Question: Suppose McDonald’s 2014 financial statements

> On January 1, 2014, the ledger of Hiatt Company contained these liability accounts. Accounts Payable …………………………………………$42,500 Sales Taxes Payable …………………………………………6,600 Unearned Service Revenue ……………………………. 19,000 During January, the following selected tr

> As noted in this chapter, because of global competition, companies have become increasingly focused on reducing costs. To reduce costs and remain competitive, many companies are turning to outsourcing. Outsourcing means hiring an outside supplier to prov

> The primary purpose of managerial accounting is to provide information useful for management decisions. Many of the managerial accounting techniques that you learn in this section of the course will be useful for decisions you make in your everyday life.

> Steve Morgan, controller for Newton Industries, was reviewing production cost reports for the year. One amount in these reports continued to bother him—advertising. During the year, the company had instituted an expensive advertising campaign to sell som

> Refer to P14-5A and add the following requirement. Prepare a letter to the president of the company, Shelly Phillips, describing the changes you made. Explain clearly why net income is different after the changes. Keep the following points in mind as yo

> If your school has a subscription to the FASB Codification, go to http://aaahq.org/ ascLogin.cfm to log in and prepare responses to the following. Use the Master Glossary for determining the proper definitions. (a) Discontinued operations. (b) Extraordin

> Kelli Rice, president of LR Industries, wishes to issue a press release to bolster her company’s image and maybe even its stock price, which has been gradually falling. As controller, you have been asked to provide a list of 20 financial ratios and other

> David Lemay is the chief executive officer of Brenna Electronics. Lemay is an expert engineer but a novice in accounting. Lemay asks you, as an accounting student, to explain (a) the bases for comparison in analyzing Brenna’s financial statements and (b)

> The following data are taken from the financial statements of Filbert Company Compute for each year (a) the accounts receivable turnover and (b) the average collection period. What conclusions about the management of accounts receivable can be drawn

> You are a loan officer for Great Plains Bank of Davenport. Jason Putnam, president of J. Putnam Corporation, has just left your office. He is interested in an 8-year loan to expand the company’s operations. The borrowed funds would be u

> Templeton Automotive Corp. is a medium-sized wholesaler of automotive parts. It has 10 stockholders who have been paid a total of $1 million in cash dividends for 8 consecutive years. The board’s policy requires that, for this dividend to be declared, ne

> Jack Werth, the owner-president of Computer Services Company, is unfamiliar with the statement of cash flows that you, as his accountant, prepared. He asks for further explanation. Instructions: Write him a brief memo explaining the form and content of

> Ken Pember and Robyn Mays are examining the following statement of cash flows for Gilbert Company for the year ended January 31, 2014. GILBERT COMPANY Statement of Cash Flows For the Year Ended January 31, 2014 Sources of cash From sales of merchandise

> Osborn Corporation has paid 60 consecutive quarterly cash dividends (15 years). The last 6 months have been a real cash drain on the company, however, as profit margins have been greatly narrowed by increasing competition. With a cash balance sufficient

> The R&D division of Jobe Corp. has just developed a chemical for sterilizing the vicious Brazilian “killer bees” which are invading Mexico and the southern United States. The president of Jobe is anxious to get the chemical on the market because Jobe pro

> Ken Endicott, your uncle, is an inventor who has decided to incorporate. Uncle Ken knows that you are an accounting major at U.N.O. In a recent letter to you, he ends with the question, “I’m filling out a state incorporation application. Can you tell me

> During a recent period, the fast-food chain Wendy’s International purchased many treasury shares. This caused the number of shares outstanding to fall from 124 million to 105 million. The following information was drawn from the company

> If your school has a subscription to the FASB Codification, go to http://aaahq.org/ asclogin.cfm to log in and prepare responses to the following. (a) What is the definition of current liabilities? (b) What is the definition of long-term obligations? (c)

> Some employees are encouraging and setting up preventive healthcare programs. Here are the percentages for five unhealthy behaviors for individuals with some college education: current cigarette smoker (22.9%), five or more alcoholic drinks at one sittin

> The management of Unruh Inc. is trying to decide whether it can increase its dividend. During the current year, it reported net income of $875,000. It had net cash provided by operating activities of $734,000, paid cash dividends of $92,000, and had capi

