Question: Listed as follows are eight events or
Listed as follows are eight events or transactions of Lone Star Corporation.
a. Made an adjusting entry to record interest on a short-term note payable.
b. Made a monthly installment payment of a fully amortizing, six-month, interest-bearing installment note payable.
c. Recorded a regular biweekly payroll, including the amounts withheld from employees, the issuance of paychecks, and payroll taxes on the employer.
d. Came within 12 months of the maturity date of a note payable originally issued for a period of 24 months.
e. Deposited employee tax withholdings with proper tax authorities.
f. Issued long-term bonds payable at face value.
g. Recognized semiannual interest expense on bonds payable described in part f and paid bond holders the full interest amount.
h. Recorded the necessary adjusting entry on December 31 of the current year to accrue three months’ interest on bonds payable that had been issued at a discount several years prior. The next semiannual interest payment will occur March 31 of the following year. Indicate the effects of each of these transactions on the following financial statement categories. Organize your answer in tabular form, using the illustrated column headings. Use the following code letters to indicate the effects of each transaction on the accounting element listed in the column heading: I for increase, D for decrease, and NE for no effect
> The following is a summary of the transactions affecting the stockholders’ equity of Dry Wall, Inc.,during the current year Instructions:a. Prepare a statement of stockholders’ equity for the year. Use the column head
> What is meant by the term overhead cost driver? How does a cost driver enter into the computation of an overhead application rate?
> What is the basic purpose of classifications in financial statements? Identify the classifications widely used in a balance sheet, a multiple-step income statement, and a statement of cash flows.
> Differentiate between horizontal and vertical analysis
> What amounts are debited to the Materials Inventory account? What amounts are credited to this account? What type of balance (debit or credit) is this account likely to have at year-end? Explain.
> What is meant by the term overhead application rate?
> What factors should be taken into account in deciding whether to use job order costing in any given situation?
> Rizzo’s has been in business since January of the current year. The company buys frozen pizza Crusts and resells them to large supermarket chains in five states. The following information pertains to Rizzo’s first four
> Selected data from the financial statements of Italian Marble Co. and Brazil Stone Products for the year just ended follow. Assume that for both companies dividends declared were equal in amount to net earnings during the year and therefore stockholders&
> The international business community has been calling for stronger corporate governance for companies around the globe. As a result, in 1999 the Organization for Economic Cooperation and Development (OECD) issued some principles that deal with the ethica
> Into which of the three elements of manufacturing cost would each of the following be classified? a. Tubing used in manufacturing bicycles. b. Wages paid by an automobile manufacturer to employees who test-drive completed automobiles. c. Property taxes o
> At the beginning of the year, Sunstone, Inc., has total stockholders’ equity of $1,200,000 and20,000 outstanding shares of a single class of capital stock. During the year, the corporation completes the following transactions affecting
> Ionic Charge is a newly organized manufacturing business that plans to manufacture and sell 60,000 units per year of a new product. The following estimates have been made of the company’s costs and expenses (other than income taxes). I
> Some of the accounts appearing in the year-end financial statements of Rogand Grocery, Inc., appear as follows. This list includes all of the company’s current assets and current liabilities. Instructions: a. Prepare a schedule of the
> Define financial instruments. Explain the valuation concept used in initially recording financial instruments in financial statements.
> Locate an annual report in your library (or some other source) that includes a large gain or loss on the disposal of plant assets. Report to the class the amount of the gain or loss and where in the company income statement it is reported is. Describe ho
> Are normal accounts receivable and accounts payable financial instruments? Are these items shown in the balance sheet at their present values? Explain
> The following are 10 technical accounting terms introduced or emphasized in Chapters 11 and 12. Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the term described, or answer â&#
> Use the information from Exercise 18.3 to complete a production cost report for Lamberton Industries for the month of July. Data from exercise 18.3: Lamberton Industries uses process costing. All of the company’s manufacturing activiti
> When are the costs of postretirement benefits recognized as an expense? When are the related cash payments made?
