Questions and Answers of Survey of Accounting

Immediately after a used truck is acquired, a new motor is installed and the tires are replaced at a total cost of $4,300. Is this a capital expenditure or a revenue expenditure?
Retrograde Delivery Co. incurred the following costs related to trucks and vans used in operating its delivery service:1. Changed the oil and greased the joints of all the trucks and vans.2. Changed
Debra Bundy owns and operates DB Transport Co. During the past year, Debra incurred the following costs related to an 18-wheel truck:1. Changed engine oil.2. Installed a television in the sleeping
Equipment acquired on January 3, 20Y1, at a cost of $140,000, has an estimated useful life of 5 years and an estimated residual value of $15,000.a. What was the annual amount of depreciation for the
The following cost graphs illustrate various types of cost behavior:For each of the following costs, identify the cost graph that best illustrates its cost behavior as the number of units produced
How would each of the following costs be classified if units produced is the activity base?a. Salary of factory supervisor ($120,000 per year)b. Straight-line depreciation of plant and equipmentc.
FirstClass Gaming Inc. manufactures components for computer games within a relevant range of 250,000 to 500,000 components per year. Within this range, the following partially completed manufacturing
Partially completed budget performance reports for EZ Breezy Company, a manufacturer of air conditioners, are provided next.a. Complete the budget performance reports by determining the correct
The total assets and total liabilities for a recent year of Best Buy (BBY) and Gamestop (GME) are shown below.Determine the stockholders’ equity of each company. Best Buy (in millions) Gamestop (in
Identify the primary business emphasis of each of the following companies as (a) a lowcost emphasis or (b) a premium-price emphasis. If you are unfamiliar with the company, you may use the Internet
What particular item of financial or operating data appears on both the income statement and the statement of stockholders’ equity? What items appear on both the balance sheet and the statement of
Briefly describe the nature of the information provided by each of the following financial statements: the income statement, the statement of stockholders’ equity, the balance sheet, and the
The three business activities are financing, investing, and operating. Using Southwest Airlines (LUV), give an example of each type of activity.
Assume that a friend of yours operates a familyowned pharmacy. A Walmart Supercenter, scheduled to open in the next several months, will also offer pharmacy services. What business emphasis would
Both Kia Motors (KRX) and BMW (BMW) produce and sell automobiles. Describe and contrast the business emphasis of KIA and BMW.
Why are most large companies like Apple (AAPL), Pepsico (PEP), General Electric (GE), and Intel (INTC) organized as corporations?
What are the basic elements of a financial accounting system? Do these elements apply to all businesses, from a local restaurant to Alphabet (Google) Inc. (GOOGL)? Explain.
Based on the Amazon.com, Inc. (AMZN), financial statement data shown in Exercise 1-22, prepare an income statement for the year ending December 31.Exercise 1-22Amazon.com, Inc. (AMZN) operates as an
Amazon.com, Inc. (AMZN) operates as an online retailer in North America and internationally. Both Amazon and third parties, via the Amazon.com Web site, sell products across various product
JLM Services was organized on August 1, 20Y5. A summary of the revenue and expense transactions for August follows: Fees earnedWages expense $2,550,000 1,612,500Miscellaneous
Financial information related to All Seasons Company for the month ended June 30, 20Y7, is as follows:Common stock, June 1, 20Y7Stock issued in June $ 30,000 20,000Net income for
From the following list of selected items taken from the records of Mermaid Stories, Inc. as of a specific date, identify those that would appear on the balance sheet.1. Accounts Receivable2. Common
Staples, Inc. (SPLS) is a leading office products distributor, with retail stores in the United States, Canada, Asia, Europe, and South America. The following financial statement data were adapted
Four different companies—Chang, Henry, Nagel, and Wilcox—show the same balance sheet data at the beginning and end of a year. These data, exclusive of the amount of stockholders’ equity, are
Alternative Flour Company manufactures flour by a series of three processes, beginning in the Milling Department. From the Milling Department, the materials pass through the Sifting and Packaging
Prepare a cost of production report for the Dyeing Department of Alladin Carpet Company for May. Use the weighted average cost method with the following data: Work in process, May 1, 4,000 units, 75%
The following information concerns production in the Finishing Department for July. The Finishing Department uses the weighted average cost method.a. Determine the number of units in work-in-process
Units of production data for the two processing departments of the Tennessee Cable and Wire Company for May of the current fiscal year are as follows:Each department uses the weighted average cost
The Assembly Department of A-Okay Company uses the weighted average cost method and had 700 units in work in process that were 60% complete at the beginning of the period. During the period, 4,980
