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managerial accounting
Questions and Answers of
Managerial Accounting
LM6vX is a partnership owned by Lee, Mah, and Nguyen, who share profits and losses in the ratio of 5:3:2. The account balances of the partnership at September 30 follow.Requirements 1. Prepare the
How does a partnership get started?a. The partners reach an agreement and begin operations.b. The partners get a charter from the state.c. The partners register under the Uniform Partnership Act.d.
An \(\mathrm{S}\) corporation is taxed like aa. Corporationb. Partnershipc. Either a orb, depending on the stockholders' decisiond. None of the above
Malcolm pays \(\$ 50,000\) to Lloyd to acquire Lloyd's \(\$ 25,000\) interest in a partnership. The journal entry to record this transaction is a. Lloyd, Capital............. 75,000 Malcolm,
Clark and Douglas admit Evans to their partnership, with Evans paying \(\$ 50,000\) more than the book value of her equity in the new business. Clark and Douglas have no formal profit-and-loss
Tate retires from the partnership of Roberts, Smith, and Tate. The partners share profits and losses in the ratio of \(4: 3: 3\). Tate's capital balance is \(\$ 40,000\), and he receives \(\$
The book value of the assets of the KLM partnership is \(\$ 100,000\). In liquidation, the partnership sells the assets for \(\$ 130,000\). How should the partnership account for the sale of the
Partnership financial statements reporta. Revenues on the income statementb. Liabilities on the income statementc. Net income on the balance sheetd. Expenses on the balance sheet
On June 30, 2006. Cimmaron Co. purchased \(\$ 8,000\) of inventory: on a 1 -year, \(9 \%\) note payable. Journalize the company's(a) accrual of interest expense on December 31,2006, (b) payment of
Refer to the data in Short Exercise 11-1. Show what Cimmaron reports for the note parable and related interest payable on its balance sheet at December 31, 2006, and on its income statement for the
Sierra Corporation guarantees its snowmobiles for three years. Company experience indicates that warranty costs will add up to \(5 \%\) of sales.Assume that the Sierra dealer in Colorado Springs made
What amount of warranty expense will Sierra (in Short Exercise 11-3) report during \(200^{-}\)? Does the warranty expense for the year equal the year's cash payments for warranties? Which accounting
Harley-Davidson, Inc., the motorcycle manufacturer, included the following note (adapted) in its annual report:1. Why are these contingent (versus real) liabilities?2. How can a contingent liability
Grant Teiman is paid \(\$ 640\) for a 40 -hour workweek and time-and-a-half for hours above 40.1. Compute Teiman's gross pay for working 50 hours during the first week of February.2. Teiman is
Suppose you work for KPMG, the accounting firm, all year and earn a monthly salary of \(\$ 6,000\). There is no overtime pay. Your withheld income taxes consume \(15 \%\) of gross pay. In addition to
Refer to Blumenthal's payroll record in Exhibit 11-6.1. How much was the company's total salary expense for the week?2. How much cash did the employees take home for their work?3. How much did
What are some of the important elements of good internal control to safeguard payroll disbursements?
Citadel Sporting Goods' payroll record for the week ended June 30, 3 2007 , included these totals:In addition to the payroll liabilities shown here, Citadel has the following current liabilities at
TransWorld Publishing completed the following transactions during 2008:Journalize these transactions (explanations are not required). Then report the liability' on the company's balance sheet at
The accounting records of Durango Ceramics included the following at December 31, 2007:In the past, Durango's warranty expense has been \(6 \%\) of sales. During 2008 , Durango made sales of \(\$
Cappy Scanlan manages the women's sportswear department of Parisian Department Store in Seattle. She earns a base monthly salary of \(\$ 750\) plus a \(10 \%\) commission on her personal sales.
