Question: Even though transfer prices have no direct

> At the end of the year, when closing the books, what is the treatment for immaterial standard variance account balances? What is the treatment for standard variance account balances that are material in amount?

> Canfield Appliance Company is planning to introduce a coffee grinder to its line of small home appliances. Annual sales of the grinder are estimated at 15,000 units at a price of $40 per unit. Variable manufacturing costs are estimated at $18 per unit, i

> I.C. Cream is considering two possible expansion plans. Proposal A involves opening eight stores in northern Alaska at a total cost of $4,000,000. Under another strategy, Proposal B, I.C. Cream would focus on southern Alaska and open five stores for a to

> Jackson Publishing, Inc. (JPI), publishes two newspapers and, until recently, owned a professional baseball team. The baseball team had been losing money for several years and was sold at the end of 2021 to a group of investors who plan to move it to a l

> The Internet provides a wealth of information concerning long-term liabilities, bond financing, types of bonds, and unique features of bonds. Instructions Search the Internet and learn about the following types of bonds. For each type, briefly summarize

> Listed are the eight activity cost pools used by Charvez Corporation.

> Samba is a popular restaurant located in Brazilton Resort. Management feels that enlarging the facility to incorporate a large outdoor seating area will enable Samba to continue to attract existing customers as well as handle large banquet parties that n

> Early in the year, John Raymond founded Raymond Engineering Co. for the purpose of manufacturing a special flow control valve that he had designed. Shortly after year-end, the company’s accountant was injured in a skiing accident, and n

> Explain the meaning of the term double taxation as it applies to corporate profits.

> Nelson Equipment Company is evaluating two alternative investment opportunities. The controller of the company has prepared the following analysis of the two investment proposals. Items in addition to depreciation may have attributed to differences in th

> During the fiscal year ended December 31, Swanlee Corporation engaged in the following transactions involving notes payable. July 1 borrowed $20,000 from Weston Bank, signing a 90-day, 12 percent note payable. Sept. 16 purchased office equipment from M

> Visit the site at www.iasplus.com/country/useias.htm. a. Name three governments that require companies to prepare their financial reports only in accordance with IFRS in order to list their stocks on the country’s securities markets. b. Name three govern

> Using the information presented in Problem 13.4A, prepare a partial statement of cash flows for the current year, showing the computation of net cash flows from operating activities by the indirect method. Explain why the decline in accounts receivable o

> When evaluating the performance of a manager, why should fixed costs be divided into the categories of controllable costs and committed costs?

> Sea Travel sells motor boats. One of Sea Travel’s most popular models is the Wing. During the current year, Sea Travel purchased 12 Wings at the following costs. On April 28, Sea Travel sold five Wings to the Jack Sport racing team. Th

> The following information was developed from the financial statements of Free Time, Inc. At the beginning of 2021, the company’s former supplier went bankrupt, and the company began buying merchandise from another supplier. Instruction

> The International Organization of Securities Commissions (IOSCO) is a group of top securities administrators from about 50 countries. The Securities and Exchange Commission (SEC) is a member of IOSCO. IOSCO is a primary supporter of the internationalizat

> During the current year, the following credit entries (increases) were posted to the paid-in capital accounts of Crawford Shipyards. Explain the type of cash transaction that probably caused these credit changes, and illustrate the presentation of this

> Why are payments and receipts of interest classified as operating activities rather than as financing or investing activities?

> Early in the year, Jane Jackson founded Jackson Engineering Co. for the purpose of manufacturing a special plumbing device that she had designed. Shortly after year-end, the company’s accountant was injured in an auto accident, and no y

> Wilcox Mills is a manufacturer that makes all sales on 30-day credit terms. Annual sales are approximately $30 million. At the end of year 1, accounts receivable were presented in the company’s balance sheet as follows. During year 2,

> Gable, Inc., is a provider of home furnishings. The company uses the FIFO inventory method. The following information was taken from the company’s recent financial statements (dollar amounts are in thousands). The financial statements

> Inland Co., has a total of 40,000 shares of common stock outstanding and no preferred stock. Total stockholders’ equity at the end of the current year amounts to $2.5 million, and the market value of the stock is $33 per share. At year-end, the company d

> Putnam & Putnam, a legal firm, uses the balance sheet approach to estimate uncollectible accounts expense. At year-end, an aging of the accounts receivable produced the following five groupings. On the basis of past experience, the company estimated

> The Home Depot, Inc., financial statements appear in Appendix A at the end of this textbook. Using figures from the income statement and balance sheet, answer the following questions. a. What was the company’s inventory turnover for the most recent year

> The balance sheet items of The Sweet Shop (arranged in alphabetical order) were as follows at the close of the business on September 30, 2021 The transactions occurring during the first week of October were as follows. Instructions: a. Prepare a balanc

> A French furniture maker agrees to purchase wood stain from a U.S. paint manufacturer. If all payments are to be made in U.S. dollars, which company bears the risk of exchange rate gains and losses?

