $42,000, and the machine hour capacity is 32,000 hours per year. The Lowell Lamp has the […]

Marketable securities are also known as ________. A) short-term investments B) held-to-maturity investments C) debt investments D) long-term investments Deal Corporation sells a product for $500 on account to Liza Masters. This transaction will be recorded in the ________. A) […]

Budgeting software is often designed as a component of the company’s Enterprise Resource Planning (ERP) system. According to Generally Accepted Accounting Principles, if the fair value of goodwill decreases below its book value, an impairment loss must be recorded. TRUE […]

________ is a costing system that starts with output that has been completed and then assigns manufacturing costs to units sold and to inventories. A) Job costing B) Batch costing C) Backflush costing D) Process costing Maize Corporation pays $532,000 […]

Uncontrollable costs are the costs that can be influenced by the decisions of a manager. The current ratio is calculated using the values from the income statement. FALSE AICPA Functional: Measurement PE Question Type: Concept H2 : How Do We […]

A just-in-time costing system does not use the Finished Goods Inventory account; instead, it combines the Finished Goods Inventory account with the Work-in-Process Inventory account. If an investment’s internal rate of return is higher than the required rate of return, […]

Which of the following would be considered a direct labor cost for a manufacturing company? A) wages of the assembly line staff B) wages of the factory janitors C) wages of the factory manager D) salaries of the internal auditors […]

The financing section of the statement of cash flows involves transactions relating to the equity accounts and the long-term liability accounts. Differential analysis is a common approach to making long-term business decisions. FALSE Explanation: Differential analysis is a common approach […]

If a business changes the estimated useful life, or estimated residual value, of a plant asset, depreciation expense must be recalculated. Under the perpetual inventory system, two journal entries are used to record the sales of merchandise. One entry records […]

Fixed manufacturing overhead is considered a product cost under variable costing. After a bond is issued, investors may buy and sell it through the bond market. TRUE AICPA Functional: Measurement PE Question Type: Concept H2 : Bond Prices Both job […]

The following details have been extracted from the budget of a merchandising company. Commissions and salaries expenses are paid 50% in the month to which they are incurred and the balance in the next month. Rent and miscellaneous expenses are […]

The purchase of treasury stock ________. A) decreases assets and stockholders’ equity B) increases assets and stockholders’ equity C) increases assets and decreases stockholders’ equity D) decreases assets and increases stockholders’ equity Which of the following is true when the […]

From the graph given below, identify the sales revenue line. A) OB B) AC C) AD D) AE Black Hills Manufacturing has two processing departments, Department I and Department II. During the year, direct materials worth $38,000 purchased on account […]

Investments accounted for by the equity method are recorded at cost at the time of purchase. Absorption costing is more appropriate when determining the product costs for long-term planning. TRUE AICPA Functional: Measurement PE Question Type: Concept The Accumulated Depreciation […]

The beginning balance in the Retained Earnings account of a company was $11,000. The revenues and expenses were $220,000 and $170,000, respectively. During the year, the company paid dividends of $4,000. The ending balance in Retained Earnings was $61,000. On […]

First Buy Television Antenna Company provided the following manufacturing costs for the month of June. From the above information, calculate First Buy’s total fixed costs. A) $298,800 B) $40,200 C) $60,200 D) $64,200 In 2017, a corporation purchased a small […]

Dillani, Inc. is a consulting firm that offers optimal legal solutions. It allocates indirect costs using a single predetermined overhead allocation rate with direct labor hours as the allocation base. The estimated indirect costs for this year amount to $200,000. […]

Assets are something of value that the business owns or has control of. Nurix, Inc. sold goods on credit terms n/20 to Jelly Harper, Inc. This means no discounts are offered, and the amount of the invoice is due 20 […]

Benchmarking is the practice of comparing a company with other leading companies. A security is a share or interest representing financial value. TRUE AICPA Functional: Measurement PE Question Type: Concept H2 : Debt Securities Versus Equity Securities Under absorption costing, […]

