Thursday, July 22, 2010

Continuing Cookie Chronicle 4: CCC4: Cookie Creations is gearing up for the winter holiday season

Accounting Tools for Business Decision Making
Weygandt, Kimmel, Kieso

Continuing Cookie Chronicle 4: CCC4
Chapter 4
CCC4 Cookie Creations is gearing up for the winter holiday season. During the month of December 2009, the following transactions occur. AND SO ON

Instructions
Using the information that you have gathered and the general ledger accounts that you have prepared through Chapter 3, plus the new information above, do the following.
(a) Journalize the above transactions.
(b) Post the December transactions. (Use the general ledger accounts prepared in Chapter 3.)
(c) Prepare a trial balance at December 31, 2009.
(d) Prepare and post adjusting journal entries for the month of December.
(e) Prepare an adjusted trial balance as of December 31, 2009.
(f) Prepare an income statement and a retained earnings statement for the 2-month period ending December 31, 2009, and a classified balance sheet as of December 31, 2009.
(g) Prepare and post closing entries as of December 31, 2009.
(h) Prepare a post-closing trial balance

(c) Totals $8,160
(e) Totals $8,804
(f) Net income $3,211
(h) Totals $6,065

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Continuing Cookie Chronicle 3: CCC3: In November 2009 after having incorporated Cookie Creations Inc

Accounting Tools for Business Decision Making
Weygandt, Kimmel, Kieso

Continuing Cookie Chronicle 3: CCC3
Chapter 3
CCC3 In November 2009 after having incorporated Cookie Creations Inc., Natalie begins operations. She has decided not to pursue the offer to supply cookies to Biscuits. Instead she will focus on offering cooking classes. The following events occur. AND SO ON

Instructions
(a) Prepare journal entries to record the November transactions.
(b) Post the journal entries to the general ledger accounts.
(c) Prepare a trial balance at November 30, 2009.

(c) Trial balance total $3,910

Click here for the SOLUTION

Comprehensive Problems: Williams Haka Bettner: Financial and Managerial Accounting

Financial and Managerial Accounting
Williams Haka Bettner

COMPREHENSIVE PROBLEMS

1 - Susquehanna Equipment Rentals SOLUTION

2 - Guitar Universe, Inc SOLUTION

3 - McMinn Retail, Inc SOLUTION

4 - The Home Depot SOLUTION

5 - The Gilster Company SOLUTION

6 - Utease Corporation SOLUTION

Utease Corporation: COMPREHENSIVE PROBLEM 6: Utease Corporation Utease Corporation Utease Corporation Utease Corporation Utease Corporation

Financial and Managerial Accounting
Williams Haka Bettner

COMPREHENSIVE PROBLEM 6 (CP6): Utease Corporation

Utease Corporation has many production plants across the midwestern United States. A newly opened plant, the Bellingham plant, produces and sells one product. The plant is treated, for responsibility accounting purposes, as a profit center. The unit standard costs for a production unit, with overhead applied based on direct labor hours, are as follows:

AND SO ON

Click here for the SOLUTION

The Gilster Company: COMPREHENSIVE PROBLEM 5: The Gilster Company The Gilster Company The Gilster Company

Financial and Managerial Accounting
Williams Haka Bettner

COMPREHENSIVE PROBLEM 5 (CP5): The Gilster Company

The Gilster Company, a machine tooling firm, has several plants. One plant located in St. Falls, Minnesota, uses a job order costing system for its batch production processes.

AND SO ON

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The Home Depot, Inc: COMPREHENSIVE PROBLEM 4 : The Home Depot, Inc The Home Depot, Inc The Home Depot, Inc The Home Depot, Inc The Home Depot, Inc

Financial and Managerial Accounting
Williams Haka Bettner

COMPREHENSIVE PROBLEM 4 (CP4): The Home Depot, Inc

Click here for the SOLUTION

Instructions: Answer each of the following questions and briefly explain where in the statements, notes, or other sections of the annual report you located the information used in your answer.

a. How many years are covered in each of the primary comparative financial statements? Were all of these statements audited? Name the auditors. What were the auditors' conclusions concerning these statements?
b. Home Depot combines its statement of retained earnings with another financial statement. Where are details about changes in the amount of retained earnings fund?
c. Over the three years presented, have the company's annual net cash flows been positive or negative from 1) operating activities, 2) investing activities, and 3) financing activities? Has the company's cash balance increased or decreased during each of these three years?

Part II

Home Depot wants to make credit purchases from your company, with payment due in 60 days assuming you are a credit manager of a medium sized supplier.

a. read the first note to the financial statements, "Summary of Significant Accounting Policies". Compute the following for the fiscal years ending feb. 3, 2008, and jan. 28, 2007 (round percentages to the nearest tenth of 1 percent, and other computations to one decimal place):
1. Current Ratio
2. Quick Ratio
3. Amount of Working Capital
4. Percentage change in working capital from the prior year
5. Percentage change in cash and cash equivalents from the prior year.

B. Based upon your analysis in part a, does teh company's liquidity appear to have increased or decreased during the most recent fiscal year? Explain.

C. Other than the ability of Home Depot to pay for it's purchases, do you see any major considerations that should enter into your company's decision? Explain.

D. Your company assigns each customer one of the four credit ratings listed below. Assign a credit rating to Home Depot and write a memorandum explaining your decision.

Possible Credit Ratings:

A- Outstanding
B- Good
C- Marginal
D- Unacceptable

Part III
a. compute the following for the fiscal years ending Feb. 3, 2008 and jan. 28, 2007 (round percentages to the nearest tenth):

1. percentage change in net sales (relative to the prior year)
2. Percentage change in net earnings
3. Gross profit rate.
4. Net income as a percentage of sales.
5. Return on average total assets.
6. Return on average total equity.

B. Write a statement that describes your conclusion(s) concerning rends in Home Depot's profitability during the period covered in your analysis in part a above2009, following these guidelines:

AND SO ON

Click here for the SOLUTION

Guitar Universe, Inc: COMPREHENSIVE PROBLEM 2: Guitar Universe, Inc

Financial and Managerial Accounting
Williams Haka Bettner

COMPREHENSIVE PROBLEM 2 (CP2): Guitar Universe, Inc

Guitar Universe, Inc., is a popular source of musical instruments for professional and amateur musicians. The company's accountants make necessary adjusting entries monthly, and they make all closing entries annually. Guitar Universe is growing rapidly and prides itself on having no long-term liabilities.

The company has provided the following trial balance dated December 31, 2009:

AND SO ON

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McMinn Retail, Inc: COMPREHENSIVE PROBLEM 3: McMinn Retail, Inc

Financial and Managerial Accounting
Williams Haka Bettner

COMPREHENSIVE PROBLEM 3 (CP3): McMinn Retail, Inc

McMinn Retail, Inc., is a retailer that has engaged you to assist in the preparation of its financial statements at December 31, 2009. Following are the correct adjusted account balances, in alphabetical order, as of that date. Each balance is the “normal” balance for that account. (Hint: The “normal” balance is the same as the debit or credit side that increases the account.)

