ACCOUNTING
ADVANCE ACCOUNTING Multiple Choice
1. On December 1, 2006, Passey Corporation sold a machine with a carrying amount of $150,000 to its 80%-owned subsidiary, Scully Company, for $200,000. Scully adopted a four-year economic life, no residual value, and the sum-of-the-years'-digits method of depreciation for the machine. If correct working paper eliminations are prepared for Passey Corporation and subsidiary on November 30, 2007, the end of the fiscal year, Passey's net income to be included in consolidated net income is (disregarding income taxes): (Points : 1)
2. In the measurement of minority interest in net income of a partially owned subsidiary, the credit for Depreciation Expense¾Parent in the working paper elimination (in journal entry format) for intercompany gain in a depreciable plant asset is attributed to net income of: (Points : 1)
3. A material realized gain on a subsidiary's open-market acquisition of its parent company's outstanding bonds at a discount is displayed in the consolidated income statement as: (Points : 1)
4. The starting point for the computation of net cash provided by operating activities in a consolidated statement of cash flows (indirect method) for a parent company and its partially owned subsidiary is: (Points : 1)
5. The realized but unrecognized gain on extinguishment of debt resulting from a parent company's open-market acquisition of the subsidiary's outstanding bonds is recorded in subsequent journal entries by: (Points : 1)
6. In the preparation of a consolidated statement of cash flows, dividends declared and paid to minority shareholders of a subsidiary are: (Points : 1)
7. Included in a working paper elimination (in journal entry format) for intercompany sales of merchandise was a debit to Minority Interest in Net Assets of Subsidiary. This debit indicates that: (Points : 1)
8. Included in a working paper elimination (in journal entry format) for intercompany sales was a credit of $60,000 to Cost of Goods Sold¾Subsidiary. The credit indicates that, for the accounting period involved: (Points : 1)
9. In the installment acquisition of a controlling interest in a subsidiary, the Retained Earnings of Subsidiary/Investee ledger account is first credited in a journal entry of the parent company/investor to: (Points : 1)
10. Intercompany loans, operating leases of property, and rendering of services do not include an element of intercompany profit gain or loss for the consolidated entity because: (Points : 1)
Click here for the SOLUTION
Wednesday, August 31, 2011
Kananga Company has these obligations at December 31
ACCOUNTING
Kananga Company has these obligations at December 31: (a) a note payable for $100,000 due in 2 years, (b) a 10-year mortgage payable of $200,000 payable in ten $20,000 annual payments, (c) interest payable of $15,000 on the mortgage, and (d) accounts payable of $60,000.
For each obligation, indicate whether it should be classified as a current liability.
Click here for the SOLUTION
Kananga Company has these obligations at December 31: (a) a note payable for $100,000 due in 2 years, (b) a 10-year mortgage payable of $200,000 payable in ten $20,000 annual payments, (c) interest payable of $15,000 on the mortgage, and (d) accounts payable of $60,000.
For each obligation, indicate whether it should be classified as a current liability.
Click here for the SOLUTION
Valentin Zukovsky says that liquidity and solvency are the same thing. Is he correct? If not, how do they differ?
ACCOUNTING
Valentin Zukovsky says that liquidity and solvency are the same thing. Is he correct? If not, how do they differ?
Click here for the SOLUTION
Valentin Zukovsky says that liquidity and solvency are the same thing. Is he correct? If not, how do they differ?
Click here for the SOLUTION
Contrast these types of bonds: (a) Secured and unsecured. (b) Convertible and callable.
ACCOUNTING
Contrast these types of bonds:
(a) Secured and unsecured.
(b) Convertible and callable.
Click here for the SOLUTION
Contrast these types of bonds:
(a) Secured and unsecured.
(b) Convertible and callable.
Click here for the SOLUTION
(a) What are long-term liabilities? Give two examples. (b) What is a bond?
ACCOUNTING
(a) What are long-term liabilities? Give two examples.
(b) What is a bond?
Click here for the SOLUTION
(a) What are long-term liabilities? Give two examples.
(b) What is a bond?
Click here for the SOLUTION
Georgia Lazenby believes a current liability is a debt that can be expected to be paid in one year. Is Georgia correct? Explain.
ACCOUNTING
Georgia Lazenby believes a current liability is a debt that can be expected to be paid in one year. Is Georgia correct? Explain.
Click here for the SOLUTION
Georgia Lazenby believes a current liability is a debt that can be expected to be paid in one year. Is Georgia correct? Explain.
Click here for the SOLUTION
Shine Corporation purchased 30 percent of the common stock of Ash Corporation on January 1, 2002, at $28,000 in excess of underlying book value
ACCOUNTING
Shine Corporation purchased 30 percent of the common stock of Ash Corporation on January 1, 2002, at $28,000 in excess of underlying book value. The excess is attributable to equipment with a remaining useful life of 2 years. The companies reported the following operating results and dividends for the 3 years following the date of purchase:
Shine Ash
Operating Income Dividends Net Income Dividends
2002 1,000,000 130,000 400,000 40,000
2003 960,000 140,000 300,000 40,000
2004 1,200,000 140,000 500,000 22,000
Required:
A) Compute the net income reported by Shine for each of the 3 years, assuming Shine accounts for its investment in Ash using the cost method.
B) Compute the net income reported by Shine for each of the 3 years, assuming Shine accounts for its investment in Ash using the equity method.
Click here for the SOLUTION
Shine Corporation purchased 30 percent of the common stock of Ash Corporation on January 1, 2002, at $28,000 in excess of underlying book value. The excess is attributable to equipment with a remaining useful life of 2 years. The companies reported the following operating results and dividends for the 3 years following the date of purchase:
Shine Ash
Operating Income Dividends Net Income Dividends
2002 1,000,000 130,000 400,000 40,000
2003 960,000 140,000 300,000 40,000
2004 1,200,000 140,000 500,000 22,000
Required:
A) Compute the net income reported by Shine for each of the 3 years, assuming Shine accounts for its investment in Ash using the cost method.
B) Compute the net income reported by Shine for each of the 3 years, assuming Shine accounts for its investment in Ash using the equity method.
Click here for the SOLUTION
E7-3 Presented below is the assumptions, principles, and constraints discussed in this chapter
ACCOUNTING
E7-3 Presented below is the assumptions, principles, and constraints discussed in this chapter.
1. Economic entity assumption 6. Matching principle
2. Going concern assumption 7. Full disclosure principle
3. Monetary unit assumption 8. Revenue recognition principle
4. Time period assumption 9. Materiality
5. Cost principle 10. Conservatism
Instructions: Identify by number the accounting assumption, principle, or constraint above that describes each situation below. Do not use a number more than once.
(a) Is the rationale for why plant assets are not reported at liquidation value. (Do not use historical cost principle.)
(b) Indicates that personal and business record-keeping should be separately maintained.
(c) Ensures that all relevant financial information is reported.
(d) Assumes that the dollar is the “measuring stick” used to report on financial performance.
(e) Requires that the operational guidelines be followed for all significant items.
(f) Separates financial information into time periods for reporting purpose.
(g) Requires recognition of expenses in the same period as related revenues.
(h) Indicates that market value changes subsequent to purchase are not recorded in the accounts.
Click here for the SOLUTION
E7-3 Presented below is the assumptions, principles, and constraints discussed in this chapter.
1. Economic entity assumption 6. Matching principle
2. Going concern assumption 7. Full disclosure principle
3. Monetary unit assumption 8. Revenue recognition principle
4. Time period assumption 9. Materiality
5. Cost principle 10. Conservatism
Instructions: Identify by number the accounting assumption, principle, or constraint above that describes each situation below. Do not use a number more than once.
(a) Is the rationale for why plant assets are not reported at liquidation value. (Do not use historical cost principle.)
(b) Indicates that personal and business record-keeping should be separately maintained.
(c) Ensures that all relevant financial information is reported.
(d) Assumes that the dollar is the “measuring stick” used to report on financial performance.
(e) Requires that the operational guidelines be followed for all significant items.
(f) Separates financial information into time periods for reporting purpose.
(g) Requires recognition of expenses in the same period as related revenues.
(h) Indicates that market value changes subsequent to purchase are not recorded in the accounts.
Click here for the SOLUTION
P9-7B The intangible assets section of Time Company at December 31, 2011, is presented below
ACCOUNTING
ACC 291 Week 2 Assignment
P9-7B The intangible assets section of Time Company at December 31, 2011, is presented below.
Patent ($100,000 cost less $10,000 amortization) $ 90,000
Copyright ($60,000 cost less $24,000 amortization) 36,000
Total $126,000
The patent was acquired in January 2011 and has a useful life of 10 years. The copyright was acquired in January 2008 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2012.
Jan. 2 Paid $45,000 legal costs to successfully defend the patent against infringement by another company.
Jan.–June Developed a new product, incurring $230,000 in research and development costs. A patent was granted for the product on July 1. Its useful life is equal to its legal life.
Sept. 1 Paid $125,000 to an Xgames star to appear in commercials advertising the company’s products. The commercials will air in September and October
Oct. 1 Acquired a copyright for $200,000. The copyright has a useful life of 50 years.
Instructions
(a) Prepare journal entries to record the transactions above.
(b) Prepare journal entries to record the 2012 amortization expense for intangible assets.
(b) Amortization Expense—Patents $15,000;
Amortization Expense—Copyrights $7,000
(c) Prepare the intangible assets section of the balance sheet at December 31, 2012.
(c) Total intangible assets, $349,000
(d) Prepare the note to the financials on Time’s intangibles as of December 31, 2012.
Click here for the SOLUTION
ACC 291 Week 2 Assignment
P9-7B The intangible assets section of Time Company at December 31, 2011, is presented below.
Patent ($100,000 cost less $10,000 amortization) $ 90,000
Copyright ($60,000 cost less $24,000 amortization) 36,000
Total $126,000
The patent was acquired in January 2011 and has a useful life of 10 years. The copyright was acquired in January 2008 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2012.
Jan. 2 Paid $45,000 legal costs to successfully defend the patent against infringement by another company.
Jan.–June Developed a new product, incurring $230,000 in research and development costs. A patent was granted for the product on July 1. Its useful life is equal to its legal life.
Sept. 1 Paid $125,000 to an Xgames star to appear in commercials advertising the company’s products. The commercials will air in September and October
Oct. 1 Acquired a copyright for $200,000. The copyright has a useful life of 50 years.
Instructions
(a) Prepare journal entries to record the transactions above.
(b) Prepare journal entries to record the 2012 amortization expense for intangible assets.
(b) Amortization Expense—Patents $15,000;
Amortization Expense—Copyrights $7,000
(c) Prepare the intangible assets section of the balance sheet at December 31, 2012.
(c) Total intangible assets, $349,000
(d) Prepare the note to the financials on Time’s intangibles as of December 31, 2012.
Click here for the SOLUTION
E9-12 The following are selected 2011 transactions of Franco Corporation
ACCOUNTING
ACC 291 Week 2 Assignment
E9-12 The following are selected 2011 transactions of Franco Corporation.
Jan. 1 Purchased a small company and recorded goodwill of $150,000. Its useful life is indefinite.
May 1 Purchased for $90,000 a patent with an estimated useful life of 5 years and a legal life of 20 years.
Instructions
Prepare necessary adjusting entries at December 31 to record amortization required by the events above.
Click here for the SOLUTION
ACC 291 Week 2 Assignment
E9-12 The following are selected 2011 transactions of Franco Corporation.
Jan. 1 Purchased a small company and recorded goodwill of $150,000. Its useful life is indefinite.
May 1 Purchased for $90,000 a patent with an estimated useful life of 5 years and a legal life of 20 years.
Instructions
Prepare necessary adjusting entries at December 31 to record amortization required by the events above.
Click here for the SOLUTION
E9-7 Brainiac Company purchased a delivery truck for $30,000 on January 1, 2011
ACCOUNTING
ACC 291 Week 2 Assignment
E9-7 Brainiac Company purchased a delivery truck for $30,000 on January 1, 2011. The truck has a expected salvage value of 2,000 and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2011 and 12,000 in 2012.
Instructions
a) compute depreciation expense for 2010 and 2011 using (1) the straight line method (2) the units of activity method and (3) the double declining balance method.
b) Assume that Brainiac uses the straight line method
(1) prepare the journal entry to record 2010 depreciation.
(2) Show how the truck would be reported in the December 31, 2010 balance sheet.
Click here for the SOLUTION
ACC 291 Week 2 Assignment
E9-7 Brainiac Company purchased a delivery truck for $30,000 on January 1, 2011. The truck has a expected salvage value of 2,000 and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2011 and 12,000 in 2012.
Instructions
a) compute depreciation expense for 2010 and 2011 using (1) the straight line method (2) the units of activity method and (3) the double declining balance method.
b) Assume that Brainiac uses the straight line method
(1) prepare the journal entry to record 2010 depreciation.
(2) Show how the truck would be reported in the December 31, 2010 balance sheet.
Click here for the SOLUTION
The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2011
ACCOUNTING
ACC 291 Week 2 Assignment
E9‑1 The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2011.
1. Paid $5,000 of accrued taxes at time plant site was acquired.
2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit.
3. Paid $850 sales taxes on new delivery truck.
4. Paid $17,500 for parking lots and driveways on new plant site.
5. Paid $250 to have company name and advertising slogan painted on new delivery truck.
6. Paid $8,000 for installation of new factory machinery.
7. Paid $900 for one-year accident insurance policy on new delivery truck.
8. Paid $75 motor vehicle license fee on the new truck.
Instructions
(a) Explain the application of the cost principle in determining the acquisition cost of plant assets.
(b) List the numbers of the foregoing transactions, and opposite each indicate the account title to which each expenditure should be debited.
Click here for the SOLUTION
ACC 291 Week 2 Assignment
E9‑1 The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2011.
1. Paid $5,000 of accrued taxes at time plant site was acquired.
2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit.
3. Paid $850 sales taxes on new delivery truck.
4. Paid $17,500 for parking lots and driveways on new plant site.
5. Paid $250 to have company name and advertising slogan painted on new delivery truck.
6. Paid $8,000 for installation of new factory machinery.
7. Paid $900 for one-year accident insurance policy on new delivery truck.
8. Paid $75 motor vehicle license fee on the new truck.
Instructions
(a) Explain the application of the cost principle in determining the acquisition cost of plant assets.
(b) List the numbers of the foregoing transactions, and opposite each indicate the account title to which each expenditure should be debited.
Click here for the SOLUTION
ACC 291 Week Two (Week 2)
ACCOUNTING
ACC 291 Week Two (Week 2) Assignment
Individual Exercises and Problems – Week Two
Resources: Ch. 9 of Financial Accounting
Complete Exercise E9-1, E9-7, & E9-12.
Complete Problem P9-7B.
Exercise E9-1 SOLUTION
Exercise E9-7 SOLUTION
Exercise E9-12 SOLUTION
Problem P9-7B SOLUTION
ACC 291 Week Two (Week 2) Assignment
Individual Exercises and Problems – Week Two
Resources: Ch. 9 of Financial Accounting
Complete Exercise E9-1, E9-7, & E9-12.
Complete Problem P9-7B.
Exercise E9-1 SOLUTION
Exercise E9-7 SOLUTION
Exercise E9-12 SOLUTION
Problem P9-7B SOLUTION
E9-2 Trudy Company incurred the following costs
ACCOUNTING
ACC 291 Week 1 Assignment
E9-2 Trudy Company incurred the following costs.
