Journalize the following transactions for Shelton, Inc. a. Incurred direct labor costs of $24,000 for 3,000 hours. The standard labor cost was $24,900. b. Assigned 3,000 direct labor hours costing $24,000 to production. Standard hours were 3,150.
> Why is it necessary to convert accrual-basis net income to cash-basis income when preparing a statement of cash flows?
> What constitutes “significant influence” when an investor’s financial interest is below the 50% level?
> To acquire Peoples Corporation stock, J. Rich pays $62,000 in cash. What entry should be made for this investment?
> Seibel Company sells Mayo’s bonds costing $40,000 for $45,000, including $500 of accrued interest. Seibel records a $5,000 gain on this sale. Is this correct? Explain.
> Alex Ramirez is confused about losses and gains on the sale of debt investments. Explain to Alex (a) how the gain or loss is computed, and (b) the statement presentation of the gains and losses.
> In general, what are the requirements for the financial statement presentation of long-term liabilities?
> (a) What are long-term liabilities? Give three examples. (b) What is a bond?
> Bargain Wholesale Supply owns stock in Cyrus Corporation, which it intends to hold indefinitely because of some negative tax consequences if sold. Should the investment in Cyrus be classified as a short-term investment? Why?
> Talkington Electronics issues a $400,000, 8%, 15-year mortgage note on December 31, 2019. The proceeds from the note are to be used in financing a new research laboratory. The terms of the note provide for annual installment payments, exclusive of real e
> Where is Accumulated Other Comprehensive Loss reported on the balance sheet?
> What are the valuation guidelines for trading and available for- sale debt investments at a balance sheet date?
> What are consolidated financial statements?
> What are the reasons that corporations invest in securities?
> Rattigan Corporation is considering issuing a convertible bond. What is a convertible bond? Discuss the advantages of a convertible bond from the standpoint of (a) the bondholders and (b) the issuing corporation.
> If the Bonds Payable account has a balance of $900,000 and the Discount on Bonds Payable account has a balance of $120,000, what is the carrying value of the bonds?
> If a 7%, 10-year, $800,000 bond is issued at face value and interest is paid annually, what is the amount of the interest payment at the end of the first year period?
> Assume that Remington Inc. sold bonds with a face value of $100,000 for $104,000. Was the market interest rate equal to, less than, or greater than the bonds’ contractual interest rate? Explain.
> The following terms are important in issuing bonds: (a) face value, (b) contractual interest rate, (c) bond indenture, and (d) bond certificate. Explain each of these terms.
> Contrast the following types of bonds: (a) secured and unsecured, and (b) convertible and callable.
> Condensed financial data of Oakley Company appear below. Additional information: 1. Equipment costing $97,000 was purchased for cash during the year. 2. Investments were sold at cost. 3. Equipment costing $47,000 was sold for $15,550, resulting in gai
> DeWeese Corporation issues $400,000 of 8%, 5-year bonds on January 1, 2020, at 105. Assuming that the straight-line method is used to amortize the premium, what is the total amount of interest expense for 2020?
> Did Apple redeem any of its debt during the fiscal year ended September 26, 2015?
> Benedict Company entered into an agreement to lease 12 computers from Haley Electronics, Inc. The present value of the lease payments is $186,300. Assuming that this is a finance lease, what entry would Benedict Company make on the date of the lease agre
> (a) What is a lease agreement? (b) What are the two common types of leases?
> (a) As a source of long-term financing, what are the major advantages of bonds over common stock? (b) What are the major disadvantages in using bonds for long-term financing?
> Why is it advantageous to use a worksheet when preparing a statement of cash flows? Is a worksheet required to prepare a statement of cash flows?
> Rob Grier, a friend of yours, has recently purchased a home for $125,000, paying $25,000 down and the remainder financed by a 10.5%, 20-year mortgage, payable at $998.38 per month. At the end of the first month, Rob receives a statement from the bank ind
> What are some of the limitations of regression analysis?
> Mary Webster owns and manages a company that provides trenching services. Her clients are companies that need to lay power lines, gas lines, and fiber optic cable. Because trenching machines require considerable maintenance due to the demanding nature of
> James Brooks estimated the variable and fixed components of his company’s utility costs using the high-low method. He is concerned that the cost equation that resulted from the high-low method might not provide an accurate representation of his company’s
> The comparative balance sheets for Rothlisberger Company as of December 31 are presented below. Additional information: 1. Operating expenses include depreciation expense of $42,000 and charges from prepaid expenses of $5,720. 2. Land was sold for cash
> In its 2015 statement of cash flows, what amount did Apple report for net cash (a) provided by operating activities, (b) used for investing activities, and (c) used for financing activities?
