Questions and Answers of Survey of Accounting

Ma Restaurant Corporation wholesales ovens and ranges to restaurants throughout the Southwest. Ma Restaurant Corporation, which had 40,000 shares of common stock outstanding, declared a 4-for-1 stock
Awesome Audio Works, Inc. warrants its products for one year. The estimated product warranty is 2% of sales. Assume that sales were $500,000 for January. In February, a customer received warranty
The price-earnings ratio for the common stock of Breeden Company was 12 at December 31, the end of the current fiscal year. What does the ratio indicate about the selling price of the common stock in
An owner of 250 shares of Reynolds Spring Company common stock receives a stock dividend of 20 shares. (a) What is the effect of the stock dividend on the stockholder’s proportionate interest
The treasury stock in Question 14 is resold for $3,250,000. (a) What is the effect on the corporation’s revenue of the period? (b) What is the effect on stockholders’ equity?
The following data relate to a $5,000,000, 6% bond issue for a selected semiannual interest period:(a) Were the bonds issued at a discount or at a premium?(b) What expense account was decreased to
When are short-term notes payable issued?
Pac Vac Company purchased a machine that has a manufacturer’s suggested life of 15 years. The company plans to use the machine on a special project that will last 12 years. At the completion of the
Immediately after a used truck is acquired, a new motor is installed and the tires are replaced at a total cost of $3,175. Is this a capital expenditure or a revenue expenditure?
My Mother’s Closet Company solicited bids from several contractors to construct an addition to its office building. The lowest bid received was for $375,000. My Mother’s Closet Company decided to
Mancini Outfitters Co. has a fleet of automobiles and trucks for use by salespersons and for delivery of office supplies and equipment. East Village Auto Sales Co. has automobiles and trucks for
Which of the three methods of inventory costing—FIFO, LIFO, or average cost—will in general yield an inventory cost most nearly approximating current replacement cost?
Gallatin’s Hardware is a small hardware store in the rural township of Willow Creek that rarely extends credit to its customers in the form of an account receivable. The few customers that are
For a recent year, Best Buy reported revenue of $40,023 million. Its gross profit was $9,546 million. What was the amount of Best Buy’s cost of merchandise sold?
Employees performed services in 2010, but the wages were not paid until 2011. During which year would the wages expense be reported on the income statement under (a) the cash basis? (b) the accrual
Fees for services provided are billed to a customer during 2010. The customer remits the amount owed in 2011. During which year would the revenues be reported on the income statement under (a) the
If the net income for the current year had been $424,300 in Exercise 3–18, what would have been the correct net income if the proper adjustments had been made?Data From Exercise 3-18:The accountant
The balances of the two wages accounts at December 31, after adjustments at the end of the first year of operations, are Wages Payable, $3,175, and Wages Expense, $93,800. Determine the amount of
The balance in the unearned fees account, before adjustment at the end of the year, is $27,300. What is the adjustment if the amount of unearned fees at the end of the year is $14,650? Indicate each
The balance in the unearned fees account, before adjustment at the end of the year, is $29,300. What is the adjustment if the amount of unearned fees at the end of the year is $14,650? Indicate each
The balance in the unearned fees account, before adjustment at the end of the year, is $27,300. What is the adjustment if the amount of unearned fees at the end of the year is $15,650? Indicate each
Answer each of the following independent questions concerning supplies and the adjustment for supplies.(a) The balance in the supplies account, before adjustment at the end of the year, is $3,175.
The total assets and total liabilities of Marathon Oil and Dell are shown here.Determine the stockholders’ equity of each company.
The following information concerns production in the Finishing Department for July. The Finishing Department uses the weighted average cost (WAC) method.
The Hershey Foods Company manufactures chocolate confectionery products. The three largest raw materials are cocoa beans, sugar, and dehydrated milk. These raw materials first go into the Blending
The following table summarizes the rules of debit and credit. For each of the items (a) through (l), indicate whether the proper answer is a debit or a credit.
Carnival Corporation has recently placed into service some of the largest cruise ships in the world. One of these ships can hold up to 3,600 passengers and cost $750 million to build. Assume the
How does using the return on investment facilitate comparability between divisions of decentralized companies?
Why should the factors under the control of the investment center manager (revenues, expenses, and invested assets) be considered in computing the return on investment?
What is the major shortcoming of using operating income as a performance measure for investment centers?
The following data relate to factory overhead cost for the production of 8,000 computers:
H.J. Heinz Company uses standards to control its materials costs. Assume that a batch of ketchup (6,000 pounds) has the following standards:
A new assistant controller recently said: “All the assembly workers in this plant are covered by union contracts, so there should be no labor variances.” Was the controller’s remark correct?
