All Related Questions of General Accounting

Q: Christian Children’s Fund, Inc. (CCF), established in 1938

Christian Children’s Fund, Inc. (CCF), established in 1938, is an international, nonsectarian, nonprofit organization dedicated to assisting children. With program offices around the...

Q: You are manager of a painting department of a large office complex

You are manager of a painting department of a large office complex. The painting department is responsible for painting the buildings’ exteriors and interiors. Your performance is judged in part on mi...

Q: Aurora Medical Center (AMC), located outside Phoenix, has an

Aurora Medical Center (AMC), located outside Phoenix, has an inpatient hospital and outpatient clinic. Because it is located in a retirement area, a substantial fraction of its patients are elderly, a...

Q: Hallsite Imaging produces hardware and software for imaging the structures of the

Hallsite Imaging produces hardware and software for imaging the structures of the human eye and the optic nerve. Hallsite systems are in most major medical centers and leading ophthalmology clinics. H...

Q: Sanjog and Rajiv Gupta have started a business that manufactures and sells

Sanjog and Rajiv Gupta have started a business that manufactures and sells thermal mugs. Users personalize the mugs by plugging them into a laptop and downloading their favorite images from a digital...

Q: Mutual Fund Company (MFC) is considering centralizing its overnight mail

Mutual Fund Company (MFC) is considering centralizing its overnight mail function. Five departments within MFC use overnight mail service: trades processing, trades verifications, securities processin...

Q: Eastern University faces a shortage of parking spaces and charges for parking

Eastern University faces a shortage of parking spaces and charges for parking. For nearby parking (e.g., behind the business school), faculty and staff pay $180 per year. Parking in lots Z and B, whic...

Q: A home identical to yours in your neighborhood sold last week for

A home identical to yours in your neighborhood sold last week for $150,000. Your home has a $120,000 assumable, 8 percent mortgage (compounded annually) with 30 years remaining. An assumable mortgage...

Q: Wujo is a Shanghai company that designs high-end software to

Wujo is a Shanghai company that designs high-end software to enhance and edit digital images. Its software, EzPhoto, is more powerful and easier to use than Adobe Photoshop, but sells at a much lower...

Q: Old Rosebud is a Kentucky horse farm that specializes in boarding thoroughbred

Old Rosebud is a Kentucky horse farm that specializes in boarding thoroughbred breeding mares and their foals. Customers bring their breeding mares to Old Rosebud for delivery of their foals and after...

Q: BFR is a ship-building firm that has just won a

BFR is a ship-building firm that has just won a government contract to build 10 high-speed patrol boats for the Coast Guard for drug interdiction and surveillance. Besides building ships for the gover...

Q: Grove City Broadcasting owns and operates a radio station and a television

Grove City Broadcasting owns and operates a radio station and a television station in Grove City. Both stations are located in the same building and are operated as separate profit centers with separa...

Q: Ferguson Metals is a decentralized mining, smelting, and metals company

Ferguson Metals is a decentralized mining, smelting, and metals company with three divisions: mining, lead, and copper. The mining division owns the ore mine that produces the lead and copper that occ...

Q: Amalfi Texts specializes in printing textbooks for high school science classes.

Amalfi Texts specializes in printing textbooks for high school science classes. Publishing companies like McGraw-Hill contract with authors to prepare the manuscript, which is then copyedited and type...

Q: William Company owns and operates a nationwide chain of movie theaters.

William Company owns and operates a nationwide chain of movie theaters. The 500 properties in the William chain vary from low-volume, small-town, single-screen theaters to high-volume, big-city, multi...

Q: It is frequently argued that for empowerment to work, managers must

It is frequently argued that for empowerment to work, managers must “let go of control” and learn to live with decisions that are made by their subordinates. Evaluate this argument.

Q: The telecom division of Kothari Inc. produces and sells 100,

The telecom division of Kothari Inc. produces and sells 100,000 line modulators. Half of the modulators are sold externally at $150 per unit, and the other half are sold internally at variable manufac...

Q: Toby Manufacturing produces three different products in the same plant and uses

Toby Manufacturing produces three different products in the same plant and uses a job order costing system to estimate product costs. A flexible budget is used to forecast overhead costs. Total budget...

Q: Talor Chemical Company is a highly diversified chemical processing company. The

Talor Chemical Company is a highly diversified chemical processing company. The company manufactures swimming pool chemicals, chemicals for metal processing companies, specialized chemical compounds f...

Q: Suppose you are the manager of a mortgage department at a savings

Suppose you are the manager of a mortgage department at a savings bank. Under the state usury law, the maximum interest rate allowed for mortgages is 10 percent compounded annually. Required: a. If yo...

Q: Serviflow manufactures products that move and measure various fluids, ranging from

Serviflow manufactures products that move and measure various fluids, ranging from water to high viscosity polymers, corrosive or abrasive chemicals, toxic substances, and other difficult pump in medi...

Q: Adrian and Pells (AP) is an advertising agency that uses

Adrian and Pells (AP) is an advertising agency that uses flexible budgeting for both planning and control. One of its clients, Troika Toys, asked AP to prepare an ad campaign for a new toy. APâ&...

Q: Barry’s Fashions operates a Downtown Store and a Mall Store. Both

Barry’s Fashions operates a Downtown Store and a Mall Store. Both department stores use three centralized, corporate service departments (human resources, maintenance, and informatio...

Q: Specialized Surgical Instruments (SSI) manufactures four surgical implants. SSI

Specialized Surgical Instruments (SSI) manufactures four surgical implants. SSI uses an absorption costing system to allocate manufacturing overhead to its four products. Direct labor hours are used a...

Q: Pyramid Products manufactures a large number of home and commercial cleaning products

Pyramid Products manufactures a large number of home and commercial cleaning products at its plant in Oshkosh, Wisconsin. This plant, which employs about 450 people, produces floor waxes, cleaners, ba...

Q: Mastich Counters manufactures a material used to fabricate kitchen counters. It

Mastich Counters manufactures a material used to fabricate kitchen counters. It is a very durable, high-fashion, and expensive product that is installed in luxury homes. The manufacturing process is c...

Q: A firm that purchases electric power from the local utility is considering

A firm that purchases electric power from the local utility is considering the alternative of generating its own electricity. The current cost of obtaining the firm’s electricity from its local utilit...

Q: The sales department of a cellular phone company pays its salespeople $

The sales department of a cellular phone company pays its salespeople $1,500 per month plus 25 percent of each new subscriber’s first month’s billings. A new subscriber’s first-month bill averages $80...

Q: Janitorial services is one of five service departments in a firm that

Janitorial services is one of five service departments in a firm that allocates service department costs using the step-down allocation method. Janitorial services is currently the third service depar...

Q: Sue Young sells fax machines for Fast Fax. There are two

Sue Young sells fax machines for Fast Fax. There are two fax machines: model 700 and model 800. At the beginning of the month, Sue’s sales budget is as follows: At the end of the mon...

Q: Magic Floor produces and sells a complete line of floor care products

Magic Floor produces and sells a complete line of floor care products: wax strippers, floor soaps, and floor waxes. All of these products are packaged on a new high-speed bottling fill line. Empty bot...

Q: Lys Wheels manufactures high-performance mountain bikes. Lys uses a

Lys Wheels manufactures high-performance mountain bikes. Lys uses a predetermined overhead rate based on direct labor hours to absorb overhead to mountain bikes. For the last fiscal year, the firm had...

Q: The following data summarize the operating performance of your company’s wholly owned

The following data summarize the operating performance of your company’s wholly owned Canadian subsidiary for 2009 to 2011. The cost of capital for this subsidiary is 10 percent. Req...

Q: You are evaluating ways to expand an optometry practice and its earnings

You are evaluating ways to expand an optometry practice and its earnings capacity. Optometrists perform eye exams, prescribe corrective lenses (eyeglasses and contact lenses), and sell corrective lens...

Q: IVAX manufactures commercial brushes in two operating divisions (O1 and O2

IVAX manufactures commercial brushes in two operating divisions (O1 and O2) and has two service departments (Human Resources and Janitorial/Maintenance). The two service departments’...

Q: Ab Landlord owns a dilapidated 30-year-old apartment building

Ab Landlord owns a dilapidated 30-year-old apartment building in Los Angeles. The net cash flow from renting the apartments last year was $200,000. She expects that inflation will cause the net cash f...

Q: Pebble Beach Sandals has designed and patented a luxury golf sandal for

Pebble Beach Sandals has designed and patented a luxury golf sandal for both men and women. The unique handmade designs include spikes and cleats to prevent the golfer from slipping during the swing....

Q: To generate needed foreign exchange, the Cuban government entered into a

To generate needed foreign exchange, the Cuban government entered into a joint venture with Domingo Cigars of Spain. The joint venture manufactures Domingo Cigars in Cuba using Cuban tobacco and emplo...

Q: A plant manufactures two products, Hi-V and Lo-

A plant manufactures two products, Hi-V and Lo-V. Hi-V is the high-volume product that represents most of the plant’s revenue. It is produced 10 times per year, inventoried, and ship...

Q: Software Associates (SA) is a computer software consulting firm that

Software Associates (SA) is a computer software consulting firm that specializes in designing and implementing integrated marketing database warehousing programs. Humphrey Catalog is a client. In prep...

Q: Artco manufactures fiberglass home and office planters in a variety of decorator

Artco manufactures fiberglass home and office planters in a variety of decorator colors. These planters, in three sizes, are used to hold indoor plants. Overhead is allocated based on the standard pou...

Q: With gasoline prices at $3.00 per gallon, consumers

With gasoline prices at $3.00 per gallon, consumers are flocking to purchase hybrid vehicles (combination of gasoline and electric motors) that get 50 miles per gallon of gasoline. The monthly payment...

Q: Suppose that a mining operation has spent $8 million developing an

Suppose that a mining operation has spent $8 million developing an ore deposit in South America. Current expectations are that the deposit will require two years of development and will result in a re...

Q: One of the main tenets of economic analysis is that people act

One of the main tenets of economic analysis is that people act in their narrow self-interest. Why then do people leave tips in restaurants? If a study were to compare the size of tips earned by server...

Q: Innovative Sports sells a patented golf trainer called the Puttmaster. This

Innovative Sports sells a patented golf trainer called the Puttmaster. This device, which sells for $69.95, consists of a metal strip on the floor that is attached to the golfer’s putter with elastic...

Q: Premier Brands buys and manages consumer personal products brands such as cosmetics

Premier Brands buys and manages consumer personal products brands such as cosmetics, hair care, and personal hygiene. Premier management purchases underperforming brands and redesigns their marketing...

Q: The empirical evidence reveals that very few firms change their standard prices

The empirical evidence reveals that very few firms change their standard prices and standard quantities during the fiscal year. Most firms have the following policy, “We set our standards before the f...

Q: Alexander Products manufactures dental equipment and uses a standard cost system.

Alexander Products manufactures dental equipment and uses a standard cost system. A new product (HV65) that is being introduced requires a particular type of stainless steel. Alexander purchased a qua...

Q: Media Designs is a marketing firm that designs and prints customized marketing

Media Designs is a marketing firm that designs and prints customized marketing brochures. The design department designs the brochure and the printing department prints and binds it. Each department ha...

Q: Using the data from Table 10–6, recast the analysis

Using the data from Table 10–6, recast the analysis with one change of assumption: Instead of assuming that an additional $17,000 of overhead was incurred in both years, assume that...

Q: For each of the following questions draw a graph that depicts how

For each of the following questions draw a graph that depicts how costs vary with volume. Completely label each graph and axis. a. Plant XXX works a 40-hour week. Management can vary the number of emp...

Q: The demand for DVD players is expanding rapidly, but the industry

The demand for DVD players is expanding rapidly, but the industry is highly competitive. A plant to make DVD players costs $40 million, has an annual capacity of 100,000 units, and has an indefinite p...

Q: Joan Chris is the Denver district manager of Stale-Mart,

Joan Chris is the Denver district manager of Stale-Mart, an old established chain of more than 100 department stores. Her district contains eight stores in the Denver metropolitan area. One of her sto...

Q: Veriplex manufactures process control equipment. This 100-year-old

Veriplex manufactures process control equipment. This 100-year-old German company has recently acquired another firm that has a design for a new proprietary process control system. A key component of...

Q: World Imports buys products from around the world for import into the

World Imports buys products from around the world for import into the United States. The firm is organized into a number of separate regional sales districts that sell the imported goods to retail sto...

Q: A bank has three service centers: EDP (electronic data processing

A bank has three service centers: EDP (electronic data processing), copying, and accounting. These service centers provide services to one another as well as to three operating divisions: A, B, and C....

Q: DigiEar has invented and patented a new digital behind-the-

DigiEar has invented and patented a new digital behind-the-ear hearing aid with adaptive noise reduction and automatic feedback cancellation. DigiEar produces four different models of its DigiEar devi...

Q: The Easton plant produces sheet metal chassis for television sets. Its

The Easton plant produces sheet metal chassis for television sets. Its customer is General Electric Appliances. The chassis are manufactured on a computerized, numerically controlled (NC) machine that...

Q: Familia Insurance Company (FMC) specializes in offering insurance products to

Familia Insurance Company (FMC) specializes in offering insurance products to the Hispanic community. It has its own direct sales organization of agents that sells three lines of insurance: life insur...

Q: At its Lyle Avenue plant, Milan Pasta produces two types of

At its Lyle Avenue plant, Milan Pasta produces two types of pasta: spaghetti and fettuccine. The two pastas are produced on the same machines, with different settings and slightly different raw materi...

Q: Wasley has three operating divisions. Each manager of a division is

Wasley has three operating divisions. Each manager of a division is evaluated on that division’s total operating income. Managers are paid 10 percent of operating income as a bonus....

Q: Consider the following two separate firms. One firm manufactures flexible packaging

Consider the following two separate firms. One firm manufactures flexible packaging films for the snack, bakery, confectionery, and tobacco industries. Its manufacturing process has been quite stable...

Q: At the Hilton Applefest and Trade Expo, James Jones, owner

At the Hilton Applefest and Trade Expo, James Jones, owner of Jones Orchard, saw a sign displayed in front of a vendor’s booth: I CAN GET YOU PESTICIDES AT $10.00 A GALLONâ...

Q: APC is a contract manufacturer of printed circuit board assemblies that specializes

APC is a contract manufacturer of printed circuit board assemblies that specializes in manufacturing and test engineering support of complex printed circuit boards for companies in the defense and med...

Q: The Flower City Grocery is faced with the following capital budgeting decision

The Flower City Grocery is faced with the following capital budgeting decision. Its display freezer system must be repaired. The cost of this repair will be $1,000 and the system will be usable for an...

Q: Jim Shoe, chief executive officer of Jolsen International, a multinational

Jim Shoe, chief executive officer of Jolsen International, a multinational textile conglomerate, has recently been evaluating the profitability of one of the company’s subsidiaries, Pride Fashions, In...

Q: Donovan Steel has two profit centers: Ingots and Stainless Steel.

Donovan Steel has two profit centers: Ingots and Stainless Steel. These profit centers rely on services supplied by two service departments: electricity and water. The profit centers’...

Q: Ware Paper Box manufactures corrugated paper boxes. It uses a job

Ware Paper Box manufactures corrugated paper boxes. It uses a job order costing system. Operating data for February and March are as follows: The factory was closed due to a labor strike prior to Janu...

Q: Compute the unknowns: / There is no opening or

Compute the unknowns: There is no opening or closing finished goods or work-in-process inventory.

Q: You work on a team that reports to the chief financial officer

You work on a team that reports to the chief financial officer of Fiedler International, a consumer products company that manages a variety of consumer beauty brands (shampoos, facial soaps, deodorant...

Q: Declining Market, Inc., is considering the problem of when to

Declining Market, Inc., is considering the problem of when to stop production of a particular product in its product line. Sales of the product in question have been declining and all estimates are th...

Q: Access.Com produces and sells software to libraries and schools to

Access.Com produces and sells software to libraries and schools to block access to Web sites deemed inappropriate by the customer. In addition, the software also tracks and reports on Web sites visite...

Q: Spa Ariana promotes itself as an upscale spa offering a variety of

Spa Ariana promotes itself as an upscale spa offering a variety of treatments, including massages, facials, and manicures, performed in a luxurious setting by qualified therapists. The owners of Spa A...

Q: In the 1800s Australia was a colony of England and most of

In the 1800s Australia was a colony of England and most of its trade was with England. Australia primarily exported agricultural products such as wheat and imported manufactured goods such as steel, m...

Q: Alliance Tooling produces a single product in its plant. At the

Alliance Tooling produces a single product in its plant. At the beginning of the year, there were no units in inventory. During the year, Alliance produced 120,000 units and sold 100,000 units at $26....

Q: Silky Smooth lotions come in three sizes: 4, 8,

Silky Smooth lotions come in three sizes: 4, 8, and 12 ounces. The following table summarizes the selling prices and variable costs per case of each lotion size Fixed costs are $771,000. Current produ...

Q: Webb & Drye (WD) is a New York City law

Webb & Drye (WD) is a New York City law firm with over 200 attorneys. WD has a sophisticated set of information technologies—including intranets and extranets, e-mail servers, th...

Q: True Cost Manufacturing, Inc., manufactures and sells large business equipment

True Cost Manufacturing, Inc., manufactures and sells large business equipment for the office and business markets. The primary function of Manufacturing is to provide components and subassemblies for...

Q: Scion Corp. manufactures earth-moving equipment. Department A303 produces

Scion Corp. manufactures earth-moving equipment. Department A303 produces a number of small metal parts for the equipment, including specialized screw products, rods, frame fittings, and some engine p...

Q: A Swiss firm, Smythe and Yves (S&Y),

A Swiss firm, Smythe and Yves (S&Y), manufactures toiletries such as hand soaps, shampoo, conditioners, and a mouthwash that hotels purchase and place in the rooms for their guests. S&Y uses a...

Q: Galt Electric Motors (GEM) produces two types of motors, small

Galt Electric Motors (GEM) produces two types of motors, small and large. Standard machine time to make one small motor is 20 minutes; standard machine time to make one large motor is 30 minutes. GEM...

Q: I’ve given a good deal of thought to this issue of how

I’ve given a good deal of thought to this issue of how companies . . . go about negotiating objectives with their different business units. The typical process in such cases is that once the parent ne...

Q: Software Development Inc. (SDI) produces and markets software for

Software Development Inc. (SDI) produces and markets software for personal computers, including spreadsheet, word processing, desktop publishing, and database management programs. SDI has annual sales...

Q: Oneida Metal manufactures stainless steel boxes to house sophisticated communications integrated circuit

Oneida Metal manufactures stainless steel boxes to house sophisticated communications integrated circuit boards for the defense industry. Oneida cuts the metal, bends it to form the chassis and top, p...

Q: Sunnybrook Farms is a local grocery store that is currently open only

Sunnybrook Farms is a local grocery store that is currently open only Monday through Saturday. Sunnybrook is considering opening on Sundays. The annual incremental costs of Sunday openings are estimat...

Q: The Medford Mug Company is an old-line maker of ceramic

The Medford Mug Company is an old-line maker of ceramic coffee mugs. It imprints company logos and other sayings on mugs for both commercial and wholesale markets. The firm has the capacity to produce...

Q: Carlos Sanguine, Inc., makes premium wines and table wines.

Carlos Sanguine, Inc., makes premium wines and table wines. Grapes are crushed and the free flowing juice and the first-processing juice are made into premium wines (bottles with corks). The second- a...

Q: The purchasing department of Ball Brothers purchases raw materials and supplies for

The purchasing department of Ball Brothers purchases raw materials and supplies for the various divisions in the firm. Most of the purchasing department’s costs are labor costs. The costs of the purch...

Q: In its radio fund-raising campaign, National Public Radio (

In its radio fund-raising campaign, National Public Radio (NPR) stated, “On-air radio membership campaigns are the most cost-effective means we have for raising the funds necessary to bring you the ty...

Q: Suppose the market rate of interest is 10 percent and you have

Suppose the market rate of interest is 10 percent and you have just won a $1 million lottery that entitles you to $100,000 at the end of each of the next 10 years. Required: a. What is the minimum lum...

Q: A company recently raised the pay of employees by 20 percent.

A company recently raised the pay of employees by 20 percent. The productivity of the employees, however, remained the same. The CEO of the company was quoted as saying, “It just goes to show that mon...

Q: Old Turkey Mash is a whiskey manufactured by distilling grains and

Old Turkey Mash is a whiskey manufactured by distilling grains and corn and then aging the mixture for five years in 50-gallon oak barrels. Distilling requires about a week and aging takes place in c...

Q: Scanners Plus manufactures and sells two types of scanners for personal computers

Scanners Plus manufactures and sells two types of scanners for personal computers, the Home Scanner and the Pro Scanner. The Home model is a low resolution model for small office applications. The Pro...

Q: Microelectronics is a large electronics firm with multiple divisions. The circuit

Microelectronics is a large electronics firm with multiple divisions. The circuit board division manufactures circuit boards, which it sells externally and internally. The phone division assembles cel...

Q: Robin Jensen, manager of market planning for Viral Products of the

Robin Jensen, manager of market planning for Viral Products of the IDP Pharmaceutical Co., is responsible for advertising a class of products. She has designed a three-year marketing plan to increase...

Q: The Winterton Group is an investment advisory firm specializing in high-

The Winterton Group is an investment advisory firm specializing in high-income investors in upstate New York. Winterton has offices in Rochester, Syracuse, and Buffalo. Operating as a profit center, e...

Q: Dakota Mining is considering operating a strip mine, the cost of

Dakota Mining is considering operating a strip mine, the cost of which is $4.4 million. Cash returns will be $27.7 million, all received at the end of the first year. The land must be returned to its...

Q: Department 100 is the first step in the firm’s manufacturing process.

Department 100 is the first step in the firm’s manufacturing process. Data for the current quarter’s operations are as follows:...

Q: Royal Resort and Casino (RRC), a publicly traded company,

Royal Resort and Casino (RRC), a publicly traded company, caters to affluent customers seeking plush surroundings, high-quality food and entertainment, and all the “glitzâ€...

Q: Murray Hill was preparing the monthly report that allocates the three service

Murray Hill was preparing the monthly report that allocates the three service department’s (A, B, and C) costs to the three operating divisions (D1, D2, and D3) when he choked to dea...

Q: Why are drivers for long-haul (cross-country)

Why are drivers for long-haul (cross-country) moving companies (e.g., Allied Van Lines) often franchised, while moving companies that move households within the same city hire drivers as employees? Fr...

Q: Wyatt Oil owns a major oil refinery in Channelview, Texas.

Wyatt Oil owns a major oil refinery in Channelview, Texas. The refinery processes crude oil into valuable outputs in a two-stage process. First, it distills a barrel of crude oil at a variable cost of...

Q: Just One, Inc., has two mutually exclusive investment projects,

Just One, Inc., has two mutually exclusive investment projects, P and Q, shown below. Suppose the market interest rate is 10 percent. The ranking of projects differs, depending on the use of IRR or NP...

Q: DeJure Scents manufactures an aftershave and uses process costing. All materials

DeJure Scents manufactures an aftershave and uses process costing. All materials are added at the beginning of the process and conversion costs are incurred uniformly over time. In May, DeJure started...

Q: Aspen View produces a full line of sunglasses. This year it

Aspen View produces a full line of sunglasses. This year it began producing a new model of sunglasses, the Peak 32. It produced 5,300 pairs and sold 4,900 pairs. The following table summarizes the fix...

Q: One large company that has been successful in applying Total Quality Management

One large company that has been successful in applying Total Quality Management (TQM) principles in manufacturing reports that it has had less success in applying the same techniques in improving admi...

Q: Friendly Grocer has three departments in its store: beverages, dairy

Friendly Grocer has three departments in its store: beverages, dairy and meats, and canned and packaged foods. Each department is headed by a departmental manager. Operating results for the last month...

Q: Healing Touch manufactures massage chairs with the following standard cost structure:

Healing Touch manufactures massage chairs with the following standard cost structure: During the month 500 chairs are manufactured and the following costs incurred: Required: a. Calculate all material...

Q: Neweway Plastics manufactures an acrylic compound used in automobile bumpers in a

Neweway Plastics manufactures an acrylic compound used in automobile bumpers in a continuous flow process. Raw material is added at the beginning of the process and conversion costs are incurred unifo...

Q: The Doe Company sells three products: sliced pineapples, crushed pineapples

The Doe Company sells three products: sliced pineapples, crushed pineapples, and pineapple juice. The pineapple juice is a by-product of sliced pineapple, while crushed pineapples and sliced pineapple...

Q: The PQR Coal Company has several conventional and strip mining operations.

The PQR Coal Company has several conventional and strip mining operations. Recently, new legislation has made strip mining, which produces coal of high sulfur content, unprofitable, so those operation...

Q: Avant Designs designs and manufactures polished-nickel fashion bracelets. It

Avant Designs designs and manufactures polished-nickel fashion bracelets. It offers two bracelets: Aztec and Mayan. The following data summarize budgeted operations for the current year: Budgeted fixe...

Q: Western Sugar processes sugar beets into granulated sugar that is sold to

Western Sugar processes sugar beets into granulated sugar that is sold to food companies. It uses a standard cost system to aid in cost control and performance evaluation. To compute the standards for...

Q: WWWeb Marketing is a decentralized firm specializing in designing and operating Internet

WWWeb Marketing is a decentralized firm specializing in designing and operating Internet marketing Web sites. The firm is four years old and has been growing rapidly, but it only shows a small profit....

Q: Kinsley & Sons is a large, successful direct-mail catalog

Kinsley & Sons is a large, successful direct-mail catalog company in the highly competitive market for upscale men’s conservative business and business-casual dress wear. On sales of $185 million they...

Q: You are working for an investment banking firm. One of your

You are working for an investment banking firm. One of your clients is examining the possibility of purchasing Stirling Manufacturing, a parts supplier (specifically, tail-light assemblies) to the aut...

Q: Telephone Computer Corporation (TCC) manufactures and sells two computerized directory

Telephone Computer Corporation (TCC) manufactures and sells two computerized directory assistance computers to telephone companies. The firm has its own sales force that sells directly to the phone co...

Q: Taylor Chemicals produces a particular chemical at a fixed cost of $

Taylor Chemicals produces a particular chemical at a fixed cost of $1,000 per day. The following table displays how marginal cost varies with output (in cases): Required: a. Given the preceding data,...

Q: Mr. Jones intends to retire in 20 years at the age

Mr. Jones intends to retire in 20 years at the age of 65. As yet he has not provided for retirement income, and he wants to set up a periodic savings plan to do this. If he makes equal annual payments...

Q: Federal Mixing (FM) is a division of Federal Chemicals,

Federal Mixing (FM) is a division of Federal Chemicals, a large diversified chemical company. FM provides mixing services for both outside customers and other Federal divisions. FM buys or receives li...

Q: Some economists (e.g., Hayek) argue that decentralization

Some economists (e.g., Hayek) argue that decentralization of economic decisions in the economy leads to efficient resource allocation. What differences exist within the firm that make the link between...

Q: US Copiers manufactures a full line of copiers including desktop models.

US Copiers manufactures a full line of copiers including desktop models. The Small Copier Division (SCD) manufactures desktop copiers and sells them in the United States. A typical model has a retail...

Q: “It was in Deyang in 1969 that I came to know

“It was in Deyang in 1969 that I came to know how China’s peasants really lived. Each day started with the production team leader allocating jobs. All the peasants had to work, and they each earned a...

Q: Portable Phones, Inc., manufactures and sells wireless telephones for residential

Portable Phones, Inc., manufactures and sells wireless telephones for residential and commercial use. Portable Phones’ plant is organized by product line, with five phone assembly departments in total...

Q: Potter-Bowen (PB) manufactures and sells postage meters throughout

Potter-Bowen (PB) manufactures and sells postage meters throughout the world. Postage meters print the necessary postage on envelopes, eliminating the need to affix stamps. The meter keeps track of th...

Q: J.P. Max is a department store carrying a large

J.P. Max is a department store carrying a large and varied stock of merchandise. Management is considering leasing part of its floor space for $72 per square foot per year to an outside jewelry compan...

Q: Kollel is a private hospital that operates in a large metropolitan area

Kollel is a private hospital that operates in a large metropolitan area. The hospital admits “regular” patients and “private” pa...

Q: Data for the Bidwell Company are as follows: /

Data for the Bidwell Company are as follows: Required: a. Based on the preceding data, calculate break-even sales in units. b. If Bidwell Company is subject to an effective income tax rate of 40 perce...

Q: Five departments of National Training Institute, a nonprofit organization, share

Five departments of National Training Institute, a nonprofit organization, share a rented building. Four of the departments provide services to educational agencies and have little or no competition f...

Q: Overland Steel operates a coal-burning steel mill in New York

Overland Steel operates a coal-burning steel mill in New York state. Changes in the state’s air quality control laws will result in this mill’s incurring a $1,000 per day fine (which will be paid at t...

Q: Your boss, the vice president of corporate accounting, has just

Your boss, the vice president of corporate accounting, has just returned from a two-week seminar in Maui on activity-based cost accounting. He says he wants to completely overhaul the company’s existi...

Q: New York Fashions owns 87 women’s clothing stores in shopping malls.

New York Fashions owns 87 women’s clothing stores in shopping malls. Corporate headquarters of New York Fashions uses flexible budgets to control the operations of each of the stores...

Q: Kay Enterprises is a small, family-owned and managed business

Kay Enterprises is a small, family-owned and managed business. It has a patented production process for manufacturing a digital switch used in large telephone switches. It manufactures two models in i...

Q: Two genetically engineered enzymes are produced simultaneously from a series of chemical

Two genetically engineered enzymes are produced simultaneously from a series of chemical and biological processes: Q enzyme and Y enzyme. The cost per batch of Q and Y enzymes is $200,000, resulting i...

Q: Beckett is a large car dealership that sells several different automobile manufacturers

Beckett is a large car dealership that sells several different automobile manufacturers new cars (Toyota, Ford, Lexus, and Subaru). Beckett also consists of a Pre-owned Cars Department and a large ser...

Q: Chemtrex is an agricultural chemical producer. Process costing is used in

Chemtrex is an agricultural chemical producer. Process costing is used in its mixing department. At the beginning of July, Chemtrex had 700,000 gallons 70 percent complete in work in process. During J...

Q: CLIC manufactures two types of cigarette lighters: Basic and Super.

CLIC manufactures two types of cigarette lighters: Basic and Super. A new plant began producing both lighter models this year. The following variable costing statement summarizes the first year of ope...

Q: Houston Milling is a subcontractor to Pratt & Whitney, which makes

Houston Milling is a subcontractor to Pratt & Whitney, which makes jet engines. Houston Milling makes two different fuel pump housings for two Pratt & Whitney jet engines: the A11 housing and...

Q: Marian Health Care is a large hospital system outside Chicago that offers

Marian Health Care is a large hospital system outside Chicago that offers both hospital (inpatient) and clinic (outpatient) services. It has a centralized admissions office that admits and registers c...

Q: Simple Plant manufactures DNA test strips. Manufacturing overhead is applied to

Simple Plant manufactures DNA test strips. Manufacturing overhead is applied to units produced using direct labor dollars as the allocation base. The overhead rate is calculated prior to the beginning...

Q: The soldering department of Xtel Circuits solders integrated circuits onto circuit boards

The soldering department of Xtel Circuits solders integrated circuits onto circuit boards. The department is highly automated. The existing machinery is state of the art, having been installed only 15...

Q: Printers, Inc., manufactures and sells a midvolume color printer (

Printers, Inc., manufactures and sells a midvolume color printer (MC) and a high-volume color printer (HC). Each MC requires 100 direct labor hours to manufacture and each HC requires 150 direct labor...

Q: The Stowbridge Division is analyzing expanding its Total Quality Management program.

The Stowbridge Division is analyzing expanding its Total Quality Management program. It already has a TQM program in place. However, one of its customers, Amlan Equipment, is asking all suppliers to b...

Q: Emrich Processing is a small custom stainless steel parts processor. Customers

Emrich Processing is a small custom stainless steel parts processor. Customers send new and used stainless steel parts to Emrich for cleaning in various acid baths to remove small imperfections or fil...

Q: “I used to run the company that made Formula 409,

“I used to run the company that made Formula 409, the spray cleaner. From modest entrepreneurial beginnings, we’d gone national and shipped the hell out of P&G, Colgate, Drackett, and every other gian...

Q: Dr. Na Gu plans to open a radiology office that provides

Dr. Na Gu plans to open a radiology office that provides CAT scans. She can lease the CAT scanner for $1,200 per month plus $45 for each imaging session. In addition to the $45 lease cost per imaging...

Q: Hochstedt is a German firm with a wholly owned U.S

Hochstedt is a German firm with a wholly owned U.S. subsidiary. The parent firm manufactures and exports products from Germany to its U.S. subsidiary for sale in the United States. Hochstedt also has...

Q: Wedig Diagnostics manufactures two laser photometers that are used in preparing DNA

Wedig Diagnostics manufactures two laser photometers that are used in preparing DNA tests. The U.S. model is designed for use in the United States and the EU model is designed to meet the specificatio...

Q: Candice Company has decided to introduce a new product that can be

Candice Company has decided to introduce a new product that can be manufactured by either of two methods. The manufacturing method will not affect the quality of the product. The estimated manufacturi...

Q: Marti Meyers, vice president of marketing for LaserFlo, was concerned

Marti Meyers, vice president of marketing for LaserFlo, was concerned as she reviewed the costs for the AP2000 laser printer she was planning to launch next month. The AP2000 is a new commercial print...

Q: American Cinema shows first-run movies. It pays the company

American Cinema shows first-run movies. It pays the company distributing the movies a fixed fee of $1,000 per week plus a percentage of the gross box office receipts. In the first two weeks a movie is...

Q: Flower City Cartridges (FCC) manufactures replacement cartridges for desktop printers

Flower City Cartridges (FCC) manufactures replacement cartridges for desktop printers. FCC uses standard costs within a job order cost system. In June, FCC purchased 18 gallons of blue ink for $385.20...

Q: Medical Instruments produces a variety of electronic medical devices. Medical Instruments

Medical Instruments produces a variety of electronic medical devices. Medical Instruments uses a standard cost system and computes price variances at the time of purchase. One product, a thermometer,...

Q: You are considering buying a $50,000 car. The

You are considering buying a $50,000 car. The dealer has offered you a 13.6 percent loan with 30 equal monthly payments. On questioning him, you find that the interest charge of $17,000 (or 0.136 x $5...

Q: The following data are available for the Megan Corp. finishing department

The following data are available for the Megan Corp. finishing department for the current year. The department makes a single product that requires three hours of labor per unit of finished product. B...

Q: A textbook on organization theory says: Drawing upon the writings

A textbook on organization theory says: Drawing upon the writings of Maslow, McGregor presented his Theory X–Theory Y dichotomy to describe two differing conceptions of human behavior. Theory X assump...

Q: A large consulting firm is looking to expand the services currently offered

A large consulting firm is looking to expand the services currently offered its clients. The firm has developed a new performance metric called “Economic Earnings,” or EE for short. The performance me...

Q: U.S. Pump is a multidivisional firm that manufactures and

U.S. Pump is a multidivisional firm that manufactures and installs chemical piping and pump systems. The valve division makes a single standardized valve. The valve division and the installation divis...

Q: Mail delivery during the Christmas holidays of 1990 to U.S

Mail delivery during the Christmas holidays of 1990 to U.S. troops stationed in Saudi Arabia for Operation Desert Storm was haphazard. So many letters and packages were mailed during the holidays, tha...

Q: Joint Products, Inc., produces two joint products, X and

Joint Products, Inc., produces two joint products, X and V, using a common input. These are produced in batches. The common input costs $8,000 per batch. To produce the final products (X and V), addit...

Q: You are working in the office of the vice president of administration

You are working in the office of the vice president of administration at International Telecon (IT) as a senior financial planner. IT is a Fortune 500 firm with sales approaching $1 billion. IT provid...

Q: Fuentes Systems provides security software to law enforcement agencies. It has

Fuentes Systems provides security software to law enforcement agencies. It has a sales force of 70 and has plans to add another 10–15 salespeople. Fuentes allocates corporate administrative costs base...

Q: Vigdor processes cut trees into various wood products, veneers, lumber

Vigdor processes cut trees into various wood products, veneers, lumber, wood chips, and so forth. Each of the products can be sold immediately upon processing the trees, or processed further and sold...

Q: UniCom produces a wide range of consumer electronics. UniCom’s Newark,

UniCom produces a wide range of consumer electronics. UniCom’s Newark, New York, plant produces two types of cordless phones: 2.4 GHz and 6.0 GHz. The following table summarizes oper...

Q: Brickley Chains produces five different styles of silver chains, A,

Brickley Chains produces five different styles of silver chains, A, B, C, D, and E, in a highly automated batch machining process. The following table summarizes the production and cost data for the f...

Q: An investment under consideration has a payback of five years and a

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Q: The following figures were taken from the records of Wellington Co.

The following figures were taken from the records of Wellington Co. for the year 2008. At the end of the year, two jobs were still in process. Details about the two jobs include: Wellington Co. applie...

Q: Howard Binding manufactures two types of notebooks: large and small.

Howard Binding manufactures two types of notebooks: large and small. The large and small notebooks are made of the same cloth cover (direct materials) but in different quantities. The standard cost sh...

Q: Taylor designs and manufactures high-performance bicycle chains for professional racers

Taylor designs and manufactures high-performance bicycle chains for professional racers and serious amateurs. Two new titanium chain sets, the Challenger and the Tour, sell for €110 a...

Q: Goodstone Tires designs, manufactures, and sells automotive tires through three

Goodstone Tires designs, manufactures, and sells automotive tires through three profit centers (divisions): Passenger Vehicles, Industrial Vehicles, and Racing. The Racing Division develops state-of t...

Q: Picture Maker is a freestanding photo kiosk consumers use to download their

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Q: Coase Farm grows soybeans near property owned by Taggart Railroad. Taggart

Coase Farm grows soybeans near property owned by Taggart Railroad. Taggart can build zero, one, or two railroad tracks adjacent to Coase Farm, yielding a net present value of $0, $9 million, or $12 mi...

Q: A company makes DVD players and incurs a variety of different costs

A company makes DVD players and incurs a variety of different costs. Place a check in the appropriate column if the cost is a product cost or a period cost. Further, classify each product cost as dire...

Q: PortCo Products is a divisionalized furniture manufacturer. The divisions are autonomous

PortCo Products is a divisionalized furniture manufacturer. The divisions are autonomous segments, each responsible for its own sales, costs of operations, working capital management, and equipment ac...

Q: Amy Laura is opening a snowboard rental store. She rents snowboards

Amy Laura is opening a snowboard rental store. She rents snowboards for skiing on a weekly basis for $75 per week including the boots. The skiing season is 20 weeks long. Laura can buy a snowboard and...

Q: You work in the Strategy Analysis department of On-Call,

You work in the Strategy Analysis department of On-Call, a worldwide paging firm offering satellite based digital communications through sophisticated pagers. On-Call is analyzing the possibility of a...

