Questions and Answers of Financial Managerial Accounting

Bonita Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 18% of sales. The income statement for the year ending
The external financial statements published by publicly traded companies are based on absorption cost accounting. As a consequence, it is very difficult to gain an understanding of the relative
Comfi Airways, Inc., a small two-plane passenger airline, has asked for your assistance in some basic analysis of its operations. Both planes seat 10 passengers each, and they fly commuters from
Hamby Inc. has sales of $2,000,000 for the first quarter of 2020. In making the sales, the company incurred the following costs and expenses. Prepare a CVP income statement for the quarter ended
Snow Cap Springs produces and sells water filtration systems for homeowners. Information regarding its three models is shown below. The company's total fixed costs to produce the filtration systems
Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 80,000 units of product: net
The controller of Standard Industries has collected the following monthly expense data for analyzing the cost behavior of electricity costs. Instructions a. Determine the fixed- and variable-cost
Felde Bucket Co., a manufacturer of rain barrels, had the following data for 2019:Sales ............................... 2,500 unitsSales price ..................... $40 per
Kaiser Industries carries no inventories. Its product is manufactured only when a customer's order is received. It is then shipped immediately after it is made. For its fiscal year ended October 31,
Billings Company has the following information available for September 2020.Unit selling price of video game consoles ..................... $ 400Unit variable costs
Tanek Corp.'s sales slumped badly in 2020. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 500,000 units of product:
Russell Inc. had sales of $2,200,000 for the first quarter of 2020. In making the sales, the company incurred the following costs and expenses. Prepare a CVP income statement for the quarter ended
Determine the missing amounts. Unit Selling Unit Variable Unit Contribution Contribution Margin Margin (a) Price Ratio Costs (b) $352 1. $640 (c) 2. (d) $300 $93 (e) (f) $325 25% 3.
Building a kayak using the composite method is a very laborintensive process. In the Fabrication Department, the kayaks go through several steps as employees carefully place layers of Kevlar® in a
Fire Out Company manufactures its product, Vitadrink, through two manufacturing processes: Mixing and Packaging. All materials are entered at the beginning of each process. On October 1, 2020,
At May 31, 2020, the accounts of Lopez Company show the following.1. May 1 inventories—finished goods $12,600, work in process $14,700, and raw materials $8,200.2. May 31 inventories—finished
a. Wise Photography reported net income of $130,000 for 2020. Included in the income statement were depreciation expense of $6,000, amortization expense of $2,000, and a gain on disposal of equipment
Dirk Company reported the following balances at December 31, 2019: common stock $500,000, paid-in capital in excess of par value—common stock $100,000, and retained earnings $250,000. During 2020,
Newland Company reported retained earnings at December 31, 2019, of $330,000. Newland had 200,000 shares of common stock outstanding at the beginning of 2020. The following transactions occurred
On January 1, 2020, Eddy Corporation had retained earnings of $610,000. During the year, Eddy had the following selected transactions.1. Declared cash dividends $120,000.2. Earned net income
The following accounts appear in the ledger of Horner Inc. after the books are closed at December 31, 2020. Common Stock, no par, $1 stated value, 400,000 shares authorized; 300,000 shares
Case Inc. is a construction company specializing in custom patios. The patios are constructed of concrete, brick, fiberglass, and lumber, depending upon customer preference. On June 1, 2020, the
For the year ended December 31, 2020, the job cost sheets of Cinta Company contained the following data. Other data:1. Raw materials inventory totaled $15,000 on January 1. During the year,
Lott Company uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1, 2020, Job 50 was the only job in process. The costs incurred prior to
An analysis of the accounts of Roberts Company reveals the following manufacturing cost data for the month ended June 30, 2020. Costs incurred: raw materials purchases $54,000, direct labor
The following information is available for Aikman Company. Instructionsa. Compute cost of goods manufactured. b. Prepare an income statement through gross profit. c. Show the presentation of the
Keisha Tombert, the bookkeeper for Washington Consulting, a political consulting firm, has recently completed a managerial accounting course at her local college. One of the topics covered in the
The following data were taken from the records of Clarkson Company for the fiscal year ended June 30, 2020. Instructions a. Prepare a cost of goods manufactured schedule. (Assume all raw materials
The following financial information is available for Flintlock Corporation. InstructionsCalculate the payout ratio and return on common stockholders? equity for 2020 and 2019. Comment on your
The financial statements of Apple Inc. are presented in Appendix A. The complete annual report, including the notes to the financial statements, is available at the company’s
Tom Epps and Mary Jones are examining the following statement of cash flows for Guthrie Company for the year ended January 31, 2020.
