ACC 290 Week 5 Assignment
BE7-4 Aldstadt Company has the following internal control procedures over cash receipts. Identify the internal control principle that is applicable to each procedure.
(a) All over-the-counter receipts are registered on cash registers.
(b) All cashiers are bonded.
(c) Daily cash counts are made by cashier department supervisors.
(d) The duties of receiving cash, recording cash, and having custody of cash are assigned to different individuals.
(e) Only cashiers may operate cash registers.
Click here for the solution: Aldstadt Company has the following internal control procedures over cash receipts
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Showing posts with label over. Show all posts
Friday, October 9, 2015
Ndon Company has the following internal control procedures over cash disbursements (ACC 290 Week 5)
ACC 290 Week 5 Assignment
BE7-6 Ndon Company has the following internal control procedures over cash disbursements. Identify the internal control principle that is applicable to each procedure.
(a) Company checks are prenumbered.
(b) The bank statement is reconciled monthly by an internal auditor.
(c) Blank checks are stored in a safe in the treasurer’s office.
(d) Only the treasurer or assistant treasurer may sign checks.
(e) Check signers are not allowed to record cash disbursement transactions.
Click here for the solution: Ndon Company has the following internal control procedures over cash disbursements (ACC 290 Week 5)
BE7-6 Ndon Company has the following internal control procedures over cash disbursements. Identify the internal control principle that is applicable to each procedure.
(a) Company checks are prenumbered.
(b) The bank statement is reconciled monthly by an internal auditor.
(c) Blank checks are stored in a safe in the treasurer’s office.
(d) Only the treasurer or assistant treasurer may sign checks.
(e) Check signers are not allowed to record cash disbursement transactions.
Click here for the solution: Ndon Company has the following internal control procedures over cash disbursements (ACC 290 Week 5)
Wednesday, September 23, 2015
What are the major elements of an internal control over property, plant, and equipment?
What are the major elements of an internal control over property, plant,
and equipment? For the specific control procedures identified, indicate
their importance to the audit.
Click here for the solution: What are the major elements of an internal control over property, plant, and equipment?
Click here for the solution: What are the major elements of an internal control over property, plant, and equipment?
Ben Chase needs to pay off some of his debts over the next few months
1) Ben Chase needs to pay off some of his debts over the next few
months. Which item on his balance sheet would help him decide what
amounts are due in the near future?
2) A family with $45,000 in assets and $22,000 of liabilities would have a net worth of
3) A budget deficit would result when a person's or family's
4) The tax base for an individual tax return is
5) All of the following are for AGI deductions EXCEPT
6) Which of the following series of inequalities is generally most accurate?
7) Which of the following has the lowest authoritative weight?
8) Josephine is considering taking a 6-month rotation in Paris for her job. Which type of authority may be especially helpful in determining the tax consequences of Josephine's job in Paris?
9) Which of the following has the highest authoritative weight?
10) Congress allows self-employed taxpayers to deduct the cost of health insurance above the line (for AGI) because
11) Hector is a married self-employed taxpayer, and this year he paid $3,000 for his health insurance premiums. Under which of the following alternative conditions can Hector deduct the cost of the premiums for AGI?
12) Graham has accepted an offer to do graduate work in the chemistry department at State University. The chemistry department offered Graham a scholarship that will pay $5,000 toward his tuition, $500 toward his university fees, and $3,500 toward the cost of room and meals. Under the terms of the scholarship, Graham must work in the chemistry labs during the summer. What amount must Graham include in his gross income?
13) After a meeting with a prospective client, Holly paid for dinner. After dinner, Holly took the prospective client to the theatre. Holly paid $290 for the meal and $250 for the tickets, amounts that were reasonable under the circumstances. What amount of these expenditures can Holly deduct as a business expense?
14) Rhianna and Jay are married filing jointly in 2009. They have six children for whom they may claim the child tax credit. Their AGI was $123,440. What amount of child tax credit may they claim on their 2009 tax return?
15) Which of the following taxes will not qualify as an itemized deduction?
16) Bateman Corporation sold an office building that it used in its business for $800,000. Bateman bought the building ten years ago for $600,000 and has claimed $200,000 of depreciation expense. What is the amount and character of Bateman's gain or loss?
17) The sale of machinery for more than the original cost basis (before depreciation), used in a trade or business, and held for more than one year results in the following types of gain or loss:
18) Winchester LLC sold the following business assets during the current year: (1) automobile, $30,000 cost basis, $12,000 depreciation, proceeds $20,000; (2) machinery, $25,000 cost basis, $20,000 depreciation, proceeds $10,000; (3) furniture, $15,000 cost basis, $10,000 depreciation, proceeds $4,000; (4) computer equipment, $25,000 cost basis, $6,000 depreciation, proceeds $10,000; (5) Winchester had unrecaptured Section 1231 losses of $3,000 in the prior 5 years. What is the amount and character of Winchester's gains and losses before the 1231 netting process?
