Questions and Answers of Managerial Accounting Tools For Business Decision Making 9th

Big Boy Engines is a division of Gas Guzzler Lawn Equipment Company. Big Boy makes engines for lawn mowers, snow blowers, and other types of lawn and garden equipment. It sells its engines to the
Alameda Corporation needs to set a target price for its newly designed product E2-D2. The following data (the same as for Alameda in P11-IA) relate to this new product.The above costs are based on a
Carolina Furniture Inc. is in the process of setting a targel price on its newlv designed leather recliner sofa. Cost data relating to the sofa at a budgeted volume ol 2.500 units are as
Bonita Corporation needs to set a target price for its newly designed product M14-M16. The following data relate to this new product.These costs are based on a budgeted volume of 80,000 units
Migami Computer Parts Inc. is in the process of setting a selling price on a new component it has just designed and developed. The following cost estimates for this new component have been provided
Ernie's Electronic Repair Shop has budgeted the following time and material for 2002.Ernie's budgets 5,000 hours of repair time in 2002 and will bill a profit of $$5$ per labor hour along with a
World of Words is a publishing company with a number of different book lines. Each line has contracts with a number of different authors. The company also owns a printing operation called Pronto
The Electronics Manufacturing Company makes various electronic products.The company is divided into a number of autonomous divisions that can either sell to internal units or sell externally. All
Communication Manufacturing (CM) is a division of Universal Communications, Inc. CM produces pagers and other personal communication devices. These de- vices are sold to other Universal divisions, as
Mak-A-Buck Corporation needs to set a target price for its newly designed product AlwaysReady. The following data relate to this new product.The costs above are based on a budgeted volume of 80,000
Wisconsin Windows Inc. is in the process of setting a target price on its newly designed tinted window. Cost data relating to the window at a budgeted volume of 3,000 units are as follows.Wisconsin
Harvey Manufacturing has multiple divisions that make a wide variety of prod- ucts. Recently the Bearing Division and the Wheel Division got into an argument over a transfer price. The Wheel Division
Construction on the Stellar Full-Service Car Wash is nearing completion. The owner is Les Vin, a retired accounting professor. The car wash is strategically located on a busy street that separates an
Ann Osborne recently graduated from college with a degree in landscape architecture. Her father runs a tree, shrub, and perennial-flower uursery, and her brother has a business delivering lopsoil,
The April 17, 2001, issue of the Wall Street Journal includes an article by James Bandler and Mark Maremont entitled "How Xerox's Plan to Reduce Taxes While Boosting Earnings
Net income is $132,000. During the year,counts payable increased $10,000, inventory decreased $6,000, and accounts receivable in- creased $12,000. Under the indirect method, net cash provided by
Noncash charges that are added back to net in- come in determining cash provided by operations under the indirect method do not include:(a) depreciation expense.(b) an increase in inventory.(c)
Which one of the following ratios provides useful comparison to the profit margin ratio?(a) Capital expenditure ratio.(b) Cash return on sales ratio.(c) Cash debt coverage ratio.(d) Current cash debt
(a) What is the statement of cash Flows? (b) Alice Weise man maintains that the statement of cash flows is an optional financial statement. Do you agree?Explain
What are "cash equivalents"? How do cash equivalents affect the statement of cash flows?
Win is it necessary to use comparative balance sheets, a current income statement, and certain transaction data in preparing a statement of cash flows.'
The president of Styx Company is puzzled. During the year, the company experienced a net loss of$800,000, yet its cash increased $300,000 during the same period. Explain to the president how this
. Identify five items that are adjustments to reconcile net income to net cash provided b\ operating activities under the indirect method
During 2002, Joe Pesci Company converted$1,600,000 of its total $2,000,000 of bonds payable into common stock. Indicate how the transaction would be reported on a statement of cash flows, if at all.
Kim Bassinger Inc. reported sales of $2 million for 2002. Accounts receivable decreased $200,000 and accounts payable increased $325,000. Compute cash receipts from customers, assuming that the
Why is depreciation expense not reported in the direct method cash How from operating activities section.'
Titanic Co. reported net income of $$2.5$ million in 2002. Depreciation for the year was $$260,000$, accounts receivable decreased $$350,000$, and accounts payable decreased $$310,000$.
