Complete the following table by calculating marginal product and average product from the data

given: Input of labor Total Product Marginal Product Average Product 0 0 1 15 2 34 3 51 4 64 5

75 6 84 7 91 8 96

You’ll complete a number of your school assignments in small groups, many of which will
be student selected. Assume group members are rational and select fellow group members based
on their assessment of teammates’ intellectual and productive capabilities. Someone you
don’t know invites you to join a group. Shoul

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1. Six bidders in an oral auction place the following values on a good: ($6, $5, $4, $3, $2, $1). In
an oral competitive auction, what is the winning price? a. $3 b. $4 c. $5 d. $6 2. Suppose that the
second, third, and fourth bidders from the preceding oral auction form a cartel. What is the new
winning price? a. $3

You have developed the following income statement for the Hugo Boss Corporation. It
represents the most recent year’s operations, which ended yesterday. Your supervisor in the
controller’s office has just handed you a memorandum asking for written responses to the
following questions: What is the firm’s break-eve

Percy Corporation was organized on January 1, 2010, with an authorization of 1,200,000 shares
of common stock with a par value of $6 per share. During 2010, the corporation had the
following capital transactions: January 5 issued 675,000 shares @ $10 per share July 28
purchased 90,000 shares @ $11 per share

The British government offered physicians incentive pay to offer better customer (patient)
service, such as managing appointments better. In particular, physicians can score “points”
by seeing a patient within 48 hours after making an appointment. This year, each point brings
£75; next year, it will be £120. Do y

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The federal government increases spending by $1 billion to develop a new fighter jet. If the MPC
in the economy is 0.1, what will be the overall spending effect on the economy? Show your
work.

A bank has $110 million in deposits and holds $10 million in vault cash. a. If the required
reserves ratio is 10 percent, what dollar amount of reserves must be held at the Federal Reserve
Bank? b. How would your answer in Part (a) change if the required reserves ratio was increased
to 12 percent?

Jed is an electrician. Jed and his wife are cash basis taxpayers and file a joint return. Jed wired a
new house for Alison and billed her $15,000. Alison paid Jed $10,000 (last year) and refused to
pay the remainder of the bill, claiming the fee to be exorbitant. Jed took Alison to Small Claims
Court for the unpaid amo

This problem is mentioned in the text (see the section on “Functional Silos versus Process
Teams”). Your task is to propose an organizational solution. To briefly recap, a manufacturer
is trying to design the next generation of turbine engines for jet airplanes. The company is
divided along functional lines. Engine

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Suppose your company is considering three health insurance policies. The first policy requires no
tests and covers all preexisting illnesses. The second policy requires that all covered employees
test negative for the HIV virus. The third policy does not cover HIV- or AIDS-related illnesses.
All insurance policies are

Details: Suppose you are a painter, and the price of a gallon of paint increases from $3.00 a
gallon to $3.50 a gallon. Your usage of paint drops from 35 gallons a month to 20 gallons a
month. Perform the following: Compute the price elasticity of demand for paint and show your
calculations. Decide whether the demand f

How could you take the advantage away from the other player in the ultimatum game?

If the nominal GDP is $559 billion in the base year, and it rises to 577 in Year 1, and 605 in Year
2, what is the real GDP in each year, given that the price index has risen from 100 to 104.5 in the
first year and up to 108.3 in the second year? If the price index 20 years before the base year
was 41.2, and the nomin

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The balance sheet that follows indicates the capital structure for Nealon Inc. Flotation costs are
(a) 15 percent of market value for a new bond issue, and (b) $2.01 per share for preferred stock.
The dividends for common stock were $2.50 last year and are projected to have an annual
growth rate of 6 percent. The firm

In the final round of a TV game show, contestants have a chance to increase their current
winnings of 1 million dollars to 10 million dollars. If they are wrong, their prize is decreased to
$100,000. To win, they have to guess the exact percentage that answered a question a certain
way, and the range has already been n

Maritime Insurance Company offers insurance policies for recreational boats. A typical policy
will pay the replacement cost of $25,000 if the boat is a total loss. If the boat is not a total loss
but the damage is more than $10,000, the policy pays $5,000. For damage under $10,000, no
coverage is offered. The company e
1. If a life insurance company knows that smoking increases the risk of death but is unable to
determine which applicants smoke, the problem of _______________ refers to
_______________ being more likely to buy insurance. a. adverse selection, nonsmokers’ b.
screening, nonsmokers’ c. adverse selection, smokers’ d

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If the nominal GDP is $559 billion in the base year, and it rises to 577 in Year 1, and 605 in Year
2, what is the real GDP in each year, given that the price index has risen from 100 to 104.5 in the
first year and up to 108.3 in the second year? If the price index 20 years before the base year
was 41.2, and the nomin

Suppose that a paper mill “feeds” a downstream box mill. For the downstream mill, the
marginal profitability of producing boxes declines with volume. For example, the first unit of
boxes increases earnings by $10, the second $9, the third $7, and so on, until the tenth unit
increases profit by just $1. The cost the

You want to invest in a hot dog stand near the ballpark. You have a 0.35 probability that you can
turn your current $15,000 into $50,000 and a 0.65 probability that fierce competition will drive
you to ruin, losing all your money. If you decide not to enter, you keep your $15,000.Would you
enter the market?