> Harry Jackman, president of Weast, Inc., is considering the issuance of bonds to finance an expansion of his business. He has asked you to do the following: (1) discuss the advantages of bonds over common stock financing, (2) indicate the types of bond

> On January 1, 2012, Kenard Corporation issued $3,000,000, 5-year, 8% bonds at 97. Thevbonds pay interest annually on January 1. By January 1, 2014, the market rate of interest for bonds of risk similar to those of Kenard Corporation had risen. As a resul

> If your school has a subscription to the FASB Codification, go to http://aaahq.org/ asclogin.cfm to log in and prepare responses to the following. (a) What is the definition of current liabilities? (b) What is the definition of long-term obligations? (c)

> Some employees are encouraging and setting up preventive healthcare programs. Here are the percentages for five unhealthy behaviors for individuals with some college education: current cigarette smoker (22.9%), five or more alcoholic drinks at one sittin

> Harry Jackman, president of Weast, Inc., is considering the issuance of bonds to finance an expansion of his business. He has asked you to do the following: (1) discuss the advantages of bonds over common stock financing, (2) indicate the types of bond

> On January 1, 2012, Kenard Corporation issued $3,000,000, 5-year, 8% bonds at 97. Thevbonds pay interest annually on January 1. By January 1, 2014, the market rate of interest for bonds of risk similar to those of Kenard Corporation had risen. As a resul

> The following information is available for Fishel Company. Materials purchased in April $ 98,000 Direct labor in April 80,000 Manufacturing overhead in April 180,000 Prepare the cost of goods manufactured schedule for the month of April. April 1 Ra

> A music company has these costs: Advertising Paper inserts for CD cases Blank CDs CD plastic cases Depreciation of CD image Salaries of sales representatives burner Salaries of factory maintenance employees Salary of factory manager

> Match each of the following terms with the phrase that best describes it. Quality of earnings Pro forma income Current ratio Discontinued operations Horizontal analysis Comprehensive income 1. A me

> Foyle Corporation has issued 100,000 shares of $5 par value common stock. It was authorized 500,000 shares. The paid-in capital in excess of par value on the common stock is $263,000. The corporation has reacquired 7,000 shares at a cost of $46,000 and i

> Fugate Inc. is considering these two alternatives to finance its construction of a new $2 million plant: 1. Issuance of 200,000 shares of common stock at the market price of $10 per share. 2. Issuance of $2 million, 6% bonds at face value. Complete the t

> Kosco CD Company has had 4 years of record earnings. Due to this success, the market price of its 400,000 shares of $2 par value common stock has increased from $6 per share to $50. During this period, paid-in capital remained the same at $2,400,000. Ret

> Fusion Corporation has 3,000 shares of 8%, $100 par value preferred stock outstanding at December 31, 2014. At December 31, 2014, the company declared a $105,000 cash dividend. Determine the dividend paid to preferred stockholders and common stockholders

> Edelman Corporation issued the following statement of cash flows for 2014. (a) Compute free cash flow for Edelman Corporation. (b) Explain why free cash flow often provides better information than “Net cash provided by operating activ

> RL Photography reported net income of $100,000 for 2014. Included in the income statement were depreciation expense of $6,300, patent amortization expense of $4,000, and a gain on disposal of plant assets of $3,600. RL’s comparative bal

> Suppose McDonald’s 2014 financial statements contain the following selected data (in millions). Instructions: (a) Compute the following values and provide a brief interpretation of each. (1) Working capital. (2) Current ratio. (3) D

> Romine Company issued $350,000 of 8%, 20-year bonds on January 1, 2014, at face value. Interest is payable annually on January 1. Instructions: Prepare the journal entries to record the following events. (a) The issuance of the bonds. (b) The accrual of

> Assume that the following are independent situations recently reported in the Wall Street Journal. 1. General Electric (GE) 7% bonds, maturing January 28, 2015, were issued at 111.12. 2. Boeing 7% bonds, maturing September 24, 2029, were issued at 99.08.

