Question: Myers Company uses a flexible budget for

> Detwiler Orchard issues a $700,000, 6%, 15-year mortgage note to obtain needed financing for a new lab. The terms call for annual payments of $72,074 each. Prepare the entries to record the mortgage loan and the first installment payment.

> Presented below are two independent situations: 1. Edelman Inc. acquired 10% of the 500,000 shares of common stock of Schuberger Corporation at a total cost of $11 per share on June 17, 2020. On September 3, Schuberger declared and paid a $160,000 divide

> Ragsdell Corporation had the following transactions. 1. Issued $200,000 of bonds payable. 2. Paid utilities expense. 3. Issued 500 shares of preferred stock for $45,000. 4. Sold land and a building for $250,000. 5. Lent $30,000 to Tegtmeier Corporation,

> Kurtyka Corporation had the following transactions relating to debt investments: Jan. 1, 2020 Purchased 50, $1,000, 10% Spiller Company bonds for $50,000. Interest is payable annually on January 1. Dec. 31, 2020 Accrued interest on Spiller Company bonds.

> Wayne Company is considering a long-term investment project called ZIP. ZIP will require an investment of $120,000. It will have a useful life of 4 years and no salvage value. Annual revenues would increase by $80,000, and annual expenses (excluding depr

> Wayne Company is considering a long-term investment project called ZIP. ZIP will require an investment of $120,000. It will have a useful life of 4 years and no salvage value. Annual cash inflows would increase by $80,000, and annual cash outflows would

> Ranger Corporation has decided to invest in renewable energy sources to meet part of its energy needs for production. It is considering solar power versus wind power. After considering cost savings as well as incremental revenues from selling excess elec

> Wayne Company is considering a long-term investment project called ZIP. ZIP will require an investment of $120,000. It will have a useful life of 4 years and no salvage value. Annual cash inflows would increase by $80,000, and annual cash outflows would

> Wayne Company is considering a long-term investment project called ZIP. ZIP will require an investment of $140,000. It will have a useful life of 4 years and no salvage value. Annual cash inflows would increase by $80,000, and annual cash outflows would

> Suppose the 2020 adidas financial statements contain the following selected data (in millions). Compute the following values and provide a brief interpretation of each. a. Debt to assets ratio. b. Times interest earned. Current assets $4,485 8,875

> Presented below are long-term liability items for Lind Company at December 31, 2020. Prepare the long-term liabilities section of the balance sheet for Lind Company. Bonds payable, due ………………………………………………….. 2022 $600,000 Lease liability …………………………………………

> Hanschu Inc. issues an $800,000, 10%, 10-year mortgage note on December 31, 2020, to obtain financing for a new building. The terms provide for annual installment payments of $130,196. Prepare the entry to record the mortgage loan on December 31, 2020, a

> The balance sheet for Miley Consulting reports the following information on July 1, 2020. Miley decides to redeem these bonds at 101 after paying annual interest. Prepare the journal entry to record the redemption on July 1, 2020. Long-term liabili

> Frankum Company has issued three different bonds during 2020. Interest is payable annually on each of these bonds. 1. On January 1, 2020, 1,000, 8%, 5-year, $1,000 bonds dated January 1, 2020, were issued at face value. 2. On July 1, $900,000, 9%, 5-year

> Nasreen Company issues $2 million, 10-year, 8% bonds at 97, with interest payable each January 1. a. Prepare the journal entry to record the sale of these bonds on January 1, 2020. b. Assuming instead that the above bonds sold for 104, prepare the journa

> Meera Corporation issued 4,000, 8%, 5-year, $1,000 bonds dated January 1, 2020, at 100. Interest is paid each January 1. a. Prepare the journal entry to record the sale of these bonds on January 1, 2020. b. Prepare the adjusting journal entry on December

> Price Company issues $400,000, 20-year, 7% bonds at 101. Prepare the journal entry to record the sale of these bonds on June 1, 2020.

