What types of information are presented in the notes to the financial statements?
> The Boeing Company produces commercial aircraft. The following passage is taken from Management’s Discussion and Analysis, included in Boeing’s 2005 Annual Report. Commercial aircraft production costs include a significant amount of infrastructure costs,
> The sole supplier of Montrose, Inc.’s critical direct material declared bankruptcy last year. As a result, Montrose had to quickly find alternative sources for the material. Since no one supplier had enough material to meet the company’s needs, Montrose
> Levine Labs used 50,000 ounces of specimen adhesive during the year. The direct materials standard allows 1.5 ounces of adhesive at a price of $0.40 per ounce for each pathology test. The direct materials quantity variance was $880 F. Required: How many
> Refer to the information about Adarmes Adventures given in Exercise 6-4. Information from Exercise 6-4: Adarmes Adventures manufactures aluminum canoes. In planning for the coming year, CFO Alexis King is considering three different sales targets: 2,500
> Adarmes Adventures manufactures aluminum canoes. In planning for the coming year, CFO Alexis King is considering three different sales targets: 2,500 canoes, 3,000 canoes, and 3,500 canoes. Canoes sell for $800 each. The standard variable cost informatio
> Rogers Sports sells volleyball kits that it purchases from a sports equipment distributor. The following static budget based on sales of 2,000 kits was prepared for the year. Fixed operating expenses account for 80% of total operating expenses at this le
> At the monthly management meeting, Leslie Smith, president of Mama Fran’s Fantastic Foods, was reviewing the April budget report with some satisfaction. “Our actual results are never exactly what we budget, but I guess
> Spitzer Specialty Furniture manufactures furniture for specialty shops throughout the Southwest. With annual sales of $12 million, the company has four major product lines—bookcases, magazine racks, end tables, and bar stoolsâ
> Conradt Connectivity Company manufactures various electrical connectors. The company’s sales budget for the first six months of the coming year is as follows. All sales are made on credit. Conradt is planning to change its credit poli
> R. Wilson Ascots, a retailer of collegiate neckwear, has completed the sales forecast for the coming year. R. Wilson Ascots maintains an ending inventory level of 60% of the following month’s cost of goods sold. The companyâ€
> Identify each of the following costs in terms of its cost behavior—variable, fixed, mixed, or step. a. The cost of coffee beans at a Starbucks shop b. Depreciation of airplanes at Southwest Airlines c. Nurses’ wages at M. D. Anderson Cancer Center, assum
> Aaron Furniture builds high-end hand-made dining tables. Attacus Simmons, the company’s owner, has developed the following sales forecast for 2018. Because of the time needed to create each table, Aaron maintains an ending Finished Go
> Simmons Enterprises is a boutique guitar manufacturer. The company produces both acoustic and electric guitars for rising and established professional musicians. Vanessa Aaron, the company’s sales manager, prepared the following sales f
> Bill Thomas, Bates & Hill’s controller, has received all the budgets prepared by the various operating units (see Exercises 5-8, 9, 11, 15, 17, 19, 20, 23, 25, and 29) and is ready to compile the pro-forma financial statements for t
> In its latest Annual Report, Monterey Holdings reported revenues of $849,414,000 and net income of $22,682,000 for the year. Part of the revenues and income for the year was generated by Montego Motors, which Monterey Holdings acquired on February 26 for
> John Wills, Bates & Hill Fabricators’ budget director, has received budget information from several managers (see Exercises 5-8, 9, 11, 15, 17, 19, 20, 23, and 25) and is preparing the company’s cash budget. In addition to the information he received fro
> Inc. prepared the following cash budget for the fourth quarter. Required: Fill in the missing amounts, assuming that Topper desires to maintain a $15,000 minimum monthly cash balance. Any required borrowings and repayments must be made in even increment
> Will Benjamin has been working on Heston Paints’ cash budget for the coming year. Based on his projections for March, the beginning cash balance will be $45,700, cash collections will be $650,000, and cash disbursements will be $684,000. Heston Paints de