> Blaster Corporation manufactures hiking boots. For the coming year, the company has budgeted the following costs for the production and sale of 30,000 pairs of boots. Instructions: a. Compute the sales price per unit that would result in a budgeted ope
> Myer’s Treats makes institutional cakes. Finished cakes must pass through two departments: Mixing and Baking. Vats of cake batter are processed in the Mixing Department and then transferred to the Baking Department, where individual cakes are baked, cool
> Some expenses that appear in the income statement do not require a direct cash payment during the period. List at least two such expenses.
> Explain the relationship between the management functions of planning and controlling costs.
> What are the major objectives of a cost accounting system?
> Redstone Mill is a manufacturer that makes all sales on 30-day credit terms. Annual sales are approximately $40 million. At the end of year 1, accounts receivable were presented in the company’s balance sheet as follows. During year 2,
> Salt & Pepper, Inc., had retained earnings at the beginning of the current year of $460,000. During the year the company earned net income of $250,000 and declared dividends as follows. / In addition, the company discovered an overstatement in the prio
> Winona Enterprises uses job order costing. Manufacturing overhead is charged to individual jobs through the use of a predetermined overhead rate based on direct labor costs. The following information appears in the company’s Work in Pro
> How might the required financial reports differ between countries that are individualistic and countries that are collectivist?
> Slick Corporation is a small producer of synthetic motor oil. During May, the company produced 5,000 cases of lubricant. Each case contains 12 quarts of synthetic oil. To achieve this level of production, Slick purchased and used 16,500 gallons of direct
> Former Corporation sells office supplies to government agencies. At the beginning of the current quarter, the company reports the following selected account balances. Former’s management has made the following budget estimates regardin
> What are the characteristics of a just-in-time inventory system? Briefly explain some advantages and risks of this type of system.
> Why are direct labor hours likely to be an inappropriate activity base in a highly mechanized production facility?
> Alan Weber originally started Prime Cuts, a small butcher shop, as a sole proprietorship. Then he began advertising in gift catalogs, and his company quickly grew into a large mail-order business. Now Prime Cuts sends meat and seafood all over the world
> The following is a series of related transactions between Hip Pants and Sleek, a chain of retail clothing stores. Instructions: a. Record this series of transactions in the general journal of Hip Pants. (The company records sales at gross sales price.)
> What nonfinancial considerations should be taken into account when deciding whether to accept a special order?
> Throughout the year, Baker Construction Company had 3 million shares of common stock and 150,000 shares of convertible preferred stock outstanding. Each share of preferred is convertible into two shares of common. What number of shares should be used in
> Westminster Inc. produces clocks and has two divisions—the frames division and the works division. The frames division produces the outside casings for clocks, which it sells to the outside market. The casing for the desktop grandfather clock sells for $
> What is the relationship between contribution margin and responsibility .margin? Explain how each of these measurements is useful in making management
> At the beginning of year 1, Kara Company initiated a quality improvement program. Considerable effort was expended over two years to reduce the number of defective units produced. By the end of the second year, reports from the production manager reveale
> Why is the preparation of a sales forecast one of the earliest steps in preparing a master budget?
> Monster Cookie Company is located in Denmark. It is a relatively new company and so far has sold its products only in its home country. In December, Monster determined that it had excess capacity to produce more of its special Halloween cookies. It is tr
> Purple Cow operates a chain of drive-ins selling primarily ice cream products. The following information is taken from the records of a typical drive-in now operated by the company. Based on these data, the monthly break-even sales volume is determined
> Hans Enterprises is a large producer of birdseed. During June, the company produced 160 batches of crow bait. Each batch weighs 1,000 pounds. To produce this quantity of output, the company purchased and used 170,000 pounds of direct materials at a cost
> Assume that you are the production manager of the Assembly Department at Metal Products, Inc., the process costing and equivalent units example from earlier in this chapter. One of your responsibilities is to determine whether costs are remaining relativ
> Explore the following web address to learn about processes involved in soft drink manufacturing: http://www.madehow.com/Volume-2/Soft-Drink.html. Answer the following question about how most soft drinks are made. Instructions: a. What are the primary di
> Zelda Manufacturing organized in June and recorded the following transactions during its first month of operations. 1 . Purchased materials costing $800,000. 2. Used direct materials in production costing $485,000. 3. Applied direct labor costs of $500
> Hot Water, Inc., manufactures a variety of dry cleaning equipment. The following are five eventsthat occurred during the current year.1. Declared a $5 per share cash dividend.2. Paid the cash dividend.3. Purchased 1,000 shares of treasury stock for $37 p
> Procter & Gamble sells Gillette razors near or below their manufacturing cost. It also sells razor blades that have a relatively high contribution margin. Explain why P&G does not eliminate its unprofitable razor line and sell only blades.