> Moby Inc. is considering two alternatives to finance its construction of a new $2 million plant. a. Issuance of 200,000 shares of common stock at the market price of $10 per share. b. Issuance of $2 million, 8% bonds at face value. Complete the following

> Selected data taken from a recent year’s financial statements of trading card company Topps Company, Inc. are as follows (in millions). Net sales …………………………………………………………….. $326.7 Current liabilities, beginning of year ………………………….. 41.1 Current liabiliti

> Sisson Corporation reports operating expenses of $80,000 excluding depreciation expense of $15,000 for 2020. During the year, prepaid expenses decreased $6,600 and accrued expenses payable increased $4,400. Compute the cash payments for operating expense

> Data for Stiever Corporation’s maintenance costs is shown below. Compute the variable- and fixed-cost elements using regression analysis. Present your solution in the form of a cost equation. Units Produced Total Cost $32,000 July

> Deines Corporation has fixed costs of $480,000. It has a unit selling price of $6, unit variable costs of $4.40, and a target net income of $1,500,000. Compute the required sales in units to achieve its target net income.

> Using the data in BE26.6 and BE26.10, compute the overhead volume variance. Normal capacity was 25,000 direct labor hours. Data from BE26.6 & BE26.10: In October, Pine Company reports 21,000 actual direct labor hours, and it incurs $118,000 of manufactu

> Some overhead data for Pine Company are given in BE26.6. In addition, the flexible manufacturing overhead budget shows that budgeted costs are $4 variable per direct labor hour and $50,000 fixed. Compute the overhead controllable variance. Data from BE2

> Swift Oil Company is considering investing in a new oil well. It is expected that the oil well will increase annual revenues by $130,000 and will increase annual expenses by $70,000 including depreciation. The oil well will cost $490,000 and will have a

> For the year ending December 31, 2020, Cobb Company accumulates the following data for the Plastics Division which it operates as an investment center: contribution margin—$700,000 budget, $710,000 actual; controllable fixed costs—$300,000 budget, $302,0

> Kanye Company is evaluating the purchase of a rebuilt spot-welding machine to be used in the manufacture of a new product. The machine will cost $176,000, has an estimated useful life of 7 years, a salvage value of zero, and will increase net annual cash

> In October, Pine Company reports 21,000 actual direct labor hours, and it incurs $118,000 of manufacturing overhead costs. Standard hours allowed for the work done is 20,600 hours. The predetermined overhead rate is $6 per direct labor hour. Compute the

> McKnight Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $400,000, has an expected useful life of 10 years, a salvage value of zero, and is expected to increase net annual cash flows by $70,000.

> Gundy Company expects to produce 1,200,000 units of Product XX in 2020. Monthly production is expected to range from 80,000 to 120,000 units. Budgeted variable manufacturing costs per unit are direct materials $5, direct labor $6, and overhead $8. Budget

> Nathan T Corporation is comparing two different options. Nathan T currently uses Option 1, with revenues of $65,000 per year, maintenance expenses of $5,000 per year, and operating expenses of $26,000 per year. Option 2 provides revenues of $60,000 per y

> Thunder Corporation, an amusement park, is considering a capital investment in a new exhibit. The exhibit would cost $136,000 and have an estimated useful life of 5 years. It can be sold for $60,000 at the end of that time. (Amusement parks need to rotat

> Data for Croix Company are given in BE25.1. In the second quarter, budgeted sales were $380,000, and actual sales were $384,000. Prepare a static budget report for the second quarter and for the year to date. Data from BE25.1: For the quarter ended Marc

> Rihanna Company is considering purchasing new equipment for $450,000. It is expected that the equipment will produce net annual cash flows of $60,000 over its 10-year useful life. Annual depreciation will be $45,000. Compute the cash payback period.

> Vern Thoms is puzzled. His company had a profit margin of 10% in 2020. He feels that this is an indication that the company is doing well. Tina Amos, his accountant, says that more information is needed to determine the company’s financial well-being. Wh

> When the total cash inflows exceed the total cash outflows in the statement of cash flows, how and where is this excess identified?

> (a) When should a long-term investment in common stock be accounted for by the equity method? (b) When is revenue recognized under this method?

> Distinguish among the three types of activities reported in the statement of cash flows.

> The return on assets for Ayala Corporation is 7.6%. During the same year, Ayala’s return on common stockholders’ equity is 12.8%. What is the explanation for the difference in the two rates?

> Windsor Corporation issues $500,000 of 9%, 5-year bonds on January 1, 2020, at 104. If Windsor uses the effective-interest method in amortizing the premium, will the annual interest expense increase or decrease over the life of the bonds? Explain.

