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1) Shaw Corporation reported stockholders' equity on December 31 of the prior year as
follows:
The following selected transactions occurred during the current year:
Prepare a statement of retained earnings as of December 31 of the current year.
2) Goods that are in transit and were shipped FOB shipping point should be included in
the inventory records of the _______________________.
3) Explain the amortization of a bond premium. Identify and describe the amortization
methods available.
4) Cleveland Company manufactures two products, Product A-33 and Product C-17.
Product C-17 is the more complex of the two products, requiring 1.5 hours of direct
labor per unit to manufacture compared to 1.0 hour of direct labor time for Product
A-33. Product C-17 is produced on an automated production line.
The company estimated it would incur $510,000 in manufacturing overhead costs and
produce 10,000 units of Product C-17 and 40,000 units of Product A-33 during the
current year.
Unit costs for materials and labor are:
Required:
The company is considering the use of activity-based costing as an alternative to its
current traditional costing method for manufacturing overhead. Data relating to the
company's activity cost pools for the current year are given below:
Using the data above, determine the unit product cost of Product A-33 for the current
year.
5) The ___________ shows expected cash inflows and outflows during the budget
period.
6) A company had the following items and amounts in its unadjusted trial balance as of
December 31 of the current year:
Prepare the adjusting entry to estimate bad debts assuming bad debts are estimated to be
2.5% of credit sales.
7) The comparative balance sheet for Silverlight Co. is shown below. Express the
balance sheet in common-size percentages.
8) Match the following terms with the appropriate definition.
9) A company is planning to introduce a new portable computer to its existing product
line. Management must decide whether to make the computer case or buy it from an
outside supplier. The lowest outside price is $90. If the case is produced internally, the
company will have to purchase new equipment that will yield annual depreciation of
$130,000. The company will also need to rent a new production facility at $200,000 a
year. At 20,000 cases per year, a preliminary analysis of production costs shows the
following:
Per Case
Required:
(1) Determine whether the company should make the cases or buy them from the
outside supplier.
(2) What other factors, besides cost, should the company consider?
10) A company issued 10-year, 9% bonds, with a par value of $500,000 when the
market rate was 9.5%. The issuer received $484,087 in cash proceeds. Prepare the
issuer's journal entry to record the bond issuance.
