Galaxy Company had net sales of $150,000 in its first year and $189,500 in its second year. Calculate the amount of change in terms of both dollars and percentage.
> Indicate whether job order costing is appropriate for each of the following businesses. Explain why. a. Let Them Eat Cake (a small bakery that makes wedding cakes unique to each customer). b. Baxter, Claxter, and Stone (a law firm specializing in malpr
> Morris Corporation applies manufacturing overhead to jobs at a rate of $50 per direct labor hour. During the current period, actual overhead costs totaled $240,000, and 5,000 direct labor hours were worked by the company’s employees. a. Record the journ
> Sorensen Company provides the following information related to its investing and financing activities for the current year. a. Calculate the net amount of cash provided by or used for investing activities for the year. b. What impact, if any, do the fol
> Fox Manufacturing applies manufacturing overhead at a rate of $32 per machine hour. a. When during the year was this rate computed? b. Describe briefly how this rate was computed. c. Identify the shortcomings of this rate that will cause overhead appl
> Glenn Grimes is the founder and president of Heartland Construction, a real estate development venture. The business transactions during February while the company was being organized are listed as follows. Instructions: a. Prepare journal entries to r
> Nicholes Corporation finished job no. 600 on June 1. On June 10, the company sold job no. 600 for $25,000 on account to a credit customer. Total manufacturing costs allocated to this job at the time of the sale amounted to $16,000. a. Record the transfer
> Lewis & Company applies manufacturing overhead to production using an activity-based costing system. The company’s utilities cost pool has accumulated $450,000, its maintenance cost pool has accumulated $600,000, and its set-up cost pool has accumulated
> Toole Corporation uses a job order costing system and allocates manufacturing overhead at a rate of $45 per machine hour. During the period, the company used 1,200 machine-hours and actually incurred manufacturing overhead costs of $55,000. a. Prepare a
> Star Repairs Co. does all the repair work for a medium-sized manufacturer of handheld computer games. The games are sent directly to Star, and after the games are repaired, Star bills the game manufacturer for cost plus a 20 percent markup. In the month
> The Work in Process Inventory account had a beginning balance of $16,200 on April 1. During April, the cost of direct materials used was $408,000 and direct labor cost assigned to production was $56,000. A total of $72,000 of overhead was assigned to pro
> Canterbury Pets, Inc., has three stores in the state. The owner, Ms. Perkins, is having trouble tracking inventory costs in the three pet stores. Ms. Perkins knows about your skill in tracking and understanding cost flows and asks you to find the followi
> During the current year, CF Manufacturing Co. incurred $370,000 of indirect labor costs, $15,000 of indirect materials costs, and $163,000 of other overhead costs. It also incurred $125,000 in rent costs on a warehouse for storing finished goods. What am
> Some managers believe machine performance is more important in a JIT environment than in a non-JIT environment. Do you agree or disagree? Explain your answer.
> Among the transactions of Marvel Manufacturing were the following. 1. Made payments on accounts payable to office suppliers. 2. Paid the principal amount of a mortgage to Seventh Bank. 3. Paid interest charges relating to a mortgage to Seventh Bank. 4. I
> What is the objective of activity-based management and how does it differ from activity-based costing?
> What are performance obligations, and how do performance obligations relate to the principle of revenue recognition?
> Freddy’s Furnaces, Inc., assigned $550,000 of direct labor costs to production during the current period but paid its employees only $500,000. What are the two journal entries used to record these transactions?
> Sonic, Inc., sells business software. Currently, all of its programs come on disks. Due to their complexity, some of these applications occupy as many as seven disks. Not only are the disks cumbersome for customers to load, but they are relatively expens
> Hefty-Lift, Inc., is a company that manufactures forklifts. During the year, Hefty purchased $1,250,000 of direct materials and placed $1,600,000 worth of direct materials into production. Hefty’s beginning balance in the Materials Inventory account was
> A company that assembles trucks produces 60 trucks during the current year and incurs $4.5 million of material, labor, and overhead costs. Fifty-three trucks were sold during the year and each is allocated the same amount of costs. How much of the $4.5 m
> During the current year, the cost of direct materials purchased by a manufacturing firm was $360,000, and the direct materials inventory increased by $80,000. What was the cost of direct materials used during the year?
> At the end of the year, Eskola Manufacturing had the following balances. Prepare a partial balance sheet for Eskola’s showing the given accounts.