> You have been given the following information about the production of Usher Co., and are asked to provide the plant manager with information for a meeting with the vice president of operations. Standard Cost Card Direct materials (5 pounds

> Levine Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product. Direct materials (8 pounds at $2.50 per pound) …………………………………….. $20 Direct labor (3 hours at $12.00 per hour) ………………………………………………. $

> The standard cost of Product B manufactured by Pharrell Company includes three units of direct materials at $5.00 per unit. During June, 29,000 units of direct materials are purchased at a cost of $4.70 per unit, and 29,000 units of direct materials are

> Stefani Company has gathered the following information about its product. Direct materials. Each unit of product contains 4.5 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.5 pounds. Materials cost $5

> Manufacturing overhead data for the production of Product H by Shakira Company, assuming the company uses a standard cost system, are as follows. Overhead incurred for 52,000 actual direct labor hours worked ……………………….. $263,000 Overhead rate (variable

> Parsons Company is planning to produce 2,000 units of product in 2020. Each unit requires 3 pounds of materials at $5 per pound and a half-hour of labor at $16 per hour. The overhead rate is 70% of direct labor. Instructions a. Compute the budgeted amou

> As sales manager, Joe Batista was given the following static budget report for selling expenses in the Clothing Department of Soria Company for the month of October. As a result of this budget report, Joe was called into the presidentâ€&#153

> Appliance Possible Inc. (AP) is a manufacturer of toaster ovens. To improve control over operations, the president of AP wants to begin using a flexible budgeting system, rather than use only the current master budget. The following data are available fo

> Fallon Company uses flexible budgets to control its selling expenses. Monthly sales are expected to range from $170,000 to $200,000. Variable costs and their percentage relationship to sales are sales commissions 6%, advertising 4%, travel 3%, and delive

> Presented below is selected financial information for two divisions of Samberg Brewing. Instructions Supply the missing information for the lettered items. Lager Lite Lager Contribution margin Controllable margin Average operating assets $ 300,000

> The Dinkle and Frizell Dental Clinic provides both preventive and orthodontic dental services. The two owners, Reese Dinkle and Anita Frizell, operate the clinic as two separate investment centers: Preventive Services and Orthodontic Services. Each of th

> The Sports Equipment Division of Harrington Company is operated as a profit center. Sales for the division were budgeted for 2020 at $900,000. The only variable costs budgeted for the division were cost of goods sold ($440,000) and selling and administra

> Horatio Inc. has three divisions which are operated as profit centers. Actual operating data for the divisions listed alphabetically are as follows. Instructions a. Compute the missing amounts. Show computations. b. Prepare a responsibility report for

> Fey Company’s organization chart includes the president; the vice president of production; three assembly plants—Dallas, Atlanta, and Tucson; and two departments within each plant— Machining and Finishing. Budget and actual manufacturing cost data for Ju

> UrLink Company is a newly formed company specializing in high-speed Internet service for home and business. The owner, Lenny Kirkland, had divided the company into two segments: Home Internet Service and Business Internet Service. Each segment is run by

> Chubbs Inc.’s manufacturing overhead budget for the first quarter of 2020 contained the following data. Actual variable costs were indirect materials $13,500, indirect labor $9,500, utilities $8,700, and maintenance $5,000. Actual fix

> Connie Rice has prepared the following list of statements about budgetary control. 1. Budget reports compare actual results with planned objectives. 2. All budget reports are prepared on a weekly basis. 3. Management uses budget reports to analyze differ

> Rodriguez, Inc., is preparing its direct labor budget for 2020 from the following production budget based on a calendar year. Each unit requires 1.5 hours of direct labor. Instructions Prepare a direct labor budget for 2020. Wage rates are expected to

> Rensing Ltd. estimates sales for the second quarter of 2020 will be as follows. Month ………………………. Units April ………………………… 2,550 May …………………………. 2,675 June ……………………….. 2,390 The target ending inventory of finished products is as follows. March 31 …………………

> On January 1, 2020, the Hardin Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2020. Sales units: First quarter 5,000; second quarter 6,000; third quarter 7,000. Ending raw materials inventory: 40% of

> DeWitt Industries has adopted the following production budget for the first 4 months of 2020. Each unit requires 2 pounds of raw materials costing $3 per pound. On December 31, 2019, the ending raw materials inventory was 4,000 pounds. Management wants