Orange Realty acts as an agent in buying, selling, renting, and managing real estate. The trial balance on October 31, 20Y4, is shown next.The following business transactions were completed by Orange
On March 1, 20Y1, Sadie May established Pampered Pet, which completed the following transactions during the month:a. Sadie May transferred cash from a personal bank account to an account to be used
The accounts in the ledger of Angel Co. as of December 31, 20Y7, are listed in alphabetical order as follows. All accounts have normal balances. The balance of the cash account has been intentionally
The following selected transactions were completed during January of the current year:1. Billed customers for fees earned, $8,346.2. Purchased supplies on account, $360.3. Received cash from
Winter Solstice Co. has the following accounts in its ledger: Cash, Accounts Receivable, Supplies, Office Equipment, Accounts Payable, Common Stock, Retained Earnings, Dividends, Fees Earned, Rent
Identify each of the following accounts of Shakti Yoga Co. as an asset, liability, stockholders’ equity, revenue, or expense, and state in each case whether the normal balance is a debit or a
During the month, Be You Co. has a substantial number of transactions affecting each of the following accounts. State for each account whether it is likely to have (a) debit entries only, (b) credit
Costco Wholesale Corporation (COST) and Walmart Stores Inc. (WMT) reported the following data (in millions) for a recent year:1. Compute the return on total assets. Round to one decimal place.2.
Delta Air Lines, Inc. (DAL) reported the following data (in millions) for a recent year:Sales ...........................................$41,244Operating income ........................ 6,114Average
Southwest Airlines Co. (LUV) reported the following data (in millions) for a recent year:Sales ..........................................$21,171Operating income ........................4,116Average
Microsoft Corporation (MSFT) reported the following data (in millions) for a recent year:Sales ..............................................$110,360Operating income
West Coast Industries Inc. wishes to evaluate three capital investment projects by using the net present value method. Relevant data related to the projects are summarized as follows:Instructions1.
Mulkey Development Company has two competing projects: an office building and a condominium complex. Both projects have an initial investment of $1,000,000. The net cash flows estimated for the two
Kentucky Grill has computed the net present value for capital expenditures for the Somerset and Whitley City locations using the net present value method. Relevant data related to the computation are
Take a Load Off Hotels is considering the construction of a new hotel for $40 million. The expected life of the hotel is 20 years with no residual value. The hotel is expected to earn revenues of
RiverBend Wood is evaluating two capital investment proposals for a retail outlet store, each requiring an investment of $500,000 and each with a five-year life and expected total net cash flows of
The following data are accumulated by GreenApple Motors Inc. evaluating two competing capital investment proposals:Determine the expected average rate of return for each proposal. Testing Equipment
A condensed income statement for the Motorboat Division of Ride of Your Life Inc. for the year ended December 31, 20Y2, is as follows:Sales ..............................$ 6,000,000Cost of goods sold
Horizon Foods Inc. is a diversified food products company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year
Raptor Company sells vehicle parts to manufacturers of heavy construction equipment. The Bulldozer Division is organized as a cost center. The budget for the Bulldozer Division for the month ended
Based on Childs Manufacturing’s data in Exercise 14-17, assume that a transfer price of $11 has been established and that 75,000 units of materials are transferred, with no reduction in the
Wiring used by the Appliance Division of Childs Manufacturing is currently purchased from outside suppliers at a cost of $12.50 per unit. However, the same materials are available from the Electronic
The condensed income statement for the International Division of Shakti Inc. is as follows (assuming no service department charges):Sales .........................................$12,000,000Cost of
Power Sports Company has two divisions, Wholesale and Retail, and two corporate service departments, Tech Support and Accounts Payable. The corporate expenses for the year ended December 31, 20Y7,
Children’s Hospital of the King’s Daughters Health System in Norfolk, Virginia, introduced a new budgeting method that allowed the hospital’s annual plan to be updated for changes in actual
Southwest Airlines Co. (LUV) reported the following data (in millions) for three recent years.Southwest refers to its utilization rates as “passenger load factor.”1. Compute the passenger load
Delta Air Lines (DAL) reported the following data (in millions) for three recent years.Delta refers to its utilization rates as “passenger load factor.”1. Compute the passenger load factor
Hilton Worldwide Holdings Inc. (HLT) and Marriott International, Inc. (MAR) reported the following occupancy data for two recent years:1. Comment on Hilton’s occupancy rate for Years 1 and 2.2.
