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Accounting 5th Edition Charles T. Horngren, Walter T. Harrison, Linda S. Bamber, Betsy Willis, Becky Jones - Solutions
P23-6B Home-Aid is a charitable organization, recently established in the Midwest, that builds low-income housing. The manager of each city's Home-Aid office reports to the state's director, who in turn reports to headquarters in Milwaukee, Wisconsin. The actual income statements for the Cincinnati
P23-7B World Travel.com is an Internet-based travel agency. The company has a Custom Travel Department and a Group Discount Travel Department. At August 31, the end of World- Travel's fiscal year, the bookkeeper prepared the adjusted trial balance at the top of the next page. Last September. World
Case 1. Liquid Sky designs, manufactures, and sells wakeboards through water-sports spe- cialty stores and sports superstores. In 20X5, Liquid Sky incurred the following costs that are directly traceable to its Blowout product line: Production Molding (direct materials and direct labor).
Case 2. Renee Willis has recently accepted the position of assistant manager at Jack and Jill, a children's clothing store in St. Louis. She has just finished her accounting courses. Jack and Jill's manager and owner, Kristy Simms, asks Renee to prepare a budgeted income statement for 20X6 based on
Link Back to Chapter 7. p. 290. for Ethics, Decision Guidelines box. Guest Suites operates a regional motel chain. Each motel is operated by a manager and an assistant manager/con- troller. Many of the staff who run the front desk, clean the rooms, and prepare the breakfast buffet work part-time or
Budgets are an important management tool in a large company like Target. Refer to Target's annual report to answer the following questions: 1. When preparing the master budget, would Target budget approximately the same sales and profit amounts for each quarter? Explain. (Hint: Quarterly results
Nova Solutions provides e-commerce software for the pharmaceuticals industry. Nova is orga- nized into several divisions. A companywide planning committee sets general strategy and goals for the company and its divisions, but each division develops its own budget. Rick Watson is the new division
Starbucks Corporation is the number I specialty coffee retailer, operating more than 2,800 shops. The company also sells coffee beans to restaurants, businesses, airlines, and hotels, and offers mail order and on-line shopping. 1. Go to http://www.Forbes.com and under "Stocks" type SBUX, the stock
Distinguish a process costing system from a job cost system.
Give the type of costing system-job or process-that is better suited to account for the following products: (a) chemicals. (b) textbooks, (c) lumber, id) specialty machinery, (e) custom lampshades.
Why does a process costing system use multiple Work in Process Inventory accounts but a job costing system uses only one such account?
Give the entries taccounts only) to record the following: (a) purchase of materials on account: (b) incurrence of labor; (c) incurrence of manufacturing overhead cost: (d) requisition of materials and assignment of labor and overhead to Work in Process Inventory Department 1 (combine in one entry:
What is an equivalent unit? Give an example of equiva- lent units
Georgia-Pacific completed and transferred 35,000 units of its product to a second department during the period. At the end of the period, another 10.000 units were in the first department's work in process inventory, 20% complete. How many equivalent units did the first department produce during
How are equivalent units used in Exhibits 21-8 and 21-9?
Why might a company have different numbers of equiv- alent units for direct materials and conversion costs?
What information does a production cost report give?
Using the FIFO method. compute the equivalent units for Department 2 during July: Work in process, June 30 (10% complete as to direct materials. 40% complete as to conversion costs.. 1.000 units Transferred in from Department I during July......... 25.000 units Completed during July. 22.000 units
Repeat Question 10, using the weighted-average method.
Under what conditions are FIFO equivalent-unit costs equal to weighted-average equivalent-unit costs? 13. "Unit costs in process costing are averages, but this is not true in job costing." Do you agree or disagree? Explain.
DE21-1 Use Exhibit 21-1 to help you describe, in your own words, the major difference in the flow of costs between a job costing system and a process costing system.
