Question: Refer to the information in Exercise 26-

> For each of the following, (1) identify the account as an asset, liability, equity, revenue, or expense; (2) identify the normal balance of the account; and (3) enter debit or credit to identify the kind of entry that would increase the account balance.

> Identify the item that best completes each of the descriptions below. 1. Chart 2. General ledger 3. Journal 4. Account 5. Source document a. A (n) of accounts is a list of all accounts a company uses, not including account balances. b. The is a record co

> Identify the item that best completes each of the descriptions below. 1. Asset 2. Equity 3. Account 4. Liability 5. Three a. Balance sheet accounts are arranged into general categories. b. The owner’s claim on a company’s assets is called. c. Accounts Pa

> Identify the source document for NDX Company in each of the following accounting processes. a. A customer purchases merchandise with a credit card. NDX uses the electronic sales receipt to record transaction details in its accounting system. b. NDX purch

> a. Compute the debt ratio for each of the three companies. b. Which company has the most financial leverage?

> Compute the missing amount for each of the following separate companies in columns B through E.

> Use the information in Exercise 2-25 to prepare a December 31 balance sheet for Help Today. Hint: The ending C. Camry, Capital account balance as of December 31 is $106,470.

> A company had the following assets and liabilities at the beginning and end of this year. Determine net income or net loss for the business during the year for each of the following separate cases. a. Owner made no investments in the business, and no wit

> Prepare a December 31 trial balance for Jindal Co. using the following information and fill in the missing amount for Equipment (assume all data are correct).

> Use the T-accounts in Exercise 2-19 from Chase Company’s first month of operations to prepare its December 31 trial balance.

> Ellis Island Tropical Tea manufactures and sells tea. Founder Nailah Ellis-Brown stresses the importance of planning and budgeting for business success. Required 1. How can budgeting help Nailah efficiently develop and operate her business? 2. Nailah ho

> Chase Company posted transactions (a through f) in the following T-accounts in December, its first month of operations. Prepare the six journal entries from which the postings were made.

> Use information from Exercise 2-17 to prepare the general journal entries for Belle Co.’s first seven transactions.

> Fill in each of the following T-accounts for Belle Co.’s seven transactions listed here. The T-accounts represent Belle Co.’s general ledger. Code each entry with transaction numbers 1 through 7 (in order) for referenc

> Skull Co. makes snowboards and uses the total cost method in setting product price. Its costs for producing 10,000 units follow. The company targets a 12.5% markup on total cost. 1. Compute the total cost per unit if 10,000 units are produced. 2. Compute

> Lopez Co. is considering replacing one of its old manufacturing machines. The old machine has a book value of $45,000 and a remaining useful life of five years. It can be sold now for $52,000. Variable manufacturing costs are $36,000 per year for this ol

> Marin Company makes several products, including canoes. The company reports a loss from its canoe segment (see below). All its variable costs are avoidable, and $300,000 of its fixed costs are avoidable. (a) Compute the income increase or decrease from e

> Chip Company produces three products, Kin, Ike, and Bix. Each product uses the same direct material. Kin uses 4 pounds of the material, Ike uses 3 pounds of the material, and Bix uses 6 pounds of the material. Selling price per unit and variable costs pe

> Colt Company produces two skateboard models. Machine time per unit for Hero is two hours and for Flip is one hour. The machine’s capacity is 1,600 hours per year. Colt can sell up to 500 units of Hero and 900 units of Flip per year. Sel

> A company must decide between scrapping or reworking units that do not pass inspection. The company has 22,000 defective units that have already cost $132,000 to manufacture. The units can be sold as scrap for $78,000 or reworked for $99,000 and then sol

> Cobe Co. has manufactured 200 partially finished cabinets at a cost of $50,000. These can be sold as is for $60,000. Instead, the cabinets can be stained and fitted with hardware to make finished cabinets. Further processing costs would be $12,000, and t

> Smart Sweets, launched by entrepreneur Tara Bosch as described in this chapter’s opener, makes gummy candy without sugar and from all-natural ingredients. Required 1. Identify at least two fixed costs that do not change regardless of how much candy Tara

> Current year information for Apple and Google follows. Required 1. Compute profit margin for each company. 2. Compute investment turnover for each company. 3. Refer to answers for parts 1 and 2. Which company performed better on investment turnover?

