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Study Resources (Accounting)

  Problem C-5Depreciation Methods A machine costing $180,000 has an estimated residual value of $15,000 and an estimated service life of ten years.What is the annual depreciation for each of the first two full years under the following methods? 1.Doubledeclining-balance: a.Year one$______________ b.Year two$______________ 2.Units of production.Lifetime production is estimated at 110,000 units; the machine produced.
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11) What are Bleach's and Bleach-2's return on investment based on current values? A) 0.22; 0.67 B) 0.42; 0.52 C) 0.52; 0.42 D) 0.67; 0.22 E) 0.50; 0.45 12) What are Bleach's and Bleach-2's residual incomes, based on current values, respectively? A) $116,250; $37,500 B) $110,000; $67,500 C) $67,500; $110,000 D) $37,500; $116,250 E) $115,340; $80,000 Answer the following question(s) using the.
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  Problem E-1 Accounting Changes and Error Corrections Thor Corp.’s reported pretax incomes for 2017 and the previous two years as follows: 201720162015 $150,000$125,000$95,000 2017’s income was correctly determined after taking into account the following accounting changes and error corrections made during the year (the errors were made in previous years but were not discovered.
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Problem B-4Journal Entries for Perpetual and Periodic Inventory Systems Lime Corporation is a supplier of electronic components used in the manufacture of computers. The company uses the FIFO cost flow method. During the month of September 2017, Lime’s inventory records for part LIM-0325, showed the following transactions: DateTransactionUnitsUnitUnitsUnit PurchasedCostSoldSelling Price Sep 1Balance900$1.65 Sep 8Purchase400$1.67 Sep 17Sale(800)$4.25 Sep 23Sale(250)$4.30 Sep.
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Problem D-4 Stock Dividends and Stock Splits Stock dividends and stock splits are common forms of corporate share distribution to shareholders. Consider each of the numbered statements below, and decide whether it: A.Applies to both stock dividends and stock splits. B.Applies to stock splits only. C.Applies to stock dividends only. D.Applies to neither. (In each instance,.
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82) Coptermagic Company supplies helicopters to corporate clients. Coptermagic has two sources of funds: long term debt with a market and book value of $32 million issued at an interest rate of 10%, and equity capital that has a market value of $18 million and book value of $8 million..
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86) The following table presents information related to three divisions of Bacchus Ltd.: Alpha Division Beta Division Delta Division Sales $12,000,000 E I Operating Income $2,640,000 F $450,000 Profit Margin A 24% 25% Asset Turnover B G 1.2 times ROI C 19.2% J Investment $6,600,000 H K Residual Income D $138,000 L The company's required rate of return is 10%. Required: Solve for the unknowns. 87) Stratton Industries has two divisions. These divisions reported the following results for the year just ended: Division 1 Division 2 Operating Income $840,000 $180,000 Assets $4,200,000 $750,000 Required: a.Calculate.
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  Problem A-6 Income and Retained Earnings Statements Peanut Corporation is a private corporation using ASPE.At December 31, 2017, an analysis of the accounts and discussions with company officials included the following account balances and other information: Accounts receivable.............................................$  102,000 Accrued interest payable..........................................1,000 Dividend revenue................................................9,000 Sales.........................................................600,000 Purchase discounts..............................................9,000 Purchases.....................................................360,000 Accounts payable...............................................30,000 Loss from fire (net of $7,000 tax)...................................21,000 Selling expenses................................................64,000 Common shares.
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41.On February 10, 2017, after issuance of its financial statements for calendar 2016, Diogenes Corp. entered into a financing agreement with Gigantic Bank, allowing Diogenes Corp. to borrow up to $6,000,000 at any time through 2019. Amounts borrowed under the agreement bear interest at 2% above the bank's prime interest.
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____11.The cost model of accounting for PP&E assets a.should be applied to investment property only. b.should be applied to other PP&E assets only. c.can be applied to all classes of PP&E including investment property. d.is not appropriate under current Canadian GAAP. ____12.When an investor is using the equity method and the investee reports net income,.
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72) Batman Abstract Company has three divisions that operate autonomously. Their results for the current year were as follows: Riddler Joker Penguin Sales $5,000,000 $7,000,000 $10,000,000 Contribution margin 1,440,000 1,700,000 3,500,000 Operating income 1,000,000 1,750,000 2,520,000 Investment base 9,000,000 10,000,000 14,000,000 The company's desired rate of return is 20%. Required: a.Compute each division's ROI. b.Compute each division's residual income. c.Rank each division by both ROI and residual income. 73) Hargrave Products has three divisions which.
