1. Nu Company reported the following pretax data for its first year of operations

MULTIPLE CHOICE

1. Nu Company reported the following pretax data for its first year of operations.
Net sales 2,800 Cost of goods available for sale 2,500 Operating expenses 880 Effective tax rate 40% Ending inventories: If LIFO is elected 820 If FIFO is elected 1,060
What is Nu's gross profit percentage if it elects LIFO? (Points : 1)

2. The use of LIFO during a long inflationary period can result in: (Points : 1)

3. The primary reason for the popularity of LIFO is that it gives: (Points : 1)

4. In determining the cost-to-retail percentage for the current year,: (Points : 1)

5. Inventory does not include: (Points : 1)

6. So. California Inc., through no fault of its own, lost an entire plant due to an earthquake on May 1, 2006. In preparing their insurance claim on the inventory loss, they developed the following data: Inventory January 1, 2006, $300,000; sales and purchases from January 1, 2006, to May 1, 2006, $1,300,000 and $875,000, respectively. So. California consistently reports a 40% gross profit. The estimated inventory on May 1, 2006, is: (Points : 1)

7. In a period when prices are falling and inventory quantities are stable, the lowest taxable income would be reported by using the inventory method of: (Points : 1)

8. To determine the value of a LIFO layer, using dollar-value LIFO retail: (Points : 1)

9. When using the gross profit method to estimate ending inventory, it is not necessary to know: (Points : 1)

10. The inventory method that will always produce the same amount for cost of goods sold in a periodic inventory system as in a perpetual inventory system would be: (Points : 1)

Click here for the solution: 1. Nu Company reported the following pretax data for its first year of operations

During its first year of operations, Collin Raye Corporation had the following transactions pertaining to its common stock

E15-1 (Recording the Issuances of Common Stock) During its first year of operations, Collin Raye Corporation had the following transactions pertaining to its common stock.

Jan 10 Issued 80,000 shares for case at $6 per share
Mar 1 Issued 5,000 shares to attorneys in payment of a bill for $35,000 for services rendered in helping the company to incorporate.
July 1 Issued 30,000 shares for cash at $8 per share

Instructions
a.) Prepare the journal entries for these transactions, assuming that the common stock has a par value of $5 per share.
b.) Prepare the journal entries for these transactions assuming that the common stock is no par with a stated value of $3 per share.

Click here for the solution: During its first year of operations, Collin Raye Corporation had the following transactions pertaining to its common stock

The Sanding Department of Ortiz Furniture Company has the following production and manufacturing cost data for March 2008, the first month of operation

ACC 560 Week 2 Assignment

E3-7 The Sanding Department of Ortiz Furniture Company has the following production and manufacturing cost data for March 2008, the first month of operation.

Production: 12,000 units finished and transferred out; 3,000 units started that are 100% complete as to materials and 20% complete as to conversion costs.
Manufacturing costs: Materials $33,000; labor $27,000; overhead $36,000.

Prepare a production cost report.

Click here for the solution: The Sanding Department of Ortiz Furniture Company has the following production and manufacturing cost data for March 2008, the first month of operation

The T accounts below summarize the ledger of Simon Landscaping Company at the end of the first month of operations

E2-10 The T accounts below summarize the ledger of Simon Landscaping Company at the end of the first month of operations.

Cash No. 101
4/1 15,000 4/15 600
4/12 900 4/25 1,500
4/29 400
4/30 1,000

Accounts Receivable No. 112
4/7 3,200 4/29 400

Supplies No. 126
4/4 1,800

Accounts Payable No. 201
4/25 1,500 4/4 1,800

Unearned Revenue No. 205
4/30 1,000

Common Stock No. 311
4/1 15,000

Service Revenue No. 400
4/7 3,200
4/12 900

Salaries Expense No. 726
4/15 600

Instructions
(a) Prepare the complete general journal from which the postings to Cash were made.
(b) Prepare a trial balance at April 30, 2008.

Click here for the solution: The T accounts below summarize the ledger of Simon Landscaping Company at the end of the first month of operations

Selected transactions for D. Reyes, Inc., an interior decorating firm, in its first month of business, are as follows

E2-2 Selected transactions for D. Reyes, Inc., an interior decorating firm, in its first month of business, are as follows.

