Question: Prime Contracting Services provides various

> Sedan Corporation, a Japanese automobile manufacturer, follows U.S. GAAP and reports its results in millions of yen (Â¥). On March 31, 2013 and 2012, Sedan reported the following information pertaining to its inventories: Sedan reported Cost

> The following data relate to the manufacturing activities of the Lord Crompton Plc. during June: It incurred factory costs during the month of June as follows: Raw Materials Purchased ………&aci

> Katherine’s Outdoor Furniture, a manufacturer specializing in lawn, deck, and poolside furniture, showed the following amounts in its inventory accounts on January 1: Raw Materials Inventory……………………………………..$226,800 Work-in-Process Inventory…………………………………

> Metso Corporation is a Finnish engineering firm specializing in design and development for the paper and pulp industry. Metso applies IFRS and reports its results in millions of euros (€). For the years ended December 31, 2012 and 2011,

> Aracruz Celulose, a Brazilian pulp manufacturer, applies U.S. GAAP and reports its results in thousands of U.S. dollars. For the years ended December 31, 2012 and 2011, Aracruz reported the following information pertaining to accounts receivable: At De

> The financial statements and notes for Polaris Corporation reveal the following for the four years ending in March 2010–2013 (amounts in millions of US$): Assume that Polaris’s credit sales as a percent of total sale

> Stone Pest Control offers extermination services to customers in various arrangements and packages. For example, a customer could call Stone as needed to come out and spray for insects; for this service, Stone charges $80 per service call. For a separate

> Pret a Manger is a food retailer with stores in the United Kingdom and the United States and is known for its fast but fresh food menu. A customer shopping at a London Heathrow store purchased a ham and cheese baguette (£4.50), a small fruit salad (£2.40

> Assume that during December 2013, Nordstrom sold $20 million of merchandise and another $12 million of gift cards, of which $24 million was on credit and the rest in cash. Nordstrom acquired the merchandise for $7.2 million. Further assume that Nordstrom

> A member of the Audit Committee of a firm asks the chief financial officer (CFO) the following question: “How do you know the Allowance for Uncollectible Accounts is adequate?” Discuss the adequacy or inadequacy of each of the following independent respo

> Most firms recognize at least some revenues at the time of sale or delivery of goods and services and, following the principles of the accrual basis of accounting, match expenses either with associated revenues or with the period when they consume resour

> Pickin Chicken, Inc., and Country Delight, Inc., both sell franchises for their chicken restaurants. The franchisee receives the right to use the franchisor’s products and to benefit from national training and advertising programs. The franchisee agrees

> The J. C. Spangle catalog company began business on January 1, 2012. Activities of the company for the first two years are as follows: a. Prepare income statements for 2012 and 2013, assuming that the company uses the accrual basis of accounting and re

> Appliance Sales and Service sells major household appliances to retail customers, offering extended payment terms. Its fiscal year ends on June 30. In July of 2013, a customer bought a freezer, a refrigerator, and a convection oven on an installment plan

> Furniture Retailers sells furniture to retail customers, offering extended payment terms. In January 2013, a customer buys a full set of dining room and living room furniture for $8,400 on an installment plan, with no down payment and monthly payments of

> On October 15, 2010, Flanikin Construction Company contracted to build a shopping center at a contract price of $180 million. The schedule of expected and actual cash collections and contract costs is as follows: a. Calculate the amount of revenue, exp

> The French energy company, Areva Group, recently won a $2 billion contract to build a uranium enrichment plant. Areva began construction in 2013 and expects to complete it by 2019. Assume that the customer agrees to pay as follows: at the time of signing

> Indicate—using O/S (overstated), U/S (understated), or NO (no effect)—the pretax effect of each of the following errors on (1) the rate of return on assets ratio, (2) the accounts receivable turnover ratio, and (3) the liabilities to assets ratio. Each o

> In the preceding Exercises 10 through 15, you computed a number. To do so, first you must decide on the appropriate factor from the Appendix Tables, and then you use that factor in the appropriate calculation. Notice that you could omit the last step. Yo