Q: Ed Koehler started Great Southern Furniture five years ago to assemble prefabricated

Ed Koehler started Great Southern Furniture five years ago to assemble prefabricated bedroom furniture for large hotel chains. Hotels purchase furniture (beds, night stands, and chests of drawers) fro...

Q: Betterton Corporation manufactures automobile headlight lenses and uses a standard cost system

Betterton Corporation manufactures automobile headlight lenses and uses a standard cost system. At the beginning of the year, the following standards were established per 100 lenses (a single batch)....

Q: Tagway 4000 is a computer manufacturer based in Montana. One component

Tagway 4000 is a computer manufacturer based in Montana. One component of the computer is an internal battery that keeps track of the time and date while the computer is turned off. Tagway produces th...

Q: Jan Vanderschmidt was the founder of a successful chain of restaurants located

Jan Vanderschmidt was the founder of a successful chain of restaurants located throughout Europe. He died unexpectedly last week at the age of 55. Jan was sole owner of the company’s common stock and...

Q: Thermalloy makes extruded aluminum heat sinks that are small devices that help

Thermalloy makes extruded aluminum heat sinks that are small devices that help cool semiconductors and printed circuit boards. Thermalloy uses an absorption costing system whereby all fixed and variab...

Q: a. Scottie Corporation has been offered a contract to produce 100

a. Scottie Corporation has been offered a contract to produce 100 castings a year for five years at a price of $200 per casting. Producing the castings will require an investment in the plant of $35,0...

Q: Home Auto Parts is a large retail auto parts store selling the

Home Auto Parts is a large retail auto parts store selling the full range of auto parts and supplies for do-it-yourself auto repair enthusiasts. The store is arranged with three prime displays in the...

Q: Allied Adhesives (AA) manufactures specialty bonding agents for very specialized

Allied Adhesives (AA) manufactures specialty bonding agents for very specialized applications (electronic circuit boards, aerospace, health care, etc.). AA operates a number of small plants around the...

Q: Using your knowledge of the relationship between inflation and nominal interest rates

Using your knowledge of the relationship between inflation and nominal interest rates, and assuming that the savings were invested in government bills, comment briefly on the analysis presented in the...

Q: Employee bonuses at American InterConnect (AI), a large communications

Employee bonuses at American InterConnect (AI), a large communications firm, depend on meeting a number of targets, one of which is a revenue target. Some bonus is awarded to the group if it meets or...

Q: Winter Games manufactures a competitive line of skis and sells its skis

Winter Games manufactures a competitive line of skis and sells its skis to retailers at a price of $225 per pair. Based on an annual volume of 5,000 pairs, the cost per pair is $185: Sports Palace, a...

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Q: Wine Distributors is a wholesaler of wine, buying from wineries and

Wine Distributors is a wholesaler of wine, buying from wineries and selling to wine stores. Three different white wines are sold: Chablis, Chardonnay, and Riesling. Here are budgeted and actual sales...

Q: CJ Equity Partners is a privately held firm that buys small family

CJ Equity Partners is a privately held firm that buys small family-owned firms, installs professional managers to run the firms, and then sells them 3–5 years later, often for a subs...

Q: The city of Toledo has received a proposal to build a new

The city of Toledo has received a proposal to build a new multipurpose outdoor sports stadium. The expected life of the stadium is 20 years. It will be financed by a 20-year bond paying 8 percent inte...

Q: Adrian Power manufactures small power supplies for car stereos. The company

Adrian Power manufactures small power supplies for car stereos. The company uses flexible budgeting techniques to deal with the seasonal and cyclical nature of the business. The accounting department...

Q: Cogen’s Turbine Division manufactures gas-powered turbines for generating electric power

Cogen’s Turbine Division manufactures gas-powered turbines for generating electric power and hot water for heating systems. Turbine’s variable cost per unit is $150...

Q: Vorma manufactures two proprietary all-natural fruit antioxidant food additives that

Vorma manufactures two proprietary all-natural fruit antioxidant food additives that are approved by the U.S. Food and Drug Administration. One is for liquid vitamins (LiqVita) and the other is used b...

Q: Advanced Micro Processors (AMP) has designed a new dual-

Advanced Micro Processors (AMP) has designed a new dual-core microprocessor, dubbed DUALxl. DUALxl microprocessors are produced on silicon wafers with 100 chips per wafer. Once fabricated,the wafer is...

Q: Magnetic resonance imaging (MRI) is a noninvasive medical diagnostic device

Magnetic resonance imaging (MRI) is a noninvasive medical diagnostic device that uses magnets and radio waves to produce a picture of an area under investigation inside the body. A patient is position...

Q: Royal Holland is a cruise ship company. It currently has six

Royal Holland is a cruise ship company. It currently has six ships and plans to add two more. It offers luxury passenger cruises in the Caribbean, Alaska, and the Far East. Management is currently add...

Q: British Airways (BA) has implemented the balanced scorecard. Match

British Airways (BA) has implemented the balanced scorecard. Match the following performance indicators: Return on invested capital …….………..……On-time arrivals Earnings growth ……………………….…………Percent emp...

Q: Joe Bell, president and chief executive officer of Dyna Golf,

Joe Bell, president and chief executive officer of Dyna Golf, has called a meeting of the executive committee of his board of directors. He is concerned about the price competition and declining sales...

Q: Mat Machinery has received an order from Dewey Sales Corp. for

Mat Machinery has received an order from Dewey Sales Corp. for special machinery. Dewey pays Mat Machinery a deposit of 10 percent of the sales price for the order. Just before the order is completed,...

Q: Increased global competition has spurred most firms to take a hard look

Increased global competition has spurred most firms to take a hard look at their costs and become “lean and mean.” Rochco, a large industrial complex, has seen offshore competition erode its market sh...

Q: Navisky designs, manufactures, and sells specialized GPS (Global Positioning

Navisky designs, manufactures, and sells specialized GPS (Global Positioning System) devices for commercial applications. For example, Navisky currently sells a system for environmental studies and is...

Q: Massey Electronics manufactures heat sinks. Heat sinks are small devices attached

Massey Electronics manufactures heat sinks. Heat sinks are small devices attached to solid-state circuit boards that dissipate the heat from the circuit board components. Made of aluminum, the devices...

Q: You are working as a loan officer at TransPacific Bank and are

You are working as a loan officer at TransPacific Bank and are analyzing a loan request for a client when you come across the following footnote in the client’s annual report: Inventories are priced a...

Q: The admissions office of a large hospital has an annual operating budget

The admissions office of a large hospital has an annual operating budget of $700,000. These costs are distributed to inpatient departments (surgery, medicine, pediatrics, psychiatry) and to outpatient...

Q: Cibo Leathers manufactures a line of designer purses and handbags, some

Cibo Leathers manufactures a line of designer purses and handbags, some selling for as much as $1,000 per bag. One particular style requires a hand-stitched shoulder strap of cow leather that has been...

Q: The purchasing department at Feder buys all of its raw materials,

The purchasing department at Feder buys all of its raw materials, supplies, and parts. This department is a cost center. It uses a flexible budget based on the number of different items purchased each...

Q: Warren City, with sales of $2 billion, produces and

Warren City, with sales of $2 billion, produces and sells farm equipment. The manufacturing division produces some parts internally and purchases other parts from external suppliers and assembles farm...

Q: Golf ball manufacturer Trevino is generally regarded as the industry leader.

Golf ball manufacturer Trevino is generally regarded as the industry leader. It commands a 40 percent market share in its targeted channels of distribution and reported net profits of $31.5 million on...

Q: Karsten Mills is one of the premier carpet manufacturers in the world

Karsten Mills is one of the premier carpet manufacturers in the world. It manufactures carpeting for both residential and commercial applications. Home sales and commercial sales each account for abou...

Q: Videx is the premier firm in the security systems industry. Martha

Videx is the premier firm in the security systems industry. Martha Rameriz is an account manager at Videx responsible for selling residential systems. She is compensated based on beating a predetermin...

Q: UOP is a manufacturing firm that has depreciation as its only overhead

UOP is a manufacturing firm that has depreciation as its only overhead expense (i.e., there are no indirect labor, indirect materials, property taxes, factory insurance, etc.). UOP uses a flexible bud...

Q: Measer Enterprises produces standardized telephone keypads and operates in a highly competitive

Measer Enterprises produces standardized telephone keypads and operates in a highly competitive market in which the keypads are sold for $4.50 each. Because of the nature of the production technology,...

Q: Farmers in a valley are subject to occasional flooding when heavy rains

Farmers in a valley are subject to occasional flooding when heavy rains cause the river to overflow. They have asked the federal government to build a dam upstream to prevent flooding. The constructio...

Q: DVDS manufactures and sells DVD players in two countries. It manufactures

DVDS manufactures and sells DVD players in two countries. It manufactures two models—Basic and Custom—in the same plant. The Basic DVD has fewer options and provide...

Q: It is often argued that private country clubs tend to have low

It is often argued that private country clubs tend to have low-quality food operations because the members do not join or frequent their clubs for the food but rather for the golf and fellowship. (Not...

Q: Jason Rocks is small rock quarry that produces five different sizes of

Jason Rocks is small rock quarry that produces five different sizes of stones, from small crushed stones (#1 stones) to large (3-inch) rocks (#5 stones). The stones are first mined and sorted into the...

Q: Phonetex is a medium-size manufacturer of telephone sets and switching

Phonetex is a medium-size manufacturer of telephone sets and switching equipment. Its primary business is government contracts, especially defense contracts, which are very profitable. The company has...

Q: Sanchez Gadgets purchases innovative home kitchen gadgets from around the world (

Sanchez Gadgets purchases innovative home kitchen gadgets from around the world (such as kitchen torch, a pasta maker, and an automatic salad spinner) and sells them to specialty cooking retail stores...

Q: Secure Servers Inc. (SSI) is one of the largest

Secure Servers Inc. (SSI) is one of the largest software and service providers directed at providing high levels of backup and security for computer servers to the financial community, military, and o...

Q: Background Woodhaven Service is a small, independent filling station located

Background Woodhaven Service is a small, independent filling station located in the Woodhaven section of Queens. The station has three gasoline pumps and two service bays. The repair facility speciali...

Q: Savannah Products, a small integrated wood and lumber products company with

Savannah Products, a small integrated wood and lumber products company with substantial timber holdings, has two divisions: Forest and Lumber. Forest Division manages the timber holdings, maintains th...

Q: City Hospital is a city government-owned and -operated hospital

City Hospital is a city government-owned and -operated hospital providing basic health care to low income people. Most of the hospital’s revenues are from federal, state, county, and city governments....

Q: One MBA student was overheard saying to another, “Accounting is

One MBA student was overheard saying to another, “Accounting is baloney. I worked for a genetic engineering company and we never looked at the accounting numbers and our stock price was always growing...

Q: The Chicago Omni Hotel is a 750-room luxury hotel offering

The Chicago Omni Hotel is a 750-room luxury hotel offering guests the finest facilities in downtown Chicago. The hotel is organized into four departments: lodging, dining, catering, and retail stores....

Q: Employee satisfaction is a major performance measure used at American Inter Connect

Employee satisfaction is a major performance measure used at American Inter Connect (AI), a large communications firm. All employees receive some bonus compensation. The lower-level employees receive...

Q: Equity Corp. paid a consultant to study the desirability of installing

Equity Corp. paid a consultant to study the desirability of installing some new equipment. The consultant recently submitted the following analysis: Cost of new machine………………………………………………………. $100,000...

Q: Fast Photo operates four film developing labs in upstate New York.

Fast Photo operates four film developing labs in upstate New York. The four labs are identical: They employ the same production technology, process the same mix of films, and buy raw materials from th...

Q: Assuming the firm sells everything it produces and assuming that variable cost

Assuming the firm sells everything it produces and assuming that variable cost per unit does not change with volume, total profits are higher as volume increases because fixed costs are spread over mo...

Q: The Mowerson Division of Brown Instruments manufactures testing equipment for the automobile

The Mowerson Division of Brown Instruments manufactures testing equipment for the automobile industry. Mowerson’s equipment is installed in several places along an automobile assembl...

Q: Employees at White’s Department Store are observed engaging in the following behavior

Employees at White’s Department Store are observed engaging in the following behavior: (1) They hide items that are on sale from the customers and (2) they fail to expend appropriate effort in designi...

Q: A firm has four service centers, S1, S2, S3

A firm has four service centers, S1, S2, S3, and S4, which provide services to each other, as well as to three operating divisions, A, B, and C. The distribution of each service centerâ€
...

Q: Kitchen Rite is considering outsourcing the production of a steel chassis that

Kitchen Rite is considering outsourcing the production of a steel chassis that is used in a kitchen appliance. Two thousand chassis are produced per month. An outside vendor will supply an identical c...

Q: The standard cost sheet calls for 80 pounds of zinc per batch

The standard cost sheet calls for 80 pounds of zinc per batch of 70 faucets. Zinc has a standard price of $5.10 per pound. One thousand pounds of zinc are purchased for $5,530. Ten batches of the fauc...

Q: The Mopart Division produces a single product. Its standard cost system

The Mopart Division produces a single product. Its standard cost system uses a flexible budget to assign indirect costs on the basis of standard direct labor hours. At the budgeted volume of 4,000 dir...

Q: Salespeople at a particular firm forecast what they expect to sell next

Salespeople at a particular firm forecast what they expect to sell next period. Their supervisors then review the forecasts and make revisions. These forecasts are used to set production and purchasin...

Q: JLE Electronics is an independent contract manufacturer of complex printed circuit board

JLE Electronics is an independent contract manufacturer of complex printed circuit board assemblies. Computer companies and other electronics firms engage JLE to assemble their boards. Utilizing compu...

Q: Eastern Educational Services is considering the following proposal to sell its teaching

Eastern Educational Services is considering the following proposal to sell its teaching machine and purchase a new, improved machine. The following data are presented by the department head: Additiona...

Q: Sunder manufactures hard rubber pet toys. The purple dog chewy has

Sunder manufactures hard rubber pet toys. The purple dog chewy has a variable cost of $3.00 per unit. It is produced on a machine that is leased. The three models of this machine have three different...

Q: Rothwell Inc. is the leader in computer-integrated manufacturing and

Rothwell Inc. is the leader in computer-integrated manufacturing and factory automation products and services. The Rothwell product offering is segmented into 15 product categories, based on product f...

Q: You work for the strategy group of Adapt Inc., a firm

You work for the strategy group of Adapt Inc., a firm that designs and manufactures memory cards for digital cameras. Your task is to gather intelligence about Adapt’s key competitor, DigiMem, a priva...

Q: Geico is considering expanding an existing plant on a piece of land

Geico is considering expanding an existing plant on a piece of land it already owns. The land was purchased 15 years ago for $325,000 and its current market appraisal is $820,000. A capital budgeting...

Q: The Ogden plant makes Beanie Babies, small stuffed toys in a

The Ogden plant makes Beanie Babies, small stuffed toys in a variety of animal shapes. The toys are so popular that they have become collectors’ items. The plant uses a flexible budget and predetermin...

Q: Repro Corporation is the leading manufacturer and seller of office equipment.

Repro Corporation is the leading manufacturer and seller of office equipment. Its most profitable business segment is the production and sale of large copiers. The company is currently organized into...

Q: Logical Solutions reports the following overhead variances for 2010: Spending

Logical Solutions reports the following overhead variances for 2010: Spending variance …………………………………$100,000 F Efficiency variance …………………………………$100,000 F Volume variance …………………………………..$300,000 F In...

Q: ICB has four manufacturing divisions, each producing a particular type of

ICB has four manufacturing divisions, each producing a particular type of cosmetic or beauty aid. These products are then transferred to five marketing divisions, each covering a particular geographic...

Q: The Transfer Price Company has two divisions (Intermediate and Final)

The Transfer Price Company has two divisions (Intermediate and Final) that report to the corporate office (Corporate). The two divisions are profit centers. Intermediate produces a proprietary product...

Q: Madden International is a large ($7 billion sales), successful international

Madden International is a large ($7 billion sales), successful international pharmaceuticals firm operating in 23 countries with 15 autonomous subsidiaries. The corporate office consists of five vice...

Q: Commando Force is a new set of children’s action toys consisting of

Commando Force is a new set of children’s action toys consisting of three separately sold pieces: Matt, Kim, and the multi-terrain vehicle (MTV). The MTV can be used by itself or it...

Q: Robert S. Kaplan in “One Cost System Isn’t Enough”

Robert S. Kaplan in “One Cost System Isn’t Enough” (Harvard Business Review, January–February 1988, pp. 61–66) states, No single system can adequately answer the demands made by diverse functions of c...

Q: Is it preferable to use an accelerated depreciation method rather than the

Is it preferable to use an accelerated depreciation method rather than the straight-line method for tax purposes?

Q: Blauvelt Products uses a flexible budget to set the overhead rate at

Blauvelt Products uses a flexible budget to set the overhead rate at the beginning of the year based on units produced. In year 1 budgeted fixed overhead is $1 million and budgeted variable overhead i...

Q: R&D Inc. has the following financial data for the

R&D Inc. has the following financial data for the current year (millions): Earnings before R&D expenditures……………………………………. $21.5 Interest expense……………………………….………………………………. $0.0 R&D expenditures…………………...

Q: ITI Technology designs and manufactures solid-state computer chips. In

ITI Technology designs and manufactures solid-state computer chips. In one of the production departments, employees fabricate a six-inch circular wafer by laying down successive layers of silicon and...

Q: Plastic Chairs manufactures plastic lawn chairs using a combination of new and

Plastic Chairs manufactures plastic lawn chairs using a combination of new and recycled plastic. Varying amounts of each type of plastic can be used to produce a batch of 100 chairs. The table below l...

Q: Beckett Manufacturing is a contract manufacturer that assembles products for other companies

Beckett Manufacturing is a contract manufacturer that assembles products for other companies. Beckett has two service departments, Maintenance and Administration, and two operating divisions, Small Co...

Q: Giza Farms in Cairo, Egypt, has a corporate headquarters staff

Giza Farms in Cairo, Egypt, has a corporate headquarters staff and three operating divisions: consulting services, chemicals, and agricultural products. Giza is considering allocating 160 million Egyp...

Q: In 1995 Global Oil Corporation’s Marketing and Refining (M&R

In 1995 Global Oil Corporation’s Marketing and Refining (M&R) Division was the fifth largestU.S. refiner with 7,700 Global-branded service stations selling about 23 million gallons per day, or 7 perce...

Q: Frames, Inc., manufactures two types of metal frames: large

Frames, Inc., manufactures two types of metal frames: large and small. Steel angle iron is first cut to the appropriate sizes; the pieces are then welded together to form the frames. The process invol...

Q: Exotic Roses, owned by Margarita Rameriz, provides a variety of

Exotic Roses, owned by Margarita Rameriz, provides a variety of rare rose bushes to local nurseries that sell Rameriz’s roses to the end consumer (landscapers and retail customers)....

Q: Flat Images develops and manufactures large, state-of-the

Flat Images develops and manufactures large, state-of-the-art flat-panel television screens that consumer electronic companies purchase and incorporate into a complete TV unit by adding the case, moun...

Q: Background Artisans Shirtcraft manufactures and sells hand-painted shirts of

Background Artisans Shirtcraft manufactures and sells hand-painted shirts of original design. The company was founded in 1999 by three sisters: Cathy, Linda, and Valerie Montgomery. Shirtcraft started...

Q: A proposed cost-saving device has an installed cost of $

A proposed cost-saving device has an installed cost of $59,400. It will be depreciated for tax purposes on a straight-line basis over three years (zero salvage), although its actual life will be five...

Q: Background Economists and managers have long recognized the importance of productivity

Background Economists and managers have long recognized the importance of productivity in determining an organization’s success. Productivity is the relation between the firmâ&...

Q: Critically evaluate the statement: The step-down method is

Critically evaluate the statement: The step-down method is better than the direct allocation method because at least the step-down method captures on average half of the service flows between service...

Q: Diagnostic Imaging Software (DIS) is the leading producer of imaging

Diagnostic Imaging Software (DIS) is the leading producer of imaging software for the health sciences. DIS develops, writes, produces, and sells its software through two direct selling organizations:...

Q: Golf Specialties (GS), a Belgian company, manufactures a variety

Golf Specialties (GS), a Belgian company, manufactures a variety of golf paraphernalia, such as head covers for woods, embroidered golf towels, and umbrellas. GS sells all its products exclusively in...

Q: Turow Trailers assembles horse trailers. Two models are manufactured: G7

Turow Trailers assembles horse trailers. Two models are manufactured: G7 and V8. While labor intensive, the production process is not very complicated. The single plant produces all the trailers with...

Q: The keyboard division of XBT, a personal computer manufacturing firm,

The keyboard division of XBT, a personal computer manufacturing firm, fabricates 50-key keyboards for both XBT and non-XBT computers. Keyboards for XBT machines are included as part of the XBT persona...

Q: Brehm Vineyards grows a unique white pinot noir grape that they use

Brehm Vineyards grows a unique white pinot noir grape that they use to produce a white wine that is in high demand. Brehm uses all the grapes they can grow to produce their own white pinot noir wine....

Q: Golf World is a 1,000-room luxury resort with

Golf World is a 1,000-room luxury resort with swimming pools, tennis courts, three golf courses, and many other resort amenities. The head golf course superintendent, Sandy Green, is responsible for a...

Q: At the beginning of year 1, Northern Sun, Inc.,

At the beginning of year 1, Northern Sun, Inc., a food processing concern, is considering a new line of frozen entrees. The accompanying table shows projected cash outflows and inflows. Assume that al...

Q: A Wall Street Journal article (December 26, 1996) describes

A Wall Street Journal article (December 26, 1996) describes a series of changes at the Pratt & Whitney plant in Maine that manufactures parts for jet engines. In 1993 it was about to be closed because...

Q: Madigan produces a single high-speed modem. The following table

Madigan produces a single high-speed modem. The following table summarizes the current month’s budget for Madigan’s modem production: Projected production and sales ………………………. 4,000 units Variable cos...

Q: Woodley Furniture is a small boutique manufacturer of high quality contemporary wood

Woodley Furniture is a small boutique manufacturer of high quality contemporary wood tables. They make two models: end tables and coffee tables in a variety of different woods and finishes. Current an...

Q: Bio Labs is a genetic engineering firm manufacturing a variety of gene

Bio Labs is a genetic engineering firm manufacturing a variety of gene-spliced, agricultural-based seed products. The firm has five separate laboratories producing different product lines. Each lab is...

Q: Rick’s Bags manufactures both golf bags and tennis totes. Fixed manufacturing

Rick’s Bags manufactures both golf bags and tennis totes. Fixed manufacturing overhead is budgeted to be $187,200, variable manufacturing overhead is budgeted to be $1.10 per direct labor hour, and fi...

Q: Roberts Machining specializes in fabricating metal racks that hold electronic equipment such

Roberts Machining specializes in fabricating metal racks that hold electronic equipment such as telephone switching units, power supplies, and so forth. Roberts designs and produces the metal stamping...

Q: Tax laws in Japan tie taxable income directly to the financial statements’

Tax laws in Japan tie taxable income directly to the financial statements’ reported income. That is, to compute a Japanese firm’s tax liability, multiply the net income as reported to shareholders by...

Q: Littleton Medical Center (LMC) has three service departments (accounting

Littleton Medical Center (LMC) has three service departments (accounting, human resources, and Janitorial/maintenance) and two patient units: hospital and an outpatient clinic. The following table sum...

Q: The Lancaster Chamber Orchestra is a small community orchestra that offers two

The Lancaster Chamber Orchestra is a small community orchestra that offers two distinct concert series for its patrons. Series A is devoted entirely to the performance of a classical repertoire and of...

Q: Hurst Mats manufactures custom replacement floor mats for automobiles. The floor

Hurst Mats manufactures custom replacement floor mats for automobiles. The floor mats are made of spun nylon on highly automated, expensive machinery. Hurst manufactures two mat styles: Plush and Delu...

Q: SnapOn makes snap-together button fasteners (a male top and

SnapOn makes snap-together button fasteners (a male top and female bottom) for designer clothes Each top and bottom consists of several metal parts that, when attached to the garment, allow the shirt,...

Q: The Linda Lion Co. has an investment opportunity that involves a

The Linda Lion Co. has an investment opportunity that involves a current outlay of $1,000 for equipment. The investment will yield net cash inflows for four years. The net cash inflow at the end of th...

Q: Physicians practicing in Eastern University’s hospital have the following compensation agreement.

Physicians practicing in Eastern University’s hospital have the following compensation agreement. Each doctor bills the patient (or Blue Cross Blue Shield) for his or her services. The doctor pays for...

Q: Oppenheimer Visuals manufactures state-of-the-art flat-

Oppenheimer Visuals manufactures state-of-the-art flat-panel plasma display screens that large computer companies like Dell and Gateway assemble into flat-panel monitors. Oppenheimer produces just the...

Q: You are working on a special assignment as a financial analyst for

You are working on a special assignment as a financial analyst for the president of household products of RBB Brands. RBB Brands is a large $4 billion diversified consumer products firm. RBB has two d...

Q: Astin Car Stereos manufactures and distributes four different car stereos. The

Astin Car Stereos manufactures and distributes four different car stereos. The accompanying table summarizes the unit sales, selling prices, and manufacturing costs of each stereo. Selling and distrib...

Q: An investment project involves the purchase of equipment at a cost of

An investment project involves the purchase of equipment at a cost of $100 million. For tax purposes, the equipment has a life of five years and will be depreciated on a straight-line basis. Inflation...

Q: Infantino Saab is a car dealership that has been in business for

Infantino Saab is a car dealership that has been in business for 40 years at the same 20-acre location selling and servicing new and “pre-owned” (used) Saabs. Two y...

Q: Republic Insurance has a direct sales force that sells life insurance policies

Republic Insurance has a direct sales force that sells life insurance policies. All salespeople at the beginning of the year forecast the number of policies they expect to sell that year. At the end o...

Q: Chris Maynard, one of Heath Metal Products’s three customer engineers,

Chris Maynard, one of Heath Metal Products’s three customer engineers, is reviewing the costs of the radar housings for Lingle Aerospace (LA). LA is one of Maynard’s largest accounts and the radar hou...

Q: Transmation, with sales of over $2.2 billion,

Transmation, with sales of over $2.2 billion, builds and markets several of the world's leading brands of construction and agricultural equipment. Transmation has three operating divisions that are de...

Q: A present investment of $50,000 is expected to yield

A present investment of $50,000 is expected to yield receipts of $8,330 a year for seven years. What is the internal rate of return on this investment?

Q: Communities are frequently concerned about whether or not police are vigilant in

Communities are frequently concerned about whether or not police are vigilant in carrying out their responsibilities. Several communities have experimented with incentive compensation for police. In p...

Q: Amos Doral owns a small store that rents punchbowls, dishes,

Amos Doral owns a small store that rents punchbowls, dishes, silverware, glassware, tables, and chairs to people having large parties. Amos runs the business by himself. He is considering adding power...

Q: Fuller Aerosols manufactures six different aerosol can products (room deodorants,

Fuller Aerosols manufactures six different aerosol can products (room deodorants, hair sprays, furniture polish, and so forth) on its fill line. The fill line mixes the ingredients, adds the propellan...

Q: Celtex is a large and very successful decentralized specialty chemical producer organized

Celtex is a large and very successful decentralized specialty chemical producer organized into five independent investment centers. Each of the five investment centers is free to buy products either i...

Q: Chateau Napa purchased a small vineyard and is now producing magnum bottles

Chateau Napa purchased a small vineyard and is now producing magnum bottles (1.5 liters) of Redwood Cabernet Sauvignon. This wine is much sought after, and bottling the wine in larger bottles enhances...

Q: Can opportunity costs be negative? Give an example.

Can opportunity costs be negative? Give an example.

Q: A punch press currently in use has a book value of $

A punch press currently in use has a book value of $1,800 and needs design modifications totaling $16,200, which would be capitalized at the present time and depreciated. The press can be sold for $2,...

Q: Jasper, Inc., is considering two mutually exclusive investments. Alternative

Jasper, Inc., is considering two mutually exclusive investments. Alternative A has a current outlay of $300,000 and returns $100,300 a year for five years. Alternative B has a current outlay of $150,0...

Q: Sue Koehler manages a revenue center of a large national manufacturer that

Sue Koehler manages a revenue center of a large national manufacturer that sells office furniture to local businesses in Detroit. She has decision rights over pricing. Her compensation is a fixed wage...

Q: You work for a venture capitalist and have been asked to analyze

You work for a venture capitalist and have been asked to analyze a proposal from a group of investors interested in building a new ski area in Colorado, the Gold Mountain Ski Resort. The demand for sk...

Q: Faculty members at a leading business school receive a budget to cover

Faculty members at a leading business school receive a budget to cover research expenditures, software and hardware purchases, travel expenses, photocopying for classroom use, and so forth. The budget...

Q: The opening paragraph of an accounting textbook says, “Managers need

The opening paragraph of an accounting textbook says, “Managers need accounting information and need to know how to use it.” Critically evaluate this statement.

Q: Brighton Holdings owns private companies and hires professional managers to run its

Brighton Holdings owns private companies and hires professional managers to run its companies. One company in Brighton Holdings’ portfolio is Sunder Properties. Sunder owns and operates apartment comp...

Q: James, Inc., a large mail-order catalog firm,

James, Inc., a large mail-order catalog firm, is thinking of expanding into Canada. The Buffalo district office would manage the expansion and must decide how much to spend on the advertising campaign...

Q: Blue Sage Mountain produces hinged snowboards. The price charged affects the

Blue Sage Mountain produces hinged snowboards. The price charged affects the quantity sold. The following equation captures the relation between price and quantity each month:...

Q: The MedView brochure said, “Only 45 scans per month to

The MedView brochure said, “Only 45 scans per month to cover the monthly equipment rental of $18,000.”* The footnote at the bottom of the brochure read: *“Assumes a reimbursable fee of $475 per scan.”...

Q: Two types of machine tools are available for performing a particular job

Two types of machine tools are available for performing a particular job in Apex Corporation. Tool A has an initial investment of $52,000, with operating costs of $26,000 per year, an economic service...

Q: In March, a devastating ice storm struck Monroe County, New

In March, a devastating ice storm struck Monroe County, New York, causing millions of dollars of damage. Mathews & Peat (M&P), a large horticultural nursery, was hit hard. As a result of the s...

Q: Tilist Golf is a premier producer of golf clubs and golf balls

Tilist Golf is a premier producer of golf clubs and golf balls. The Ball Division makes two types of balls: a professional ball (the “Masters”) played by profession...

Q: Several years ago, your firm paid $25,000,

Several years ago, your firm paid $25,000,000 for Clean Tooth, a small, high-technology company that manufactures laser-based tooth cleaning equipment. Unfortunately, due to extensive production line...

Q: You work in the finance department of a telecommunications firm with a

You work in the finance department of a telecommunications firm with a large direct sales force selling high-speed fiber optics access lines to companies wanting telephone and Internet access. Your fi...

Q: Vintage Cellars manufactures a 1,000-bottle wine storage system

Vintage Cellars manufactures a 1,000-bottle wine storage system that maintains optimum temperature (55–57 °F) and humidity (50–80 percent) for aging wines. The system has a backup battery for power fa...

Q: A large corporation has a manufacturing division with 40 parts departments and

A large corporation has a manufacturing division with 40 parts departments and 20 assembly departments. The parts departments manufacture most of the parts for the products, and the assembly departmen...

Q: Parkview Hospital, a regional hospital, serves a population of 400

Parkview Hospital, a regional hospital, serves a population of 400,000 people. The next closest hospital is 50 miles away. Parkview’s accounting system is adequate for patient billing. The system repo...

Q: Jacklin Stampings allocates overhead to products based on machine hours. It

Jacklin Stampings allocates overhead to products based on machine hours. It uses a flexible overhead budget to calculate a predetermined overhead rate at the beginning of the year. This rate is used d...

Q: GAMMA produces over a hundred different types of residential water faucets at

GAMMA produces over a hundred different types of residential water faucets at its Delta, Florida, plant. This plant uses activity-based costing to calculate product costs. The following table summariz...

Q: A large corporation maintains a fleet of three 30-passenger corporate

A large corporation maintains a fleet of three 30-passenger corporate jets that provide (weather permitting) daily scheduled service between Detroit and several cities that are home to its production...

Q: SCX is a $2 billion chemical company with a plastics plant

SCX is a $2 billion chemical company with a plastics plant located in Durango, Colorado. The Durango plastics plant of SCX was started 30 years ago to produce a particular plastic film for snack food...

Q: Rose Hospital has two service departments (building services and food service

Rose Hospital has two service departments (building services and food service), and three patient care units (intensive care, surgery, and general medicine). Building Services provides janitorial, mai...

Q: The Densain Water plant in Naples, Florida, bottles purified and

The Densain Water plant in Naples, Florida, bottles purified and flavored waters in a variety of sizes (20, 36, 48, and 64 ounces) for sale through vending machines and retail stores. Volume is measur...

Q: Varilux manufactures a single product and sells it for $10 per

Varilux manufactures a single product and sells it for $10 per unit. At the beginning of the year, there were 1,000 units in inventory. Upon further investigation, you discover that units produced las...

Q: Telstar Electronics manufactures and imports a wide variety of consumer and industrial

Telstar Electronics manufactures and imports a wide variety of consumer and industrial electronics, including stereos, televisions, camcorders, telephones, and VCRs. Each line of business (LOB) handle...

Q: MacGiver Brass is a brass plating firm with sales of $8

MacGiver Brass is a brass plating firm with sales of $8 million and profits before taxes of $625,000. MacGiver has a loan outstanding at its local bank for working capital purposes. As the loan office...

Q: Required: a. What differentiates unit-level costs,

Required: a. What differentiates unit-level costs, batch-level costs, product-line costs, and capacity-sustaining costs? Give examples. b. “One advantage of an activity-based cost system is that it pr...

Q: Metro Blood Bank, a for-profit firm, collects whole

Metro Blood Bank, a for-profit firm, collects whole blood from donors, tests it, and then separates it into two components: platelets and plasma. Three pints of whole blood yield two pints of platelet...

Q: The Pottery Store is a chain of retail stores in upscale malls

The Pottery Store is a chain of retail stores in upscale malls that sells pottery, woodcarvings, and other craft items. The typical customer is shopping for a gift and spends between $50 and $200. Buy...

Q: Sarah Adams manages Executive Inn of Toronto, a 200-room

Sarah Adams manages Executive Inn of Toronto, a 200-room facility that rents furnished suites to executives by the month. The market is for people relocating to Toronto and waiting for permanent housi...

Q: Avid, a small, privately held biotech pharmaceutical manufacturing firm,

Avid, a small, privately held biotech pharmaceutical manufacturing firm, specializes in developing and producing a set of drugs for rare classes of cancers. Avid has two divisions that share the same...

Q: Fidelity Bank has five service departments (telecom, information management,

Fidelity Bank has five service departments (telecom, information management, building occupancy, training & development, and human resources). The bank uses a step-down method of allocating servic...

Q: Dr. Madison, inventor and owner of Madison Corrosion Treatment,

Dr. Madison, inventor and owner of Madison Corrosion Treatment, has discovered that ordinary mufflers and pipes, when treated with his patented process, will become permanently impervious to corrosion...

Q: Two years ago Federal Insurance was charged with making misleading marketing claims

Two years ago Federal Insurance was charged with making misleading marketing claims about the way it was selling its insurance products. In response to these allegations and subsequent investigations,...

Q: Spectra Inc. produces color monitors for personal computers. The firm

Spectra Inc. produces color monitors for personal computers. The firm makes 19-inch monitors with the following cost structure: Direct materials ……â€...

Q: Shop and Save (S&S) is a large grocery

Shop and Save (S&S) is a large grocery chain with 350 supermarkets. Twenty-eight S&S stores are located within the Detroit metropolitan region and serviced by the S&S Detroit Bakery, a large central b...

Q: Joanna Wu manages the University Lab Testing department within the University Hospital

Joanna Wu manages the University Lab Testing department within the University Hospital. Lab Testing, a profit center, performs most of the standard medical tests (such as blood tests) for other univer...

Q: Pool Scrubbers manufactures three different models of swimming pool cleaners (710

Pool Scrubbers manufactures three different models of swimming pool cleaners (710, 720, and 830). These are sophisticated computer-controlled, programmed cleaners that scrub and vacuum the pool’s bott...

Q: Diagnostic Imaging & Medical (DIM) has introduced a revolutionary new

Diagnostic Imaging & Medical (DIM) has introduced a revolutionary new magnetic resonance imaging (MRI) device that it sells to hospital radiology departments. Their new device has a much larger ch...

Q: Zipp Cards buys baseball cards in bulk from the companies that produce

Zipp Cards buys baseball cards in bulk from the companies that produce them. Zipp buys sheets of 48 cards, then cuts the sheets into individual cards, and sorts and packages them, usually by team. Zip...

Q: Mickles Ltd. uses a standard cost system. In June,

Mickles Ltd. uses a standard cost system. In June, Mickles’ direct labor efficiency variance was $1,470 U and its direct labor rate variance was $825 F. Mickles manufactured 460 batches of product in...

Q: Prior to the Securities Acts of 1933 and 1934, corporations with

Prior to the Securities Acts of 1933 and 1934, corporations with publicly traded stock were not required to issue financial statements, yet many voluntarily issued income statements and balance sheets...

Q: The MRI department at Community Hospital, a large urban health center

The MRI department at Community Hospital, a large urban health center, performs magnetic resonance imaging for heart disease, brain disorders, and total body scans for the various patient care units (...

Q: A new pharmaceutical drug calls for 4.5 ounces of compound

A new pharmaceutical drug calls for 4.5 ounces of compound AN7-X1 per batch of 250 tablets. AN7- X1 has a standard price of $2 per ounce. An initial inventory of 8,000 ounces of AN7-X1 is purchased fo...

Q: The coating department of a parts manufacturing department coats various parts with

The coating department of a parts manufacturing department coats various parts with an antirust, zinc based material. The parts to be processed are loaded into baskets; the baskets are passed through...

Q: News.com is a Web site that offers users access to

News.com is a Web site that offers users access to current national and international news stories. News.com does not charge users a fee for accessing the site, but rather charges advertisers $0.05 pe...

Q: The Bartolotta Company had an overabsorbed overhead balance at year-end

The Bartolotta Company had an overabsorbed overhead balance at year-end. The firm wrote off one-third of it to Cost of Goods Sold, thereby raising net income by $100,000, and the remainder was charged...

Q: Watson’s Bay Co. is considering a contract to manufacture didgeridoos.

Watson’s Bay Co. is considering a contract to manufacture didgeridoos. Producing didgeridoos will require an investment in equipment of $100,000 and operating costs of $15 per didgeridoo produced. The...

Q: Sunstar sells a full line of small home kitchen appliances, including

Sunstar sells a full line of small home kitchen appliances, including toasters, coffee makers, blenders, and bread machines. It is organized into a marketing division and a manufacturing division. The...

Q: Starling Coatings produces weatherproofing coatings that protect metal from oxidation. One

Starling Coatings produces weatherproofing coatings that protect metal from oxidation. One of Starling’s patented coatings, zurtan, is composed of two inputs, magna45 and zelon. Whil...

