accounting questions 498780

Aug 29, 2021 | Uncategorized

Question 1

A factor which distinguishes the corporate form of organization from a sole proprietorship or partnership is that a

corporation is organized for the purpose of making a profit.

corporation is subject to more federal and state government regulations.

corporation s temporary accounts are closed at the end of the accounting period.

corporation is an accounting economic entity.
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Question 2

The following data is available for Blaine Corporation at December 31, 2012:
Common stock, par $10 (authorized 25,000 shares) $200,000
Treasury Stock (at cost $15 per share) 900

Based on the data, how many shares of common stock are outstanding?

19,940

24,940

25,000

20,000
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Question 3

On January 1, Collins Corporation had 800,000 shares of $10 par value common stock outstanding. On March 31, the company declared a 15% stock dividend. Market value of the stock was $15/share. As a result of this event,

Collins Paid-in Capital in Excess of Par account increased $600,000.

Collins total stockholders equity was unaffected.

Collins Stock Dividends account increased $1,800,000.

All of the above.

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Question 4

Dillon Corporation splits its common stock 2 for 1, when the market value is $40 per share. Prior to the split, Dillon had 50,000 shares of $10 par value common stock issued and outstanding. After the split, the par value of the stock

is reduced to $20 per share.

remains the same.

is reduced to $2 per share.

is reduced to $5 per share.

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Question 5

A major disadvantage resulting from the use of bonds is that

taxes may increase.

earnings per share may be lowered.

interest must be paid on a periodic basis.

bondholders have voting rights.
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Question 6

Bargain Company has $1,600,000 of bonds outstanding. The unamortized premium is $21,600. If the company redeemed the bonds at 101, what would be the gain or loss on the redemption?

$16,000 loss

$5,600 loss

$16,000 gain

$5,600 gain
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Question 7

Horton Company purchased a building on January 2 by signing a long-term $480,000 mortgage with monthly payments of $4,400. The mortgage carries an interest rate of 10 percent. The amount owed on the mortgage after the first payment will be

$479,600.

$476,000.

$475,600.

$480,000.
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Question 8

Wise Company owns 30% interest in the stock of Dark Corporation. During the year, Dark pays $20,000 in dividends to Wise, and reports $200,000 in net income. Wise Company’s investment in Dark will increase Wise’s net income by

$6,000.

$60,000.

$66,000.

$80,000.
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Question 9

If an investor owns less than 20% of the common stock of another corporation as a long-term investment,

no dividends can be expected.

it is presumed that the investor has relatively little influence on the investee.

it is presumed that the investor has significant influence on the investee.

the equity method of accounting for the investment should be employed.
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Question 10

Reporting investments at fair value is

a conservative approach because only losses are recognized.

applicable to both debt and stock securities.

applicable to debt securities only.

applicable to stock securities only.
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Question 11

Available-for-sale securities are classified as

short-term investments only.

long-term investments only.

either short-term or long-term investments.

current assets only.
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Question 12

Which of the following changes in retained earnings during a period will be reported in the financing activities section of the statement of cash flows?
1. Declaration and payment of a cash dividend during the period.
2. Net income for the period.

1

2

Neither 1 nor 2.

Both 1 and 2.
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Question 13

Hark Inc. had cash sales of $400,000 and credit sales of $1,100,000. The accounts receivable balance increased $25,000 during the year. How much cash did Hark receive from its customers during the year?

$725,000

$1,500,000

$1,475,000

$1,075,000
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Question 14

The statement of cash flows is prepared from all of the following except

comparative balance sheets.

the current income statement.

selected transaction data.

the adjusted trial balance.
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Question 15

Corgan Company uses the direct method in determining net cash provided by operating activities, During the year, operating expenses were $290,000, prepaid expenses increased $20,000, and accrued expenses payable increased $30,000. Cash payments for operating expenses were

$240,000.

$280,000.

$300,000.

$340,000.
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Question 16

Assume the following sales data for a company:
2014 $1,050,000
2013 950,000
2012 800,000
2011 550,000

If 2011 is the base year, what is the percentage increase in sales from 2011 to 2013?

72.7%

100%

52.4%

90.9%
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Question 17

Darius, Inc. has the following income statement (in millions):
DARIUS, INC.
Income Statement
For the Year Ended December 31, 2012

Net Sales $300
Cost of Goods Sold 120
Gross Profit 180
Operating Expenses 44
Net Income $136

Using vertical analysis, what percentage is assigned to Net Income?

100%

75.6%

45.3%

None of the above.
Question 18

Parrish, Inc. decided on January 1 to discontinue its telescope manufacturing division. On July 1, the division s assets with a book value of $1,250,000 are sold for $850,000. Operating income from January 1 to June 30 for the division amounted to $125,000. Ignoring income taxes, what total amount should be reported on Parrish s income statement for the current year under the caption, Discontinued Operations?

$400,000 loss

$125,000

$275,000 loss

$525,000

Question 24

Each of these items must be considered in preparing a statement of cash flows for Kiner Co. for the year ended December 31, 2012. For each item, state how it should be shown in the statement of cash flows for 2012.
(a) Issued bonds for $200,000 cash. C
(b) Purchased equipment for $150,000 cash.
(c) Sold land costing $20,000 for $20,000 cash.
(d) Declared and paid a $50,000 cash dividend. –
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Question 25

Villa Company reported net income of $195,000 for 2012. Villa also reported depreciation expense of $45,000 and a loss of $5,000 on the sale of equipment. The comparative balance sheet shows a decrease in accounts receivable of $15,000 for the year, a $17,000 increase in accounts payable, and a $4,000 decrease in prepaid expenses.
Instructions
Prepare the operating activities section of the statement of cash flows for 2012. Use the indirect method. (List multiple entries with a positive cash flow first and then the negative cash flow. List amounts from largest to smallest e.g. 10, 5, 3, 2. If amount decreases cash flow, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
VILLA COMPANY
Partial Statement of Cash Flows
For the Year Ended December 31, 2012
Cash flows from operating activities
$

Adjustments to reconcile net income
to net cash provided by operating activities $
Net cash by operating activities $

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accounting problems 498753

Aug 29, 2021 | Uncategorized

Title:

Accounting Problems

Question Detail:

Brief Exercise 2-4 Journal entries [LO2]

Brief Exercise 2-11 Closing entries [LO7]

Exercise 2-5 The accounting processing cycle [LO2, 3, 4, 5, 6, 7]

Exercise 2-6 Debits and credits [LO1]

Exercise 2-14 Cash versus accrual accounting; adjusting entries [LO4, 5, 8]

Exercise 2-15 External transactions and adjusting entries [LO2, 4, 5]

Problem 2-3 Adjusting entries [LO 4, 5]

Problem :

Problem 2-6 Accounting cycle [LO2, 3, 4, 5, 6, 7]

The following is a summary of the transactions for the year:

accounting problems 498754

Aug 29, 2021 | Uncategorized

accounting problems and excel solutions 3 498755

Aug 29, 2021 | Uncategorized

Edwards, Inc. has prepared the following comparative balance sheets
for 2003 and 2004:
2004 2003

Cash $ 198,000 $102,000
Receivables 106,000 78,000
Inventory 100,000 120,000
Prepaid expenses 12,000 18,000
Plant assets 840,000 700,000
Accumulated depreciation (300,000) (250,000)
Patent 102,000 116,000

$1,058,000 $884,000

Accounts payable $ 102,000 $112,000
Accrued liabilities 40,000 28,000
Mortgage payable 300,000
Preferred stock 350,000
Additional paid-in capital preferred 80,000
Common stock 400,000 400,000
Retained earnings 86,000 44,000

$1,058,000 $884,000

1. The Accumulated Depreciation account has been credited only for
the depreciation expense for the period.

2. The Retained Earnings account has been charged for dividends of
$92,000 and credited for the net income for the year.

The income statement for 2004 is as follows:

Sales $1,320,000
Cost of sales 726,000

Gross profit 594,000
Operating expenses 460,000

Net income $ 134,000

INSTRUCTIONS
(a) From the information above, prepare a statement of cash flows
(indirect method) for Edwards, Inc. for the year ended
December 31, 2004.

(b) From the information above, prepare a schedule of cash provided
by operating activities using the direct method.

accounting problems and excel solutions 4 498756

Aug 29, 2021 | Uncategorized

Tanner Furniture Company concluded its FIRST year of operations in

which it made sales of $1,500,000, ALL on installment. Collections

during the year from down payments and installments totaled

$600,000. Purchases for the year totaled $900,000; the cost of

merchandise on hand at the end of the year was $180,000.

INSTRUCTIONS

Using the installment-sales method, make summary entries to record:

(a) the installment sales and cash collections;

(b) the cost of installment sales;

(c) the unrealized gross profit;

(d) the realized gross profit.

6. On February 1, 2003, Miley Contractors agreed to construct a

building at a contract price of $5,600,000. Miley estimated total

construction costs would be $4,000,000 and the project would be

finished in 2005. Information relating to the costs and billings for

this contract is as follows:

2003 2004 2005

Total costs incurred to date $1,500,000 $2,640,000 $4,600,000

Estimated costs to complete 2,500,000 1,760,000 -0-

Customer billings to date 2,200,000 4,000,000 5,600,000

Collections to date 2,000,000 3,500,000 5,500,000

INSTRUCTIONS

Fill in the correct amounts on the following schedule. For

percentage-of-completion accounting and for completed-contract

accounting, show the gross profit that should be recorded for 2003,

2004, and 2005.

Percentage-of-Completion Completed-Contract

Gross Profit Gross Profit

2003 ____________ 2003 ____________

2004 ____________ 2004 ____________

2005 ____________ 2005 ____________

————————-

Section 3.Problems

7. Cherry Construction specializes in the construction of commercial

and industrial buildings. The contractor is experienced in bidding

long-term construction projects of this type, with the typical

project lasting fifteen to twenty-four months. The contractor uses

the percentage-of-completion method of revenue recognition since,

given the characteristics of the contractor’s business and con-

tracts, it is the most appropriate method. Progress toward comple-

tion is measured on a cost to cost basis. Cherry began work on a

lump-sum contract at the beginning of 2004. As bid, the statistics

were as follows:

Lump-sum price (contract price) $4,000,000

Estimated costs

Labor $ 850,000

Materials and subcontractor 1,750,000

Indirect costs 400,000 3,000,000

$1,000,000

At the end of the first year, the following was the status of the contract:

Billings to date $2,230,000

Costs incurred to date

Labor $ 414,000

Materials and subcontractor 1,098,000

Indirect costs 150,000 1,662,000

Latest forecast total cost 3,000,000

It should be noted that included in the above costs incurred to date

were standard electrical and mechanical materials stored on the job

site, but not yet installed, costing $102,000. These costs should

not be considered in the costs incurred to date.

INSTRUCTIONS

(a) Compute the percentage of completion on the contract at the end

of 2004.

(b) Indicate the amount of gross profit that would be reported on

this contract at the end of 2004.

(c) Make the journal entry to record the income (loss) for 2004 on

Cherry’s books.

(d) Indicate the account(s) and the amount(s) that would be shown on

the balance sheet of Cherry Construction at the end of 2004

related to its construction accounts. Also indicate where these

items would be classified on the balance sheet. Billings

collected during the year amounted to $1,960,000.

(e) Assume the latest forecast on total costs at the end of 2004 was

$4,100,000. How much income (loss) would Cherry report for

the year 2004?

accounting production budget direct labor budget foh and budgeted income 498757

Aug 29, 2021 | Uncategorized

Natural Fragrance, Inc., began operations on January 1, 2012. The company produces a hand and body lotion in an eight-ounce bottle called Eternal Beauty. The lotion is sold wholesale in 12-bottle cases for $80 per case. There is a selling commission of $16 per case. The January direct materials, direct labor, and factory overhead costs are as follows:

Make a workbook in excel and apply the worksheets within it.

Spreadsheet One: Break-Even Analysis

Determine a fixed and variable portion of a utility cost using the high-low method.

Determine a contribution margin

Determine a fix cost

Determine a break-even number

Spreadsheet Two: Budgets

Include a production budget

Include a direct materials purchase budget

Include a direct labor budget

Include a factory overhead budget

Include a budgeted income statement

Spreadsheet Three: Variance Analysis

Determine a direct material price and quantity variances

Determine a direct labor rate and time variances

Determine a factory overhead controllable variance

Determine a factory overhead volume variance

The software (excel workbook) should be attractive and user friendly.

See the following for the work information to complete it.

DIRECT MATERIALS

Cost Behavior Units per Case Cost per Unit Direct Materials Cost per Case

Cream base Variable 72 ozs. $0.015 $ 1.08

Natural oils Variable 24 ozs. 0.250 6.00

Bottle (8-oz.) Variable 12 bottles 0.400 4.80

$11.88

DIRECT LABOR

Department Cost Behavior Time per Case Labor Rate per Hour Direct Labor Cost per Case

Mixing Variable 16.8 min. $15.00 $4.20

Filling Variable 4.2 12.00 0.84

21.0 min. $5.04

FACTORY OVERHEAD

Cost Behavior Total Cost

Utilities Mixed $ 230

Facility lease Fixed 12,043

Equipment depreciation Fixed 3,600

Supplies Fixed 600

$16,473

Part A Break-Even Analysis

The management of Natural Fragrance, Inc., wishes to determine the number of cases

required to break even per month. The utilities cost, which is part of factory overhead,

is a mixed cost. The following information was gathered from the first six months of

operation regarding this cost:

2012 Case Production Utility Total Cost

January 300 $230

February 600 263

March 1,000 300

April 900 292

May 750 280

June 825 285

Instructions

1. Determine the fixed and variable portion of the utility cost using the high-low method.

2. Determine the contribution margin per case.

3. Determine the fixed costs per month, including the utility fixed cost from part (1).

4. Determine the break-even number of cases per month.

Part B August Budgets

During July of the current year, the management of Natural Fragrance, Inc., asked the controller to prepare August manufacturing and income statement budgets. Demand was expected to be 1,300 cases at $80 per case for August. Inventory planning information is provided as follows:

Finished Goods Inventory:

Cases Cost

Estimated finished goods inventory, August 1, 2012 200 $6,000

Desired finished goods inventory, August 31, 2012 100 3,000

Materials Inventory:

Cream Base(ozs.) Oils(ozs.) Bottles (bottles)

Estimated materials inventory, August 1, 2012 200 240 500

Desired materials inventory, August 31, 2012 800 300 200

There was negligible work in process inventory assumed for either the beginning or end of the month; thus, none was assumed. In addition, there was no change in the cost per unit or estimated units per case operating data from January.

