compute variances between the budgeted segment margin income statement and the actua 572489

Aug 29, 2021 | Uncategorized

Jane Booth, head of the accounting department at Pacific State University, has felt increasing pressure to raise external funds to compensate for dwindling state financial support. Accordingly, in early January 2001, she conceived the idea of offering a three day accounting workshop on income taxation for local CPAs. She asked Jim Cost, a tenured tax professor, to supervise the planning process for the seminar, which was to be held in late February 2001. In mid January, Professor Cost presented Ms. Booth with the following budget plan:

Explanations of budget items: The facilities rent of $3,600 is a fixed rental, which is to be paid to a local hotel for use of its meeting rooms. The advertising is also a fixed budgeted cost. Meal expense is budgeted at $5 per person per meal (a total of nine meals are to be provided for each participant); lodging is budgeted at the rate of $45 per participant per night. The departmental overhead includes a specific charge for supplies costing $10 for each participant as well as a general allocation of $2,500 for use of departmental secretarial resources. After reviewing the budget, Ms. Booth gave Professor Cost approval to proceed with the seminar.

a. Recast the above income statement in a segment margin income statement format.

b. Assume the actual financial results of the seminar were as follows:

Explanation of actual results: Because sign ups were running below expectations, the seminar fee was reduced from $400 to $300 for late enrollees an advertising expense was increased. In budgeting for the speakers, Professor Cost neglected to include airfare, which averaged $250 per speaker. After the fees were reduced and advertising increased, the number of participants grew and was larger than expected; therefore, a larger meeting room had to be rented from the local hotel. Recast the actual resultsin a segment margin income format.

c. Compute variances between the budgeted segment margin income statement and the actual segment income statement. Identify and discuss the factors that are primarily responsible for the difference between the budgeted profit and the actual loss on the tax seminar.

artz mountain inc manufactures small industrial tools and has an annual sales volume 572490

Aug 29, 2021 | Uncategorized

Hartz Mountain Inc. manufactures small industrial tools and has an annual sales volume of approximately $3.5 million. Sales growth has been steady during the year and there is no evidence of cyclical demand. The company’s market has expanded only in response to product innovation; therefore, R&D is very important to the company. Janice Bennett, controller, has designed and implemented a new budget system. An annual budget has been prepared and divided into 12 equal segments to use for monthly performance evaluations. The vice president of operations was upset upon receiving the following responsibility report for the Machining Department for October 2000:

MACHINING DEPARTMENT—RESPONSIBILITY REPORT FOR THE MONTH ENDED OCTOBER 31, 2000

a. Identify the weaknesses in the responsibility report for the Machining Department.

b. Prepare a revised responsibility report for the Machining Department that reduces or eliminates the weaknesses indicated in part (a).

c. Deviations in excess of 5 percent of budget are considered material and

worthy of investigation. Should any of the variances of the Machining Department be investigated? Regardless of materiality, is there any area that the vice president of operations might wish to discuss with the manager of the Machining Department? (CMA adapted)

compute the revenue mix variance 572491

Aug 29, 2021 | Uncategorized

Juan Louis manages the sales department at the Boulder Lighting Company. Juan is evaluated based on his ability to meet budgeted revenues. For June 2001, Juan’s revenue budget was as follows:

The actual sales generated by Mr. Louis’s sales department in June were as follows:

a. Compute the revenue price variance.

b. Compute the revenue mix variance.

c. Compute the revenue volume variance.

d. Based on your answers to parts (a) through (c), evaluate the performance of Mr. Louis.

e. If Mr. Louis is to be held accountable for meeting the revenue budget, why might it be advisable to also give him the authority to set the sales person salary and commission structure?

the management of santa fe community hospital sfch has decided to allocate the budge 572492

Aug 29, 2021 | Uncategorized

The management of Santa Fe Community Hospital (SFCH) has decided to allocate the budgeted costs of its three service departments (Administration, Public Relations, and Maintenance) to its three revenue producing programs (Surgery, In Patient Care, and Out Patient Services). Budgeted information for 2000 follows:

Using the direct method, allocate the expected service department costs to the revenue producing areas.

which department is apparently the most profitable 572493

Aug 29, 2021 | Uncategorized

McDougle Real Estate classifies its operations into three departments: Commercial Sales, Residential Sales, and Property Management. The owner, William McDougle, wants to know the full cost of operating each department. Direct costs of each department, along with several allocation bases associated with each, are as follows:

The service departments are shown in a benefits provided ranking. McDougle has also selected the following allocation bases: number of employees/salespersons for Administration; dollars of assets employed for Accounting; and dollars of revenue for Promotion.

a. Using the step method, allocate the service department costs to the revenue generating departments.

b. Which department is apparently the most profitable?

discuss advantages and disadvantages of each of the above transfer prices to both th 572495

Aug 29, 2021 | Uncategorized

(Transfer price) Two of the divisions of Construction Equipment Company are the Engine Division and the Mobile Systems Division. The Engine Division produces engines used by both the Mobile Systems Division and a variety of external industrial customers. For external sales, sales orders are generally produced in 50 unit lots. Using this typical lot size, the cost per engine is as follows:

The Engine Division normally earns a profit margin of 20 percent by setting the external selling price at $2,616. Because a significant number of sales are being made internally, Engine Division managers have decided that $2,616 is the appropriate price to use for all transfers to the Mobile Systems Division. When the managers in the Mobile Systems Division heard of this change in the transfer price, they became very upset because the change would have a major negative impact on Mobile Systems’ net income figures. Because of competition, Mobile Systems has asked the Engine Division to lower its transfer price; by reducing the transfer price, Engine’s profit margin will be 15 percent. Mobile Systems’ managers have asked Construction Equipment top management whether the Division can buy engines externally. Bud Dawkins, Construction Equipment’s president, has gathered the following price information to help the two divisional managers negotiate an equitable transfer price:

a. Discuss advantages and disadvantages of each of the above transfer prices to both the selling and buying divisions and to Construction Equipment.

b. If the Engine Division could sell all of its production externally at $2,616, what is the appropriate transfer price and why?

athlete rsquo s companion division makes top of the line sports travel bags that are 572496

Aug 29, 2021 | Uncategorized

Athlete’s Companion Division makes top of the line sports travel bags that are sold to external buyers and are also being used by the Travel America Division. During the month just ended, Travel America acquired 2,000 bags from Athlete’s Companion Division. Athlete’s Companion’s standard unit costs are

Travel America can acquire comparable bags externally for $40 each. Give the entries for each division for the past month if the transfer is to be recorded

a. at Travel America’s external purchase price.

b. at a negotiated price of variable cost plus 15 percent of production cost.

c. by Athlete’s Companion at Travel America’s external price and by Travel America at Athlete’s Companion’s variable production cost.

d. at Athlete’s Companion’s absorption cost.

robert brown cpa has three revenue departments auditing and accounting a amp a tax t 572498

Aug 29, 2021 | Uncategorized

Robert Brown, CPA, has three revenue departments: Auditing and Accounting (A&A), Tax (T), and Consulting (C). In addition, the company has two support departments: Administration and EDP. Administration costs are allocated to the three revenue departments on the basis of number of employees. The EDP Department’s fixed costs are allocated to revenue departments on the basis of peak hours of monthly service expected to be used by each revenue department. EDP’s variable costs are assigned to the revenue department sat a transfer price of $40 per hour of actual service. Following are the direct costs and the allocation bases associated with each of the departments:

a. Was the variable EDP transfer price of $40 adequate? Explain.

b. Allocate the other service department costs to A&A, T, and C using the direct method.

c. What are the total costs of the revenue producing departments after the allocation in part (b)?

Robert Brown, CPA, has three revenue departments: Auditing and Accounting (A&A), Tax (T), and Consulting (C). In addition, the company has two support departments: Administration and EDP. Administration costs are allocated to the three revenue departments on the basis of number of employees. The EDP Department’s fixed costs are allocated to revenue departments on the basis of peak hours of monthly service expected to be used by each revenue department. EDP’s variable costs are assigned to the revenue department sat a transfer price of $40 per hour of actual service. Following are the direct costs and the allocation bases associated with each of the departments:

a. Was the variable EDP transfer price of $40 adequate? Explain.

b. Allocate the other service department costs to A&A, T, and C using the direct method.

c. What are the total costs of the revenue producing departments after the allocation in part (b)?

carolyn williams a management accountant has recently been employed as controller in 572499

Aug 29, 2021 | Uncategorized

Carolyn Williams, a management accountant, has recently been employed as controller in the Fashions Division of Deluxe Products, Inc. The company is organized on a divisional basis with considerable vertical integration Fashions Division makes several luggage products, including a slim leather portfolio. Sales of the portfolio have been steady, and the marketing department expects continued strong demand. Carolyn is looking for ways the Fashions Division can contain its costs and thus boost its earnings from future sales. She discovered that the Fashions Division has always purchased its supply of high quality tanned leather from another division of Deluxe Products, the Leather Works Division. Leather Works Division has been providing the three square feet of tanned leather needed for each portfolio for $9 per square foot. Carolyn wondered whether it might be possible to purchase Fashions’ leather needs from a supplier other than Leather Works at a lower price for comparable quality. Top management at Deluxe Products reluctantly agreed to allow the Fashions Division to consider purchasing outside the company. The Fashions Division will need leather for 100,000 portfolios during the coming year. Fashions management has requested bids from several leather suppliers. The two best bids are $8 and $7 per square foot from Koenig and Thompson, respectively. Carolyn has been informed that another subsidiary of Deluxe Products, Ridley Chemical, supplies Thompson with chemicals that have been an essential ingredient of the tanning process for Thompson. Ridley Chemical charges Thompson $2 for enough chemicals to prepare three square feet of leather. Ridley’s profit margin is 30 percent. The Leather Works Division wants to continue supplying Fashions’ leather needs at the same price per square foot as in the past. Tom Reed, Leather Works’ controller, has made it clear that he believes Fashions should continue to purchase all its needs from Leather Works to preserve Leather Works’ healthy profit margin of 40 percent of sales. You, as Deluxe Products’ vice president of finance, have called a meeting of the controllers of Fashions and Leather Works. Carolyn is eager to accept Thompson’s bid of $7. She points out that Fashions’ earnings will show a significant increase if the division can buy from Thompson. Tom Reed, however, wants Deluxe Products to keep the business within the company and suggests that you require Fashions to purchase its needs from Leather Works. He emphasizes that Leather Works’ profit margin should not be lost to the company. From whom should the Fashions Division buy the leather? Consider both Fashions’ desire to minimize its costs and Deluxe Products’ corporate goal of maximizing profit on a companywide basis. (IMA adapted)

southeast products inc is a decentralized company each division has its own sales fo 572500

Aug 29, 2021 | Uncategorized

Southeast Products Inc. is a decentralized company. Each division has its own sales force and production facilities and I operated as an investment center. Top management uses return on investment (ROI) for performance evaluation. The Hazlett Division has just been awarded a contract for a product that uses a component manufactured by the Andalusia Division as well as by outside suppliers. Hazlett used a cost figure of $3.80 for the component when the bid was prepared for the new product. Andalusia supplied this cost figure in response to Hazlett’s request for the average variable cost of the component. Andalusia has an active sales force that is continually soliciting new customers. Andalusia’s regular selling price for the component Hazlett needs for the new product is $6.50. Sales of the component are expected to increase. Andalusia management has the following costs associated with the component:

The two divisions have been unable to agree on a transfer price for the component. Corporate management has never established a transfer price because interdivisional transactions have never occurred. The following suggestions have been made for the transfer price:

• regular selling price,

• regular selling price less variable selling and distribution expenses,

• standard manufacturing cost plus 15 percent, or

• standard variable manufacturing cost plus 20 percent.

a. Compute each of the suggested transfer prices.

b. Discuss the effect each of the transfer prices might have on the Andalusia Division management’s attitude toward intra company business.

c. Is the negotiation of a price between the Hazlett and Andalusia Divisions a satisfactory method to solve the transfer price problem? Explain your answer.