> Maria Bockman, Bates & Hill Fabricators’ accounts payable manager, has just received the company’s direct materials purchases budget for the first quarter (see Exercise 5-15). The company makes all of its direct materials purchases on account. Maria’s re
> Dakota Williams is one of Texas’s premiere party planners. She purchases a variety of supplies, such as plastic tableware, stemware, and decorations, throughout the year. Dakota has prepared the following purchases budget for the coming
> Laura Falk, Bates & Hill Fabricators’ accounts receivable manager, has just received the company’s sales budget for the first quarter (see Exercise 5-8). The company makes all sales on credit. Laura recently reviewed the company’s collection history and
> Charlie Anderson recently began a new job as the office manager for a prominent medical clinic. He has just received a bill from Med-Count, one of the labs that performs tests for the clinic. In reviewing the bill, Charlie notices that the lab has charge
> Brooks/Neff, Ltd. personalizes scrapbooks for customers, using their digital photographs. Each scrapbook sells for $50. Brooks/Neff collects cash at the time of sale from 30% of customers. Of the remaining sales, 75% are collected in the month of sale an
> In the coming year, Urayse, Inc. will be introducing its first product, a wrist brace that protects serious video gamers from repetitive-motion injuries. The brace will be sold for $11.25 to retailers throughout the country. All sales will be made on acc
> Joshua Hill, Bates & Hill Fabricators’ production manager, has just completed the company’s production budget (see Exercise 5-11) and manufacturing overhead budget (see Exercise 5-19) for the first quarter. He also
> Joshua Hill, Bates & Hill Fabricators’ production manager, has just completed the company’s production budget for the first quarter (see Exercise 5-11). He has identified the following monthly expenses that will be
> Sanchez Sleep Systems manufactures nylon mesh hammocks for a chain of retail outlets located throughout the Southeast. The company plans to manufacture and sell 30,000 hammocks during the fourth quarter. Overhead costs are expected to include: Variable
> Joshua Hill, Bates & Hill Fabricators’ production manager, has just completed the company’s production budget for the first quarter (see Exercise 5-11). Each brick requires 15 minutes to produce, and Joshua expects to pay workers $20 per direct labor hou
> Rider Auto has developed the following production plan for its new auto part. Each unit passes through two departments before completion. The company has developed the following direct labor standards: Required: Prepare the direct labor budget for the th
> Marcy Jones, Bates & Hill Fabricators’ purchasing manager, has just received the company’s production budget for the first quarter (see Exercise 5-11). Each brick requires 5 pounds of clay, and Marcy expects to pay $0.40 per pound of clay in the coming y
> Mackenzie Chemicals has developed a new window cleaner that requires two ingredients, AM972 and CA38. Based on forecasted sales, Mackenzie has developed the following budgeted production for the coming year. Each gallon of window cleaner requires 100 oun
> Rider Auto has developed the following production plan for its new auto part. Each unit contains four pounds of raw material. The desired raw materials ending inventory is 40% of the next month’s production needs, plus an additional 100
> After working for three different companies in ten years, Martin Long decided that he just wasn’t cut out to be someone else’s employee. For the next four years, he saved 25% of his salary and then opened his own graphic design firm. He intends to target
> High Flyers manufactures competition stunt kites. In November, Jerry Box prepared the following production budget for the first quarter of the coming year. Desired ending inventory is based on the following month’s budgeted sales. Follo
> Bates & Hill Fabricators’ marketing department has identified the following monthly expenses that will be needed to support the company’s sales and administrative functions (see Exercise 5-8). In addition to these monthly expenses, the company will pay a
> Mark Newton has just opened a gourmet coffee bar, the first of its kind in Fountain, North Carolina. You are Mark’s accountant. On a recent visit to the store, you asked how the budget was coming along. Mark replied that since there was no history of gou
> Miller Manufacturing makes several different products for the mountain biking enthusiast. In an extremely competitive market, Miller has assumed a strong position by stressing cost control. Several years ago, the company implemented a standard cost syste