Instructions

5. Prepare the August production budget.

6. Prepare the August direct materials purchases budget.

7. Prepare the August direct labor budget.

8. Prepare the August factory overhead budget.

9. Prepare the August budgeted income statement, including selling expenses.

Part C August Variance Analysis

During September of the current year, the controller was asked to perform variance analyses for August. The January operating data provided the standard prices, rates, times, and quantities per case. There were 1,300 actual cases produced during August, which was 100 more cases than planned at the beginning of the month. Actual data for August were as follows:

Actual Direct Materials Actual Direct Materials

Price per Unit Quantity per Case

Cream base $0.014 per oz. 74 ozs.

Natural oils $0.27 per oz. 26 ozs.

Bottle (8-oz.) $0.35 per bottle 12.6 bottles

Actual Direct Labor Rate Actual Direct Labor Time per Case

Mixing $15.20 16.20 min.

Filling 11.70 4.80 min.

Actual variable overhead $162.00

Normal volume 1,350 cases

The prices of the materials were different than standard due to fluctuations in market prices. The standard quantity of materials used per case was an ideal standard. The Mixing Department used a higher grade labor classification during the month, thus causing the actual labor rate to exceed standard. The Filling Department used a lower grade labor classification during the month, thus causing the actual labor rate to be less than standard.

Instructions

10. Determine and interpret the direct materials price and quantity variances for the three materials.

11. Determine and interpret the direct labor rate and time variances for the two departments.

12. Determine and interpret the factory overhead controllable variance.

13. Determine and interpret the factory overhead volume variance.

14. Why are the standard direct labor and direct materials costs in the calculations for

parts (10) and (11) based on the actual 1,300-case production volume rather than

the planned 1,200 cases of production used in the budgets for parts (6) and (7)?

accounting productline 498758

Aug 29, 2021 | Uncategorized

Scenario: RYT (aka RotYourTeeth) Candy Company sells lollipops.

Last year the company sold 10,000,000 lollipops for $1,000,000.

The Variable Costs were $350,000 and the Net Profits were $100,000

Administration has directed management to double profits in the next year.

ASSIGNMENT: DETERMINE whether RYT should discontinue a product line to increase profitability.

RYT has been evaluating its various product lines and is specifically analyzing one location that produces three flavors: Cherry, Lemon, and Blueberry. Further analysis indicates that 20% of COGS is variable and 30% of Selling and Admin expenses are variable.

Given the following data for the month of September, RYT is considering discontinuing the Blueberry flavor. What would you advise Support your position.

accounting question 498759

Aug 29, 2021 | Uncategorized

Vitalite, Inc., produces a number of products, including a body-wrap kit. Standard variable costs relating to a single kit are given below:
Standard Quantity
or Hours Standard Price
or Rate Standard
Cost
Direct materials ? $6 per yard $ ?
Direct labor ? ? ?
Variable manufacturing overhead ? $2 per direct
labor-hour ?

Total standard cost per kit $42

During August, 500 kits were manufactured and sold. Selected information relating to the month s production is given below:

Materials Used Direct Labor Variable
Manufacturing
Overhead
Total standard cost* ? $8,000 $1,600
Actual costs incurred $10,000 ? $1,620
Materials price variance
Materials quantity variance $ 600 U
Labor rate variance
Labor efficiency variance
Variable overhead rate variance ?
Variable overhead efficiency variance ?
*For the month’s production.

The following additional information is available for August s production of kits:

Actual direct labor-hours 900
Difference between standard and actual cost per kit produced during August $.14 U
Required:
1.

What was the total standard cost of the materials used during August? (Omit the “$” sign in your response.)

Standard cost $
2.

How many yards of material are required at standard per kit? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Number of yards yards per kit
3.

What was the materials price variance for August if there were no beginning or ending inventories of materials? (Input all amounts as positive values. Do not round intermediate calculations. Leave no cells blank – be certain to enter “0” wherever required. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Omit the “$” sign in your response.)

Material price variance $
4.

What is the standard direct labor rate per hour? (Omit the “$” sign in your response.)

Standard direct labor rate $ per DLH

5.

What was the labor rate variance for August? The labor efficiency variance? (Input all amounts as positive values. Do not round intermediate calculations. Leave no cells blank – be certain to enter “0” wherever required. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Omit the “$” sign in your response.)

Labor rate variance $
Labor efficiency variance $

6.

What was the variable overhead rate variance for August? The variable overhead efficiency variance? (Input all amounts as positive values. Do not round intermediate calculations. Leave no cells blank – be certain to enter “0” wherever required. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Omit the “$” sign in your response.)

Variable overhead rate variance $
Variable overhead efficiency variance $

7.

Complete the standard cost card for one kit shown at the beginning of the problem. (Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the “$” sign in your response.)

Standard Quantity
or Hours Standard Price or Rate Standard Cost
Direct materials yards $6 per yard $
Direct labor hours $ per hour
Variable manufacturing overhead hours $2 per direct labor-hour

Total standard cost per kit $42

accounting question 498762

Aug 29, 2021 | Uncategorized

1. (TCO A) Below you will find selected information (in millions) from Coca-Cola Co. s 2012 Annual Report:

Other information taken from the Annual Report:

Required:
1. Using the information provided prepare a Balance Sheet. Separate the current assets from non-current assets and provide a total for each. Also separate the current liabilities from the non-current liabilities and provide a total for each.
2. Using the Balance Sheet from your answer above, calculate the Current Ratio and Return on common stockholders equity ratio. (Make sure to show all your work).

2.

(TCO B) The following selected data was retrieved from the Wal-Mart, Inc. financial statements for the year ending January 31, 2013:

Required:

Using the information provided above:
1. Prepare a multiple-step income statement
2. Calculate the Profit Margin, and Gross profit rate for the company. Be sure to provide the formula you are using, show your calculations, and discuss your findings/results.

3.(TCO C) Please review the following real-world Hewlett Packard Statement of Cash flows and address the 2 questions below:

Required:

1) Please calculate the percentage increase or decrease in cash for the total line of the operating, investing, and financing sections bolded above and explain the major reasons for the increase or decrease for each of these sections.

2) Please calculate the free cash flow for 2012 and explain the meaning of this ratio.

4.(TCO D) You are CFO of Goforit, Inc., a wholesale distribution company specializing in emerging technologies. Your CEO is a brilliant marketer, but relies on you to explain issues and choices in accounting and finance. She has heard from other members of a CEO organization to which she belongs that a company s net income can vary widely depending on which accounting choices are made from the GAAP menu.

Assuming the goal is to maximize net income, choose an accounting treatment from each of the following scenarios, and explain to your CEO why the choice will produce the desired effect on reported Net Income for the current year. Include in your answer the effect of the choice on both the income statement and balance sheet.

Required:

a. Goforit carries significant electronics inventory in a competitive environment where prices are actually falling. Which inventory valuation method would you choose LIFO, FIFO, or average cost Assume that unit purchases exceed unit sales.

b. Goforit has a large investment in warehouse equipment including conveyor belts, forklifts, and automated packaging systems. Which depreciation method would you choose: Straight line (SL) or double declining balance (DDB)?

accounting question 498763

Aug 29, 2021 | Uncategorized

1. Wheel Industries is considering a three year expansion project.

The project requires an initial investment of $1.5 million. The project will use straight line depreciation method. The project has no salvage value. It is estimated that the project will generate additional revenues of $1.2 million and has costs of $600,000.

The tax rate is 35%. Calculate the cash flows for the project. If the discount rate is 6% calculate the NPV of the project.

2. Clinton Co. has just paid a dividend of $2.50 per share. The dividends are expected to grow at a constant rate of 6% per year for ever. If the stock is currently selling for $50 per share, calculate the cost of equity for the firm

3. The Jersey Co s common stock has beta of 1.25. The risk free rate is 4% and the expected return on the market is 12%. What is the firm s cost of equity?

4. The WW Inc. has 9% coupon bonds outstanding. They have a maturity of 13 Years and are selling for $1,080. The face value is $1,000 and the interest is paid semi-annually. Calculate the cost of debt on a pre-tax basis. What will be the after tax cost of debt if the tax rate is 35%?

5. BW Co. has a target debt equity ratio of 0.6. Its cost of debt is 12% and its cost of equity is 20%. If the corporate tax rate is 34%, what is the firm s WACC?

6. MW Co. has a target capital structure of 35% common equity, 10% preferred equity and 55% debt. The cost of common equity is 18%, the cost of preferred equity is 8% and the pre-tax cost of debt is 10%.

If the corporate tax rate is 35%, what is MW s WACC?
If the firm has a project with an IRR of 12% would you accept the project?

accounting question 498764

Aug 29, 2021 | Uncategorized

Q1. Montana Company produces basketballs. It incurred the following costs during the year.

Direct materials $14,509

Direct labor $25,625

Fixed manufacturing overhead $10,440

Variable manufacturing overhead $32,425

Selling costs $21,365

What are the total product costs for the company under variable costing? Total product costs $

Q2.

On December 1,Diaz Company introduces a new product that includes a one-year warranty on parts. In December, 1,000 units are sold. Management believes that 5% of the units will be defective and that the average warranty costs will be $80 per unit. Prepare the adjusting entry at December 31 to accrue the estimated warranty cost.

accounting question 498766

Aug 29, 2021 | Uncategorized

Presented below are data on three promissory notes. Determine the missing amounts.(Round answers to 0 decimal places, e.g. 125. Assume length of year = 360 days.)

accounting question 498767

Aug 29, 2021 | Uncategorized

Presented below are data on three promissory notes. Determine the missing amounts.(Round answers to 0 decimal places, e.g. 125. Assume length of year = 360 days.)

accounting question discussion question acct221 498769

Aug 29, 2021 | Uncategorized

Ron Benson is a new production manager. After a great deal of effort, including considerable market research, he completes his budget and submits it to his boss, Diane Moran. Without even looking at it, she asks him what his “fudge factor” was, and which items contained the most slack. Ron, very surprised, responds that he doesn’t use any “fudge factor,” and that all his figures are honest. Ms. Moran counters by asking him how he would respond if he had to cut about 20% from his budget, as it is. She tells him that most budgets are trimmed in committee, and he had better be ready. She returns the budget to him, and tells him to come back with something reasonable.

Should Ms. Moran refuse to accept a budget without slack? Should building in slack be an accepted budgeting practice? Explain.

accounting question help for acct 221 498770

Aug 29, 2021 | Uncategorized

accounting question from wiley plus 498772

Aug 29, 2021 | Uncategorized

Fredonia Inc. had a bad year in 2013. For the first time in its history, it operated at a loss. The company s income statement showed the following results from selling 75,400 units of product: Net sales $1,485,380; total costs and expenses $1,736,000; and net loss $250,620. Costs and expenses consisted of the following.

Management is considering the following independent alternatives for 2014.

(a) Compute the break-even point in dollars for 2014.
(Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answers to 0 decimal places, e.g. 2,510.)

(b) Compute the break-even point in dollars under each of the alternative courses of action.
(Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answers to 0 decimal places, e.g. 2,510.)

Which course of action do you recommend Alternative 1Alternative 2Alternative 3

accounting question problem writing 498773

Aug 29, 2021 | Uncategorized

Volumetrica, a producer of audio equipment for large computer systems, is reviewing its policies as part of a biannual self-examination of the company. As part of this process, all managers have been asked to carefully examine costs and determine as closely as possible which costs are direct and which are indirect.

Linda Bedard and Sam Hilton, managers of different manufacturing departments in the same building, have been working together. They found the following four costs that could be economically traced to the products, but have historically been a part of overhead:

• Cost of setting up the machinery for a different production run.
• Cost of minor assembly components such as knobs and switches.
• Cost of packaging, which is quite different for each model.
• Cost of inspecting and testing each model.

None of the costs is significant by itself, but together these four costs make up between 10 and 15% of the total cost of the product. Linda favors “leaving well enough alone,” as she puts it, and leaving these costs in overhead. She is afraid that her volunteering to trace these costs will result in her having to trace many more costs in the future. Sam, on the other hand, prefers to have the product cost as accurate as possible. He points out that these costs are already known, and the process would require little extra work.

You have been called on in your function as accounting manager to resolve the dispute. Write a response to Linda and Sam, supporting one or the other position. Be sure to adequately defend your position.

accounting questions 498774

Aug 29, 2021 | Uncategorized

3 accounting questions, to be done ASAP

total answer should not be longer than 2 pages

Q1.

