Questions and Answers of Accounting What The Numbers Mean

MDA Inc. processes corn into corn starch and corn syrup. The company’s productivity and cost standards follow: From every bushel of corn processed, ten pounds of starch and five pounds of syrup
In addition to the information for Acme Company in Mini-Exercises 15.1 and 15.2, the standard fixed overhead application rate per unit consists of $2 per machine hour and each unit is allowed a
Following is a partially completed performance report for a recent week for direct labor in the binding department of a book publisher:The original budget is based on the expectation that 4,000 books
ABC Company operates two divisions with the following sales and expense information for the month of May:Division 1: sales, $240,000; contribution margin ratio, 50%; direct fixed expenses,
ABC Company operates two divisions with the following operating information for the month of May:Division 1: sales, $240,000; operating income, $72,000; operating assets, $600,000.Division 2: sales,
The cost formula for the maintenance department of Rambo Ltd. is $9,700 per month plus $3.85 per machine hour used by the production department.Required:a. Calculate the maintenance cost that would
Oakton Inc. manufactures end tables, armchairs, and other wood furniture products from high-quality materials. The company uses a standard costing system and isolates variances as soon as possible.
Smallman’s Garage uses standards to plan and control labor time and expense. The standard time for an engine tune-up is 4 hours, and the standard labor rate is $20 per hour. Last week, 36 tune-ups
The president of Eaglesway Inc. attended a seminar about the contribution margin model and returned to her company full of enthusiasm about it. She requested that last year’s traditional model
Vogel Co. produces three models of heating and air conditioning thermostat components. The following table summarizes data about each model:Required:a. Criticize the preceding presentation. On what
The standards for one case of Springfever Tonic are as follows:During the week ended March 13, the following activity took place:14,800 lb of raw materials were purchased for inventory at a cost of
Romano Corporation has three operating divisions and requires a 12% return on all investments. Selected information is presented here:Required:a. Calculate the missing amounts for each division.b.
The standards for one case of liquid weed killer are as follows:During the week ended May 6, the following activity took place: 4,360 machine hours were worked. 22,800 lb of raw material were
The Flynn Insurance Company developed standard times for processing claims. When a claim was received at the processing center, it was first reviewed and classified as simple or complex. The standard
The Northern Division of Allied Inc. has operating income of $32,000 on sales revenue of $320,000. Divisional operating assets are $160,000, and management of Allied has determined that a minimum
Graystone’s production budget for September called for making 60,000 units of a single product. The firm’s production standards allow one-half of a machine hour per unit produced. The fixed
Presented here are the original overhead budget and the actual costs incurred during April for Piccolo Inc. Piccolo’s managers relate overhead to direct labor hours for planning, control, and
The chair of the Science Department of State University has a budget for laboratory supplies. Supplies have a variable cost behavior pattern that is a function of the number of students enrolled in
One of the significant costs for a nonpublic college or university is student aid in the form of gifts and grants awarded to students because of academic potential or performance, and/or financial
During the year ended May 31, 2021, Teller Register Co. reported favorable raw material usage and direct labor and variable overhead efficiency variances that totaled $285,800. Price and rate
The Consortium for Advanced Manufacturing—International (CAM-I) is an international consortium of companies, consultancies, and academics that have elected to work cooperatively in a precompetitive
Lakeside Inc. produces a product that currently sells for $72 per unit. Current production costs per unit include direct materials, $20; direct labor, $24; variable overhead, $10; and fixed overhead,
In addition to the product cost information for Lakeside Inc. in Mini-Exercise 16.1, Lakeside has received an offer from a nonprofit organization to buy 6,000 units at $56 per unit. Lakeside
Lakeside Inc. produces Product A and Product B that require special machining time. Machine time capacity is 10,000 machine hours per month. Lakeside estimates April demand for each product and
In addition to the product cost information for Lakeside Inc. in Mini-Exercise 16.1, product engineering has determined that a certain part of the product conversion process could be outsourced. Raw
Lakeside Inc. is considering replacing old production equipment with state-of-the-art technology that will allow production cost savings of $7,500 per month. The new equipment will have a five-year
Use the information presented for Lakeside Inc. in Mini-Exercise 16.6 and your calculation of the net present value of the new production equipment.Data from in Mini-Exercise 16.6Lakeside Inc. is
ABC Company produces product X, product Y, and product Z. All three products require processing on specialized finishing machines. The capacity of these machines is 1,800 hours per month. ABC Company