1. Sales tax on factory machinery purchased $5,000
2. Painting of and lettering on truck immediately upon purchase 700
3. Installation and testing of factory machinery 2,000
4. Real estate broker’s commission on land purchased 3,500
5. Insurance premium paid for first year’s insurance on new truck 880
6. Cost of landscaping on property purchased 7,200
7. Cost of paving parking lot for new building constructed 17,900
8. Cost of clearing, draining, and filling land 13,300
9. Architect’s fees on self-constructed building 10,000
Indicate to which account Trudy would debit each of the costs.
Click here for the SOLUTION
ACC 291 Week 1 Assignment
E9-2 Trudy Company incurred the following costs.
1. Sales tax on factory machinery purchased $5,000
2. Painting of and lettering on truck immediately upon purchase 700
3. Installation and testing of factory machinery 2,000
4. Real estate broker’s commission on land purchased 3,500
5. Insurance premium paid for first year’s insurance on new truck 880
6. Cost of landscaping on property purchased 7,200
7. Cost of paving parking lot for new building constructed 17,900
8. Cost of clearing, draining, and filling land 13,300
9. Architect’s fees on self-constructed building 10,000
Indicate to which account Trudy would debit each of the costs.
Click here for the SOLUTION
ACC 291 Week One (Week 1)
ACCOUNTING
ACC 291 Week One (Week 1) Assignment
Individual Exercises – Week One
Resources: Ch. 9 of Financial Accounting
Complete Exercise E9-2
Exercise E9-2 SOLUTION
ACC 291 Week One (Week 1) Assignment
Individual Exercises – Week One
Resources: Ch. 9 of Financial Accounting
Complete Exercise E9-2
Exercise E9-2 SOLUTION
Monday, August 29, 2011
1. Wealth or net worth is equal to (Points : 1)
ECONOMICS
MULTIPLE CHOICE
1. Wealth or net worth is equal to (Points : 1)
2. The utility possibilities frontier is a graphic representation of a two-person world that shows all points at which A's utility can be ________ . (Points : 1)
3. Paula was born with an aptitude for learning languages. This aptitude is an example of ________. (Points : 1)
4. Evidence suggests that in the last several decades, technology has played a role in driving inequality. Thus, ________ may be key to reducing inequality in the future. (Points : 1)
5. In 2007 about 14% of personal income in the United States came from (Points : 1)
6. If there are external costs of production not accounted for, then marginal (Points : 1)
7. The bottom fifth of families in the income distribution receive most of their income from ________ income. (Points : 1)
l
8. Tax shifting ________ . (Points : 1)
9. The payroll tax for Social Security in the United States is (Points : 1)
10. The top 1% of families in the income distribution receive most of their income from ________ income. (Points : 1)
Click here for the SOLUTION
MULTIPLE CHOICE
1. Wealth or net worth is equal to (Points : 1)
2. The utility possibilities frontier is a graphic representation of a two-person world that shows all points at which A's utility can be ________ . (Points : 1)
3. Paula was born with an aptitude for learning languages. This aptitude is an example of ________. (Points : 1)
4. Evidence suggests that in the last several decades, technology has played a role in driving inequality. Thus, ________ may be key to reducing inequality in the future. (Points : 1)
5. In 2007 about 14% of personal income in the United States came from (Points : 1)
6. If there are external costs of production not accounted for, then marginal (Points : 1)
7. The bottom fifth of families in the income distribution receive most of their income from ________ income. (Points : 1)
l
8. Tax shifting ________ . (Points : 1)
9. The payroll tax for Social Security in the United States is (Points : 1)
10. The top 1% of families in the income distribution receive most of their income from ________ income. (Points : 1)
Click here for the SOLUTION
Comprehensive Problem: Julie Molony opened Julie’s Maids Cleaning Service Inc. on July 1, 2008
ACCOUNTING
Comprehensive Problem: Chapters 2 to 4 Julie Molony opened Julie’s Maids Cleaning Service Inc. on July 1, 2008. During July, the company completed the following transactions.
July 1 Issued $14,000 of common stock for $14,000 cash.
1 Purchased a used truck for $10,000, paying $3,000 cash and the balance on account.
3 Purchased cleaning supplies for $800 on account.
5 Paid $1,800 on a one-year insurance policy, effective July 1.
12 Billed customers $3,800 for cleaning services.
18 Paid $1,000 of amount owed on truck, and $400 of amount owed on cleaning supplies.
20 Paid $1,600 for employee salaries.
21 Collected $1,400 from customers billed on July 12.
25 Billed customers $1,500 for cleaning services.
31 Paid gas and oil for the month on the truck, $400.
31 Paid a $600 cash dividend.
The chart of accounts for Julie’s Maids Cleaning Service contains the following accounts: No. 101
Cash, No. 112 Accounts Receivable, No. 128 Cleaning Supplies, No. 130 Prepaid Insurance, No. 157 Equipment, No. 158 Accumulated Depreciation—Equipment, No. 201 Accounts Payable, No. 212 Salaries Payable,No. 311 Common Stock,No. 320 Retained Earnings,No. 332 Dividends, No. 350 Income Summary, No. 400 Service Revenue, No. 633 Gas & Oil Expense, No. 634 Cleaning Supplies Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, and No. 726 Salaries Expense.
Instructions
(a) Journalize and post the July transactions. Use page J1 for the journal.
(b) Prepare a trial balance at July 31 on a worksheet.
(c) Enter the following adjustments on the worksheet, and complete the worksheet.
(1) Earned but unbilled fees at July 31 were $1,300.
(2) Depreciation on equipment for the month was $200.
(3) One-twelfth of the insurance expired.
(4) An inventory count shows $100 of cleaning supplies on hand at July 31.
(5) Accrued but unpaid employee salaries were $500.
(d) Prepare the income statement and a retained earnings statement for July, and a classified balance sheet at July 31, 2008.
(e) Journalize and post the adjusting entries. Use page J2 for the journal.
(f ) Journalize and post the closing entries, and complete the closing process. Use page J3 for the journal.
(g) Prepare a post-closing trial balance at July 31.
Click here for the SOLUTION
Comprehensive Problem: Chapters 2 to 4 Julie Molony opened Julie’s Maids Cleaning Service Inc. on July 1, 2008. During July, the company completed the following transactions.
July 1 Issued $14,000 of common stock for $14,000 cash.
1 Purchased a used truck for $10,000, paying $3,000 cash and the balance on account.
3 Purchased cleaning supplies for $800 on account.
5 Paid $1,800 on a one-year insurance policy, effective July 1.
12 Billed customers $3,800 for cleaning services.
18 Paid $1,000 of amount owed on truck, and $400 of amount owed on cleaning supplies.
20 Paid $1,600 for employee salaries.
21 Collected $1,400 from customers billed on July 12.
25 Billed customers $1,500 for cleaning services.
31 Paid gas and oil for the month on the truck, $400.
31 Paid a $600 cash dividend.
The chart of accounts for Julie’s Maids Cleaning Service contains the following accounts: No. 101
Cash, No. 112 Accounts Receivable, No. 128 Cleaning Supplies, No. 130 Prepaid Insurance, No. 157 Equipment, No. 158 Accumulated Depreciation—Equipment, No. 201 Accounts Payable, No. 212 Salaries Payable,No. 311 Common Stock,No. 320 Retained Earnings,No. 332 Dividends, No. 350 Income Summary, No. 400 Service Revenue, No. 633 Gas & Oil Expense, No. 634 Cleaning Supplies Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, and No. 726 Salaries Expense.
Instructions
(a) Journalize and post the July transactions. Use page J1 for the journal.
(b) Prepare a trial balance at July 31 on a worksheet.
(c) Enter the following adjustments on the worksheet, and complete the worksheet.
(1) Earned but unbilled fees at July 31 were $1,300.
(2) Depreciation on equipment for the month was $200.
(3) One-twelfth of the insurance expired.
(4) An inventory count shows $100 of cleaning supplies on hand at July 31.
(5) Accrued but unpaid employee salaries were $500.
(d) Prepare the income statement and a retained earnings statement for July, and a classified balance sheet at July 31, 2008.
(e) Journalize and post the adjusting entries. Use page J2 for the journal.
(f ) Journalize and post the closing entries, and complete the closing process. Use page J3 for the journal.
(g) Prepare a post-closing trial balance at July 31.
Click here for the SOLUTION
Sunday, August 28, 2011
Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold mine in South Dakota
FINANCE
Bullock Gold Mining Case Study Solution
Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold mine in South Dakota. Dan Dority, the company’s geologist, has just finished his analysis of the mine site. He has estimated that the mine would be productive for eight years, after which the gold would be completely mined. Dan has taken an estimate of the gold deposits to Alma Garrett, the company’s financial officer. Alma has been asked by Seth to perform an analysis of the new mine and present her recommendation on whether the company should open the new mine.
Alma has used estimates provided by Dan to determine the revenues that could be expected from the mine. She has also projected the expense of opening the mine and the annual operating expenses. If the company opens the mine, it will cost $500 million today, and it will have a cash outflow of $80 million nine years from today in costs associated with closing the mine and reclaiming the area surrounding it. The expected cash flows each year from the mine are shown in the following table. Bullock Mining has a 12 percent required return on all of its gold mines.
Year Cash Flow
0 -$500,000,000
1 60,000,000
2 90,000,000
3 170,000,000
4 230,000,000
5 205,000,000
6 140,000,000
7 110,000,000
8 70,000,000
9 -80,000,000
1. Construct a spreadsheet to calculate the payback period, internal rate of return, modified internal rate of return, and net present value of the proposed mine.
2. Based on your analysis, should the company open the mine?
3. Most spreadsheets do not have a built-in formula to calculate the payback period. Write a YBA script that calculates the payback period for a project.
Click here for the SOLUTION
Bullock Gold Mining Case Study Solution
Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold mine in South Dakota. Dan Dority, the company’s geologist, has just finished his analysis of the mine site. He has estimated that the mine would be productive for eight years, after which the gold would be completely mined. Dan has taken an estimate of the gold deposits to Alma Garrett, the company’s financial officer. Alma has been asked by Seth to perform an analysis of the new mine and present her recommendation on whether the company should open the new mine.
Alma has used estimates provided by Dan to determine the revenues that could be expected from the mine. She has also projected the expense of opening the mine and the annual operating expenses. If the company opens the mine, it will cost $500 million today, and it will have a cash outflow of $80 million nine years from today in costs associated with closing the mine and reclaiming the area surrounding it. The expected cash flows each year from the mine are shown in the following table. Bullock Mining has a 12 percent required return on all of its gold mines.
Year Cash Flow
0 -$500,000,000
1 60,000,000
2 90,000,000
3 170,000,000
4 230,000,000
5 205,000,000
6 140,000,000
7 110,000,000
8 70,000,000
9 -80,000,000
1. Construct a spreadsheet to calculate the payback period, internal rate of return, modified internal rate of return, and net present value of the proposed mine.
2. Based on your analysis, should the company open the mine?
3. Most spreadsheets do not have a built-in formula to calculate the payback period. Write a YBA script that calculates the payback period for a project.
Click here for the SOLUTION
15-13B. (Break-even point and selling price) Heritage Chain Company will produce 175,000 units next year
FINANCE
15-13B. (Break-even point and selling price) Heritage Chain Company will produce 175,000 units next year. All of this production will be sold as finished goods. Fixed costs will total $335,000. Variable costs for this firm are relatively predictable at 80 percent of sales.
a. If Heritage Chain wants to achieve an earnings before interest and taxes level of $270,000 next year, at what price per unit must it sell its product?
b. Based on your answer to part (a), set up an analytical income statement that will verify your solution.
Click here for the SOLUTION
15-13B. (Break-even point and selling price) Heritage Chain Company will produce 175,000 units next year. All of this production will be sold as finished goods. Fixed costs will total $335,000. Variable costs for this firm are relatively predictable at 80 percent of sales.
a. If Heritage Chain wants to achieve an earnings before interest and taxes level of $270,000 next year, at what price per unit must it sell its product?
b. Based on your answer to part (a), set up an analytical income statement that will verify your solution.
Click here for the SOLUTION
15-12B. (Fixed costs and the break-even point) Mini-Kool hopes to earn $70,000 next year after taxes
FINANCE
15-12B. (Fixed costs and the break-even point) Mini-Kool hopes to earn $70,000 next year after taxes. Sales will be $2,500,050. The firm’s single plant manufactures only small refrigerators. These are used in many recreational campers. The refrigerators sell for $75 per unit and have a variable cost of $58. Mini-Kool experiences a 45 percent tax rate.
a. What are the firm’s fixed costs expected to be next year?
b. Calculate the firm’s break-even point both in units and dollars.
Click here for the SOLUTION
15-12B. (Fixed costs and the break-even point) Mini-Kool hopes to earn $70,000 next year after taxes. Sales will be $2,500,050. The firm’s single plant manufactures only small refrigerators. These are used in many recreational campers. The refrigerators sell for $75 per unit and have a variable cost of $58. Mini-Kool experiences a 45 percent tax rate.
a. What are the firm’s fixed costs expected to be next year?
b. Calculate the firm’s break-even point both in units and dollars.
Click here for the SOLUTION
Cardinal Paz Corp. carries an account in its general ledger called Investments, which contained debits for investment purchases, and no credits, with
ACCOUNTING
Cardinal Paz Corp. carries an account in its general ledger called Investments, which contained debits for investment purchases, and no credits, with the following descriptions.
Feb. 1, 2010 Sharapova Company common stock, $100 par, 200 shares $ 37,400
April 1 U.S. government bonds, 11%, due April 1, 2020, interest payable
April 1 and October 1, 110 bonds of $1,000 par each 110,000
July 1 McGrath Company 12% bonds, par $50,000, dated March 1, 2010 purchased at 104 plus accrued interest, interest payable annually on March 1, due March 1, 2030 54,000
Instructions
(Round all computations to the nearest dollar.)
(a) Prepare entries necessary to classify the amounts into proper accounts, assuming that all the securities are classified as available-for-sale.
(b) Prepare the entry to record the accrued interest and the amortization of premium on December 31, 2010 using the straight-line method.
(c) The fair values of the securities on December 31, 2010, were:
Sharapova Company common stock $ 31,800
U.S. government bonds 124,700
McGrath Company bonds 58,600
What entry or entries, if any, would you recommend be made?
(d) The U.S. government bonds were sold on July 1, 2011, for $119,200 plus accrued interest. Give the proper entry.
Click here for the SOLUTION
Cardinal Paz Corp. carries an account in its general ledger called Investments, which contained debits for investment purchases, and no credits, with the following descriptions.
Feb. 1, 2010 Sharapova Company common stock, $100 par, 200 shares $ 37,400
April 1 U.S. government bonds, 11%, due April 1, 2020, interest payable
April 1 and October 1, 110 bonds of $1,000 par each 110,000
July 1 McGrath Company 12% bonds, par $50,000, dated March 1, 2010 purchased at 104 plus accrued interest, interest payable annually on March 1, due March 1, 2030 54,000
Instructions
(Round all computations to the nearest dollar.)
(a) Prepare entries necessary to classify the amounts into proper accounts, assuming that all the securities are classified as available-for-sale.
(b) Prepare the entry to record the accrued interest and the amortization of premium on December 31, 2010 using the straight-line method.