Describe what is meant by the naive investor hypothesis and the no-effects hypothesis

in relation to firms accounting policy changes.

Q2.

Firms often borrow funds from lenders (i.e., debtholders) to finance their investments

and activities. However, this can create incentives for firms to take actions that are

opportunistic, such as claim dilution and asset substitution.

REQUIRED:

(a) What is meant by claim dilution and asset substitution

(b) Who ultimately bears the (agency) costs if the firm engages in these opportunistic

actions and why

(c) In relation to accounting, how can the interests of the firm and debtholders be

aligned

Q3.

Explain why managers would have an incentive to choose income decreasing

accounting methods when there are (complex) bonus plan arrangements that pay

bonuses if reported earnings are between lower and upper bounds

accounting questions 498775

Aug 29, 2021 | Uncategorized

1. The Modified Accelerated Cost Recovery System (MACRS) specifies which of the following depreciation methods for buildings?

A. 150% declining-balance.

B. Double-declining-balance.

C. Straight line.

D. Buildings are not depreciable assets.

2. The Modified Accelerated Cost Recovery System (MACRS) specifies which of the following depreciation methods for land?

A. 150% declining-balance.

B. Double-declining-balance.

C. Straight line.

D. Land is not a depreciable asset.

3. If an organization has an obligation to pay $5,000 to a supplier two years from now, the present value of the obligation:

A. is less than $5,000.

B. is $5,000.

C. is more than $5,000.

D. could be calculated using an annuity factor from the present value
tables.

4. Depreciation, in accounting, is a process that results in:

A. depreciable assets being reported in the balance sheet at their fair market value.

B. accumulating cash for the replacement of the asset.

C. an accurate measurement of the economic usefulness of an asset.

D. spreading the cost of an asset over its useful life to the entity.

Use the below present value tables for problems 5, 6 and 7

5. The present value of $3,000 to be received in 7 years at 10% is:

A. $616.22

B. $1,539.60

C. $3,000.00

D. $5,845.67

6. The present value of $3,000 to be received every year for 9 years, at 10%, is:

A. $7,073.80

B. $12,273.00

C. $17,277.00

D. $27,000.00

7. The present value of an obligation of $4,000 payable in 7 years at 8% is:

A. $1,760

B. $2,334

C. $3,206

D. $3,680

Solution -PV = FV [ 1 / (1 + i)n ]

8. A particular common stock has an annual cash dividend of $2.00 per share and is predicted to have a market value of $30 per share 5 years from now. Assuming a discount rate of 10%, a fair market price for the stock today is:

A. $20.00

B. $26.21

C. $37.58

D. $56.21

Solution-

= $26.21

9. Psyche Company wants to acquire Trim Company. Trim’s ROI has been above average for its industry; net income has averaged $70,000 a year more than the industry average. These
“excess” earnings are expected to continue at this amount for 5 years. Assuming a discount rate of 8%, how much goodwill will arise from Psyches’ purchase of Trim?

A. $40,836

B. $88,157

C. $279,489

D. $350,000

Solution

= $279,490

10. Leasehold is an example of which of the following types of assets?

A. Current asset.

B. Property, plant and equipment.

C. Goodwill.

D. Intangible asset.

11. The principal challenge to calculating depletion is estimating:

A. the cost of the asset.

B. the salvage value of the exploration equipment.

C. the demand for the product.

D. the quantity of material to be recovered.

12. Long-lived, intangible assets such as leasehold improvements, patents, and copyrights are all subject to:

A. depreciation

B. amortization

C. depletion

D. consolidation

13. When a depreciable asset is sold:

A. a gain arises if the sales proceeds exceed the net book value.

B. a loss arises if the sales proceeds exceed the net book value.

C. any cash received results in a gain.

D. depreciation expense is adjusted so there is no gain or loss.

14. Goodwill is an asset that arises because the present value of an acquired company’s estimated future earnings, discounted at the acquiring firm’s ROI:

A. is less than the fair market value of the net assets of the acquired company.

B. is more thanthe fair market value of the net assets of the acquired company.

C. is more than the fair market value of the net assets of the acquiring company.

D. is less than the fair market value of the net assets of the acquiring company.

15. The intangible asset “goodwill:”

A. represents the management team’s assessment of its value to the
company.

B. may arise when one company purchases another company.

C. arises because the market value of a company’s assets is greater than
cost.

D. all of the above are correct.

16. Many current liabilities are affected by accrual accounting entries. This happens because:

A. liabilities are usually paid when they are incurred.

B. accrual accounting involves recognizing liabilities before they are paid.

C. the only way to reduce a liability account balance is with an adjusting entry.

D. accrual accounting frequently involves recognizing liabilities before
they are incurred.

17. Which of the following is not usually associated with bonds?

A. Coupon rate.

B. Maturity value.

C. Face amount.

D. Maturity rate.

18. An Accounts Payable could result from which of the following transactions?

A. Purchasing accounts for cash.

B. Purchasing property, plant and equipment on credit.

C. Purchasing goods and services from suppliers on credit.

D. All of the above.

19. The current liability for Wages Payable (or Accrued Payroll) represents the:

A. gross pay earned by employees for which they have not yet been paid.

B. net pay earned by employees for which they have not yet been paid.

C. employer’s federal and state payroll tax obligation.

D. employer’s liability for various with holdings taken out of the gross pay earned by employees.

20. The financial leverage characteristic of long-term debt results in:

A. a reduction of the risk that creditors will not be paid.

B. a magnification of ROE relative to what it would be without long-term debt.

C. a magnification of ROI relative to what it would be without long-term debt.

D. the deductibility, for income tax purposes, of dividends to stockholders.

21. When a company issues a bond at a premium:

A. the company is more profitable than most companies in its industry.

B. investors perceive the bond to be a very safe investment.

C. the investors’ interest income will be less than the interest received each year.

D. the investors’ interest income will be more than the interest received each year.

22. Which of the following is not sometimes associated with bonds?

A. Debenture.

B. Callable.

C. Cumulative.

D. Convertible

23. If the market price of a bond exceeds its face amount:

A. the coupon rate is less than the market interest rate.

B. the coupon rate is more than the market interest rate.

C. the company’s ROI and working capital have been increasing over time.

D. the maturity rate has been declining.

24. The market value of a bond is the sum of the present value of future interest payments and the present value of the amount to be repaid at maturity, discounted at:

A. the market rate.

B. the coupon rate.

C. the dividend rate.

D. the prime rate.

25. Financial leverage refers to which of the following?

A. The difference between the rate of return earned on assets (ROI) and the rate of return earned on owners’ equity (ROE).

B. The difference between the rate of return earned on current assets and the rate of return earned on retained earnings.

C. The leverage a firm obtains from increasing production.

D. Decreasing fixed costs per unit by increasing production.

26. When a company issues a bond at a discount:

A. the company will pay less than the face amount of the bond at its
maturity.

B. the company will pay more than the face amount of the bond at its maturity.

C. the company’s interest expense will be less than the interest paid each year.

D. the company’s interest expense will be more than the interest paid each year.

27. When bonds are issued at a premium:

A. interest expense on the bonds will be less than the interest paid.

B. interest expense on the bonds will be more than the interest paid.

C. the bonds are sold for less than their face amount.

D. the coupon interest rate is less than the market interest rate.

28. Which of the following is (are) a true statement(s) pertaining to bonds?

A. Bonds can be sold at a discount, par, or payable.

B. Bonds can be sold at a discount, par, or premium.

C. The SEC sets the market price of a bond.

D. The issuing firm sets the price of a bond.

E. None of the above.

29. Which of the following is true regarding bond discounts and/or premiums?

A. Bond discount is amortized but bond premium is not.

B. Bond premium is amortized but bond discount is not.

C. Neither bond discount nor premium is amortized.

D. Both bond discount and premium are amortized.

30. The amortization of bond discount:

A. increases the cash paid to bondholders for interest.

B. results in bond interest expense being greater than the interest paid to bondholders.

C. results in bond interest expense being less than the interest paid to bondholders.

D. reduces the carrying value of bonds payable on the balance sheet.

31. Factors that usually affect retained earnings directly include:

A. net income or loss, and dividends.

B. extraordinary items and losses from discontinued operations.

C. stock dividends and gains or losses from the sale of treasury stock.

D. net income or loss, and the issuance of stock at an amount in excess of par value.

32. In comparison to the owners’ equity section of a corporation’s balance sheet, owners’ equity of a proprietorship or partnership:

A. normally does not make a distinction between invested capital and retained earnings.

B. normally uses “Capital” accounts for each individual owner, rather than a “Retained Earnings” account for all of the owners.

C. normally uses a “Drawings” account for each individual owner, rather than a “Dividends” account for all of the owners.

D. all of the above.

33. The declaration of a cash dividend by the directors results in:

A. a decrease in cash and a decrease in retained earnings.

B. a decrease in retained earnings and an increase in current liabilities.

C. a decrease in net income and a decrease in cash.

D. a decrease in net income and an increase in current liabilities.

34. In most states, par value of issued shares represents:

A. Legal capital.

B. No par capital.

C. Noncontrolling capital.

D. Corporate capital.

35. The term preemptive right pertains to which of the following?

A. The Board of Directors rights in liquidation.

B. Present shareholders right to purchase shares from any additional share issuances.

C. Present shareholders right to purchase treasury shares when reissued.

D. Preferred stockholders right to dividends.

36. Balance sheet disclosures for preferred stock include all of the following except:

A. The number of shares issued.

B. The number of shares outstanding.

C. The liquidating or redemption value.

D. The credit or market value.

E. The number of shares authorized.

37. The declaration date pertains to:

A. The date used to determine who receives dividends.

B. The date on which the board of directors declares it’s going to liquidate the firm.

C. The date on which the board of directors declares a dividend.

D. The date a dividend is paid.

38. Fred Jones owns 56 shares of the Robust Corporation’s stock. Robust announces a 3 for 2 stock split. How many shares will Fred have after this split?

A. 178 shares.

B. 112 shares.

C. 84 shares.

D. 56 shares.

39. Braco has 40,000 shares of $100 par value common stock outstanding, and 10,000 shares in the treasury. The number of additional shares that would be issued in a 5% stock dividend is:

A. 500

B. 1,000

C. 1,500

D. 2,000

40. When a stock dividend is declared and issued:

A. total paid-in capital does not change.

B. total owners’ equity does not change.

C. the balance in the retained earnings account is decreased by the par value of the shares issued in the dividend.

D. total paid-in capital is decreased by the market value of the shares issued in the dividend.

41. When a company splits its common stock 3 for 1:

A. total paid-in capital increases by a factor of 3.

B. the balance in the retained earnings account is decreased by the market value of the shares issued.

C. the market value of the company’s stock falls by two-thirds.

D. the shareholders are assured of receiving larger cash dividends.

42. The principal reason for a company having a common stock split is to:

A. increase the total cash dividends paid to stockholders.

B. capitalize retained earnings.

C. decrease total owners’ equity.

D. decrease the market value per share of common stock.

43. When a firm purchases its own shares for the treasury:

A. total owners’ equity is decreased.

B. total owners’ equity is increased.

C. the balance in the retained earnings account is decreased.

D. paid-in capital is decreased.

44. If a firm sells treasury stock for more than its cost:

A. a gain is recognized in the income statement.

B. the balance in the retained earnings account is increased.

C. additional paid-in capital is increased.

D. total owners’ equity does not change.

45. The statement of changes in retained earnings for the year shows:

A. the retained earnings balance at the beginning of the year.

B. amounts received from the sale of additional common stock during the
year.

C. extraordinary gains or losses during the year.

D. the effect of a stock split during the year.

accounting questions 498776

Aug 29, 2021 | Uncategorized

13. Aerospace Dynamics will invest $110,000 in a project that will produce the following cash flows. The cost of capital is 11 percent. Should the project be undertaken? (Note that the fourth year s cash flow is negative.)

14. The Horizon Company will invest $60,000 in a temporary project that will generate the following cash inflows for the next three years.

The firm will also be required to spend $10,000 to close down the project at the end of the three years. If the cost of capital is 10 percent, should the investment be undertaken?

15. Skyline Corp. will invest $130,000 in a project that will not begin to produce returns until after the 3rd year. From the end of the 3rd year until the end of the 12th year (10 periods), the annual cash flow will be $34,000. If the cost of capital is 12 percent, should this project be undertaken?

16. The Ogden Corporation makes an investment of $25,000, which yields the following
cash flows:

a. What is the present value with a 9 percent discount rate (cost of capital)?

b. What is the internal rate of return? Use the interpolation procedure shown in this chapter.

c. In this problem would you make the same decision in parts a and b

17. The Danforth Tire Company is considering the purchase of a new machine that would increase the speed of manufacturing and save money. The net cost of this machine is $66,000. The annual cash flows have the following projections.

a. If the cost of capital is 10 percent, what is the net present value?

b. What is the internal rate of return?

c. Should the project be accepted? Why?

18. You are asked to evaluate two projects for Adventures Club, Inc. Using the net present value method combined with the profitability index approach described in footnote 2 on page ____, which project would you select? Use a discount rate of 12 percent.

19. Cablevision, Inc., will invest $48,000 in a project. The firm s discount rate (cost of capital) is 9 percent. The investment will provide the following inflows.

The internal rate of return is 15 percent.

a. If the reinvestment assumption of the net present value method is used, what will be the total value of the inflows after five years? (Assume the inflows come at the end of each year.)

b. If the reinvestment assumption of the internal rate of return method is used, what will be the total value of the inflows after five years?

c. Generally is one investment assumption likely to be better than another?

