accounting questions

Long-term LiabilitiesLTL-2P&P Products issued $1,800,000 of face value bonds on April 1, 2012. The bonds were sold for $1,908,000. They pay 8% interest each year on December 31, and come due in 10 years from their date of January 1, 2012. The company uses the effective interest method to amortize any premium or discount. The market rate is 6%. Required: Prepare a bond amortization schedule showing the interest expense, interest payable/cash amount of amortization and carrying value of the bond for the first two years. Prepare entries for the issuance of the bonds and payment of interest for 2012 and 2013. LTL-3On January 1, 2012, P&P Products purchased $1,000,000 of the five-year, 8% bonds of Delta Products in the open market for $960,000. Delta Products is a wholly owned subsidiary of P&P Products. The bonds are dated and were issued by Delta Products on January 1, 2010. The bonds pay interest every January 1 and July 1. The effective interest method is used for amortization purposes. The market rate is 10%. Required: Make any necessary entries on Delta Products booksProperty, Plant, and EquipmentPPE-2Background: P& P Products is relocating their Human Resource department to an unused space that is closer to the main administration building. The 4,000 square foot space is empty and has not been used in several years. Jane, the VP of personnel, is overseeing the conversion and relocation of the HR Department. P&P Products’ maintenance department will perform the work. Jane has asked George, the maintenance foreman, to prepare a list of what needs to be completed in order to make the space ready for occupancy. George has provided the following list of tasks and their estimated costs. Assume that contractors will perform the construction and that the prices given include labor costs: 1. Painting (the current walls have paint peeling)-$15,0002. Removal of old asbestos in the ceiling-$12,0003. Replacing the wood floors with tile to increase the life of the space-$34,0004. Installing wiring for computers-$18,0005. Installing modular units for work space-$124,000Problem: In addition to the costs listed above, Jane asked the IT department to give her a price list for new computer equipment. The following information was provided: a. 14 new computers-$140,000. Additionally, P&P Products would have to pay $2,000 for freight and 6% tax on $140,000. The estimated useful life is 5 years, with a 5% salvage value. The computers are listed as a single unit for financial reporting purposes. b. 10 existing computers, with a total trade-in value of $10,000 will be traded for the new computers. The computers are treated as a single unit for financial reporting purposes. These computers have an original cost of $80,000 and a book value of $8,000. The remainder of the purchase price of the new computers will be paid in cash. c. Additional IT personnel to support the increased workload created by the HR department-$200,000 annually. This amount includes fringe benefits and taxes. Required: Prepare the potential journal entries for the above items (a, b, c only) assuming that the exchange is considered to lack commercial substance. PPE-5P&P Products began construction on a warehouse that had a total estimated cost of $4,000,000. Construction began on January 2, 2012. Expenditures for 2012 were made as follows: January 2, $1,000,000March 1, $900,000July 1, $400,000October 1, $800,000P&P Products financed the project by issuing $1,000,000 in stock at the beginning of 2012, and in 2011, obtained a construction loan for $1,200,000 at an interest rate of 8%. Additionally, the company had a $1,000,000, 9% note payable that was obtained in 2010 and a $2,000,000, 11% note payable that was obtained in 2009. Both notes come due in 2016. The warehouse was completed in 2013. Required: a. Calculate the weighted average accumulated expenditures for the year 2012b. How much is the avoidable interest in the year 2012?c. How much is the actual interest in the year 2012?d. Prepare the entry to record the interest capitalized in 2012.

accounting questions

The following summary transactions occurred during 2011 for Bluebonnet Bakers:Cash Received from: Customers $380,000 Interest on note receivable 6,000 Principal on note receivable 30,000 Sale of investments 50,000 Proceeds from note payable 100,000Cash Paid for: Purchase of inventory 160,000 Interest on note payable 5,000Purchase of equipment 85,000Salaries to employees 90,000Principal on notes payable 25,000Payment of dividends to shareholders 20,000The balance of cash and cash equivalents at the beginning of 2011 was $17,000. Required:Prepare a statement of cash flows for 2011for Bluebonnet Bakers. Use the direct method for reporting operating activities.

Accounting Questions

1. During the month of September, direct labor cost totaled $13,400 and direct labor cost was 40% of prime cost. If total manufacturing costs during September were $73,000, the manufacturing overhead was:$39,500$33,500$50,000$10,5002.A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $4,410 and is paid at the beginning of the first year. Seventy percent of the premium applies to manufacturing operations and thirty percent applies to selling and administrative activities. What amounts should be considered product and period costs respectively for the first year of coverage?Product Period$4,410 $0$3,087 $1,323$2,058 $882$1,029 $4413.Carbaugh Corporation has provided the following production and average cost data for two levels of monthly production volume. The company produces a single product.Production volume 7,000 units 8,000 unitsDirect materials $82.90 per unit $82.90 per unitDirect labor $58.20 per unit $58.20 per unitManufacturing overhead $74.20 per unit $69.20 per unitThe best estimate of the total cost to manufacture 7,400 units is closest to: (Do not round intermediate calculations.)$1,545,930$1,577,220$1,595,100$1,583,9254.A soft drink bottler incurred the following factory utility cost: $3,736 for 1,200 cases bottled and $3,812 for 1,700 cases bottled. Factory utility cost is a mixed cost containing both fixed and variable components. The variable factory utility cost per case bottled is closest to:$3.11$0.15$2.24$2.205.Supply costs at Lattea Corporation’s chain of gyms are listed below:Client-Visits Supply CostMarch 11,670 $28,584April 11,466 $28,418May 11,998 $28,842June 14,300 $28,938July 11,730 $28,645August 11,216 $28,244September 12,010 $28,843October 11,701 $28,601November 11,849 $28,726Management believes that supply cost is a mixed cost that depends on client-visits. Use the high-low method to estimate the variable and fixed components of this cost, Compute the variable component first, rounding off to the nearest whole cent. Then compute the fixed component, rounding off to the nearest whole dollar. Those estimates would be closest to: (Round your Variable cost per unit to 2 decimal places.)$1.92 per client-visit; $28,646 per month$.81 per client-visit; $18,591 per month$0.27 per client-visit; $25,144 per month$0.23 per client-visit; $25,649 per month6.The following cost data pertain to the operations of Swestka Department Stores, Inc., for the month of July.Corporate headquarters building lease $82,400Cosmetics Department sales commissions–Northridge Store $5,860Corporate legal office salaries $64,200Store manager’s salary-Northridge Store $19,900Heating-Northridge Store $18,500Cosmetics Department cost of sales–Northridge Store $34,500Central warehouse lease cost $8,000Store security-Northridge Store $19,700Cosmetics Department manager’s salary–Northridge Store $4,490The Northridge Store is just one of many stores owned and operated by the company. The Cosmetics Department is one of many departments at the Northridge Store. The central warehouse serves all of the company’s stores.What is the total amount of the costs listed above that are direct costs of the Cosmetics Department?$40,360$95,540$44,850$34,5007.At a sales volume of 44,500 units, Thoma Corporation’s sales commissions (a cost that is variable with respect to sales volume) total $640,800.To the nearest whole cent, what should be the average sales commission per unit at a sales volume of 45,500 units? (Assume that this sales volume is within the relevant range.)$14.09$15.09$14.40$13.778.Erkkila Inc. reports that at an activity level of 7,000 machine-hours in a month, its total variable inspection cost is $424,580 and its total fixed inspection cost is $179,142.What would be the average fixed inspection cost per unit at an activity level of 7,300 machine-hours in a month? Assume that this level of activity is within the relevant range.$24.54$86.25$25.59$35.069.Inspection costs at one of Iuliano Corporation’s factories are listed below:Units produced Inspection costFebruary 913 $ 17,012March 965 $ 17,400April 919 $ 17,065May 903 $ 16,910June 925 $ 17,094July 910 $ 16,980August 927 $ 17,132September 867 $ 16,480October 906 $ 16,938Management believes that inspection cost is a mixed cost that depends on units produced.Using the high-low method, the estimate of the fixed component of inspection cost per unit produced is closest to: (Round the intermediate calculations to two decimal places.)$16,920.00$16,481.00$16,911.00$8,338.6510.Nikkel Corporation, a merchandising company, reported the following results for July:Sales $490,000Cost of goods sold (all variable) $169,700Total variable selling expense $24,200Total fixed selling expense $21,700Total variable administrative expense $13,200Total fixed administrative expense $33,600The gross margin for July is:$227,600$434,700$282,900$320,30011.Salvadore Inc., a local retailer, has provided the following data for the month of September:Merchandise inventory, beginning balance $49,500Merchandise inventory, ending balance $42,900Sales $268,500Purchases of merchandise inventory $138,700Selling expense $18,800Administrative expense $53,800The cost of goods sold for September was:$138,700$145,300$132,100$211,30012.Salvadore Inc., a local retailer, has provided the following data for the month of September:Merchandise inventory, beginning balance $ 42,700Merchandise inventory, ending balance $ 42,100Sales $268,300Purchases of merchandise inventory $134,800Selling expense $ 16,800Administrative expense $ 57,600The net operating income for September was:$58,500$134,500$61,300$133,50013.Management of Modugno Corporation is considering whether to purchase a new model 370 machine costing $525,000 or a new model 240 machine costing $423,000 to replace a machine that was purchased 8 years ago for $488,000. The old machine was used to make product M25A until it broke down last week. Unfortunately, the old machine cannot be repaired.Management has decided to buy the new model 240 machine. It has less capacity than the new model 370 machine, but its capacity is sufficient to continue making product M25A.Management also considered, but rejected, the alternative of simply dropping product M25A. If that were done, instead of investing $423,000 in the new machine, the money could be invested in a project that would return a total of $450,000.In making the decision to buy the model 240 machine rather than the model 370 machine, the differential cost was:$37,000$65,000$-38,000$102,00014.Sawyer Manufacturing Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Last year, the Corporation worked 30,000 actual direct labor-hours and incurred $319,000 of actual manufacturing overhead cost. The Corporation had estimated that it would work 29,000 direct labor-hours during the year and incur $290,000 of manufacturing overhead cost. The Corporation’s manufacturing overhead cost for the year was:underapplied by $10,000underapplied by $19,000overapplied by $10,000overapplied by $19,00015. Cribb Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 11,400 hours and the total estimated manufacturing overhead was $255,360. At the end of the year, actual direct labor-hours for the year were 11,100 hours and the actual manufacturing overhead for the year was $244,840. Overhead at the end of the year was: (Round your intermediate calculations to 2 decimal places.)$8,800 underapplied$8,800 overapplied$3,800 underapplied$3,800 overapplied16.The following data have been recorded for recently completed Job 323 on its job cost sheet. Direct materials cost was $2,127. A total of 32 direct labor-hours and 256 machine-hours were worked on the job. The direct labor wage rate is $20 per labor-hour. The Corporation applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $27 per machine-hour. The total cost for the job on its job cost sheet would be:$6,635$9,679$7,054$11,82417.During October, Dorinirl Corporation incurred $71,300 of direct labor costs and $5,900 of indirect labor costs. The journal entry to record the accrual of these wages would include a:credit to Work in Process of $77,200debit to Work in Process of $71,300debit to Work in Process of $77,200credit to Work in Process of $71,30018.During October, Beidleman Inc. transferred $60,900 from Work in Process to Finished Goods and recorded a Cost of Goods Sold of $65,930. The journal entries to record these transactions would include a:credit to Cost of Goods Sold of $65,930debit to Finished Goods of $65,930credit to Work in Process of $60,900credit to Finished Goods of $60,90019.Compute the amount of raw materials used during August if $11,000 of raw materials were purchased during the month and the inventories were as follows:Inventories Balance August 1 Balance August 31Raw materials $1,500 $1,300Work in process $15,000 $16,000Finished goods $37,000 $31,000$16,000$17,300$13,800$11,20020.Cerrone Inc. has provided the following data for the month of July. The balance in the Finished Goods inventory account at the beginning of the month was $57,800 and at the end of the month was $49,400. The cost of goods manufactured for the month was $281,000. The actual manufacturing overhead cost incurred was $86,200 and the manufacturing overhead cost applied to Work in Process was $76,000. The adjusted cost of goods sold that would appear on the income statement for July is:$272,600$279,200$299,600$289,40021.Baker Corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $77,280 and 2,400 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $79,530 and actual direct labor-hours were 2,200.The applied manufacturing overhead for the year was closest to: (Round your intermediate calculations to 2 decimal places.)$75,688$67,864$70,840$72,52022.Baker Corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $110,250 and 3,500 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $112,200 and actual direct labor-hours were 3,250.The overhead for the year was: (Round your intermediate calculations to 2 decimal places.)$7,875 overapplied$9,825 underapplied$9,825 overapplied$7,875 underapplied. The following information applies to the questions displayed below.]Meyers Corporation had the following inventory balances at the beginning and end of November:November 1 November 30Raw Materials $ 80,000 $ 28,000Finished Goods $ 220,000 $ 150,000Work in Process $ 46,000 $ 50,000________________________________________During November, $170,000 in raw materials (all direct materials) were drawn from inventory and used in production. The company’s predetermined overhead rate was $9 per direct labor-hour, and it paid its direct labor workers $14 per hour. A total of 1,000 hours of direct labor time had been expended on the jobs in the beginning Work in Process inventory account. The ending Work in Process inventory account contained $20,000 of direct materials cost. The Corporation incurred $120,000 of actual manufacturing overhead cost during the month and applied $110,000 in manufacturing overhead cost.23.The direct materials cost in the November 1 Work in Process inventory account totaled:$32,000$37,000$23,000$14,00024.The actual direct labor-hours worked during November totaled: (Round your answers to the nearest dollar.)7,857 hours8,571 hours12,222 hours13,333 hours25.During February, Irving Corporation incurred $77,000 of actual Manufacturing Overhead costs. During the same period, the Manufacturing Overhead applied to Work in Process was $75,000.The journal entry to record the incurrence of the actual Manufacturing Overhead costs would include a:debit to Work in Process of $75,000credit to Work in Process of $75,000debit to Manufacturing Overhead of $77,000credit to Manufacturing Overhead of $77,000Additional Requirements

Accounting Questions

1. Wayne and Maria file a joint tax return on which they itemize their deductions and report AGI of $50,000. During the year they incurred $1,500 of medical expenses when Maria broke her leg. Furthermore, their dentist informed them that their daughter, Alicia, needs $3,000 of orthodontic work to correct her overbite. Wayne also needs a new pair of eye glasses that will cost $300. What tax issues should Wayne and Maria consider?2. This year, Chuck took out a loan to purchase some raw land for investment. He paid $40,000 for the land, and he expects that within 5 years the land will be worth at least $75,000. Chuck is married, and his AGI for the year is $240,000. Chuck paid $4,300 in interest on the loan this year. Chuck has $2,600 in interest income and 1,300 in dividend income for the year. He plans to itemize his deductions so he can use the interest expense to offset his investment income. What tax issues should Chuck consider?3. Chad is divorced and has custody of Brett, his 14-year-old-son. Chad’s ex wife has custody of their daughter, Sara. During the year, Chad incurs $3,000 for orthodontic work for Sara to correct a severe overbite and $2,000 in unreimbursed medical expenses associated with Brett’s broken leg. Chad also pays $900 in health insurance premiums, which is withheld from his paycheck on a pre-tax basis. Both Brett and Sara are covered under Chad’s medical insurance plan. In addition, Chad incurs $400 for prescription drugs and $1,000 in doctor bills for himself. Chad’s AGI is $40,000. What is Chad’s medical expense deduction for the year assuming that his other itemized deductions exceed the standard deduction?4. Joyce is a single, cash-method taxpayer. On April 11, 2012, Joyce paid $120 state income taxes with her 2011 state income tax return. During 2012, Joyce had $1,600 in state income taxes withheld. On April 13, 2013, Joyce paid $200 with her 2012 state tax return. During 2013, she had $2,100 in state income taxes withheld from her paycheck. Upon filing her 2013 tax return on April 15, 2014, she received a refund of $450 for excess state income taxes withheld. Joyce had a total AGI in 2013 and 2014 of $51,000 and $53,500, respectively. In 2013, Joyce also paid $5,500 in qualified residence interest. a. What is the amount of state income taxes Joyce may include as an itemized deduction for 2012?b. What is the allowed itemized deduction for state income taxes for 2013?c. What is her taxable income for 2013?d. What is her AGI for 2014?