The net income for Robin Williams Co. for 2002 was $$250,000$. For 2002, depreciation on plant assets was $$60,000$, and the company incurred a loss on sale of plant assets of $$10,000$.
Each of the following items must be considered in preparing a statement of cash flows for Rudy Boesch Co. for the year ended December 31, 2002. For each item, state how it should be shown in the
The comparative balance sheets for Survivor Company show the following changes in noncash current asset accounts: accounts receivable decrease $$75,000$, prepaid expenses increase $$12,000$, and
Wal-Mart Stores, Inc. reported income taxes of $$3,692,000,000$ on its 2001 in- come statement and income taxes payable of $$1,129,000,000$ at January 31, 2000, and$$841,000,000$ at January 31,
Excel Corporation reports operating expenses of $$90,000$ excluding depreciation expense of $$15,000$ for 2002. During the year prepaid expenses decreased $$6,600$ and accrued expenses payable
DiCaprio Company reports operating expenses of $$270,000$ excluding depreciation expense of $$45,000$ for 2002. During the year prepaid expenses decreased $$19,800$. and accrued expenses
The T accounts for Equipment and the related Accumulated Depreciation for Sharon Stone Company at the end of 2002 are as follows.Sharon Stone Company's income statement reported a loss on the sale of
The Following T account is a summary of the cash account of Ann Company.For Amy Company what amount of net cash provided (used) by financing activities should be reported in the statement ol cash
Barbara Eden Corporation had the following transactions during 2002.1. Issued $$50,000$ par value common stock for cash.2. Collected $$16,000$ of accounts receivable.3. Declared and paid a cash
Porky Company reported net income of $$195,000$ for 2002. Porky also reported depreciation expense of $$35,000$, and a loss of $$5,000$ on the sale of equipment. The comparative balance sheets
The current sections of Depeche Mode Co. balance sheets at December 31, 2001 and 2002, are presented as follows.Depeche Mode's nel income For 2002 was $$163,000$. Depreciation expense was
Presented below are three accounts that appear in the general ledger of Wesley Snipes Co. during 2002.InstructionsFrom the postings in the accounts above, indicate how the information is reported on
Satchmo Company has just completed its first year of operations on December 31, 2002. Its initial income statement showed that Satchmo had revenues of $$137,000$ and operating expenses of
The income statement for Mel Gibson Company shows cost of goods sold$$325,000$ and operating expenses (exclusive of depreciation) $$250,000$. The comparative balance sheets for the year show that
The 2002 accounting records of Winona Ryder Co. reveal the following trans- actions and events.InstructionsPrepare the cash flows from operating activities section using the direct method. (Not all
The following information is taken from the 2002 general ledger of Richard Gere Company.InstructionsIn each ol the above cases, compute the amount that should ing activities section ol the statement
Presented here is 1998 information for PepsiCo, Inc. and The Coca-Cola Company:InstructionsUsing the cash-based ratios presented in this chapter, compare the (a) liquidity, (b) solvency, and (c)
The income stement of Rebecca Sherrick Company is shown below.Additional information:1Accounts receivable increased $$490,000$ during the year.2. Prepaid expenses increased $$170,000$ during the
The income statement of Dreamworks International Co. for the year ended December 31, 2002, reported the following condensed information.Dream works' balance sheet contained the following comparative
The financial statements of Jim Carrey Company appear below.Additional information:1. Dividends of $$9,000$ were declared and paid.2. During the year equipment was sold for $$10,000$ cash. This
Data for the Jim Carrey Company are presented in P12-5A. Further analysis re- veals the following. 1. Accounts payable pertains to merchandise creditors. 2. All operating expenses except for
Condensed financial data of Tom Cruise Company appear on the next page.Additional information:1 New plant assets costing $$92,000$ were purchased for cash during the year.2. Investments were sold
Presented on page 538 are the comparative balance sheets for Nicolas Cage Company at December 31.Additional information: 1. Operating expenses include depreciation expense of $$70,000$ and charges
The income statement of Barbra Streisand Company is shown below.Additional information:1. Accounts receivable decreased $$280,000$ during the year.2. Prepaid expenses increased $$150,000$ during
George Clooney Company's income statement for the year ended December 31 2002, contained the following condensed information.Clooney s balance sheet contained the following comparative data at
The financial statements of Frank B. Robinson Company appear below.Additional information: 1. Dividends declared and paid were $$3,000$. 2. During the year equipment was sold for $$8,500$ cash.