20. The 21st Century Corporation uses the modified internal rate of return. The firm has a cost of capital of 8 percent. The project being analyzed is as follows ($20,000 investment):

a. What is the modified internal rate of return? An approximation from Appendix B is adequate. (You do not need to interpolate.)

b. Assume the traditional internal rate of return on the investment is 14.9 percent. Explain why your answer in part a would be lower.

21. Oliver Stone and Rock Company uses a process of capital rationing in its decision making. The firm s cost of capital is 12 percent. It will invest only $80,000 this year. It has determined the internal rate of return for each of the following projects.

a. Pick out the projects that the firm should accept.

b. If Projects B and G are mutually exclusive, how would that affect your overall answer? That is, which projects would you accept in spending the $80,000?

22. Miller Electronics is considering two new investments. Project C calls for the purchase of a coolant recovery system. Project H represents an investment in a heat recovery system.
The firm wishes to use a net present value profile in comparing the projects. The investment and cash flow patterns are as follows:

a. Determine the net present value of the projects based on a zero discount rate.

b. Determine the net present value of the projects based on a 9 percent discount rate.

c. The internal rate of return on Project C is 13.01 percent, and the internal rate of return on Project H is 15.68 percent. Graph a net present value profile for the two investments similar to Figure 12-3. (Use a scale up to $10,000 on the vertical axis, with $2,000 increments. Use a scale up to 20 percent on the horizontal axis, with
5 percent increments.)

d. If the two projects are not mutually exclusive, what would your acceptance or rejection decision be if the cost of capital (discount rate) is 8 percent? (Use the net present value profile for your decision; no actual numbers are necessary.)

e. If the two projects are mutually exclusive (the selection of one precludes the selection of the other), what would be your decision if the cost of capital is (1) 5 percent,
(2) 13 percent, (3) 19 percent? Use the net present value profile for your answer.

23. Software Systems is considering an investment of $20,000, which produces the following inflows:

You are going to use the net present value profile to approximate the value for the internal rate of return. Please follow these steps:

a. Determine the net present value of the project based on a zero discount rate.

b. Determine the net present value of the project based on a 10 percent discount rate.

c. Determine the net present value of the project based on a 20 percent discount rate
(it will be negative).

d. Draw a net present value profile for the investment. (Use a scale up to $6,000 on the vertical axis, with $2,000 increments. Use a scale up to 20 percent on the horizontal axis, with 5 percent increments.) Observe the discount rate at which the net present value is zero. This is an approximation of the internal rate of return on the project.

e. Actually compute the internal rate of return based on the interpolation procedure presented in this chapter. Compare your answers in parts d and e.

24. Howell Magnetics Corporation is going to purchase an asset for $400,000 that will produce $180,000 per year for the next four years in earnings before depreciation and taxes. The asset will be depreciated using the three-year MACRS depreciation schedule in Table 12-9. (This represents four years of depreciation based on the half-year convention.) The firm is in a 34 percent tax bracket. Fill in the schedule below for the next four years. (You need to first determine annual depreciation.)

25. Assume $80,000 is going to be invested in each of the following assets. Using Tables 12-8 and 12-9, indicate the dollar amount of the first year s depreciation.

a. Computers

b. Petroleum refining product

c. Office furniture

d. Pipeline distribution

26. The Keystone Corporation will purchase an asset that qualifies for three-year MACRS depreciation. The cost is $60,000 and the asset will provide the following stream of earnings before depreciation and taxes for the next four years:

Year 1……………… $27,000

Year 2……………… 30,000

Year 3……………… 23,000

Year 4……………… 15,000

The firm is in a 36 percent tax bracket and has an 11 percent cost of capital. Should it purchase the asset?

27. Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost is $300,000. If the equipment is purchased, the following earnings before depreciation and taxes will be generated for the next six years.

Year 1………………… $112,000

Year 2………………… 105,000

Year 3………………… 82,000

Year 4………………… 53,000

Year 5………………… 37,000

Year 6………………… 32,000

The firm is in a 30 percent tax bracket and has a 14 percent cost of capital. Should Oregon Forest Products purchase the equipment? Use the net present value method.

28. The Thorpe Corporation is considering the purchase of manufacturing equipment with a 10-year midpoint in its asset depreciation range (ADR). Carefully refer to Table 12-8 to determine in what depreciation category the asset falls. (Hint: It is not 10 years.) The asset will cost $80,000, and it will produce earnings before depreciation and taxes of $28,000 per year for three years, and then $12,000 a year for seven more years. The firm has a tax rate of 34 percent. With a cost of capital of 12 percent, should it purchase the asset? Use the net present value method. In doing your analysis, if you have years in which there is no depreciation, merely enter a zero for depreciation.

accounting questions 498777

Aug 29, 2021 | Uncategorized

Question 1. Prepare a budget for this year for the Administrative Department at Tom’s Toyota Company based on the following information:
Last Year Forecasting Assumption Budget for this Year

Salaries $60,000 2% increase ___________
Stationary $ 900 1% decrease ___________
Telephone $ 2,500 3% increase ___________
Electricity $ 1,200 2.5% increase ___________
Office Rent $10,000 2% increase ___________
Depreciation $ 4,000 no change ___________
Total: $78,600 ___________

Question 2. Define a “Static Budget.”

Question 3. Define a “Flexible Budget.”

Question 4. Define the term “Zero-based Budgeting.”

Question 5. Define “Period Budgets.”

Question 6. Define “Rolling Budgets.”

Question 7. Big Bob’s Discount Appliances expects sales of $5,000, $5,000, and $10,000 during April, May, and June (big sale in June). To build business, Big Bob lets all customers buy on credit, and all do so. In the past, 50% of Big Bob’s sales have been collected during the month of sale, 40% are collected the following month, and 10% the month after that. If this trend continues, what will be Big Bob’s total cash collections in the month of June?

Question 8. Little Louie’s expects to have $100 in cash on hand at the beginning of June, and the company’s target cash balance is $100. Net cash flow for June is minus $300. Assuming that Little Louie’s borrows to meet shortterm cash needs and pays back as soon as surplus cash is available, what will be the company’s ending cash balance after financing at the end of June?

Question 9. Ma & Pa Kettle’s Chili Company has begun selling a new chili recipe and they want you to help them with next year’s budgeted financial statements. Using the worksheet below, complete Ma & Pa’s forecast and answer the questions which follow.
Assumptions:

To begin with, Ma & Pa are sure sales will grow 50% next year. Assume that is true. Then assume that COGS, Current Assets, and Current Liabilities all vary directly with Sales (that means if sales grows a certain percentage, then the account in question will grow by that same percentage). Assume that fixed expenses will remain unchanged and that $1,000 worth of new Fixed Assets will be obtained next year. Lastly, the current dividend policy will be continued next year.

Ma & Pa Kettle Chili Company, Inc.

Financial Forecast

Estimated
This year for next year

Sales $10,000 ________
COGS 4,000 ________
Gross Profit 6,000 ________
Fixed Expenses 3,000 ________
BeforeTax Profit 3,000 ________
Tax @ 33.3333% 1,000 ________
Net Profit $2,000 ________

Dividends $0 ________

Current Assets $25,000 ________
Net Fixed Assets 15,000 ________
Total Assets $40,000 ________

Current Liabilities $17,000 ________
Longterm debt 3,000 ________
Common Stock 7,000 ________
Retained Earnings 13,000 ________
Total Liabs & Eq $40,000 ________

Amount need to balance the balance sheet ________
(Projected total assets minus projected
total liabilities & equity *)

* If this number is positive it means Ma & Pa need additional external funding to finance their projected asset growth. If this number is negative it means Ma & Pa have programmed too much financing for the amount

accounting now 498728

Aug 29, 2021 | Uncategorized

The Pizza Company makes two types of frozen pizzas: pepperoni and cheese. The Pizza Company allocates overhead to these two products based on the number of direct labor hours. The direct labor hours per unit for making a pepperoni pizza is 5 minutes or 1/12 of an hour. The direct labor hours per unit for making a cheese pizza is 4 minutes or 1/15 of an hour. At the start of the year The Pizza Company expected to make 12,000 pepperoni pizzas and 6,000 cheese pizzas. During the year, The Pizza Company actually made 9,000 pepperoni pizzas and 7,500 cheese pizzas. The time cards indicate that direct laborers worked for 1,300 hours.

What are the total expected direct labor hours, standard direct labor hours, and actual direct labor hours?

accounting paper 498730

Aug 29, 2021 | Uncategorized

Writea paper of no more than 750 words in which you respond to the Broadening Your Perspective 17-2 activity titled “Managerial Perspective” in Ch. 17 of Accounting.

Some of you are having troubles finding this exercise. I have included the exercise in this message. For further reference, please click in:

“Reading Activity – Chapter 17”, a new tab will open: Reading Activity Chapter, please select the last item on the list “Broadening your perspective”. Please let me know if you have any questions.

accounting for perfecto 498731

Aug 29, 2021 | Uncategorized

The owner of the company where you work finds out that you are majoring in accounting and she wants you to explain the corporate structure to her. She also wants to see why someone would want to invest in a corporation. She wants to better understand stock transactions that the corporation would engage in.

She wants you to:

• Explain the corporate structure.
• Select two companies in the same industry and find their financial statements for the last two years. Provide citations for all statements.
• Compare the stockholder s equity between these two company’s financial statements.
• Explain what kinds of stock transactions have taken place in the last two years.

accounting for perfecto 498732

Aug 29, 2021 | Uncategorized

You are between jobs and have decided to relocate to a city west of the Mississippi River, but you are unsure of what size or type of city you and your family can afford to live in.

Choose 4 cities west of the Mississippi River, each of a different size, and research the housing prices for a 3-bedroom, 2-bath condo for each city. Determine how supply and demand can affect the prices of these homes. In a PowerPoint presentation, submit data findings that include economic factors within that area that may influence your decision, or factors that have prohibited an area to be chosen.

Present the data in the following format:

• 1 slide of housing data findings. Provide the housing prices of each chosen city west of the Mississippi for a 3-bedroom, 2-bath condo or house.
• 2 3 slides of your preferred city to relocate with your reasoning for this choice
• 1 2 slides: Explain at least 2 reasons why housing prices vary from city to city
• 3 5 slides: Explain 3 4 ways in which supply and demand affect the prices of the homes
• 3 5 slides: Include any supply and demand figures or calculations to support your reasoning
• Cite sources using APA style.

accounting powerpoint 498733

Aug 29, 2021 | Uncategorized

accounting principal mcqs 498736

Aug 29, 2021 | Uncategorized

The business provided services to a credit customer.

a.

Assets and owners equity increase

b.

Assets and revenue increase

c.

Liabilities and owner s equity increase

d.

None of the above are correct

A credit may signify a(n):

a.

Decrease in revenues

b.

Decrease in assets

c.

Decrease in capital

d.

Decrease in liabilities

A credit to an asset account was posted to an owners equity account. This error would cause:

a.

Assets were overstated

b.

Owners equity was overstated

c.

Liabilities were overstated

d.

Both A and C are correct

A debit to an asset account was posted to an expense account. This error would cause:

a.

Assets were overstated

b.

Expenses were overstated

c.

Liabilities were overstated

d.

None of the above are correct

One asset would be debited and another credited if:

a.

A business paid a creditor

b.

The business provided services to a cash customer

c.

The business bought supplies paying cash

d.

The business provided services to a credit customer

Paid the rent for the next six months.

a.

an asset would be debited and an expense credited

b.

an asset would be debited and a revenue credited

c.

capital would be debited and a revenue credited

d.

an asset would be debited and an asset credited

M. Sands, CPA, collected fees of $650 not previously billed or recorded. The journal entry to record the collection would be:

a.

accounting fees 650, cash 650

b.

accounts receivable 650, cash 650

c.

cash 650, accounting fees 650

d.

cash 650, M. Sands Capital 650

A $600 check written for supplies was journalized as $60. The entry to correct this error is:

a.

debit supplies, $540; credit cash, $540

b.

debit supplies, $60; credit cash $60

c.

debit cash, $540; credit supplies, $540

d.

debit cash, $60; credit cash, $60

Proof that the dollar amount in debits equals the dollar amount of the credits in the ledger means:

a.

all accounts have their correct balances in the ledger

b.

all of the information from the journal was correctly transferred to the ledger

c.

only that the debit dollar amounts equal the credit dollar amounts

d.

only the ledger is accurate; the journal may be incorrect

A debit to a revenue account was posted to an asset account. This would cause:

a.

revenue to be understated

b.

liabilities to be understated

c.

expense to be understated

d.

assets to be overstated

The general journal entry to record an exchange of assets would most commonly include:

a.

a debit to cash and a credit to fees earned

b.

a debit to fees earned and a credit to accounts receivable

c.

a debit to supplies and a credit to accounts payable

d.

a debit to cash and a credit to accounts receivable

If cash has been debited, it is most likely that:

a.

the business borrowed cash from the bank

b.

a charge customer made a payment

c.

the owner made an investment

d.

all of these are possible

If the adjustment for supplies used during the period was not made:

a.

expenses would be too high

b.

revenue would be too high

c.

expenses would be too low

d.

asset office supplies would be too low

Roy purchased a one year insurance policy for $2400. The adjusting entry for he one month would be:

a.

debit to prepaid insurance, $200

b.

credit to cash, $200

c.

debit to insurance expense, $200

d.

none of these answers are correct

The capital balance amount shown in the balance sheet column of the worksheet represents:

a.

beginning capital plus net income

b.

beginning capital plus investments to capital

c.

beginning capital less withdrawals

d.

beginning capital plus net income less withdrawal

When counting the supplies a file cabinet was forgotten and the adjustment was made based upon the incorrect count. This would:

a.

overstate the periods net income

b.

overstate the end of period assets

c.

understand the end of period assets

d.

none of these are correct

The adjustment for accrued wages included the entire pay period, some of which occurs next month. This would:

a.

understate the end of period liabilities

b.

overstate the periods net income

c.

overstate the end of period liabilities

d.

none of these are correct

The purchase of equipment will require an adjustment of:

a.

increasing the total assets and increasing the total expenses at the end of the month

b.

decreasing the total assets and decreasing the total expenses at the end of the month

c.

decreasing the total assets and increasing the total expenses at the end of the month

d.

none of the above

Which of the following would cause an asset to be debited and a liability to be credited?

a.