> During the year, Newark Boat Yard has incurred manufacturing costs of $250,000 in building three large sailboats. At year-end, each boat is about 60 percent complete. How much of these manufacturing costs should be recognized as expenses in Newark Boat Y
> In 2016, Novartis AG agreed to pay the U.S. Securities and Exchange Commission $25 million as a result of its China-based subsidiaries engaging in pay-to-prescribe schemes to increase sales. Employees of these China-based subs gave money, gifts, and othe
> Bosor Corporation has a receivable denominated in British pounds and a payable in Brazilian reals resulting from imports from Brazil. Bosor recorded foreign exchange losses related to both its pound-related receivable and its real-denominated payable. Di
> Among the transactions of Salem, Inc., were the following. a. Made payments on accounts payable to merchandise suppliers. b. Paid the principal amount of a note payable to First State Bank. c. Paid interest charges relating to a note payable to First Sta
> When business transactions are conducted internationally, cultural differences must be taken into consideration. Geert Hofstede is a leading researcher on how cultural variables can affect such international arrangements. Hofstede has a website where he
> Computes is a U.S.-based multinational corporation. Foreign sales are made at prices set in U.S. dollars, but foreign purchases are often made at prices stated in foreign currencies. If the exchange rate for the U.S. dollar has risen against most foreign
> A regional airline and a furniture manufacturer each generate annual revenue of $120 million and earn net income of $10 million. Which company probably has the higher break-even point? Explain.
> Jefferson Mountain is a small ski resort located in central Pennsylvania. In recent years, the resort has experienced two major problems: (1) unusually low annual snowfalls and (2) long lift lines. To remedy these problems, management is considering two
> You are the purchasing agent for a U.S. business that purchases merchandise on account from companies in Mexico. The exchange rate for the Mexican peso has been falling against the U.S. dollar and the trend is expected to continue for at least several mo
> Explain how an increase in a foreign exchange rate will affect a U.S. company that makes: a. Credit sales to a foreign company at prices stated in the foreign currency. b. Credit purchases from a foreign company at prices stated in the foreign currency.
> A recent newspaper shows the exchange rate for the British pound at $1.4135 and the yen at $0.008843. Does this indicate that the pound is stronger than the yen? Explain.
> Assume that a U.S. company makes a purchase from a British company and agrees to pay a price of £2 million. a. How will the U.S. company determine the cost of this purchase for the purpose of recording it in its accounting records? b. Briefly explain how
> A U.S. company purchased a shipment of fabrics from Bahrain for 3,500,000 dinars. According to the current exchange rate, what is the value of this contract in U.S. dollars?
> Translate the following amounts of foreign currency into an equivalent number of U.S. dollars using the exchange rates in Exhibit 15–7. a. £800,000. b. ¥350,000. c. €50,000.
> The following data are taken from the income statement and balance sheet of Freeman Machinery, Inc. Using this information, prepare a partial statement of cash flows for the year ended December 31, 2021, showing the computation of net cash flows from op
> Flanders Company’s operating income for the current year was $475,000. The company’s average total assets for the same period were $3,500,000, and its total liabilities were $1,000,000. Calculate the company’s return on assets.
> Multi-Star, Inc., had sales of $890,000, cost of sales and operating expenses of $450,000 and $225,000, respectively, and 10,000 shares of common stock outstanding. Calculate the amount of earnings per share.
> Lone Star, Inc., reported sales of $560,000, cost of sales of $255,000, and operating expenses of $130,000 for the current year. Using this information, calculate the amount of net income and net income as a percentage of sales.
> Jarman Company had current and noncurrent liabilities of $50,000 and $160,000, respectively. The company’s current assets were $76,000, out of a total asset figure of $457,000. Calculate the company’s debt ratio.
> Doctors Hanson, Dominick, and Borchard are radiologists living in Fargo, North Dakota. They realize that many of the state’s small rural hospitals cannot afford to purchase their own magnetic resonance imaging devices (MRIs). Thus, the
> Explain why the selection of cost drivers is an important part of identifying non–value-added activities.
> Foster Company had current assets and current liabilities as follows. Calculate the current and quick ratios using the information provided.
> Harrisonburg Company had current and total assets of $470,000 and $1,000,000, respectively. The company’s current and total liabilities were $267,000 and $600,000, respectively. Calculate the amount of working capital and the current ratio using this inf
> Moon, Inc., had the following income statement figures. Calculate component percentages for this information.
> Star, Inc., had depreciation expenses on its plant assets as follows for 2019, 2020, and 2021, respectively: $267,000, $289,000, and $368,000. Compute the trend percentages for these years, assuming 2019 is the base year.
> Wallace Company’s statement of cash flows for the current year is summarized as follows. a. Briefly explain what is included in each of the first three categories listed (i.e., the cash from operating, investing, and financing activiti
> Prince Company had net income of $45,500 in a year when its stockholders’ equity averaged $450,000 and its total assets averaged $2,500,000. Calculate the company’s return on equity for the period.