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  Problem B-6Gross Profit Method On December 31, 2017, the entire inventory of Clementine Corp.was destroyed by a flood. Sales and purchases for the year had been $2.6 million and $1.2 million, respectively. The beginning inventory (Jan 1, 2017) was $450,000.In the past,Clementine’s gross profit has averaged 40%.Clementine uses the periodic inventory.
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22.5   Apply strategic concepts to analyze the four levers of control and evaluate their usefulness. 1) Ethical behaviour on the part of managers, while important for its own sake, is not paramount in importance. 2) An interactive control system is a formal information system that managers use to focus organization attention and.
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Problem F-2 Statement of Cash Flows (Indirect Method) BIRCH CORPORATION Comparative Statements of Financial Position December 31 20172016 Cash........................................$     43,000$     24,000 Accounts receivable, net........................31,00038,000 Inventory.....................................118,00082,000 Land........................................120,000190,000 Building......................................200,000200,000 Accumulated depreciation.......................(50,000)(40,000) Equipment...................................1,030,000600,000 Accumulated depreciation....................... (118,000)   (94,000) $1,374,000$1,000,000 Accounts payable..............................$   115,000$   100,000 4% Bonds payable.............................320,000-0- Common shares...............................750,000750,000 Retained earnings.............................   189,000   150,000 $1,374,000$1,000,000 Additional data: 1.Net income for the year was $84,000. 2.Cash dividends were paid. 3.Land was sold for $80,000. 4.Old equipment was sold for $70,000.This.
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14) Alpine Ltd. has two divisions. Division A manufactures components that can be sold in the external market place or transferred to Division B for further processing. The following data relate to Division A's component product. Variable manufacturing costs/unit   $925 Fixed costs/unit at capacity   $275 Selling price/unit$1,800 The capacity of the plant is 2,500.
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9) The Shamrock Corporation manufactures flower pots in Canada and Ireland. The operations are organized as decentralized divisions. The following information is available for the year just ended: Canada DivisionIrish Division Operating income $900,0001,250,000 € Total assets $3,500,000  2,100,000 € The exchange rate at the time of Shamrock's investment (the end of the previous.
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  Problem C-1 Multiple Choice (Various Topics) Choose the best answer for each of the following questions and enter the identifying letter in the space provided. ____1.When the declining-balance method is used, depreciation expense for a given asset will a.decline by a constant amount each year. b.be the same each year. c.decrease rapidly at first, then.
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Ex. 13-77Premiums Modern Music gives its customers coupons which are redeemable for a poster plus a Hens and Chicks DVD. One coupon is issued for each dollar of sales. On presentation of 100 coupons and $5.00 cash, the customer receives the poster and DVD. Modern estimates that 80% of the coupons.
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Problem D-7 Basic and Diluted Earnings per Share The following data relate to Schroeder Ltd. for the calendar year 2017: Net income (30% tax rate)...............................$3,250,000 Average number of common shares outstanding during 2017.............................1,200,000shares 8%, cumulative convertible preferred shares: convertible into 90,000 common shares.................$1,800,000 6% convertible bonds; convertible into 60,000 common shares....................................$2,000,000 Stock options, exercisable at $30 per share.................105,000shares All.
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  Problem F-1 Multiple Choice (Various Topics) Choose the best answer for each of the following questions and enter the identifying letter in the space provided. ____1.In preparing a statement of cash flows, which of the following transactions would be considered a financing activity? a.purchasing new equipment b.recording net income c.selling common shares d.purchasing inventory ____2.Which of the.
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*Problem A-2Adjusting and Reversing Entries At December 31, 2017, Hazelnut Corp.’s unadjusted trial balance was as follows: Cash................................................$ 39,590 Accounts Receivable...................................69,000 Allowance for Doubtful Accounts..........................$    500 Merchandise Inventory..................................54,720 Prepaid Rent..........................................24,000 Investment in Pecan Corp. Bonds.........................70,000 Plant and Equipment...................................156,000 Accumulated Depreciation...............................14,740 Accounts Payable......................................11,370 Bonds Payable........................................90,000 Common Shares.......................................170,000 Retained Earnings.....................................97,180 Sales Revenue........................................222,000 Cost of Goods Sold.....................................154,400 Transportation-Out.....................................11,000 Salaries and Wages Expense............................32,000 Interest Expense.......................................2,040 Rent Revenue.........................................14,400 Miscellaneous Expense.................................890 Insurance Expense.....................................      6,550       $620,190$620,190 Additional data: 1.The balance in.
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Problem B-2 Definitions and Key Concepts Provide clear, concise answers for the following: 1.What are cash and cash equivalents and how are they reported? 2.Identify the main differences between ASPE and IFRS with respect to the accounting for receivables. 3.Identify the inventory categories of a manufacturing company and describe how they are related. Problem B-3.