> The sales, all on account, of Pins Company in 2013, its first year of operations, were $700,000. Collections totaled $500,000. On December 31, 2013, Pins Company estimated that 2% of all sales would probably be uncollectible. On that date, Pins Company w

> Fast Growth Start-Up Company (FGSUC) has a new successful Internet business. It expects to earn $100 million of after tax free cash flows this year. The company proposes to go public, and the company’s internal financial staff suggests to the board of di

> William Marsh, CEO of Gulf Coast Manufacturing, wishes to know which of two strategies he has chosen for acquiring an automobile has lower present value of cost. Strategy L. Acquire a new Lexus at the beginning of 2013, keep it until the end of 2018, the

> Lexie T. Colleton is the chief financial officer of Ragazze, and one of her duties is to give advice on investment projects. Today’s date is December 31, 2013. Colleton requires that, to be acceptable, new investments must provide a positive net present

> Selected data from the financial statements of Kajima Corporation appear next for the years ended March 31, 2009, through March 31, 2012. Kajima applies Japanese accounting standards and reports its results in millions of yen (Â¥). For purposes

> Refer to the data in the preceding problem. Assume now that the acquisition is taxable, so that the tax basis of the assets acquired changes after the purchase. If the purchase price is $V, then depreciation charges will be $V/20 per year for 20 years. I

> Hilton Garden Inn, a division of Hilton Hotels, offers its customers two choices when reserving rooms. The customer may purchase a nonrefundable internet special of $150 per night, or pay at the refundable rate of $220 per night. Whether a customer purch

> Suppose that yesterday Black & Decker Company purchased and installed a made-to-order machine tool for fabricating parts for small appliances. The machine cost $100,000. Today, Square D Company offers a machine tool that will do exactly the same work but

> Friendly Loan Company advertises that it is willing to lend cash for five years at the low rate of 8% per year. A potential borrower discovers that a five-year, $10,000 loan requires that the borrower pay the 8% interest in advance, with interest deducte

> On January 1, 2013, assume that Levi Strauss opened a new textile plant to produce synthetic fabrics. The plant is on leased land; 20 years remain on the nonrenewable lease. The cost of the plant was $20 million. Net cash flow to be derived from the proj

> Indicate whether each of the following accurately describes the meaning of the Allowance for Uncollectible Accounts account when properly used. If the description does not apply to this account, discuss why it does not. a. Assets available in case custom

> Oberweis Dairy switched from delivery trucks with regular gasoline engines to ones with diesel engines. The diesel trucks cost $6,000 more than the ordinary gasoline trucks but costs $1,800 per year less to operate. Assume that Oberweis saves the operati

> Exhibit 10.3 presents a partial balance sheet for Hargon, Inc., a creator and manufacturer of biotechnology pharmaceutical products, for December 31, 2012 and 2013. a. Does Hargon likely recognize depreciation on the amount in the Construction-in- Progre

> Exhibit 10.2 presents a partial balance sheet for Comerica Mills, Inc., a consumer foods processing company, for its fiscal years ending May 28, 2012, and May 27, 2013. Exhibit 10.2: a. Comerica Mills is not in the business of developing computer soft

> Pfizer, a pharmaceutical company, plans to spend $90 million on research and development (R&D) at the beginning of each of the next several years to develop new drugs. As a result of the R&D expenditure for a given year, it expects pretax income (not cou

> Give the journal entry to recognize an impairment loss, if appropriate, in each of the following cases under U.S. GAAP. If a loss does not qualify as an impairment loss, explain the reason, and indicate the appropriate accounting. a. Commercial Realty Co

> Cloud Airlines has $3 billion of assets, including airplanes costing $2.5 billion with net carrying value of $1.6 billion. It earns net income equal to approximately 6% of total assets. Cloud Airlines depreciates its airplanes for financial reporting pur

> Present journal entries for each of the following transactions of Moon Macro systems: a. Acquired computers costing $400,000 and computer software costing $40,000 on January 1, 2011. Moon expects the computers to have a service life of 10 years and $40,0