Instructions

1. Prepare an income statement for the year ended December 31, 2009, which includes amounts for gross profit, income before income taxes, and net income. List expenses (other than cost of goods sold and income tax expense) in order, from the largest to the smallest dollar balance. You may ignore earnings per share.
2. Prepare a statement of retained earnings for the year ending December 31, 2009.
3. Prepare a statement of financial position (balance sheet) as of December 31, 2009, following these guidelines:

AND SO ON

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Wednesday, July 21, 2010

Guitar Universe, Inc Guitar Universe, Inc Guitar Universe, Inc Guitar Universe, Inc Guitar Universe, Inc Guitar Universe, Inc

Financial and Managerial Accounting
Williams Haka Bettner

COMPREHENSIVE PROBLEM 2 (CP2): Guitar Universe, Inc

Guitar Universe, Inc., is a popular source of musical instruments for professional and amateur musicians. The company's accountants make necessary adjusting entries monthly, and they make all closing entries annually. Guitar Universe is growing rapidly and prides itself on having no long-term liabilities.

The company has provided the following trial balance dated December 31, 2009:

AND SO ON

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Susquehanna Equipment Rentals Susquehanna Equipment Rentals Susquehanna Equipment Rentals Susquehanna Equipment Rentals Susquehanna Equipment Rentals

Financial and Managerial Accounting
Williams Haka Bettner

COMPREHENSIVE PROBLEM 1 (CP1): SUSQUEHANNA EQUIPMENT RENTALS

On December 1, 2007, John and Patty Driver formed a corporation called Susquehanna Equipment Rentals. The new corporation was able to begin operations immediately by purchasing the asset and taking over the location of Rent-it, an equipment rental company that was going out of business.

The corporation performs adjusting entries monthly. Closing entries are performed annually on December 31. During December, the corporation entered into the following Transactions:

AND SO ON

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COMPREHENSIVE PROBLEM 1: Susquehanna Equipment Rentals

Financial and Managerial Accounting
Williams Haka Bettner

COMPREHENSIVE PROBLEM 1 (CP1): SUSQUEHANNA EQUIPMENT RENTALS

On December 1, 2007, John and Patty Driver formed a corporation called Susquehanna Equipment Rentals. The new corporation was able to begin operations immediately by purchasing the asset and taking over the location of Rent-it, an equipment rental company that was going out of business.

The corporation performs adjusting entries monthly. Closing entries are performed annually on December 31. During December, the corporation entered into the following Transactions:

AND SO ON

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Sunday, July 18, 2010

Advanced Accounting: Chapter 3 E3-2 General Questions

BA 459

Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 3

Exercise 3-2 (E3-2)
General problems
1. Under FASB Statement No. 94, “Consolidation of All Majority-Owned Subsidiaries,” a parent company should exclude a subsidiary from consolidation if:

2. The FASB’s primary motivation for issuing FASB Statement No. 94, “Consolidation of All Majority-Owned Subsidiaries,” was to:

3. Parent-company and consolidated financial statement amounts would not be the same for:

4. Noncontrolling interest, as it appears in a consolidated balance sheet, refers to:

5. Pat Corporation acquired an 80% interest in Sal Corporation on January 1, 2007, and issued consolidated financial statements at and for the year ended December 31, 2007. Pat and Sal had issued separate-company financial statements in 2006.

6. The noncontrolling interest expense that appears in the consolidated income statement is computed as follows:

7. The retained earnings that appear on the consolidated balance sheet of a parent company and its 60%-owned subsidiary are:

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Advanced Accounting: Chapter 3 E3-1 General Questions

BA 459

Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 3

Exercise 3-1 (E3-1)
General problems
1. A 75%-owned subsidiary should not be consolidated under the provisions of FASB Statement No. 94, “Consolidation of All Majority-Owned Subsidiaries,” when:

2. Under the provisions of FASB Statement No. 94, an 80% owned subsidiary that cannot be consolidated must be accounted for:

3. Consolidated statements for Porter Corporation and its 60%-owned investee, Spinelli Company, will not be prepared under the provisions of FASB Statement No. 94 if:

4. Armor Industries owns 7,000,000 shares of Babbitt Corporation’s outstanding common stock (a 70% interest). The remaining 3,000,000 outstanding common shares of Babbitt are held by Ottman Insurance Company. On Armor Industries’ consolidated financial statements, Ottman Insurance Company is considered:

5. Pella Corporation owns a 60% interest in Sanico Company and an 80% interest in Talbert Company. Pella consolidates its investment in Sanico, but Talbert, which is currently under protection of the bankruptcy court, is not consolidated, and Pella accounts for this investment by the equity method. Which statement is correct?

6. On January 1, 2006, Paxton Company purchased 75% of the outstanding shares of Salem Company at a cost exceeding the book value and fair value of Salem’s net assets. Using the following notations, describe the amount at which the plant assets will appear in a consolidated balance sheet of Paxton Company and Subsidiary prepared immediately after the acquisition:
Pbv = book value of Paxton’s plant assets
Pfv = fair value of Paxton’s plant assets
Sbv = book value of Salem’s plant assets
Sfv = fair value of Salem’s plant assets

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Advanced Accounting: Chapter 2 E2-7 General Questions

BA 459

Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 2

Exercise 2-7 (E2-7)
General problems
1. On January 3, 2006, Harrison Company purchases a 15% interest in Bennett Corporation’s common stock for $50,000 cash. Harrison accounts for the investment using the cost method. Bennett’s net income for 2006 is $20,000, but it declares no dividends. In 2007, Bennett’s net income is $80,000, and it declares dividends of $120,000. What is the correct balance of Harrison’s Investment in Bennett account at December 31, 2007?

2. Screwsbury Corporation’s stockholders’ equity at December 31, 2006, follows (in thousands):
Capital stock, $100 par $3,000
Additional paid-in capital 500
Retained earnings 500
Total stockholders’ equity $4,000
On January 3, 2007, Screwsbury sells 10,000 shares of previously unissued $100 par common stock to Pannell Corporation for $1,400,000. On this date the recorded book values of Screwsbury’s assets and liabilities equal their fair values. Goodwill from Pannell’s investment in Screwsbury at the date of purchase is:

3. On January 1, Leighton Company paid $300,000 for a 20% interest in Monroe Corporation’s voting common stock, at which time Monroe’s stockholders’ equity consisted of $600,000 capital stock and $400,000 retained earnings. Leighton was not able to exercise any influence over the operations of Monroe and accounted for its investment in Monroe using the cost method. During the year, Monroe had net income of $200,000 and paid dividends of $150,000. The balance of Leighton’s Investment in Monroe account at December 31 is:

4. Jollytime Corporation owns a 40% interest in Krazy Products acquired several years ago at book value. Krazy Products’ income statement contains the following information (in thousands):
Income before extraordinary item $200
Extraordinary loss 50
Net income $150
Jollytime should report income from Krazy Products in its income from continuing operations at:

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Thursday, July 15, 2010

QS 2-5 Identify whether the normal balances

ACC 225

Axia College of University of Phoenix (UoP)

Financial Accounting

Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)

Quick Study 2-5 (QS 2-5) Identify whether the normal balances (in parentheses) assigned to the following accounts are correct or incorrect:
a. To increase Store Equipment f. To decrease Unearned Revenue
b. To increase Owner Withdrawals g. To decrease Prepaid Insurance
c. To decrease Cash h. To increase Notes Payable
d. To increase Utilities Expense i. To decrease Accounts Receivable
e. To increase Fees Earned j. To increase Owner Capital

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QS 2-4 Identify whether a debit or credit yields the indicated change for each of the following accounts

ACC 225

Axia College of University of Phoenix (UoP)

Financial Accounting

Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)