The Frozen Lake Company issues $503,000 of 10%, 10-year bonds at 107 on March 31, 2017. The bond pays interest on March 31 and September 30. Assume that the company uses the straight-line method for amortization. The journal entry to […]

Regarding the separation of corporate ownership and management, which of the following is a true statement? A) The corporate officers elect the board of directors. B) The corporation runs better with day-to-day input from stockholders. C) None of the stockholders […]

Jewel Tone Paints Company uses the direct method for preparing its statement of cash flow. Jewel Tone reports the following information regarding 2017: From the income statement: Sales Revenues, $267,000 Cost of Goods Sold, $213,000 Operating Expenses, $33,000 From the […]

Which of the following is true of internal control? A) A company’s outside auditor is responsible for the company’s internal control system. B) One of the major purposes of internal control is to ensure that the assets are safeguarded. C) […]

Higher fixed costs increase the total number of units required to break even. Dezire Travel Services provided the following information: Direct labor rate: $80 per hour Predetermined overhead allocation rate for indirect costs: $18 per direct labor hour If Dezire […]

Discounted cash flow methods, such as net present value and internal rate of return, ________. A) use simple interest calculations B) use net income amounts rather than cash flows C) focus on the payback period D) consider discounted cash flows […]

In a cash receipts journal, ________. A) cash sales are recorded in the Accounts Receivable CR column and the Cash DR column B) collections on account are recorded in the Accounts Receivable DR column and the Cash DR column C) […]

The accounting rate of return shows the effect of the investment on the company’s accrual-based income. Journal entries are required if the bank reconciliation includes outstanding checks. FALSE AICPA Functional: Measurement PE Question Type: Concept H2 : Journalizing Transactions From […]

Liabilities represent creditors’ claims on the business’s assets. Debits in the journal are always posted as debits in the ledger. TRUE AICPA Functional: Measurement PE Question Type: Concept H2 : Journalizing and Posting Transactions A predetermined overhead allocation rate is […]

The difference that arises between the balance on the bank statement and the balance on the company’s books because of a time lag in recording transactions is known as a timing difference. Critical thinking and judgment skills are not necessary […]

If a physical count of inventory indicates that the Merchandise Inventory account is overstated, an adjusting entry is required to record the difference. Long Company owns a 2% investment in the common stock of Smith Company. The receipt of a […]

When using the periodic inventory system, the process of recording the ending Merchandise Inventory is completed by making an adjusting entry. If the debt ratio is too high, the company may be unable to pay its debts. TRUE AICPA Functional: […]

Equipment was acquired for $210,000 and has accumulated depreciation of$93,000. The business exchanges this equipment for new equipment. The new equipment has a market value of $304,000 and the business pays $52,000 cash. Assume the exchange has commercial substance. The […]

When a business records the earning of service revenue, the Service Revenue account is credited. In order to keep accurate records about the collection of cash for a previously written off account, collection of cash for a previously written off […]

For an accounting equation to balance, a transaction must affect both sides of the equation. A compound journal entry has more than two accounts, but the total dollar value of the debits still must equal total dollar value of the […]

The direct write-off method for uncollectible accounts violates the matching principle. Discontinued operations and extraordinary items are reported without consideration of the income tax effects. FALSE AICPA Functional: Measurement PE Question Type: Concept The units-of-production method is used to compute […]

On July 7, Smithview Bank lent $430,000 to Andrews Retail Shop on a 90 day, 6% note. What is the maturity date of the note? A) October 7 B) October 5 C) October 6 D) October 8 Princeton Avionics makes […]

Accountants record ________. A) economic recessions B) estimated future transactions C) a transaction or any event that affects the financial position of the business and can be measured with faithful representation D) the $20,000 increase in value of a building […]

Requirements 1. Use the appropriate journal to record the preceding transactions in a sales journal (omit the Invoice No. column), a cash receipts journal, a purchases journal, a cash payments journal (omit the Check No. column), and a general journal. […]