Q: Swan Systems developed and manufactures residential water filtration units that are installed

Swan Systems developed and manufactures residential water filtration units that are installed under sinks. The filtration unit removes chlorine and other chemicals from drinking water. This Dutch comp...

Q: After the Iraqi invasion of Kuwait in August 1990, the world

After the Iraqi invasion of Kuwait in August 1990, the world price of crude oil doubled to more than $30 per barrel in anticipation of reduced supply. Immediately, the oil companies raised the retail...

Q: The current year’s income statement for Sants Brakes Co. on a

The current year’s income statement for Sants Brakes Co. on a variable costing basis appears in the accompanying table. Inventories of finished stock were increased during the year i...

Q: Montana Pen Company manufactures a full line of premium writing instruments.

Montana Pen Company manufactures a full line of premium writing instruments. It has 12 different styles and within each style, it offers ball point pens, fountain pens, mechanical pencils, and a rolle...

Q: You have just purchased a house and have obtained a 30-

You have just purchased a house and have obtained a 30-year, $200,000 mortgage with an interest rate of 10 percent. Required: a. What is your annual payment? b. Assuming you bought the house on Januar...

Q: Oaks Auto Supply just acquired a patent on an antifreeze recycler that

Oaks Auto Supply just acquired a patent on an antifreeze recycler that flushes used antifreeze from a car, filters it, removes dissolved chemicals, and then returns it to the automobile without having...

Q: A finance professor and a marketing professor were recently comparing notes on

A finance professor and a marketing professor were recently comparing notes on their perceptions of corporations. The finance professor claimed that the goal of a corporation should be to maximize the...

Q: Darien Industries operates a cafeteria for its employees. The operation of

Darien Industries operates a cafeteria for its employees. The operation of the cafeteria requires fixe costs of $4,700 per month and variable costs of 40 percent of sales. Cafeteria sales are currentl...

Q: Anpax, Inc., manufactures two products: L7 and Q2.

Anpax, Inc., manufactures two products: L7 and Q2. Overhead is allocated to products based on machine hours. Management uses a flexible budget to forecast overhead. For the current year, fixed factory...

Q: Shady Tree produces two products: M1 and M2. There are

Shady Tree produces two products: M1 and M2. There are no beginning inventories or ending working-process inventories of either M1 or M2. A single plant wide overhead rate is used to allocate overhead...

Q: The Xerox DocuColor iGen3 digital production press is a high volume,

The Xerox DocuColor iGen3 digital production press is a high volume, on-demand, full-color printer capable of producing up to 6,000 impressions (pages) per hour. It weighs nearly 3 tons, stretches 30...

Q: Panarude Airfreight is an international air freight hauler with more than 45

Panarude Airfreight is an international air freight hauler with more than 45 jet aircraft operating in the United States and the Pacific Rim. The firm is headquartered in Melbourne, Australia, and is...

Q: Magee Inc. pays its sales manager a bonus of $10

Magee Inc. pays its sales manager a bonus of $10,000 if the manager meets the sales quota. The sales manager can exert either high effort or low effort. The additional disutility of the manager in exe...

Q: The National Direct Student Loan (NDSL) program allows college students

The National Direct Student Loan (NDSL) program allows college students to borrow funds from the federal government. The contract stipulates that the annual percentage rate of interest is 0 percent un...

Q: International Computer Company (ICC) has annual revenues of $2

International Computer Company (ICC) has annual revenues of $2 billion primarily from selling and leasing large networked workstation systems to businesses and universities. The manufacturing division...

Q: Dr. Lucy Zang, a noted local podiatrist, plans to

Dr. Lucy Zang, a noted local podiatrist, plans to open a retail shoe store specializing in hard-to-find footwear for people with feet problems such as bunions, flat feet, mallet toes, diabetic feet, a...

Q: Guest Watches is a division of Guest Fashions, a large,

Guest Watches is a division of Guest Fashions, a large, international fashion designer. Guest Watches manufactures highly stylish watches for young adults (age 18 to 30) who are fashion conscious. It...

Q: Black Feather Indian Nation is a 900 square-mile territory in

Black Feather Indian Nation is a 900 square-mile territory in North Dakota that has the legal right to sell gasoline without having to collect or pay state and federal taxes on it. Gasoline in North D...

Q: Phipps manufactures circuit boards in Division Low in a country with a

Phipps manufactures circuit boards in Division Low in a country with a 30 percent income tax rate and transfers them to Division High in a country with a 40 percent income tax. An import duty of 15 pe...

Q: Critically discuss the following quotation: ABC (activity-based

Critically discuss the following quotation: ABC (activity-based cost) information, by itself, does not invoke actions and decisions leading to improved profits and operating performance. . . . For ABC...

Q: Rogers Petersen and Cabots are two of the five largest investment banks

Rogers Petersen and Cabots are two of the five largest investment banks in the United States. Last year there was a major scandal at Cabots involving manipulation of some auctions for government bonds...

Q: Slawson is a publicly traded Argentine company with three operating companies located

Slawson is a publicly traded Argentine company with three operating companies located in Argentina, the United States, and Germany. Slawson’s corporate headquarters in Buenos Aires o...

Q: Outback Opals mines and processes opals from its Australian opal mines.

Outback Opals mines and processes opals from its Australian opal mines. The process consists of removing large chunks of stones, carefully splitting the stones and removing the opals, and then cutting...

Q: Zeflax manufactures insulated plastic bottles for bikes that the company sells for

Zeflax manufactures insulated plastic bottles for bikes that the company sells for $4.00 per bottle. Last year the company produced 230,000 bottles and sold 200,000 bottles. This year Zeflax produced...

Q: You are a new consultant with the Boston Group and have been

You are a new consultant with the Boston Group and have been sent to advise the executives of Penury Company. The company recently acquired product line L from an out-of-state concern and now plans to...

Q: Old Town Roasters (OTR) owns and operates a chain of

Old Town Roasters (OTR) owns and operates a chain of 12 coffee shops around town. OTR’s strategy is to provide the highest-quality coffee and baked goods in a warm, friendly environment. Each OTR prov...

Q: Discretionary costs are defined as “costs that (1) arise

Discretionary costs are defined as “costs that (1) arise from periodic (usually yearly) appropriation decisions regarding the maximum amounts to be incurred and (2) have no well-specified function rel...

Q: IPX is a specialized packaging company that packages other manufacturers’ products.

IPX is a specialized packaging company that packages other manufacturers’ products. Other manufacturers ship their products to IPX in bulk. IPX then packages the products using high-speed, stateof-the...

Q: The owner of a small software company felt his accounting system was

The owner of a small software company felt his accounting system was useless. He stated, “Accounting systems only generate historical costs. Historical costs are useless in my business because everyth...

Q: Joon manufactures and sells to retailers a variety of home care and

Joon manufactures and sells to retailers a variety of home care and personal care products. Joon has a single plant that produces all four of its product lines: Stick Goods (brooms and mops), Floor Ca...

Q: An October 25, 1999, article in BusinessWeek by D.

An October 25, 1999, article in BusinessWeek by D. Brady, “Why Xerox Is Struggling,” reported: President and Chief Executive G. Richard Thoman is a big-picture guy. For the past two years, he has prea...

Q: Digital Convert (DC) is a three-year-old

Digital Convert (DC) is a three-year-old start-up company with most of its capital coming from banks and personal investments by the founders. DC manufactures a high-resolution scanner (MXP35) for pro...

Q: Your firm uses return on assets (ROA) to evaluate investment

Your firm uses return on assets (ROA) to evaluate investment centers and is considering changing the valuation basis of assets from historical cost to current value. When the historical cost of the as...

Q: Ultrasonic manufactures three ultrasound imaging systems: Avex, AvexII, and

Ultrasonic manufactures three ultrasound imaging systems: Avex, AvexII, and Mel. Overhead is allocated to each system based on standard direct material dollars in each system. The firm uses a flexible...

Q: The purchasing department of Bradley Inc. is responsible for companywide purchasing

The purchasing department of Bradley Inc. is responsible for companywide purchasing. Its total costs are assigned to each division based on the number of purchase orders the purchasing department proc...

Q: An investment opportunity that will involve an investment of $1,

An investment opportunity that will involve an investment of $1,000 will generate $300 per year for five years and then earn $140 per year forever. What is the net present value of this investment, as...

Q: Auden Manufacturing produces a single product with the following standards:

Auden Manufacturing produces a single product with the following standards: Standard direct labor cost per unit…………………………………….. $2.00 Standard direct materials per unit ……………………………………… $3.00 Flexible...

Q: The frame-welding department of a large automotive company welds car

The frame-welding department of a large automotive company welds car frames as they pass down the assembly line. Four computer-controlled robots make the welds on each frame simultaneously. When insta...

Q: The transactions relating to the formation of Blue Co. Stores,

The transactions relating to the formation of Blue Co. Stores, Inc., and its first month of operations follow. Prepare an answer sheet with the columns shown. Record each transaction in the appropriat...

Q: During the month of April, Simpson Co. had cash receipts

During the month of April, Simpson Co. had cash receipts from customers of $170,000. Expenses totaled $156,000, and accrual basis net income was $42,000. There were no gains or losses during the month...

Q: Prist Co. had not provided a warranty on its products,

Prist Co. had not provided a warranty on its products, but competitive pressures forced management to add this feature at the beginning of 2010. Based on an analysis of customer complaints made over t...

Q: A firm issues long-term debt with an effective interest rate

A firm issues long-term debt with an effective interest rate of 10% and the proceeds of this debt issue can be invested to earn an ROI of 12%. What effect will this financial leverage have on the firm...

Q: Kohl Co. provides warranties for many of its products. The

Kohl Co. provides warranties for many of its products. The January 1, 2010, balance of the Estimated Warranty Liability account was $70,400. Based on an analysis of warranty claims during the past sev...

Q: The following summary data for the payroll period ended December 27,

The following summary data for the payroll period ended December 27, 2009, are available for Cayman Coating Co.: Gross pay . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . ....

Q: O’Kelley Co. has outstanding $2 million face amount of 12

O’Kelley Co. has outstanding $2 million face amount of 12% bonds that were issued on January 1, 2002, for $2 million. The 20-year bonds were issued in $1,000 denominations and mature on December 31, 2...

Q: Riley Co. has outstanding $40 million face amount of 15

Riley Co. has outstanding $40 million face amount of 15% bonds that were issued on January 1, 1998, for $39,000,000. The 20-year bonds mature on December 31, 2017, and are callable at 102 (that is, th...

Q: On January 1, 2010, Drennen, Inc., issued $

On January 1, 2010, Drennen, Inc., issued $3 million face amount of 10-year, 14% stated rate bonds when market interest rates were 12%. The bonds pay semiannual interest each June 30 and December 31 a...

Q: On January 1, 2010, Learned, Inc., issued $

On January 1, 2010, Learned, Inc., issued $60 million face amount of 20-year, 14% stated rate bonds when market interest rates were 16%. The bonds pay interest semiannually each June 30 and December 3...

Q: On November 1, 2010, Gordon Co. collected $25

On November 1, 2010, Gordon Co. collected $25,200 in cash from its tenant as an advance rent payment on its store location. The six-month lease period ends on April 30, 2011, at which time the contrac...

Q: Evans Ltd. publishes a monthly newsletter for retail marketing managers and

Evans Ltd. publishes a monthly newsletter for retail marketing managers and requires its subscribers to pay $50 in advance for a one-year subscription. During the month of September 2010, Evans Ltd. s...

Q: On April 1, 2010, Tabor Co. received a $

On April 1, 2010, Tabor Co. received a $6,000 note from a customer in settlement of a $6,000 account receivable from that customer. The note bore interest at the rate of 15% per annum, and the note pl...

Q: The following summary data for the payroll period ended on November 14

The following summary data for the payroll period ended on November 14, 2009, are available for Brac Construction Ltd.: Gross pay . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . ....

Q: Proco had an account payable of $16,800 due to

Proco had an account payable of $16,800 due to Shirmoo, Inc., one of its suppliers. The amount was due to be paid on January 31. Proco did not have enough cash on hand then to pay the amount due, so P...

Q: Assume that Cater Co.’s accountant neglected to record the payroll

Assume that Cater Co.’s accountant neglected to record the payroll expense accrual adjustment at the end of October. Required: a. Explain the effect of this omission on net income reported for Octobe...

Q: A bookkeeper prepared the year-end financial statements of Giftwrap,

A bookkeeper prepared the year-end financial statements of Giftwrap, Inc. The income statement showed net income of $47,400, and the balance sheet showed ending retained earnings of $182,000. The firm...

Q: Answer these questions that are related to the following Interest Payable T

Answer these questions that are related to the following Interest Payable T-account: a. What is the amount of the February 28 adjustment? b. What account would most likely have been credited for the...

Q: This exercise provides practice in understanding the operation of T-accounts

This exercise provides practice in understanding the operation of T-accounts and transaction analysis. For each situation, you must solve for a missing amount. Use a T-account for the balance sheet ac...

Q: Use the horizontal model, or write the journal entry, for

Use the horizontal model, or write the journal entry, for each of the following transactions that occurred during the first year of operations at Kissick Co. a. Issued 200,000 shares of $5-par-value...

Q: a. Based on your answers to Problem 4.17,

a. Based on your answers to Problem 4.17, prepare an income statement (ignoring income taxes) for Kissick Co.’s first year of operations and a balance sheet as of the end of the year. (Hint: You may f...

Q: Selected information taken from the financial statements of Verb eke Co.

Selected information taken from the financial statements of Verb eke Co. for the year ended December 31, 2010, follows: Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: The following are the transactions relating to the formation of Cardinal Mowing

The following are the transactions relating to the formation of Cardinal Mowing Services, Inc., and its first month of operations. Prepare an answer sheet with the columns shown. Record each transacti...

Q: Selected information taken from the financial statements of Ford star Co.

Selected information taken from the financial statements of Ford star Co. for the year ended December 31, 2010, follows: Net cash provided by operations . . . . . . . . . . . . . . . . . . . . . . ....

Q: On January 10, 2010, the first day of the spring

On January 10, 2010, the first day of the spring semester, the cafeteria of The Defiance College purchased for cash enough paper napkins to last the entire 16-week semester. The total cost was $4,800....

Q: Calco, Inc., rents its store location. Rent is $

Calco, Inc., rents its store location. Rent is $1,500 per month, payable quarterly in advance. On July 1, a check for $4,500 was issued to the landlord for the July–September quarter. Required: Use t...

Q: Set up a horizontal model in the following format:

Set up a horizontal model in the following format: Required: a. Enter the beginning (December 29, 2007) and ending (December 27, 2008) account balances for Accounts Receivable, Inventories, and Acco...

Q: Prepare an answer sheet with the column headings shown here. For

Prepare an answer sheet with the column headings shown here. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on the appropriate balance shee...

Q: Mower- Blower Sales Co. started business on January 20,

Mower- Blower Sales Co. started business on January 20, 2010. Products sold were snow blowers and lawn mowers. Each product sold for $350. Purchases during 2010 were as follows: The December 31, 201...

Q: The following data are available for Sellco for the fiscal year ended

The following data are available for Sellco for the fiscal year ended on January 31, 2011: Sales….. . . . . . . . . . . . . . . . . .. . . . . . . . . . . . ……… . 1,600 units Beginning inventory ....

Q: The inventory records of Kuffel Co. reflected the following information for

The inventory records of Kuffel Co. reflected the following information for the year ended December 31, 2010: Required: a. Assume that Kuffel Co. uses a periodic inventory system. Calculate cost of...

Q: a. If the beginning balance of the Inventory account and the

a. If the beginning balance of the Inventory account and the cost of items purchased or made during the period are correct, but an error resulted in overstating the firm’s ending inventory balance by...

Q: Beckett Co. received its bank statement for the month ending June

Beckett Co. received its bank statement for the month ending June 30, 2010, and reconciled the statement balance to the June 30, 2010, balance in the Cash account. The reconciled balance was determine...

Q: Prepare an answer sheet with the column headings shown after the following

Prepare an answer sheet with the column headings shown after the following list of transactions. Record the effect, if any, of the transaction entry or adjusting entry on the appropriate balance sheet...

Q: Branson Co. received its bank statement for the month ending May

Branson Co. received its bank statement for the month ending May 31, 2010, and reconciled the statement balance to the May 31, 2010, balance in the Cash account. The reconciled balance was determined...

Q: The following is a portion of the current assets section of the

The following is a portion of the current assets section of the balance sheets of Avanti’s, Inc., at December 31, 2011 and 2010: Required: a. If $11,800 of accounts receivable were...

Q: The following is a portion of the current asset section of the

The following is a portion of the current asset section of the balance sheets of HiROE Co., at December 31, 2011 and 2010: Required: a. Describe how the allowance amount at December 31, 2011, was mos...

Q: A portion of the current assets section of the December 31,

A portion of the current assets section of the December 31, 2011, balance sheet for Carr Co. is presented here: The company’s accounting records revealed the following information...

Q: a. Show the reconciling items in a horizontal model or write

a. Show the reconciling items in a horizontal model or write the adjusting journal entry (or entries) that should be prepared to reflect the reconciling items of Exercise 5.1. b. What is the amount of...

Q: You have been approached by Gary Gerrard, President and CEO of

You have been approached by Gary Gerrard, President and CEO of Gerrard Construction Co., who would like your advice on a number of business and accounting related matters. Your conversation with Mr. G...

Q: Answer the following questions using data from the Intel Corporation annual report

Answer the following questions using data from the Intel Corporation annual report in the appendix: Required: a. Find the discussion of depreciation methods used by Intel on page 695. Explain why the...

Q: Assume that a company chooses an accelerated method of calculating depreciation expense

Assume that a company chooses an accelerated method of calculating depreciation expense for financial statement reporting purposes for an asset with a five-year life. Required: State the effect (high...

Q: Millco, Inc., acquired a machine that cost $240,

Millco, Inc., acquired a machine that cost $240,000 early in 2010. The machine is expected to last for eight years, and its estimated salvage value at the end of its life is $24,000. Required: a. Usi...

Q: Kleener Co. acquired a new delivery truck at the beginning of

Kleener Co. acquired a new delivery truck at the beginning of its current fiscal year. The truck cost $26,000 and has an estimated useful life of four years and an estimated salvage value of $4,000....

Q: Using a present value table, your calculator, or a computer

Using a present value table, your calculator, or a computer program present value function, calculate the present value of a. A car down payment of $3,000 that will be required in two years, assuming...

Q: Prepare an answer sheet with the column headings shown after the following

Prepare an answer sheet with the column headings shown after the following list of transactions. Record the effect, if any, of the transaction entry or adjusting entry on the appropriate balance sheet...

Q: Using a present value table, your calculator, or a computer

Using a present value table, your calculator, or a computer program present value function, verify that the present value of $100,000 to be received in five years at an interest rate of 16%, compounde...

Q: Assume that fast-food restaurants generally provide an ROI of 15

Assume that fast-food restaurants generally provide an ROI of 15%, but that such a restaurant near a college campus has an ROI of 18% because its relatively large volume of business generates an above...

Q: Goodwill arises when one firm acquires the net assets of another firm

Goodwill arises when one firm acquires the net assets of another firm and pays more for those net assets than their current fair market value. Suppose that Target Co. had operating income of $90,000 a...

Q: a. Show the reconciling items in a horizontal model or write

a. Show the reconciling items in a horizontal model or write the adjusting journal entry (or entries) that should be prepared to reflect the reconciling items of Exercise 5.2. b. What is the amount of...

Q: Prepare an answer sheet with the column headings that follow. For

Prepare an answer sheet with the column headings that follow. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on assets, liabilities, and ne...

Q: Prepare an answer sheet with the following column headings. For each

Prepare an answer sheet with the following column headings. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on assets, liabilities, and net...

Q: Dorsey Co. has expanded its operations by purchasing a parcel of

Dorsey Co. has expanded its operations by purchasing a parcel of land with a building on it from Bibb Co. for $90,000. The appraised value of the land is $20,000, and the appraised value of the buildi...

Q: Crow Co. purchased some of the machinery of Hare, Inc

Crow Co. purchased some of the machinery of Hare, Inc., a bankrupt competitor, at a liquidation sale for a total cost of $33,600. Crow’s cost of moving and installing the machinery t...

Q: For each of the following expenditures, indicate the type of account

For each of the following expenditures, indicate the type of account (asset or expense) in which the expenditure should be recorded. Explain your answers. a. $15,000 annual cost of routine repair and...

Q: For each of the following expenditures, indicate the type of account

For each of the following expenditures, indicate the type of account (asset or expense) in which the expenditure should be recorded. Explain your answers. a. $400 for repairing damage that resulted f...

Q: Alpha, Inc., and Beta Co. are sheet metal processors

Alpha, Inc., and Beta Co. are sheet metal processors that supply component parts for consumer product manufacturers. Alpha, Inc., has been in business since 1980 and is operating in its original plant...

Q: Enter the following column headings across the top of a sheet of

Enter the following column headings across the top of a sheet of paper: Enter the transaction / situation letter in the first column and show the effect, if any, of the transaction entry or adjustin...

Q: Grove Co. acquired a production machine on January 1, 2010

Grove Co. acquired a production machine on January 1, 2010, at a cost of $240,000. The machine is expected to have a four year useful life, with a salvage value of $40,000. The machine is capable of p...

Q: Moyle Co. acquired a machine on January 1, 2010,

Moyle Co. acquired a machine on January 1, 2010, at a cost of $320,000. The machine is expected to have a five-year useful life, with a salvage value of $20,000. The machine is capable of producing 30...

Q: Write the journal entry (ies) for each of the transactions

Write the journal entry (ies) for each of the transactions of Exercise 4.2. Exercise 4.2: The following are the transactions relating to the formation of Cardinal Mowing Services, Inc., and its firs...

Q: The balance sheets of Tully Corp. showed the following at December

The balance sheets of Tully Corp. showed the following at December 31, 2011, and 2010: Required: a. If there have not been any purchases, sales, or other transactions affecting this machine account...

Q: The balance sheets of HiROE, Inc., showed the following at

The balance sheets of HiROE, Inc., showed the following at December 31, 2011, and 2010: Required: a. If there have not been any purchases, sales, or other transactions affecting this equipment accou...

Q: On January 1, 2010, Carey, Inc., entered into

On January 1, 2010, Carey, Inc., entered into a No cancellable lease agreement, agreeing to pay $3,500 at the end of each year for four years to acquire a new computer system having a market value of...

Q: Ambrose Co. has the option of purchasing a new delivery truck

Ambrose Co. has the option of purchasing a new delivery truck for $28,200 in cash or leasing the truck for $6,100 per year, payable at the end of each year for six years. The truck also has a useful l...

Q: Renter Co. acquired the use of a machine by agreeing to

Renter Co. acquired the use of a machine by agreeing to pay the manufacturer of the machine $900 per year for 10 years. At the time the lease was signed, the interest rate for a 10-year loan was 12%....

Q: During the first month of its current fiscal year, Green Co

During the first month of its current fiscal year, Green Co. incurred repair costs of $20,000 on a machine that had five years of remaining depreciable life. The repair cost was inappropriately capita...

Q: Early in January 2010, Tellco, Inc. acquired a new

Early in January 2010, Tellco, Inc. acquired a new machine and incurred $100,000 of interest, installation, and overhead costs that should have been capitalized but were expensed. The company earned n...

Q: Freedom Co. purchased a new machine on July 2, 2010

Freedom Co. purchased a new machine on July 2, 2010, at a total installed cost of $44,000. The machine has an estimated life of five years and an estimated salvage value of $6,000. Required: a. Calcu...

Q: a. Calculate the approximate annual rate of return on investment of

a. Calculate the approximate annual rate of return on investment of the following cash discount terms: 1. 1/15, n30. 2. 2/10, n60. 3. 1/10, n90. b. Which of these terms, if any, is not likely to be a...

Q: Porter, Inc., acquired a machine that cost $720,

Porter, Inc., acquired a machine that cost $720,000 on October 1, 2010. The machine is expected to have a four-year useful life and an estimated salvage value of $80,000 at the end of its life. Porter...

Q: On January 1, 2010, the balance in Tabor Co.

On January 1, 2010, the balance in Tabor Co.’s Allowance for Bad Debts account was $13,400. During the first 11 months of the year, bad debts expense of $21,462 was recognized. The balance in the Allo...

Q: Assume that Home and Office City, Inc., provided the following

Assume that Home and Office City, Inc., provided the following comparative data concerning long-term debt in the notes to its 2011 annual report (amounts in millions): Required: a. As indicated, Hom...

Q: A review of the accounting records at Corless Co. revealed the

A review of the accounting records at Corless Co. revealed the following information concerning the company’s liabilities that were outstanding at December 31, 2011, and 2010, respec...

Q: Cool froth Brewing Company distributes its products in an aluminum keg.

Cool froth Brewing Company distributes its products in an aluminum keg. Customers are charged a deposit of $50 per keg; deposits are recorded in the Keg Deposits account. Required: a. Where on the ba...

Q: Kirkland Theater sells season tickets for six events at a price of

Kirkland Theater sells season tickets for six events at a price of $252. For the 2010 season, 1,200 season tickets were sold. Required: a. Use the horizontal model (or write the journal entry) to sho...

Q: Kaye Co. issued $1 million face amount of 11%,

Kaye Co. issued $1 million face amount of 11%, 20-year bonds on April 1, 2010. The bonds pay interest on an annual basis on March 31 each year. Required: a. Assume that market interest rates were sli...

Q: Coley Co. issued $30 million face amount of 9%,

Coley Co. issued $30 million face amount of 9%, 10-year bonds on June 1, 2010. The bonds pay interest on an annual basis on May 31 each year. Required: a. Assume that the market interest rates were s...

Q: On August 1, 2002, Bonnie purchased $15,000

On August 1, 2002, Bonnie purchased $15,000 of Huber Co.’s 10%, 20-year bonds at face value. Huber Co. has paid the semiannual interest due on the bonds regularly. On August 1, 2010, market rates of i...

Q: On March 1, 2005, Matt purchased $63,000

On March 1, 2005, Matt purchased $63,000 of Lawson Co.’s 8%, 20-year bonds at face value. Lawson Co. has paid the annual interest due on the bonds regularly. On March 1, 2010, market interest rates ha...

Q: Reynolds Co. issued $40 million face amount of 11%

Reynolds Co. issued $40 million face amount of 11% bonds when market interest rates were 11.14% for bonds of similar risk and other characteristics. Required: a. How much interest will be paid annual...

Q: On February 1, 2010, the balance of the retained earnings

On February 1, 2010, the balance of the retained earnings account of Blue Power Corporation was $630,000. Revenues for February totaled $123,000, of which $115,000 was collected in cash. Expenses for...

Q: On January 1, 2010, the balance in Kubera Co.

On January 1, 2010, the balance in Kubera Co.’s Allowance for Bad Debts account was $9,720. During the year, a total of $23,900 of delinquent accounts receivable was written off as bad debts. The bala...

Q: Atom Endeavour Co. issued $250 million face amount of 9

Atom Endeavour Co. issued $250 million face amount of 9% bonds when market interest rates were 8.92% for bonds of similar risk and other characteristics. Required: a. How much interest will be paid a...

Q: The difference between the amounts of book and tax depreciation expense,

The difference between the amounts of book and tax depreciation expense, as well as the desire to report income tax expense that is related to book income before taxes, causes a long-term deferred inc...

Q: Enter the following column headings across the top of a sheet of

Enter the following column headings across the top of a sheet of paper: Enter the transaction/adjustment letter in the first column and show the effect, if any, of each of the transactions/adjustmen...

Q: Enter the following column headings across the top of a sheet of

Enter the following column headings across the top of a sheet of paper: Enter the transaction/adjustment letter in the first column, and show the effect, if any, of each of the transactions/adjustme...

Q: Enter the following column headings across the top of a sheet of

Enter the following column headings across the top of a sheet of paper: Enter the transaction/adjustment letter in the first column and show the effect, if any, of each transaction/adjustment on the...

Q: Enter the following column headings across the top of a sheet of

Enter the following column headings across the top of a sheet of paper: Enter the transaction/adjustment letter in the first column and show the effect, if any, of each transaction/adjustment on the...

Q: On April 15, 2010, Powell, Inc., obtained a

On April 15, 2010, Powell, Inc., obtained a six-month working capital loan from its bank. The face amount of the note signed by the treasurer was $300,000. The interest rate charged by the bank was 9%...

Q: On August 1, 2010, Colombo Co.’s treasurer signed

On August 1, 2010, Colombo Co.’s treasurer signed a note promising to pay $240,000 on December 31, 2010. The proceeds of the note were $232,000. Required: a. Calculate the discount rate used by the l...

Q: At March 31, 2010, the end of the first year

At March 31, 2010, the end of the first year of operations at Jaryd, Inc., the firm’s accountant neglected to accrue payroll taxes of $4,800 that were applicable to payrolls for the year then ended....

Q: Karysa Co. operates in a city in which real estate tax

Karysa Co. operates in a city in which real estate tax bills for one year are issued in May of the subsequent year. Thus tax bills for 2010 are issued in May 2011 and are payable in July 2011. Requir...

Q: Prepare a bank reconciliation as of August 31 from the following information

Prepare a bank reconciliation as of August 31 from the following information: a. The August 31 balance shown on the bank statement is $9,810. b. There is a deposit in transit of $1,260 at August 31....

Q: Annual credit sales of Nadak Co. total $340 million.

Annual credit sales of Nadak Co. total $340 million. The firm gives a 2% cash discount for payment within 10 days of the invoice date; 90% of Nadak’s accounts receivable are paid within the discount p...

Q: DeBauge Realtors, Inc., is a realty firm owned by Jeff

DeBauge Realtors, Inc., is a realty firm owned by Jeff and Kristi DeBauge. The DeBauge family owns 100% of the corporation’s stock. The following summarized data (in thousands) are taken from the Dece...

Q: Gerrard Construction Co. is an excavation contractor. The following summarized

Gerrard Construction Co. is an excavation contractor. The following summarized data (in thousands) are taken from the December 31, 2010, financial statements: For the Year Ended December 31, 2010: Ne...

Q: Agrico, Inc., accepted a 10-month, 13.

Agrico, Inc., accepted a 10-month, 13.8% (annual rate), $4,500 note from one of its customers on June 15; interest is payable with the principal at maturity. Required: a. Use the horizontal model or...

Q: Moiton Co.’s assets include notes receivable from customers. During

Moiton Co.’s assets include notes receivable from customers. During fiscal 2010, the amount of notes receivable averaged $46,250, and the interest rate of the notes averaged 6.4%. Required: a. Calcul...

Q: Proponents of the LIFO inventory cost-flow assumption argue that this

Proponents of the LIFO inventory cost-flow assumption argue that this costing method is superior to the alternatives because it results in better matching of revenue and expense. Required: a. Explain...

Q: Write the journal entry (ies) for each of the transactions

Write the journal entry (ies) for each of the transactions of Exercise 4.1. Exercise 4.1: The transactions relating to the formation of Blue Co. Stores, Inc., and its first month of operations follo...

Q: Natco, Inc., uses the FIFO inventory costflow assumption. In

Natco, Inc., uses the FIFO inventory costflow assumption. In a year of rising costs and prices, the firm reported net income of $480,000 and average assets of $3,000,000. If Natco had used the LIFO co...

Q: The 2008 annual reports of Pearson plc and The McGraw-Hill

The 2008 annual reports of Pearson plc and The McGraw-Hill Companies, Inc. , two publishing and information services companies, included the following selected data as at December 31, 2008, and 2007:...

Q: a. Use the horizontal model or write the journal entry to

a. Use the horizontal model or write the journal entry to record the payment of a one-year insurance premium of $3,000 on March 1. b. Use the horizontal model or write the adjusting entry that will b...

Q: Prepare a bank reconciliation as of October 31 from the following information

Prepare a bank reconciliation as of October 31 from the following information: a. The October 31 cash balance in the general ledger is $844. b. The October 31 balance shown on the bank statement is $...

Q: On November 1, 2010, Wenger Co. paid its landlord

On November 1, 2010, Wenger Co. paid its landlord $25,200 in cash as an advance rent payment on its store location. The six-month lease period ends on April 30, 2011, at which time the contract may be...

Q: Prepare an answer sheet with the column headings shown here. For

Prepare an answer sheet with the column headings shown here. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on the appropriate balance shee...

Q: Prepare an answer sheet with the column headings shown here. For

Prepare an answer sheet with the column headings shown here. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on the appropriate balance shee...

Q: Prepare an answer sheet with the column headings shown here. For

Prepare an answer sheet with the column headings shown here. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on the appropriate balance shee...

Q: A portion of the current assets section of the December 31,

A portion of the current assets section of the December 31, 2010, balance sheet for Gibbs Co. is presented here: The company’s accounting records revealed the following information...

Q: Listed here are a number of financial statement captions. Indicate in

Listed here are a number of financial statement captions. Indicate in the spaces to the right of each caption the category of each item and the financial statement(s) on which the item can usually be...

Q: The information presented here represents selected data from the December 31,

The information presented here represents selected data from the December 31, 2010, balance sheets and income statements for the year then ended for three firms: Required: Calculate the missing amou...

Q: Porter, Inc., acquired a machine that cost $720,

Porter, Inc., acquired a machine that cost $720,000 on October 1, 2010. The machine is expected to have a four-year useful life and an estimated salvage value of $80,000 at the end of its life. Porter...

Q: Grove Co. acquired a production machine on January 1, 2010

Grove Co. acquired a production machine on January 1, 2010, at a cost of $240,000. The machine is expected to have a four year useful life, with a salvage value of $40,000. The machine is capable of p...

Q: Moyle Co. acquired a machine on January 1, 2010,

Moyle Co. acquired a machine on January 1, 2010, at a cost of $320,000. The machine is expected to have a five-year useful life, with a salvage value of $20,000. The machine is capable of producing 30...

Q: The balance sheets of Tully Corp. showed the following at December

The balance sheets of Tully Corp. showed the following at December 31, 2011, and 2010: Required: a. If there have not been any purchases, sales, or other transactions affecting this machine account...

Q: The balance sheets of HiROE, Inc., showed the following at

The balance sheets of HiROE, Inc., showed the following at December 31, 2011, and 2010: Required: a. If there have not been any purchases, sales, or other transactions affecting this equipment accou...

Q: On January 1, 2010, Carey, Inc., entered into

On January 1, 2010, Carey, Inc., entered into a No cancellable lease agreement, agreeing to pay $3,500 at the end of each year for four years to acquire a new computer system having a market value of...

Q: Ambrose Co. has the option of purchasing a new delivery truck

Ambrose Co. has the option of purchasing a new delivery truck for $28,200 in cash or leasing the truck for $6,100 per year, payable at the end of each year for six years. The truck also has a useful l...

Q: A review of the accounting records at Corless Co. revealed the

A review of the accounting records at Corless Co. revealed the following information concerning the company’s liabilities that were outstanding at December 31, 2011, and 2010, respec...

Q: Assume that Home and Office City, Inc., provided the following

Assume that Home and Office City, Inc., provided the following comparative data concerning long-term debt in the notes to its 2011 annual report (amounts in millions): Required: a. As indicated, Hom...

Q: Enter the following column headings across the top of a sheet of

Enter the following column headings across the top of a sheet of paper: Enter the transaction/adjustment letter in the first column and show the effect, if any, of each transaction/adjustment on the...

Q: Pope’s Garage had the following accounts and amounts in its financial statements

Pope’s Garage had the following accounts and amounts in its financial statements on December 31, 2010. Assume that all balance sheet items reflect account balances at December 31, 2010, and that all i...

Q: On April 15, 2010, Powell, Inc., obtained a

On April 15, 2010, Powell, Inc., obtained a six-month working capital loan from its bank. The face amount of the note signed by the treasurer was $300,000. The interest rate charged by the bank was 9%...

Q: On August 1, 2010, Colombo Co.’s treasurer signed

On August 1, 2010, Colombo Co.’s treasurer signed a note promising to pay $240,000 on December 31, 2010. The proceeds of the note were $232,000. Required: a. Calculate the discount rate used by the l...

Q: At March 31, 2010, the end of the first year

At March 31, 2010, the end of the first year of operations at Jaryd, Inc., the firm’s accountant neglected to accrue payroll taxes of $4,800 that were applicable to payrolls for the year then ended....

Q: Karysa Co. operates in a city in which real estate tax

Karysa Co. operates in a city in which real estate tax bills for one year are issued in May of the subsequent year. Thus tax bills for 2010 are issued in May 2011 and are payable in July 2011. Requir...

Q: Prist Co. had not provided a warranty on its products,

Prist Co. had not provided a warranty on its products, but competitive pressures forced management to add this feature at the beginning of 2010. Based on an analysis of customer complaints made over t...

Q: Cool froth Brewing Company distributes its products in an aluminum keg.

Cool froth Brewing Company distributes its products in an aluminum keg. Customers are charged a deposit of $50 per keg; deposits are recorded in the Keg Deposits account. Required: a. Where on the ba...

Q: Kirkland Theater sells season tickets for six events at a price of

Kirkland Theater sells season tickets for six events at a price of $252. For the 2010 season, 1,200 season tickets were sold. Required: a. Use the horizontal model (or write the journal entry) to sho...

Q: Kaye Co. issued $1 million face amount of 11%,

Kaye Co. issued $1 million face amount of 11%, 20-year bonds on April 1, 2010. The bonds pay interest on an annual basis on March 31 each year. Required: a. Assume that market interest rates were sli...

Q: Coley Co. issued $30 million face amount of 9%,

Coley Co. issued $30 million face amount of 9%, 10-year bonds on June 1, 2010. The bonds pay interest on an annual basis on May 31 each year. Required: a. Assume that the market interest rates were s...

Q: On August 1, 2002, Bonnie purchased $15,000

On August 1, 2002, Bonnie purchased $15,000 of Huber Co.’s 10%, 20-year bonds at face value. Huber Co. has paid the semiannual interest due on the bonds regularly. On August 1, 2010, market rates of i...

Q: Gary’s TV had the following accounts and amounts in its financial statements

Gary’s TV had the following accounts and amounts in its financial statements on December 31, 2010. Assume that all balance sheet items reflect account balances at December 31, 2010, and that all incom...

Q: On March 1, 2005, Matt purchased $63,000

On March 1, 2005, Matt purchased $63,000 of Lawson Co.’s 8%, 20-year bonds at face value. Lawson Co. has paid the annual interest due on the bonds regularly. On March 1, 2010, market interest rates ha...

Q: Reynolds Co. issued $40 million face amount of 11%

Reynolds Co. issued $40 million face amount of 11% bonds when market interest rates were 11.14% for bonds of similar risk and other characteristics. Required: a. How much interest will be paid annual...

Q: Atom Endeavour Co. issued $250 million face amount of 9

Atom Endeavour Co. issued $250 million face amount of 9% bonds when market interest rates were 8.92% for bonds of similar risk and other characteristics. Required: a. How much interest will be paid a...

Q: The difference between the amounts of book and tax depreciation expense,

The difference between the amounts of book and tax depreciation expense, as well as the desire to report income tax expense that is related to book income before taxes, causes a long-term deferred inc...

Q: Enter the following column headings across the top of a sheet of

Enter the following column headings across the top of a sheet of paper: Enter the transaction/adjustment letter in the first column and show the effect, if any, of each of the transactions/adjustmen...

