The accounts of Consolidated Can contain the following amounts at December 31, 2012: Cost of products sold …………………………………..$410,000 Dividends…………………………………………………………3,000 Extraordinary gain (net of tax)…………………………..1,000 Income taxes……………………………………………………9,300 Interest expense……………………………………………… 8,700 Other income……………………………………………………1,600 Retained earnings 1/1,……………………………………..270,000 Sales …………………………………………………………….480,000 Selling and administrative expense ……………………42,000 Required Prepare a multiple-step income statement combined with a reconciliation of retained earnings for the year ended December 31, 2012.
> What is redeemable preferred stock? Why should it be included with debt for purposes of financial statement analysis?
> Describe the item Unrealized Decline in Market Value of Noncurrent Equity Investments.
> When would no controlling interest be presented on a balance sheet?
> How is an unconsolidated subsidiary presented on a balance sheet?
> A firm, with no opening inventory, buys 10 units at $6 each during the period. In which accounts might the $60 appear on the financial statements?
> The following information applies to Bowling Green Metals Corporation for the year ended December 31, 2012: Total revenues from regular operations …………………………………..$832,000 Total expenses from regular operations ……………………………………..776,000 Extraordinary gain,
> What is treasury stock? Why is it deducted from stockholders’ equity?
> Many assets are presented at historical cost. Why does this accounting principle cause difficulties in financial statement analysis?
> To be conservative, how should no controlling interest on the balance sheet be handled for primary analysis?
> A rental agency collects rent in advance. Why is the rent collected treated as a liability?
> Classify each of the following as a (CA) current asset, (NA) noncurrent asset, (CL) current liability, (NL) noncurrent liability, or (E) equity account. Choose the best or most frequently used classification. a. Supplies b. Notes receivable c. Unearned s
> Explain how the issuance of a convertible bond can be a very attractive means of raising common equity funds.
> A bond carries a stated rate of interest of 6% and par of $1,000. It matures in 20 years. It is sold at 83 (83% of $1,000, or $830). a. Under normal conditions, why would the bond sell at less than par? b. How would the discount be disclosed on the sta
> For reporting purposes, management prefers higher profits; for tax purposes, lower taxable income is desired. To meet these goals, firms often use different methods of depreciation for tax and reporting purposes. Which depreciation method is best for rep
> DeLand Company owns 100% of Little Florida, Inc. Will DeLand Company show a noncontrolling interest on its balance sheet? Would the answer change if it owned only 60%? Will there ever be a case in which the subsidiary, Little Florida, is not consolidated
> Describe the account Unrealized Exchange Gains or Losses.
> At the end of 2012, vandals destroyed your financial records. Fortunately, the controller had kept certain statistical data related to the income statement, as follows: a. Cost of goods sold was $2 million. b. Administrative expenses were 20% of the co
> Explain these preferred stock characteristics: a. Accumulation of dividends b. Participation in excess of stated dividend rate c. Convertibility into common stock d. Callability by the corporation e. Preference in liquidation
> Consolidation rules are similar between countries. Comment.
> Describe how a company could be required to consolidate another company in which it has no or minor voting stock.
> Indicate the two approaches to presenting consolidated statements.
> Private companies are not under Sarbanes-Oxley. Why do some private companies follow the law?
> Under Sarbanes-Oxley, management must include what report with the audited statements?
> Under Sarbanes-Oxley, the auditing firm will include which two reports with the audited statements? (Note: These two reports can be combined into one report.)
> Why is the COSO report on internal control systems important under requirements of the Sarbanes-Oxley Act?
> Describe the Tredway Commission.
> Where must a company’s code of ethics be made available?
> The income statement of Rawl Company for the year ended December 31, 2012, shows the following: Net sales ………………………………………………………………………………$360,000 Cost of sales…………………………………………………………………………… 190,000 Gross profit…………………………………………………………………………….. 170,000 Sellin
> What is the basic guideline for consolidation?
> Consolidated statements may be issued to show financial position as it would appear if two or more companies were one entity. What is the objective of these statements?
> Describe the purchase method of accounting for a business combination.
> Considering the EMH, how could abnormal returns be achieved?
> Considering the EMH, it is best if financial disclosure is made in the body of the financial statements. Comment.
> Why would the use of insider information be of concern if the market is efficient?
> Identify the usual forms of a business entity and describe the ownership characteristic of each.
> Describe the filing deadline for Form 10-K.
> Why aren’t all transactions recorded in the general journal?
> Why are adjusting entries necessary?
> The following items are from Taperline Corporation on December 31, 2012. Assume a flat 40% corporate tax rate on all items, including the casualty loss. Sales …………………………………………. $670,000 Rentalincome…..…………………………………..3,600 Gain on the sale of fixed assets
> A typical accrual recognition for salaries is as follows: Salaries Expense $1,000 (increase) Salaries Payable 1,000 (increase) Explain how the matching concept applies in this situation.
> Define the following: a. Permanent accounts b. Temporary accounts
> What is the relationship between the accounting equation and the double-entry system of recording transactions?
> Identify the basic accounting equation.
> What is the relationship between ethics and law?