Quick Study 2-4 (QS 2-4) Identify whether a debit or credit yields the indicated change for each of the following accounts:
a. To increase Store Equipment f. To decrease Unearned Revenue
b. To increase Owner Withdrawals g. To decrease Prepaid Insurance
c. To decrease Cash h. To increase Notes Payable
d. To increase Utilities Expense i. To decrease Accounts Receivable
e. To increase Fees Earned j. To increase Owner Capital

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QS 2-3 Indicate whether a debit or credit decreases the normal balance of each of the following accounts

ACC 225

Axia College of University of Phoenix (UoP)

Financial Accounting

Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)

Quick Study 2-3 (QS 2-3) Indicate whether a debit or credit decreases the normal balance of each of the following accounts:
a. Office Supplies e. Salaries Expense i. Interest Revenue
b. Repair Services Revenue f. Owner Capital j. Owner Withdrawals
c. Interest Payable g. Prepaid Insurance k. Unearned Revenue
d. Accounts Receivable h. Buildings l. Accounts Payable

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Compute the following ratios for 2002 and 2003 Landry’s Restaurants

Fundamentals of Financial Accounting 1st ed.
by Phillips, Libby, and Libby

Landry’s Restaurants
Compute the following ratios for 2002 and 2003. Use the Landry’s Restaurants financial statements located in Appendix A of Fundamentals of Financial Accounting:
a. Earnings per share
b. Return on assets
c. Current ratio
d. Times interest earned
e. Asset turnover
f. Debt to total assets
g. Current cash debt coverage
h. Cash debt coverage
i. Free cash flow

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At December 31, 2010, Rijo Corporation reported the following plant assets

ACCOUNTING
Warren, Reeve and Duchac

Financial Accounting
Managerial Accounting
Carl Warren, James M. Reeve, Jonathan E. Duchac
Chapter 9
Problem 9-2A (P9-2A) At December 31, 2010, Rijo Corporation reported the following plant assets.
Land $ 3,000,000
Buildings $26,500,000
Less: Accumulated depreciation—buildings 12,100,000 14,400,000
Equipment 40,000,000
Less: Accumulated depreciation—equipment 5,000,000 35,000,000
Total plant assets $52,400,000
During 2011, the following selected cash transactions occurred.
Apr. 1 Purchased land for $2,200,000.
May 1 Sold equipment that cost $600,000 when purchased on January 1, 2004. The equipment was sold for $170,000.
June 1 Sold land for $1,800,000. The land cost $1,000,000.
July 1 Purchased equipment for $1,300,000.
Dec. 31 Retired equipment that cost $500,000 when purchased on December 31, 2001. No salvage value was received.
Instructions
(a) Journalize the transactions. (Hint: You may wish to set up T accounts, post beginning balances, and then post 2011 transactions.) Rijo uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 40-year useful life and no salvage value; the equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement.
(b) Record adjusting entries for depreciation for 2011.
(c) Prepare the plant assets section of Rijo’s balance sheet at December 31, 2011.

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Lorenz Company closes its books on July 31

ACCOUNTING
Warren, Reeve and Duchac

Financial Accounting
Managerial Accounting
Carl Warren, James M. Reeve, Jonathan E. Duchac
Chapter 8
Problem 8-8A (P8-8A) Lorenz Company closes its books on July 31. On June 30 the Notes Receivable account balance is $23,800. Notes Receivable include the following.
Date Maker Face Value Term Maturity Date Interest Rate
May 21 Agler Inc. $ 6,000 60 days July 20 8%
May 25 Girard Co. 7,800 60 days July 24 10%
June 30 LSU Corp. 10,000 6 months December 31 9%
During July the following transactions were completed.
July 5 Made sales of $5,100 on Lorenz credit cards.
14 Made sales of $600 on Visa credit cards. The credit card service charge is 3%.
20 Received payment in full from Agler Inc. on the amount due.
24 Received payment in full from Girard Co. on the amount due.
Instructions
(a) Journalize the July transactions and the July 31 adjusting entry for accrued interest receivable. (Interest is computed using 360 days.)
(b) Enter the balances at July 1 in the receivable accounts and post the entries to all of the receivable accounts. (Use T accounts.)
(c) Show the balance sheet presentation of the receivable accounts at July 31.

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On July 31, 2010, Fenton Company had a cash balance per books of $6,140

ACCOUNTING
Warren, Reeve and Duchac

Financial Accounting
Managerial Accounting
Carl Warren, James M. Reeve, Jonathan E. Duchac
Chapter 7
Problem 7-3A (P7-3A) On July 31, 2010, Fenton Company had a cash balance per books of $6,140. The statement from Jackson State Bank on that date showed a balance of $7,695.80. A comparison of the bank statement with the cash account revealed the following facts.
1. The bank service charge for July was $25.
2. The bank collected a note receivable of $1,500 for Fenton Company on July 15, plus $30 of interest. The bank made a $10 charge for the collection. Fenton has not accrued any interest on the note.
3. The July 31 receipts of $1,193.30 were not included in the bank deposits for July. These receipts were deposited by the company in a night deposit vault on July 31.
4. Company check No. 2480 issued to H. Coby, a creditor, for $384 that cleared the bank in July was incorrectly entered in the cash payments journal on July 10 for $348.
5. Checks outstanding on July 31 totaled $1,980.10.
6. On July 31 the bank statement showed an NSF charge of $690 for a check received by the company from P. Figura, a customer, on account.
Instructions
(a) Prepare the bank reconciliation as of July 31.
(b) Prepare the necessary adjusting entries at July 31

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Tuesday, July 13, 2010

South Coast Boards Co: Comprehensive Problem 2

ACCOUNTING
Warren, Reeve and Duchac

Financial Accounting
Managerial Accounting
Carl Warren, James M. Reeve, Jonathan E. Duchac
Chapter 5, Chapter 6
Comprehensive Problem 2 (CP 2)

South Coast Boards Co. is a merchandising business. The account balances for south coast boards co. as of July 1, 2010 (unless otherwise indicated), are as follows: AND SO ON

Check: 8. Net Income 693,800

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Aunt Ethel's Fancy Cookie Company manufactures and sells three flavors of cookies

Aunt Ethel's Fancy Cookie Company

Problem 1
Aunt Ethel's Fancy Cookie Company manufactures and sells three flavors of cookies: Macaroon, Sugar, and Buttercream. The batch size for the cookies is limited to 1,000 cookies based on the size of the ovens and cookie molds owned by the company. Based on budgetary projections, the information listed below is available:
Macaroon Sugar Buttercream
Projected sales in units
500,000 800,000 600,000
PER UNIT data:
Selling price $0.80 $0.75 $0.60
Direct materials $0.20 $0.15 $0.14
Direct labor $0.04 $0.02 $0.02 Hours per 1000-unit batch:
Direct labor hours 2 1 1
Oven hours 1 1 1
Packaging hours 0.5 0.5 0.5
Total overhead costs and activity levels for the year are estimated as follows:
Activity Overhead costs Activity levels
Direct labor 2,400 hours
Oven $210,000 1,900 oven hours
Packaging $150,000 950 packaging hours $360,000
Questions: 1. Determine the activity-cost-driver rate for packaging costs (3 points).
2. Using the ABC system, for the sugar cookie, compute the estimated overhead costs per thousand cookies (3 points).
3. Using the ABC system, for the sugar cookie, compute the estimated operating profit per thousand cookies (3 points).
4. Using a traditional system (with direct labor hours as the overhead allocation base) for the sugar cookie, compute the estimated overhead costs per thousand cookies (3 points).
5. Using a traditional system (with direct labor hours as the overhead allocation base) for the sugar cookie, compute the estimated operating profit per thousand cookies (3 points).
6. Explain the difference between the profits obtained from the traditional system and the ABC system. Which system provides a better estimate of profitability? Why? (3 points).
Problem 2:
What is activity-based management and how can it be used to improve the profitability of a company? (12 points).