(c) The fair values of the securities on December 31, 2010, were:
Sharapova Company common stock $ 31,800
U.S. government bonds 124,700
McGrath Company bonds 58,600
What entry or entries, if any, would you recommend be made?
(d) The U.S. government bonds were sold on July 1, 2011, for $119,200 plus accrued interest. Give the proper entry.
Click here for the SOLUTION
Saturday, August 27, 2011
4-6A (Cash budget) The Sharpe Corporation’s projected sales for the first eight months of 2004 are as follows
FINANCE
4-6A (Cash budget) The Sharpe Corporation’s projected sales for the first eight months of 2004 are as follows:
January $90,000 February $120,000
March $135,000 April $240,000
May $300,000 June $270,000
July $225,000 August $150,000
Of Sharpe’s sales, 10 percent is for cash, another 60 percent is collected in the month following sales, and 30 percent is collected in the second month following sales. November and December sales for 2003 were $220,000 and $175,000, respectively. Sharpe purchases its raw material two months in advance of its sales equal to 60 percent of their final sales price. The supplier is paid one month after it makes delivery. For example, purchase for April sales are made in February and payment is made in March. In addition, Sharpe pays $10,000 per month for rent and $20,000 each month for other expenditures. Tax prepayments of $22,500 are made each quarter, beginning in March. The company’s cash balance at December 31, 2003, was $22,000; a minimum balance of $15,000 must be maintained at all times. Assume that any short-term financing needed to maintain the cast balance is paid off in the month following the month of financing if sufficient funds are available. Interest on short-term loans (12 percent) is paid monthly. Borrowing to meet estimated monthly cash needs takes place at the beginning of the month. Thus, if he month of April the firm expects to have a need for additional $60,500, these funds would be borrowed at the beginning of April with interest of $605 (.12 x ½ x $60,500) owed for April and paid at the beginning of May.
A. Prepare a cash budget for Sharpe covering the first seven months of 2004.
B. Sharpe has a $200,000 in notes payable due in July that must be repaid or renegotiated for an extension. Will the firm have ample cash to repay the notes?
Click here for the SOLUTION
4-6A (Cash budget) The Sharpe Corporation’s projected sales for the first eight months of 2004 are as follows:
January $90,000 February $120,000
March $135,000 April $240,000
May $300,000 June $270,000
July $225,000 August $150,000
Of Sharpe’s sales, 10 percent is for cash, another 60 percent is collected in the month following sales, and 30 percent is collected in the second month following sales. November and December sales for 2003 were $220,000 and $175,000, respectively. Sharpe purchases its raw material two months in advance of its sales equal to 60 percent of their final sales price. The supplier is paid one month after it makes delivery. For example, purchase for April sales are made in February and payment is made in March. In addition, Sharpe pays $10,000 per month for rent and $20,000 each month for other expenditures. Tax prepayments of $22,500 are made each quarter, beginning in March. The company’s cash balance at December 31, 2003, was $22,000; a minimum balance of $15,000 must be maintained at all times. Assume that any short-term financing needed to maintain the cast balance is paid off in the month following the month of financing if sufficient funds are available. Interest on short-term loans (12 percent) is paid monthly. Borrowing to meet estimated monthly cash needs takes place at the beginning of the month. Thus, if he month of April the firm expects to have a need for additional $60,500, these funds would be borrowed at the beginning of April with interest of $605 (.12 x ½ x $60,500) owed for April and paid at the beginning of May.
A. Prepare a cash budget for Sharpe covering the first seven months of 2004.
B. Sharpe has a $200,000 in notes payable due in July that must be repaid or renegotiated for an extension. Will the firm have ample cash to repay the notes?
Click here for the SOLUTION
Julie Molony opened Julie’s Maids Cleaning Service Inc. on July 1, 2008
ACCOUNTING
Comprehensive Problem: Chapters 2 to 4 Julie Molony opened Julie’s Maids Cleaning Service Inc. on July 1, 2008. During July, the company completed the following transactions.
July 1 Issued $14,000 of common stock for $14,000 cash.
1 Purchased a used truck for $10,000, paying $3,000 cash and the balance on account.
3 Purchased cleaning supplies for $800 on account.
5 Paid $1,800 on a one-year insurance policy, effective July 1.
12 Billed customers $3,800 for cleaning services.
18 Paid $1,000 of amount owed on truck, and $400 of amount owed on cleaning supplies.
20 Paid $1,600 for employee salaries.
21 Collected $1,400 from customers billed on July 12.
25 Billed customers $1,500 for cleaning services.
31 Paid gas and oil for the month on the truck, $400.
31 Paid a $600 cash dividend.
The chart of accounts for Julie’s Maids Cleaning Service contains the following accounts: No. 101
Cash, No. 112 Accounts Receivable, No. 128 Cleaning Supplies, No. 130 Prepaid Insurance, No. 157 Equipment, No. 158 Accumulated Depreciation—Equipment, No. 201 Accounts Payable, No. 212 Salaries Payable,No. 311 Common Stock,No. 320 Retained Earnings,No. 332 Dividends, No. 350 Income Summary, No. 400 Service Revenue, No. 633 Gas & Oil Expense, No. 634 Cleaning Supplies Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, and No. 726 Salaries Expense.
Instructions
(a) Journalize and post the July transactions. Use page J1 for the journal.
(b) Prepare a trial balance at July 31 on a worksheet.
(c) Enter the following adjustments on the worksheet, and complete the worksheet.
(1) Earned but unbilled fees at July 31 were $1,300.
(2) Depreciation on equipment for the month was $200.
(3) One-twelfth of the insurance expired.
(4) An inventory count shows $100 of cleaning supplies on hand at July 31.
(5) Accrued but unpaid employee salaries were $500.
(d) Prepare the income statement and a retained earnings statement for July, and a classified balance sheet at July 31, 2008.
(e) Journalize and post the adjusting entries. Use page J2 for the journal.
(f ) Journalize and post the closing entries, and complete the closing process. Use page J3 for the journal.
(g) Prepare a post-closing trial balance at July 31.
Click here for the SOLUTION
Comprehensive Problem: Chapters 2 to 4 Julie Molony opened Julie’s Maids Cleaning Service Inc. on July 1, 2008. During July, the company completed the following transactions.
July 1 Issued $14,000 of common stock for $14,000 cash.
1 Purchased a used truck for $10,000, paying $3,000 cash and the balance on account.
3 Purchased cleaning supplies for $800 on account.
5 Paid $1,800 on a one-year insurance policy, effective July 1.
12 Billed customers $3,800 for cleaning services.
18 Paid $1,000 of amount owed on truck, and $400 of amount owed on cleaning supplies.
20 Paid $1,600 for employee salaries.
21 Collected $1,400 from customers billed on July 12.
25 Billed customers $1,500 for cleaning services.
31 Paid gas and oil for the month on the truck, $400.
31 Paid a $600 cash dividend.
The chart of accounts for Julie’s Maids Cleaning Service contains the following accounts: No. 101
Cash, No. 112 Accounts Receivable, No. 128 Cleaning Supplies, No. 130 Prepaid Insurance, No. 157 Equipment, No. 158 Accumulated Depreciation—Equipment, No. 201 Accounts Payable, No. 212 Salaries Payable,No. 311 Common Stock,No. 320 Retained Earnings,No. 332 Dividends, No. 350 Income Summary, No. 400 Service Revenue, No. 633 Gas & Oil Expense, No. 634 Cleaning Supplies Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, and No. 726 Salaries Expense.
Instructions
(a) Journalize and post the July transactions. Use page J1 for the journal.
(b) Prepare a trial balance at July 31 on a worksheet.
(c) Enter the following adjustments on the worksheet, and complete the worksheet.
(1) Earned but unbilled fees at July 31 were $1,300.
(2) Depreciation on equipment for the month was $200.
(3) One-twelfth of the insurance expired.
(4) An inventory count shows $100 of cleaning supplies on hand at July 31.
(5) Accrued but unpaid employee salaries were $500.
(d) Prepare the income statement and a retained earnings statement for July, and a classified balance sheet at July 31, 2008.
(e) Journalize and post the adjusting entries. Use page J2 for the journal.
(f ) Journalize and post the closing entries, and complete the closing process. Use page J3 for the journal.
(g) Prepare a post-closing trial balance at July 31.
Click here for the SOLUTION
Friday, August 26, 2011
Prepare the missing adjusting entry. For each journal entry write Dr for debit and Cr for credit
ACCOUNTING
Prepare the missing adjusting entry. For each journal entry write Dr for debit and Cr for credit.
A) Unearned rent at 1/1/10 was $5,300 and at 12/31/10 was $6,000. The records indicate cash receipts from rental sources during 2010 amounted to $60,000, all of which was credited to Unearned Rent Account. Prepare the missing adjusting entry.
B) Data relating to the balances of various accounts affected by adjusting or closing entries appear below. (The entries which caused the changes in the balances are not given). Supply the missing journal entries which would logically account for the changes in the account balances. Interest receivable at 1/1/10 was $5,000. During 2010 cash received from debtors for interest on outstanding notes receivable amounted to $5,000. The 2010 income statement showed interest revenue in the amount of $4,900. Provide the missing adjusting entry that must have been made, assuming reversing entries are not made.
C) Accumulated depreciation-equipment at 1/1/10 was $200,000. At 12/31/10, the balance of the account was $320,000. During 2010, one piece of equipment was sold. The equipment had an original cost of $50,000 and was 1/2 depreciated when sold. Prepare the missing adjusting entry.
D) Allowance for doubtful accounts on 1/1/10 was $40,000. The balance in the allowance account on 12/31/10 after making the annual adjusting entry was $60,000 and during 2010 bad debts written off amounted to $30,000. Provide the missing adjusting entry.
E) Prepaid rent at 1/1/10 was $50,000. During 2010 rent payments of $110,000 were made and charged to "rent expense." The 2010 income statement shows as a general expense the item "rent expense" in the amount of $135,000. You are to prepare the missing adjusting entry that must have been made, assuming reversing entries are not made.
F) Retained Earnings at 1/1/10 was $0 and at 12/31/10 was $400,000. During 2010, cash dividend of $50,000 were paid and a stock dividend of $100,000 was issued. Both dividends were properly charged to retained earnings. Provide the missing closing entry.
Click here for the SOLUTION
Prepare the missing adjusting entry. For each journal entry write Dr for debit and Cr for credit.
A) Unearned rent at 1/1/10 was $5,300 and at 12/31/10 was $6,000. The records indicate cash receipts from rental sources during 2010 amounted to $60,000, all of which was credited to Unearned Rent Account. Prepare the missing adjusting entry.
B) Data relating to the balances of various accounts affected by adjusting or closing entries appear below. (The entries which caused the changes in the balances are not given). Supply the missing journal entries which would logically account for the changes in the account balances. Interest receivable at 1/1/10 was $5,000. During 2010 cash received from debtors for interest on outstanding notes receivable amounted to $5,000. The 2010 income statement showed interest revenue in the amount of $4,900. Provide the missing adjusting entry that must have been made, assuming reversing entries are not made.
C) Accumulated depreciation-equipment at 1/1/10 was $200,000. At 12/31/10, the balance of the account was $320,000. During 2010, one piece of equipment was sold. The equipment had an original cost of $50,000 and was 1/2 depreciated when sold. Prepare the missing adjusting entry.
D) Allowance for doubtful accounts on 1/1/10 was $40,000. The balance in the allowance account on 12/31/10 after making the annual adjusting entry was $60,000 and during 2010 bad debts written off amounted to $30,000. Provide the missing adjusting entry.
E) Prepaid rent at 1/1/10 was $50,000. During 2010 rent payments of $110,000 were made and charged to "rent expense." The 2010 income statement shows as a general expense the item "rent expense" in the amount of $135,000. You are to prepare the missing adjusting entry that must have been made, assuming reversing entries are not made.
F) Retained Earnings at 1/1/10 was $0 and at 12/31/10 was $400,000. During 2010, cash dividend of $50,000 were paid and a stock dividend of $100,000 was issued. Both dividends were properly charged to retained earnings. Provide the missing closing entry.
Click here for the SOLUTION
A machine cost $500,000 on April 1, 2010. Its estimated salvage value is $50,000 and its expected life is eight years
ACCOUNTING
A machine cost $500,000 on April 1, 2010. Its estimated salvage value is $50,000 and its expected life is eight years.
Instructions:
Calculate the depreciation expense (to the nearest dollar) by each of the following methods, showing the figures used
a) straight-line for 2010
b) Double-declining balance for 2011
c) Sum-of-the-years digits for 2011
Click here for the SOLUTION
A machine cost $500,000 on April 1, 2010. Its estimated salvage value is $50,000 and its expected life is eight years.
Instructions:
Calculate the depreciation expense (to the nearest dollar) by each of the following methods, showing the figures used
a) straight-line for 2010
b) Double-declining balance for 2011
c) Sum-of-the-years digits for 2011
Click here for the SOLUTION
Presented below is information related to Michelle Company
ACCOUNTING
Presented below is information related to Michelle Company.
Retained earnings, December 31, 2010 $ 2,750,000
Sales 2,000,000
Selling and administrative expenses 240,000
Hurricane loss (pre-tax) on plant (extraordinary item) 250,000
Cash dividends declared on common stock 33,600
Cost of goods sold 960,000
Gain resulting from computation error 2,000,000
on depreciation charge in 2009 (pre-tax)
Other revenue 80,000
Other expenses 50,000
Instructions
Prepare in good form a multiple-step income statement for the year 2011. Assume a 30% tax rate and that 100,000 shares of common stock were outstanding during the year.
Click here for the SOLUTION
Presented below is information related to Michelle Company.
Retained earnings, December 31, 2010 $ 2,750,000
Sales 2,000,000
Selling and administrative expenses 240,000
Hurricane loss (pre-tax) on plant (extraordinary item) 250,000
Cash dividends declared on common stock 33,600
Cost of goods sold 960,000
Gain resulting from computation error 2,000,000
on depreciation charge in 2009 (pre-tax)
Other revenue 80,000
Other expenses 50,000
Instructions
Prepare in good form a multiple-step income statement for the year 2011. Assume a 30% tax rate and that 100,000 shares of common stock were outstanding during the year.
Click here for the SOLUTION
Listed below are some information characteristics and accounting principles and assumptions
ACCOUNTING
Listed below are some information characteristics and accounting principles and assumptions. Match the letter of each with the appropriate phrase that states its application
Answer Potential Matches
_______________ Consistency characteristic 1. Presentation of error-free information with representational faithfulness.
_______________ Historical cost principle 2. Money in the common denominator of economic activity and provides an appropriate basis for accounting measurement and analysis.
_______________ Going concern principle 3. Business enterprise assumed to have a long life
_______________ Periodicity assumption 4. Application of the same accounting principles as in the preceding year
_______________ Reliability characteristic 5. Valuing assets at amounts originally paid for them
_______________ Economic entity assumption 6. Implies that a company can divide its economic activities into artificial time periods.
_______________ Monetary unit assumption 7. Notes as part of necessary information to a fair presentation
_______________ Revenue recognition principle 8. Affairs of the business distinguished from those of its owners
_______________ Full disclosure principle 9. Economic activity can be identified with a particular unit of accountability
________________ Economic entity assumption 10. Earnings process completed and realized or realizable
Click here for the SOLUTION
Listed below are some information characteristics and accounting principles and assumptions. Match the letter of each with the appropriate phrase that states its application
Answer Potential Matches
_______________ Consistency characteristic 1. Presentation of error-free information with representational faithfulness.
_______________ Historical cost principle 2. Money in the common denominator of economic activity and provides an appropriate basis for accounting measurement and analysis.