DE21-2 Consider the SeaView example on pages 847-866. Diagram the flow of costs for the Shaping and Finishing Departments' production of swim masks, similar to Exhibit 21-2.
DE21-3 In Exhibit 21-3 (page 844), suppose direct materials added in the chopping process are $20 rather than $7 (keep all amounts in thousands as in the exhibit). Assume that direct labor and manufacturing overhead amounts remain the same, as do each of the ending inventory balances, 1. Show the
DE21-4 Refer to your answer to Daily Exercise 21-3. Record the journal entries for the fol- lowing I. The use of $20 rather than $7 of direct materials in the chopping process. 2. Cost of goods completed and transferred out of the Chopping Department and into the Mixing & Bottling Department. 3.
DE21-5 Polar Spring produces premium bottled water. Polar Spring purchases artesian water, stores the water in large tanks, and then runs the water through two processes: Filtration, where workers microfilter and ozonate the water Bottling, where workers bottle and package the filtered water During
DE21-6 Record the journal entries for the use of direct materials and direct labor, and for the allocation of manufacturing overhead to Polar Spring's filtration process, described in Daily Exercise 21-5.
DE21-7 Colleges and universities use the equivalent-unit concept to describe the number of faculty as well as the number of students. The University of Georgia has about 2,000 full- time faculty and 400 part-time faculty. Assume the following: A full-time faculty member teaches six courses per year
DE21-8 Refer to Daily Exercise 21-5. At Polar Spring, water is added at the beginning of the filtration process. Conversion costs are added evenly throughout the process, and in February 80.000 liters have been completed and transferred out of the Filtration Department, and into the Bottling
DE21-9 Look at SeaView Shaping Department's equivalent-unit computation in Exhibit 21-5. Suppose the ending work in process inventory is 40% of the way through the shaping process, rather than 25% of the way through. Compute the equivalent units of direct materi- als and conversion costs.
DE21-10 Consider the original SeaView Shaping Department equivalent-unit computations in Exhibit 21-5. Suppose plastic and chemicals are added at the beginning of the shaping process, and another direct material-a hardening agent-is added 75% of the way through the shaping process. SeaView needs to
DE21-11 Return to the original SeaView example. Suppose direct labor is $38.250 rather than $21.250. Now what is the conversion cost per equivalent unit? (Use Exhibit 21-8 to for- mar your answer.)
DE21-12 Return to Polar Spring's Filtration Department described in Daily Exercises 21-5 and 21-8. Using your answers to those exercises, compute the cost per equivalent unit for direct materials and for conversion costs in the Filtration Department. (Recall that there were no beginning
DE21-13 Return to Polar Spring's Filtration Department. Use the information in Daily Exercises 21-5, 21-8, and 21-12 to fulfill the following requirements: 1. What is the cost of the 80,000 liters completed and transferred out of Polar Spring's Filtration Department? 2. What is the cost of the
DE21-14 Use the information in Daily Exercises 21-5 and 21-13 to 1. Record the journal entry to transfer the cost of the 80,000 liters completed and trans- ferred out of Filtration and into the Bottling Department. 2. Record all the transactions in the Work in Process Inventory-Filtration
DE21-15 Polar Spring produces premium bottled water. Preceding daily exercises consid- ered Polar Spring's first process-filtration. We now consider Polar Spring's second process- bottling. In the Bottling Department, workers bottle the filtered water and pack the bottles into boxes. Conversion
DE21-16 Use the time line you developed in Daily Exercise 21-15 to help you compute the Bottling Department's equivalent units, using the FIFO method.
DE21-17 Consider Polar Spring's Bottling Department, as described in Daily Exercise 21-15. Compute the cost per equivalent unit, using FIFO.
DE21-18 Use the information about Polar Spring's Bottling Department in Daily Exercises 21-15 through 21-17 to assign the costs to units completed and transferred out, and to ending inventory, under FIFO.