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South Coast Boards Co. is a merchandising business

ACCOUNTING
Warren, Reeve and Duchac

Financial Accounting
Managerial Accounting
Carl Warren, James M. Reeve, Jonathan E. Duchac
Chapter 5, Chapter 6
Comprehensive Problem 2 (CP 2)

South Coast Boards Co. is a merchandising business. the account balances for south coast boards co. as of July 1, 2010 (unless otherwise indicated), are as follows:

Check: 8. Net Income 693,800

Click here for the SOLUTION

110 Cash $63600
112 A/R $153900
115 Merchandise Inventory $602400
116 Prepaid insurance $16800
117 Store supplies $11400
123 store equipment $469500
124 Accum. Depr. --Store equip $56700
210 A/P $96600
211 Salaries payable $-
310 capital stock $100000
311 retained earnings, Aug 1 2009 $455300
312 Dividends $135000
313 Income summary $-
410 Sales $3221100
411 Sales return and allowances $92700
412 Sales discounts $59400
510 Cost of merchandise sold $1623000
520 sales salaries expense $334800
521 advertising expense $81000
522 depreciation expense $-
523 store supplies expense $-
529 misc. selling expense $12600
530 Office salaries expense $182100
531 Rent Expense $83700
532 insurance expense $-
539 Misc. Administrative expense $7800
During July, the last month of the fiscal year, the following transactions were completed:
July
1, Paid rent for July, $5000.
3, Purchased merchandise on account from Belmont Co., Terms 2/10,n/30,POB shipping point, $40000.
4, Paid freight on purchase of July 3, $600.
6, Sold merchandise on account to Modesto Co., terms 2/10,n/30, FOB shipping point, $25000. The cost of the merchandise sold was $15000.
7, Received $26500 cash from Yuba Co. on account, no discount.
10, sold merchandise for cash $80000. The cost of the merchandise sold was $50000.
13, Paid for merchandise purchased on July 3, less discount.
14, Received merchandise returned on sale of July 6, $6000. The cost of the merchandise returned was $4500.
15, Paid advertising expense for last half of July, $7500
16, received cash from sale of July 6, less return of July 14 and discount.
19, purchased merchandise for cash, $36000.
19, Paid $18000 to Blakke Co. on account, no discount
20, sold merchandise on account to Reedley Co., terms 1/10,n/30, FOB shipping point, $40000. the cost of the merchandise sold was $25000.
21, for the convenience of the customer, paid freight on sale of July 20, $1100.
21, received $17600 cash from Owen co. on account, no discount.
21, purchased merchandise on account from Nye Co., terms 1/10, n/30, FOB Destination, $20000.
24, Returned $2000 of damaged merchandise purchased on July 21, receiving credit from the seller.
26, Refunded cash on sales made for cash, $3000. The cost of the merchandise returned was $1800.
28, paid sales salaries of $22800 and office salaries of $15200.
29, purchased store supplies for cash, $2400.
30, Sold merchandise on account to Whitetail co., terms 2/10, n/30, FOB shipping point, $18750. The cost of the merchandise sold was $11250.
30, received cash from sale of July 20, less discount, plus freight paid on July 21.
31, Paid for purchase of July 21, less return of July 24 and discount.

Instructions
1. Enter the balances of each of the accounts in the appropriate balance column of a four-column account. Write Balance in the item section, and place a check mark (?) in the posting reference column. Journalize the transactions for July.
2. Post the journal to the general ledger, extending the month-end balances to the appropriate balance columns after all posting is completed. In this problem, you are no required to update or post to the accounts receivable and accounts payable subsidiary ledgers.
3. Prepare and unadjusted trial balance.
4. At the end of July, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6).
a) Merchandise inventory on July 31 $ 589850
b) Insurance expired during the year $ 12500
c) Store supplies on hand on July 31 $4700
d) Depreciation for the current year $18800
e) Accrued salaries on July 31: Sale salaries $4400 Office salaries $2700 ($7100)
5. Enter the unadjusted trial balance on a 10-column end-of-period spreadsheet (work Sheet), and complete the spreadsheet.
6. Journalize and post the adjusting entries.
7. Prepare an adjusted trial balance
8. Prepare an income statement, a retained earnings statement, and a balance sheet.
9. Prepare and post the closing entries. Indicated closed accounts by inserting a line in both the Balance columns opposite the closing entry. Insert the new balance in the retained earnings account.
10. Prepare a post-closing trial balance.

Check: 8. Net Income 693,800

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Aunt Ethel's Fancy Cookie Company: Aunt Ethel's Fancy Cookie Company

Aunt Ethel's Fancy Cookie Company

Problem 1
Aunt Ethel's Fancy Cookie Company manufactures and sells three flavors of cookies: Macaroon, Sugar, and Buttercream. The batch size for the cookies is limited to 1,000 cookies based on the size of the ovens and cookie molds owned by the company. Based on budgetary projections, the information listed below is available:
Macaroon Sugar Buttercream
Projected sales in units
500,000 800,000 600,000
PER UNIT data:
Selling price $0.80 $0.75 $0.60
Direct materials $0.20 $0.15 $0.14
Direct labor $0.04 $0.02 $0.02 Hours per 1000-unit batch:
Direct labor hours 2 1 1
Oven hours 1 1 1
Packaging hours 0.5 0.5 0.5
Total overhead costs and activity levels for the year are estimated as follows:
Activity Overhead costs Activity levels
Direct labor 2,400 hours
Oven $210,000 1,900 oven hours
Packaging $150,000 950 packaging hours $360,000
Questions: 1. Determine the activity-cost-driver rate for packaging costs (3 points).
2. Using the ABC system, for the sugar cookie, compute the estimated overhead costs per thousand cookies (3 points).
3. Using the ABC system, for the sugar cookie, compute the estimated operating profit per thousand cookies (3 points).
4. Using a traditional system (with direct labor hours as the overhead allocation base) for the sugar cookie, compute the estimated overhead costs per thousand cookies (3 points).
5. Using a traditional system (with direct labor hours as the overhead allocation base) for the sugar cookie, compute the estimated operating profit per thousand cookies (3 points).
6. Explain the difference between the profits obtained from the traditional system and the ABC system. Which system provides a better estimate of profitability? Why? (3 points).
Problem 2:
What is activity-based management and how can it be used to improve the profitability of a company? (12 points).