_______________ Going concern principle 3. Business enterprise assumed to have a long life
_______________ Periodicity assumption 4. Application of the same accounting principles as in the preceding year
_______________ Reliability characteristic 5. Valuing assets at amounts originally paid for them
_______________ Economic entity assumption 6. Implies that a company can divide its economic activities into artificial time periods.
_______________ Monetary unit assumption 7. Notes as part of necessary information to a fair presentation
_______________ Revenue recognition principle 8. Affairs of the business distinguished from those of its owners
_______________ Full disclosure principle 9. Economic activity can be identified with a particular unit of accountability
________________ Economic entity assumption 10. Earnings process completed and realized or realizable
Click here for the SOLUTION
Jack Sawyer is presently leasing a copier from John Office Equipment Company
ACCOUNTING
Jack Sawyer is presently leasing a copier from John Office Equipment Company. The lease requires 11 annual payments of $2,500 at the end of each year and provides the lesser (John) with an 8% return on its investment. You may use the following 8% interest factors:
Future value of 1 1.99900 2.15892 2.33164
Present value of 1 .50025 .46319 .42888
Future value of ordinary annuity of 1 12.48756 14.48656 16.64549
Present value of ordinary annuity of 1 6.24689 6.71008 7.13896
Present value of annuity due of 1 6.74664 7.24689 7.71008
a) Assume the computer has an eleven-year life and will have no salvage value at the expiration of the lease, what was the original cost of the copier to John?
b) What amount would each payment be if the 11 annual payments are to be made at the beginning of each period?
Click here for the SOLUTION
Jack Sawyer is presently leasing a copier from John Office Equipment Company. The lease requires 11 annual payments of $2,500 at the end of each year and provides the lesser (John) with an 8% return on its investment. You may use the following 8% interest factors:
Future value of 1 1.99900 2.15892 2.33164
Present value of 1 .50025 .46319 .42888
Future value of ordinary annuity of 1 12.48756 14.48656 16.64549
Present value of ordinary annuity of 1 6.24689 6.71008 7.13896
Present value of annuity due of 1 6.74664 7.24689 7.71008
a) Assume the computer has an eleven-year life and will have no salvage value at the expiration of the lease, what was the original cost of the copier to John?
b) What amount would each payment be if the 11 annual payments are to be made at the beginning of each period?
Click here for the SOLUTION
Rye Company was formed on December 1, 2010. The following information is available from Rye's inventory record for Product Bread
ACCOUNTING
Rye Company was formed on December 1, 2010. The following information is available from Rye's inventory record for Product Bread.
Units Unit Cost
January 1, 2011 (beginning inventory) 1,700 $17.00
Purchases:
January 5, 2011 2,600 $20.00
January 25, 2011 2,400 $21.00
February 16, 2011 1,000 $22.00
March 15, 2011 2,100 $25.00
A physical inventory on March 31, 2011 shows 3,000 units on hand
Instructions:
Prepare schedules to compute the ending inventory at March 31, 2011, under each of the following inventory methods:
a) FIFO
b) LIFO
c) Weighted Average
Click here for the SOLUTION
Rye Company was formed on December 1, 2010. The following information is available from Rye's inventory record for Product Bread.
Units Unit Cost
January 1, 2011 (beginning inventory) 1,700 $17.00
Purchases:
January 5, 2011 2,600 $20.00
January 25, 2011 2,400 $21.00
February 16, 2011 1,000 $22.00
March 15, 2011 2,100 $25.00
A physical inventory on March 31, 2011 shows 3,000 units on hand
Instructions:
Prepare schedules to compute the ending inventory at March 31, 2011, under each of the following inventory methods:
a) FIFO
b) LIFO
c) Weighted Average
Click here for the SOLUTION
David deposits all receipts and makes all payments by check. The following information is available from the cash records
ACCOUNTING
David deposits all receipts and makes all payments by check. The following information is available from the cash records:
MARCH 31 BANK RECONCILIATION
Balance per bank $26,746
Add: Deposits in transit 2,100
Deduct: Outstanding checks (3,800)
Balance per books $25,046
Month of April Results
Per Bank Per Books
Balance April 30 $27,995 $24,355
April deposits 8,864 14,889
April checks 12,200 16,080
April note collected 3,000 -0-
(not included in April deposits)
April bank service charge 35 -0-
April NSF check of a customer 900 -0-
returned by the bank
(recorded by bank as a charge)
Instructions
Calculate the amount of the April 30:
1. Deposits in transit
2. Outstanding checks
Click here for the SOLUTION
David deposits all receipts and makes all payments by check. The following information is available from the cash records:
MARCH 31 BANK RECONCILIATION
Balance per bank $26,746
Add: Deposits in transit 2,100
Deduct: Outstanding checks (3,800)
Balance per books $25,046
Month of April Results
Per Bank Per Books
Balance April 30 $27,995 $24,355
April deposits 8,864 14,889
April checks 12,200 16,080
April note collected 3,000 -0-
(not included in April deposits)
April bank service charge 35 -0-
April NSF check of a customer 900 -0-
returned by the bank
(recorded by bank as a charge)
Instructions
Calculate the amount of the April 30:
1. Deposits in transit
2. Outstanding checks
Click here for the SOLUTION
Thursday, August 25, 2011
The following balance sheet was prepared by the bookkeeper for Blue Company as of December 31, 2011
ACCOUNTING
The following balance sheet was prepared by the bookkeeper for Blue Company as of December 31, 2011
Blue Company
Balance Sheet
as of December 31, 2011
Cash $90,000
Accounts receivable (net) 42,000
Inventories 57,000
Equipment (net) 96,000
Patents 32,000
Sub-Total 393,500
Accounts payable 75,000
Long-term liabilities 100,000
Stockholders' equity 218,500
Sub-Total 393,500
The following additional information is provided:
1) Cash includes the cash surrender value of a life insurance policy $5,000 and a bank overdraft of $4,000 has been deducted.
2) The net accounts receivable balance includes:
a) Accounts receivable debit balances $50,000
b) Accounts receivable credit balances 0
c) Allowance for doubtful accounts 3,800
3) Inventories do not include goods costing $3,000 shipped out on consignment. Receivables of $3,000 were recorded on these goods.
4) Investments include investments in common stock, trading $13,000 and available-for-sale $46,300 and franchises $17,000
INSTRUCTIONS
Prepare a balance sheet in good form (Stockholders' equity details can be omitted)
Do not worry about balancing the statement but rather compute the account balances properly for presentation purposes.
Click here for the SOLUTION
The following balance sheet was prepared by the bookkeeper for Blue Company as of December 31, 2011
Blue Company
Balance Sheet
as of December 31, 2011
Cash $90,000
Accounts receivable (net) 42,000
Inventories 57,000
Equipment (net) 96,000
Patents 32,000
Sub-Total 393,500
Accounts payable 75,000
Long-term liabilities 100,000
Stockholders' equity 218,500
Sub-Total 393,500
The following additional information is provided:
1) Cash includes the cash surrender value of a life insurance policy $5,000 and a bank overdraft of $4,000 has been deducted.
2) The net accounts receivable balance includes:
a) Accounts receivable debit balances $50,000
b) Accounts receivable credit balances 0
c) Allowance for doubtful accounts 3,800
3) Inventories do not include goods costing $3,000 shipped out on consignment. Receivables of $3,000 were recorded on these goods.
4) Investments include investments in common stock, trading $13,000 and available-for-sale $46,300 and franchises $17,000
INSTRUCTIONS
Prepare a balance sheet in good form (Stockholders' equity details can be omitted)
Do not worry about balancing the statement but rather compute the account balances properly for presentation purposes.
Click here for the SOLUTION
Mark Cotteleer owns a company that manufactures sailboats
Production and Operations Management
MGT 455 Module 3: Assignments
Module 3: Topic and Objectives
Forecasting
Module 3: Assignments
Problem 4.27 Mark Cotteleer owns a company that manufactures sailboats. Actual demand for Mark’s sailboats during each season in 2004 through 2007 was as follows:
Year
Season 2004 2005 2006 2007
Winter 1,400 1,200 1,000 900
Spring 1,500 1,400 1,600 1,500
Summer 1,000 2,100 2,000 1,900
Fall 600 750 650 500
Mark has forecasted that annual demand for his sailboats in 2009 will equal 5,600 sailboats. Based on this data and the multiplicative seasonal model, what will the demand level be for Mark’s sailboats in the spring of 2009?
Click here for the SOLUTION
MGT 455 Module 3: Assignments
Module 3: Topic and Objectives
Forecasting
Module 3: Assignments
Problem 4.27 Mark Cotteleer owns a company that manufactures sailboats. Actual demand for Mark’s sailboats during each season in 2004 through 2007 was as follows:
Year
Season 2004 2005 2006 2007
Winter 1,400 1,200 1,000 900
Spring 1,500 1,400 1,600 1,500
Summer 1,000 2,100 2,000 1,900
Fall 600 750 650 500
Mark has forecasted that annual demand for his sailboats in 2009 will equal 5,600 sailboats. Based on this data and the multiplicative seasonal model, what will the demand level be for Mark’s sailboats in the spring of 2009?
Click here for the SOLUTION
The following gives the number of accidents that occurred on Florida State Highway 101 during the last 4 months
Production and Operations Management
MGT 455 Module 3: Assignments
Module 3: Topic and Objectives
Forecasting
Module 3: Assignments
Problem 4.25 The following gives the number of accidents that occurred on Florida State Highway 101 during the last 4 months:
Month Number of Accidents
January 30
February 40
March 60
April 90
Forecast the number of accidents that will occur in May, using least squares regression to derive a trend equation.
Click here for the SOLUTION
MGT 455 Module 3: Assignments
Module 3: Topic and Objectives
Forecasting
Module 3: Assignments
Problem 4.25 The following gives the number of accidents that occurred on Florida State Highway 101 during the last 4 months:
Month Number of Accidents
January 30
February 40
March 60
April 90
Forecast the number of accidents that will occur in May, using least squares regression to derive a trend equation.
Click here for the SOLUTION
The Carbondale Hospital is considering the purchase of a new ambulance
Production and Operations Management
MGT 455 Module 3: Assignments
Module 3: Topic and Objectives
Forecasting
Module 3: Assignments
Problem 4.5 The Carbondale Hospital is considering the purchase of a new ambulance. The decision will rest partly on the anticipated mileage to be driven next year. The miles driven during the past 5 years are as follows:
Year Mileage
1 3,000
2 4,000
3 3,400
4 3,800
5 3,700
a) Forecast the mileage for next year using a 2-year moving average.
b) Find the MAD based on the 2-year moving average forecast in part (a). (Hint: You will have only 3 years of matched data.)
c) Use a weighted 2-year moving average with weights of .4 and .6 to forecast next year’s mileage. (The weight of .6 is for the most recent year.) What MAD results from using this approach to forecasting? (Hint: You will have only 3 years of matched data.)
d) Compute the forecast for year 6 using exponential smoothing, an initial forecast for year 1 of 3,000 miles, and a= .5.
Click here for the SOLUTION
MGT 455 Module 3: Assignments
Module 3: Topic and Objectives
Forecasting
Module 3: Assignments
Problem 4.5 The Carbondale Hospital is considering the purchase of a new ambulance. The decision will rest partly on the anticipated mileage to be driven next year. The miles driven during the past 5 years are as follows:
Year Mileage
1 3,000
2 4,000
3 3,400
4 3,800
5 3,700
a) Forecast the mileage for next year using a 2-year moving average.
b) Find the MAD based on the 2-year moving average forecast in part (a). (Hint: You will have only 3 years of matched data.)
c) Use a weighted 2-year moving average with weights of .4 and .6 to forecast next year’s mileage. (The weight of .6 is for the most recent year.) What MAD results from using this approach to forecasting? (Hint: You will have only 3 years of matched data.)
d) Compute the forecast for year 6 using exponential smoothing, an initial forecast for year 1 of 3,000 miles, and a= .5.
Click here for the SOLUTION
Refer to Problem 4.2. Develop a forecast for years 2 through 12 using exponential smoothing with a= .4 and a forecast for year 1 of 6
Production and Operations Management
MGT 455 Module 3: Assignments
Module 3: Topic and Objectives
Forecasting
Module 3: Assignments
Problem 4.3 Refer to Problem 4.2. Develop a forecast for years 2 through 12 using exponential smoothing with a= .4 and a forecast for year 1 of 6. Plot your new forecast on a graph with the actual data and the naive forecast. Based on a visual inspection, which forecast is better
Year 1 2 3 4 5 6 7 8 9 10 11
Demand 7 9 5 9 13 8 12 13 9 11 7
Click here for the SOLUTION
MGT 455 Module 3: Assignments
Module 3: Topic and Objectives
Forecasting
Module 3: Assignments
Problem 4.3 Refer to Problem 4.2. Develop a forecast for years 2 through 12 using exponential smoothing with a= .4 and a forecast for year 1 of 6. Plot your new forecast on a graph with the actual data and the naive forecast. Based on a visual inspection, which forecast is better
Year 1 2 3 4 5 6 7 8 9 10 11
Demand 7 9 5 9 13 8 12 13 9 11 7
Click here for the SOLUTION
Tuesday, August 23, 2011
The following gives the number of pints of type A blood used at Woodlawn Hospital in the past 6 weeks
Production and Operations Management
MGT 455 Module 3: Assignments
Module 3: Topic and Objectives
Forecasting
Module 3: Assignments
Problem 4.1 The following gives the number of pints of type A blood used at Woodlawn Hospital in the past 6 weeks:
Week Of Pints Used
August 31 360
September 7 389
September 14 410
September 21 381
September 28 368
October 5 374
a) Forecast the demand for the week of October 12 using a 3-week moving average.
b) Use a 3-week weighted moving average, with weights of .1, .3, and .6, using .6 for the most recent week. Forecast demand for the week of October 12.
c) Compute the forecast for the week of October 12 using exponential smoothing with a forecast for August 31 of 360 and a= .2.
Click here for the SOLUTION
MGT 455 Module 3: Assignments
Module 3: Topic and Objectives
Forecasting
Module 3: Assignments
Problem 4.1 The following gives the number of pints of type A blood used at Woodlawn Hospital in the past 6 weeks:
Week Of Pints Used
August 31 360
September 7 389
September 14 410
September 21 381
September 28 368
October 5 374
a) Forecast the demand for the week of October 12 using a 3-week moving average.
b) Use a 3-week weighted moving average, with weights of .1, .3, and .6, using .6 for the most recent week. Forecast demand for the week of October 12.
c) Compute the forecast for the week of October 12 using exponential smoothing with a forecast for August 31 of 360 and a= .2.
Click here for the SOLUTION
MGT 455 Module 3: Assignment (Week 3)
Production and Operations Management
MGT 455 Module 3: Assignments
Module 3: Topic and Objectives
Forecasting
Module 3: Assignments
Problem Set 3:
Complete problems 4.1, 4.3, 4.5, 4.25, 4.27, 4.33.
