Question: A $100,000 initial investment will generate

> Ace Company reports revenues of $40,000 and expenses of $31,000. The owner made no additional investments during the period but withdrew $5,000 cash from the business. After closing entries are recorded, determine the amount of the increase or decrease i

> Using Sierra Company’s adjusted trial balance from QS 4-16, prepare its December 31 closing entries.

> Set up T-accounts for the following accounts and amounts with normal balances as of December 31: K. Carver, Capital $18,000; K. Carver, Withdrawals $2,000; Services Revenue $33,000; Salaries Expense $25,000; Rent Expense $3,000; and Income Summary $0. (1

> The ledger of Mai Company includes the following accounts with normal balances as of December 31: D. Mai, Capital $9,000; D. Mai, Withdrawals $800; Services Revenue $13,000; Wages Expense $8,400; and Rent Expense $1,600. Prepare its December 31 closing e

> The ledger of Claudel Company includes the following unadjusted normal balances: Prepaid Rent $1,000, Services Revenue $55,600, and Wages Expense $5,000. Adjustments are required for (a) prepaid rent expired $200; (b) accrued services revenue $900; and (

> Gerald Company made an adjusting entry at its December 31 year-end for $800 of wages earned by employees but not yet paid. Gerald uses reversing entries. Prepare the reversing entry Gerald must record on January 1.

> Compute Chavez Company’s current ratio using the following information.

> Use the information in the adjusted trial balance reported in QS 4-16 to prepare Sierra Company’s classified balance sheet as of December 31.

> Use the following adjusted trial balance of Sierra Company to prepare its (1) income statement and (2) statement of owner’s equity for the year ended December 31. The L. Sierra, Capital account balance was $10,500 on December 31 of the

> Use the following selected accounts and amounts with normal balances from Juan Co. to prepare its classified balance sheet at December 31.

> Explain how labor costs flow through a company’s process cost system.

> Determine the financial statement column (Income Statement column or the Balance Sheet & Statement of Owner’s Equity column) where a normal account balance is extended. a. Equipment b. Owner, Withdrawals c. Prepaid Rent d. Depreciation Expense e. Accoun

> For each separate case below, follow the three-step process for adjusting the accrued revenue account at December 31. Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Reco

> a. Alonzo Co. receives $3,000 cash in advance for six months of recycling services on September 1 and records it by debiting Cash and crediting Unearned Revenue for $3,000. Alonzo provides recycling services monthly as promised. Prepare the December 31 y

> a. Tao Co. receives $10,000 cash in advance for four months of evenly planned legal services beginning on October 1. Tao records it by debiting Cash and crediting Unearned Revenue both for $10,000. It is now December 31, and Tao has provided legal servic

> a. Braga Company purchases $20,000 of equipment on January 1. The equipment is expected to last five years and be worth $2,000 at the end of that time. Prepare the entry to record one year’s depreciation expense of $3,600 for the equipment as of December

> For each separate case below, follow the three-step process for adjusting the Accumulated Depreciation account at December 31. Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Ste

> a. On July 1, Lopez Company paid $1,200 for six months of insurance coverage. No adjustments have been made to the Prepaid Insurance account, and it is now December 31. Prepare the year-end adjusting entry to reflect expiration of the insurance as of Dec

> At the end of its annual accounting period, the company must make three adjusting entries. For each of these adjusting entries, indicate the account to be debited and the account to be credited. a. Accrue salaries expense. b. Adjust the Unearned Revenue

> Classify the following adjusting entries as involving prepaid expenses, unearned revenues, accrued expenses, or accrued revenues. a. To record revenue earned that was previously received as cash in advance. b. To record wages expense incurred but not yet

> Cal Consulting follows the practice that prepayments are debited to expense when paid, and unearned revenues are credited to revenue when cash is received. Given this company’s accounting practices, which one of the following applies to the preparation o

> Use Apple’s financial statements in Appendix A to answer the following. 1. Compute Apple’s profit margin for fiscal years ended (a) September 28, 2019, and (b) September 29, 2018. 2. is the change in Apple’s profit margin favorable or unfavorable? 3. In

> Gomez Company reported net income of $48,025 and net sales of $425,000 for the current year. (a) Compute Gomez’s profit margin. (b) Assuming Cruz (a competitor) has a profit margin of 15%, which company is generating more profit on each dollar of sales

> The adjusted trial balance for Happy Company follows. Use the adjusted trial balance to prepare the December 31 year-end (a) income statement, (b) statement of owner’s equity, and (c) balance sheet. The E. Happy, Capital account bala

> Choose from the following list of terms and phrases to best complete the statements below. a. Fiscal year c. Accrual basis accounting e. Cash basis accounting b. Timeliness d. Annual financial statements f. Time period assumption 1. Presumes that an orga

> For each transaction, (1) analyze the transaction using the accounting equation, (2) record the transaction in journal entry form, and (3) post the entry using T-accounts to represent ledger accounts. Use the following partial chart of accounts—account n

> Determine the ending balance of each of the following T-accounts.

