Question: AJ Manufacturing Company incurred $50,000 of

> Partner A has a capital credit of $25,000. Partner B’s capital credit is also $25,000. Partners A and B share profits and losses in a 60:40 ratio. Which partner will receive the first payment of cash in an installment liquidation?

> Define loss absorption potential and explain its importance in determining cash distributions to partners.

> What is a proxy? What must be included in the proxy material submitted to security holders?

> In which cases of a new partner’s admission does the credit to capital equal the new partners’ investment? In which cases of a new partner’s admission is his or her capital credit less than or more than the amount of the investment?

> What types of items that specifically involve the accounting function are reported on Form 8-K?

> Present the arguments for and against the bonus method of recognizing the admission of a new partner.

> What does Regulation S-X cover? What is included in Regulation S-K?

> What is included in Form 10-K? When must a 10-K be filed with the SEC?

> Does a partner leaving the partnership require the partnership to dissolve and wind up its business? Explain how the partnership may purchase the disassociated partner’s interest in the partnership

> Assume that, because of a new law recently passed, the types of significant transactions in which a partnership engages are no longer lawful. Two of the five partners wish to wind up and terminate the partnership. Can these two partners require the partn

> Are salaries to partners a partnership expense? Why or why not?

> When must a company use a Form S-1 registration form? In what circumstances may a company use a Form S-3 registration form?

> The Good-Nite partnership agreement includes a provision for profit distribution of interest on capital balances. Unfortunately, the provision does not state the specific capital balance to be used in computing the profit share. What choices of capital b

> What types of public offerings of securities are exempted from the SEC’s comprehensive registration requirements?

> A partnership agreement specifies that profits will be shared in the ratio of 4:6:5. What percentage of profits will each partner receive? Allocate a profit of $60,000 to each of the three partners.

> Contrast a lump-sum liquidation with an installment liquidation.

> May an individual partner simply decide to leave a partnership? Does the partnership have any legal recourse against that partner? Explain

> Define the following features of a partnership: (a) separate business entity, (b) agency relationship, and (c) partner’s joint and several liability

> X, Y, and Z are partners. The partnership is liquidating, and Partner Z is personally insolvent. What implications may this have for Partners X and Y?

> What items are typically included in the partnership agreement?

> What is the basis of the SEC’s legal authority to regulate accounting principles?

> What are the major causes of a dissolution? What are the accounting implications of a dissolution?

> Why is the partnership form of business organization sometimes preferred over the corporate or sole proprietorship forms?

> Match the items in the left-hand column with the descriptions/explanations in the right-hand column Items 1. Current exchange rate 2. Foreign entity goodwill under translation 3. Credit translation adjustment for the year 4. Other comprehensive inc

> Match the items in the left-hand column with the descriptions/explanations in the right-hand column. Items Descriptions/Explanations A. Hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm com

> Match the items in the left-hand column with the descriptions/explanations in the right-hand column. Items Descriptions/Explanatlons 1. Direct exchange rate 2. Indirect exchange rate 3. Managing an exposed net asset position 4. Spot rates 5. Curre

> What is the attitude toward the possible use of IFRS in the United States?

> The IASB promulgates International Financial Reporting Standards (IFRS). Briefly describe the standard-setting process used by the IASB.

> Match the items in the left-hand column with the descriptions/explanations in the right-hand column. Items Descriptions/Explanations 1. Reportable operating segment 2. 10 percent significance rules 3. Revenue test for material foreign country dis

> How is revenue recognized on an interim basis?

> What information must be disclosed about a company’s major customers? Are the names of customers disclosed?

> Only two materiality tests are used to determine separately reportable foreign operations. What are these two tests?

> Specifically, what items are in the determination of a segment’s profit or loss?

> What is the relationship between the FASB’s requirements for segment-based disclosures and a company’s profit centers?

> What is a joint venture? How are corporate joint ventures accounted for on the books of the investor companies?

> How is the tax benefit of an interim period’s operating loss treated if the future realizability of the tax benefit is not assured beyond a reasonable doubt?

> The partnership of Bull and Bear is in the process of termination. The partners have disagreed on virtually every decision and have decided to liquidate the present business with each partner taking his own clients from the partnership. Bull wants cash d

> Arrow Manufacturing Co. expects to make 50,000 chairs during the 2017 accounting period. The company made 3,000 chairs in January. Materials and labor costs for January were $36,000 and $48,000, respectively. Arrow produced 4,000 chairs in February. Mate

> Erickson Air is a large airline company that pays a customer relations representative $8,000 per month. The representative, who processed 3,000 customer complaints in January and 2,500 complaints in February, is expected to process 40,000 customer compla

> Production workers for Chadwick Manufacturing Company provided 3,200 hours of labor in January and 2,800 hours in February. The company, whose operation is labor intensive, expects to use 48,000 hours of labor during the year. Chadwick paid a $120,000 an

> Ludmilla Construction Company is composed of two divisions: (1) Home Construction and (2) Commercial Construction. The Home Construction Division is in the process of building 12 houses and the Commercial Construction Division is working on three project

> Owen Company makes a product that sells for $61 per unit. The company pays $37 per unit for the variable costs of the product and incurs annual fixed costs of $360,000. Owen expects to sell 20,000 units of product. Required: Determine Owen’s margin of s

> Information concerning a product produced by Ender Company appears here: Sales price per unit……………………………………………………………………….$200 Variable cost per unit………………………………………………………………………$80 Total annual fixed manufacturing and operating costs…………….$600,000 Requir

> Santiago Company incurs annual fixed costs of $66,000. Variable costs for Santiago’s product are $34 per unit, and the sales price is $50 per unit. Santiago desires to earn an annual profit of $34,000. Required: Use the per unit contribution margin appr

> Chang Corporation sells products for $120 each that have variable costs of $80 per unit. Chang’s annual fixed cost is $720,000. Required: Use the per-unit contribution margin approach to determine the break-even point in units and dollars.

> The following income statement applies to Kawai Company for the current year. Income Statement Sales revenue (200 units × $60)……………………………….$12,000 Variable cost (200 units × $36)…………………………………..(7,200) Contribution margin……………………………………………………..4,800 Fixed

> The following income statement was drawn from the records of Joel Company, a merchandising firm. JOEL COMPANY Income Statement For the Year Ended December 31, 2018 Sales revenue (2,000 units × $125)………………………………………………………..$250,000 Cost of goods sold (2,0

> The American Acupuncture Association offers continuing professional education courses for its members at its annual meeting. Instructors are paid a fee for each student attending their courses but are charged a fee for overhead costs that is deducted fro

> Estrada Corporation produced 300,000 watches that it sold for $35 each during 2019. The company determined that fixed manufacturing cost per unit was $14 per watch. The company reported a $2,700,000 gross margin on its 2019 financial statements. Require

> The following income statements illustrate different cost structures for two competing-companies. Required: a. Reconstruct Hill’s income statement, assuming that it serves 400 customers when it lures 200 customers away fro

> Bell Entertainment sells souvenir T-shirts at each rock concert that it sponsors. The shirts cost $7 each. Any excess shirts can be returned to the manufacturer for a full refund of the purchase price. The sales price is $16 per shirt. Required: a. What

> Bell Entertainment sponsors rock concerts. The company is considering a contract to hire a band at a cost of $84,000 per concert. Required: a. What are the total band cost and the cost per person if concert attendance is 2,000, 2,500, 3,000, 3,500, or 4

> Solomon Corporation paid one of its sales representatives $4,000 during the month of March. The rep is paid a base salary plus $10 per unit of product sold. During March, the rep sold 300 units. Required: Calculate the total monthly cost of the sales re

> The following graph setups depict the dollar amount of variable cost on the vertical axes and the level of activity on the horizontal axes. Required: a. Draw a line that depicts the relationship between total variable cost and the level of activity. b.

> The following graph setups depict the dollar amount of fixed cost on the vertical axes and the level of activity on the horizontal axes. Required: a. Draw a line that depicts the relationship between total fixed cost and the level of activity. b. Draw

> Leach Trophies makes and sells trophies it distributes to little league ballplayers. The company normally produces and sells between 6,000 and 12,000 trophies per year. The following cost data apply to various activity levels. Required: a. Complete the

> Tanaka Company’s cost and production data for two recent months included the following: Required: a. Separately calculate the rental cost per unit and the utilities cost per unit for both March and April. b. Identify which cost is var

> Use the 2014 Form 10-K (year ended on January 1, 2014) for Coca-Cola Bottling Co. Consolidated to complete the requirements below. Be aware that Coca-Cola Bottling Co. Consolidated (COKE) is a separate company from The Coca-Cola Company (KO), so do not c

> The following variable production costs apply to goods made by O’Brien Manufacturing Corporation. Item Cost…………………………….per Unit Materials……………………………………….$ 6.00 Labor ……………………………………………….3.00 Variable overhead…………………………….3.50 Total……………………………………………..$12.

> Fanning Corporation incurs the following annual fixed costs. Item…………………………………………………..Cost Depreciation………………………………………….$ 80,000 Officers’ salaries……………………………………..190,000 Long-term lease……………………………………...42,000 Property taxes………………………………………….48,000 Requ

> At the various activity levels shown, Harper Company incurred the following costs. Required: Identify each of these costs as fixed, variable, or mixed. Units Sold 20 40 60 80 100 Rental cost per unit of merchandise sold a. $ 36.00 $ 18.00 $ 12.00 $

> Rachael’s Restaurant, a fast-food restaurant company, operates a chain of restaurants across the nation. Each restaurant employs eight people; one is a manager paid a salary plus a bonus equal to 4 percent of sales. Other employees, two cooks, one dishwa

> Gerty Manufacturing Company has an opportunity to purchase some technologically advanced equipment that will reduce the company’s cash outflow for operating expenses by $640,000 per year. The cost of the equipment is $3,932,522.88. Gerty expects it to ha

> To open a new store, Enid Tire Company plans to invest $320,000 in equipment expected to have a four-year useful life and no salvage value. Enid expects the new store to generate annual cash revenues of $400,000 and to incur annual cash operating expense

> Rolla Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternative is $125,000 and $100,000, respectively. The present value of cash inflows and outflows for the second alternative is $300,

> Aaron Heath is seeking part-time employment while he attends school. He is considering purchasing technical equipment that will enable him to start a small training services company that will offer tutorial services over the Internet. Aaron expects deman

> Monterey Company is considering investing in two new vans that are expected to generate combined cash inflows of $30,000 per year. The vans’ combined purchase price is $93,000. The expected life and salvage value of each are four years and $23,000, respe

> The dean of the School of Fine Arts is trying to decide whether to purchase a copy machine to place in the lobby of the building. The machine would add to student convenience, but the dean feels compelled to earn an 8 percent return on the investment of

> Vulcan College School of Business is divided into three departments: accounting, marketing, and management. Relevant information for each of the departments follows: Vulcan is a private school that expects each department to generate a profit. It rewar

> Gail Trevino expects to receive a $500,000 cash benefit when she retires five years from today. Ms. Trevino’s employer has offered an early retirement incentive by agreeing to pay her $325,000 today if she agrees to retire immediately. Ms. Trevino desire

> Larry Mattingly turned 20 years old today. His grandfather had established a trust fund that will pay him $120,000 on his next birthday. However, Larry needs money today to start his college education, and his father is willing to help. Mr. Mattingly has

> Currie Company has an opportunity to purchase a forklift to use in its heavy equipment rental business. The forklift would be leased on an annual basis during its first two years of operation. Thereafter, it would be leased to the general public on deman

> North Airline Company is considering expanding its territory. The company has the opportunity to purchase one of two different used airplanes. The first airplane is expected to cost $12,000,000; it will enable the company to increase its annual cash infl

> Barbara Harvey is angry with Martin Cochran. He is behind schedule developing supporting material for tomorrow’s capital budget committee meeting. When she approached him about his apparent lackadaisical attitude in general and his tardiness in particula

> Velma and Keota (V&K) is a partnership that owns a small company. It is considering two alternative investment opportunities. The first investment opportunity will have a five-year useful life, will cost $19,680.96, and will generate expected cash inflow

> Required: Indicate which of the following items will result in cash inflows and which will result in cash outflows. The first one is shown as an example. Item Type of Cash Flow a. Initial investment

> Roanoke Company expected to sell 400,000 of its pagers during 2018. It set the standard sales price for the pager at $60 each. During June, it became obvious that the company would be unable to attain the expected volume of sales. Roanoke’s chief competi

> Use the standard price and cost data provided in Exercise 15-2. Assume that the actual sales price is $11.76 per unit and that the actual variable cost is $6.90 per unit. The actual fixed manufacturing cost is $3,000, and the actual selling and administr

> Use the information provided in Exercise 15-2. a. Determine the sales and variable cost volume variances. b. Classify the variances as favorable (F) or unfavorable (U). c. Comment on the usefulness of the variances with respect to performance evaluation