> Turney Company produces and sells automobile batteries, the heavy-duty HD-240. The 2020 sales forecast is as follows. Quarter ……………………………. HD-240 1 ………………………………………………….. 5,000 2 ………………………………………………….. 7,000 3 ………………………………………………….. 8,000 4 ………………………………………

> Thome and Crede, CPAs, are preparing their service revenue (sales) budget for the coming year (2020). The practice is divided into three departments: auditing, tax, and consulting. Billable hours for each department, by quarter, are provided below. Ave

> Emeric and Ellie’s Painting Service estimates that it will paint 10 small homes, 5 medium homes, and 2 large homes during the month of June 2020. The company estimates its direct labor needs as 40 hours per small home, 70 hours for a medium home, and 120

> Edington Electronics Inc. produces and sells two models of calculators, XQ-103 and XQ-104. The calculators sell for $15 and $25, respectively. Because of the intense competition Edington faces, management budgets sales semiannually. Its projections for t

> Pletcher Dental Clinic is a medium-sized dental service specializing in family dental care. The clinic is currently preparing the master budget for the first 2 quarters of 2020. All that remains in this process is the cash budget. The following informati

> Green Landscaping Inc. is preparing its budget for the first quarter of 2020. The next step in the budgeting process is to prepare a cash receipts schedule and a cash payments schedule. To that end the following information has been collected. Clients us

> Nieto Company’s budgeted sales and direct materials purchases are as follows. Nieto’s sales are 30% cash and 70% credit. Credit sales are collected 10% in the month of sale, 50% in the month following sale, and 36% i

> The controller of Trenshaw Company wants to improve the company’s control system by preparing a month-by-month cash budget. The following information is for the month ending July 31, 2020. June 30, 2020, cash balance …………………………………………………………. $45,000 Divi

> Deitz Corporation is projecting a cash balance of $30,000 in its December 31, 2019, balance sheet. Deitz’s schedule of expected collections from customers for the first quarter of 2020 shows total collections of $185,000. The schedule of expected payment

> Danner Company expects to have a cash balance of $45,000 on January 1, 2020. Relevant monthly budget data for the first 2 months of 2020 are as follows. Collections from customers: January $85,000, February $150,000. Payments for direct materials: Januar

> Fultz Company has accumulated the following budget data for the year 2020. 1. Sales: 30,000 units, unit selling price $85. 2. Cost of one unit of finished goods: direct materials 1 pound at $5 per pound, direct labor 3 hours at $15 per hour, and manufact

> Atlanta Company is preparing its manufacturing overhead budget for 2020. Relevant data consist of the following. Units to be produced (by quarters): 10,000, 12,000, 14,000, 16,000. Direct labor: time is 1.5 hours per unit. Variable overhead costs per dir

> Lowell Company makes and sells artistic frames for pictures. The controller is responsible for preparing the master budget and has accumulated the following information for 2020. Lowell has a labor contract that calls for a wage increase to $9.00 per h

> Trusler Company has always done some planning for the future, but the company has never prepared a formal budget. Now that the company is growing larger, it is considering preparing a budget. Instructions Write a memo to Jim Dixon, the president of Trus

> Anna Garden recently opened her own basketweaving studio. She sells finished baskets in addition to selling the raw materials needed by customers to weave baskets of their own. Unfortunately, owing to space limitations, Anna is unable to carry all variet

> Gwynn Incorporated had the following transactions involving current assets and current liabilities during February 2020. Feb. 3 Collected accounts receivable of $15,000. 7 Purchased equipment for $23,000 cash. 11 Paid $3,000 for a 1-year insurance policy

> Riggs Company purchases sails and produces sailboats. It currently produces 1,200 sailboats per year, operating at normal capacity, which is about 80% of full capacity. Riggs purchases sails at $250 each, but the company is considering using the excess c

> Here are the comparative income statements of Delaney Corporation. Instructions a. Prepare a horizontal analysis of the income statement data for Delaney Corporation, using 2019 as a base. (Show the amounts of increase or decrease.) b. Prepare a vertic

> Pottery Ranch Inc. has been manufacturing its own finials for its curtain rods. The company is currently operating at 100% of capacity, and variable manufacturing overhead is charged to production at the rate of 70% of direct labor cost. The direct mater