SOLUTION Requirements 1, 2 and 3 Sales Journal Page 1 Date Invoice No. Customer Account Debited Post. Ref. Accounts Receivable DR Cost of Goods Sold DR Sales Revenue CR Merchandise Inventory CR 2016 Nov. 2 Image, Inc. ✓ 2,200 200 […]

Note: Short Exercise SC-10 must be completed before attempting Short Exercise SC-11. SC-11 Posting transactions from a cash payments journal to a subsidiary ledger and general ledger Learning Objective 3 Review your results from Short Exercise SC-10. Requirements 1. Total […]

Comprehensive Problem, cont. Requirements 1 and 3, cont. Insurance Expense No. 516 Date Post. Ref. Debit Credit Balance Debit Credit Bal. 0 Supplies Expense No. 519 Date Post. Ref. Debit Credit Balance Debit Credit Bal. 0 Subsidiary Ledgers Accounts Receivable—Finnish […]

Appendix C Accounting Information Systems Review Questions 1. What is an accounting information system (AIS)? An accounting information system (AIS) is a system that collects, records, stores, and processes accounting data to produce information that is useful for decision makers. […]

Comprehensive Problem, cont. Requirement 7 QUICK NETWORKING SYSTEMS Income Statement For the Month Ended August 31 Sales Revenue $ 13,296 Less: Sales Returns and Allowances (550) Sales Discounts (56) Net Sales Revenue $ 12,690 Cost of Goods Sold (4,031) Gross […]

1-57 P1-51B Preparing financial statements Learning Objective 5 Total Assets $47,400 The bookkeeper of Beautiful World Landscaping prepared the company’s balance sheet while the accountant was ill. The balance sheet contains numerous errors. In particular, the bookkeeper knew that the […]

1-1 Chapter 1 Accounting and the Business Environment Review Questions 1. What is accounting? Accounting is the information system that measures business activities, processes the information into reports, and communicates the results to decision makers. Accounting is the language of […]

1-41 P1-44A Preparing financial statements Learning Objective 5 Total Assets $47,100 The bookkeeper of Lone Star Landscaping prepared the company’s balance sheet while the accountant was ill. The balance sheet contains numerous errors. In particular, the bookkeeper knew that the […]

Chapter 11 Current Liabilities and Payroll Review Questions 1. What are the three main characteristics of liabilities? The three main characteristics of liabilities are: • They occur because of a past transaction or event. • They create a present obligation […]

E11-20 Recording employee and employer payroll taxes Learning Objective 2 2. Salaries & Wages Payable $17,060.10 District Company had the following partially completed payroll register: Requirements 1. Complete the payroll register. 2. Journalize District’s wages expense accrual for the current […]

SOLUTION Requirement 1 a. $200,000 b. $168,000 c. $200,000 × 0.08 × 12/12 = $16,000; semiannual is $16,000 × 1/2 = $8,000 d. $200,000 – ($200,000 × 0.80) = $40,000 Discount / 10 years = $4,000 per year plus $16,000 […]

SOLUTION Requirement 1 Date Accounts and Explanation Debit Credit 2016 Apr. 1 Equipment 56,000 Notes Payable 56,000 Purchased equipment by issuing an 7-year, 13% note. Dec. 31 Interest Expense ($56,000 × 0.13 × 9/12) 5,460 Interest Payable 5,460 Recognized accrued […]

P13-37A, cont. Requirement 2 *Net income $96,000 – Dividends $16,000 = $80,000 Stockholders’ Equity Paid-In Capital: Cumulative Preferred Stock—7%, $50 Par Value; 50,000 shares authorized, 900 shares issued and outstanding $ 45,000 Paid-In Capital in Excess of Par—Preferred 18,000 Common […]

SOLUTION Requirement 1 Date Accounts and Explanation Debit Credit Jan. 16 Cash Dividends 32,943 Dividends Payable—Preferred (6% × $97 × 1,150 shares) 6,693 Dividends Payable—Common ($0.25 × 105,000 shares) 26,250 Declared cash dividend. Feb. 15 Dividends Payable—Preferred 6,693 Dividends Payable—Common […]