d. Should the corporate management of Southeast Products Inc. become involved in this transfer controversy? Explain your answer. (CMA adapted)

shiell corporation is a diversified manufacturing company with corporate headquarter 572501

Aug 29, 2021 | Uncategorized

Shiell Corporation is a diversified manufacturing company with corporate headquarters in Tampa, Florida. The three operating divisions are the Kennedy Division, the Plastic Products Division, and the Outer space Products Division. Much of the manufacturing activity of the Kennedy Division is related to work performed for the government space program under negotiated contracts. Shiell Corporation headquarters provides general administrative support and computer services to each of the three operating divisions. The computer services are provided through a computer time sharing arrangement. The central processing unit (CPU) is located in Tampa, and the divisions have remote terminals that are connected to the CPU by telephone lines. One standard from the Cost Accounting Standards Board provides that the cost of general administration may be allocated to negotiated defense contracts. Further, the standards provide that, in situations in which computer services are provided by corporate headquarters, the actual costs (fixed and variable) of operating the computer department may be allocated to the defense division based on a reasonable measure of computer usage. The general managers of the three divisions are evaluated based on the before tax performance of each division. The November 2000 performance evaluation reports (in millions of dollars) for each division are presented below:

Without a charge for computing services, the operating divisions may not make the most cost effective use of the Computer Systems Department’s resources. Outline and discuss a method for charging the operating divisions for use of computer services that would promote cost consciousness by the operating divisions and operating efficiency by the Computer Systems Department. (CMA adapted)

what alternative transfer price or performance measure might be more appropriate in 572503

Aug 29, 2021 | Uncategorized

Appleby Industries consists of eight divisions that are evaluated as profit centers. All transfers between divisions are made at market price. Precision Regulator is a division of Appleby that sells approximately 20 percent of its output externally. The remaining 80 percent of the output from Precision Regulator is transferred to other divisions within Appleby. No other division of Appleby Industries transfers internally more than 10 percent of its output. Based on any profit based measure of performance, Precision Regulator is the leading division within Appleby Industries. Other divisional managers within Appleby always find that their performance is compared to that of Precision Regulator. These managers argue that the transfer pricing situation gives Precision Regulator a competitive advantage.

a. What factors may contribute to any advantage that the Precision Regulator Division might have over the other divisions?

b. What alternative transfer price or performance measure might be more appropriate in this situation?

discuss what might be the causes for the ethical problems described 572505

Aug 29, 2021 | Uncategorized

A large American corporation participates in a highly competitive industry. To meet the competition and achieve profit goals, the company has chosen the decentralized form of organization. Each manager of a decentralized center is measured on the basis of profit contribution, market penetration, and return on investment. Failure to meet the objectives established by corporate management for these measures is not accepted and usually results in demotion or dismissal of a center manager. An anonymous survey of managers in the company revealed that the managers felt pressure to compromise their personal ethical standards to achieve the corporate objectives. For example, certain plant locations felt pressure to reduce quality control to a level that could not ensure that all unsafe products would be rejected. Also, sales personnel were encouraged to use questionable sales tactics to obtain orders, including offering gifts and other incentives to purchasing agents. The chief executive officer is disturbed by the survey findings. In her opinion, the company cannot condone such behavior. She concludes that the company should do something about this problem.

a. Discuss what might be the causes for the ethical problems described.

b. Outline a program that could be instituted by the company to help reduce the pressures on managers to compromise personal ethical standards in their work. (CMA adapted)

presented below is information related to sanford corp 572521

Aug 29, 2021 | Uncategorized

E7 12 (Journalizing Various Receivable Transactions) Presented below is information related to Sanford Corp.

Instructions

Prepare all necessary entries in general journal form for Sanford Corp.

on april 1 2012 prince company assigns 500 000 of its accounts receivable to the thi 572522

Aug 29, 2021 | Uncategorized

E7 13 (Assigning Accounts Receivable) On April 1, 2012, Prince Company assigns $500,000 of its accounts receivable to the Third National Bank as collateral for a $300,000 loan due July 1, 2012. The assignment agreement calls for Prince Company to continue to collect the receivables. Third National Bank assesses a finance charge of 2% of the accounts receivable, and interest on the loan is 10% (a realistic rate of interest for a note of this type).

Instructions

(a) Prepare the April 1, 2012, journal entry for Prince Company.

(b) Prepare the journal entry for Prince’s collection of $350,000 of the accounts receivable during the period from April 1, 2012, through June 30, 2012.

(c) On July 1, 2012, Prince paid Third National all that was due from the loan it secured on April 1, 2012. Prepare the journal entry to record this payment.

the trial balance before adjustment for sinatra company shows the following balances 572523

Aug 29, 2021 | Uncategorized

E7 14 (Journalizing Various Receivable Transactions) The trial balance before adjustment for Sinatra Company shows the following balances.

Instructions

Using the data above, give the journal entries required to record each of the following cases. (Each situation is independent.)

1. To obtain additional cash, Sinatra factors without recourse $20,000 of accounts receivable with Stills Finance. The finance charge is 10% of the amount factored.

2. To obtain a one year loan of $55,000, Sinatra assigns $65,000 of specific receivable accounts to Ruddin Financial. The finance charge is 8% of the loan; the cash is received and the accounts turned over to Ruddin Financial.

3. The company wants to maintain Allowance for Doubtful Accounts at 5% of gross accounts receivable.

4. The company wishes to increase the allowance account by 1½% of net sales.

gringo corporation factors 250 000 of accounts receivable with winkler financing inc 572525

Aug 29, 2021 | Uncategorized

E7 16 (Transfer of Receivables with Recourse) Gringo Corporation factors $250,000 of accounts receivable with Winkler Financing, Inc. on a with recourse basis. Winkler financing will collect the receivables. The receivables records are transferred to Winkler Financing on August 15, 2012. Winkler financing assesses a finance charge of 2% of the amount of accounts receivable and also reserves an amount equal to 4% of accounts receivable to cover probable adjustments.

Instructions

(a) What conditions must be met for a transfer of receivables with recourse to be accounted for as a sale?

(b) Assume the conditions from part (a) are met. Prepare the journal entry on August 15, 2012, for Gringo to record the sale of receivables, assuming the recourse liability has a fair value of $3,000.

sek corp factors 400 000 of accounts receivable with mays finance corporation on a w 572526

Aug 29, 2021 | Uncategorized

E7 17 (Transfer of Receivables without Recourse) SEK Corp. factors $400,000 of accounts receivable with Mays Finance Corporation on a without recourse basis on July 1, 2012. The receivables records are transferred to Mays Finance, which will receive the collections. Mays Finance assesses a finance charge of 1½% of the amount of accounts receivable and retains an amount equal to 4% of accounts receivable to cover sales discounts, returns, and allowances. The transaction is to be recorded as a sale.

Instructions

(a) Prepare the journal entry on July 1, 2012, for SEK Corp. to record the sale of receivables without recourse.

(b) Prepare the journal entry on July 1, 2012, for Mays Finance Corporation to record the purchase of receivables without recourse.

it sold land having a fair value of 900 000 in exchange for a 4 year zero interest b 572527

Aug 29, 2021 | Uncategorized

E7 18 (Note Transactions at Unrealistic Interest Rates) On July 1, 2012, Rentoul Inc. made two sales.

1. It sold land having a fair value of $900,000 in exchange for a 4 year zero interest bearing promissory note in the face amount of $1,416,163. The land is carried on Rentoul’s books at a cost of $590,000.

2. It rendered services in exchange for a 3%, 8 year promissory note having a face value of $400,000 (interest payable annually). Rentoul Inc. recently had to pay 8% interest for money that it borrowed from British National Bank. The customers in these two transactions have credit ratings that require them to borrow money at 12% interest.

Instructions

Record the two journal entries that should be recorded by Rentoul Inc. for the sales transactions above that took place on July 1, 2012.

how do the layoffs in this situation suggest that sgi rsquo s strategy has failed 572425

Aug 29, 2021 | Uncategorized

In 1999 Silicon Graphics Inc. (SGI) said it would lay off up to 17% of its workforce and sell or spin off several divisions, including its Cray super computer unit, as the computer maker faces an increasingly difficult market Yesterday’s announcements, made before an analysts’ meeting scheduled for New York, were a setback for Richard E. Belluzzo, brought in 1998 from Hewlett Packard Co. to turn around SGI. While SGI had a sterling reputation for its graphics based workstations, used to create special effects for many movies, it had been badly outmaneuvered in the high end of the market by such competitorsas Sun Microsystems Inc., and was losing sales in the low end to generic PCs.

a. How do the layoffs in this situation suggest that SGI’s strategy has failed?

b. As a market analyst, would you interpret these layoffs to be good news or bad news?

you have been hired as a consultant by a company that manufactures toys from plastic 572434

Aug 29, 2021 | Uncategorized

You have been hired as a consultant by a company that manufactures toys from plastic stocks and resins. The company management is presently wrestling with ways to improve the quality of its products. Evidence of quality problems is everywhere: high rates of product defects, many customer returns, poor rate of customer retention, and high warranty costs. Top management has traced virtually all quality related problems to the production department. Production workers in the company are paid based on a flat hourly rate. No bonuses are paid based on corporate profits or departmental performance measures. As the outside consultant, prepare an oral report to present to the top management of your client discussing how open book management could be applied to address the quality problems. At a minimum, include in your report the following: how quality information would be conveyed to workers, how workers would be trained to understand the information, and how incentives would be established for improved quality performance.

ollowing are descriptions of environmental waste situations identify the environment 572435

Aug 29, 2021 | Uncategorized

Following are descriptions of environmental waste situations. Identify the environmental strategy you would select to deal with each situation and discuss your logic.

a. A relatively small amount of low toxicity waste is produced. This waste is not easily recycled, nor is technology available to avoid its production. Disposal costs are relatively modest.

b. This waste is highly toxic and is associated with several lethal diseases in humans. The cost of disposal is extraordinarily high.

c. A moderate amount of this waste is produced. The waste is nearly identical to a chemical purchased and used in an etching operation. The waste differs from the purchased chemical only because of a small amount of contaminants introduced in the production process.

why would the application of discounted cash flow methods be appropriate to evaluate 572436

Aug 29, 2021 | Uncategorized

Galveston Chemical produces a variety of chemicals that are used in an array of commercial applications. One popular product, a chemical solvent, has among its required materials two very caustic acids, A and B. These acids are a very serious environmental hazard if not disposed of properly. For every ton of chemical produced, 500 pounds of acid A are required as well as 300 pounds of acid B. Because of inefficiencies in the present production process, 40 pounds of acid A and 20 pounds of acid B remain as waste with each ton of chemical manufactured. Because of impurities in the waste acids, they cannot be used in the production of future batches of product. The company incurs a cost of $2 per pound to dispose of the waste acid produced. Recently, the company has become aware of new technology that reduces the quantity of waste acids produced. This technology would generate only 1 pound of acid A and 5 pounds of acid B as waste from each ton of chemical manufactured. Corporate management has estimated the new technology could be acquired and installed at a cost of $500,000. The technology would have a life expectancy of six years. The new technology would not otherwise affect the cost of producing the chemical solvent.

a. Which environmental cost management strategy is Galveston Chemical considering in this example?

b. Why would the application of discounted cash flow methods be appropriate to evaluate the new technology?

discuss how you would evaluate the news as good or bad about chiron making deep cuts 572438

Aug 29, 2021 | Uncategorized

With pioneering feats like the discovery of the hepatitis C virus, Chiron became one of the nation’s largest biotech companies. Then some of its academic style research and gambles on technology didn’t pan out commercially, and growth stalled. In 1998, the proud scientists running Chiron reluctantly turned it over to a no nonsense manager from the pharmaceutical industry. Chiron now is seeking a comeback by taking fewer research risks and squeezing more profit from its assets—acting, that is, more like a traditional pharmaceutical company. Recently, chairman and chief executive, Sean Lance, unveiled the first significant research cuts ever at Chiron. The retrenchment, announced only to employees, is part of a plan to cap its bulging R&D budget at $290 million, and could result in layoffs of as many as 90 scientists, or 20% of its research staff. The cuts, mainly in gene therapy and vaccine programs, are designed to help sustain earnings growth, a priority for Mr. Lance. In the first nine months of 1999, earnings from continuing operations, at $102.5 million, leapt 66% over the year earlier period.

