Which of the following is an example of an application control for the purchases and payments system?

A. Management approval is required for large purchases.

B. The purchase order number is automatically assigned.

C. The employee who receives supplier goods must not be the same employee who ordered the goods.

D. Defective items should be returned to suppliers promptly.

Ida Sidha Karya Company is a family-owned company located on the island of Bali in Indonesia. The company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $920. Selected data for the company’s operations last year follow: Units in beginning inventory 0 Units produced 275 Units sold 260 Units in ending inventory 15 Variable costs per unit: Direct materials $ 110 Direct labor $ 320 Variable manufacturing overhead $ 40 Variable selling and administrative $ 15 Fixed costs: Fixed manufacturing overhead $ 77,000 Fixed selling and administrative $ 33,000 The absorption costing income statement prepared by the company’s accountant for last year appears below: Sales $ 239,200 Cost of goods sold 195,000 Gross margin 44,200 Selling and administrative expense 36,900 Net operating income $ 7,300 Required: 1. Under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of last year? 2. Prepare an income statement for last year using variable costing.

Haas Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations: Variable costs per unit: Manufacturing: Direct materials $ 22 Direct labor $ 14 Variable manufacturing overhead $ 5 Variable selling and administrative $ 3 Fixed costs per year: Fixed manufacturing overhead $ 270,000 Fixed selling and administrative expenses $ 210,000 During its first year of operations, Haas produced 60,000 units and sold 60,000 units. During its second year of operations, it produced 75,000 units and sold 50,000 units. In its third year, Haas produced 40,000 units and sold 65,000 units. The selling price of the company’s product is $52 per unit. Required: 1. Compute the company’s break-even point in unit sales. 2. Assume the company uses variable costing: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. 3. Assume the company uses absorption costing: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3.

In 2018, Wilma Way’s sole proprietorship, WW Bookstore, generated $120,000 net profit. In addition, Wilma recognized a $17,000 gain on the sale of business furniture and shelving, all of which was recaptured as ordinary income. The business checking account earned $960 interest income.

Compute Wilma’s 2018 self-employment tax.

Compute Wilma's allowable Section 199A deduction, assuming $43,000 of W-2 wages and $90,000 unadjusted basis of tangible depreciable property.

Compute Wilma’s 2018 taxable income from her bookstore activity.

The stockholders’ equity accounts of Bramble Corp. on January 1, 2017, were as follows.

Preferred Stock (7%, $100 par noncumulative, 4,200 shares authorized)		$252,000
Common Stock ($5 stated value, 300,000 shares authorized)		1,250,000
Paid-in Capital in Excess of Par Value—Preferred Stock		12,600
Paid-in Capital in Excess of Stated Value—Common Stock		480,000
Retained Earnings		688,500
Treasury Stock (4,200 common shares)		33,600

During 2017, the corporation had the following transactions and events pertaining to its stockholders’ equity.

Feb.	1		Issued 4,730 shares of common stock for $33,110.
Mar.	20		Purchased 1,050 additional shares of common treasury stock at $8 per share.
Oct.	1		Declared a 7% cash dividend on preferred stock, payable November 1.
Nov.	1		Paid the dividend declared on October 1.
Dec.	1		Declared a $0.40 per share cash dividend to common stockholders of record on December 15, payable December 31, 2017.
Dec.	31		Determined that net income for the year was $283,900. Paid the dividend declared on December 1.

A. Enter the beginning balances in the accounts and post the journal entries to the stockholders’ equity accounts. (Post entries in the order of journal entries posted in the previous part. For accounts that have zero ending balance, the entry should be the balance date and zero for the amount.)

B Prepare the stockholders’ equity section of the balance sheet at December 31, 2017.

C. Calculate the payout ratio, earnings per share, and return on common stockholders’ equity. (Round earning per share to 2 decimal places, e.g. $2.66 and all other answers to 1 decimal place. 17.5%.)