Click here for the SOLUTION

South Coast Boards Co: South Coast Boards Co: South Coast Boards Co: South Coast Boards Co: South Coast Boards Co: South Coast Boards Co

ACCOUNTING
Warren, Reeve and Duchac

Financial Accounting
Managerial Accounting
Carl Warren, James M. Reeve, Jonathan E. Duchac
Chapter 5, Chapter 6
Comprehensive Problem 2 (CP 2)

South Coast Boards Co. is a merchandising business. the account balances for south coast boards co. as of July 1, 2010 (unless otherwise indicated), are as follows:

Check: 8. Net Income 693,800

Click here for the SOLUTION

110 Cash $63600
112 A/R $153900
115 Merchandise Inventory $602400
116 Prepaid insurance $16800
117 Store supplies $11400
123 store equipment $469500
124 Accum. Depr. --Store equip $56700
210 A/P $96600
211 Salaries payable $-
310 capital stock $100000
311 retained earnings, Aug 1 2009 $455300
312 Dividends $135000
313 Income summary $-
410 Sales $3221100
411 Sales return and allowances $92700
412 Sales discounts $59400
510 Cost of merchandise sold $1623000
520 sales salaries expense $334800
521 advertising expense $81000
522 depreciation expense $-
523 store supplies expense $-
529 misc. selling expense $12600
530 Office salaries expense $182100
531 Rent Expense $83700
532 insurance expense $-
539 Misc. Administrative expense $7800
During July, the last month of the fiscal year, the following transactions were completed:
July
1, Paid rent for July, $5000.
3, Purchased merchandise on account from Belmont Co., Terms 2/10,n/30,POB shipping point, $40000.
4, Paid freight on purchase of July 3, $600.
6, Sold merchandise on account to Modesto Co., terms 2/10,n/30, FOB shipping point, $25000. The cost of the merchandise sold was $15000.
7, Received $26500 cash from Yuba Co. on account, no discount.
10, sold merchandise for cash $80000. The cost of the merchandise sold was $50000.
13, Paid for merchandise purchased on July 3, less discount.
14, Received merchandise returned on sale of July 6, $6000. The cost of the merchandise returned was $4500.
15, Paid advertising expense for last half of July, $7500
16, received cash from sale of July 6, less return of July 14 and discount.
19, purchased merchandise for cash, $36000.
19, Paid $18000 to Blakke Co. on account, no discount
20, sold merchandise on account to Reedley Co., terms 1/10,n/30, FOB shipping point, $40000. the cost of the merchandise sold was $25000.
21, for the convenience of the customer, paid freight on sale of July 20, $1100.
21, received $17600 cash from Owen co. on account, no discount.
21, purchased merchandise on account from Nye Co., terms 1/10, n/30, FOB Destination, $20000.
24, Returned $2000 of damaged merchandise purchased on July 21, receiving credit from the seller.
26, Refunded cash on sales made for cash, $3000. The cost of the merchandise returned was $1800.
28, paid sales salaries of $22800 and office salaries of $15200.
29, purchased store supplies for cash, $2400.
30, Sold merchandise on account to Whitetail co., terms 2/10, n/30, FOB shipping point, $18750. The cost of the merchandise sold was $11250.
30, received cash from sale of July 20, less discount, plus freight paid on July 21.
31, Paid for purchase of July 21, less return of July 24 and discount.

Instructions
1. Enter the balances of each of the accounts in the appropriate balance column of a four-column account. Write Balance in the item section, and place a check mark (?) in the posting reference column. Journalize the transactions for July.
2. Post the journal to the general ledger, extending the month-end balances to the appropriate balance columns after all posting is completed. In this problem, you are no required to update or post to the accounts receivable and accounts payable subsidiary ledgers.
3. Prepare and unadjusted trial balance.
4. At the end of July, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6).
a) Merchandise inventory on July 31 $ 589850
b) Insurance expired during the year $ 12500
c) Store supplies on hand on July 31 $4700
d) Depreciation for the current year $18800
e) Accrued salaries on July 31: Sale salaries $4400 Office salaries $2700 ($7100)
5. Enter the unadjusted trial balance on a 10-column end-of-period spreadsheet (work Sheet), and complete the spreadsheet.
6. Journalize and post the adjusting entries.
7. Prepare an adjusted trial balance
8. Prepare an income statement, a retained earnings statement, and a balance sheet.
9. Prepare and post the closing entries. Indicated closed accounts by inserting a line in both the Balance columns opposite the closing entry. Insert the new balance in the retained earnings account.
10. Prepare a post-closing trial balance.

Check: 8. Net Income 693,800

Click here for the SOLUTION

Monday, July 12, 2010

South Coast Boards Co: South Coast Boards: Comprehensive Problem 2

ACCOUNTING
Warren, Reeve and Duchac

Financial Accounting
Managerial Accounting
Carl Warren, James M. Reeve, Jonathan E. Duchac
Chapter 5, Chapter 6
Comprehensive Problem 2 (CP 2)

South Coast Boards Co. is a merchandising business. the account balances for south coast boards co. as of July 1, 2010 (unless otherwise indicated), are as follows:

Check: 8. Net Income 693,800

Click here for the SOLUTION

110 Cash $63600
112 A/R $153900
115 Merchandise Inventory $602400
116 Prepaid insurance $16800
117 Store supplies $11400
123 store equipment $469500
124 Accum. Depr. --Store equip $56700
210 A/P $96600
211 Salaries payable $-
310 capital stock $100000
311 retained earnings, Aug 1 2009 $455300
312 Dividends $135000
313 Income summary $-
410 Sales $3221100
411 Sales return and allowances $92700
412 Sales discounts $59400
510 Cost of merchandise sold $1623000
520 sales salaries expense $334800
521 advertising expense $81000
522 depreciation expense $-
523 store supplies expense $-
529 misc. selling expense $12600
530 Office salaries expense $182100
531 Rent Expense $83700
532 insurance expense $-
539 Misc. Administrative expense $7800
During July, the last month of the fiscal year, the following transactions were completed:
July
1, Paid rent for July, $5000.
3, Purchased merchandise on account from Belmont Co., Terms 2/10,n/30,POB shipping point, $40000.
4, Paid freight on purchase of July 3, $600.
6, Sold merchandise on account to Modesto Co., terms 2/10,n/30, FOB shipping point, $25000. The cost of the merchandise sold was $15000.
7, Received $26500 cash from Yuba Co. on account, no discount.
10, sold merchandise for cash $80000. The cost of the merchandise sold was $50000.
13, Paid for merchandise purchased on July 3, less discount.
14, Received merchandise returned on sale of July 6, $6000. The cost of the merchandise returned was $4500.
15, Paid advertising expense for last half of July, $7500
16, received cash from sale of July 6, less return of July 14 and discount.
19, purchased merchandise for cash, $36000.
19, Paid $18000 to Blakke Co. on account, no discount
20, sold merchandise on account to Reedley Co., terms 1/10,n/30, FOB shipping point, $40000. the cost of the merchandise sold was $25000.
21, for the convenience of the customer, paid freight on sale of July 20, $1100.
21, received $17600 cash from Owen co. on account, no discount.
21, purchased merchandise on account from Nye Co., terms 1/10, n/30, FOB Destination, $20000.
24, Returned $2000 of damaged merchandise purchased on July 21, receiving credit from the seller.
26, Refunded cash on sales made for cash, $3000. The cost of the merchandise returned was $1800.
28, paid sales salaries of $22800 and office salaries of $15200.
29, purchased store supplies for cash, $2400.
30, Sold merchandise on account to Whitetail co., terms 2/10, n/30, FOB shipping point, $18750. The cost of the merchandise sold was $11250.
30, received cash from sale of July 20, less discount, plus freight paid on July 21.
31, Paid for purchase of July 21, less return of July 24 and discount.