Jan. 2 Invested $10,000 cash in the business in exchange for common stock.
3 Purchased used car for $4,000 cash for use in business.
9 Purchased supplies on account for $500.
11 Billed customers $1,800 for services performed.
16 Paid $200 cash for advertising.
20 Received $700 cash from customers billed on January 11.
23 Paid creditor $300 cash on balance owed.
28 Declared and paid a $1,000 cash dividend.

Instructions
For each transaction indicate the following.
(a) The basic type of account debited and credited (asset, liability, stockholders’ equity).
(b) The specific account debited and credited (cash, rent expense, service revenue, etc.).
(c) Whether the specific account is increased or decreased.
(d) The normal balance of the specific account.

Post journal entries to standard form of account.

Use the following format, in which the January 2 transaction is given as an example.
Account Debited Account Credited
(a) (b) (c) (d) (a) (b) (c) (d)
Basic Specific Normal Basic Specific Normal
Date Type Account Effect Balance Type Account Effect Balance
Jan. 2 Asset Cash Increase Debit Stockholders' Stock Common Increase Credit

Click here for the solution: Selected transactions for D. Reyes, Inc., an interior decorating firm, in its first month of business, are as follows

A tabular analysis of the transactions made during August 2012 by Nigel Company during its first month of operations is shown below

E3-4 A tabular analysis of the transactions made during August 2012 by Nigel Company during its first month of operations is shown below. Each increase and decrease in stockholders’ equity is explained.

Instructions
(a) Describe each transaction.
(b) Determine how much stockholders’ equity increased for the month.
(c) Compute the net income for the month.

Click here for the solution: A tabular analysis of the transactions made during August 2012 by Nigel Company during its first month of operations is shown below

In its first month of operation, Moraine Company purchased 100 units of inventory for $6, then 200 units for $7, and finally 140 units for $8

BE6-5 In its first month of operation, Moraine Company purchased 100 units of inventory for $6, then 200 units for $7, and finally 140 units for $8. At the end of the month, 180 units remained. Compute the amount of phantom profit that would result if the company used FIFO rather than LIFO. Explain why this amount is referred to as phantom profit. The company uses the periodic method.

Click here for the solution: In its first month of operation, Moraine Company purchased 100 units of inventory for $6, then 200 units for $7, and finally 140 units for $8

Selected transactions completed by Blackwell Company during its first fiscal year ending December 31 were as follow (Chapter 11 Comprehensive Problem 3)

Chapter 11 Comprehensive Problem 3 Selected transactions completed by Blackwell Company during its first fiscal year ending December 31 were as follow:

Jan. 2. Issued a check to establish a petty cash fund of $2,000.
Mar. 4. Replenished the petty cash fund, based on the following summary of petty cash receipts: office supplies, $789; miscellaneous selling expense, $256; miscellaneous administrative expense, $378.

AND SO ON

Click here for the solution: Selected transactions completed by Blackwell Company during its first fiscal year ending December 31 were as follow (Chapter 11 Comprehensive Problem 3)

At the end of its first year of operations on December 31, 2010, CNU Company's accounts show the following

P12-2A At the end of its first year of operations on December 31, 2010, CNU Company's accounts show the following.

Partner Drawings Capital
Reese Caplin 23,000 48,000
Phyllis Newell 14,000 30,000
Betty Uhrich 10,000 25,000

The capital balance represents each partner's initial capital investment. Therefore, net income or net loss for 2010 has not been closed to the partners' capital accounts.

 a. Journalize the entry to record the division of net income for the year 2010 under each of the following independent assumptions.
1. Net income is $30,000. Income is shared 6 : 3 : 1.
2. Net income is $37,000. Caplin and Newell are given salary allowances of $15,000 and $10,000, respectively. The remainder is shared equally.
3. Net income is $19,000. Each partner is allowed interest of 10% on beginning capital balances. Caplin is given a $12,000 salary allowance. The remainder is shared equally.

b. Complete the schedule showing the division of net income under assumption (3) above.

c. Complete the partners' capital statement for the year under assumption (3) above.

