1. A contingent loss should be reported in a footnote to the financial statements rather than being accrued if: (Points : 1)

MULTIPLE CHOICE

1. A contingent loss should be reported in a footnote to the financial statements rather than being accrued if: (Points : 1)

2. Which of the following investment securities held by Zoogle Inc. may be classified as held-to-maturity securities in its balance sheet? (Points : 1)

3. Large, highly rated firms sometimes sell commercial paper: (Points : 1)

4. Which of the following increases the investment account under the equity method of accounting? (Points : 1)

5. When the equity method of accounting for investments is used by the investor, the investment account is increased when: (Points : 1)

6. Which of the following is a contingency that would most likely require accrual? (Points : 1)

7. When a product or service is delivered for which a customer advance has been previously received, the appropriate journal entry includes: (Points : 1)

8. Other things being equal, most managers would prefer to report liabilities as noncurrent rather than current. The logic behind this preference is that the long-term classification permits the company to report: (Points : 1)

9. The key accounting considerations relating to accounts payable are: (Points : 1)

10. The investment category for which the investor's "positive intent and ability to hold" is important is: (Points : 1)

Click here for the solution: 1. A contingent loss should be reported in a footnote to the financial statements rather than being accrued if: (Points : 1)

Wilmington Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department

PR 20-3A Wilmington Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling Departments, emerging as finished chemicals. The balance in the account Work in Process - Filling was as follows on December 1, 2010:

AND SO ON

INSTRUCTIONS:
1. Prepare a cost of production report for the Filling department for December.
2. Journalize the entries for costs transferred from Reaction to Filling and the cost transferred from filling to finished goods.
3. Determine the increase or decrease in the cost per equivalent unit from November to December for direct materials and conversion costs.
4. Discuss the uses of the cost of production report and the results of part (3).


Click here for the solution: Wilmington Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department

An audit client is being sued for $500,000 for discriminatory hiring practices

15-32 (Contingencies) An audit client is being sued for $500,000 for discriminatory hiring practices.

Required:
Indicate the appropriate action the auditor should take for each of the following independent responses to the letter of audit inquiry:
a. The lawyer stated that the client had a meritorious defense.
b. The lawyer stated that there is only a remote chance that the client will lose. The client did not accrue any contingent loss or disclose this situation.
c. The lawyer stated the client will probably lose, and the amount of the loss could be anywhere between $250,000 and $500,000, with no amount within that range being more likely than another. The client disclosed this situation but did not accrue a loss.
d. The lawyer stated that there is a reasonable possibility that the client will lose. The client disclosed this situation but did not accrue a loss.
e. The lawyer stated the client will probably lose between $250,000 and $500,000, but most likely will lose $400,000. The client accrued a $250,000 contingent loss and disclosed the situation.


Click here for the solution: An audit client is being sued for $500,000 for discriminatory hiring practices

Moon Company includes 1 coupon in each box of soap powder that it packs, 20 coupons being redeemable for a premium consisting of a kitchen utensil

Moon Company includes 1 coupon in each box of soap powder that it packs, 20 coupons being redeemable for a premium consisting of a kitchen utensil. In 2010, Moon Company purchased 12,000 premiums at $1.00 each and sold 360,000 boxes of soap powder @ $4.00 per box. Based on past experience, it is estimated that 60% of the coupons will be redeemed. During 2010, 96,000 coupons were presented for redemption.

During 2011, 19,000 premiums were purchased at $1.10. The company sold 800,000 boxes of soap at $4.00 and 330,000 coupons were presented for redemption.

Instructions
Prepare all the entries that would be made relative to sales of soap powder and to the premium plan in both 2010 and 2011. Assume a FIFO inventory flow.


Click here for the solution: Moon Company includes 1 coupon in each box of soap powder that it packs, 20 coupons being redeemable for a premium consisting of a kitchen utensil