19) On the sale of a passive activity, any suspended losses can be used to offset income from
20) Which of the following would be considered passive income?
21) Which of the following would be considered active income?
22) Sue invested $5,000 in the ABC Limited Partnership and received a 10 percent interest in the partnership. The partnership had $20,000 of qualified nonrecourse debt and $20,000 of debt she is not responsible to repay because she is a limited partner. Sue is allocated a 10 percent share of both types of debt. During the year, ABC LP generated a ($90,000) loss. How much of Sue's loss is disallowed due to her tax basis or at-risk amount?
23) Harvey rents his second home. During 2009, Harvey reported a net loss of $35,000 from the rental. If Harvey is an active participant in the rental and his AGI is $80,000, how much of the loss can he deduct against ordinary income in 2009?
24) What happens when a taxpayer experiences a net loss from a rental home?
25) What is the minimum ownership percentage an owner must have in the entity to avoid gain recognition when property is contributed?
26) What is the tax impact to a taxable corporation or an S corporation when it makes a property distribution to a shareholder?
27) What item(s) affect the tax basis of a shareholder in a taxable corporation?
28) Antoine transfers property with a tax basis of $500 and a fair market value of $600 to a corporation in exchange for stock with a fair market value of $550 in a transaction that qualifies for deferral under Section 351. The corporation assumed a liability of $50 on the property transferred. What is Antoine's tax basis in the stock received in the exchange?
29) Which of the following requirements do not have to be met in a Section 351 transaction?
30) Inez transfers property with a tax basis of $200 and a fair market value of $300 to a corporation in exchange for stock with a fair market value of $250 in a transaction that qualifies for deferral under Section 351. The corporation assumed a liability of $50 on the property transferred. What is the corporation's tax basis in the property received in the exchange?
31) Au Sable Corporation reported taxable income of $800,000 in 2010 and paid federal income taxes of $272,000. Not included in the computation was a disallowed penalty of $25,000, life insurance proceeds of $100,000, and an income tax refund from 2009 of $50,000. Au Sable is an accrual basis taxpayer. The corporation's current earnings and profits for 2010 would be
32) BTW Corporation has taxable income in the current year that can be offset with an NOL from a previous year. What is the nature of the book-tax difference created by the net operating loss deduction in the current year?
33) A calendar-year corporation has negative current E&P of $(500) and accumulated positive E&P of $1,000. The corporation makes a $600 distribution to its sole shareholder. Which of the following statements is true?
34) El Toro Corporation declared a common stock dividend to all shareholders of record on June 30, 2010. Shareholders will receive 1 share of El Toro stock for each 2 shares of stock they already own. Raoul owns 300 shares of El Toro stock with a tax basis of $60 per share. The fair market value of the El Toro stock was $100 per share on June 30, 2010. What are the tax consequences of the stock dividend to Raoul?
35) Which of the following stock dividends would be tax-free to the shareholder?
36) Which of the following individuals is not considered "family" for purposes of applying the stock attribution rules to a stock redemption?
37) Which of the following statements is true when property is contributed in exchange for a partnership interest?
38) Which of the following are prohibited from being an S corporation shareholder?
39) Under which of the following circumstances will a partner recognize a loss from an operating distribution?
40) Suppose at the beginning of 2010, Jamaal's basis in his S corporation stock was $27,000 and that Jamaal has loaned the S corporation $10,000. During 2010, the S corporation reported an $80,000 ordinary business loss and no separately stated items. How much of the ordinary loss is deductible by Jamaal if he owns 50% of the S corporation?
41) Clampett, Inc. has been an S corporation since its inception. On July 15, 2011, Clampett, Inc. distributed $50,000 to J.D. His basis in his Clampett, Inc. stock on January 1, 2011, was $45,000. For 2011, J.D. was allocated $10,000 of ordinary income from Clampett, Inc. and no separately stated items. What is J.D.'s basis in his Clampett, Inc. stock after all transactions in 2011?
42) Clampett, Inc. has been an S corporation since its inception. On July 15, 2011, Clampett, Inc. distributed $50,000 to J.D. His basis in his Clampett, Inc. stock on January 1, 2011, was $45,000. For 2011, J.D. was allocated $10,000 of ordinary income from Clampett, Inc. and no separately stated items. What is the amount of income J.D. recognizes related to Clampett, Inc. in 2011?
43) Erica and Brett decide to form their new motorcycle business as an LLC. Each will receive an equal profits (loss) interest by contributing cash, property, or both. In addition to the members' contributions, their LLC will obtain a $50,000 nonrecourse loan from First Bank at the time it is formed. Brett contributes cash of $5,000 and a building he bought as a storefront for the motorcycles. The building has an FMV of $45,000, an adjusted basis of $30,000, and is secured by a $35,000 nonrecourse mortgage that the business LLC will assume. What is Brett's outside tax basis in his LLC interest?
44) Under general circumstances, debt is allocated from the partnership to each partner in the following manner:
45) Which of the following statements is true when property is contributed in exchange for a partnership interest?