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20) The following data are available for a manufacturing business started as a new company five years ago when the construction cost index was 115: Current liabilities $190,000 Operating income $329,000 NBV long-term assets (end year 4) $1,200,000 Current assets $600,000 Gross book value * $2,000,000 Estimated total useful life * 10 years Age of assets * 5 years Construction cost index end of year.
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11.Which of the following may be classified as a current liability? a) stock dividends distributable b) accounts receivable credit balances c) losses expected to be incurred within the next twelve months in excess of the company's insurance coverage d) tenant’s rent deposit not returnable until the end of a long-term lease 12.Accounting for GST includes a).
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Problem A-1Multiple Choice (Various Topics) Choose the best answer for each of the following questions and enter the identifying letter in the space provided. ___1.Which of the following entities is least likely to be a major player in developing financial reporting standards in Canada? a.International Accounting Standards Board b.(Canadian) Accounting Standards Board c.The Federal government d.Financial.
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  Problem E-3 PensionCalculations and Accounting On January 1, 2017, HulkLtd. reported the following balances relating to their defined benefit pension plan: Defined benefit obligation......................$1,600,000 Fair value of plan assets.......................1,600,000 Other data related to the pension plan for calendar 2017 are: Current service cost...........................70,000 Contributions to the plan.......................102,000 Benefits paid................................100,000 Actual return on plan assets....................96,000 Interest (discount) rate.........................9% Instructions a.Calculate the defined.
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    Problem F-4 Segmented Reporting Pine Ltd. is a diversified corporation and has developed the following information about its five segments:     A       B       C     D       E     Total sales$180,000$  625,000$125,000$   190,000$  260,000 Operating profit (loss)(125,000)140,00020,000(130,000)(15,000) Total assets780,0002,400,000525,0001,650,0002,650,000 Instructions Identify which segments would be considered as reportable segments by applying the following tests: i.revenue test iioperating profit or loss test iii.assets test Do.
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84) Chaucer Ltd. has current assets of $450,000 and capital assets of $630,000. Its budgeted production volume for the next fiscal year is 200,000 units. Fixed costs are projected at $400,000 and variable unit costs for the one product produced total $5/unit. The company defines ROI as Operating Income/Total Assets.
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    Problem E-2DeferredIncome Taxes In 2017, the first year of its existence, Spider Ltd.'s accountant, in preparing both the income statement and the tax return, developed the following list of items creating differences between accounting and taxable income: 1.The company sells its merchandise on an installment contract basis. In 2017,Spider elected, for tax.
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88) Consolidated Gas Supply Corporation uses the investment center concept for the gasoline stations that it manages in the city. Consolidated has a 15% required rate of return on investment in order for a branch station to be viable. Select operating data for three of its stations for the current.
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    Problem C-2Assignment of Costs Match the following cost items with the appropriate accounts: a.Landc.Land Improvements b.Buildingsd.Other ____              1.Interest cost incurred during building construction. ____              2.Back taxes on land purchased to be used for building site. ____              3.Assessment by city for drainage system. ____              4.Building permits. ____              5.Landscaping shrubs planted after building has been constructed. ____              6.Demolition costs of building.
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51.What is the amount of vacation pay expense that should be reported on Silver’s income statement for 2017? a) $37,800 b) $36,120 c) $34,440 d) $0 52.What is the amount of the Vacation Wages Payable that should be reported at December 31, 2019? a) $39,900 b) $45,360 c) $47,460 d) $47,880 53. Information regarding Oxygen Inc.’s payroll for the period.
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Problem B-1 Multiple Choice (Various Topics) For each of the following questions, select the letter of the statement which best answers the question and write it on the line to the left of the question. ___1.When a customer account is recognized as uncollectible and written off, under the allowance method a.it is always.
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80) Capital Investments has three divisions. Each division's required rate of return is 15 percent. Planned operating results for next year are: DivisionOperating incomeInvestment A$15,000,000 $100,000,000 B25,000,000125,000,000 C11,000,00050,000,000 The company is planning an expansion requiring each division to increase its investments by $25,000,000 and its income by $4,500,000. Required: a.Compute the current ROI for each division. b.Compute the.