Accounting Questions

Question 6: ( 2 points)Johnny Ringo Company uses the weighted-average method in its processing costing system. The Assembly Department started the month with 643 units in process that were 53% complete, received 1,250 units the Detail Department, and had 414 units in process at the end of the period. All materials are added at the beginning of the process and conversion costs are incurred uniformly. The units in process at the end of the month are 27% complete with respect to conversion costs. During the month, 1270 units were completed and transferred out. The cost per equivalent unit for direct materials is $3.10. The department incurred the following costs:Begin WIPAddedTotalTransferred IN70012,90013,600Direct Materials8753,2004,075Conversion Costs6505,8206,470Total1,62521,92023,545Of the $4,075 total cost for direct materials, what amount will be transferred out? (Round your answer to the nearest dollar)Question 9 ( 3 points)Stagecoach Company projects the following sales:Projections:OctoberNovemberDecemberCash Sales -10%$2,600$3,300$2,600Sales on Account -90%26,10029,70023,400Total Sales$28,700$33,000$26,000Stagecoach collects sales on account in the month after the sale. The Accounts Receivable balance on October 1 is $18,300 which represents Septembers sales on account. Stage coach projects the following cash receipts from customers:Projections:OctoberNovemberDecemberCash receipts from Cash Sales$2,600$3,300$2,600Cash receipts from sales on account18,30026,10029,700Total cash receipts from customers$20,900$29,400$32,300Recalculate sales and cash receipts from customers if total sales remain the same but cash sales are 25% of the total.OctoberNovemberDecemberCash Sales -25%Sales on Account- 75%Total SalesOctoberNovemberDecemberCash receipts from Cash SalesCash receipts from sales on accountTotal cash receipts from customers

Accounting Questions

Resolved Question:1. The convention of consistency refers to consistent use of accounting principles:among firmswithin industriesamong accounting periodsthroughout the accounting period2. Jayadev Athreya has started his first job. He will invest $5,000 at the end of each year for the next 45 years in a fund that will earn a return of 10 percent. How much will Jayadev have at the end of 45 years?$2,667,904$3,594,524$1,745,600$5,233,4423. Variance reports are:SEC financial reportsinternal reports for managementexternal financial reportsall of these4. Horizontal analysis is also known as:linear analysisvertical analysiscommon size analysistrend analysis5. Turnbull Corp. had an EBIT of $247 million in the last fiscal year. Its depreciation and amortization expenses amounted to $84 million. The firm has 135 million shares outstanding and a share price of $12.80. A competing firm that is very similar to Turnbull has an enterprise value/EBITDA multiple of 5.40.What is the enterprise value of Turnbull Corp.? Round to the nearest million dollars.$1,787 million$1,344 million$1,315 million$453.6 million6. Regatta, Inc., has six-year bonds outstanding that pay a 8.25 percent coupon rate. Investors buying the bond today can expect to earn a yield to maturity of 6.875 percent. What should the companys bonds be priced at today? Assume annual coupon payments. (Round to the nearest dollar.)$1,066$923$1014$9727. How firms estimate their cost of capital: The WACC for a firm is 13.00 percent. You know that the firms cost of debt capital is 10 percent and the cost of equity capital is 20% What proportion of the firm is financed with debt?33%50%70%30%8. The cash conversion cycle?estimates how long it takes on average for the firm to collect its outstanding accounts receivables balance.begins when the firm uses its cash to purchase raw materials and ends when the firm collects cash payments on its credit sales.begins when the firm invests cash to purchase the raw materials that would be used to produce the goods that the firm manufactures.shows how long the firm keeps its inventory before selling it.9. The accumulation of accounting data on the basis of the individual manager who has the authority to make day-to-day decisions about activities in an area is called:responsibility accountingflexible accountingmaster budgetingstatic reporting10. Which of the following financial statements is concerned with the company at a point in time?balance sheetstatement of cash flowsincome statementretained earnings statement11. The major element in budgetary control is:the approval of the budget by the stockholdersthe comparison of actual results with planned objectives.the preparation of long-term plansthe valuation of inventories12. The group of users of accounting information charged with achieving the goals of the business is its:creditorsinvestorsmanagersauditors13. Which of the following is an advantage of corporations relative to partnerships and sole proprietorships?most common form of organizationreduced legal liability for investorslower taxesharder to transfer ownership14. Teakap, Inc. has current assets of $1,456,312 and total assets of $4,812,369 for the year ending September 30, 2006. It also has current liabilities of $1,041,012, common equity of $1,500,000 and retained earnings of $1,468,347. How much long-term debt does the firm have?$1,844,022$803,010$2,303,010$2,123,61215. Gateway, Corp. has an inventory turnover of 5.6. What is the firms dayss sales in inventory?65.257.961.764.316. An activity that has a direct cause-effect relationship with the resources consumed is a(n):product activitycost drivercost pooloverhead rate17. The process of evaluating financial data that change under alternative courses of action is called:cost-benefit analysisdouble entry analysiscontribution margin analysisincremental analysis18. An unrealistic budget is more likely to result when it:is developed with performance appraisal usages in mind.has been developed in a top down fashion.has been developed by all levels of management.has been developed in a bottom up fashion.19. Serox stock was selling for $20 two years ago. The stock sold for $25 one year ago, and it is currently selling for $28. Serox pays a $1.10 dividend per year. What was the rate of return for owning Serox in the most recent year? (Round to the nearest percent.)12%40%32%16%20. Which of the following is considered a hybrid organizational form?partnershipsole proprietorshiplimited liability partnershipcorporation21. A cost which remains constant per unit at various levels of activity is a:manufacturing costmixed costfixed costvariable cost

Accounting Questions

Problem 1:TheQEC Company owns and operates an amusement park. The following are selected accounts from theQEC Company s trial balance as of December 31:DebitCreditEquipment$973,400Accumulated Depreciation Equipment$304,200Notes Payables456,300Admissions Revenue1,926,600Advertising Expense69,400Salaries Expense292,000Interest Expense7,100The following information is also available:1. The equipment is depreciated using the straight-line method over its estimated life of17years. The equipment has an estimated salvage value of$202,8002. The note payable carries a8% interest rate. It was given to the First National Bank onSeptember17and is due to be repaid in270days after that date. (Note: Assume a 365 day year in any computations.)3. During the Christmas holiday season,QEC Company ran a promotion for park admission tickets valid during the next year. In total, they sold4,980tickets at a price of$15each. The sales amount was credited to Admissions Revenue.4. Included in the Advertising Expense account balance is a$5,580prepayment of advertising that will be aired on local radio stations during the first quarter of the next year.5. As of December 31, there was$23,830in salaries that had been earned but not recorded.6. QEC Company ends its accounting year on December 31.Instructions:1. Prepare the annual adjusting journal entries necessary as of December 31.2. Compute the amount of the following account balances that should be shown on the income statement for the year:a. Interest Expenseb. Admissions Revenuec. Advertising Expensed. Salaries ExpenseProblem 2:The following is the trial balance of theRRV Company as of December 31:RRV CompanyTrial BalanceDecember 31DebitCreditCash$121,600Accounts Receivable276,000Allowance for Doubtful Accounts$4,600Inventory, December 31525,700Prepaid Insurance33,500Equipment552,000Accumulated Depreciation Equipment230,000Notes Payable184,000Common Stock529,600Retained Earnings65,700Sales3,942,600Cost of Goods Sold2,615,300Sales Salaries Expense328,600Advertising Expense44,000Administrative Salaries Expense427,100Office Expense32,700$4,956,500$4,956,500Additional Information:1. Estimated bad debt expense for the year is$9,200.2. Equipment is depreciated using the straight-line method over the estimated life of12 years with zero estimated salvage value.3. During the year,$16,750 of the prepaid insurance expired.4. During the year,$22,080 of interest on the notes payable accrued.5. $15,770 of sales salaries were earned towards the end of the year but not recorded.6. The company paid$4,600 for advertising in advance which will be used during the next year.7. At the end of the year,$9,810 of office supplies was on hand. All purchases of office supplies are charged to Office Expense when purchased. 8. The company ends its accounting year on December 31.Instructions:1. Prepare the annual adjusting journal entries necessary as of December 31.2. Prepare the annual closing journal entries necessary to close the books for the year.E4-6(Multiple-Step and Single-Step) The accountant of Weatherspoon Shoe Co. has compiled the following information from the company s records as a basis for an income statement for the year ended December 31, 2012.Rent revenue $29,000Interest expense 18,00018,000Market appreciation on land above cost 31,00031,000Salaries and wages expense (sales) 114,000114,800Supplies (sales) 17,60017,600Income tax 30,60030,600Salaries and wages expense (administrative)$135,900135,900Other administrative expenses 51,70051,700Cost of goods sold 516,000516,000Net sales 980,000980,000Depreciation on plant assets (70% selling, 30% administrative) $65,00065,000Cash dividends declared 16,00016,000There were 20,000 shares of common stock outstanding during the year.Instructions1. Prepare a multiple-step income statement.2. Prepare a single-step income statement.3. Which format do you prefer? Discuss. (As a short essay.)E4-16(Various Reporting Formats) The following information was taken from the records of Gibson Inc. for the year 2012: income tax applicable to income from continuing operations $119,000; income tax applicable to loss on discontinued operations $25,500; income tax applicable to extraordinary gain $32,300; income tax applicable to extraordinary loss $20,400; and unrealized holding gain on available-for-sale securities $15,000.Extraordinary gain$95,000Cash dividends declared$ 150,000Loss on discontinued operations75,000Retained earnings January 1, 2012600,000Administrative expenses240,000Cost of goods sold850,000Rent revenue40,000Selling expenses300,000Extraordinary loss60,000Sales revenue1,700,000Shares outstanding during 2012 were 100,000.Instructions4. Prepare a single-step income statement for 2012.5. Prepare a retained earnings statement for 2012.6. Show how comprehensive income is reported using the second income statement format.

Accounting Questions

Ladanza Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $135.00 per unit.Sales volume (units) 11,000 12,120Cost of sales $935,000 $1,030,200Selling and administrative costs $627,000 $644,920The best estimate of the total contribution margin when 11,410 units are sold is:$387,940$501,970$244,250$167,57011:00Management of Modugno Corporation is considering whether to purchase a new model 370 machine costing $496,000 or a new model 240 machine costing $481,000 to replace a machine that was purchased 6 years ago for $486,000. The old machine was used to make product M25A until it broke down last week. Unfortunately, the old machine cannot be repaired.Management has decided to buy the new model 240 machine. It has less capacity than the new model 370 machine, but its capacity is sufficient to continue making product M25A.Management also considered, but rejected, the alternative of simply dropping product M25A. If that were done, instead of investing $481,000 in the new machine, the money could be invested in a project that would return a total of $483,000.In making the decision to buy the model 240 machine rather than the model 370 machine, the differential cost was:$5,000$10,000$15,000$-3,00011:01At a sales volume of 43,000 units, Thoma Corporation’s sales commissions (a cost that is variable with respect to sales volume) total $580,500.To the nearest whole cent, what should be the average sales commission per unit at a sales volume of 40,400 units? (Assume that this sales volume is within the relevant range.)$13.50$14.19$13.19$12.87

Accounting Questions

Question 1 2 points Save Current liabilities are expected to be paid within one year or the operating cycle, whichever is longer. True False Question 2 2 points Save During the month, a company sells goods for a total of $108,000, which includes sales taxes of $8,000; therefore, the company should recognize $100,000 in Sales Revenues and $8,000 in Sales Tax Expense. True False Question 3 2 points Save Current maturities of long-term debt are often identified as long-term debt due within one year on the balance sheet. True False Question 4 2 points Save Bond interest paid by a corporation is an expense, whereas dividends paid are not an expense of the corporation. True False Question 5 2 points Save A debenture bond is an unsecured bond which is issued against the general credit of the borrower. True False Question 6 2 points Save If $150,000 face value bonds are issued at 102, the proceeds received will be $102,000. True False Question 7 2 points Save Discount on bonds is an additional cost of borrowing and should be recorded as interest expense over the life of the bonds. True False Question 8 2 points Save A corporation that issues bonds at a discount will recognize interest expense at a rate which is greater than the market interest rate. True False Question 9 2 points Save If bonds are issued at a discount, the issuing corporation will pay a principal amount less than the face amount of the bonds on the maturity date. True False Question 10 2 points Save If bonds are issued at a premium, the carrying value of the bonds will be greater than the face value of the bonds for all periods prior to the bond maturity date. True False Question 11 2 points Save If the market interest rate is greater than the contractual interest rate, bonds will sell at a discount. True False Question 12 2 points Save If $800,000, 8% bonds are issued on January 1, and pay interest semiannually, the amount of interest paid on July 1 will be $32,000. True False Question 13 2 points Save The carrying value of bonds is calculated by adding the balance of the Discount on Bonds Payable account to the balance in the Bonds Payable account. True False Question 14 2 points Save The loss on bond redemption is the difference between the cash paid and the carrying value of the bonds. True False Question 15 2 points Save Bonds that mature at a single specified future date are called term bonds. True False Question 16 2 points Save The terms of the bond issue are set forth in a formal legal document called a bond indenture. True False Question 17 2 points Save Premium on Bonds Payable is a contra account to Bonds Payable. True False Question 18 2 points Save All of the following are reported as current liabilities except accounts payable. bonds payable. notes payable. unearned revenues. Question 19 2 points Save Liabilities are classified on the balance sheet as current or deferred. unearned. long-term. accrued. Question 20 2 points Save A corporation is not an entity which is separate and distinct from its owners. True False Question 21 2 points Save A corporation must be incorporated in each state in which it does business. True False Question 22 2 points Save A stockholder has the right to vote in the election of the board of directors. True False Question 23 2 points Save A proxy is a legal document that instructs a stockholder’s agent how to vote shares of stock for the stockholder. True False Question 24 2 points Save Treasury stock should not be classified as a current asset. True False Question 25 2 points Save Treasury stock purchased for $25 per share that is reissued at $20 per share, results in a Loss on Sale of Treasury Stock being recognized on the income statement. True False Question 26 2 points Save A 3 for 1 common stock split will increase total stockholders’ equity but reduce the par or stated value per share of common stock. True False Question 27 2 points Save Retained earnings represents the amount of cash available for dividends. True False Question 28 2 points Save Common Stock Dividends Distributable is shown within the Paid-in Capital subdivision of the stockholders’ equity section of the balance sheet. True False Question 29 2 points Save A dividend based on paid-in capital is termed a liquidating dividend. True False Question 30 2 points Save The chief accounting officer in a company is known as the controller. treasurer. vice-president. president. Question 31 2 points Save From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that bond interest is deductible for tax purposes. interest must be paid on a periodic basis regardless of earnings. income to stockholders may increase as a result of trading on the equity. the bondholders do not have voting rights. Question 32 2 points Save Investors who receive checks in their names for interest earned on bonds must hold registered bonds. coupon bonds. bearer bonds. direct bonds. Question 33 2 points Save A bondholder that sends in a coupon to receive interest payments must have a(n) unsecured bond. bearer bond. mortgage bond. serial bond. Question 34 2 points Save A $1,000 face value bond with a quoted price of 98 is selling for $1,000. $980. $908. $98. Question 35 2 points Save A bond with a face value of $100,000 and a quoted price of 102 1/4 has a selling price of $120,225. $102,025. $100,225. $102,250. Question 36 2 points Save Mendez Corporation issues 2,000, 10-year, 8%, $1,000 bonds dated January 1, 2008, at 103. The journal entry to record the issuance will show a debit to Cash of $2,000,000. credit to Premium on Bonds Payable for $60,000. credit to Bonds Payable for $2,030,000. credit to Cash for $2,060,000. Question 37 2 points Save On the date of issue, Chudzick Corporation sells $2 million of 5-year bonds at 97. The entry to record the sale will include the following debits and credits: 1 2 3 4 Question 38 2 points Save Becker Company is a publicly held corporation whose $1 par value stock is actively traded at $20 per share. The company issued 2,000 shares of stock to acquire land recently advertised at $50,000. When recording this transaction, Becker Company will debit Land for $50,000. credit Common Stock for $40,000. debit Land for $40,000. credit Paid-In Capital in Excess of Par Value for $48,000. Question 39 2 points Save New Corp. issues 1,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to Common Stock $10,000 and Paid-in Capital in Excess of Stated Value $4,000. Common Stock $14,000. Common Stock $10,000 and Paid-in Capital in Excess of Par Value $4,000. Common Stock $10,000 and Retained Earnings $4,000. Question 40 2 points Save Kim, Inc. issued 5,000 shares of stock at a stated value of $10/share. The total issue of stock sold for $15/share. The journal entry to record this transaction would include a debit to Cash for $50,000. credit to Common Stock for $50,000. credit to Paid-in Capital in Excess of Par Value for $25,000. credit to Common Stock for $75,000. Question 41 2 points Save Rancho Corporation sold 100 shares of treasury stock for $40 per share. The cost for the shares was $30. The entry to record the sale will include a credit to Gain on Sale of Treasury Stock for $3,000. credit to Paid-in Capital from Treasury Stock for $1,000. debit to Paid-in Capital in Excess of Par Value for $1,000. credit to Treasury Stock for $4,000. Question 42 2 points Save Each of the following is correct regarding treasury stock except that it has been issued. fully paid for. reacquired. retired. Question 43 2 points Save Dividends in arrears on cumulative preferred stock never have to be paid. must be paid before common stockholders can receive a dividend. should be recorded as a current liability until they are paid. enable the preferred stockholders to share equally in corporate earnings with the common stockholders. Question 44 2 points Save The cumulative effect of the declaration and payment of a cash dividend on a company’s financial statements is to decrease total liabilities and stockholders’ equity. increase total expenses and total liabilities. increase total assets and stockholders’ equity. decrease total assets and stockholders’ equity. Question 45 2 points Save If a corporation declares a 10% stock dividend on its common stock, the account to be debited on the date of declaration is Common Stock Dividends Distributable. Common Stock. Paid-in Capital in Excess of Par. Retained Earnings. Question 46 2 points Save Which of the following is not a significant date with respect to dividends? The declaration date The incorporation date The record date The payment date Question 47 2 points Save On the dividend record date, a dividend becomes a current obligation. no entry is required. an entry may be required if it is a stock dividend. Dividends Payable is debited. Question 48 2 points Save The declaration and distribution of a stock dividend will increase total stockholders’ equity. increase total assets. decrease total assets. have no effect on total assets. Question 49 2 points Save On January 1, Sandford Corporation had 80,000 shares of $10 par value common stock outstanding. On June 17, the company declared a 10% stock dividend to stockholders of record on June 20. Market value of the stock was $15 on June 17. The entry to record the transaction of June 17 would include a debit to Retained Earnings for $120,000. credit to Cash for $120,000. credit to Common Stock Dividends Distributable for $120,000. credit to Common Stock Dividends Distributable for $40,000. Question 50 2 points Save A prior period adjustment that corrects income of a prior period requires that an entry be made to an income statement account. a current year revenue or expense account. the retained earnings account. an asset account. Question 1 2 points Save Current liabilities are expected to be paid within one year or the operating cycle, whichever is longer. True False Question 2 2 points Save During the month, a company sells goods for a total of $108,000, which includes sales taxes of $8,000; therefore, the company should recognize $100,000 in Sales Revenues and $8,000 in Sales Tax Expense. True False Question 3 2 points Save Current maturities of long-term debt are often identified as long-term debt due within one year on the balance sheet. True False Question 4 2 points Save Bond interest paid by a corporation is an expense, whereas dividends paid are not an expense of the corporation. True False Question 5 2 points Save A debenture bond is an unsecured bond which is issued against the general credit of the borrower. True False Question 6 2 points Save If $150,000 face value bonds are issued at 102, the proceeds received will be $102,000. True False Question 7 2 points Save Discount on bonds is an additional cost of borrowing and should be recorded as interest expense over the life of the bonds. True False Question 8 2 points Save A corporation that issues bonds at a discount will recognize interest expense at a rate which is greater than the market interest rate. True False Question 9 2 points Save If bonds are issued at a discount, the issuing corporation will pay a principal amount less than the face amount of the bonds on the maturity date. True False Question 10 2 points Save If bonds are issued at a premium, the carrying value of the bonds will be greater than the face value of the bonds for all periods prior to the bond maturity date. True False Question 11 2 points Save If the market interest rate is greater than the contractual interest rate, bonds will sell at a discount. True False Question 12 2 points Save If $800,000, 8% bonds are issued on January 1, and pay interest semiannually, the amount of interest paid on July 1 will be $32,000. True False Question 13 2 points Save The carrying value of bonds is calculated by adding the balance of the Discount on Bonds Payable account to the balance in the Bonds Payable account. True False Question 14 2 points Save The loss on bond redemption is the difference between the cash paid and the carrying value of the bonds. True False Question 15 2 points Save Bonds that mature at a single specified future date are called term bonds. True False Question 16 2 points Save The terms of the bond issue are set forth in a formal legal document called a bond indenture. True False Question 17 2 points Save Premium on Bonds Payable is a contra account to Bonds Payable. True False Question 18 2 points Save All of the following are reported as current liabilities except accounts payable. bonds payable. notes payable. unearned revenues. Question 19 2 points Save Liabilities are classified on the balance sheet as current or deferred. unearned. long-term. accrued. Question 20 2 points Save A corporation is not an entity which is separate and distinct from its owners. True False Question 21 2 points Save A corporation must be incorporated in each state in which it does business. True False Question 22 2 points Save A stockholder has the right to vote in the election of the board of directors. True False Question 23 2 points Save A proxy is a legal document that instructs a stockholder’s agent how to vote shares of stock for the stockholder. True False Question 24 2 points Save Treasury stock should not be classified as a current asset. True False Question 25 2 points Save Treasury stock purchased for $25 per share that is reissued at $20 per share, results in a Loss on Sale of Treasury Stock being recognized on the income statement. True False Question 26 2 points Save A 3 for 1 common stock split will increase total stockholders’ equity but reduce the par or stated value per share of common stock. True False Question 27 2 points Save Retained earnings represents the amount of cash available for dividends. True False Question 28 2 points Save Common Stock Dividends Distributable is shown within the Paid-in Capital subdivision of the stockholders’ equity section of the balance sheet. True False Question 29 2 points Save A dividend based on paid-in capital is termed a liquidating dividend. True False Question 30 2 points Save The chief accounting officer in a company is known as the controller. treasurer. vice-president. president. Question 31 2 points Save From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that bond interest is deductible for tax purposes. interest must be paid on a periodic basis regardless of earnings. income to stockholders may increase as a result of trading on the equity. the bondholders do not have voting rights. Question 32 2 points Save Investors who receive checks in their names for interest earned on bonds must hold registered bonds. coupon bonds. bearer bonds. direct bonds. Question 33 2 points Save A bondholder that sends in a coupon to receive interest payments must have a(n) unsecured bond. bearer bond. mortgage bond. serial bond. Question 34 2 points Save A $1,000 face value bond with a quoted price of 98 is selling for $1,000. $980. $908. $98. Question 35 2 points Save A bond with a face value of $100,000 and a quoted price of 102 1/4 has a selling price of $120,225. $102,025. $100,225. $102,250. Question 36 2 points Save Mendez Corporation issues 2,000, 10-year, 8%, $1,000 bonds dated January 1, 2008, at 103. The journal entry to record the issuance will show a debit to Cash of $2,000,000. credit to Premium on Bonds Payable for $60,000. credit to Bonds Payable for $2,030,000. credit to Cash for $2,060,000. Question 37 2 points Save On the date of issue, Chudzick Corporation sells $2 million of 5-year bonds at 97. The entry to record the sale will include the following debits and credits: 1 2 3 4 Question 38 2 points Save Becker Company is a publicly held corporation whose $1 par value stock is actively traded at $20 per share. The company issued 2,000 shares of stock to acquire land recently advertised at $50,000. When recording this transaction, Becker Company will debit Land for $50,000. credit Common Stock for $40,000. debit Land for $40,000. credit Paid-In Capital in Excess of Par Value for $48,000. Question 39 2 points Save New Corp. issues 1,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to Common Stock $10,000 and Paid-in Capital in Excess of Stated Value $4,000. Common Stock $14,000. Common Stock $10,000 and Paid-in Capital in Excess of Par Value $4,000. Common Stock $10,000 and Retained Earnings $4,000. Question 40 2 points Save Kim, Inc. issued 5,000 shares of stock at a stated value of $10/share. The total issue of stock sold for $15/share. The journal entry to record this transaction would include a debit to Cash for $50,000. credit to Common Stock for $50,000. credit to Paid-in Capital in Excess of Par Value for $25,000. credit to Common Stock for $75,000. Question 41 2 points Save Rancho Corporation sold 100 shares of treasury stock for $40 per share. The cost for the shares was $30. The entry to record the sale will include a credit to Gain on Sale of Treasury Stock for $3,000. credit to Paid-in Capital from Treasury Stock for $1,000. debit to Paid-in Capital in Excess of Par Value for $1,000. credit to Treasury Stock for $4,000. Question 42 2 points Save Each of the following is correct regarding treasury stock except that it has been issued. fully paid for. reacquired. retired. Question 43 2 points Save Dividends in arrears on cumulative preferred stock never have to be paid. must be paid before common stockholders can receive a dividend. should be recorded as a current liability until they are paid. enable the preferred stockholders to share equally in corporate earnings with the common stockholders. Question 44 2 points Save The cumulative effect of the declaration and payment of a cash dividend on a company’s financial statements is to decrease total liabilities and stockholders’ equity. increase total expenses and total liabilities. increase total assets and stockholders’ equity. decrease total assets and stockholders’ equity. Question 45 2 points Save If a corporation declares a 10% stock dividend on its common stock, the account to be debited on the date of declaration is Common Stock Dividends Distributable. Common Stock. Paid-in Capital in Excess of Par. Retained Earnings. Question 46 2 points Save Which of the following is not a significant date with respect to dividends? The declaration date The incorporation date The record date The payment date Question 47 2 points Save On the dividend record date, a dividend becomes a current obligation. no entry is required. an entry may be required if it is a stock dividend. Dividends Payable is debited. Question 48 2 points Save The declaration and distribution of a stock dividend will increase total stockholders’ equity. increase total assets. decrease total assets. have no effect on total assets. Question 49 2 points Save On January 1, Sandford Corporation had 80,000 shares of $10 par value common stock outstanding. On June 17, the company declared a 10% stock dividend to stockholders of record on June 20. Market value of the stock was $15 on June 17. The entry to record the transaction of June 17 would include a debit to Retained Earnings for $120,000. credit to Cash for $120,000. credit to Common Stock Dividends Distributable for $120,000. credit to Common Stock Dividends Distributable for $40,000. Question 50 2 points Save A prior period adjustment that corrects income of a prior period requires that an entry be made to an income statement account. a current year revenue or expense account. the retained earnings account. an asset account.