The T-accounts for Equipment and the related Accumulated Depreciation?Equipment for Luo Company at the end of 2020 are shown here. In addition, Luo?s income statement reported a loss on the
Hinck Corporation reported net cash provided by operating activities of $360,000, net cash used by investing activities of $250,000 (including cash spent for capital assets of $200,000), and net cash
Here are comparative statement data for Duke Company and Lord Company, two competitors. All balance sheet data are as of December 31, 2020, and December 31, 2019. Instructions a. Prepare a
Your parents are considering investing in Apple Inc. common stock. They ask you, as an accounting expert, to make an analysis of the company for them. Apple's financial statements are presented in
The comparative statements of Wahlberg Company are presented here. All sales were on account. Net cash provided by operating activities for 2020 was $220,000. Capital expenditures were $136,000,
PepsiCo's financial statements are presented in Appendix B. Financial statements of The Coca-Cola Company are presented in Appendix C. The complete annual reports of PepsiCo and Coca-Cola,
Condensed balance sheet and income statement data for Jergan Corporation are presented here. Additional information: 1. The market price of Jergan?s common stock was $7.00, $7.50, and $8.50 for
Amazon.com, Inc.'s financial statements are presented in Appendix D. Financial statements of Wal-Mart Stores, Inc. are presented in Appendix E. The complete annual reports of Amazon and Wal-Mart,
The following financial information is for Priscoll Company. Additional information: 1. Inventory at the beginning of 2019 was $115,000. 2. Accounts receivable (net) at the beginning of 2019 were
You are a loan officer for White Sands Bank of Taos. Paul Jason, president of P. Jason Corporation, has just left your office. He is interested in an 8-year loan to expand the company?s operations.
Suppose selected financial data of Target and Wal-Mart for 2020 are presented here (in millions). Instructions a. For each company, compute the following ratios. 1. Current ratio. 2. Accounts
Here are the comparative income statements of Delaney Corporation. Instructionsa. Prepare a horizontal analysis of the income statement data for Delaney Corporation, using 2019 as a base. (Show
Here is financial information for Glitter Inc. Instructions Prepare a schedule showing a horizontal analysis for 2020, using 2019 as the base year. December 31, 2020 December 31, 2019 Current assets
The following data are taken from the financial statements of Colby Company. a. Compute for each year (1) the accounts receivable turnover and (2) the average collection period. At the end of
The following data were taken from the income statements of Mydorf Company. a. Compute for each year (1) the inventory turnover and (2) days in inventory. b. What conclusions concerning the
Staples, Inc. is one of the largest suppliers of office products in the United States. Suppose it had net income of $738.7 million and sales of $24,275.5 million in 2020. Its total assets were
Mike Cichanowski founded Wenonah Canoe and later purchased Current Designs, a company that designs and manufactures kayaks. The kayak-manufacturing facility is located just a few minutes from the
Bell Company, a manufacturer of audio systems, started its production in October 2020. For the preceding 3 years, Bell had been a retailer of audio systems. After a thorough survey of audio system
Siren Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2020, the company incurred the following costs. Variable Costs per UnitDirect materials
Crate Express Co. produces wooden crates used for shipping products by ocean liner. In 2020, Crate Express incurred the following costs.Wood used in crate production
The management of Shatner Manufacturing Company is trying to decide whether to continue manufacturing a part or to buy it from an outside supplier. The part, called CISCO, is a component of the
Founded in 1983 and foreclosed in 1996 Beverly Hills Fan Company was located in Woodland Hills, California. With 23 employees and sales of less than $10 million, the company was relatively small.
