ACCT 615: Selected Topics in Empirical Accounting Research

Published: 1 year ago

ACCT 615: Selected Topics in Empirical Accounting Research

17. A company purchased a weaving machine for $190,000. The machine has a useful life of 8 years and ...

A company purchased a weaving machine for $190,000. The machine has a useful life of 8 years and a residual value of $10,000. It is estimated that the machine could produce 75,000 bolts of woven fabric over its useful life. In the first year, 15,000 bolts were produced. In the second year, production increased to 19,000 units. Using the units-of-production method, what is the amount of depredation expense that should be recorded for the second year? A) $48, 133 B) $45, 600 C) $22, 500 D) $23, 750 E) $81, 600

18. Brown Glory Corp. has sales revenue of $150,000, sales discounts of $12,000, sales returns and...

Brown Glory Corp. has sales revenue of $150,000, sales discounts of $12,000, sales returns and allowances of $24,000, and cost of goods sold of $60,000. What would be the net sales revenue of Brown Glory Corp.? a. $102,000 b. $54,000 c. $90,000 d. $114,000

19. Which of the following instruments would not be classified as a financial liability?

Which of the following instruments would not be classified as a financial liability?

(a) A preference share that will be redeemed by the issuer for a fixed amount of cash on a future date (i.e., the entity has an outstanding share that it will repurchase at a future date).

(b) A contract for the delivery of as many of the entity’s ordinary shares as are equal in value to $100,000 on a future date (i.e., the entity will issue a variable number of own shares in return for cash at a future date).

(c) A written call option that gives the holder the right to purchase a fixed number of the entity’s ordinary shares in return for a fixed price (i.e., the entity would issue a fixed number of own shares in return for cash, if the option is exercised by the holder, at a future date).

(d) An issued perpetual debt instrument (i.e., a debt instrument for which interest will be paid for all eternity, but the principal will not be repaid).

20. Baldwin’s product Bell has material costs that are rising from $6.80 to $7.80. Assume that peri...

21. Ratio Analysis, DuPont equation, Barry’s strengths and weaknesses

RATIO ANALYSIS Data for Barry Computer Co. and its industry averages follow.

a. Calculate the indicated ratios for Barry.

b. Construct the DuPont equation for both Barry and the industry.

c. Outline Barry’s strengths and weaknesses as revealed by your analysis.

d. Suppose Barry had doubled its sales as well as its inventories, accounts receivable, and common equity during 2008. How would that information affect the validity of your ratio analysis?

aCalculation is based on a 365-day year.

22. For each of the following misstatements in property, plant, and equipment accounts, state an...

For each of the following misstatements in property, plant, and equipment accounts, state an internal control that the client can implement to prevent the misstatement from occurring and a substantive audit procedure that the auditor can use to discover the misstatement:

1. Computer equipment that is abandoned or traded for replacement equipment is not removed from the accounting records.

2. Depreciation expense for manufacturing operations is charged to administrative expenses.

3. The asset lives used to depreciate equipment are less than reasonable, expected useful lives.

4. Capitalizable assets are routinely expensed as repairs and maintenance, perishable tools, or supplies expense.

5. Acquisitions of property are recorded at incorrect amounts.

6. A loan against existing equipment is not recorded in the accounting records. The cash receipts from the loan never reached the company because they were used for the down payment on a piece of equipment now being used as an operating asset. The equipment is also not recorded in the records.

7. Tools necessary for the maintenance of equipment are stolen by company employees for their personal use.

23. Glenn Grimes is the founder and president of Heartland Construction, a real estate development ve...

Glenn Grimes is the founder and president of Heartland Construction, a real estate development venture. The business transactions during February while the company was being organized are listed as follows.

Required:

a. Prepare journal entries to record the above transactions. Select the appropriate account titles from the following chart of accounts.

b. Indicate the effects of each transaction on the company's assets, liabilities, and owners' equity for the month of February. The Feb. 1 transaction is provided for you.

