At the end of the current year, the accounts receivable account has a balance of $2,875,000 and sales for the year total $34,500,000. Determine the amount of the adjusting entry to provide for doubtful accounts under each of the following independent assumptions: a. The allowance account before adjustment has a negative balance of $(18,500). Bad debt expense is estimated at ½ of 1% of sales. b. The allowance account before adjustment has a negative balance of $(18,500). An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $200,000. c. The allowance account before adjustment has a positive balance of $9,000. Bad debt expense is estimated at ¾ of 1% of sales. d. The allowance account before adjustment has a positive balance of $9,000. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $255,000.
> Firefly Products, Inc., has just completed development of a new line of skin-care products. Preliminary market research indicate two feasible marketing strategies: (1). creating general consumer acceptance through media advertising or (2). creating di
> Perry Chandler, a broker with Caveat Emptor, Ltd., offers free investment seminars to local PTA groups. On average, Chandler expects 1 percent of seminar participants to purchase $25,000 in tax-sheltered investments and 5 percent to purchase $5,000 in st
> The certainty equivalent concept can be widely employed in the analysis of personal and business decision making. Indicate whether each of the following statements is true or false and explain why: The appropriate certainty equivalent adjustment factor,
> Speedy Business Cards, Inc., supplies customized business cards to commercial and individual customers. The company is preparing a bid to supply cards to the Nationwide Realty Company, a large association of independent real estate agents. Because paper,
> Identify each of the following as being consistent with risk-averse, risk-neutral, or risk-seeking behavior in investment project selection. Explain your answers. a. Larger risk premiums for riskier projects b. Preference for smaller, as opposed to large
> Kinked Demand Curves. Assume Safety Service Products (SSP) faces the following segmented demand and marginal revenue curves for its new infant safety seat: 1. Over the range from 0 to 10,000 units of output, P1 = $60 - Q, MR1 = ∂TR1/∂Q = $60 - $
> Bertrand Equilibrium. Coke and Pepsi dominate the U. S soft-drink market. Together, they account for about 75% of industry sales. Suppose the quantity of Coke demanded depends upon the price of Coke (PC) and the price of Pepsi (PP) QC = 15 - 2.5PC + 1.25
> Statisticians use the Greek letter beta to signify the slope coefficient in a linear relation. Financial economists use this same Greek letter β to signify stock-price risk because betas are the slope coefficients in a simple linear relation that links t
> Stackelberg Model. Imagine that a two-firm duopoly dominates the market for spreadsheet application software for personal computers. Also assume that the firms face a linear market demand curve P = $1,250 - Q where P is price and Q is total output in t
> Cournot Equilibrium. VisiCalc, the first computer spreadsheet program, was released to the public in 1979. A year later, introduction of the DIF format made spreadsheets much more popular because they could now be imported into word processing and other
> Cartel Equilibrium. Assume the Hand Tool Manufacturing Industry Trade Association recently published the following estimates of demand and supply relations for hammers: QD = 60,000 - 10,000P (Demand), QS = 20,000P (Supply). a. Calculate the perfectly
> Monopolistic Competition. Gray Computer, Inc., located in Colorado Springs, Colorado, is a privately held producer of high-speed electronic computers with immense storage capacity and computing capability. Although Gray=s market is restricted to industri
> Competitive Markets v. Cartels. Suppose the City of Columbus, Ohio, is considering two proposals to privatize municipal garbage collection. First, a handful of leading waste disposal firms have offered to purchase the city's plant and equipment at an att
> Monopolistically Competitive Demand. Would the following factors increase or decrease the ability of domestic auto manufacturers to raise prices and profit margins? Why? a. Decreased import quotas b. Elimination of uniform emission standards c. Incr
> Market Structure Measurement. In 2005, Federated Department Stores, Inc. proposed to acquire The May Department Stores Co., thereby combining the two largest chains in the United States of so-called “traditional” or “conventional” department stores. Conv
> Market Structure Concepts. Indicate whether each of the following statements is true or false and explain why. a. Equilibrium in monopolistically competitive markets requires that firms be operating at the minimum point on the long-run average cost curve
> Creative Accountants, Ltd., is a small San Francisco-based accounting partnership specializing in the preparation of individual (I) and corporate (C) income tax returns. Prevailing prices in the local market are $125 for individual tax return preparation
> The James Bond Fund is a mutual fund (open-end investment company) with an objective of maximizing income from a widely diversified corporate bond portfolio. The fund has a policy of remaining invested largely in a diversified portfolio of investment-gra
> On May 12, 2000, the two daily newspapers in Denver, Colorado, filed an application with the U.S. Department of Justice for approval of a joint operating arrangement. The application was filed by The E.W. Scripps Company, whose subsidiary, the Denver Pub
> Kate Warner, a senior loan officer with Citybank in Cleveland, Ohio, has both corporate and personal lending customers. On average, the profit contribution margin or interest rate spread is 1.5 percent on corporate loans and 2 percent on personal loans.