Accounting Questions

1. McCarty Pointers Corporation expects to begin operations on January 1, 2012; it will operate as a specialty sales company that sells laser pointers over the Internet. McCarty expects sales in January 2012 to total $200,000 and to increase 10 percent per month in February and March. All sales are on account. McCarty expects to collect 70 percent of accounts receivable in the month of sale, 20 percent in the month following the sale, and 10 percent in the second month following the sale. Required:a. Prepare a sales budget for the first quarter of 2012. b. Determine the amount of sales revenue McCarty will report on the first 2012 quarterly pro forma income statement. c. Prepare a cash receipts schedule for the first quarter of 2012. d. Determine the amount of accounts receivable as of March 31, 2012. 2. Preparing pro form income statements with different assumptions. Top executive officers of Zottoli Company, a merchandising firm, are preparing the next year s budget. The controller has provided everyone with the current year s projected income statement. Sales revenue $2,000. 000 Cost of goods sold 1,400,000 Gross profit 600,000 Net income 340,000 Cost of goods sold is usually 70 percent of sales revenue, and selling and administrative expenses are usually 10 percent of sales plus a fixed cost of $60,000. The president has announced that the company s goal is to increase net income by 15 percent. Required a. What percentage increase in sales would enable the company to reach its goal? Support your answer with a pro forma income statement. b. The market may become stagnant next year, and the company does not expect an increase in sales revenue. The production manager believes that an improved production procedure can cut cost of goods sold by 2 percent. What else can the company do to reach its goal? Prepare a pro forma income statement illustrating your proposal. c. The company decides to escalate its advertising campaign to boost consumer recognition, which will increase selling and administrative expenses to $340,000. With the increased advertising, the company expects sales revenue to increase by 15 percent. Assume that cost of goods sold remains a constant proportion of sales. Can the company reach its goal?3. P14-20 Kinnion Medical Clinic has budgeted the following cash flows. January February March Cash receipts$ 100,000 $106,000 $126,000 Cash payments For inventory purchases 90,000 72,000 85,000 For S&A expenses 31,000 32,000 27,000 Kinnion Medical had a cash balance of $8,000 on January 1. The company desires to maintain a cash cushion of $5,000. Funds are assumed to be borrowed, in increments of $1,000, and repaid on the last day of each month; the interest rate is 1 percent per month. Kinnion pays its vendor on the last day of the month also. The company had a monthly $40,000 beginning balance in its line of credit liability account from this year s quarterly results. Required Prepare a cash budget. (Round all computations to the nearest whole dollar. )

Accounting Questions

Answer each True or False1. Translation risk can be hedged against by using the forward market forcurrency exchange. 2. Environmental scanning involves looking for changes in environmental forcesin the global marketplace. 3. The Total Product and the Physical Product mean the same thing. 4. Transfer pricing is a form of intracorporate pricing that can be used to shift thetax burden from one subsidiary to another. 5. A language trap, where a person can speak two languages, occurs because theperson relies on their knowledge of a second language without seeking theassistance of a native speaker. 6. Even with the development of the internet and the virtual capabilities it is stillimportant to make a personal visit to a potential market before investing in the market. 7. Market segment screening is based on needs across national borders. 8. National borders may no longer be the relative unit of analysis for a firm indeveloping a global market plan. 9. A disadvantage for companies that insist on less risky transactions, such as aletter of credit, is that they may be losing business to competitors who sell onopen accounts. T F 10. An importer delays payment of the necessary currency exchange when shethinks her currency will devalue in terms of the foreign payment currency. T F 11. When using a money market hedge, the hedger will immediately convert thecurrency borrowed into its own currency. T F 12. JIT systems are more efficient than synchronous manufacturing in all situations. T F 13. The US has adopted the International Financial Reporting Standards and theyare now in effect in the US. T F 14. A broad statement that defines the organization’s purpose and scope is avalues statement. T F 15. Most companies can enter a market in stages. The order listed in the textbookis establishment of a foreign sales company, exporting, local assembly, andmanufacturing. II. (78pts) Mark the best answer. 1. Terms of Payment found in international business contracts include:a. CFR (cost and freight, foreign port)b. Consignmentc. Documentary Draftsd. all of the abovee. (b) and (c) above2. Joint Ventures have thea. advantage of utilizing the expertise of a local partner. b. disadvantage of not being able to make all the decisions because control isshared. c. advantage of being able to share the profits. d. all of the abovee. (a) and (b) above3. Which of the following is a reason that imports are not a measure of the total marketpotential for a good?a. lack of foreign exchangeb. a competitor decides to produce locallyc. change in a country’s political structured. all of the abovee. none of the above4. Businesses are using global or regional brands for the following reason(s):a. private brands do not offer any meaningful competition. b. economies of scale usually result in reduced costs. c. satellite and cable TV are widely available. d. all of the abovee. (b) and (c) above5. The Harmonized Tariff Schedule of the US:a. applies only to goods imported from the EU to the U. S. b. provides for special rates for imports from countries that are not consideredfriends of the US. c. allows an importer to receive an advanced ruling from US Customs which isbinding on all customs inspectors. d. all of the abovee. (b) and (c) above6. E-Commerce Potential isa) is higher for Jamaica than for Argentina. b) is an index based on mobile phones, internet hosts, and number of PCs. c) is a composite ranking of three indices. d) (a) and (b) abovee) (a) and (c) above7. Generally, industrial products require __________ adaptation than consumer productsto meet the demands of the world market. a) greaterb) lessc) the same amount ofd) only slightly lesse) only slightly more8. Nonequity modes of entry includea) Strategic Allianceb) Management contractc) Franchisingd) All of the abovee) (b) and (c) above only9. Management Contracts may be useda) in a joint venture arrangementb) in a wholly owned subsidiary situationc) in a minority ownership situationd) all of the abovee) (a) and (c) above10. Terms of Sale found in international business contracts include:a. CFR (cost and freight, foreign port)b. Consignmentc. Documentary Draftsd. all of the abovee. (b) and (c) above11. The Ex-Im Banka. is a private corporation that supports firms that wish to export. b. makes loans to foreign buyers and foreign governments to assist in financingc. provides export credit insurance against commercial risk but not political risk. d. all of the abovee. (b) and (c) above12. According to Table 15. 1a. Google has made the greatest increase and Citi the greatest decrease in ranking. b. IBM, Disney, and McDonalds have all improved their ranking. c. Coca Cola is the only brand whose ranking has not changed. d. (a) and (b) abovee. (a) and (c) aboveUS exports. 13. Although global sourcing can be beneficial it may have some disadvantages such asa. added costsb. exchange rate fluctuations affecting pricesc. quality controld. all of the abovee. (b) and (c) above14. In staffinga. an ethnocentric policy is always the most effective if qualified personnel areb. a polycentric policy is always the least effective even when qualified personnelc. using third country personnel would be considered most frequently withd. all of the abovee. (a) and (c) above15. In value chain analysis the firm must answer the following question(s):a. How will customer value be created?b. Will decisions be made at the local or home office level?c. Who are the company’s target customers?d. All of the abovee. (a) and (c) above only16. In the most recent 40 years, union membership around the world has been in decline,in part because:a) There are more women in the workforce. b) The unions have been successful and priced themselves out of the market. c) Employers have made efforts to keep business union-free. d) (a) and (c) above onlye) All of the above. 17. When a firm has less than a majority interest in a subsidiary it can still have controlby havinga) a management contractb) the right to control the technologyc) the right to vote its sharesd) all of the abovee) (a) and (b) above only18. The Female Wage Gapa. is the percent of Male Wages earned by Female Employees. b. younger females have less of a gap in all countries. c. is the smallest for older females in Korea. d. all of the abovee. (a) and (c) aboveavailable. are available. regiocentric or geocentric policies. 19. Income earned abroad by U. S. citizens:a) incurs a tax liability in the US with some adjustments. b) incurs tax liability only on the portions earned in the U. S. c) incurs no tax liability. d) incurs a tax liability in the US on all income earned with no adjustments fore) none of the above20. The international structural stages model suggests that a typical evolutional path foran international company’s structure would be:a) from international division to geographical area division to worldwideb) from international division to worldwide product division to geographicalc) from geographical area division to worldwide product division to globald) from functional division to horizontal company to virtual corporation. e) from international division to worldwide product division to globaltaxes paid in other countries. product division. area division. matrix. matrix. 21. Competitive advantage is acquired by developing competencies thata. are common to all competitors so the firm can compete. b. create value for customers even if the price is higher than customers want toc. are difficult to imitate. d. all of the abovee. (a) and (c) above only22. In their measurement and disclosure for accounting systems, less developed countries tend toward:A. transparency and conservatism. B. transparency and optimism. C. secrecy and optimism. D. secrecy and conservatism. pay. 23. Export marketing plans should be specific about:A. the markets to be developed. B. the marketing strategy for servicing them. C. the tactics required to make the strategy operational. D. cash flow projections. E. A, B, and C. 24. Factors that are involved in the operation of a manufacturing system include:A. Plant locationB. Plant layoutC. Material handlingD. Human assetE. all of the above25. Hiring and promoting employees on the basis of the specific local context in which the subsidiaryoperates refers to:A. an ethnocentric orientation. B. a polycentric orientation. C. a regiocentric orientation. D. a geocentric orientation. E. none of the above. 26. A middle ground between an ad campaign that is standardized worldwide and anentirely local ad campaign is called a:A. hybrid advertising campaign. B. programmed-management approach. C. computerized-management approach. D. shared-management approach. E. none of the above.

Accounting Questions

The following information is from the materials requisitions and time tickets for Job 9-1005 completed by Wright Boats. The requisitions are identified by code numbers starting with the letter Q and the time tickets start with W. At the start of the year, management estimated that overhead cost would equal 140% of direct labor cost for each job. Date Document Amount7/1/2011 Q-4698 $ 1,3507/1/2011 W-3393 7007/5/2011 Q-4725 1,1007/5/2011 W-3479 5507/10/2011 W-3559 400Determine the total cost on the job cost sheet for Job 9-1005. (Omit the “$” sign in your response. )Total cost $In December 2010, Kent Computer s management establishes the year 2011 predetermined overhead rate based on direct labor cost. The information used in setting this rate includes estimates that the company will incur $797,500 of overhead costs and $550,000 of direct labor cost in year 2011. During March 2011, Kent began and completed Job No. 13-56. 1. What is the predetermined overhead rate for year 2011? (Omit the “%” sign in your response. )Predetermined overhead rate %2. Use the information on the following job cost sheet. JOB COST SHEETCustomer s Name Keiser Co. Job No. 13-56 Job Description 5 color monitors21 inch Direct Materials Direct Labor OverheadCosts Applied Date Requisition No. Amount Time-Ticket No. Amount Rate Amount Mar. 8 4-129 $ 4,000 T-306 $ 660Mar. 11 4-142 6,600 T-432 1,340Mar. 18 4-167 3,350 T-456 1,300Totals Determine the total cost of the job. (Round your answer to the nearest whole number. Omit the “$” sign in your response. )Total cost of the job $Lopez Company uses a job order cost accounting system that charges overhead to jobs on the basis of direct material cost. At year-end, the Goods in Process Inventory account shows the following. Date Explanation Debit Credit Balance2011 Dec. 31 Direct materials cost 1,300,000 1,300,00031 Direct labor cost 210,000 1,510,00031 Overhead costs 598,000 2,108,00031 To finished goods 2,020,000 88,0001. Determine the overhead rate used (based on direct material cost). (Omit the “%” sign in your response. )Overhead rate %2. Only one job remained in the goods in process inventory at December 31, 2011. Its direct materials cost is $22,000. How much direct labor cost and overhead cost are assigned to it? (Round your answers to the nearest dollar amount. Omit the “$” sign in your response. )Direct labor cost $Overhead cost $

Accounting Questions

I. Write a paper of no more than 350 words after completing Exercise 19-17 in WileyPLUS in which you respond to the following questions: In this case, would it be better to use the variable or absorption costing method, and why? What are the benefits of the two methods? Which method would lead to the best decision when a competitor is submitting a lower bid for your product? Compute product cost and prepare an income statement under variable and absorption costing. Polk Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2012, the company incurred the following costs. Variable Cost per Unit Direct materials ???$7. 50Direct labor ???$2. 45Variable manufacturing overhead ???$5. 75Variable selling and administrative expenses ???$3. 90Fixed Costs per Year Fixed manufacturing overhead $234,650Fixed selling and administrative expenses $240,100 Polk Company sells the fishing lures for $25. During 2012, the company sold 80,000 lures and produced 95,000 lures. Instructions(a) Assuming the company uses variable costing, calculate Polk’s manufacturing cost per unit for 2012. (b) Prepare a variable costing income statement for 2012. (c) Assuming the company uses absorption costing, calculate Polk’s manufacturing cost per unit for 2012. (d) Prepare an absorption costing income statement for 2012.