Data for the Frank B. Robinson Company are presented in PI2-5B. Further analysis reveals the following.1. Accounts payable pertain to merchandise suppliers.2. All operating expenses except for
The financial statements of Bruce Willis Company appear below.Additional information: 1. Plant assets were sold at a sales price of $$37,500$. 2. Additional equipment was purchased at a cost of
P12-8B Data for Bruce Willis Company is presented in P12-7B. Further analysis reveals the following. 1. Accounts payable relates to merchandise creditors. 2. All operating expenses, except
Presented below are the comparative balance sheets for Dennis Weigle Company as of December 31.Additional information: 1. Operating expenses include depreciation expense of $$42.000$. 2. Land was
Greg Rhoda and Debra Sondgeroth are examining the following statement of cash flows for K.K. Bean Trading Company for the year ended January 31, 2002.Greg claims that K.K. Bean's statement of cash
Purpose: Locate SEC filing in Edgar Database.Address: wwvv.sec.gov/index.htnil (or go to www.wiley.com/coUegefyveygandt)Steps:1. From the SEC homepage, choose Edgar Database.2. Choose Search the
Purpose: Use the Internet to view SEC filings.Address: www.yahoo.com (or go to www.wiley.cont/coUegefyveygandt)Steps:1. From the Yahoo homepage, choose Stock Quotes.2. Enter a company's stock symbol
Arnold Byte, the owner-president of Computer Services Company, is unfamiliar with the statement of cash flows that you, as his accountant, prepared. He asks for further explanation.InstructionsWrite
The March 21, 1997, issue of the Wall Street Journal contains an article by Greg Ip entitled "Cash Flow Rise Could Be Prop to Stock Prices."Instructions Read the article and answer the following
The Chicago Corporation has income before taxes of $$400,000$ and an extraordinary loss of $$100,000$. If the income tax rate is 25% on all items, the income statement should show income before
Earlville Corporation reported net sales of$$300,000$, $$330,000$, and $$360,000$ in the years 2000, 2001, and 2002, respectively. If 2000 is the base year, what is the trend percentage for
Which measure is an evaluation of a company's ability to pay current liabilities?(a) Acid-test ratio.(b) Current ratio.(c) Both (a) and (b).(d) None of the above.
Which measure is useful in evaluating the efficiency in managing inventories?(a) Inventory turnover ratio.(b) Days in inventory.(c) Both (a) and (b).(d) None of the above.
Oswego Corporation reported net income $24,000; net sales $400.000; and average assets $$600,000$ for 2002. What is the 2002 profit margin?(a) 6%.(b) 12%.(c) 40%.(d) 200%.
Which of the following is generally not considered to be a limitation of financial analysis?(a) Use of ratio analysis.(b) Use of estimates.(c) Use of cost.(d) Use of alternative account- ing methods.
Your roommate, Alyssa Mandula, asks you to explain earning power. What relationship does this concept have to the treatment of irregular items on the income statement?
Kelly Berryman Inc. reported 2000 earnings per share of $$3.26$ and had no extraordinary items. In 2001 earnings per share on income before extraordinary items was $$2.99$. and earnings per share
Alia Khan Robotics Inc. has been in operation for 3 years. All of its manufacturing equipment, which has a useful life of 10 to 12 years, has been depreciated on a straight-line basis. During the
(a) Josh Avers believes that the analysis ol linancial statements is directed at two characteristics of a company: liquidity and probability. Is Josh collect? Explain,(b) Are short-term creditors,
Distinguish among the following bases ol comparison: intracompany, industry averages, and intercompany(b) Give the principal value of using each of the three bases of comparison.
(a) If Nick Flach Company had net income of $$540,000$ in 2001 and it experienced a 24.5% in- crease in net income for 2002, what is its net in- come for 2002? (b) If six cents of every dollar of
Jon Alden is puzzled. His company had a profit margin of 10% in 2002. He feels that this is an indication that the company is doing well. Anna Weis, his accountant, says that more information is
Brian Tanaka Company, a retail store, has a receivables turnover ratio of 4.5 times. The industry aver- age is 12.5 times. Does Tanaka have a collection problem with its receivables?