Q: Enter the following column headings across the top of a sheet of

Enter the following column headings across the top of a sheet of paper: Enter the transaction/adjustment letter in the first column, and show the effect, if any, of each of the transactions/adjustme...

Q: Enter the following column headings across the top of a sheet of

Enter the following column headings across the top of a sheet of paper: Enter the transaction/adjustment letter in the first column and show the effect, if any, of each transaction/adjustment on the...

Q: (Note: See Exercise 5.14 for the related prepaid

(Note: See Exercise 5.14 for the related prepaid expense accounting .) On November 1, 2010, Gordon Co. collected $25,200 in cash from its tenant as an advance rent payment on its store location. The s...

Q: Evans Ltd. publishes a monthly newsletter for retail marketing managers and

Evans Ltd. publishes a monthly newsletter for retail marketing managers and requires its subscribers to pay $50 in advance for a one-year subscription. During the month of September 2010, Evans Ltd. s...

Q: The following summary data for the payroll period ended on November 14

The following summary data for the payroll period ended on November 14, 2009, are available for Brac Construction Ltd.: Gross pay . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . ....

Q: The following information was obtained from the records of Breanna, Inc

The following information was obtained from the records of Breanna, Inc.: Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 10,000 Accumulated depreciation. . . . . . . ....

Q: The following summary data for the payroll period ended December 27,

The following summary data for the payroll period ended December 27, 2009, are available for Cayman Coating Co.: Gross pay . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . ....

Q: O’Kelley Co. has outstanding $2 million face amount of 12

O’Kelley Co. has outstanding $2 million face amount of 12% bonds that were issued on January 1, 2002, for $2 million. The 20-year bonds were issued in $1,000 denominations and mature on December 31, 2...

Q: Riley Co. has outstanding $40 million face amount of 15

Riley Co. has outstanding $40 million face amount of 15% bonds that were issued on January 1, 1998, for $39,000,000. The 20-year bonds mature on December 31, 2017, and are callable at 102 (that is, th...

Q: On January 1, 2010, Drennen, Inc., issued $

On January 1, 2010, Drennen, Inc., issued $3 million face amount of 10-year, 14% stated rate bonds when market interest rates were 12%. The bonds pay semiannual interest each June 30 and December 31 a...

Q: On January 1, 2010, Learned, Inc., issued $

On January 1, 2010, Learned, Inc., issued $60 million face amount of 20-year, 14% stated rate bonds when market interest rates were 16%. The bonds pay interest semiannually each June 30 and December 3...

Q: For now you can ignore the 2011 column in the balance sheet

For now you can ignore the 2011 column in the balance sheet; all disclosures presented here relate to the June 30, 2010, balance sheet.) DeZurik Corp. had the following owners’ equit...

Q: The transactions affecting the owners’ equity accounts of DeZurik Corp. for

The transactions affecting the owners’ equity accounts of DeZurik Corp. for the year ended June 30, 2011, are summarized here: 1. 320,000 shares of common stock were issued at $14.25 per share. 2. 80...

Q: Your conversation with Mr. Gerrard, which took place in February

Your conversation with Mr. Gerrard, which took place in February 2011 (see Case 6.28), continued as follows: Case 4.26: Gerrard Construction Co. is an excavation contractor. The following summarized...

Q: Knight, Inc., expects to incur a loss for the current

Knight, Inc., expects to incur a loss for the current year. The chairperson of the board of directors wants to have a cash dividend so that the company’s record of having paid a dividend during every...

Q: Find a list of common stock exdividend date data. (You

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Q: Circle-Square, Ltd., is in the process of liquidating

Circle-Square, Ltd., is in the process of liquidating and going out of business. The firm’s balance sheet shows $22,800 in cash, accounts receivable of $114,200, inventory totaling $61,400, plant and...

Q: Assume that you own 500 shares of $10 par value common

Assume that you own 500 shares of $10 par value common stock of a company and the company has a 2-for-1 stock split when the market price per share is $40. Required: a. How many shares of common stoc...

Q: At the beginning of the current fiscal year, the balance sheet

At the beginning of the current fiscal year, the balance sheet of Hughey, Inc., showed owners’ equity of $520,000. During the year, liabilities increased by $21,000 to $234,000; paid...

Q: At the beginning of the current fiscal year, the balance sheet

At the beginning of the current fiscal year, the balance sheet of Cummings Co. showed liabilities of $219,000. During the year, liabilities decreased by $36,000; assets increased by $77,000; and paid-...

Q: From the following data, calculate the Retained Earnings balance as of

From the following data, calculate the Retained Earnings balance as of December 31, 2010: Retained earnings, December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: The balance sheet caption for common stock is the following:

The balance sheet caption for common stock is the following: Common stock without par value, 2,000,000 shares authorized, 400,000 shares issued, and 360,000 shares outstanding . . . . . . . . . . . ....

Q: Calculate the annual cash dividends required to be paid for each of

Calculate the annual cash dividends required to be paid for each of the following preferred stock issues: Required: a. $3.75 cumulative preferred, no par value; 200,000 shares authorized, 161,522 sha...

Q: Calculate the cash dividends required to be paid for each of the

Calculate the cash dividends required to be paid for each of the following preferred stock issues: Required: a. The semiannual dividend on 6% cumulative preferred, $50 par value, 30,000 shares author...

Q: Qamar, Inc., did not pay dividends in 2009 or 2010

Qamar, Inc., did not pay dividends in 2009 or 2010, even though 50,000 shares of its 6.5%, $50 par value cumulative preferred stock were outstanding during those years. The company has 800,000 shares...

Q: Blanker, Inc., has paid a regular quarterly cash dividend of

Blanker, Inc., has paid a regular quarterly cash dividend of $0.50 per share for several years. The common stock is publicly traded. On February 21 of the current year, Blanker’s board of directors de...

Q: Under what circumstances would you (as an investor) prefer to

Under what circumstances would you (as an investor) prefer to receive cash dividends rather than stock dividends? Under what circumstances would you prefer stock dividends to cash dividends?

Q: Indicate the effect of each of the following transactions on total assets

Indicate the effect of each of the following transactions on total assets, total liabilities, and total owners’ equity. Use for increase, â...

Q: Assume that you own 3,000 shares of Blueco, Inc

Assume that you own 3,000 shares of Blueco, Inc.’s, common stock and that you currently receive cash dividends of $.42 per share per year. Required: a. If Blueco, Inc., declared a 5% stock dividend,...

Q: Allyn, Inc., has the following owners’ equity section in its

Allyn, Inc., has the following owners’ equity section in its November 30, 2010, balance sheet: Paid-in capital: 12% preferred stock, $60 par value, 1,500 shares authorized, issued, and outstanding ....

Q: Homestead Oil Corp. was incorporated on January 1, 2010,

Homestead Oil Corp. was incorporated on January 1, 2010, and issued the following stock for cash: 800,000 shares of no-par common stock were authorized; 150,000 shares were issued on January 1, 2010,...

Q: Permabilt Corp. was incorporated on January 1, 2010, and

Permabilt Corp. was incorporated on January 1, 2010, and issued the following stock for cash: 3,600,000 shares of no-par common stock were authorized; 1,050,000 shares were issued on January 1, 2010...

Q: On May 4, 2010, Docker, Inc., purchased 800

On May 4, 2010, Docker, Inc., purchased 800 shares of its own common stock in the market at a price of $18.25 per share. On September 19, 2010, 600 of these shares were sold in the open market at a pr...

Q: On January 1, 2010, Metco, Inc., had issued

On January 1, 2010, Metco, Inc., had issued an outstanding 574,600 shares of $2 par value common stock. On March 15, 2010, Metco, Inc., purchased for its treasury 4,400 shares of its common stock at a...

Q: Enter the following column headings across the top of a sheet of

Enter the following column headings across the top of a sheet of paper: Enter the transaction letter in the first column and show the effect (if any) of each of the following transactions on each fi...

Q: Enter the following column headings across the top of a sheet of

Enter the following column headings across the top of a sheet of paper: Enter the transaction letter in the first column and show the effect (if any) of each of the following transactions on each fi...

Q: Enter the following column headings across the top of a sheet of

Enter the following column headings across the top of a sheet of paper: Enter the transaction letter in the first column and show the effect (if any) of each of the following transactions on each fi...

Q: Enter the following column headings across the top of a sheet of

Enter the following column headings across the top of a sheet of paper: Enter the transaction letter in the first column and show the effect (if any) of each of the following transactions on each fi...

Q: Kenisha Morgan owns and operates Morgan’s Furniture Emporium, Inc. The

Kenisha Morgan owns and operates Morgan’s Furniture Emporium, Inc. The balance sheet totals for assets, liabilities, and owner’s equity at August 1, 2010, are as in...

Q: Following are comparative statements of cash flows, as reported by The

Following are comparative statements of cash flows, as reported by The Coca-Cola Company in its 2008 annual report: Required: a. Briefly review the consolidated statements of cash flows, and then pr...

Q: Refer to the consolidated statements of cash flows on page 689 of

Refer to the consolidated statements of cash flows on page 689 of the Intel Corporation annual report in the appendix. consolidated statements: Required: a. Identify the two most significant source...

Q: Big Blue University has a fiscal year that ends on June 30

Big Blue University has a fiscal year that ends on June 30. The 2010 summer session of the university runs from June 9 through July 28. Total tuition paid by students for the summer session amounted t...

Q: Kirkland Theater sells season tickets for six events at a price of

Kirkland Theater sells season tickets for six events at a price of $180. In pricing the tickets, the planners assigned the leadoff event a value of $45 because the program was an expensive symphony or...

Q: If the ending inventory of a firm is overstated by $50

If the ending inventory of a firm is overstated by $50,000, by how much and in what direction (overstated or understated) will the firm’s operating income be misstated? (Use the cost of goods sold mod...

Q: Assume that the ending inventory of a merchandising firm is overstated by

Assume that the ending inventory of a merchandising firm is overstated by $40,000. Required: a. By how much and in what direction (overstated or understated) will the firm’s cost of goods sold be mis...

Q: Refer to the consolidated statements of income on page 687 of the

Refer to the consolidated statements of income on page 687 of the Intel Corporation annual report in the appendix. consolidated statements: Required: a. Calculate the gross profit ratio for each of...

Q: MBI, Inc., had sales of $141.6 million

MBI, Inc., had sales of $141.6 million for fiscal 2010. The company’s gross profit ratio for that year was 31.6%. Required: a. Calculate the gross profit and cost of goods sold for MBI, Inc., for fis...

Q: If you were interested in evaluating the profitability of a company and

If you were interested in evaluating the profitability of a company and could have only limited historical data, would you prefer to know operating income or net income for the past five years? Explai...

Q: Refer to the selected financial data (five-year financial summary

Refer to the selected financial data (five-year financial summary) on page 685 of the Intel Corporation annual report in the appendix. selected financial data: Required: Compare the trend of the op...

Q: A partially completed balance sheet for Blue Co., Inc., as

A partially completed balance sheet for Blue Co., Inc., as of January 31, 2011, follows. Where amounts are shown for various items, the amounts are correct. Required: Using the following data, compl...

Q: Ringemup, Inc., had net income of $473,400

Ringemup, Inc., had net income of $473,400 for its fiscal year ended October 31, 2010. During the year the company had outstanding 38,000 shares of $4.50, $50 par value preferred stock, and 105,000 sh...

Q: Thrifty Co. reported net income of $465,000 for

Thrifty Co. reported net income of $465,000 for its fiscal year ended January 31, 2011. At the beginning of that fiscal year, 200,000 shares of common stock were outstanding. On October 31, 2010, an a...

Q: For each of the following items, calculate the cash sources or

For each of the following items, calculate the cash sources or cash uses that should be recognized on the statement of cash flows for Baldin Co. for the year ended December 31, 2010: a. Sales on acco...

Q: For each of the following items, calculate the amount of revenue

For each of the following items, calculate the amount of revenue or expense that should be recognized on the income statement for Pelkey Co. for the year ended December 31, 2010: a. Cash collected fr...

Q: Refer to the consolidated statements of income on page 687 of the

Refer to the consolidated statements of income on page 687 of the Intel Corporation annual report in the appendix. Required: a. Does Intel use the single-step format or the multiple-step format? Whic...

Q: Following are a statement of cash flows (indirect method) for

Following are a statement of cash flows (indirect method) for Harris, Inc., for the year ended December 31, 2011, and the firm’s balance sheet at December 31, 2010: HARRIS, INC. Statement of Cash Flo...

Q: For each of the following costs, check the columns that most

For each of the following costs, check the columns that most likely apply (both variable and fixed might apply for some costs).

Q: Staley Toy Co. makes toy flutes. Two manufacturing overhead application

Staley Toy Co. makes toy flutes. Two manufacturing overhead application bases are used; some overhead is applied on the basis of machine hours at a rate of $7.50 per machine hour, and the balance of t...

Q: Prepare an answer sheet with the column headings shown here. For

Prepare an answer sheet with the column headings shown here. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on the appropriate balance shee...

Q: Prepare an answer sheet with the column headings shown here. For

Prepare an answer sheet with the column headings shown here. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on the appropriate balance shee...

Q: Prepare an answer sheet with the column headings shown here. For

Prepare an answer sheet with the column headings shown here. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on the appropriate balance shee...

Q: Annual reports provide significant information about an organization’s capital budget and capital

Annual reports provide significant information about an organization’s capital budget and capital budgeting process. Intel Corporation provides financial reports for several years at www.intel.com (Ab...

Q: Following are the current asset and current liability sections of the balance

Following are the current asset and current liability sections of the balance sheets for Cal ketch, Inc., at August 31, 2011 and 2010 (in millions): Required: a. Calculate the working capital and cu...

Q: Manyops, Inc., is a manufacturing firm that has experienced strong

Manyops, Inc., is a manufacturing firm that has experienced strong competition in its traditional business. Management is considering joining the trend to the “service economy” by eliminating its manu...

Q: DeBauge Realtors, Inc., is a realty firm owned by Jeff

DeBauge Realtors, Inc., is a realty firm owned by Jeff and Kristi DeBauge. The DeBauge family owns 100% of the corporation’s stock. The following summarized data (in thousands) are taken from the Dece...

Q: Gerrard Construction Co. is an excavation contractor. The following summarized

Gerrard Construction Co. is an excavation contractor. The following summarized data (in thousands) are taken from the December 31, 2010, financial statements: For the Year Ended December 31, 2010: Ne...

Q: This exercise provides practice in understanding the operation of T-accounts

This exercise provides practice in understanding the operation of T-accounts and transaction analysis. For each situation, you must solve for a missing amount. Use a T-account for the balance sheet ac...

Q: The transactions relating to the formation of Blue Co. Stores,

The transactions relating to the formation of Blue Co. Stores, Inc., and its first month of operations follow. Prepare an answer sheet with the columns shown. Record each transaction in the appropriat...

Q: Brent, Inc., manufactures wool sweaters. Costs incurred in making

Brent, Inc., manufactures wool sweaters. Costs incurred in making 55,000 sweaters in August included $330,000 of fixed manufacturing overhead. The total absorption cost per sweater was $38.60. Requir...

Q: Write a statement identifying the expectations you have for this course.

Write a statement identifying the expectations you have for this course.

Q: The following are the transactions relating to the formation of Cardinal Mowing

The following are the transactions relating to the formation of Cardinal Mowing Services, Inc., and its first month of operations. Prepare an answer sheet with the columns shown. Record each transacti...

Q: Write the journal entry (ies) for each of the transactions

Write the journal entry (ies) for each of the transactions of Exercise 4.1. Exercise 4.1: The transactions relating to the formation of Blue Co. Stores, Inc., and its first month of operations follo...

Q: Write the journal entry (ies) for each of the transactions

Write the journal entry (ies) for each of the transactions of Exercise 4.2. Exercise 4.2: The following are the transactions relating to the formation of Cardinal Mowing Services, Inc., and its firs...

Q: Prepare an answer sheet with the column headings shown after the following

Prepare an answer sheet with the column headings shown after the following list of transactions. Record the effect, if any, of the transaction entry or adjusting entry on the appropriate balance sheet...

Q: Prepare an answer sheet with the column headings shown after the following

Prepare an answer sheet with the column headings shown after the following list of transactions. Record the effect, if any, of the transaction entry or adjusting entry on the appropriate balance sheet...

Q: Enter the following column headings across the top of a sheet of

Enter the following column headings across the top of a sheet of paper: Enter the transaction / situation letter in the first column and show the effect, if any, of the transaction entry or adjustin...

Q: During the month of April, Simpson Co. had cash receipts

During the month of April, Simpson Co. had cash receipts from customers of $170,000. Expenses totaled $156,000, and accrual basis net income was $42,000. There were no gains or losses during the month...

Q: On April 1, 2010, Tabor Co. received a $

On April 1, 2010, Tabor Co. received a $6,000 note from a customer in settlement of a $6,000 account receivable from that customer. The note bore interest at the rate of 15% per annum, and the note pl...

Q: Proco had an account payable of $16,800 due to

Proco had an account payable of $16,800 due to Shirmoo, Inc., one of its suppliers. The amount was due to be paid on January 31. Proco did not have enough cash on hand then to pay the amount due, so P...

Q: Precision Numbers, Inc., manufactures pocket calculators. Costs incurred in

Precision Numbers, Inc., manufactures pocket calculators. Costs incurred in making 25,000 calculators in April included $85,000 of fixed manufacturing overhead. The total absorption cost per calculato...

Q: Assume that Cater Co.’s accountant neglected to record the payroll

Assume that Cater Co.’s accountant neglected to record the payroll expense accrual adjustment at the end of October. Required: a. Explain the effect of this omission on net income reported for Octobe...

Q: Jennifer Rankine is an accountant for a local manufacturing company. Jennifer’s

Jennifer Rankine is an accountant for a local manufacturing company. Jennifer’s good friend, Mike Bortolotto, has been operating a retail sporting goods store for about a year. The store has been mode...

Q: Answer these questions that are related to the following Interest Payable T

Answer these questions that are related to the following Interest Payable T-account: a. What is the amount of the February 28 adjustment? b. What account would most likely have been credited for the...

Q: Use the horizontal model, or write the journal entry, for

Use the horizontal model, or write the journal entry, for each of the following transactions that occurred during the first year of operations at Kissick Co. a. Issued 200,000 shares of $5-par-value...

Q: a. Based on your answers to Problem 4.17,

a. Based on your answers to Problem 4.17, prepare an income statement (ignoring income taxes) for Kissick Co.’s first year of operations and a balance sheet as of the end of the year. (Hint: You may f...

Q: Selected information taken from the financial statements of Verb eke Co.

Selected information taken from the financial statements of Verb eke Co. for the year ended December 31, 2010, follows: Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: Selected information taken from the financial statements of Ford star Co.

Selected information taken from the financial statements of Ford star Co. for the year ended December 31, 2010, follows: Net cash provided by operations . . . . . . . . . . . . . . . . . . . . . . ....

Q: On January 10, 2010, the first day of the spring

On January 10, 2010, the first day of the spring semester, the cafeteria of The Defiance College purchased for cash enough paper napkins to last the entire 16-week semester. The total cost was $4,800....

Q: Calco, Inc., rents its store location. Rent is $

Calco, Inc., rents its store location. Rent is $1,500 per month, payable quarterly in advance. On July 1, a check for $4,500 was issued to the landlord for the July–September quarter. Required: Use t...

Q: Set up a horizontal model in the following format:

Set up a horizontal model in the following format: Required: a. Enter the beginning (December 29, 2007) and ending (December 27, 2008) account balances for Accounts Receivable, Inventories, and Acco...

Q: The following table summarizes the beginning and ending inventories of Decatur Manufacturing

The following table summarizes the beginning and ending inventories of Decatur Manufacturing, Inc., for the month of March: Feb. 28 Mar. 31 Raw materials . . . . . . . . . . . . . . . . . . . . . . ....

Q: On November 1, 2010, Wenger Co. paid its landlord

On November 1, 2010, Wenger Co. paid its landlord $25,200 in cash as an advance rent payment on its store location. The six-month lease period ends on April 30, 2011, at which time the contract may be...

Q: a. Show the reconciling items in a horizontal model or write

a. Show the reconciling items in a horizontal model or write the adjusting journal entry (or entries) that should be prepared to reflect the reconciling items of Exercise 5.1. b. What is the amount of...

Q: Charlie and Mari belle Brown have owned and operated a retail furniture

Charlie and Mari belle Brown have owned and operated a retail furniture store for more than 30 years. They have employed an independent CPA during this time to prepare various sales tax, payroll tax,...

Q: a. Show the reconciling items in a horizontal model or write

a. Show the reconciling items in a horizontal model or write the adjusting journal entry (or entries) that should be prepared to reflect the reconciling items of Exercise 5.2. b. What is the amount of...

Q: On January 1, 2010, the balance in Tabor Co.

On January 1, 2010, the balance in Tabor Co.’s Allowance for Bad Debts account was $13,400. During the first 11 months of the year, bad debts expense of $21,462 was recognized. The balance in the Allo...

Q: On January 1, 2010, the balance in Kubera Co.

On January 1, 2010, the balance in Kubera Co.’s Allowance for Bad Debts account was $9,720. During the year, a total of $23,900 of delinquent accounts receivable was written off as bad debts. The bala...

Q: Annual credit sales of Nadak Co. total $340 million.

Annual credit sales of Nadak Co. total $340 million. The firm gives a 2% cash discount for payment within 10 days of the invoice date; 90% of Nadak’s accounts receivable are paid within the discount p...

Q: a. Calculate the approximate annual rate of return on investment of

a. Calculate the approximate annual rate of return on investment of the following cash discount terms: 1. 1/15, n30. 2. 2/10, n60. 3. 1/10, n90. b. Which of these terms, if any, is not likely to be a...

Q: Agrico, Inc., accepted a 10-month, 13.

Agrico, Inc., accepted a 10-month, 13.8% (annual rate), $4,500 note from one of its customers on June 15; interest is payable with the principal at maturity. Required: a. Use the horizontal model or...

Q: Moiton Co.’s assets include notes receivable from customers. During

Moiton Co.’s assets include notes receivable from customers. During fiscal 2010, the amount of notes receivable averaged $46,250, and the interest rate of the notes averaged 6.4%. Required: a. Calcul...

Q: Evans, Inc., had current liabilities at November 30 of $

Evans, Inc., had current liabilities at November 30 of $137,400. The firm’s current ratio at that date was 1.8. Required: a. Calculate the firm’s current assets and working capital at November 30. b....

Q: Proponents of the LIFO inventory cost-flow assumption argue that this

Proponents of the LIFO inventory cost-flow assumption argue that this costing method is superior to the alternatives because it results in better matching of revenue and expense. Required: a. Explain...

Q: Natco, Inc., uses the FIFO inventory costflow assumption. In

Natco, Inc., uses the FIFO inventory costflow assumption. In a year of rising costs and prices, the firm reported net income of $480,000 and average assets of $3,000,000. If Natco had used the LIFO co...

Q: a. Use the horizontal model or write the journal entry to

a. Use the horizontal model or write the journal entry to record the payment of a one-year insurance premium of $3,000 on March 1. b. Use the horizontal model or write the adjusting entry that will b...

Q: At the beginning of its current fiscal year, Willie Corp.

At the beginning of its current fiscal year, Willie Corp.’s balance sheet showed assets of $12,400 and liabilities of $7,000. During the year, liabilities decreased by $1,200. Net in...

Q: a. If the beginning balance of the Inventory account and the

a. If the beginning balance of the Inventory account and the cost of items purchased or made during the period are correct, but an error resulted in overstating the firm’s ending inventory balance by...

Q: Beckett Co. received its bank statement for the month ending June

Beckett Co. received its bank statement for the month ending June 30, 2010, and reconciled the statement balance to the June 30, 2010, balance in the Cash account. The reconciled balance was determine...

Q: Branson Co. received its bank statement for the month ending May

Branson Co. received its bank statement for the month ending May 31, 2010, and reconciled the statement balance to the May 31, 2010, balance in the Cash account. The reconciled balance was determined...

Q: The following is a portion of the current assets section of the

The following is a portion of the current assets section of the balance sheets of Avanti’s, Inc., at December 31, 2011 and 2010: Required: a. If $11,800 of accounts receivable were...

Q: The following is a portion of the current asset section of the

The following is a portion of the current asset section of the balance sheets of HiROE Co., at December 31, 2011 and 2010: Required: a. Describe how the allowance amount at December 31, 2011, was mos...

Q: A portion of the current assets section of the December 31,

A portion of the current assets section of the December 31, 2011, balance sheet for Carr Co. is presented here: The company’s accounting records revealed the following information...

Q: Med Tech, Inc. manufactures and sells diagnostic equipment used in

Med Tech, Inc. manufactures and sells diagnostic equipment used in the medical profession. Its job costing system was designed using an activity-based costing approach. Direct materials and direct lab...

Q: A portion of the current assets section of the December 31,

A portion of the current assets section of the December 31, 2010, balance sheet for Gibbs Co. is presented here: The company’s accounting records revealed the following information...

Q: Mower- Blower Sales Co. started business on January 20,

Mower- Blower Sales Co. started business on January 20, 2010. Products sold were snow blowers and lawn mowers. Each product sold for $350. Purchases during 2010 were as follows: The December 31, 201...

Q: The following data are available for Sellco for the fiscal year ended

The following data are available for Sellco for the fiscal year ended on January 31, 2011: Sales….. . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . ……… . 1,600 units Beginning inventory...

Q: The inventory records of Kuffel Co. reflected the following information for

The inventory records of Kuffel Co. reflected the following information for the year ended December 31, 2010: Required: a. Assume that Kuffel Co. uses a periodic inventory system. Calculate cost of...

Q: At the beginning of the current fiscal year, the balance sheet

At the beginning of the current fiscal year, the balance sheet for Davis Co. showed liabilities of $320,000. During the year liabilities decreased by $18,000, assets increased by $65,000, and paid in...

Q: Answer the following questions using data from the Intel Corporation annual report

Answer the following questions using data from the Intel Corporation annual report in the appendix: Required: a. Find the discussion of depreciation methods used by Intel on page 695. Explain why the...

Q: Please refer to Case 4.26 on pages 144–145

Please refer to Case 4.26 on pages 144–145 for the financial statement data needed for the analysis of this case. You should also review the solution to Case 4.26, provided by your i...

Q: Dorsey Co. has expanded its operations by purchasing a parcel of

Dorsey Co. has expanded its operations by purchasing a parcel of land with a building on it from Bibb Co. for $90,000. The appraised value of the land is $20,000, and the appraised value of the buildi...

Q: Crow Co. purchased some of the machinery of Hare, Inc

Crow Co. purchased some of the machinery of Hare, Inc., a bankrupt competitor, at a liquidation sale for a total cost of $33,600. Crow’s cost of moving and installing the machinery t...

Q: For each of the following expenditures, indicate the type of account

For each of the following expenditures, indicate the type of account (asset or expense) in which the expenditure should be recorded. Explain your answers. a. $15,000 annual cost of routine repair and...

Q: Galva set Industries manufactures and sells custom-made windows. Its

Galva set Industries manufactures and sells custom-made windows. Its job costing system was designed using an activity-based costing approach. Direct materials and direct labor costs are accumulated s...

Q: For each of the following expenditures, indicate the type of account

For each of the following expenditures, indicate the type of account (asset or expense) in which the expenditure should be recorded. Explain your answers. a. $400 for repairing damage that resulted f...

Q: Alpha, Inc., and Beta Co. are sheet metal processors

Alpha, Inc., and Beta Co. are sheet metal processors that supply component parts for consumer product manufacturers. Alpha, Inc., has been in business since 1980 and is operating in its original plant...

Q: Assume that a company chooses an accelerated method of calculating depreciation expense

Assume that a company chooses an accelerated method of calculating depreciation expense for financial statement reporting purposes for an asset with a five-year life. Required: State the effect (high...

Q: Millco, Inc., acquired a machine that cost $240,

Millco, Inc., acquired a machine that cost $240,000 early in 2010. The machine is expected to last for eight years, and its estimated salvage value at the end of its life is $24,000. Required: a. Usi...

Q: Kleener Co. acquired a new delivery truck at the beginning of

Kleener Co. acquired a new delivery truck at the beginning of its current fiscal year. The truck cost $26,000 and has an estimated useful life of four years and an estimated salvage value of $4,000....

Q: The information presented here represents selected data from the December 31,

The information presented here represents selected data from the December 31, 2010, balance sheets and income statements for the year then ended for three firms: Required: Calculate the missing amou...

Q: Using a present value table, your calculator, or a computer

Using a present value table, your calculator, or a computer program present value function, calculate the present value of a. A car down payment of $3,000 that will be required in two years, assuming...

Q: Using a present value table, your calculator, or a computer

Using a present value table, your calculator, or a computer program present value function, verify that the present value of $100,000 to be received in five years at an interest rate of 16%, compounde...

Q: Assume that fast-food restaurants generally provide an ROI of 15

Assume that fast-food restaurants generally provide an ROI of 15%, but that such a restaurant near a college campus has an ROI of 18% because its relatively large volume of business generates an above...

Q: Goodwill arises when one firm acquires the net assets of another firm

Goodwill arises when one firm acquires the net assets of another firm and pays more for those net assets than their current fair market value. Suppose that Target Co. had operating income of $90,000 a...

Q: Trout Pro Co. manufactures fishing equipment. During 2010, total

Trout Pro Co. manufactures fishing equipment. During 2010, total costs associated with manufacturing 35,000 fly-cast fishing rods (a new product introduced this year) were as follows: Raw materials ....

Q: Prepare an answer sheet with the column headings that follow. For

Prepare an answer sheet with the column headings that follow. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on assets, liabilities, and ne...

Q: Prepare an answer sheet with the following column headings. For each

Prepare an answer sheet with the following column headings. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on assets, liabilities, and net...

Q: Renter Co. acquired the use of a machine by agreeing to

Renter Co. acquired the use of a machine by agreeing to pay the manufacturer of the machine $900 per year for 10 years. At the time the lease was signed, the interest rate for a 10-year loan was 12%....

Q: During the first month of its current fiscal year, Green Co

During the first month of its current fiscal year, Green Co. incurred repair costs of $20,000 on a machine that had five years of remaining depreciable life. The repair cost was inappropriately capita...

Q: Early in January 2010, Tellco, Inc. acquired a new

Early in January 2010, Tellco, Inc. acquired a new machine and incurred $100,000 of interest, installation, and overhead costs that should have been capitalized but were expensed. The company earned n...

Q: Freedom Co. purchased a new machine on July 2, 2010

Freedom Co. purchased a new machine on July 2, 2010, at a total installed cost of $44,000. The machine has an estimated life of five years and an estimated salvage value of $6,000. Required: a. Calcu...

Q: The following information is available from the accounting records of Manahan Co

The following information is available from the accounting records of Manahan Co. for the year ended December 31, 2010: Net cash provided by fi nancing activities . . . . . . . . . . . . . . . . . ....

Q: The following information is available from the accounting records of Spenser Co

The following information is available from the accounting records of Spenser Co. for the year ended December 31, 2010: Selling, general, and administrative expenses . . . . . . . . . . . . . . . . ....

Q: Franklin Co. has experienced gross profit ratios for 2010, 2009

Franklin Co. has experienced gross profit ratios for 2010, 2009, and 2008 of 33%, 30%, and 31%, respectively. On April 3, 2011, the firm’s plant and all of its inventory were destroyed by a tornado. A...

Q: The financial statements of Simon Co. include the following items (

The financial statements of Simon Co. include the following items (amounts in thousands): For the Year Ended December 31, Income Statement 2011 Net income . . . . . . . . . . . . . . . . . ....

Q: Milan, Inc. manufactures digital voice recorders. During 2010,

Milan, Inc. manufactures digital voice recorders. During 2010, total costs associated with manufacturing 208,000 of the new MV-5253 model (introduced this year) were as follows: Raw materials . . . ....

Q: Following is a partially completed balance sheet for Epsico, Inc.,

Following is a partially completed balance sheet for Epsico, Inc., at December 31, 2010, together with comparative data for the year ended December 31, 2009. From the statement of cash flows for the y...

Q: The following information is available from Bromfield Co.’s accounting records

The following information is available from Bromfield Co.’s accounting records for the year ended December 31, 2010 (amounts in millions): Cash dividends declared and paid. . . . . . . . . . . . . ....

Q: The following information is available from Gray Co.’s accounting records

The following information is available from Gray Co.’s accounting records for the year ended December 31, 2010 (amounts in millions): Cash dividends declared and paid. . . . . . . . . . . . . . . . ....

Q: Following is a statement of cash flows (indirect method) for

Following is a statement of cash flows (indirect method) for Hartford, Inc., for the year ended December 31, 2011. Also shown is a partially completed comparative balance sheet as of December 31, 2011...

Q: McDonald’s Corp McDonald’s conducts operations worldwide and is managed in three primary

McDonald’s Corp McDonald’s conducts operations worldwide and is managed in three primary geographic segments: America, Europe, and Asia/Pacific, Middle East and Afr...

Q: Refer to the Intel Corporation annual report for 2008 in the appendix

Refer to the Intel Corporation annual report for 2008 in the appendix or to the most recent full annual report that you have downloaded from Intel’s Web site. Find and scan the financial review (notes...

Q: Find and read management’s statement of responsibility in the annual report that

Find and read management’s statement of responsibility in the annual report that you obtained either as a result of completing Exercise 1.1 or otherwise. Identify the principal topics covered in that...

Q: During the fiscal year ended September 30, 2011, Worrell,

During the fiscal year ended September 30, 2011, Worrell, Inc., had a 2-for-1 stock split and a 5% stock dividend. In its annual report for 2011, the company reported earnings per share for the year e...

Q: Refer to the “Corporate Governance & Ethics” disclosures provided under

Refer to the “Corporate Governance & Ethics” disclosures provided under the “Investor Relations” link on Intel Corporation’s Web site. Identify the principal topics covered in those disclosures. Are t...

Q: It is impossible for an auditor to “guarantee” that a

It is impossible for an auditor to “guarantee” that a company’s financial statements are free of all error because the cost to the company to achieve absolute accuracy (even if that were possible) and...

Q: Richards, Inc. incurred the following costs during May:

Richards, Inc. incurred the following costs during May: Raw materials used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 662,000 Direct labor . . . . . . . . . . . . . . . . . . . . ....

Q: To what extent is the auditors’ opinion an indicator of a company’s

To what extent is the auditors’ opinion an indicator of a company’s future financial success and future cash dividends to stockholders?

Q: Following are selected data from the November 30, 2008, and

Following are selected data from the November 30, 2008, and November 25, 2007, consolidated balance sheets and income statements for the years then ended for Levi Strauss & Co. and Subsidiaries. A...

Q: Required: a. For the year ended December 31,

Required: a. For the year ended December 31, 2009, Finco, Inc. reported earnings per share of $3.12. During 2010 the company had a 3-for-1 stock split. Calculate the 2009 earnings per share that will...

Q: This problem is based on the 2008 annual report of Intel Corporation

This problem is based on the 2008 annual report of Intel Corporation in the appendix. Find in the Selected Financial Data (also known as the Five-Year Financial Summary), or calculate, the following d...

Q: This problem is based on the 2008 annual report of Intel Corporation

This problem is based on the 2008 annual report of Intel Corporation in the appendix. Find in the Selected Financial Data (also known as the Five-Year Financial Summary), or calculate, the following d...

Q: The annual reports of the Coca-Cola Co. and PepsiCo

The annual reports of the Coca-Cola Co. and PepsiCo, Inc., indicate the following for the year ended December 31, 2008 (amounts in millions): Required: a. Calculate ROI and ROE for each company for...

Q: Partially completed financial statements for Whittaker, Inc., follow:

Partially completed financial statements for Whittaker, Inc., follow: WHITTAKER, INC. Income Statement For the Year Ended December 31, 2011 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: You should also review the solution to Case 4.26 on

You should also review the solution to Case 4.26 on the Web site for this text at www.mhhe.com/marshall9e before attempting to complete this case.) Case 4.26: Gerrard Construction Co. is an excavati...

Q: If your library has a common stock investment advisory service such as

If your library has a common stock investment advisory service such as Moody’s Handbook of Common Stocks or online access to an investment advisory service such as Value Line Research Center: Historic...

Q: Indicate the effect that each transaction/event listed here will have

Indicate the effect that each transaction/event listed here will have on the financial ratio listed opposite it, and provide an explanation for your answer. Use + for increase, - for decrease, and (NE...

Q: Aussie Corp. manufactures rugby jerseys for collegiate sports teams and sells

Aussie Corp. manufactures rugby jerseys for collegiate sports teams and sells its merchandise through university bookstores. Required: Identify a specific item in the company’s manufacturing, selling...

Q: The Office of Management and Budget provides access to the budget of

The Office of Management and Budget provides access to the budget of the United States government at its Web site: www.gpoaccess.gov/usbudget/citizensguide.html. “A Citizen’s Guide to the Federal Budg...

Q: Indicate the effect that each transaction/event listed here will have

Indicate the effect that each transaction/event listed here will have on the financial ratio listed opposite it, and provide an explanation for your answer. Use + for increase, - for decrease, and (NE...

Q: Look forward to the day when you will have accumulated $5

Look forward to the day when you will have accumulated $5,000, and assume that you have decided to invest that hard-earned money in the common stock of a publicly owned corporation. What data about th...

Q: Listed here are a number of financial statement captions. Indicate in

Listed here are a number of financial statement captions. Indicate in the spaces to the right of each caption the category of each item and the financial statement(s) on which the item can usually be...

Q: Selected data from the September 27, 2008, and September 29

Selected data from the September 27, 2008, and September 29, 2007, consolidated balance sheets and income statements for the years then ended for Apple Inc. follow. All amounts are reported in million...

Q: Refer to the consolidated balance sheets on page 688 of the Intel

Refer to the consolidated balance sheets on page 688 of the Intel Corporation annual report in the appendix. Required: Prepare a common size balance sheet at December 29, 2007, using the following ca...

Q: Required: Prepare a common size balance sheet at December 27

Required: Prepare a common size balance sheet at December 27, 2008, using the following captions: Total current assets Property, plant, and equipment (net) Marketable equity securities and other long-...

Q: Assume that the current ratio for Arch Company is 2.0

Assume that the current ratio for Arch Company is 2.0, its acid-test ratio is 1.5, and its working capital is $300,000. Answer each of the following questions independently, always referring to the or...

Q: Selected balance sheet accounts for Tibbetts Company on September 30, 2010

Selected balance sheet accounts for Tibbetts Company on September 30, 2010, are as follows: Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 32,000 Marketable securi...

Q: Presented here are summarized data from the balance sheets and income statements

Presented here are summarized data from the balance sheets and income statements of Wiper, Inc.: Required: a. Calculate return on investment, based on net income and average total assets, for 2011 a...

Q: This problem is based on the 2008 annual report of Intel Corporation

This problem is based on the 2008 annual report of Intel Corporation in the appendix. Required: a. Compute the following profitability measures for the year ended December 27, 2008: 1. Return on inve...