> Joseph A. Knab distributes men’s suits in the Southwest. The following information was gathered to prepare the budget for the third quarter. Suits are budgeted to sell for an average price of $225. Unit sales are expected to be as follo
> (Data set from “Café Data,” Concetta A. DePaolo and David F. Robinson, Journal of Statistics Education Volume 19, Number 1 (2011) used by permission of the authors.) The Peppy Paladin Café is an experiential learning lab at a state university in the Mid
> Refer to Problem 4-28. Reference from Problem 4-28: ErgoFurn, Inc. manufactures ergonomically designed computer furniture. ErgoFurn uses a job order costing system. On November 30, the Work in Process Inventory consisted of the following jobs: On Nove
> Refer to Problem 4-26. Reference from Problem 4-26: Paladin Parabolics Company produces high-quality microscopes for education and health care uses. The company uses a job order costing system. Because the microscopes’ optics require s
> ErgoFurn, Inc. manufactures ergonomically designed computer furniture. ErgoFurn uses a job order costing system. On November 30, the Work in Process Inventory consisted of the following jobs: On November 30, ErgoFurn’s Raw Materials I
> E. Cain, Ltd. produces decorative lamps in several styles and finishes. The company uses a job order costing system to accumulate product costs. Because much of the production process is automated, E. Cain, Ltd. has selected machine hours as its overhead
> Macon Vitamins sells a variety of vitamins and herbal supplements to small health food stores. Macon purchases the vitamins and supplements from leading manufacturers. Identify each of the following costs incurred by Macon Vitamins in terms of its cost b
> Harker Company manufactures automobile components for the worldwide market. The company has three large production facilities in Virginia, New Jersey, and California, which have been operating for many years. Brett Harker, vice president of production, b
> All businesses are involved in three types of activities—financing, investing, and operating. Listed below are the names and descriptions of companies in several different industries. Abitibi Consolidated Inc.—manufacturer and marketer of newsprint Cal S
> Classify each item as an asset, liability, common stock, revenue, or expense. (a) Issuance of ownership shares. (b) Land purchased. (c) Amounts owed to suppliers. (d) Bonds payable. (e) Amount earned from selling a product. (f) Cost of advertising.
> Columbia Sportswear Company’s fi nancial statements are presented in Appendix B. Financial statements of VF Corporation are presented in Appendix C. Instructions (a) Based on the information in these financial statements, determine the following for each
> The accounting equation is Assets = Liabilities + Stock- holders’ Equity. Appendix A, at the end of this textbook, reproduces Apple’s financial statements. Replacing words in the equation with dollar amounts, what is Apple’s accounting equation at Septem
> Why is it important for financial statements to receive an unqualified auditor’s opinion?
> What is the purpose of the management discussion and analysis section (MD&A)?
> The annual report provides financial information in a variety of formats, including the following. Management discussion and analysis (MD&A) Financial statements Notes to the financial statements Auditor’s opinion Instructions For each of the following,
> How are each of the following financial statements interrelated? (a) Retained earnings statement and income statement. (b) Retained earnings statement and balance sheet. (c) Balance sheet and statement of cash flows.
> The summaries of data from the balance sheet, income statement, and retained earnings statement for two corporations, Walco Corporation and Gunther Enterprises, are presented as follows for 2017. Instructions Determine the missing amounts. Assume all ch
> Which of these items are liabilities of White Glove Cleaning Service? (a) Cash. (b) Accounts payable. (c) Dividends. (d) Accounts receivable. (e) Supplies. (f) Equipment. (g) Salaries and wages payable. (h) Service revenue. (i) Rent expense.
> Suppose the following items were taken from the balance sheet of Nike, Inc. (All dollars are in millions.) Instructions Perform each of the following. (a) Classify each of these items as an asset, liability, or stockholders’ equity, an
> (a) Define the terms assets, liabilities, and stockholders’ equity. (b) What items affect stockholders’ equity?