In May 2001 the price-earnings ratio of General Motors was 15, and the price-earnings ratio of Microsoft was 40. Which company did the stock market favor? Explain.
The return on assets for Ray St. John Corporation is 7.6%. During the same year St. John's return on com- mon stockholders' equits is 12.8%. What is the ex- planation For the difference in the two
Jenna Greenlee Inc. has net income of $$270,000$, as- erage shares of common stock outstanding of 50,000 and preferred dividends for the period of $40,000.What is Greenlee's earnings per share of
On June 30 Georgia Keen Corporation discontinued its operations in Mexico.During the year, the operating loss was $$400,000$ before taxes. On September 1 Keen disposed of the Mexico facility at a
On January 1, 2002, Elora Karim Inc. changed from the straight-line method of depreciation to the declining-balance method. The cumulative effect of the change was to increase the prior years'
Net income was $$500,000$ in 2000, $$420,000$ in 2001, and $$504,000$ in 2002.What is the percentage of change from (a) 2000 to 2001 and (b) 2001 to 2002? Is the change an increase or a
If Forest Hanold Company had net income of $$672,300$ in 2002 and it experienced a 25% increase in net income over 2001, what was its 2001 net income?
Janie McMahon Products Company has stockholders' equity of $$200,000$ and net income of $$50,000$. It has a payout ratio of 20°c and a rate of return on assets oi 16%.How much did McMahon
Dylan Karraker Company has income from continuing operations of $$240,000$ for the year ended December 31, 2002. It also has the following items (before considering income taxes): ( 1 ) an
Here is financial information IInstructionsPrepare a schedule showing a horizontal analysis fo] 2002. using 2001 as the base year. December 31, 2002 December 31, 2001 Current assets $120,000 $100,000
Here are the comparative income statements of Olympic CorporationInstructions (a) Prepare a horizontal analysis of the income statement data for Olympic Corporation, using 2001 as a base.(b) Prepare
Eugene Incorporated had the following transactions involving current assets and current liabilities during February 2002.Additional information:1. As of February 1, 2002, current assets were
Gladys feske ( ompanj has these comparative balance sheet dataAdditional inlormalin !1. Net income was $25,000.2. Sales on account ueie >420.()()(). Sales returns and allowances amounted to
Selected comparative statement data For the giant bookseller Barnes & Noble are presented here. All balance sheet data are as of December 31 (in millions).Instructions Compute the following
Easi Corporation experienced a fire on December 31, 2002, in which its financial records were partially destroyed. It has been able to salvage some of the records and has ascertained the following
The comparative statements of Harry Connick, Jr., Company are presented here.On July 1, 2002, 4,000 shares were repurchased and canceled. All sales were on account.Net cash provided by operating
Condensed balance sheet and income statement data for Midnight Oil Corporation are presented here.Additional information:1. The market price of Midnight Oil's common slock was $$4.00$, $$6.00$,
A This financial information is for Semisonic CompanyAdditional information:1. Inventory at the beginning of 2001 was $115,000.2. Receivables at the beginning of 2001 were $88,000.3. Total assets at
Selected financial data of Kmart and Wal-Mart for 1998 are presented here (in millions).Instructions (a) For each company, compute the following ratios. (1) Current.(2) Receivables turnover.3)
Here are comparative statement data for Jimmy Paige Company and Robert Plant Company, two competitors. All balance sheet data are as of December 31, 2002, and December 31, 2001.Instructions(a)
The comparative statements of Monster Magnet Company are presented here.On July 1, 2002, 1,000 shaies weie repuichased and canceled. All sales were on account. Net cash provided b) operating
These are condensed balance sheet and income statement data for Vicente Fernandez Corporation.Additional information: 1. The market price of Vicente Fernandez's common stock was $$5.00$, $$3.50$,
Financial information for Dwight Yoakam Company is presented here..Additional information: 1. Inventory at the beginning of 2001 was $$350.000$. 2. Receivables at the beginning of 2001 were
Selected financial data for Bethlehem Steel and USX are presented here (in millions)Instructions (a) For each company, compute the following ratios.(1) Current ratio.(2) Receivables turnover.(3)

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