Questions and Answers of Financial And Managerial Accounting The Basis For Business Decisions

Assignment Material Before month-end adjustments are made, the January 31 trial balance of Rover Excursions contains revenue of $27,900 and expenses of $17,340. Adjustments are necessary for the
The weekly payroll for employees of Ryan Company, who work a five-day week, amounts to$20,000. All employees are paid up-to-date at the close of business each Friday. If December
falls on Thursday, what year-end adjusting entry is needed?
Explain briefly the items generally included in a company’s annual report. (You may use the annual report appearing in Appendix A to support your answer.)
Can a company be both profitable and insolvent? Explain.
Alta Mine Company, a restaurant that had always made cash sales only, adopted a new policy of honoring several nationally known credit cards. Sales did not increase, but many of Alta
Mine’s regular customers began charging dinner bills on the credit cards. Has the new policy been beneficial to Alta Mine Company? Explain.
Under what circumstances do generally accepted accounting principles permit the use of an inventory cost flow assumption? Must a flow assumption closely parallel the physical movement of the
A large art gallery has in inventory more than
paintings. No two are alike. The least expensive is priced at more than $1,000 and the higher-priced items carry prices of $100,000 or more. Which of the four methods of inventory valuation discussed
Apex Corporation operates in two locations: New York and Oregon. The LIFO method is used in accounting for inventories at the New York facility and the specific identification method for inventories
How is the inventory turnover rate computed? Why is this measurement of interest to shortterm creditors?
One accelerated depreciation method is called fixed-percentage-of-declining-balance. Explain
what is meant by the terms “fixed-percentage” and “declining-balance.” For what purpose is this method most widely used?
An accountant for a corporation said the company computes depreciation on its plant assets by using several different methods for different purposes. But a note to the company’s financial
Explain two approaches to computing depreciation for a fractional period in the year in which an asset is purchased. (Neither of your approaches should require the computation of depreciation to the
After 4 years of using a machine acquired at a cost of $15,000, Miller Construction Company determined that the original estimated life of 10 years had been too short and that a total useful life of
Over what period of time should the cost of various types of intangible assets be amortized by regular charges against revenue? (Your answer should be in the form of a principle or guideline rather
In reviewing the financial statements of Digital Products Company with a view to investing in the company’s stock, you notice that net tangible assets total $1 million, that goodwill is listed at
Explain the meaning of an impairment of an asset. Provide several examples. What accounting event should occur when an asset has become substantially impaired?Several years ago Walker Security
The following items were taken from the accounting records of Murfreesboro Telephone Corporation (MTC) for the year ended December 31, 2021 (dollar amounts are in thousands).Other Information1. The 6
Thompson Plumbing Inc. is a wholesaler of plumbing accessories. Thompson Plumbing began operations in September of the current year and engaged in the following transactions during September and
Ron Jasper manages a factory for Barth Corporation. A salesperson for new factory equipment has persuaded Ron that the new equipment offered by her company would be less dangerous for the employees
The Internet provides a wealth of information concerning long-term liabilities, bond financing, types of bonds, unique features of bonds.Instructions Search the Internet and learn about the
Assume that the required rate of return for capital investments at Knorr Foods is 12 percent. The Produce Department has proposed an investment in refrigeration equipment with a 10-year life. The
Winett Corporation is considering an investment in special-purpose equipment to enable the company to obtain a six-year municipal contract. The equipment costs $1,320,000 and would have no salvage
Samba is a popular restaurant located in Brazilton Resort. Management feels that enlarging the facility to incorporate a large outdoor seating area will enable Samba to continue to attract existing
Solve for the missing information pertaining to each investment proposal. Using the tables in Exhibits 26–3 and 26–4, determine the present value of the following cash flows, discounted at an
Nelson Equipment Company is evaluating two alternative investment opportunities. The controller of the company has prepared the following analysis of the two investment proposals. Items in addition
Pete Nunn is trying to decide whether to go ahead with an investment opportunity that costs $60,000. The expected incremental cash inflows are $32,000, while the expected incremental cash outflows
Hawkins Poultry Farms is considering the purchase of feeding equipment that costs $139,000 and will produce annual cash flows of approximately $36,000 for five years. The equipment is expected to be
Willie Industries is evaluating two alternative investment opportunities. The controller of the company has prepared the following analysis of the two investment proposals. Items in addition to
Rommel Fabrics is considering an investment proposal with a negative net present value of $50 when a discount rate of 9 percent is used. The same proposal has a positive net present value of $400
Tucker Technology is considering two alternative proposals for modernizing its production facilities. To provide a basis for selection, the cost accounting department has developed the following data
Baylor Lumber Products is considering the purchase of a high-efficiency conveyor system. Two manufacturers have approached Baylor with proposals: (1) Duke Industries and (2) Wake Manufacturing.