Recorded the adjustment for the expiration of the insurance policy

b.

Recorded the adjustment for the expiration of rent

c.

Purchases supplies on account

d.

None of these would have that effect

Which of the following would cause a liability to be credited and an expense debited?

a.

Recorded the adjustment for the accrual of wages

b.

It s the end of the month and no utility bill has been received

c.

Recorded an accrued expense

d.

All of the above would have that effect

Which of the following accounts will be directly closed to capital at the end of the fiscal year?

a.

Depreciation expense

b.

Fees revenue

c.

Salaries expense

d.

Withdrawals

The income summary account shows debits of $20,000 and credits of $18,000. This is a result of a:

a.

Net loss of $38,000

b.

Net income of $2,000

c.

Net income of $38,000

d.

Net loss of $2,000

After closing the revenue, expense and withdrawal accounts, the capital increased by $2,000. Which of the following situations could have occurred

a.

The owner made withdrawals

b.

The company had a net income of $5,000

c.

The owner invested an additional amount

d.

All of these answers are correct

When the expense are closed:

a.

Owners capital will be debited

b.

Income summary will be credited

c.

Income summary will be debited

d.

None of these are correct

Close the fees earned account:

a.

Owners capital would increase

b.

Owners capital would remain the same

c.

Owners capital would increase

d.

None of these are correct

A check for $78 is incorrectly recorded on the checkbook stub as $87. The $9 error should be shown on the bank reconciliation as:

a.

Deducted from the balance per bank statement

b.

Added to the balance per bank statement

c.

Added to the balance per books

d.

Deducted from the balance per books

Which of the following bank reconciliation items would not be reflected in a journal entry?

a.

Outstanding checks

b.

NSF customer check

c.

Collection of a note by the bank

d.

Bank service charges

The debit recorded in the journal to establish the petty cash fund is to:

a.

Petty cash

b.

Accounts receivable

c.

Cash

d.

Accounts payable

Robbins supply journal entry to establish a $100 petty cash fund for the office would include a:

a.

Credit to petty cash for $100

b.

Credit to cash for $100

c.

Debit to office expense for $100

d.

Debit to cash for $100

An error recording a $72 check as $27 would be included on the bank reconciliation as a(n):

a.

Subtraction from the balance per bank

b.

Subtraction from the balance per books

c.

Addition to the balance per books

d.

Addition to the balance per bank

The accounting department forgot to estimate the worker s compensation, this will cause:

a.

The net income to be understated

b.

The liabilities to be overstated

c.

The assets to be overstated

d.

The net income to be overstated

Posting the payroll entry comes from the:

a.

Employees earning record

b.

Journal

c.

Payroll register

d.

None of these answers are correct

The entry to record he employers payroll taxes would include:

a.

a credit to state and federal unemployment tax payable

b.

a credit to fica-social security taxes payable and fica-medicare taxes payable

c.

a debit to payroll taxes expense

d.

all of these answers are correct

The entry to record the payroll tax expense would include:

a.

a credit to cash

b.

a credit to fica (social security and medicare) taxes payable

c.

a credit to federal income taxes payable

d.

a credit to wages payable

The normal balance of the sales returns and allowances account is:

a.

a debit

b.

zero

c.

a credit

d.

it does not have a normal balance

Accounts of a single type are kept in this ledger

a.

Subsidiary ledger

b.

Supplemental ledger

c.

Additional ledger

d.

None of these answers are correct

Payment for merchandise sold on credit for $100 subject to 2/10 n/30 was received within the discount period – $98 was received. This was recorded with a debit to sales discounts for $2, a debit to cash for $98 and a credit to accounts receivable 100, but no mention was made of the subsidiary ledger account. This error will cause:

a.

The net income for the period to be overstated

b.

The net income for the period to be understated

c.

The assets to be overstated

d.

The control account to not agree with the subsidiary ledger

A list of creditors with ending balances is called:

a.

A trade list

b.

A schedule of accounts payable

c.

A list of suppliers

d.

A schedule of accounts receivable

Purchased office supplies on account. This will be recorded with:

a.

A debit to a liability and a credit to an asset

b.

A credit to a liability and a debit to an asset

c.

A credit to an asset and a debit to an expense

d.

A debit to an asset and a credit to an expense

The journal entry to record the return of a purchase of inventory under the perpetual system includes a:

a.

Credit to merchandise inventory

b.

Credit to purchases

c.

Debit to purchase returns and allowances

d.

Debit to merchandise inventory

Deluth Corporation has a normal gross profit of 40%. The current year s beginning inventory was $2,000, purchase were $5,000 and retail sales were $6,000. The estimated ending inventory under the gross margin method is:

a.

$3,600

b.

$3,400

c.

$3,450

d.

$4,500

When an asset is exchanged for a similar asset and a gain results, under accounting rules the gain is:

a.

Subtracted from the cost of the new asset

b.

Credited to gain on exchange of an asset

c.

Absorbed into the cost of the new asset

d.

Recorded in the other income section of the income statement

Salvage value was ignored using units of production depreciation. This error would cause:

a.

The periods net income to be understated

b.

The periods net income will be overstated

c.

The periods net assets will be overstated

d.

None of these are correct

accounting principles mcqs 498737

Aug 29, 2021 | Uncategorized

1. The convention of consistency refers to consistent use of accounting principles:

among firms
within industries
among accounting periods
throughout the accounting period

2. Jayadev Athreya has started his first job. He will invest $5,000 at the end of each year for the next 45 years in a fund that will earn a return of 10 percent. How much will Jayadev have at the end of 45 years?

$2,667,904
$3,594,524
$1,745,600
$5,233,442

3. Variance reports are:

SEC financial reports
internal reports for management
external financial reports
all of these

4. Horizontal analysis is also known as:

linear analysis
vertical analysis
common size analysis
trend analysis

5. Turnbull Corp. had an EBIT of $247 million in the last fiscal year. Its depreciation and amortization expenses amounted to $84 million. The firm has 135 million shares outstanding and a share price of $12.80. A competing firm that is very similar to Turnbull has an enterprise value/EBITDA multiple of 5.40.

What is the enterprise value of Turnbull Corp.? Round to the nearest million dollars.

$1,787 million
$1,344 million
$1,315 million
$453.6 million

6. Regatta, Inc., has six-year bonds outstanding that pay a 8.25 percent coupon rate. Investors buying the bond today can expect to earn a yield to maturity of 6.875 percent. What should the company s bonds be priced at today? Assume annual coupon payments. (Round to the nearest dollar.)

$1,066
$923
$1014
$972

7. How firms estimate their cost of capital: The WACC for a firm is 13.00 percent. You know that the firm s cost of debt capital is 10 percent and the cost of equity capital is 20% What proportion of the firm is financed with debt?

33%
50%
70%
30%

8. The cash conversion cycle?

estimates how long it takes on average for the firm to collect its outstanding accounts receivables balance.

begins when the firm uses its cash to purchase raw materials and ends when the firm collects cash payments on its credit sales.

begins when the firm invests cash to purchase the raw materials that would be used to produce the goods that the firm manufactures.

shows how long the firm keeps its inventory before selling it.

9. The accumulation of accounting data on the basis of the individual manager who has the authority to make day-to-day decisions about activities in an area is called:

responsibility accounting
flexible accounting
master budgeting
static reporting

10. Which of the following financial statements is concerned with the company at a point in time?

balance sheet
statement of cash flows
income statement
retained earnings statement

11. The major element in budgetary control is:

the approval of the budget by the stockholders
the comparison of actual results with planned objectives.
the preparation of long-term plans
the valuation of inventories

12. The group of users of accounting information charged with achieving the goals of the business is its:

creditors
investors
managers
auditors

13. Which of the following is an advantage of corporations relative to partnerships and sole proprietorships?

most common form of organization
reduced legal liability for investors
lower taxes
harder to transfer ownership

14. Teakap, Inc. has current assets of $1,456,312 and total assets of $4,812,369 for the year ending September 30, 2006. It also has current liabilities of $1,041,012, common equity of $1,500,000 and retained earnings of $1,468,347. How much long-term debt does the firm have?

$1,844,022
$803,010
$2,303,010
$2,123,612

15. Gateway, Corp. has an inventory turnover of 5.6. What is the firm s days s sales in inventory?

65.2
57.9
61.7
64.3

16. An activity that has a direct cause-effect relationship with the resources consumed is a(n):

product activity
cost driver

cost pool
overhead rate

17. The process of evaluating financial data that change under alternative courses of action is called:

cost-benefit analysis
double entry analysis
contribution margin analysis
incremental analysis

18. An unrealistic budget is more likely to result when it:

is developed with performance appraisal usages in mind.
has been developed in a top down fashion.
has been developed by all levels of management.
has been developed in a bottom up fashion.

19. Serox stock was selling for $20 two years ago. The stock sold for $25 one year ago, and it is currently selling for $28. Serox pays a $1.10 dividend per year. What was the rate of return for owning Serox in the most recent year? (Round to the nearest percent.)

12%
40%
32%
16%

20. Which of the following is considered a hybrid organizational form?

partnership
sole proprietorship
limited liability partnership
corporation

21. A cost which remains constant per unit at various levels of activity is a:

manufacturing cost
mixed cost
fixed cost
variable cost

accounting problem 498738

Aug 29, 2021 | Uncategorized

Duggan Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $338,580 for the year, and machine usage is estimated at 125,400 hours.

For the year, $361,548 of overhead costs are incurred and 132,400 hours are used.

(a) Compute the manufacturing overhead rate for the year. (Round answers to 2 decimal places, e.g. 1.25.)
Manufacturing overhead rate ————————- per machine hour

(b) What is the amount of under or over-applied overhead at December 31?

(c) Prepare the adjusting entry to assign the under or over-applied overhead for the year to cost of goods sold.

The ledger of Custer Company has the following work in process account.

Production records show that there were 570 units in the beginning inventory, 30% complete, 1,460 units started, and 1,510 units transferred out. The beginning work in process had materials cost of $2,610 and conversion costs of $1,670. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process.

Instructions

(a) How many units are in process at May 31?

(b) What is the unit materials cost for May?

(c) What is the unit conversion cost for May?

(d) What is the total cost of units transferred out in May?

(e) What is the cost of the May 31 inventory?

(b) Compute the overhead rates using the activity-based costing approach.

(c) Determine the difference in allocation between the two approaches.

accounting problem 498739

Aug 29, 2021 | Uncategorized

Additional Information (for all entries; please see the posted Excel spreadsheet with a few journal entries already provided):
1. Sales for 2011 are $310,000. All sales are on credit.
2. Gross Margin ratio is 40 percent
3. Accounts Receivable:
i. $190,000 of the accounts receivable is paid by the end of the year (the remaining balance remains on the balance sheet).
ii. $4,000 of A/R is written off during the year.
iii. 5% of Accounts Receivable (after write-off and collections) is considered to be uncollectible.
4. Inventory:
i. Inventory purchases is $180,000, all on credit.
ii. All accounts payable is from inventory purchases; all but $12,000 of inventory purchased is paid by the end of the year.
5. Additional equipment is purchased on 4/1/11 for $20,000 cash. All equipment when new, including the new purchase, has/had a five year life, no salvage value, and is depreciated using the straight-line method.
6. The building depreciates at $5,000 per year.
7. Half of the marketable securities were sold for $1,200. The FMV and cost of the other half of the securities are the same, so no adjustment to FMV is required.
8. Salaries are $2,200 per month (12 months of salaries expense must be booked). It is expected that one-half month will be owed on 12/31/11 because of when payday falls (therefore, 11.5 months of salaries have been paid and month is still owed to the employees at year end).
9. $55,000 in cash is borrowed on 9/30/11 by issuing a Note Payable. Interest is 8% per year.
10. The bonds were sold at face value last December and pay interest on Dec. 31, 2011.
11. 10,000 additional shares of stock were sold for $3 a share.
12. Insurance costing $18,000 was purchased on 6/1/11 (the same time in which the policy purchased in 2010 expired. The new policy was for 12 months).
13. On Dec. 31, 1000 shares of stock are repurchased from the market at $2.90/share (treasury stock).
14. The tax rate is 30 percent. Income taxes for the current year are due and therefore paid during the first two months of the next year (you will have complete an entry to pay the 2010 taxes, however the 2011 taxes will not be paid until the end of January 2012).
15. Dividends of $3,000 were paid during 2011.
16. The unearned revenue has been earned during the year (classified as other revenue on the multi-step income stmt.).

accounting problem and solution 2 excel answer attached 498741

Aug 29, 2021 | Uncategorized

L. Rashid Company, a rapid growing chemical company needs to raise $3 million in external funds to finance the acquisition of a new chemical waste disposal system. After carefully analyzing alternative financing sources, Denise MacMahon, the firm’s vice president of finance reduced the financing alternatives to three choices: (1) debt (2) debt with warrants, and (3) a financial lease. The key terms of each of these choices are below.