DE21-19 Refer to Polar Spring's Bottling Department and the computations you made in Daily Exercises 21-15 through 21-18. 1. Prepare the journal entry to record the cost of units completed and transferred out, using FIFO. 2. Post all transactions from Daily Exercises 21-15 through 21-18 to the Work
DE21-20 Using the data from Polar Spring's Bottling Department from Daily Exercise 21-15: 1. Draw a time line similar to the one in Exhibit 21-16, using the weighted average method. 2. Use the time line to help you compute the Bottling Department equivalent units, using the weighted-average method.
DE21-21 Using data from Polar Spring's Bottling Department in Daily Exercise 21-15 and the equivalent units computed in Daily Exercise 21-20, compute the cost per equivalent unit, using the weighted-average method.
DE21-22 Use the information on Polar Spring's Bottling Department in Daily Exercise 21-15, and the equivalent units and cost per equivalent unit you computed in Daily Exercises 21-20 and 21-21. to assign the costs to units completed and transferred out, and to ending inventory, using the
DE21-23 Using data from Polar Spring's Bottling Department in Daily Exercise 21-15 and the cost assignments in Daily Exercise 21-22: 1. Prepare the journal entry to record the cost of units completed and transferred out under the weighted average method. 2. Post all transactions from Daily
DE21-24 + Link Back to Chapter 9 (Difference Between FIFO and Weighted Average). For Polar Spring's Bottling Department, use your answers to Daily Exercise 21-18 and Daily Exercise 21-22 to compare the cost of the units completed and transferred out under FIFO to that under weighted-average.
E21-1 Chesnut Furniture produces oak furniture in a three-stage process that includes milling, assembling, and finishing, in that order. Direct materials are added in the Milling and Finishing Departments. Direct labor and overhead are incurred in all three departments. The company's general ledger
E21-2 Record the following process costing transactions in the general journal:a. Purchase of raw materials on account, $8.400b. Requisition of direct materials to Assembly Department. $3.800 Finishing Department, $2,000c. Incurrence and payment of manufacturing labor, $10,800,d. Incurrence of
E21-3 Apple Acres prepares and packages fruit juice products. Apple Acres has two depart- ments: (1) Blending and (2) Packaging. Direct materials are added at the beginning of the blending process (raw fruit juice) and at the end of the packaging process (cartons). Conversion costs are added evenly
E21-4 Return to the Blending Department for Apple Acres in Exercise 21-3. Required 1. Present the journal entries to record the use of direct materials and direct labor, and the allocation of manufacturing overhead to the Blending Department. Also, give the journal entry to record the costs of the
E21-5 The Assembly Department of Bentley Surge Protectors began September with no work in process inventory. During the month, production that cost $38.850 (direct materials. $8.550, and conversion costs. $30,300) was started on 21.000 units. Bentley completed and transferred to the Testing
E21-6 Goodtimes is a microbrewery in Centreville, Virginia. Goodtimes has two depart- ments-Fermenting and Packaging. Direct materials are added at the beginning of the fer- menting process (barley, malt, hops) and at the end of the packaging process (bottles). Conversion costs are added evenly
E21-7 Return to the Fermenting Department for Goodtimes in Exercise 21-6. Required 1. Present the journal entries to record the use of direct materials and direct labor, and the allocation of manufacturing overhead to the Fermenting Department. Also give the jour- nal entry to record the costs of
E21-8 The following information was taken from the ledger of Newport Glass. End- ing inventory is 50% complete as to direct materials but 30% complete as to conversion work. WORK IN PROCESS-FORMING Physical Units Dollars Physical Units Dollars Beginning inventory, September 30 Production started:
E21-9 Assume that Edy's Grand Ice Cream Co. reports the following data from its FIFO process costing system. Insert the missing values. Equivalent Units Direct Materials Conversion Costs Flow of Production Units to account for Beginning work in process, March 31. Started in production during
E21-10 Selected production and cost data of Clarke Chemical Co. follow for May 20X3. Flow of Physical Units Mixing Department Heating Department Flow of Production Units to account for: Beginning work in process. April 30. 20,000 6.000 Transferred in during May. 70,000 80.000 Total physical units
E21-11 Repeat Requirement 2 of Exercise 21-10 for Clarke Chemical's Heating Department. using the weighted-average method.