> Federal Stores owns several retail store chains. On August 30, 2013, it sold all of the credit card receivables of its department store chains to Community Bank. Exhibit 12.16 reports the sale of these receivables. a. Using information in Exhibit 12.16,

> A bank reports the following information relating to its marketable securities classified as available-for-sale securities for a recent year (amounts in millions of US$): Cash proceeds from sales and maturities of marketable securities totaled $37,600

> Information related to marketable equity securities of Callahan Corporation appears on the next page. a. Assume these securities are trading securities. Indicate the nature and amount of income recognized during 2013 and 2014 and the presentation of in

> Refer to the conceptual revenue recognition guidance given in Appendix 8.1. Applying this conceptual guidance, discuss the timing of revenue recognition and any related measurement issues. a. Company A develops software and sells it to customers for an u

> Exhibit 13.8 reproduces data about marketable equity securities classified as available-for-sale securities by Moonlight Mining Company. Assume that Moonlight held no current marketable securities at the end of 2013, sold no current marketable securities

> The following information summarizes data about Rice Corporation’s investments in equity securities held as noncurrent assets and classified as available-for-sale securities: a. Give all journal entries relating to these equity securi

> The following information summarizes data about Dostal Corporation’s marketable securities held as current assets and classified as available-for-sale securities: a. Give all journal entries relating to these marketable equity securit

> The Layton Ball Corporation has a relatively complicated capital structure—that is, it raises funds using various financing devices. In addition to common shares, it has issued stock options, warrants, and convertible bonds. Exhibit 17.

> Exhibit 17.13 presents a consolidated statement of income and retained earnings for 2013, and Exhibit 17.14 presents a consolidated balance sheet for Tuck Corporation as of December 31, 2012 and 2013. A statement of accounting policies and a set of notes

> Exhibits 17.11 and 17.12 present a partial set of financial statements of Chicago Corporation for 2013, including a consolidated statement of income and retained earnings for 2013 and consolidated comparative balance sheets at December 31, 2012 and 2013.

> Exhibit 16.22 presents financial data, including a partial statement of cash flows, for LKR Company for the year. Fill in the numbers in the statement of cash flows. Then respond to the following questions. Use positive numbers for cash inflows (receipts

> Exhibit 16.21 presents a statement of cash flows for Cypress Corporation. a. What are the likely reasons that net income increased between 2011 and 2013, but cash flow from operations decreased? b. What are the likely reasons for the increased cash flow

> Exhibit 16.19 presents a statement of cash flows for Canned Soup Company for three recent years (based on financial statements of Campbell Soup Company). Canned Soup Company is in the consumer foods industry, a relatively mature industry in the United St

> Discuss when each of the following types of businesses is likely to recognize revenue and related costs of sales: a. A shoe store. b. A shipbuilding firm constructing an aircraft carrier under a government contract. c. A real estate developer selling lot

> Exhibit 16.18 presents a statement of cash flows for Gear Locker, manufacturer of athletic shoes and sportswear, for three recent years. a. What is the likely reason for the negative cash flow from operations? b. How did Gear Locker finance the negative

> Selected information from the accounting records of Breda Enterprises, Inc., appears next. The firm uses a calendar year as its reporting period. Prepare a statement of cash flows for Breda Enterprises for 2014. Use the indirect method. Key all figures i

> Irish Paper Company (Irish) manufactures and markets various paper products around the world. Paper manufacturing is a capital-intensive activity. A firm that does not adequately use its manufacturing capacity will experience poor operating performance.