> Indicate whether a debit or credit decreases the normal balance of each of the following accounts.

> Identify the normal balance (debit or credit) for each of the following accounts.

> A chart of accounts is a list of all ledger accounts and an identification number for each. One example of a chart of accounts is near the end of the book on pages CA and CA-1. Using that chart, identify the following accounts as either an Asset, Liabili

> Classify each of the following accounts as an Asset, Liability, or Equity account.

> Home Demo reports the following: Total liabilities = $38,633 million and Total assets = $42,966 million. (a) Compute Home Demo’s debt ratio. (b) Assuming Lows Hardware (a competitor) has a debt ratio of 60.0%, which company has higher risk from financia

> Refer to Apple’s financial statements in Appendix A for the following questions. Required 1. What amount of total liabilities does Apple report for each of the fiscal years ended (a) September 28, 2019, and (b) September 29, 2018? 2. What amount of tota

> Apple provides customer service and device repair through its Apple Care program. In preparing its monthly master budget, assume Apple’s Apple Care division reports the data below. Required Prepare a direct labor budget for the Apple C

> The debt ratio for Deutsche Auto for each of the last three years follows. Over this three-year period, did the company’s risk from financial leverage increase or decrease?

> Use the information in QS 2-14 to prepare a December 31 balance sheet for Lawson Consulting. Hint: The ending I. Lawson, Capital account balance as of December 31 is $13,000.

> Use the information in QS 2-14 to prepare a December statement of owner’s equity for Lawson Consulting. The I. Lawson, Capital account balance at December 1 was $0. Hint: Net income for December is $4,000 and the owner invested $10,500 cash in the compan

> Use the information in QS 2-14 to prepare a December income statement for Lawson Consulting. The company began operations on December 1.

> Lawson Consulting had the following accounts and amounts on December 31. Prepare a December 31 trial balance.

> Prepare compound journal entries for each transaction. a. The owner, J. Cruz, invests $6,500 cash and $3,500 of equipment in the company. b. The company acquires $2,000 of supplies by paying $500 cash and putting $1,500 on credit (accounts payable).

> Analyze each transaction in QS 2-9 by showing its effects on the accounting equation—specifically, identify the accounts and amounts (including + or −) for each transaction.

> Prepare general journal entries for the following transactions of Green Energy Company. Use the following partial chart of accounts: Cash; Accounts Receivable; Supplies; Accounts Payable; Consulting Revenue; and Utilities Expense. May 1 The Company provi

> A company is considering three alternative investment projects with different net cash flows. The present value of net cash flows is calculated using Excel and the results follow. a. Compute the net present value of each project. b. If the company accept

> Net present values for three alternative investment projects follow. (a) If the company accepts all positive net present value investments, which of these projects will it accept? (b) If the company can choose only one project, which will it choose?

>  Key financial figures for Apple’s two most recent fiscal years follow. Required 1. What is the total amount of assets invested in Apple in the current year? 2. What is Apple’s return on assets for t

> Peng Company is considering buying a machine that will yield income of $1,950 and net cash flow of $14,950 per year for three years. The machine costs $45,000 and has an estimated $6,000 salvage value. Compute the accounting rate of return for this inves

> A company is considering three alternative investment projects. Accounting rate of return computations are calculated using Excel and are shown below. If the company can choose only one project, which will it choose on the basis of accounting rate of ret

> Compute the payback period for an investment with the following net cash flows.

> Park Co. is considering an investment of $27,000 that provides net cash flows of $9,000 annually for four years. What is the investment’s payback period?

> Perez Co. is considering an investment of $27,336 that provides net cash flows of $9,000 annually for four years. (a) What is the internal rate of return of this investment? (b) The hurdle rate is 10%. Should the company invest in this project on the bas

> Internal rates of return for three alternative investment projects follow. Each project has a five-year life. The company requires a 12% rate of return on its investments. (a) Which project(s) will the company accept on the basis of internal rate of retu

> Refer to the information in QS 26-19 and instead assume the machine has a salvage value of $20,000 at the end of its three-year life. Compute the machine’s net present value.

> Following is information on an investment in a manufacturing machine. The machine has zero salvage value. The company requires a 12% return from its investments. Compute this machine’s net present value.

