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fundamental accounting
Fundamental Accounting Principles Volume 2 21st Edition John Wild, Ken Shaw, Barbara Chiappetta - Solutions
A company issued 8-year, 5% bonds with a par value of $350,000. The company received proceeds of $373,745. Inter¬ est is payable semiannually. The amount of premium amortized for the first semiannual interest period, assuming straight-line bond amortization, isa. $2,698.b. $23,745.c. $8,750.d.
What is the issue price of a $2,000 bond sold at 98/4? What is the issue price of a $6,000 bond sold at 101/2?
Refer to the statements for Arctic Cat in Appendix A. For the year ended March 31,2011, Cat what is its debt-to-equity ratio? What does this ratio tell us?
Prepare the journal entries for the issuance of the bonds in both QS 14-1 and QS 14-2. Assume that both bonds are issued for cash on January 1, 2013.
Using the bond details in both QS 14-1 and QS 14-2, confirm that the bonds’ selling prices given in each problem are approximately correct (within $100 of each other). Use the present value tables B.l and B.3 in Appendix B.
Murray Company borrows $340,000 cash from a bank and in return signs an installment note for five Computing payments for annual payments of equal amount, with the first payment due one year after the note is signed. Use an installment note C1 Table B.3 in Appendix B to compute the amount of the
Citywide Company issues bonds with a par value of $150,000 on their stated issue date. The bonds mature in five years and pay 10% annual interest in semiannual payments. On the issue date, the annual market rate for the bonds is 8%.1. What is the amount of each semiannual interest payment for these
Use the information in Exercise 14-14 to prepare the journal entries for Eagle to record the loan on January 1, 2013, and the four payments from December 31,2013, through December 31, 2016.
Indicate whether the company in each separate case 1 through 3 has entered into an operating lease or a capital lease.1. The lessor retains title to the asset, and the lease term is three years on an asset that has a five-year useful life.2. The title is transferred to the lessee, the lessee can
How are short-term held-to-maturity securities reported (valued) on the balance sheet?
How are trading securities reported (valued) on the balance sheet?
Where are unrealized gains and losses on available-for-sale securities reported?
Where are unrealized gains and losses on trading securities reported?
Does the FairValue Adjustment account have a normal balance?
Give at least two examples of assets classified as long-term investments.
What are the requirements for an equity security to be listed as a long-term investment?
Identify similarities and differences in accounting for long-term investments in debt securities that are held-to-maturity versus those available-for-sale.
What are the three possible classifications of long-term equity investments? Describe the criteria for each class and the method used to account for each.
Garden Company completes the following selected transactions related to its short-term investments during 2013.May 8 Purchased 300 shares of FedEx stock as a short-term investment in available-for-sale securities at $40 per share plus $975 in broker fees.Sept. 2 Sold 100 shares of its investment in
The following transactions relate to Brown Company’s long-term investments during 2012 and 2013. Brown did not own any long-term investments prior to 2012. Show (1) the appropriate journal entries and (2) the relevant portions of each year’s balance sheet and income statement that reflect these
Distinguish between debt and equity securities and between short-term and long-term investments
Describe how to report equity securities with controlling influence
Explain foreign exchange rates and record transactions listed in a foreign currency
Compute and analyze the components of return on total assets
A company purchased $30,000 of 5% bonds for investment purposes on May 1. The bonds pay interest on February 1 and August 1. The amount of interest revenue accrued at December 31 (the company’s year-end) is:a. $1,500b. $1,375c. $1,000d. $625e. $300
Earlier this period, Amadeus Co. purchased its only available-for- sale investment in the stock of Bach Co. for $83,000. The period-end fair value of this stock is $84,500. Amadeus records a:a. Credit to Unrealized Gain—Equity for $1,500.b. Debit to Unrealized Loss—Equity for $1,500.c. Debit to
Mozart Co. owns 35% of Melody Inc. Melody pays $50,000 in cash dividends to its shareholders for the period. Mozart’s entry to record the Melody dividend includes a:a. Credit to Investment Revenue for $50,000.b. Credit to Long-Term Investments for $17,500c. Credit to Cash for $17,500.d. Debit to
Assume the same facts as in QS 15-8 except that the stock acquired represents 40% of ORD Corp.’s outstanding stock. Also assume that ORD Corp. paid a $100,000 dividend on November 1, 2013, and reported a net income of $700,000 for 2013. Prepare the entries to record (o) the receipt of the
The Carrefour Group reports the following description of its financial assets available-for-sale.Note 10 to Carrefour’s 2010 financial statem,ents reports €18 million in net unrealized losses (net of unreal¬ ized gains) for 2010, which is included in the fair value of its available-for-sale
Brinkley Company, which began operations on January 3, 2013, had the following subsequent transac¬ tions and events in its long-term investments.2013 Jan. 5 Brinkley purchased 20,000 shares (25% of total) of Bloch’s common stock for $200,500.Aug. 1 Bloch declared and paid a cash dividend of
Refer to Polaris’ financial statements in Appendix A to answer the following 1. Are Polaris’ financial statements consolidated? How can you tell?2. What is Polaris’ comprehensive income for the year ended December 31, 2011?3. Does Polaris have any foreign operations? How can you tell?4.