P14B-38A, cont. Panel B – Statement of Cash Flows: Cash Flows from Operating Activities: Net Income (a) 62,500 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation Expense—Plant Assets (b) 15,600 Decrease in Accounts Receivable (c) […]

SOLUTION Requirement 1 ROOST DEPARTMENT STORES, INC. Common-Size Income Statement Year Ended December 31, 2016 Roost Average Industry Average Net Sales 100.0% 100.0% Cost of Goods Sold 67.6 65.8 Gross Profit 32.4 34.2 Operating Expenses 21.0 19.7 Operating Income 11.4 […]

Requirements 1. Compute the following ratios for 2016 and 2015: a. Current ratio b. Cash ratio c. Times-interest-earned ratio d. Inventory turnover e. Gross profit percentage f. Debt to equity ratio g. Rate of return on common stockholders’ equity h. […]

Chapter 15 Financial Statement Analysis Review Questions 1. What are the three main ways to analyze financial statements? The three main ways to analyze financial statements are horizontal analysis, vertical analysis, and ratio analysis. 2. What is an annual report? […]

E16-21 Computing cost of goods manufactured Learning Objective 4 Consider the following partially completed schedules of cost of goods manufactured. Compute the miss- ing amounts. SOLUTION (a) Total Manufacturing Costs to Account For $ 55,300 Total Manufacturing Costs Incurred during […]

SOLUTION CHILI MANUFACTURING COMPANY Schedule of Cost of Goods Manufactured Month Ended June 30, 2016 Beginning Work-in-Process Inventory $ 21,000 Direct Materials Used: Beginning Raw Materials Inventory $ 26,000 Purchases of Raw Materials 58,000 Raw Materials Available for Use 84,000 […]

Chapter 16 Introduction to Managerial Accounting Review Questions 1. What is the primary purpose of managerial accounting? The primary purpose of managerial accounting is to provide information to help managers plan and control operations. 2. Explain the difference between planning […]

P16-39B, cont. Requirement 2 ORGANIC BONES Income Statement Year Ended December 31, 2016 Revenues: Sales Revenue $ 114,000 Cost of Goods Sold: Beginning Finished Goods Inventory $ 0 Cost of Goods Manufactured* 68,700 Cost of Goods Available for Sale 68,700 […]

E17-21 Allocating and adjusting manufacturing overhead Learning Objectives 3, 5 2. Underallocated by $15,500 The manufacturing records for Bob’s Boats at the end of the 2016 fiscal year show the following information about manufacturing overhead: Requirements 1. How many machine […]

June transactions are summarized as follows: a. Collections on account, $150,000. b. Selling and administrative expenses incurred and paid, $33,000. c. Payments on account, $40,000. d. Materials purchases on account: Paper, $20,000; indirect materials, $5,000. e. Materials requisitioned and used […]

SOLUTION Requirement 1 Overhead Allocation Rate = Total estimated overhead costs Total estimated quantity of the overhead allocation base = $217,200* = $7.50 per MHr 28,960 MHrs *$14,000 + $45,000 + $25,000 + $46,000 + $87,200 = $217,200 Predetermined Requirement […]

Chapter 17 Job Order Costing Review Questions 1. Why do managers need to know the cost of their products? If the manager knows the cost to produce each unit of product, then the manager can plan and control the cost […]

P18-37B, cont. Requirement 2 Date Accounts and Explanation Debit Credit Sep. 30 Work-in–Process Inventory―Mixing 5,675 Raw Materials Inventory 5,675 Materials used, direct materials assigned to WIP. Work-in–Process Inventory―Mixing 570 Wages Payable 570 Labor incurred, direct labor assigned to WIP. Work-in–Process […]

Requirements 1. Compute the Blending Department’s equivalent units of production for direct ma– terials and for conversion costs. 2. Compute the total costs of the units (gallons) a. completed and transferred out to the Packaging Department. b. in the Blending […]

Chapter 18 Process Costing Review Questions 1. What types of companies use job order costing systems? Companies that manufacture batches of unique products or provide specialized services use job order costing systems. Some examples would be accounting firms, lawyers, building […]

