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17. S.V. Ltd. manufactures a single product, the standard mix of which are as follows: Material A 60%...S.V. Ltd. manufactures a single product, the standard mix of which are as follows:
Material A 60% at Rs.20 per kg
Material B 40% at Rs.10 per kg
Normal loss in the production is 20% of input. Due to shortage of material A, the standard mix was changed and the actual mix was as follows:
Material A 105 kg at Rs.20 per kg
Material B 95 kg at Rs.9 per kg
Actual loss was 35 kg, while the actual output was 165 kg
Calculate all material variances.
18. Goldstar Communications was organized on December 1 of the current year and had the following...
Goldstar Communications was organized on December 1 of the current year and had the following account balances at December 31, listed in tabular form:
Owners’
Assets = Liabilities + Equity
Office Notes Accounts
Cash + Land + Building + Equipment = Payable + Payable + Capital Stock
Balances $37,000 $95,000 $125,000 $51,250 $80,000 $28,250 $200,000
Early in January, the following transactions were carried out by Goldstar Communications:
1. Sold capital stock to owners for $35,000.
2. Purchased land and a small office building for a total price of $90,000, of which $35,000 was the value of the land and $55,000 was the value of the building. Paid $22,500 in cash and signed a note payable for the remaining $67,500.
3. Bought several computer systems on credit for $9,500 (30-day open account).
4. Obtained a loan from Capital Bank in the amount of $20,000. Signed a note payable.
5. Paid the $28,250 account payable due as of December 31.
Instructions
a. List the December 31 balances of assets, liabilities, and owners’ equity in tabular form as shown.
b. Record the effects of each of the five transactions in the format illustrated in Exhibit 2–11. Show the totals for all columns after each transaction.
19. A company budgeted unit sales of 204,000 units for January, 2012 and 240,000 units for February,...
A company budgeted unit sales of 204,000 units for January, 2012 and 240,000 units for February, 2012. The company has a policy of having an inventory of units on hand at the end of each month equal to 30% of next month's budgeted unit sales. If there were 61,200 units of inventory on hand on December 31, 2011, how many units should be produced in January, 2012 in order for the company to meet its goals?
a. 214,800 units
20. Assuming a constant mix of 3 units of Small for every 1 unit of Large
Assuming a constant mix of 3 units of Small for every 1 unit of Large. Small Large Total Sales $20 $30 VC 14 18 Total fixed costs $48,000 The breakeven point in units would be: 1. 4,800 units of Small and 1,600 units of Large 2. 1,200 units of Small and 400 units of Large 3. 1,600 units of Small and 4,800 units of Large 4. 400 units of Small and 1,200 units of Large
21. In the AD partnership, Allen's capital is $140,000 and Daniel's is $40,000 and they share income ...
In the AD partnership, Allen's capital is $140,000 and Daniel's is $40,000 and they share income in a 3:1 ratio, respectively. They decide to admit David to the partnership. Each of the following questions is independent of the others.
Refer to the information provided above. What amount will David have to invest to give him one-fifth percent interest in the capital of the partnership if no goodwill or bonus is recorded?
A. $60,000
B. $36,000
C. $50,000
D. $45,000
22. The right side of the balance sheet shows the firm's liabilities and stockholders' equity. Which...
The right side of the balance sheet shows the firm's liabilities and stockholders' equity. Which of the following best describes shareholders' equity? Equity is the sum of what the initial stockholders paid when they bought company shares and the earnings that the company has retained over the years. Equity is the difference between the paid-in capital and retained earnings. Now Inc. released its annual results and financial statements. Grace is reading the summary in the business pages of today's paper. In its annual report this year, Now Inc. reported a net income of $120 million. Last year, the company reported a retained earnings balance of $527 million, whereas this year it increased to $620 million. How much was paid out in dividends this year? $213 million $140 million $5 million $27 million
23. You are supplied with the following information in respect of XYZ Ltd for the ensuing year:...
You are supplied with the following information in respect of XYZ Ltd for the ensuing year: Production of the year, 69,000 units Finished goods in store, 3 months Raw material in store, 2 months’ consumption Production process, 1 month Credit allowed by creditors, 2 months Credit given to debtors, 3 months Selling price per unit, Rs 50 Raw material, 50 per cent of selling price Direct wages, 10 per cent of selling price Manufacturing and administrative overheads, 16 per cent of selling price Selling overheads, 4 per cent of selling price There is a regular production and sales cycle and wages overheads accrue evenly. Wages are paid in the next month of accrual. Material is introduced in the beginning of the production cycle. You are required to ascertain its working capital requirement.
24. Which of the following is a true statement? a. Pro forma financial statements are based on the...
Which of the following is a true statement? a. Pro forma financial statements are based on the company's budgets. b. Companies prepare pro forma financial statements to show how their performance for the period will "look" if actual results match the budget. c. Companies usually prepare a pro forma income statement, pro forma balance sheet, and pro forma statement of cash flows. d. All of these answers are correct.