Accounting Questions

Exercise 17-12 Profitability analysis L. O. P3Sanderson Company s year-end balance sheets follow. At December 31 2012 2011 2010Assets Cash $ 30,501 $ 35,307 $ 36,403Accounts receivable, net 86,685 59,970 47,595Merchandise inventory 105,753 77,645 51,708Prepaid expenses 9,727 8,905 3,888Plant assets, net 269,247 250,857 217,406Total assets $ 501,913 $ 432,684 $ 357,000Liabilities and Equity Accounts payable $ 127,476 $ 74,586 $ 47,124Long-term notes payable secured bymortgages on plant assets 94,360 98,522 79,686Common stock, $10 par value 162,500 162,500 162,500Retained earnings 117,577 97,076 67,690Total liabilities and equity $ 501,913 $ 432,684 $ 357,000The company s income statements for the years ended December 31, 2012 and 2011, follow. For Year Ended December 31 2012 2011Sales $ 652,487 $ 514,894Cost of goods sold $ 398,017 $ 334,681 Other operating expenses 202,271 130,268 Interest expense 11,092 11,843 Income taxes 8,482 7,723 Total costs and expenses 619,862 484,515Net income $ 32,625 $ 30,379Earnings per share $ 2. 01 $ 1. 87Additional information about the company follows. Common stock market price, December 31, 2012 $30. 00Common stock market price, December 31, 2011 28. 00Annual cash dividends per share in 2012 0. 32Annual cash dividends per share in 2011 0. 16To help evaluate the company’s profitability, compute the following ratios for 2012 and 2011:(1) Return on common stockholders’ equity. (Do not round intermediate calculations and round your final answers to 1 decimal place. Omit the “%” sign in your response. )Return on common shareholders equity2012 %2011 %(2) Price-earnings ratio on December 31. (Round your answers to 1 decimal place. )Price-earnings ratio2012 2011 (3) Dividend yield. (Round your answers to 1 decimal place. Omit the “%” sign in your response. )Dividend Yield2012 %2011 %Problem 17-4A Calculation of financial statement ratios L. O. P3Selected year-end financial statements of McCord Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2010, were inventory, $50,900; total assets, $259,400; common stock, $90,000; and retained earnings, $52,348. )McCORD CORPORATIONIncome StatementFor Year Ended December 31, 2011Sales $ 454,600Cost of goods sold 297,450Gross profit 157,150Operating expenses 98,800Interest expense 4,300Income before taxes 54,050Income taxes 21,774Net income $ 32,276McCORD CORPORATIONBalance SheetDecember 31, 2011Assets Liabilities and Equity Cash $ 12,000 Accounts payable $ 23,500Short-term investments 9,200 Accrued wages payable 4,000Accounts receivable, net 30,000 Income taxes payable 3,700Notes receivable (trade)* 5,500 Long-term note payable, secured Merchandise inventory 34,150 by mortgage on plant assets 72,400Prepaid expenses 2,500 Common stock 90,000Plant assets, net 147,300 Retained earnings 47,050Total assets $ 240,650 Total liabilities and equity $ 240,650* These are short-term notes receivable arising from customer (trade) sales. Required:Compute the following. (Use 365 days a year. Do not round intermediate calculations and round your final answers to 1 decimal place. Omit the “%” sign in your response):(1) Current ratio to (2) Acid-test ratio to (3) Days’ sales uncollected (including note) days (4) Inventory turnover times (5) Days’ sales in inventory days (6) Debt-to-equity ratio to (7) Times interest earned times (8) Profit margin ratio % (9) Total asset turnover times (10) Return on total assets % (11) Return on common stockholders’ equity %

Accounting Questions

19-30Each of the following situations involves a possible violation by a member in industry of the AICPA’s Code of Professional Conduct. For each situation, indicate whether it violates the Code. If it violates the Code, indicate which rule is violated and explain why. LO 19-4, 19-5, 19-6, 19-7a. Jack Jackson is a CPA and controller of Acme Trucking Company. Acme’s external auditors have asked Jackson to sign the management representation letter. Jackson has signed the management representation letter, even though he knows that full disclosures have not been made to Acme’s external auditors. b. Mary McDermott, CPA, is employed in the internal audit department of the United Fund of America. The United Fund raises money from individuals and distributes it to other organizations. McDermott has audited Children’s Charities, an organization that receives funds from United Fund. c. Janet Jett, CPA, formerly worked for Delta Disk Drive, Inc. She is currently interviewing for a new position with Maxiscribe, Inc. , another manufacturer of disk drives. Jett has agreed to provide confidential information about Delta’s trade secrets if she is hired by Maxiscribe. d. Brian Thorough, CPA, is currently employed as controller of TransLouisiana Oil Company. He has discovered that TransLouisiana has been illegally paying state environmental employees so that they will not charge TransLouisiana with dumping highly toxic chemicals into the bayous. Thorough discloses this information to the state attorney general. e. Jill Burnett, CPA, was hired by Cooper Corporation to supervise its accounting department in preparing financial statements and presenting them to senior management. Due to considerable time incurred on other financial activities, Burnett was unable to supervise the accounting staff adequately. It is later discovered that Cooper’s financial statements contain false and misleading informationAdditional Requirements

Accounting Questions

uestion 1:On 1 August 2014, Piper Ltd makes an offer of 1,000,000 ordinary shares to the public. The shares are to be issued at $2 per share, payable as follows:$0.80 on application (due 31 August)$0.80 on allotment (due 30 September)$0.40 on final callBy 31 August 2014, applications had been received for 1,100,000 ordinary shares. Shares were allotted on 2 September 2014. To deal with the oversubscription, Piper Ltd provided a refund to unsuccessful applicants.The issue was underwritten at a commission of $12,500, and this commission was paid on 15 September 2014. All amounts due on allotment are paid by the due date.The final call was made on 1 December 2014 with money due by 31 December 2014. All money was received on the due date except for the holder of 50,000 shares who failed to meet the final call. On 5 January 2015, the shares on which the call was unpaid were forfeited. According to the constitution, a refund is to be provided to former shareholders, and this refund was paid on 7 January 2015.On 3 March 2015, Piper Ltd makes a private placement of redeemable preference shares, and 500,000 6% redeemable preference shares are issued at a price of $3 per share. These shares are classified as equity, and are redeemable at a 10% premium. On 30 April 2017, the preference shares are redeemed out of profits and cheques are sent to preference shareholders on 2 May 2017.Required:Prepare the general journal entries to record the transactions of Piper Ltd for the events outlined above. Show all workings. Ignore preference share dividend payments.Question 2:Gravatt Ltd, which operates in the mining industry, decided not to comply with the accounting standard AASB112 on tax-effect accounting. If it had done so, its profit would have been significantly reduced. The annual report of the company revealed that the auditors had qualified the accounts. The auditors noted that no deferred tax liability had been recognised, in contravention of the accounting standard.Gravatt Ltd declared a profit of $54 million for the year, with no tax expense, but it admitted in the notes to the accounts that it would have had a notional income tax expense of $24.3 million if it had followed the accounting standard.The company also would have had a deferred tax liability of $80 million if it had followed the standard. This compares with total equity of $570 million.The directors believed that neither current tax liability nor a deferred tax liability was necessary as the company was making tax losses because of huge allowable deductions available for exploration and development costs. These exploration and development costs were treated as assets in the accounting records.The directors stated that a deferred tax liability should be recorded only when it is probable that the company will be liable to pay income tax. At this stage it is unclear when that will be.Required1. Explain how exploration and development costs create a deferred tax liability.2. Analyse the arguments presented by the directors in light of the AASB Frameworkfor the Preparation and Presentation of Financial Statements and the requirements of AASB 112 Income Taxes, and discuss the information utility to readers of Gravatt Ltd s annual report of including/excluding the deferred tax liability.Question 3:On 1 July 2011, Kookaburra Ltd acquired an item of plant at a cost of $200 000. The machine has an expected useful life of eight years, and Kookaburra Ltd adopts the straight-line method of deprecation. The tax depreciation rate for this type of plant is 25%. The company tax rate is 30%.Kookaburra Ltd measures plant at fair value. At 30 June 2012, Kookaburra Ltd determines the fair value of the plant to be $186 000, with a remaining useful life of three years. At 30 June 2013, the fair value of the plant is determined to be $112 000, with a remaining useful life of two years.Required1. For the year ending 30 June 2012:a) Prepare the necessary journal entries to account for the depreciation andrevaluation of plant.b) Determine the carrying amount and tax base of the plant after revaluation, andprepare the necessary journal entries to account for any deferred tax effectrelating to the plant. Show all workings.c) In relation to the plant, discuss why the temporary difference exists and explainthe adjustment required to the deferred tax account.2. For the year ending 30 June 2013:a) Prepare the necessary journal entries to account for the depreciation andrevaluation of plant.b) Determine the carrying amount and tax base of the plant after revaluation, andprepare the necessary journal entries to account for any deferred tax effectrelating to the plant. Show all workings.c) In relation to the plant, explain the adjustment required to the deferred taxaccount.

Accounting Questions

5-7The Village of Harris issued $5,000,000 in 6 percent general obligation, tax-supported bonds on July 1, 2008, at 101. A fiscal agent is not used. Resources for principal and interest payments are to come from the General Fund. Interest payment dates are December 31 and June 30. The first of 20 annual principal payments is to be made June 30, 2009. Harris has a calendar fiscal year.1. A capital projects fund transferred the premium ($50,000) to the debt service fund.2. On December 31, 2008, funds in the amount of $150,000 were received from the General Fund and the first interest payment was made.3. The books were closed for 2008.4. On June 30, 2009, funds in the amount of $350,000 were received from the General Fund, and the second interest payment was made along with the first principal payment ($250,000).5. On December 31, 2009, funds in the amount of $142,500 were received from the General Fund and the first interest payment was made.6. The books were closed for 2009.a. Prepare journal entries to record the events above in the debt service fund.b. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the debt service fund for the year ended December 31, 2008.5-10On July 1, 2008, a five-year agreement is signed between the City of Genoa and the Computer Leasing Corporation for the use of computer equipment not associated with proprietary funds activity. The cost of the lease, excluding executory costs, is $15,000 per year. The first payment is to be made by a capital projects fund at the inception of the lease. Subsequent payments, beginning July 1, 2009, are to be made by a debt service fund. The present value of the lease payments, including the first payment, is $68,189. The interest rate implicit in the lease is 5 percent.a. Assuming the agreement meets the criteria for a capital lease under the provisions of SFAS No. 13, make the entries required in (1) the capital projects fund and (2) the debt service fund on July 1, 2008, and July 1, 2009.b. Comment on where the fixed asset and long-term liability associated with this capital lease would be recorded and the impact of the journal entries recorded for a.6-3Why might it be desirable to operate enterprise funds at a profit?6-10The Village of Parry reported the following for its Print Shop Fund for the year ended April 30, 2009.VILLAGE OF PARRYPRINT SHOP FUNDStatement of Revenues, Expenses, and Changes in Net Assets For the Year Ended April 30, 2009Operating revenues: Charges for services $1,000,000Operating expenses: Salaries and benefits $500,000 Depreciation 200,000 Supplies used 200,000 Utilities 70,000 970,000Income from operations 30,000Nonoperating income (expenses): Interest revenue 30,000 Interest expense (50,000) (20,000)Net income before transfers 10,000Transfers in 180,000 Changes in net assets 190,000 Net assetsbeginning 1,120,000 Net assetsending $1,310,000The Print Shop Fund records also revealed the following:1. Contribution from Water Utility Fund for working capital needs $ 80,0002. Contribution from General Fund for purchase of equipment 100,0003. Loan from Water Utility Fund for purchase of equipment 300,0004. Purchase of equipment (450,000)5. Purchase of one-year investments (100,000)6. Paid off a bank loan outstanding at May 1, 2008 $50,000 Paid interest $1,000 The loan was for short-term operating purposes. 7. Signed a capital lease on April 30, 2009 $42,180The following balances were observed in current asset and current liability accounts. ( ) denote credit balances: 5/1/08 4/30/09Cash $151,000 $233,000Accrued interest receivable 5,000 10,000Due from other funds 40,000 50,000Accrued salaries and benefits (20,000) (30,000)Utility bills payable (4,000) (5,000)Accounts payable (30,000) (25,000)Accrued interest payable (5,000) (7,000)Prepare a Statement of Cash Flows for the Village of Parry Print Shop Fund for the Year Ended April 30, 2009. Include the reconciliation of operating income to net cash provided by operating activities.7-6On July 1, 2008, the City of Belvedere accepted a gift of cash in the amount of $3,000,000 from a number of individuals and foundations and signed an agreement to establish a private-purpose trust. The $3,000,000 and any additional gifts are to be invested and retained as principal. Income from the trust is to be distributed to community nonprofit groups as directed by a Board consisting of city officials and other community leaders. The agreement provides that any increases in the market value of the principal investments are to be held in trust; if the investments fall below the gift amounts, then earnings are to be withheld until the principal amount is reestablished.a. The following events and transactions occurred during the fiscal year ended June 30, 2009. Record them in the Belvedere Community Trust Fund.a. On July 1, the original gift of cash was received.b. On July 1, $2,000,000 in XYZ Company bonds were purchased at par plus accrued interest. The bonds pay an annual rate of 6 percent interest semiannually on April 1 and October 1.c. On July 2, $950,000 in ABC Company common stock was purchased. ABC normally declares and pays dividends semiannually, on January 31 and July 31.d. On October 1, the first semiannual interest payment was received from XYZ Company. Note that part of this is for accrued interest due at the time of purchase; the remaining part is an addition that may be used for distribution.e. On January 31, 2009, a cash dividend was received from ABC Company in the amount of $19,000.f. On March 1, the ABC stock was sold for $960,000. On the same day, DEF Company stock was purchased for $965,000.g. On April 1, the second semiannual interest payment was received from XYZ Company.h. During the month of June, distributions were approved by the Board and paid in cash in the amount of $95,000.i. Administrative expenses were recorded and paid in the amount of $12,000.j. An accrual for interest on the XYZ bonds was made as of June 30, 2009.k. As of June 30, 2009, the fair value of the XYZ bonds, exclusive of accrued interest, was determined to be $2,002,000. The fair value of the DEF stock was determined to be $960,000.l. Closing entries were prepared.b. Prepare, in good form, (1) a Statement of Fiduciary Net Assets and (2) a Statement of Changes in Fiduciary Net Assets for the Belvedere Community Trust Fund.

Accounting Questions

“Faldo Corp sells on terms that allow customers 45 days to pay for merchandise. Its sales last year were $435,000, and its year-end receivables were $60,000. If its DSO is less than the 45-day credit period, then customers are paying on time. Otherwise, they are paying late. By how much are customers paying early or late? Base your answer on this equation: DSO – Credit Period = Days early or late, and use a 365-day year when calculating the DSO. A positive answer indicates late payments, while a negative answer indicates early payments.5.184.865.295.345.40-2. Stewart Inc.’s latest EPS was $3.50, its book value per share was $22.75, it had 215,000 shares outstanding, and its debt ratio was 46%. How much debt was outstanding?$3,393,738$3,572,356$3,760,375$3,958,289$4,166,620-3. Last year Harrington Inc. had sales of $325,000 and a net income of $19,000, and its year-end assets were $250,000. The firm’s total-debt-to-total-assets ratio was 37.5%. Based on the DuPont equation, what was the ROE?14.71%12.16%11.92%11.43%13.74%-4. Last year Ann Arbor Corp had $160,000 of assets, $305,000 of sales, $20,000 of net income, and a debt-to-total-assets ratio of 37.5%. The new CFO believes a new computer program will enable it to reduce costs and thus raise net income to $33,000. Assets, sales, and the debt ratio would not be affected. By how much would the cost reduction improve the ROE?13.00%14.17%11.31%10.14%15.73%-5. What’s the present value of a 4-year ordinary annuity of $2,250 per year plus an additional $2,950 at the end of Year 4 if the interest rate is 5%?$11,133.74$8,740.50$10,405.36$8,532.40$12,590.49-6. Last year Kruse Corp had $275,000 of assets, $403,000 of sales, $28,250 of net income, and a debt-to-total-assets ratio of 39%. The new CFO believes the firm has excessive fixed assets and inventory that could be sold, enabling it to reduce its total assets to $252,500. Sales, costs, and net income would not be affected, and the firm would maintain the same debt ratio (but with less total debt). By how much would the reduction in assets improve the ROE?1.50%1.23%1.85%1.13%1.19%-7. Wie Corp’s sales last year were $365,000, and its year-end total assets were $355,000. The average firm in the industry has a total assets turnover ratio (TATO) of 2.4. The firm’s new CFO believes the firm has excess assets that can be sold so as to bring the TATO down to the industry average without affecting sales. By how much must the assets be reduced to bring the TATO to the industry average, holding sales constant?$202,917$221,179$213,063$160,304$184,654-8. Assume that you own an annuity that will pay you $15,000 per year for 12 years, with the first payment being made today. You need money today to start a new business, and your uncle offers to give you $80,000 for the annuity. If you sell it, what rate of return would your uncle earn on his investment?23.15%16.17%20.96%19.96%22.16%-9. Last year Tiemann Technologies reported $10,500 of sales, $6,250 of operating costs other than depreciation, and $1,300 of depreciation. The company had no amortization charges, it had $5,000 of bonds that carry a 6.5% interest rate, and its federal-plus-state income tax rate was 35%. This year’s data are expected to remain unchanged except for one item, depreciation, which is expected to increase by $750. By how much will net after-tax income change as a result of the change in depreciation? The company uses the same depreciation calculations for tax and stockholder reporting purposes.-463.13-487.50-511.88-537.47-564.34-10. Pace Corp.’s assets are $625,000, and its total debt outstanding is $185,000. The new CFO wants to employ a debt ratio of 55%. How much debt must the company add or subtract to achieve the target debt ratio?$158,750$166,688$175,022$183,773$192,962-11. Last year Hamdi Corp. had sales of $500,000, operating costs of $450,000, and year-end assets of $350,000. The debt-to-total-assets ratio was 17%, the interest rate on the debt was 7.5%, and the firm’s tax rate was 35%. The new CFO wants to see how the ROE would have been affected if the firm had used a 50% debt ratio. Assume that sales, operating costs, total assets, and the tax rate would not be affected, but the interest rate would rise to 8.0%. By how much would the ROE change in response to the change in the capital structure?3.79%3.69%3.18%3.53%2.48%-12. Chang Corp. has $375,000 of assets, and it uses only common equity capital (zero debt). Its sales for the last year were $520,000, and its net income was $25,000. Stockholders recently voted in a new management team that has promised to lower costs and get the return on equity up to 15.0%. What profit margin would the firm need in order to achieve the 15% ROE, holding everything else constant?10.71%9.41%10.82%8.11%12.66%-13. Last year Rennie Industries had sales of $240,000, assets of $175,000, a profit margin of 5.3%, and an equity multiplier of 1.2. The CFO believes that the company could reduce its assets by $51,000 without affecting either sales or costs. Had it reduced its assets by this amount, and had the debt ratio, sales, and costs remained constant, how much would the ROE have changed?3.55%3.19%3.66%3.01%3.59%-14. Last year Kruse Corp had $355,000 of assets, $403,000 of sales, $28,250 of net income, and a debt-to-total-assets ratio of 39%. The new CFO believes the firm has excessive fixed assets and inventory that could be sold, enabling it to reduce its total assets to $252,500. Sales, costs, and net income would not be affected, and the firm would maintain the same debt ratio (but with less total debt). By how much would the reduction in assets improve the ROE?5.67%5.30%4.40%4.18%5.98%-15. Last year Ann Arbor Corp had $300,000 of assets, $305,000 of sales, $20,000 of net income, and a debt-to-total-assets ratio of 37.5%. The new CFO believes a new computer program will enable it to reduce costs and thus raise net income to $33,000. Assets, sales, and the debt ratio would not be affected. By how much would the cost reduction improve the ROE?5.34%5.82%6.59%8.67%6.93%-16. Last year Hamdi Corp. had sales of $500,000, operating costs of $450,000, and year-end assets of $355,000. The debt-to-total-assets ratio was 17%, the interest rate on the debt was 7.5%, and the firm’s tax rate was 35%. The new CFO wants to see how the ROE would have been affected if the firm had used a 50% debt ratio. Assume that sales, operating costs, total assets, and the tax rate would not be affected, but the interest rate would rise to 8.0%. By how much would the ROE change in response to the change in the capital structure?3.17%3.42%3.48%3.08%2.99%-17. Edwards Electronics recently reported $11,250 of sales, $5,500 of operating costs other than depreciation, and $1,250 of depreciation. The company had no amortization charges, it had $3,500 of bonds that carry a 6.25% interest rate, and its federal-plus-state income tax rate was 35%. How much was its net cash flow?$3,284.75$3,457.63$3,639.61$3,831.17$4,032.81-18. What annual payment must you receive in order to earn a 6.5% rate of return on a perpetuity that has a cost of $2,500?$162.50$164.13$123.50$185.25$128.38-19. Your father paid $10,000 (CF at t = 0) for an investment that promises to pay $750 at the end of each of the next 5 years, then an additional lump sum payment of $13,500 at the end of the 5th year. What is the expected rate of return on this investment?12.91%10.46%11.49%15.23%12.39%-20. You have a chance to buy an annuity that pays $2,350 at the beginning of each year for 3 years. You could earn 5.5% on your money in other investments with equal risk. What is the most you should pay for the annuity?$6,688.85$7,090.18$7,825.96$6,822.63$6,956.41