Use the information presented for Lakeside Inc. in Mini-Exercise 16.6.Data from in Mini-Exercise 16.6Lakeside Inc. is considering replacing old production equipment with state-of-the-art technology
Waterway Engine Inc. produces engines for the watercraft industry. An outside manufacturer has offered to supply several component parts used in the engine assemblies, which are currently being
TopCap Co. is evaluating the purchase of another sewing machine that will be used to manufacture sport caps. The invoice price of the machine is $98,000. In addition, delivery and installation costs
The following capital expenditure projects have been proposed for management’s consideration at Scott Inc. for the upcoming budget year:Required:a. Calculate the net present value of projects B, C,
Southern Manufacturing Ltd. is considering the investment of $230,000 in a new machine. The machine will generate cash flow of $40,000 per year for each year of its eight-year life and will have a
Throughout this course, you will be asked to relate the material being studied to actual financial statements. After you complete this course, you will be able to use an organization’s financial
The accounting profession is frequently in the news, not always in the most positive light. The purpose of this assignment is to increase your awareness of an issue facing the
Chris and Tiasha Hirst have owned and operated a retail furniture store for more than 30 years. They have employed an independent CPA during this time to prepare various sales tax, payroll tax, and
Using the search engine you are most comfortable with, identify at least five sources concerning the general topic of auditor independence. Write a brief memo to provide an update on the current
From the set of financial statements acquired for E1.1, determine the following:a. Who is the chief financial officer?b. What are the names of the directors?c. Which firm conducted the audit? Have
The information presented here represents selected data from the December 31, 2022, balance sheets and income statements for the year then ended for three firms:Required:Calculate the missing amounts
Total assets were $58,000 and total liabilities were $35,000 at the beginning of the year. Net income for the year was $11,000, and dividends of $3,000 were declared and paid during the
During the year, net sales were $400,000; gross profit was $160,000; net income was $60,000; income tax expense was $15,000; and selling, general, and administrative expenses were
From the following data, calculate the retained earnings balance as of December 31, 2022: Retained earnings, December 31, 2021. ... Cost of buildings purchased during 2022. . . . Net loss for the
During the year, cost of goods sold was $120,000; income from operations was $114,000; income tax expense was $24,000; interest expense was $18,000; and selling, general, and administrative expenses
From the following data, calculate the retained earnings balance as of December 31, 2021: Retained earnings, December 31, 2022. Decrease in total liabilities during 2022. Gain on the sale of
Net income for the year was $72,000. During the year, net cash provided by operating activities was $201,000; net cash used for investing activities was $168,000; net cash provided by financing
At the beginning of its current fiscal year, Willie Corp.’s balance sheet showed assets of $67,600 and liabilities of $33,000. During the year, liabilities decreased by $5,000. Net income for the
Net income for the year was $62,000. During the year, net cash provided by operating activities was $145,000; net cash used for investing activities was $96,000; net increase in cash for the year was
Pope’s Garage had the following accounts and amounts in its financial statements on December 31, 2022. Assume that all balance sheet items reflect account balances at December 31, 2022, and that
At the beginning of the current fiscal year, the balance sheet for Davis Co. showed liabilities of $160,000. During the year, liabilities decreased by $9,000, assets increased by $33,000, and paid-in
The information on the following page was obtained from the records of Breanna Inc.:Except as otherwise indicated, assume that all balance sheet items reflect account balances at December 31, 2022,
Circle-Square Ltd. is in the process of liquidating and going out of business. The firm’s balance sheet shows $50,000 in cash, accounts receivable of $240,000, inventory totaling $110,000, plant
Gary’s TV had the following accounts and amounts in its financial statements on December 31, 2022. Assume that all balance sheet items reflect account balances at December 31, 2022, and that all
A partially completed balance sheet for Blue Co. Inc. as of October 31, 2022, is presented. Where amounts are shown for various items, the amounts are correct.Required:Using the following data,
Following is a partially completed balance sheet for Epsico Inc. at December 31, 2022, together with comparative data for the year ended December 31, 2021. From the statement of cash flows for the
The following selected data are adapted from the February 2, 2020, and February 3, 2019, consolidated balance sheets and income statements for the years then ended for The Home Depot, Inc. All
Selected data from the September 26, 2020, and September 28, 2019, consolidated balance sheets and income statements (statements of operations) for the years then ended for Apple Inc. follow. All
Firm J has net income of $124,800, sales of $960,000, and average total assets of $640,000.Required:Calculate Firm J’s margin, turnover, and return on investment (ROI).