Problems 4.1 SOLUTION
Problems 4.3 SOLUTION
Problems 4.5 SOLUTION
Problems 4.25 SOLUTION
Problems 4.27 SOLUTION
Problems 4.33 SOLUTION
MGT 455 Module 3: Assignments
Module 3: Topic and Objectives
Forecasting
Module 3: Assignments
Problem Set 3:
Complete problems 4.1, 4.3, 4.5, 4.25, 4.27, 4.33.
Problems 4.1 SOLUTION
Problems 4.3 SOLUTION
Problems 4.5 SOLUTION
Problems 4.25 SOLUTION
Problems 4.27 SOLUTION
Problems 4.33 SOLUTION
The following cash flows were reported by Techno Inc. in 2008 and 2007
FINANCE
Analyzing the Statement of Cash Flows
4.6. The following cash flows were reported by Techno Inc. in 2008 and 2007.
(In thousands) 2008 2007
Net income $316,354 $242,329
Noncash charges (credits) to income
Depreciation and amortization 68,156 62,591
Deferred taxes 15,394 22,814
$399,904 $327,734
Cash Provided (Used) by Operating Assets and Liabilities:
Receivables (288,174) (49,704)
Inventories (159,419) (145,554)
Other current assets (1,470) 3,832
Accounts payable, accrued liabilities 73,684 41,079
Total Cash Provided by Operations $ 24,525 $177,387
Investment activities
Additions to plant and equipment (94,176) (93,136)
Other investment activities 14,408 (34,771)
Net investment activities ($79,768) ($127,907)
Financing activities
Purchases of treasury stock (45,854) (39,267)
Dividends paid (49,290) (22,523)
Net changes in short-term borrowings 125,248 45,067
Additions to long-term borrowings 135,249 4,610
Repayments of long-term borrowings (250,564)
Net financing activities $165,353 ($262,677)
Increase (decrease) in cash $110,110 ($213,197)
Beginning cash balance 78,114 291,311
Ending cash balance $188,224 $ 78,114
(a) Explain the difference between net income and cash flow from operating activities for Techno in 2008.
(b) Analyze Techno Inc.’s cash flows for 2008 and 2007.
Click here for the SOLUTION
Analyzing the Statement of Cash Flows
4.6. The following cash flows were reported by Techno Inc. in 2008 and 2007.
(In thousands) 2008 2007
Net income $316,354 $242,329
Noncash charges (credits) to income
Depreciation and amortization 68,156 62,591
Deferred taxes 15,394 22,814
$399,904 $327,734
Cash Provided (Used) by Operating Assets and Liabilities:
Receivables (288,174) (49,704)
Inventories (159,419) (145,554)
Other current assets (1,470) 3,832
Accounts payable, accrued liabilities 73,684 41,079
Total Cash Provided by Operations $ 24,525 $177,387
Investment activities
Additions to plant and equipment (94,176) (93,136)
Other investment activities 14,408 (34,771)
Net investment activities ($79,768) ($127,907)
Financing activities
Purchases of treasury stock (45,854) (39,267)
Dividends paid (49,290) (22,523)
Net changes in short-term borrowings 125,248 45,067
Additions to long-term borrowings 135,249 4,610
Repayments of long-term borrowings (250,564)
Net financing activities $165,353 ($262,677)
Increase (decrease) in cash $110,110 ($213,197)
Beginning cash balance 78,114 291,311
Ending cash balance $188,224 $ 78,114
(a) Explain the difference between net income and cash flow from operating activities for Techno in 2008.
(b) Analyze Techno Inc.’s cash flows for 2008 and 2007.
Click here for the SOLUTION
Bill Fennema, president of Fennema Construction, has developed the tasks, durations, and predecessor relationships in the following table for building
Production and Operations Management
MGT 455 Module 2: Assignments
Module 2: Topic and Objectives
Project Management
Module 2: Assignments
Problem 3.17 Bill Fennema, president of Fennema Construction, has developed the tasks, durations, and predecessor relationships in the following table for building new motels. Draw the AON network and answer the questions that follow.
Activity Immediate Predecessor Optimistic Most Likely Pessimistic
A - 4 8 10
B A 2 8 24
C A 8 12 16
D A 4 6 10
E B 1 2 3
F E,C 6 8 20
G E,C 2 3 4
H F 2 2 2
I F 6 6 6
J D,G,H 4 6 12
K I,J 2 2 3
a) What is the expected (estimated) time for activity C?
c) Based on the calculation of estimated times, what is the critical path?
d) What is the estimated time of the critical path?
Click here for the SOLUTION
MGT 455 Module 2: Assignments
Module 2: Topic and Objectives
Project Management
Module 2: Assignments
Problem 3.17 Bill Fennema, president of Fennema Construction, has developed the tasks, durations, and predecessor relationships in the following table for building new motels. Draw the AON network and answer the questions that follow.
Activity Immediate Predecessor Optimistic Most Likely Pessimistic
A - 4 8 10
B A 2 8 24
C A 8 12 16
D A 4 6 10
E B 1 2 3
F E,C 6 8 20
G E,C 2 3 4
H F 2 2 2
I F 6 6 6
J D,G,H 4 6 12
K I,J 2 2 3
a) What is the expected (estimated) time for activity C?
c) Based on the calculation of estimated times, what is the critical path?
d) What is the estimated time of the critical path?
Click here for the SOLUTION
The following is a table of activities associated with a project at Bill Figg Enterprises, their durations and what activities each must precede
Production and Operations Management
MGT 455 Module 2: Assignments
Module 2: Topic and Objectives
Project Management
Module 2: Assignments
Problem 3.15 The following is a table of activities associated with a project at Bill Figg Enterprises, their durations and what activities each must precede:
ACTIVITY DURATION (WEEKS) PRECEDES
A (START) 1 B,C
B 1 E
C 4 F
E 2 F
F(END) 2 -
a) Draw an AON diagram of the project, including activity durations.
c) What is the project duration (in weeks)?
d) What is the slack (in weeks) associated with any and all noncritical paths through the project?
Click here for the SOLUTION
MGT 455 Module 2: Assignments
Module 2: Topic and Objectives
Project Management
Module 2: Assignments
Problem 3.15 The following is a table of activities associated with a project at Bill Figg Enterprises, their durations and what activities each must precede:
ACTIVITY DURATION (WEEKS) PRECEDES
A (START) 1 B,C
B 1 E
C 4 F
E 2 F
F(END) 2 -
a) Draw an AON diagram of the project, including activity durations.
c) What is the project duration (in weeks)?
d) What is the slack (in weeks) associated with any and all noncritical paths through the project?
Click here for the SOLUTION
Task time estimates for a production line setup project at Robert Klassen’s Ontario factory are as follows
Production and Operations Management
MGT 455 Module 2: Assignments
Module 2: Topic and Objectives
Project Management
Module 2: Assignments
Problem 3.7 Task time estimates for a production line setup project at Robert Klassen’s Ontario factory are as follows:
Activity Time In HRS Immediate Predecessor
A 6 -
B 7.2 -
C 5 A
D 6 B,C
E 4.5 B,C
F 7.7 D
G 4 E,F
a) Develop an AON network for this problem.
b) What is the critical path?
c) What is the total project completion time?
Click here for the SOLUTION
MGT 455 Module 2: Assignments
Module 2: Topic and Objectives
Project Management
Module 2: Assignments
Problem 3.7 Task time estimates for a production line setup project at Robert Klassen’s Ontario factory are as follows:
Activity Time In HRS Immediate Predecessor
A 6 -
B 7.2 -
C 5 A
D 6 B,C
E 4.5 B,C
F 7.7 D
G 4 E,F
a) Develop an AON network for this problem.
b) What is the critical path?
c) What is the total project completion time?
Click here for the SOLUTION
Draw the activity-on-node (AON) project network associated with the following activities for Dave Carhart's consulting company project
Production and Operations Management
MGT 455 Module 2: Assignments
Module 2: Topic and Objectives
Project Management
Module 2: Assignments
Problem 3.3 Draw the activity-on-node (AON) project network associated with the following activities for Dave Carhart’s consulting company project. How long should it take Dave and his team to complete this project? What are the critical path activities?
Activity Immediate Predecessor Days
A - 3
B A 4
C A 6
D B 6
E B 4
F C 4
G D 6
H E,F 8
Click here for the SOLUTION
MGT 455 Module 2: Assignments
Module 2: Topic and Objectives
Project Management
Module 2: Assignments
Problem 3.3 Draw the activity-on-node (AON) project network associated with the following activities for Dave Carhart’s consulting company project. How long should it take Dave and his team to complete this project? What are the critical path activities?
Activity Immediate Predecessor Days
A - 3
B A 4
C A 6
D B 6
E B 4
F C 4
G D 6
H E,F 8
Click here for the SOLUTION
MGT 455 Module 2: Assignment (Week 2)
Production and Operations Management
MGT 455 Module 2: Assignments
Module 2: Topic and Objectives
Project Management
Module 2: Assignments
Problem Set 2:
1) Complete the following problems:
a) 3.3, 3.7 (parts a, b, and c).
b) 3.15, 3.17 (parts a, c, and d).
Problem 3.3 SOLUTION
Problem 3.7 SOLUTION
Problem 3.15 SOLUTION
Problem 3.17 SOLUTION
MGT 455 Module 2: Assignments
Module 2: Topic and Objectives
Project Management
Module 2: Assignments
Problem Set 2:
1) Complete the following problems:
a) 3.3, 3.7 (parts a, b, and c).
b) 3.15, 3.17 (parts a, c, and d).
Problem 3.3 SOLUTION
Problem 3.7 SOLUTION
Problem 3.15 SOLUTION
Problem 3.17 SOLUTION
Cunningham Performance Auto, Inc., modifies 375 autos per year
Production and Operations Management
MGT 455 Module 1: Assignment
Module 1: Topic and Objectives
Operations Management Strategy and Competitiveness
Module 1: Assignments MGT 455 Week 1 Assignment
Problems 1.11 Cunningham Performance Auto, Inc., modifies 375 autos per year. The manager, Peter Cunningham, is interested in obtaining a measure of overall performance. He has asked you to provide him with a multifactor measure of last year’s performance as a benchmark for future comparison. You have assembled the following data. Resource inputs were: labor, 10,000 hours; 500 suspension and engine modification kits; and energy, 100,000 kilowatthours. Average labor cost last year was $20 per hour, kits cost $1,000 each, and energy costs were $3 per kilowatt-hour. What do you tell Mr. Cunningham?
Click here for the SOLUTION
MGT 455 Module 1: Assignment
Module 1: Topic and Objectives
Operations Management Strategy and Competitiveness
Module 1: Assignments MGT 455 Week 1 Assignment
Problems 1.11 Cunningham Performance Auto, Inc., modifies 375 autos per year. The manager, Peter Cunningham, is interested in obtaining a measure of overall performance. He has asked you to provide him with a multifactor measure of last year’s performance as a benchmark for future comparison. You have assembled the following data. Resource inputs were: labor, 10,000 hours; 500 suspension and engine modification kits; and energy, 100,000 kilowatthours. Average labor cost last year was $20 per hour, kits cost $1,000 each, and energy costs were $3 per kilowatt-hour. What do you tell Mr. Cunningham?
Click here for the SOLUTION
David Upton is president of Upton Manufacturing, a producer of Go-Kart tires
Production and Operations Management
MGT 455 Module 1: Assignment
Module 1: Topic and Objectives
Operations Management Strategy and Competitiveness
Module 1: Assignments MGT 455 Week 1 Assignment
Problems 1.9 David Upton is president of Upton Manufacturing, a producer of Go-Kart tires. Upton makes 1,000 tires per day with the following resources:
Labor: 400 hours per day @ $12.50 per hour
Raw material: 20,000 pounds per day @ $1 per pound
Energy: $5,000 per day
Capital: $10,000 per day
a) What is the labor productivity per labor-hour for these tires at Upton Manufacturing?
b) What is the multifactor productivity for these tires at Upton Manufacturing?
c) What is the percent change in multifactor productivity if Upton can reduce the energy bill by $1,000 per day without cutting production or changing any other inputs?
Click here for the SOLUTION
MGT 455 Module 1: Assignment
Module 1: Topic and Objectives
Operations Management Strategy and Competitiveness
Module 1: Assignments MGT 455 Week 1 Assignment
Problems 1.9 David Upton is president of Upton Manufacturing, a producer of Go-Kart tires. Upton makes 1,000 tires per day with the following resources:
Labor: 400 hours per day @ $12.50 per hour
Raw material: 20,000 pounds per day @ $1 per pound
Energy: $5,000 per day
Capital: $10,000 per day
a) What is the labor productivity per labor-hour for these tires at Upton Manufacturing?
b) What is the multifactor productivity for these tires at Upton Manufacturing?
c) What is the percent change in multifactor productivity if Upton can reduce the energy bill by $1,000 per day without cutting production or changing any other inputs?
Click here for the SOLUTION
Eric Johnson (using data from Problem 1.6) determines his costs to be as follows
Production and Operations Management
MGT 455 Module 1: Assignment
Module 1: Topic and Objectives
Operations Management Strategy and Competitiveness
Module 1: Assignments MGT 455 Week 1 Assignment
Problems 1.7 Eric Johnson (using data from Problem 1.6) determines his costs to be as follows:
• Labor: $10 per hour
• Resin: $5 per pound
• Capital expense: 1% per month of investment
• Energy: $.50 per BTU.
Show the percent change in productivity for one month last year versus one month this year, on a multifactor basis with dollars as the common denominator.
Data from Problem 1.6
Last Year Now
Units produced 1,000 1,000
Labor (hours) 300 275
Resin (pounds) 50 45
Capital invested ($) 10,000 11,000
Energy (BTU) 3,000 2,850
Click here for the SOLUTION
MGT 455 Module 1: Assignment
Module 1: Topic and Objectives
Operations Management Strategy and Competitiveness
Module 1: Assignments MGT 455 Week 1 Assignment
Problems 1.7 Eric Johnson (using data from Problem 1.6) determines his costs to be as follows:
• Labor: $10 per hour
• Resin: $5 per pound
• Capital expense: 1% per month of investment
• Energy: $.50 per BTU.
Show the percent change in productivity for one month last year versus one month this year, on a multifactor basis with dollars as the common denominator.
Data from Problem 1.6
Last Year Now
Units produced 1,000 1,000
Labor (hours) 300 275
Resin (pounds) 50 45
Capital invested ($) 10,000 11,000
Energy (BTU) 3,000 2,850
Click here for the SOLUTION
Lori produces "Final Exam Care Packages" for resale by her sorority
Production and Operations Management
MGT 455 Module 1: Assignment
Module 1: Topic and Objectives
Operations Management Strategy and Competitiveness
Module 1: Assignments MGT 455 Week 1 Assignment
Problems 1.5 Lori produces “Final Exam Care Packages” for resale by her sorority. She is currently working a total of 5 hours per day to produce 100 care packages.
a) What is Lori’s productivity?
b) Lori thinks that by redesigning the package, she can increase her total productivity to 133 care packages per day. What will be her new productivity?
c) What will be the percentage increase in productivity if Lori makes the change?
Click here for the SOLUTION
MGT 455 Module 1: Assignment
Module 1: Topic and Objectives
Operations Management Strategy and Competitiveness
Module 1: Assignments MGT 455 Week 1 Assignment
Problems 1.5 Lori produces “Final Exam Care Packages” for resale by her sorority. She is currently working a total of 5 hours per day to produce 100 care packages.
a) What is Lori’s productivity?
b) Lori thinks that by redesigning the package, she can increase her total productivity to 133 care packages per day. What will be her new productivity?
c) What will be the percentage increase in productivity if Lori makes the change?