Q: Canada Printing Group, Inc. (CPGI), has recently begun

Canada Printing Group, Inc. (CPGI), has recently begun the process of acquiring small to medium-size local and regional printing firms across the country to facilitate its corporate strategy of becomi...

Q: You have recently been engaged by Dominic’s Italian Cafe to evaluate the

You have recently been engaged by Dominic’s Italian Cafe to evaluate the financial impact of adding gourmet pizza items to the menu. A survey of the clientele indicates that demand for the product exi...

Q: Assume you are a sales representative for Sweet Tooth Candy Company.

Assume you are a sales representative for Sweet Tooth Candy Company. One of your customers is interested in buying some candy that will be given to the members of a high school Substance Abuse Awarene...

Q: Tommy Appleton is in charge of arranging the “attitude adjustment”

Tommy Appleton is in charge of arranging the “attitude adjustment” period and dinner for the monthly meetings of the local chapter of the Management Accountants Association. Tommy is negotiating with...

Q: The concept of financial leverage was introduced in Chapter 7 and expanded

The concept of financial leverage was introduced in Chapter 7 and expanded on in Chapter 11. In Exercise 7.15 you were asked to describe the risks associated with financial leverage. You should now re...

Q: a. Prepare a personal balance sheet for yourself as of today

a. Prepare a personal balance sheet for yourself as of today. Work at identifying your assets and liabilities; use rough estimates for amounts. b. Prepare a projected income statement for yourself for...

Q: High Tech, Inc., and Old Time Co. compete within

High Tech, Inc., and Old Time Co. compete within the same industry and had the following operating results in 2010: Required: a. Calculate the break-even point for each firm in terms of revenue. b....

Q: For each of the following costs, check the column(s

For each of the following costs, check the column(s) that most likely apply:

Q: For each of the following costs, check the column(s

For each of the following costs, check the column(s) that most likely apply:

Q: Terry estimates that the costs of insurance, license, and depreciation

Terry estimates that the costs of insurance, license, and depreciation to operate his car total $430 per month and that the gas, oil, and maintenance costs are 80 cents per mile. Terry also estimates...

Q: The following information provides the amount of cost incurred in May for

The following information provides the amount of cost incurred in May for the cost items indicated. During May 16,000 units of the firm’s single product were manufactured. Raw materials . . . . . . ....

Q: Kiel Center’s sales are all made on account. The firm’s collection

Kiel Center’s sales are all made on account. The firm’s collection experience has been that 35% of a month’s sales are collected in the month the sale is made, 55% are collected in the month following...

Q: Calculate the missing amounts for each of the following firms:

Calculate the missing amounts for each of the following firms:

Q: Calculate the missing amounts for each of the following firms:

Calculate the missing amounts for each of the following firms:

Q: Jackman, Inc. makes and sells many consumer products. The

Jackman, Inc. makes and sells many consumer products. The firm’s average contribution margin ratio is 30 percent. Management is considering adding a new product that will require an additional $21,000...

Q: Meyers Corp. has annual revenues of $450,000,

Meyers Corp. has annual revenues of $450,000, an average contribution margin ratio of 35%, and fixed expenses of $175,000. Required: a. Management is considering adding a new product to the company’s...

Q: Sam and Denny’s ice cream shop charges $2.50 for

Sam and Denny’s ice cream shop charges $2.50 for a cone. Variable expenses are $0.80 per cone, and fixed costs total $3,200 per month. A “sweetheart” promotion is being planned for the second week of...

Q: Kimber Co. is in the process of liquidating and going out

Kimber Co. is in the process of liquidating and going out of business. The firm’s accountant has provided the following balance sheet and additional information: It is estimated th...

Q: The management of Rocko’s Pizzeria is considering a special promotion for the

The management of Rocko’s Pizzeria is considering a special promotion for the last two weeks of October, which is normally a relatively low-demand period. The special promotion would involve selling t...

Q: Ozark, Inc., produces small-scale replicas of vintage automobiles

Ozark, Inc., produces small-scale replicas of vintage automobiles for collectors and museums. Finished products are built on a 1/20 scale of originals. The firm’s income statement showed the following...

Q: A department of Alpha Co. incurred the following costs for the

A department of Alpha Co. incurred the following costs for the month of September. Variable costs, and the variable portion of mixed costs, are a function of the number of units of activity: Activity...

Q: Shown here is an income statement in the traditional format for a

Shown here is an income statement in the traditional format for a firm with a sales volume of 20,000 units. Cost formulas also are shown: Revenues . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: A cost analyst for Stamper Manufacturing Co. has assembled the following

A cost analyst for Stamper Manufacturing Co. has assembled the following data about the Model 24 stamp pad: The piece of sheet metal from which five pad cases can be made costs $0.24. This amount is b...

Q: Presented here is the income statement for Big Surf, Inc.,

Presented here is the income statement for Big Surf, Inc., for the month of May: Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: Presented here is the income statement for Edwards Co. for February

Presented here is the income statement for Edwards Co. for February: Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $80,00...

Q: Monterey Co. makes and sells a single product. The current

Monterey Co. makes and sells a single product. The current selling price is $15 per unit. Variable expenses are $9 per unit, and fixed expenses total $27,000 per month. Required: (Unless otherwise st...

Q: Camden Metal Co. makes a single product that sells for $

Camden Metal Co. makes a single product that sells for $84.00 per unit. Variable costs are $54.00 per unit, and fixed costs total $120,000 per month. Required: a. Calculate the number of units that m...

Q: Nautical Canvas Co. currently makes and sells two models of a

Nautical Canvas Co. currently makes and sells two models of a boat cover. Data applicable to the current operation are summarized in the following columns labeled Current Operation. Management is cons...

Q: Body Sculpture, Inc., makes three models of high-performance

Body Sculpture, Inc., makes three models of high-performance weight-training benches. Current operating data are summarized here: Required: a. Calculate the contribution margin ratio of each product...

Q: The following summarized data (amounts in millions) are taken from

The following summarized data (amounts in millions) are taken from the September 27, 2008, and September 29, 2007, comparative financial statements of Apple Inc. , a manufacturer of personal computers...

Q: Riveria Co. makes and sells a single product. The current

Riveria Co. makes and sells a single product. The current selling price is $32 per unit. Variable expenses are $20 per unit, and fixed expenses total $43,200 per month. Sales volume for May totaled 4,...

Q: Determine each of the following missing amounts: /

Determine each of the following missing amounts:

Q: Custom Granite, Inc., uses an absorption cost system for accumulating

Custom Granite, Inc., uses an absorption cost system for accumulating product cost. The following data are available for the past year: • Raw materials purchases totaled $480,000. &a...

Q: Olympia Productions, Inc., makes award medallions that are attached to

Olympia Productions, Inc., makes award medallions that are attached to ribbons. Each medallion requires 18 inches of ribbon. The sales forecast for February is 8,000 medallions. Estimated beginning in...

Q: Intel Corporation provides access to its annual reports online at www.

Intel Corporation provides access to its annual reports online at www.intel.com. The annual reports are found in the “About Intel/Investor Relations/Financials and Filings” area of its Web site. Locat...

Q: SAS® is a world leader in business analytics software, delivering

SAS® is a world leader in business analytics software, delivering breakthrough technology to transform the way organizations do business. For SAS the mission is to empower organizations around the wor...

Q: Match each of the following cost items with the value chain business

Match each of the following cost items with the value chain business function where you would expect the cost to be incurred:

Q: Match each of the following cost items with the value chain business

Match each of the following cost items with the value chain business function where you would expect the cost to be incurred:

Q: For each of the following costs, check the columns that most

For each of the following costs, check the columns that most likely apply (both variable and fixed might apply for some costs).

Q: A friend has $4,800 that has been saved from

A friend has $4,800 that has been saved from her part-time job. She will need her money, plus any interest earned on it, in six months and has asked for your help in deciding whether to put the money...

Q: Pelican Co. is forecasting sales of 40,300 units of

Pelican Co. is forecasting sales of 40,300 units of product for October. To make one unit of finished product, 10 pounds of raw materials are required. Actual beginning and desired ending inventories...

Q: Each gallon of Old Guard, a popular aftershave lotion, requires

Each gallon of Old Guard, a popular aftershave lotion, requires 6 ounces of ocean scent. Budgeted production of Old Guard for the first three quarters of 2010 is: Management’s polic...

Q: Osage Inc. has actual sales for June and July and forecast

Osage Inc. has actual sales for June and July and forecast sales for August, September, October, and November as follows: Actual: June . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: Flagstaff Co. has actual sales for July and August and forecast

Flagstaff Co. has actual sales for July and August and forecast sales for September, October, November, and December as follows: Actual: July . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: The following data (amounts in millions) are taken from the

The following data (amounts in millions) are taken from the January 30, 2009, and February 1, 2008, comparative financial statements of Dell Inc., a direct marketer and distributor of personal compute...

Q: Brass Creations Co. makes decorative candle pedestals. An industrial engineer

Brass Creations Co. makes decorative candle pedestals. An industrial engineer consultant developed ideal time standards for one unit of the Cambridge model pedestal. The standards follow, along with t...

Q: Ozark Manufacturing Co. manufactures and sells household cleaning products. The

Ozark Manufacturing Co. manufactures and sells household cleaning products. The company’s research department has developed a new cleaner for which a standard cost must be determined. The new cleaner...

Q: DMA, Inc., processes corn into corn starch and corn syrup

DMA, Inc., processes corn into corn starch and corn syrup. The company’s productivity and cost standards follow: From every bushel of corn processed, 12 pounds of starch and 6 pounds of syrup should b...

Q: Soprano Co. is in the process of preparing the second quarter

Soprano Co. is in the process of preparing the second quarter budget for 2010, and the following data have been assembled: • The company sells a single product at a selling price of...

Q: Brooklyn Furniture, a retail store, has an average gross profit

Brooklyn Furniture, a retail store, has an average gross profit ratio of 42%. The sales forecast for the next four months follows: May. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: Gemstone, Ltd., is a retail jeweler. Most of the

Gemstone, Ltd., is a retail jeweler. Most of the firm’s business is in jewelry and watches. The firm’s average gross profit ratio for jewelry and watches is 80% and...

Q: You have two investment opportunities. One will have a 10%

You have two investment opportunities. One will have a 10% rate of return on an investment of $500; the other will have an 11% rate of return on principal of $700. You would like to take advantage of...

Q: Prime Time Sportswear is a custom imprinter that began operations six months

Prime Time Sportswear is a custom imprinter that began operations six months ago. Sales have exceeded management’s most optimistic projections. Sales are made on account and collecte...

Q: Refer to the Prime Time Sportswear data presented in Problem 14.

Refer to the Prime Time Sportswear data presented in Problem 14.13. Problem 14.13: Prime Time Sportswear is a custom imprinter that began operations six months ago. Sales have exceeded management&ac...

Q: The monthly cash budgets for the second quarter of 2010 follow ($

The monthly cash budgets for the second quarter of 2010 follow ($000 omitted) for Morrison Mfg. Co. A minimum cash balance of $30,000 is required to start each month, and a $100,000 line of credit has...

Q: College Carriers manufactures backpacks that are sold to students for use as

College Carriers manufactures backpacks that are sold to students for use as book bags. Required: Identify a specific item in this company’s manufacturing, selling, or administrative processes for wh...

Q: The chair of the Science Department of State University has a budget

The chair of the Science Department of State University has a budget for laboratory supplies. Supplies have a variable cost behavior pattern that is a function of the number of students enrolled in la...

Q: One of the significant costs for a nonpublic college or university is

One of the significant costs for a nonpublic college or university is student aid in the form of gifts and grants awarded to students because of academic potential or performance, and/or financial nee...

Q: If a company uses a standard cost system, should all variances

If a company uses a standard cost system, should all variances be calculated with the same frequency (e.g., monthly) and should they always be expressed in dollar amounts? Explain your answer and incl...

Q: Assume that you are the production manager of a small branch plant

Assume that you are the production manager of a small branch plant of a large manufacturing firm. The central accounting control department sends you monthly performance reports showing the flexed bud...

Q: Williamson, Inc., manufactures quality replacement parts for the auto industry

Williamson, Inc., manufactures quality replacement parts for the auto industry. The company uses a standard costing system and isolates variances as soon as possible. The purchasing manager is respons...

Q: During the year ended May 31, 2009, Teller Register Co

During the year ended May 31, 2009, Teller Register Co. reported favorable raw material usage and direct labor and variable overhead efficiency variances that totaled $114,312. Price and rate variance...

Q: York Co. uses a standard cost system. When raw materials

York Co. uses a standard cost system. When raw materials are purchased, the standard cost of the raw materials purchased is recorded as an increase in the Raw Materials Inventory account. When raw mat...

Q: a. Firm A has a margin of 12%, sales of

a. Firm A has a margin of 12%, sales of $600,000, and ROI of 18%. Calculate the firm’s average total assets. b. Firm B has net income of $78,000, turnover of 1.3, and average total assets of $950,000....

Q: The Consortium for Advanced Manufacturing—International (CAM-I)

The Consortium for Advanced Manufacturing—International (CAM-I) is an international consortium of companies, consultancies, and academics that have elected to work cooperatively in a precompetitive en...

Q: The cost formula for the maintenance department of Rainbow, Ltd.,

The cost formula for the maintenance department of Rainbow, Ltd., is $12,600 per month plus $4.50 per machine hour used by the production department. Required: a. Calculate the maintenance cost that...

Q: Clay Co. produces ceramic coffee mugs and pencil holders. Manufacturing

Clay Co. produces ceramic coffee mugs and pencil holders. Manufacturing overhead is assigned to production using an application rate based on direct labor hours. Required: a. For 2010, the company’s...

Q: Following is a partially completed performance report for a recent week for

Following is a partially completed performance report for a recent week for direct labor in the binding department of a book publisher: The original budget is based on the expectation that 8,000 boo...

Q: For the stamping department of a manufacturing firm, the standard cost

For the stamping department of a manufacturing firm, the standard cost for direct labor is $12 per hour, and the production standard calls for 1,000 stampings per hour. During June, 168 hours were req...

Q: Ackerman’s Garage uses standards to plan and control labor time and expense

Ackerman’s Garage uses standards to plan and control labor time and expense. The standard time for an engine tune-up is 3 hours, and the standard labor rate is $25 per hour. Last week, 42 tune-ups wer...

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Coastal Industries has established direct labor performance standards for its maintenance and repair shop. However, some of the labor records were destroyed during a recent fire. The actual hours work...

Q: Birchwood, Inc., manufactures end tables, armchairs, and other

Birchwood, Inc., manufactures end tables, armchairs, and other wood furniture products from high-quality materials. The company uses a standard costing system and isolates variances as soon as possibl...

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Fiber works Company is a manufacturer of fiberglass toy boats. The company has recently implemented a standard cost system and has designed the system to isolate variances as soon as possible. During...

Q: The president of Truman, Inc., attended a seminar about the

The president of Truman, Inc., attended a seminar about the contribution margin model and returned to her company full of enthusiasm about it. She requested that last year’s traditio...

Q: Vogel Co. produces three models of heating and air conditioning thermostat

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Q: The Central Division of American, Inc., has operating income of

The Central Division of American, Inc., has operating income of $19,200 on sales revenue of $160,000. Divisional operating assets are $100,000, and management of American has determined that a minimum...

Q: Deckhand Accessories, Inc., manufactures women’s boating shoes. Manufacturing overhead

Deckhand Accessories, Inc., manufactures women’s boating shoes. Manufacturing overhead is assigned to production on a machine-hour basis. For 2010, it was estimated that manufacturing overhead would t...

Q: Milano Corporation has three operating divisions and requires a 12% return

Milano Corporation has three operating divisions and requires a 12% return on all investments. Selected information is presented here: Required: a. Calculate the missing amounts for each division. b...

Q: Silverstone’s production budget for March called for making 200,000 units

Silverstone’s production budget for March called for making 200,000 units of a single product. The firm’s production standards allow one-quarter of a machine hour per unit produced. The fixed overhead...

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The standards for one case of Spring fever Tonic are: Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 lbs. @ $5.00/lb. =$30 Direct labor . . . . . . . . . . . . ....

Q: The Foster Insurance Company developed standard times for processing claims. When

The Foster Insurance Company developed standard times for processing claims. When a claim was received at the processing center, it was first reviewed and classified as simple or complex. The standard...

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Pioneer State Bank developed a standard for teller staffing that provided for one teller to handle 12 customers per hour. During April, the bank averaged 57 customers per hour and had six tellers on d...

Q: Jinny Buffett recently retired as a flight attendant and is interested in

Jinny Buffett recently retired as a flight attendant and is interested in opening a fitness center and health spa exclusively for women in Grand Cayman, where she resides. After careful study, she is...

Q: Assume that you have decided to drive your car to Florida for

Assume that you have decided to drive your car to Florida for the spring break. A classmate learns about your plans and asks about riding along with you. Explain how you would apply each of the follow...

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Q: National Chemical Company manufactures a chemical compound that is sold for $

National Chemical Company manufactures a chemical compound that is sold for $58 per gallon. A new variant of the chemical has been discovered, and if the basic compound were processed into the new var...

Q: Write a paragraph describing your perceptions of what accounting is all about

Write a paragraph describing your perceptions of what accounting is all about and the work that accountants do.

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Checker, Inc., produces automobile bumpers. Overhead is applied on the basis of machine hours required for cutting and fabricating. A predetermined overhead application rate of $18.50 per machine hour...

Q: Management of Rivers Co. anticipates that its year-end balance

Management of Rivers Co. anticipates that its year-end balance sheet will show current assets of $12,639 and current liabilities of $7,480. Management is considering paying $3,850 of accounts payable...

Q: Mizzou Mining Company mines an iron ore called Alpha. During the

Mizzou Mining Company mines an iron ore called Alpha. During the month of December, 400,000 tons of Alpha were mined and processed at a cost of $742,500. As the Alpha ore is mined, it is processed int...

Q: Circuit Masters, Inc. (CMI), is presently operating at

Circuit Masters, Inc. (CMI), is presently operating at 80% of capacity and manufacturing 120,000 units of a patented electronic component. The cost structure of the component is as follows: Raw mater...

Q: AAA Lock Manufacturing Co. makes and sells several models of locks

AAA Lock Manufacturing Co. makes and sells several models of locks. The cost records for the ZForce lock show that manufacturing costs total $29.00 per lock. An analysis of this amount indicates that...

Q: Canton Company, a manufacturer of digital cameras, is considering entry

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Q: Rainbow Cruises operates a week-long cruise tour through the Hawaiian

Rainbow Cruises operates a week-long cruise tour through the Hawaiian Islands. Passengers currently pay $1,800 for a two-person cabin, which is an all-inclusive price that includes food, beverages, an...

Q: Eldon Engine, Inc., produces engines for the watercraft industry.

Eldon Engine, Inc., produces engines for the watercraft industry. An outside manufacturer has offered to supply several component parts used in the engine assemblies, which are currently being produce...

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Q: Product S has a contribution margin of $150 per unit and

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Q: ABC Company produces Product X, Product Y, and Product Z

ABC Company produces Product X, Product Y, and Product Z. All three products require processing on specialized finishing machines. The capacity of these machines is 3,600 hours per month. ABC Company...

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Lamp Art Co. makes specialty table lamps. Manufacturing overhead is applied to production on a direct labor hour’s basis. During November, the first month of the company’s fiscal year, $173,250 of man...

Q: An investor has asked for your help with the following time value

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Q: Using data from the financial statements of Intel Corporation in the appendix

Using data from the financial statements of Intel Corporation in the appendix, calculate a. ROI for 2008. Round your percentage answer to one decimal place. b. ROE for 2008. Round your percentage ans...

Q: Use the appropriate factors from Table 6-4 or Table 6

Use the appropriate factors from Table 6-4 or Table 6-5 to answer the following questions. Table 6-4: Required: a. Staley Co.’s common stock is expected to have a dividend of $6 p...

Q: Capital budgeting analysis involves the use of many estimates.

Capital budgeting analysis involves the use of many estimates. Required: For each of the following estimation errors, state whether the net present value of the project will be too high or too low: a...

Q: National Leasing is evaluating the cost of capital to use in its

National Leasing is evaluating the cost of capital to use in its capital budgeting process. Over the recent past, the company has averaged a return on equity of 12% and a return on investment of 9%. T...

Q: South Bay Manufacturing Ltd. is considering the investment of $230

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Q: A task force of capital budgeting analysts at Seger Ltd. collected

A task force of capital budgeting analysts at Seger Ltd. collected the following data concerning the drilling and production of known petroleum reserves at an offshore location: Investment in rigging...

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The Good wrench Garage is considering an investment in a new tune-up computer. The cost of the computer is $48,000. A cost analyst has calculated the discounted present value of the expected cash flow...

Q: Lake Regional Hospital is considering the acquisition of a new diagnostic scanning

Lake Regional Hospital is considering the acquisition of a new diagnostic scanning machine. The investment required to get the machine operational will be $2,082,560. The machine will be capable of pe...

Q: Busy Beaver Corp. is interested in reviewing its method of evaluating

Busy Beaver Corp. is interested in reviewing its method of evaluating capital expenditure proposals using the accounting rate of return method. A recent proposal involved a $50,000 investment in a mac...

Q: Eddie Lander Tie Co. manufactures neckties and scarves. Two overhead

Eddie Lander Tie Co. manufactures neckties and scarves. Two overhead application bases are used; some overhead is applied on the basis of raw material cost at a rate of 120% of material cost, and the...

Q: The Delmar Beverage Co. produces a premium root beer that is

The Delmar Beverage Co. produces a premium root beer that is sold throughout its chain of restaurants in the Midwest. The company is currently producing 4,000 gallons of root beer per day, which repre...

Q: Hull Motors, Inc. (HMI), produces small gasoline-

Hull Motors, Inc. (HMI), produces small gasoline-powered motors for use in lawn mowers. The company has been growing steadily over the past five years and is operating at full capacity. HMI recently c...

Q: Following are the current asset and current liability sections of the balance

Following are the current asset and current liability sections of the balance sheets for Freedom, Inc., at January 31, 2011 and 2010 (in millions): Required: a. Calculate the working capital and cur...

Q: MMV Inc. opened a chain of businesses several years ago that

MMV Inc. opened a chain of businesses several years ago that provide quick oil changes and other minor services in conjunction with a convenience operation consisting of a soup, sandwich, and snack ba...

Q: The segmented income statement for XYZ Company for the year ended December

The segmented income statement for XYZ Company for the year ended December 31, 2010, follows: The company is concerned about the performance of product A, and you have been asked to analyze the situ...

Q: Duncan Company is considering the investment of $140,000 in

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Q: Information about four investment proposals is summarized here: /

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Q: The following capital expenditure projects have been proposed for management’s consideration at

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Q: Crichton Publications uses the accounting rate of return method to evaluate proposed

Crichton Publications uses the accounting rate of return method to evaluate proposed capital investments. The company’s desired rate of return (its cost of capital) is 18%. The project being evaluated...

Q: Prepare an answer sheet with the column headings shown here. For

Prepare an answer sheet with the column headings shown here. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on the appropriate balance shee...

Q: Two acquaintances have approached you about investing in business activities in which

Two acquaintances have approached you about investing in business activities in which each is involved. Julie is seeking $560 and Sam needs $620. One year from now your original investment will be ret...

Q: Kohl Co. provides warranties for many of its products. The

Kohl Co. provides warranties for many of its products. The January 1, 2010, balance of the Estimated Warranty Liability account was $70,400. Based on an analysis of warranty claims during the past sev...

Q: The balance sheet caption for common stock is the following:

The balance sheet caption for common stock is the following: Common stock, $5 par value, 2,000,000 shares authorized, 1,400,000 shares issued, 1,250,000 shares outstanding . . . . . . . . . . . . . ....

Q: Maliha, Inc., did not pay dividends on its $6

Maliha, Inc., did not pay dividends on its $6.50, $50 par value, cumulative preferred stock during 2009 or 2010. Since 2005, 22,000 shares of this stock have been outstanding. Maliha, Inc., has been p...

Q: A bookkeeper prepared the year-end financial statements of Giftwrap,

A bookkeeper prepared the year-end financial statements of Giftwrap, Inc. The income statement showed net income of $47,400, and the balance sheet showed ending retained earnings of $182,000. The firm...

Q: A firm issues long-term debt with an effective interest rate

A firm issues long-term debt with an effective interest rate of 10% and the proceeds of this debt issue can be invested to earn an ROI of 12%. What effect will this financial leverage have on the firm...

Q: Assume that you own 600 shares of common stock of a company

Assume that you own 600 shares of common stock of a company, that you have been receiving cash dividends of $6 per share per year, and that the company has a 4-for-3 stock split. Required: a. How man...

Q: Prepare a bank reconciliation as of August 31 from the following information

Prepare a bank reconciliation as of August 31 from the following information: a. The August 31 balance shown on the bank statement is $9,810. b. There is a deposit in transit of $1,260 at August 31....

Q: Prepare a bank reconciliation as of October 31 from the following information

Prepare a bank reconciliation as of October 31 from the following information: a. The October 31 cash balance in the general ledger is $844. b. The October 31 balance shown on the bank statement is $...

Q: From the following data, calculate the Retained Earnings balance as of

From the following data, calculate the Retained Earnings balance as of December 31, 2011: Retained earnings, December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: From the following data, calculate the retained earnings balance as of

From the following data, calculate the retained earnings balance as of December 31, 2010: Retained earnings, December 31, 2009 . . . . . . . . …………... . . . . . . . . . . …. $311,800 Cost of equipmen...

Q: From the following data, calculate the retained earnings balance as of

From the following data, calculate the retained earnings balance as of December 31, 2009: Retained earnings, December 31, 2010 . . . . . . . . . . . . . ………... . . . . . . . $841,200 Decrease in tota...

Q: At the beginning of the year, the net assets of Carby

At the beginning of the year, the net assets of Carby Co. were $346,800. The only transactions affecting owners’ equity during the year were net income of $42,300 and dividends of $12,000. Required:...

Q: For the year ended December 31, 2010, Ebanks, Inc

For the year ended December 31, 2010, Ebanks, Inc., earned an ROI of 12%. Sales for the year were $96 million, and average asset turnover was 2.4. Average owners’ equity was $32 million. Required: a....

Q: On February 1, 2010, the balance of the retained earnings

On February 1, 2010, the balance of the retained earnings account of Blue Power Corporation was $630,000. Revenues for February totaled $123,000, of which $115,000 was collected in cash. Expenses for...

Q: The following accounts are used by Britt’s Knits, Inc.

The following accounts are used by Britt’s Knits, Inc. Required: For each of the following nine independent situations, prepare the journal entry by entering the appropriate code(s)...

Q: At the end of August, Rothchild Company had completed Jobs 40

At the end of August, Rothchild Company had completed Jobs 40 and 42. Job 40 is for 10,000 units, and Job 42 is for 11,000 units. Using the data from Practice Exercises 19 ­ 1B, 19 ­ 2B, and 19 ­ 4B,...

Q: The following information is available for the first month of operations of

The following information is available for the first month of operations of Bahadir Company, a manufacturer of mechanical pencils: Sales……………………………………………………..$792,000 Gross profit…………………………………………….46...

Q: a. How does the return on total assets differ from the

a. How does the return on total assets differ from the return on stockholders’ equity? b. Which ratio is normally higher? Why?

Q: a. Why is a high inventory turnover considered to be a

a. Why is a high inventory turnover considered to be a positive indicator? b. Is it possible to have a high inventory turnover and a high number of days’ sales in inventory? Why?

Q: Sentinel Systems Inc. prepared the following sales budget for 20Y8:

Sentinel Systems Inc. prepared the following sales budget for 20Y8: At the end of December 20Y8, the following unit sales data were reported for the year: For the year ending December 31, 20Y9, unit...

Q: The budget director of Royal Furniture Company requests estimates of sales,

The budget director of Royal Furniture Company requests estimates of sales, production, and other operating data from the various administrative units every month. Selected information concerning sale...

Q: The budget director of Gold Medal Athletic Co., with the assistance

The budget director of Gold Medal Athletic Co., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budge...

Q: a. Under what conditions is the use of the straight-

a. Under what conditions is the use of the straight- line depreciation method most appropriate? b. Under what conditions is the use of the units-of-activity depreciation method most ap- prop...

Q: What are the three major objectives of budgeting?

What are the three major objectives of budgeting?

Q: Three phases of the management process are planning, directing, and

Three phases of the management process are planning, directing, and controlling. Match the following descriptions to the proper phase:

Q: On May 7, Bergan Company purchased on account 10,000

On May 7, Bergan Company purchased on account 10,000 units of raw materials at $8 per unit. During May, raw materials were requisitioned for production as follows: 7,500 units for Job 200 at $8 per un...

Q: Briefly describe the type of human behavior problems that might arise if

Briefly describe the type of human behavior problems that might arise if budget goals are set too tightly.

Q: What behavioral problems are associated with setting a budget too loosely?

What behavioral problems are associated with setting a budget too loosely?

Q: What behavioral problems are associated with establishing conflicting goals within the budget

What behavioral problems are associated with establishing conflicting goals within the budget?

Q: How do computerized budgeting systems aid firms in the budgeting process?

How do computerized budgeting systems aid firms in the budgeting process?

Q: Why should the timing of direct materials purchases be closely coordinated with

Why should the timing of direct materials purchases be closely coordinated with the production budget?

Q: a. Discuss the purpose of the cash budget. b

a. Discuss the purpose of the cash budget. b. If the cash for the first quarter of the fiscal year indicates excess cash at the end of each of the first two months, how might the excess cash be used?...

Q: Give an example of how the capital expenditures budget affects other operating

Give an example of how the capital expenditures budget affects other operating budgets.

Q: On August 4, Rothchild Company purchased on account 12,000

On August 4, Rothchild Company purchased on account 12,000 units of raw materials at $14 per unit. During August, raw materials were requisitioned for production as follows: 5,000 units for Job 40...

Q: Why should the production requirements set forth in the production budget be

Why should the production requirements set forth in the production budget be carefully coordinated with the sales budget?

Q: Briggs Excavation Company is planning an investment of $132,000

Briggs Excavation Company is planning an investment of $132,000 for a bulldozer. The bulldozer is expected to operate for 1,500 hours per year for five years. Customers will be charged $110 per hour f...

Q: A chemical company has commodity-grade and premium-grade products

A chemical company has commodity-grade and premium-grade products. Why might the company elect to process the commodity-grade product further to the premium-grade product?

Q: Based on the data in Exercise 24-10, assume that

Based on the data in Exercise 24-10, assume that management has established a 9% minimum acceptable return for invested assets. a. Determine the residual income for each division. b. Which division...

Q: Somerset Inc. has finished a new video game, Snowboard Challenge

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Q: One item is omitted from each of the following computations of the

One item is omitted from each of the following computations of the return on investment: Determine the missing items, identifying each by the appropriate letter.

Q: Peachtree Beverage Company manufactures soft drinks. Information about two products is

Peachtree Beverage Company manufactures soft drinks. Information about two products is as follows: It is known that both products have the same direct materials and direct labor costs per case. Peac...

Q: The following conversation took place between Juanita Jackson, vice president of

The following conversation took place between Juanita Jackson, vice president of marketing, and Les Miles, controller of Diamond Computer Company: Juanita: I am really excited about our new computer...

Q: A manager of Varden Sporting Goods Company is considering accepting an order

A manager of Varden Sporting Goods Company is considering accepting an order from an overseas customer. This customer has requested an order for 20,000 dozen golf balls at a price of $22 per dozen. Th...

Q: If you are not familiar with Priceline.com Inc. ,

If you are not familiar with Priceline.com Inc. , go to its website. Assume that an individual “names a price” of $85 on Priceline.com for a room in Nashville, Tenn...

Q: Project 1 requires an original investment of $55,000.

Project 1 requires an original investment of $55,000. The project will yield cash flows of $15,000 per year for seven years. Project 2 has a calculated net present value of $5,000 over a four-year lif...

Q: Determine the average rate of return for a project that is estimated

Determine the average rate of return for a project that is estimated to yield total income of $180,000 over five years, has a cost of $400,000, and has a $50,000 residual value.

Q: In the long run, the normal selling price must be set

In the long run, the normal selling price must be set high enough to cover what factors?

Q: Determine the average rate of return for a project that is estimated

Determine the average rate of return for a project that is estimated to yield total income of $36,000 over three years, has a cost of $70,000, and has a $10,000 residual value.

Q: A project has estimated annual net cash flows of $95,

A project has estimated annual net cash flows of $95,200. It is estimated to cost $580,720. Determine the cash payback period. Round to one decimal place.

Q: Identify the following costs as direct materials (DM), direct labor

Identify the following costs as direct materials (DM), direct labor (DL), or factory overhead (FO) for an automobile manufacturer: a. Wages of employees that operate painting equipment b. Wages of...

Q: The owner of Warwick Printing, a printing company, is planning

The owner of Warwick Printing, a printing company, is planning direct labor needs for the upcoming year. The owner has provided you with the following information for next year’s pla...

Q: A project has estimated annual net cash flows of $9,

A project has estimated annual net cash flows of $9,300. It is estimated to cost $41,850. Determine the cash payback period. Round to one decimal place.

Q: A project has estimated annual net cash flows of $8,

A project has estimated annual net cash flows of $8,000 for five years and is estimated to cost $28,000. Assume a minimum acceptable rate of return of 12%. Using Exhibit 5, determine (1) the net pres...

Q: A project has estimated annual net cash flows of $96,

A project has estimated annual net cash flows of $96,200 for four years and is estimated to cost $315,500. Assume a minimum acceptable rate of return of 10%. Using Exhibit 5, determine (1) the net pr...

Q: A project is estimated to cost $90,045 and provide

A project is estimated to cost $90,045 and provide annual net cash flows of $14,500 for eight years. Determine the internal rate of return for this project, using Exhibit 5.

Q: Carnival Corporation has recently placed into service some of the largest cruise

Carnival Corporation has recently placed into service some of the largest cruise ships in the world. One of these ships, the Carnival Breeze, can hold up to 3,600 passengers, and it can cost $800 mi...

Q: A project is estimated to cost $362,672 and provide

A project is estimated to cost $362,672 and provide annual net cash flows of $76,000 for nine years. Determine the internal rate of return for this project, using Exhibit 5.

Q: During May, Bergan Company accumulated 2,500 hours of direct

During May, Bergan Company accumulated 2,500 hours of direct labor costs on Job 200 and 3,000 hours on Job 305. The total direct labor was incurred at a rate of $28 per direct labor hour for Job 200...

Q: Sales volume has been dropping at Mumford Industries. During this time

Sales volume has been dropping at Mumford Industries. During this time, however, the Shipping Department manager has been under severe financial constraints. The manager knows that most of the Shippin...

Q: Casual Cuts Inc. has total estimated factory overhead for the year

Casual Cuts Inc. has total estimated factory overhead for the year of $225,000, divided into four activities: cutting, $90,000; sewing, $22,500; setup, $80,000; and inspection, $32,500. Casual Cuts ma...

Q: Diamond & Turf Inc. is considering an investment in one of

Diamond & Turf Inc. is considering an investment in one of two machines. The sewing machine will increase productivity from sewing 150 baseballs per hour to sewing 290 per hour. The contribution m...

Q: Duncan Company owns a machine with a cost of $75,

Duncan Company owns a machine with a cost of $75,000 and accumulated depreciation of $15,000 that can be sold for $54,000 less a 5% sales commission. Alternatively, Duncan Company can lease the machin...

Q: Timberlake Company owns equipment with a cost of $165,000

Timberlake Company owns equipment with a cost of $165,000 and accumulated depreciation of $60,000 that can be sold for $82,000 less a 6% sales commission. Alternatively, Timberlake Company can lease t...

Q: Product Alpha has revenue of $545,000, variable cost

Product Alpha has revenue of $545,000, variable cost of goods sold of $400,000, variable selling expenses of $65,000, and fixed costs of $90,000, creating a loss from operations of $10,000. Prepare a...

Q: Although the cost-plus approach to product pricing may be used

Although the cost-plus approach to product pricing may be used by management as a general guideline, what are examples of other factors that managers should consider in setting product prices?

Q: Product B has revenue of $39,500, variable cost

Product B has revenue of $39,500, variable cost of goods sold of $25,500, variable selling expenses of $16,500, and fixed costs of $15,000, creating a loss from operations of $17,500. Prepare a differ...

Q: A restaurant bakes its own bread for a cost of $230

A restaurant bakes its own bread for a cost of $230 per unit (100 loaves), including fixed costs of $47 per unit. A proposal is offered to purchase bread from an outside source for $180 per unit, plus...

Q: A company manufactures various sized plastic bottles for its medicinal product.

A company manufactures various sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $67 per unit (100 bottles), including fixed costs of $22 per unit. A proposa...

Q: A machine with a book value of $250,000 has

A machine with a book value of $250,000 has an estimated six-year life. A proposal is offered to sell the old machine for $320,000 and replace it with a new machine at a cost of $390,000. The new mach...

Q: A machine with a book value of $80,000 has

A machine with a book value of $80,000 has an estimated five-year life. A proposal is offered to sell the old machine for $50,500 and replace it with a new machine at a cost of $75,000. The new machin...

Q: Edward Seymour is a financial consultant to Cornish Inc., a real

Edward Seymour is a financial consultant to Cornish Inc., a real estate syndicate. Cornish finances and develops commercial real estate (office buildings) projects. The completed projects are then sol...

Q: Bi-Coastal Railroad Inc. is considering acquiring equipment at a

Bi-Coastal Railroad Inc. is considering acquiring equipment at a cost of $520,000. The equipment has an estimated life of eight years and no residual value. It is expected to provide yearly net cash f...

Q: Product K is produced for $155 per pound. Product K

Product K is produced for $155 per pound. Product K can be sold without additional processing for $220 per pound or processed further into Product L at an additional cost of $28 per pound. Product L c...

Q: Product D is produced for $24 per gallon. Product D

Product D is produced for $24 per gallon. Product D can be sold without additional processing for $36 per gallon or processed further into Product E at an additional cost of $9 per gallon. Product E c...

Q: Product AA is normally sold for $120 per unit. A

Product AA is normally sold for $120 per unit. A special price of $112 is offered for the export market. The variable production cost is $80 per unit. An additional export tariff of 30% of revenue mus...

Q: Product A is normally sold for $9.60 per unit

Product A is normally sold for $9.60 per unit. A special price of $7.20 is offered for the export market. The variable production cost is $5.00 per unit. An additional export tariff of 15% of revenue...

Q: What is the appropriate measure of a product’s value when a firm

What is the appropriate measure of a product’s value when a firm is operating under production bottlenecks? Answer The proper measure of product value in a bottlenecked process is the contribution...

Q: Mainline Marine Company has total estimated factory overhead for the year of

Mainline Marine Company has total estimated factory overhead for the year of $2,090,000, divided into four activities: fabrication, $750,000; assembly, $240,000; setup, $600,000; and inspection, $500,...

Q: Divide your team into two groups. In one group, find

Divide your team into two groups. In one group, find a local business, such as a copy shop, that rents time on desktop computers for an hourly rate. Determine the hourly rate. In the other group, dete...