Pathways Appliance Company is planning to introduce a built-in blender to its line of small home appliances. Annual sales of the blender are estimated at 12,000 units at a price of $35 per unit.
Marshall Technology is considering two alternative proposals for modernizing its production facilities. To provide a basis for selection, the cost accounting department has developed the following
Refer to the information from Problem 18.2A. Data from :Problem 18.2A. One of Spa Magic’s products is a whirlpool spa. Two processing departments are involved in the whirlpool spa’s
The following information relates to the manufacturing operations of Trevino Golf Company during the month of March. The company uses job order costing. a. Purchases of direct materials during
The following are data regarding last year’s production of Dicer Ricer, one of the major products of Kitchen Gadget Company.During the year, 61,000 units of this product were manufactured and
Many companies have established business codes of conduct outlining procedures that enable employees, suppliers, customers, and members of the Board of Directors to report illegal and or unethical
During the current year, the cost of direct materials purchased by a manufacturing firm was $360,000, and the direct materials inventory increased by $80,000. What was the cost of direct materials
Shown are selected data from a recent annual report of CVS Health, a large drugstore chain. (Dollar amounts are in millions.)a. Compute for the year CVS Health’s return on average total assets.
The following income statement and selected balance sheet account data are available for Treece, Inc., at December 31, 2021.Additional Information1. Dividend revenue is recognized on the cash basis.
Joy Sun organized Ray Beam, Inc., in January 2018. The corporation immediately issued at $15 per share one-half of its 260,000 authorized shares of $1 par value common stock. On January 2, 2019, the
Maria Martinez organized Manhattan Transport Company in January 2018. The corporation immediately issued at $8 per share one-half of its 200,000 authorized shares of $2 par value common stock. On
Banner Publications was organized early in 2018 with authorization to issue 10,000 shares of $100 par value preferred stock and 1 million shares of $1 par value common stock. All of the preferred
McMinn Publications was organized early in 2016 with authorization to issue 20,000 shares of $100 par value preferred stock and 1 million shares of $1 par value common stock. All of the preferred
Early in 2018, Searfoss, Inc., was organized with authorization to issue 2,000 shares of $100 par value preferred stock and 300,000 shares of $1 par value common stock. Five hundred shares of the
Early in 2018, Robbinsville Press was organized with authorization to issue 100,000 shares of $100 par value preferred stock and 500,000 shares of $1 par value common stock. Ten thousand shares of
Melillo Corporation issued $5 million of 20-year, 9.5 percent bonds on July 1, 2021, at 98. Interest is due on June 30 and December 31 of each year, and all of the bonds in the issue mature on June
Xonic Corporation issued $8 million of 20-year, 8 percent bonds on April 1, 2021, at 102. Interest is paid on March 31 and September 30 of each year, and all of the bonds in the issue mature on March
As of December 31 of the current year, Alexander Company has prepared the following information regarding its liabilities and other obligations.Instructionsa. Prepare a listing of Alexander’s
As of December 31 of the current year, Petersen Corporation has prepared the following information regarding its liabilities and other obligations.Instructions.a. Prepare a listing of the Petersen
On March 31, 2021, Gardner Corporation received authorization to issue $50,000 of 9 percent, 30-year bonds payable. The bonds pay interest on March 31 and September 30. The entire issue was dated
Joseph Max, Inc., sold 10-year, 5 percent bonds for $1,000,000 at 98. On the interest payment date at the end of the fifth year the bonds were outstanding, 40 percent ($400,000) of the bonds were
Seattle Boat Company pays federal income taxes at a rate 35 percent on taxable income. Compute the company’s annual after-tax cost of borrowing on a 5 percent, $5 million bond issue. Express