Click here for the solution: At the end of its first year of operations on December 31, 2010, CNU Company's accounts show the following

During her first quarter review of the financial statements, Debra Bell, the CFO of HAL Computer Corporation

Problem 12-7 Foreign Currency Risk

During her first quarter review of the financial statements, Debra Bell, the CFO of HAL Computer Corporation, was distressed to notice the company’s transaction loss had been steadily increasing each month. HAL is a publicly held manufacturer of “PC clone” personal computers. Like most manufacturers of its kind, HAL does not manufacture domestically but utilizes lower cost offshore suppliers for components and subcontractors for assembly. As it is HAL’s policy to denominate foreign contracts in U.S. dollars whenever possible, the increase in transaction losses was particularly puzzling. Subsequent conversations with HAL’s controller, Tom Stewart, revealed all new contracts had been denominated in foreign currencies (primarily the South Korean won and Taiwanese dollar) in order to obtain more favorable purchase terms. Further, Mr. Stewart believed that the U.S. dollar would strengthen due to it being an election year. Since these contracts specify delivery and payment at various dates over the next 12 months, tremendous potential for exposure exists for the company if the dollar continues to decline against the major foreign currencies.

Required:
A. Mr. Stewart executed all new foreign contracts in foreign currencies in the belief it would help the company. (1) Do you think he was justified in his actions given the company policy? (2) On what basis did you decide if the controller was justified or not? (3) Was the loss a factor in your decision? Is this appropriate?
B. A substantial amount of foreign denominated contracts already exist for goods and services not yet received. (1) What actions may HAL take to minimize potential losses? (2) What are the advantages and disadvantages of these actions? (3) What implication does each of these scenarios have for financial statement disclosure?
C. Assume that you are Ms. Bell, and you are concerned about how the Board of Directors and the stockholders may react. Additionally, you are about to purchase a new home and are planning to sell some HAL stock for the down payment. (1) After carefully considering all of your options, what action do you decide to take? (2) Did concern over the Board, stockholders, or HAL’s stock price enter into your decision? Why or why not?

Click here for the solution: During her first quarter review of the financial statements, Debra Bell, the CFO of HAL Computer Corporation

Webster Consulting experienced the following transactions for 2012, its first year of operations and 2013

Problem 1-30 Prepare Financial Statements for Two Complete Accounting Cycles

Webster Consulting experienced the following transactions for 2012, its first year of operations and 2013. Assume that all transactions involve the receipt or payment of cash.

Transactions for 2012
1. Acquired $20,000 by issuing common stock.
2. Received $35,000 cash for providing services to customers.
3. Borrowed $25,000 cash from creditors
4. Paid expenses amounting to $22,000
5. Purchased land for $30,000 cash

Transactions for 2013
Beginning account balances for 2013 are:
Cash $28,000
Land $30,000
Notes payable 25,000
Common stock 20,000
Retained earnings 13,000

1. Acquired an additional $24,000 from the issue of common stock
2. Received $95,000 for providing services
3. Paid $15,000 to creditors to reduce loan
4. Paid expenses amounting to $71,500
5. Paid a $3,000 dividend to the stockholders
6. Determined that the market value of the land is $47,000.

Required
a. Write an accounting equation and record the effects of each accounting event under the appropriate headings for each year. Record the amounts of revenue expense and dividends in the retained earnings column. Provide appropriate titles for these accounts in the last column of the table.
b. Prepare an income statement, statement of changes in stockholders equity, year end balance sheet and statement of cash flows for each year.
c. Determine the amount of cash that is in the retained earnings account at the end of 2012 and 2013.
d. Examine the balance sheets for the two years. How did assets change from 2012 to 2013?
e. Determine the balance in the retained earnings account immediately after event 2 in 2012 and in 2013 are recorded.

Click here for the solution: Webster Consulting experienced the following transactions for 2012, its first year of operations and 2013

Pletcher Company's manufacturing overhead budget for the first quarter of 2008 contained the following data

ACC 560 Week 6 Assignment

E10-7 Pletcher Company's manufacturing overhead budget for the first quarter of 2008 contained the following data.

Variable Costs Fixed Costs
Indirect materials $12,000 Supervisory salaries $36,000
Indirect labor 10,000 Depreciation 7,000
Utilities 8,000 Property taxes and insurance 8,000
Maintenance 6,000 Maintenance 5,000

Actual variable costs were: indirect materials $13,800, indirect labor $9,600, utilities $8,700, and maintenance $4,900. Actual fixed costs equaled budgeted costs except for property taxes and insurance, which were $8,200. The actual activity level equaled the budgeted level.