a. Assume you are a market analyst for the biotech industry. Discuss how you would evaluate the news (as good or bad) about Chiron making deep cuts in R&D spending.

b. As a finance professional at Chiron, how could you help Mr. Lance identify opportunities for reducing costs and improving profitability?

in 1997 the current employment market for top talent was the tightest in 25 years 572439

Aug 29, 2021 | Uncategorized

In 1997 the current employment market for top talent was the tightest in 25 years. The number of searches for senior level executives was at an all time high, nearly 15% ahead of last year’s record clip. Among some of the hottest searches under way: chief executives for Unisys Corp., Delta Air Lines, Quaker Oats Co. and a president and chief operating officer for St. Jude Medical Inc. Why is the labor market so thin for the “performance elite”—the top 4% or so of executives and senior managers? The long term impact of corporate downsizing is a principal reason. The cutbacks in the ranks of middle managers during the past two decades have meant a loss of career development patterns for employees. Because there are fewer rungs on the career ladder, “45 year olds are basically doing the same thing they were at 30,” says Roger I. Sekara, an Alexandria, Va., vice president of A.T. Kearney Executive Search. In light of the scarcity of qualified leaders, what can the accounting functionin an organization do to help identify potential top management talentfrom internal operations?

examine the information mr wyndale has gathered analyze the data that are given to i 572440

Aug 29, 2021 | Uncategorized

Peter Wyndale, president of Mallory Industrial, sat dejected in his chair after reviewing the 2001 first quarter financial reports on one of the company’s core products: a standard, five speed transmission (product number 2122) used in the heavy equipment industry in the manufacture of earth moving equipment. Some of the information in the report follows.

MARKET REPORT, PRODUCT NUMBER 2122, QUARTER 1, 2001

MARKET REPORT, PRODUCT NUMBER 2122, QUARTER 1, 2001

Mallory’s strategy for this transmission is to compete on the basis of price. Mallory’s transmission offers no features that allow it to be differentiated from those of major competitors and Mallory’s level of quality is similar to the average of the industry. Also on Mr. Wyndale’s desk was a report from his business intelligence unit. Mr. Wyndale underlined some key pieces of information from the report. The underlined items follow.

• Commodity transmission components (nuts, bolts, etc.), which all major transmission producers acquire from specialty vendors, decreased in price by approximately 5% from January 2000 to January 2001.

• Two major competitors moved their main assembly operations to China from the United States in early 2000. These competitors are believed tohave the lowest unit production cost in the industry.

• A third major competitor ceased manufacture of major gear components and began outsourcing these parts from a Mexican firm in mid 2000. Thi firm increased its market share in 2000 from 10 to 14 percent following amajor decrease in sales price.

• Mallory’s production operations did not change in any material respect from 2000 to 2001.

• Mallory manufactures approximately 83 percent of the components used in the heavy industrial transmission. The industry norm is to make 57 percent of the components.

• For the balance of 2001, industry experts agree that quarterly demand for the heavy industrial transmission will be even higher than the levels posted for the first quarter of 2001.

a. Examine the information Mr. Wyndale has gathered. Analyze the data that are given to identify as specifically as possible the problems that have led to Mallory’s loss of profit and market share in the heavy industrial transmission market.

b. Based on your analysis in part (a), and the information given to Mr. Wyndale, suggest specific alternatives that Mr. Wyndale should consider to make his firm more competitive in the heavy industrial transmission market. Use concepts presented in the chapter as the basis of your recommendations.

abx plastics has experienced serious problems as a result of attempts to manage its 572442

Aug 29, 2021 | Uncategorized

ABX Plastics has experienced serious problems as a result of attempts to manage its impacts on the environment. To illustrate the problems, consider the following events, which occurred during the past five years:

• ABX was assessed $75 million in fines and penalties for toxic emissions. These amounts related to several separate regulatory investigations.

• ABX received reprimands from several regulatory bodies for failing to maintain required records regarding hazardous waste.

• ABX is currently facing a class action lawsuit filed by former employees of a subsidiary in Mexico alleging management failed to disclose information to employees about the toxicity of certain materials—and as a consequence the health of the former employees has been permanently harmed.

• ABX must submit bids to obtain most of its business. Managers have casually observed that the company is successful more frequently when it bids on jobs that require handling the most toxic chemicals.

• ABX has a very basic accounting system that tracks costs on a job order basis, but is not sensitive to quality or environmental costs. Assume that you are an employee of a consulting firm that has been hired by ABX to improve management of all environmental effects. As the finance expert on the consulting team, you are expected to make recommendations as to how the information systems should be modified to reduce environmental costs. Prepare a report discussing your recommendations for ABX.

does the achievement of high quality operations mandate that a firm treat its employ 572443

Aug 29, 2021 | Uncategorized

Slightly more than half of working Americans question their bosses’ integrity; when they do, they’re more likely to leave their jobs over it, according to a study by the Hudson Institute and Walker Information. The firms surveyed more than 2,000 full and part time workers from the public and private sectors in 48 states. Fewer than half of them, 42%, believe their company deserves their loyalty. And slightly more than half of the surveyed employees would recommend their place of employment to another. Employees also fear retaliation for reporting inappropriate behavior like drug use, sexual harassment, record falsification, and unfair treatment of employees, representatives of the research firms said. They also worry complaints won’t be kept confidential.

a. In your opinion, does the achievement of high quality operations mandate that a firm treat its employees ethically? Discuss.

b. Assume a firm has adopted open book management. Discuss how the survey respondents’ perceptions of their employers mesh with the open book management requirement to have honest exchanges of information between employees and managers.

what ethical responsibility does gm bear to the union in seeking to restructure and 572445

Aug 29, 2021 | Uncategorized

Automakers provide an interesting study in cost management strategies. General Motors often provides a contrast to the other U.S. manufacturers. For example, while Chrysler and Ford have opted to outsource many product components, GM continues to manufacture a much higher percentage of the parts needed to produce its cars. One of the variables driving GM’s strategy is its high level of unionization. The unions have resisted attempts made by General Motors to restructure operations and outsource more components.

a. From the perspective of price based competition, why would GM want the flexibility to outsource more of its parts and components?

b. From the perspective of managing quality, how could outsourcing positively or negatively affect GM’s ability to manage quality relative to its competitors?

c. What ethical responsibility does GM bear to the union in seeking to restructure and outsource more of its parts manufacturing?

match the following lettered terms on the left with the appropriate numbered descrip 572472

Aug 29, 2021 | Uncategorized

(Terminology) Match the following lettered terms on the left with the appropriate numbered description on the right.

the sales department of porcelain works is responsible for sales of two figurines on 572475

Aug 29, 2021 | Uncategorized

The Sales Department of Porcelain Works is responsible for sales of two figurines. One is called “Elegant Maiden” and the other is called “Summer Memories.” For April 2001, the Sales Department’s actual and budgeted sales were as follows:

For April 2001, compute each of the following for the Sales Department of Porcelain Works:

a. Price variance

b. Mix variance

c. Volume variance

compute the volume variance for 2001 572476

Aug 29, 2021 | Uncategorized

Athletes’ Friend, Inc., manufactures two products: baseball bats and gloves. For 2001, the firm budgeted the following:

At the end of 2001, managers were informed that total actual sales amounted to 35,000 units and totaled $1,225,000. Glove sales for the year amounted to 20,000 units at an average price of $35.

a. Compute the total revenue variance for 2001.

b. Compute the price variance for 2001.

c. Compute the mix variance for 2001.

d. Compute the volume variance for 2001.

what amount of personnel and maintenance costs should be assigned to finishing for j 572477

Aug 29, 2021 | Uncategorized

Chance Corporation allocates its service department costs to its production departments using the direct method. Information for June 2001 follows:

a. What amount of personnel and maintenance costs should be assigned to Fabricating for June?

b. What amount of personnel and maintenance costs should be assigned to Finishing for June?

compute the total cost for each revenue generating area using the direct method 572478

Aug 29, 2021 | Uncategorized

Palisade Bank has three revenue generating areas: checking accounts, savings accounts, and loans. The bank also has three service areas: administration, personnel, and accounting. The direct costs per month and the interdepartmental service structure are shown below in a benefits provided ranking.

Compute the total cost for each revenue generating area using the direct method.

what is the total service department cost that was assigned to stamping in october t 572480

Aug 29, 2021 | Uncategorized

Cognevich Company is organized in three service departments (Personnel, Administration, and Maintenance) and two revenue generating departments (Stamping and Assembly). The company uses the step method to allocate service department costs to operating departments. In October 2000, Personnel incurred $60,000 of costs, Administration incurred $90,000, and Maintenance incurred $40,000. Proportions of services provided to other departments for October 2000 follow:

a. Assuming that the departments are listed in a benefits provided ranking, what amount of Personnel cost should be assigned to each of the other departments for October? Administration costs? Maintenance costs?

b. What is the total service department cost that was assigned to Stamping in October? To Assembly?

c. Explain why the cost allocation is affected by the order in which costs are assigned.

colleague press has two revenue producing divisions college textbooks and profession 572482

Aug 29, 2021 | Uncategorized

Colleague Press has two revenue producing divisions (College Textbooks and Professional Publications) and two service departments(Administration and Personnel). Direct costs and allocation bases for each of these areas are presented below:

Company management has decided to allocate administration and personnel costs on the basis of dollars of assets employed and number of employees, respectively. Use the algebraic method to allocate the service department costs and determine the final costs of operating the College Textbooks and Professional Publications Departments.

determine the upper and lower limits for the transfer price between the motchip divi 572483

Aug 29, 2021 | Uncategorized

Motchip Division, a decentralized plant of Pazazz Motor Company, is considering what transfer price to charge the Engine Division for transfers of computer chips to that division. The following data on production cost per computer chip have been gathered:

The Motchip Division sells the computer chips to external buyers for $21.75. Managers of the Engine Division have received external offers to provide the division comparable chips, ranging from $15 at one company to $23 at another.

a. Determine the upper and lower limits for the transfer price between the Motchip Division and the Engine Division.

b. If the Motchip Division is presently selling all the chips it can produce to external buyers, what is the minimum price it should set for transfers to the Engine Division?

what should be the minimum selling price to the trailer division under these conditi 572484

Aug 29, 2021 | Uncategorized

Another division of Keeler, the Trailer Division, wants to purchase 25,000 pairs of brake pads from Trusty pad Division during next year. No selling costs are incurred on internal sales.

a. If Trusty pad’s manager can sell all the brake pads it produces externally, what should the minimum transfer price be? Explain.

b. Assume that Trust ypad Division is experiencing a slight slowdown in external demand and will be able to sell only 600,000 pairs of brake pads to outsiders next year at the $12 selling price. What should be the minimum selling price to the Trailer Division under these conditions? Explain.

c. Assume that Mr. Leon, the manager of Trailer Division, offers to pay Trusty pad Division’s production costs plus 25 percent for each pair of brake pads. He receives an invoice for $217,187.50, and he was planning on a cost of $131,250. How were these amounts determined? What created the confusion? Explain.

two investment centers of jones products company are the electronics division and th 572485

Aug 29, 2021 | Uncategorized

Two investment centers of Jones Products Company are the Electronics Division and the Appliance Division. The Electronics Division manufactures an electronic computer chip that can be sold externally and is also used by the Appliance Division in making motors for its appliances. The following information is available about the computer chip: Total production annually: 200,000 units; internal requirements: 150,000 units; all others are sold externally List selling price: $25.60 Variable production costs: $12 Fixed overhead: $300,000; allocated on the basis of units of production Variable selling costs: $3; includes $1 per unit in advertising cost Fixed selling costs: $400,000 Determine the transfer price under each of the following methods:

a. Total variable cost

b. Full production cost

c. Total variable production cost plus necessary selling costs

d. Market price

match each of the following accounts to its proper balance sheet classification show 572352

Aug 29, 2021 | Uncategorized

The following accounts were taken from the financial statements of Callahan Company.