Click here for the SOLUTION
MGT 455 Module 1: Assignment (Week 1)
Production and Operations Management
MGT 455 Module 1: Assignment
Module 1: Topic and Objectives
Operations Management Strategy and Competitiveness
Module 1: Assignments
Problem Set 1
1) Complete problems 1.5, 1.7, 1.9, 1.11.
Problems 1.5 SOLUTION
Problems 1.7 SOLUTION
Problems 1.9 SOLUTION
Problems 1.11 SOLUTION
MGT 455 Module 1: Assignment
Module 1: Topic and Objectives
Operations Management Strategy and Competitiveness
Module 1: Assignments
Problem Set 1
1) Complete problems 1.5, 1.7, 1.9, 1.11.
Problems 1.5 SOLUTION
Problems 1.7 SOLUTION
Problems 1.9 SOLUTION
Problems 1.11 SOLUTION
The board of trustees of a local church is concerned about the internal accounting controls pertaining to the offering collections made at weekly
ACCOUNTING
The board of trustees of a local church is concerned about the internal accounting controls pertaining to the offering collections made at weekly services. They ask you to serve on a three-person audit team with the internal auditor of the university and a CPA who has just joined the church. At a meeting of the audit team and the board of trustees you learn the following.
1. The church’s board of trustees has delegated responsibility for the financial management and audit of the financial records to the finance committee. This group prepares the annual budget and approves major disbursements but is not involved in collections or recordkeeping. No audit has been made in recent years because the same trusted employee has kept church records and served as financial secretary for 15 years. The church does not carry any fidelity insurance.
2. The collection at the weekly service is taken by a team of ushers who volunteer to serve for 1 month. The ushers take the collection plates to a basement office at the rear of the church. They hand their plates to the head usher and return to the church service. After all plates have been turned in, the head usher counts the cash received. The head usher then places the cash in the church safe along with a notation of the amount counted. The head usher volunteers to serve for 3 months.
3. The next morning the financial secretary opens the safe and recounts the collection. The secretary withholds $150 – $200 in cash, depending on the cash expenditures expected for the week, and deposits the remainder of the collections in the bank. To facilitate the deposit, church members who contribute by check are asked to make their checks payable to “Cash.”
4. Each month the financial secretary reconciles the bank statement and submits a copy of the reconciliation to the board of trustees. The reconciliations have rarely contained any bank errors and have never shown any errors per books.
Instructions
(a) Indicate the weaknesses in internal accounting control in the handling of collections.
(b) List the improvements in internal control procedures that you plan to make at the next meeting of the audit team for (1) the ushers, (2) the head usher, (3) the financial secretary, and (4) the finance committee.
(c) What church policies should be changed to improve internal control?
Click here for the SOLUTION
The board of trustees of a local church is concerned about the internal accounting controls pertaining to the offering collections made at weekly services. They ask you to serve on a three-person audit team with the internal auditor of the university and a CPA who has just joined the church. At a meeting of the audit team and the board of trustees you learn the following.
1. The church’s board of trustees has delegated responsibility for the financial management and audit of the financial records to the finance committee. This group prepares the annual budget and approves major disbursements but is not involved in collections or recordkeeping. No audit has been made in recent years because the same trusted employee has kept church records and served as financial secretary for 15 years. The church does not carry any fidelity insurance.
2. The collection at the weekly service is taken by a team of ushers who volunteer to serve for 1 month. The ushers take the collection plates to a basement office at the rear of the church. They hand their plates to the head usher and return to the church service. After all plates have been turned in, the head usher counts the cash received. The head usher then places the cash in the church safe along with a notation of the amount counted. The head usher volunteers to serve for 3 months.
3. The next morning the financial secretary opens the safe and recounts the collection. The secretary withholds $150 – $200 in cash, depending on the cash expenditures expected for the week, and deposits the remainder of the collections in the bank. To facilitate the deposit, church members who contribute by check are asked to make their checks payable to “Cash.”
4. Each month the financial secretary reconciles the bank statement and submits a copy of the reconciliation to the board of trustees. The reconciliations have rarely contained any bank errors and have never shown any errors per books.
Instructions
(a) Indicate the weaknesses in internal accounting control in the handling of collections.
(b) List the improvements in internal control procedures that you plan to make at the next meeting of the audit team for (1) the ushers, (2) the head usher, (3) the financial secretary, and (4) the finance committee.
(c) What church policies should be changed to improve internal control?
Click here for the SOLUTION
Cheaney Corporation owns a number of cruise ships and a chain of hotels
ACCOUNTING
ACC 560 Week 10 Assignment
P14-8A Cheaney Corporation owns a number of cruise ships and a chain of hotels. The hotels, which have not been profitable, were discontinued on September 1, 2008. The 2008 operating results for the company were as follows.
Operating revenues $12,850,000
Operating expenses 8,700,000
Operating income $ 4,150,000
Analysis discloses that these data include the operating results of the hotel chain, which were: operating revenues $2,000,000 and operating expenses $2,400,000. The hotels were sold at a gain of $200,000 before taxes. This gain is not included in the operating results. During the year, Cheaney suffered an extraordinary loss of $800,000 before taxes, which is not included in the operating results. In 2008, the company had other revenues and gains of $100,000, which are not included in the operating results. The corporation is in the 30% income tax bracket.
Instructions
Prepare a condensed income statement.
Click here for the SOLUTION
ACC 560 Week 10 Assignment
P14-8A Cheaney Corporation owns a number of cruise ships and a chain of hotels. The hotels, which have not been profitable, were discontinued on September 1, 2008. The 2008 operating results for the company were as follows.
Operating revenues $12,850,000
Operating expenses 8,700,000
Operating income $ 4,150,000
Analysis discloses that these data include the operating results of the hotel chain, which were: operating revenues $2,000,000 and operating expenses $2,400,000. The hotels were sold at a gain of $200,000 before taxes. This gain is not included in the operating results. During the year, Cheaney suffered an extraordinary loss of $800,000 before taxes, which is not included in the operating results. In 2008, the company had other revenues and gains of $100,000, which are not included in the operating results. The corporation is in the 30% income tax bracket.
Instructions
Prepare a condensed income statement.
Click here for the SOLUTION
Condensed balance sheet and income statement data for Kersenbrock Corporation appear below
ACCOUNTING
ACC 560 Week 10 Assignment
P14-3A Condensed balance sheet and income statement data for Kersenbrock Corporation appear below.
KERSENBROCK CORPORATION
Balance Sheets
December 31
2009 2008 2007
Cash $ 25,000 $ 20,000 $ 18,000
Receivables (net) 50,000 45,000 48,000
Other current assets 90,000 95,000 64,000
Investments 75,000 70,000 45,000
Plant and equipment (net) 400,000 370,000 358,000
$640,000 $600,000 $533,000
Current liabilities $ 75,000 $ 80,000 $ 70,000
Long-term debt 80,000 85,000 50,000
Common stock, $10 par 340,000 310,000 300,000
Retained earnings 145,000 125,000 113,000
$640,000 $600,000 $533,000
KERSENBROCK CORPORATION
Income Statement
For the Year Ended December 31
2009 2008
Sales $740,000 $700,000
Less: Sales returns and allowances 40,000 50,000
Net sales 700,000 650,000
Cost of goods sold 420,000 400,000
Gross profit 280,000 250,000
Operating expenses (including income taxes) 235,000 220,000
Net income $ 45,000 $ 30,000
Additional information:
1. The market price of Kersenbrock's common stock was $4.00, $5.00, and $8.00 for 2007, 2008, and 2009, respectively.
2. All dividends were paid in cash.
Instructions
a) Compute the following ratios for 2008 and 2009. (1) Profit margin. (2) Asset turnover. (3) Earnings per share. (Weighted average common shares in 2009 were 32,000 and in 2008 were 31,000.) (4) Price-earnings. (5) Payout. (6) Debt to total assets.
b) Based on the ratios calculated, discuss briefly the improvement or lack thereof in financial position and operating results from 2008 to 2009 of Kersenbrock Corporation.
Click here for the SOLUTION
ACC 560 Week 10 Assignment
P14-3A Condensed balance sheet and income statement data for Kersenbrock Corporation appear below.
KERSENBROCK CORPORATION
Balance Sheets
December 31
2009 2008 2007
Cash $ 25,000 $ 20,000 $ 18,000
Receivables (net) 50,000 45,000 48,000
Other current assets 90,000 95,000 64,000
Investments 75,000 70,000 45,000
Plant and equipment (net) 400,000 370,000 358,000
$640,000 $600,000 $533,000
Current liabilities $ 75,000 $ 80,000 $ 70,000
Long-term debt 80,000 85,000 50,000
Common stock, $10 par 340,000 310,000 300,000
Retained earnings 145,000 125,000 113,000
$640,000 $600,000 $533,000
KERSENBROCK CORPORATION
Income Statement
For the Year Ended December 31
2009 2008
Sales $740,000 $700,000
Less: Sales returns and allowances 40,000 50,000
Net sales 700,000 650,000
Cost of goods sold 420,000 400,000
Gross profit 280,000 250,000
Operating expenses (including income taxes) 235,000 220,000
Net income $ 45,000 $ 30,000
Additional information:
1. The market price of Kersenbrock's common stock was $4.00, $5.00, and $8.00 for 2007, 2008, and 2009, respectively.
2. All dividends were paid in cash.
Instructions
a) Compute the following ratios for 2008 and 2009. (1) Profit margin. (2) Asset turnover. (3) Earnings per share. (Weighted average common shares in 2009 were 32,000 and in 2008 were 31,000.) (4) Price-earnings. (5) Payout. (6) Debt to total assets.
b) Based on the ratios calculated, discuss briefly the improvement or lack thereof in financial position and operating results from 2008 to 2009 of Kersenbrock Corporation.
Click here for the SOLUTION
For its fiscal year ending October 31, 2008, Molini Corporation reports the following partial data
ACCOUNTING
ACC 560 Week 10 Assignment
E14-12 For its fiscal year ending October 31, 2008, Molini Corporation reports the following partial data.
Income before income taxes $540,000
Income tax expense (30% $390,000) 117,000
Income before extraordinary items 423,000
Extraordinary loss from flood 150,000
Net income $273,000
The flood loss is considered an extraordinary item. The income tax rate is 30% on all items.
Instructions
a) Prepare a correct income statement, beginning with income before income taxes.
b) Explain in memo form why Molini's reported income statement data are incorrect
Click here for the SOLUTION
ACC 560 Week 10 Assignment
E14-12 For its fiscal year ending October 31, 2008, Molini Corporation reports the following partial data.
Income before income taxes $540,000
Income tax expense (30% $390,000) 117,000
Income before extraordinary items 423,000
Extraordinary loss from flood 150,000
Net income $273,000
The flood loss is considered an extraordinary item. The income tax rate is 30% on all items.
Instructions
a) Prepare a correct income statement, beginning with income before income taxes.
b) Explain in memo form why Molini's reported income statement data are incorrect
Click here for the SOLUTION
The comparative condensed income statements of Hendi Corporation are shown below
ACCOUNTING
ACC 560 Week 10 Assignment
E14-4 The comparative condensed income statements of Hendi Corporation are shown below.
HENDI CORPORATION
Comparative Condensed Income Statements
For the Years Ended December 31
2009 2008
Net sales $600,000 $500,000
Cost of goods sold 483,000 420,000
Gross profit 117,000 80,000
Operating expenses 57,200 44,000
Net income $ 59,800 $ 36,000
Instructions
a) Prepare a horizontal analysis of the income statement data for Hendi Corporation using 2008 as a base. (Show the amounts of increase or decrease.)
b) Prepare a vertical analysis of the income statement data for Hendi Corporation in columnar form for both years.
Click here for the SOLUTION
ACC 560 Week 10 Assignment
E14-4 The comparative condensed income statements of Hendi Corporation are shown below.
HENDI CORPORATION
Comparative Condensed Income Statements
For the Years Ended December 31
2009 2008
Net sales $600,000 $500,000
Cost of goods sold 483,000 420,000
Gross profit 117,000 80,000
Operating expenses 57,200 44,000
Net income $ 59,800 $ 36,000
Instructions
a) Prepare a horizontal analysis of the income statement data for Hendi Corporation using 2008 as a base. (Show the amounts of increase or decrease.)
b) Prepare a vertical analysis of the income statement data for Hendi Corporation in columnar form for both years.
Click here for the SOLUTION
Monday, August 22, 2011
Linda Ace started her own consulting firm, Modine Consulting, Inc. on May 1, 2008
ACCOUNTING
P3-1B Linda Ace started her own consulting firm, Modine Consulting, Inc. on May 1, 2008. The trial balance at May 31 is as follows.
MODINE CONSULTING, INC.
Trial Balance
May 31, 2008
Account
Number Debit Credit
101 Cash $ 7,700
112 Accounts Receivable 4,000
126 Supplies 1,500
130 Prepaid Insurance 4,800
149 Office Furniture 9,600
201 Accounts Payable $ 3,500
209 Unearned Service Revenue 3,000
311 Common Stock 19,100
400 Service Revenue 6,000
726 Salaries Expense 3,000
729 Rent Expense 1,000
$31,600 $31,600
In addition to those accounts listed on the trial balance, the chart of accounts for Modine Consulting also contains the following accounts and account numbers: No. 150 Accumulated Depreciation—Office Furniture, No. 212 Salaries Payable, No. 229 Travel Payable, No. 631 Supplies Expense,No. 717 Depreciation Expense,No. 722 Insurance Expense, and No. 736 Travel Expense.
Other data:
1. $500 of supplies have been used during the month.
2. Travel expense incurred but not paid on May 31, 2008, $200.
3. The insurance policy is for 2 years.
4. $1,000 of the balance in the unearned service revenue account remains unearned at the end of the month.
5. May 31 is a Wednesday, and employees are paid on Fridays. Modine Consulting has two employees, who are paid $700 each for a 5-day work week.
6. The office furniture has a 5-year life with no salvage value. It is being depreciated at $160 per month for 60 months.
7. Invoices representing $1,000 of services performed during the month have not been recorded as of May 31.
Instructions
(a) Prepare the adjusting entries for the month of May. Use J4 as the page number for your journal.
(b) Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance as beginning account balances and place a check mark in the posting reference column.
(c) Prepare an adjusted trial balance at May 31, 2008.
Check: (c) Adj. trial balance $33,800
Click here for the SOLUTION
P3-1B Linda Ace started her own consulting firm, Modine Consulting, Inc. on May 1, 2008. The trial balance at May 31 is as follows.
MODINE CONSULTING, INC.
Trial Balance
May 31, 2008
Account
Number Debit Credit
101 Cash $ 7,700
112 Accounts Receivable 4,000
126 Supplies 1,500
130 Prepaid Insurance 4,800
149 Office Furniture 9,600
201 Accounts Payable $ 3,500
209 Unearned Service Revenue 3,000
311 Common Stock 19,100
400 Service Revenue 6,000
726 Salaries Expense 3,000
729 Rent Expense 1,000
$31,600 $31,600
In addition to those accounts listed on the trial balance, the chart of accounts for Modine Consulting also contains the following accounts and account numbers: No. 150 Accumulated Depreciation—Office Furniture, No. 212 Salaries Payable, No. 229 Travel Payable, No. 631 Supplies Expense,No. 717 Depreciation Expense,No. 722 Insurance Expense, and No. 736 Travel Expense.