At the beginning of last year (2019), Richter Condos installed a mechanized elevator for its tenants. The owner of the company, Ron Richter, recently returned from an industry equipment exhibition
Jobs, Inc. has recently started the manufacture of Tri-Robo, a three-wheeled robot that can scan a home for fires and gas leaks and then transmit this information to a smartphone. The cost structure
On January 2, 2019, Twilight Hospital purchased a $100,000 special radiology scanner from Bella Inc. The scanner had a useful life of 4 years and was estimated to have no disposal value at the end of
Sutton's Electronic Repair Shop has budgeted the following time and material for 2020. Sutton's budgets 5,000 hours of repair time in 2020 and will bill a profit of $10 per labor hour along with a
Rey Custom Electronics (RCE) sells and installs complete security, computer, audio, and video systems for homes. On newly constructed homes it provides bids using time-and-material pricing. The
Cook Farm Supply Company manufactures and sells a pesticide called Snare. The following data are available for preparing budgets for Snare for the first 2 quarters of 2020. 1. Sales: quarter 1,
Diane Buswell is preparing the 2020 budget for one of Current Designs' rotomolded kayaks. Extensive meetings with members of the sales department and executive team have resulted in the following
Edington Electronics Inc. produces and sells two models of pocket calculators, XQ-103 and XQ-104. The calculators sell for $15 and $25, respectively. Because of the intense competition Edington
Hill Industries had sales in 2019 of $6,800,000 and gross profit of $1,100,000. Management is considering two alternative budget plans to increase its gross profit in 2020.Plan A would increase the
Turney Company produces and sells automobile batteries, the heavy-duty HD-240. The 2020 sales forecast is as follows.Quarter HD-240 1
Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2020 are as follows. All sales are on account. Collections are expected to be 50% in the month of sale, 30% in
In order to better serve their rural patients, Drs. Joe and Rick Parcells (brothers) began giving safety seminars. Especially popular were their "emergency-preparedness" talks given to farmers. Many
DeWitt Industries has adopted the following production budget for the first 4 months of 2020.Month UnitsJanuary 10,000February
The budget committee of Suppar Company collects the following data for its San Miguel Store in preparing budgeted income statements for May and June 2020.1. Sales for May are expected to be $800,000.
On January 1, 2020, the Hardin Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2020. Sales units: First quarter 5,000; second quarter 6,000;
Krause Industries' balance sheet at December 31, 2019, is presented below. Budgeted data for the year 2020 include the following. To meet sales requirements and to have 2,500 units of finished
Green Landscaping Inc. is preparing its budget for the first quarter of 2020. The next step in the budgeting process is to prepare a cash receipts schedule and a cash payments schedule. To that end
Pletcher Dental Clinic is a medium-sized dental service specializing in family dental care. The clinic is currently preparing the master budget for the first 2 quarters of 2020. All that remains in
In May 2020, the budget committee of Grand Stores assembles the following data in preparation of budgeted merchandise purchases for the month of June.1. Expected sales: June $500,000, July
Bumblebee Company estimates that 300,000 direct labor hours will be worked during the coming year, 2020, in the Packaging Department. On this basis, the following budgeted manufacturing overhead cost
The Current Designs staff has prepared the annual manufacturing budget for the rotomolded line based on an estimated annual production of 4,000 kayaks during 2020. Each kayak will require 54 pounds
Green Pastures is a 400-acre farm on the outskirts of the Kentucky Bluegrass, specializing in the boarding of broodmares and their foals. A recent economic downturn in the thoroughbred industry has
Zelmer Company manufactures tablecloths. Sales have grown rapidly over the past 2 years. As a result, the president has installed a budgetary control system for 2020. The following data were used in
Ratchet Company uses budgets in controlling costs. The August 2020 budget report for the company's Assembling Department is as follows. The monthly budget amounts in the report were based on an
The service division of Raney Industries reported the following results for 2020.Sales ................................................ $500,000Variable costs .................................