Salaries and wages payable

Investment in real estate

Service revenue

Equipment

Interest payable

Accumulated depreciation— equipment

Goodwill Short term investments

Depreciation expense

Mortgage payable (due in 3 years)

Owner’s capital

Unearned service revenue

Match each of the following accounts to its proper balance sheet classification, shown below. If the item would not appear on a balance sheet, use “NA.”

Current assets (CA)

Current liabilities (CL)

Long term investments (LTI)

Long term liabilities (LTL)

Property, plant, and equipment (PPE)

Owner’s equity (OE)

Intangible assets (IA)

prepare a classified balance sheet assuming 35 000 of the notes payable are long ter 572353

Aug 29, 2021 | Uncategorized

At the end of its first month of operations, Watson Answering Service has the following unadjusted trial balance.

Other data:

1. Insurance expires at the rate of $200 per month.

2. $1,000 of supplies are on hand at August 31.

3. Monthly depreciation on the equipment is $900.

4. Interest of $500 on the notes payable has accrued during August.

Instructions

(a) Prepare a worksheet.

(b) Prepare a classified balance sheet assuming $35,000 of the notes payable are long term. (c) Journalize the closing entries.

prepare the assets section of taylor company rsquo s classified balance sheet 572356

Aug 29, 2021 | Uncategorized

Chester Taylor recently received the following information related to Taylor Company’s December 31, 2012, balance sheet.

Prepare the assets section of Taylor Company’s classified balance sheet.

match each of the accounts to its proper balance sheet classification as shown below 572357

Aug 29, 2021 | Uncategorized

The following accounts were taken from the financial statements of Tillman Company.

Interest revenue

Owner’s capital

Utilities payable

Accumulated depreciation

Accounts payable

Equipment

Supplies

Salaries and wages expense

Bonds payable

Investment in real estate

Trademarks

Unearned rent revenue

Match each of the accounts to its proper balance sheet classification, as shown below. If the item would not appear on a balance sheet, use “NA.”

Current assets (CA)

Current liabilities (CL)

Long term investments (LTI)

Long term liabilities (LTL)

Property, plant, and equipment (PPE)

Owner’s equity (OE)

Intangible assets (IA)

match the lettered terms on the left with the numbered descriptions on the right a l 572372

Aug 29, 2021 | Uncategorized

(Terminology) Match the lettered terms on the left with the numbered descriptions on the right. A letter may be used more than once.

what actions might the company take to reduce this cost 572376

Aug 29, 2021 | Uncategorized

The marketing department at Walters Production Company has an idea for a new product that is expected to have a life cycle of five years. After conducting market research, the company has determined that the product could sell for $250 per unit in the first three years of life and $175 per unit for the last two years. Unit sales are expected as follows:

Per unit variable selling costs are estimated at $30 throughout the product’s life; annual fixed selling and administrative costs are expected to be $1,750,000. Walters Production Company desires a profit margin of 20 percent of selling price per unit.

a. Compute the life cycle target cost to manufacture the product. (Round to the nearest penny.)

b. If the company expects the product to cost $65 to manufacture in the first year, what is the maximum that manufacturing cost can be in the following four years? (Round to the nearest penny.)

c. Assume Walters Production Company engineers indicate that the expected manufacturing cost per unit is $70. What actions might the company take to reduce this cost?

calculate the material variance and the enc material variance 572378

Aug 29, 2021 | Uncategorized

James Company uses a JIT system. The following standards are related to Materials A and B, which are used to make one unit of the company’s final product:

The current material standards differ from the original because of an engineering change made near the end of June. During July, the company produced 3,000 units of its final product and used 22,000 pounds of Material A and 20,500 pounds of Material B. All material is acquired at the standard cost per pound.

a. Calculate the material variance and the ENC material variance.

b. Explain the effect of the engineering change on product cost.

why would a company implement an engineering change that increases the standard prod 572379

Aug 29, 2021 | Uncategorized

Erica Tommasen uses a JIT system in her manufacturing firm, which makes “Mew” for cats. Erica provides you with the following standards for a can of Mew:

The standards were changed because of a nutritional (engineering) adjustment. Production during March was 60,000 cans of Mew. Usage of raw material (all purchased at standard costs) was 250,000 ounces of Component X and 108,000 ounces of Component Y.

a. Calculate the material quantity variance for each component.

b. Calculate the engineering change variance for each component.

c. Why would a company implement an engineering change that increases the standard production cost by 20 percent?

did office superstore complete the 180 units by 5 00 p m 572381

Aug 29, 2021 | Uncategorized

Office Superstore produces commercial calendars in a two department operation: Department 1 is labor intensive and Department2 is automated. The average output of Department 1 is 45 units per hour. The units are then transferred to Department 2 where they are finished by a robot. The robot can finish a maximum of 45 units per hour. Office Superstore needs to complete 180 units this afternoon for an order that has been backlogged for four months. The production manager has informed the people in Department 1 that they are to work on nothing else except this order from 1 p.m. until 5 p.m. The supervisor in Department 2 has scheduled the same times for the robot to work on the order. Department 1’s activity for each hour of the afternoon follows:

Assume that each unit moves directly from Department 1 to Department 2 with no lag time. Did Office Superstore complete the 180 units by 5:00 p.m.? If not, explain and provide detailed computations.

a drugstore carries three types of face cream wonder cream skin so bright and fresh 572383

Aug 29, 2021 | Uncategorized

A drugstore carries three types of face cream: Wonder Cream, Skin so Bright, and Fresh & Sweet. Determine the economic order quantity for each, given the following information:

determine the total gross margin to be generated by this product over its life what 572390

Aug 29, 2021 | Uncategorized

The Products Development Division of Lite & Fine Cuisinehas just completed its work on a new microwave entrée. The marketing group has decided on an original price for the entrée, but the selling price will be reduced as competitors appear. Market studies indicate that the following quantities of the product can be sold at the following prices over its life cycle:

Development costs plus other startup costs for this product will total $600,000. Engineering estimates of direct material and direct labor costs are $0.85 and $0.20, respectively, per unit. These costs can be held constant for approximately four years and in year 5 will each increase by 10 percent. Variable overhead per unit is expected to be $0.25, and fixed overhead is expected to be $100,000 per year. Lite & Fine Cuisine management likes to earn a 20 percent gross margin on products of this type.

a. Prepare an income statement for each year of the product’s life, assuming all product costs are inventoried and using eight year amortization of the development and startup costs. What is the cost per unit each year? What rate of gross margin will the product generate each year?

b. Determine the total gross margin to be generated by this product over its life. What rate of gross margin is this?

c. Discuss the differences in the information provided by the analyses in parts (a) and (b).

given the features below concerning just in time systems indicate by letter which of 572391

Aug 29, 2021 | Uncategorized

Given the features below concerning just in time systems, indicate by letter which of the three categories apply to the following items. If more than one category applies, indicate with an additional letter.

D _ desired intermediate result of using JIT

U _ ultimate goal of JIT

T _ technique associated with JIT

a. Reducing setup time

b. Reducing total cost of producing and carrying inventory

c. Using focused factory arrangements

d. Designing products to minimize design changes after production starts

e. Monitoring quality on a continuous basis

f. Using manufacturing cells

g. Minimizing inventory stored

h. Measuring variances caused by engineering changes

i. Using autonomation processes

j. Pulling purchases and production through the system based on sales demand

prepare a journal entry to reclassify the actual conversion costs by the savings fou 572392

Aug 29, 2021 | Uncategorized

Brandt Production Company has implemented a just in time inventory system for the production of its insulated wire. Inventories of raw material and work in process are so small that Brandt uses a Raw and In Process account. In addition, almost all labor operations are automated and Brandt has chosen to cost products using standards for direct material and conversion. The following production standards are applicable at the beginning of 2000 for one roll of insulated wire:

The conversion cost of $35 per machine hour was estimated on the basis of 500,000 machine hours for the year and $17,500,000 of conversion costs. The following activities took place during 2000:

1. Raw material purchased and placed into production totaled 12,452,000 yards. All except 8,000 yards were purchased at the standard price of $2 per yard. The other 8,000 yards were purchased at a cost of $2.06 per yard due to the placement of a rush order. The order was approved in advance by management. All purchases are on account.

2. From January 1 to February 28, Brandt manufactured 20,800 rolls of insulated wire. Conversion costs incurred to date totaled $3,000,000. Of this amount, $600,000 was for depreciation, $2,200,000 was paid in cash, and $200,000 was on account.

3. Conversion costs are applied to the Raw and In Process account from January 1 to February 28 on the basis of the annual standard.

4. The Engineering Department issued a change in the operations flow document effective March 1, 2000. The change decreased the machine time to manufacture one roll of wire by 5 minutes per roll. However, the standard raises the quantity of direct material to 100.4 yards per roll. The Accounting Department requires that the annual standard be continued for costing the Raw and In Process Inventory for the remainder of 2000. The effects of the engineering changes should be shown in two accounts: Material Quantity Engineering Change Variance and Machine Hours Engineering Change Variance.

5. Total production for the remainder of 2000 was 103,200 rolls of wire. Total conversion costs for the remaining 10 months of 2000 were $14,442,000. Of this amount, $4,000,000 was depreciation, $9,325,000 was paid in cash, and $1,117,000 was on account.

6. The standard amount of conversion cost is applied to the Raw and In Process Inventory for the remainder of the year. Note: Some of the journal entries for the following items are not explicitly covered in the chapter. This problem challenges students regarding the accounting effects of the implementation of a JIT system.

a. Prepare entries for items 1, 2, 3, 5, and 6 above.

b. Determine the increase in material cost due to the engineering change related to direct material.

c. Prepare a journal entry to adjust the Raw and In Process Inventory accountfor the engineering change cost found in part (b).

d. Determine the reduction in conversion cost due to the engineering change related to machine time.

e. Prepare a journal entry to reclassify the actual conversion costs by the savings found in part (d).

f. Making the entry in part (e) raises conversion costs to what they would have been if the engineering change related to machine time had not been made. Are conversion costs under or overapplied and by what amount?

g. Assume the reduction in machine time could not have been made without the corresponding increase in material usage. Is the net effect of these engineering changes cost beneficial? Why?

calculate the appropriate order point 572393

Aug 29, 2021 | Uncategorized

Andrew Jackson operates a health food bakery that uses a special type of ground flour in its products. The bakery operates 365 days a year. Andrew finds that he seems to order either too much or too little flour and asks for your help. After some discussion, you find he does not have any idea of when or how much to order. An examination of his records and Andrew’s answers to further questions reveal the following information:

a. Calculate the economic order quantity for flour.

b. Assume that Andrew desires a safety stock cushion of seven days’ usage.