> Jell Stores is considering expanding its operations to include the greater Portsmouth area. Rather than build new stores in Portsmouth, management plans to acquire existing stores and convert them into Jell outlets. Jell is evaluating two similar acquisi

> Boston Bait Shop uses a periodic inventory system. At December 31, year 2, the accounting records include the following information. A complete physical inventory taken at December 31, year 2, indicates merchandise costing $3,000 remains in stock. a. H

> Rodeo Drive Jewelers makes custom jewelry for celebrities. Would you expect the company to use job order or process costing? Explain

> Osage Farm Supply had poor internal control over its cash transactions. Facts about the company’s cash position at November 30 are described as follows. The accounting records showed a cash balance of $35,400, which included a deposit i

> Ivy Blooms sells wreaths and leis. The following is selected per-unit information for these two products. Fixed costs and expenses amount to $97,500 per month. The company generates total sales of $300,000 per month, of which 80 percent result from the

> The cash transactions and cash balances of Banner, Inc., for July were as follows. 1. Banner, Inc.’s account for Cash showed a balance at July 31 of $125,568. 2. The July bank statement showed a closing balance of $114,828. 3. The cash received on July

> CPI sells computer peripherals. At December 31, year 1, CPI’s inventory amounted to $500,000. During the first week in January, year 2, the company made only one purchase and one sale. These transactions were as follows. CPI has a full

> A summary of the transactions affecting the stockholders’ equity of Riverton Corporation duringthe current year follows. Instructions:a. Prepare a statement of stockholders’ equity for the year. Use these column headi

> For each of the following scenarios, use the current exchange rates from an internet site or other source of your choice to compute the required amount. Round exchange rates to three decimal points. a. A Citroën automobile is advertised in France for 17,

> The following are data regarding last year’s production of Old Joe, one of the major products of Columbus Toy Company. During the year, 50,000 units of this product were manufactured and 51,500 units were sold. Selected information con

> How do the costs of operating service departments (organized as cost centers) appear in a responsibility income statement?

> To maintain a high level of control over production operations and final product quality, what types of globalization activities could a company engage in?

> Distinguish between traceable and common fixed costs. Give an example of each type of fixed cost for an auto dealership with a sales department and a service department.

> Important information concerning a company’s operating performance can be found in its income statement and statement of financial position (balance sheet). Using the search mechanism of your choice, locate the most recent annual report of Martin Mariett

> In a responsibility accounting system, should the recording of revenue and costs begin at the largest areas of responsibility or the smallest? Explain.

> Identify four ratios or other analytical tools used to evaluate profitability. Explain briefly how each is computed.

> Glassware Company is organized into two divisions—etched glass and clear glass. During August, sales for the etched division totaled $7,500,000, and its contribution margin ratio averaged 38 percent. Sales generated by the clear division totaled $6,000,0

> What is meant by the term mutual agency?

> Name three types of transfer prices and explain when each type of transfer price would be used.

> Distinguish among a cost center, a profit center, and an investment center, and give an example of each for a multihospital corporation.

> Assume that you have recently obtained your scuba instructor’s certification and have decided to start a scuba diving school. a. Describe the advantages and disadvantages of organizing your scuba diving school as a 1. Sole proprietorship 2. Corporatio

> Shown as follows is information from the financial reports of Klaus Supermarkets for the past few years. Instructions: a. Calculate the following statistics for Knauss Supermarkets (round your answers to one decimal place). 1. The percentage change in

> You are a loan officer with Third Nebraska Bank. Joe West owns two successful restaurants, each of which has applied to your bank for a $250,000 one-year loan for the purpose of opening a second location. Condensed balance sheets for the two business ent

> Mickey Gillespie is the controller of Print Technologies, a publicly owned company. The company is experiencing financial difficulties and is aggressively looking for ways to cut costs. Suzanne Befell, the CEO, instructs Gillespie to lengthen from 5 to 1

> What amounts are debited to the Finished Goods Inventory account during the year? What amounts are credited to this account? What type of balance (debit or credit) is this account likely to have at year-end?

