Question & Answer

Cost of sales schedule Rebecca Ltd is a manufacturer of machines made to customer specifications. All production costs are accumulated by means of a job order costing system. The following information is available at the beginning of the month of October.       A review of the job order cost sheets revealed the composition of the work in process inventory on October 1 as follows:         Activity during the month of October was as follows:       On 31 October, inventories consisted of the following:       Required Prepare a detailed schedule showing the cost of goods manufactured for October.

Mission statement, strategy, balanced scorecard implementation Squeezers Juice and Tea Company manufactures organic juices and chai teas that are sold at whole foods stores. Several of its products have been featured in movies because the company’s products are popular with celebrities. The owners and employees value organic products and innovative combinations of juices and teas with outstanding taste. Several employees have found sources of unusual ingredients from organic farmers around the world. The ingredients are more expensive than those used by other juice manufacturers. Although Squeezers cannot set unrealistically high prices, it focuses on high quality. Demand for the company’s products is stable, even though it sets the highest prices for juices in its market. Recently, the costs of several unusual ingredients increased because of weather conditions. The owner is concerned that increasing prices any more could reduce demand. She has taken a business workshop and learned about the balanced scorecard. She wants to incorporate a balanced scorecard at Squeezers.   Required (a)     Draft a potential mission statement for Squeezers. Explain how you decided what should be included in the statement and how it should be worded. (b)     Explain the company’s business strategy and core competencies. (c)     Identify several performance objectives for each of the four perspectives. (d)     Select two performance objectives for each of the four perspectives, and identify a potential performance measure for each. Explain your choices. (e)     Describe possible methods to collect the data needed for each of the performance measures in part (d). For example, what existing information might be available? What new record-keeping might be required? Would the company need to develop surveys?

{Planning} Jackie has a corporate client that has recently received a 30-day notice from the IRS with a $100,000 tax assessment.  Her client is considering requesting an appeals conference to contest the assessment.  What factors should Jackie advise her client to consider before requesting an appeals conference?

Explain why the use of residual income for performance evaluation provides better incentives, in some ways, than ROI, but still causes managers to make some decisions that could be harmful to an organisation in the long run.

On January 1, 2014, Richards Inc. had cash and common stock of $60,000. At that date, the company had no other asset, liability, or equity balances. On January 2, 2014, it purchased for cash $20,000 of equity securities that it classified as available-for-sale. It received cash dividends of $3,000 during the year on these securities. In addition, it has an unrealized holding gain on these securities of $4,000 net of tax. Determine the following amounts for 2014: (a) net income, (b) comprehensive income, (c) other comprehensive income, and (d) accumulated other comprehensive income (end of 2014).

When stock market volatility is high, corporate bond yields tend to increase. Which market forces cause the increase in corporate bond yields under these conditions? (LO2)

The financial statements of P&G are presented in Appendix 5B. The company’s complete annual report, including the notes to the financial statements, can be accessed at the book’s companion website, www. wiley.com/college/kieso. Instructions Refer to P&G’s financial statements and the accompanying notes to answer the following questions. (a) How does P&G value its inventories? Which inventory costing method does P&G use as a basis for reporting its inventories? (b) How does P&G report its inventories in the balance sheet? In the notes to its financial statements, what three descriptions are used to classify its inventories? (c) What costs does P&G include in Inventory and Cost of Products Sold? (d) What was P&G’s inventory turnover in 2011? What is its gross profit percentage? Evaluate P&G’s inventory turnover and its gross profit percentage.

What will be the effect on the UK economy if the European Central Bank cuts interest rates?