> Gelb Co. currently makes a key part for its main product. Making this part incurs per unit variable costs of $1.20 for direct materials and $0.75 for direct labor. Incremental overhead to make this part is $1.40 per unit. The company can buy the part for

> HH Electric reports the following information. a. Compute the time charge per hour of direct labor. b. Compute the materials markup percentage. c. What price should the company quote for a job requiring four direct labor hours and $580 in materials?

> Pardo Company produces a single product and has capacity to produce 120,000 units per month. Costs to produce its current monthly sales of 80,000 units follow. The normal selling price of the product is $100 per unit. A new customer offers to purchase 20

> Farrow Co. reports the following annual results. The company receives a special offer for 15,000 units at $12 per unit. The additional sales would not affect its normal sales. Variable costs per unit would be the same for the special offer as they are fo

> Rios Co. makes drones and uses the variable cost method in setting product price. Its costs for producing 20,000 units follow. The company targets a profit of $300,000 on this product. 1. Compute the total variable cost and the markup percentage. 2. Comp

> Beto Company pays $2.50 per unit to buy a part for one of the products it manufactures. With excess capacity, the company is considering making the part. Making the part would cost $1.20 per unit for direct materials and $1.00 per unit for direct labor.

> Following is information on two alternative investments. Beachside Resort is considering building a new pool or spa. The company requires a 10% return from its investments. For each investment project, compute, (a) Net present value (b) Profitability in

> Refer to the information in Exercise 26-10. The company instead requires a 12% return on its investments. Compute each project’s: (a) Net present value. (b) Profitability index. Round present value calculations to the nearest dollar and round the profita

> Gonzalez Co. is considering two new projects with the following net cash flows. The company’s required rate of return on investments is 10%. a. Compute payback period for each project. Based on payback period, which project is preferred

> A company is considering a $150,000 investment in machinery with the following net cash flows. The company requires a 10% return on its investments. (a) Compute the net present value of this investment. (b) Should the machinery be purchased?

> Many companies use technology to help them improve processes. One example of such a tool is robotic process automation. Access https://www2.deloitte.com/us/en/pages/operations/articles/a-guide-to-roboticprocess- automation-and-intelligent-automation.htm

> Gomez is considering a $180,000 investment with the following net cash flows. Gomez requires a 10% return on its investments. (a) Compute the net present value of this investment. (b) Should Gomez accept the investment?

> Information for two alternative projects involving machinery investments follows. a. Compute accounting rate of return for each project. b. Based on accounting rate of return, which project is preferred?

> Beyer Company is considering buying an asset for $180,000. It is expected to produce the following net cash flows. Compute the payback period for this investment.

> A shoe manufacturer is evaluating new equipment that would custom fit athletic shoes. The new equipment costs $90,000 and will generate $35,000 in net cash flows for five years. Determine the break-even time for this equipment.

> Quary Co. is considering an investment in machinery with the following information. Compute the investment’s (a) annual income and annual net cash flow and (b) payback period.

> Refer to the information in Exercise 26-12. Create an Excel spreadsheet to compute the internal rate of return for each of the projects.

> Refer to the information in Exercise 26-10. (a) Create an Excel spreadsheet to compute the internal rate of return for each of the projects. (b) Based on internal rate of return, determine whether the company should accept either of the two projects.

> Refer to the information in Exercise 26-17. Create an Excel spreadsheet to compute the internal rate of return for the proposed investment.

> Refer to the information in Exercise 26-2. The company’s required rate of return is 12%. a. Compute the investment’s net present value. b. Using the answer from part a, is the investment’s internal rate of return higher or lower than 12%? Hint: It is not

> Phoenix Company is considering investments in projects C1 and C2. Both require an initial investment of $228,000 and would yield the following annual net cash flows. a. The company requires a 12% return from its investments. Compute net present values us

> Sofia Luz Eckrich’s company Teysha makes hand-made boots, shoes, and home goods. Required 1. How can Teysha use departmental (product line) income statements to assist in understanding and controlling operations? 2. Are departmental income statements al

> OptiLux is considering investing in an automated manufacturing system. The system requires an initial investment of $4 million, has a 20-year life, and will have zero salvage value. If the system is implemented, the company will save $500,000 per year in

> Lopez Co. is considering three alternative investment projects below. Which project is preferred if management makes its decision based on, (a) Payback period, (b) Net present value, (c) Internal rate of return?