Being a franchisor seems to be a mechanism for growth, but what are the growth prospects for entrepreneurs that are franchisees? Isn’t the entrepreneur limited in his or her ability to pursue all the different types of growth strategies? Is being a franchisee simply substituting one type of employment for another type of employment? How can a franchisee grow his or her business (es)?

Hickory Company manufactures two products—13,000 units of Product Y and 5,000 units of Product Z. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates all $630,000 of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Y and Z:

Activity Cost Pool	Activity Measure	Estimated Overhead Cost		Expected Activity
Machining	Machine-hours	$	228,000	12,000	MHs
Machine setups	Number of setups	$	40,000	100	setups
Product design	Number of products	$	74,000	2	products
General factory	Direct labor-hours	$	288,000	14,400	DLHs

Activity Measure	Product Y	Product Z
Machine-hours	10,000	2,000
Number of setups	40	60
Number of products	1	1
Direct labor-hours	7,000	7,400

Foundational 7-5

5. What is the activity rate for the Product Design activity cost pool?

  

6. What is the activity rate for the General Factory activity cost pool? (Round your answer to 2 decimal places.)

  

7. Which of the four activities is a batch-level activity?

Machine setups activity

Machining activity

Product design activity

General factory activity

  

8. Which of the four activities is a product-level activity?

General factory activity

Product design activity

Machine setups activity

Machining activity

  

9. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Y? (Round all intermediate calculations to 2 decimal places.)

  

10. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Z?

  

11. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z? (Round your "Percentage" answers to 2 decimal place.)

12. Using the ABC system, what percentage of the Machining costs is assigned to Product Y and Product Z? (Round your "Percentage" answers to 2 decimal places.)

13. Using the ABC system, what percentage of Machine Setups cost is assigned to Product Y and Product Z? (Round your "Percentage" answers to 2 decimal places.)

14. Using the ABC system, what percentage of the Product Design cost is assigned to Product Y and Product Z?

  

15. Using the ABC system, what percentage of the General Factory cost is assigned to Product Y and Product Z? (Round your

The Geneva Company manufactures the famous Ticktock watch on an assembly-line basis. January 1 work-in-process consisted of 5,000 units partially completed. During the month, an additional 110,000 units were started, and 105,000 units were completed. The ending work-in-process was 60% complete as to conversion costs. Conversion costs are added evenly throughout the process. The following conversion costs were incurred: Beginning costs for work-in-process $1,500 Total current conversion costs $273,920 The conversion costs assigned to ending work-in-process totaled $15,360 using the FIFO method of process costing.

Required:	What was the percentage of completion as to conversion costs of the						5,000	units in beginning work-in-process
	inventory?

Required information [The following information applies to the questions displayed below.] Washington County’s Board of Representatives is considering the construction of a longer runway at the county airport. Currently, the airport can handle only private aircraft and small commuter jets. A new, long runway would enable the airport to handle the midsize jets used on many domestic flights. Data pertinent to the board’s decision appear below. Cost of acquiring additional land for runway $ 82,500 Cost of runway construction 280,000 Cost of extending perimeter fence 19,908 Cost of runway lights 45,000 Annual cost of maintaining new runway 22,500 Annual incremental revenue from landing fees 57,500 In addition to the preceding data, two other facts are relevant to the decision. First, a longer runway will require a new snowplow, which will cost $180,000. The old snowplow could be sold now for $18,000. The new, larger plow will cost $16,000 more in annual operating costs. Second, the County Board of Representatives believes that the proposed long runway, and the major jet service it will bring to the county, will increase economic activity in the community. The board projects that the increased economic activity will result in $94,000 per year in additional tax revenue for the county. In analyzing the runway proposal, the board has decided to use a 10-year time horizon. The county’s hurdle rate for capital projects is 18 percent. Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) In analyzing the runway proposal, the board has decided to use a 10-year time horizon. The county’s hurdle rate for capital projects is 18 percent. The County Board of Representatives believes that if the county conducts a promotional effort costing $28,000 per year, the proposed long runway will result in substantially greater economic development than was projected originally. However, the board is uncertain about the actual increase in county tax revenue that will result. Required: Suppose the board builds the long runway and conducts the promotional campaign. What would the increase in the county’s annual tax revenue need to be in order for the proposed runway’s internal rate of return to equal the county’s hurdle rate of 18 percent? (Round intermediate and final answer to the nearest dollar amount.)