> Melcher, Inc., originally sold 100,000 shares of its $10 par value common stock at $25 per share. Several years later the company repurchased 10,000 of these shares at $45 per share. Melcher currently holds those shares in treasury. Prepare the company’s
> Smelling Company declared a 2-for-1 stock split on its common stock in order to intentionally reduce the market value of its stock so that it would be an attractive investment for a larger set of investors. The company’s common stock before the split is
> Franks, Inc., has preferred and common stock outstanding as follows. Calculate the book value on common stock, assuming preferred dividends are cumulative and are currently one year in arrears.
> Pathways Appliance Company is planning to introduce a built-in blender to its line of small home appliances. Annual sales of the blender are estimated at 12,000 units at a price of $35 per unit. Variable manufacturing costs are estimated at $15 per unit,
> A store using the retail inventory method takes its physical inventory by applying current retail prices as marked on the merchandise to the quantities counted. Does this procedure mean that the inventory will appear in the financial statements at retail
> Mensa Company has stockholders’ equity accounts as follows. Calculate the amount of book value per share for common stock and briefly describe what that figure means in relation to the current market value of the stock.
> Why does cost-volume-profit analysis focus on operating income instead of net income?
> Baker Company has common and preferred stock outstanding as follows. Dividends on preferred stock have not been paid for the last three years (in addition to the current year). If the company pays a total of $120,000 in dividends, how much will the comm
> Johnston, Inc., engaged in the following transactions involving treasury stock. a. Prepare general journal entries to record these transactions. b. Compute the amount of retained earnings that should be restricted because of the treasury stock still ow
> Mega, Inc., has common and 6 percent preferred stock outstanding as follows. The company declares a total dividend of $225,000. If the dividends on preferred stock are one year in arrears (in addition to the current year), how will the total dividend be
> Zeta Co. has outstanding 100,000 shares of $100 par value cumulative preferred stock, which has a dividend rate of 7 percent. The company has not declared any cash dividends on the preferred stock for the last three years. Calculate the amount of dividen
> Beta Co. sold 10,000 shares of common stock, which has a par value of $25, for $28 per share. The company also sold 1,000 shares of $100 par value preferred stock for $110. Assume the balance in retained earnings is $80,000. Prepare the stockholders’ equ
> Weller, Inc., sold 1,000,000 shares of $25 par value common stock at $32. It subsequently repurchased 100,000 of those shares at $50 per share and then sold 70,000 of those shares at $55. Calculate the total amount of stockholders’ equity given these tra
> Omega Co. sold 10,000 shares of common stock, which has a par value of $8, for $13 per share. The company’s balance in retained earnings is $75,000. Prepare the stockholders’ equity section of the company’s balance sheet.
> Joseph Max, Inc., sold 10-year, 5 percent bonds for $1,000,000 at 98. On the interest payment date at the end of the fifth year the bonds were outstanding, 40 percent ($400,000) of the bonds were retired by Max at 102 under an early retirement option tha
> Joseph Max, Inc., sold 10-year, 5 percent bonds for $1,000,000 at 98. On the interest payment date at the end of the fifth year the bonds were outstanding, 40 percent ($400,000) of the bonds were retired by Max at 102 under an early retirement option tha
> V. S. Yogurt is considering two possible expansion plans. Proposal A involves opening 10 stores in northern California at a total cost of $3,150,000. Under another strategy, Proposal B, V. S. Yogurt would focus on southern California and open six stores
> Wolfe Company has debt totaling $2,000,000 and total stockholders’ equity of $4,200,000. Tiger Company has debt totaling $3,100,000 and stockholders’ equity of $5,000,000. a. Calculate the debt ratio for each company. (Hint: You will find an explanation
> Lewis Company sold $500,000 of bonds at 97 on an interest payment date. Assuming the bonds will be retired in 10 years and interest is paid annually, calculate the amount of cash that will be received and paid by Lewis in the first year, as well as the i
> The following information is necessary to compute the net assets (stockholders’ equity) and book value per share of common stock for Rothschild Corporation. a. Compute the amount of net assets (stockholders’ equity).
> What is life-cycle costing and why should it be used in the target costing process?