Hendrick Motorsports sponsors cars and drivers in the National Association for Stock Car Auto Racing (NASCAR)’s Sprint Cup Series. Performance data for three years are as follows:Performance data
Kraft Heinz Company (KHC) uses standards to control its materials costs. Assume that a batch of ketchup (6,000 pounds) has the following standards:The actual materials in a batch may vary from the
The following data relate to the direct materials cost for the production of 20,000 automobile tires:a. Determine the price variance, quantity variance, and total direct materials cost variance.b. To
Shakti Power Inc. was organized on February 28. Projected selling and administrative expenses for each of the first three months of operations are as follows:March ........$60,000April
Fur Family Inc., a pet wholesale supplier, was organized on May 1. Projected sales for each of the first three months of operations are as follows:May ..........$600,000June ............900,000July
Levi Strauss & Co. manufactures slacks and jeans under a variety of brand names, such as Dockers® and 501 Jeans®. Slacks and jeans are assembled by a variety of different sewing operations.
Sea Pines Company manufactures two types of tennis rackets, the Junior and Pro Striker models. The production budget for March for the two rackets is as follows:Both rackets are produced in two
Your Pie Inc. has determined from its production budget the following estimated production volumes for 12" and 16" frozen pizzas for September:There are three direct materials used in producing the
Sadie & Chipper, CPAs, offer three types of services to clients: auditing, tax, and small business accounting. Based on experience and projected growth, the following billable hours have been
Bass Audio Company manufactures two models of speakers, U500 and S1000. Based on the following production and sales data for June, prepare (a) A sales budget(b) A production budget. U500 S1000
The production supervisor of the Painting Department for Whitley Company agreed to the following monthly static budget for the upcoming year: WHITLEY COMPANY
Wedge Shoe Company is planning a one-month campaign for August to promote sales of one of its two shoe products. A total of $650,000 has been budgeted for advertising, contests, redeemable coupons,
Toyota Motor Corporation (TM) uses target costing. Assume that Toyota marketing personnel estimate that the competitive, average selling price for the Rav4 in the upcoming model year will need to be
Rubber Meets the Road Company has capacity to produce 250,000 tires. Rubber Meets the Road presently produces and sells 100,000 tires for the North American market at a price of $20 per tire. Rubber
Madison Industries Inc. has an annual plant capacity of 800,000 units, and current production is 650,000 units. Monthly fixed costs are $1,200,000 and variable costs are $36 per unit. The present
Happy Hour Coffee Company produces Columbian coffee in batches of 5,000 pounds. The standard quantity of materials required in the process is 5,000 pounds, which cost $3.50 per pound. Columbian
White Noise Technologies Inc. assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $37,500, the accumulated depreciation
Wisconsin Arts of Milwaukee employs five people in its Publication Department. These people lay out pages for pamphlets, brochures, and other publications for the production. The pages are delivered
Post Technologies Company has been purchasing carrying cases for its portable tablets at a delivered cost of $13.00 per unit. The company, which is currently operating below full capacity, charges
On the basis of the following data, the general manager of Flow Industries Inc. decided to discontinue Half Moon because it reduced operating income by $32,500. What is the flaw in this decision?