Other data:
1. $500 of supplies have been used during the month.
2. Travel expense incurred but not paid on May 31, 2008, $200.
3. The insurance policy is for 2 years.
4. $1,000 of the balance in the unearned service revenue account remains unearned at the end of the month.
5. May 31 is a Wednesday, and employees are paid on Fridays. Modine Consulting has two employees, who are paid $700 each for a 5-day work week.
6. The office furniture has a 5-year life with no salvage value. It is being depreciated at $160 per month for 60 months.
7. Invoices representing $1,000 of services performed during the month have not been recorded as of May 31.
Instructions
(a) Prepare the adjusting entries for the month of May. Use J4 as the page number for your journal.
(b) Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance as beginning account balances and place a check mark in the posting reference column.
(c) Prepare an adjusted trial balance at May 31, 2008.
Check: (c) Adj. trial balance $33,800
Click here for the SOLUTION
E14-11 Scully Corporation's comparative balance sheets are presented below
ACCOUNTING
ACC 560 Week 10 Assignment
E14-11 Scully Corporation's comparative balance sheets are presented below.
SCULLY CORPORATION
Balance Sheets
December 31
2008 2007
Cash $ 4,300 $ 3,700
Accounts receivable 21,200 23,400
Inventory 10,000 7,000
Land 20,000 26,000
Building 70,000 70,000
Accumulated depreciation (15,000) (10,000)
Total $110,500 $120,100
Accounts payable $ 12,370 $ 31,100
Common stock 75,000 69,000
Retained earnings 23,130 20,000
Total $110,500 $120,100
Scully's 2008 income statement included net sales of $100,000, cost of goods sold of $60,000, and net income of $15,000.
Instructions
Compute the following ratios for 2008. (a) Current ratio. (b) Acid-test ratio. (c) Receivables turnover. (d) Inventory turnover. (e) Profit margin. (f) Asset turnover. (g) Return on assets. (h) Return on common stockholders' equity. (i) Debt to total assets ratio.
Click here for the SOLUTION
ACC 560 Week 10 Assignment
E14-11 Scully Corporation's comparative balance sheets are presented below.
SCULLY CORPORATION
Balance Sheets
December 31
2008 2007
Cash $ 4,300 $ 3,700
Accounts receivable 21,200 23,400
Inventory 10,000 7,000
Land 20,000 26,000
Building 70,000 70,000
Accumulated depreciation (15,000) (10,000)
Total $110,500 $120,100
Accounts payable $ 12,370 $ 31,100
Common stock 75,000 69,000
Retained earnings 23,130 20,000
Total $110,500 $120,100
Scully's 2008 income statement included net sales of $100,000, cost of goods sold of $60,000, and net income of $15,000.
Instructions
Compute the following ratios for 2008. (a) Current ratio. (b) Acid-test ratio. (c) Receivables turnover. (d) Inventory turnover. (e) Profit margin. (f) Asset turnover. (g) Return on assets. (h) Return on common stockholders' equity. (i) Debt to total assets ratio.
Click here for the SOLUTION
ACC490 Final Exam
ACCOUNTING
ACC490 Final Exam
1. Most audit work in a financial statement audit consists of obtaining and evaluating evidence about
2. The existence of audit risk is recognized by the statement in the auditor's standard report that the
3. Analytical procedures enable the internal auditor to predict the balance or quantity of an item. Information to develop this estimate can be obtained by all of the following except
4. Analytical Procedures can be best categorized as
5. The risk that an auditor's procedures will lead to the conclusion that a material misstatement does not exist in an account balance when, in fact, such misstatement does exist is
6. Inherent risk and control risk differ from detection risk in that they
7. The acceptable level of detection risk is inversely related to the
8. As the acceptable level of detection risk decreases, an auditor may
9. Holding other planning considerations equal, a decrease in the amount of misstatements in a class of transactions that an auditor could tolerate most likely would cause the auditor to
10. Which of the following would an auditor most likely use in determining the auditor's preliminary judgment about materiality?
11. Which of the following is a false statement about materiality?
12. The objective of tests of details of transactions performed as substantive tests is to
13. In testing the existence assertion for an asset, an auditor ordinarily works from the
14. An auditor observes the mailing of monthly statements to a client's customers and reviews evidence of follow-up on errors reported by the customers. This test of controls most likely is performed to support management's financial statement assertion(s) of
15. Which of the following statements reflects an auditor's responsibility for detecting errors and fraud?
16. Which of the following circumstances most likely would cause an auditor to consider whether material misstatements exist in an entity's financial statements?
17. The established scope of the engagement should be sufficient to satisfy the objectives of the engagement. When developing the objectives of the engagement, the internal auditor should consider the
18. Which of the following is the best explanation of the difference, if any, between engagement objectives and procedures?
19. In planning an engagement, the internal auditor should establish objectives and procedures to address the risk associated with the activity. Risk is defined as
20. Writing an engagement work program occurs at which stage of the engagement?
Click here for the SOLUTION
ACC490 Final Exam
1. Most audit work in a financial statement audit consists of obtaining and evaluating evidence about
2. The existence of audit risk is recognized by the statement in the auditor's standard report that the
3. Analytical procedures enable the internal auditor to predict the balance or quantity of an item. Information to develop this estimate can be obtained by all of the following except
4. Analytical Procedures can be best categorized as
5. The risk that an auditor's procedures will lead to the conclusion that a material misstatement does not exist in an account balance when, in fact, such misstatement does exist is
6. Inherent risk and control risk differ from detection risk in that they
7. The acceptable level of detection risk is inversely related to the
8. As the acceptable level of detection risk decreases, an auditor may
9. Holding other planning considerations equal, a decrease in the amount of misstatements in a class of transactions that an auditor could tolerate most likely would cause the auditor to
10. Which of the following would an auditor most likely use in determining the auditor's preliminary judgment about materiality?
11. Which of the following is a false statement about materiality?
12. The objective of tests of details of transactions performed as substantive tests is to
13. In testing the existence assertion for an asset, an auditor ordinarily works from the
14. An auditor observes the mailing of monthly statements to a client's customers and reviews evidence of follow-up on errors reported by the customers. This test of controls most likely is performed to support management's financial statement assertion(s) of
15. Which of the following statements reflects an auditor's responsibility for detecting errors and fraud?
16. Which of the following circumstances most likely would cause an auditor to consider whether material misstatements exist in an entity's financial statements?
17. The established scope of the engagement should be sufficient to satisfy the objectives of the engagement. When developing the objectives of the engagement, the internal auditor should consider the
18. Which of the following is the best explanation of the difference, if any, between engagement objectives and procedures?
19. In planning an engagement, the internal auditor should establish objectives and procedures to address the risk associated with the activity. Risk is defined as
20. Writing an engagement work program occurs at which stage of the engagement?
Click here for the SOLUTION
Sunday, August 21, 2011
Toyco, a retail toy chain, honors two bank credit cards and makes daily deposits of credit card sales in two credit card bank accounts
ACCOUNTING
12-42 Toyco, a retail toy chain, honors two bank credit cards and makes daily deposits of credit card sales in two credit card bank accounts. (Bank A and Bank B). Each day, Toyco batches its credit card sales slips, bank deposit slips and authorized sales return documents and sends them to data processing for data entry. Each week detailed computer printouts of the general ledger credit card cash accounts are prepared. Credit card banks have been instructed to make an automatic weekly transfer of cash to Toyco's general bank account. The credit card banks charge back deposits that include sales to holders of stolen or expired cards.
The auditor examining Toyco financial statements has obtained copies of the detailed general ledger cash account printouts, a summary of the bank statements and the manually prepared bank reconciliations, all for the week of December 31, as shown here. (see attachment)
Required:
Review the December 31 bank reconciliation and the related information contained in the following schedules and describe what actions the auditor should take to obtain satisfaction for each item on the bank reconciliation. Assume that all amounts are material and that all computations are accurate. Organize your answer sheet as follows, using the code contained on the bank reconciliation:
Code Number Actions to Be Taken by the Auditor to Gain Satisfaction
Click here for the SOLUTION
12-42 Toyco, a retail toy chain, honors two bank credit cards and makes daily deposits of credit card sales in two credit card bank accounts. (Bank A and Bank B). Each day, Toyco batches its credit card sales slips, bank deposit slips and authorized sales return documents and sends them to data processing for data entry. Each week detailed computer printouts of the general ledger credit card cash accounts are prepared. Credit card banks have been instructed to make an automatic weekly transfer of cash to Toyco's general bank account. The credit card banks charge back deposits that include sales to holders of stolen or expired cards.
The auditor examining Toyco financial statements has obtained copies of the detailed general ledger cash account printouts, a summary of the bank statements and the manually prepared bank reconciliations, all for the week of December 31, as shown here. (see attachment)
Required:
Review the December 31 bank reconciliation and the related information contained in the following schedules and describe what actions the auditor should take to obtain satisfaction for each item on the bank reconciliation. Assume that all amounts are material and that all computations are accurate. Organize your answer sheet as follows, using the code contained on the bank reconciliation:
Code Number Actions to Be Taken by the Auditor to Gain Satisfaction
Click here for the SOLUTION
E14-13 Classifying items on the indirect statement of cash flows
ACCOUNTING
E14-13 Classifying items on the indirect statement of cash flows
The cash flow statement categorizes like transactions for optimal reporting.
Requirement:
1. Identify each of the following transactions as one of the following:
• Operating activity (0)
• Investing activity (I)
• Financing activity (F)
• Noncash investing and financing activity (NIF)
• Transaction that is not reported on the statement of cash flows (N)
For each cash flow, indicate whether the item increases (+) or decreases (-) cash. The indirect method is used to report cash flows from operating activities.
___ a. Loss on sale of land.
___ b. Acquisition of equipment by issuance of note payable.
___ c. Payment of long-term debt.
___ d. Acquisition of building by issuance of common stock. J
___ e. Increase in salary payable.
___ f. Decrease in inventory.
___ g. Increase in prepaid expenses.
___ h. Decrease in accrued liabilities.
___ i. Cash sale of land.
___ j. Issuance of long-term note payable to borrow cash.
___ k. Depreciation
___ 1. Purchase of treasury stock.
___ m. Issuance of common stock.
___ n. Increase in accounts payable.
___ o. Net income.
___ p. Payment of cash dividend.
Click here for the SOLUTION
E14-13 Classifying items on the indirect statement of cash flows
The cash flow statement categorizes like transactions for optimal reporting.
Requirement:
1. Identify each of the following transactions as one of the following:
• Operating activity (0)
• Investing activity (I)
• Financing activity (F)
• Noncash investing and financing activity (NIF)
• Transaction that is not reported on the statement of cash flows (N)
For each cash flow, indicate whether the item increases (+) or decreases (-) cash. The indirect method is used to report cash flows from operating activities.
___ a. Loss on sale of land.
___ b. Acquisition of equipment by issuance of note payable.
___ c. Payment of long-term debt.
___ d. Acquisition of building by issuance of common stock. J
___ e. Increase in salary payable.
___ f. Decrease in inventory.
___ g. Increase in prepaid expenses.
___ h. Decrease in accrued liabilities.
___ i. Cash sale of land.
___ j. Issuance of long-term note payable to borrow cash.
___ k. Depreciation
___ 1. Purchase of treasury stock.
___ m. Issuance of common stock.
___ n. Increase in accounts payable.
___ o. Net income.
___ p. Payment of cash dividend.
Click here for the SOLUTION
1) Ben Chase needs to pay off some of his debts over the next few months
ACCOUNTING
1) Ben Chase needs to pay off some of his debts over the next few months. Which item on his balance sheet would help him decide what amounts are due in the near future?
2) A family with $45,000 in assets and $22,000 of liabilities would have a net worth of
3) A budget deficit would result when a person's or family's
4) The tax base for an individual tax return is
5) All of the following are for AGI deductions EXCEPT
6) Which of the following series of inequalities is generally most accurate?
7) Which of the following has the lowest authoritative weight?
8) Josephine is considering taking a 6-month rotation in Paris for her job. Which type of authority may be especially helpful in determining the tax consequences of Josephine's job in Paris?
9) Which of the following has the highest authoritative weight?
10) Congress allows self-employed taxpayers to deduct the cost of health insurance above the line (for AGI) because
11) Hector is a married self-employed taxpayer, and this year he paid $3,000 for his health insurance premiums. Under which of the following alternative conditions can Hector deduct the cost of the premiums for AGI?
12) Graham has accepted an offer to do graduate work in the chemistry department at State University. The chemistry department offered Graham a scholarship that will pay $5,000 toward his tuition, $500 toward his university fees, and $3,500 toward the cost of room and meals. Under the terms of the scholarship, Graham must work in the chemistry labs during the summer. What amount must Graham include in his gross income?
13) After a meeting with a prospective client, Holly paid for dinner. After dinner, Holly took the prospective client to the theatre. Holly paid $290 for the meal and $250 for the tickets, amounts that were reasonable under the circumstances. What amount of these expenditures can Holly deduct as a business expense?
14) Rhianna and Jay are married filing jointly in 2009. They have six children for whom they may claim the child tax credit. Their AGI was $123,440. What amount of child tax credit may they claim on their 2009 tax return?
15) Which of the following taxes will not qualify as an itemized deduction?
16) Bateman Corporation sold an office building that it used in its business for $800,000. Bateman bought the building ten years ago for $600,000 and has claimed $200,000 of depreciation expense. What is the amount and character of Bateman's gain or loss?
17) The sale of machinery for more than the original cost basis (before depreciation), used in a trade or business, and held for more than one year results in the following types of gain or loss:
18) Winchester LLC sold the following business assets during the current year: (1) automobile, $30,000 cost basis, $12,000 depreciation, proceeds $20,000; (2) machinery, $25,000 cost basis, $20,000 depreciation, proceeds $10,000; (3) furniture, $15,000 cost basis, $10,000 depreciation, proceeds $4,000; (4) computer equipment, $25,000 cost basis, $6,000 depreciation, proceeds $10,000; (5) Winchester had unrecaptured Section 1231 losses of $3,000 in the prior 5 years. What is the amount and character of Winchester's gains and losses before the 1231 netting process?
19) On the sale of a passive activity, any suspended losses can be used to offset income from
20) Which of the following would be considered passive income?
21) Which of the following would be considered active income?
22) Sue invested $5,000 in the ABC Limited Partnership and received a 10 percent interest in the partnership. The partnership had $20,000 of qualified nonrecourse debt and $20,000 of debt she is not responsible to repay because she is a limited partner. Sue is allocated a 10 percent share of both types of debt. During the year, ABC LP generated a ($90,000) loss. How much of Sue's loss is disallowed due to her tax basis or at-risk amount?
23) Harvey rents his second home. During 2009, Harvey reported a net loss of $35,000 from the rental. If Harvey is an active participant in the rental and his AGI is $80,000, how much of the loss can he deduct against ordinary income in 2009?
24) What happens when a taxpayer experiences a net loss from a rental home?
25) What is the minimum ownership percentage an owner must have in the entity to avoid gain recognition when property is contributed?
26) What is the tax impact to a taxable corporation or an S corporation when it makes a property distribution to a shareholder?