Bozeman Coffee Company produces Columbian coffee in batches of 10,000 pounds. The standard quantity of materials required in the process is 10,000 pounds, which cost $3.50 per pound. Columbian coffee
Many fast-food restaurant chains, such as McDonald’s, occasionally discontinue restaurants in their system. What are some financial considerations in deciding to eliminate a store?
A chemical company has a commodity-grade and a premium-grade product. Why might the company elect to process the commodity-grade product further to the premium-grade product?
It was reported that Exabyte Corporation, a fast-growing Colorado marketer of computer devices has decided to purchase key components of its product from other suppliers. A former chief executive
Name the following graph, and identify the items represented by the letters (a) through (f).
Using the data for Cabinet Inc. in Exercise 11-16, (a) determine the maximum possible operating loss, (b) compute the maximum possible operating income, (c) construct a profit-volume graph, and (d)
With a group of students, visit a local copy and graphics shop or a take-out pizza restaurant. As you observe the operation, consider the costs associated with running the business. As a group,
The management of Colfax Manufacturing Inc. uses cost information from job sheets to assess its performance. Information on the total, product type, and quantity of items produced is as follows:a.
The following account appears in the ledger after all postings have been completed except for the entries to transfer the costs of the jobs completed in October.
An incomplete subsidiary ledger of wire cable for July is as follows: a. Complete the materials issuances and balances for
Five selected transactions for the current month are indicated by letters in the following accounts in a job order cost accounting system:
Indicate whether the following costs of Colgate-Palmolive Company would be classified as direct materials cost, direct labor cost, or factory overhead cost:a. Bottles in which mouthwashes are soldb.
Indicate whether each of the following costs of an airplane manufacturer would be classified as direct materials cost, direct labor cost, or factory overhead cost:a. Aircraft enginesb. Controls for
Thornby Inc. completed its fiscal year on December 31. The auditor, Kim Holmes, has approached the CFO, Brad Potter, regarding the year-end receivables and inventory levels of Thornby Inc. The
Favorable business conditions may bring about certain seemingly unfavorable ratios, and unfavorable business operations may result in apparently favorable ratios. For example, Shaddox Company
Why would the dividend yield differ significantly from the return on common stockholders’ equity?
a. Why is the return on stockholders’ equity by a thriving business ordinarily higher than the return on total assets?b. Should the return on common stockholders equity normally be higher or lower
a. Why is it advantageous to have a high inventory turnover?b. Is it possible for the inventory turnover to be too high? Discuss.c. Is it possible to have a high inventory turnover and a high days’
Back in Time Inc. warrants its products for one year. The estimated product warranty is 2% of sales. Assume that sales were $1,250,000 for March. In April, a customer received warranty repairs
Deere & Company (DE), a company well known for manufacturing farm equipment, reported more than $800 million of product warranties in recent financial statements. How would costs of repairing a
When are short-term notes payable issued?
For most companies, what two types of transactions make up the largest percent of their current liabilities?
About Time 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
A refrigerator used by a meat processor has a cost of $90,000, an estimated residual value of $15,000, and an estimated useful life of 20 years. What is the amount of the annual depreciation computed
Convert each of the following estimates of useful life to a straight-line depreciation rate, stated as a percentage, assuming that the residual value of the fixed asset is to be ignored: (a) 2 years,
Summer Wilks owns and operates Wilks Services. During July, Wilks Services incurred the following costs in acquiring two printing presses. One printing press was new, and the other was used by a
Using data in E6-18, indicate the effects of valuing inventory using lower of cost or market on the liquidity metric days’ sales in inventory and profitability metric return on sales.Data Frome
Using transactions listed in E6-8, indicate the effects of the adjustment on the liquidity metric days’ sales in receivables and profitability metric return on sales.Transaction List From
Assume that a firm separately determined inventory under FIFO and LIFO and then compared the results.1. In each space below, place the correct sign [less than (<), greater than (>), or equal
During its first year of operations, Fisher Plumbing Supply Co. had sales of $2,780,000, wrote off $16,000 of accounts as uncollectible using the direct write-off method, and reported net income of
If inventory is being valued at cost and the price level is steadily rising, which of the three methods of costing—FIFO, LIFO, or average cost—will yield (a) the highest inventory cost, (b) the
In what section of the balance sheet should a note receivable be listed if its term is (a) 90 days, (b) 12 years?
(a) How are cash equivalents reported on the financial statements? (b) What are some examples of cash equivalents?
Why should the responsibility for maintaining the accounting records be separated from the responsibility for operations?
Compare the gross profit percent, average markup percent, and ratio of sales to assets for Deere & Company and Caterpillar Inc. using the results of MBA 4-7 and MBA 4-8. Comment on any
What type of revenue is reported in the “Other revenue” section of the multiple-step income statement?