> Describe the relationship between the terms ethics and morals.
> Where do we find a description of a firm’s accounting policies?
> Why should notes to financial statements be reviewed?
> Can cash dividends be paid from retained earnings? Comment.
> What are the three major categories on a balance sheet?
> (1). Lennar Homebuilding costs and expenses include $51.3 million, $373.5 million and $340.5 million, respectively, of valuation adjustments and write-offs of option deposits and pre-acquisition costs for the years ended November 30, 2010, 2009 and 2008
> Last year, Barnard Company incurred the following costs: Direct materials …………………………………… $ 50,000 Direct labor …………………………………………….. 20,000 Manufacturing overhead ……………………….. 130,000 Selling expense ………………………………………. 40,000 Administrative expense ………………………
> Last year, Barnard Company incurred the following costs: Direct materials …………………………………… $ 50,000 Direct labor …………………………………………….. 20,000 Manufacturing overhead ……………………….. 130,000 Selling expense ………………………………………. 40,000 Administrative expense ………………………
> Last year, Barnard Company incurred the following costs: Direct materials …………………………………… $ 50,000 Direct labor …………………………………………….. 20,000 Manufacturing overhead ……………………….. 130,000 Selling expense ………………………………………. 40,000 Administrative expense ………………………
> Last year, Barnard Company incurred the following costs: Direct materials …………………………………… $ 50,000 Direct labor …………………………………………….. 20,000 Manufacturing overhead ……………………….. 130,000 Selling expense ………………………………………. 40,000 Administrative expense ………………………
> Last year, Barnard Company incurred the following costs: Direct materials …………………………………… $ 50,000 Direct labor …………………………………………….. 20,000 Manufacturing overhead ……………………….. 130,000 Selling expense ………………………………………. 40,000 Administrative expense ………………………
> Jack Man Company produces diecast metal bulldozers for toy shops. Jack Man estimated the following average costs per bulldozer: Direct materials ………………………………. $8.65 Direct labor ………………………………………… 1.10 Manufacturing overhead …………………… 0.95 Prime cost per
> Solve the following independent problems. Required: 1. Andromeda Company’s break-even point is 2,400 units. Variable cost per unit is $42; total fixed costs are $67,200 per year. What price does Andromeda charge? 2. Immelt Company charges a price of $6.
> Suppose a company finds that shipping cost is $3,560 each month plus $6.70 per package shipped. What is the cost formula for monthly shipping cost? Identify the independent variable, the dependent variable, the fixed cost per month, and the variable rate
> Jasper Company provided the following information for last year: Sales in units ………………………………………………. 280,000 Selling price ………………………………………………………. $ 12 Direct materials …………………………………………… 180,000 Direct labor …………………………………………………. 505,000 Manufacturing over
> The method of least squares was used to develop a cost equation to predict the cost of receiving purchased parts at a video game manufacturer. Ninety-six data points from monthly data were used for the regression. The following computer output was receiv
> Allyson Ashley makes jet skis. During the year, Allyson manufactured 94,000 jet skis. Finished goods inventory had the following units: January 1 ……………………………. 6,800 December ……………………….. 31 7,200 Required: 1. How many jet skis did Allyson sell during th
> Melford Company sold 26,800 units last year at $16.00 each. Variable cost was $11.50, and total fixed cost was $126,000. Required: 1. Prepare an income statement for Melford for last year. 2. Calculate the break-even point in units. 3. Calculate the uni
> Grin Company manufactures digital cameras. In January, Grin produced 4,000 cameras with the following costs: Direct materials …………………………….. $400,000 Direct labor ……………………………………….. 80,000 Manufacturing overhead …………………. 320,000 There were no beginning o
> Head-First Company had planned to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (in
> Luisa Crimini has been operating a beauty shop in a college town for the past 10 years. Recently, Luisa rented space next to her shop and opened a tanning salon. She anticipated that the costs for the tanning service would primarily be fixed but found th
> Martinez Manufacturing Inc. showed the following costs for last month: Direct materials …………………………………….. $7,000 Direct labor ……………………………………………… 3,000 Manufacturing overhead ………………………….. 2,000 Selling expense ……………………………………….. 8,000 Last month, 4,000 un
> Ben Pal man owns an art gallery. He accepts paintings and sculpture on consignment and then receives 20% of the price of each piece as his fee. Space is limited, and there are costs involved, so Ben is careful about accepting artists. When he does accept
> Ben Pal man owns an art gallery. He accepts paintings and sculpture on consignment and then receives 20% of the price of each piece as his fee. Space is limited, and there are costs involved, so Ben is careful about accepting artists. When he does accept
> Wachman Company produces a product with the following per-unit costs: Direct materials ……………………………….. $15 Direct labor ………………………………………… 6 Manufacturing overhead …………………… 19 Last year, Wachman produced and sold 2,000 units at a price of $75 each. Total
> Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes
> Select the graph (A through K) that best matches the numbered (1 through 6) descriptions of various cost behavior. For each graph, the vertical (y) axis represents total dollars of cost, and the horizontal (x) axis represents output units during the peri
> Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes
> Slaps hot Company makes ice hockey sticks and sold 1,880 sticks during the month of June at a total cost of $433,000. Each stick sold at a price of $400. Slaps hot also incurred two types of selling costs: commissions equal to 10% of the sales price, and