> Listed are six technical accounting terms introduced or emphasized in this chapter. Each of the following statements may or may not describe these technical terms. For each statement, indicate the term described, or answer “Noneâ
> What is the difference between an international licensing agreement and an international joint venture?
> Distinguish between a stock split and a stock dividend. Is there any reason for the difference in accounting treatment of these two events?
> Define opportunity costs and explain why they represent a common source of error in making cost analyses.
> Discuss the importance of incremental costs and revenue when considering alternative courses of action.
> On September 1, 2021, Evansville Lumber Company issued $80 million in 20-year, 10 percent bonds payable. Interest is payable semiannually on March 1 and September 1. Bond discounts and premiums are amortized at each interest payment date and at year-end.
> Tootsie Roll Industries has two business segments, one for operations in the United States and one for operations in Mexico and Canada. The following information (in thousands) comes from a recent annual report. Find the ROI for each segment for each yea
> There is a business saying that “You shouldn’t be in business if your company doesn’t earn higher than bank rates.” This means that if a company is to succeed, its return on assets should be significantly higher than its cost of borrowing. Why is this so
> Identify various product characteristics that distinguish job costing systems from process costing systems.
> You have recently taken a position with Albers, Inc., a wholesale company that relies heavily on sales outside the United States. In order to facilitate sales worldwide, the company has warehouses at several non–U.S. locations from which it services impo
> When Delta Airlines sells tickets for future flights, it debits Cash and credits an account entitled Air Traffic Liability (Passenger Revenue Earned is recorded only when passengers are provided flight services). The Air Traffic Liability account, report
> Tyge Corporation recorded the following activities during its first month of operations. Purchased materials costing $300,000. Used direct materials in production costing $280,000. Incurred direct labor costs of $220,000, of which $190,000 had actually
> Using the search approach of your choice, find the 2018 annual report of Johnson & Johnson. Locate the company’s 2018 balance sheet. Instructions: Answer the following questions. a. Does the company report preferred stock in its balance sheet? If so,
> Rachel’s Costume Creations has two product lines: machine-made costumes and hand-made costumes. The company assigns $96,000 in manufacturing overhead costs to two cost pools: power costs and inspection costs. Of this amount, the power c
> What would be the effect, if any, on book value per share of common stock as a result of each of the following independent events: (a) A corporation obtains a bank loan; (b) a dividend is declared (to be paid in the next accounting period)?
> An analysis of the income statement and the balance sheet accounts of Mary’s Fashions at December 31 of the current year, provides the following information. Additional Information: 1. Except as noted in 4, payments and proceeds relati
> Foding Corporation has supplied the following information obtained from its standard cost system in May. Instructions: a. Determine the actual quantity of materials purchased and used in production during May. b. Determine the standard quantity of mater
> On March 31, 2021, Gardner Corporation received authorization to issue $50,000 of 9 percent, 30-year bonds payable. The bonds pay interest on March 31 and September 30. The entire issue was dated March 31, 2021, but the bonds were not issued until April
> Is the cost of disposing of hazardous waste materials resulting from factory operations a product cost or a period cost? Explain.
> Thompson Plumbing Inc. is a wholesaler of plumbing accessories. Thompson Plumbing began operations in September of the current year and engaged in the following transactions during September and October of this year. Thompson Plumbing uses a perpetual in
> In a process costing system that uses a FIFO cost flow assumption, how is the number of units started and completed during the period computed?
> Year after year two huge supermarket chains—Publix Super Markets, Inc., and Safeway, Inc.— consistently report gross profit rates between 26 percent and 29 percent. Each uses a sophisticated perpetual inventory system to account for billions of dollars i
> What is the difference between a sunk cost and an out-of pocket cost?