Braddock Inc. had the following long-term receivable account balances at December 31, 2013. Note receivable from sale of division $1,500,000 Note receivable from offi cer 400,000 Transactions during 2014 and other information relating to Braddock’s long-term receivables were as follows. 1. The $1,500,000 note receivable is dated May 1, 2013, bears interest at 9%, and represents the balance of the consideration received from the sale of Braddock’s electronics division to New York Company. Principal payments of $500,000 plus appropriate interest are due on May 1, 2014, 2015, and 2016. The first principal and interest payment was made on May 1, 2014. Collection of the note installments is reasonably assured. 2. The $400,000 note receivable is dated December 31, 2013, bears interest at 8%, and is due on December 31, 2016. The note is due from Sean May, president of Braddock Inc. and is collateralized by 10,000 shares of Braddock’s common stock. Interest is payable annually on December 31, and all interest payments were paid on their due dates through December 31, 2014. The quoted market price of Braddock’s common stock was $45 per share on December 31, 2014. 3. On April 1, 2014, Braddock sold a patent to Pennsylvania Company in exchange for a $100,000 zerointerest- bearing note due on April 1, 2016. There was no established exchange price for the patent, and the note had no ready market. The prevailing rate of interest for a note of this type at April 1, 2014, was 12%. The present value of $1 for two periods at 12% is 0.797 (use this factor). The patent had a carrying value of $40,000 at January 1, 2014, and the amortization for the year ended December 31, 2014, would have been $8,000. The collection of the note receivable from Pennsylvania is reasonably assured. 4. On July 1, 2014, Braddock sold a parcel of land to Splinter Company for $200,000 under an installment sale contract. Splinter made a $60,000 cash down payment on July 1, 2014, and signed a 4-year 11% note for the $140,000 balance. The equal annual payments of principal and interest on the note will be $45,125 payable on July 1, 2015, through July 1, 2018. The land could have been sold at an established cash price of $200,000. The cost of the land to Braddock was $150,000. Circumstances are such that the collection of the installments on the note is reasonably assured. Instructions (a) Prepare the long-term receivables section of Braddock’s balance sheet at December 31, 2014. (b) Prepare a schedule showing the current portion of the long-term receivables and accrued interest receivable that would appear in Braddock’s balance sheet at December 31, 2014. (c) Prepare a schedule showing interest revenue from the long-term receivables that would appear on Braddock’s income statement for the year ended December 31, 2014.

Many financial institutions borrow heavily in the money markets using mortgages and mortgage-backed securities as collateral. Write a short essay about the lessons of the credit crisis to the deficit units and the surplus units that participate in the money markets. Should money markets be regulated to a greater degree to ensure proper collateral in money markets?

Determine the bending force required in Problem 20.11 if the bend is to be performed in a V-die with a die opening width dimension = 1.25 in. The material has a tensile strength = 70,000 lb/in2 .

In some instances, accounting principles require a departure from valuing inventories at cost alone. Determine the proper unit inventory price in the following cases. Cases 1 2 3 4 5 Cost $15.90 $16.10 $15.90 $15.90 $15.90 Sales price 14.80 19.20 15.20 10.40 17.80 Estimated cost to complete 1.50 1.90 1.65 .80 1.00 Estimated cost to sell .50 .70 .55 .40 .60

The 2011 Annual Report of Tootsie Roll Industries contains the following information. (in millions) December 31, 2011 December 31, 2010 Total assets $857.9 $858.0 Total liabilities 191.9 190.6 Net sales 528.4 517.1 Net income 43.9 53.0 Instructions Compute the following ratios for Tootsie Roll for 2011. (a) Asset turnover. (b) Return on assets. (c) Profit margin on sales. (d) How can the asset turnover be used to compute the return on assets?

Tori Amos Corporation began operations on December 1, 2013. The only inventory transaction in 2013 was the purchase of inventory on December 10, 2013, at a cost of $20 per unit. None of this inventory was sold in 2013. Relevant information is as follows. Ending inventory units December 31, 2013 100 December 31, 2014, by purchase date December 2, 2014 100 July 20, 2014 50 150 During the year, the following purchases and sales were made. Purchases Sales March 15 300 units at $24 April 10 200 July 20 300 units at 25 August 20 300 September 4 200 units at 28 November 18 150 December 2 100 units at 30 December 12 200 The company uses the periodic inventory method. Instructions (a) Determine ending inventory under (1) specific identification, (2) FIFO, (3) LIFO, and (4) average cost. (b) Determine ending inventory using dollar-value LIFO. Assume that the December 2, 2014, purchase cost is the current cost of inventory. (Hint: The beginning inventory is the base layer priced at $20 per unit.)

What are the criteria necessary to meet the “not essentially equivalent to a dividend” change-in-stock-ownership test in a stock redemption?

Assume that the (weekly) market demand and supply of tomatoes are given by the following figures: Price (£ per kilo) 4.00 3.50 3.00 2.50 2.00 1.50 1.00 Qd (000 kilos) 30 35 40 45 50 55 60 Qs (000 kilos) 80 68 62 55 50 45 38 (a)  What are the equilibrium price and quantity? (b)  What will be the effect of the government fixing a minimum price of (i) £3 per kilo; (ii) £1.50 per kilo? (c)  Suppose that the government paid tomato producers a subsidy of £1 per kilo. (i) Give the new supply schedule. (ii) What will be the new equilibrium price? (iii) How much will this cost the government? (d)  Alternatively, suppose that the government guaranteed tomato producers a price of £2.50 per kilo. (i) How many tomatoes would it have to buy in order to ensure that all the tomatoes produced were sold? (ii) How much would this cost the government? (e)  Alternatively, suppose it bought all the tomatoes produced at £2.50. (i) At what single price would it have to sell them in order to dispose of the lot? (ii) What would be the net cost of this action?