Calculate the appropriate order point.

what is the total annual cost of ordering carrying and setting up for onion producti 572394

Aug 29, 2021 | Uncategorized

The Town and Country Nursery grows and sells a variety of household and outdoor plants. The firm also grows and sells garden vegetables. One of the more popular vegetables grown by the firm is a red onion. The company sells approximately 30,000 pounds of red onions per year. Two of the major inputs in the growing of onions are seeds and fertilizer. Due to the poor germination rate, two seeds must be purchased for each onion plant grown (a mature onion plant provides 0.5 pound of onion). Also, 0.25 pound of fertilizer is required for each pound of onion produced. The following information summarizes costs pertaining to onions, seeds, and fertilizer. Carrying costs for onions are expressed per pound of onion; carrying costs for seeds are expressed per seed; and for fertilizer, carrying costs are expressed per pound of fertilizer. To plant onions, the company incurs a cost of $50 to set up the planter and the fertilizing equipment.

a. What is the economic production run for onions?

b. How many production runs will Town and Country make for onions annually?

c. What are the economic order quantities for seeds and fertilizer?

d. How many orders will be placed for seeds? For fertilizer?

e. What is the total annual cost of ordering, carrying, and setting up for onion production?

f. How is the planting of onions similar to and different from a typical factory production run?

g. Are there any inconsistencies in your answers to parts (a) through (c) that need to be addressed? Explain.

determine the number of times during the year that stanly will have to sell securiti 572395

Aug 29, 2021 | Uncategorized

Chemcon Corporation sells various industrial supplies used for general purpose cleaning. Approximately 85percent of its sales are to not for profit and governmental institutions. These sales are on a contract basis with an average contract length of two years. Al Stanly, Chemcon’s treasurer, wants to initiate a system that will maximize the amount of time Chemcon holds its cash in the form of marketable securities. Chemcon currently has $9 million of securities that have an expected annual earnings rate of 8 percent. Chemcon is expecting a cash drain over the next 12 month period. Monthly cash outflows are expected to be $2,650,000, but inflows are only expected to be $2,500,000. The cost of either buying or selling securities is $125 per transaction. Stanly has heard that the EOQ inventory model can be applied to cash management. Therefore, he has decided to employ this model to determine the optimal value of marketable securities to be sold to replenish Chemcon’s cash balance.

a. Use the EOQ model in the chapter to

(1) explain the costs Al Stanly is attempting to balance in this situation, and

(2) calculate the optimal dollar amount of marketable securities Stanly should sell when Chemcon needs to replenish its cash balance.

b. Without prejudice to your solution in part a(2), assume that the optimal dollar amount of marketable securities to be sold is $60,000.

(1) Calculate the average cash balance in Chemcon’s checking account that will be on hand during the course of the year.

(2) Determine the number of times during the year that Stanly will have to sell securities.

c. Describe two different economic circumstances applicable to Chemcon that would render its use of the EOQ inventory model inappropriate as a cash management model.

how would the threat of product obsolescence affect the epr for a typical product p 572396

Aug 29, 2021 | Uncategorized

The Smith Company manufactures various electronic assemblies that it sells primarily to computer manufacturers. Smith’s reputation has been built on quality, timely delivery, and products that are consistently on the cutting edge of technology. Smith’s business is fast paced. The typical product has a short life; the product is in development for about a year and in the growth stage, with sometimes spectacular growth, for about a year. Each product then experiences a rapid decline in sales as new products become available. Smith’s competitive strategy requires a reliable stream of new products to be developed each year. This is the only way that the company can overcome the threat of product obsolescence. Although the products go through the first half of the product life cycle like products in other industries, they do not go through the second half of the product life cycle in a similar manner. Smith’s products never reach the mature product or declining product stage. Toward the end of the growth stage, products just die as new ones are introduced.

a. In the competitive market facing Smith Company, what would be key considerations in production and inventory control?

b. How would the threat of immediate product obsolescence affect Smith’s practices in purchasing product components and materials?

c. How would the threat of product obsolescence affect the EPR for a typical product produced by Smith Company?

describe two different economic circumstances applicable to chemcon that would rende 572397

Aug 29, 2021 | Uncategorized

A plant manager and her controller were discussing the plant’s inventory control policies one day. The controller suggested to the plant manager that the ordering policies needed to be reviewed because of new technology that had been put in place in the plant’s purchasing department. Among the changes that had been implemented in the plant were installation of (1) computerized inventory tracking, (2) electronic data interchange capabilities with the plant’s major suppliers, and (3) in house facilities for electronic fund transfers.

a. As technology changes, why should managers update ordering policies for inventory?

b. Write a memo to the plant manager describing the likely impact of the changes made in this plant on the EOQ of material input.

b. Without prejudice to your solution in part a(2), assume that the optimal dollar amount of marketable securities to be sold is $60,000.

(1) Calculate the average cash balance in Chemcon’s checking account that will be on hand during the course of the year.

(2) Determine the number of times during the year that Stanly will have to sell securities.

c. Describe two different economic circumstances applicable to Chemcon that would render its use of the EOQ inventory model inappropriate as a cash management model.

prepare a report on your findings 572400

Aug 29, 2021 | Uncategorized

According to Barry Bay us, a marketing professor, the perception that product life cycles are getting shorter is a mistaken one. Bay us identified three reasons for the appearance of shortened product life cycles:

1. New knowledge is being applied faster. The time between an invention and its first application is decreasing, from 90 years during the 1700s to 20 years from 1901 to 1950.

2. More new products are being introduced. In 1986, for example, the number of new product introductions was just under 13,000. By 1991, the number had increased to more than 15,000.

3. The time between innovations is decreasing.

a. As a team, investigate the reality or myth of shortened product life cycles. Use all resources (library, Internet, personal) at your disposal.

b. Prepare a report on your findings.

how can the finance function of a business improve the internal process of technolog 572420

Aug 29, 2021 | Uncategorized

The acquisition of new technology is often a perilous event for firms. The successful acquisition and implementation of new systems require much more than merely purchasing hardware and software. For example, expenditures for a typical installation of a new financial system are split as follows:

a. Why is it necessary that training be included as a cost of the technology acquisition?

b. How can the finance function of a business improve the internal process of technology acquistion?

determine the amount of cash received by the club with respect to member services du 572319

Aug 29, 2021 | Uncategorized

The following data are taken from the comparative balance sheets of Mayberry Billiards Club, which prepares its financial statements using the accrual basis of accounting.

Members are billed based upon their use of the club’s facilities. Unearned service revenues arise from the sale of gift certificates, which members can apply to their future use of club facilities. The 2012 income statement for the club showed that service revenue of $161,000 was earned during the year.

Instructions

(a) Prepare journal entries for each of the following events that took place during 2012.

(1) Accounts receivable from 2011 were all collected.

(2) Gift certificates outstanding at the end of 2011 were all redeemed.

(3) An additional $38,000 worth of gift certificates were sold during 2012. A portion of these was used by the recipients during the year; the remainder was still outstanding at the end of 2012.

(4) Services provided to members for 2012 were billed to members.

(5) Accounts receivable for 2012 (i.e., those billed in item [4] above) were partially collected.

(b) Determine the amount of cash received by the club, with respect to member services, during 2012.

prepare the adjusting entries needed at december 31 2012 572320

Aug 29, 2021 | Uncategorized

Brad Maynard Company has the following balances in selected accounts on December 31, 2012.

All the accounts have normal balances. Brad Maynard Company debits prepayments to expense accounts when paid, and credits unearned revenues to revenue accounts when received. The following information below has been gathered at December 31, 2012.

1. Brad Maynard Company paid $2,700 for 12 months of insurance coverage on June 1, 2012.

2. On December 1, 2012, Brad Maynard Company collected $40,000 for consulting services to be performed from December 1, 2012, through March 31, 2013.

3. A count of supplies on December 31, 2012, indicates that supplies of $900 are on hand.

Instructions

Prepare the adjusting entries needed at December 31, 2012.

determine the ending balance in each of the accounts 572321

Aug 29, 2021 | Uncategorized

At Richmond Company, prepayments are debited to expense when paid, and unearned revenues are credited to revenue when received. During January of the current year, the following transactions occurred.

On January 31, it is determined that $2,500 of the services are earned and that there are $650 of supplies on hand.

Instructions

(a) Journalize and post the January transactions. (Use T accounts.)

(b) Journalize and post the adjusting entries at January 31.

(c) Determine the ending balance in each of the accounts.

prepare an adjusted trial balance at june 30 2012 572322

Aug 29, 2021 | Uncategorized

Tony Masasi started his own consulting firm, McGee Company, on June 1, 2012. The trial balance at June 30 is shown below.

In addition to those accounts listed on the trial balance, the chart of accounts for McGee Company also contains the following accounts and account numbers: No. 158 Accumulated Depreciation—Equipment, No. 212 Salaries and Wages Payable, No. 631 Supplies Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, and No. 732 Utilities Expense.

Other data:

1. Supplies on hand at June 30 are $750.

2. A utility bill for $150 has not been recorded and will not be paid until next month.

3. The insurance policy is for a year.

4. $2,800 of unearned service revenue has been earned at the end of the month.

5. Salaries of $1,900 are accrued at June 30.

6. The equipment has a 5 year life with no salvage value. It is being depreciated at $250 per month for 60 months.

7. Invoices representing $1,200 of services performed during the month have not been recorded as of June 30.

Instructions

(a) Prepare the adjusting entries for the month of June. Use J3 as the page number for your journal.

(b) Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance as beginning account balances and place a check mark in the posting reference column.

(c) Prepare an adjusted trial balance at June 30, 2012.

melton river resort opened for business on june 1 with eight air conditioned units i 572323

Aug 29, 2021 | Uncategorized

Melton River Resort opened for business on June 1 with eight air conditioned units. Its trial balance before adjustment on August 31 is as follows.

In addition to those accounts listed on the trial balance, the chart of accounts for Melton River Resort also contains the following accounts and account numbers: No. 112 Accounts Receivable, No. 144 Accumulated Depreciation—Buildings, No. 150 Accumulated Depreciation—Equipment, No. 212 Salaries and Wages Payable, No. 230 Interest Payable, No. 620 Depreciation Expense, No. 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense.

Other data:

1. Insurance expires at the rate of $300 per month.

2. A count on August 31 shows $800 of supplies on hand.

3. Annual depreciation is $6,000 on buildings and $2,400 on equipment.

4. Unearned rent revenue of $4,800 was earned prior to August 31.

5. Salaries of $400 were unpaid at August 31.

6. Rentals of $4,000 were due from tenants at August 31. (Use Accounts Receivable.)

7. The mortgage interest rate is 9% per year. (The mortgage was taken out on August 1.)

Instructions

(a) Journalize the adjusting entries on August 31 for the 3 month period June 1–August 31.

(b) Prepare a ledger using the three column form of account. Enter the trial balance amounts and post the adjusting entries. (Use J1 as the posting reference.)

(c) Prepare an adjusted trial balance on August 31.

(d) Prepare an income statement and an owner’s equity statement for the 3 months ending August 31 and a balance sheet as of August 31.

minor advertising agency was founded by brandon minor in january of 2011 presented b 572324

Aug 29, 2021 | Uncategorized

Minor Advertising Agency was founded by Brandon Minor in January of 2011. Presented below are both the adjusted and unadjusted trial balances as of December 31, 2012.

Instructions

(a) Journalize the annual adjusting entries that were made.

(b) Prepare an income statement and an owner’s equity statement for the year ending December 31, 2012, and a balance sheet at December 31.

(c) Answer the following questions.

(1) If the note has been outstanding 6 months, what is the annual interest rate on that note?

(2) If the company paid $12,500 in salaries in 2012, what was the balance in Salaries and Wages Payable on December 31, 2011?

prepare the adjusting entries at december 31 2012 572325

Aug 29, 2021 | Uncategorized

A review of the ledger of D. J. Moore Company at December 31, 2012, produces the following data pertaining to the preparation of annual adjusting entries.

1. Salaries and Wages Payable $0. There are eight salaried employees. Salaries are paid every Friday for the current week. Five employees receive a salary of $900 each per week, and three employees earn $700 each per week. Assume December 31 is a Tuesday. Employees do not work weekends. All employees worked the last 2 days of December.

2. Unearned Rent Revenue $354,000. The company began subleasing Office space in its new building on November 1. At December 31, the company had the following rental contracts that are paid in full for the entire term of the lease.

3. Prepaid Advertising $15,600. This balance consists of payments on two advertising contracts. The contracts provide for monthly advertising in two trade magazines. The terms of the contracts are as follows.

The first advertisement runs in the month in which the contract is signed.

4. Notes Payable $120,000. This balance consists of a note for one year at an annual interest rate of 9%, dated June 1.

Instructions

Prepare the adjusting entries at December 31, 2012.

on september 1 2012 the account balances of moore equipment repair were as follows 572326

Aug 29, 2021 | Uncategorized

On September 1, 2012, the account balances of Moore Equipment Repair were as follows.