Harold Sollenberger manages a Dairy Queen drive-in. His straight-time pay is \(\$ 10\) per hour, with time-and-a-half for hours in excess of 40 per week. Sollenberger's payroll deductions include
Saturn Solartech has annual salary expense of \(\$ 450,000\). In addition, Saturn incurs payroll tax expense equal to \(10 \%\) of the total payroll. At December 31, Saturn owes salaries of \(\$
Optical Dispensary borrowed \$300,000 on January 2, 2007, by issuing a \(10 \%\) note payable that must be paid in three equal annual installments plus interest for the year. The first payment of
Oriental Rug Company completed these selected transactions during December 2006, its first month of operations.a. Sales of \(\$ 200,000\) are subject to estimated warranty cost of \(3 \%\).b. Pier 1
The comparative balance sheet of Paladin Security Services for two years reported these figures:Compute Paladin's current ratio and debt ratio for both years. Did the ratios improve or deteriorate in
The following transactions of Lexington Pharmacies occurred during 2006 and 2017:Requirement Record the transactions in Lexington's general journal. Explanations are not required. 2006 Jan. 9
The records of Georgia Tea \& Coffee Company show the following figures:Requirements 1. Determine missing amounts (a) through (d).2. Journalize this payroll for the month. No explanation is
Felix McKay is general manager of Moonwalk Tanning Salons. During 2008, McKay worked for the company all year at a \(\$ 6,625\) monthly salary. He also earned a year-end bonus equal to \(10 \%\) of
The payroll records of Navasota Video Productions provide the following information for the weekly pay period ended December 29, 2007:Employees are paid wages at the rate of time-and-a-half for hours
Morrison's Gifts' accounting records provide the following liability data at year-end:a. Sales of \(\$ 400,000\) were covered by Morrison's product warranty. At January 1 , estimated warranty payable
The following transactions of Pan-American Paper Company occurred during 2006 and 2007.Requirement Record the transactions in Pan American's general journal. Explanations are not required. 2006 Feb.
The records of Lyndon Olson Political Consultants show the following figures:Requirements 1. Determine missing amounts (a) through (d). 2. Journalize Olson's payroll for the month. No explanation is
Louann Winters is a vice president at Crossroads Bank. During 2008, Winters worked for the bank all year at a \(\$ 6,500\) monthly salary. She also earned a year-end bonus equal to \(15 \%\) of her
The Northwood Inn general ledger at September 30, 2008, the end of the company's fiscal year, includes the following account balances before adjusting entries.The additional data needed to develop
The payroll records of Carolina Home Improvements provide the following information for the weekly pay period ended December 29, 2007:All employees are paid time-and-a-half for hours worked in excess
Following are pertinent facts about events during the current year at Lafferty Trailers.a. December sales totaled \(\$ 300,000\), and Lafferty collected sales tax of \(5 \%\). The sales tax will be
Jack Delaney is the accountant responsible for customer accounts in the accounts receivable subsidiary ledger. What duty will a good internal control system withhold from Delaney? Why?
During its first year of operations, Signature Lamp Company earned revenue of \(\$ 350,000\) on account. Industry experience suggests that bad debts will amount to \(2 \%\) of revenues. At December
During 2009, Signature Lamp Company completed these transactions:1. Sales revenue on account, \(\$ 400,000\) (ignore cost of goods sold). 2. Collections on account, \(\$ 420,000\). 3. Write-offs of
Interstate Marble Importers had the following balances at December 31, 2007 , before the year-end adjustments:The aging of accounts receivable yields these data:1. Journalize Interstate's entry to
Bob Rassler is an attorney in I.os Angeles. Rassler uses the direct writeoff method to account for uncollectible receivables.At May 31, Rassler's accounts receivable totaled \(\$ 14,000\). During
Restaurants do a large volume of business by credit cards and bankcards.Suppose a Chili's restaurant had these transactions on a Saturday:Suppose American Express charges merchants \(2 \%\) and VISA
Lantana Bank & Trust Company lent $100,000 to Ben Milam on a 90-day, 10% note. Record the following transactions for the hank (explanations are not required):a. Lending the money on May 6. b.
Concentra Medical Center included the following items in its financial statements:1. How much net income did Concentra earn for the month?Show two ways Concentra can report receivables on its
Avant Garde Clothiers reported the following items at February 28, 2008 (amounts in thousands, with last year's — 2007 — amounts also given as needed):Compute Avant Garde's(a) acid-test
Use the data in Short Exercise 9-12 to compute the following 2008 ratios for Avant Garde Clothiers. Round decimals to two places.a. Current ratio b. Debt ratio c. Gross profit percentage d. Rate
At September 30, Eagle Mountain Flagpoles had Accounts Receivable of \(\$ 28,000\) and Allowance for Uncollectible Accounts of \(\$ 1,000\). During October, Eagle Mountain recorded- Sales of \(\$
At December 31, 2008, the Accounts Receivable balance of Easy Card is \(\$ 300,000\). The Allowance for Doubtful Accounts has a \(\$ 8,900\) credit balance. Easy Card prepares the following aging
High Performance Cell Phones sold \$20,000 of merchandise to Avery Trucking Company on account. Avery fell on hard times and paid only \(\$ 6,000\) of the account receivable. After repeated attempts
On April 30, 2007, Synergy Bank loaned \$80,000 to Kim Sperry on a one-year, \(9 \%\) note.Requirements 1. Compute the interest for the years ended December 31, 2007 and 2008 for the Sperry note.2.