P18-29A, cont. Requirement 2 Work-in–Process―Assembly Balance, Nov. 1 0 516,768 Transferred to Programming Direct Materials 375,720 Direct Labor 157,500 Manufacturing Overhead 98,505 Balance, Nov. 30 114,957 P18-30A Preparing a production cost report, no beginning WIP or costs transferred in; journal […]

Note: Short Exercise S19-10 must be completed before attempting Short Exercise S19-11. S19-11 Using ABM in a service company Learning Objective 4 Refer to Short Exercise S19-10. Western desires a 20% target operating income after covering all costs. Considering the […]

P19-40B, cont. Requirement 2 bookcases bookcases Pre-manufacturing costs per unit $ 6 $ 2 Manufacturing product costs per unit (a) 75 48 Post-manufacturing costs per unit 20 15 Full product costs per unit $ 101 $ 65 (a) Calculated in […]

Chapter 19 Management Systems: Activity-Based, Just-In-Time, and Quality Management Systems Review Questions 1. What is the formula to compute the predetermined overhead allocation rate? The formula to compute the predetermined overhead allocation rate is: Total estimated overhead costs / Total […]

P19-34A Computing product costs in an ABC system Learning Objectives 2, 3 1. Standard $70 per unit Owen, Inc. manufactures bookcases and uses an activity-based costing system. Owen’s activity areas and related data follow: Owen produced two styles of bookcases […]

E19-22, cont. Requirement 3 Predetermined Overhead Allocation Rate × Actual Quantity of the Allocation Base Used = Allocated Manufacturing Overhead Cost $9.20 per DLHr × 14,000 DLHr = $128,800 Total direct materials cost $ 200,000 (b) Total direct labor cost […]

P2-41, cont. Requirements 2 and 3 Cash Accounts Payable Dec. 2 20,000 2,000 Dec. 2 Dec. 26 200 3,000 Dec. 4 Dec. 18 2,100 3,600 Dec. 3 800 Dec. 5 Dec. 21 2,400 150 Dec. 12 3,600 Balance Dec. 28 […]

SOLUTION Requirement 1 Variable Cost Percent of Revenue Financial planner 8% Advertising 13% Supplies and postage 3% Usage fees 6% Total 30% If variable costs are 30% of revenues, then the contribution margin ratio is 70% of revenues. Fixed costs […]

E20-18 Determining cost behavior Learning Objective 1 Identify each cost below as variable (V), fixed (F), or mixed (M), relative to units sold. Explain your reason. SOLUTION a. Mixed Total phone cost has the characteristics of both a fixed cost […]

Problems (Group A) P20-33A Calculating cost-volume-profit elements Learning Objectives 1, 2 The budgets of four companies yield the following information: Requirements 1. Fill in the blanks for each missing value. (Round the contribution margin per unit to the nearest cent.) […]

Chapter 20 Cost-Volume-Profit Analysis Review Questions 1. What is a variable cost? Give an example. Variable costs are costs that increase or decrease in total in direct proportion to increases or decreases in the volume of activity. An example of […]

21-1 Chapter 21 Variable Costing Review Questions 1. What is absorption costing? Absorption costing is a costing method that considers direct materials, direct labor, variable manufacturing overhead, and fixed manufacturing overhead as product costs. Absorption costing is required by GAAP […]

21–21 SOLUTION Requirement 1 REFRESHADE Income Statement For the Month Ending April 30, 2016 Sales Revenue ($30/case × 12,000 cases) $ 360,000 Cost of Goods Sold: Variable ($10/case × 12,000 cases) $ 120,000 Fixed ($45,000 × 12,000/15,000*) 36,000 156,000 Gross […]

SOLUTION Requirement 1 Business Segment Contribution margin / Net sales revenue Contribution margin ratio Borden $1,500 / $5,000 30% Morrissey $3,600 / $9,000 40% Flounder $6,000 / $10,000 60% Requirement 2 Business Segment Borden Service Revenue per Customer $5,000 / […]