> Alva Community Hospital has five laboratory technicians who are responsible for doing a series of standard blood tests. Each technician is paid a salary of $30,000. The lab facility represents a recent addition to the hospital and cost $300,000. It is ex
> Pizza Vesuvio makes specialty pizzas. Data for the past eight months were collected: Coefficients shown by a regression program for Pizza Vesuvio’s data are: Intercept ………&a
> Slaps hot Company makes ice hockey sticks. On June 1, Slaps hot had $48,000 of materials in inventory. During the month of June, the company purchased $132,000 of materials. On June 30, materials inventory equaled $45,000. Required: Calculate the direct
> Slaps hot Company makes ice hockey sticks. Last week, direct materials (wood, paint, Kevlar, and resin) costing $32,000 were put into production. Direct labor of $28,000 (10 workers 3 200 hours 3 $14 per hour) was incurred. Manufacturing overhead equaled
> Slaps hot Company makes ice hockey sticks. Last week, direct materials (wood, paint, Kevlar, and resin) costing $32,000 were put into production. Direct labor of $28,000 (10 workers 3 200 hours 3 $14 per hour) was incurred. Manufacturing overhead equaled
> Last year, Barnard Company incurred the following costs: Direct materials …………………………………… $ 50,000 Direct labor …………………………………………….. 20,000 Manufacturing overhead ……………………….. 130,000 Selling expense ………………………………………. 40,000 Administrative expense ………………………
> Wachman Company produces a product with the following per-unit costs: Direct materials ………………………………….. $15 Direct labor ……………………………………………. 6 Manufacturing overhead ………………………. 19 Last year, Wachman produced and sold 2,000 units at a price of $75 each. T
> How can sensitivity analysis be used in conjunction with CVP analysis?
> Suppose that Head-First Company now sells both bicycle helmets and motorcycle helmets. The bicycle helmets are priced at $75 and have variable costs of $45 each. The motorcycle helmets are priced at $220 and have variable costs of $140 each. Total fixed
> Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Variable cost is 60% of the sales price; contribution margin is 40% of the sales price. Total fixed cost equals $49,500 (includes fixed factory overhead and fixed sell
> Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes
> Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Variable cost is 60% of the sales price; contribution margin is 40% of the sales price. Total fixed cost equals $49,500 (includes fixed factory overhead and fixed sell
> Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Fixed factory overhead is $20,000 and fix
> Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes
> Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Product costs include: Direct materials per helmet …………………………………… $ 30 Direct labor per helmet ………………………………………………. 8 Variable factory overhead per helmet ………………………….
> Head-First Company now sells both bicycle helmets and motorcycle helmets. Next year, Head First expects to produce total revenue of $570,000 and incur total variable cost of $388,000. Total fixed cost is expected to be $58,900. Required: 1. Calculate th
> Danna Lumus, the marketing manager for a division that produces a variety of paper products, is considering the divisional manager’s request for a sales forecast for a new line of paper napkins. The divisional manager has been gathering data so that he c
> Briefly describe some of the common themes or pressures faced by executives who commit corporate fraud.
> Artistic Wood crafting Inc. began several years ago as a one-person, cabinet-making operation. Employees were added as the business expanded. Last year, sales volume totaled $850,000. Volume for the first five months of the current year totaled $600,000,
> The management of Wheeler Company has decided to develop cost formulas for its major overhead activities. Wheeler uses a highly automated manufacturing process, and power costs are a significant manufacturing cost. Cost analysts have decided that power c
> About 8 years ago, Kicker faced the problem of rapidly increasing costs associated with workplace accidents. The costs included the following: State unemployment insurance premiums ……………………………….. $100,000 Average cost per injury ………………………………………………………………
> Li Ming Yuan and Tiffany Shaden are the department heads for the accounting department and human resources department, respectively, at a large textile firm in the southern United States. They have just returned from an executive meeting at which the nec
> Jana Morgan is about to sign up for cellular telephone service. She is primarily interested in the safety aspect of the phone; she wants to have one available for emergencies. She does not want to use it as her primary phone. Jana has narrowed her option
> Fonseca, Ruiz, and Dunn is a large, local accounting firm located in a southwestern city. Carlos Ruiz, one of the firm’s founders, appreciates the success his firm has enjoyed and wants to give something back to his community. He believ
> Farnsworth Company has gathered data on its overhead activities and associated costs for the past 10 months. Tracy Heppler, a member of the controller’s department, has convinced management that overhead costs can be better estimated an
> Consider each of the following independent situations: a. Shaniqua Boyer just started her new job as controller for St. Matthias General Hospital. She wants to get a feel for the cost behavior of various departments of the hospital. Shaniqua first looks
> Consider each of the following independent situations: a. A computer service agreement in which a company pays $150 per month and $15 per hour of technical time b. Fuel cost of the company’s fleet of motor vehicles c. The cost of beer for a bar d. The co