During September, the following summary transactions were completed.

Adjustment data consist of:

1. Supplies on hand $1,300.

2. Accrued salaries payable $300.

3. Depreciation is $100 per month.

4. Unearned service revenue of $1,450 is earned.

Instructions

(a) Enter the September 1 balances in the ledger accounts.

(b) Journalize the September transactions.

(c) Post to the ledger accounts. Use J1 for the posting reference. Use the following additional accounts: No. 407 Service Revenue, No. 615 Depreciation Expense, No. 631 Supplies Expense, No. 726 Salaries and Wages Expense, and No. 729 Rent Expense.

(d) Prepare a trial balance at September 30.

(e) Journalize and post adjusting entries.

(f) Prepare an adjusted trial balance.

(g) Prepare an income statement and an owner’s equity statement for September and a balance sheet at September 30.

prepare an income statement and owner rsquo s equity statement for the 6 months ende 572327

Aug 29, 2021 | Uncategorized

Olsen Graphics Company was organized on January 1, 2012, by Gwen Olsen. At the end of the first 6 months of operations, the trial balance contained the accounts shown below.

Analysis reveals the following additional data.

1. The $3,700 balance in Supplies Expense represents supplies purchased in January. At June 30, $1,500 of supplies was on hand.

2. The note payable was issued on February 1. It is a 9%, 6 month note.

3. The balance in Insurance Expense is the premium on a one year policy, dated March 1, 2012.

4. Service revenues are credited to revenue when received. At June 30, service revenue of $1,300 is unearned.

5. Sales revenue earned but unrecorded at June 30 totals $2,000.

6. Depreciation is $2,250 per year.

Instructions

(a) Journalize the adjusting entries at June 30.

(b) Prepare an adjusted trial balance.

(c) Prepare an income statement and owner’s equity statement for the 6 months ended June 30 and a balance sheet at June 30.

prepare the adjusting entries for the month of may use j4 as the page number for you 572328

Aug 29, 2021 | Uncategorized

Fran Omiyale started her own consulting firm, Omiyale Consulting, on May 1, 2012. The trial balance at May 31 is as follows.

In addition to those accounts listed on the trial balance, the chart of accounts for Omiyale Consulting also contains the following accounts and account numbers: No. 150 Accumulated Depreciation—Equipment, No. 212 Salaries and Wages Payable, No. 631 Supplies Expense, No. 717 Depreciation Expense, No. 722 Insurance Expense, and No. 736 Utilities Expense.

Other data:

1. $900 of supplies have been used during the month.

2. Utilities expense incurred but not paid on May 31, 2012, $250.

3. The insurance policy is for 2 years.

4. $400 of the balance in the unearned service revenue account remains unearned at the end of the month.

5. May 31 is a Wednesday, and employees are paid on Fridays. Omiyale Consulting has two employees, who are paid $900 each for a 5 day work week.

6. The office furniture has a 5 year life with no salvage value. It is being depreciated at $190 per month for 60 months.

7. Invoices representing $1,700 of services performed during the month have not been recorded as of May 31.

Instructions

(a) Prepare the adjusting entries for the month of May. Use J4 as the page number for your journal.

(b) Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance as beginning account balances and place a check mark in the posting reference column.

(c) Prepare an adjusted trial balance at May 31, 2012.

the bear motel opened for business on may 1 2012 its trial balance before adjustment 572329

Aug 29, 2021 | Uncategorized

The Bear Motel opened for business on May 1, 2012. Its trial balance before adjustment on May 31 is as follows.

In addition to those accounts listed on the trial balance, the chart of accounts for Bear Motel also contains the following accounts and account numbers: No. 142 Accumulated Depreciation— Buildings, No. 150 Accumulated Depreciation—Equipment, No. 212 Salaries and Wages Payable, No. 230 Interest Payable, No. 619 Depreciation Expense, No. 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense.

Other data:

1. Prepaid insurance is a 1 year policy starting May 1, 2012.

2. A count of supplies shows $750 of unused supplies on May 31.

3. Annual depreciation is $3,000 on the buildings and $1,500 on equipment.

4. The mortgage interest rate is 12%. (The mortgage was taken out on May 1.)

5. Two thirds of the unearned rent revenue has been earned.

6. Salaries of $750 are accrued and unpaid at May 31.

Instructions

(a) Journalize the adjusting entries on May 31.

(b) Prepare a ledger using the three column form of account. Enter the trial balance amounts and post the adjusting entries. (Use J1 as the posting reference.)

(c) Prepare an adjusted trial balance on May 31.

(d) Prepare an income statement and an owner’s equity statement for the month of May and a balance sheet at May 31.

peterman co was organized on july 1 2012 quarterly financial statements are prepared 572330

Aug 29, 2021 | Uncategorized

Peterman Co. was organized on July 1, 2012. Quarterly financial statements are prepared. The unadjusted and adjusted trial balances as of September 30 are shown below.

Instructions

(a) Journalize the adjusting entries that were made.

(b) Prepare an income statement and an owner’s equity statement for the 3 months ending September 30 and a balance sheet at September 30.

(c) If the note bears interest at 12%, how many months has it been outstanding?

prepare the adjusting entries at december 31 2012 572331

Aug 29, 2021 | Uncategorized

A review of the ledger of Roach Company at December 31, 2012, produces the following data pertaining to the preparation of annual adjusting entries.

1. Prepaid Insurance $10,440. The company has separate insurance policies on its buildings and its motor vehicles. Policy B4564 on the building was purchased on April 1, 2011, for $7,920. The policy has a term of 3 years. Policy A2958 on the vehicles was purchased on January 1, 2012, for $4,500. This policy has a term of 2 years.

2. Unearned Rent Revenue $429,000. The company began subleasing Office space in its new building on November 1. At December 31, the company had the following rental contracts that are paid in full for the entire term of the lease.

3. Notes Payable $120,000. This balance consists of a note for 9 months at an annual interest rate of 9%, dated November 1.

4. Salaries and Wages Payable $0. There are eight salaried employees. Salaries are paid every Friday for the current week. Five employees receive a salary of $700 each per week, and three employees earn $500 each per week. Assume December 31 is a Tuesday. Employees do not work weekends. All employees worked the last 2 days of December.

Instructions

Prepare the adjusting entries at December 31, 2012.

on november 1 2012 the account balances of robinson equipment repair were as follows 572332

Aug 29, 2021 | Uncategorized

On November 1, 2012, the account balances of Robinson Equipment Repair were as follows.

During November, the following summary transactions were completed.

Adjustment data consist of:

1. Supplies on hand $1,400.

2. Accrued salaries payable $350.

3. Depreciation for the month is $200.

4. Unearned service revenue of $1,250 is earned.

Instructions

(a) Enter the November 1 balances in the ledger accounts.

(b) Journalize the November transactions.

(c) Post to the ledger accounts. Use J1 for the posting reference. Use the following additional accounts: No. 407 Service Revenue, No. 615 Depreciation Expense, No. 631 Supplies Expense, No. 726 Salaries and Wages Expense, and No. 729 Rent Expense.

(d) Prepare a trial balance at November 30.

(e) Journalize and post adjusting entries.

(f) Prepare an adjusted trial balance.

(g) Prepare an income statement and an owner’s equity statement for November and a balance sheet at November 30.

prepare and post the adjusting journal entries 572333

Aug 29, 2021 | Uncategorized

It is the end of November and Natalie has been in touch with her grandmother. Her grandmother asked Natalie how well things went in her month of business. Natalie, too, would like to know if she has been profitable or not during November. Natalie realizes that in order to determine Cookie Creations’ income, she must make adjustments.

Natalie puts together the following additional information.

1. A count reveals that $35 of baking supplies were used during November.

2. Natalie estimates that all of her baking equipment will have a useful life of 5 years or 60 months. (Assume Natalie decides to record a full month’s worth of depreciation, regardless of when the equipment was obtained by the business.)

3. Natalie’s grandmother has decided to charge interest of 6% on the note payable extended on November 16. The loan plus interest is to be repaid in 24 months. (Assume that half a month of interest accrued during November.)

4. On November 30, a friend of Natalie’s asks her to teach a class at the neighborhood school. Natalie agrees and teaches a group of 35 grade students how to make Santa Claus cookies. The next day, Natalie prepares an invoice for $300 and leaves it with the school principal. The principal says that he will pass the invoice along to the head office, and it will be paid sometime in December.

5. Natalie receives a utilities bill for $45. The bill is for utilities consumed by Natalie’s business during November and is due December 15.

Instructions

Using the information that you have gathered and based on the new information above, do the following.

(a) Prepare and post the adjusting journal entries.

(b) Prepare an adjusting trial balance.

(c) Using the adjusted trial balance, calculate Cookie Creations’ net income or net loss for the month of November. Do not prepare an income statement.

explain to amaya the generally accepted accounting principles that she did not recog 572336

Aug 29, 2021 | Uncategorized

Happy Camper Park was organized on April 1, 2011, by Amaya Berge. Amaya is a good manager but a poor accountant. From the trial balance prepared by a part time bookkeeper, Amaya prepared the following income statement for the quarter that ended March 31, 2012.

Amaya thought that something was wrong with the statement because net income had never exceeded $20,000 in any one quarter. Knowing that you are an experienced accountant, she asks you to review the income statement and other data.

You first look at the trial balance. In addition to the account balances reported above in the income statement, the ledger contains the following additional selected balances at March 31, 2012.

You then make inquiries and discover the following.

1. Rent revenues include advanced rentals for summer occupancy $15,000.

2. There were $1,700 of supplies on hand at March 31.

3. Prepaid insurance resulted from the payment of a one year policy on January 1, 2012.

4. The mail on April 1, 2012, brought the following bills: advertising for week of March 24, $110; repairs made March 10, $260; and utilities, $180.

5. There are four employees, who receive wages totaling $300 per day. At March 31, 2 days’ salaries and wages have been incurred but not paid.

6. The note payable is a 3 month, 10% note dated January 1, 2012.

Instructions

With the class divided into groups, answer the following.

(a) Prepare a correct income statement for the quarter ended March 31, 2012.

(b) Explain to Amaya the generally accepted accounting principles that she did not recognize in preparing her income statement and their effect on her results.

what are the ethical considerations of 1 the president rsquo s request and 2 cathi r 572338

Aug 29, 2021 | Uncategorized

Bluestem Company is a pesticide manufacturer. Its sales declined greatly this year due to the passage of legislation outlawing the sale of several of Bluestem’s chemical pesticides. In the coming year, Bluestem will have environmentally safe and competitive chemicals to replace these discontinued products. Sales in the next year are expected to greatly exceed any prior year’s. The decline in sales and profits appears to be a one year aberration. But even so, the company president fears a large dip in the current year’s profits. He believes that such a dip could cause a significant drop in the market price of Bluestem’s stock and make the company a takeover target.

To avoid this possibility, the company president calls in Cathi Bell, controller, to discuss this period’s year end adjusting entries. He urges her to accrue every possible revenue and to defer as many expenses as possible. He says to Cathi, “We need the revenues this year, and next year can easily absorb expenses deferred from this year. We can’t let our stock price be hammered down!” Cathi didn’t get around to recording the adjusting entries until January 17, but she dated the entries December 31 as if they were recorded then. Cathi also made every effort to comply with the president’s request.

Instructions

(a) Who are the stakeholders in this situation?

(b) What are the ethical considerations of (1) the president’s request and (2) Cathi’s dating the adjusting entries December 31?

(c) Can Cathi accrue revenues and defer expenses and still be ethical?

how would you address each of the following situations in reporting your financial p 572339

Aug 29, 2021 | Uncategorized

Companies must report or disclose in their financial statements information about all liabilities, including potential liabilities related to environmental clean up. There are many situations in which you will be asked to provide personal financial information about your assets, liabilities, revenue, and expenses. Sometimes you will face difficult decisions regarding what to disclose and how to disclose it.

Instructions

Suppose that you are putting together a loan application to purchase a home. Based on your income and assets, you qualify for the mortgage loan, but just barely. How would you address each of the following situations in reporting your financial position for the loan application? Provide responses for each of the following situations.