46) Frank and Bob are equal members in Soxy Socks, LLC. When forming the LLC, Frank contributed $50,000 in cash and $50,000 worth of equipment. Frank's adjusted basis in the equipment was $35,000. Bob contributed $50,000 in cash and $50,000 worth of land. Bob's adjusted basis in the land was $30,000. On 3/15/04, Soxy Socks sells the land Bob contributed for $60,000. How much gain (loss) related to this transaction will Bob report on his X4 return?
47) What form does a partnership use when filing an annual informational return?
48) Vanessa contributed $20,000 of cash and land with a fair market value of $100,000 and an adjusted basis of $40,000 to Cook, Inc. (an S corporation) when it was formed. The land was encumbered by a $30,000 mortgage executed two years before. What is Vanessa's tax basis in Cook, Inc. after formation?
49) The estate and gift taxes share several common features. Which of the following characteristics are common to both the estate and gift taxes?
50) The estate and gift taxes share several common features. Which of the following characteristics are common to both the estate and gift taxes?
51) The estate and gift taxes share several common features. Which of the following characteristics are common to both the estate and gift taxes?
52) This year Samantha gave each of her three nephews birthday gifts of $10,000 in cash. At Christmas, Samantha gave each of her three nephews Christmas gifts of an additional $5,000 in cash. What is the amount of the taxable gifts, if any, made by Samantha this year?
53) Jonathan transferred $90,000 of cash to a trust this year for the benefit of Hannah, age 10. The trustee has the discretion to distribute income or corpus (principal) for Hannah's benefit and is required to distribute all assets to Hannah (or her estate) not later than Hannah's 21st birthday. What is the amount of the taxable gift?
54) This year Natalie transferred $500,000 of bonds to a revocable trust with directions to the trustee to pay income to her aunt for five years, after which the corpus is to be distributed to Natalie's niece. At year-end, the trustee paid $14,000 of income to the aunt. Which of the following is a true statement?
Click here for the solution: Ben Chase needs to pay off some of his debts over the next few months
2) A family with $45,000 in assets and $22,000 of liabilities would have a net worth of
3) A budget deficit would result when a person's or family's
4) The tax base for an individual tax return is
5) All of the following are for AGI deductions EXCEPT
6) Which of the following series of inequalities is generally most accurate?
7) Which of the following has the lowest authoritative weight?
8) Josephine is considering taking a 6-month rotation in Paris for her job. Which type of authority may be especially helpful in determining the tax consequences of Josephine's job in Paris?
9) Which of the following has the highest authoritative weight?
10) Congress allows self-employed taxpayers to deduct the cost of health insurance above the line (for AGI) because
11) Hector is a married self-employed taxpayer, and this year he paid $3,000 for his health insurance premiums. Under which of the following alternative conditions can Hector deduct the cost of the premiums for AGI?
12) Graham has accepted an offer to do graduate work in the chemistry department at State University. The chemistry department offered Graham a scholarship that will pay $5,000 toward his tuition, $500 toward his university fees, and $3,500 toward the cost of room and meals. Under the terms of the scholarship, Graham must work in the chemistry labs during the summer. What amount must Graham include in his gross income?
13) After a meeting with a prospective client, Holly paid for dinner. After dinner, Holly took the prospective client to the theatre. Holly paid $290 for the meal and $250 for the tickets, amounts that were reasonable under the circumstances. What amount of these expenditures can Holly deduct as a business expense?
14) Rhianna and Jay are married filing jointly in 2009. They have six children for whom they may claim the child tax credit. Their AGI was $123,440. What amount of child tax credit may they claim on their 2009 tax return?
15) Which of the following taxes will not qualify as an itemized deduction?
16) Bateman Corporation sold an office building that it used in its business for $800,000. Bateman bought the building ten years ago for $600,000 and has claimed $200,000 of depreciation expense. What is the amount and character of Bateman's gain or loss?
17) The sale of machinery for more than the original cost basis (before depreciation), used in a trade or business, and held for more than one year results in the following types of gain or loss:
18) Winchester LLC sold the following business assets during the current year: (1) automobile, $30,000 cost basis, $12,000 depreciation, proceeds $20,000; (2) machinery, $25,000 cost basis, $20,000 depreciation, proceeds $10,000; (3) furniture, $15,000 cost basis, $10,000 depreciation, proceeds $4,000; (4) computer equipment, $25,000 cost basis, $6,000 depreciation, proceeds $10,000; (5) Winchester had unrecaptured Section 1231 losses of $3,000 in the prior 5 years. What is the amount and character of Winchester's gains and losses before the 1231 netting process?
19) On the sale of a passive activity, any suspended losses can be used to offset income from
20) Which of the following would be considered passive income?
21) Which of the following would be considered active income?
22) Sue invested $5,000 in the ABC Limited Partnership and received a 10 percent interest in the partnership. The partnership had $20,000 of qualified nonrecourse debt and $20,000 of debt she is not responsible to repay because she is a limited partner. Sue is allocated a 10 percent share of both types of debt. During the year, ABC LP generated a ($90,000) loss. How much of Sue's loss is disallowed due to her tax basis or at-risk amount?