> Pablo Company is considering buying a machine that will yield income of $1,950 and net cash flow of $14,950 per year for three years. The machine costs $45,000 and has an estimated $6,000 salvage value. Pablo requires a 15% return on its investments. Com

> Apple provides device support services to large business clients. These services use direct labor and overhead costs. Assume Apple uses two types of direct labor: phone support staff, paid $12 per hour, and technical specialists, paid $25 per hour. Overh

> Quail Co. is considering buying a food truck that will yield net cash inflows of $10,000 per year for seven years. The truck costs $50,000 and has an estimated $6,000 salvage value at the end of the seventh year. What is the net present value of this inv

> Pena Co. is considering an investment of $27,000 that provides net cash flows of $9,000 annually for four years. (a) If Pena Co. requires a 10% return on its investments, what is the net present value of this investment? (b) Based on net present value, s

> The profitability indexes for three alternative investment projects follow. Each project has a five-year life. (a) Which project(s) will the company accept on the basis of profitability index? (b) If the company can choose only one project, which will it

> A company is considering two alternative machines with different net cash flows and salvage values. Present value amounts are calculated using Excel and the results follow. a. Compute the net present value of each machine A and B. b. If the company can c

> Dax Co. is considering an investment with the following information. a. Compute the net present value of the investment. b. Determine whether the investment should be accepted on the basis of net present value.

> Ibez Co. is considering a project that requires an initial investment of $60,000 and will generate net cash flows of $16,000 per year for 6 years. Ibez requires a return of 9% on its investments. The present value factor of an annuity for 6 years at 9% i

> Maya Co. currently buys a component part for $3 per unit. Maya estimates that making the part would require $2.25 per unit of direct materials and $1.00 per unit of direct labor. Maya normally applies overhead using a predetermined overhead rate of 125%

> Kando Company currently pays $7 per unit to buy a part for a product it manufactures. Instead, Kando could make the part for per unit costs of $3 for direct materials, $2 for direct labor, and $1 for incremental overhead. Kando normally applies overhead

> 1. A company is considering replacing an old machine. The old machine has a book value of $50,000 and a remaining five-year life. The old machine can be sold now for $55,000. The new machine can be purchased for $100,000. 2. A company spent $2,000 to mak

> Zycon has produced 10,000 units of raw milk at a $15,000 cost. These units can be sold as is to another manufacturer for $20,000. Instead, Zycon can process the units further and produce yogurt. Processing further will cost an additional $22,000 and will

> For Apple’s current annual report, assume it reports the following for raw materials. Required 1. Compute Apple’s raw materials inventory turnover ratio for the most recent two years. 2. Is the current year change in

> Refer to the information in QS 25-1. Based on income, should Helix accept this new customer order at the special price?

> Cheng Co. reports the following information. Determine its, (a) Time charge per hour of direct labor. (b) Materials markup percentage.

> Meng uses time and materials pricing. Its time charge per hour of direct labor is $55. Its materials markup is 30%. What price should Meng quote for a job that will take 80 direct labor hours and use $3,800 of direct materials?

> Raju is in a competitive product market. The expected selling price is $80 per unit, and Raju’s target profit is 20% of selling price. Using the target cost method, what is the highest Raju’s cost per unit can be?

> GoSnow sells snowboards. Each snowboard requires direct materials of $110, direct labor of $35, variable overhead of $45, and variable selling, general, and administrative costs of $10. The company has fixed overhead costs of $265,000 and fixed selling,

> José Ruiz starts a company that makes handcrafted birdhouses. Competitors sell a similar birdhouse for $245 each. José believes he can produce a birdhouse for a total cost of $200 per unit, and he plans a 25% markup on total cost. (a) Compute José’s plan

> Garcia Co. sells snowboards. Each snowboard requires direct materials of $100, direct labor of $30, variable overhead of $45, and variable selling, general, and administrative costs of $3. The company has fixed overhead costs of $635,000 and fixed sellin

> Rory Company has an old machine with a book value of $75,000 and a remaining five-year useful life. Rory is considering purchasing a new machine at a price of $90,000. Rory can sell its old machine now for $60,000. The old machine has variable manufactur

> A segment of a company reports the following loss for the year. All $140,000 of its variable costs are avoidable, and $75,000 of its fixed costs are avoidable. (a) Compute the income increase or decrease from eliminating this segment. (b) Should the segm

> A manufacturer is considering eliminating a segment because it shows the following $6,000 loss. All $20,000 of its variable costs are avoidable, and $36,000 of its fixed costs are avoidable. (a) Compute the income increase or decrease from eliminating th

> Use Apple’s financial statements in Appendix A to answer the following. 1. Using fiscal 2017 as the base year, compute trend percent’s for fiscal years 2017, 2018, and 2019 for total net sales, total cost of sales, operating income, other income (expense