> Riot Company issued $500,000, 15-year, 7% bonds at 96. Instructions: (a) Prepare the journal entry to record the sale of these bonds on January 1, 2014. (b) Suppose the remaining Discount on Bonds Payable was $12,000 on December 31, 2019. Show the balan

> Leiker Corporation has these accounts at December 31: Common Stock, $10 par, 5,000 shares issued, $50,000; Paid-in Capital in Excess of Par Value $22,000; Retained Earnings $42,000; and Treasury Stock, 500 shares, $11,000. Prepare the stockholders’ equit

> Goins Corporation issued a $50,000, 10%, 10-year installment note payable on January 1, 2014. Payments of $8,137 are made each January 1, beginning January 1, 2015. Instructions: (a) What amounts should be reported under current liabilities related to t

> Nance Co. receives $280,000 when it issues a $280,000, 6%, mortgage note payable to finance the construction of a building at December 31, 2014. The terms provide for semiannual installment payments of $14,285 on June 30 and December 31. Instructions: P

> Gomez Company issued $380,000, 7%, 10-year bonds on January 1, 2014, for $407,968. This price resulted in an effective-interest rate of 6% on the bonds. Interest is payable annually on January 1. Gomez uses the effective-interest method to amortize bond

> Cole Corporation issued $400,000, 7%, 20-year bonds on January 1, 2014, for $360,727. This price resulted in an effective-interest rate of 8% on the bonds. Interest is payable annually on January 1. Cole uses the effective-interest method to amortize bon

> Canyon Company issued $600,000, 10-year, 6% bonds at 103. Instructions: (a) Prepare the journal entry to record the sale of these bonds on January 1, 2014. (b) Suppose the remaining Premium on Bonds Payable was $10,800 on December 31, 2017. Show the bal

> Prophet Company issued $500,000, 6%, 30-year bonds on January 1, 2014, at 103. Interest is payable annually on January 1. Prophet uses straight-line amortization for bond premium or discount. Instructions: Prepare the journal entries to record the follo

> Suppose 3M Company reported the following financial data for 2014 and 2013 (in millions). Instructions: (a) Calculate the current ratio for Sedgewick Boutique for 2014 and 2013. (b) Suppose that at the end of 2014, Sedgewick Boutique used $1.5 million

> Santana, Inc. reports the following liabilities (in thousands) on its January 31, 2014, balance sheet and notes to the financial statements. Instructions: (a) Identify which of the above liabilities are likely current and which are likely long-term. Li

> The situations presented here are independent of each other. Instructions: For each situation, prepare the appropriate journal entry for the redemption of the bonds. (a) Pelfer Corporation redeemed $140,000 face value, 9% bonds on April 30, 2014, at 101

> Mike Haden, president of Haden Corporation, believes that it is a good practice for a company to maintain a constant payout of dividends relative to its earnings. Last year, net income was $600,000, and the corporation paid $120,000 in dividends. This ye

> Explain how IFRS defines a provision and give an example.

> 5.1. A pollution tax on automobiles provides an incentive to buy , maintain , drive , and use alternative . 5.2. Arrows up or down: A gasoline tax will shift the supply curve for gasoline , causing the equ

> 3.1. Consider a market with two firms managed by Harry and Vera. Under a cartel (both firms pick the high price), each firm earns a profit of $80. Under a duopoly (both firms pick the low price), each firm earns a profit of $60. If the two firms pick dif

> 6.1. The short-run supply curve is steeper than the long-run supply curve because of the principle of . 6.2. Arrows up or down: Suppose the demand for shirts increases. In the short run, the price by a relatively large amount. As firms enter

> 2.1. The relationship between the quantity of output produced and the quantity of inputs used to produce it is called the __________. 2.2. Which of the following would be counted as part of the stock of capital? a. copy machines in a photocopying shop b.

> 2.1. A fire extinguisher is an example of a (n) good with a (n) benefit. 2.2. Education generates three types of external benefits: , , and . 2.3. The external benefit of transforming a high school

> 1.1. Suppose 2,000 people would each get a benefit of $60 from a bridge. Building the bridge is socially efficient if its cost is less than $ . If the cost is $80,000, a tax of $ per person would generate unanimous support for the bridge. 1

> 5.1. The reservation price is the price at which the consumer is about additional search, meaning that the of search equals the . 5.2. If a consumer knows that TVs are available at BestBuy at a price as low as $200,

> 2.1. Consider a thin used-car market. Someone just developed a device that can instantly identify the nearest plum in a used-car lot. The device works only once. The maximum amount that a consumer would be willing to pay for the device equals

> 4.1. In the market for insurance, the moral-hazard problem is that encourages . 4.2. While shopping for office equipment, an office manager sees a display of fire extinguishers. After making a single phone call, the manager decides not to buy

> 3.1. Suppose the average annual penalty is $10,000 for reckless drivers and $1,000 for careful drivers. If half of an insurance company’s insured drivers are reckless, the company will earn zero economic profit if the price of insurance is $ .