23) Harvey rents his second home. During 2009, Harvey reported a net loss of $35,000 from the rental. If Harvey is an active participant in the rental and his AGI is $80,000, how much of the loss can he deduct against ordinary income in 2009?
24) What happens when a taxpayer experiences a net loss from a rental home?
25) What is the minimum ownership percentage an owner must have in the entity to avoid gain recognition when property is contributed?
26) What is the tax impact to a taxable corporation or an S corporation when it makes a property distribution to a shareholder?
27) What item(s) affect the tax basis of a shareholder in a taxable corporation?
28) Antoine transfers property with a tax basis of $500 and a fair market value of $600 to a corporation in exchange for stock with a fair market value of $550 in a transaction that qualifies for deferral under Section 351. The corporation assumed a liability of $50 on the property transferred. What is Antoine's tax basis in the stock received in the exchange?
29) Which of the following requirements do not have to be met in a Section 351 transaction?
30) Inez transfers property with a tax basis of $200 and a fair market value of $300 to a corporation in exchange for stock with a fair market value of $250 in a transaction that qualifies for deferral under Section 351. The corporation assumed a liability of $50 on the property transferred. What is the corporation's tax basis in the property received in the exchange?
31) Au Sable Corporation reported taxable income of $800,000 in 2010 and paid federal income taxes of $272,000. Not included in the computation was a disallowed penalty of $25,000, life insurance proceeds of $100,000, and an income tax refund from 2009 of $50,000. Au Sable is an accrual basis taxpayer. The corporation's current earnings and profits for 2010 would be
32) BTW Corporation has taxable income in the current year that can be offset with an NOL from a previous year. What is the nature of the book-tax difference created by the net operating loss deduction in the current year?
33) A calendar-year corporation has negative current E&P of $(500) and accumulated positive E&P of $1,000. The corporation makes a $600 distribution to its sole shareholder. Which of the following statements is true?
34) El Toro Corporation declared a common stock dividend to all shareholders of record on June 30, 2010. Shareholders will receive 1 share of El Toro stock for each 2 shares of stock they already own. Raoul owns 300 shares of El Toro stock with a tax basis of $60 per share. The fair market value of the El Toro stock was $100 per share on June 30, 2010. What are the tax consequences of the stock dividend to Raoul?
35) Which of the following stock dividends would be tax-free to the shareholder?
36) Which of the following individuals is not considered "family" for purposes of applying the stock attribution rules to a stock redemption?
37) Which of the following statements is true when property is contributed in exchange for a partnership interest?
38) Which of the following are prohibited from being an S corporation shareholder?
39) Under which of the following circumstances will a partner recognize a loss from an operating distribution?
40) Suppose at the beginning of 2010, Jamaal's basis in his S corporation stock was $27,000 and that Jamaal has loaned the S corporation $10,000. During 2010, the S corporation reported an $80,000 ordinary business loss and no separately stated items. How much of the ordinary loss is deductible by Jamaal if he owns 50% of the S corporation?
41) Clampett, Inc. has been an S corporation since its inception. On July 15, 2011, Clampett, Inc. distributed $50,000 to J.D. His basis in his Clampett, Inc. stock on January 1, 2011, was $45,000. For 2011, J.D. was allocated $10,000 of ordinary income from Clampett, Inc. and no separately stated items. What is J.D.'s basis in his Clampett, Inc. stock after all transactions in 2011?
42) Clampett, Inc. has been an S corporation since its inception. On July 15, 2011, Clampett, Inc. distributed $50,000 to J.D. His basis in his Clampett, Inc. stock on January 1, 2011, was $45,000. For 2011, J.D. was allocated $10,000 of ordinary income from Clampett, Inc. and no separately stated items. What is the amount of income J.D. recognizes related to Clampett, Inc. in 2011?
43) Erica and Brett decide to form their new motorcycle business as an LLC. Each will receive an equal profits (loss) interest by contributing cash, property, or both. In addition to the members' contributions, their LLC will obtain a $50,000 nonrecourse loan from First Bank at the time it is formed. Brett contributes cash of $5,000 and a building he bought as a storefront for the motorcycles. The building has an FMV of $45,000, an adjusted basis of $30,000, and is secured by a $35,000 nonrecourse mortgage that the business LLC will assume. What is Brett's outside tax basis in his LLC interest?
44) Under general circumstances, debt is allocated from the partnership to each partner in the following manner:
45) Which of the following statements is true when property is contributed in exchange for a partnership interest?
46) Frank and Bob are equal members in Soxy Socks, LLC. When forming the LLC, Frank contributed $50,000 in cash and $50,000 worth of equipment. Frank's adjusted basis in the equipment was $35,000. Bob contributed $50,000 in cash and $50,000 worth of land. Bob's adjusted basis in the land was $30,000. On 3/15/04, Soxy Socks sells the land Bob contributed for $60,000. How much gain (loss) related to this transaction will Bob report on his X4 return?