> GTO Inc. is considering an investment costing $214,170 that results in net cash flows of $30,000 annually for 11 years. (a) What is the internal rate of return of this investment? (b) The hurdle rate is 9.5%. Should the company invest in this project on

> Refer to the information in Exercise 26-1. Project 1 has a seven-year useful life, and Project 2 has a five-year useful life. Assume the company requires a 10% rate of return on its investments. Compute the net present value of each potential investment.

> Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $135,000. Project 2 requires an initial investment of $98,000. Compute (a) annual net cash flow and (b) payback period for each

> The following information is available for ADT Company, which produces special-order security products and uses a job order costing system. Overhead is applied using a predetermined overhead rate of 70% of direct labor cost. 1. Set up a Raw Materials Inv

> The following information is available for a custom manufacturer. 1. Compute the ending balances of Raw Materials Inventory, Work in Process Inventory, and Finished Goods Inventory. Hint: Set up T-accounts for each of these three inventory accounts. 2.

> Refer to information in Exercises 19-6 and 19-7. Set up T-accounts for each of the following accounts, each of which started the month with a zero balance: Raw Materials Inventory, Work in Process Inventory, Finished Goods Inventory, Factory Overhead, an

> Refer to information in Exercise 19-6. Prepare journal entries to record the transactions reflected in items a through g.

> True Fit, as discussed in the chapter opener, uses a costing system with standard costs for direct labor and overhead costs. Two comments frequently are mentioned in relation to standard costing and variance analysis: “Variances are not explanations” and

> Information on Kwon Mfg.’s activities for its first month of operations follows. a. Purchased $100,000 of raw materials on credit. b. Materials requisitions show the following materials used for the month. c. Time tickets show the follo

> A manufacturer’s Raw Materials Inventory account appears as follows. All raw materials purchases are made on credit. Prepare journal entries to record the: 1. Purchase of raw materials. 2. Direct materials used. 3. Indirect materials us

> Bell Co. produces stainless steel drink tumblers, its only product. These tumblers are stamped with company logos and used as promotional items. Following are simplified job cost sheets for two separate job lots. Job 1 was for 250 units and Job 2 was for

> Diaz and Associates incurred the following direct labor costs in completing tax services job for a client. Diaz applies overhead at 50% of direct labor cost. 1. Determine the total cost of this tax services job. 2. If Diaz charged $20,000 for this tax se

> Hansel Company has requested bids from several architects to design its new corporate headquarters. Frey Architects is bidding on the job. Frey estimates that the job will require the following direct labor. Frey applies overhead to jobs at 175% of direc

> Doctors Moby, Oak, and Chug have been in a group practice for several years. Moby and Oak are family practice physicians, and Chug is a general surgeon. Chug receives many referrals for surgery from his family practice partners. Upon the partnership’s o

> Erica Gray, CPA, is a sole practitioner. She has been practicing as an auditor for 10 years. Recently a long-standing audit client asked Gray to design and implement an integrated computer-based accounting information system. The fees associated with thi

> Management requires purchases above $5,000 to be submitted with cash flow projections for capital budget approval. As systems manager, you want to upgrade your computers at a $25,000 cost. You consider submitting several orders, each under $5,000 to avoi

> Assume that your company sells portable housing to both general contractors and the government. It sells jobs to contractors on a bid basis. A contractor asks for three bids from different manufacturers. The combination of low bid and high quality wins t

> You are the managerial accountant at Info store, a manufacturer of hard drives. Its reporting year-end is December 31. The chief financial officer is concerned about having enough cash to pay the expected income tax bill because of poor cash flow managem

> Setting standards is challenging. If standards are set too low, companies might purchase inferior products and employees might not work to their full potential. If standards are set too high, companies could be unable to offer a quality product at a prof

> Chris Gray, Bryson Alf, and Nick Pirelli are founding partners of their company, Schally. Assume that Chris, Bryson, and Nick decide to expand their business with the help of general partners. Required 1. What details should Chris, Bryson, Nick, and th

> Refer to the chapter’s opening feature about Aaron, Dylan, Jeff, and Sam and their company, Box. Their company deals with the cloud storage needs of numerous suppliers and customers. Required 1. Identify the special journals that Box