> Assuming no change in the expected amount of future cash flows, what factors may cause the present value of a financial instrument to change? Explain fully
> Briefly explain the relationships between present value and (a) the length of time until the future cash flow occurs, and (b) the discount rate used in determining present value
> What does book value per share of common stock represent? Does it represent the amount common stockholders would receive in the event of liquidation of the corporation? Explain briefly.
> Percale Farms raises marine fish for sale in the aquarium trade. Each year, Percale obtains a batch of approximately one million eggs from a local supplier. Percale’s manager is trying to decide whether to use the farm’s facilities to raise Maroon Clownf
> Why would a company use multiple cost accounting systems?
> Define the term activity base.
> Frost, Inc., acquired land by issuing $770,000 of capital stock. No cash changed hands in this transaction. Will the transaction be included in the company’s statement of cash flows? Explain.
> Tots-To-Go, Inc., has two divisions—the seat division and the stroller division. The seat division supplies the seat frames used by the stroller division to make its strollers. The stroller division produces approximately 10,000 strollers for young child
> Kendahl Plastics Corporation contracts with NASA to manufacture component parts used in commedications satellites. NASA reimburses Kendahl on the basis of the actual manufacturing costs it incurs, plus a fixed percentage. Prior to being awarded a contrac
> Briefly describe the rationale for using a cost flow assumption, rather than the specific identification method, to value an inventory
> With a group of two or three students, choose a publicly traded global company that you think you might want to invest in sometime in the future. Use the Internet or annual report data to answer the following questions. a. In which geographical regions d
> Early in 2018, Sear Foss, Inc., was organized with authorization to issue 2,000 shares of $100 par value preferred stock and 300,000 shares of $1 par value common stock. Five hundred shares of the preferred stock were issued at par, and 80,000 shares of
> How do cash effects differ among out-of-pocket costs, sunk costs, and opportunity costs?
> A recent balance sheet of Denver Tours is provided as follows. Other information provided by the company is as follows Compute and discuss briefly the significance of the following measures as they relate to Denver Tours. a. Net income percentage in c
> An American company is considering entering into a joint venture with a Korean firm. Describe what cultural differences each party should consider.
> Wells Enterprises manufactures a component that is processed successively by Department I and Department II. Manufacturing overhead is applied to units produced at the following budget costs. These budgeted overhead costs per unit are based on the norma
> General Electric Company has had its financial ups and downs. Recently, the CFO for General Electric helped turn its problems around by analyzing the amount of value each product was providing to the company’s bottom line. The analysis ultimately determi
> The Ski Factory provided the following information at December 31, year 1. Marketable Securities The company invested $52,000 in a portfolio of marketable securities on December 22, year 1. The portfolio’s market value on December 31,
> A financial analyst notes that Collier Corporation’s earnings per share have been rising steadily for the past five years. The analyst expects the company’s net income to continue to increase at the same rate as in the past. In forecasting future basic e
> Taylor & Malone is a law firm. Would the concepts of job order costing be appropriate for this type of service business? Explain
> The common stock of Fido Corporation was trading at $45 per share on October 15 of the previous year. A year later, on October 15 of the current year, it was trading at $80 per share. On this date, Fido’s board of directors decided to split the company’s
> Xerox Company applies manufacturing overhead on the basis of machine-hours using a predetermined overhead rate. At the end of the current year, the Manufacturing Overhead account has a credit balance. What are the possible explanations for this? What dis
> Is management accounting information developed in conformity with generally accepted accounting principles or some other set of prescribed standards? Explain.
> At the beginning of the year, Albers, Inc., has total stockholders’ equity of $840,000 and 40,000outstanding shares of a single class of capital stock. During the year, the corporation completes thefollowing transactions affecting its s
> Mentor Company sells kitchen appliances to contractors to install in newly constructed houses. Mentor sold appliances to a single contractor for ten homes at a total price of $150,000. Mentor extends the manufacturer’s warrants for one year beyond the ma
> Provide an example showing how the following environmental forces affect accounting Practices. a. Political and legal systems. b. Economic systems. c. Culture. d. Technology and infrastructure.
> Describe how activity-based costing can improve overhead cost allocations in companies that produce diverse product lines.
> 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