47) What form does a partnership use when filing an annual informational return?
48) Vanessa contributed $20,000 of cash and land with a fair market value of $100,000 and an adjusted basis of $40,000 to Cook, Inc. (an S corporation) when it was formed. The land was encumbered by a $30,000 mortgage executed two years before. What is Vanessa's tax basis in Cook, Inc. after formation?
49) The estate and gift taxes share several common features. Which of the following characteristics are common to both the estate and gift taxes?
50) The estate and gift taxes share several common features. Which of the following characteristics are common to both the estate and gift taxes?
51) The estate and gift taxes share several common features. Which of the following characteristics are common to both the estate and gift taxes?
52) This year Samantha gave each of her three nephews birthday gifts of $10,000 in cash. At Christmas, Samantha gave each of her three nephews Christmas gifts of an additional $5,000 in cash. What is the amount of the taxable gifts, if any, made by Samantha this year?
53) Jonathan transferred $90,000 of cash to a trust this year for the benefit of Hannah, age 10. The trustee has the discretion to distribute income or corpus (principal) for Hannah's benefit and is required to distribute all assets to Hannah (or her estate) not later than Hannah's 21st birthday. What is the amount of the taxable gift?
54) This year Natalie transferred $500,000 of bonds to a revocable trust with directions to the trustee to pay income to her aunt for five years, after which the corpus is to be distributed to Natalie's niece. At year-end, the trustee paid $14,000 of income to the aunt. Which of the following is a true statement?
Click here for the solution: Ben Chase needs to pay off some of his debts over the next few months
Tuesday, September 8, 2015
In a business combination, the appropriate accounting for an excess of current fair values the combinee's identifiable net assets over the combinor's cost is to
1. In a business combination, the appropriate accounting for an excess
of current fair values the combinee's identifiable net assets over the
combinor's cost is to: (Points : 1)
2. Which of the following is not included in the combinor's cost of a combinee in a business combination? (Points : 1)
3. Slocum Corporation and Merton Company, both publicly owned companies, are planning a merger, with Slocum being the survivor. Which of the following is a requirement of the merger? (Points : 1)
4. On January 31, 2006, the home office of Wall Company collected a trade account receivable of Doris Branch. The accounting for this transaction by Wall Company should include a: (Points : 1)
5. Both a home office and a branch use the periodic inventory system. If at the end of an accounting period the balance of the branch's Home Office ledger account does not agree with the balance of the home office's Investment in Branch account because of a shipment of merchandise in transit from the home office to the branch: (Points : 1)
6. If both the home office and the branch of a business enterprise use the periodic inventory system, the home office's Shipments to Branch ledger account: (Points : 1)
7. The Income: Branch ledger account is maintained in the accounting records of: (Points : 1)
8. Among the journal entries (explanation omitted) in the accounting records of the home office of Price Company was the following:
Office Equipment: Lang Branch 12,500
Investment in Lang Branch 12,500
This journal entry indicates that: (Points : 1)
9. The Home Office ledger account in the accounting records of a branch is best described as: (Points : 1)
10. The following journal entry (explanation omitted) appeared in the accounting records of Marty Corporation's only branch:
Operating Expenses 600,000
Home Office 600,000
The journal entry indicates that: (Points : 1)
Click here for the solution: In a business combination, the appropriate accounting for an excess of current fair values the combinee's identifiable net assets over the combinor's cost is to
2. Which of the following is not included in the combinor's cost of a combinee in a business combination? (Points : 1)
3. Slocum Corporation and Merton Company, both publicly owned companies, are planning a merger, with Slocum being the survivor. Which of the following is a requirement of the merger? (Points : 1)
4. On January 31, 2006, the home office of Wall Company collected a trade account receivable of Doris Branch. The accounting for this transaction by Wall Company should include a: (Points : 1)
5. Both a home office and a branch use the periodic inventory system. If at the end of an accounting period the balance of the branch's Home Office ledger account does not agree with the balance of the home office's Investment in Branch account because of a shipment of merchandise in transit from the home office to the branch: (Points : 1)
6. If both the home office and the branch of a business enterprise use the periodic inventory system, the home office's Shipments to Branch ledger account: (Points : 1)
7. The Income: Branch ledger account is maintained in the accounting records of: (Points : 1)
8. Among the journal entries (explanation omitted) in the accounting records of the home office of Price Company was the following:
Office Equipment: Lang Branch 12,500
Investment in Lang Branch 12,500
This journal entry indicates that: (Points : 1)
9. The Home Office ledger account in the accounting records of a branch is best described as: (Points : 1)
10. The following journal entry (explanation omitted) appeared in the accounting records of Marty Corporation's only branch:
Operating Expenses 600,000
Home Office 600,000
The journal entry indicates that: (Points : 1)
Click here for the solution: In a business combination, the appropriate accounting for an excess of current fair values the combinee's identifiable net assets over the combinor's cost is to
ACC 225 P07-05A You have just taken over the accounting for Choi Enterprises, whose annual accounting period ends December 31
ACC 225 P07-05A
You have just taken over the accounting for Choi Enterprises, whose annual accounting period ends December 31. The company’s previous accountant journalized its transactions through December 15 and posted all items that required posting as individual amounts (see the journals and ledgers in the Working Papers). The company’s transactions beginning on December 16 follow (terms for all its credit sales are 2/10, n/30):
Dec. 16 Sold merchandise on credit to Hanna Seppa, Invoice No. 916, for $7,700 (cost is $4,600).