E21-12 Silicon Semiconductors, Inc., experienced the following activity in its Photolith- ography Department during December. Materials are added at the beginning of the photolith- ography process. Units: Work in process, November 30 (80% of the way through the process).. Transferred in from the
E21-13 Repeat Exercise 21-12, using the weighted-average method. (See Exhibit 21-16 for a weighted-average time line.) The November 30 balance of Work in Process Inventory Photolithography Department ($60,116) is composed of the following amounts: transferred-in costs. $20,050; direct materials
E21-14 The following data pertain to the Packaging Department of Nature's Way Supplements, for the month of July 20X3: FIFO Equivalent Units Transferred Method In Direct Materials Conversion Costs 200,000 210,000 210.000 206,250 210,000 208,750 Weighted-average. Direct materials are added when the
P21-1A Find-it. Inc.. engraves and prints address books. Production occurs in three processes: engraving, printing, and binding. The Engraving Department had no work in process on May 31. In mid-June. Find-it started production on 80,000 books. Of this number. 67.600 books were engraved during
P21-2A Premium Paper produces the paper used by wallpaper manufacturers (Imperial, Norwall. Premium Paper's four-stage process includes mixing, cooking, rolling, and cutting. In the Mixing Department, wood pulp and chemicals are blended. The resulting mix is heated in the Cooking Department in much
P21-3A Greenply produces exterior siding for homes. The Preparation Department begins with wood, which is chopped into small bits. At the end of the process, an adhesive is added. Then the wood/adhesive mixture goes on to the Compression Department, where the wood is compressed into sheets. Assume
P21-4A Cox Carpeting manufactures broadloom carpet in seven processes: spinning, dyeing. plying, spooling, tufting, latexing, and shearing. First, fluff nylon purchased from a company such as DuPont or Monsanto is spun into yarn that is dyed the desired color. Then threads of the yarn are joined
P21-5A Refer to Problem 21-4A. Required 1. Prepare the March production cost report for Cox's Dyeing Department. 2. Journalize all transactions affecting the Dyeing Department during March, including the entries that have already been posted.
P21-6A EZ Lift uses three processes to manufacture lifts for personal watercraft: forming the lift's parts from galvanized steel, assembling the lift, and testing the completed lifts. The lifts are transferred to finished goods before shipment to marinas across the country. EZ Lift's Testing
P21-7A Repeat Problem 21-6A, using the weighted-average method. The $111,000 begin- ning balance of Work in Process-Testing includes $93.000 of transferred-in cost and $18,000 of conversion cost. (For requirement 1, use the time line in Exhibit 21-16 as a guide.)
P21-1B Quickcomm, Inc.. produces components for the telecommunications industry. One part, a laser diode is manufactured in a single processing department. No laser diodes were in process on May 31, and Quickcomm started production on 10,600 units during June. Direct materials are added at the
P21-2B The Southern Cotton Company produces cotton fabric in a three-stage process: cleaning, spinning, and weaving. Costs incurred in the Cleaning Department during September are summarized as follows: Sep. 1 balance Direct materials Direct labor WORK IN PROCESS INVENTORY-CLEANING Manufacturing
P21-3B Royal Chicken produces canned chicken la king. The chicken la king passes through three departments (1) Mixing. (2) Retort (sterilization), and (3) Packing. In the Mixing Department, chicken and cream are added at the beginning of the process, the mix- is partly cooked, and then chopped
P21-4B Rule. Inc., manufacturers auto roof racks in a two-stage process that includes shap- ing and plating. Steel alloy is the basic raw material of the shaping process. The steel is molded according to the design specifications of automobile manufacturers (Ford and General Motors). The Plating
P21-5B Refer to Problem 21-4B. Required 1. Prepare the March production cost report for the Plating Department. 2. Journalize all transactions affecting the Plating Department during March, including the entries that have already been posted.