(a) You signed a guarantee for a bank loan that a friend took out for $20,000. If your friend doesn’t pay, you will have to pay. Your friend has made all of the payments so far, and it appears he will be able to pay in the future.

(b) You were involved in an auto accident in which you were at fault. There is the possibility that you may have to pay as much as $50,000 as part of a settlement. The issue will not be resolved before the bank processes your mortgage request.

(c) The company at which you work isn’t doing very well, and it has recently laid off employees. You are still employed, but it is quite possible that you will lose your job in the next few months.

the financial statements of zetar plc are presented in appendix c the company rsquo 572348

Aug 29, 2021 | Uncategorized

The financial statements of Zetar plc are presented in Appendix C. The company’s complete annual report, including the notes to its financial statement.

Instructions

Visit Zetar’s corporate website and answer the following questions from Zetar’s 2009 annual report.

(a) From the notes to the financial statements, how does the company determine the amount of revenue to record at the time of a sale?

(b) From the notes to the financial statements, how does the company determine whether a sale has occurred?

(c) Using the consolidated income statement and consolidated statement of financial position, identify items that may result in adjusting entries for deferrals.

(d) Using the consolidated income statement, identify two items that may result in adjusting entries for accruals.

prepare the asset section of hoffman company rsquo s balance sheet 572351

Aug 29, 2021 | Uncategorized

Baxter Hoffman recently received the following information related to Hoffman Company’s December 31, 2012, balance sheet.

Prepare the asset section of Hoffman Company’s balance sheet.

pepsico rsquo s financial statements are presented in appendix a financial statement 572243

Aug 29, 2021 | Uncategorized

PepsiCo’s financial statements are presented in Appendix A. Financial statements of The Coca Cola Company are presented in Appendix B.

Instructions

(a) Based on the information contained in the financial statements, determine the normal balance of the listed accounts for each company.

PepsiCo

1.Inventory

2.Property, Plant, and Equipment

3.Accounts Payable

4.Interest Expense

Coca Cola

1.Accounts Receivable

2.Cash and Cash Equivalents

3.Cost of Goods Sold

4.Sales (revenue)

(b) Identify the other account ordinarily involved when:

(1) Accounts Receivable is increased.

(2) Salaries and Wages Payable is decreased.

(3) Property, Plant, and Equipment is increased.

(4) Interest Expense is increased.

lisa ortega operates ortega riding academy the academy rsquo s primary sources of re 572244

Aug 29, 2021 | Uncategorized

Lisa Ortega operates Ortega Riding Academy. The academy’s primary sources of revenue are riding fees and lesson fees, which are paid on a cash basis. Lisa also boards horses for owners, who are billed monthly for boarding fees. In a few cases, boarders pay in advance of expected use. For its revenue transactions, the academy maintains the following accounts: No. 1 Cash, No. 5 Boarding Accounts Receivable, No. 27 Unearned Boarding Revenue, No. 51 Riding Revenue, No. 52 Lesson Revenue, and No. 53 Boarding Revenue.

The academy owns 10 horses, a stable, a riding corral, riding equipment, and office equipment. These assets are accounted for in accounts No. 11 Horses, No. 12 Building, No. 13 Riding Corral, No. 14 Riding Equipment, and No. 15 Office Equipment.

For its expenses, the academy maintains the following accounts: No. 6 Hay and Feed Supplies, No. 7 Prepaid Insurance, No. 21 Accounts Payable, No. 60 Salaries and Wages Expense, No. 61 Advertising Expense, No. 62 Utilities Expense, No. 63 Veterinary Expense, No. 64 Hay and Feed Expense, and No. 65 Insurance Expense.

Lisa makes periodic withdrawals of cash for personal living expenses. To record Lisa’s equity in the business and her drawings, two accounts are maintained: No. 50 Owner’s Capital, and No. 51 Owner’s Drawings.

During the first month of operations an inexperienced bookkeeper was employed. Lisa Ortega asks you to review the following eight entries of the 50 entries made during the month. In each case, the explanation for the entry is correct.

Instructions

With the class divided into groups, answer the following.

(a) Identify each journal entry that is correct. For each journal entry that is incorrect, prepare the entry that should have been made by the bookkeeper

(b) Which of the incorrect entries would prevent the trial balance from balancing?

(c) What was the correct net income for May, assuming the bookkeeper reported net income of $4,500 after posting all 50 entries?

(d) What was the correct cash balance at May 31, assuming the bookkeeper reported a balance of $12,475 after posting all 50 entries (and the only errors occurred in the items listed above)?

what are the ethical issues involved in this case 572246

Aug 29, 2021 | Uncategorized

Mary Jansen is the assistant chief accountant at Casey Company, a manufacturer of computer chips and cellular phones. The company presently has total sales of $20 million. It is the end of the first quarter. Mary is hurriedly trying to prepare a general ledger trial balance so that quarterly financial statements can be prepared and released to management and the regulatory agencies. The total credits on the trial balance exceed the debits by $1,000. In order to meet the 4 p.m. deadline, Mary decides to force the debits and credits into balance by adding the amount of the difference to the Equipment account. She chose Equipment because it is one of the larger account balances; percentage wise, it will be the least misstated. Mary “plugs” the difference! She believes that the difference will not affect anyone’s decisions. She wishes that she had another few days to find the error but realizes that the financial statements are already late.

Instructions

(a) Who are the stakeholders in this situation?

(b) What are the ethical issues involved in this case?

(c) What are Mary’s alternatives?

where would you like to be working in three to five years describe your plan for get 572247

Aug 29, 2021 | Uncategorized

Every company needs to plan in order to move forward. Its top management must consider where it wants the company to be in three to five years. Like a company, you need to think about where you want to be three to five years from now, and you need to start taking steps now in order to get there. With some forethought, you can help yourself avoid a situation, like those described in the All About You feature (available online at the book’s companion website) in which your résumé seems to need creative writing.

Instructions

Provide responses to each of the following items.

(a) Where would you like to be working in three to five years? Describe your plan for getting there by identifying between five and 10 specific steps that you need to take.

(b) In order to get the job you want, you will need a résumé. Your résumé is the equivalent of a company’s annual report. It needs to provide relevant and reliable information about your past accomplishments so that employers can decide whether to “invest” in you. Do a search on the Internet to find a good

résumé format. What are the basic elements of a résumé?

(c) A company’s annual report provides information about a company’s accomplishments. In order for investors to use the annual report, the information must be reliable; that is, users must have faith that the information is accurate and believable. How can you provide assurance that the information on your résumé is reliable?

(d) Prepare a résumé assuming that you have accomplished the five to 10 specific steps you identified in part (a). Also, provide evidence that would give assurance that the information is reliable.

prepare the adjusting entries for the month of march 572257

Aug 29, 2021 | Uncategorized

The ledger of Hammond Company, on March 31, 2012, includes these selected accounts before adjusting entries are prepared.

An analysis of the accounts shows the following.

1. Insurance expires at the rate of $100 per month.

2. Supplies on hand total $800.

3. The equipment depreciates $200 a month.

4. One half of the unearned service revenue was earned in March.

Prepare the adjusting entries for the month of March.

determine the amount that appears for owner rsquo s capital at june 30 2012 572259

Aug 29, 2021 | Uncategorized

Skolnick Co. was organized on April 1, 2012. The company prepares quarterly financial statements. The adjusted trial balance amounts at June 30 are shown below.

(a) Determine the net income for the quarter April 1 to June 30.

(b) Determine the total assets and total liabilities at June 30, 2012, for Skolnick Co.

(c) Determine the amount that appears for Owner’s Capital at June 30, 2012.

prepare the adjusting entries for the month of april show computations 572260

Aug 29, 2021 | Uncategorized

Terry Thomas opens the Green Thumb Lawn Care Company on April 1. At April 30, the trial balance shows the following balances for selected accounts.

Analysis reveals the following additional data.

1. Prepaid insurance is the cost of a 2 year insurance policy, effective April 1.

2. Depreciation on the equipment is $500 per month.

3. The note payable is dated April 1. It is a 6 month, 12% note.

4. Seven customers paid for the company’s 6 months’ lawn service package of $600 beginning in April. The company performed services for these customers in April.

5. Lawn services provided other customers but not recorded at April 30 totaled $1,500.

Instructions

Prepare the adjusting entries for the month of April. Show computations.

identify timing concepts 572261

Aug 29, 2021 | Uncategorized

Numerous timing concepts are discussed on pages 100–102. A list of concepts is provided below in the left column, with a description of the concept in the right column. There are more descriptions provided than concepts. Match the description of the concept to the concept.

1. Cash basis accounting.

2. Fiscal year.

3. Revenue recognition principle.

4. Expense recognition principle.

(a) Monthly and quarterly time periods.

(b) Accountants divide the economic life of a business into artificial time periods.

(c) Efforts (expenses) should be matched with accomplishments (revenues).

(d) Companies record revenues when they receive cash and record expenses when they pay out cash.

(e) An accounting time period that is one year in length.

(f) An accounting time period that starts on January 1 and ends on December 31.

(g) Companies record transactions in the period in which the events occur.

(h) Recognize revenue in the accounting period in which it is earned.

Identify timing concepts.

prepare the adjusting entries for the month of march 572262

Aug 29, 2021 | Uncategorized

The ledger of Lefevour, Inc. on March 31, 2012, includes the following selected accounts before adjusting entries.

An analysis of the accounts shows the following.

1. Insurance expires at the rate of $300 per month.

2. Supplies on hand total $1,100.

3. The equipment depreciates $500 per month.

4. 2/5 of the unearned service revenue was earned in March.

Prepare the adjusting entries for the month of March.

determine the amount that appears for owner rsquo s capital at june 30 2012 572264

Aug 29, 2021 | Uncategorized

Kreutz Co. was organized on April 1, 2012. The company prepares quarterly financial statements. The adjusted trial balance amounts at June 30 are shown on the next page.

(a) Determine the net income for the quarter April 1 to June 30.

(b) Determine the total assets and total liabilities at June 30, 2012 for Kreutz Company.

(c) Determine the amount that appears for Owner’s Capital at June 30, 2012.

the trial balance shows supplies 1 350 and supplies expense 0 if 600 of supplies are 572271

Aug 29, 2021 | Uncategorized

The trial balance shows Supplies $1,350 and Supplies Expense $0. If $600 of supplies are on hand at the end of the period, the adjusting entry is:

queenan company computes depreciation on delivery equipment at 1 000 for the month o 572274

Aug 29, 2021 | Uncategorized

Queenan Company computes depreciation on delivery equipment at $1,000 for the month of June. The adjusting entry to record this depreciation is as follows.

kathy siska earned a salary of 400 for the last week of september 572277

Aug 29, 2021 | Uncategorized

Kathy Siska earned a salary of $400 for the last week of September. She will be paid on October 1. The adjusting entry for Kathy’s employer at September 30 is:

identify each statement as true or false if false indicate how to correct the statem 572306

Aug 29, 2021 | Uncategorized

Lance Louis has prepared the following list of statements about the time period assumption.

1. Adjusting entries would not be necessary if a company’s life were not divided into artificial time periods.

2. The IRS requires companies to fi le annual tax returns.

3. Accountants divide the economic life of a business into artificial time periods, but each transaction affects only one of these periods.

4. Accounting time periods are generally a month, a quarter, or a year.

5. A time period lasting one year is called an interim period.

6. All fiscal years are calendar years, but not all calendar years are fiscal years.

Instructions

Identify each statement as true or false. If false, indicate how to correct the statement.

identify what type of adjusting entry prepaid expense unearned revenue accrued expen 572309

Aug 29, 2021 | Uncategorized

Mannelly Corporation encounters the following situations:

1. Mannelly collects $1,300 from a customer in 2012 for services to be performed in 2013.

2. Mannelly incurs utility expense which is not yet paid in cash or recorded.

3. Mannelly’s employees worked 3 days in 2012 but will not be paid until 2013.

4. Mannelly earned service revenue but has not yet received cash or recorded the transaction.

5. Mannelly paid $2,400 rent on December 1 for the 4 months starting December 1.

6. Mannelly received cash for future services and recorded a liability until the revenue was earned.

7. Mannelly performed consulting services for a client in December 2012. On December 31, it had not billed the client for services provided of $1,200.