On September 1, 2021, Rodriguez Plumbing Company issued $5 million in 10-year, 12 percent bonds payable. Interest is payable semiannually on March 1 and September 1. Bond discounts and premiums are
Bramblett Recording Studio is considering two investment proposals (1 and 2). Data for the two proposals are presented here.Calculate the return on average investment for both proposals. Cost of
Rico Petricelli Industries invests $960,000 in plant assets with an estimated 10-year service life and no salvage value. These assets contribute $64,000 to annual net income when depreciation is
Last month, Hildebrand Corporation generated sales of $800,000 and incurred selling and administrative expenses of $320,000, of which half were variable. This month, the company estimates that it
On September 1, 2021, Evansville Lumber Company issued $80 million in 20-year, 10 percent bonds payable. Interest is payable semiannually on March 1 and September 1. Bond discounts and premiums are
Glen Pool Club, Inc., has an installment loan outstanding with a current balance of $150.000. The company makes monthly installments of $1,543, which include interest computed at an annual rate of 6
Stevens Manufacturing Company obtained authorization to issue 10-year bonds with a face value of $5 million. The bonds are dated June 1, 2021, and have a contract rate of interest of 6 percent. They
On September 1, 2021, Speedy Lube signed a 30-year, $1,080,000 mortgage note payable to Jonstown Bank and Trust in conjunction with the purchase of a building and land. The mortgage note calls for
On October 1, 2021, Jenco signed a four-year, $100,000 note payable to Vicksburg State Bank in conjunction with the purchase of equipment. The note calls for interest at an annual rate of 12 percent
Green Mountain Power Company obtained authorization to issue 20-year bonds with a face value of $10 million. The bonds are dated May 1, 2021, and have a contract rate of interest of 10 percent. They
Delta Airlines leases most of its commercial aircraft and is currently committed to pay almost $15 billion in future lease obligations. However, notes to the company’s financial statements reported
During the fiscal year ended December 31, Swanson Corporation engaged in the following transactions involving notes payable. Aug. 6 Borrowed $12,000 from Maple Grove Bank, signing a 45-day, 12
Six events relating to liabilities follow.a. Paid the liability for interest payable accrued at the end of the last accounting period.b. Made the current monthly payment on a 12-month installment
The following are selected items from the accounting records of Georgia Peach for the year ended December 31, 2021.Other Information1. The note payable to Smithfield Bank is due in 60 days.
The following are selected items from the accounting records of Denver Chocolates for the year ended December 31, 2021.Other Information1. The note payable to Northwest Bank is due in 60 days.
One of the advantages of borrowing is that interest is deductible for income tax purposes. a. If a company pays 5 percent interest to borrow $500,000, but is in an income tax bracket that
The Home Depot, Inc., financial statements appear in Appendix A at the end of this text. Use these statements to answer the following questions. a. What is the total dollar value of the
The Home Depot financial statements and related material appear in Appendix A at the end of this textbook. Use these to answer the following questions and indicate where in the financial statements
Fifteen transactions or events affecting Philmar, Inc., are as follows.a. Made a year-end adjusting entry to accrue interest on a note payable that has the interest rate stated separately from the
Fifteen transactions or events affecting Technology Specialists, Inc., are as follows.a. Made a year-end adjusting entry to accrue interest on a note payable.b. A liability classified for several
Jansen Company borrowed $12,000 on a 1-year, 5 percent note payable from the local bank on April 1. Interest was paid quarterly, and the note was repaid one year from the time the money was borrowed.