Exercises E22-21 Budgeting benefits Learning Objective 1 This year Op. Inc. $1,880,000 David Rodriguez owns a chain of travel goods stores, Rodriguez Travel Goods. Last year, his sales staff sold 25,000 suitcases at an average sales price of $150. Variable […]

P22-52B Using sensitivity analysis Learning Objective 5 1. Option 2 Feb. NI $1,531 Shaner Company prepared the following budgeted income statement for the first quarter of 2016: Shaner Company is considering two options. Option 1 is to increase advertising by […]

Chapter 22 Master Budgets Review Questions 1. List the four budgeting objectives. The four budgeting objectives are: • Develop strategies—overall, long-term business goals • Plan—budget for specific actions to achieve goals • Act—carry out the plans • Control—feedback to identify […]

P22A-45A Preparing a financial budget—schedule of cash receipts, schedule cash payments, cash budget Learning Objective 7 Appendix 22A 1. Jan. total cash recpts. $68,000 3. Feb. total pmts. for S&A exp. $13,056 Knobbles Company’s budget committee provides the following information: […]

SOLUTION Requirement 1 COOKE COMPANY Budgeted Income Statement For the Quarter Ended March 31, 2017 Sales Revenue $ 308,500 Cost of Goods Sold 71,960 Gross Profit 236,540 Selling and Administrative Expenses 25,240 Income before Income Taxes 211,300 Income Tax Expense […]

E22A-34 Preparing an operating budget—selling and administrative expense budget Learning Objective 6 Appendix 22A Qtr. ended Mar. 31 total S&A exp. $21,700 Consider the sales budget presented in Exercise E22A-33. Stewart’s selling and administrative expenses include the following: Prepare a […]

P22-48B, cont. Requirement 5 HANEY BATTING COMPANY Selling and Administrative Expense Budget For the Quarter Ended March 31, 2017 Salaries Expense $ 14,000 Rent Expense 2,500 Insurance Expense 1,900 Depreciation Expense 100 Supplies Expense (1% of $216,000 total sales) 2,160 […]

As True Printing’s controller, you have assembled the following additional information: a. April dividends of $3,500 were declared and paid. b. April capital expenditures of $16,900 budgeted for cash purchase of equipment. c. April depreciation expense, $200. d. Cost of […]

E23-24 Preparing a standard cost income statement Learning Objective 6 GP $1,002,990 All-Star Fender, which uses a standard cost system, manufactured 20,000 boat fenders during 2016. The 2016 revenue and cost information for All-Star follows: Assume each fender produced was […]

SOLUTION Requirement 1 ROOT RECLINERS Flexible Budget Budget Amounts per Unit Actual Units (Recliners) 980 Sales $ 505.00 $ 494,900(d) Variable Manufacturing Costs: Direct Materials 52.20(a) 51,156(e) Direct Labor 90.00(b) 88,200(f) Variable Overhead 30.00(c) 29,400(g) Fixed Manufacturing Costs: Fixed Overhead […]

Exercises E23-15 Preparing a flexible budget Learning Objective 1 $203,500 Op. Inc. for 55,000 units Safe Now sells its main product, ergonomic mouse pads, for $13 each. Its variable cost is $5.30 per pad. Fixed costs are $220,000 per month […]

Chapter 23 Flexible Budgets and Standard Cost Systems Review Questions 1. What is a variance? A variance is the difference between an actual amount and the budgeted amount. 2. Explain the difference between a favorable and an unfavorable variance. A […]

Chapter 24 Responsibility Accounting and Performance Evaluation Review Questions 1. Explain the difference between a centralized company and a decentralized company. In a small company, the owner or top manager often makes all planning and controlling decisions. Small companies are […]

24-21 E24-17 Using ROI and RI to evaluate investment centers Learning Objective 4 1. Residential’s ROI 32.50% Zoes, a national manufacturer of lawn-mowing and snow-blowing equipment, segments its business according to customer type: professional and residential. The following divisional information […]