> Surf Company can sell all of the two surfboard models it produces, but it has only 400 direct labor hours available. The Glide model requires 2 direct labor hours per unit. The Ultra model requires 4 direct labor hours per unit. Contribution margin per u

> Estela Company produces skateboards and scooters. Their per unit selling prices and variable costs follow. Skateboards require 2 machine hours per unit. Scooters require 3 machine hours per unit. For each product, compute (a) Contribution margin per unit

> Rosa Company produced 1,000 defective phones due to a production error. The phones had cost $60,000 to produce. A salvage company will buy the defective phones as scrap for $30,000. It would cost Rosa $80,000 to rework the phones. If the phones are rewor

> Garcia Company has 10,000 units of its product that were produced at a cost of $150,000. The units were damaged in a rainstorm. Garcia can sell the units as scrap for $20,000, or it can rework the units at a cost of $38,000 and then sell them for $50,000

> A company has already spent $5,000 to harvest tomatoes. The tomatoes can be sold as is for $90,000. Instead, the company could incur further processing costs of $48,000 and sell the resulting salsa for $126,000. (a) Prepare a sell as is or process furthe

> Holmes Company has already spent $50,000 to harvest peanuts. Those peanuts can be sold as is for $67,500. Alternatively, Holmes can process further into peanut butter at an additional cost of $312,500. If Holmes processes further, the peanut butter can b

> QualCo manufactures a single product in two departments: Cutting and Assembly. Information for the Cutting department for May follows. 1. Compute equivalent units of production for both direct materials and conversion. 2. Compute cost per equivalent unit

> Sierra Company manufactures soccer balls in two sequential processes: Cutting and Stitching. All direct materials enter production at the beginning of the cutting process. The following information is available regarding its May inventories. The followin

> Refer to the data in Problem 20-3A. Assume that Tamar uses the FIFO method of process costing. The units started and completed for May total 19,200. Required 1. Prepare the Forming department’s production cost report for May using FIFO. 2. Prepare the M

> Tamar Co. manufactures a single product in two departments: Forming and Assembly. Information for the Forming process for May follows. Required 1. Prepare the Forming department’s production cost report for May using the weighted avera

> Use Apple’s financial statements in Appendix A to answer the following. 1. Is Apple’s statement of cash flows prepared under the direct method or the indirect method? 2. For each fiscal year 2019, 2018, and 2017, identify the amount of cash provided by o

> Fast Co. produces its product through two processing departments: Cutting and Assembly. Information for the Cutting department follows. Required 1. Prepare the Cutting department’s production cost report for October using the weighted

> Victory Company uses weighted average process costing. The company has two production processes. Conversion cost is added evenly throughout each process. Direct materials are added at the beginning of the first process. Additional information for the fir

> Sadar Company is a store with two operating departments, Guitar and Piano. Information follows. The company reports the following indirect expenses for the year. Additional information about the two operating departments follows. Required 1. Allocate in

> Bonanza has two operating departments (Movies and Video Games) and one service department (Office). Its departmental income statements follow. Indirect expenses and service department expenses consist of rent, utilities, and office department expenses.

> Harmon’s has two operating departments, Clothing and Shoes. Indirect expenses for the period follow. The company occupies 4,000 square feet of a rented building. In prior periods, the company divided the $92,000 of indirect expenses by

> Britney Brown is the plant manager of GT Co.’s Chicago plant. The Refrigerator and Dishwasher operating departments manufacture products and have their own managers. The Office department, which Brown also manages, provides services equ

> California Orchards reports the following sales data for the year ended December 31. The company incurred the following joint costs for the year. Required 1. Use the value basis to allocate joint costs to the three grades of walnuts. 2. Compute gross pr

> Diaz Company is a retail store with two operating departments, Clothes and Shoes. Information follows. The company reports the following indirect expenses for the year. Additional information about the two departments follows. Required 1. Allocate indir

> Garcia Company has two operating departments (Phone and Earbuds) and one service department (Office). Its departmental income statements follow. Indirect expenses and service department expenses consist of rent, utilities, and office department expenses.

> National Retail has two departments, House wares and Sporting. Indirect expenses for the period follow. The company occupies 4,000 square feet of a rented building. In prior periods, the company divided the $80,000 of indirect expenses by 4,000 square fe

> Use Apple’s financial statements in Appendix A to answer the following. 1. Compute Apple’s return on total assets for the years ended September 28, 2019, and September 29, 2018. 2. Is the change in Apple’s return on total assets from part 1 favorable or

> Santana Rey’s two departments, Computer Consulting Services and Computer Workstation Furniture Manufacturing, have each been profitable for Business Solutions. Santana has heard of the cash conversion cycle and wants to use it as anothe