All costs are considered controllable by the production department manager except for depreciation, and property taxes and insurance.

Instructions
(a) Prepare a flexible manufacturing overhead budget report for the first quarter.
(b) Prepare a responsibility report for the first quarter.

Click here for the solution: Pletcher Company's manufacturing overhead budget for the first quarter of 2008 contained the following data

The transactions completed by Over-Nite Express Company during May 2010, the first month of the fiscal year, were as follows

PR 5-5A The transactions completed by Over-Nite Express Company during May 2010, the first month of the fiscal year, were as follows:

May1: Issued check no. 205 for May rent. $1000
2. Purchased a vehicle on account from McIntyre Sales Co. $22,300
3. Purchased office equipment on account from Office Mate $520
5. Issued Invoice No. 91 to Martin Co., $5,200

AND SO ON

Check: 2. Total Cash Receipts $73,230

Click here for the solution: The transactions completed by Over-Nite Express Company during May 2010, the first month of the fiscal year, were as follows

Midwest Corp completed the following transactions in 2012, the first year of operation

P8-19 Midwest Corp completed the following transactions in 2012, the first year of operation.

1. Issued 20,000 shares of $10 par common stock at par.
2. Issued 2,000 shares of $30 stated value preferred stock at $32 per share.
3. Purchased 500 shares of common stock as treasury stock for $15 per share.
4. Declared a five percent dividend on preferred stock.
5. Sold 300 shares of treasury stock for $18 per share.
6. Paid the cash dividend on preferred stock that was declared in event four.
7. Earned cash service revenue of $75,000 and incurred cash operating expenses of $42,000.
8. Appropriated $6,000 of retained earnings.

Required
a. Organize the transaction in accounts under an accounting equation.
b. Prepare the stockholders equity section of the balance sheet as of December 31, 2012.


Click here for the solution: Midwest Corp completed the following transactions in 2012, the first year of operation

The following transactions apply to Artesia Co for 2012 its first year of operations

P7-26 The following transactions apply to Artesia Co for 2012 its first year of operations.

1. Received 40,000 cash from the issue of a short term note with a five percent interest rate and a one year maturity. The note was issued on April 1, 2012.
2. Received 120,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of six percent.
3. Paid 72,000 cash for other operating expenses during the year.
4. Paid the sales tax due on 100,000 of the services revenue for the year. Sales tax balance on the balance of the revenue is not due until 2013.
5. Recognized the accrued interest at December 31, 2012.

The following transactions apply to Artesia Co for 2013.

1. Paid the balance of the sales tax due for 2012.
2. Received $145,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent.
3. Repaid the principal of the note and applicable interest on April 1, 2013.
4. Paid $85,000 of other operating expenses during the year.
5. Paid the sales tax due on $120,000 of the services revenue. The sales tax on the balance of the revenue is not due until 2014.

Required
a. Organize the transaction data in accounts under an accounting equation.
b. Prepare an income statement, a statement of changes in stockholders equity a balance sheet and a statement of cash flow for 2012 and 2013.


Click here for the solution: The following transactions apply to Artesia Co for 2012 its first year of operations

The Sharpe Corporation’s projected sales for the first eight months of 2004 are as follows

4-6A (Cash budget) The Sharpe Corporation’s projected sales for the first eight months of 2004 are as follows:

January $90,000 February $120,000
March $135,000 April $240,000
May $300,000 June $270,000
July $225,000 August $150,000

Of Sharpe’s sales, 10 percent is for cash, another 60 percent is collected in the month following sales, and 30 percent is collected in the second month following sales. November and December sales for 2003 were $220,000 and $175,000, respectively. Sharpe purchases its raw material two months in advance of its sales equal to 60 percent of their final sales price. The supplier is paid one month after it makes delivery. For example, purchase for April sales are made in February and payment is made in March. In addition, Sharpe pays $10,000 per month for rent and $20,000 each month for other expenditures. Tax prepayments of $22,500 are made each quarter, beginning in March. The company’s cash balance at December 31, 2003, was $22,000; a minimum balance of $15,000 must be maintained at all times. Assume that any short-term financing needed to maintain the cast balance is paid off in the month following the month of financing if sufficient funds are available. Interest on short-term loans (12 percent) is paid monthly. Borrowing to meet estimated monthly cash needs takes place at the beginning of the month. Thus, if he month of April the firm expects to have a need for additional $60,500, these funds would be borrowed at the beginning of April with interest of $605 (.12 x ½ x $60,500) owed for April and paid at the beginning of May.