Firm L had net assets at the end of the year of $660,000. The only items affecting stockholders’ equity during the year were net income of $162,000 and dividends of $42,000.Required:Calculate Firm
Firm N has a current ratio of 2.6 and current assets of $169,000.Required:Calculate Firm N’s current liabilities and working capital.
Firm O has a current ratio of 3.5 and current liabilities of $56,000.Required:Calculate Firm O’s current assets and working capital.
Firm P has accounts receivable of $19,000, cash of $11,000, property, plant, and equipment of $310,000, merchandise inventory of $26,000, accounts payable of $24,000, other accrued liabilities of
Firm Q has short term debt of $14,000, land of $85,000, merchandise inventory of $31,000, cash of $9,000, property, plant, and equipment of $330,000, accounts payable of $16,000, long-term debt of
Your friend Amber has approached you seeking advice concerning two investment opportunities that she is presently considering. Her classmate Simone has asked her for a loan of $5,000 to help
Your friend has two investment opportunities that she is considering and has asked for your advice regarding how she should proceed. One will have an 9% rate of return on an investment of $12,000;
a. Firm A has a margin of 7%, sales of $980,000, and ROI of 19.6%. Calculate the firm’s average total assets.b. Firm B has net income of $259,200, turnover of 0.9, and average total assets of
Following are the current asset and current liability sections of the balance sheets for Freedom Inc. at January 31, 2023 and 2022 (in millions):Required:a. Calculate the working capital and current
At the beginning of the year, the net assets of Shannon Co. were $492,600. The only transactions affecting stockholders’ equity during the year were net income of $70,200 and dividends of
For the year ended December 31, 2022, Settles Inc. earned an ROI of 12.6%. Sales for the year were $120 million, and average asset turnover was 2.8. Average stockholders’ equity was $25
Following are the current asset and current liability sections of the balance sheets for Around square Inc. at August 31, 2023 and 2022 (in millions):Required:a. Calculate the working capital and
Jay Oullette, CEO of Bumper to Bumper Inc., anticipates that his company’s year-end balance sheet will show current assets of $300,000 and current liabilities of $200,000. Oullette has asked your
A company’s preclosing trial balance shows the following accounts and amounts:a. Calculate total assets on the balance sheet.b. Calculate total liabilities on the balance sheet.c. Calculate the
Use A for Assets; L for Liabilities; SE for Stockholders’ Equity; R for Revenues; and E for Expenses in your answers to parts a–f below:a. The debit side is the normal balance for which
a.Accounts Payable had a balance of $15,000 at the beginning of the month and $21,400 at the end of the month. During the month, purchases on account amounted to $34,600. Calculate the payments to
Prepare an answer sheet with the column headings shown after the following list of transactions. Record the effect, if any, of the transaction entry or adjusting entry on the appropriate balance
Enter the following column headings across the top of a sheet of paper:Enter the transaction or adjustment letter in the first column and show the effect, if any, of the transaction entry or
a. The Supplies account had a balance of $2,400 at the beginning of the month and $3,200 at the end of the month. The cost of supplies purchased during the month was $7,800. Calculate the cost of
On February 1, 2022, the balance of the retained earnings account of Blue Power Corporation was $132,000. Revenues for February totaled $47,000, of which $41,500 was collected in cash. Expenses for
Answer these questions that are related to the following Interest Payable T-account:a. What is the amount of the February 28 adjustment?b. What account would most likely have been credited for the
On May 1, 2022, Tabor Co. received an $21,000 note from a customer in settlement of an $21,000 account receivable from that customer. The note bore interest at the rate of 9% per annum, and the note