> Lewis Company sold $500,000 of bonds at 97 on an interest payment date. Assuming the bonds will be retired in 10 years and interest is paid annually, calculate the amount of cash that will be received and paid by Lewis in the first year, as well as the i
> Crosby, Inc., sells $1,000,000 general obligation bonds for 98. The interest rate on the bonds, paid quarterly, is 6 percent. Calculate (a) the amount that the company will actually receive from the sale of the bonds, and (b) the amount of both the quart
> One of the advantages of borrowing is that interest is deductible for income tax purposes. a. If a company pays 5 percent interest to borrow $500,000, but is in an income tax bracket that requires it to pay 30 percent income tax, what is the actual net-o
> Grammar, Inc., offers its full-time employees pension and other postretirement benefits, primarily health insurance. During the current year, pension benefits for the employees totaled $250,000. Other postretirement benefits totaled $140,000. The pension
> Jansen Company borrowed $12,000 on a 1-year, 5 percent note payable from the local bank on April 1. Interest was paid quarterly, and the note was repaid one year from the time the money was borrowed. Calculate the amount of cash payments Jansen was requi
> Alamo Company has sales, cost of goods sold, and average ending inventory for the current year in the following amounts: $650,000, $500,000, and $128,000, respectively. Calculate the amount of the company’s inventory turnover for the year. What is the co
> Due to ineffective controls while counting its inventory, Walker & Comer, Inc., double-counted $50,000 of inventory at the end of the current year. Before discovering this error, the company’s ending inventory was $670,000. How will correction of this er
> Marengo is a popular restaurant located in Chilton Resort. Management feels that enlarging the facility to incorporate a large outdoor seating area will enable Marengo to continue to attract existing customers as well as handle large banquet parties that
> Bring Company’s inventory is subject to shrinkage via evaporation. At the end of the current financial reporting period, the company’s inventory had a cost of $100,000. Management estimates that evaporation has resulted in a 6 percent inventory loss. Ass
> Three events pertaining to Lean Machine Co. are described as follows. a. Issued common stock for cash. b. The market value of the corporation’s stock increased. c. Declared and paid a cash dividend to stockholders. Indicate the immed
> Franklin Co. had 10 units of an inventory item on hand at the beginning of the current year, each of which had a per-unit cost of $10. During the year, 20 additional units were purchased at $11, and 25 units were sold. What is the amount of the ending in
> Murphy, Inc., purchased a new inventory item two times during the month of April, as follows. a. What is the amount of the ending inventory of this item on April 30 if the company has sold 75 units and uses the LIFO inventory method? b. How would this
> Explain why businesses normally can reduce unit costs by utilizing their facilities more intensively.
> Fox Company purchased items of inventory as follows. May 3 100 units @ $3.05 May 10 150 units @ $3.10 May 15 120 units @ $3.15 By the end of the month of May, Fox had sold 125 units. If the company uses the average-cost method of accounting for invent
> Mason Company purchased items of inventory as follows. Dec. 2 50 units @ $20 Dec. 12 12 units @ $21 Mason sold 15 units on December 20. Determine the cost of goods sold for the month under the LIFO inventory method.
> Rouse Incorporated reported sales, cost of sales, and inventory figures for last year and the current year as follows (all dollars in thousands). What is the amount of inventory turnover for each year, and in which year did Rouse manage its inventory mo
> Smalley, Inc., purchased items of inventory as follows. Smalley sold 50 units on January 28. Compute the cost of goods sold for the month under the FIFO inventory method
> On September 1, year 1, Health Wise International acquired a 6 percent, 9-month note receivable from Herbal Innovations, a credit customer, in settlement of a $22,000 account receivable. Prepare journal entries to record the following. a. The receipt of
> Following are the average accounts receivable and net sales reported recently by two large beverage companies (dollar amounts are stated in millions) a. Compute the accounts receivable turnover rate for each company (round your results to one decimal pl
> Willie Industries 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 the estim
> Ed Winslow is considering investing in a sandwich machine operation involving 50 sandwich machines located in various locations throughout the city. The machine manufacturer reports that similar sandwich machine routes have produced a sales volume rangin
> Wilson Corporation uses an income statement approach to estimate credit losses. Its gross Accounts Receivable of $5,000,000 at the beginning of the period had a net realizable value of $4,925,000. During the period, the company wrote off actual accounts
> Pacher Corporation reports the following information pertaining to its accounts receivable. The company uses a balance sheet approach to estimate credit losses. a. Record the company’s uncollectible accounts expense, assuming it has a
> Match the department on the left to the task that the department performs on the right, all of which relate to accounts receivable and cash collections. Each department should be used only once.
> Mumford Corporation invested $30,000 in marketable securities at various times during the year. On December 9, it sold some of these investments for $10,000, and on December 18, it sold more of these investments for $5,000. The securities sold on Decembe
> List and describe the four components of the cost of quality and provide examples of each.
> Franklin, Inc., accumulates large amounts of excess cash throughout the year. It typically invests these funds in marketable securities, both short term and long term. The company’s most recent financial statements revealed a net unrealized loss on marke
> The Cash account of Lycos Corporation showed a balance of $21,749 at December 31 prior to preparing a bank reconciliation. The company’s bank statement showed a balance of $22,000 at the same date. The only reconciling items consisted of: (1) a $5,000 de
> Explain why Sprint’s percentages are so much larger than Weis Markets’ percentages. Cromley Corporation reports annual sales of $1,800,000. Its accounts receivable throughout the year averaged $150,000. a. Compute the company’s accounts receivable turno
> The following percentages were computed using figures from recent annual reports of Weis Markets, a large grocery store chain, and Sprint Corporation, a provider of telecommunication services.