> Operating data for Joshua Corporation are presented below. Instructions Prepare a schedule showing a vertical analysis for 2020 and 2019. 2020 2019 Sales revenue $800,000 $600,000 Cost of goods sold Selling expenses Administrative expenses 520,000

> Moonbeam Company manufactures toasters. For the first 8 months of 2020, the company reported the following operating results while operating at 75% of plant capacity: Sales (350,000 units) ………………………….. $4,375,000 Cost of goods sold ……………………………….. 2,600,

> The adjusted trial balance for Karr Farm Corporation at the end of the current year contained the following accounts. Interest Payable ……………………………………………… $ 9,000 Lease Liability …………………………………………………. 89,500 Bonds Payable, due 2025 ……………………………….. 180,000

> Dreiling Company borrowed $300,000 on January 1, 2020, by issuing a $300,000, 8% mortgage note payable. The terms call for annual installment payments of $40,000 on December 31. Instructions a. Prepare the journal entries to record the mortgage loan and

> Trayer Corporation has income from continuing operations of $290,000 for the year ended December 31, 2020. It also has the following items (before considering income taxes). 1. An unrealized loss of $80,000 on available-for-sale securities. 2. A gain of

> The ledger of Hasgrove Company has the following work in process account. Production records show that there were 800 units in the beginning inventory, 30% complete, 1,100 units started, and 1,500 units transferred out. The units in ending inventory we

> The controller of Standard Industries has collected the following monthly expense data for analyzing the cost behavior of electricity costs. Instructions a. Determine the fixed- and variable-cost components using regression analysis b. Prepare a scatte

> Tharp Company operates a small factory in which it manufactures two products: C and D. Production and sales results for last year were as follows. For purposes of simplicity, the firm averages total fixed costs over the total number of units of C and D

> Using the data in E21.15, assume Santana Mortgage Company uses the FIFO method. Also, assume that the applications in process on September 1 were 100% complete as to materials (application forms) and 40% complete as to conversion costs. Assume overhead c

> Veronica Mars, a recent graduate of Bell’s accounting program, evaluated the operating performance of Dunn Company’s six divisions. Veronica made the following presentation to Dunn’s board of director

> Darcy Roofing is faced with a decision. The company relies very heavily on the use of its 60-foot extension lift for work on large homes and commercial properties. Last year, Darcy Roofing spent $60,000 refurbishing the lift. It has just determined that

> Naylor Company had $210,000 of net income in 2019 when the selling price per unit was $150, the variable costs per unit were $90, and the fixed costs were $570,000. Management expects per unit data and total fixed costs to remain the same in 2020. The pr

> On January 2, 2019, Twilight Hospital purchased a $100,000 special radiology scanner from Bella Inc. The scanner had a useful life of 4 years and was estimated to have no disposal value at the end of its useful life. The straight-line method of depreciat

> In 2019, Manhoff Company had a break-even point of $350,000 based on a selling price of $5 per unit and fixed costs of $112,000. In 2020, the selling price and the variable costs per unit did not change, but the break-even point increased to $420,000. I

> Kirk Minerals processes materials extracted from mines. The most common raw mterial that it processes results in three joint products: Spock, Uhura, and Sulu. Each of these products can be sold as is, or each can be processed further and sold for a highe

> Suppose selected comparative statement data for the giant bookseller Barnes & Noble are presented here. All balance sheet data are as of the end of the fiscal year (in millions). Instructions Compute the following ratios for 2020. a. Profit margin.

> As a study aid, your classmate Pascal Adams has prepared the following list of statements about decision-making and incremental analysis. 1. The first step in management’s decision-making process is, “Determine and evaluate possible courses of action.” 2

> The Palmer Acres Inn is trying to determine its break-even point during its off -peak season. The inn has 50 rooms that it rents at $60 a night. Operating costs are as follows . Salaries ……………………………………………………. $5,900 per month Utilities ………………………………………………

> Marty Moser wants Moser Company to use CVP analysis to study the effects of changes in costs and volume on the company. Marty has heard that certain assumptions must be valid in order for CVP analysis to be useful. Instructions Prepare a memo to Marty M

> The controller of Hall Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs. Instructions a. Determine the fixed- and variable-cost components using the high-low method. b. Prepare a gr