P26-38, cont. Requirement 1. cont. Server A Server B Total net cash inflows during operating life of server $ 78,000 $ 44,000 Less: Total depreciation during operating life of server 44,000 39,000 Total operating income during operating life 34,000 5,000 […]

P26-35B Using payback, ARR, NPV, IRR, and profitability index to make capital investment decisions Learning Objectives 2, 4 1. Plan A 1.10 profitability index; Plan B $(955,800) NPV Lolas operates a chain of sandwich shops. The company is considering two […]

Requirements 1. Show whether each transaction would be handled as a revenue or an expense using both the cash basis and accrual basis accounting systems by completing the following table. (Expenses should be shown in parentheses.) Also, indicate the dollar […]

SOLUTION Requirement 1 VOICE LINK Worksheet November 30, 2016 Account Names Unadjusted Trial Balance Adjustments Adjusted Trial Balance Income Statement Balance Sheet Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit Cash $ 3,900 $ 3,900 $ 3,900 Accounts […]

Chapter 4 Completing the Accounting Cycle Review Questions 1. What document are financial statements prepared from? The financial statements are prepared from the adjusted trial balance or worksheet. 2. What does the income statement report? The income statement reports revenues […]

Problems (Group A) P4-28A Preparing financial statements including a classified balance sheet in report form, preparing and posting closing entries, and preparing a post-closing trial balance Learning Objectives 1, 3, 4 1. Net Loss $(8,700) The adjusted trial balance of […]

Comprehensive Problem 2, cont. Requirement 2, 5, cont. Salaries Expense Jan. 15 1,500 Adj. 1,000 Bal. 2,500 Depreciation Expense—Truck Adj. 250 Bal. 250 Insurance Expense Adj. 250 Bal. 250 Fuel Expense Jan. 24 250 Bal. 250 Rent Expense Jan. 28 […]

P4-37B, cont. Requirement 2 WALSH ANVILS Worksheet December 31, 2016 Account Names Unadjusted Trial Balance Adjustments Adjusted Trial Balance Income Statement Balance Sheet Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit Cash $ 6,710 $ 6,710 $ 6,710 […]

Net Income 19,890 19,890 Total $ 24,400 $ 24,400 $ 68,370 $ 68,370 © 2016 Pearson Education, Inc. 4-61 P4-31A, cont. Requirement 3 Date Accounts and Explanation Debit Credit Dec. 31 Unearned Revenue 3,900 Service Revenue 3,900 To adjust revenue […]

P5-42B, cont. Requirement 2 FARM FRESH BEEF COMPANY Income Statement Quarter Ended September 30, 2016 Sales Revenue $ 317,800 Less: Sales Returns and Allowances 8,300 Sales Discounts 4,500 Net Sales Revenue $ 305,000 Cost of Goods Sold 158,600 Gross Profit […]

P5A-36A, cont. Mar. 26 Sales Returns and Allowances 200 Accounts Receivable—Smecker 200 29 Cash ($600 – $12) 588 Sales Discounts ($600 × 0.02) 12 Accounts Receivable—Smecker ($800 – $200) 600 30 Cash 2,100 Accounts Receivable—Julian Company ($2,200 – $100) 2,100 […]

Chapter 5 Merchandising Operations Review Questions 1. What is a merchandiser, and what is the name of the merchandise that it sells? A merchandiser is a business that sells merchandise, or goods, to customers. The merchandise that these types of […]

6-96 P6A-37B, cont. Requirement 1, cont. FIFO Cost of Goods Sold: Cost of Goods Available for Sale $ 19,680 Ending Merchandise Inventory (11,080) Cost of Goods Sold $ 8,600 Alternatively, FIFO Cost of Goods Sold: Quantity Unit Cost Total Cost […]

SOLUTION Date Accounts and Explanation Debit Credit Jan. 1 Office Equipment 112,000 Cash 74,000 Note Payable 38,000 To record purchase of office equipment. Apr. 1 Land 255,000 Communication Equipment 85,000 Cash 340,000 To record purchase of land and comm. equipment. […]