Each team member is to become an expert on a specific classification of long-term invest¬ ments. This expertise will be used to facilitate other teammates’ understanding of the concepts and proce¬ dures relevent to the classification chosen.1. Each team member must select an area for expertise
What temporary accounts do you expect to find in a merchandising business but not in a service business?
Describe the closing entries normally made by a merchandising company.
Describe merchandising activities and identify income components for a merchandising company
Compute the acid-test ratio and explain its use to assess liquidity
Define and prepare multiple-step and single-step income statements
A company’s net sales are $675,000, its costs of goods sold are $459,000, and its net income is $74,250. Its gross margin ratio equalsa. 32%b. 68%c. 47%d. 11%e. 34%
Refer to the income statement for Piaggio in Appendix A. What does Piaggio title its cost of goods sold account?
The cost of merchandise inventory includes which of the following:a. Costs incurred to make the goods ready for sale.b. Costs incurred to ship the goods to the store(s).c. Costs incurred to buy the goods.d. Both b and c.e.a, b, and c.
The multiple-step income statement normally includes which of the following:a. Operating expenses are usually classified into (1) selling expenses and (2) general and administrative expenses.b. Detailed computations of expenses, including subtotals for various expense categories.c. Detailed
Identify whether each description best applies to a periodic or a perpetual inventory system.a. Updates the inventory account only at period-end.b. Requires an adjusting entry to record inventory shrinkage.c. Markedly increased in frequency and popularity in business within the past decade.d.
Sales returns and allowances C1: Business decision makers desire information on sales returns and allowances. (1) Explain why a company’s manager wants the accounting system to record customers’ returns of unsatisfactory goods in the Sales Returns and Allowances account instead of the Sales
Analyzing and recording merchandise transactions— both buyer and seller PI P2: On May 11, Sydney Co. accepts delivery of $40,000 of merchandise it purchases for resale from Troy Corporation. With the merchandise is an invoice dated May 11, with terms of 3/10, n/90, FOB shipping point. The goods
Refer to Exercise 5-3 and prepare journal entries to record each of the merchandising transactions assuming that the periodic inventory system is used by both the buyer and the seller. (Skip the part 3 requirement.)
Prepare journal entries to record the following merchandising transactions of Blink Company, which applies the perpetual inventory system. (Hint: It will help to identify each receivable and payable; for example, record the purchase on July 1 in Accounts Payable—Boden. )July 1 Purchased
Prepare journal entries to record the following merchandising transactions of Sheng Company, which applies the perpetual inventory system. {Hint: It will help to identify each receivable and payable; for example, record the purchase on August 1 in Accounts Payable—Arotek.)Aug. 1 Purchased
Megan Brink is offered the possibility of investing $6,651 today at 6% interest per year in a desire to accumulate $10,000. How many years must Brink wait to accumulate $10,000? (Use Table B.l.)
Beene Distributing is considering a project that will return $150,000 annually at the end of each year for the next six years. If Beene demands an annual return of 7% and pays for the project immediately, how much is it willing to pay for the project?