> Match each of the following forms of business organization with a set of characteristics: sole proprietorship (SP), partnership (P), corporation (C). (a) _____ Shared control, tax advantages, increased skills and resources. (b) _____ Simple to set up and
> Wayne Holtz is the bookkeeper for Beeson Company. Wayne has been trying to get the balance sheet of Beeson Company to balance. It fi nally balanced, but now he’s not sure it is correct. Instructions Prepare a correct balance sheet.
> What is the basic accounting equation?
> Suppose the following data are derived from the 2017 financial statements of Southwest Airlines. (All dollars are in millions.) Southwest has a December 31 year-end. Cash balance, January 1, 2017…………………………….$1,390 Cash paid for repayment of debt………………………
> What is retained earnings? What items increase the balance in retained earnings? What items decrease the balance in retained earnings?
> Although Clif Bar & Company is not a public company, it does share its financial information with its employees as part of its open-book management approach. Further, although it does not publicly share its fi nancial information, it does provide a diffe
> What are the three main categories of the statement of cash flows? Why do you think these categories were chosen?
> This information is for Williams Corporation for the year ended December 31, 2017. Cash received from lenders……………………..$20,000 Cash received from customers…………………..50,000 Cash paid for new equipment……………………28,000 Cash dividends paid……………………..…………..8,000
> Which is not a required part of an annual report of a publicly traded company? (a) Statement of cash flows. (b) Notes to the financial statements. (c) Management discussion and analysis. (d) All of these are required.
> What is the primary purpose of the statement of cash flows?
> Kellogg Company is the world’s leading producer of ready-to-eat cereal and a leading producer of grain-based convenience foods such as frozen waffl es and cereal bars. Suppose the following items were taken from its 2017 income statemen
> What are the three basic forms of business organizations?
> Indicate whether each of these items is an asset (A), a liability (L), or part of stock- holders’ equity (SE). (a) Accounts receivable. (b) Salaries and wages payable. (c) Equipment. (d) Supplies. (e) Common stock. (f) Notes payable.
> A company’s net income appears directly on the income statement and the retained earnings statement, and it is included indirectly in the company’s balance sheet.” Do you agree? Explain.
> Otay Lakes Park is a private camping ground near the Mount Miguel Recreation Area. It has compiled the following financial information as of December 31, 2017. Service revenue (from camping fees)……………………..$132,000 Dividends……………………..……………………..………………$9,00
> Some people are tempted to make their finances look worse to get financial aid. Companies sometimes also manage their financial numbers in order to accomplish certain goals. Earnings management is the planned timing of revenues, expenses, gains, and loss
> At the beginning of the year, Morales Company had total assets of $800,000 and total liabilities of $500,000. (Treat each item independently.) (a) If total assets increased $150,000 during the year and total liabilities decreased $80,000, what is the amo
> Why would a bank want to monitor the dividend payment practices of the corporations to which it lends money?
> Here are incomplete financial statements for Donavan, Inc. Instructions Calculate the missing amounts. DONAVAN, INC. Balance Sheet Assets Liabilities and Stockholders' Equity Cash Inventory Buildings $ 7,000 10,000 45,000 Liabilities $ 5,000 Account
> Rules governing the investment practices of individual certified public accountants prohibit them from investing in the stock of a company that their firm audits. The Securities and Exchange Commission (SEC) became concerned that some accountants were vi
> Marci Ling is the bookkeeper for Samco Company, Inc. Marci has been trying to get the company’s balance sheet to balance. She finally got it to balance, but she still isn’t sure that it is correct. Instructions Explai
> Listed here are some items found in the financial statements of Finzelberg. Indicate in which financial statement(s) each item would appear. (a) Service revenue. (b) Equipment. (c) Advertising expense. (d) Accounts receivable. (e) Common stock. (f) Inter
> Presented below are five independent situations. (a) Three physics professors at MIT have formed a business to improve the speed of information transfer over the Internet for stock exchange transactions. Each has contributed an equal amount of cash and k
> The following items and amounts were taken from Lonyear Inc.’s 2017 income statement and balance sheet. Instructions (a) In each, case, identify on the blank line whether the item is an asset (A), liability (L), stockholdersâ
> Indicate which statement you would examine to find each of the following items: Income statement (IS), balance sheet (BS), retained earnings statement (RES), or statement of cash flows (SCF). (a) Revenue during the period. (b) Supplies on hand at the end
> What are the three main types of business activity? Give examples of each activity.