24. adjusting entries for subsequent journal entries

Problem 3-2A Preparing adjusting and subsequent journal entries LO C1, A1, P1

25. Harrison Company makes two products and uses a traditional costing system...

Harrison Company makes two products and uses a traditional costing system in which a single plantwide predetermined overhead rate is computed based on direct labor-hours. Data for the two products for the upcoming year follow:

These products are customized to some degree for specific customers.

Required:

1. The company’s manufacturing overhead costs for the year are expected to be $576,000. Using the company’s traditional costing system, compute the unit product Costs for the two products.

2. Management is considering an activity-based costing system in which half of the overhead would continue to be allocated on the basis of direct labor-hours and half would be allocated on the basis of engineering design time. This time is expected to be distributed as follows during the upcoming year:

Compute the unit product costs for the two products using the proposed ABC system.

3. Explain why the product costs differ between the twosystems.

26. Trenton Travel Agency purchased land for $90,000 cash on December 10, 2014. At December 31, 2014,...

Trenton Travel Agency purchased land for $90,000 cash on December 10, 2014. At December 31, 2014, the land"s value has increased to $93,000. What amount should be reported for land on Trenton"s balance sheet at December 31, 2014? Explain.

27. THE CRIMSON PRESS CURRICULUM CENTER THE CRIMSON GROUP, INC....

THE CRIMSON PRESS CURRICULUM CENTER THE CRIMSON GROUP, INC.

Converse Health System I don't get it! We switched St. Luke's from a profit center to a standard expense center, and yet they continue to encourage the PCPs to admit patients that we all know could be treated as outpatients. What's going on? Maybe we should just switch back to profit centers and be done with it.

The speaker was Gus Mahler, Chief Financial Officer of Converse Health System (CHS). He was speaking with Rob Shuman, M.D.. CHS's Senior Vice President for Medical Affairs, about his concern that, despite a change in the control structure and incentive system at one of the sys-tem's hospitals, many primary care physicians (PCPs) were continuing to admit to the hospital pa-tients who could be treated appropriately in a less expensive setting. He wanted to enlist Dr. Shu-man's help with the problem.

BACKGROUND

Converse Health System began through a merger of St. Luke's Hospital and Medical Center with HealthGroup. St. Luke's was a 283 bed tertiary care facility located in downtown Mansfield. HealthGroup consisted of two hospitals: Mansfield Memorial Hospital and Lakeview Medical Center. Mansfield Memorial was a 454 bed tertiary care facility located approximately 2 miles from St. Luke's. Lakeview was a smaller hospital about 2 miles from Mansfield and St. Luke's. The merger also involved a large visiting nurse association and several smaller providers, in-cluding an occupational medicine group practice, two urgent care centers, a sub-acute care hospital. a skilled nursing facility, a birthing center, and a mortuary. Some two years later, the management and medical staffs at Mansfield, St. Luke's, and Lakeview were consolidated. For the next two years. the three hospitals. plus the other providers and several physician group practices that had been acquired, were run as Affiliated Health Care. Two years after that, Affiliated was acquired by SecureHealth, a large (150,000 member) health maintenance organization. The resulting entity was named Converse Health System in memory of the board member who had initiated the acquisition and who had died shortly before its consumma-tion. During the next two years, SecureHealth's enrollees doubled, slightly exceeding 300,000. In addition, Converse acquired several more physician group practices, and became, in the words of Kerry Johnson, its CEO, a fully-integrated and exclusive integrated delivery system. That is, with a few exceptions, patients received all their care within the system, and the system's operating entities provided care only to the enrollees of SecureHealth.