Claire Fitch is planning to begin an individual retirement program in which she will invest $1,500 at the end of each year. Fitch plans to retire after making 30 annual investments in the program earning a return of 10%. What is the value of the program on the date of the last payment (30 years
For each of the following situations, identify (1) the case as either {a) a present or a future value and {b) a single amount or an annuity, (2) the table you would use in your computations (but do not solve the problem), and (3) the interest rate and time periods you would use.a. You need to
Refer to the information in QS C-2. Compute the activity rate for each activity, assuming the company uses activity-based costing.
Qinto Company sells two types of products, Basic and Deluxe. The company provides technical support for users of its products, at an expected cost of $250,000 per year. The company expects to process 10,000 customer service calls per year.Required 1. Determine the company’s cost of technical
After reading an article about activity-based costing in a trade journal for the furniture industry, Adria Lopez wondered if it was time to critically analyze overhead costs at Success Systems. In a recent month, Lopez found that setup costs, inspection costs, and utility costs made up most of its
A process operation (a) is another name for a job order operation, {b) does not use the concepts of direct materials or direct labor, or (c) typically produces large quantities of homogeneous products or services.
Under what conditions is a process cost accounting system more suitable for measuring production costs than a job order cost accounting system?
When direct materials are assigned and used in production, the entry to record their use includes (a) a credit to Goods in Process Inventory, (b) a debit to Goods in Process Inventory, or (c) a debit to Raw Materials Inventory.
What are the three cost categories incurred by both job order and process operations?
How many Goods in Process Inventory accounts are needed in a process cost system?
Equivalent units are (a) a measure of a production department's productivity in using direct materials, direct labor, or overhead; {b) units of a product produced by a foreign competitor that are similar to units produced by a domestic company; or (c) generic units of a product similar to brand
Interpret the meaning of a department's equivalent units with respect to direct labor.
A department began the period with 8,000 units that were one-fourth complete with respect to direct labor. It completed 58,000 units, and ended with 6,000 units that were one-third complete with respect to direct labor. What were its direct labor equivalent units for the period using the
A process cost summary for a department has three sections. What information is presented in each of them?
Pennsylvania Company produces a product that passes through a single production process. Then com¬ pleted products are transferred to finished goods in its warehouse. Information related to its manufacturing activities for July followsRequired 1. Prepare a physical flow reconciliation for July as
Explain process operations and the way they differ from job order operations
Define and compute equivalent units and explain their use in process cost accounting
Describe accounting for production activity and preparation of a process cost summary using weighted average
Describe accounting for production activity and preparation of a process cost summary using FIFO.
Compare process cost accounting and Job order cost ac¬ counting
Explain and illustrate a hybrid costing system
Equivalent units of production are equal toa. Physical units that were completed this period from all effort being applied to them.b. The number of units introduced into the process this period.c. The number of finished units actually completed this period.d. The number of units that could have
Recording the cost of raw materials purchased for use in a process costing system includes aa. Credit to Raw Materials Inventory.b. Debit to Goods in Process Inventory.c. Debit to Factory Overhead.d. Credit to Factory Overhead.e. Debit to Raw Materials Inventory.
The production department started the month with a beginning goods in process inventory of $20,000. During the month, it was assigned the following costs: direct materials, $152,000; direct labor, $45,000; overhead applied at the rate of40% of direct labor cost. Inventory with a cost of $218,000
Acompany’s beginning work in process inventory consists of 10,000 units that are 20% complete with respect to direct labor costs. A total of 40,000 units are completed this period. There are 15,000 units in goods in process, one-third complete for direct labor, at period-end. The equivalent units
Assume the same information as in question 4. Also assume that beginning work in process had $6,000 in direct labor cost and that $84,000 in direct labor is added during this period. What is the cost per EUP for labor?a.$0.50 per EUP b.$1.87 per EUP c.$2.00 per EUP d.$2.10 per EUP e.$2.25 per EUP
For each of the following products and services, indicate whether it is most likely produced in a process operation or in a job order operation.1. Tennis courts 2. Apple juice 3. Vanilla ice cream 4. Luxury cars
Refer to the information in QS 20-2. Blanche’s Boxes incurred $135,OOO in factory payroll costs, of which $125,000 was direct labor. Prepare journal entries to record its (1) total factory payroll incurred and (2) direct labor used in production.