Problem 6-2A (Part Level Submission)

Dunbar Distribution markets CDs of numerous performing artists. At the beginning of March, Dunbar had in beginning inventory 3,613 CDs with a unit cost of $10. During March, Dunbar made the following purchases of CDs.

March 5 2,890 @ $12

March 13 5,058 @ $13

March 21 7,225 @ $14

March 26 2,890 @ $16

During March 17,340 units were sold. Dunbar uses a periodic inventory system.

Costs of goods available for sale $283, 954

Average cost $ 13.099

QUESTION:

Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). (Round answerS to 0 decimal places, e.g. 125.)

The ending inventory FIFO LIFO AVERAGE-COST

$? $? $?

The cost of goods sold FIFO LIFO AVERAGE-COST

$? $? $?

Comprehensive Variance Problem
The standard cost sheet for Chambers Company, which manufactures one product, follows:
Direct materials, 40 yards at $2.00 per yard . . . . . . . . . . . . . . . $ 80
Direct labor, 5 hours at $20 per hour. . . . . . . . . . . . . . . . . . . . . 100
Factory overhead applied at 80% of direct labor
(variable costs = $60; fixed costs = $20). . . . . . . . . . . . . . . . . . 80
Variable selling and administrative . . . . . . . . . . . . . . . . . . . . . . 64
Fixed selling and administrative . . . . . . . . . . . . . . . . . . . . . . . .   40
Total unit costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $364
Standards have been computed based on a master budget activity level of 28,800 direct labor-
hours per month. Actual activity for the past month was as follows:
Materials used. . . . . . . . . . . . . . 228,000 yards at $2.05 per yard
Direct labor . . . . . . . . . . . . . . . . 25,200 hours at $20.40 per hour
Total factory overhead. . . . . . . . $444,000
Production . . . . . . . . . . . . . . . . . 5,000 units
Required
Prepare variance analyses for the variable and fixed costs. Indicate which variances cannot be
computed. Materials are purchased as they are used

The management and discussion and analysis (MD&A) section of the annual report provides valuable information on an entity's revenue and expenses. The information contained therein, helps deriving various ratio analyses.

What information do you find in the MD & A that is important in assessing the earnings and earnings potential of a selected company and why?

Determine what the initial basis of an asset would be in the following situations:

1. purchase of asset

2. Bargain Purchase

3. Lump-sum purchase

4. Property acquired by gift

5. Property acquired from a decedent

6. Property converted from personal use to business or income-producing use

Complete the table using the figures provided for the three products: A, B and C.

Last month’s budget for sales

Product	Cost price	Sale price	Budget sales last month		Total costs on sales	Budget profit last month		Profit % per item on sale price
			#	$		per item	on sales
A	$7.50	$12.00	500	$6,000	$3,750	$4.50	$2,250	38%
B	$9.25	$17.00	400	$6,800	$3,700	$7.75	$3,100	46%
C	$10.00	$30.00	300	$9,000	$3,000	$20.00	$6,000	67%
Total			1,200	$21,800	$10,450		$11,350

Last month’s sales (actuals)

Product	Cost price	Sale price	Total sales last month		Total costs on sales	Gross profit last month		Profit % per item on sale price
			#	$		per item	on sales
A	$7.50	$12.00	650	$7,800	$4,875	$4.50	$2,925	38%
B	$9.25	$17.00	500	$8,500	$4,625	$7.75	$3,875	46%
C	$10.00	$30.00	200	$6,000	$2,000	$20.00	$4,000	67%
Total			1,350	$22,300	$11,500		$10,800