P21-6B ToolTime uses three departments to produce screwdrivers with plastic handles. Forming the handles requires mixing the raw materials, molding, and drying. ToolTime's Drying Department requires no direct materials. Other process costing infor- mation follows: T Units: Beginning work in process
P21-7B Repeat Problem 21-6B, using the weighted-average method. The $371 beginning balance of Work in Process-Drying includes $140 of transferred-in cost and $231 of conver- sion cost. For requirement 1. use the time line in Exhibit 21-16 as a guide. From manage- ment's perspective, what are the
Case 1. Bobby Jones operates Bobby's Cricket Farm in Baton Rouge, Louisiana, Bobby's raises about 18 million crickets a month. Most are sold to pet stores at $13 for a box of 1,000 crickets. Pet stores sell the crickets for 5-10 cents each as live feed for reptiles. Raising crickets requires a
Case 2. Refer to Case 1. During June. Bobby Jones made a big effort to control the farm's costs. He expects the level of costs incurred during June to continue in the future. Required 1. What is the cost per box for June production only? (Hint: Do not include beginning Work in Process Inventory
Jay Stolz and Ben Moyer are the plant managers for Southern Lumber's particle board divi- sion Southern Lumber has adopted a just-in-time management philosophy. Each plant com- bines wood chips with chemical adhesives to produce particle board to order, and all produc- tion is sold as soon as it is
Hermiston Food Processors in Hermiston, Oregon, processes potatoes into french fries. Production requires two processes: cutting and cooking. The cutting process begins as scalding steam explodes the potatoes' brown skins. Workers using paring knives gouge out black spots before high pressure water
Hershey Foods Corporation is the market leader in the candy business, making the well-h known chocolate and candy brands Hershey's Kisses, Reese's peanut butter cups, and Kit Kat. Required 1. Go to http://www.hersheys.com and, in the left-hand column, click on Plant Tour and then From Bean to Bar.
What is the check figure for the statement of cash flows? (In other words, which figure do you check to make sure you've done your work correctly?) Where is it obtained, and how is it used?
Why are depreciation, depletion, and amortization expenses not reported on a cash-flow statement prepared by the direct method? Why and how are these expenses reported on a statement prepared by the indirect method?
Taco Grande Restaurants collected cash of $92.000 from customers and $6,000 interest on notes receivable. Cash payments included $24,000 to employees, $13,000 to suppliers, $6,000 as dividends to stockholders, and $5,000 as a loan to another company. How much was Taco Grande's net cash inflow from
DE17-1 For 19X9, 19X8, and 19X7, two well-known companies reported the following (in millions): Safeway, Inc., the grocery chain: 19X9 19X8 19X7 Net income. $ 971 $ 807 $ 557 Net cash flow from operating activities. 1.488 1.253 1.222 U.S. Airways Group, Inc.: Net income. 197 538. 1,025 Net cash
DE 17-2 Pepsi Co, General Electric, Qualcomm, and most other companies report the following on their balance sheets: CURRENT ASSETS Cash and cash equivalents............ SXXX What is a cash equivalent (give an example), and why is it combined with cash on the balance sheet?
DE17-3 Describe operating activities, investing activities, and financing activities. For each category, give an example of (a) a cash receipt and (b) a cash payment.
DE17-4 Link Back to Chapter 2 (Journal Entries). Return to Daily Exercise 17-3. For each cash receipt and each cash payment that you identified, give the journal entry, using made-up figures.
DE17-5 Storage Technology Corporation prepares its statement of cash flows by the direct method for operating activities. Identify the section of Storage Technology's statement of cash flows where each of the following transactions will appear. If the transaction does not appear on the cash-flow
DE17-6 Examine the statement of cash flows of drkoop.com, Inc., on page 654. What is the main danger signal about the company's cash flows?