> Exhibit 16.14 presents a comparative balance sheet and Exhibit 16.15 presents a comparative income statement for Airlines Corporation for 2013 and 2014 (based on financial statements of UAL). Expenditures on new property, plant, and equipment were $1,568

> Exhibit 16.11 presents a comparative statement of financial position for Biddle Corporation as of December 31, 2013 and 2014. Exhibit 16.12 presents an income statement for 2014. Additional information follows after Exhibit 16.11: Exhibit 16.11: (1) O

> The management of Warren Corporation, concerned over a decrease in cash, provides you with the comparative analysis of changes in account balances between June 30, 2013, and June 30, 2014, appearing in Exhibit 16.8. During the year ended June 30, 2014,

> Exhibit 16.7 presents a statement of cash flows from Ingers Company for 2013. Give the entry made on the T-account work sheet for each of the numbered line items. For example, the work sheet entry for line (1) is as follows (amounts in millions of US$):

> Refer to the data in Exhibit 16.6 for Metals Company for 2014 (based on financial statements of Alcoa). Derive a presentation of cash flow from operations using the direct method. Exhibit 16.6: Metals Company (all amounts in millions of US$) (Probl

> Exhibit 16.6 presents an income statement and a statement of cash flows for Metals Company for 2014 (based on financial statements of Alcoa). Give the entry made on the T-account work sheet for each of the numbered line items. For example, the work sheet

> Exhibit 6.12 in Chapter 6 provides a simplified statement of cash flows. For each of the transactions that follow, indicate the number(s) of the line(s) in Exhibit 6.12 affected by the transaction and the amount and direction (increase or decrease) of th

> For each of the items a to d below, describe the accounting treatment using one of the following four approaches, assuming that the firm does not elect the fair value option: (1) Measured at fair value with changes recognized in net income. (2) Measured

> On December 7, 2008, Alpharm issued shares of convertible preferred stock and warrants to purchase additional shares of preferred stock for an aggregate issue price of $46,180,000 in a private placement of securities. Investment bankers estimated the fai

> Kiersten Corporation sells 60,000 common stock warrants for $4 each on February 26, 2013. Each warrant permits its holder to purchase a share of the firm’s $10 par value common stock for $30 per share at any time during the next two years. The market pri

> Symantec has convertible bonds outstanding with a face value of $10,000,000 and a carrying value of $10,255,000. Holders of the bonds convert them into 100,000 shares of $10 par value common stock. The common stock sells for $105 per share on the market.

> Higgins Corporation issues $1 million of 20-year, $1,000 face value, 10% semiannual coupon bonds at par on January 2, 2013. Each $1,000 bond is convertible into 40 shares of $1 par value common stock. Assume that Higgins Corporation’s credit rating is su

> Watson Corporation grants 20,000 stock options to its managerial employees on December 31, 2013, to purchase 20,000 shares of its $10 par value common stock for $25 per share. The market price of a share of common stock on this date is $25 per share. Emp

> Morrissey Corporation grants 50,000 stock options to its managerial employees on December 31, 2013, to purchase 50,000 shares of its $1 par value common stock for $60 per share. The market price of a share of common stock on this date is $60 per share. E

> Prepare journal entries under the cost method to record the following treasury stock transactions of Melissa Corporation. a. Purchases 10,000 shares of its own $5 par value common stock for $12 per share. b. Issues 6,000 treasury shares upon the conversi

> Prepare journal entries under the cost method to record the following treasury stock transactions of Danos Corporation. a. Purchases 10,000 shares of its own $10 par value common stock for $30 per share. b. Issues 6,000 treasury shares to employees under

> Prepare journal entries for the following transactions of Watt Corporation. Watt has 20,000 shares of $15 par value common stock outstanding on January 1, 2013. The balance in the Additional Paid-In Capital account on this date is $200,000. a. Declares a

> Give journal entries, if required, for the following transactions pertaining to Grable: a. Grable declares the regular quarterly dividend of $1.50 per share on its $100 par value preferred stock. There are 30,000 shares authorized and 15,000 shares issue

> Carter, Inc., issued 100,000 shares of $1 par value common stock on December 1, 2013. On that date, the market price of the shares was $18 per share. What journal entry did Carter record to reflect this transaction?

> On September 30, 2014, Homing Corporation issued 500,000 shares of $0.10 par value common stock. The market price of the shares on this date was $30 per share. What journal entry did Homing record to reflect this transaction?