Q: Global Electronics Inc. invested $1,000,000 to

Global Electronics Inc. invested $1,000,000 to build a plant in a foreign country. The labor and materials used in production are purchased locally. The plant expansion was estimated to produce an int...

Q: A Masters of Accountancy degree at Central University costs $12,

A Masters of Accountancy degree at Central University costs $12,000 for an additional fifth year of education beyond the bachelor’s degree. Assume that all tuition is paid at the be-...

Q: The following are some selected quotes from senior executives: CEO

The following are some selected quotes from senior executives: CEO, Worthington Industries (a high-technology steel company): “We try to find the best technology, stay ahead of the competition, and s...

Q: The plant manager of Shenzhen Electronics Company is considering the purchase of

The plant manager of Shenzhen Electronics Company is considering the purchase of new automated assembly equipment. The new equipment will cost $1,400,000. The manager believes that the new investment...

Q: Metro-Goldwyn-Mayer Studios Inc. (MGM) is

Metro-Goldwyn-Mayer Studios Inc. (MGM) is a major producer and distributor of theatrical and television filmed entertainment. Regarding theatrical films, MGM states, “Our feature fil...

Q: Sana Rosa Furniture Company manufactures designer home furniture. Sana Rosa uses

Sana Rosa Furniture Company manufactures designer home furniture. Sana Rosa uses a standard cost system. The direct labor, direct materials, and factory overhead standards for an unfinished dining roo...

Q: One of Danielle’s first assignments was to perform a net present value

One of Danielle’s first assignments was to perform a net present value analysis for a new warehouse. Danielle performed the analysis and calculated a present value index of 0.75. The plant manager, Je...

Q: Caroline Company’s costs were over budget by $319,000.

Caroline Company’s costs were over budget by $319,000. The company is divided into West and East regions. The East Region’s costs were under budget by $47,500. Determine the amount that the West Regio...

Q: Conley Company’s costs were under budget by $198,000.

Conley Company’s costs were under budget by $198,000. The company is divided into North and South regions. The North Region’s costs were over budget by $52,000. Deter - mine the amount that the South...

Q: a. Name two principal types of cost accounting systems.

a. Name two principal types of cost accounting systems. b. Which system provides for a separate record of each particular quantity of product that passes through the factory? c. Which sys...

Q: The centralized employee travel department of Croce Company has expenses of $

The centralized employee travel department of Croce Company has expenses of $724,000. The department has serviced a total of 5,000 travel reservations for the period. The South Division has made 2,850...

Q: The centralized computer technology department of Hardy Company has expenses of $

The centralized computer technology department of Hardy Company has expenses of $320,000. The department has provided a total of 4,000 hours of service for the period. The Retail Division has used 2,7...

Q: Using the data for Hardy Company from Practice Exercise 24-2B

Using the data for Hardy Company from Practice Exercise 24-2B along with the following data, determine the divisional income from operations for the Retail Division and the Commercial Division:

Q: Weyerhaeuser developed a system that assigns service department expenses to user divisions

Weyerhaeuser developed a system that assigns service department expenses to user divisions on the basis of actual services consumed by the division. Here are a number of Weyerhaeuser’s activities...

Q: Cash Company has income from operations of $112,500,

Cash Company has income from operations of $112,500, invested assets of $750,000, and sales of $1,875,000. Use the DuPont formula to compute the return on investment and show (a) the profit margin,...

Q: Briggs Company has income from operations of $36,000,

Briggs Company has income from operations of $36,000, invested assets of $180,000, and sales of $720,000. Use the DuPont formula to compute the return on investment and show (a) the profit margin, (...

Q: The Consumer Division of Galena Company has income from operations of $

The Consumer Division of Galena Company has income from operations of $12,680,000 and assets of $74,500,000. The minimum acceptable return on assets is 12%. What is the residual income for the divisio...

Q: Genie in a Bottle Company (GBC) manufactures plastic two-

Genie in a Bottle Company (GBC) manufactures plastic two-liter bottles for the beverage industry. The cost standards per 100 two-liter bottles are as follows: At the beginning of July, GBC management...

Q: The Commercial Division of Herring Company has income from operations of $

The Commercial Division of Herring Company has income from operations of $420,000 and assets of $910,000. The minimum acceptable return on assets is 8%. What is the residual income for the division?...

Q: What are the major disadvantages of the use of the internal rate

What are the major disadvantages of the use of the internal rate of return method of analyzing capital investment proposals?

Q: What kind of firm would use a job order cost system?

What kind of firm would use a job order cost system?

Q: Why would the use of the cash payback period for analyzing the

Why would the use of the cash payback period for analyzing the financial performance of theatrical releases from a motion picture production studio be supported over the net present value method?

Q: A net present value analysis used to evaluate a pro- posed

A net present value analysis used to evaluate a pro- posed equipment acquisition indicated a $7,900 net present value. What is the meaning of the $7,900 as it relates to the desirability of the propos...

Q: The internal rate of return method is used by King Bros.

The internal rate of return method is used by King Bros. Construction Co. in analyzing a capital expenditure proposal that involves an investment of $156,218 and annual net...

Q: Two projects have an identical net present value of $9,

Two projects have an identical net present value of $9,000. Are both projects equal in desirability? Explain.

Q: What are the major disadvantages of the use of the net present

What are the major disadvantages of the use of the net present value method of analyzing capital investment proposals?

Q: What are the principal objections to the use of the average rate

What are the principal objections to the use of the average rate of return method in evaluating capital investment proposals?

Q: Discuss the principal limitations of the cash payback method for evaluating capital

Discuss the principal limitations of the cash payback method for evaluating capital investment proposals.

Q: Your boss has suggested that a one-year payback period is

Your boss has suggested that a one-year payback period is the same as a 100% average rate of return. Do you agree? Explain.

Q: The following data relate to the direct materials cost for the production

The following data relate to the direct materials cost for the production of 10,000 automobile tires: Actual: ……………………………………. 145,000 lb. at $2.80 Standard: ………………………………...150,000 lb. at $2.75 a. Det...

Q: Why would the cash payback method understate the attractiveness of a project

Why would the cash payback method understate the attractiveness of a project with a large residual value?

Q: Which account is used in the job order cost system to accumulate

Which account is used in the job order cost system to accumulate direct materials, direct labor, and factory overhead applied to production costs for individual jobs?

Q: What are the major advantages of leasing a fixed asset rather than

What are the major advantages of leasing a fixed asset rather than purchasing it?

Q: Give an example of a qualitative factor that should be considered in

Give an example of a qualitative factor that should be considered in a capital investment analysis related to acquiring automated factory equipment.

Q: Park City Mountain Resort, a Utah ski resort, recently announced

Park City Mountain Resort, a Utah ski resort, recently announced a $415 million expansion of lodging properties, lifts, and terrain. Assume that this investment is estimated to produce $99 million in...

Q: How are investments in sustainability justified?

How are investments in sustainability justified?

Q: Based on the data presented in Exercise 25-18, assume

Based on the data presented in Exercise 25-18, assume that Smart Stream Inc. uses the variable cost concept of applying the cost-plus approach to product pricing. Data from Exercise 25-18: Smart Str...

Q: Matrix Construction Company is considering selling excess machinery with a book value

Matrix Construction Company is considering selling excess machinery with a book value of $75,000 (original cost of $200,000 less accumulated depreciation of $125,000) for $60,000 less a 5% brokerage c...

Q: D’Amato Corporation is considering new equipment. The equipment can be purchased

D’Amato Corporation is considering new equipment. The equipment can be purchased from an overseas supplier for $315,000. The freight and installation costs for the equipment are $15,000. If purchased,...

Q: A condensed income statement by product line for Celestial Beverage Inc.

A condensed income statement by product line for Celestial Beverage Inc. indicated the following for Star Cola for the past year: Sales ……………………………………………………………. $390,000 Cost of goods sold …………………………...

Q: The condensed product-line income statement for Dish N’ Dat Company

The condensed product-line income statement for Dish N’ Dat Company for the month of May is as follows: Fixed costs are 15% of the cost of goods sold and 30% of the selling and admi...

Q: Charles Schwab Corporation is one of the more innovative brokerage and financial

Charles Schwab Corporation is one of the more innovative brokerage and financial service companies in the United States. The company recently provided information about its major business segments as...

Q: Silicone Engine Inc. produces wrist-worn tablet computers. The

Silicone Engine Inc. produces wrist-worn tablet computers. The company uses Thin Film Crystal (TFC) LCD displays for its products. Each tablet uses one display. The company produced 580 tablets during...

Q: What document is the source for (a) debiting the

What document is the source for (a) debiting the accounts in the materials ledger and (b) crediting the accounts in the materials ledger?

Q: On the basis of the following data, the general manager of

On the basis of the following data, the general manager of Foremost Footwear Inc. decided to discontinue Children’s Shoes because it reduced income from operations by $10,000. What i...

Q: Munch N’ Crunch Snack Company is considering two possible investments: a

Munch N’ Crunch Snack Company is considering two possible investments: a delivery truck or a bagging machine. The delivery truck would cost $43,056 and could be used to deliver an ad...

Q: Diamond Computer Company has been purchasing carrying cases for its portable computers

Diamond Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $59 per unit. The company, which is currently operating below full capacity, charges facto...

Q: The Theater Arts Guild of Dallas (TAG-D) employs

The Theater Arts Guild of Dallas (TAG-D) employs five people in its Publication Department. These people lay out pages for pamphlets, brochures, magazines, and other publications for the TAG-D product...

Q: A company is considering replacing an old piece of machinery, which

A company is considering replacing an old piece of machinery, which cost $105,000 and has $55,000 of accumulated depreciation to date, with a new machine that has a purchase price of $83,000. The old...

Q: Kim Kwon Digital Components Company assembles circuit boards by using a manually

Kim Kwon Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $60,000, the accumulated deprecia...

Q: Big Fork Lumber Company incurs a cost of $402 per hundred

Big Fork Lumber Company incurs a cost of $402 per hundred board feet (hbf) in processing certain “rough-cut” lumber, which it sells for $540 per hbf. An alternative is to produce a “finished cut” at a...

Q: Rise N’ Shine Coffee Company produces Columbian coffee in batches of 6

Rise N’ Shine Coffee Company produces Columbian coffee in batches of 6,000 pounds. The standard quantity of materials required in the process is 6,000 pounds, which cost $5.50 per pound. Columbian cof...

Q: Homestead Jeans Co. has an annual plant capacity of 65,

Homestead Jeans Co. has an annual plant capacity of 65,000 units, and current production is 45,000 units. Monthly fixed costs are $54,000, and variable costs are $29 per unit. The present selling pr...

Q: Brightstone Tire and Rubber Company has capacity to produce 170,000

Brightstone Tire and Rubber Company has capacity to produce 170,000 tires. Brightstone presently produces and sells 130,000 tires for the North American market at a price of $175 per tire. Brightstone...

Q: Cityscape Hotels has 200 rooms available in a major metropolitan city.

Cityscape Hotels has 200 rooms available in a major metropolitan city. The hotel is able to attract business customers during the weekdays and leisure customers during the week- end. However, the leis...

Q: The management of Dominican Sugar Company is considering whether to process further

The management of Dominican Sugar Company is considering whether to process further raw sugar into refined sugar. Refined sugar can be sold for $2.20 per pound, and raw sugar can be sold without furth...

Q: Under what circumstances is a static budget appropriate?

Under what circumstances is a static budget appropriate?

Q: Keystone Healthcare Corp. is proposing to spend $260,820

Keystone Healthcare Corp. is proposing to spend $260,820 on an eight-year project that has estimated net cash flows of $42,000 for each of the eight years. a. Compute the net present value, using a r...

Q: What is the difference between a clock card and time ticket?

What is the difference between a clock card and time ticket?

Q: La Femme Accessories Inc. produces women’s handbags. The cost of

La Femme Accessories Inc. produces women’s handbags. The cost of producing 800 handbags is as follows: Direct materials ……………………………………. $18,000 Direct labor……………………………………………. 8,500 Factory overhead....

Q: Smart Stream Inc. uses the product cost concept of applying the

Smart Stream Inc. uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 10,000 cellular phones are as follows: Smart Stream wants a p...

Q: Toyota Motor Corporation uses target costing. Assume that Toyota marketing personnel

Toyota Motor Corporation uses target costing. Assume that Toyota marketing personnel estimate that the competitive selling price for the Camry in the upcoming model year will need to be $27,000. Assum...

Q: Instant Image Inc. manufactures color laser printers. Model J20 presently

Instant Image Inc. manufactures color laser printers. Model J20 presently sells for $460 and has a product cost of $230, as follows: Direct materials …………………. $175 Direct labor……………………………. 40 Factory...

Q: Youngstown Glass Company manufactures three types of safety plate glass: large

Youngstown Glass Company manufactures three types of safety plate glass: large, medium, and small. All three products have high demand. Thus, Youngstown Glass is able to sell all the safety glass it c...

Q: CardioTrainer Equipment Company manufactures stationary bicycles and treadmills. The products are

CardioTrainer Equipment Company manufactures stationary bicycles and treadmills. The products are produced in the Fabrication and Assembly production departments. In addition to production activities,...

Q: Artscape Inc. is considering the purchase of automated machinery that is

Artscape Inc. is considering the purchase of automated machinery that is expected to have a useful life of five years and no residual value. The average rate of return on the average investment has be...

Q: BriteLite Inc. manufactures entry and dining room lighting fixtures. Five

BriteLite Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated activity costs and activity bases are...

Q: a. How is a predetermined factory overhead rate calculated?

a. How is a predetermined factory overhead rate calculated? b. Name three common bases used in calculating the rate.

Q: H.J. Heinz Company uses standards to control its materials

H.J. Heinz Company uses standards to control its materials costs. Assume that a batch of ketchup (3,128 pounds) has the following standards: The actual materials in a batch may vary from the standard...

Q: Portable Power Company expects to operate at 80% of productive capacity

Portable Power Company expects to operate at 80% of productive capacity during July. The total manufacturing costs for July for the production of 25,000 batteries are budgeted as follows: Direct mate...

Q: Light Force Inc. produces and sells lighting fixtures. An entry

Light Force Inc. produces and sells lighting fixtures. An entry light has a total cost of $180 per unit, of which $100 is product cost and $80 is selling and administrative expenses. In addition, the...

Q: Green Thumb Garden Tools Inc. produces and sells home and garden

Green Thumb Garden Tools Inc. produces and sells home and garden tools and equipment. A lawn mower has a total cost of $230 per unit, of which $160 is product cost and $70 is selling and administrativ...

Q: Product A has a unit contribution margin of $24. Product

Product A has a unit contribution margin of $24. Product B has a unit contribution mar - gin of $30. Product A requires four testing hours, while Product B requires six testing hours. Determine the mo...

Q: Product K has a unit contribution margin of $120. Product

Product K has a unit contribution margin of $120. Product L has a unit contribution mar - gin of $100. Product K requires five furnace hours, while Product L requires four furnace hours. Determine the...

Q: On June 30, the end of the first month of operations

On June 30, the end of the first month of operations, Tudor Manufacturing Co. prepared the following income statement, based on the variable costing concept: a. Prepare an absorption costing income s...

Q: Southeastern Paper Company manufactures three products (computer paper, newsprint,

Southeastern Paper Company manufactures three products (computer paper, newsprint, and specialty paper) in a continuous production process. Senior management has asked the controller to conduct an act...

Q: Intuit Inc. develops and sells software products for the personal finance

Intuit Inc. develops and sells software products for the personal finance market, including popular titles such as Quickbooks ® and TurboTax ®. Classify each of the following costs and expenses for th...

Q: a. What is (1) overapplied factory overhead and

a. What is (1) overapplied factory overhead and (2) underapplied factory overhead? b. If the factory overhead account has a debit balance, was factory overhead underapplied or overapplied?

Q: Boston Railroad decided to use the high-low method and operating

Boston Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Boston R...

Q: The following data relate to labor cost for production of 22,

The following data relate to labor cost for production of 22,000 cellular telephones: Actual: 4,220 hrs. at $44.50 Standard: 4,160 hrs. at $46.00 a. Determine the direct labor rate variance, direct l...

Q: For the current year ended October 31, Yentling Company expects fixed

For the current year ended October 31, Yentling Company expects fixed costs of $14,000,000, a unit variable cost of $200, and a unit selling price of $300. a. Compute the anticipated break-even sales...

Q: Anheuser-Busch InBev Companies, Inc., reported the following operating

Anheuser-Busch InBev Companies, Inc., reported the following operating information for a recent year (in millions): In addition, assume that Anheuser-Busch InBev sold 400 million barrels of beer dur...

Q: Currently, the unit selling price of a product is $1

Currently, the unit selling price of a product is $1,500, the unit variable cost is $1,200, and the total fixed costs are $4,500,000. A proposal is being evaluated to increase the unit selling price t...

Q: The Junior League of Yadkinville, California, collected recipes from members

The Junior League of Yadkinville, California, collected recipes from members and published a cookbook entitled Food for Everyone . The book will sell for $18 per copy. The...

Q: Media outlets such as ESPN and Fox Sports often have websites that

Media outlets such as ESPN and Fox Sports often have websites that provide in-depth coverage of news and events. Portions of these websites are restricted to members who pay a monthly subscription to...

Q: Describe how total variable costs and unit variable costs behave with changes

Describe how total variable costs and unit variable costs behave with changes in the level of activity.

Q: Sprint Nextel is one of the largest digital wireless service providers in

Sprint Nextel is one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 32.5 million direct subscribers (accounts) that generated revenue of...

Q: For the coming year, Loudermilk Inc. anticipates fixed costs of

For the coming year, Loudermilk Inc. anticipates fixed costs of $600,000, a unit variable cost of $75, and a unit selling price of $125. The maximum sales within the relevant range are $2,500,000. a....

Q: Using the data for Loudermilk Inc. in Exercise 21-

Using the data for Loudermilk Inc. in Exercise 21-17, Data from Exercise 21-17: For the coming year, Loudermilk Inc. anticipates fixed costs of $600,000, a unit variable cost of $75, and a unit sell...

Q: Identify the following costs as direct materials (DM), direct labor

Identify the following costs as direct materials (DM), direct labor (DL), or factory overhead (FO) for a magazine publisher: a. Staples used to bind magazines b. Wages of printing machine employees...

Q: La Barte Company manufactures commuter bicycles from recycled materials. The following

La Barte Company manufactures commuter bicycles from recycled materials. The following data for July of the current year are available: Quantity of direct labor used ………………………………5,050 hrs. Actual rat...

Q: Name the following chart and identify the items represented by the letters

Name the following chart and identify the items represented by the letters (a) through (f):

Q: Daisy’s Creamery Inc. is considering one of two investment options.

Daisy’s Creamery Inc. is considering one of two investment options. Option 1 is a $75,000 investment in new blending equipment that is expected to produce equal annual cash flows of...

Q: Dragon Sports Inc. manufactures and sells two products, baseball bats

Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $620,000, and the sales mix is 40% bats and 60% gloves. The unit selling price and the un...

Q: Zero Turbulence Airline provides air transportation services between Los Angeles, California

Zero Turbulence Airline provides air transportation services between Los Angeles, California; and Kona, Hawaii. A single Los Angeles to Kona round-trip flight has the following operating statistics: F...

Q: a. If Canace Company, with a break-even point

a. If Canace Company, with a break-even point at $960,000 of sales, has actual sales of $1,200,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? b. If the...

Q: Beck Inc. and Bryant Inc. have the following operating data

Beck Inc. and Bryant Inc. have the following operating data: a. Compute the operating leverage for Beck Inc. and Bryant Inc. b. How much would income from operations increase for each company if the...

Q: During August, Rothchild Company accumulated 3,500 hours of direct

During August, Rothchild Company accumulated 3,500 hours of direct labor costs on Job 40 and 4,200 hours on Job 42. The total direct labor was incurred at a rate of $25.00 per direct labor hour...

Q: Indicate with a Yes or No whether or not each of the

Indicate with a Yes or No whether or not each of the following accounts normally requires an adjusting entry:

Q: Classify the following items as (1) prepaid expense,

Classify the following items as (1) prepaid expense, (2) unearned revenue, (3) accrued revenue, or (4) accrued expense:

Q: Classify the following items as (1) prepaid expense,

Classify the following items as (1) prepaid expense, (2) unearned revenue, (3) accrued revenue, or (4) accrued expense:

Q: At the end of the current year, $17,555

At the end of the current year, $17,555 of fees have been earned but have not been billed to clients. Journalize the adjusting entry (include an explanation) to record the accrued fees

Q: Central Plains Power Company is considering an investment in wind farm technology

Central Plains Power Company is considering an investment in wind farm technology to replace natural gas-generating capacity. Initial installation cost of a wind turbine is expected to be $1,200 per k...

Q: Greeson Clothes Company produced 25,000 units during June of the

Greeson Clothes Company produced 25,000 units during June of the current year. The Cutting Department used 6,380 direct labor hours at an actual rate of $10.90 per hour. The Sewing Department used 9,8...

Q: At the end of the current year, $23,570

At the end of the current year, $23,570 of fees have been earned but have not been billed to clients. Journalize the adjusting entry (include an explanation) to record the accrued fees.

Q: Prospect Realty Co. pays weekly salaries of $27,600

Prospect Realty Co. pays weekly salaries of $27,600 for a six-day workweek (Monday thru Saturday). Journalize the necessary adjusting entry (include an explanation) assuming that the accounting period...

Q: We-Sell Realty Co. pays weekly salaries of $11

We-Sell Realty Co. pays weekly salaries of $11,800 on Friday for a five-day workweek ending on that day. Journalize the necessary adjusting entry (include an explanation) assuming that the accounting...

Q: On June 1, 2019, Herbal Co. received $18

On June 1, 2019, Herbal Co. received $18,900 for the rent of land for 12 months. Journalize the adjusting entry (include an explanation) required for unearned rent on December 31, 2019.

Q: How would the following costs be classified (variable or fixed)

How would the following costs be classified (variable or fixed) if units produced was the activity base? a. Direct materials costs b. Electricity costs of $0.35 per kilowatt-hour

Q: The balance in the unearned fees account, before adjustment at the

The balance in the unearned fees account, before adjustment at the end of the year, is $272,500. Journalize the adjusting entry (include an explanation) required if the amount of unearned fees at the...

Q: The prepaid insurance account had a beginning balance of $4,

The prepaid insurance account had a beginning balance of $4,500 and was debited for $16,600 of premiums paid during the year. Journalize the adjusting entry (include an ex- planation) required at the...

Q: The supplies account had a beginning balance of $3,375

The supplies account had a beginning balance of $3,375 and was debited for $6,450 for supplies purchased during the year. Journalize the adjusting entry (include an explanation) required at the end of...

Q: The estimated amount of depreciation on equipment for the current year is

The estimated amount of depreciation on equipment for the current year is $7,700. Journalize the adjusting entry (include an explanation) to record the depreciation

Q: AutoSource Inc. designs and manufactures tires for automobiles. The company’s

AutoSource Inc. designs and manufactures tires for automobiles. The company’s strategy is to design products that incorporate the full environmental impact of the product over its li...

Q: The estimated amount of depreciation on equipment for the current year is

The estimated amount of depreciation on equipment for the current year is $6,880. Journalize the adjusting entry (include an explanation) to record the depreciation.

Q: For the year ending April 30, Urology Medical Services Co.

For the year ending April 30, Urology Medical Services Co. mistakenly omitted adjusting entries for (1) $1,400 of supplies that were used, (2) unearned revenue of $6,600 that was earned, and (3) in...

Q: For the year ending August 31, Mammalia Medical Co. mistakenly

For the year ending August 31, Mammalia Medical Co. mistakenly omitted adjusting entries for (1) depreciation of $5,800, (2) fees earned that were not billed of $44,500, and (3) accrued wages of $7...

Q: For each of the following errors, considered individually, indicate

For each of the following errors, considered individually, indicate whether the error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted...

Q: For each of the following errors, considered individually, indicate whether

For each of the following errors, considered individually, indicate whether the error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance t...

Q: Describe how total fixed costs and unit fixed costs behave with changes

Describe how total fixed costs and unit fixed costs behave with changes in the level of activity.

Q: Indicate with a Yes or No whether or not each of the

Indicate with a Yes or No whether or not each of the following accounts normally re- quires an adjusting entry:

Q: In a payroll system, what types of input data are referred

In a payroll system, what types of input data are referred to as (a) constants and (b) variables?

Q: The following information about the payroll for the week ended December 30

The following information about the payroll for the week ended December 30 was obtained from the records of Pharrell Co.: Instructions 1. Assuming that the payroll for the last week of the year is...

Q: Glenville Company has the following information for April: Cost

Glenville Company has the following information for April: Cost of direct materials used in production ………. $280,000 Direct labor ………………………………………………………. 324,000 Factory overhead ………………………………………………....

Q: The following data for Throwback Industries Inc. relate to the payroll

The following data for Throwback Industries Inc. relate to the payroll for the week ended December 9, 20Y8: Employees Mantle and Williams are office staff, and all of the other employees are sales...

Q: The following accounts, with the balances indicated, appear in the

The following accounts, with the balances indicated, appear in the ledger of Garcon Co. on December 1 of the current year: The following transactions relating to payroll, payroll deductions, and payr...

Q: The following items were selected from among the transactions completed by O’Donnel

The following items were selected from among the transactions completed by O’Donnel Co. during the current year: Jan. 10. Purchased merchandise on account from Laine Co., $240,000, terms n/30. Feb....

Q: One of the operations in the United States Postal Service is a

One of the operations in the United States Postal Service is a mechanical mail sorting operation. In this operation, letter mail is sorted at a rate of 1.5 letters per second. The letter is mechanical...

Q: The senior management of Tungston Company has proposed the following three performance

The senior management of Tungston Company has proposed the following three performance measures for the company: 1. Net income as a percent of stockholders’ equity 2. Revenue growth 3. Employee sat...

Q: If fixed costs increase, what would be the impact on the

If fixed costs increase, what would be the impact on the (a) contribution margin? (b) income from operations?

Q: You have been asked to investigate some cost problems in the Assembly

You have been asked to investigate some cost problems in the Assembly Department of Ruthenium Electronics Co., a consumer electronics company. To begin your investigation, you have obtained the follow...

Q: Vanadium Audio Inc. is a small manufacturer of electronic musical instruments

Vanadium Audio Inc. is a small manufacturer of electronic musical instruments. The plant manager received the following variable factory overhead report for the period: The plant manager is not pleas...

Q: How does using the return on investment facilitate comparability between divisions of

How does using the return on investment facilitate comparability between divisions of decentralized companies?

Q: Dash Riprock is a cost analyst with Safe Insurance Company. Safe

Dash Riprock is a cost analyst with Safe Insurance Company. Safe is applying standards to its claims payment operation. Claims payment is a repetitive operation that could be evaluated with standards....

Q: Target Corp. sells merchandise primarily through its retail stores. On

Target Corp. sells merchandise primarily through its retail stores. On the other hand, Amazon .com uses its e-commerce services, features, and technologies to sell its products through the Internet. R...

Q: Dip N’ Dunk Doughnuts has computed the net present value for capital

Dip N’ Dunk Doughnuts has computed the net present value for capital expenditure at two locations. Relevant data related to the computation are as follows: a. Determine the present value index for ea...

Q: Cash payback period for a service company OBJ. 2 Prime Financial

Cash payback period for a service company OBJ. 2 Prime Financial Inc. is evaluating two capital investment proposals for a drive-up ATM kiosk, each requiring an investment of $200,000 and each with an...

Q: Welcome Inn Hotels is considering the construction of a new hotel for

Welcome Inn Hotels is considering the construction of a new hotel for $90 million. The expected life of the hotel is 30 years, with no residual value. The hotel is expected to earn revenues of $26 mil...

Q: Hit-n-Run Food Trucks, Inc. owns and

Hit-n-Run Food Trucks, Inc. owns and operates food trucks (mobile kitchens) throughout the West Coast. The company’s employees have varying wage levels depending on their experience and length of time...

Q: If the unit cost of direct materials is decreased, what effect

If the unit cost of direct materials is decreased, what effect will this change have on the break-even point?

Q: The city of Milton has an annual budget cycle that begins on

The city of Milton has an annual budget cycle that begins on July 1 and ends on June 30. At the beginning of each budget year, an annual budget is established for each depart- ment. Th...

Q: Timbuk 3 Company has the following information for March:

Timbuk 3 Company has the following information for March: Cost of direct materials used in production…………$21,000 Direct labor…………………………………………………….... 54,250 Factory overhead…………………………………………….…35,000...

Q: Children’s Hospital of the King’s Daughters Health System in Norfolk, Virginia

Children’s Hospital of the King’s Daughters Health System in Norfolk, Virginia, introduced a new budgeting method that allowed the hospital’s annual plan to be updated for changes in operating plans....

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A bank manager of City Savings Bank Inc. uses the managerial accounting system to track the costs of operating the various departments within the bank. The departments include Cash Management, Trust,...

Q: Domino’s Pizza L.L.C. operates pizza delivery and

Domino’s Pizza L.L.C. operates pizza delivery and carry-out restaurants. The annual report describes its business as follows: We offer a focused menu of high-quality, value-priced pizza with three ty...

Q: The director of marketing for Starr Computer Co., Megan Hewitt,

The director of marketing for Starr Computer Co., Megan Hewitt, had the following discussion with the company controller, Cam Morley, on July 26 of the current year: Megan: Cam, it looks like I’m goi...

Q: Daybook Inc. projected sales of 400,000 personal journals for

Daybook Inc. projected sales of 400,000 personal journals for 20Y6. The estimated January 1, 20Y6, inventory is 20,000 units, and the desired December 31, 20Y6, inventory is 23,500 units. What is the...

Q: Magnolia Candle Inc. projected sales of 75,000 candles

Magnolia Candle Inc. projected sales of 75,000 candles for 20Y4. The estimated January 1, 20Y4, inventory is 3,500 units, and the desired December 31, 20Y4, inventory is 2,700 units. What is the budge...

Q: Daybook Inc. budgeted production of 403,500 personal journals in

Daybook Inc. budgeted production of 403,500 personal journals in 20Y6. Paper is required to produce a journal. Assume six square yards of paper are required for each journal. The estimated January 1,...

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Both Austin Company and Hill Company had the same unit sales, total costs, and income from operations for the current fiscal year; yet, Austin Company had a lower break-even point than Hill Company. E...

Q: Midwest Fabricators Inc. is considering an investment in equipment that will

Midwest Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of $132,000 with a $16,000 residual value and a 10-year life. The equipment...

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Which of the three methods of inventory costing—FIFO, LIFO, or weighted average cost—will in general yield an inventory cost most nearly approximating current replacement cost?...

Q: Magnolia Candle Inc. budgeted production of 74,200 candles in

Magnolia Candle Inc. budgeted production of 74,200 candles in 20Y4. Wax is required to produce a candle. Assume that eight ounces (one-half of a pound) of wax is required for each candle. The estimate...

Q: Daybook Inc. budgeted production of 403,500 personal journals in

Daybook Inc. budgeted production of 403,500 personal journals in 20Y6. Each journal requires assembly. Assume that eight minutes are required to assemble each journal. If assembly labor costs $13.00 p...

Q: Magnolia Candle Inc. budgeted production of 74,200 candles in

Magnolia Candle Inc. budgeted production of 74,200 candles in 20Y4. Each candle requires molding. Assume that 12 minutes are required to mold each candle. If molding labor costs $14.00 per hour, deter...

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Prepare a cost of goods sold budget for Daybook Inc. using the information in Practice Exercises 22-3A and 22-4A. Assume the estimated inventories on January 1, 20Y6, for finished goods and work in pr...

Q: As an assistant cost accountant for Mississippi Industries, you have been

As an assistant cost accountant for Mississippi Industries, you have been assigned to re­ view the activity base for the predetermined factory overhead rate. The president, Tony Favre, ha...

Q: Carol Creedence, the plant manager of the Clearwater Company’s Revival plant

Carol Creedence, the plant manager of the Clearwater Company’s Revival plant, has prepared the following graph of the unit costs from the job cost reports for the plantâ€&...

Q: RIRA Company makes attachments such as backhoes and grader and bulldozer blades

RIRA Company makes attachments such as backhoes and grader and bulldozer blades for construction equipment. The company uses a job order cost system. Management is concerned about cost performance and...

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Todd Lay just began working as a cost accountant for Enteron Industries Inc., which manufactures gift items. Todd is preparing to record summary journal entries for the month. Todd begins by recording...

Q: TAC Industries sells heavy equipment to large corporations and to federal,

TAC Industries sells heavy equipment to large corporations and to federal, state, and local governments. Corporate sales are the result of a competitive bidding process, where TAC competes against oth...

Q: Indicate whether each of the following costs of an automobile manufacturer would

Indicate whether each of the following costs of an automobile manufacturer would be classified as direct materials cost, direct labor cost, or factory overhead cost: a. Wheels b. Glass used in the v...

Q: The budget director of Gourmet Grill Company requests estimates of sales,

The budget director of Gourmet Grill Company requests estimates of sales, production, and other operating data from the various administrative units every month. Selected information concerning sales...

Q: How does the sales mix affect the calculation of the break-

How does the sales mix affect the calculation of the break-even point?

Q: Leno Manufacturing Company prepared the following factory overhead cost budget for the

Leno Manufacturing Company prepared the following factory overhead cost budget for the Press Department for October of the current year, during which it expected to require 20,000 hours of productive...

Q: Indicate whether the following costs of Procter & Gamble , a maker

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Q: Which of the following items are properly classified as part of factory

Which of the following items are properly classified as part of factory overhead for Ford Motor Company, a maker of heavy automobiles and trucks? a. Plant manager’s salary at Buffalo, New York, stamp...

Q: From the choices presented in parentheses, choose the appropriate term for

From the choices presented in parentheses, choose the appropriate term for completing each of the following sentences: a. Advertising costs are usually viewed as (period, product) costs. b. Feedback i...

Q: From the choices presented in parentheses, choose the appropriate term for

From the choices presented in parentheses, choose the appropriate term for completing each of the following sentences: a. The phase of the management process that uses process information to eliminat...

Q: A partial list of the costs for Wisconsin and Minnesota Railroad,

A partial list of the costs for Wisconsin and Minnesota Railroad, a short hauler of freight, follows. Classify each cost as either indirect or direct. For purposes of classifying each cost, use the tr...

Q: Four types of eco-efficiency measures are identified below. Match

Four types of eco-efficiency measures are identified below. Match the following descriptions to the proper eco-efficiency measures:

Q: Partial balance sheet data for Diesel Additives Company at August 31

Partial balance sheet data for Diesel Additives Company at August 31 are as follows: Prepare the Current assets section of Diesel Additives Company’s balance sheet at August 31.

Q: The budget director of Birds of a Feather Inc., with the

The budget director of Birds of a Feather Inc., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budge...

Q: Two items are omitted from each of the following three lists of

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Q: The following information is available for Ethtridge Manufacturing Company for the month

The following information is available for Ethtridge Manufacturing Company for the month ending July 31: Cost of direct materials used in production……………………. $1,150,000 Direct labor………………………………………………...

Q: Clearcast Communications Inc. is considering allocating a limited amount of capital

Clearcast Communications Inc. is considering allocating a limited amount of capital investment funds among four proposals. The amount of proposed investment, estimated income from operations, and net...

Q: Two items are omitted from each of the following three lists of

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Q: Wiki Wiki Company has determined that the variable overhead rate is $

Wiki Wiki Company has determined that the variable overhead rate is $4.50 per direct labor hour in the Fabrication Department. The normal production capacity for the Fabrication Department is 10,000 h...

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Q: What are the basic objectives in the use of standard costs?

What are the basic objectives in the use of standard costs?

Q: What are the two variances between the actual cost and the standard

What are the two variances between the actual cost and the standard cost for direct materials?

Q: A new assistant controller recently was heard to re- mark:

A new assistant controller recently was heard to re- mark: “All the assembly workers in this plant are covered by union contracts, so there should be no labor variances.” Was the controller’s remark c...

Q: Would the use of standards be appropriate in a nonmanufacturing setting such

Would the use of standards be appropriate in a nonmanufacturing setting such as a fast-food restaurant?

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On July 1, Coastal Distribution Company is considering leasing a building and buying the necessary equipment to operate a public warehouse. Alternatively, the company could use the funds to invest in...

Q: When using the negotiated price approach to transfer pricing, within what

When using the negotiated price approach to transfer pricing, within what range should the transfer price be established?

Q: Differentiate between centralized and decentralized operations.

Differentiate between centralized and decentralized operations.

Q: What is the major shortcoming of using income from operations as a

What is the major shortcoming of using income from operations as a performance measure for investment centers?

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The capital investment committee of Nature’s Portrait Landscaping Company is considering two capital investments. The estimated income from operations and net cash flows from each in...

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In a decentralized company in which the divisions are organized as investment centers, how could a division be considered the least profitable even though it earned the largest amount of income from o...

Q: Why would a firm use a balanced scorecard in evaluating divisional performance

Why would a firm use a balanced scorecard in evaluating divisional performance?

Q: What is the objective of transfer pricing?

What is the objective of transfer pricing?

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The following are inputs and outputs to the cooking process of a restaurant: Number of times ingredients are missing Number of customer complaints Number of hours kitchen equipment is down for repairs...

Q: Bellingham Company produces a product that requires 2.5 standard pounds

Bellingham Company produces a product that requires 2.5 standard pounds per unit. The standard price is $3.75 per pound. If 15,000 units required 36,000 pounds, which were purchased at $4.00 per pound...

Q: Dvorak Company produces a product that requires 5 standard pounds per unit

Dvorak Company produces a product that requires 5 standard pounds per unit. The standard price is $2.50 per pound. If 1,000 units required 4,500 pounds, which were purchased at $3.00 per pound, what i...

Q: Bellingham Company produces a product that requires 4 standard hours per unit

Bellingham Company produces a product that requires 4 standard hours per unit at a standard hourly rate of $20 per hour. If 15,000 units required 61,800 hours at an hourly rate of $19.85 per hour, wha...

Q: Dvorak Company produces a product that requires 3 standard hours per unit

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Q: Prepare an income statement through gross profit for Bellingham Company for the

Prepare an income statement through gross profit for Bellingham Company for the month ended March 31 using the variance data in Practice Exercises 23-1A through 23-4A. Assume that Bellingham sold 15,0...

Q: Prepare an income statement through gross profit for Dvorak Company for the

Prepare an income statement through gross profit for Dvorak Company for the month ended July 31 using the variance data in Practice Exercises 23-1B through 23-4B. Assume that Dvorak sold 1,000 units a...

Q: Bellingham Company produced 15,000 units of product that required 4

Bellingham Company produced 15,000 units of product that required 4 standard hours per unit. The standard variable overhead cost per unit is $0.90 per hour. The actual variable factory overhead was $5...

Q: Dvorak Company produced 1,000 units of product that required 3

Dvorak Company produced 1,000 units of product that required 3 standard hours per unit. The standard variable overhead cost per unit is $1.40 per hour. The actual variable factory overhead was $4,000....

Q: Blumen Textiles Corporation began April with a budget for 90,000

Blumen Textiles Corporation began April with a budget for 90,000 hours of production in the Weaving Department. The department has a full capacity of 100,000 hours under normal business conditions. Th...