> Consider each of the following independent situations. (a) The retained earnings statement of Lee Corporation shows dividends of $68,000, while net income for the year was $75,000. (b) The statement of cash flows for Steele Corporation shows that cash pr
> Sylvia Ayala recently accepted a job in the production department at Apple. Before she starts work, she decides to review the company’s annual report to better understand its operations. The content and organization of corporate annual reports have becom
> Eskimo Pie Corporation markets a broad range of frozen treats, including its famous Eskimo Pie ice cream bars. The following items were taken from a recent income statement and balance sheet. In each case, identify whether the item would appear on the ba
> Who are the external users of accounting data? Give examples.
> Presented here is information for Zheng Inc. for 2017. Retained earnings, January 1 ……………………..$130,000 Service revenue……………………..……………………400,000 Total expenses……………………..……………………..175,000 Dividends……………………..…………………………….65,000 Instructions Prepare the 2017
> The June 22, 2011, issue of the Wall Street Journal Online includes an article by Michael Rapoport entitled “Auditors Urged to Tell More.” It provides an interesting discussion of the possible expanding role of CPAs. Instructions Read the article and ans
> Purpose: Identify summary information about companies. This information includes basic descriptions of the company’s location, activities, industry, financial health, and financial performance. Steps 1. Type in a company name, or use the index to find co
> Here is a list of words or phrases discussed in this chapter: 1. Corporation 2. Creditor 3. Accounts receivable 4. Partnership 5. Stockholder 6. Common stock 7. Accounts payable 8. Auditor’s opinion Instructions Match each word or phrase with the best d
> Who are the internal users of accounting data? How does accounting provide relevant data to the internal users?
> Micado Corporation was formed on January 1, 2017. At December 31, 2017, Miko Liu, the president and sole stockholder, decided to prepare a balance sheet, which appeared as follows. Miko willingly admits that she is not an accountant by training. She is
> Suppose the following information was taken from the 2017 financial statements of pharmaceutical giant Merck and Co. (All dollar amounts are in millions.) Retained earnings, January 1, 2017……………………..$43,698.8 Cost of goods sold……………………..………………………..9,018.
> Presented below are a number of transactions. Determine whether each transaction affects common stock (C), dividends (D), revenues (R), expenses (E), or does not affect stockholders’ equity (NSE). Provide titles for the revenues and expenses. (a) Costs i
> “Accounting is ingrained in our society and is vital to our economic system.” Do you agree? Explain.
> Presented below is selected financial information for Rojo Corporation for December 31, 2017. Inventory $ 25,000 Cash paid to purchase equipment ………………$ 12,000 Cash paid to suppliers …………………………………104,000 Equipment 40,000 Buildings ………………………200,000 Servic
> This information relates to Benser Co. for the year 2017. Retained earnings, January 1, 2017……..$67,000 Advertising expense…………………………….1,800 Dividends……………………..…………………….6,000 Rent expense……………………..………………..10,400 Service revenue……………………..…………….58,000 Util
> Xerox was not having a particularly pleasant year. The company’s stock price had already fallen in the previous year from $60 per share to $30. Just when it seemed things couldn’t get worse, Xerox’s s
> Indicate whether each of the following items is most closely associated with the management discussion and analysis (MD&A), the notes to the financial statements, or the auditor’s report. (a) Description of ability to pay near-term obligations. (b) Unqua