8. Mannelly paid cash for an expense and recorded an asset until the item was used up.

9. Mannelly purchased $900 of supplies in 2012; at year end, $400 of supplies remain unused.

10. Mannelly purchased equipment on January 1, 2012; the equipment will be used for 5 years.

11. Mannelly borrowed $10,000 on October 1, 2012, signing an 8% one year note payable.

Instructions

Identify what type of adjusting entry (prepaid expense, unearned revenue, accrued expense, or accrued revenue) is needed in each situation, at December 31, 2012.

prepare the adjusting entries at march 31 assuming that adjusting entries are made q 572312

Aug 29, 2021 | Uncategorized

The ledger of Danieal Rental Agency on March 31 of the current year includes the selected accounts, shown on the next page, before adjusting entries have been prepared.

An analysis of the accounts shows the following.

1. The equipment depreciates $400 per month.

2. One third of the unearned rent revenue was earned during the quarter.

3. Interest of $500 is accrued on the notes payable.

4. Supplies on hand total $900.

5. Insurance expires at the rate of $200 per month.

Instructions

Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. Additional accounts are: Depreciation Expense, Insurance Expense, Interest Payable, and Supplies Expense.

prepare the adjusting entries on january 31 account titles are accumulated depreciat 572313

Aug 29, 2021 | Uncategorized

Danielle Manning, D.D.S., opened a dental practice on January 1, 2012. During the first month of operations, the following transactions occurred.

1. Performed services for patients who had dental plan insurance. At January 31, $875 of such services was earned but not yet recorded.

2. Utility expenses incurred but not paid prior to January 31 totaled $650.

3. Purchased dental equipment on January 1 for $80,000, paying $20,000 in cash and signing a $60,000, 3 year note payable. The equipment depreciates $400 per month. Interest is $500 per month.

4. Purchased a one year malpractice insurance policy on January 1 for $24,000.

5. Purchased $1,600 of dental supplies. On January 31, determined that $400 of supplies were on hand.

Instructions

Prepare the adjusting entries on January 31. Account titles are: Accumulated Depreciation—Equipment, Depreciation Expense, Service Revenue, Accounts Receivable, Insurance Expense, Interest Expense, Interest Payable, Prepaid Insurance, Supplies, Supplies Expense, Utilities Expense, and Utilities Payable.

if 3 500 of salaries was paid in january what was the balance in salaries and wages 572316

Aug 29, 2021 | Uncategorized

A partial adjusted trial balance of Manumaleuna Company at January 31, 2012, shows the following.

Instructions

Answer the following questions, assuming the year begins January 1.

(a) If the amount in Supplies Expense is the January 31 adjusting entry, and $1,000 of supplies was purchased in January, what was the balance in Supplies on January 1?

(b) If the amount in Insurance Expense is the January 31 adjusting entry, and the original insurance premium was for one year, what was the total premium and when was the policy purchased?

(c) If $3,500 of salaries was paid in January, what was the balance in Salaries and Wages Payable at December 31, 2011?

selected accounts of tabor company are shown below 572317

Aug 29, 2021 | Uncategorized

Selected accounts of Tabor Company are shown below.

Instructions

After analyzing the accounts, journalize (a) the July transactions and (b) the adjusting entries that were made on July 31.

the trial balances before and after adjustment for matthews company at the end of it 572318

Aug 29, 2021 | Uncategorized

The trial balances before and after adjustment for Matthews Company at the end of its fiscal year are presented on the next page.

Instructions

Prepare the adjusting entries that were made.

an inexperienced bookkeeper prepared the following trial balance prepare a correct t 572218

Aug 29, 2021 | Uncategorized

An inexperienced bookkeeper prepared the following trial balance. Prepare a correct trial balance, assuming all account balances are normal.

selected transactions for m anderson an interior decorator in her fi rst month of bu 572220

Aug 29, 2021 | Uncategorized

Selected transactions for M. Anderson, an interior decorator, in her fi rst month of business, are as follows.

Instructions

For each transaction, indicate the following.

(a) The basic type of account debited and credited (asset, liability, owner’s equity).

(b) The specific account debited and credited (cash, rent expense, service revenue, etc.).

(c) Whether the specific account is increased or decreased.

(d) The normal balance of the specific account.

Use the following format, in which the January 2 transaction is given as an example.

prepare the debit credit analysis for each transaction 572221

Aug 29, 2021 | Uncategorized

Presented below is information related to Aromashodu Real Estate Agency.

Instructions

Prepare the debit credit analysis for each transaction.

selected transactions from the journal of consuela brown investment broker are prese 572225

Aug 29, 2021 | Uncategorized

Selected transactions from the journal of Consuela Brown, investment broker, are presented below.

Instructions

(a) Post the transactions to T accounts.

(b) Prepare a trial balance at August 31, 2012.

selected transactions from the journal of consuela brown investment broker are prese 572226

Aug 29, 2021 | Uncategorized

Selected transactions from the journal of Consuela Brown, investment broker, are presented below.

end of the first month of operations.

Instructions

(a) Prepare the complete general journal (including explanations) from which the postings to Cash were made.

(b) Prepare a trial balance at April 30, 2012.

presented below is the ledger for bowman co journalize transactions from account dat 572227

Aug 29, 2021 | Uncategorized

Presented below is the ledger for Bowman Co. Journalize transactions from account data and prepare a trial balance.

Instructions

(a) Reproduce the journal entries for the transactions that occurred on October 1, 10, and 20, and provide explanations for each.

(b) Determine the October 31 balance for each of the accounts above, and prepare a trial balance at October 31, 2012.

post the transactions using the standard account form 572228

Aug 29, 2021 | Uncategorized

Selected transactions for Roberta Garza Company during its fi rst month in business are presented below.

Garza’s chart of accounts shows: No. 101 Cash, No. 157 Equipment, No. 201 Accounts Payable, No. 301 Owner’s Capital, and No. 306 Owner’s Drawings.

Instructions

(a) Journalize the transactions on page J1 of the journal. (Omit explanations.)

(b) Post the transactions using the standard account form.

indicate the trial balance column that will have the larger total 572229

Aug 29, 2021 | Uncategorized

The bookkeeper for Lance Briggs Equipment Repair made a number of errors in journalizing and posting, as described below.

1. A credit posting of $525 to Accounts Receivable was omitted.

2. A debit posting of $750 for Prepaid Insurance was debited to Insurance Expense.

3. A collection from a customer of $100 in payment of its account owed was journalized and posted as a debit to Cash $100 and a credit to Service Revenue $100.

4. A credit posting of $415 to Property Taxes Payable was made twice.

5. A cash purchase of supplies for $250 was journalized and posted as a debit to Supplies $25 and a credit to Cash $25.

6. A debit of $475 to Advertising Expense was posted as $457.

Instructions

For each error:

(a) Indicate whether the trial balance will balance.

(b) If the trial balance will not balance, indicate the amount of the difference.

(c) Indicate the trial balance column that will have the larger total.

Consider each error separately. Use the following form, in which error (1) is given as an example.

prepare a trial balance with the accounts arranged as illustrated in the chapter and 572230

Aug 29, 2021 | Uncategorized

The accounts in the ledger of Bullucks Delivery Service contain the following balances on July 31, 2012.

Instructions

Prepare a trial balance with the accounts arranged as illustrated in the chapter and fill in the missing amount for Cash.

journalize the april transactions 572231

Aug 29, 2021 | Uncategorized

Frontier Park was started on April 1 by H. Hillenmeyer. The following selected events and transactions occurred during April.

Instructions

Journalize the April transactions.

prepare a trial balance on may 31 2012 572232

Aug 29, 2021 | Uncategorized

Desiree Clark is a licensed CPA. During the first month of operations of her business, the following events and transactions occurred.

Desiree uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126 Supplies, No. 201 Accounts Payable, No. 209 Unearned Service Revenue, No. 301 Owner’s Capital, No. 400 Service Revenue, No. 726 Salaries and Wages Expense, and No. 729 Rent Expense.

Instructions

(a) Journalize the transactions.

(b) Post to the ledger accounts.

(c) Prepare a trial balance on May 31, 2012.

open t accounts for each of the accounts listed in the trial balance and enter the o 572233

Aug 29, 2021 | Uncategorized

Jay Cutler owns and manages a computer repair service, which had the following trialbalance on December 31, 2011 (the end of its fiscal year).

Summarized transactions for January 2012 were as follows.

1. Advertising costs, paid in cash, $1,000.

2. Additional supplies acquired on account $4,200.

3. Miscellaneous expenses, paid in cash, $2,000.

4. Cash collected from customers in payment of accounts receivable $14,000.

5. Cash paid to creditors for accounts payable due $15,000.

6. Supplies used during January $4,000.

7. Repair services performed during January: for cash $6,000; on account $9,000.

8. Wages for January, paid in cash, $3,500.

9. Jay’s drawings during January were $3,000.

Instructions

(a) Open T accounts for each of the accounts listed in the trial balance, and enter the opening balances for 2012.

(b) Prepare journal entries to record each of the January transactions.

(c) Post the journal entries to the accounts in the ledger. (Add accounts as needed.)

(d) Prepare a trial balance as of January 31, 2012.

prepare a correct trial balance note that the chart of accounts includes the followi 572234

Aug 29, 2021 | Uncategorized

The trial balance of the Kellen Davis Company shown below does not balance.

Your review of the ledger reveals that each account has a normal balance. You also discover the following errors.

1. The totals of the debit sides of Prepaid Insurance, Accounts Payable, and Insurance Expense were each understated $100.

2. Transposition errors were made in Accounts Receivable and Service Revenue. Based on postings made, the correct balances were $2,570 and $6,960, respectively.

3. A debit posting to Salaries and Wages Expense of $200 was omitted.

4. A $1,000 cash drawing by the owner was debited to Owner’s Capital for $1,000 and credited to Cash for $1,000.

5. A $520 purchase of supplies on account was debited to Equipment for $520 and credited to Cash for $520.

6. A cash payment of $540 for advertising was debited to Advertising Expense for $54 and credited to Cash for $54.

7. A collection from a customer for $210 was debited to Cash for $210 and credited to Accounts Payable for $210.

Instructions

Prepare a correct trial balance. Note that the chart of accounts includes the following: Owner’s Drawings and Supplies.

prepare a trial balance on april 30 2012 problems set b 572235

Aug 29, 2021 | Uncategorized

The Chicago Theater is owned by Rashied Davis. All facilities were completed on March 31. At this time, the ledger showed: No. 101 Cash $4,000, No. 140 Land $10,000, No. 145 Buildings (concession stand, projection room, ticket booth, and screen) $8,000, No. 157 Equipment $6,000, No. 201 Accounts Payable $2,000, No. 275 Mortgage Payable $8,000, and No. 301 Owner’s Capital $18,000. During April, the following events and transactions occurred.

In addition to the accounts identified above, the chart of accounts shows: No. 112 Accounts Receivable, No. 136 Prepaid Rent, No. 400 Service Revenue, No. 429 Rent Revenue, No. 610 Advertising Expense, No. 726 Salaries and Wages Expense, and No. 729 Rent Expense.

Instructions

(a) Enter the beginning balances in the ledger as of April 1. Insert a check mark (?) in the reference column of the ledger for the beginning balance.

(b) Journalize the April transactions. Chicago records admission revenue as service revenue, rental of the concession stand as rent revenue, and fi lm rental expense as rent expense.

(c) Post the April journal entries to the ledger. Assume that all entries are posted from page 1 of the journal.

(d) Prepare a trial balance on April 30, 2012. Problems: Set B

prepare a trial balance on april 30 2012 572237

Aug 29, 2021 | Uncategorized