> Review this chapter’s opening feature involving Emily and Betsy and Sword & Plough. Required 1. Assume that Sword & Plough sells a $300 gift certificate to a customer, collecting the $300 cash in advance. Prepare the journal entry for (a) collection of

> Eye Symmetry’s founder Max Stewart makes surfboards in different lengths. He must decide on the best sales mix. Assume Max has a capacity of 240 hours of direct labor time available each month, and he makes two types of boards: Short an

> Refer to the chapter opener regarding Mark Wallace and his company, Wallace Detroit Guitars. All successful businesses track their costs, and it is especially important for start-up businesses to monitor and control costs. Required 1. Assume that Mark

> Tianna Bass of Sweet Tea Cosmetics understands and controls merchandising costs. Required 1. How does a merchandiser such as Sweet Tea Cosmetics compute cost of goods sold? Provide examples of costs Tianna must monitor and control. 2. What are four goa

> Assume that Carla Harris of Morgan Stanley (MorganStanley.com) has impressed you with the company’s success and its commitment to ethical behavior. You learn of a staff opening at Morgan Stanley and decide to apply for it. Your resume i

> A company’s normal selling price is $100 per unit. Describe a situation in which the company would accept a special offer at a selling price of $80 per unit.

> Apple is considering eliminating one of its stores in a large U.S. city. What are some factors that it should consider in making this decision?

> What is time and materials pricing?

> Assume the following data for each company for a recent week. 1. Compute yield for the current week for both Apple and Samsung. Which company’s process manufacturing system is more efficient? 2. Compute yield for the prior week for Sams

> Explain how a price-setter differs from a price-taker.

> Samsung is planning to invest in a new companywide computerized inventory tracking system. What makes this potential investment risky?

> Google is planning to acquire new equipment to manufacture tablet computers.

> What is the combined amount (in percent) of the employee and employer Social Security tax rate? (Assume wages do not exceed $137,700 per year.)

> (a) The voucher system of control establishes procedures for what two processes? (b) When is the voucher initially prepared?

> Why would companies invest their idle cash in cash equivalents?

> Cash receipts from customers are received by the company with regular mail. The record keeper opens these letters and deposits the cash received each day. (a) Identify any internal control problem(s) in this arrangement. (b) What changes to its internal

> Recommend an internal control procedure for each situation: (a) A concession company has one employee who sells towels, coolers, and sunglasses at the beach. Each day, the employee is given enough towels, coolers, and sunglasses to last through the day

> Franco Co.’s record keeper left town after the manager discovered that a large sum of money had been stolen. The record keeper had written and signed several checks made payable to her fiancé and then recorded the checks as salaries expense. The fiancé,

> Distinguish between a receiving report and a materials requisition.

> Fitbit division makes fitness trackers. Assume the following data from Google. 1. Compute cost per unit for (a) a non custom (standard) fitness tracker and (b) a custom tracker with a company logo. 2. Assume Google marks up its fitness trackers by 40%. C

> What journal entry is recorded when a materials manager receives a materials requisition and then issues direct materials for use in the factory? What journal entry is recorded for requisitions of indirect materials?

> How do the balances in the Work in Process Inventory, Finished Goods Inventory, and Cost of Goods Sold general ledger accounts link to job cost sheets?

> Many companies use direct labor cost to apply factory overhead to jobs. Identify another activity base a company might use to apply overhead costs.

> Read the Statement of Ethical Professional Practice posted at IMAnet.org. (Under “Career Resources,” select “Ethics Center,” and then select “IMA Statement of Ethical Professional Practice.”) What four overarching ethical principles underlie the IMA’s st

> The triple bottom line includes what three main dimensions?

> Define and describe two measures to assess raw materials inventory management.

> List the four components of a schedule of cost of goods manufactured and provide specific examples of each for Apple

> What are the goals of the lean business model?

> List several examples of nonmanufacturing costs.

> Assume that a company purchases land for $1,000,000, paying $400,000 cash and borrowing the remainder with a long-term notes payable. How should this transaction be reported on a statement of cash flows?

> Allows customers to select different cases for the watches it produces and sells. Assume the following data for the newest Apple Watch. 1. Compute cost per unit for an Apple watch with either an (a) aluminum case or (b) titanium case. 2. In setting price

> Identify the three classes of debt investments and the three classes of equity investments.