> During 2020, Doubleday Company converted $1,700,000 of its total $2,000,000 of bonds payable into common stock. Indicate how the transaction would be reported on a statement of cash flows, if at all.
> Boise Company’s investments in equity securities at December 31 show total cost of $200,000 and total fair value of $210,000. Boise has less than a 20% ownership interest in the equity securities. Prepare the adjusting entry.
> Using the data in Question 13, how would Jill report the data if the investments were long-term and the debt securities were classified as available-for-sale?
> Total fixed costs are $26,000 for Daz Inc. It has a unit contribution margin of $15, and a contribution margin ratio of 25%. Compute the break-even sales in dollars.
> Alou Company has 20,000 beginning finished goods units. Budgeted sales units are 160,000. If management desires 15,000 ending finished goods units, what are the required units of production?
> Name the major ratios useful in assessing (a) liquidity and (b) solvency.
> Distinguish between the cost and equity methods of accounting for investments in stocks.
> “Cost-volume-profit (CVP) analysis is based entirely on unit costs.” Do you agree? Explain.
> a. If Erin Company had net income of $300,000 in 2019 and it experienced a 24.5% increase in net income for 2020, what is its net income for 2020? b. If 6 cents of every dollar of Erin’s revenue is net income in 2019, what is the dollar amount of 2019 r
> Using the information in P26.5A, compute the overhead controllable variance and the overhead volume variance. Data from P26.5: Hart Labs, Inc. provides mad cow disease testing for both state and federal governmental agricultural agencies. Because the co
> How should mixed costs be classified in CVP analysis? What approach is used to effect the appropriate classification?
> Diane Hollowell and Terry Parmenter were discussing the format of the statement of cash flows of Snow Candy Co. At the bottom of Snow Candy’s statement of cash flows was a separate section entitled “Noncash investing and financing activities.” Give three
> Identify and explain factors that affect quality of earnings.
> What amount did Apple report as “Other comprehensive income (loss)” in its consolidated statement of comprehensive income ending September 26, 2015? By what percentage did Apple’s “Comprehensive income” differ from its “Net income”?
> Contrast the effects of changes in the activity level on total fixed costs and on unit fixed costs.
> Hogan Inc. reported 2019 earnings per share of $3.26 and had no discontinued operations. In 2020, earnings per share on income from continuing operations was $2.99, and earnings per share on net income was $3.49. Do you consider this trend to be favorabl
> Identify which costing system—job order or process cost— the following companies would primarily use: (a) Quaker Oats, (b) Jif Peanut Butter, (c) Gulf Craft (luxury yachts), and (d) Warner Bros. Motion Pictures.
> The four perspectives in the balanced scorecard are (1) financial, (2) customer, (3) internal process, and (4) learning and growth. Match each of the following objectives with the perspective it is most likely associated with: (a) plant capacity utiliz
> Mordica Company’s standard labor cost per unit of output is $22 (2 hours × $11 per hour). During August, the company incurs 2,150 hours of direct labor at an hourly cost of $10.80 per hour in making 1,000 units of finished product. Compute the total, pri
> Using the information in P26.3A, compute the overhead controllable variance and the overhead volume variance. Data from P26.3: Rudd Clothiers is a small company that manufactures tall-men’s suits. The company has used a standard cost a
> In Rooney Company, direct labor is $20 per hour. The company expects to operate at 10,000 direct labor hours each month. In January 2020, direct labor totaling $206,000 is incurred in working 10,400 hours. Prepare (a) a static budget report and (b) a fle
> Lopez Company uses both standards and budgets. For the year, estimated production of Product X is 500,000 units. Total estimated cost for materials and labor are $1,400,000 and $1,700,000. Compute the estimates for (a) a standard cost and (b) a budgete
> For its three investment centers, Gerrard Company accumulates the following data: Compute the return on investment (ROI) for each center. I II III $2,000,000 1,400,000 $ 4,000,000 3,600,000 Sales $4,000,000 Controllable margin Average operating ass
> Torres Company accumulates the following summary data for the year ending December 31, 2020, for its Water Division, which it operates as a profit center: sales $2,000,000 budget, $2,080,000 actual; variable costs—$1,000,000 budget, $1,050,000 actual; an
> In the Assembly Department of Hannon Company, budgeted and actual manufacturing overhead costs for the month of April 2020 were as follows. All costs are controllable by the department manager. Prepare a responsibility report for April for the cost cen
> Data for Gundy Company are given in BE25.4. In March 2020, the company incurs the following costs in producing 100,000 units: direct materials $520,000, direct labor $596,000, and variable overhead $805,000. Actual fixed costs were equal to budgeted fixe
> Sterling, Inc. reports the following financial information for its sports clothing segment. Average operating assets ………………………………. $3,000,000 Controllable margin ………………………………………… $ 630,000 Minimum rate of return ………………………………………….. 10% Compute the retur
> Data for the investment centers for Gerrard Company are given in BE25.9. The centers expect the following changes in the next year: (I) increase sales 15%, (II) decrease costs $400,000, and (III) decrease average operating assets $500,000. Compute the
> For the quarter ended March 31, 2020, Croix Company accumulates the following sales data for its newest guitar, The Edge: $315,000 budget; $305,000 actual. Prepare a static budget report for the quarter.