Accounting Questions

Steven Clark and two of his colleagues are considering opening a law office in a large metropolitan area that would make inexpensive legal services available to those who could not otherwise afford services. The intent is to provide easy access for their clients by having the office open 360 days per year, 16 hours each day from7:00 a.m. to 11:00 p.m.The office would be staffed by a lawyer, paralegal, legal secretary, and clerk-receptionist for each of the two eight-hour shifts.In order to determine the feasibility of the project, Clark hired a marketing consultant to assist with market projections. The results of this study show that if the firm spends $1,035,000 on advertising the first year, the number of new clients expected each day will be 61. Clark and his associates believe this number is reasonable and are prepared to spend the $1,035,000 on advertising. Other pertinent information about the operation of the office follows: The only charge to each new client would be $71 for the initial consultation. All cases that warrant further legal work will be accepted on a contingency basis with the firm earning 30 percent of any favorable settlements or judgments. Clark estimates that 20 percent of new client consultations will result in favorable settlements or judgments averaging $5,100 each. It is not expected that there will be repeat clients during the first year of operations. The hourly wages of the staff are projected to be $61 for the lawyer, $51 for the paralegal, $41 for the legal secretary, and $31 for the clerk-receptionist. Fringe benefit expense will be 40 percent of the wages paid. A total of 620 hours of overtime is expected for the year; this will be divided equally between the legal secretary and the clerk-receptionist positions. Overtime will be paid at one and one-half times the regular wage, and the fringe benefit expense will apply to the full wage. Clark has located 6,000 square feet of suitable office space which rents for $67 per square foot annually. Associated expenses will be $59,500 for property insurance and $82,800 for utilities. It will be necessary for the group to purchase malpractice insurance, which is expected to cost $371,000 annually. The initial investment in the office equipment will be $131,000. This equipment has an estimated useful life of four years. The cost of office supplies has been estimated to be $12 per expected new client consultation.Required:1. Determine how many new clients must visit the law office being considered by Steven Clark and his colleagues in order for the venture to break even during its first year of operations. (Do not round intermediate calculations and round your final answer up to nearest whole number.)2. Compute the law firm s safety margin. (Round final answer to the nearest whole dollar amount.)

Accounting Questions

Question 1ABC is reviewing a project that will cost $1,431.The project will produce cash flows $210 at the end of each year for the first two years and $772 at the end of each year for the next two years. What is the profitability index? Assume interest rate is 4%.a. 1.56b. 0.95c. 1.22d. 2.56Question 2Suppose an investment offers to double your money in 39 years. What annual rate of return are you being offered if interest is compounded semi-annually?a. 1.79%b. 1.56%c. 0.98%d. 0.89%Question 3How many years will it take to quadruple (i.e. 4 times) your money at 9% compounded quarterly?a. 7.2424b. 15.5759c. 5.6478d. 3.3168Question 4A bond is currently selling for $1,087. If the yield to maturity is 10%, the coupon rate will be:a. less than 10%.b. equal than 10%.c. more than 10%.d. None aboveQuestion 5Suppose the real rate is 9.83% and the inflation rate is 4.65%. Solve for the nominal rate.a. 11.32%b. 12.87%c. 14.93%d. 21.74%Question 6An investment is acceptable if the profitability index (PI) of the investment is:a. less than the net present value (NPV).b. less than one.c. greater than one.d. greater than the internal rate of return (IRR).e. greater than a pre-specified rate of return.Question 7A 8.9 percent $1,000 bond matures in 17 years, pays interest semiannually, and has a yield to maturity of 16.02 percent. What is the current market price of the bond?a. $587.92b. $456.23c. $143.24d. $693.22Question 8Uptown Insurance offers an annuity due with semi-annual payments for 19 years at 4.9 percent interest. The annuity costs $176,239 today. What is the amount of each annuity payment?a. $7,008.06b. $5,670.26c. $8,300.23d. $4,607.98Question 9ABC s last dividend paid was $4.4, its required return is 13%, its growth rate is 6%, and its growth rate is expected to be constant in the future. What is ABC’s expected stock price in 19 years?a. $104.37b. $201.59c. $98.15d. $120.31Question 10Given the following cash flows, calculate the payback period:Year CF0 -9211 3682 2533 2914 784a. 3.0115b. 3c. 2.0125d. 4.5209Question 11A stock just paid a dividend of D0 = $3.4. The required rate of return is rs = 15.8%, and the constant growth rate is g = 3%. What is the current stock price?a. $35.76b. $24.469c. $3.45d. $27.359Question 12Suppose that today’s stock price is $49.8. If the required rate on equity is 18.6% and the growth rate is 7.9%, compute the expected dividend (i.e. compute D1)a. $7.2447b. $10.6483c. $5.3286d. $2.5643Question 13The common stock of ABC Industries is valued at $49 a share. The company increases their dividend by 3.1 percent annually and expects their next dividend to be $1.84. What is the required rate of return on this stock?a. 2.82%b. 3.61%c. 4.87%d. 6.86%Question 14The ABC Co. has $1,000 face value stock outstanding with a market price of $937.6. The stock pays interest annually, matures in 9 years, and has a yield to maturity of 10.7 percent. What is the current yield?a. 5.11%b. 10.22%c. 7.34%d. 14.94%Question 15The principal amount of a bond that is repaid at the end of term is called the par value or the:a. call premiumb. perpetuity valuec. face valued. back-end valuee. coupon valueQuestion 16What is the effective rate of 18% compounded monthly?a. 26.97%b. 13.56%c. 17.46%d. 19.56%Question 17A project has the following cash flows. What is the internal rate of return?Year 0 1 2 3Cash flow -$121,000 68,150 $42,200 $39,100a. 12.71%b. 14.39%c. 13.47%d. 13.85%e. 14.82%Question 18A cost that has already been incurred and cannot be recouped is called as a(n):a. sunk costb. financial costc. opportunity costd. side coste. relevant costQuestion 19ABC Corp. just paid a dividend of $2.4 per share at the end of the year. The stock has a required rate of return is 18%. The dividend is expected to grow at 6.9%. What is dividend at time = 8? (solve for D8?)a. $7.667b. $3.175c. $6.451d. $4.093Question 20What is the net present value of the following cash flows? Assume an interest rate of 3.5%Year CF0 -$11,8951 $7,7222 $5,6873 $5,120a. $5,492.69b. $17,387.92c. $6,247.34d. $8,235.81Question 21A bond that sells for less than face value is called as:a. discount bondb. premium bondc. par value bondd. debenturee. perpetuity

Accounting Questions

QuestionWhich of the following is not a step needed to maximize the profits from joint products?1.Forecasting the sales price of each final product2.Identifying alternative sets and quantities of final products possible from the jointprocess3.Determining how to allocate joint costs to the final products4.Estimating the costs required to further process joint products into salable productsQuestionA product’s net realizable value is calculated by:1.Deducting the cost of goods sold from the sales revenue2.Deducting the allocated joint costs and processing costs after split-off from the sales revenue3.Deducting unit-level costs from the sales revenue4.Deducting processing costs after split-off from the sales revenueQuestionGreat Sweets Candy Company produces various types of candies. Several candies could besold at thesplit-off point or processed further and sold in a different form after further processing.The candies are produced in a joint processing operation with $500,000 of joint processingcostsmonthly, which are allocated based on pounds produced. Information concerning this processfor arecent month appears below:Candy type – Sweet Meats- # of pounds 50,000, Price per pound a split off $ 8.00 Further processing Cost 75,000, price after processing $10.00Candy type – Sweet Meats- # of pounds 100,000, Price per pound a split off $ 10.00 Further processing Cost 30,000, price after processing $10.50Candy type – Sweet Meats- # of pounds 25,000, Price per pound a split off $ 5.00 Further processing Cost 20,000, price after processing $5.50The joint processing costs in this operation:1.Should be allocated to products to determine whether they are sold at split-off orprocessed further2.Should be ignored in determining whether to sell at split-off or process further3.Should be ignored in making all product decisions4.Are never included in product cost, as they are misleading to all management decisionsQuestionGardner Company processes products in a joint processing operation that produces products Aand B in ajoint process. The company incurs $1,200,000 of joint processing costs monthly. Currently,3,600 of A and2,800 of B are being produced each month. Management plans to decrease B’s production by600 units in orderto increase the production of A by 1,000 units. Additionally, this change will require minormodificationswhich will add $40,000 to the production costs. This cost is entirely attributable to product BWhat is the amount of the joint costs allocable to A before the changes are made to the existingproduction process, assuming Gardner allocates its joint costs according to the proportion ofA and B produced?1.$675,0002.$547,0583.$529,4124.$525,000[$1,200,000 x 3600/6400 = $675,000/-]QuestionWhich of the following is not a method of allocating joint costs?1.Sales value at split-off2.Net realizable value3.By-product method4.Physical-measures methodQuestionWhich of the following would not be a physical measure used to allocate joint costs?1.Number of pounds produced2.Cubic feet of gas produced3.Sales value at split off4.Energy content (BTUs)QuestionIn joint-process costing and analysis, which of the following costs is relevant when deciding thepoint at which a product should be sold to maximize profits?1.The cost of the machinery used to produce the three products2.The salaries of production personnel making the product3.The cost of the materials required for the joint products4.The selling price if the products are processed furtherQuestionWhich of the following would not be a joint-product cost?1.Cost of picking apples to be processed into cider and applesauce in a cider factory2.Cost of cinnamon used in applesauce3.Cost of maintaining oil rigs for an oil manufacturer4.Costs of running a fishing boat that sells haddock, cod, and lobsters to wholesalersQuestionAllocation of factory service department costs to the production departments is necessary to:1.Measure use of plant capacity2.Make sure that machines are operating efficiently3.Calculate cost per unit for purposes of external financial reporting4.Control costsQuestionWhich of the following would be an appropriate cost-allocation base for allocating thecost of the company cafeteria?1.Square footage occupied by departments2.Number of hours of use3.Number of meals served4.Salaries of personnel purchasing mealsQuestionWhich of the following would not be an appropriate cost-allocation base for the Personneldepartment costs?1.Space occupied2.Number of employees3.Total payroll dollars in department using the equipment4.Labor hoursQuestionWhich of the following would not be an appropriate cost-allocation base for allocating thecost of the corporate library in a consulting company with multiple divisions?1.Number of employees employed in each division2.Square footage occupied by each division3.Cost of periodicals ordered by each division4.Number of consultants employed in each divisionQuestionMansfield River Corporation maintains computer equipment and provides services in all 50states and in 20 countries. The Corporation has a fleet of 3 Corporate Jets and 2 Helicoptersand employs 6 full time pilots who receive salary and benefits. The most appropriate way toallocate the total cost of the corporate jets, helicopters and pilots to individual userdepartments would be:1.Number of trips taken by each department2.Sales revenue generated by each department3.Number of miles flown by each department4.Number of employees in each departmentQuestionWhich of the following is not a recognized method of allocating costs of service departmentsto user departments?1.The direct method2.The reciprocal method3.The labor hours method4.The step methodQuestionThere was an error in the text of this question, so everyone gets this one correct… but I hadalreadyactivated the quiz when the error was discovered (thanks, Scott!) so Blackboard will not allowme toremove the question. To have this automatically scored as correct, select the letter for theanswer of$187,000.1.$187,0002.$165,0003.$171,5834.$136,334QuestionWhich of the following statements regarding traditional cost accounting systems is False?1.Products are often over or under costed in traditional cost accounting systems2.Most traditional cost accounting systems do not trace individual costs to products3.The advantage of traditional cost accounting systems is their simplicity4.Traditional cost accounting systems can be sufficient to meet managers’ cost informationneeds as long as the level of indirect costs is relatively high compared to the level ofdirect costsQuestionCosts associated with a special machine which sands the edges of all finished products wouldbe an example of:1.Unit-level activity2.Batch-level activity3.Customer-level activity4.Product-level activityQuestionThe review of each tax return by H & R Block would be an example of:1.Unit-level activity2.Facility-level activity3.Product-level activity4.Batch-level activityQuestionFerguson Molding Company produces custom bottle caps and jar covers for large cosmeticcompanies.Each customer owns the custom-made molds that are used for the caps and jar covers, so capsareproduced only to customer order. Each order requires the setting of molds in moldingmachines.Two full time mechanics, whose combined total annual salary and benefits are $160,000 peryear,are employed setting up and breaking down the molding machines. An order consists ofanywherefrom 50,000 to 500,000 units. 80 orders were received during the year 2008 for individualcustom production runs. The total number of units produced was 8 million.The cost of setting up the molding machines is an example of1.Facility-level activity2.Product-level activity3.Batch-level activity4.Customer-level activityQuestionFerguson Molding Company produces custom bottle caps and jar covers for large cosmeticcompanies.Each customer owns the custom-made molds that are used for the caps and jar covers, so capsareproduced only to customer order. Each order requires the setting of molds in moldingmachines.Two full time mechanics, whose combined total annual salary and benefits are $160,000 peryear,are employed setting up and breaking down the molding machines. An order consists ofanywherefrom 50,000 to 500,000 units. 80 orders were received during the year 2008 for individualcustom production runs. The total number of units produced was 8 million.The most appropriate cost driver base to allocate the salaries of the two mechanics underActivity-Based Costing would be:1.The number of bottle caps and jar covers produced2.The number of setups3.The number of hours spent on each setup4.The number of setup mechanicsQuestionSalaries of the human resource staff responsible for hiring production personnel at DellComputer would be an example of:1.Unit-level activity2.Facility-level activity3.Batch-level activity4.Product-level activityQuestionThe purchase of chemicals to make a special batch of synthetic fiber would be an example of:1.Customer-level resource2.Facility-level resource3.Product-level resource4.Batch-level resourceQuestionRichardson Motors uses ten units of part Number T305 each month in the production of largeDiesel engines.The cost to manufacture one unit of T305 is presented below:Direct Material: $2000Material Handling20% of direct material cost: 400Direct Labor: 16000Manufacturing Overhead150% of direct labor cost: 24000Material handling, which is not included in manufacturing overhead, represents the directvariablecosts of the receiving department that are applied to direct materials and purchasedcomponents on thebasis of their costs. Richardson’s annual manufacturing overhead budget isone-third variable and two-thirds fixed) Simpson Castings, one of Richardson’s reliablevendors,has offered to supply T305 at a unit price of $30,000.Assume Richardson Motors is able to rent all idle capacity for $50,000 per month. If Richardsondecides to purchase the ten units from Simpson Castings, Richardson’s monthlyCost for T305 would:1.Decrease $14,0002.Increase $46,0003.Decrease $34,0004.Decrease $64,000Cost of manufacturing 10 units = ($2,000+$16,000) x 10 +$24,000 =$204,000Cost of buying 10 units = $30,000 x 10 =$300,000Increase in cost = $300,000 – $204,000 = $96,000/Rental Income of $50,000 would reduce the cost by $50,000.Thus, Net Increase in the cost = $96,000 -$50,000 = $46,000/QuestionIn differential analysis, changes in the cost of direct materials among alternatives is an exampleof1.Price discrimination2.Relevant data3.Batch-level costs4.None of the aboveQuestionTwoWheels (TW) manufactures hi-tech bicycles that sell for $600 each. They sell 1,000bicyclesper year. Fixed higher-level costs amount to $100,000. Break-even for TW is 300 bicycles.TW’s margin safety is1.$50,0002.$180,0003.$360,0004.$420,000[($600 x 1000) ($600 x 300) = $420,000/-]QuestionFaulk Industries (FI) produces low cost digital cameras that sell for $100. FI requiresa 25% return on sales. Currently feasible costs are $5,160,000 and a cost reduction of$660,000 is required to meet their target. FI assumes they will sell ____ cameras.1.60,0002.75,0003.85,0004.None of the above[($5,160,000 – $660,000) x 100/75 =$6,000,000, $6,000,000/100 =60,000/-]QuestionJuarez Healthcare Center receives reimbursement from C.H.E.A.T.E.M. insurance company.Juarez receives $20 per physical therapy session. Each session lasts 15 minutes. Becauseof a shortage of physical therapists, Juarez often finds it necessary to use a temporaryservice to provide therapists. Assume collections and other variable cost amount to $5per visit and all other facility costs are fixed.What other qualitative factors should Juarez consider before using a temporary service?1.What is the training of the employees?2.Will Juarez builds relationships with the employees and has a potential source of newtherapists?3.Can Juarez uses the temporary service as a means to screen employees for a good matchwith the company?4.All of the aboveQuestionRelevant costs exclude1.Fixed costs2.Costs that change from year to year3.Costs that do not change based upon the alternative choices4.All of the aboveQuestionWhen deciding on special order pricing, it is important to consider1.Alternative capacity uses2.The reaction of other customers3.The potential for future sales4.All of the aboveQuestionAbrams Corporation sells a product for $75 per unit. Its market share is 20 percent. The marketshare can be increased to 30 percent with a reduction in price to $63. The product is currentlyearning a profit of $12 per unit. The president of Abrams feels that the $12 profit per unitmust be maintained.What is the target price per unit?1.$532.$633.$654.$75QuestionUse of negotiation to arrive at a transfer price can lead to divisiveness and competition betweenparticipating division managers.1.True2.FalseQuestionA particular manufacturing job is subject to an estimated 90% learning curve. The first unitrequired40 labor hours to complete. What is the cumulative average time per unit after four units arecompleted?1.32.0 hours2.32.4 hours3.36.0 hours4.40.0 hours[Y4 = 40(4)log0.9/log2 = 32.4 hours]QuestionIn which cost estimation method would costs most likely be broken into unit-level, batch-level,product-level and facility-level costs?1.Scattergraph method2.Account analysis method3.Regression method4.Engineering estimates methodQuestionAn amusement park estimates average costs per day. Which of the following is true?1.Average cost per day considers the relationship between labor costs and other variablessuch as temperature2.Average cost per day can be useful in estimating labor costs3.Average cost per day would include a component of variable labor costs but not fixedlabor cost4.All of the aboveQuestionWhich method of cost estimation does not use the company records as its primary source ofcost-activity data?1.Engineering estimates2.Regression analysis3.Account analysis4.High-low methodQuestionWhich of the following companies would most likely use operation costing?1.A piano manufacturer2.A potato chip company3.An oil company4.A pocketbook manufacturerQuestionOak Bluff Company incorrectly assigns a $50,000 overhead item to selling expense. Bordenhasmore inventory at the end of the year than at the beginning of the year. The result of this errorwill be to:1.Understate inventory and profit for the year2.Have no effect on inventory and profit for the year3.Overstate inventory and profit for the year4.Understate inventory but have no effect on profit for the yearQuestion ]Before prorating overhead, the current period overhead component of Cost of Goods Sold forWilmington Company was $230,000, while the current period overhead component of theendinginventory was $80,000. Manufacturing overhead of $310,000 was applied during the period,whereas$296,000 was actually incurred. Wilmington has no Work-in-Process inventory at the end ofthe period.If the manufacturing overhead-variance is prorated between inventory and cost of goods sold,how much will be allocated to the ending inventory? (round to the nearest whole dollar)1.$14,0002.$ 03.$3,6134.$2,868[under applied overhead is $310,000 – $296,000 =$14,000]Cost of goods sold..Dr.$14,000Manufacturing overheadsCr.$14,000WIP Inventory..ZeroCost of goods sold2.3K0/2.3K x $14,000 = $0QuestionWhich of the following statements about activity-based flexible budgeting are true?1.It uses several cost drivers2.Costs that may appear fixed with respect to a single volume-based cost driver may bevariable with respect to other appropriate cost drivers3.It can also be used as the basis for a flexible budget for planning and cost managementpurposes4.All of the aboveQuestionWhich of the following is not important to managers when analyzing revenue sales-volumevariance information?1.The combination of the individual revenue sales-volume variances2.The comparison of budgeted and actual total costs3.The picture of the product-line portrayed by aggregate dollars4.The production for the periodQuestionXYZ Corp. produced 26,000 units of its only product. Machine hours per unit are 2.8. Thebudget planned for23,000 units. What are the budgeted machine hours and the flexible-budget machine hours,respectively?1.64,400 machine hours; 72,800 machine hours2.72,800 machine hours; 64,400 machine hours3.68,000 machine hours; 75,000 machine hours4.75,000 machine hours; 68,000 machine hoursQuestionRhone Corporation produces a product called Sharone, which gives rise to a by-productcalled Erone. The only costs associated with Erone are additional processing costs of $2for each unit. Rhone accounts for Erone’s sales first by deducting its separable costsfrom its sales and then by deducting this net amount from the cost of goods sold of Sharone.This year, 4,800 units of Erone were produced. They were all sold for $10 each. Companyoperating expenses were $120,000 for the year. Sales revenue and cost of goods sold forSharone were $800,000 and $400,000, respectively, for the year. (CPA adapted)If Rhone changes its method of accounting for Erone’s sales, assuming that all of Erone’sproduction is sold in the period that it is produced, what would be the effect on Rhone’s overallprofits?1.Overall profit would increase2.Overall profit would decrease3.Overall profit would remain the same4.Additional information is needed to determine the effect on overall profitQuestionThe Stanford Corporation produces three outputs: A, B and C from one input.The net-realizable-value of A at the split-off point is $200,000.The net-realizable-value of B at the split-off point is $400,000 andthe net-realizable- value of C at the split-off is $50,000. Final salesvalues are $400,000, $600,000 and $50,000 for A, B and C respectively. However,these prices are subject to erratic change. The additional processing costsfor A, B and C are $100,000, $150,000 and $0 respectively. Stanfordproduces 120,000 units of A, 120,000 units of B and 60,000 units of C.The total costs incurred up to the split-off point are $300,000What is the expected gross margin for Stanford Corporation?1.$350,0002.$450,0003.$500,0004.The expected gross margin cannot be determining without knowing how joint-costs will be allocatedGross Profit =[Revenues Joint cost at split-off point additional processing costs]Gross Profit Margin =$400,000 + $600,000 + $50,000 – $300,000 – $100,000 – $150,000=$500,000/-QuestionWhich of the following statements regarding the physical-measures method of allocatingjoint-product costs is false?1.Joint product costs are allocated proportional to economic values2.It is based on the relative volume, weight, or other physical measure of eachjoint product at the split-off point3.It is preferred when prices of output products are highly volatile or unpredictable4.The total profit of the company will be the same regardless of which physicalmeasure is used to allocated joint-product costs