> Why is the combination of direct labor and manufacturing overhead referred to as a conversion cost?

> What is the purpose of arranging an income statement to show separate amounts for unusual and/or infrequent items and discontinued operations?

> Explain why using cost as a transfer price is inappropriate when the center producing the product is evaluated as a profit center.

> Many companies hold a significant portion of their financial assets in the form of marketable securities. For example, Microsoft Corporation recently reported short-term investments totaling almost $122 billion, an amount equal to 76 percent of its total

> The controller of Fifties, a chain of drive-in restaurants, is considering modifying the monthly income statements by charging all costs relating to operations of the corporate headquarters to the individual restaurants in proportion to each restaurant’s

> In financial statement analysis, what is the basic objective of observing trends in information and ratios? Suggest some standards of comparison.

> Early in 2019, Teak Corporation was formed with authorization to issue 50,000 shares of $3 par value common stock. All shares were issued at a price of $10 per share. The corporation reported net income of $160,000 in 2019, $89,200 in 2020, and $97,000 i

> Sarah Miller is the proprietor of a small manufacturing business. She is considering the possibility of joining in partnership with Will Bracken, whom she believes will be a highly competent and congenial partner. Prepare a brief statement outlining the

> Old Victrola, Inc., produces top-quality stereos and uses process costing. The manufacture of stereos is such that direct materials, labor, and overhead are all added evenly throughout the production process. Due to the smooth production process, only on

> At the beginning of the current year, Wexler Corporation had dividends payable of $1,600,000. During the current year, the company declared cash dividends of $4,500,000, of which $970,000 appeared as a liability in the statement of financial position (ba

> Briefly explain the distinction between controllable fixed costs and committed fixed costs. Also explain the nature and purpose of performance margin in a responsibility income statement.

> Sanlucas, Inc., provides home inspection services to its clients. The following is the company’s trial balance dated June 1, current year. Sanlucas engaged in the following transactions in June Instructions: a. Record the company&acir

> Glen Pool Club, Inc., has an installment loan outstanding with a current balance of $150.000. The company makes monthly installments of $1,543, which include interest computed at an annual rate of 6 percent. a. Prepare a partial amortization table showi

> What amounts are debited to the Work in Process Inventory account during the year? What amounts are credited to this account? What does the year-end balance in this account represent?

> Describe the usual nature of the following features as they apply to a share of preferred stock: (a) cumulative, and (b) convertible.

> In a recent annual report the chief executive officer of Kimberly-Clark outlined his plans as follows. We have four reportable global business segments: Personal Care, Consumer Tissue, K-C Professional (KCP) and Health Care . . . Key strategies for our s

> Assume that on May 1, Zavior Corporation (a U.S. company) sells goods to a Portuguese corporation at a price of 100,000 euros, with payment due within three months. At the date of the sale, the exchange rate is $1.20 per euro. The Portuguese customer wai

> Fifteen transactions or events affecting Phil mar, Inc., are as follows. a. Made a year-end adjusting entry to accrue interest on a note payable that has the interest rate stated separately from the principal amount. b. A liability classified for severa

> Distinguish between paid-in capital and retained earnings of a corporation. Why is such a distinction useful?

> Arrow Products typically earns a contribution margin ratio of 25 percent and has current fixed costs of $80,000. Arrow’s general manager is considering spending an additional $20,000 to do one of the following. 1. Start a new ad campaign that is expected

> The balances in the perpetual inventory accounts of Anditon Manufacturing Corporation at the beginning and end of the current year are as follows. The total dollar amounts debited and credited during the year to the accounts used in recording manufactur

> Lind Manufacturing had the following account balances as of January 1. During the month of January, all of the following occurred. 1. Direct labor costs were $460,000 for 18,400 hours worked. 2. Direct materials costing $340,000 and indirect materials c

> Darby Press publishes two lines of books—fiction and nonfiction. Cost and revenue data for each product line for the current month are as follows In addition to the costs shown, the company incurs monthly fixed costs of $260,000 common

> Distinguish between corporations and sole proprietorships in terms of the following characteristics. a. Owners’ liability for debts of the business. b. Transferability of ownership interest. c. Continuity of existence. d. Federal taxation on income.