Instructions
1. Enter the balances of each of the accounts in the appropriate balance column of a four-column account. Write Balance in the item section, and place a check mark (?) in the posting reference column. Journalize the transactions for July.
2. Post the journal to the general ledger, extending the month-end balances to the appropriate balance columns after all posting is completed. In this problem, you are no required to update or post to the accounts receivable and accounts payable subsidiary ledgers.
3. Prepare and unadjusted trial balance.
4. At the end of July, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6).
a) Merchandise inventory on July 31 $ 589850
b) Insurance expired during the year $ 12500
c) Store supplies on hand on July 31 $4700
d) Depreciation for the current year $18800
e) Accrued salaries on July 31: Sale salaries $4400 Office salaries $2700 ($7100)
5. Enter the unadjusted trial balance on a 10-column end-of-period spreadsheet (work Sheet), and complete the spreadsheet.
6. Journalize and post the adjusting entries.
7. Prepare an adjusted trial balance
8. Prepare an income statement, a retained earnings statement, and a balance sheet.
9. Prepare and post the closing entries. Indicated closed accounts by inserting a line in both the Balance columns opposite the closing entry. Insert the new balance in the retained earnings account.
10. Prepare a post-closing trial balance.

Check: 8. Net Income 693,800

Click here for the SOLUTION

South Coast Boards: South Coast Boards: Comprehensive Problem 2

ACCOUNTING
Warren, Reeve and Duchac

Financial Accounting
Managerial Accounting
Carl Warren, James M. Reeve, Jonathan E. Duchac
Chapter 5, Chapter 6
Comprehensive Problem 2 (CP 2)

South Coast Boards Co. is a merchandising business. the account balances for south coast boards co. as of July 1, 2010 (unless otherwise indicated), are as follows:

Check: 8. Net Income 693,800

Click here for the SOLUTION

110 Cash $63600
112 A/R $153900
115 Merchandise Inventory $602400
116 Prepaid insurance $16800
117 Store supplies $11400
123 store equipment $469500
124 Accum. Depr. --Store equip $56700
210 A/P $96600
211 Salaries payable $-
310 capital stock $100000
311 retained earnings, Aug 1 2009 $455300
312 Dividends $135000
313 Income summary $-
410 Sales $3221100
411 Sales return and allowances $92700
412 Sales discounts $59400
510 Cost of merchandise sold $1623000
520 sales salaries expense $334800
521 advertising expense $81000
522 depreciation expense $-
523 store supplies expense $-
529 misc. selling expense $12600
530 Office salaries expense $182100
531 Rent Expense $83700
532 insurance expense $-
539 Misc. Administrative expense $7800
During July, the last month of the fiscal year, the following transactions were completed:
July
1, Paid rent for July, $5000.
3, Purchased merchandise on account from Belmont Co., Terms 2/10,n/30,POB shipping point, $40000.
4, Paid freight on purchase of July 3, $600.
6, Sold merchandise on account to Modesto Co., terms 2/10,n/30, FOB shipping point, $25000. The cost of the merchandise sold was $15000.
7, Received $26500 cash from Yuba Co. on account, no discount.
10, sold merchandise for cash $80000. The cost of the merchandise sold was $50000.
13, Paid for merchandise purchased on July 3, less discount.
14, Received merchandise returned on sale of July 6, $6000. The cost of the merchandise returned was $4500.
15, Paid advertising expense for last half of July, $7500
16, received cash from sale of July 6, less return of July 14 and discount.
19, purchased merchandise for cash, $36000.
19, Paid $18000 to Blakke Co. on account, no discount
20, sold merchandise on account to Reedley Co., terms 1/10,n/30, FOB shipping point, $40000. the cost of the merchandise sold was $25000.
21, for the convenience of the customer, paid freight on sale of July 20, $1100.
21, received $17600 cash from Owen co. on account, no discount.
21, purchased merchandise on account from Nye Co., terms 1/10, n/30, FOB Destination, $20000.
24, Returned $2000 of damaged merchandise purchased on July 21, receiving credit from the seller.
26, Refunded cash on sales made for cash, $3000. The cost of the merchandise returned was $1800.
28, paid sales salaries of $22800 and office salaries of $15200.
29, purchased store supplies for cash, $2400.
30, Sold merchandise on account to Whitetail co., terms 2/10, n/30, FOB shipping point, $18750. The cost of the merchandise sold was $11250.
30, received cash from sale of July 20, less discount, plus freight paid on July 21.
31, Paid for purchase of July 21, less return of July 24 and discount.

Instructions
1. Enter the balances of each of the accounts in the appropriate balance column of a four-column account. Write Balance in the item section, and place a check mark (?) in the posting reference column. Journalize the transactions for July.
2. Post the journal to the general ledger, extending the month-end balances to the appropriate balance columns after all posting is completed. In this problem, you are no required to update or post to the accounts receivable and accounts payable subsidiary ledgers.
3. Prepare and unadjusted trial balance.
4. At the end of July, the following adjustment data were assembled. Analyze and use these data to complete (5) and (6).
a) Merchandise inventory on July 31 $ 589850
b) Insurance expired during the year $ 12500
c) Store supplies on hand on July 31 $4700
d) Depreciation for the current year $18800
e) Accrued salaries on July 31: Sale salaries $4400 Office salaries $2700 ($7100)
5. Enter the unadjusted trial balance on a 10-column end-of-period spreadsheet (work Sheet), and complete the spreadsheet.
6. Journalize and post the adjusting entries.
7. Prepare an adjusted trial balance
8. Prepare an income statement, a retained earnings statement, and a balance sheet.
9. Prepare and post the closing entries. Indicated closed accounts by inserting a line in both the Balance columns opposite the closing entry. Insert the new balance in the retained earnings account.
10. Prepare a post-closing trial balance.

Check: 8. Net Income 693,800

Click here for the SOLUTION

Friday, July 9, 2010

Advanced Accounting: Chapter 2 E2-2 General Questions

BA 459

Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 2

Exercise 2-2 (E2-2)
[AICPA adapted] General problems
1. Investor Company owns 40% of Alimand Corporation. During the calendar year, Alimand had net earnings of $100,000 and paid dividends of $10,000. Investor mistakenly recorded these transactions using the cost method rather than the equity method of accounting. What effect would this have on the investment account, net earnings, and retained earnings, respectively?

2. The corporation exercises control over an affiliate in which it holds a 40% common stock interest. If its affiliate completed a fiscal year profitably but paid no dividends, how would this affect the investor corporation?

3. An investor uses the cost method to account for an investment in common stock. A portion of the dividends received this year were in excess of the investor’s share of investee’s earnings after the date of the investment. The amount of dividends revenue that should be reported in the investor’s income statement for this year would be:

4. On January 1 Grade Company paid $300,000 for 20,000 shares of Medium Company’s common stock, which represents a 15% investment in Medium. Grade does not have the ability to exercise significant influence over Medium. Medium declared and paid a dividend of $1 per share to its stockholders during the year. Medium reported net income of $260,000 for the year ended December 31. The balance in Grade’s balance sheet account “Investment in Medium Company” at December 31 should be

5. On January 2, 2006, Troquel Corporation bought 15% of Zafacon Corporation’s capital stock for $30,000. Troquel accounts for this investment by the cost method. Zafacon’s net income for the years ended December 31, 2006, and December 31, 2007, were $10,000 and $50,000, respectively. During 2007 Zafacon declared a dividend of $70,000. No dividends were declared in 2006. How much should Troquel show on its 2007 income statement as income from this investment?