Refer to the information in QS 20-2 and QS 20-3. Blanche’s Boxes requisitioned $9,000 of indirect mate¬ rials from its raw materials and used $ 10,000 of indirect labor in its production of boxes. Also, it incurred $156,000 of other factory overhead costs. It applies factory overhead at the rate
Refer to QS 20-6 and compute the total equivalent units of production with respect to labor for March using the FIFO inventory method
Put the four steps in accounting for production activities in the order in which they would occur.a. Determine physical flow of unitsb. Compute the cost per equivalent unitc. Compute equivalent units of productiond. Assign and reconcile costs
Label each statement below as either true (“T”) or false (“F”).1. The cost per equivalent unit is computed as the total costs of a process divided by the number of equivalent units passing through that process.2. Service companies are not able to use process costing.3. Costs per job are
Refer to QS 20-14 and compute the total equivalent units of production with respect to labor for July using the FIFO inventory method
Match each of the following items A through G with the best numbered description of its purpose.A. Factory Overhead account E. Raw Materials Inventory account B. Process cost summary F. Materials requisition C. Equivalent units of production G. Finished Goods Inventory account D. Goods in Process
Refer to information in Exercise 20-3. Prepare journal entries to record the following production activities.1. Paid overhead costs (other than indirect materials and indirect labor) of $38,750.2. Applied overhead at 110% of direct labor costs
Laffer Lumber produces bagged bark for use in landscaping. Production involves packaging bark chips in plastic bags in a bagging department. The following information describes production operations for OctoberThe company's revenue for the month totaled $950,000 from credit sales, and its cost of
Refer to the information in Exercise 20-9 and complete its parts (1) and (2) using the FIFO method.(Round cost per equivalent unit to two decimal places.)
Refer to the information in Exercise 20-15. Prepare a process cost summary using the FIFO method.(Round cost per equivalent unit calculations to two decimal places.)
Label each item a through h below as a feature of either a job order or process operation.a. Heterogeneous products and servicese. Focus on individual batchb. Custom ordersf. Low product standardizationc. Low production volume g. Low product flexibilityd. Routine, repetitive procedures h. Focus on
ProChem manufactures aspirin in a process operation. Details on production activity follow. Compute the department’s equivalent units of production with respect to direct materials under each of two separate assumptions1. All direct materials are added to products when processing begins.2.
Refer to the information in Exercise 20-20 and complete it for each of the two separate assumptions using the FIFO method for process costing.
Hi-Test Company uses the weighted-average method of process costing to assign production costs to its products. Information for September follows. Assume that all materials are added at the beginning of its production process, and that direct labor and factory overhead are added uniformly
Sierra Company manufactures woven blankets and accounts for product costs using process costing. The following information is available regarding its May inventories.The following additional information describes the company’s production activities for May.Required 1. Compute the cost of (a)
Elliott Company produces large quantities of a standardized product. The following information is available for its production activities for March.Additional information about units and costs of production activities follows.During March, 10,000 units of finished goods are sold for $120 cash each.
East Co. produces its product through a single processing department. Direct materials are added at the start of production, and direct labor and overhead are added evenly throughout the process. The company uses monthly reporting periods for its weighted-average process cost accounting system. Its
Refer to the data in Problem 20-5A. Assume that Tamar uses the FIFO method to account for its process costing system. The following additional information is available:• Beginning goods in process consisted of 3,000 units that were 100% complete with respect to direct materials and 40% complete
Refer to the information in Problem 20-2A and complete its parts (1) through (4) using the FIFO method of process costing. Round cost per equivalent unit calculations to two decimal places.
Dream Toys Company manufactures video game consoles and accounts for product costs using process costing. The following information is available regarding its June inventories.The following additional information describes the company’s production activities for June.Required 1. Compute the eost
Oslo Company produces large quantities of a standardized product. The following information is available for its production activities for May.Additional information about units and costs of production activities follows.During May, 10,000 units of finished goods are sold for $120 cash each. Cost
Refer to the information in Problem 20-2B and complete its parts (1) through (4) using the FIFO method of process costing. Round cost per equivalent unit calculations to two decimal places.
Major League Bat Company manufactures baseball bats. In addition to its goods in process in¬ ventories, the company maintains inventories of raw materials and finished goods. It uses raw materials as direct materials in production and as indirect materials. Its factory payroll costs include direct
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