Journalize the following transactions of Mediterranean Importers, which ends its accounting year on June 30: Apr. 1 June 6 Loaned $10,000 cash to Carroll Fadal on a one-year, 8% note. Sold goods to
Record the following transactions in the journal of Top Dog Running Shoes: 2008 Feb. 12 Recorded MasterCard bankcard sales of $100,000, less a 2% discount. Aug. 1 Loaned $20,000 to Jean Porter, an
High-Pressure Steam Cleaning performs service on account. When a customer account becomes four months old, High-Pressure converts the account to a note receivable. During 2008 , the company completed
Cherokee Carpets reported the following amounts in its 2009 financial statements. The 2008 figures are given for comparison.Requirements 1. Determine whether Cherokee's acid-test ratio improved or
Mail Plus performs mailing services on account, so virtually all cash receipts arrive in the mail. Gina Star, the owner, has just returned from a meeting with new ideas for the business. Among other
On February 28, Tradewinds Sailing Supplies had a \(\$ 75,000\) debit balance in Accounts Receivable and a \(\$ 2,200\) credit balance in Allowance for Uncollectible Accounts. During March,
At September 30, the accounts of Aguilar Outsourcing Solutions include the following:During the last quarter of 2009, Aguilar completed the following selected transactions:Requirements 1. Record the
Showbiz Sportswear completed the following selected transactions during 2008 and 2009:Requirements 1. Open general ledger accounts for Allowance for Uncollectible Accounts and Uncollectible-Account
Record the following transactions in the general journal of Dvorak Interiors. Round all amounts to the nearest dollar. Explanations are not required. 2007 Dec. 21 Received a $4,400, 30-day, 9% note
Speedo Paint Company completed the following selected transactions:Requirement Record the transactions in the journal of Speedo Paint Company. Explanations are not required. Using ratio data to
The comparative financial statements of 4th Gear Website Design for 5 2008,2007 , and 2006 include the data shown here:Requirements 1. Compute these ratios for 2008 and 2007 :a. Current ratiob.
Stained Glass Crafters performs all work on account, with regular monthly billing to customers. M. C. Perry, the accountant, opens the mail. Company procedure requires him to separate customer checks
On May 31, Rosetree Floral Supply had a \(\$ 160,000\) debit balance in Accounts Receivable and a \(\$ 6,400\) credit balance in Allowance for Uncollectible Accounts. During June, Rosetree made:-
At September 30, the accounts of East Terrace Medical Center (ETMC) include the following:During October through December, ETMC completed the following selected transactions:Requirements 1. Record
Dialex Watches completed the following transactions during 2007 and 2008:Requirements 1. Open general ledger accounts for Allowance for Uncollectible Accounts and Uncollectible-Account Expense. Keep
Bank of Nashville received the following notes during 2008.Requirements For each note compute interest using a 360 -day year. Explanations are not required.1. Determine the due date and maturity
Record the following transactions in the general journal of Renschler Communication. Explanations are not required. 2007 Dec. 19 Received a $5,000, 60-day, 12% note on account from Video 2008
Assume that La-Z Recliner Chairs completed the following selected transactions:Requirement Record the transactions in the journal of La-Z Recliner Chairs. Explanations are not required. 2007 July
FedEx bought two used Boeing airplanes. Each plane was worth \(\$ 35\) million, but the owner sold the combination for \(\$ 60\) million. How much is FedEx's cost of each plane?a. \(\$ 60\) millionb.
Which depreciation method would you prefer to use for income tax purposes? Why?a. Straight-line because it is simplestb. Units-of-production because it best tracks the asset's usec.
A copy machine cost \(\$ 40,000\) when new and has accumulated depreciation of \(\$ 35,000\). Suppose Kinko's junks this machine, receiving nothing. What is the result of the disposal transaction?a.
Suppose Kinko's in the preceding question sold the machine for \(\$ 5,000\). What is the result of this disposal transaction?a. Gain of \(\$ 2,000\)b. Loss of \(\$ 2,000\)c. Gain of \(\$ 3,000\)d. No
Which method is used to compute depletion?a. Depletion methodb. Units-of-production methodc. Straight-line methodd. Double-declining-balance method
At the beginning of the year, Texas Aero purchased a used Boeing jet for \(\$ 35,000,000\). Texas Aero expects the plane to remain useful for five years ( 6 million miles) and to have a residual
At the beginning of 2007, Texas Aero purchased a used Boeing jet at a cost of \(\$ 35,000,000\). Texas Aero expects the plane to remain useful for five years ( 6 million miles) and to have a residual
On March 31, 2008, FedEx Kinko's purchased a Xerox copy machine for \(\$ 80,000\). FedEx Kinko's expects the machine to last for five years and to have a residual value of \(\$ 8,000\). Compute
Assume that the Chicago Cubs baseball organization paid \(\$ 50,000\) for a hot dog stand with a 10 -year life and zero expected residual value. After using the hot dog stand for four years, the
Return to the American Airlines baggage-handling truck in Exhibit 10-7. Suppose American sold the truck on December 31, 2009, for \(\$ 28,000\) cash, after using the truck for two full years.