Debt: The firm can borrow the full $3million from First Shreveport Bank. The bank will charge 12% annual interest and require annual end of year payments of $1,249,050 over the next three years. The disposal system will be depreciated under MACRS using a three year recovery period (Depreciation percentages below). The firm will pay $45,000 at the end of each year for a service contract that covers all maintenance cost; insurance and other costs will be borne by the firm. The firm plans to use the equipment beyond its three year recovery period.
Depreciation
Year 1 33%
Year 2 45%
Year 3 15%
Year 4 7%

Debt with warrants: The firm can borrow the full %3 million from Southern National Bank. The bank will charge 10% interest and will, in addition, require a grant of $50,000 warrants, each allowing the purchase of two shares of the firm’s stock for $30 per share at any time during the next 10 years. The stock is currently selling for $28 per share and the warrants are estimated to have a market value of $1 each. The price (market value) of the debt with the warrants attached is estimated to equal the $3 million initial loan principle. The annual end of year payments on this loan will be $1,206,345 over the next three years. Depreciation, maintenance, insurance, and other costs will have the same costs and treatments under this alternative as those described before the straight debt financing alternative

Financial Lease: The waste disposal system can be leased from First International Capital. The lease will require annual end of year payments of $1,200,000 over the next three years. All maintenance costs will be paid by the lessor; insurance and other costs will be borne by the lessee. The lessee will exercise the option to purchase the system at the end of the lease for $220,000.
Denise decided first to determine which of the debt alternatives would least burden the firm’s cash flows over the next three years. In this regard, she felt that very few if any, warrants would be exercised during this period. Once the better debt alternative was found, Denise planned to use lease – versus purchase analysis to evaluate it in light of the lease alternative. Assume the firm is in the 40% tax bracket, and its after tax cost of debt is 7% under the debt alternative and 6% under the debt with warrants alternative.

A. Under the debt with warrants, find the following
(1) Straight debt value
(2) Implied price of all warrants
(3) Implied price of each warrant
(4) Theoretical value of a warrant
B. On the basis of A, do you think that the price of the debt with warrants is too high or too low? Explain
C. Assuming that the firm can raise the needed funds under the specified terms, which debt financing alternatives – debt or debt with warrants- would recommend in view of your findings above? Explain.
D. For the purchase alternative, financed as recommended is part c, calculate the following
(1) The annual interest expense deductible for tax purchases for each of the next three years.
(2) The after tax outflow for each for the next three years.
(3) The present value of cash outflows using the appropriate discount rate

accounting problem compute the amount of gain or loss to elton company 498742

Aug 29, 2021 | Uncategorized

Accounting for a troubled debt settlement.

Elton, Inc., which owes Boston Co. $900,000 in notes payable, is in financial difficulty. To eliminate the debt, Boston agrees to accept from Elton land having a fair market value of $680,000 and a recorded cost of $510,000.

Instructions

(a) Compute the amount of gain or loss to Elton, Inc. on the transfer (disposition) of the land.

(b) Compute the amount of gain or loss to Elton, Inc. on the settlement of the debt.

(c) Prepare the journal entry on Elton’s books to record the settlement of this debt.

(d) Compute the gain or loss to Boston Co. from settlement of its receivable from Elton.

(e) Prepare the journal entry on Boston’s books to record the settlement of this receivable.

accounting problem on computing equivalent units of production 498743

Aug 29, 2021 | Uncategorized

Accounting Problem on Computing Equivalent Units of Production? Computing equivalent units of production Weighted average L.O. C2, P4 During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 30,000 were in process in the production department at the beginning of April and 120,000 were started and completed in April. April’s beginning inventory units were 60% complete with respect to materials and 40% complete with respect to labor. At the end of April, 41,000 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to labor. 1. Compute the number of units transferred to finished goods. Total units transferred to finished goods ____________ 2. Compute the number of equivalent units with respect to both materials used and labor used in the production department for April using the Weighted average method. Equivalent units of production (direct materials) Weighted average ____________ Equivalent units of production (direct labor) Weighted average ____________

accounting problem set 3 498744

Aug 29, 2021 | Uncategorized

Problem Set 3

1. Louise McIntyre s monthly gross income is $2,000. Her employer withholds $400 in federal, state, and local income taxes and $160 in Social Security taxes per month. Louise contributes $80 per month for her IRA. Her monthly credit payments for VISA, MasterCard, and Discover card are $35, $30, and $20, respectively. Her monthly payment on an automobile loan is $285. What is Louise s debt payments-to-income ratio? Is Louise living within her means?

2. Calculating Debt Payments to – Income Ratio. Suppose that your monthly net income is $2,400. Your monthly debt payments include your student loan payment, a gas credit card and they total $360. What is your debt payments to income ratio?

3. Dave borrowed $500 for one year and paid $50 in interest. The bank charged him a $5 service charge.

A- What is the finance charge on this loan?

B- Dave borrowed $500 on January 1, 2006, and paid it all back at once on December 31, 2006. What was the APR?

C- If Dave paid the $500 in 12 equal monthly payments, what is the APR?

4. Calculating Simple Interest on a Loan. Damon convinced his aunt to lend him $2,000 to purchase a plasma digital TV. She has agreed to charge only 6 % simple interest, and he has agreed to repay the loan at the end of one year. How much interest will he pay for the year?

5. After visiting several automobile dealerships, Richard Welch selects the car he wants. He likes its $10,000 price, but financing through the dealer is no bargain. He has $2,000 cash for a down payment, so he needs an $8,000 loan. In shopping at several banks for an installment loan, he learns that interest on most automobile loans is quoted at add-on rates. That is, during the life of the loan, interest is paid on the full amount borrowed even though a portion of the principal has been paid back. Richard borrows $8,000 for a period of four years at an add-on interest rate of 11 percent.

Questions

a. What is the total interest on Richard s loan?

b. What is the total cost of the car?

c. What is the monthly payment?

d. What is the annual percentage rate (APR)?

accounting problem solution 498745

Aug 29, 2021 | Uncategorized

1. Wheel Industries is considering a three year expansion project.

The project requires an initial investment of $1.5 million. The project will use straight line depreciation method. The project has no salvage value. It is estimated that the project will generate additional revenues of $1.2 million and has costs of $600,000.

The tax rate is 35%. Calculate the cash flows for the project. If the discount rate is 6% calculate the NPV of the project.

2. Clinton Co. has just paid a dividend of $2.50 per share. The dividends are expected to grow at a constant rate of 6% per year for ever. If the stock is currently selling for $50 per share, calculate the cost of equity for the firm.

3. The Jersey Co s common stock has beta of 1.25. The risk free rate is 4% and the expected return on the market is 12%. What is the firm s cost of equity?

4. The WW Inc. has 9% coupon bonds outstanding. They have a maturity of 13 Years and are selling for $1,080. The face value is $1,000 and the interest is paid semi-annually. Calculate the cost of debt on a pre-tax basis. What will be the after tax cost of debt if the tax rate is 35%?

5. BW Co. has a target debt equity ratio of 0.6. Its cost of debt is 12% and its cost of equity is 20%. If the corporate tax rate is 34%, what is the firm s WACC?

6. MW Co. has a target capital structure of 35% common equity, 10% preferred equity and 55% debt. The cost of common equity is 18%, the cost of preferred equity is 8% and the pre-tax cost of debt is 10%.

If the corporate tax rate is 35%, what is MW s WACC?
If the firm has a project with an IRR of 12% would you accept the project?

accounting problems 498746

Aug 29, 2021 | Uncategorized

Resolved Question:

1. Specific identification method. Boston Galleries uses the specific identification method for inventory valuation. Inventory information for several oil paintings follows.

Painting Cost

1/2 Beginning inventory Woods $21,000

4/19 Purchase Sunset 21,800

6/7 Purchase Earth 31,200

12/16 Purchase Moon 4,000

Woods and Moon were sold during the year for a total of $35,000. Determine the firm s

a. cost of goods sold.

b. gross profit.

c. ending inventory.

2. Inventory valuation methods: basic computations. The January beginning inven tory of the Gilette Company consisted of 300 units costing $40 each. During the first quarter, the company purchased two batches of goods: 700 Units at $44 on February 21 and 800 units at $50 on March 28. Sales during the first quarter were 1,400 units at $75 per unit. The White Company uses a periodic inventory system. Using the White Company data, fill in the following chart to compare the results obtained under the FIFO, LIFO, and weighted-average inventory methods.

FIFO LIFO Weighted Average

Goods available for sale $ $ $

Ending inventory, March 31

Cost of goods sold

3. Perpetual inventory system: journal entries. At the beginning of 20X3, Beehler Company implemented a computerized perpetual inventory system. The first transactions that occurred during 20X3 follow:

1/2/20X3 Purchases on account: 500 units @ $6 = $3,000

1/15/20X3 Sales on account: 300 units @ $8.50 = $2,550

1/20/20X3 Purchases on Account: 200 units @ 5 = $1,000

1/25/20X3 Sales on Account: 300 units @ $8.50 = $2,550

The company president examined the computer-generated journal entries for these transactions and was confused by the absence of a Purchases account.

a. Duplicate the journal entries that would have appeared on the computer printout under FIFO & LIFO

b. Calculate the balance in the firm s Inventory account under each method.

c. Briefly explain the absence of the Purchases account to the company president.

4. Inventory valuation methods: computations and concepts.

Wild Riders Surfboard Company began business on January 1 of the current year. Purchases of surfboards were as follows:

Date Quantity Unit Cost Total Cost

1/3 100 $125 $12,500

4/3 200 $135 $27,000

6/3 100 $145 $14,500

7/3 100 $155 $15,500

Total 500 $69,500

Wild Riders sold 400 boards at $250 per board on the dates listed below. The company uses a perpetual inventory system.

Date Quantity Sold Unit Price Total Sales

3/17 50 $250 $12,500

5/17 75 $250 $18,750

8/10 275 $250 $68,750

Total 400 $100,000

Instructions

a. Calculate cost of goods sold, ending inventory, and gross profit under each of the following inventory valuation methods:

First-in, first-out

Last-in, first-out

Weighted average

b. Which of the three methods would be chosen if management s goal is to

(1) produce an up-to-date inventory valuation on the balance sheet

(2) show the lowest net income for tax purposes

5. Depreciation methods. XXXXX XXXXX Enterprises purchased a delivery van for $40,000 in January 20X7. The van was estimated to have a service life of 5 years and a resid ual value of $6,000. The company is planning to drive the van 20,000 miles annually. Compute depreciation expense for 20X8 by using each of the following methods:

a. Units-of-output, assuming 17,000 miles were driven during 20X8

b. Straight-line

c. Double-declining-balance

6. Depreciation computations. Alpha Alpha Alpha, a college fraternity, purchased a new heavy-duty washing machine on January 1, 20X3. The machine, which cost $2,000, had an estimated residual value of $100 and an estimated service life of 4 years (1,800 washing cycles). Calculate the following:

a. The machine s book value on December 31, 20X5, assuming use of the straight-line depreciation method

b. Depreciation expense for 20X4, assuming use of the units-of-output depreciation method. Actual washing cycles in 20X4 totaled 500.

c. Accumulated depreciation on December 31, 20X5, assuming use of the double-declining-balance depreciation method.

7. Depreciation computations: change in estimate. Aussie Imports purchased a specialized piece of machinery for $50,000 on January 1, 20X3. At the time of acquisition, the machine was estimated to have a service life of 5 years (25,000 operating hours) and a residual value of $5,000. During the 5 years of operations (20X3 – 20X7), the machine was used for 5,100, 4,800, 3,200, 6,000, and 5,900 hours, respectively.

Instructions

a. Compute depreciation for 20X3 – 20X7 by using the following methods: straight line, units of output, and double-declining-balance.

b. On January 1, 20X5, management shortened the remaining service life of the machine to 15 months. Assuming use of the straight-line method, compute the company s depreciation expense for 20X5.

c. Briefly describe what you would have done differently in part (a) if Aussie Imports had paid $47,800 for the machinery rather than $50,000 In addition, assume that the company incurred $800 of freight charges $1,400 for machine setup and testing, and $300 for insurance during the first year of use.

accounting problems 498747

Aug 29, 2021 | Uncategorized

A camera company produces and sells cameras, film, and other imaging products. A condensed 2000 income statement (in millions) includes the following:

Sales
20,991

Cost of goods sold
12,028

Gross margin
8,963

Other operating expenses
5,641

Operating income
$3,322

Assume that $3.6 million of the cost of goods sold is a fixed cost representing depreciation and other production costs that do not change with the volume of production. In addition, $5 million of the other operating expenses are fixed.
Compute the total contribution margin for 2010 and the contribution margin percentage. Explain why the contribution margin differs from the gross margin.
Suppose that sales for the camera company were predicted to increase by 10% in 2011 and that the cost behavior was expected to continue in 2011 as it did in 2010. Compute the predicted operating income for 2011. By what percentage did this predicted 2011 operating income exceed the 2010 operating income?
What assumptions were necessary to compute the predicted 2011 operating income in question 2

accounting problems 498748

Aug 29, 2021 | Uncategorized

1. Johnson Company has entered into a lease agreement for equipment which is not cancelable. The details of the lease are as follows: Inception of the lease: Jan 1, 2012, residual value at the end of the lease term is guaranteed at the end of the lease term for $50,000, annual lease payments are $124,798 due at the beginning of each year, starting on Jan 1, 2012. The lease term is 6 years, the economic life of the equipment is 5 years and the fair value of the asset at Jan 1, 2012 is $600,000. The borrowing rate is 6% per year. The lessee uses the straight line method to depreciate the asset.
a. Prepare the journal entry to record the lease agreement on Jan 1, 2012 from the lessee s perspective.
b. Record the first payment on Jan 1, 2012
c. Record the second payment on Jan 1, 2013 and any adjusting entries needed on Dec 31, 2013.