17 Received a $1,040 credit memorandum from Funk Company for the return of merchandise received on December 15.
AND SO ON
31 Issued Check No. 626 to Jamie Inman, the company’s only sales employee, in payment of her $2,020 salary for the last half of December.
31 Issued Check No. 627 to Access Electric Company in payment of its $710 December electric bill.
31 Cash sales for the last half of the month are $29,600 (cost is $11,200). (Cash sales are recorded daily but are recorded only twice in this problem to reduce repetitive entries.)
Required
1. Record these transactions in the journals provided in the working papers.
2. Verify that amounts that should be posted as individual amounts to the general ledger accounts have been posted, including posting to the customer and creditor accounts. (Such items are immediately posted.) Foot and crossfoot the journals and make the month-end postings.
3. Prepare a December 31 trial balance and prove the accuracy of the subsidiary ledgers by preparing schedules of both accounts receivable and accounts payable.
Click here for the solution: ACC 225 P07-05A You have just taken over the accounting for Choi Enterprises, whose annual accounting period ends December 31
You have just taken over the accounting for Choi Enterprises, whose annual accounting period ends December 31. The company’s previous accountant journalized its transactions through December 15 and posted all items that required posting as individual amounts (see the journals and ledgers in the Working Papers). The company’s transactions beginning on December 16 follow (terms for all its credit sales are 2/10, n/30):
Dec. 16 Sold merchandise on credit to Hanna Seppa, Invoice No. 916, for $7,700 (cost is $4,600).
17 Received a $1,040 credit memorandum from Funk Company for the return of merchandise received on December 15.
AND SO ON
31 Issued Check No. 626 to Jamie Inman, the company’s only sales employee, in payment of her $2,020 salary for the last half of December.
31 Issued Check No. 627 to Access Electric Company in payment of its $710 December electric bill.
31 Cash sales for the last half of the month are $29,600 (cost is $11,200). (Cash sales are recorded daily but are recorded only twice in this problem to reduce repetitive entries.)
Required
1. Record these transactions in the journals provided in the working papers.
2. Verify that amounts that should be posted as individual amounts to the general ledger accounts have been posted, including posting to the customer and creditor accounts. (Such items are immediately posted.) Foot and crossfoot the journals and make the month-end postings.
3. Prepare a December 31 trial balance and prove the accuracy of the subsidiary ledgers by preparing schedules of both accounts receivable and accounts payable.
Click here for the solution: ACC 225 P07-05A You have just taken over the accounting for Choi Enterprises, whose annual accounting period ends December 31
Saturday, August 22, 2015
Suburban Lifestyles, Inc. has manufactured prefabricated houses for over 20 years
13-29 Suburban Lifestyles, Inc. has manufactured prefabricated houses for over 20 years. The houses are constructed in sections to be assembled on customers’ lots. Suburban Lifestyles expanded into the precut housing market when it acquired Fairmont Company, one of its suppliers. In this market, various types of lumber are precut into the appropriate lengths, banded into packages, and shipped to customers’ lots for assembly. Suburban Lifestyles’ management designated the Fairmont Division as an investment center. Suburban uses return on investment (ROI) as a performance measure with investment defined as average productive assets. Management bonuses are based in part on ROI. All investments are expected to earn a minimum return of 15 percent before income taxes. Fairmont’s ROI has ranged from 19.3 to 22.1 percent since it was acquired. Fairmont had an investment opportunity in 20x1 that had an estimated ROI of 18 percent. Fairmont’s management decided against the investment because it believed the investment would decrease the division’s overall ROI. The 20x1 income statement for Fairmont Division follows. The division’s productive assets were $25,200,000 at the end of 20x1, a 5 percent increase over the balance at the beginning of the year.
FAIRMONT DIVISION
Income Statement
For the Year Ended December 31, 20x1
(in thousands)
Sales revenue $48,000
Cost of goods sold 31,600
Gross margin $16,400
Operating expenses:
Administrative $4,280
Selling 7,200 11,480
Income from operations before income taxes $ 4,920
Required:
1. Calculate the following performance measures for 20x1 for the Fairmont Division.
a. Return on investment (ROI).
b. Residual income.
2. Would the management of Fairmont Division have been more likely to accept the investment opportunity it had in 20x1 if residual income were used as a performance measure instead of ROI? Explain your answer.