SOLUTION Date Accounts and Explanation Debit Credit Jan. 1 Office Equipment 112,000 Cash 78,000 Note Payable 34,000 To record purchase of office equipment. Apr. 1 Land 307,500 Communication Equipment 102,500 Cash 410,000 To record purchase of land and comm. equipment. […]

Saturn Corporation has 13,000 shares of 14%, $84 par noncumulative preferred stock outstanding and 20,000 shares of no-par common stock outstanding. At the end of the current year, the corporation declares a dividend of $180,000. How is the dividend allocated […]

Fixed costs per unit decrease as production levels decrease. Free cash flow is calculated by adding cash payments planned for investments in long-term assets and cash dividends to the amount of net cash provided by operating activities. FALSE AICPA Functional: […]

Bacon Financial Advisors provides accounting and finance assistance to customers in the retail business. Bacon has four professionals on staff and an office with six clerical staff. Total compensation, including benefits, for the professional staff runs about $573,000 per year, […]

Eliasen, Inc. invests its excess cash in Creative Technologies, Inc. and acquires 3,300 shares for $32.50 per share. Eliasen, Inc. owns less than 2% of Creative’s voting stock and plans to hold the stock for two years. Which of the […]

The employees of Royal Clothes achieved all of the sales goals for 2017. Royal decides to reward the employees with a bonus of 20% on annual net income, after deducting the bonus. The net income before the calculation of the […]

Federal Furniture manufactures a small table and a large table. The small table sells for $1,000, has variable costs of $560 per table, and takes 10 direct labor hours to manufacture. The large table sells for $1,700, has variable costs […]

Weller, Inc. provided the following particulars for 2017: Calculate the average number of days that inventory was held by Weller, Inc. during 2017. (Assume 365 days in a year. Round your intermediate calculations and final answer to two decimal places.) […]

The sales revenue of a merchandiser amounted to $25,000, sales returns and allowances amounted to $2,400, and sales discounts amounted to $600. The merchandiser uses a perpetual inventory system. The first entry in the closing process would include ________. A) […]

For each of the following, indicate whether the statement relates to managerial accounting (MA) or financial accounting (FA): The management of Vert Lawnmowers has calculated the following variances: AICPA Functional: Reporting PE Question Type: Concept When determining the total production […]

The Tarrago Company issues $517,000 of 11%, 10-year bonds at 104 on March 31, 2017. The bond pays interest on March 31 and September 30. Assume that the company uses the straight-line method for amortization. Calculate the net balance that […]

Which of the following items should be amortized? A) natural resources B) goodwill C) patents, copyrights, trademarks D) tangible property, plant, and equipment, other than land Which of the following taxes has a ceiling on the amount of annual earnings […]

Accounts Receivable are generally reported at the gross amount on the balance sheet. An increase in sales price per unit increases the number of units required to break even. FALSE AICPA Functional: Measurement PE Question Type: Concept The guidelines for […]

A high current ratio indicates that current liabilities are greater than current assets. The Social Security system is funded by contributions from both the employer and employee. TRUE AICPA Functional: Measurement PE Question Type: Concept H2 : Employer Payroll Taxes […]

When all the units produced are sold, the operating income calculated under absorption costing is higher when compared to the operating income calculated under variable costing. Assume that there is no beginning Finished Goods Inventory. Short-term investments are investments in […]

Which of the following will lower the breakeven point? A) a decrease in the sales price per unit B) an increase in total fixed costs C) an increase in the variable cost per unit D) an increase in the sales […]

A mortgage payable is a long-term debt that is backed with a security interest in specific property. A sales allowance is recorded with a credit to Accounts Payable. FALSE AICPA Functional: Measurement PE Question Type: Concept H2 : Sales Returns […]

A worksheet is an external document that forms a part of the financial statements. When a corporation issues no-par stock, it debits the asset received and credits the stock account. TRUE AICPA Functional: Measurement PE Question Type: Concept The net […]

The date on which the principal amount is repaid to the bondholder is known as the ________. A) issuing date B) interest date C) maturity date D) installment date A(n) ________ is a device that enables members of a local […]