DE17-7 (Daily Exercise 17-10 is an alternative exercise.) eFax.com. Inc., accountants have assembled the following data for the year ended December 31, 20X2: Cost of goods sold Payments to suppliers $100,000 80,000 Payment of dividends Proceeds from issuance $ 6,000 Purchase of equipment 90,000 of
DE17-8 (Daily Exercise 17-10 is an alternative exercise.) Use the data in Daily Exercise 17-7 to prepare the investing activities section of eFax.com's statement of cash flows for the year ended December 31, 20X2.
DE17-9 (Daily Exercise 17-10 is an alternative exercise.) Use the data in Daily Exercise 17-7 to prepare the financing activities section of eFax.com's statement of cash flows for the year ended December 31, 20X2. Identifying financing cash flows (Obj. 2, 3)
DE17-10 eFax.com, Inc., accountants have assembled the following data for the year ended Preparing a statement of cash December 31, 20X2. flows-direct method (Obj. 3) Cost of goods sold Payments to suppliers. $100.000 Payment of dividends. $ 6,000. 80,000 Proceeds from issuance Purchase of
DE17-11 Inatome Processing began 20X1 with cash of $104,000. During the year, Inatome earned service revenue of $800,000 and collected $720,000 from customers. Expenses for the year totaled $670,000, of which Inatome paid $610,000 in cash to suppliers and employees. Inatome also paid $140.000 to
DE17-12 Exterra Communications reported the following financial statements for 20X3: EXTERRA COMMUNICATIONS Income Statement Year Ended June 30, 20X3 Computing cash-flow amounts (Obj. 4) Thousands Assets Sales revenue.. Cost of goods sold Depreciation expense. Salary expense Other expense... Total
DE 17-13 Use the Exterra Communications data in Daily Exercise 17-12 to computea. Payments of other expenses. (Use the computational approach for Operating Expense outlined in Exhibit 17-9.)b. Payments to employees.
DE17-14 Use the Exterra Communications data in Daily Exercise 17-12 to computea. Proceeds from the sale of long-term investments. (Study Exterra's income statement to see whether there was a gain or loss on the sale. Exterra purchased no investments dur- ing the year.)b. Acquisitions of plant
DE 17-15 Use the Exterra Communications data in Daily Exercise 17-12 to computea. New borrowing or payment of long-term notes payable. Exterra had only one long-term note payable transaction during the year.b. Issuance of common stock or retirement of common stock. Exterra had only one com- mon
DE17-16 Return to the Anchor Corporation income statement (Exhibit 17-6, page 665) and comparative balance sheet (Exhibit 17-7, page 666). Assume that Anchor sold no plant assets during 20X2. 1. Compute the cost of Anchor's plant asset acquisition during the year. 2. Anchor financed the plant asset
DE17-17 Laclede Shipping. Inc., is preparing its statement of cash flows for the year ended September 30, 20X2. Laclede reports cash flows from operating activities by the indirect method. The company's head bookkeeper has provided the following list of items for you to consider in preparing the
DE17-18 The Tribune Herald Publishing Company began 20X2 with accounts receivable. inventory, and prepaid expenses totaling $65,000. At the end of the year, the company had a total of $78,000 for these current assets. At the beginning of 20X2. The Tribune Herald owed current liabilities of $42,000,
DE 17-19 Exterra Communications reported the following financial statements for 20X3: EXTERRA COMMUNICATIONS Income Statement Year Ended June 30, 20X3 Sales revenue... Cost of goods sold Depreciation expense. Salary expense..... Other expenses, including income taxes. Total expenses. Net income
DE 17-20 Link Back to Chapter-Opening Story. A friend is a stockholder in MotherNature.com and has received the company's statement of cash flows, which follows. as adapted. Answer the following questions to help your friend understand this financial (Obj. 5) statement and its purpose.
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