Swindall Industries uses straight-line depreciation on all of its depreciable assets. The company records annual depreciation expense at the end of each calendar year. On January 11, 2017, the
On January 2, 2021, Jatson Corporation acquired a new machine with an estimated useful life of five years. The cost of the equipment was $40,000 with an estimated residual value of $5,000. a.
Ryan Sound uses a periodic inventory system. One of the store’s products is a wireless headphone. The inventory quantities, purchases, and sales of this product for the most recent year are as
On January 22, 2021, Dobbins Supply, Inc., sold 700 toner cartridges to Foster Office Fitters. Immediately prior to this sale, Dobbins Supply’s perpetual inventory records for these units included
Zeta Co. has outstanding 100,000 shares of $100 par value cumulative preferred stock, which has a dividend rate of 7 percent. The company has not declared any cash dividends on the preferred stock
A portion of the stockholders’ equity section from the balance sheet of Walland Corporation appears as follows. Notice that the company has two classes of preferred stock with different features,
The Enforcement Division of the Securities and Exchange Commission (SEC) is an important aspect of the corporate governance structure in the United States that is intended to protect investors.
Using the search approach of your choice, find the 2018 annual report of Johnson & Johnson. Locate the company’s 2018 balance sheet.InstructionsAnswer the following questions.a. Does the
Timberlake Corporation is a publicly owned company. The following information is taken from a recent balance sheet. Dollar amounts (except for per-share amounts) are stated in
Early in 2019, Feller Corporation was formed with authorization to issue 50,000 shares of $1 par value common stock. All shares were issued at a price of $8 per share. The corporation reported net
Early in 2019, Teek Corporation was formed with authorization to issue 50,000 shares of $3 par value common stock. All shares were issued at a price of $10 per share. The corporation reported net
The following information is necessary to compute the net assets (stockholders’ equity) and book value per share of common stock for Rothchild Corporation.a. Compute the amount of net assets
The following income statement was prepared by a new and inexperienced employee in the accounting department of Phoenix, Inc., a business organized as a corporation.Instructions.a. Prepare a
Early in 2017, Herndon Industries was formed with authorization to issue 250,000 shares of $10 par value common stock and 30,000 shares of $100 par value cumulative preferred stock. During 2017, all
At the beginning of 2021, Greene, Inc., showed the following amounts in the stockholders’ equity section of its balance sheet.The transactions relating to stockholders’ equity during the year are
Early in 2017, Laird Industries was formed with authorization to issue 150,000 shares of $20 par value common stock and 10,000 shares of $100 par value cumulative preferred stock. During 2017, all
At the beginning of 2021, Thompson Service, Inc., showed the following amounts in the stockholders’ equity section of its balance sheet.The transactions relating to stockholders’ equity during
The Adams family decided early in 2020 to incorporate their family-owned farm under the name Adams Corporation. The corporation was authorized to issue 100,000 shares of a single class of $1 par
The Mandella family decided early in 2020 to incorporate their family owned vineyards under the name Mandella Corporation. The corporation was authorized to issue 500,000 shares of a single class of
Refer to the information in Problem 18.5B. Information in Problem 18.5B. Instructionsa. Complete a production cost report for the Balfanz Company Finishing Department for the month of
The following information is from the manufacturing budget and the budgeted financial statements of Schenck Development Partners.Compute the budgeted amounts fora. Purchases of direct materials
The contribution margin ratio of the Parts Department of Buffalo Valley Repair is 40 percent. Traceable fixed costs of the Parts Department average $80,000 per year, and the department’s projected

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