The Charles Schwab Corporation (SCHW) is one of the more innovative brokerage and financial service companies in the United States. The company provided information about its major business segments
The condensed product-line income statement for Blonde Espresso Company is as follows:Fixed costs are 40% of the cost of goods sold and 18% of the selling and administrative expenses. Blonde Espresso
A condensed income statement by product line for Yukon Beverages Inc. indicated the following for Whitehorse Cola for the past year:Sales ..............................................$ 1,875,000Cost
Pike Industries is considering selling excess machinery with a book value of $150,000 (original cost of $475,000 less accumulated depreciation of $325,000) for $72,500 less a 5% brokerage commission.
Management of a fast-growing marketer of computer devices has decided to purchase key components of its product from other suppliers. The decision to purchase key product components is an example of
Use the data from E11-12 and assume that break-even sales are $7,347 million. Determine the following for Molson-Coors Brewing Company.1. Margin of safety expressed as dollars of sales. Round to
At a recent staff meeting, the management of Warp Time Technologies Inc. was considering discontinuing its Track Time line of electronic games. The chief financial analyst reported the following
Currently, the unit selling price of a product is $675, the unit variable cost is $450, and the total fixed costs are $405,000. A proposal is being evaluated to increase the unit selling price to
Molson-Coors Brewing Company (TAP) reported the following operating information for a recent year (in millions):Sales
For the current year ending December 31, Fromm Industries expects fixed costs of $930,000, a unit variable cost of $53, and a unit selling price of $63.a. Compute the anticipated break-even sales
For a recent year, McDonald’s (MCD) company-owned restaurants had the following sales and expenses (in millions):Assume that the variable costs consist of food and paper, payroll and employee
a. Old Dominion Company budgets sales of $5,200,000, fixed costs of $550,000 and variable costs of $3,328,000. What is the contribution margin ratio for Old Dominion Company?b. If the contribution
How would each of the following costs be classified if units produced is the activity base?a. Direct materials costsb. Direct labor costsc. Electricity costs of $0.09 per kilowatt-hour
A summary of the time tickets for September is as follows:a. Determine the amounts of factory labor costs transferred to Work in Process and Factory Overhead for September.b. Illustrate the effect on
Rustic Ramblings Furniture Company manufactures furniture. Rustic Ramblings uses a job order cost system. Balances on August 1 from the materials ledger are as follows:Fabric .......................$
Materials issued for the current month are as follows:a. Determine the amount of materials transferred to Work in Process and Factory Overhead for the current month.b. Illustrate the effect on the
The following information is available for the first month of operations of Makin’ It Inc., amanufacturer of arts and craft items:Sales
Starwood Hotels & resorts Worldwide inc. (HOt) and Marriott international inc. (Mar) are two major owners and managers of lodging and resort properties in the United States. Financial data (in
Harley-Davidson, inc. (HOG), is a leading motorcycle manufacturer in the United States. The company manufactures and sells a number of different types of motorcycles, a complete line of motorcycle
The condensed income statements through operating income for apple inc. (aPPL) and Best Buy Co. inc. (BBY) are reproduced below for recent fiscal years (numbers in millions of dollars).Prepare
The table below shows recent stock prices, earnings per share, and dividends per share for three companies.a. Determine the price-earnings ratio and dividend yield for the three companies. Round to
Macy’s, inc. (M), sells merchandise through company-owned retail stores and an Internet website. Recent financial information for Macy’s is provided below (all numbers in millions).Assume the
Three major transportation segments and a major company within each segment are as follows:Segment .............................................................CompanyMotor carriers

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