Accounting Questions

1. Stephanie Pizza Parlor issues an instrument in favor of Pepperoni Supplies, Inc. For the instrument to be negotiable, it need NOT:a. Be an unconditional order or promise to payb. Be payable on demand or at a specified timec. Be for a fixed amount of money (or, for an amount that is ascertainable from the face of the instrument)d. Recite the consideration given in exchange for the promise to pay2. To pay local property taxes, Donny writes a check to the appropriate public agency. Which of the following is true regarding this check:The Public Agency is the: Donny is the:a. Payee Draweeb. Payee Drawerc. Drawer Indorserd. Drawee Payee3. Nadine writes a personal check for $1,000 payable to Karime on her account at Fat Cat Bank. Fat Cat Bank is the:a. Draweeb. Drawerc. Indorserd. Payee4. For accounting services she previously provided, Francesca received a check from 5782 Inc. She then indorsed it by writing without recourse and signing her name. This is an example of a:a. Conditional indorsementb. Qualified indorsementc. Restrictive indorsementd. Indorsement for collection5. Rafael s oral promise to pay $510 to Carolyn would NOT be a negotiable instrument because:a. The oral promise did not recite the consideration given (or to be given) by Carolyn in exchange for Rafael s promise to pay $510b. A negotiable instrument must be in writingc. Rafael may have a contractual defense to Carolyn s right to receive the $510d. The amount of the promise exceeds $5006. Carol signs an instrument in favor of David that indicates that the instrument is subject to an agreement dated 12/01/10 and between Carol and David. This instrument is:a. Negotiableb. Nonnegotiable, because it refers to another agreementc. Nonnegotiable, because it is made subject to another agreementd. Nonnegotiable, because neither Carol, David nor any other party is a financial institution or bank (as such terms are broadly defined by the UCC)7. Natalya receives a check from Big Corp. Natalya, who needs cash, indorses the check to Quick Cash, Inc., by writing pay to Quick Cash, Inc., without recourse and signing her name. This is an example of a:a. Restrictive indorsementb. Blank indorsementc. Conditional indorsementd. Special qualified indorsement8. Carolyn signs a $5,000 note payable to Steven in payment for goods (the goods are NOT consumer goods). Steven negotiates the note to Nadine, who promises to pay Steven for it in 30 days. Immediately upon receiving the note from Steven, Nadine has the rights of:a. A holder onlyb. A holder in due course (a HDC )c. Both a holder and an HDCd. A guarantor9. Assume the same facts as in the prior question and assume that Carolyn has a valid breach of contract defense relating to the goods. Which of the following is true:a. Carolyn s breach of contract defense is valid against Stevenb. Carolyn s breach of contract defense is valid against Nadinec. If Nadine had paid Steven for the note at the time of the transfer (instead of waiting for 30 days), Nadine could hold Carolyn liable for the amount even if Carolyn had a valid breach of contract defensed. All of the aboveFACT PATTERN FOR QUESTIONS 10-12: Kareemah writes a check on his account at Bank of USA to Carol to satisfy an existing debt. Carol negotiates the check to Ninfa by special indorsement. Ninfa, in turn, negotiates the check to Heidi by special indorsement. Heidi, in turn, presents the check for payment to Bank of USA.10. Ninfa is:a. The Payeeb. Secondarily liablec. Primarily liabled. None of the above11. Before Ninfa could have signature liability on the instrument:a. The instrument must be properly and timely presented to Bank of USA for paymentb. The instrument must be dishonored by Bank of USAc. Timely notice of dishonor must be given to Ninfad. All of the above12. Assume that Kareemah had instead written the check payable to bearer and then signed his name. Assume further that Carol had transferred the check without indorsement to Ninfa (and that Ninfa then negotiated the check to Heidi by special indorsement). Upon the failure of the Bank of USA to honor the check, Heidi could:a. Present the check to Ninfa for paymentb. Present the check to Carol for paymentc. Either a or b (i.e., Heidi has her choice to present the check to Ninfa or Carol)d. None of the above13. Which of the following documents is required to have a reasonably detailed description of the applicable collateral:a. A UCC financing statementb. An unsecured promissory notec. A security agreementd. Each of these agreements MUST provide the same level of detail when describing collateral14. Top Bank agrees to accept a check by setting aside sufficient funds to cover the amount of the check. This check would MOST LIKELY be considered:a. Conditionalb. Restrictedc. Certifiedd. Qualified15. Family Land Furniture sells household consumer goods. To create a purchase-money security interest, Family Land Furniture must:a. Extend credit for part (or all) of the purchase price of the goodsb. Refer purchasers to a qualified third-party lenderc. File a Financing Statement (UCC-1 Form) within 10 days of the sale (or before)d. Both a and c 16. Fredi indorses a check, Pay to Christopher s Clay Studios, if my ceramic vase is delivered by March 31, 2011. This indorsement is an example of a:a. Blank indorsementb. Restrictive indorsementc. Qualified indorsementd. Artisans indorsement17. East Region Bank wants to perfect its security interest in inventory owned by Angelo Manufacturing Corp. Most likely, a UCC financing statement should be filed with:a. The Uniform Commercial Code Corporationb. The County Clerk of Courtc. The proper department of local newspapers having significant circulations (as defined by the UCC)d. The Secretary of State Office in the state where Angelo Manufacturing Corp. was formed18. Mega Loan & Finance Company has a security interest in equipment held by Oliver s Repair Inc. The security interest in the collateral:a. Essentially eliminates the need for filing financing statementb. Can only attach after Oliver s Repair Inc. owns the applicable equipmentc. Can only be obtained by Mega Loan & Finance Company taking possession of the collaterald. Is enforceable when attachment occurs19. Rafael is a surety of Carolyn s debt to Christopher Credit Corp. If Rafael pays Carolyn s debt in its entirety upon Carolyn s bankruptcy, then Rafael s right to file a proof of claim in Carolyn s bankruptcy case (as a result of the surety) is the right of:a. Subrogationb. Contributionc. Redemptiond. Reimbursement20. Steven and Natalya are co-sureties for Helen s loan from Second State Bank. Steven s right to be reimbursed by Natalya after he paid Helen s debt to Second State Bank is the right of:a. Subrogationb. Contributionc. Redemptiond. Reimbursement21. Which of the following is FALSE:a. A surety can be liable for an obligation even if his/her agreement is not in writingb. Generally, a surety is primarily liable for the debtor s obligationc. A surety can only be held liable if his/her agreement is in writingd. Generally, a guarantor is secondarily liable for the debtor s obligation22. A Trustee in a bankruptcy liquidation proceeding is responsible for selling nonexempt assets and distributing the proceeds to creditors. This Trustee is most likely:a. A government employeeb. A Bankruptcy Court judgec. A U.S. Trusteed. A private individual23. Nadine owes Carlos $20,000. With a writ of attachment or execution, Carlos could satisfy this debt from Nadine s:a. Exempt or nonexempt property (i.e., Carlos will have a choice)b. Exempt property onlyc. Nonexempt property onlyd. None of the above (i.e., Carlos must first force Nadine into bankruptcy)24. Donny sold his 5 bedroom luxury home to his brother for $6,500 (the deed and cash were exchanged simultaneously). One month later, Donny filed for bankruptcy under Chapter 7. Regarding the sale of the house, the Trustee will most likely:a. Cancel it as a fraudulent transferb. Grant Donny s brother a security interest in the house (i.e., an automatic mortgage)c. Not be allowed to cancel it because of the family transfers exemption lawsd. Not be allowed to cancel it because the asset in question one s home25. Fifty-five days before filing his petition for bankruptcy, David makes a payment to an existing creditor (the payment represented 75% of a bona fide debt). At the time of the payment, David had several creditors. This payment will most likely be considered:a. The grant of a deemed secured interestb. A Chapter 11 dividendc. A preference paymentd. A fraudulent transfer26. Carol writes the following note on a piece of paper: I, the undersigned, do hereby acknowledge that I owe Jeff Thomas five hundred dollars, with interest, payable out of the proceeds of the sale of my prize dog, Spot, next month. Payment is to be made on or before six months from date. Which of the following is TRUE?a. The note is negotiableb. Carol did not make a definite promise to payc. The note is payable at a definite timed. The note is payable to the order of Jeff Thomas27. Steven writes a check for $500 payable to cash. He puts the check in his pocket and drives to his bank to cash it. As he gets out of his truck (in the bank s parking lot), the check blows out of his pocket and falls to the ground. Minutes later, David walks by and picks up the check. Later that same day, David delivers the check to Nadine Thomas, to whom he owes $500. Nadine indorses the check For deposit only, [signed] Nadine Thomas and deposits it into her checking account. Which of the following is TRUE?a. The check was never a bearer instrumentb. Steven has a right to recover the $500 from Nadinec. David s delivery of the check to Nadine was a valid negotiationd. All of the above28. Carol takes her truck to Ian s Truck Repair Shop. A sign in the shop clearly states that all repairs must be paid for in cash unless credit is approved in advance. Carol and Ian agree that Ian will repair Carol s truck engine. No mention is made of credit. Ian refuses to provide Carol with an estimate because he is not sure how much repair will be necessary. Ian later repairs the engine. When Carol comes to pick up her truck, she learns that the bill is $3,000. Carol is furious and refuses to pay Ian the amount and demands possession of her truck. Which of the following is TRUE?a. To perfect his security interest, Ian should promptly return the truck to Carolb. This is an example of a potential mechanic s lienc. This is an example of a potential artisan s liend. Once Carol pays the $3,000 amount, she automatically waives her right to challenge the bill29. Wayne has a prize horse named Bee Lah Two. Wayne is in need of some capital so he borrows $35,000 from Oliver, who takes possession of Bee Lah Two as security for the loan. No written agreement is signed. Which of the following is TRUE?a. Oliver has a security interest in the collateralb. Oliver is a perfected secured partyc. No security interest has attached because no agreement was signedd. Both a and b are correct30. Steven petitioned himself into voluntary bankruptcy. There were three major claims against his estate. One was made by Carlos, a friend who held Steven s promissory note for $5,000; one was made by Francesca, an employee who was owed two months back wages of $9,000; and one made by Lake County Bank on an unsecured loan of $10,000. In addition, Natalya, an accountant retained by the Trustee, was owed $300, and property taxes of $2,000 were owed to Lake County. Steven s nonexempt property was liquidated, with proceeds of $10,000. Which of the following is TRUE?a. $5,000 of the proceeds will be paid to Carlosb. $300 of the proceeds will go to Natalyac. $9,000 of the proceeds will go to Francescad. Each creditor will be paid a pro-rata amount (i.e., $10,000 times the amount owed divided by $26,300)