Using the information in E23.3, assume that in July 2020, Myers Company incurs the following manufacturing overhead costs. Instructions a. Prepare a flexible budget performance report, assuming
Hassellhouf Company's trial balance at December 31, 2020, is presented below. All 2020 transactions have been recorded except for the items described following the trial balance. Unrecorded
On January 1, 2020, the ledger of Accardo Company contains the following liability accounts.Accounts Payable ................................ $52,000Sales Taxes Payable
The financial statements of Apple Inc. are presented in Appendix A. The complete annual report, including the notes to the financial statements, is available at the company's
PepsiCo, Inc.'s financial statements are presented in Appendix B. Financial statements of The Coca-Cola Company are presented in Appendix C. The complete annual reports of PepsiCo and Coca-Cola,
1. Eubank Corporation issues $500,000 of bonds for $520,000.(a) Prepare the journal entry to record the issuance of the bonds(b) show how the bonds would be reported on the balance sheet at the date
Amazon.com, Inc.'s financial statements are presented in Appendix D. Financial statements of Wal-Mart Stores, Inc. are presented in Appendix E. The complete annual reports of Amazon and Wal-Mart,
The financial statements of Louis Vuitton are presented in Appendix F. The complete annual report, including the notes to its financial statements, is available at the company's
Grouper Company provides you with the following balance sheet information as of December 31, 2020. In addition, Grouper reported net income for 2020 of $16,000, income tax expense of $3,200, and
Moreno Company publishes a monthly sports magazine, Fishing Preview. Subscriptions to the magazine cost $20 per year. During November 2020, Moreno sells 15,000 subscriptions beginning with the
The following section is taken from Hardesty's balance sheet at December 31, 2018.Current liabilitiesInterest payable .................................................................. $
Meera Corporation issued 4,000, 8%, 5-year, $1,000 bonds dated January 1, 2020, at 100. Interest is paid each January 1.a. Prepare the journal entry to record the sale of these bonds on January 1,
The following section is taken from Ohlman Corp.'s balance sheet at December 31, 2019.Current liabilitiesInterest payable ....................................................... $ 112,000Long-term
The adjusted trial balance for Karr Farm Corporation at the end of the current year contained the following accounts.Interest Payable ................................ $ 9,000Bonds Payable, due
Sanchez, Inc. reports the following liabilities (in thousands) on its December 31, 2020, balance sheet and notes to the financial statements. Instructions Prepare the liabilities section of
Presented here are liability items for O'Brian Inc. at December 31, 2020. Prepare the liabilities section of O'Brian's balance sheet.? Accounts payable Notes payable (due May 1, 2020) Bonds payable
Suppose the 2020 adidas financial statements contain the following selected data (in millions). Compute the following values and provide a brief interpretation of each. a. Working capital. b.
Suppose McDonald's 2020 financial statements contain the following selected data (in millions). Adcock Company issued $600,000, 9%, 20-year bonds on January 1, 2020, at 103. Interest is payable
DeLong Corporation was organized on January 1, 2020. It is authorized to issue 10,000 shares of 8%, $100 par value preferred stock, and 500,000 shares of no-par common stock with a stated value of
Hawkeye Corporation?s balance sheet at December 31, 2019, is presented below. During 2020, the following transactions occurred. 1. On January 1, 2020, Hawkeye issued 1,200 shares of $40 par, 7%
The stockholders’ equity section for Apple Inc. is shown in Appendix A. The complete annual report, including the notes to the financial statements, is available at the company’s
Fechter Corporation had the following stockholders' equity accounts on January 1, 2020: Common Stock ($5 par) $500,000, Paid-in Capital in Excess of Par-Common Stock $200,000, and Retained Earnings

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