Q: Bellingham Company produced 15,000 units of product that required 4

Bellingham Company produced 15,000 units of product that required 4 standard hours per unit. The standard fixed overhead cost per unit is $1.15 per hour at 58,000 hours, which is 100% of normal capaci...

Q: Dvorak Company produced 1,000 units of product that required 3

Dvorak Company produced 1,000 units of product that required 3 standard hours per unit. The standard fixed overhead cost per unit is $0.60 per hour at 3,500 hours, which is 100% of normal capacity. De...

Q: Bellingham Company produced 15,000 units that require 2.5

Bellingham Company produced 15,000 units that require 2.5 standard pounds per unit at $3.75 standard price per pound. The company actually used 36,000 pounds in production. Journalize the entry to rec...

Q: Dvorak Company produced 1,000 units that require 5 standard pounds

Dvorak Company produced 1,000 units that require 5 standard pounds per unit at $2.50 standard price per pound. The company actually used 4,500 pounds in production. Journalize the entry to record the...

Q: The following are inputs and outputs to the copying process of a

The following are inputs and outputs to the copying process of a copy shop: Number of employee errors Number of times paper supply runs out Copy machine downtime (broken) Number of pages copied per ho...

Q: The manufacturing costs of Ackerman Industries for the first three months of

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Q: The manufacturing costs of Carrefour Enterprises for three months of the year

The manufacturing costs of Carrefour Enterprises for three months of the year follow: Using the high-low method, determine (a) the variable cost per unit and (b) the total fixed cost

Q: Bigelow Inc. sells a product for $800 per unit.

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Q: Elrod Inc. sells a product for $75 per unit.

Elrod Inc. sells a product for $75 per unit. The variable cost is $45 per unit, while fixed costs are $48,000. Determine (a) the break-even point in sales units and (b) the break- even point if the...

Q: Ramirez Inc. sells a product for $80 per unit.

Ramirez Inc. sells a product for $80 per unit. The variable cost is $60 per unit, and fixed costs are $2,000,000. Determine (a) the break-even point in sales units and (b) the break- even point in s...

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Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for an automobile manufacturer: a. Wages of employees that operate painting equipment b. Wages of...

Q: Scrushy Company sells a product for $150 per unit. The

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Q: SungSam Enterprises reports the following data: / Determine

SungSam Enterprises reports the following data: Determine SungSam Enterprises’s operating leverage

Q: Westminster Co. reports the following data: / Determine

Westminster Co. reports the following data: Determine Westminster Co.’s operating leverage.

Q: Liu Inc. has sales of $48,500,000

Liu Inc. has sales of $48,500,000, and the break-even point in sales dollars is $31,040,000. Determine the company’s margin of safety as a percent of current sales

Q: During May, Bergan Company incurred factory overhead costs as follows:

During May, Bergan Company incurred factory overhead costs as follows: indirect materials, $8,800; indirect labor, $6,600; utilities cost, $4,800; and factory depreciation, $9,000. Journalize the ent...

Q: Junck Company has sales of $550,000, and the

Junck Company has sales of $550,000, and the break-even point in sales dollars is $385,000. Determine the company’s margin of safety as a percent of current sales.

Q: Melinda Stoffers owns and operates ABC Print Co. During February,

Melinda Stoffers owns and operates ABC Print Co. During February, ABC incurred the following costs in acquiring two printing presses. One printing press was new, and the o...

Q: Renaissance Capital Group is considering allocating a limited amount of capital investment

Renaissance Capital Group is considering allocating a limited amount of capital investment funds among four proposals. The amount of proposed investment, estimated income from operations, and net cash...

Q: The capital investment committee of Ellis Transport and Storage Inc. is

The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows...

Q: Social Circle Publications Inc. is considering two new magazine products.

Social Circle Publications Inc. is considering two new magazine products. The estimated net cash flows from each product are as follows: Each product requires an investment of $125,000. A rate of 10%...

Q: First United Bank Inc. is evaluating three capital investment projects using

First United Bank Inc. is evaluating three capital investment projects using the net present value method. Relevant data related to the projects are summarized as follows: Instructions 1. As...

Q: Tannin Products Inc. prepared the following factory overhead cost budget for

Tannin Products Inc. prepared the following factory overhead cost budget for the Trim Department for July of the current year, during which it expected to use 20,000 hours for production: Tannin has...

Q: The management of Style Networks Inc. is considering two TV show

The management of Style Networks Inc. is considering two TV show projects. The estimated net cash flows from each project are as follows: After Hours requires an investment of $913,600, while Sun Fun...

Q: Cioffi Manufacturing Company incorporates standards in its accounts and identifies variances at

Cioffi Manufacturing Company incorporates standards in its accounts and identifies variances at the time the manufacturing costs are incurred. Journalize the entries to record the following transactio...

Q: The management of Advanced Alternative Power Inc. is considering two capital

The management of Advanced Alternative Power Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows: The wind turbines require an investme...

Q: The Assembly Department produced 5,000 units of product during March

The Assembly Department produced 5,000 units of product during March. Each unit required 2.20 standard direct labor hours. There were 11,500 actual hours used in the Assembly Department during March a...

Q: The following data were taken from the records of Griggs Company for

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Q: In applying the high-low method of cost estimation to mixed

In applying the high-low method of cost estimation to mixed costs, how is the total fixed cost estimated?

Q: Diamond Inc. is an Internet retailer of woodworking equipment. Customers

Diamond Inc. is an Internet retailer of woodworking equipment. Customers order wood- working equipment from the company, using an online catalog. The company processes these orders and delivers the re...

Q: Alpha University wants to monitor the efficiency and quality of its course

Alpha University wants to monitor the efficiency and quality of its course registration process. a. Identify three input and three output measures for this process. b. Why would Alpha University us...

Q: Roanoke Company produces chocolate bars. The primary materials used in producing

Roanoke Company produces chocolate bars. The primary materials used in producing chocolate bars are cocoa, sugar, and milk. The standard costs for a batch of chocolate (5,200 bars) are as follows: De...

Q: Based on T_Kong Industries’ data in Exercise 24-20

Based on T_Kong Industries’ data in Exercise 24-20, assume that a transfer price of $160 has been established and that 50,000 units of materials are transferred, with no reduction in the Components Di...

Q: Partially completed budget performance reports for Garland Company, a manufacturer of

Partially completed budget performance reports for Garland Company, a manufacturer of light duty motors, follow: a. Complete the budget performance reports by determining the correct amounts for the...

Q: Identify the following costs as a prime cost (P), conversion

Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for a magazine publisher: a. Paper used for the magazine b. Wages of printing machine employees...

Q: The following data were summarized from the accounting records for Jersey Coast

The following data were summarized from the accounting records for Jersey Coast Construction Company for the year ended June 30, 20Y8: Prepare divisional income statements for Jersey Coast Constructi...

Q: An examination of the accounting records of Clowney Company disclosed a high

An examination of the accounting records of Clowney Company disclosed a high contribution margin ratio and production at a level below maximum capacity. Based on this information, suggest a likely mea...

Q: Middler Corporation, a manufacturer of electronics and communications systems, uses

Middler Corporation, a manufacturer of electronics and communications systems, uses a service department charge system to charge profit centers with Computing and Communications Services (CCS) service...

Q: Grael Technology has two divisions, Consumer and Commercial, and two

Grael Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as fol...

Q: Wild Sun Airlines Inc. has two divisions organized as profit centers

Wild Sun Airlines Inc. has two divisions organized as profit centers, the Passenger Division and the Cargo Division. The following divisional income statements were prepared: The service department c...

Q: Glades Sporting Goods Co. operates two divisions—the Winter Sports

Glades Sporting Goods Co. operates two divisions—the Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the trial balance as of Decembe...

Q: The condensed income statement for the Consumer Products Division of Fargo Industries

The condensed income statement for the Consumer Products Division of Fargo Industries Inc. is as follows (assuming no service department charges): The manager of the Consumer Products Division is con...

Q: The Walt Disney Company has four profitable business segments, described as

The Walt Disney Company has four profitable business segments, described as follows: • Media Networks: The ABC television and radio network, Disney channel, ESPN, A&E, E!, and Di...

Q: Data for Uberto Company are presented in the following table of returns

Data for Uberto Company are presented in the following table of returns on investment and residual incomes: Determine the missing items, identifying each item by the appropriate letter.

Q: Identify the following costs as a product cost or a period cost

Identify the following costs as a product cost or a period cost for an automobile manufacturer: a. Steel b. Wages of employees that operate painting equipment c. Rent on office buil...

Q: A business issued a 45-day, 6% note for

A business issued a 45-day, 6% note for $210,000 to a creditor on account. Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity, including intere...

Q: Differentiate between a profit center and an investment center.

Differentiate between a profit center and an investment center.

Q: When is the negotiated price approach preferred over the market price approach

When is the negotiated price approach preferred over the market price approach in setting transfer prices?

Q: H&R Block Inc. provides tax preparation services throughout the

H&R Block Inc. provides tax preparation services throughout the United States and other parts of the world. These services are provided through two segments: company-owned offices and franchised o...

Q: American Express Company is a major financial services company, noted for

American Express Company is a major financial services company, noted for its American Express ® card. Some of the performance measures used by the company in its balanced scorecard follow:...

Q: Hit-n-Run Inc. owns and operates 10 food

Hit-n-Run Inc. owns and operates 10 food trucks (mobile kitchens) throughout metropolitan Los Angeles. Each food truck has a different food theme, such as Irish-Mexican fusion, traditional Mexican str...

Q: Materials used by the Instrument Division of T_Kong Industries are

Materials used by the Instrument Division of T_Kong Industries are currently purchased from outside suppliers at a cost of $175 per unit. However, the same materials are available from the Components...

Q: Red Line Railroad Inc. has three regional divisions organized as profit

Red Line Railroad Inc. has three regional divisions organized as profit centers. The chief executive officer (CEO) evaluates divisional performance, using income from operations as a percent of revenu...

Q: The Whole Life Baked Goods Company is a diversified food company that

The Whole Life Baked Goods Company is a diversified food company that specializes in all natural foods. The company has three operating divisions organized as investment centers. Condensed data taken...

Q: A condensed income statement for the Commercial Division of Maxell Manufacturing Inc

A condensed income statement for the Commercial Division of Maxell Manufacturing Inc. for the year ended December 31 is as follows: Assume that the Commercial Division received no charges from servic...

Q: The vice president of operations of Pavone Company is evaluating the performance

The vice president of operations of Pavone Company is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year...

Q: Garcon Inc. manufactures electronic products, with two operating divisions,

Garcon Inc. manufactures electronic products, with two operating divisions, the Consumer and Commercial divisions. Condensed divisional income statements, which involve no intracompany transfers and i...

Q: Identify the following costs as a product cost or a period cost

Identify the following costs as a product cost or a period cost for a magazine publisher: a. Sales salaries b. Paper used for the magazine c. Maintenance on printing machines d. Depreciation expen...

Q: The following is a list of costs incurred by several businesses:

The following is a list of costs incurred by several businesses: a. Salary of quality control supervisor b. Packing supplies for products sold. These supplies are a very small portion of the total c...

Q: Valotic Tech Inc. sells electronics over the Internet. The Consumer

Valotic Tech Inc. sells electronics over the Internet. The Consumer Products Division is organized as a cost center. The budget for the Consumer Products Division for the month ended January 31 is as...

Q: Under what conditions might a company use activity-based costing to

Under what conditions might a company use activity-based costing to allocate factory overhead to products?

Q: Explain the meaning of (a) differential revenue,

Explain the meaning of (a) differential revenue, (b) differential cost, and (c) differential income.

Q: A company could sell a building for $250,000 or

A company could sell a building for $250,000 or lease it for $2,500 per month. What would need to be considered in determining if the lease option would be preferred?

Q: A company accepts incremental business at a special price that exceeds the

A company accepts incremental business at a special price that exceeds the variable cost. What other issues must the company consider in deciding whether to accept the business?

Q: A company fabricates a component at a cost of $6.

A company fabricates a component at a cost of $6.00. A supplier offers to supply the same component for $5.50. Under what circumstances is it reasonable to purchase from the supplier?

Q: Many fast-food restaurant chains such as McDonald’s occasionally discontinue restaurants

Many fast-food restaurant chains such as McDonald’s occasionally discontinue restaurants in their system. What are some financial considerations in deciding to eliminate a store?

Q: How does the target cost concept differ from cost- plus

How does the target cost concept differ from cost- plus approaches?

Q: What is meant by reporting by the “principle of exceptions”

What is meant by reporting by the “principle of exceptions” as the term is used in reference to cost control?

Q: A partial list of The Grand Hotel’s costs follows: /

A partial list of The Grand Hotel’s costs follows: Instructions 1. What would be The Grand Hotel’s most logical definition for the final cost object? Explain. 2. I...

Q: The materials cost variance report for Nickols Inc. indicates a large

The materials cost variance report for Nickols Inc. indicates a large favorable materials price variance and a significant unfavorable materials quantity variance. What might have caused these offsett...

Q: Fire Rock Company manufactures designer paddle boards in a wide variety of

Fire Rock Company manufactures designer paddle boards in a wide variety of sizes and styles. The following incomplete ledger accounts refer to transactions that are summarized for June: In addition,...

Q: Three phases of the management process are controlling, planning, and

Three phases of the management process are controlling, planning, and decision making. Match the following descriptions to the proper phase:

Q: a. What are the two variances between the actual cost and

a. What are the two variances between the actual cost and the standard cost for direct labor? b. Who generally has control over the direct labor cost variances?

Q: If variances are recorded in the accounts at the time the manufacturing

If variances are recorded in the accounts at the time the manufacturing costs are incurred, what does a debit balance in Direct Materials Price Variance represent?

Q: Briefly explain why firms might use nonfinancial performance measures.

Briefly explain why firms might use nonfinancial performance measures.

Q: Several items are omitted from the income statement and cost of goods

Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December. Instructions 1. Determine the amo...

Q: During Year 1, its first year of operations, Galileo Company

During Year 1, its first year of operations, Galileo Company purchased two available-for- sale investments as follows: Assume that as of December 31, Year 1, the Hawking Inc. stock had a...

Q: Explain the meaning of each of the following terms as they relate

Explain the meaning of each of the following terms as they relate to a bond issue: (a) convertible and (b) callable.

Q: Ginocera Inc. is a designer, manufacturer, and distributor of

Ginocera Inc. is a designer, manufacturer, and distributor of low ­ cost, high ­ quality stainless steel kitchen knives. A new kitchen knife series called the Kitchen Ninja was released for production...

Q: Lexigraphic Printing Company is considering replacing a machine that has been used

Lexigraphic Printing Company is considering replacing a machine that has been used in its factory for four years. Relevant data associated with the operations of the old machine and the new machine, n...

Q: a. Where should a declared but unpaid cash dividend be reported

a. Where should a declared but unpaid cash dividend be reported on the balance sheet? b. Where should a declared but unissued stock dividend be reported on the balance sheet?

Q: Munson Co. uses a job order cost system. The following

Munson Co. uses a job order cost system. The following data summarize the operations related to production for July: a. Materials purchased on account, $225,750 b. Materials requisitioned, $217,600,...

Q: Tybee Industries Inc. uses a job order cost system. The

Tybee Industries Inc. uses a job order cost system. The following data summarize the operations related to production for January, the first month of operations: a. Materials purchased on account, $2...

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During August, Rothchild Company incurred factory overhead costs as follows: indirect materials, $17,500; indirect labor, $22,000; utilities cost, $9,600; and factory depreciation, $17,500. Journalize...

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Distinguish between prime costs and conversion costs.

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Q: Magnolia Candle Inc. pays 10% of its purchases on account

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How does the Cost of goods sold section of the income statement differ between merchandising and manufacturing companies?

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What are the major differences between financial accounting and managerial accounting?

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Break-even analysis is an important tool for managing any business, including colleges and universities. In a group, identify three areas where break-even analysis might be...

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What is the difference between a product cost and a period cost?

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Describe sustainability and sustainable business practices.

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Q: Last year Parr Co. had sales of $900,000

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Q: Belmain Co. expects to maintain the same inventories at the

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Q: Describe how a job order cost system can be used for professional

Describe how a job order cost system can be used for professional service businesses.

Q: What is a job cost sheet?

What is a job cost sheet?

Q: Discuss how the predetermined factory overhead rate can be used in job

Discuss how the predetermined factory overhead rate can be used in job order cost accounting to assist management in pricing jobs.

Q: For each of the following service departments, select the activity base

For each of the following service departments, select the activity base listed that is most appropriate for charging service expenses to responsible units:

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Q: What do you think is meant by the term ethical auditing with

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Q: Some criticize the accounting profession for using expressions in the audit report

Some criticize the accounting profession for using expressions in the audit report that seem to build in deniability should the client commit a fraudulent act. What expressions enable the CPA to build...

Q: Do you think the concept of materiality is incompatible with ethical behavior

Do you think the concept of materiality is incompatible with ethical behavior? Consider in your answer how materiality judgments affect risk assessment in the audit of financial statements.

Q: According to GAAS, the auditor must evaluate the control deficiencies that

According to GAAS, the auditor must evaluate the control deficiencies that he has become aware of to determine whether those deficiencies, individually or in combination, are significant deficiencies...

Q: Mr. Arty works for Smile Accounting Firm as a senior accountant

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Q: Auditing standards require that a “brainstorming” session should be held

Auditing standards require that a “brainstorming” session should be held at the beginning of each audit to help identify steps to assess the possibility that material misstatements/fraud in the financ...

Q: Discuss the link between skeptical judgment and skeptical action and Rest’s Four

Discuss the link between skeptical judgment and skeptical action and Rest’s Four-Component Model of Ethical Decision Making.

Q: What are the auditor’s responsibilities to communicate information to the audit committee

What are the auditor’s responsibilities to communicate information to the audit committee under AICPA and PCAOB standards? If the auditor discovers that the audit committee routinely ignores such comm...

Q: Evaluate the costs and benefits of having a two-year “

Evaluate the costs and benefits of having a two-year “cooling off period for engagement partners.

Q: Explain how PCAOB inspections can lead to improvements in audit engagement quality

Explain how PCAOB inspections can lead to improvements in audit engagement quality.

Q: Is there a difference between cheating on a math test, lying

Is there a difference between cheating on a math test, lying about your age to purchase a cheaper ticket at a movie theater, and using someone else’s ID to get a drink at a bar?

Q: Distinguish between an auditor’s responsibilities to detect and report errors, illegal

Distinguish between an auditor’s responsibilities to detect and report errors, illegal acts, and fraud. What role does materiality have in determining the proper reporting and disclosure of such event...

Q: Discuss the cultural factors that create barriers for the Chinese units of

Discuss the cultural factors that create barriers for the Chinese units of Big Four firms to receiving support from the Chinese authorities to share audit information with the PCAOB to aid its inspect...

Q: In its report prepared for audit committees and other stakeholders in December

In its report prepared for audit committees and other stakeholders in December 2014, “Our Commitment to Audit Quality,” EY acknowledges that recent PCAOB findings indicate the need for improving audit...

Q: The International Auditing and Assurance Standards Board has issued a new standard

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Q: Do you agree that a professional accountant providing professional services to a

Do you agree that a professional accountant providing professional services to a client that is not an audit client of the firm or a network firm, who is unable to escalate a matter pertaining to an i...

Q: Audit morality includes moral sensitivity, moral judgment, moral motivation,

Audit morality includes moral sensitivity, moral judgment, moral motivation, and moral character. Explain how audit morality plays a key role in determining best audit practices that influence audit p...

Q: Dennis just got hired after not working for two years following his

Dennis just got hired after not working for two years following his reporting of financial statement fraud by his previous employer. Dennis was treated as an outcast and ultimately fired after the com...

Q: AU-C 240 points to three conditions that enable fraud to

AU-C 240 points to three conditions that enable fraud to occur. Briefly describe each condition. How does one’s propensity to act ethically as described by Rest’s model of morality influence each of t...

Q: What is the ethical value of applying the fraud triangle to assess

What is the ethical value of applying the fraud triangle to assess the risk of material misstatements in the financial statements?

Q: All companies are vulnerable to fraud, but small businesses are particularly

All companies are vulnerable to fraud, but small businesses are particularly vulnerable. Why do you think this may be the case? What signs of possible fraud may be more pronounced in small businesses...

Q: Do you think it is ethical for an employer to use social

Do you think it is ethical for an employer to use social media information as a factor when considering whether to hire an employee? What about monitoring social networking activities of employees whi...

Q: Explain the content of each section of the audit report. Evaluate

Explain the content of each section of the audit report. Evaluate the importance of each section with respect to the users of financial reports.

Q: Give one example each of when an auditor might render an unmodified

Give one example each of when an auditor might render an unmodified opinion and include an emphasis-of-matter paragraph and other-matter paragraph. What is the value of such paragraphs in the audit re...

Q: The following statement expresses the conclusion of XYZ auditors with respect to

The following statement expresses the conclusion of XYZ auditors with respect to the company’s investment in ABC. Assume that all amounts are material. What kind of audit opinion should be rendered gi...

Q: Rationalization for fraud can fall under two categories: “no harm

Rationalization for fraud can fall under two categories: “no harm” and “no responsibility.” Assume an employee is directed by management to reduce recorded expenses at year-end by insignificant amount...

Q: As discussed in the opening reflection, MF Global filed a complaint

As discussed in the opening reflection, MF Global filed a complaint charging PwC with professional malpractice, breach of contract, and unjust enrichment in connection with its advice concerning, and...

Q: Nixon and Co., CPAs, issued an unmodified opinion on the

Nixon and Co., CPAs, issued an unmodified opinion on the 2015 financial statements of Madison Corp. These financial statements were included in Madison’s annual report and Form 10-K filed with the SEC...

Q: The following pertains to auditor legal liability standards under the PSLRA:

The following pertains to auditor legal liability standards under the PSLRA: a. The Reform Act requires that, in any private securities fraud action in which the plaintiff is alleging a misleading sta...

Q: Some auditors claim that increased exposure under Section 404 of the SOX

Some auditors claim that increased exposure under Section 404 of the SOX creates a litigation environment that is unfairly risky for auditors. Do you think that the inability of auditors to detect a f...

Q: Assume a U.S. company operates overseas and is approached

Assume a U.S. company operates overseas and is approached by foreign government officials with a request to provide family members with student internships with the company. The company does business...

Q: Has the accounting profession created a situation in which the auditors’ ethical

Has the accounting profession created a situation in which the auditors’ ethical behavior is impaired by their professional obligations? How does the profession’s view of such obligations relate to ho...

Q: In a 2014 segment of Shark Tank, Trevor Hiltbrand, the

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Consider the following statement and explain the relationship between legal compliance on a global level and ethical responsibilities of accountants and auditors: “Ethical values and legal principles...

Q: Business ethics is about managing ethics in an organizational context and involves

Business ethics is about managing ethics in an organizational context and involves applying principles and standards that guide behavior in business conduct. According to IFAC, “The decisions and beha...

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How do Gray’s accounting values establish a basis for financial reporting in countries with different cultural systems?

Q: What are the costs and benefits of establishing one set of accounting

What are the costs and benefits of establishing one set of accounting standards (i.e., IFRS) around the world? How do cultural factors, legal systems, and ethics influence your answer? Apply a utilita...

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The Institute of Chartered Accountants in England and Wales (ICAEW) has adopted a code of ethics based on the IFAC Code. In commenting on the principles-based approach used in these codes, the ICAEW s...

Q: Distinguish between common-law liability and statutory liability for auditors.

Distinguish between common-law liability and statutory liability for auditors. What is the basis for the difference in liability?

Q: Consider the practice of making “facilitating payments” to foreign officials

Consider the practice of making “facilitating payments” to foreign officials and others as part of doing business abroad in the context of the following statement: International companies are confront...

Q: One provision of the U.K. Bribery Act is that

One provision of the U.K. Bribery Act is that it applies to bribes that occur anywhere in the world by non-U.K. companies that conduct any part of their business in the United Kingdom. For example, th...

Q: What is the purpose of having a two-tier system of

What is the purpose of having a two-tier system of boards of directors in countries such as Germany? How does the dual-board approach ameliorate the potential conflicts in the principal-agent relation...

Q: In discussing the benefits of the Global Code of Ethics, Richard

In discussing the benefits of the Global Code of Ethics, Richard George, chairperson of the International Ethics Standards Board for Accountants, said, “Strong and clear independence standards are vit...

Q: According to Adam Smith’s The Wealth of Nations, when it comes

According to Adam Smith’s The Wealth of Nations, when it comes to government oversight in the free market and regulations, the less intervention, the better. Does the government play an important role...

Q: What are the unique challenges to the global internal audit function?

What are the unique challenges to the global internal audit function?

Q: In this chapter, we discuss problems encountered by the PCAOB in

In this chapter, we discuss problems encountered by the PCAOB in gaining access to inspect workpapers of auditors in U.S. international accounting firms that have Chinese company clients that list the...

Q: Distinguish between the legal concepts of actually foreseen third-party users

Distinguish between the legal concepts of actually foreseen third-party users and reasonably foreseeable third-party users. How does each concept establish a basis for an auditor’s legal liability to...

Q: Do you think that the provision of nonaudit services for a client

Do you think that the provision of nonaudit services for a client with a failed audit is evidence of negligence?

Q: Explain the legal basis for a cause of action against an auditor

Explain the legal basis for a cause of action against an auditor. What are the defenses available to the auditor to rebut such charges? How does adherence to the ethical standards of the accounting pr...

Q: Assume a third party such as a successor audit firm quickly discovers

Assume a third party such as a successor audit firm quickly discovers a fraud that the predecessor auditor has overlooked for years. Do you think this provides evidence supporting scienter? Explain.

Q: What are the legal requirements for a third party to sue an

What are the legal requirements for a third party to sue an auditor under Section 10 and Rule 10b-5 of the Securities Exchange Act of 1934? How do these requirements relate to the Hochfelder decision?...

Q: Valley View Manufacturing Inc., sought a $500,000 loan

Valley View Manufacturing Inc., sought a $500,000 loan from First National Bank. First National insisted that audited financial statements be submitted before it would extend credit. Valley View agree...

Q: In Arthur Levitt’s speech that was referred to in the opening quote

In Arthur Levitt’s speech that was referred to in the opening quote he also said: “…I fear that we are witnessing an erosion in the quality of earnings, and therefore, the quality of financial reporti...

Q: Maines and Wahlen state in their research paper on the reliability of

Maines and Wahlen state in their research paper on the reliability of accounting information: “Accrual estimates require judgment and discretion, which some firms under certain incentive conditions wi...

Q: According to the 2011 National Business Ethics Survey conducted by the Ethics

According to the 2011 National Business Ethics Survey conducted by the Ethics Resource Center, Generational Differences in Workplace Ethics, a relatively high percentage of Millennials consider certai...

Q: Krispy Kreme was involved in an accounting fraud where the company reported

Krispy Kreme was involved in an accounting fraud where the company reported false quarterly and annual earnings and falsely claimed that, as a result of those earnings, it had achieved what had become...

Q: Safety-Kleen issued a major financial restatement in 2001. The

Safety-Kleen issued a major financial restatement in 2001. The next year, the company restated (reduced) previously reported net income by $534 million for the period 1997–1999. PwC withdrew its finan...

Q: Revenue recognition in the Xerox case called for determining the stand-

Revenue recognition in the Xerox case called for determining the stand-alone selling price for each of the deliverables and using it to separate out the revenue amounts. Why do you think it is importa...

Q: Tinseltown Construction just received a $2 billion contract to construct a

Tinseltown Construction just received a $2 billion contract to construct a modern football stadium in the City of Industry, located in southern California, for a new National Football League (NFL) tea...

Q: Explain how a company might use the accounting rules for impairment of

Explain how a company might use the accounting rules for impairment of long-lived assets to manage earnings.

Q: The SEC’s new rules on posting financial information on social media sites

The SEC’s new rules on posting financial information on social media sites such as Twitter means that companies can now tweet their earnings in 140 characters or less. What are the problems that may a...

Q: Do you agree with each of the following statements? Explain.

Do you agree with each of the following statements? Explain. • EBITDA makes companies with asset-heavy balance sheets look healthier than they may actually be. • EBITDA portrays a company’s debt servi...

Q: Critics of IFRS argue that the more principles-based standards are

Critics of IFRS argue that the more principles-based standards are not as precise as, and therefore easier to manipulate than, the more rules-based GAAP. The reason for this is that IFRS requires more...

Q: In the Enron case, the company eventually turned to “back

In the Enron case, the company eventually turned to “back-door” guaranteeing of the debt of Chewco, one of its SPEs, to satisfy equity investors. Assume that a $16 million loan agreement required that...

Q: Are the use of non-GAAP financial measures ethical?

Are the use of non-GAAP financial measures ethical?

Q: How should an accounting professional go about determining whether a proposed action

How should an accounting professional go about determining whether a proposed action is in the public interest?

Q: In the study of earnings quality by Dichev et al., CFOs

In the study of earnings quality by Dichev et al., CFOs stated that “current earnings are considered to be high quality if they serve as a good guide to the long-run profits of the firm.” Discuss how...

Q: The auditor of Beastie Company is reviewing the following client information for

The auditor of Beastie Company is reviewing the following client information for the prior year ended December 31, 2015, and all four quarters of 2016. Estimated Accruals in pretax earnings (in millio...

Q: Explain the meaning of the following two statements and why each may

Explain the meaning of the following two statements and why each may be true: a. Where management does not try to manipulate earnings, there is a positive effect on earnings quality. b. The absence of...

Q: Big Pharma has been criticized for making deals that may bring harm

Big Pharma has been criticized for making deals that may bring harm to shareholder interests. Evaluate the following transaction from earnings management and ethical perspectives: A pharmaceutical dru...

Q: In well-governed companies, a sense of accountability and ethical

In well-governed companies, a sense of accountability and ethical leadership create a culture that places organizational ethics above all else. What role does organizational culture play in preventing...

Q: Evaluate the following statement: Do the ends of positive organizational consequences

Evaluate the following statement: Do the ends of positive organizational consequences justify the means of earnings management?

Q: Relevance and faithful representation are the qualitative characteristics of useful information under

Relevance and faithful representation are the qualitative characteristics of useful information under SFAC 8. Evaluate these characteristics from an ethical perspective. That is, how does ethical reas...

Q: Evaluate earnings management from a utilitarian perspective. Can earnings management be

Evaluate earnings management from a utilitarian perspective. Can earnings management be an ethical practice? Discuss why or why not.

Q: Evaluate the following statements from an ethical perspective: “Earnings

Evaluate the following statements from an ethical perspective: “Earnings management in a narrow sense is the behavior of management to play with the discretionary accrual component to determine high o...

Q: Comment on the statement that materiality is in the eye of the

Comment on the statement that materiality is in the eye of the beholder. How does this statement relate to the discussion in the chapter of how to gauge materiality in assessing financial statement re...

Q: Distinguish between ethical rights and obligations from the perspective of accountants and

Distinguish between ethical rights and obligations from the perspective of accountants and auditors.

Q: Needles talks about the use of a continuum ranging from questionable or

Needles talks about the use of a continuum ranging from questionable or highly conservative to fraud to assess the amount to be recorded from for an estimated expense. Discuss his concept of a continu...

Q: In 2010 LinkedIn reported trade payable obligations totaling $10.8

In 2010 LinkedIn reported trade payable obligations totaling $10.8 million in other accrued expenses within accrued liabilities instead of accounts payable. In 2011, note 2 in the 10-K financial state...

Q: Comment on the statement that what a company’s income statement reveals is

Comment on the statement that what a company’s income statement reveals is interesting but what it conceals is vital.

Q: Choose someone from the business or accounting world who you think is

Choose someone from the business or accounting world who you think is an authentic leader and explain why you believe that to be true.

Q: How might an accounting firm influence whether non–tax practitioners view

How might an accounting firm influence whether non–tax practitioners view a contentious issue with a client as having been handled ethically?

Q: How does an auditor’s commitment to the firm, the profession,

How does an auditor’s commitment to the firm, the profession, and to colleagues influence whether she will blow the whistle on financial wrongdoing?

Q: Evaluate the moral intensity of the issues faced by Diem-Thi

Evaluate the moral intensity of the issues faced by Diem-Thi Le in her whistleblowing experience at DCAA.

Q: How does organizational dissonance influence ethical leadership and decision making?

How does organizational dissonance influence ethical leadership and decision making?

Q: Why do you think studies show that no single factor has a

Why do you think studies show that no single factor has a bigger impact on the ethicality of a firm’s culture than the personal examples set by firm leaders?

Q: Audit firms are expected to establish and maintain a system of quality

Audit firms are expected to establish and maintain a system of quality control. PCAOB inspections often cite the lack of quality controls as a deficiency of audit firms. What role does leadership play...

Q: Using the concept of justice, evaluate how an auditor would assess

Using the concept of justice, evaluate how an auditor would assess the equality of interests in the financial reporting process.

Q: Explain how the circumstances under each of the following might reflect failed

Explain how the circumstances under each of the following might reflect failed leadership by auditors and the audit firm: • Under-reporting of time on an engagement • Premature sign-off on audit proce...

Q: What is the role of leadership in auditor assessments of the likelihood

What is the role of leadership in auditor assessments of the likelihood of fraud in the context of the fraud triangle?

Q: Bruns and Merchant found that managers did not agree on the types

Bruns and Merchant found that managers did not agree on the types of earnings management activities that are acceptable. Refer to the definitions of earnings management in Chapter 7. Explain how leade...

Q: Moral legitimacy refers to the generalized perception or assumption of observers that

Moral legitimacy refers to the generalized perception or assumption of observers that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, v...

Q: Why might a moral person who is not viewed as a moral

Why might a moral person who is not viewed as a moral manager fail to establish an ethical culture in an organization?

Q: The American writer, Robert McKee, is quoted as saying,

The American writer, Robert McKee, is quoted as saying, “True character is revealed in the choices a human being makes under pressure.” Explain what you think this means in the context of moral intens...

Q: Distinguish between authentic leadership, transformational leadership, and servant leadership.

Distinguish between authentic leadership, transformational leadership, and servant leadership. Are all necessary to change individuals and social systems within an organization?

Q: Identify three reasons why there may be ethical leadership failures and explain

Identify three reasons why there may be ethical leadership failures and explain why failed leadership occurs.

Q: Values-driven leadership as envisioned in the Giving Voice to Values

Values-driven leadership as envisioned in the Giving Voice to Values technique poses the following question: Once I know what is right, how do I get it done and get it done effectively? Discuss how an...

Q: Are accountants and auditors moral agents of corporations and society? Explain

Are accountants and auditors moral agents of corporations and society? Explain.

Q: Why is it important for a CPA to promote professional services in

Why is it important for a CPA to promote professional services in an ethical manner? Do you believe it would be ethical for a CPA to advertise professional services using testimonials and endorsements...

Q: How might moral intensity influence the decisions made by accounting professionals?

How might moral intensity influence the decisions made by accounting professionals?

Q: Describe the role of professional judgment in ethical leadership as it pertains

Describe the role of professional judgment in ethical leadership as it pertains to accountants and auditors.

Q: How does the nature of the internal audit function, strength of

How does the nature of the internal audit function, strength of ethical leadership, and level of moral intensity influence whether an auditor will record questionable and undocumented journal entries?...

Q: The audit of KBC Solutions by Carlson and Smith, CPAs,

The audit of KBC Solutions by Carlson and Smith, CPAs, was scheduled to end on February 28, 2016. However, Rick Carlson was uncertain whether it could happen. As the review partner, he had just comple...

Q: Lance Popperson woke up in a sweat, with an anxiety attack

Lance Popperson woke up in a sweat, with an anxiety attack coming on. Popperson popped two anti-anxiety pills, laid down to try and sleep for the third time that night, and thought once again about hi...

Q: Family Games, Inc., is a publicly owned company with annual

Family Games, Inc., is a publicly owned company with annual sales of $50 million from a variety of wholesome electronic games that are designed for use by the entire family. However, during the past t...

Q: One area of concern for the accounting profession for the past 20

One area of concern for the accounting profession for the past 20 years has been the proliferation of alternative practice structures. Potential problems exist because the audit side of the business m...

Q: Joe Kang is an owner and audit partner for Han, Kang

Joe Kang is an owner and audit partner for Han, Kang & Lee, LLC. As the audit on Frost Systems was reaching its concluding stages on January 31, 2016, Kang met with Kate Boller, the CFO, to discuss th...

Q: You are a tax manager and work for CPA firm that that

You are a tax manager and work for CPA firm that that performs audits, advisory services, and tax planning for wealthy clients in a large Midwestern city. You just joined the tax department after five...

Q: Yardley, Inc., is a mid-size company in Oklahoma

Yardley, Inc., is a mid-size company in Oklahoma City. It has been struggling the past few years because chemical products it uses in its agricultural production process increasingly have been deemed...

Q: Another ethical dilemma deals with a runaway trolley heading for five railway

Another ethical dilemma deals with a runaway trolley heading for five railway workers who will be killed if it proceeds on its present course. The only way to save these people is to hit a switch that...

Q: Do you think it would be ethical for a CPA to have

Do you think it would be ethical for a CPA to have someone else do for her that which she is prohibited from doing by the AICPA Code of Professional Conduct? Why or why not? Do you think a CPA can jus...

Q: Sue Kolb has been associated with Valley View Hospital in Highlands Ranch

Sue Kolb has been associated with Valley View Hospital in Highlands Ranch, a small town in Colorado. Kolb is a CPA licensed in Colorado and handles the hospital’s financial affairs; she climbed the la...

Q: How does one go from whistleblower to being charged by the SEC

How does one go from whistleblower to being charged by the SEC for participating in a scheme from mid-2000 to mid-2002 to overstate online revenue through round-trip transactions over two years while...

Q: In a bizarre twist to a bizarre story, on October 22

In a bizarre twist to a bizarre story, on October 22, 2013, Deloitte agreed to pay a $2 million penalty to settle civil charges—brought by the Public Company Accounting Oversight Board (PCAOB)—that th...

Q: Ethan Lester was seen as a “model employee” who deserved

Ethan Lester was seen as a “model employee” who deserved a promotion to CFO, according to Kelly Fostermann, the CEO of Fostermann Corporation, a Maryland-based, largely privately held company that is...

Q: The Groupon case was first discussed in Chapter 3. Here,

The Groupon case was first discussed in Chapter 3. Here, we expand on the discussion of internal controls and the risk of material misstatement in the financial statements. Groupon is a deal-of-the-d...

Q: The story of ZZZZ Best is one of greed and audaciousness.

The story of ZZZZ Best is one of greed and audaciousness. It is the story of a 15-year-old boy from Reseda, California, who was driven to be successful, regardless of the costs. His name is Barry Mink...

Q: Bill Stanley, of Jacobs, Stanley & Company, started to

Bill Stanley, of Jacobs, Stanley & Company, started to review the working paper files on his client, Imperial Valley Community Bank, in preparation for the audit of the client’s financial statements f...

Q: Romello Accounting LLP is a small CPA firm consisting of three partners

Romello Accounting LLP is a small CPA firm consisting of three partners and seven other professional staff. The firm offers full attestation and assurance services. Most of the work is for small and m...