> Exhibit 14.11 presents a spreadsheet that we use to compare the effects of using the equity method with using consolidated financial statements. The Web site for this book contains an Excel spreadsheet that duplicates the one in Exhibit 14.11. Download t

> On May 1, 2013, Homer acquired the assets and agreed to take on and pay off the liabilities of Tonga in exchange for 10,000 of Homer’s common shares. Homer accounted for the acquisition of the net assets of Tonga using the purchase method. On the date of

> Alpha owns 100% of Omega and consolidates Omega in an entity called Alpha/Omega. Beginning in 2013, Alpha sold merchandise to Omega at a price 50% larger than Alpha’s costs. Omega sold some, but not all, of these goods to customers at a

> Vogel Company is a subsidiary of Joyce Company. Joyce Company accounts for its investment in Vogel Company using the equity method on its single- company books. Present journal entries for the following selected transactions and other information. Record

> CAR Corporation manufactures computers in the United States. It owns 75% of the voting stock of Charles Electronics, 80% of the voting stock of Alexandre du France Software Systems (in France), and 90% of the voting stock of R Credit Corporation (a finan

> The following information summarizes data about the minority, active investments of Stebbins Corporation. Company R owns a building with 10 years of remaining life and with a fair value exceeding its carrying value by $160,000. $40,000 of this amount a

> Corporation made three long-term inter corporate investments on January 2. Data relating to these investments for the year appear next. Give the journal entries to record the acquisition of these investments and to apply the equity method during the ye

> Weber Corporation acquired significant influence over Albee Computer Company on January 2 by purchasing 20% of its outstanding stock for $100 million. Weber Corporation attributes the entire excess of acquisition cost over the carrying value of Albee Com

> Cayman Company purchased 100% of the common stock of Denver Company on January 2 for $550,000. The common stock of Denver at this date was $200,000, and the retained earnings balance was $350,000. During the year, net income of Denver was $120,000 and di

> Exhibit 16.13 presents the comparative balance sheets for Plainview Corporation for 2013 and 2014. The following additional information relates to 2014 activities: (1) The Retained Earnings account changed as follows: (2) On January 2, 2014, Plainview

> Indicate the accounting principle or method described in each of the following statements. a. This inventory cost-flow assumption results in reporting the largest net income during periods of rising acquisition costs and non-decreasing inventory levels.

> In this chapter, we discussed many data inputs to an organization’s production process. What are the specific data items to input into a system when adding a new raw materials inventory item? What specific data items need to be input when a worker records

> Why are accounting transactions associated with payroll processing so repetitive in nature? Why do some companies choose to have payroll processed by external service companies rather than do it themselves?

> Discuss specific steps you would take as a manager to ensure that a business process reengineering effort is successful.

> Assume for the moment that you are the controller for Dr. Lazik & Associates, which is a full-service ophthalmology practice with 10 locations in a large metropolitan area. The president of the company just asked you to take charge of the task of automat

> The resource management process includes events associated with both personnel and payroll functions. Describe four data items that could be used by both functions. Describe two data items for each function that would not necessarily be needed by the oth

> Explain the term “business-without boundaries.” How is this changing the nature of organizations?

> How are the inputs and outputs of the purchasing process likely to be different for a restaurant versus an automobile manufacturer?

> How does a data flow diagram for the sales process differ from a system flowchart describing that process?

> This chapter discussed many inputs to an organization’s sales process. What are the specific data items needed to add a new customer and record a sales order?

> What are some criteria that systems designers should consider when developing managerial reports for an AIS? How do system designers know what to include on reports?

> What is a data warehouse? Why do companies use them?

> What are some typical outputs of an AIS? Why do systems analysts concentrate on managerial reports when they start to design an effective AIS? Why not start with the inputs to the system instead?

> What are the purposes of accounting codes? How are they used? Bring to class some examples of codes used by manufacturing firms, accounting firms, and merchandising firms.

> Since the accounting and finance function is a target for outsourcing for some firms, how does that make you feel about your choice of accounting as a major? How can you protect your future job security?

> When companies think about outsourcing a function, many questions need to be answered. Search the Internet for answers to the following questions: a. What are some of the “pros” associated with outsourcing? b. What are some of the “cons” associated with