Accounting Questions

1. Next year’s annual dividend divided by the current stock price is called the:(a) yield to maturity.(b) total yield.(c) dividend yield.(d) capital gains yield.(e) earnings yield.2. Payments made by a corporation to its shareholders, in the form of eithercash, stock or payments in kind, are called:(a) retained earnings.(b) net income.(c) dividends.(d) redistributions.(e) infused equity.3. The excess return required from a risky asset over that required from a risk-free asset is called the:(a) risk premium.(b) geometric premium.(c) excess return.(d) average return.(e) variance.14. A stock had returns of 8 percent, -2 percent, 4 percent, and 16 percent overthe past four years. What is the standard deviation of this stock for the pastfour years?(a) 6.3 percent(b) 6.6 percent(c) 7.1 percent(d) 7.5 percent(e) 7.9 percent5. Nuvo, Inc. stock has a beta of .86 and an expected return of 10.5 percent.The risk-free rate of return is 3.2 percent and the market rate of return is 11.2percent. Which one of the following statements is true given this information?(a) The return on Nuvo stock will graph below the Security Market Line.(b) Nuvo stock is underpriced.(c) The expected return on Nuvo stock based on the Capital Asset PricingModel is 9.88 percent.(d) Nuvo stock has more systematic risk than the overall market.(e) Nuvo stock is correctly priced.6. The common stock of Flavorful Teas has an expected return of 14.4 percent.The return on the market is 10 percent and the risk-free rate of return is 3.5percent. What is the beta of this stock?(a) 0.65(b) 1.09(c) 1.32(d) 1.44(e) 1.687. An investment is acceptable if its IRR:(a) is exactly equal to its net present value (NPV).(b) is exactly equal to zero.(c) is less than the required return.(d) exceeds the required return.(e) is exactly equal to 100 percent.8. A project costing $20,000 generates cash inows of $9,000 annually for therst 3 years, followed by cash outows of $1,000 annually for 2 years. Atmost, this project has dierent IRR(s).(a) one2(b) two(c) three(d) ve9. Which of the following stocks is (are) incorrectly priced if the risk-free rate is4% and the market risk premium is 6%?Stock A B CBeta 1.25 .80 1.06Expected Return 12.6% 8.8% 11.2%(a) A only(b) B only(c) C only(d) A and C only(e) A, B, and C10. The standard deviation of a portfolio that contains all securities in the marketwill equal:(a) Zero.(b) One.(c) The portfolio beta.(d) The systematic risk.(e) The risk premium of the portfolio.11. The internal rate of return on a project is 11.24%. Choose the TRUE state-ment(s) if the project has a Required Rate of Return (RRR) of 9.5%? (Cashows are conventional.)I. Both NPV > 0 and IRR > RRRII. IRR > RRR.III. NPV > 0.IV. IRR > RRR but there is not enough information to determine ifNPV > 0 or if NPV < 0.(a) I, II and III are the only true statements.(b) II and IV are the only true statements.(c) II is the only true statement.(d) IV is the only true statement.(e) All of the statements are true.312. The principle of diversication states that spreading an investment over anumber of assets will eliminate:(a) All of the risk.(b) All of the systematic risk and part of the unsystematic risk.(c) All of the unsystematic risk and part of the systematic risk.(d) The systematic risk.(e) The unsystematic risk.13. Suppose you observe the following situation:Beta Expected ReturnPete Corp. 1.3 24%Repeat Corp 0.65 13%Assume these securities are correctly priced. Based on the CAPM, what isthe market risk premium?(a) 14.9%(b) 2.9%(c) 16.9%(d) 4.9%(e) 17.9%The following is for problems 13-15. A stock has a beta of 1.3 and an expectedreturn of 17%. The market portfolio currently earns 12%.14. What is the expected return on a portfolio that is equally invested in the twoassets? (The stock and the market portfolio).(a) 14.5%(b) 13.5%(c) 12%(d) 17%(e) 16.5%15. If a portfolio of the two assets has a beta of 0.80 what is the portfolio weightson the stock?(a) 2/3(b) -2/3(c) 1/3(d) 23/45(e) -23/45416. If a portfolio of the two assets has an expected return of 10% what is it'sbeta? (If you nd a negative risk-free rate you are on the right track)(a) 0.78(b) 0.88(c) 1.08(d) 1.18(e) 3.5417. Analyzing a Portfolio. You have to invest in a portfolio containing Stock X,Stock Y, and a risk free asset. You must invest all of you money. Your goalis to create a portfolio that has an expected return of 13% and that has only80% of the risk of the overall market. If X has an expected return of 31%and a beta of 1.8. Y has an expected return of 20% and a beta of 1.3 andthe risk free rate is 7%, what is the portfolio weight on X?(a) 2/3(b) -2/3(c) 2/6(d) -2/6(e) -0.23718. Ecient portfolios are those that oer:(a) Highest expected return for a given level of risk(b) Highest risk for a given level of expected return(c) The maximum risk and expected return(d) All of the above19. A project anticipates net cashows of $10,000 at the end of year 1, with suchamount growing at the expected 5% rate of ination over the subsequent 4years. Calculate the real present value of this 5-year cash stream if the rmemploys a nominal discount rate of 15%.(a) $33,522(b) $38,377(c) $43,294(d) $55,00020. A rm generates sales of $250,000, depreciation expense of $50,000, taxableincome of $50,000, and has a 35% tax rate. By how much does net cashowdeviate from net income?(a) $17,5005(b) $50,000(c) $67,500(d) $82,50021. How does net working capital aect the NPV of a 5-year project if workingcapital is expected to increase by $25,000 and the rm has a 15% cost ofcapital?(a) NPV will increase by $9,322.(b) NPV will increase by $12,571.(c) NPV will decrease by $25,000.(d) NPV will decrease by $12,571.22. A parcel of corporate land was recently dedicated as the new plant site. Whatcost allocation should the land receive, based on the following: original costof $200,000, market value of $300,000, net book value of $200,000, a recentoer to purchase for $250,000.(a) $200,000(b) $250,000(c) $275,000(d) $300,00023. New projects or products can have an indirect eect on the rm as well asa direct eect. Which of the following appears to be an indirect eect oflaunching a new product?(a) Additional working capital is required.(b) Sales force will need to be increased.(c) Sales of a similar product of your rm's will decline.(d) Additional machinery must be purchased.24. Mr. Hopper is expected to retire in 28 years and he wishes accumulate$750,000 in his retirement fund by that time. If the interest rate is 10%per year, how much should Mr. Hopper put into the retirement fund at theend of each year in order to achieve this goal?(a) $4,559.44(b) $5,588.26(c) $9,118.88(d) $10,018.6725. What is the monthly mortgage payment on a $150,000 mortgage for 30 yearsan APR 5.85%?6(a) $784.71(b) $805.65(c) $884.91(d) $925.6426. The present value of a $2.50 dividend received at the end of this year thatgrows at 4% forever given a cost of capital of 12% is worth how much today?(a) $20.83(b) $62.50(c) $54.23(d) $31.2527. You would like to have enough money saved to receive a $100,000 per yearperpetuity after retirement so that you and your family can lead a good life.How much would you need to save in your retirement fund to achieve thisgoal (assume that the perpetuity payments start one year from the date ofyour retirement. The interest rate is 10%)?(a) $1,000,000(b) $10,000,000(c) $100,000(d) None of the above28. Sam's Company expects to pay a dividend of $6 per share at the end of yearone, $9 per share at the end of year two and then be sold for $136 per share.If the required rate on the stock is 20%, what is the current value of thestock?(a) $100.10(b) $105.69(c) $110.00(d) $120.2929. Which of the following is the likely price on a bond that has a current priceof $1,100 when interest rates rise?(a) $1,050(b) $1,100(c) $1,225(d) Can not be determined30. What is the expected YTM on a bond that pays a $15 coupon annually hasa $1,000 par value, and matures in 6 years if the current price of the bond is$978?7(a) 1.89%(b) 3.67%(c) 9.78%(d) 15.00%

Accounting Questions

1. Corresponds to CLO 1(a)On January 15, 2013, Talbot Corporation purchased a parcel of land as a factory site for $425,000. An old building on the property was demolished, and construction began on a new building which was completed on November 31, 2013. Salvaged materials resulting from the demolition were sold for $12,000. Costs incurred during this period included: Demolition of old building, $35,000, Architect’s fees, $15,000, Legal fees for title investigation and purchase contract, $7,000, and Construction costs, $980,000. Talbot should record the cost of the land and new building, respectively, as (Points : 7)$425,000 and $980,000$455,000 and $995,000$460,000 and $995,000$460,000 and $983,000Question 2.2. Corresponds to CLO 1(b)Which of the following costs should be fully expensed in the period in which the expenditure is made? (Points : 7)An outlay made to increase the efficiency of an existing plant asset.An outlay made to maintain an existing asset in operating condition.An outlay made to extend the useful life of an existing asset.None of the above costs should be fully expensed immediately; all should be capitalized.Question 3.3. Corresponds to CLO 1(c)On January 2, 2013, Apple Valley Produce began construction of a new processing plant. The plant was expected to be finished and ready for use on September 30, 2014. Expenditures for construction during 2013 were as follows: January 2, 2013, $600,000, July 1, 2013, $800,000, and December 31, 2013, $900,000. To fund this project, on January 2, 2013, Apple Valley borrowed $1,800,000 on a construction loan at 10% interest. This loan was outstanding during the construction period. The company also had $5,000,000 in 9% bonds outstanding in 2013. The interest capitalized for 2013 should be: (Points : 7)$90,000$180,000$107,500$100,000Question 4.4. Corresponds to CLO 1(d)On March 1, 2004, Tucker Corporation purchased a new machine for $355,000. At the time of acquisition, the machine was estimated to have a useful life of ten years and an estimated salvage value of $19,000. The company has recorded monthly depreciation using the straight-line method. On July 1, 2013, the machine was sold for $45,000. What gain should be recognized from the sale of the machine? (Points : 7)$21,333$3,600$2,800$19,000Question 5.5. Corresponds to CLO 2(a)On July 2, 2013, Peak Power Corporation purchased machinery for $80,000. Salvage value was estimated to be $5,000. The machinery will be depreciated over ten years using the double-declining balance method. If depreciation is computed on the basis of the nearest full month, Peak Power should record depreciation expense on this machinery for 2014 of (Points : 7)$14,400$13,500$8,000$7,500Question 6.6. Corresponds to CLO 2(b)At the beginning of 2013, Brennan Corporation purchased a delivery truck for $80,000. The truck was estimated to have a useful life of 150,000 miles and a salvage value of $5,000. It was driven 29,000 miles in 2013 and 33,000 miles in 2014. What is the depreciation expense for 2014? (Points : 7)$14,500$15,467$16,500$17,600Question 7.7. Corresponds to CLO 2(c)Volmer Corporation owns machinery with a book value of $400,000. It is estimated that the machinery will generate future cash flows of $375,000. The machinery has a fair value of $325,000. Volmer should recognize a loss on impairment of (Points : 7)$ -0-$25,000$50,000$75,000Question 8.8. Corresponds to CLO 2(d)Plymouth Mining Corporation acquired, for $5,500,000, a tract of land containing an extractable natural resource. Geological surveys estimate that the recoverable reserves will be 1,000,000 tons. Plymouth is required by its purchase contract to restore the land at an estimated cost of $750,000. The land is expected to have a value of $1,250,000 after restoration. Plymouth maintains no inventories of extracted materials. What is the amount of depletion per ton? (Points : 7)$4.25$5.00$5.50$6.25Question 9.9. Corresponds to CLO 3(a)Titan Corporation acquired a patent on September 28, 2013. Titan paid cash of $63,000 to the seller. Legal fees of $2,000 were paid related to the acquisition. At what amount should Titan record the patent on its books? (Points : 7)$65,000$63,000$61,000$2,000Question 10.10. Corresponds to CLO 3(b)Hodgson Company’s December 31, 2014 balance sheet reports assets of $8,500,000 and liabilities of $4,500,000. All of Hodgson’s book values approximate their fair value, except for land, which has a fair value that is $500,000 greater than its book value. On December 31, 3014, Motley Corporation paid $10,500,000 to acquire Hodgson. What amount of goodwill should Motley record as a result of this purchase? (Points : 7)$6,000,000$4,500,000$2,000,000$ -0-Question 11.11. Corresponds to CLO 3(c)Innovative Technologies, Inc. incurred research and development costs of $160,000 and legal fees of $36,000 to acquire a patent. The patent has a legal life of 20 years and a useful life of 10 years. What amount should Innovative Technologies record as Patent Amortization Expense in the first year? (Points : 7)$1,800$3,600$8,000$19,600Question 12.12. Corresponds to CLO 3(d)Stewart Company acquired Meyer Manufacturing on January 1, 2013 for $6,800,000 and recorded goodwill of $1,800,000 as a result of that purchase. At December 31, 2013, Meyer Manufacturing Division had a fair value of $4,600,000. The net identifiable assets of the Division, excluding goodwill, had a fair value of $3,200,000 at that time. What amount of loss on impairment of goodwill should Stewart record in 2013? (Points : 7)$ -0-$2,200,000$1,400,000$400,000Question 13.13. Corresponds to CLO 4(a)Lillian Properties leased a building to Hopping Industries for a ten year term at an annual rental of $250,000. The lease began January 1, 2013, at which time Lillian received $1,000,000 covering the first two years’ rent of $500,000 and a security deposit of $500,000. The deposit will not be returned to Hopping upon expiration of the lease, but will be applied to payment of rent for the last two years of the lease. What portion of the $1,000,000 should be shown as current and long-term liabilities, respectively, in Lillian’s December 31, 2013 balance sheet?(Answers shown with Current Liabilities listed first, Long-term Liabilities listed second. ) (Points : 7)$500,000 $500,000$250,000 $500,000$500,000 $250,000$ -0- $1,000,000Question 14.14. Corresponds to CLO 4(b)Which of the following is the proper way to report a gain contingency? (Points : 7)As deferred revenue.As an accrued amount.As an account receivable with additional disclosure explaining the nature of the contingency.As a disclosure only.Question 15.15. Corresponds to CLO 4(c)On January 1, 2014, Huntington Corporation issued eight year bonds with a face value of $6,000,000 and a stated interest rate of 6%, payable semiannually on June 30 and December 31. The bonds were sold to yield 8%. Table values are:37What is the issue price of the bonds?(Points : 7)$5,301,360$5,308,920$5,520,000$6,742,800Question 16.16. Corresponds to CLO 4(d)On December 31, 2013, the 11% bonds payable of Goodly Corporationhad a carrying amount of $2,040,000. The bonds, which had a face value of $2,000,000 were issued at a premium to yield 10%. Goodly uses the effective-interest method of amortization. Interest is paid on June 30 and December 31. On July 1, 2014, several years before their maturity, Goodly retired the bonds at 103. The interest payment on June 30, 2014 was made as scheduled. The loss on retirement, ignoring taxes, is (Points : 7)$40,000$28,000$20,000$ -0-Question 17.17. Corresponds to CLO 5(a)The current FASB viewpoint on accounting for leases is best described as: (Points : 7)All leases should be capitalized.Leases should never be capitalized.All long-term leases should be capitalized.Leases similar to installment purchases should be capitalized.Question 18.18. Corresponds to CLO 5(b)On January 1, 2013, Martin Corporation signed a ten-year noncancelable lease for machinery. The terms of the lease called for Martin to make annual payments of $350,000 at the end of each year for ten years with title to pass to Martin at the end of this period. The machinery has an estimated useful life of 20 years and no salvage value. Martin uses the straight-line method of depreciation for all of its fixed assets. Martin accounted for this lease transaction as a capital lease. The lease payments were determined to have a present value of $1,977,577 at an effective interest rate of 12%. With respect to this capitalized lease, Martin should record for 2013: (Points : 7)Depreciation expense of $197,758 and interest expense of $420,000.Depreciation expense of $197,758 and interest expense of $237,309.Depreciation expense of 98,879 and interest expense of $237,309.Lease expense of $350,000.Question 19.19. Corresponds to CLO 5(c)On December 31, 2014, Pacific Rail Corporation leased a train car from Southern Transportation Company for a ten year period expiring December 30, 2024. Equal annual payments of $120,000 are due on December 31 of each year, beginning with December 31, 2014. The lease is properly classified as a capital lease on Pacific Rail’s books. The present value at December 31, 2013 of the ten lease payments over the lease term discounted at 8% is $869,627. Assuming the first payment is made on time, the amount that should be reported by Pacific Rail Corporation as the lease liability on its December 31, 2014 balance sheet is (Points : 7)$749,627$800,000$869,627$1,080,000Question 20.20. Corresponds to CLO 5(d)Colfax Corporation enters into an agreement with Reynolds Rentals on January 1, 2014 for the purpose of leasing a machine to be used in its manufacturing operations. The term of the noncancelable lease is 5 years with no renewal option. Payments of $200,000 are due on December 31 of each year. The fair value of the machine on January 1, 2014, is $800,000. The machine has a remaining economic life of 10 years, with no salvage value. The machine reverts to the lessor upon termination of the lease. Colfax Corporation’s incremental borrowing rate is 10% per year. Colfax does not have knowledge of the 8% implicit rate used by Reynolds. The factor for the present value of an ordinary annuity of 1, for 5 periods at 10% is 3. 79079. The factor for the present value of an ordinary annuity of 1, for 5 periods at 8% is 3. 99271. What type of lease is this from Colfax Corporation’s point of view? (Points : 7)Sales-type leaseDirect-financing leaseCapital leaseOperating leaseQuestion 21.21. Corresponds to CLO 6(a)Roberts Corporation has 100,000 shares of $10 par common stock authorized. The following transactions took place during 2013, the first year of the corporation’s existence:Sold 10,000 shares of common stock for $14 per shareIssued 20,000 shares of common stock in exchange for legal services valued at $300,000At the end of Roberts’ first year, total paid-in capital amounted to (Points : 7)$100,000$140,000$300,000$440,000Question 22.22. Corresponds to CLO 6(b)On June 15, Handel Corporation reacquired 10,000 shares of its $10 par value common stock for $19 per share. Handel uses the cost method to account for treasury stock. The journal entry to record the reacquisition of the stock should debit (Points : 7)Common Stock for $100,000Common Stock for $100,000 and Paid-in Capital in Excess of Par for $90,000Treasury Stock for $190,000Treasury Stock for $100,000Question 23.23. Corresponds to CLO 6(c)The fair value of Willow Company’s common stock was $57 per share at December 31, 2013 and $63 per share at December 31, 2014. Willow acquired 7,000 shares of its own common stock at $60 per share on March 10, 2014, and sold 5,000 of these shares at $65 per share on September 25, 2014. Willow Company uses the cost method to account for treasury stock. The journal entry to record the sale of the treasury stock should credit (Points : 7)Treasury Stock for $300,000 and Retained Earnings for $25,000Treasury Stock for $285,000 and Retained Earnings for $40,000Treasury Stock for $300,000and Paid-in Capital from Treasury Stock for $25,000Treasury Stock for $325,000Question 24.24. Corresponds to CLO 6(d)Under GAAP, preferred stock with which of the following features should be reported as a liability on the balance sheet: (Points : 7)ConvertibleNoncumulativeRedeemableCallableQuestion 25.25. Corresponds to CLO 7(a)Farnsworth Inc. declared a $450,000 cash dividend. It currently has 10,000 shares of 8%, $100 par value cumulative preferred stock outstanding. It is one year in arrears on its preferred stock. How much cash will Farnsworth distribute to the common stockholders? (Points : 7)$290,000$370,000$160,000$450,000Question 26.26. Corresponds to CLO 7(b)Weston Corporation owned 80,000 shares of Brandt Corporation, purchased in 2008 for $320,000. On December 20, 2013, Weston declared a property dividend of all of its Brandt Corporation shares on the basis of one share of Brandt for every 10 shares of Weston common stock held by its shareholders. The property dividend was distributed on January 10, 2014. On the declaration date, the aggregate market price of the Brandt Corporation shares held by Weston was $610,000. The entry to record the declaration of the dividend would include a debit to Retained Earnings (property dividends declared) of (Points : 7)$320,000$610,000$290,000$ -0-Question 27.27. Corresponds to CLO 7(c)Harping Corporation declared an $800,000 dividend, $200,000 of which was liquidating. How would this distribution affect Retained Earnings and Additional Paid-in Capital, respectively?(Answer is shown with Retained Earning listed first, Additional Paid-in Capital listed second. ) (Points : 7)No effect $800,000 Decrease$800,000 Decrease No effect$600,000 Decrease $200,000 DecreaseNoeffect No effectQuestion 28.28. Corresponds to CLO 7(d)After several profitable years, Pear Corporation’s stock price had increased by 10-fold. Management prefers the stock price to be within range of the majority of potential investors, and on June 30, 2013, split its stock 2-for-1. Prior to the split, Pear’s stockholders’ equity section showed: Common Stock, 2,000 shares at $100 par. After the split, Pear’s stockholders’ equity section showed: (Points : 7)Common stock, 4,000 shares at $50 parCommon stock, 2,000 shares at $200 parCommon stock, 1,000 shares at $200 parCommon stock, 4,000 shares at $100 par

Accounting Questions

Keith Company is a two-division firm and has the following information available for this year:Common fixed costs $ 800,000Direct fixed costs of Division A 200,000Direct fixed costs of Division B 400,000Sales revenue of Division A 800,000Sales revenue ofDivision B 1,200,000Variable costs of Division A 240,000Variable costs of Division B 360,000What is Division A’s contribution margin?A) $840,000B) $440,000C) $560,000D) $(240,000)Exhibit 1: The Testa Company has 500 obsolete microcomputers that are carried in inventory at a total cost of $720,000. If these microcomputers are upgraded at a total cost of$100,000, they can be sold for a total of$160,000. As an alternative, the microcomputers can be sold in their present condition for $50,000. I. Refer to Exhibit 1. The sunk cost in this situation is:2. Refer to Exhibit 1: What is the net advantage or disadvantage to the company from upgrading the computers rather than selling them in their present condition?3. Refer to Exhibit 1. Suppose the selling price of the upgraded computers has not been set. At what selling price per unit would the company be as well off upgrading the computers as if it just sold the computers in their present condition?Exhibit 2: The Wright Company has established standard cost for its single product as follows:Direct material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 gallons at $3 per gallon Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0. 5 hours at $8 per hour Variable overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0. 5 hours at $2 per hourDuring May, the company made 4,000 units and incurred the following costs: Direct materials purchased: 8,100 gallons at $3. I 0 per gallonDirect material used: 7,600 gallonsDirect labor used: 2,200 hours at $8. 25 per hourActual Variable overhead cost:$4,1754. Refer to Exhibit 2. The materials price variance is:5. Refer to Exhibit 2. The materials quantity variance is:6. Refer to Exhibit 2. The labor rate variance is:on, showing your calculation, and overall company’s net operating income or loss, before and after eliminating Northern Division. 6. United Corporation manufactures laser printers. United currently manufactures the 32,000 imaging drums that it uses in its printers. The annual costs to manufacture these 32,000 drums are as follows:Cost of drumTotal costVariable manufacturing cost . . . . . . . . . . . . . . . $23 $736,000Fixed manufacturing cost . . . . . . . . . . . . . . . . . . . . $2. 080. 000Total cost $88 $2. 816. 000Hardware Solutions Inc. has offered to provide United with all of its imaging drum needs for $72 per drum. If United accepts this offer, 70% of the fixed manufacturing cost above could be totally eliminated. Also, United will be able to use the freed up space to generate $240,000 of income each year in the production of alternative products. Based on the information presented, would United be better off to make the drums or buy the drums and by bow much?7. Apex Company had the following data for the current fiscal period:Units in process at the beginning of the month 6,000Units in process at the end of the month 4,000Units started during the month 20,000Materials are added at the beginning of the process. Beginning work-in-process was 40 percent complete as to conversion. Ending work-in-process was 70 percent complete as to conversion. Calculate the number of units completed and transferred out during the period?a. Weighted Average method:b. FIFO method:8. Speedy Delivery Services has the collected the following information about operating expenditures for its delivery truckfleet for the past five years:Year Miles Ooerating Costs2007 110,000 $390,0002008 140,000 $420,0002009 100,000 $360,0002010 130,000 $410,0002011 150,000 $440,000a. Using the high-low method, what is the cost estimate for variable costs for 2012?b. Using the high-low method, what is the cost estimate forfzxed costs for 2012?c. What is the best estimate of total operating expenses for 2012 using the high-low method based on total expected miles of 120,000?