27) What item(s) affect the tax basis of a shareholder in a taxable corporation?
28) Antoine transfers property with a tax basis of $500 and a fair market value of $600 to a corporation in exchange for stock with a fair market value of $550 in a transaction that qualifies for deferral under Section 351. The corporation assumed a liability of $50 on the property transferred. What is Antoine's tax basis in the stock received in the exchange?
29) Which of the following requirements do not have to be met in a Section 351 transaction?
30) Inez transfers property with a tax basis of $200 and a fair market value of $300 to a corporation in exchange for stock with a fair market value of $250 in a transaction that qualifies for deferral under Section 351. The corporation assumed a liability of $50 on the property transferred. What is the corporation's tax basis in the property received in the exchange?
31) Au Sable Corporation reported taxable income of $800,000 in 2010 and paid federal income taxes of $272,000. Not included in the computation was a disallowed penalty of $25,000, life insurance proceeds of $100,000, and an income tax refund from 2009 of $50,000. Au Sable is an accrual basis taxpayer. The corporation's current earnings and profits for 2010 would be
32) BTW Corporation has taxable income in the current year that can be offset with an NOL from a previous year. What is the nature of the book-tax difference created by the net operating loss deduction in the current year?
33) A calendar-year corporation has negative current E&P of $(500) and accumulated positive E&P of $1,000. The corporation makes a $600 distribution to its sole shareholder. Which of the following statements is true?
34) El Toro Corporation declared a common stock dividend to all shareholders of record on June 30, 2010. Shareholders will receive 1 share of El Toro stock for each 2 shares of stock they already own. Raoul owns 300 shares of El Toro stock with a tax basis of $60 per share. The fair market value of the El Toro stock was $100 per share on June 30, 2010. What are the tax consequences of the stock dividend to Raoul?
35) Which of the following stock dividends would be tax-free to the shareholder?
36) Which of the following individuals is not considered "family" for purposes of applying the stock attribution rules to a stock redemption?
37) Which of the following statements is true when property is contributed in exchange for a partnership interest?
38) Which of the following are prohibited from being an S corporation shareholder?
39) Under which of the following circumstances will a partner recognize a loss from an operating distribution?
40) Suppose at the beginning of 2010, Jamaal's basis in his S corporation stock was $27,000 and that Jamaal has loaned the S corporation $10,000. During 2010, the S corporation reported an $80,000 ordinary business loss and no separately stated items. How much of the ordinary loss is deductible by Jamaal if he owns 50% of the S corporation?
41) Clampett, Inc. has been an S corporation since its inception. On July 15, 2011, Clampett, Inc. distributed $50,000 to J.D. His basis in his Clampett, Inc. stock on January 1, 2011, was $45,000. For 2011, J.D. was allocated $10,000 of ordinary income from Clampett, Inc. and no separately stated items. What is J.D.'s basis in his Clampett, Inc. stock after all transactions in 2011?
42) Clampett, Inc. has been an S corporation since its inception. On July 15, 2011, Clampett, Inc. distributed $50,000 to J.D. His basis in his Clampett, Inc. stock on January 1, 2011, was $45,000. For 2011, J.D. was allocated $10,000 of ordinary income from Clampett, Inc. and no separately stated items. What is the amount of income J.D. recognizes related to Clampett, Inc. in 2011?
43) Erica and Brett decide to form their new motorcycle business as an LLC. Each will receive an equal profits (loss) interest by contributing cash, property, or both. In addition to the members' contributions, their LLC will obtain a $50,000 nonrecourse loan from First Bank at the time it is formed. Brett contributes cash of $5,000 and a building he bought as a storefront for the motorcycles. The building has an FMV of $45,000, an adjusted basis of $30,000, and is secured by a $35,000 nonrecourse mortgage that the business LLC will assume. What is Brett's outside tax basis in his LLC interest?
44) Under general circumstances, debt is allocated from the partnership to each partner in the following manner:
45) Which of the following statements is true when property is contributed in exchange for a partnership interest?
46) Frank and Bob are equal members in Soxy Socks, LLC. When forming the LLC, Frank contributed $50,000 in cash and $50,000 worth of equipment. Frank's adjusted basis in the equipment was $35,000. Bob contributed $50,000 in cash and $50,000 worth of land. Bob's adjusted basis in the land was $30,000. On 3/15/04, Soxy Socks sells the land Bob contributed for $60,000. How much gain (loss) related to this transaction will Bob report on his X4 return?
47) What form does a partnership use when filing an annual informational return?
48) Vanessa contributed $20,000 of cash and land with a fair market value of $100,000 and an adjusted basis of $40,000 to Cook, Inc. (an S corporation) when it was formed. The land was encumbered by a $30,000 mortgage executed two years before. What is Vanessa's tax basis in Cook, Inc. after formation?
49) The estate and gift taxes share several common features. Which of the following characteristics are common to both the estate and gift taxes?
50) The estate and gift taxes share several common features. Which of the following characteristics are common to both the estate and gift taxes?
51) The estate and gift taxes share several common features. Which of the following characteristics are common to both the estate and gift taxes?
52) This year Samantha gave each of her three nephews birthday gifts of $10,000 in cash. At Christmas, Samantha gave each of her three nephews Christmas gifts of an additional $5,000 in cash. What is the amount of the taxable gifts, if any, made by Samantha this year?
53) Jonathan transferred $90,000 of cash to a trust this year for the benefit of Hannah, age 10. The trustee has the discretion to distribute income or corpus (principal) for Hannah's benefit and is required to distribute all assets to Hannah (or her estate) not later than Hannah's 21st birthday. What is the amount of the taxable gift?
54) This year Natalie transferred $500,000 of bonds to a revocable trust with directions to the trustee to pay income to her aunt for five years, after which the corpus is to be distributed to Natalie's niece. At year-end, the trustee paid $14,000 of income to the aunt. Which of the following is a true statement?
Click here for the SOLUTION
1) Ben Chase needs to pay off some of his debts over the next few months. Which item on his balance sheet would help him decide what amounts are due in the near future?
2) A family with $45,000 in assets and $22,000 of liabilities would have a net worth of
3) A budget deficit would result when a person's or family's
4) The tax base for an individual tax return is
5) All of the following are for AGI deductions EXCEPT
6) Which of the following series of inequalities is generally most accurate?
7) Which of the following has the lowest authoritative weight?
8) Josephine is considering taking a 6-month rotation in Paris for her job. Which type of authority may be especially helpful in determining the tax consequences of Josephine's job in Paris?
9) Which of the following has the highest authoritative weight?
10) Congress allows self-employed taxpayers to deduct the cost of health insurance above the line (for AGI) because
11) Hector is a married self-employed taxpayer, and this year he paid $3,000 for his health insurance premiums. Under which of the following alternative conditions can Hector deduct the cost of the premiums for AGI?
12) Graham has accepted an offer to do graduate work in the chemistry department at State University. The chemistry department offered Graham a scholarship that will pay $5,000 toward his tuition, $500 toward his university fees, and $3,500 toward the cost of room and meals. Under the terms of the scholarship, Graham must work in the chemistry labs during the summer. What amount must Graham include in his gross income?
13) After a meeting with a prospective client, Holly paid for dinner. After dinner, Holly took the prospective client to the theatre. Holly paid $290 for the meal and $250 for the tickets, amounts that were reasonable under the circumstances. What amount of these expenditures can Holly deduct as a business expense?
14) Rhianna and Jay are married filing jointly in 2009. They have six children for whom they may claim the child tax credit. Their AGI was $123,440. What amount of child tax credit may they claim on their 2009 tax return?
15) Which of the following taxes will not qualify as an itemized deduction?
16) Bateman Corporation sold an office building that it used in its business for $800,000. Bateman bought the building ten years ago for $600,000 and has claimed $200,000 of depreciation expense. What is the amount and character of Bateman's gain or loss?
17) The sale of machinery for more than the original cost basis (before depreciation), used in a trade or business, and held for more than one year results in the following types of gain or loss:
18) Winchester LLC sold the following business assets during the current year: (1) automobile, $30,000 cost basis, $12,000 depreciation, proceeds $20,000; (2) machinery, $25,000 cost basis, $20,000 depreciation, proceeds $10,000; (3) furniture, $15,000 cost basis, $10,000 depreciation, proceeds $4,000; (4) computer equipment, $25,000 cost basis, $6,000 depreciation, proceeds $10,000; (5) Winchester had unrecaptured Section 1231 losses of $3,000 in the prior 5 years. What is the amount and character of Winchester's gains and losses before the 1231 netting process?
19) On the sale of a passive activity, any suspended losses can be used to offset income from
20) Which of the following would be considered passive income?
21) Which of the following would be considered active income?
22) Sue invested $5,000 in the ABC Limited Partnership and received a 10 percent interest in the partnership. The partnership had $20,000 of qualified nonrecourse debt and $20,000 of debt she is not responsible to repay because she is a limited partner. Sue is allocated a 10 percent share of both types of debt. During the year, ABC LP generated a ($90,000) loss. How much of Sue's loss is disallowed due to her tax basis or at-risk amount?
23) Harvey rents his second home. During 2009, Harvey reported a net loss of $35,000 from the rental. If Harvey is an active participant in the rental and his AGI is $80,000, how much of the loss can he deduct against ordinary income in 2009?
24) What happens when a taxpayer experiences a net loss from a rental home?
25) What is the minimum ownership percentage an owner must have in the entity to avoid gain recognition when property is contributed?
26) What is the tax impact to a taxable corporation or an S corporation when it makes a property distribution to a shareholder?
27) What item(s) affect the tax basis of a shareholder in a taxable corporation?
28) Antoine transfers property with a tax basis of $500 and a fair market value of $600 to a corporation in exchange for stock with a fair market value of $550 in a transaction that qualifies for deferral under Section 351. The corporation assumed a liability of $50 on the property transferred. What is Antoine's tax basis in the stock received in the exchange?
29) Which of the following requirements do not have to be met in a Section 351 transaction?
30) Inez transfers property with a tax basis of $200 and a fair market value of $300 to a corporation in exchange for stock with a fair market value of $250 in a transaction that qualifies for deferral under Section 351. The corporation assumed a liability of $50 on the property transferred. What is the corporation's tax basis in the property received in the exchange?
31) Au Sable Corporation reported taxable income of $800,000 in 2010 and paid federal income taxes of $272,000. Not included in the computation was a disallowed penalty of $25,000, life insurance proceeds of $100,000, and an income tax refund from 2009 of $50,000. Au Sable is an accrual basis taxpayer. The corporation's current earnings and profits for 2010 would be
32) BTW Corporation has taxable income in the current year that can be offset with an NOL from a previous year. What is the nature of the book-tax difference created by the net operating loss deduction in the current year?
33) A calendar-year corporation has negative current E&P of $(500) and accumulated positive E&P of $1,000. The corporation makes a $600 distribution to its sole shareholder. Which of the following statements is true?
34) El Toro Corporation declared a common stock dividend to all shareholders of record on June 30, 2010. Shareholders will receive 1 share of El Toro stock for each 2 shares of stock they already own. Raoul owns 300 shares of El Toro stock with a tax basis of $60 per share. The fair market value of the El Toro stock was $100 per share on June 30, 2010. What are the tax consequences of the stock dividend to Raoul?
35) Which of the following stock dividends would be tax-free to the shareholder?
36) Which of the following individuals is not considered "family" for purposes of applying the stock attribution rules to a stock redemption?
37) Which of the following statements is true when property is contributed in exchange for a partnership interest?
38) Which of the following are prohibited from being an S corporation shareholder?
39) Under which of the following circumstances will a partner recognize a loss from an operating distribution?
40) Suppose at the beginning of 2010, Jamaal's basis in his S corporation stock was $27,000 and that Jamaal has loaned the S corporation $10,000. During 2010, the S corporation reported an $80,000 ordinary business loss and no separately stated items. How much of the ordinary loss is deductible by Jamaal if he owns 50% of the S corporation?
41) Clampett, Inc. has been an S corporation since its inception. On July 15, 2011, Clampett, Inc. distributed $50,000 to J.D. His basis in his Clampett, Inc. stock on January 1, 2011, was $45,000. For 2011, J.D. was allocated $10,000 of ordinary income from Clampett, Inc. and no separately stated items. What is J.D.'s basis in his Clampett, Inc. stock after all transactions in 2011?
42) Clampett, Inc. has been an S corporation since its inception. On July 15, 2011, Clampett, Inc. distributed $50,000 to J.D. His basis in his Clampett, Inc. stock on January 1, 2011, was $45,000. For 2011, J.D. was allocated $10,000 of ordinary income from Clampett, Inc. and no separately stated items. What is the amount of income J.D. recognizes related to Clampett, Inc. in 2011?
43) Erica and Brett decide to form their new motorcycle business as an LLC. Each will receive an equal profits (loss) interest by contributing cash, property, or both. In addition to the members' contributions, their LLC will obtain a $50,000 nonrecourse loan from First Bank at the time it is formed. Brett contributes cash of $5,000 and a building he bought as a storefront for the motorcycles. The building has an FMV of $45,000, an adjusted basis of $30,000, and is secured by a $35,000 nonrecourse mortgage that the business LLC will assume. What is Brett's outside tax basis in his LLC interest?
44) Under general circumstances, debt is allocated from the partnership to each partner in the following manner:
45) Which of the following statements is true when property is contributed in exchange for a partnership interest?
46) Frank and Bob are equal members in Soxy Socks, LLC. When forming the LLC, Frank contributed $50,000 in cash and $50,000 worth of equipment. Frank's adjusted basis in the equipment was $35,000. Bob contributed $50,000 in cash and $50,000 worth of land. Bob's adjusted basis in the land was $30,000. On 3/15/04, Soxy Socks sells the land Bob contributed for $60,000. How much gain (loss) related to this transaction will Bob report on his X4 return?
47) What form does a partnership use when filing an annual informational return?
48) Vanessa contributed $20,000 of cash and land with a fair market value of $100,000 and an adjusted basis of $40,000 to Cook, Inc. (an S corporation) when it was formed. The land was encumbered by a $30,000 mortgage executed two years before. What is Vanessa's tax basis in Cook, Inc. after formation?
49) The estate and gift taxes share several common features. Which of the following characteristics are common to both the estate and gift taxes?
50) The estate and gift taxes share several common features. Which of the following characteristics are common to both the estate and gift taxes?
51) The estate and gift taxes share several common features. Which of the following characteristics are common to both the estate and gift taxes?
52) This year Samantha gave each of her three nephews birthday gifts of $10,000 in cash. At Christmas, Samantha gave each of her three nephews Christmas gifts of an additional $5,000 in cash. What is the amount of the taxable gifts, if any, made by Samantha this year?
53) Jonathan transferred $90,000 of cash to a trust this year for the benefit of Hannah, age 10. The trustee has the discretion to distribute income or corpus (principal) for Hannah's benefit and is required to distribute all assets to Hannah (or her estate) not later than Hannah's 21st birthday. What is the amount of the taxable gift?
54) This year Natalie transferred $500,000 of bonds to a revocable trust with directions to the trustee to pay income to her aunt for five years, after which the corpus is to be distributed to Natalie's niece. At year-end, the trustee paid $14,000 of income to the aunt. Which of the following is a true statement?
Click here for the SOLUTION
Subscribe to:
Posts (Atom)