Mansfield Area Market Approximately 85 percent of the Mansfield metropolitan area population was enrolled in man-aged care plans. Over 70 percent of the Medicare eligible population and all of the Medicaid popu-lation were enrolled in federally qualified HMOs. Inpatient utilization for the Mansfield area aver-aged 340 days per 1,000, well below the national average. There were seven hospitals in the area, operating at an overall occupancy of about 65 percent. The Mansfield area market was dominated by Converse and one other major delivery system. Like many markets, Mansfield was characterized by an oversupply of physicians, especially spe-cialists, which created a highly competitive physician market. Because of this competition, one of the exceptions to Converse's fully integrated and exclusive status was that it did not own a large number of specialist physician groups. Instead, it had contractual relationships with physician prac-tices in each specialty; the specialists also provided care to patients outside SecureHealth.

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28. Which of the following statements about break-even analysis is most likely true? A) It determine...

Which of the following statements about break-even analysis is most likely true? A) It determines how customer-perceived value changes with value-added pricing. B) It is a tool used to calculate fixed costs. C) It is used to determine the maximum price that can be set on a product. D) It is a tool marketers use to examine the relationship between supply and demand. E) It fails to consider customer value and the relationship between price and demand. Everyday low pricing is a cost-based pricing strategy. A) True B) False Value-based pricing is often product driven, and customer value perceptions arc secondary. A) True B) False An airline runs a 6-month promotional program where all baggage fees arc waived. It is using a cost-based pricing strategy. A) True B) False Each PC produced by HP involves a cost of computer chips, wires, plastic, packaging, and other inputs Although these costs tend to be the same for each unit produced, they are called costs because the total changes based on the number of units produced. A) fixed B) variable C) target D) capital E) payroll Radox, a luxury watch brand, identifies a market segment that is willing to pay premium prices for its watches, and Radox managers select an ideal selling price. Managers then determine the costs to create watches that meet the ideal selling price. The company's pricing approach is referred to as _____. A) mass production B) cost-plus pricing C) target costing D) value-added pricing E) target return pricing

29. The Dilly Company marks up all merchandise at 25% of gross purchase price. 22-23 Budgeted Cash Recei

The Dilly Company marks up all merchandise at 25% of gross purchase price. 22-23 Budgeted Cash Receipts and Disbursements The Dilly Company marks up all merchandise at 25% of gross purchase price. All pur- chases are made on account with terms of 1/10, net/60. Purchase discounts, which are recorded as miscellaneous income, are always taken. Normally, 60% of each month's purchases are paid for in the month of purchase while the other 40% are paid during the first 10 days of the first month after purchase. Inventories of merchandise at the end of each month are kept at 30% of the next month's projected cost of goods sold. Terms for sales on account are 2/10, net/30. Cash sales are not subject to discount. Fifty percent of each month's sales on account are collected during the month of sale, 45% are collected in the succeeding month, and the remainders are usually uncollect- ible. Seventy percent of the collections in the month of sale are subject to discount while 10% of the collections in the succeeding month are subject to discount. Projected sales data for selected months follow: Sales on Account-Gross Cash Sales December January February March $1,900,000 1,500,000 1,700,000 1,600,000 $400,000 250,000 350,000 300,000 Prepare a schedule of budgeted cash receipts and disbursements for the months of January and February (AICPA adapted)

30. Exercise 7-6 Z Your answer is partially correct. Try again. Presented below is information from K...

Exercise 7-6 Z Your answer is partially correct. Try again. Presented below is information from Kingbird Computers Incorporated. July 1 sold $28,900 of computers to Robertson Company with terms 2/15, n/60. Kingbird uses the gross method to record cash discounts. Kingbird estimates allowances of $1,190 will be honored on these sales. 10 Kingbird received payment from Robertson for the full amount owed from the July transactions 17 sold $281,900 in computers and peripherals to The Clark Store with terms of 1/10, n/30. 30 The Clark Store paid Kingbird for its purchase of July 17.

31. Val's Hair Emporium operates a hair salon. Its unadjusted trial balance as of December 31, 2013, ...

HELP! if you could explain some of these red ones that would be awesome!!