> 1.1. There is asymmetric information in the used-car market because (buyers/sellers) cannot distinguish between lemons and plums but (buyers/sellers) can. 1.2. The supply curve for high-quality used cars lies (above

> 1.1. Arrows up or down: At a natural monopolist’s current level of output, marginal cost exceeds marginal revenue. The firm should its output and its price. 1.2. The entry of a second firm shifts the demand curve of

> 2.1. The purpose of antitrust policy is to promote , which leads to lower . 2.2. There are three types of antitrust policies: (1) , (2) , and (3) . 2.3. In the Staples case discussed in this chapt

> 4.1. Otto has a monopoly on limousine service, and Carla is thinking about entering the market. The outcome of the entry-deterrence game represented by the game tree on the following page is that Otto picks the quantity and Carla the

> 3.1. Robert Solow added ____________ to the conventional production function to account for technological change. 3.2. ____________ is a method used to determine the contribution to economic growth from increased capital, labor, and technological progre

> 5.1. The advertisers’ dilemma is that both firms would be better if advertises, but each has an incentive to . 5.2. The advertisers’ dilemma shown in Figure 27.10 on page 618 occurs when advertisi

> 2.1. For firms with a low-price guarantee, the promise of matching a lower price is a(n) promise because all firms will charge the same price. 2.2. Suppose that Jack and Jill use a tit-for-tat scheme to encourage cartel pricing. Jill chooses

> 1.1. A market is considered “unconcentrated” if the Herfindahl– Hirschman Index (HHI) is below and is “highly” concentrated if the HHI is at least . 1.2.

> 3.1. The trade-off with entry is that an increase in the number of firms leads to higher but greater. 3.2. When products are differentiated by location, the entry of firms generates benefits for consumers in the form of. 3.3. A perfectly competitive fir

> 1.1. Monopolistic competition describes a market served by firms that sell products. 1.2. Arrows up or down: At a firm’s current level of output, marginal revenue exceeds the marginal cost. The firm should its output and its price. 1.3. The marginal pr

> 2.1. Monopolistic competition refers to a market in which old boys act naturally as they transport tight slacks in the back of Dodge Ram pickup trucks. (True/False) 2.2. Perfectly competitive firms sell a product, while monopolistically competitive firm

> 4.1. Advertising for eyeglasses (increases/ decreases) the price of eyeglasses because advertising promotes . 4.2. An advertisement that succeeds in getting consumers to try the product will be sensible only if the number of

> 2.1. A monopoly is inefficient solely because the monopolist gets a profit at the expense of consumers. (True/False) 2.2. To show the deadweight loss from monopoly, we compare the monopoly outcome to what would happen under .

> 1.1. For a monopolist, marginal revenue is (greater/less) than price. 1.2. A monopoly that cuts its price gains revenue from its customers but loses revenue from its customers. 1.3. At a price of $18 per CD, a firm sells 60 CDs. If the slope of the dem

> 4.1. A price-discriminating firm will charge a higher price to consumers with a relatively (elastic/ inelastic) demand and a lower price to consumers with a relatively (elastic/inelastic) demand. 4.2. The aspirin sold in airports is more expensive than a

> 1.1. To gauge living standards across countries with populations of different sizes, economists use ____________. 1.2. In poor countries, the relative prices for nontraded goods (such as household services) to traded goods (such as jewelry) are ________

> 5.1. An increasing-cost industry is one in which the average cost of production as the total output of the industry . 5.2. Arrows up or down: Costs with output in an increasing-cost industry because input prices i

> 3.1. A firm will not shut down in the long run as long as its revenue is (larger/smaller) than the firm’s variable cost. 3.2. Your firm has a total revenue of $500, a total cost of $700, and a variable cost of $600. You

> 2.1. Economic profit equals minus . 2.2. Economic cost equals cost plus cost. 2.3. For a perfectly competitive firm, marginal revenue equals , and to maximize profit, the firm produces the quantity at