6. Pare purchased 10% of Tot Company’s 100,000 outstanding shares of common stock on January 2 for $50,000. On December 31, Pare purchased an additional 20,000 shares of Tot for $150,000. There was no goodwill as a result of either acquisition, and Tot had not issued any additional stock during the year. Tot reported earnings of $300,000 for the year. What amount should Pare report in its December 31 balance sheet as investment in Tot?

7. On January 1, Point purchased 10% of Iona Company’s common stock. Point purchased additional shares, bringing its ownership up to 40% of Iona’s common stock outstanding, on August 1. During October, Iona declared and paid a cash dividend on all of its outstanding common stock. How much income from the Iona investment should Point’s income statement report?

8. On January 2, Kean Company purchased a 30% interest in Pod Company for $250,000. On this date, Pod’s stockholders’ equity was $500,000. The carrying amounts of Pod’s identifiable net assets approximated their fair values, except for land, whose fair value exceeded its carrying amount by $200,000. Pod reported net income of $100,000 and paid no dividends. Kean accounts for this investment using the equity method. In its December 31 balance sheet, what amount should Kean report as investment in subsidiary?

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Advanced Accounting: Chapter 2 E2-1 General Questions

BA 459

Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 2

Exercise 2-1 (E2-1)
General questions
1. Indicators of an investor company’s inability to exercise significant influence over an investee are provided in FASB Interpretation No. 35. Which of the following is not included among those indicators?

2. A 20% common stock interest in an investee company:

3. The cost of a 25% interest in the voting stock of an investee that is recorded in the investment account includes:

4. The underlying equity of an investment at acquisition:

5. Jarret Corporation is a 25%-owned equity investee of Marco Corporation. During the current year, Marco receives $12,000 in dividends from Jarret. How does the $12,000 dividend affect Marco’s financial position and results of operations?

Click here for the SOLUTION

Advanced Accounting: Chapter 1 E1-2 General Questions

BA 459

Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 1

Exercise 1-2 (E1-2)
[AICPA adapted] General Problems
1. Fast Corporation paid $50,000 cash for the net assets of Agge Company, which consisted of the following:
Book Value Fair Value
Current assets $10,000 $14,000
Plant and equipment 40,000 55,000
Liabilities assumed (10,000) (9,000)
$40,000 $60,000
The plant and equipment acquired in this business combination should be recorded at:


2. On April 1, Jack Company paid $800,000 for all the issued and outstanding common stock of Ann Corporation in a transaction properly accounted for as a purchase. The recorded assets and liabilities of Ann Corporation on April 1 follow:
Cash $ 80,000
Inventory 240,000
Property and equipment (net of accumulated depreciation of $320,000) 480,000
Liabilities (180,000)
On April 1, it was determined that the inventory of Ann had a fair value of $190,000 and the property and equipment (net) had a fair value of $560,000. What is the amount of goodwill resulting from the business combination?


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Wednesday, July 7, 2010

On January 1, 2006: January 1, 2006 Solomon Company purchased the following two machines for use in its production process

ACC 363

Axia College of University of Phoenix (UoP)

Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition

Financial Accounting II

Problem 10-3A (P10-3A) On January 1, 2006, Solomon Company purchased the following two machines for use in its production process.
Machine A: The cash price of this machine was $38,500. Related expenditures included: sales tax $2,200, shipping costs $175, insurance during shipping $75, installation and testing costs $50, and $90 of oil and lubricants to be used with the machinery during its first year of operation. Solomon estimates that the useful life of the machine is 4 years with a $5,000 salvage value remaining at the end of that time period.
Machine B: The recorded cost of this machine was $100,000. Solomon estimates that the useful life of the machine is 4 years with a $8,000 salvage value remaining at the end of that time period.

Instructions
(a) Prepare the following for Machine A. (1) The journal entry to record its purchase on January 1, 2006. (2) The journal entry to record annual depreciation at December 31, 2006, assuming the straight-line method of depreciation is used.
(b) Calculate the amount of depreciation expense that Solomon should record for machine B each year of its useful life under the following assumption. (1) Solomon uses the straight-line method of depreciation. (2) Solomon uses the declining-balance method.The rate used is twice the straight-line rate. (3) Solomon uses the units-of-activity method and estimates the useful life of the machine is 25,000 units. Actual usage is as follows: 2006, 6,500 units; 2007, 7,500 units; 2008, 6,000 units; 2009, 5,000 units.
(c) Which method used to calculate depreciation on machine B reports the lowest amount of depreciation expense in year 1 (2006)? The lowest amount in year 4 (2009)? The lowest total amount over the 4-year period?

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Monday, July 5, 2010

BYP 3-6 Bluestem Company is a pesticide manufacturer

ACCT 100 : Introduction to Financial Accounting
San Francisco State University (SFSU)

Financial Accounting
Jerry J. Weygandt

Ethics Case

BYP 3-6 Bluestem Company is a pesticide manufacturer. Its sales declined greatly this year due to the passage of legislation outlawing the sale of several of Bluestem’s chemical pesticides. In the coming year, Bluestem will have environmentally safe and competitive chemicals to replace these discontinued products. Sales in the next year are expected to greatly exceed any prior year’s. The decline in sales and profits appears to be a one-year aberration. But even so, the company president fears a large dip in the current year’s profits. He believes that such a dip could cause a significant drop in the market price of Bluestem’s stock and make the company a takeover target. To avoid this possibility, the company president calls in Cathi Bell, controller, to discuss this period’s year-end adjusting entries. He urges her to accrue every possible revenue and to defer as many expenses as possible. He says to Cathi, “We need the revenues this year, and next year can easily absorb expenses deferred from this year.We can’t let our stock price be hammered down!” Cathi didn’t get around to recording the adjusting entries until January 17, but she dated the entries December 31 as if they were recorded then. Cathi also made every effort to comply with the president’s request.

Instructions
(a) Who are the stakeholders in this situation?
(b) What are the ethical considerations of (1) the president’s request and (2) Cathi’s dating the adjusting entries December 31?
(c) Can Cathi accrue revenues and defer expenses and still be ethical?

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BYP 2-4 Lisa Ortega is president of Ortega Riding Academy, Inc.

ACCT 100 : Introduction to Financial Accounting
San Francisco State University (SFSU)

Financial Accounting
Jerry J. Weygandt

Decision Making Across The Organization

BYP 2-4 Lisa Ortega is president of Ortega Riding Academy, Inc. The academy’s primary sources of revenue are riding fees and lesson fees, which are paid on a cash basis. Lisa also boards horses for owners, who are billed monthly for boarding fees. In a few cases, boarders
pay in advance of expected use. For its revenue transactions, the academy maintains the following accounts: AND SO ON

Instructions
With the class divided into groups, answer the following.
(a) Identify each journal entry that is correct. For each journal entry that is incorrect, prepare the entry that should have been made by the bookkeeper.
(b) Which of the incorrect entries would prevent the trial balance from balancing?
(c) What was the correct net income for May, assuming the bookkeeper reported net income of $4,500 after posting all 50 entries?
(d) What was the correct cash balance at May 31, assuming the bookkeeper reported a balance of $12,475 after posting all 50 entries (and the only errors occurred in the items listed above)?