Val's Hair Emporium operates a hair salon. Its unadjusted trial balance as of December 31, 2013, follows along with information about selected accounts Account Names Debit Further Information 3,800 Cash As reported on December 31 bank state ment Supplies 4300 Based on count, only $1,300 of supplies still exist. This amount was paid November 1 for rent through the end of January. 1,500 This represents the total amount of bills received for utilities through December 15. Val estimates that the company has received $450 of utility services through December 31 for which it has not yet been billed Stylists have not yet been paid $150 for their work on December 31 The company has paid last year's income taxes but not this year's taxes 2,000 This amount was contributed to the company in prior years 900 This is the balance reported at the end of last year. 75,800 Customers pay cash when they receive services. 6000 Prepaid Rent Accounts Payable Wages Payable ncome Tax Payable Contributed Capita Retained Earnings Service Revenue Wages Expense 29,100 This is the cost of stylist wages through December 30 This is the cost of utilities through December 15. This year's rent was $2,000 per month This is the cost of supplies used through November 30 The company has an average tax rate of 30%. Utilities Expense 12,200 Rent Expense 20,000 Supplies 4,800 nSe ncome Tax Expense 80,200 80,200 Totals

32. Dozier Company produced and sold 1,000 units during its first month of operations. It reported th...

Dozier Company produced and sold 1,000 units during its first month of operations. It reported the following costs and expenses for the month: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total manufacturing overhead Variable selling expense Fixed selling expense Total selling expense Variable administrative expense Fixed administrative expense Total administrative expense $83,000 $ 42,000 s 20,600 32,200 $ 52,800 $14,800 23,600 38,400 $ 5,400 27,800 $33,200 Required 1. With respect to cost classifications for preparing financial statements a. What is the total product cost? b. What is the total period cost? 2. With respect to cost classifications for assigning costs to cost objects a. What is total direct manufacturing cost? b. What is the total indirect manufacturing cost? 3. With respect to cost classifications for manufacturers a. What is the total manufacturing cost? b. What is the total nonmanufacturing cost? C. What is the total conversion cost and prime cost? 4. With respect to cost classifications for predicting cost behavior: a. What is the total variable manufacturing cost? b. What is the total fixed cost for the company as a whole? C. What is the variable cost per unit produced and sold? 5. With respect to cost classifications for decision making a. If Dozier had produced 1,001 units instead of 1,000 units, how much incremental manufacturing cost would it have incurred to make the additional unit?

33. answer and show your solution Problem 1-3 (IAA) Manchester Company provided the following informatio

December 31, 2020: Income taxes withheld from employees 900,000 Cash balance at First State Bank 2.500.000 Cash overdraft at Harbor Bank 1,300,000 Accounts receivable with credit balance 750,000 Estimated expenses of meeting warranties on merchandise previously sold 500,000 Estimated damages as a result of unsatisfactory 1,500,000 performance on a contract 3,000,000 Accounts payable Deferred serial bonds, issued at par and bearing interest at 12%, payable in semiannual installment of P500,000 due April 1 and October 1 of each year, the last bond to be paid on October 1, 2026. Interest is also paid semiannually. 5.000.000 Stock dividend payable 2,000,000 Required: S.IN Compute the total current liabilitics on December 31, 2020. Problem 14 (AICPA Adapted) Multiple Company provided the following information on December 31, 2020: Accounts payable after deducting debit balances in suppliers' accounts of P100,000 500,000 Accrued liabilities 50,000 Note payable-due March 31, 2021 1,000,000 Note payable-due May 1, 2021 800,000 Bonds payable-due December 31, 2022 2,000,000 On March 1, 2021 before the 2020 financial statements were issued, the note payable of P1,000,000 was replaced by an 18-month note for the same amount. The entity is considering similar action on the P800,000 note due on May 1, 2021. The financial statements were issued on March 31, 2021. Required: 1. Compute total current liabilities. 2. Compute total noncurrent liabilities. 16