Accounting Questions

Lombardi Company manufactures a single product by a continuous process, involving threee production departments. The records indicate that direct materials, direct labor, and factory overhead for Department 1 were $100,000, $125,000 and $150,000,respectively. Work in process at the beginning of the period for Department 1 was $75,000, and work in process at the end of the period totaled $60,000. The record indicate that direct materials, direct labor and applied factory overhead for Department 2 were $50,000, $60,000 and $70,000 respectively. In addition, work in process at the beginning of the period for Department 2 totaled $75,000 and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs into Department 3 during the period is:a. Work in Process–Dept. 3 (D) 585,00 Work in Process–Dept. 2 (C) 585,000b. Work in Process–Dept. 3 (D) 570,000 Work in Process–Dept. 2 (C) 570,000c. Work in Process–Dept. 3 (D) 555,000 Work in Process–Dept. 2 (C) 555,000d. Work in Process–Dept. 3 (D) 165,000 Work in Process–Dept. 2 (C) 165,000What numbers do I use to figure this out?Work in Process, Beginning $10,000Work in Process, Ending $15,000Direct Labor Costs Incurred $ 4,000Cost of Goods Manufactured $ 8,000Factory Overhead $ 8,000What is the amount of direct materials used?a. $1,000b. $4,000c. $7,000d. $3,000What numbers do I use to figure this out?

Accounting Questions

1. Watts and Zimmerman’s Positive Accounting Theory is:A. One of several normative theories of accountingB. One of several positive theories of accountingC. One of several critical theories of accountingD. None of the given options is correct2. The key theory that underpins Positive Accounting Theory is:A. The Efficient Markets HypothesisB. Agency theoryC. Normative ethical theoryD. None of the given options is correct3. The principal’s expectation of opportunistic behaviour by his or her agent resultsin lower payments to:A. The agentB. The principalC. The principal and the agentD. Neither the principal nor the agent4. The ‘political cost hypothesis’ of Positive Accounting Theory suggests that:A. Large firms are more likely to use accounting choices that reduce reported profitsB. Small firms are more likely to use accounting choices that reduce reported profitsC. Neither large nor small firms are more likely to use accounting choices that reducereported profitsD. Both large and small firms are more likely to use accounting choices that reducereported profits5. The ‘bonus plan hypothesis’ of Positive Accounting Theory suggests managers offirms with bonus plans tied to reported income are more likely to use accountingmethods that:A. Increase prior period reported incomeB. Increase current period reported incomeC. Increase future period reported incomeD. None of the given options is correct6. The ‘debt/equity hypothesis’ of Positive Accounting Theory predicts that:A. The higher the firm’s debt/equity ratio, the more likely managers are to useaccounting methods that lower incomeB. The lower the firm’s debt/equity ratio, the more likely managers are to useaccounting methods that increase incomeC. The higher the firm’s debt/equity ratio, the more likely managers are to useaccounting methods that increase incomeD. None of the given options is correct7. Critical researchers accuse financial accounting of:A. Being open to manipulation by self-interested managersB. Reinforcing unequal distributions of wealth and powerC. Being irrelevant to management decision-makingD. Poorly predicting stock prices8. Social Praxis in the context of critical theory means thatA. Theory influences practiceB. Practice influences theoryC. Theory influences practice, while practice influences theoryD. Theory does not influence practice, and practice does not influence theory9. Critical accounting researchers have criticised other social andenvironmental accounting researchers for:A. Lacking objectivityB. Being too radical and unrealisticC. Leaving existing social structures unchallengedD. Ignoring the findings of empirical accounting research10. Which theoretical perspectives have been utilised by critical researchers?A. MarxismB. Deep ecologyC. Radical feminismD. All of the given options are correct11. Broadly speaking, critical researchers have been:A. Successful in identifying problems in accounting practices, but unsuccessful inchanging practicesB. Successful in exposing problems in accounting practices, and successful inchanging practicesC. Unsuccessful in exposing problems in accounting practices, but successful inchanging practicesD. Unsuccessful in exposing problems in accounting practices, and unsuccessful inchanging practices12. Critical researchers interpret the Australian accounting bodies’ opposition tomandatory corporate social and environmental reporting as evidence that theaccounting profession:A. Is legitimately concerned with introducing unnecessary regulationB. Does not believe mandatory reporting would enhance corporate accountabilityC. Does not believe shareholders and the public support mandatory reportingD. Promotes the interests of business above the interests of other stakeholders13. Critical researchers believe that accountants are:A. Complicit in the exploitation of citizensB. Resistant to the exploitation of citizensC. Irrelevant to the exploitation of citizensD. Exploited by citizens14. Critical researchers believe that regulation of corporations is ineffectivebecause the government:A. Is weak and powerlessB. Is deceived by corporationsC. Favours the richD. Does not believe that more effective social and environmental legislation isrequired

Accounting Questions

1. Chapman Inc. has several outdated computers that cost a total of $8,600 and could be sold as scrap for $4,600. They could be updated for an additional $2,400 and sold. If Chapman updates the computers and sells them, net income will increase by $5,400. What amount would be considered sunk costs?A) $5,400B) $11,000C) $8,600D) $1,2002. It costs Chapman Company $18. 40 of variable and $3. 75 of fixed costs to produce one bathroom scale, which normally sells for $47. 00. A foreign wholesaler offers to purchase 4,000 scales at $26. 90 each. Chapman would incur special shipping costs of $2. 75 per scale if the order were accepted. Chapman has sufficient unused capacity to produce the 4,000 scales. If the special order is accepted, what will be the effect on net income?A) $107,600 increaseB) $23,000 increaseC) $8,000 increaseD) $23,000 decrease6. Mesh Merchandising Company expects to purchase $86,000 of materials in July and $118,000 of materials in August. 21ree-quarters of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase. How much will August’s cash disbursements for materials purchases be?A) $118,000B) $64,500C) $88,500D) $110,0008. The following information is taken from the production budget for the first quarter:Beginning inventory in units 883Sales budgeted for the quarter 338,000Capacity in units of production facility 350,000How many finished goods units should be produced during the quarter if the company desires 2,100 units available to start the next quarter?A) 339,217B) 340,100C) 351,217D) 336,7839. Sala Co. is contemplating the replacement of an old machine with a new one. The following information has been gathered:Old Machine New MachinePrice $300,000 $600,000Accumulated Depreciation 90,000 -O-Remaining useful life 10 years -O-Useful life -0- 10 yearsAnimal operating costs $240,000 $180,600If the old machine is replaced, it can be sold for $24,000. The net advantage (disadvantage) of replacing the old machine isA) $18,000B) $(6,000)C) $24,000D) $(60,000)10. Astor Manufacturing has the following budgeted sales: January $120,000, February $180,000, and March $150,000. 40% of the sales are for cash and 60% are on credit. For the credit sales, 50% are collected in the month of sale, and 50% the next month. The total expected cash receipts during March are:A) $159,000. B) $168,000. C) $157,500. D) $150,000. 12. Comma Co. makes and sells widgets. The company is in the process of preparing its selling and administrative expense budget for the month. The following budget data are available:Item Variable Cost Per Unit Sold Monthly Fixed CostSales commissions $1 $10,000Shipping $3Advertising $4Executive salaries $120,000Deprecíation on office equipment $4,000Other $2 $6,000Expenses are paid in the month incurred. If the company has budgeted to sell 80,000 widgets in October, how much is the total budgeted selling and administrative expenses for October?A) $930,000B) $940,000C) $800,000D) $140,00013. The cost to produce Part A was $82 per unit in 2012. During 2013, it has increased to $89 per unit. In 2013, Supplier Company has offered to supply Part A for $75 per unit. For the make-or-buy decision,A) incremental revenues are $14 per unit. B) incremental costs are $7 per unit. C) net relevant costs are $7 per unit. D) differential costs are $14 per unit. 15. At January 1, 2013, Farley, Inc. has beginning inventory of 2,000 surfboards. Farley estimates it will seli 5,000 units during the first quarter of 2013 with a 12% increase in sales each quarter. Farley’s policy is to maintain an ending inventory equal to 25% of the next quarter’s sales. Each surfboard costs $100 and is sold for $150. How much is budgeted sales revenue for the third quarter of 2013?A) $975,000B) $6,272C) $225,000D) $940,80016. If there were 68,000 pounds of raw materials on hand on January 1, 135,000 pounds are desired for inventory at January 31, and 400,000 pounds are required for January production, how many pounds of raw materials should be purchased in January?A) 332,000 poundsB) 197,000 pounds C) 535,000 poundsD) 467,000 pounds18. On January 1, Stranbrough Company has a beginning cash balance of $21,000. During the year, the company expects cash disbursements of $169,400 and cash receipts of $154,000. If Stranbrough requires an ending cash balance of $20,000, the company must borrowA) $36,400. B) $25,600. C) $20,000. D) $14,400.

Accounting Questions

Question 1 A factor which distinguishes the corporate form of organization from a sole proprietorship or partnership is that a corporation is organized for the purpose of making a profit. corporation is subject to more federal and state government regulations. corporation s temporary accounts are closed at the end of the accounting period. corporation is an accounting economic entity. Click here if you would like to Show Work for this questionQuestion 2 The following data is available for Blaine Corporation at December 31, 2012:Common stock, par $10 (authorized 25,000 shares) $200,000Treasury Stock (at cost $15 per share) 900Based on the data, how many shares of common stock are outstanding? 19,940 24,940 25,000 20,000Click here if you would like to Show Work for this questionQuestion 3 On January 1, Collins Corporation had 800,000 shares of $10 par value common stock outstanding. On March 31, the company declared a 15% stock dividend. Market value of the stock was $15/share. As a result of this event, Collins Paid-in Capital in Excess of Par account increased $600,000. Collins total stockholders equity was unaffected. Collins Stock Dividends account increased $1,800,000. All of the above. Click here if you would like to Show Work for this questionQuestion 4 Dillon Corporation splits its common stock 2 for 1, when the market value is $40 per share. Prior to the split, Dillon had 50,000 shares of $10 par value common stock issued and outstanding. After the split, the par value of the stock is reduced to $20 per share. remains the same. is reduced to $2 per share. is reduced to $5 per share. Click here if you would like to Show Work for this questionQuestion 5 A major disadvantage resulting from the use of bonds is that taxes may increase. earnings per share may be lowered. interest must be paid on a periodic basis. bondholders have voting rights. Click here if you would like to Show Work for this questionQuestion 6 Bargain Company has $1,600,000 of bonds outstanding. The unamortized premium is $21,600. If the company redeemed the bonds at 101, what would be the gain or loss on the redemption? $16,000 loss $5,600 loss $16,000 gain $5,600 gainClick here if you would like to Show Work for this questionQuestion 7 Horton Company purchased a building on January 2 by signing a long-term $480,000 mortgage with monthly payments of $4,400. The mortgage carries an interest rate of 10 percent. The amount owed on the mortgage after the first payment will be $479,600. $476,000. $475,600. $480,000. Click here if you would like to Show Work for this questionQuestion 8 Wise Company owns 30% interest in the stock of Dark Corporation. During the year, Dark pays $20,000 in dividends to Wise, and reports $200,000 in net income. Wise Company’s investment in Dark will increase Wise’s net income by $6,000. $60,000. $66,000. $80,000. Click here if you would like to Show Work for this questionQuestion 9 If an investor owns less than 20% of the common stock of another corporation as a long-term investment, no dividends can be expected. it is presumed that the investor has relatively little influence on the investee. it is presumed that the investor has significant influence on the investee. the equity method of accounting for the investment should be employed. Click here if you would like to Show Work for this questionQuestion 10 Reporting investments at fair value is a conservative approach because only losses are recognized. applicable to both debt and stock securities. applicable to debt securities only. applicable to stock securities only. Click here if you would like to Show Work for this questionQuestion 11 Available-for-sale securities are classified as short-term investments only. long-term investments only. either short-term or long-term investments. current assets only. Click here if you would like to Show Work for this questionQuestion 12 Which of the following changes in retained earnings during a period will be reported in the financing activities section of the statement of cash flows?1. Declaration and payment of a cash dividend during the period. 2. Net income for the period. 1 2 Neither 1 nor 2. Both 1 and 2. Click here if you would like to Show Work for this questionQuestion 13 Hark Inc. had cash sales of $400,000 and credit sales of $1,100,000. The accounts receivable balance increased $25,000 during the year. How much cash did Hark receive from its customers during the year? $725,000 $1,500,000 $1,475,000 $1,075,000Click here if you would like to Show Work for this questionQuestion 14 The statement of cash flows is prepared from all of the following except comparative balance sheets. the current income statement. selected transaction data. the adjusted trial balance. Click here if you would like to Show Work for this question Question 15 Corgan Company uses the direct method in determining net cash provided by operating activities, During the year, operating expenses were $290,000, prepaid expenses increased $20,000, and accrued expenses payable increased $30,000. Cash payments for operating expenses were $240,000. $280,000. $300,000. $340,000. Click here if you would like to Show Work for this questionQuestion 16 Assume the following sales data for a company:2014 $1,050,0002013 950,0002012 800,0002011 550,000If 2011 is the base year, what is the percentage increase in sales from 2011 to 2013? 72. 7% 100% 52. 4% 90. 9%Click here if you would like to Show Work for this questionQuestion 17 Darius, Inc. has the following income statement (in millions):DARIUS, INC. Income StatementFor the Year Ended December 31, 2012 Net Sales $300Cost of Goods Sold 120Gross Profit 180Operating Expenses 44Net Income $136Using vertical analysis, what percentage is assigned to Net Income? 100% 75. 6% 45. 3% None of the above. Question 18 Parrish, Inc. decided on January 1 to discontinue its telescope manufacturing division. On July 1, the division s assets with a book value of $1,250,000 are sold for $850,000. Operating income from January 1 to June 30 for the division amounted to $125,000. Ignoring income taxes, what total amount should be reported on Parrish s income statement for the current year under the caption, Discontinued Operations? $400,000 loss $125,000 $275,000 loss $525,000Question 24 Each of these items must be considered in preparing a statement of cash flows for Kiner Co. for the year ended December 31, 2012. For each item, state how it should be shown in the statement of cash flows for 2012. (a) Issued bonds for $200,000 cash. C (b) Purchased equipment for $150,000 cash. (c) Sold land costing $20,000 for $20,000 cash. (d) Declared and paid a $50,000 cash dividend. – Click here if you would like to Show Work for this questionQuestion 25 Villa Company reported net income of $195,000 for 2012. Villa also reported depreciation expense of $45,000 and a loss of $5,000 on the sale of equipment. The comparative balance sheet shows a decrease in accounts receivable of $15,000 for the year, a $17,000 increase in accounts payable, and a $4,000 decrease in prepaid expenses. InstructionsPrepare the operating activities section of the statement of cash flows for 2012. Use the indirect method. (List multiple entries with a positive cash flow first and then the negative cash flow. List amounts from largest to smallest e. g. 10, 5, 3, 2. If amount decreases cash flow, use either a negative sign preceding the number e. g. -45 or parentheses e. g. (45). )VILLA COMPANYPartial Statement of Cash FlowsFor the Year Ended December 31, 2012Cash flows from operating activities $ Adjustments to reconcile net income to net cash provided by operating activities $? Net cash by operating activities $ Click here if you would like to Show Work for this question

Accounting Questions

Question
1. Uncertain Future Cash Flows

Union Bay Plastics is investigating the purchase of automated equipment that would save $100,000 each year in direct labor and inventory carrying costs. This equipment costs $750,000 and is expected to have a 10-year useful lift with no salvage value. The company’s required rate of return is 15% on all equipment purchases. This equipment would provide intangible benefits such as greater flexibility and higher-quality output that are difficult to estimate and yet are quite significant.

Required:

(Ignore income taxes)

What dollar value per year would the intangible benefits have to have in order to make the equipment an acceptable investment?

2. Production Budget

Chrystal Telecom has budgeted the sales of its innovative mobile phone over the next four months as follows:

Sales in Units

July………………………………………………………………………30,000

August………………………………………………………………….45,000

September…………………………………………………………..60,000

October……………………………………………………………….50,000

The company is now in the process of preparing a production budget for the third quarter. Past experience has shown that end-of-month finished goods inventories must equal 10% of the next month’s sales. The inventory at the end of Jun was 3,000 units.

Required:

Prepare a production budget for the third quarter showing the number of units to be produced each month and for the quarter in total.

3. Manufacturing Overhead Budget

The direct labor budget of Krispin Corporation for the upcoming fiscal year includes the following budgeted direct labor-hours.

1st quarter 2nd quarter 3rd quarter 4th quarter

Budgeted direct labor-hours………. 5,000 4,800 5,200 5,400

The company’s variable manufacturing overhead rate is $1.75 per direct labor-hour and the company’s fixed manufacturing overhead is $35,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation, which is $15,000 per quarter.

Required:

1. Construct the company’s manufacturing overhead budget for the upcoming fiscal year.

2. Compute the company’s manufacturing overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year. Round off to the nearest whole cent.

4. Residual Income

Midlands Design Ltd. Of Manchester, England, is a company specializing in providing design services to residential developers. Last year the company had net operating income of £400,000 on sales of £2,000,000. The company’s average operating assets for the year were £2,200,000 and its minimum required rate of return was 16%. (The currency in the United Kingdom is the pound, denoted by £)

Required:Compute the company’s residual income for the year.

1.