> Kaspar Industries expects credit sales for January, February, and March to be $220,000, $260,000, and $300,000, respectively. It is expected that 75% of the sales will be collected in the month of sale, and 25% will be collected in the following month. C
> Using the information in P26.2A, compute the overhead controllable variance and the overhead volume variance. Data from P26.2: Ayala Corporation accumulates the following data relative to jobs started and finished during the month of June 2020. Overhe
> North Company has completed all of its operating budgets. The sales budget for the year shows 50,000 units and total sales of $2,250,000. The total unit cost of making one unit of sales is $25. Selling and administrative expenses are expected to be $300,
> Elbert Company classifies its selling and administrative expense budget into variable and fixed components. Variable expenses are expected to be $24,000 in the first quarter, and $4,000 increments are expected in the remaining quarters of 2020. Fixed exp
> For Roche Inc., variable manufacturing overhead costs are expected to be $20,000 in the first quarter of 2020, with $5,000 increments in each of the remaining three quarters. Fixed overhead costs are estimated to be $40,000 in each quarter. Prepare the m
> For Gundy Company, units to be produced are 5,000 in quarter 1 and 7,000 in quarter 2. It takes 1.6 hours to make a finished unit, and the expected hourly wage rate is $15 per hour. Prepare a direct labor budget by quarters for the 6 months ending June 3
> Perine Company has 2,000 pounds of raw materials in its December 31, 2019, ending inventory. Required production for January and February of 2020 are 4,000 and 5,000 units, respectively. Two pounds of raw materials are needed for each unit, and the estim
> Sales budget data for Paige Company are given in BE24.2. Management desires to have an ending finished goods inventory equal to 25% of the next quarter’s expected unit sales. Prepare a production budget by quarters for the first 6 months of 2020. Data f
> Paige Company estimates that unit sales will be 10,000 in quarter 1, 14,000 in quarter 2, 15,000 in quarter 3, and 18,000 in quarter 4. Using a sales price of $70 per unit, prepare the sales budget by quarters for the year ending December 31, 2020.
> For Astoria Company, actual sales are $1,000,000, and break-even sales are $800,000. Compute (a) the margin of safety in dollars and (b) the margin of safety ratio.
> For Flynn Company, variable costs are 70% of sales, and fixed costs are $195,000. Management’s net income goal is $75,000. Compute the required sales in dollars needed to achieve management’s target net income of $75,000. (Use the contribution margin app
> Maris Company uses the following budgets: balance sheet, capital expenditure, cash, direct labor, direct materials, income statement, manufacturing overhead, production, sales, and selling and administrative expense. Prepare a diagram of the interrelatio
> Using the information in P26.1A, compute the overhead controllable variance and the overhead volume variance. Data from P26.1: Rogen Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct materials—1 pou
> Presto Corp. had total variable costs of $180,000, total fixed costs of $110,000, and total revenues of $300,000. Compute the required sales in dollars to break even.
> Production costs chargeable to the Finishing Department in June in Hollins Company are materials $12,000, labor $29,500, and overhead $18,000. Equivalent units of production are materials 20,000 and conversion costs 19,000. Compute the unit costs for mat
> Russell Inc. had sales of $2,200,000 for the first quarter of 2020. In making the sales, the company incurred the following costs and expenses. Prepare a CVP income statement for the quarter ended March 31, 2020. Variable Fixed $440,000 Cost of goo
> In Mordica Company, total materials costs are $33,000, and total conversion costs are $54,000. Equivalent units of production are materials 10,000 and conversion costs 12,000. Compute the unit costs for materials, conversion costs, and total manufacturin
> Markowis Corp. has collected the following data concerning its maintenance costs for the past 6 months. Compute the variable- and fixed-cost elements using the high-low method. Units Produced Total Cost 18,000 32,000 $36,000 July August September 4
> Factory labor data for Dieker Company is given in BE20.2. During January, time tickets show that the factory labor of $6,000 was used as follows: Job 1 $2,200, Job 2 $1,600, Job 3 $1,400, and general factory use $800. Prepare a summary journal entry to r
> For Wesland Company, a mixed cost is $15,000 plus $18 per direct labor hour. Diagram the behavior of the cost using increments of 500 hours up to 2,500 hours on the horizontal axis and increments of $15,000 up to $60,000 on the vertical axis.