25. 86. In January, 2006, Findley Corporation purchased a patent for a new consumer product for...
86. In January, 2006, Findley Corporation purchased a patent for a new consumer product for $720,000. At the time of purchase, the patent was valid for fifteen years. Due to the competitive nature of the product, however, the patent was estimated to have a useful life of only ten years. During 2011 the product was permanently removed from the market under governmental order because of a potential health hazard present in the product. What amount should Findley charge to expense during 2011, assuming amortization is recorded at the end of each year?
a.$480,000.
b.$360,000.
c.$72,000.
d.$48,000.
87. Day Company purchased a patent on January 1, 2010 for $360,000. The patent had a remaining useful life of 10 years at that date. In January of 2011, Day successfully defends the patent at a cost of $162,000, extending the patent’s life to 12/31/22. What amount of amortization expense would Kerr record in 2011?
a.$36,000
b.$40,500
c.$43,500
d.$54,000
88. On January 2, 2011, Klein Co. bought a trademark from Royce, Inc. for $1,000,000. An independent research company estimated that the remaining useful life of the trademark was 10 years. Its unamortized cost on Royce’s books was $800,000. In Klein’s 2011 income statement, what amount should be reported as amortization expense?
a.$100,000.
b.$ 80,000.
c.$ 50,000.
d.$ 40,000.
89. A company acquires a patent for a drug with a remaining legal and useful life of six years on January 1, 2009 for $1,800,000. The company uses straight-line amortization for patents. On January 2, 2011, a new patent is received for a timed-release version of the same drug. The new patent has a legal and useful life of twenty years. The least amount of amortization that could be recorded in 2011 is
a.$300,000.
b.$ 60,000.
c.$ 81,818.
d.$ 69,000.
90. Blue Sky Company’s 12/31/10 balance sheet reports assets of $5,000,000 and liabilities of $2,000,000. All of Blue Sky’s assets’ book values approximate their fair value, except for land, which has a fair value that is $300,000 greater than its book value. On 12/31/10, Horace Wimp Corporation paid $5,100,000 to acquire Blue Sky. What amount of goodwill should Horace Wimp record as a result of this purchase?
a.$ -0-
b.$100,000
c.$1,800,000
d.$2,100,000
91. Dotel Company’s 12/31/10 balance sheet reports assets of $6,000,000 and liabilities of $2,500,000. All of Dotel’s assets’ book values approximate their fair value, except for land, which has a fair value that is $400,000 greater than its book value. On 12/31/10, Egbert Corporation paid $6,100,000 to acquire Dotel. What amount of goodwill should Egbert record as a result of this purchase?
a.$ -0-
b.$ 100,000
c.$2,200,000
d.$2,600,000
92. Floyd Company purchases Haeger Company for $800,000 cash on January 1, 2011. The book value of Haeger Company’s net assets, as reflected on its December 31, 2010 balance sheet is $620,000. An analysis by Floyd on December 31, 2010 indicates that the fair value of Haeger’s tangible assets exceeded the book value by $60,000, and the fair value of identifiable intangible assets exceeded book value by $45,000. How much goodwill should be recognized by Floyd Company when recording the purchase of Haeger Company?
a.$ -0-
b.$180,000
c.$120,000
d.$75,000
93. General Products Company bought Special Products Division in 2010 and appropriately recorded $500,000 of goodwill related to the purchase. On December 31, 2011, the fair value of Special Products Division is $4,000,000 and it is carried on General Product’s books for a total of $3,400,000, including the goodwill. An analysis of Special Products Division’s assets indicates that goodwill of $400,000 exists on December 31, 2011. What goodwill impairment should be recognized by General Products in 2011?
a.$0.
b.$200,000.
c.$50,000.
d.$300,000.
94. During 2011, Bond Company purchased the net assets of May Corporation for $1,000,000. On the date of the transaction, May had $300,000 of liabilities. The fair value of May's assets when acquired were as follows:
Current assets$ 540,000
Noncurrent assets 1,260,000
$1,800,000
How should the $500,000 difference between the fair value of the net assets acquired ($1,500,000) and the cost ($1,000,000) be accounted for by Bond?
a.The $500,000 difference should be credited to retained earnings.
b.The $500,000 difference should be recognized as a gain.
c.The current assets should be recorded at $540,000 and the noncurrent assets should be recorded at $760,000.
d.A deferred credit of $500,000 should be set up and then amortized to income over a period not to exceed forty years.
95. The following information is available for Barkley Company’s patents:
Cost$1,720,000
Carrying amount860,000
Expected future net cash flows800,000
Fair value650,000
Barkley would record a loss on impairment of
a.$ 60,000.
b.$210,000.
c.$860,000.
d.$920,000.
26. 11) Decision-support systems often use information from external sources. 12) ESSs are designed to..