Air \& Sea Travel purchased a Dell Computer for \(\$ 3,000\), debiting Computer Equipment. During 2007 and 2008, Air \& Sea recorded depreciation of \$2,200 on the computer. In January 2009, Air \&
British Petroleum (BP) holds huge reserves of oil and gas assets. Assume that at the end of 2006 , BP's cost of oil and gas reserves totaled \(\$ 24\) billion, representing 2.4 billion barrels of oil
This exercise summarizes the accounting for patents and for research and development.During 2008, Digital Cable Company paid \(\$ 50,000\) to research and develop a new technology, and also purchased
Trautschold Furniture Co. purchased land, paying \(\$ 80,000\) cash plus a \(\$ 300,000\) note payable. In addition, Trautschold paid delinquent property tax of \(\$ 2,000\), title insurance costing
Northwood Properties bought three lots in a subdivision for a lump-sum price. An independent appraiser valued the lots as follows:Northwood paid \(\$ 150,000\) in cash. Record the purchase in the
Pulley-Bone Fried Chicken bought equipment on January 2, 2007, for \(\$ 15,000\). The equipment was expected to remain in service 4 years and to perform 3,000 fry jobs. At the end of the equipment's
Flips Gymnastics Center paid \(\$ 140,000\) for fitness equipment that is expected to have a 10 -year life. The expected residual value is \(\$ 40,000\).Select the appropriate MACRS depreciation
A-1 Security Consultants purchased a building for \(\$ 500,000\) and depreciated it on a straight-line basis over a 40 -year period. The estimated residual value was \(\$ 100,000\). After using the
On January 2, 2006, Ditto Clothing Consignments purchased showroom fixtures for \(\$ 10,000\) cash, expecting the fixtures to remain in service 5 years. Ditto has depreciated the fixtures on a
Covenant Trucking Company uses the units-of-production (UOP) depreciation method because UOP best measures wear and tear on the trucks. Consider these facts about one Mack truck in the company's
PepsiCo, Inc., has acquired several other companies. Assume that PepsiCo purchased Kettle Chips Co. for \(\$ 8\) million cash. The book value of Kettle Chips' assets is \(\$ 12\) million (market
The board of directors of Park Place Porsche is having a quarterly meeting. Accounting policies are on the agenda, and depreciation is being discussed. A new board member, an attorney, has some
On January 2, 2006, Speedway: Delivery Service purchased a truck at a cost of \(\$ 63,000\). Before placing the truck in service, Speedway spent S2,200 painting it, \(\$ 800\) replacing tires, and
On May 31, 2004, FedEx, the overnight shipper, had total assets of \(\$ 19\) billion and total liabilities of \(\$ 11\) billion. Included among the assets were property, plant, and equipment with a
Vandergiff Jewelry incurred the following costs to acquire land, make land improvements, and construct and furnish a new building.Vandergriff depreciates land improvements over 20 years, buildings
The accounts of Haley-Davis Printing Company include Land, Buildings, and Equipment. Haley-Davis has a separate accumulated depreciation account for each asset. During 2007 , the company completed
The board of directors of Computer Solutions is reviewing the 2007 annual repothat has not occurred. Further, growth in the city is increasing the values of property. He asks why the company is
On January 3, 2007, Joe Griffin Photography paid \(\$ 224,000\) for photo equipment. In addition to the purchase price, Griffin paid \(\$ 700\) transportation charges, \(\$ 100\) insurance for the
RKI Properties' balance sheet includes a natural resource asset, Coal. RKI paid \(\$ 600,000\) cash for the right to work a mine with an estimated 100,000 tons of coal. The company paid \(\$ 60,000\)
The balance sheet of MBC Television reports intangible assets. Assume that MBC purchased the intangibles as part of the acquisition of another company, which carried these figures:Requirements 1.
At the end of 2004, PepsiCo had total assets of \(\$ 28\) billion and total liabilities of \(\$ 14\) billion. Included among the assets were property, plant, and equipment with a cost of \(\$ 16\)
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