2. George Manufacturing manufactures equipment for booths and has leased one to Peterson for a period of 10 years. The equipment has an estimated useful life of 12 years and the normal selling price of the asset is $278,072. The unguaranteed residual value is $20,000. Peterson will make annual payments of $40,000 at the beginning of each year starting on June 1, 2012 and all maintenance and insurance costs. It cost George $180,000 to manufacture the equipment and the borrowing rate is 10%.
a. Record the lease agreement from the lessor s perspective on July 1, 2013.
b. Record receipt of the first payment on July 1, 2013
c. Record any adjusting entry at December 31, 2013
d. Record receipt of the second payment on July 1, 2014 and any other entries if needed.

3. On January 1, 2011 Richardson Corp. leased a new machine from Johnson Corp for 3 years which has an expected useful life of 8 years with no salvage value. It is depreciated on a straight line basis. The annual rental payments are $180,000 and start at the beginning of the year. Richardson is required to pay a security deposit of $35,000 at the signing of the lease.
a. Record the lease agreement from the lessee s point of view on Jan 1, 2011.
b. Record payment of the security deposit by Richardson and the first payment
c. Record the journal entry for initial lease contract from the lessor s perspective.
d. Record the first payment received by the lessor and the security deposit.
e. Record any adjusting journal entry needed at December 31, 2011 by the lessee or lessor.

accounting problems 498749

Aug 29, 2021 | Uncategorized

Kendra Company s standard labor cost of producing one unit of Product DD is 4 hours at the rate of $12.00 per hour. During August, 40,800 hours of labor are incurred at a cost of $12.10 per hour to produce 10,000 units of Product DD.

BE9-6 For Eckert Inc., variable manufacturing overhead costs are expected to be $20,000 in the first quarter of 2011, with $4,000 increments in each of the remaining three quarters. Fixed overhead costs are estimated to be $35,000 in each quarter. Prepare the manufacturing overhead budget by quarters and in total for the year.

Cawley Company’s Small Motor Division manufactures a number of small motors used in household and office appliances. The Household Division of Cawley then assembles and packages such items as blenders and juicers. Both divisions are free to buy and sell any of their components internally or externally. The following costs relate to small motor LN233 on a per unit basis.

accounting problems 498751

Aug 29, 2021 | Uncategorized

29. The Spartan Technology Company has a proposed contract with the Digital Systems Company of Michigan. The initial investment in land and equipment will be $120,000. Of this amount, $70,000 is subject to five-year MACRS depreciation. The balance is in nondepreciable property. The contract covers six years; at the end of six years, the nondepreciable assets will be sold for $50,000, which is their original cost. The depreciated assets will have zero resale value.

The contract will require an additional investment of $55,000 in working capital at the beginning of the first year and, of this amount, $25,000 will be returned to the Spartan Technology Company after six years.

The investment will produce $50,000 in income before depreciation and taxes for each of the six years. The corporation is in a 40 percent tax bracket and has a 10 percent cost of capital.

Should the investment be undertaken? Use the net present value method.

30. An asset was purchased three years ago for $140,000. It falls into the five-year category for MACRS depreciation. The firm is in a 35 percent tax bracket. Compute the:

a. Tax loss on the sale and the related tax benefit if the asset is sold now for $15,320.

b. Gain and related tax on the sale if the asset is sold now for $58,820. (Refer to footnote 3.)

31. Polycom Technology is considering the purchase of a new piece of equipment for
$110,000. It has a nine-year midpoint of its asset depreciation range (ADR). It will require an additional initial investment of $60,000 in nondepreciable working capital. Fifteen thousand dollars of this investment will be recovered after the sixth year and will provide additional cash flow for that year. Income before depreciation and taxes for the next
six years will be:

Year Amount

1………………… $85,000

2………………… 75,000

3………………… 60,000

4………………… 52,500

5………………… 45,000

6………………… 40,000

The tax rate is 30 percent. The cost of capital must be computed based on

the following (round the final value to the nearest whole number):

a. Determine the annual depreciation schedule.

b. Determine annual cash flow. Include recovered working capital in the sixth year.

c. Determine the weighted average cost of capital.

d. Determine the net present value. Should Polycom Technology purchase the new equipment?

32. Graphic Systems purchased a computerized measuring device two years ago for $80,000. It falls into the five-year category for MACRS depreciation. The equipment can currently be sold for $28,400.

A new piece of equipment will cost $210,000. It also falls into the five-year category for MACRS depreciation.

Assume the new equipment would provide the following stream of added cost savings for the next six years.

The tax rate is 34 percent and the cost of capital is 12 percent.

a. What is the book value of the old equipment?

b. What is the tax loss on the sale of the old equipment?

c. What is the tax benefit from the sale?

d. What is the cash inflow from the sale of the old equipment?

e. What is the net cost of the new equipment? (Include the inflow from the sale of the old equipment.)

f. Determine the depreciation schedule for the new equipment.

g. Determine the depreciation schedule for the remaining years of the old equipment.

h. Determine the incremental depreciation between the old and new equipment and the related tax shield benefits.

i. Compute the aftertax benefits of the cost savings.

j. Add the depreciation tax shield benefits and the aftertax cost savings, and determine the present value. (See Table 12-17 as an example.)

k. Compare the present value of the incremental benefits (j) to the net cost of the new equipment (e). Should the replacement be undertaken?

COMPREHENSIVE PROBLEM

The Woodruff Corporation purchased a piece of equipment three years ago for $230,000. It has an asset depreciation range (ADR) midpoint of eight years. The old equipment can be sold for $90,000.

A new piece of equipment can be purchased for $320,000. It also has an ADR of eight years.

Assume the old and new equipment would provide the following operating gains (or losses) over the next six years.

The firm has a 36 percent tax rate and a 9 percent cost of capital. Should the new equipment be purchased to replace the old equipment?

accounting problems 498752

Aug 29, 2021 | Uncategorized

Proble 3-25

3 25 Comprehensive cycle problem: perpetual system

At the beginning of 2012, the jeater company had that following balances in its accounts:

1. Purchased inventory that cost $2,200 on account from Blue Company under terms 1/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $110 were paid in cash.
2. Returned $200 of the inventory that it had purchase because the inventory was damaged in transit. The freight company agreed to pay the return freight cost.
3. Paid the amount due on its account payable to Blue Company within the cash discount period.
4. Sold inventory that had cost $3,000 for $5,500 on account, under terms 2/10, n/45.
5. Received merchandise returned from a customer. The merchandise originally cost $400 and was sold to the customer for $710 cash during the previous accounting period. The customer was paid $710 cash for the returned merchandise.
6. Delivered goods FOB destination in Event 4. Freight costs of $60 were paid in cash.
7. Collected the amount due on the account receivable within the discount period.
8. Took a physical count indicating that $7,970 of inventory was on hand at the end of the accounting period.

Required

1. Identify these events as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE).
2. Record each event in a statement model

Problem 4-20 The following data apply to superior auto supply inc. for may 2012

1. Balance per the bank on may 31, $8000

2. Deposits in transit not recorded by the bank, $975

3. Bank error, check written by allen auto supply was charged to superior auto sales account, $650

4. The following checks written and recorded by superior auto supply were not included in the bank statement: 3013-$385, 3054-$735, 3056-$1900

5. Not collected by the bank, $500

6. Service charge for the collection of note $10

7. The book keeper recorded a check written for $188 to pay for the may utilities expense as $888 in the cash disbursements journal

8. bank service charge in addition to the note collection fee $25

9. customer checks returned to the bank as NSF $125

Required: determine the amount of unadjusted cash balance per superior auto supply s books.

accounting mcqs 498701

Aug 29, 2021 | Uncategorized

1. Shelby and Mortonson formed a partnership with capital contributions of $300,000 and $400,000, respectively. Their partnership agreement calls for Shelby to receive a $60,000 per year salary. Also, each partner is to receive an interest allowance equal to 10% of a partner’s beginning capital investments. The remaining income or loss is to be divided equally. If the net income for the current year is $135,000, then Shelby and Mortonson’s respective shares are:

A. $67,500; $67,500.

B. $92,500; $42,500.

C. $57,857; $77,143.

D. $90,000; $40,000.

E. $35,000; $100,000.

2. A partnership agreement:

A. Is not binding unless it is in writing.

B. Is the same as a limited liability partnership.

C. Is binding even if it is not in writing.

D. Does not generally address the issue of the rights and duties of the partners.

E. Is also called the articles of incorporation.

3. In closing the accounts at the end of a period, the partners’ capital accounts are credited for their share of the partnership loss or debited for their share of the partnership net income.
True
False

4. Accounting procedures for all items are the same for both C corporations and S corporations in all aspects.
True
False

5. McCartney, Harris, and Hussin are dissolving their partnership. Their partnership agreement allocates income and losses equally among the partners. The current period’s ending capital account balances are McCartney, $15,000, Harris, $15,000, Hussin, $(2,000). After all the assets are sold and liabilities are paid, but before any contributions to cover any deficiencies, there is $28,000 in cash to be distributed. Hussin pays $2,000 to cover the deficiency in his account. The general journal entry to record the final distribution would be:

A. McCartney, Capital 15,000 Harris, Capital 15,000 Cash 30,000

B. McCartney, Capital 14,000 Harris, Capital 14,000 Cash 28,000

C. McCartney, Capital 15,000 Harris, Capital 15,000 Hussin, Capital 2,000 Cash 28,000

D. Cash 28,000 Hussin, Capital 2,000 McCartney, Capital 15,000 Harris, Capital 15,000

E. McCartney, Capital 9,334 Harris, Capital 9,333 Hussin, Capital 9,333 Cash 28,000

6. Partnership accounting:

A. Is the same as accounting for a sole proprietorship.

B. Is the same as accounting for a corporation.

C. Is the same as accounting for a sole proprietorship, except that separate capital and withdrawal accounts are kept for each partner.

D. Is the same as accounting for an S corporation.

E. Is the same as accounting for a corporation, except that retained earnings is used to keep track of partners’ withdrawals.

7. Limited liability partnerships are designed to protect innocent partners from malpractice or negligence claims resulting from the acts of another partner.
True
False

8. Assume that the S & B partnership agreement gave Steely 60% and Breck 40% of partnership income and losses. The partnership lost $27,000 in the current period. This implies that Steely’s share of the loss equals $16,200, and Breck’s share equals $10,800.
True
False

9. McCartney, Harris and Hussin are dissolving their partnership. Their partnership agreement allocates each partner 1/3 of all income and losses. The current period’s ending capital account balances are McCartney, $13,000; Harris, $13,000; and Hussin, $(2,000). After all assets are sold and liabilities are paid, there is $24,000 in cash to be distributed. Hussin is unable to pay the deficiency. The journal entry to record the distribution should be:

A. McCartney, Capital 8,000 Harris, Capital 8,000 Hussin, Capital 8,000 Cash 24,000

B. McCartney, Capital 12,000 Harris, Capital 12,000 Cash 24,000

C. McCartney, Capital 13,000 Harris, Capital 13,000 Hussin, Capital 2,000 Cash 24,000

D. Cash 24,000 Hussin, Capital 2,000 McCartney, Capital 13,000 Harris, Capital 13,000

E. Cash 24,000 McCartney, Capital 8,000 Harris, Capital 8,000 Hussin, Capital 8,000

10. Groh and Jackson are partners. Groh’s capital balance in the partnership is $64,000, and Jackson’s capital balance $61,000. Groh and Jackson have agreed to share equally in income or loss. Groh and Jackson agree to accept Block with a 25% interest. Block will invest $35,000 in the partnership. The bonus that is granted to Block equals:

A. $5,000.

B. $2,500.

C. $6,667

D. $3,333

E. $0, because Block must actually grant a bonus to Groh and Jackson.

Total partnership equity = $64,000 + $61,000 + $35,000 = $160,000
Equity of Block = $160,000 x 0.25 = $40,000
Bonus to Block = $40,000 – $35,000 = $5,000

11. Rice, Hepburn, and DiMarco formed a partnership with Rice contributing $60,000, Hepburn contributing $50,000 and DiMarco contributing $40,000. Their partnership agreement called for the income (loss) division to be based on the ratio of capital investments. If the partnership had income of $75,000 for its first year of operation, what amount of income (rounded to the nearest dollar) would be credited to DiMarco’s capital account?

A. $20,000.

B. $25,000.

C. $30,000.

D. $40,000.

E. $75,000.

$75,000 x ($40,000/($60,000 + $50,000 + $40,000)) = $20,000

12. Partners’ withdrawals of assets are:

A. Credited to their withdrawals accounts.

B. Debited to their withdrawals accounts.

C. Credited to their retained earnings.

D. Debited to their retained earnings.

E. Debited to their asset accounts.

13. When a partnership is liquidated:

A. Noncash assets are converted to cash.

B. Any gain or loss on liquidation is allocated to the partners’ capital accounts using the income and loss sharing ratio.

C. Liabilities are paid or settled.

D. Any remaining cash is distributed to the partners based on their capital balances.

E. All of the above.

14. Renee Jackson is a partner in Sports Promoters. Her beginning partnership capital balance for the current year $55,000, and her ending partnership capital balance for the current year is $62,000. Her share of this year’s partnership income was $5,250. What is her partner return on equity?