> Delmar Custom Homes (DCH) uses two types of crews on its Long Island, New York,, home construction projects. Type A crews consist of master carpenters and skilled carpenters, whereas B crews include skilled carpenters and unskilled labor. Each home invol
> The Syflansyd Nut Company has enjoyed booming sales following the success of its "Sometimes You Feel Like a Nut, Sometimes You Don't" advertising campaign. Syflansyd packages and sells four types of nuts in four different types of mixed-nut packages. The
> Indicate whether each of the following statements is true or false and explain why. a. Constant returns to scale and constant input prices are the only requirements for a total cost function to be linear. b. Changing input prices will always alter the sl
> Production Function Estimation. Consider the following Cobb-Douglas production function for bus service in a typical metropolitan area: Q = b0 Lb1 kb2 Fb3 Where Q = output in millions of passenger miles, L = labor input in worker hours, K = capital
> Net Marginal Revenue. Crane, Poole & Schmidt, LLC is a successful Boston-based law firm. Worker productivity at the firm is measured in billable hours, which vary between partners and associates. Partner time is billed to clients at a rate of $250 per ho
> Ticket Services, Inc., offers ticket promotion and handling services for concerts and sporting events. The Sherman Oaks, California, branch office makes heavy use of spot radio advertising on WHAM-AM, with each 30-second ad costing $100. During the past
> Marginal Revenue Product of Labor. To better serve customers interested in buying cars over the Internet, Smart Motors, Inc., hired Nora Jones to respond to customer inquiries, offer price quotes, and write orders for leads generated by the company=s web
> The First National Bank received 3,000 inquiries following the latest advertisement describing its 30-month IRA accounts in the Boston World, a local newspaper. The most recent ad in a similar advertising campaign in Massachusetts Business, a regional bu
> Optimal Compensation Policy. Café-Nervosa.com, based in Seattle, Washington, is a rapidly growing family business that offers a line of distinctive coffee products to local and regional coffee shops. Assume founder and President Frasier Cran
> Time Warner, Inc., the world’s largest media and entertainment company, is best known as the publisher of magazines such as Fortune, Time, People, and Sports Illustrated. The Company is a media powerhouse comprised of Internet technologies and electronic
> Determine whether the following production functions exhibit constant, increasing, or decreasing returns to scale. a. Q = 0.5X + 2Y + 40Z b. Q = 3L + 10K + 500 c. Q = 4A + 6B + 8AB d. Q = 7L2 + 5LK + 2K2 e. Q = 10L0.5K0.3
> “Pay for performance” means that employee compensation closely reflects the amount of value derived from each employee’s effort. In economic terms, the value derived from employee effort is measured by net marginal revenue product. It is the amount of p
> Indicate whether each of the following statements is true or false. Explain your answers. a. Decreasing returns to scale and increasing average costs are indicated when εQ < 1. b. If the marginal product of capital falls as capital usage grows, the retur
> The following production table gives estimates of the maximum amounts of output possible with different combinations of two input factors, X and Y. (Assume that these are just illustrative points on a spectrum of continuous input combinations.) a. Do th
> The United States spends more per person on health care than any other country in the world. Still, recent studies show that the United States ranks relatively low in the overall quality of health care provided. France is often described as providing its
> In Massachusetts, a state education law authorized the establishment of charter schools. Charter schools are public schools that receive state funding as well as some measure of autonomy from local school boards and the rules that govern conventional sch
> Highway crashes continue to claim the lives of thousands of Americans. Grim statistics underscore the need for better laws, stricter enforcement, and safer driving behavior. In 2006, approximately 43,300 persons died on the nation’s highways. Alcohol-rel
> In benefit-cost analysis, public-sector managers seek to learn if society as a whole will be better off by the adoption of a specific social program or public-sector investment project. Rather than seeking to maximize profits or the value of the firm, pu
> Because resources for social programs and public-sector investment projects come from private-sector consumption and/or investment, economists typically advocate the use of a social rate of discount that reflects this private-sector opportunity cost. A g
> Incidence of Regulation Costs. The Smokey Mountain Coal Company sells coal to electric utilities in the southeast. Unfortunately, Smokey’s coal has a high particulate content, and, therefore, the company is adversely affected by state and local regulatio
> Market Structure Analysis at Columbia Drugstores, Inc. Demonstrating the tools and techniques of market structure analysis is made difficult by the fact that firm competitive strategy is largely based upon proprietary data. Firms jealously guard price, m
> Over the last century, The Boeing Co. has become the largest aerospace company in the world. Boeing’s principal global competitor is Airbus, a company that has its roots in a European consortium of French, German and later, Spanish and U.K companies. Th
> Determine the missing amount for each of the following: Assets Liabilities + Stockholders' Equity %3D $ 175,000 $300,000 а. b. $ 880,000 X $525,000 c. $2,100,000 $600,000 I| || ||
> Using the data from E8-20, indicate the effects on net assets and EPS for the following dates: 1. June 1 (date of declaration) 2. July 15 (date of record) 3. August 14 (date of payment) Data from Exercise 8-20: The date of declaration, date of record, a
> Using the data from P7-5, indicate the effects on the liquidity metric free cash flow and profitability metric asset turnover for each of the following: ▪ Impaired goodwill ▪ Patent amortization ▪ Natural resource depletion Data from Problem 7-5: Data rel
> Using the data from P8-4, indicate the effects on net assets and EPS for the March 8, 13, and 26 transactions. Data from Problem 8-4: Vaga Optics produces medical lasers for use in hospitals. The following accounts and their balances appear
> Using the data from P8-3, indicate the effects on net assets and EPS of each of the following: 1. Issuing the bonds payable on July 1, 20Y3. 2. Interest payment on December 31, 20Y3. 3. Payment of the face value of the bonds at maturity. Data from Pro
> Use the data from E7-9 to answer each of the following: 1. Using the integrated financial statement framework, indicate the effects (higher or lower) of using double-declining-balance depreciation rather than straight-line depreciation on accumulated dep
> Using transactions listed in E6-5, indicate the effects of each transaction on the liquidity metric days’ sales in receivables and profitability metric return on sales. Data from Exercise 6-5: Illustrate the effects on the accounts and financial statement
> Staples, Inc., (SPLS) is a leading office products distributor, with retail stores in the United States, Canada, Asia, Europe, and South America. The following financial statement data were adapted from recent ï¬
> Determine the missing amounts (in millions) for the condensed balance sheets shown below. Costco Target (TGT) Wal-Mart (COST) (WMT) Assets $33,440 $41,404 $ (c) Liabilities 22,823 (b) 122,312 Stockholders'equity (a) 13,997 81,394
> Using transactions listed in E6-4, indicate the effects of each transaction on the liquidity metric days’ sales in receivables and profitability metric return on sales. Data from Exercise 6-4: Illustrate the effects on the accounts and financial statement
> The estimated amount of depreciation on equipment for the current year is $133,000. a. How is the adjustment recorded? Indicate each account affected, whether the account is increased or decreased, and the amount of the increase or decrease. b. If the ad
> The total assets and total liabilities for a recent year of Apple (AAPL) and HP (HPQ) formerly Hewlett-Packard are shown here. Determine the stockholders’ equity of each company. Apple HP (in millions) (in millions) Assets $290,47
> The adjustment for accrued fees of $13,400 was omitted at July 31, the end of the current year. Indicate which items will be in error because of the omission on (a) the income statement for the current year and (b) the balance sheet as of July 31. Also i
> The balance in the unearned fees account, before adjustment at the end of the year, is $900,000. Of these fees, $775,000 have been earned. In addition, $289,500 of fees have been earned but not billed to clients. What are the adjustments (a) to adjust t
> At the end of the current year, $47,700 of fees have been earned but not billed to clients. a. What is the adjustment to record the accrued fees? Indicate each account affected, whether the account is increased or decreased, and the amount of the increas
> If the net income for the current year had been $2,224,600 in Exercise 3-18, what would have been the correct net income if the proper adjustments had been made? Data from Exercise 3.18: The accountant for Healthy Medical Co., a medical services consult
> For a recent year, the balance sheet for The Campbell Soup Company (CPB) includes accrued expenses of $553 million. The income before taxes for the year was $1,073 million. a. Assume the accruals apply to the current year and were not recorded at the end
> Assume that the error in Exercise 3-15 was not corrected and that the $6,750 of accrued salaries was included in the first salary payment in January 20Y7. Indicate which items will be erroneously stated because of failure to correct the initial error on (
> Accrued salaries of $6,750 owed to employees for December 30 and 31 were not considered when preparing the financial statements for the year ended December 31, 20Y6. Indicate which items will be erroneously stated because of the error on (a) the income st
> The balances of the two accounts related to wages at October 31, after adjustments at the end of the first year of operations, are Wages Payable, $11,900, and Wages Expense, $825,000. Determine the amount of wages paid during the year.
> The Home Depot, Inc. (HD) operates over 2,200 home improvement retail stores and is a competitor of Lowe’s (LOW). The following data (in millions) were adapted from recent financial statements of The Home Depot. 1. Comp
> Laguna Realty Co. pays weekly salaries of $8,000 on Friday for a five-day week ending on that day. What is the adjustment at the end of the accounting period, assuming that the period ends (a) on Monday or (b) on Wednesday? Indicate each account affected,
> At the end of August, the first month of the business year, the usual adjustment transferring rent earned of $36,750 to a revenue account from the unearned rent account was omitted. Indicate which items will be incorrectly stated because of the error on (
> The total assets and total liabilities for a recent year of Best Buy (BBY) and Games top (GME) are shown below. Determine the stockholders’ equity of each company. Best Buy Gamestop (in millions) (in millions) Assets $15,256 $4,24
> For a recent year, Microsoft Corporation (MSFT) reported short-term unearned revenue of $23,223 million. For the same year, Microsoft also reported total revenues of $93,580 million. a. Assume that Microsoft recognized $2,000 million of unearned revenue
> The balance in the unearned fees account, before adjustment at the end of the year, is $1,375,000. What is the adjustment if the amount of unearned fees at the end of the year is $1,100,000? Indicate each account affected, whether the account is increase
> Crazy Mountain Sports sells hunting and fishing equipment and provides guided hunting and fishing trips. Crazy Mountain is owned and operated by Karl Young, a well-known sports enthusiast and hunter. Karl’s
> Critelli Company has provided the following comparative information: You have been asked to evaluate the historical performance of the company over the last five years. Selected industry ratios have remained relatively steady at the foll
> The comparative financial statements of Automotive Solutions Inc. are as follows. The market price of Automotive Solutions Inc. common stock was $119.70 on December 31, 20Y8. Instructions: Determine the following measures for 20Y8. Rou
> Data pertaining to the current position of Newlan Company are as follows: Instructions: 1. Compute (a) the working capital, (b) the current ratio, and (c) the quick ratio. 2. List the following captions on a sheet of paper: Compute the working capi
> For 20Y6, Fishing Experiences Inc. initiated a sales promotion campaign that included the expenditure of an additional $45,000 for advertising. At the end of the year, Colt Schultz, the president, is presented with the following condensed comparative inc
> For each of the following companies, indicate whether you think the ratio of liabilities to total assets is more than 50%. Also, indicate whether you think the price-earnings ratio is above 10. Debt Ratio Price-Earnings Ratio Above 10 (Yes, No) More
> For 20Y3, Greyhound Technology Company reported its most significant decline in net income in years. At the end of the year, Duane Vogel, the president, is presented with the following condensed comparative income statement: Instructions
> Yukon Bike Corp. manufactures mountain bikes and distributes them through retail outlets in Canada, Montana, Idaho, Oregon, and Washington. Yukon Bike Corp. declared the following annual dividends over a six-year period ending December 31 of each year: Y
> Vaga Optics produces medical lasers for use in hospitals. The following accounts and their balances appear in the ledger of Vaga Optics on December 31 of the current year: At the annual stockholders’ meeting on January 31,
> Beaufort Vaults Corporation produces and sells burial vaults. On July 1, 20Y3, Beaufort Vaults Corporation issued $25,000,000 of 10-year, 8% bonds at par. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the com
> The following information about the payroll for the week ended October 4 was obtained from the records of Simkins Mining Co.: Instructions: 1. For the October 4 payroll, determine the employee FICA tax payable. 2. Illustrate the effect on the accounts
> Three different plans for financing a $5,000,000 corporation are under consideration by its organizers. Under each of the following plans, the securities will be issued at their par or face amount, and the income tax rate is estimated at 4
> Data related to the acquisition of timber rights and intangible assets of Gemini Company during the current year ended December 31 are as follows: a. On December 31, Gemini Company determined that $3,000,000 of goodwill was impaired. b. Governmental and