Q: Jamie Keller was pleased with his new job position as director of

Jamie Keller was pleased with his new job position as director of international consolidation for Gamma Enterprises. Gamma Enterprises was a consolidation of high-tech gaming companies, with subsidiar...

Q: Barry Yellen, CPA, is a sole practitioner. The largest

Barry Yellen, CPA, is a sole practitioner. The largest audit client in his office is Rooster Sportswear. Rooster is a privately owned company in Chicken Heights, Idaho, with a 12-person board of direc...

Q: Assume in the DigitPrint case that the venture capitalists do not provide

Assume in the DigitPrint case that the venture capitalists do not provide additional financing to the company, even though the accrued expense adjustments have not been made. The company hires an audi...

Q: Diamond Foods, based in Stockton, California, is a premium

Diamond Foods, based in Stockton, California, is a premium snack food and culinary nut company with diversified operations. The company had a reputation of making bold and expensive acquisitions. Due...

Q: Bill Young felt uneasy but good about downloading hundreds of pages of

Bill Young felt uneasy but good about downloading hundreds of pages of documents about Infant Products Inc., an audit client of his CPA firm, Rogers & Autry, which involved the bribery of foreign gove...

Q: Ahold is a publicly held company organized in the Netherlands with securities

Ahold is a publicly held company organized in the Netherlands with securities registered with the SEC pursuant to Section 12(B) of the Exchange Act. Ahold’s securities trade on the NYSE and are eviden...

Q: Auditors are not always found guilty of negligence, gross negligence,

Auditors are not always found guilty of negligence, gross negligence, and fraud when lawsuits are filed against them. And they do not always settle lawsuits to avoid costly, protracted litigation. A g...

Q: Background On November 20, 2012, Hewlett-Packard (

Background On November 20, 2012, Hewlett-Packard (HP) disclosed that it discovered an accounting fraud and has written down $8.8 billion of the value of Autonomy, the British software company that it...

Q: The facts of this case and names of main characters have been

The facts of this case and names of main characters have been changed to focus on specific ethical and professional obligations. Heinrich Müller had always been a team player. His many years at one o...

Q: Paul Lewis is the quality review partner on the Richards & Co

Paul Lewis is the quality review partner on the Richards & Co. engagement. He was reviewing the workpapers prior to the December 31, 2015, annual audit when he came across transactions that caused him...

Q: In the 2007 case of Paul V. Anjoorian v. Arnold

In the 2007 case of Paul V. Anjoorian v. Arnold Kilberg & Co., Arnold Kilberg, and Pascarella & Trench, the Rhode Island Superior Court ruled that a shareholder can sue a company’s outside accounting...

Q: On December 13, 2012, Vertical Pharmaceuticals Inc. and an

On December 13, 2012, Vertical Pharmaceuticals Inc. and an affiliated company sued Deloitte & Touche LLP in New Jersey state court for alleged accountant malpractice, claiming the firm’s false accusat...

Q: Kay & Lee LLP was retained as the auditor for Holligan Industries

Kay & Lee LLP was retained as the auditor for Holligan Industries to audit the financial statements required by prospective banks as a prerequisite to extending a loan to the client. The auditor knows...

Q: In the discussion of loyalty in this chapter, a statement is

In the discussion of loyalty in this chapter, a statement is made that “your ethical obligation is to report what you have observed to your supervisor and let her take the appropriate action.” We poin...

Q: Kirsten had her dream job, combining her love of accounting with

Kirsten had her dream job, combining her love of accounting with traveling. She’d just had a big promotion to Director of International Accounting for Getaway Cruise Lines. As the director in the Hous...

Q: Con-way is a Delaware corporation headquartered in San Mateo,

Con-way is a Delaware corporation headquartered in San Mateo, California. It is an international freight transportation and logistics services company that conducts operations in a number of foreign j...

Q: Satyam Computer Services, now Mahindra Satyam, is an India-

Satyam Computer Services, now Mahindra Satyam, is an India-based global business and information technology services company that specializes in consulting, systems integration, and outsourcing soluti...

Q: Canada-based Nortel Networks was one of the largest telecommunications equipment

Canada-based Nortel Networks was one of the largest telecommunications equipment companies in the world prior to its filing for bankruptcy protection on January 14, 2009, in the United States, Canada,...

Q: Beazer Homes is a home-building company headquartered in Atlanta,

Beazer Homes is a home-building company headquartered in Atlanta, Georgia. Its stock is listed on the New York Stock Exchange. Beazer is required to file Form 10-Q and Form 10-K, as well as an 8-K for...

Q: We can’t recognize revenue immediately, Paul, since we agreed to

We can’t recognize revenue immediately, Paul, since we agreed to buy similar software from DSS,” Sarah Young stated. “That’s ridiculous,” Paul Henley replied. “Get your head out of the sand, Sarah, be...

Q: Back on January 16, 2003, after more than 23 years

Back on January 16, 2003, after more than 23 years, General Electric (GE) Co. decided to dump its well-recognized slogan, “We Bring Good Things to Life,” and decided to spend more than $100 million to...

Q: It’s no fun accepting a position for your dream job and then

It’s no fun accepting a position for your dream job and then red flags are raised that make you wonder about the culture of the company. Those are the thoughts of Donna Mason on January 18, 2016, as s...

Q: Background For years, Dell’s seemingly magical power to squeeze efficiencies

Background For years, Dell’s seemingly magical power to squeeze efficiencies out of its supply chain and drive down costs made it a darling of the financial markets. Now we learn that the magic was at...

Q: It took a long time but the Securities and Exchange Commission finally

It took a long time but the Securities and Exchange Commission finally acted and held auditors responsible for the fraud that occurred in banks during the financial recession. Surprisingly to some, th...

Q: Do you think there are any circumstances when you should go outside

Do you think there are any circumstances when you should go outside the company to report financial wrongdoing? If so, to what person/organization would you go? Why? If not, why would you not take the...

Q: One of the earliest frauds during the late 1990s and early 2000s

One of the earliest frauds during the late 1990s and early 2000s was at Sunbeam. The SEC alleged in its charges against Sunbeam that top management engaged in a scheme to fraudulently misrepresent Sun...

Q: A member of the audit team of Ernst & Young in Canada

A member of the audit team of Ernst & Young in Canada became concerned about the accounting for inventory by its Canadian client, Sino-Forest, a Chinese company in the forestry business and headquarte...

Q: The North Face, Inc. (North Face) is an

The North Face, Inc. (North Face) is an American outdoor product company specializing in outerwear, fleece, coats, shirts, footwear, and equipment such as backpacks, tents, and sleeping bags. North Fa...

Q: Research Triangle Software Innovations is a software solutions company specializing in enterprise

Research Triangle Software Innovations is a software solutions company specializing in enterprise resource planning (ERP) business management software. Located in the Research Triangle Park, North Car...

Q: It’s impossible! There is no justification for ignoring these entries.”

It’s impossible! There is no justification for ignoring these entries.” These are the words spoken by Jackie Bauman at a meeting with the CFO of the company, Glen Donner. Cumberland Lumber is a region...

Q: After the news broke about the frauds at Enron and WorldCom in

After the news broke about the frauds at Enron and WorldCom in the United States, there were those in Europe who used the occasion to beat the drum: “Our principles-based approach to accounting standa...

Q: The artificial tax shelter arrangements developed by KPMG LLP for wealthy clients

The artificial tax shelter arrangements developed by KPMG LLP for wealthy clients that led to the settlement of a legal action with the Department of Treasury and the Internal Revenue Service. On Augu...

Q: On March 4, 2009, the SEC reached an agreement with

On March 4, 2009, the SEC reached an agreement with Krispy Kreme Doughnuts, Inc., and issued a cease-and-desist order to settle charges that the company fraudulently inflated or otherwise misrepresent...

Q: Denise Norris is a manager at Fitch & Jones, LLP,

Denise Norris is a manager at Fitch & Jones, LLP, a regional audit firm in Providence, Rhode Island. Norris is preparing for a meeting with Alan Morse, the controller of Rhody Electronics, a publicly...

Q: On July 24, 2009, the U.S. Court

On July 24, 2009, the U.S. Court of Appeals for the District of Columbia upheld the finding of the SEC that Gregory M. Dearlove, a certified public accountant and formerly a partner with the accountin...

Q: Assume that a corporate officer or other executive asks you, as

Assume that a corporate officer or other executive asks you, as the accountant for the company, to omit or leave out certain financial figures from the balance sheet that may paint the business in a b...

Q: The U.S. Court of Appeals for the Fourth Circuit

The U.S. Court of Appeals for the Fourth Circuit affirmed the lower court ruling in the case Public Employees’ Retirement Association of Colorado; Generic Trading of Philadelphia, LLC v. Deloitte & To...

Q: South City Electronics is involved in printed circuit board assembly (PCBA

South City Electronics is involved in printed circuit board assembly (PCBA) dealing with the assembly of complex electronic system processes. The electronics company, based in the city of South San Fr...

Q: HFS Incorporated (HFS) was principally a controller of franchise brand

HFS Incorporated (HFS) was principally a controller of franchise brand names in the hotel, real estate brokerage, and car rental businesses, including Avis, Ramada Inn, Days Inn, and Century 21. Comp-...

Q: Some of my management decisions turned wrong, but fraud? Never

Some of my management decisions turned wrong, but fraud? Never, never, never.” This statement was made by the former CEO of Vivendi Universal, Jean-Marie Messier, as he took the stand in November 20,...

Q: This case focuses on improper accounting and management decision making at Waste

This case focuses on improper accounting and management decision making at Waste Management, Inc., during the period of its accounting fraud from 1992 to 1997, and the role and responsibilities of Art...

Q: Yes. Cheating occurs at the prestigious Harvard University. In 2012

Yes. Cheating occurs at the prestigious Harvard University. In 2012, Harvard forced dozens of students to leave in its largest cheating scandal in memory, but the institution would not address asserti...

Q: Ed Giles and Susan Regas have never been happier than during the

Ed Giles and Susan Regas have never been happier than during the past four months since they have been seeing each other. Giles is a 35-year-old CPA and a partner in the medium-sized accounting firm o...

Q: On December 3, 2012, a terrible incident occurred in the

On December 3, 2012, a terrible incident occurred in the New York City subway when Ki-Suck Han was pushed off a subway platform by Naeem Davis. Han was hit and killed by the train, while observers did...

Q: Jose and Emily work as auditors for the state of Texas.

Jose and Emily work as auditors for the state of Texas. They have been assigned to the audit of the Lone Star School District. There have been some problems with audit documentation for the travel and...

Q: Part A Billy Tushoes recently received an offer to join the

Part A Billy Tushoes recently received an offer to join the accounting firm of Tick and Check LLP. Billy would prefer to work for Foot and Balance LLP but has not received an offer from the firm the d...

Q: Sir Walter Scott (1771–1832), the Scottish novelist and

Sir Walter Scott (1771–1832), the Scottish novelist and poet, wrote: “Oh what a tangled web we weave, when first we practice to deceive.” Comment on what you think Scott meant by this phrase.

Q: Gloria Hernandez is the controller of a public company. She just

Gloria Hernandez is the controller of a public company. She just completed a meeting with her superior, John Harrison, who is the CFO of the company. Harrison tried to convince Hernandez to go along w...

Q: Kevin Lowe is depressed. He has been with the CPA firm

Kevin Lowe is depressed. He has been with the CPA firm Stooges LLP for only three months. Yet the partners in charge of the firm—Bo Chambers and his brother, Moe—have asked for a “sit-down.” Here’s ho...

Q: Shifty Industries is a small business that sells home beauty products in

Shifty Industries is a small business that sells home beauty products in the San Luis Obispo, California, area. The company has experienced a cash crunch and is unable to pay its bills on a timely bas...

Q: Cleveland Custom Cabinets is a specialty cabinet manufacturer for high-end

Cleveland Custom Cabinets is a specialty cabinet manufacturer for high-end homes in the Cleveland Heights and Shaker Heights areas. The company manufactures cabinets built to the specifications of hom...

Q: Better Boston Beans is a coffee shop located in the Faneuil Hall

Better Boston Beans is a coffee shop located in the Faneuil Hall Marketplace near the waterfront and Government Center in Boston. It specializes in exotic blends of coffee, including Sumatra Dark Roas...

Q: Barbara is working on the audit of a client with a group

Barbara is working on the audit of a client with a group of five other staff-level employees. During the audit, Diane, a member of the group, points out that she identified a deficiency in the client’...

Q: The WorldCom fraud was the largest in U.S. history

The WorldCom fraud was the largest in U.S. history, surpassing even that of Enron. Beginning modestly during mid-year 1999 and continuing at an accelerated pace through May 2002, the company—under the...

Q: Gregory and Alex started a small business based on a secret-

Gregory and Alex started a small business based on a secret-recipe salad dressing that got rave reviews. Gregory runs the business end and makes all final operational decisions. Alex runs the creative...

Q: Brenda Sells sent the tax return that she prepared for the president

Brenda Sells sent the tax return that she prepared for the president of Purple Industries, Inc., Harry Kohn, to Vincent Dim, the manager of the tax department at her accounting firm. Dim asked Sells t...

Q: Jackson Daniels graduated from Lynchberg State College two years ago. Since

Jackson Daniels graduated from Lynchberg State College two years ago. Since graduating from college, he has worked in the accounting department of Lynchberg Manufacturing. Daniels was recently asked t...

Q: Assume you are interviewing for a position with an accounting firm and

Assume you are interviewing for a position with an accounting firm and the recruiter asks you the following questions. Craft a response that you would feel comfortable giving for each one. • Describe...

Q: Troy just returned from a business trip for health-care administrators

Troy just returned from a business trip for health-care administrators in Orlando. Kristen, a relatively new employee who reports to him, also attended the conference. They both work for Gateway Hospi...

Q: The facts of this case are fictional. Any resemblance to real

The facts of this case are fictional. Any resemblance to real persons, living or dead, is purely coincidental. Kenny is always looking to make contacts in the business world and enhance his networkin...

Q: Milton Manufacturing Company produces a variety of textiles for distribution to wholesale

Milton Manufacturing Company produces a variety of textiles for distribution to wholesale manufacturers of clothing products. The company’s primary operations are located in Long Island City, New York...

Q: “I’m sorry, Lucy. That’s the way it is,”

“I’m sorry, Lucy. That’s the way it is,” Ricardo said. The client wants it that way. “I just don’t know if I can go along with it, Ricardo,” Lucy replied. “I know. I agree with you. But, Juggyfroot is...

Q: The story of Phar-Mor shows how quickly a company that

The story of Phar-Mor shows how quickly a company that built its earnings on fraudulent transactions can dissolve like an Alka-Seltzer. One day, Stan Cherelstein, the controller of Phar-Mor, discovere...

Q: Reprinted with permission from “The Parable of the Sadhu,” by

Reprinted with permission from “The Parable of the Sadhu,” by Bowen H. McCoy, Harvard Business Review. Copyright © Harvard Business Publishing. Last year, as the first participant in the new six-month...

Q: How could a CEO and chairperson of the board of directors of

How could a CEO and chairperson of the board of directors of a major company resign in disgrace over a personal relationship with a contractor that led to a sexual harassment charge and involved a con...

Q: Occupational fraud comes in many shapes and sizes. The fraud at

Occupational fraud comes in many shapes and sizes. The fraud at Rite-Aid is one such case. On February 10, 2015, the U.S. Attorney’s Office for the Middle District of Pennsylvania announced that a for...

Q: United Thermostatic Controls is a publicly owned company that engages in the

United Thermostatic Controls is a publicly owned company that engages in the manufacturing and marketing of residential and commercial thermostats. The thermostats are used to regulate temperature in...

Q: Natalie got the call she had been waiting for over six long

Natalie got the call she had been waiting for over six long months. Her complaint to the human resources department of Franklin Industries had been dismissed. It was HR’s conclusion that she was not r...

Q: On October 15, 2009, in Fort Collins, Colorado,

On October 15, 2009, in Fort Collins, Colorado, the parents of a six-year-old boy, Falcon Heene, claimed that he had floated away in a homemade helium balloon that was shaped to resemble a silver flyi...

Q: The facts of this case are from the Walmart shrinkage fraud discussed

The facts of this case are from the Walmart shrinkage fraud discussed in an article in Nation on June 11, 2014. “Literary license” has been exercised for the purpose of emphasizing important issues re...

Q: Bennie Gordon graduated with a Masters in Accounting two years ago and

Bennie Gordon graduated with a Masters in Accounting two years ago and now works as an accounting manager at the division level at Jet Energy Company, a company headquartered in Winston-Salem, North C...

Q: On September 25, 2012, Japanese camera and medical equipment maker

On September 25, 2012, Japanese camera and medical equipment maker Olympus Corporation and three of its former executives pleaded guilty to charges related to an accounting scheme and cover-up in one...

Q: In 2005, Tony Menendez, a former Ernst & Young LLP

In 2005, Tony Menendez, a former Ernst & Young LLP auditor and Director of Technical Accounting and Research Training for Halliburton, blew the whistle on Halliburton’s accounting practices. The fight...

Q: We are citizens of the world. The tragedy of our times

We are citizens of the world. The tragedy of our times is that we do not know this. Woodrow T. Wilson (1856–1924), 28th president of the United States At five past midnight on December 3, 1984, 40 ton...

Q: Do you believe that our beliefs trigger our actions, or do

Do you believe that our beliefs trigger our actions, or do we act and then justify our actions by changing our beliefs? Explain.

Q: Do you believe that a person’s stage of moral development and personal

Do you believe that a person’s stage of moral development and personal moral philosophy play a role in how values and actions are shaped in the workplace? Explain.

Q: The following two statements about virtue were made by noted philosophers/

The following two statements about virtue were made by noted philosophers/writers: 1. MacIntyre, in his account of Aristotelian virtue, states that integrity is the one trait of character that encompa...

Q: Explain why moral problems may be of greater intensity than nonmoral problems

Explain why moral problems may be of greater intensity than nonmoral problems.

Q: Michael just graduated with a degree in Accounting from State University.

Michael just graduated with a degree in Accounting from State University. He worked hard in school but could only achieve a 2.95 GPA because he worked 40 hours a week to pay his own way through colleg...

Q: In this chapter, we discuss the study by Libby and Thorne

In this chapter, we discuss the study by Libby and Thorne of the association between auditors’ virtue and professional judgment, done by asking members of the Canadian Institute of Chartered Accountan...

Q: You are in charge of the checking account for a small business

You are in charge of the checking account for a small business. One morning, your accounting supervisor enters your office and asks you for a check for $150 for expenses that he tells you he incurred...

Q: According to a survey reported by the Daily Mail in the United

According to a survey reported by the Daily Mail in the United Kingdom, one in eight women has bought expensive clothes, worn them on a night out, and then returned them the next day. Nearly half of t...

Q: Sharon is an intern with a local CPA firm. Prior to

Sharon is an intern with a local CPA firm. Prior to returning to school, her supervisor goes on sick leave and asks her to do some complicated reconciliation work for him. She is given what seems to h...

Q: Identify the ethical issues in each of the following situations and what

Identify the ethical issues in each of the following situations and what your ethical obligations are, assuming you are faced with the dilemma. a. A consultant for a CPA firm is ordered by her superio...

Q: In a June 1997 paper published in the Journal of Business Ethics

In a June 1997 paper published in the Journal of Business Ethics, Sharon Green and James Weber reported the results of a study of moral reasoning of accounting students prior to and after taking an au...

Q: On October 15, 2009, in Fort Collins, Colorado,

On October 15, 2009, in Fort Collins, Colorado, the parents of a six-year-old boy, Falcon Heene, claimed that he had floated away in a homemade helium balloon that was shaped to resemble a silver flyi...

Q: Explain why the process of ethical decision making depends on a number

Explain why the process of ethical decision making depends on a number of moral, social, psychological, and organizational factors.

Q: 1. Do you think it is the same to act in

1. Do you think it is the same to act in your own self-interest as it is to act in a selfish way? Why or why not? 2. Do you think “enlightened self-interest” is a contradiction in terms, or is it a va...

Q: Emotional self-awareness refers to understanding your own feelings, what

Emotional self-awareness refers to understanding your own feelings, what causes them, and how they impact your thoughts and actions. It is widely known that ethical dilemmas involving other employees/...

Q: Windsor and Kavanagh propose in a research study that client management economic

Windsor and Kavanagh propose in a research study that client management economic pressure is a situation of high moral intensity that sensitizes auditors’ emotions and thus motivates their moral reaso...

Q: The nature of accountants’ work puts them in a special position of

The nature of accountants’ work puts them in a special position of trust in relation to their clients, employers, and the general public, who rely on their professional judgment and guidance in making...

Q: Explain what you think each of the following statements means in the

Explain what you think each of the following statements means in the context of moral development. a. How far are you willing to go to do the right thing? b. How much are you willing to give up to do...

Q: A major theme of this chapter is that our cognitive processes influence

A major theme of this chapter is that our cognitive processes influence ethical decision making. Use the theme to comment on the following statement, which various religions claim as their own and has...

Q: In the debate over why good people do bad things, Tenbrunsel

In the debate over why good people do bad things, Tenbrunsel suggests that people are often blind to the ethical dimensions of a situation, a concept he refers to as “bounded ethicality.” Craig Johnso...

Q: One reason otherwise good people may do bad things is what psychologists

One reason otherwise good people may do bad things is what psychologists call scripts. This term refers to the procedures that experience tells us to use in specific situations. Unlike other forms of...

Q: Using the child abuse scandal at Penn State discussed in Chapter 1

Using the child abuse scandal at Penn State discussed in Chapter 1, explain the actions that would have been taken by Joe Paterno if he had been reasoning at each stage in Kohlberg’s model and why.

Q: In his research into the components of ethical decision making, Rest

In his research into the components of ethical decision making, Rest raised the following issue: Assuming someone possesses sound moral reasoning skills, “Why would they ever chose the moral alternati...

Q: In the text, we point out that Rest’s model is not

In the text, we point out that Rest’s model is not linear in nature. An individual who demonstrates adequacy in one component may not necessarily be adequate in another, and moral failure can occur wh...

Q: In this chapter, we have discussed the Joe Paterno matter at

In this chapter, we have discussed the Joe Paterno matter at Penn State. Another situation where a respected individual’s reputation was tarnished by personal decisions is the resignation of David Pet...

Q: In teaching about moral development, instructors often point out the threefold

In teaching about moral development, instructors often point out the threefold nature of morality: It depends on emotional development (in the form of the ability to feel guilt or shame), social devel...

Q: In her book The Seven Signs of Ethical Collapse, Jennings explains

In her book The Seven Signs of Ethical Collapse, Jennings explains: “When an organization collapses ethically, it means that those in the organization have drifted into rationalizations and legalisms,...

Q: The issue of the size of executive compensation packages is explored in

The issue of the size of executive compensation packages is explored in the text. The highest paid CEO in 2014 was David Zaslav, the CEO of Discovery Communications, whose total executive compensation...

Q: Five months before the new 2002 Lexus ES hit showroom floors,

Five months before the new 2002 Lexus ES hit showroom floors, the company’s U.S. engineers sent a test report to Toyota City in Japan: The luxury sedan shifted gears so roughly that it was “not accept...

Q: The 2011 National Business Ethics Survey defines “active social networkers”

The 2011 National Business Ethics Survey defines “active social networkers” as people who spend more than 30 percent of the workday participating on social networking sites. According to the results o...

Q: Brief and Motowidlo define prosocial behavior within the organizational setting as “

Brief and Motowidlo define prosocial behavior within the organizational setting as “behavior which is (a) performed by a member of an organization, (b) directed toward an individual, group, or organiz...

Q: What is the link between the internal control environment and accountability?

What is the link between the internal control environment and accountability?

Q: The Committee of Sponsoring Organizations (COSO) explains the importance of

The Committee of Sponsoring Organizations (COSO) explains the importance of the control environment to internal controls by stating that it sets the tone of an organization, influencing the control co...

Q: It has been argued that an organization that does not support those

It has been argued that an organization that does not support those that whistle blow because of violation of professional standards is indicative of a failure of organizational ethics. Explain what y...

Q: Evaluate the ethics of the practice of whistleblowing from the perspectives of

Evaluate the ethics of the practice of whistleblowing from the perspectives of virtue, rights theory, and utilitarianism.

Q: One explanation about rights is that “there is a difference between

One explanation about rights is that “there is a difference between what we have the right to do and what is the right thing to do.” Explain what you think is meant by this statement. Do you believe t...

Q: Just because a person has a right to blow the whistle,

Just because a person has a right to blow the whistle, does that mean she has a duty to blow the whistle? How might we make that determination?

Q: How do the concepts of cognitive dissonance and organizational/ethical dissonance

How do the concepts of cognitive dissonance and organizational/ethical dissonance relate to whether an accountant might choose to blow the whistle on corporate wrongdoing?

Q: Explain how we might evaluate auditors’ whistle-blowing intentions? Why

Explain how we might evaluate auditors’ whistle-blowing intentions? Why would this be important to do?

Q: Explain how internal auditors’ sensitivity to ethical dilemmas might be influenced by

Explain how internal auditors’ sensitivity to ethical dilemmas might be influenced by corporate governance mechanisms.

Q: On October 24, 2013, the Second Circuit Court of Appeals

On October 24, 2013, the Second Circuit Court of Appeals ruled that a tipster who provided information to the SEC about illegal payments to foreign government officials by Stryker Corporation under th...

Q: The following relates to the Menendez – Halliburton situation described in the

The following relates to the Menendez – Halliburton situation described in the text. (a) How would you characterize Halliburton’s accounting for revenue from ethical and professional perspectives? (b...

Q: “Give me the ‘McFacts,’ ma’am, nothing but

“Give me the ‘McFacts,’ ma’am, nothing but the McFacts!” So argued the defense attorney for McDonald’s Corporation as she questioned Stella Liebeck, an 81-year-old retired sales clerk, two years after...

Q: Is business ethics an oxymoron?

Is business ethics an oxymoron?

Q: One way of analyzing whether NSA whistleblower Edward Snowden’s actions were justified

One way of analyzing whether NSA whistleblower Edward Snowden’s actions were justified in leaking classified materials exposing the breadth of the U.S. government’s surveillance activities is by weigh...

Q: How do employee perceptions of commitment, integrity, and transparency in

How do employee perceptions of commitment, integrity, and transparency in the workplace contribute toward creating an ethical corporate culture?

Q: Steroid use in baseball is an important societal issue. Many members

Steroid use in baseball is an important societal issue. Many members of society are concerned that their young sons and daughters may be negatively influenced by what apparently has been done at the m...

Q: It has been said that recent graduates from a business school majoring

It has been said that recent graduates from a business school majoring in accounting and just entering the profession are especially vulnerable to ethical missteps because they are often naive and may...

Q: Explain how “group-think” might lead a person to

Explain how “group-think” might lead a person to ignore moral and ethical duty in an organization.

Q: Do you believe that employees who observe more occupational fraud in their

Do you believe that employees who observe more occupational fraud in their organizations are more likely to engage in occupational fraud themselves?

Q: 9. The following questions are about corporate governance and executive compensation

9. The following questions are about corporate governance and executive compensation. (a) How does agency theory address the issue of executive compensation? (b) How might stakeholder theory argue aga...

Q: In our discussion of the KPMG professional judgment framework, we pointed

In our discussion of the KPMG professional judgment framework, we pointed out that biased judgments can be made because of judgment tendencies. One such tendency that was not included in the framework...

Q: What are the dangers of creeping commercialism in the accounting profession?

What are the dangers of creeping commercialism in the accounting profession?

Q: Can a CPA auditor be independent without being objective? Can a

Can a CPA auditor be independent without being objective? Can a CPA auditor be objective without being independent? Explain.

Q: What is the problem with an auditor overrelying on management’s representations on

What is the problem with an auditor overrelying on management’s representations on the financial statements?

Q: Andy Simmons is a CPA with his own accounting and tax practice

Andy Simmons is a CPA with his own accounting and tax practice. He occasionally does an audit for small business clients. One day an audit client shows Andy a letter from the local Property Tax Assess...

Q: You’re struggling in your new accounting practice to tap into a potential

You’re struggling in your new accounting practice to tap into a potential client base. You have tried traditional advertising and marketing tools to no avail. Your friend tells you to use social media...

Q: Your best friend is from another country. One day after a

Your best friend is from another country. One day after a particularly stimulating lecture on the meaning of ethics by your instructor, you and your friend disagree about whether culture plays a role...

Q: You have decided to leave your CPA firm. Using the AICPA

You have decided to leave your CPA firm. Using the AICPA rules as a guide, answer the following questions: (1) Can you post some negative comments about your former employer on Twitter? (2) Can you...

Q: You previously worked for the Department of Revenue, a governmental agency

You previously worked for the Department of Revenue, a governmental agency in your town. You cut all ties with the agency after you left two years ago to start your own tax accounting business. One da...

Q: You were engaged to file the 2015 individual and corporate tax returns

You were engaged to file the 2015 individual and corporate tax returns for a client. The client provided her records and other tax information on March 1, 2016, to help prepare the 2015 tax return. Yo...

Q: In January 2008, it was discovered that William Borchard, who

In January 2008, it was discovered that William Borchard, who handled due diligence for clients of PwC interested in mergers and acquisitions, divulged controversial plans to Gregory Raben, an auditor...

Q: Assume that the CPA firm of Packers & Vikings audits Chi Bears

Assume that the CPA firm of Packers & Vikings audits Chi Bears Systems. The controller of Chi Bears, a CPA, happens to be a tax expert. During the current tax season, Packers & Vikings gets far behind...

Q: Explain the threats to professional skepticism that might influence audit judgment.

Explain the threats to professional skepticism that might influence audit judgment.

Q: Assume you are the senior in charge of the audit of a

Assume you are the senior in charge of the audit of a client in New York who offers you two tickets to the Super Bowl between the New York Giants and the Denver Broncos. The opportunity to see the Man...

Q: In recent years the move by accounting firms to offshore tax and

In recent years the move by accounting firms to offshore tax and consulting work has grown and expanded into audit work. What are the ethical concerns that might be raised about the practice of electr...

Q: According to SOX rules that mandate auditor rotation, the lead audit

According to SOX rules that mandate auditor rotation, the lead audit partner on an engagement is prohibited from providing those services for a client for greater than five consecutive years. The purp...

Q: In August 2008, EY agreed to pay more than $2

In August 2008, EY agreed to pay more than $2.9 million to the SEC to settle charges that it violated ethics rules by co-producing a series of audio CDs with a man who was also a director at three of...

Q: Hofstede’s Cultural Dimensions in Exhibit 1.2 indicate that China has

Hofstede’s Cultural Dimensions in Exhibit 1.2 indicate that China has a score of only 20 in Individualism, while the U.S. score is 91. How might the differences in scores manifest itself when the publ...

Q: On May 20, 2014, the SEC settled an investigation of

On May 20, 2014, the SEC settled an investigation of James T. Adams, the former chief risk officer at Deloitte, for causing violations of the auditor independence rules. It seems that Adams accepted t...

Q: Is accounting a trustworthy profession? How would you know whether it

Is accounting a trustworthy profession? How would you know whether it is or is not?

Q: Explain the safeguards that can be used to reduce or eliminate threats

Explain the safeguards that can be used to reduce or eliminate threats to audit independence.

Q: It has been said that independence is the cornerstone of the accounting

It has been said that independence is the cornerstone of the accounting profession. Explain what this means. What does it mean to say that auditors have special and critical gatekeeping duties?

Q: Is independence impaired when an auditor is hired, paid, and

Is independence impaired when an auditor is hired, paid, and fired by the same corporate managers whose activities are the subject of the audit? Does it matter that in most companies the audit committ...

Q: How might financial incentives in the form of client services unconsciously introduce

How might financial incentives in the form of client services unconsciously introduce auditor bias into the independent audit function? Are there any solutions to the conflict?

Q: Do you believe the internal audit activity should be independent? Explain

Do you believe the internal audit activity should be independent? Explain.

Q: Do you believe that the SEC should prohibit auditors from providing all

Do you believe that the SEC should prohibit auditors from providing all nonaudit services for audit clients? Use ethical reasoning to support your answer.

Q: Assume that a CPA serves as an audit client’s business consultant and

Assume that a CPA serves as an audit client’s business consultant and performs each of the following services for the client. Identify the threats to independence. Do you believe any safeguards can be...

Q: What are the objectives of audit risk assessment, and why is

What are the objectives of audit risk assessment, and why is it important in assessing the likelihood that fraud may occur? Explain why risk assessment performed during audit planning sets the tone fo...

Q: (a) How does the time period assumption affect an accountant’s

(a) How does the time period assumption affect an accountant’s analysis of business transactions? (b) Explain the terms fiscal year, calendar year, and interim periods.

Q: An analysis of transactions for S. Moses & Co. was

An analysis of transactions for S. Moses & Co. was presented in E1–8. Instructions Prepare an income statement and an owner’s equity statement for August and a...

Q: Yount Company reports the following for the month of June.

Yount Company reports the following for the month of June. Instructions (a) Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO and (2) LIFO. (b) Which costing method g...

Q: In its first month of operation, Gulletson Company purchased 100 units

In its first month of operation, Gulletson Company purchased 100 units of inventory for $6, then 200 units for $7, and finally 150 units for $8.At the end of the month, 180 units remained. Compute the...

Q: Alou Appliance Center accumulates the following cost and market data at December

Alou Appliance Center accumulates the following cost and market data at December 31. Compute the lower-of-cost-or-market valuation for the company’s total inventory.

Q: Jones Company had 100 units in beginning inventory at a total cost

Jones Company had 100 units in beginning inventory at a total cost of $10,000. The company purchased 200 units at a total cost of $26,000. At the end of the year, Jones had 80 units in ending inventor...

Q: Inventory data for Yount Company are presented in E6-6.

Inventory data for Yount Company are presented in E6-6. Instructions (a) Compute the cost of the ending inventory and the cost of goods sold using the average-cost method. (b) Will the results in (a)...

Q: Cody Company reports net income of $90,000 in 2010

Cody Company reports net income of $90,000 in 2010. However, ending inventory was understated $10,000.What is the correct net income for 2010? What effect, if any, will this error have on total assets...

Q: Americus Camera Shop uses the lower-of-cost-or

Americus Camera Shop uses the lower-of-cost-or-market basis for its inventory. The following data are available at December 31. Instructions Determine the amount of the ending inventory by applying t...

Q: At December 31, 2010, the following information was available for

At December 31, 2010, the following information was available for J. Graff Company: ending inventory $40,000, beginning inventory $60,000, cost of goods sold $270,000, and sales revenue $380,000. Calc...

Q: Conan Company applied FIFO to its inventory and got the following results

Conan Company applied FIFO to its inventory and got the following results for its ending inventory. Cameras……………………100 units at a cost per unit of $65 DVD players……………...150 units at a cost per unit o...

Q: Jensen’s Department Store uses a perpetual inventory system. Data for product

Jensen’s Department Store uses a perpetual inventory system. Data for product E2-D2 include the following purchases. On June 1 Jensen’s sold 30 units, and on August...

Q: Lily Company had the following assets and liabilities on the dates indicated

Lily Company had the following assets and liabilities on the dates indicated. Lily began business on January 1, 2009, with an investment of $100,000. Instructions From an analysis of the change in ow...

Q: Why may a trial balance not contain up-to-date

Why may a trial balance not contain up-to-date and complete financial information?

Q: Indicate whether each of the following statements is true or false.

Indicate whether each of the following statements is true or false. 1. When designing an accounting system, we need to think about the needs and knowledge of both the top managers and various other us...

Q: Donahue Company uses both special journals and a general journal as described

Donahue Company uses both special journals and a general journal as described in this chapter. On June 30, after all monthly postings had been completed, the Accounts Receivable control account in the...

Q: Here is a list of words or phrases related to computerized accounting

Here is a list of words or phrases related to computerized accounting systems. 1. Entry-level software. 2. Enterprise resource planning systems. 3. Network-compatible. 4. Audit trail. 5. Internal cont...

Q: Presented below is the subsidiary accounts receivable account of Jeremy Dody

Presented below is the subsidiary accounts receivable account of Jeremy Dody Instructions Write a memo to Andrea Barden, chief financial officer, that explains each transaction.

Q: Beka Borke has prepared the following list of statements about accounting information

Beka Borke has prepared the following list of statements about accounting information systems. 1. The accounting information system includes each of the steps of the accounting cycle, the documents th...

Q: On September 1 the balance of the Accounts Receivable control account in

On September 1 the balance of the Accounts Receivable control account in the general ledger of Seaver Company was $10,960.The customers’ subsidiary ledger contained account balances as follows: Ruiz $...

Q: Yu Suzuki Company has a balance in its Accounts Receivable control account

Yu Suzuki Company has a balance in its Accounts Receivable control account of $11,000 on January 1, 2010. The subsidiary ledger contains three accounts: Smith Company, balance $4,000; Green Company, b...

Q: Presented below is information related to Kienholz Company for its first month

Presented below is information related to Kienholz Company for its first month of operations. Identify the balances that appear in the accounts receivable subsidiary ledger and the accounts receivable...

Q: Identify in what ledger (general or subsidiary) each of the

Identify in what ledger (general or subsidiary) each of the following accounts is shown. 1. Rent Expense 3. Notes Payable 2. Accounts Receivable—Char 4. Accounts Payable—Thebeau

Q: Two items are omitted from each of the following summaries of balance

Two items are omitted from each of the following summaries of balance sheet and income statement data for two proprietorships for the year 2010, Craig Cantrel and Mills Enterprises. Instructions Deter...

Q: Nobo Uematsu Company has a balance in its Accounts Payable control account

Nobo Uematsu Company has a balance in its Accounts Payable control account of $8,250 on January 1, 2010. The subsidiary ledger contains three accounts: Jones Company, balance $3,000; Brown Company, ba...

Q: Identify the journal in which each of the following transactions is recorded

Identify the journal in which each of the following transactions is recorded. 1. Cash sales 4. Credit sales 2. Owner withdrawal of cash 5. Purchase of merchandise on account 3. Cash purchase o...

Q: Montalvo Company uses special journals and a general journal. The following

Montalvo Company uses special journals and a general journal. The following transactions occurred during September 2010. Sept. 2 Sold merchandise on account to T. Hossfeld, invoice no. 101, $720, ter...

Q: Pherigo Co. uses special journals and a general journal. The

Pherigo Co. uses special journals and a general journal. The following transactions occurred during May 2010. May 1 I. Pherigo invested $50,000 cash in the business. 2 Sold merchandise to B. Sherrick...

Q: Wick Company uses the columnar cash journals illustrated in the textbook.

Wick Company uses the columnar cash journals illustrated in the textbook. In April, the following selected cash transactions occurred. 1. Made a refund to a customer as an allowance for damaged goods....

Q: Velasquez Company has the following selected transactions during March. Mar

Velasquez Company has the following selected transactions during March. Mar. 2 Purchased equipment costing $9,400 from Chang Company on account. 5 Received credit of $410 from Lyden Company for merch...

Q: Below are some typical transactions incurred by Kwun Company. 1

Below are some typical transactions incurred by Kwun Company. 1. Payment of creditors on account. 2. Return of merchandise sold for credit. 3. Collection on account from customers. 4. Sale of land for...