11) Decision-support systems often use information from external sources.
12) ESSs are designed to serve the middle management of the organization.
13) ESSs are designed to incorporate data about external events, but they also draw summarized information from internal MIS and DSS.
14) ESSs are designed primarily to solve specific problems.
15) Information supplied by an enterprise system is structured around cross-functional business processes.
16) Supply chain management systems are more externally oriented than enterprise systems.
17) A business is a formal or informal organization created to sell services or products.
18) Enterprise systems do not utilize order transaction data.
19) Teams are formal business groups that are created to accomplish a specific task.
20) A business process is a single step taken in a set of logically related activities that accomplish a sp
27. Mercer Asbestos Removal Company removes potentially toxic asbestos insulation and related products f
Mercer Asbestos Removal Company removes potentially toxic asbestos insulation and related products from buildings. There has been a long-simmering dispute between the companyA????1s estimator and the work supervisors. The on-site supervisors claim that the estimators do not adequately distinguish between routine work such as removal of asbestos insulation around heating pipes in older homes and nonroutine work such as removing asbestos-contaminated ceiling plaster in industrial buildings. The on-site supervisors believe that nonroutine work is far more expensive than routine work and should bear higher customer charges. The estimator sums up his position in this way: A????1My job is to measure the area to be cleared of asbestos. As directed by top management, I simply multiply the square footage by $2.80 to determine the bid price. Since our average cost is only $2.30 per square foot, that leaves enough cushion to take care of the additional costs of nonroutine work that shows up. Besides, it is difficult to know what is routine or not routine until you actually start tearing things apart.A????1
To shed light on this controversy, the company initiated an activity -based costing study of all of its costs. Data from the activity -based costing system follow:
activity Cost Pool Activity Measure Total Activity
Removing asbestos Thousands of square feet 800 thousand square feet
Estimating and job setup Number of jobs 400 jobs
Working on nonroutine jobs Number of nonroutine jobs 100 nonroutine jobs
Other (costs of idle capacity and
organization-sustaining costs) None
Note: The 100 nonroutine jobs are included in the total of 400 jobs. Both nonroutine jobs and routine jobs require estimating and setup .
Costs for the Year
Wages and salaries $ 332,000
Disposal fees 740,000
Equipment depreciation 90,000
On-site supplies 54,000
Office expenses 240,000
Licensing and insurance 440,000
Total cost $ 1,896,000
Distribution of Resource Consumption Across activities
Removing Asbestos Estimating and Job setup Working on Nonroutine Jobs Other Total
Wages and salaries 50 % 10 % 30 % 10 % 100 %
Disposal fees 70 % 0 % 30 % 0 % 100 %
Equipment depreciation 40 % 5 % 20 % 35 % 100 %
On-site supplies 60 % 25 % 15 % 0 % 100 %
Office expenses 10 % 40 % 15 % 35 % 100 %
Licensing and insurance 25 % 0 % 60 % 15 % 100 %
1. Perform the first-stage allocation of costs to the activity cost pools.
2. compute the activity rates for the activity cost pools.
3. Using the activity rates you have computed, determine the total cost and the average cost per thousand square feet of each of the following jobs according to the activity-based costing system.(Round the "Average cost" to 2 decimal places.)
a. A routine 1,000-square-foot asbestos removal job.
b. A routine 2,000-square-foot asbestos removal job.
c. A nonroutine 2,000-square-foot asbestos removal job.
Please explain and show all work. Use tables where needed.
28. Explain the importance of periodic reporting and the time period assumption.
1. Explain the importance of periodic reporting and the time period assumption.
2. Explain accrual accounting and how it improves financial statements.
3. Identify the types of adjustments and their purpose.
4. Explain how accounting adjustments link to financial statements
29. During 2017, its first year of operations as a delivery service, Persimmon Corp. entered into the...
During 2017, its first year of operations as a delivery service, Persimmon Corp. entered into the following transactions.
1. Issued shares of common stock to investors in exchange for $100,000 in cash.
2. Borrowed $45,000 by issuing bonds.
3. Purchased delivery trucks for $60,000 cash.
4. Received $16,000 from customers for services performed.
5. Purchased supplies for $4,700 on account.
6. Paid rent of $5,200.
7. Performed services on account for $10,000.
8. Paid salaries of $28,000.
9. Paid a dividend of $11,000 to shareholders
Instructions
Using the following tabular analysis, show the effect of each transaction on the accounting equation. Put explanations for changes to Stockholders’ Equity in the right-hand margin. Use Illustration 3-3 (page 99) as a model.
30. D1. What makes accounting a valuable discipline? D2. ConCept ▶ Are all economic events...
D1. What makes accounting a valuable discipline?
D2. ConCept ▶ Are all economic events business transactions?
D3. Sole proprietorships, partnerships, and corporations differ legally; how and why does accounting treat them alike?