Product	Gross profit budget ($)	Gross profit actual ($)	Variance ($)
A
B
C
Total

Statement of Cash Flows—A method of reporting the cash flows from operating activities as the net income from operations adjusted for all deferrals of past cash receipts and payments and all accruals of expected future cash receipts and payments.Indirect Method

The comparative balance sheet of Merrick Equipment Co. for December 31, 20Y9 and 20Y8, is as follows:

		Dec. 31, 20Y9		Dec. 31, 20Y8
Assets
Cash		$284,360		$265,430
Accounts receivable (net)		103,010		95,330
Inventories		290,800		282,260
Investments		0		109,350
Land		149,150		0
Equipment		320,840		249,550
Accumulated depreciation—equipment		(75,110)		(67,290)
	Total assets	$1,073,050		$934,630
Liabilities and Stockholders' Equity
Accounts payable		$194,220		$184,120
Accrued expenses payable		19,310		24,300
Dividends payable		10,730		8,410
Common stock, $10 par		57,940		45,800
Paid-in capital: Excess of issue price over par-common stock		217,830		127,110
Retained earnings		573,020		544,890
	Total liabilities and stockholders’ equity	$1,073,050		$934,630

Additional data obtained from an examination of the accounts in the ledger for 20Y9 are as follows:

1. Equipment and land were acquired for cash.
2. There were no disposals of equipment during the year.
3. The investments were sold for $98,420 cash.
4. The common stock was issued for cash.
5. There was a $72,060 credit to Retained Earnings for net income.
6. There was a $43,930 debit to Retained Earnings for cash dividends declared.

Required:

Prepare a statement of cash flows, using the indirect method of presenting The section of the statement of cash flows that reports the cash transactions affecting the determination of net income.cash flows from operating activities. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.

Merrick Equipment Co.
Statement of Cash Flows
For the Year Ended December 31, 20Y9
Cash flows from operating activities:
Cash used for dividends Cash paid for land Cash from sale of investments Cash from sale of common stock Loss on sale of investments Net income	$
Adjustments to reconcile net income to net cash flow from operating activities:
Accumulated depreciation Cash paid for land Cash used for dividends Cash from sale of common stock Depreciation Retained earnings
Cash used for dividends Cash received from the sale of common stock Cash received from net income Gain on sale of investments Loss on sale of investments Retained earnings
Changes in current operating assets and liabilities:
Decrease in accounts receivable Decrease in accounts payable Decrease in inventories Depreciation Increase in accounts receivable Loss on sale of investments
Decrease in accounts payable Decrease in accounts receivable Decrease in inventories Gain on sale of investments Increase in accrued expenses Increase in inventories
Decrease in accounts payable Decrease in accounts receivable Decrease in inventories Increase in accounts payable Increase in accrued expenses Loss on sale of investments
Decrease in accounts payable Decrease in accrued expenses payable Decrease in dividends payable Depreciation Increase in accrued expenses payable Increase in land
Net cash flow from operating activities		$
Cash flows from (used for) investing activities:
Cash received from gain on sale of investments Cash received from loss on sale of investments Cash received from net income Cash from sale of common stock Cash from sale of investments Cash received from retained earnings	$
Cash paid for accounts payable Cash paid for accumulated depreciation Cash paid for common stock Cash paid for depreciation Cash used for dividends Cash used for purchase of land
Cash paid for accounts receivable Cash paid for accrued expenses Cash paid for accumulated depreciation Cash paid for inventories Cash used for purchase of equipment Cash paid for retained earnings
Net cash flow used for investing activities
Cash flows from (used for) financing activities:
Cash received from net income Cash from sale of common stock Cash received from sale of equipment Cash received from sale of inventories Cash from sale of investments Cash received from retained earnings
Cash used for dividends Cash paid for inventories Cash used for purchase of equipment Cash paid for purchase of investments Cash used for purchase of land Cash paid for retained earnings
Net cash flow from financing activities
Decrease in cash Increase in cash		$
Cash at the beginning of the year
Cash at the end of the year		$