> New tire retreading equipment, acquired at a cost of $140,000 at the beginning of a fiscal year, has an estimated useful life of four years and an estimated residual value of $10,000. The manager requested information regarding the effect
> Knife Edge Company purchased tool sharpening equipment on July 1, 20Y5, for $16,200. The equipment was expected to have a useful life of three years and a residual value of $900. Instructions: Determine the amount of depreciation expense for the years
> Bayside Coatings Company purchased water proofing equipment on January 2, 20Y4, for $190,000. The equipment was expected to have a useful life of four years and a residual value of $9,000. Instructions: Determine the amount of depreciatio
> Alphabet (formerly known as Google) (GOOG) is a technology company that offers users Internet search and e-mail services. Google also developed the Android operating system for use with cell phones and other mobile devices. The following data (in million
> The following payments and receipts are related to land, land improvements, and buildings acquired for use in a wholesale apparel business. The receipts are identified by an asterisk. Instructions: 1. Assign each payment and receipt to L
> Data on the physical inventory of Moyer Company as of December 31, 20Y9, are presented below. Quantity and cost data from the last purchases invoice of the year and the next-to the-last purchases invoice are summarized as follows: Instructions: Deter
> Details regarding the inventory of appliances on January 1, 20Y7, purchases invoices during the year, and the inventory count on December 31, 20Y7, of Amsterdam Appliances are summarized as follows: Instructions: 1. Determine the cost of the inventory
> Cyber Space Company, which operates a chain of 65 electronics supply stores, has just completed its fourth year of operations. The direct write-off method of recording bad debt expense has been used during the entire period. Because of substantial increa
> For several years, EquiPrime Co.’s sales have been on a “cash only” basis. On January 1, 20Y2, however, EquiPrime Co. began offering credit on terms of n/30. The amount of the adjusting entry to recor
> Averys All-Natural Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable clerk for Averys All- Natural prepared the following aging-of-receivables schedule as of the end of business on D
> Rancho Foods deposits all cash receipts each Wednesday and Friday in a night depository, after banking hours. The data required to reconcile the bank statement as of May 31 have been taken from various documents and records and are reproduced as follows.
> The cash account for All American Sports Co. on April 1, 20Y5, indicated a balance of $23,600. During April, the total cash deposited was $80,150, and checks written totaled $72,800. The bank statement indicated a balance of $40,360 on April 30, 20Y5. Co
> The cash account for Deaver Consulting at October 31, 20Y6, indicated a balance of $15,750. The bank statement indicated a balance of $31,095 on October 31, 20Y6. Comparing the bank statement and the accompanying canceled checks and memos with the record
> The following procedures were recently implemented by Wind Rivers Clothing Co.: a. Each cashier is assigned a separate cash register drawer to which no other cashier has access. b. All sales are rung up on the cash register, and a receipt is given to the
> Boston Scientific Corporation (BSX) is a competitor of Kips Bay Medical (MBA 5-3). It was organized in 1979 and also develops, produces, and sells medical devices. The following data (in thousands) were adapted from Boston Scientificâ
> For the year ending March 31, 20Y5, Omega Systems Inc. reported net income of $105,450 and paid dividends of $7,500. Comparative balance sheets as of March 31, 20Y5 and 20Y4, are as follows: Instructions: 1. Prepare a statement of cash flows, using the
> Selected accounts and related amounts for Prescott Inc. for the fiscal year ended September 30, 20Y8, are presented in Problem 4-4. Instructions: 1. Prepare a single-step income statement in the format shown in Exhibit 8. 2. Prepare a sta
> The following selected accounts and their current balances appear in the ledger of Prescott Inc. for the fiscal year ended September 30, 20Y8: Instructions: 1. Prepare a multiple-step income statement. 2. Prepare a statement of stockhold
> The following selected transactions were completed during June between Snipes Company and Beejoy Company June 8. Snipes Company sold merchandise on account to Beejoy Company, $18,250, terms FOB destination, 2/15, n/eom. The cost of the merchandise sold w