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BYP 1-1 The actual financial statements of PepsiCo, as presented in the company’s 2005 Annual Report, are contained in Appendix A

ACCT 100 : Introduction to Financial Accounting
San Francisco State University (SFSU)

Financial Accounting
Jerry J. Weygandt

Financial Reporting Problem

BYP 1-1 The actual financial statements of PepsiCo, as presented in the company’s 2005 Annual Report, are contained in Appendix A (at the back of the textbook).
Instructions
Refer to PepsiCo’s financial statements and answer the following questions.
(a) What were PepsiCo’s total assets at December 31, 2005? At December 25, 2004?
(b)How much cash (and cash equivalents) did PepsiCo have on December 31, 2005?
(c) What amount of accounts payable did PepsiCo report on December 31, 2005? On December 25, 2004?
(d) What were PepsiCo’s net sales in 2003? In 2004? In 2005?
(e) What is the amount of the change in PepsiCo’s net income from 2004 to 2005?

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Sunday, July 4, 2010

21. The Rogers Corporation has a gross profit of $880,000 and $360,000 in depreciation expense.

FIN 200

Axia College of University of Phoenix (UoP)

Foundations of Financial Management
Block Hirt Danielsen

Introduction to Finance: Harvesting the Money Tree

Fin 200 Week One (Week 1) Solution


Assignment: Cash Flow Preparation

Chapter 2
21. The Rogers Corporation has a gross profit of $880,000 and $360,000 in depreciation expense. The Evans Corporation also has $880,000 in gross profit, with $60,000 in depreciation expense. Selling and administrative expense is $120,000 for each company .
Given that the tax rate is 40 percent, compute the cash flow for both companies. Explain the difference in cash flow between the two firms.

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20. Nova Electrics anticipated cash flow from operating activities of $6 million in 2008. It will need to spend $1.2 million on capital investments

FIN 200

Axia College of University of Phoenix (UoP)

Foundations of Financial Management
Block Hirt Danielsen

Introduction to Finance: Harvesting the Money Tree

Fin 200 Week One (Week 1) Solution


Assignment: Cash Flow Preparation

Chapter 2
20. Nova Electrics anticipated cash flow from operating activities of $6 million in 2008. It will need to spend $1.2 million on capital investments in order to remain competitive within the industry. Common stock dividends are projected at $.4 million and preferred stock dividends at $.55 million.
a. What is the firm’s projected free cash flow for the year 2008?
b. What does the concept of free cash flow represent?

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Complete Problems 20, 21 in Chapter 2 of Foundations of Financial Management

FIN 200

Axia College of University of Phoenix (UoP)

Foundations of Financial Management
Block Hirt Danielsen

Introduction to Finance: Harvesting the Money Tree

Fin 200 Week One (Week 1) Solution


Assignment: Cash Flow Preparation


* Resource: Ch. 2 of Foundations of Financial Management
* Due Date: Day 7 [post to the Individual forum]
* Complete Problems 20, 21 in Chapter 2 of Foundations of Financial Management.

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Saturday, July 3, 2010

25. Carter Paint Company has plants in nine midwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar

FIN 200

Axia College of University of Phoenix (UoP)

Foundations of Financial Management
Block Hirt Danielsen

Introduction to Finance: Harvesting the Money Tree

Fin 200 Week 3 Solution


Assignment: Pro Forma Statements

Chapter 4

25. Carter Paint Company has plants in nine midwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales.

BALANCE SHEET
(in $ millions)
Assets Liabilities and Stockholders’ Equity
Cash . . . . . . . . . . . . . . . . . . . . . . . . $ 5 Accounts payable . . . . . . . . . . . . . . $15
Accounts receivable. . . . . . . . . . . . . 15 Accrued wages . . . . . . . . . . . . . . . . 6
Inventory . . . . . . . . . . . . . . . . . . . . . 30 Accrued taxes . . . . . . . . . . . . . . . . . 4
Current assets . . . . . . . . . . . . . . . 50 Current liabilities . . . . . . . . . . . . . 25
Fixed assets . . . . . . . . . . . . . . . . . . 40 Notes payable . . . . . . . . . . . . . . . . . 30
Common stock . . . . . . . . . . . . . . . . . 15
Retained earnings . . . . . . . . . . . . . . 20
Total assets . . . . . . . . . . . . . . . . . . . $90 Total liabilities and
stockholders’ equity . . . . . . . . . . . $90

Carter Paint has an aftertax profit margin of 5 percent and a dividend payout ratio of 30 percent.
If sales grow by 10 percent next year, determine how many dollars of new funds are needed to finance the expansion. (Assume Carter Paint is already using assets at full capacity and that plant must be added.)

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BYP 1-4 Mary and Jack Gray, local golf stars, opened the Chip-Shot Driving Range Company on March 1, 2008

ACCT 100 : Introduction to Financial Accounting
San Francisco State University (SFSU)

Financial Accounting
Jerry J. Weygandt

Decision Making Across The Organization

BYP 1-4 Mary and Jack Gray, local golf stars, opened the Chip-Shot Driving Range Company on March 1, 2008. They invested $25,000 cash and received common stock in exchange for their investment. A caddy shack was constructed for cash at a cost of $8,000 and $800 was spent on golf balls and golf clubs. The Grays leased five acres of land at a cost of $1,000 per month and paid the first month’s rent. During the first month, advertising costs totaled $750, of which $150 was unpaid at March 31, and $400 was paid to members of the high school golf team for retrieving golf balls. All revenues from customers were deposited in the company’s bank account. On March 15, Mary and Jack received a dividend of $1,000. A $100 utility bill was received on March 31 but was not paid. On March 31, the balance in the company’s bank account was $18,900.
Mary and Jack thought they had a pretty good first month of operations. But, their estimates of profitability ranged from a loss of $6,100 to net income of $2,450.

Instructions
(a) How could the Grays have concluded that the business operated at a loss of $6,100? Was this a valid basis on which to determine net income?
(b) How could the Grays have concluded that the business operated a t a net income of $2,450? (Hint: Prepare a balance sheet at March 31.) Was the valid basis on which to determine net income?
(c) Without preparing an income statement, determine the actual net income for March.
(d) What was the revenue earned in March?

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P1-2A On August 31, the balance sheet of Nashville Veterinary Clinic Nashville Veterinary Clinic

ACCT 100 : Introduction to Financial Accounting
San Francisco State University (SFSU)

Financial Accounting
Jerry J. Weygandt

P1-2A On August 31, the balance sheet of Nashville Veterinary Clinic showed Cash $9,000, Accounts Receivable $1,700, Supplies $600, Office Equipment $6,000, Accounts Payable $3,600, Common Stock $13,000, and Retained Earnings $700. During September the following transactions occurred.
1. Paid $2,900 cash for accounts payable due.
2. Collected $1,300 of accounts receivable.
3. Purchased additional office equipment for $2,100, paying $800 in cash and the balance on account.
4. Earned revenue of $8,000 of which $2,500 is paid in cash and the balance is due in October.
5. Declared and paid a $1,000 cash dividend.
6. Paid salaries $1,700, rent for September $900, and advertising expenses $300.
7. Incurred utility expenses for month on account $170.
8. Received $10,000 from Capital Bank on a 6-month note payable.
Instructions
(a) Prepare a tabular analysis of the September transactions beginning with August 31 balances. The column headings should be as follows:
(b) Prepare an income statement for September, a retained earnings statement for September, and a balance sheet at September 30

Check: (a) Ending Retained Earnings $4,630
(b) Net Income $4,930; Total Assets $29,800

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