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Problem F-3Statement of Cash Flows (Direct Method) SYCAMORE CORPORATION Comparative Statements of Financial Position December 31 20172016 Cash.......................................$     43,000$     24,000 Accounts receivable, net.......................35,00038,000 Inventory....................................114,00082,000 Land.......................................120,000190,000 Building.....................................200,000200,000 Accumulated depreciation......................   (50,000)(40,000) Equipment...................................1,030,000600,000 Accumulated depreciation......................   (118,000)  (94,000) ...........................................$1,374,000$1,000,000 Accounts payable (merchandise purchases only)....$   115,000$   100,000 Salaries payable..............................20,000-0- 4% Bonds payable............................300,000-0- Common shares..............................750,000750,000 Retained earnings............................   189,000   150,000 ...........................................$1,374,000$1,000,000 SYCAMORE CORPORATION Income Statement For year ended December 31, 2017 Sales........................................$  1,075,000 Cost of goods sold.............................640,000 Depreciation expense...........................  94,000 Salaries expense..............................140,000 Rent expense.................................72,000 Other.
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22.4   Evaluate the behavioural effects of salaries and incentives in compensation arrangements. 1) An important consideration in designing compensation arrangements is the tradeoff between creating incentives, and reducing risk. 2) Moral hazard describes contexts in which, once risk is shared, the individual fails to make as much effort to avoid harm as.
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14) Bob Cellular Phone uses ROI to measure divisional performance. Annual ROI calculations for each division have traditionally employed the ending amount of invested capital along with annual operating income and net revenue. The DuPont method is generally used. The company's Phone Accessories Division had the following results: Previous Year ROI.
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21.Which of the following is generally NOT used as a basis for calculating bonuses or profit-sharing amounts? a) a percentage of the employees’ regular pay rates b) the company’s pre-tax income c) productivity increases d) gross sales 22.Under IFRS, a provision is a) a special fund set aside to pay long-term debt. b) unearned revenue. c) a liability.
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MULTIPLE CHOICE—Conceptual 1.According to the existing IFRS and the CICA Handbook Part II guidelines, which of the following is NOT an essential characteristic of a liability? a) It embodies a duty or responsibility. b) The transaction or event that obliges the entity has occurred. c) The obligation is enforceable on the other party. d) The.
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Ex. 13-75Compensated absences Sycamore Ltd. began operations on January 2, 2017. The company employs 15 people who work 8-hour days. Each employee earns 10 paid vacation days annually. Vacation days may be taken after January 10 of the year following the year in which they are earned. The average hourly wage.
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Problem A-4Discontinued Operations During calendar 2017, MacadamiaLtd. entered into an agreement to sell its Trucking Division to Poodle Ltd., in order to focus its efforts on expansionof its other divisions. For purposes of income statement reporting, the Trucking Division qualifies as a separate component of the business. The Trucking Division incurred.
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22.2   Evaluate current-cost and historical-cost asset measurement methods. 1) Current cost is the cost of purchasing an asset today identical to the one currently held. 2) The timing of feedback depends on the level of management that receives the information and on the complexity of the organization's information technology. 3) Current cost return.
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22.3   Analyze the technical difficulties that arise when comparing the performance of divisions operating in different countries. 1) Comparing the performance of divisions of a multinational company operating in different countries is difficult because of the differences in economic, legal, political, social and cultural environments. 2) Benchmarks represent 'best practices', and can.
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Problem D-1 CurrentLiabilities In each box of cereal that it produces, Snoopy Cereal Corp. includes a special coupon.The purchaser may redeem 10 coupons for a cheese grater (premium).Each grater costsSnoopy $0.90. During2017, Snoopy purchased 6,000 gratersand sold 200,000 boxes of cereal @ $3.50 per box. Based on past experience, Snoopy estimates that.
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31.Under current IFRS requirements, a provision is recognized if a) the amount of the loss can be reliably measured and it is probable that an asset has been impaired or a liability incurred as of the financial statement date. b) the amount of the loss cannot be measured reliably but it is.
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75) Jim's Quality Pre-owned Auto Sales Ltd. allows its divisions to operate as autonomous units. Their results for the current year were as follows: SUVs Trucks Cars Revenues $1,650,000 $900,000 $5,800,000 Current assets 210,000 152,500 419,000 Capital assets 870,000 630,000 1,590,000 Current liabilities 275,000 127,000 399,000 Net operating income 235,000 70,000 560,000 After-tax income 186,000 55,404 443,234 Weighted average cost of capital 9.5% 9.5% 9.5% Required: For each division compute the a.return on sales b.return on investment based on total assets employed c.economic value added d.residual.
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18) National Can Company has three divisions, Eastern, Midwestern, and Western. Because of very different accounting methods and inflation rates in different countries it is considering multiple evaluation measures. Information gathered about the divisions for the year just ended follows: Assets Income Book valueCurrent value Book valueCurrent value Eastern$600,000$900,000 $120,000$110,000 Midwestern700,000 700,000120,000 120,000 Western 1,000,000.
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