A. 8.47%

B. 8.97%

C. 9.54%

D. 1047%

E. 1060%

$5,250/[($55,000 + $62,000)/2] = 8.97%

15. To buy into an existing partnership, the new partner must contribute cash.
True
False

16. Partnership accounting:

A. Uses a capital account for each partner.

B. Uses a withdrawals account for each partner.

C. Allocates net income to each partner according to the partnership agreement.

D. Allocates net loss to each partner according to the partnership agreement.

E. All of the above.

17. The partnership agreement for Smith Wesson & Davis, a general partnership, provided that profits be shared between the partners in the ratio of their financial contributions to the partnership. Smith contributed $100,000, Wesson contributed $60,000 and Davis contributed $20,000. In the partnership s first year of operation, it incurred a loss of $210,000. What amount of the partnership s loss, rounded to the nearest dollar, should be absorbed by Smith?

A. $70,000

B. $116,667

C. $23,333

D. $105,000

E. $52,500

If the partnership agreement does not specifically address how losses are to be allocated between the partners, the losses are to be shared in the same manner as profits.
Therefore, since Smith’s capital contribution ($100,000) represented 5/9 of the total capital upon formation ($100,000 + $60,000 + $20,000), Smith should be allocated 5/9 of the $210,000 loss or $116,667.

18. A partner can withdraw from a partnership by:

A. Selling his/her interest to another person who pays for it in cash.

B. Selling his/her interest to another person who pays for it with assets.

C. Receiving cash of the partnership in the amount of his/her interest.

D. Receiving assets of the partnership in the amount of his/her interest.

E. All of the above.

19. If a partner is unable to cover a deficiency and the other partners absorb the deficiency, then the partner with the deficiency is thus relieved of all liability.
True
False

20. Mutual agency implies that each partner in a partnership is a fully authorized agent of the partnership. Which of the following statements is correct regarding the authority of a partner to bind the partnership in dealings with third parties?

A. The partner s authority must be derived from the partnership agreement.

B. The partner s authority may be effectively limited by a formal resolution of the other partners, even if third parties are not aware of that limitation.

C. Only a partner with a majority interest in a partnership has the authority to represent the partnership to third parties.

D. A partner has authority to deal with third parties on the behalf of the other partners only if he has written permission to do so.

E. A partner may be able to legally bind the partnership to actions even if the other partners are unaware of his actions.

21. A partnership cannot use salary allowances or interest allowances if it uses the stated ratio method to allocate income and losses to the partners.
True
False

22. Partner return on equity can be used by each partner to help decide whether additional investment or withdrawal of resources is best for that partner.
True
False

23. When a partner is added to a partnership:

A. The previous partnership ends.

B. The underlying business operations end.

C. The underlying business operations must close and then re-open.

D. The partnership must continue.

E. The partnership equity always increases

24. Partners’ withdrawals are credited to their separate withdrawals accounts.
True
False

25. Groh and Jackson are partners. Groh’s capital balance in the partnership is $64,000, and Jackson’s capital balance $61,000. Groh and Jackson have agreed to share equally in income or loss. Groh and Jackson agree to accept Block with a 20% interest. Block will invest $35,000 in the partnership. The bonus that is granted to Groh and Jackson equals:

A. $1,500 each.

B. $1,875 each.

C. $3,750 each

D. 1,920 to Groh; $1,830 to Jackson.

E. $0, because Groh and Jackson actually grant a bonus to Block.

Total partnership equity = $64,000 + $61,000 + $35,000 = $160,000
Equity of Block = $160,000 x 0.20 = $32,000
Bonus to old partners = $35,000 – $32,000 = $3,000, split equally

26. Chen and Wright are forming a partnership. Chen will invest a building that currently is being used by another business owned by Chen. The building has a market value of $90,000. Also, the partnership will assume responsibility for a $30,000 note secured by a mortgage on that building. Wright will invest $50,000 cash. For the partnership, the amounts to be recorded for the building and for Chen’s Capital account are:

A. Building, $90,000 and Chen, Capital, $90,000.

B. Building, $60,000 and Chen, Capital, $60,000.

C. Building, $60,000 and Chen, Capital, $50,000.

D. Building, $90,000 and Chen, Capital, $60,000.

E. Building, $60,000 and Chen, Capital, $90,000.

27. Mutual agency means

A. Creditors can apply their claims to partners’ personal assets.

B. Partners are taxed on partnership withdrawals.

C. All partners must agree before the partnership can act.

D. The partnership has a limited life.

E. A partner can commit or bind the partnership in any contract within the scope of the partnership business.

28. Collins and Farina are forming a partnership. Collins is investing a building that has a market value of $80,000. However, the building carries a $56,000 mortgage that will be assumed by the partnership. Farina is investing $20,000 cash. The balance of Collins’ Capital account will be:

A. $80,000.

B. $24,000.

C. $56,000.

D. $44,000.

E. $60,000.

29. An unincorporated association of two or more persons to carry on a business for profit as co-owners is a(n):

A. Partnership.

B. Proprietorship.

C. Contractual company.

D. Mutual agency.

E. Voluntary organization

30. A partnership has an unlimited life.
True
False

accounting mcqs 498702

Aug 29, 2021 | Uncategorized

accounting mcqs 498704

Aug 29, 2021 | Uncategorized

The cost of an asset less accumulated depreciation equals:

If the balance of supplies at the start of the month was $900 and at the end of the month you had $450 on hand, the adjustment for Supplies would be:

A. $900.

B. $350.

C. $550.

D. $450.

Depreciation Expense would be found on which of the following financial statements?

A. Income statement

B. Statement of Owner’s Equity

C. Balance sheet

D. Depreciation report

Which of the following accounts would appear on the balance sheet?

A. Depreciation Expense

B. Fees Earned

C. Accumulated Depreciation

D. None of these are correct.

A form used to organize and check data before preparing financial reports is known as a(n):

A. income statement.

B. balance sheet.

C. trial balance.

D. worksheet.

Which of the following is most likely to result in an adjusting entry at the end of the period?

A. Payment for routine maintenance on the company van

B. Owner’s withdrawals

C. Payment of two months’ insurance in advance

D. Payment of one month’s rent

When historical cost is used to record equipment, it would appear as the:

A. original cost on the income statement.

B. original cost on the balance sheet.

C. residual value on the balance sheet.

D. residual value on the income statement.

Bringing account balances up to date before preparing financial reports is called:

A. adjusting.

B. posting.

C. analyzing.

D. journalizing.

Not recording the Prepaid Rent used causes:

A. assets to be too low.

B. expenses to be too high.

C. revenue to be too high.

D. assets to be too high.

A contra-asset is:

A. in reality a liability.

B. an account with an opposite balance of a normal asset.

C. an asset with a debit balance.

D. an account that increases the asset.

Reset Selection

Equipment with a cost of $150,000 has an accumulated depreciation of $100,000. What is the historical cost of the equipment?

A. $100,000

B. $200,000

C. $50,000

D. $150,000

The estimated value of an item at the end of its useful life is:

A. residual value.

B. accumulated depreciation.

C. depreciation expense.

D. None of these answers are correct.

Evans Golf Academy estimated depreciation on its building at $300. The adjusting entry for depreciation of the building would include:

A. a debit to Depreciation Expense for $300.

B. a credit to Depreciation Expense for $300.

C. a credit to Building for $300.

D. a debit to Accumulated Depreciation for $300.

Equipment with a cost of $200,000 has an accumulated depreciation of $100,000. What is the book value of the equipment?

A. $200,000

B. $100,000

C. $150,000 D. $50,000

Which of the following accounts would most likely not need to be adjusted at the end of the year?

A. Cash

B. Accumulated Depreciation

C. Prepaid Rent

D. Office Supplies

The income statement credit column of the worksheet showed the following revenues:

The journal entry to close the revenue accounts is:

Reset Selection

Income Summary:

A. is a temporary account.

B. is a permanent account.

C. summarizes revenue and expenses and transfers the balance to Capital.

D. Both A and C are correct.

Which of the following columns of the worksheet are referred to when preparing closing entries to the Income Summary?

A. Adjustments columns

B. Adjusted trial balance columns

C. Balance sheet columns

D. Income statement columns

Adjusting journal entries:

A. need not be journalized since they appear on the worksheet.

B. are not needed if closing entries are prepared.

C. need not be posted if the financial statements are prepared from the worksheet.

D. must be journalized and posted.

When the balance in the Income Summary account is a credit, the company has:

A. made an error in their closing entries.

B. incurred a net loss.

C. incurred a net income.

D. had more expenses than revenue.

How do you close the expense accounts?

A. Debit Capital; credit the expense accounts

B. Credit Income Summary; debit the expense accounts

C. Debit Income Summary; credit the expense accounts

D. Credit Capital; debit the expense accounts

How do you close a revenue account?

A. Credit Income Summary; debit Revenue

B. Credit Capital; debit Revenue

C. Debit Income Summary; credit Revenue

D. Debit Capital; credit Revenue

The adjusting entry to record the expired rent would be to:

A. debit Prepaid Rent; credit Cash.

B. debit Cash; credit Prepaid Rent.

C. debit Prepaid Rent; credit Rent Expense.

D. debit Rent Expense; credit Prepaid Rent.

Closing entries:

A. need not be posted if the financial statements are prepared from the worksheet.

B. must be journalized and posted.

C. are not needed if adjusting entries are prepared.

D. need not be journalized since they appear on the worksheet.

Which of the following accounts would appear on the post-closing trial balance?

A. Owner’s Capital

B. Fees Earned

C. Income Summary

D. Rent Expense

M. Smuts showed a net income of $6,000. The entry to close the Income Summary account would include a:

A. debit to M. Smuts Capital, $6,000.

B. credit to M. Smuts Capital, $6,000.

C. debit to Income Summary, $6,000.

D. Both B and C are correct.

Which of the following accounts will be directly closed to Capital at the end of the fiscal year?

A. Withdrawals

B. Salaries Expense

C. Fees Revenue

D. Depreciation Expense

Which of the following accounts would not be considered a permanent account?

A. Accounts Payable

B. Salaries Expense

C. Accounts Receivable

D. Office Supplies

Which of the following sequence of actions describes the proper order in the accounting cycle?

A. Analyze transactions, journalize, post, adjust, prepare financial statements, close

B. Journalize, post, close, prepare financial statements, adjust, and analyze transactions

C. Prepare financial statements, journalize, post, adjust, analyze transactions, close

D. Post, close, prepare financial statements, adjust, analyze transactions, and journalize

The adjusting entry for accrued salaries is to:

A. debit Salaries Payable; credit Salaries Expense.

B. debit Salaries Expense; credit Cash.

C. debit Salaries Expense; credit Salaries Payable. D. debit Cash; credit Salaries Expense.

accounting mcqs 24 questions 498707

Aug 29, 2021 | Uncategorized

accounting mcqs 498708

Aug 29, 2021 | Uncategorized

1.) The method of evaluating financial data that change under different courses of action is called:

a. financial statement analysis.

b. break-even analysis.

c. incremental analysis.

d. cost-benefit analysis.

2.) Braizen, Inc. produces a product with a $30 per-unit variable cost and an $80 per-unit sales price. Fixed manufacturing overhead costs are $100,000. The firm has a one-time opportunity to sell an additional 1,000 units at $60 each that would not affect its current sales. Assuming the company has sufficient capacity to produce the additional units, how would the acceptance of the special order affect net income?

a. income would decrease by $30,000.

b. income would increase by $30,000.

c. income would increase by $140,000.

d. income would increase by $40,000.

3.) Opportunity costs are:

a. included in inventory.

b. foregone benefits.

c. sunk costs.

d. included in cost of goods sold.

4.) A sunk cost is a cost that:

a. has been incurred and cannot be eliminated.

b. is never relevant in decision-making.

c. is never a differential cost.

d. all of these.

5.) _____________ is a cost management technique in which the firm determines the required cost for a product or service in order to earn a desired profit when the marketplace establishes the product’s selling price:

a. relevant costing.

b. product costing.

c. differential costing.

d. target costing.

6.) ______________ can be measured as the income that could have been earned on an asset, based on the potential rate of return that is lost or sacrificed when one alternative use of the asset is chosen over another:

a. target cost.

b. sunk cost.

c. opportunity cost.

d. allocated cost.

7.) _____________ costs between two alternative projects are those that would result from selecting one alternative instead of the other:

a. allocated.

b. differential.

c. sunk.

d. irrelevant.

8.) Which of the following cost classifications would not be considered relevant in comparing decision alternatives?

a. opportunity cost.

b. differential cost.

c. sunk cost.

d. none of these.

9.) In considering whether to accept a special order at a price less than the normal selling price of the product and where the additional sales will make use of present idle capacity, which of the following costs will not be relevant?

a. direct labor.

b. direct materials.

c. variable manufacturing overhead.

d. fixed manufacturing overhead that cannot be avoided.

10.) A cost classified “for decision making purposes” would include:

a. period cost.

b. opportunity cost.

c. controllable cost.

d. inventoriable cost.

11.) Relevant costs in decision-making:

a. are future costs that represent differences between decision alternatives.

b. result from past decisions.

c. should not influence the decision.

d. none of these.

12.) If a cost is irrelevant to a decision, the cost could not be a:

a. fixed cost.

b. sunk cost.

c. differential cost.

d. variable cost.

13.) The potential rental value of space used in the manufacturing process: