Described below are six independent and unrelated situations involving accounting changes. Each change occurs during 2018 before any adjusting entries or closing entries were prepared. Assume the tax rate for each company is 40% in all years. Any tax effects should be adjusted through the deferred tax liability account.

Fleming Home Products introduced a new line of commercial awnings in 2017 that carry a one-year warranty against manufacturer’s defects. Based on industry experience, warranty costs were expected to approximate 3% of sales. Sales of the awnings in 2017 were $3,300,000. Accordingly, warranty expense and a warranty liability of $99,000 were recorded in 2017. In late 2018, the company’s claims experience was evaluated and it was determined that claims were far fewer than expected: 2% of sales rather than 3%. Sales of the awnings in 2018 were $3,800,000, and warranty expenditures in 2018 totaled $86,450.

On December 30, 2014, Rival Industries acquired its office building at a cost of $960,000. It was depreciated on a straight-line basis assuming a useful life of 40 years and no salvage value. However, plans were finalized in 2018 to relocate the company headquarters at the end of 2022. The vacated office building will have a salvage value at that time of $680,000.

Hobbs-Barto Merchandising, Inc., changed inventory cost methods to LIFO from FIFO at the end of 2018 for both financial statement and income tax purposes. Under FIFO, the inventory at January 1, 2018, is $670,000.

At the beginning of 2015, the Hoffman Group purchased office equipment at a cost of $308,000. Its useful life was estimated to be 10 years with no salvage value. The equipment was depreciated by the sum-of-the-years’-digits method. On January 1, 2018, the company changed to the straight-line method.

In November 2016, the State of Minnesota filed suit against Huggins Manufacturing Company, seeking penalties for violations of clean air laws. When the financial statements were issued in 2017, Huggins had not reached a settlement with state authorities, but legal counsel advised Huggins that it was probable the company would have to pay $180,000 in penalties. Accordingly, the following entry was recorded:

Late in 2018, a settlement was reached with state authorities to pay a total of $328,000 in penalties.

At the beginning of 2018, Jantzen Specialties, which uses the sum-of-the-years’-digits method, changed to the straight-line method for newly acquired buildings and equipment. The change increased current year net earnings by $423,000.

Required:
For each situation:
1. Identify the type of change.
2. Prepare any journal entry necessary as a direct result of the change as well as any adjusting entry for 2018 related to the situation described.

The following changes took place last year in Pavolik Company’s balance sheet accounts:

D = Decrease; I = Increase.

Long-term investments that cost the company $6 were sold during the year for $16 and land that cost $15 was sold for $9. In addition, the company declared and paid $30 in cash dividends during the year. Besides the sale of land, no other sales or retirements of plant and equipment took place during the year. Pavolik did not retire any bonds during the year or issue any new common stock.

The company’s income statement for the year follows:

The company’s beginning cash balance was $90 and its ending balance was $85.

Required:

2. Prepare a statement of cash flows for the year.

Mark from Mark's Mowers wants to make some changes to his business. He has asked each of his department managers (Production, Marketing, and Sales ) to submit a plan for growth to you the General Manager. Currently, Mark is selling 400 lawn mowers a month at $250 each. His variable cost per lawnmower is $140 each. His fixed cost per month is $ 25,000. For purposes of this project assume that each scenario is within the relevant range (no larger space is needed, no additional people will be needed and no additional fixed cost will be necessary.

The Marketing Department is considering three different alternatives.                                                         

1. Do $5,000 in advertising. The Marketing department believes this would increase sales by at least 35 units.                                                                                                                                            

2. Do $ 10,000 in advertising. The Marketing department believes this would increase sales by at least 65 units.                                                                                                                                          

3. Do $ 6,000 in advertising combined with a "sales" price of $225 (a 10% discount). They believe that this would increase sales by at least 50 units.                                                                           

Question 6. How much money will Mark make in each of the separate situations?

Question 7. Which of the scenarios is best and why?                                                                  

The Sales Department is also considering three different alternatives.                                                                                                                                            

1. Offer a commission of $ 5 per mower to the sales force. They believe that this will increase sales by at least 20 units.                                                                                                                                             

2. Offer a commission to the sales force of $15 per mower. They believe that this will increase sales by at least 35 units per month.                                                                                              

3. Offer a commission of $ 25 per mower and increase the cost of the mower by $10. Even with the higher price, they believe it would increase mower sales by at least 40 mowers per month.                                                                                                                                       

Question 8. How much money will Mark make in each of the separate situations?

Question 9. Which of the scenarios is best and why?                                                                                  

Question 10. As the General manager of Mark's Mowers which of the above scenarios do you this is best going forward and why?

Described below are three independent and unrelated situations involving accounting changes. Each change occurs during 2018 before any adjusting entries or closing entries are prepared.

a- On December 30, 2014, Rival Industries acquired its office building at a cost of $10,700,000. It has been depreciated on a straight-line basis assuming a useful life of 40 years and no residual value. Early in 2018, the estimate of useful life was revised to 28 years in total with no change in residual value.

b- At the beginning of 2014, the Hoffman Group purchased office equipment at a cost of $550,000. Its useful life was estimated to be 10 years with no residual value. The equipment has been depreciated by the sum-of-the-years’-digits method. On January 1, 2018, the company changed to the straight-line method.

c- At the beginning of 2018, Jantzen Specialties, which uses the sum-of-the-years’-digits method, changed to the straight-line method for newly acquired buildings and equipment. The change increased current year net income by $515,000.

Required:

2. Prepare any journal entry necessary as a direct result of the change as well as any adjusting entry for 2018 related to the situation described. (Ignore income tax effects.)

Using R Studio/R programming...

A consumer-reports group is testing whether a gasoline additive changes a car's gas mileage. A test of seven cars finds an average improvement of 0.4 miles per gallon with a standard deviation of 3.57. Is the difference significantly greater than 0? Assume that the values are normally distributed.

What would the code be?

The following changes took place last year in Pavolik Company’s balance sheet accounts:

D = Decrease; I = Increase.

Long-term investments that cost the company $15 were sold during the year for $34 and land that cost $33 was sold for $18. In addition, the company declared and paid $12 in cash dividends during the year. Besides the sale of land, no other sales or retirements of plant and equipment took place during the year. Pavolik did not retire any bonds during the year or issue any new common stock.

The company’s income statement for the year follows:

The company’s beginning cash balance was $116 and its ending balance was $102.

Required:

1. Use the indirect method to determine the net cash provided by operating activities for the year.

2. Prepare a statement of cash flows for the year.

Use the indirect method to determine the net cash provided by operating activities for the year. (Adjustment amounts that are to be deducted should be indicated with a minus sign.)

Prepare a statement of cash flows for the year. (List any deduction in cash and cash outflows as negative amounts.)

Exercise 12-5 Net Cash Provided by Operating Activities [LO12-2]

Code needed in C++, make changes to the file provided (18-1, has 3 files)

Chapter 18 Stacks and Queues

-----------------------------------------------------------------------------------------------------

capacity is just 5

1. push 6 numbers on the stack

2. catch the overflow error in a catch block

3. pop one element, which means your capacity is now down to 4

4. push the element that was rejected earlier

5. verify your entire stack by popping to show the new numbers.

IntStack.h

#include <memory>

using namespace std;

class IntStack

{

unique_ptr<int[]>stackArray;

int capacity;

int top;

public:

// Constructor

IntStack(int capacity);

// Member functions

void push(int value);

void pop(int &value);

bool isEmpty() const;

// Stack Exceptions

class Overflow {};

class Underflow {};

};

IntStack.cpp

ZOOM

#include "intstack.h"

//************************************

// Constructor *

//************************************

IntStack::IntStack(int capacity)

{

stackArray = make_unique<int[]>(capacity);

this->capacity = capacity;

top = 0;

}

//***********************************

// Adds a value to the stack *

//***********************************

void IntStack::push(int value)

{

if (top == capacity) throw IntStack::Overflow();

stackArray[top] = value;

top++;

}

//****************************************

// Determines whether the stack is empty *

//****************************************

bool IntStack::isEmpty() const

{

return top == 0;

}

//************************************************

// Removes a value from the stack and returns it *

//************************************************

void IntStack::pop(int &value)

{

if (isEmpty()) throw IntStack::Underflow();

top--;

value = stackArray[top];

}

pr18-01.cpp

// This program illustrates the IntStack class.

#include "intstack.h"

#include <iostream>

using namespace std;

int main()

{

IntStack stack(5);

int values[] = { 5, 10, 15, 20, 25 };

int value;

cout << "Pushing...\n";

for (int k = 0; k < 5; k++)

{

cout << values[k] << " ";

stack.push(values[k]);

}

cout << "\nPopping...\n";

while (!stack.isEmpty())

{

stack.pop(value);

cout << value << " ";

}

cout << endl;

return 0;

}

E10-5 Calculating Return on Investment, Residual Income, Determining Effect of Changes in Sales, Expenses, Invested Assets, Hurdle Rate on Each [LO 10-4, 10-5]

Solano Company has sales of $780,000, cost of goods sold of $510,000, other operating expenses of $38,000, average invested assets of $2,300,000, and a hurdle rate of 12 percent.


Required:
1. Determine Solano’s return on investment (ROI), investment turnover, profit margin, and residual income. (Do not round your intermediate calculations. Enter your ROI and Profit Margin percentage answer to the nearest 2 decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Investment Turnover answer to 4 decimal places.)

2. Several possible changes that Solano could face in the upcoming year follow. Determine each scenario’s impact on Solano’s ROI and residual income. (Note: Treat each scenario independently.) (Enter your ROI percentage answers to 2 decimal places, (i.e., 0.1234 should be entered as 12.34%.))

   a. Company sales and cost of goods sold increase by 30 percent.      

        

  b. Operating expenses decrease by $12,000.        
      
        

c. Operating expenses increase by 10 percent.

       

  d. Average invested assets increase by $440,000.

  e. Solano changes its hurdle rate to 18 percent.

Described below are six independent and unrelated situations involving accounting changes. Each change occurs during 2018 before any adjusting entries or closing entries were prepared. Assume the tax rate for each company is 40% in all years. Any tax effects should be adjusted through the deferred tax liability account.

Fleming Home Products introduced a new line of commercial awnings in 2017 that carry a one-year warranty against manufacturer’s defects. Based on industry experience, warranty costs were expected to approximate 2% of sales. Sales of the awnings in 2017 were $4,200,000. Accordingly, warranty expense and a warranty liability of $84,000 were recorded in 2017. In late 2018, the company’s claims experience was evaluated and it was determined that claims were far fewer than expected: 1% of sales rather than 2%. Sales of the awnings in 2018 were $4,700,000, and warranty expenditures in 2018 totaled $106,925.

On December 30, 2014, Rival Industries acquired its office building at a cost of $1,140,000. It was depreciated on a straight-line basis assuming a useful life of 40 years and no salvage value. However, plans were finalized in 2018 to relocate the company headquarters at the end of 2022. The vacated office building will have a salvage value at that time of $770,000.

Hobbs-Barto Merchandising, Inc., changed inventory cost methods to LIFO from FIFO at the end of 2018 for both financial statement and income tax purposes. Under FIFO, the inventory at January 1, 2018, is $760,000.

At the beginning of 2015, the Hoffman Group purchased office equipment at a cost of $407,000. Its useful life was estimated to be 10 years with no salvage value. The equipment was depreciated by the sum-of-the-years’-digits method. On January 1, 2018, the company changed to the straight-line method.

In November 2016, the State of Minnesota filed suit against Huggins Manufacturing Company, seeking penalties for violations of clean air laws. When the financial statements were issued in 2017, Huggins had not reached a settlement with state authorities, but legal counsel advised Huggins that it was probable the company would have to pay $270,000 in penalties. Accordingly, the following entry was recorded:

Late in 2018, a settlement was reached with state authorities to pay a total of $427,000 in penalties.

At the beginning of 2018, Jantzen Specialties, which uses the sum-of-the-years’-digits method, changed to the straight-line method for newly acquired buildings and equipment. The change increased current year net earnings by $522,000.

Required:
For each situation:
1. Identify the type of change.
2. Prepare any journal entry necessary as a direct result of the change as well as any adjusting entry for 2018 related to the situation described.