What are the major advantages and disadvantages of the single-step form of the income statement compared to the multiple-step form?
Differentiate between the multiple and single-step forms of the income statement.
What is the meaning of (a) 2/10, n/30; (b) n/90; (c) n/eom?
The balance in the unearned fees account, before adjustment at the end of the year, is $1,375,000. What is the adjustment if the amount of unearned fees at the end of the year is $1,100,000? Indicate
For a recent year, the balance sheet for The Campbell Soup Company (CPB) includes accrued expenses of $553 million. The income before taxes for the year was $1,073 million.a. Assume the accruals
The balances of the two accounts related to wages at October 31, after adjustments at the end of the first year of operations, are Wages Payable, $11,900, and Wages Expense, $825,000. Determine the
Answer each of the following independent questions concerning supplies and the adjustment for supplies.a. The balance in the supplies account, before adjustment at the end of the year, is $3,500.
Yahoo.com’s (YHOO) finance Internet site provides summary financial information about public companies, such as stock quotes, recent financial filings with the Securities and Exchange Commission,
Amazon.com (AMZN), an Internet retailer, was incorporated in the early 1990s and opened its virtual doors on the Web shortly thereafter. On its statement of cash flows, would you expect
Using the financial data shown in Exercise 2-17 for Big Mountain Realty Inc., prepare a statement of stockholders’ equity for the month ending June 30, 20Y9.Data From Exercise 2-17:After its first
Indicate whether each of the following types of transactions will (a) increase stockholders’ equity or (b) decrease stockholders’ equity.a. Issued common stock for cash.b. Received cash for fees
Determine the missing amount for each of the following:
On January 9, 20--, Dr. Susan Tempkin established DocMed, a medical practice organized as a professional corporation. The below conversation took place the following September between Dr. Tempkin and
The financial statements of The Hershey Company (HSY) are shown in Exhibits 6 through 9 of this chapter. Based upon these statements, answer the following questions.1. What are Hershey’s sales (in
Outlaw Realty, organized August 1, 20Y7, is owned and operated by Julie Baxter. How many errors can you find in the following financial statements for Outlaw Realty, prepared after its first month of
Though the McDonald’s (MCD) menu of hamburgers, cheeseburgers, the Big Mac, Quarter Pounder, Filet-O-Fish, and Chicken McNuggets is easily recognized, McDonald’s financial statements may not be
Indicate whether each of the following activities would be reported on the statement of cash flows as (a) an operating activity, (b) an investing activity, or (c) a financing activity.1. Cash
From the following list of selected items taken from the records of Flip Flop Sandals Inc. as of a specific date, identify those that would appear on the balance sheet.1. Accounts Receivable2. Common
The total assets and total liabilities for a recent year of Apple (AAPL) and HP (HPQ) formerly Hewlett-Packard are shown here.Determine the stockholders’ equity of each company.
Assume that a friend of yours operates a family-owned pharmacy. A super Wal-Mart, scheduled to open in the next several months, will also offer pharmacy services. What business emphasis would your
Climax Corporation has a desired rate of return of 7.50 percent. William Tobin is in charge of one of Climax’s three investment centers. His center controlled operating assets of $4,000,000 that
Use the standard price and cost data provided in Exercise 15-2. Assume that the actual sales price is $11.76 per unit and that the actual variable cost is $6.90 per unit. The actual fixed
RequiredUse the information provided in Exercise 15-2.a. Determine the sales and variable cost volume variances.b. Classify the variances as favorable (F) or unfavorable (U).c. Comment on the
The annual budget of the United States is very complex, but this case requires that you analyze only a small portion of the historical tables that are presented as a part of each year’s budget. The
In February 2006, former senator Warren Rudman of New Hampshire completed a 17-month investigation of an $11 billion accounting scandal at Fannie Mae (a major enterprise involved in home mortgage
J. Talbot is the accounting manager for Kolla Waste Disposal Corporation. Kolla is having its worst financial year since its inception. The company is expected to report a net loss. In the midst of
RequiredUse the financial statements for Allendale Company from Problem 9-17 to perform a vertical analysis of both the balance sheets and income statements for 2019 and 2018. Round computations to
Elroy Corporation repurchased 4,000 shares of its own stock for $30 per share. The stock has a par of $10 per share. A month later Elroy resold 900 shares of the treasury stock for $32 per
A sole proprietorship was started on January 1, 2018, when it received $60,000 cash from Marlin Jones, the owner. During 2018, the company earned $35,300 in cash revenues and paid $16,200 in cash
The following financial highlights were drawn from the 2014 annual reports of ExxonMobil Corporation and Apple Inc.
Match the terms (identified as a through r) with the definitions and phrases (marked 1 through 16). For example the term “a. Assets” matches with definition “15. Equal to liabilities plus

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