> Data for Warner Company are given in BE21.1. Supporting records show that (a) the Assembly Department used $24,000 of the raw materials and $35,000 of the factory labor, and (b) the Finishing Department used the remainder. Journalize the assignment of th
> Monthly production costs in Dilts Company for two levels of production are as follows. Indicate which costs are variable, fixed, and mixed, and give the reason for each answer. Cost 2,000 Units 4,000 Units Indirect labor $10,000 $20,000 Supervisory
> Data for Hollins Company are given in BE21.8. Production records indicate that 18,000 units were transferred out, and 2,000 units in ending work in process were 50% complete as to conversion costs and 100% complete as to materials. Prepare a cost reconci
> Jorgensen Corporation uses standard costs with its job order cost accounting system. In January, an order (Job No. 12) for 1,900 units of Product B was received. The standard cost of one unit of Product B is as follows. Normal capacity for the month wa
> The executive team at Current Designs has gathered to evaluate the company’s operations for the last month. One of the topics on the agenda is the special order from Huegel Hollow, which was presented in CD2. Recall that Current Designs had a special ord
> During the first quarter, Francum Company incurs the following direct labor costs: January $40,000, February $30,000, and March $50,000. For each month, prepare the entry to assign overhead to production using a predetermined rate of 70% of direct labor
> The Smelting Department of Kiner Company has the following production data for November. Beginning work in process 2,000 units that are 100% complete as to materials and 20% complete as to conversion costs; units transferred out 9,000 units; and ending w
> Factory labor data for Warner Company are given in BE21.2. Manufacturing overhead is assigned to departments on the basis of 160% of labor costs. Journalize the assignment of overhead to the Assembly and Finishing Departments.
> Staples, Inc. is one of the largest suppliers of office products in the United States. Suppose it had net income of $738.7 million and sales of $24,275.5 million in 2020. Its total assets were $13,073.1 million at the beginning of the year and $13,717.3
> The following data were taken from the income statements of Mydorf Company. a. Compute for each year (1) the inventory turnover and (2) days in inventory. b. What conclusions concerning the management of the inventory can be drawn from these data?
> Using the data in BE21.10, prepare the cost section of the production cost report for Pix Company using the FIFO approach. Data from BE21.10: Pix Company has the following production data for March: no beginning work in process, units started and comple
> Pix Company has the following production data for March: no beginning work in process, units started and completed 30,000, and ending work in process 5,000 units that are 100% complete for materials and 40% complete for conversion costs. Pix uses the FIF
> Warner Company purchases $50,000 of raw materials on account, and it incurs $60,000 of factory labor costs. Journalize the two transactions on March 31, assuming the labor costs are not paid until April.
> Ruiz Engineering Contractors incurred service salaries and wages of $36,000 ($28,000 direct and $8,000 indirect) on an engineering project. The company applies overhead at a rate of 25% of direct labor. Record the entries to assign service salaries and
> In alphabetical order below are current asset items for Roland Company’s balance sheet at December 31, 2020. Prepare the current assets section (including a complete heading). Accounts receivable ………………………………………………… $200,000 Cash ……………………………………………………………
> Coolplay Corp. is thinking about opening a soccer camp in southern California. To start the camp, Coolplay would need to purchase land and build four soccer fields and a sleeping and dining facility to house 150 soccer players. Each year, the camp would
> Presented below are Rook Company’s monthly manufacturing cost data related to its tablet computer product. a. Utilities for manufacturing equipment $116,000 b. Raw materials (CPU, chips, etc.) $ 85,000 c. Depreciation on manufacturing b
> Data pertaining to job cost sheets for Dieker Company are given in BE20.3 and BE20.4. Prepare the job cost sheets for each of the three jobs using the format shown in Illustration 20.8. Data from BE20.3: In January, Dieker Company requisitions raw mate
> In January, Dieker Company requisitions raw materials for production as follows: Job 1 $900, Job 2 $1,200, Job 3 $700, and general factory use $600. Prepare a summary journal entry to record raw materials used.