> 4.1. A firm’s short-run supply curve shows the relationship between on the horizontal axis and on the vertical axis. 4.2. The part of a firm’s marginal cost curve that is above the minim

> 3.1. The presence of explains the negatively sloped portion of a long-run average-cost curve, and the notion of explains the horizontal portion of the curve. 3.2. Consider the information provided in Figure 23.6. Suppose the output of a large aluminum f

> 1.1. The computation of economic cost is based on the principle of . 1.2. A firm’s implicit cost is defined as the cost of nonpurchased inputs, such as the entrepreneur’s and . 1.3. Economic profit equals minus . 1.4. Fill with “ec

> 4.1. The average cost of electricity (increases/ decreases) as the size of the wind turbine increases. 4.2. For information goods such as a music video distributed online, the cost of producing the first copy is very , but the marginal

> 2.1. The short-run marginal cost curve is shaped like the letter _________ and the short-run average cost curve is shaped like the letter _________. 2.2. The negatively sloped portion of the short-run marginal-cost curve is explained by _________ and th

> 1.1. Based on Figure 22.1, fill in the blanks in the following table to identify different points on the consumer’s budget line. Figure 22.1: 1.2. In Figure 22.1 (above), suppose the price of movies increases to $9. Draw a new budge

> 2.1. In an economy with no government sector or foreign sector, saving must equal investment because a. total demand is equal to consumption and investment. b. total income is equal to consumption and saving. c. total income is equal to total demand.

> 2.1. In Figure 22.5, suppose the price of movies increases from $3 to $6. The increase in price shifts the benefit curve (marginal utility per dollar) for movies (upward/downward). For the initial quantity of six movies, the marginal utility per dollar b

> 4.1. The introduction of cognition into a consumer’s choice between healthy and unhealthy food shifts the curve downward, causing the marginal utility per dollar of to be less than the marginal utility per dollar of . 4.2. C

> 5.1. The 1990 tax on yachts and other luxury goods was shifted forward to and backward to . 5.2. A tax paid in legal terms by producers will be partly shifted forward onto and partly shifted backward onto

> 2.1. You are willing to pay $3,000 to have your windows covered, and Tom’s marginal cost of covering windows is $2,500. If you agree to split the difference, the price is , your consumer surplus is , and Tom&a

> 4.1. In Figure 21.6, the taxi medallion policy prevents mutually beneficial transactions for consumers on the demand curve between points and and producers on the supply curve between points and . Figure 21.6: 4.2. In Figur

> 3.1. Arrow up or down: In Figure 21.5, rent control the quantity of apartments , producer surplus, consumer surplus , and the total market surplus . Figure 21.5: 3.2. In Figure 21.5 (

> 1.1. Consumer surplus equals minus . 1.2. Producer surplus equals minus . 1.3. In Figure 21.1, Tupak’s consumer surplus is , compared to for Thurl. Figure 21.1: 1.4. In Figure 2

> 2.1. Recall the example “Beer Prices and Highway Deaths” from the chapter. A doubling of the tax on beer will reduce the number of highway deaths among young adults by _________ percent. 2.2. Recall the example â

> 6.1. Assume that the elasticity of demand for chewing tobacco is 0.70 and the elasticity of supply is 2.30. Suppose an antichewing campaign decreases the demand for chewing tobacco by 18 percent. The equilibrium price of chewing tobacco will _________ (d

> 5.1. When the price of paper increases from $100 to $104 per ton, the quantity supplied increases from 200 to 220 tons per day. The price elasticity of supply is _________. 5.2. Suppose that in a month the price of movie rentals increases from $2 to $2.

> 5.1. Clear property rights reduce growth in an economy because producers are not able to freely use innovations. ____________ (True/False) 5.2. Which of the following events hinder economic growth? a. Uncertain financial environment b. Reduced savings

> 4.1. The income elasticity of demand is _________ (positive/ negative) for normal goods and _________ (positive/ negative) for inferior goods. 4.2. If a 20 percent increase in income increases the quantity of iPods demanded by 30 percent, the income ela

> 3.1. Demand is _________ on the upper portion of a linear demand curve and _________ on the lower portion of a linear demand curve. 3.2. If Maria spends a fixed dollar amount per week on movie rentals regardless of changes in the price, Maria’s demand f