> The following information was reported in a recent balance sheet issued by Microsoft Corporation. 1. The book value of property and equipment is listed at $23.8 billion (net of depreciation). Related notes to the financial statements reveal that accumul

> An analysis of the income statement and the balance sheet accounts of RPZ Imports at December 31 of the current year, provides the following information. Additional Information: 1. Except as noted in 4, payments and proceeds relating to investing transa

> Identify whether each of the following costs of Granite Construction, Inc., would be classified as direct labor, direct materials, manufacturing overhead, or as selling, general, and administrative costs. a. Hourly wages paid to backhoe operators. b. C

> MURDER TO GO! writes and manufactures murder mystery parlor games that it sells to retail stores. The following is per-unit information relating to the manufacture and sale of this product. Determine the following, showing as part of your answer the for

> If you were going to start a corporation and expected to need to raise capital from several investors, would you include preferred stock in your capital structure? Why or why not? If your answer is that you would include preferred stock, what features wo

> Tom Klee is the controller of Watson Manufacturing, Inc. He estimates that the company’s breakeven point in sales dollars is $2 million. However, he recently told all of the regional sales managers that sales of $3 million were needed to break even. He a

> Of the three types of business activities summarized in a statement of cash flows, which type is least likely to show positive net cash flows in a successful, growing business? Explain your reasoning.

> The basic accounting equation for a corporation is Assets = Liabilities + Stockholders ‘Equity. Stockholders’ equity is further divided into two categories: paid-in capital and retained earnings. What are the major transactions and other financial activi

> Wharton, Inc., pays income taxes on capital gains (including gains on marketable securities) at a rate of 30 percent. At December 31, year 1, the company owns marketable securities that cost $180,000 but have a current market value of $220,000. a. How w

> Donegal’s Lawn Care Service began operations in July, current year. The company uses the following general ledger accounts The company engaged in the following transactions during its first month of operations Instructions: a. Record

> Leases most of its commercial aircraft and is currently committed to pay almost $15  billion in future lease obligations. However, notes to the company’s financial statements reported only $297 million of these commitments as long-term capital lease obli

> Nicholls Produce has two product lines—fresh and frozen. Cost and revenue data for each product line for the current month are as follows In addition to the costs shown, the company incurs monthly fixed costs of $30,000 common to both

> The pharmaceutical industry spends billions of dollars each year on research and development. Rather than capitalize these R&D expenditures as intangible assets, companies are required to charge them to expense in the year incurred. Perform a keyword sea

> For each of the six independent situations that follow, compute the missing amounts. a. Using contribution margin per unit: b. Using the contribution margin ratio:

> Moor-n-More operates a boat mooring service in the downtown harbor with 80 docking spaces. The business is open 3,000 hours per year. The mooring charge per boat is $5 per hour; the average boater docks for two hours. Moor-n-More rents the harbor space f

> In many states, corporation law requires that retained earnings be restricted for dividend purposes to the extent of the cost of treasury shares. What is the reason for this legal rule?

> Determine the following: a. The unit contribution margin. b. The number of units that must be sold each month to break even. c. The number of units that must be sold to earn an operating income of $7,600,000 per month. a. What total monthly sales revenu

> What is treasury stock? Why do corporations purchase their own shares? Is treasury stock an asset? How should it be reported in the balance sheet?

> Safe-Haul manufactures custom trailer equipment. In June, the company built 400 utility trailers for Cole’s Trailer Sales. Assembly of these units required 1,200 hours of direct labor at a cost of $30,000, direct materials costing $333,000, and 600 hours

> Hernandez Enterprises has two divisions—Retail and Wholesale. Cost and revenue data for each division for the current month are as follows. In addition, fixed costs that are common to both divisions amount to $96,000. Instructions: a.

> The following is information concerning a product manufactured by Ames Brothers. Determine the following: a. The unit contribution margin. b. The number of units that must be sold each month to break even. c. The number of units that must be sold to ear

> What is the purpose of a stock split?

> Discuss each of the following situations, indicating whether the situation is a loss contingency that should be recorded or disclosed in notes to the financial statements of Freedom Airlines. If the situation is not a loss contingency, explain how (if at

> One of your responsibilities as division manager of an important component of Paramount Industries is to oversee accounting for the division. One of the issues you are responsible for on a continuous basis is whether particular costs should be expensed i