> HealthSouth Corporation claims to be “the nation’s largest owner and operator of inpatient rehabilitation hospitals in terms of revenues, number of hospitals, and patients treated and discharged.” As of December 31, 2014, the company derived 94.5 percent

> Dunlop Company has provided the following 2018 data. Budget Sales…………………………………………………..$400,000 Variable product costs…………………………….163,000 Variable selling expense…………………………..40,000 Other variable expenses…………………………

> Compute variances for the following items and indicate whether each variance is favorable (F) or unfavorable (U). Item Budget Actual Varlance For U $400 $360,000 $192,500 $137,500 $90,000 $390 $390,000 $180,000 $140,000 $89,000 Sales price Sales re

> Indicate whether each of the following variances is favorable or unfavorable. The first one has been done as an example. Item to Classify Standard Actual Type of Varlance Sales volume 50,000 units $4.00 per unit $2.90 per pound 91,000 pounds $10.00

> According to its original plan, Topeka Consulting Services Company plans to charge its customers for service at $120 per hour in 2018. The company president expects consulting services provided to customers to reach 45,000 hours at that rate. The marketi

> Cherokee Manufacturing Company established the following standard price and cost data: Sales price………………………………………………………$12.00 per unit Variable manufacturing cost……………………………..$7.20 per unit Fixed manufacturing cost……………………………………$3,600 total Fixed sellin

> Kawai Corporation, which makes and sells 85,000 radios annually, currently purchases the radio speakers it uses for $8.00 each. Each radio uses one speaker. The company has idle capacity and is considering the possibility of making the speakers that it n

> Levesque Company makes and sells lawn mowers for which it currently makes the engines. It has an opportunity to purchase the engines from a reliable manufacturer. The annual costs of making the engines are shown here. Cost of materials (20,000 units × $

> Steele Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles, which are high-quality racing bikes with limited sales. Steele produces and sells only 10,000 bikes each year. Due to the low volume of activity, S

> Hensely Company, which produces and sells a small digital clock, bases its pricing strategy on a 25 percent markup on total cost. Based on annual production costs for 25,000 units of product, computations for the sales price per clock follow: Unit-l

> Describe the qualitative factors that Katzev should consider before accepting the special order described in Exercise 13-7. Data from Exercise 13-7: Katzev Company manufactures a personal computer designed for use in schools and markets it under its own

> Advances in biological technology have enabled two research companies, Bio Labs, Inc. and Scientific Associates, to develop an insect-resistant corn seed. Neither company is financially strong enough to develop the distribution channels necessary to brin

> Katzev Company manufactures a personal computer designed for use in schools and markets it under its own label. Katzev has the capacity to produce 40,000 units a year but is currently producing and selling only 32,000 units a year. The computer’s normal

> Visburg Concrete Company pours concrete slabs for single-family dwellings. Lancing Construction Company, which operates outside Visburg’s normal sales territory, asks Visburg to pour 40 slabs for Lancing’s new development of homes. Visburg has the capaci

> Norman Dowd owns his own taxi, for which he bought a $10,000 permit to operate two years ago. Mr. Dowd earns $30,000 a year operating as an independent but has the opportunity to sell the taxi and permit for $36,500 and take a position as dispatcher for

> Costs can be classified into one of four categories, including unit-level, batch-level, product-level, or facility-level costs. Required: Classify each of the items listed below into one of the four categories listed previously. The first item has been

> Boyle Company makes fine jewelry that it sells to department stores throughout the United States. Boyle is trying to decide which of two bracelets to manufacture. Cost data pertaining to the two choices follow. Required: a. Identify the fixed costs and

> Kilgore Company makes and sells a single product. Kilgore incurred the following costs in its most recent fiscal year. Kilgore could purchase the products that it currently makes. If it purchased the items, the company would continue to sell them using

> Gayla Ojeda is trying to decide which of two different kinds of candy to sell in her retail candy store. One type is a name-brand candy that will practically sell itself. The other candy is cheaper to purchase but does not carry an identifiable brand nam

> Because of rapidly advancing technology, Chicago Publications Corporation is considering replacing its existing typesetting machine with leased equipment. The old machine, purchased two years ago, has an expected useful life of six years and is in good c

> Kahn Company paid $240,000 to purchase a machine on January 1, 2017. During 2019, a technological breakthrough resulted in the development of a new machine that costs $300,000. The old machine costs $100,000 per year to operate, but the new machine could