3. Build a spreadsheet: Construct an Excel spreadsheet to solve requirements
Click here for the solution: Suburban Lifestyles, Inc. has manufactured prefabricated houses for over 20 years
FAIRMONT DIVISION
Income Statement
For the Year Ended December 31, 20x1
(in thousands)
Sales revenue $48,000
Cost of goods sold 31,600
Gross margin $16,400
Operating expenses:
Administrative $4,280
Selling 7,200 11,480
Income from operations before income taxes $ 4,920
Required:
1. Calculate the following performance measures for 20x1 for the Fairmont Division.
a. Return on investment (ROI).
b. Residual income.
2. Would the management of Fairmont Division have been more likely to accept the investment opportunity it had in 20x1 if residual income were used as a performance measure instead of ROI? Explain your answer.
3. Build a spreadsheet: Construct an Excel spreadsheet to solve requirements
Click here for the solution: Suburban Lifestyles, Inc. has manufactured prefabricated houses for over 20 years
Saturday, August 15, 2015
GAMMA produces over a hundred different types of residential water faucets as its Delta, Florida plant
GAMMA produces over a hundred different types of residential water faucets as its Delta, Florida plant. This plant uses activity–based costing to calculate product costs. The following table summarizes the plant's overhead for the year and the cost drivers
Used for each activity center:
Summary of plant Overhead and Activity Centers
Total cost
(millions Activity center of dollars)
Cost driver Amount of cost Activity cost per unit Driver of cost drive
Materials handling $20.8 Direct materials $130 million $ 0.16
Purchasing 13.8 part numbers 800 $17,250
Set-up labor 6.8 Batches 500 $13,600
Engineering 10.9 Number of products 125 $87,200
Occupancy 16.2 Direct labor $ 90 million $0.18
----------------
Total plant overhead $ 68.5
----------------
One faucet model GAMMA manufactures is Explorer .Its total product cost is as follows:
Direct labor $ 121,700
Direct materials 90,500
Materials handling $ 90,500 $ 0.16 14,480
Purchasing 9 17,250 155,250
Setup ; 8 13,600 108,800
Engineering 1 87,200 87, 200
Occupancy $121,70 0 $0.18 21,906
---------------------
Total cost $599,836
Number of units manufactured 12,500
---------------------
Product cost per unit $ 47.99
----------------------
Required Question:
Calculate the product cost per unit of the Explorer faucet using absorption costing where plant overhead is assigned to products using direct labor dollars.
Click here for the solution: GAMMA produces over a hundred different types of residential water faucets as its Delta, Florida plant
Used for each activity center:
Summary of plant Overhead and Activity Centers
Total cost
(millions Activity center of dollars)
Cost driver Amount of cost Activity cost per unit Driver of cost drive
Materials handling $20.8 Direct materials $130 million $ 0.16
Purchasing 13.8 part numbers 800 $17,250
Set-up labor 6.8 Batches 500 $13,600
Engineering 10.9 Number of products 125 $87,200
Occupancy 16.2 Direct labor $ 90 million $0.18
----------------
Total plant overhead $ 68.5
----------------
One faucet model GAMMA manufactures is Explorer .Its total product cost is as follows:
Direct labor $ 121,700
Direct materials 90,500
Materials handling $ 90,500 $ 0.16 14,480
Purchasing 9 17,250 155,250
Setup ; 8 13,600 108,800
Engineering 1 87,200 87, 200
Occupancy $121,70 0 $0.18 21,906
---------------------
Total cost $599,836
Number of units manufactured 12,500
---------------------
Product cost per unit $ 47.99
----------------------
Required Question:
Calculate the product cost per unit of the Explorer faucet using absorption costing where plant overhead is assigned to products using direct labor dollars.
Click here for the solution: GAMMA produces over a hundred different types of residential water faucets as its Delta, Florida plant
Thursday, August 13, 2015
What are the major advantages of a share repurchase over a cash dividend?
What are the major advantages of a share repurchase over a cash dividend?
Click here for the solution: What are the major advantages of a share repurchase over a cash dividend?
Click here for the solution: What are the major advantages of a share repurchase over a cash dividend?
Iridium Corp. has spent $3.5 billion over the past decade developing a satellite, based telecommunication system
Iridium Corp. has spent $3.5 billion over the past decade developing a satellite, based telecommunication system. It is currently trying to decide whether to spend an additional $350 million on the project. The firm expects that this outlay will finish the project and will generate cash flow of $15 million per year over the next 5 years. The competitor has offered $450 million for the satellites already in orbit. Classify the firm’s outlays as sunk costs or opportunity costs, and specify the relevant cash flows.
Click here for the solution: Iridium Corp. has spent $3.5 billion over the past decade developing a satellite, based telecommunication system
Click here for the solution: Iridium Corp. has spent $3.5 billion over the past decade developing a satellite, based telecommunication system
Wednesday, July 15, 2015
QwikRepairs has over 200 auto-maintenance service outlets nationwide
E6-7 QwikRepairs has over 200 auto-maintenance service outlets nationwide. It provides primarily two lines of service: oil changes and brake repairs: Oil change related services represent 70% of its sales and provide a contribution margin ratio of 20%. Brake repair represents 30% of its sales and provides a 60% contribution margin ratio. The company’s fixed costs are $16,000 (that is, $80,000 per service outlet).