A bookkeeper prepared the year-end financial statements of Giftwrap, Inc. The income statement showed net income of $216,000, and the balance sheet showed ending retained earnings of $810,000. The
Selected information taken from the financial statements of Ford star Co. for the year ended December 31, 2022, follows:a. Calculate income from operations (operating income) for the year ended
Selected information taken from the financial statements of Verbeke Co. for the year ended December 31, 2022, follows:a. Calculate income from operations (operating income) for the year ended
Use the horizontal model, or write the journal entry, for each of the following transactions and adjustments that occurred during the first year of operations at Kissick Co.a. Issued 800,000 shares
Set up a horizontal model in the following format:Required:a. Enter the beginning (July 28, 2019) and ending (August 2, 2020) account balances for Accounts Receivable, Inventories, and Payable to
On January 10, 2022, the first day of the spring semester, the cafeteria of The Defiance College purchased for cash enough paper napkins to last the entire 16-week semester. The total cost was
DeBauge Realtors Inc. is a realty firm owned by Jeff and Kristi DeBauge. The DeBauge family owns 100% of the corporation’s stock. The following summarized data (in thousands) are taken from the
Gerrard Construction Co. is an excavation contractor. The following summarized data (in thousands) are taken from the December 31, 2022, financial statements:At December 31, 2021, total assets were
The balance in Happ Inc.’s general ledger Cash account was $16,200 at August 31, before reconciliation. The August 31 balance shown in the bank statement was $14,900. Reconciling items included
At the beginning of the year, accounts receivable were $30,000 and the allowance for bad debts was $1,500. During the year, sales (all on account) were $100,000, cash collections were $94,000, bad
Sales during the year were 500 units. Beginning inventory was 400 units at a cost of $6 per unit. Purchase 1 was 200 units at $7 per unit. Purchase 2 was 100 units at $8 per unit.Required:Calculate
a. Use the horizontal model or write the journal entry to record the payment of a one-year insurance premium of $9,000 on May 1, 2022.b. Use the horizontal model or write the adjusting entry that
On September 1, 2022, a commercial tenant paid its landlord $18,000 in cash as an advance rent payment on its store location. The six-month lease period ends on February 28, 2023, at which time the
On January 1, 2022, the balance in Tabor Co.’s Allowance for Bad Debts account was $21,600. During the first 11 months of the year, bad debts expense of $24,910 was recognized. The balance in the
On January 1, 2022, the balance in Kubera Co.’s Allowance for Bad Debts account was $25,160. During the year, a total of $65,700 of delinquent accounts receivable was written off as bad debts. The
Agrico Inc. accepted an 8-month, 12% (annual rate), $7,000 note from one of its customers on July 15, 2022; interest is payable with the principal at maturity.Required:a. Use the horizontal model or
Annual credit sales of Nadak Co. total $240 million. The firm gives a 2% cash discount for payment within 10 days of the invoice date; 90% of Nadak’s accounts receivable are paid within the
Husemann Co.’s assets include notes receivable from customers. During fiscal 2022, the amount of notes receivable averaged $525,000, and the interest rate of the notes averaged 4.2%.Required:a.
a. Use the horizontal model or write the journal entry to record the payment of a one-year insurance premium of $4,800 on April 1, 2022.b. Use the horizontal model or write the adjusting entry that
On November 1, 2022, Wenger Co. paid its landlord $31,800 in cash as an advance rent payment on its store location. The six-month lease period ends on April 30, 2023, at which time the contract may
Beckett Co. received its bank statement for the month ending June 30, 2022, and reconciled the statement balance to the June 30, 2022, balance in the Cash account. The reconciled balance was

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