Jones Co. is in a technology-intensive industry. Recently, one of its competitors introduced a new product with technology that might render obsolete some of Jones’s inventory. The accounting staff wants to follow the appropriate authoritative literature in determining the accounting for this significant market event. Instructions Access the IFRS authoritative literature at the IASB website (http://eifrs.iasb.org/). (Click on the IFRS tab and then register for free eIFRS access if necessary.) When you have accessed the documents, you can use the search tool in your Internet browser to respond to the following questions. (Provide paragraph citations.) (a) Identify the authoritative literature addressing inventory pricing. (b) List three types of goods that are classified as inventory. What characteristic will automatically exclude an item from being classified as inventory? (c) Define “net realizable value” as used in the phrase “lower-of-cost-or-net realizable value.” (d) Explain when it is acceptable to state inventory above cost and which industries allow this practice.

The financial statements of Marks and Spencer plc (M&S) are available at the book’s companion website or can be accessed at http://annualreport.marksandspencer.com/_assets/downloads/ Marks-and-Spencer-Annual-report-and-financial-statements-2012.pdf. Instructions Refer to M&S’s financial statements and the accompanying notes to answer the following questions. (a) How does M&S value its inventories? Which inventory costing method does M&S use as a basis for reporting its inventories? (b) How does M&S report its inventories in the statement of financial position? In the notes to its financial statements, what three descriptions are used to classify its inventories? (c) What costs does M&S include in Inventory and Cost of Sales? (d) What was M&S’s inventory turnover in 2012? What is its gross profit percentage? Evaluate M&S’s inventory turnover and its gross profit percentage.

A continuous hot rolling mill has eight stands. The dimensions of the starting slab are: thickness = 3.0 in, width = 15.0 in, and length = 10 ft. The final thickness is to be 0.3 in. Roll diameter at each stand = 36 in, and rotational speed at stand number 1 = 30 rev/min. It is observed that the speed of the slab entering stand 1 = 240 ft/min. Assume that no widening of the slab occurs during the rolling sequence. Percent reduction in thickness is to be equal at all stands, and it is assumed that the forward slip will be equal at each stand. Determine (a) percent reduction at each stand, (b) rotational speed of the rolls at stands 2 through 8, and (c) forward slip. (d) What is the draft at stands 1 and 8? (e) What is the length and exit speed of the final strip exiting stand 8?

1.    : Which style of communicating do you think would be most beneficial to the long-term success of a U.S. company operating internationally—high-context or low-context communications? Why?

What are some of the general properties that distinguish metals from ceramics and polymers?

An electron-beam welding operation is to be accomplished to butt weld two sheet-metal parts that are 3.0 mm thick. The unit melting energy = 5.0 J/mm3. The weld joint is to be 0.35 mm wide, so that the cross section of the fused metal is 0.35 mm by 3.0 mm. If accelerating voltage = 25 kV, beam current = 30 milliamp, heat transfer factor f1 = 0.85, and melting factor f2 = 0.75, determine the travel speed at which this weld can be made along the seam

A face milling operation removes 0.32 in depth of cut from the end of a cylinder that has a diameter of 3.90 in. The cutter has a 4-in diameter with 4 teeth, and its feed trajectory is centered over the circular face of the work. The cutting speed is 375 ft/min and the chip load is 0.006 in/tooth. Determine (a) the time to machine, (b) the average metal removal rate (considering the entire machining time), and (c) the maximum metal removal rate.

What is the expected value of the lottery ticket gamble if the chances of purchasing a winning ticket are 1 per cent? How much of the certain pay-off is a risk-loving person willing to sacrifice if they decide to purchase the lottery ticket? If they were indifferent between purchasing and not purchasing the ticket what is their certainty equivalent and risk premium of the gamble?

Mayaguez Corporation provides its officers with bonuses based on net income. For 2014, the bonuses total $350,000 and are paid on February 15, 2015. Prepare Mayaguez’s December 31, 2014, adjusting entry and the February 15, 2015, entry.