Instructions
a) Calculate the dollar amount of each type of service that the company must provide in order to break even.
b) The company has a desired net income of $60,000 per service outlet. What is the dollar amount of each type of service that must be provided by each service outlet to meet its target net income per outlet?
Click here for the solution: QwikRepairs has over 200 auto-maintenance service outlets nationwide
Instructions
a) Calculate the dollar amount of each type of service that the company must provide in order to break even.
b) The company has a desired net income of $60,000 per service outlet. What is the dollar amount of each type of service that must be provided by each service outlet to meet its target net income per outlet?
Click here for the solution: QwikRepairs has over 200 auto-maintenance service outlets nationwide
Saturday, July 11, 2015
Which of the following is an advantage of a sole proprietorship over other business forms
1. Which of the following is an advantage of a sole proprietorship over other business forms?
2. Internet versions of topical tax services include
3. Regulations are
4. Ralph and Yolanda purchased 20% of the initial offering of Major Corporation common stock for $150,000. Major Corporation is a qualifying small business corporation and the stock qualifies as Sec. 1244 stock. Ten months later, Major Corporation files for bankruptcy and the shareholders are notified that the stock is worthless. Ralph and Yolanda, who are married and file a joint return, have a
5. Which of the following is not a step in the tax research process?
6. For Sec. 351 purposes, the term "property" does not include
7. Which of the following is a true statement regarding primary authority of tax law?
8. Which of the following is secondary authority?
9. Which of the following statements about a partnership is true?
10. Identify which of the following statements is true.
Click here for the solution: Which of the following is an advantage of a sole proprietorship over other business forms
2. Internet versions of topical tax services include
3. Regulations are
4. Ralph and Yolanda purchased 20% of the initial offering of Major Corporation common stock for $150,000. Major Corporation is a qualifying small business corporation and the stock qualifies as Sec. 1244 stock. Ten months later, Major Corporation files for bankruptcy and the shareholders are notified that the stock is worthless. Ralph and Yolanda, who are married and file a joint return, have a
5. Which of the following is not a step in the tax research process?
6. For Sec. 351 purposes, the term "property" does not include
7. Which of the following is a true statement regarding primary authority of tax law?
8. Which of the following is secondary authority?
9. Which of the following statements about a partnership is true?
10. Identify which of the following statements is true.
Click here for the solution: Which of the following is an advantage of a sole proprietorship over other business forms
Monday, July 6, 2015
World-Tec Company sells electronics over the Internet
World-Tec Company sells electronics over the Internet. The International Division is organized as a cost center. The budget for the International Division for the month ended March 31, 2012, is as follows (in thousands):
Customer service salaries ………………………. $ 325,000
Insurance and property taxes ………………………... 68,250
Distribution salaries ………………………………… 519,250
Marketing salaries ………………………………….. 612,125
Engineer salaries …………………………………… 498,125
Warehouse wages ………………………………….. 348,800
Equipment depreciation …………………………… 109,400
Total ……………………………………………. $2,481,450
During March, the costs incurred in the International Division were as follows:
Customer service salaries ………………………. $ 416,700
Insurance and property taxes ………………………... 66,200
Distribution salaries ………………………………… 514,000
Marketing salaries ………………………………….. 685,500
Engineer salaries …………………………………… 488,100
Warehouse wages ………………………………….. 334,900
Equipment depreciation …………………………… 109,375
Total ……………………………………………. $2,614,775
Required:
1. Prepare a budget performance report for the director of the International Division for the month of March. Enter all amounts as positive numbers.
2. For which costs might the director be expected to request supplemental reports?
Click here for the solution: World-Tec Company sells electronics over the Internet
Customer service salaries ………………………. $ 325,000
Insurance and property taxes ………………………... 68,250
Distribution salaries ………………………………… 519,250
Marketing salaries ………………………………….. 612,125
Engineer salaries …………………………………… 498,125
Warehouse wages ………………………………….. 348,800
Equipment depreciation …………………………… 109,400
Total ……………………………………………. $2,481,450
During March, the costs incurred in the International Division were as follows:
Customer service salaries ………………………. $ 416,700
Insurance and property taxes ………………………... 66,200
Distribution salaries ………………………………… 514,000
Marketing salaries ………………………………….. 685,500
Engineer salaries …………………………………… 488,100
Warehouse wages ………………………………….. 334,900
Equipment depreciation …………………………… 109,375
Total ……………………………………………. $2,614,775
Required:
1. Prepare a budget performance report for the director of the International Division for the month of March. Enter all amounts as positive numbers.
2. For which costs might the director be expected to request supplemental reports?
Click here for the solution: World-Tec Company sells electronics over the Internet
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