A. Prepare a cash budget for Sharpe covering the first seven months of 2004.
B. Sharpe has a $200,000 in notes payable due in July that must be repaid or renegotiated for an extension. Will the firm have ample cash to repay the notes?


Click here for the solution: The Sharpe Corporation’s projected sales for the first eight months of 2004 are as follows

The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2011

ACC 291 Week 2 Assignment

E9‑1 The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2011.

1. Paid $5,000 of accrued taxes at time plant site was acquired.
2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit.
3. Paid $850 sales taxes on new delivery truck.
4. Paid $17,500 for parking lots and driveways on new plant site.
5. Paid $250 to have company name and advertising slogan painted on new delivery truck.
6. Paid $8,000 for installation of new factory machinery.
7. Paid $900 for one-year accident insurance policy on new delivery truck.
8. Paid $75 motor vehicle license fee on the new truck.

Instructions
(a) Explain the application of the cost principle in determining the acquisition cost of plant assets.
(b) List the numbers of the foregoing transactions, and opposite each indicate the account title to which each expenditure should be debited.


Click here for the solution: The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2011

During its first year of operations, Eastern Data Links Corporation entered into the following transactions relating to shareholders' equity

E 18-5 Issuance of shares; noncash consideration

During its first year of operations, Eastern Data Links Corporation entered into the following transactions relating to shareholders' equity. The articles of incorporation authorized the issue of 8 million common shares, $1 par per share, and 1 million preferred shares, $50 par per share.

Required:
Prepare the appropriate journal entries to record each transaction.
Feb. 12 Sold 2 million common shares, for $9 per share.
13 Issued 40,000 common shares to attorneys in exchange for legal services.
13 Sold 80,000 of its common shares and 4,000 preferred shares for a total of $945,000.
Nov. 15 Issued 380,000 of its common shares in exchange for equipment for which the cash price was known to be $3,688,000


Click here for the solution: During its first year of operations, Eastern Data Links Corporation entered into the following transactions relating to shareholders' equity

Abraham Company completed the construction of a building at a cost of $2,242,000 and first occupied it in January 1984

Abraham Company completed the construction of a building at a cost of $2,242,000 and first occupied it in January 1984. It was estimated that the building will have a useful life of 40 years and a salvage value of $70,800 at the end of that time.

Early in 1994, an addition to the building was constructed at a cost of $554,600. At the time it was estimated that the remaining life of the building would be, as originally estimated, an additional 30 years, and that the addition would have a life of 30 years, and a salvage value of $23,600.

In 2012, it is determined that the probable life of the building and addition will extend to the end of 2043 or 20 years beyond the original estimate.

a) Using the straight-line method, compute the annual depreciation that would have been charged from 1984 through 1993
b) Compute the annual depreciation that would have been charged from 1994 through 2011
c) Is an entry necessary to adjust the account balances because of the revision of the estimated life in 2012?
d) Compute the annual depreciation to be charged beginning with 2012


Click here for the solution: Abraham Company completed the construction of a building at a cost of $2,242,000 and first occupied it in January 1984

If two service departments service the same number of departments, which service department's costs are allocated first when using the step method

1. If two service departments service the same number of departments, which service department's costs are allocated first when using the step method?

2. Which of the following service department cost allocation methods is most widely used by manufacturing companies?

3. Which of the following statements is (are) false regarding the effective use of management control systems.
(A) In general, cost allocations should not be used in management control systems because clear control over the cost being allocated cannot be determined.
(B) The primary reason to use a dual rate allocation system is to focus a manager's performance evaluation on factors under the manager's direct control.

4. The amount of resources used in an activity-based costing (ABC) system for a specific activity is computed by multiplying the:

5. Which of the following statements is false?

6. In general, the first budget prepared is the

7. Relative performance evaluations (RPE) are not designed to

8. Which of the following items would be classified as a batch-level cost in an activity-based cost management (ABM) system?

9. Which of the following activities is most likely to be classified as value-added for a manufacturing company?

10. The unused resource capacity is the difference between the resources supplied and the resources


Click here for the solution: If two service departments service the same number of departments, which service department's costs are allocated first when using the step method