Suppose that a bank has checkable deposits of $500, loans of $400 and reserves of $100. If the
required reserve ratio is 6%, what are this bank's excess reserves? (a) $70 (b) $60 (c) $90 (d)
$30

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In 1931, Pepsi was almost broke. The Great Depression hit it hard, and Coke had most of the
duopoly market for soft drinks in the United States. Pepsi tried many things: marketing
campaigns, label changes, and more. Then it came up with the idea of selling 12-ounce bottles
for 5¢, which had been the 6-ounce price. Cok

Two equal-sized newspapers have overlap circulation of 10%(10%of the subscribers subscribe to
both newspapers). Advertisers are willing to pay $10 to advertise in one newspaper but only $19
to advertise in both, because they’re unwilling to pay twice to reach the same subscriber.
What’s the likely bargaining negoti

Suppose that, as an owner of a federally insured S&L in the 1980s, the price of real estate falls,
and most of your loans go into default. In fact, so many loans go into default that the net worth of
the S&L is negative ($5 million). Federal regulators haven’t realized this yet, but they will
shortly. As a last-ditch
Nokia and Ericsson plan to introduce new handheld communications devices. However, they
must decide whether to use their own software standard or a common third-party-developed
standard. The respective payoffs are diagrammed here. What is the likelyoutcome?

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1. A computer manufacturer has two divisions: one serving residential customers and one serving
business customers. If an incentive conflict arises between the two divisions, how will overall
company profits be affected? a. Profits will fall. b. Profits will rise. c. Profits may either rise or
fall. d. The conflict has

When real estate agents sell their own, rather than clients’, houses, they leave the houses on
the market for a longer time (10 days longer on average) and wind up with better prices (2%
higher on average). Why?

Futura Furniture Products manufactures upscale office furniture for the “Office of the
Future.” The sales division is comprised of regionally based sales offices made up of sales
representatives and regional managers. Sales representatives—who report to the regional
managers—conduct direct sales efforts with cu

1. If you roll a pair of standard dice, what’s the probability that the total will be an odd
number less than six? a. 0.083 b. 0.167 c. 0.25 d. 0.5 2. You are taking a multiple-choice test that
awards you one point for a correct answer and penalizes you ¼ point for an incorrect answer. If
you have to make a random

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1. In the game shown below, change the ranking of values that Sally and Joe place on leisure and
grades to change the game from a prisoners’ dilemma into a game of chicken with two
equilibria. 2. Give advice to Joe about how to change the game to his advantage. Upper left is an
equilibrium if both students rank th

Suppose you are a painter, and the price of a gallon of paint increases from $3.00 a gallon to
$3.50 a gallon. Your usage of paint drops from 35gallons a month to 20gallons a month Perform
the following: 1. Compute the price elasticity of demand for paint and show your calculations. 2.
Decide whether the demand for

An artificial tooth manufacturer sells teeth to distributors through a dealer network. The dealers
sell to dental labs, which construct dentures for consumers. The manufacturer has spent a great
deal of money advertising its teeth, and it has become the most popular brand of artificial teeth.
It is now a dominant firm

A firm has fixed costs of $60 and variable costs as indicated in the table below. Calculate the
other costs. Instructions: Round your answers so that you enter no more than 2 decimal places.
Total Product Total Variable Cost 0 ............... 0 1 ............. 45 2 ............. 85 3 ..............
120 4Â ......

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1. Your notebook computer’s hard drive recently crashed, and you decide to take it to a local
repair technician to have it fixed. In this relationship, a. you are the agent. b. the technician is the
principal. c. the technician is the agent. d. no principal–agent relationship exists. 2.
Principal–agent relations

You need to hire some new employees to staff your start-up venture. You know that potential
employees are distributed throughout the population as follows, but you can’t distinguish
among them: What is the expected value of employees youhire?

In Sweden, firms that fail to meet their debt obligations are immediately auctioned off to the
highest bidder. (There is no reorganization through Chapter 11 bankruptcy.) The current
managers are often the high bidders for the company. Why?

1. Alpha Industries is considering acquiring Foxtrot Flooring. Foxtrot is worth $20 million to its
current owners under its existing operational methods. Due to some opportunities for synergies
between the two companies, Alpha believes that Foxtrot is worth $25 million as part of Alpha
Industries. What do you predict f

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Your cousin Vinnie owns a painting company with fixed costs of $200 and the following
schedule for variable costs: Quantity of houses painted per month: 1 2 3 4 5 6 7 8 Variable costs:
$10, $20, $40, $80, $160, $320, $640 Calculate average fixed cost, average variable cost, and
average total cost for each quantity. Wha

Assume that Home and Foreign produce 2 goods, TVs and cars, and use the information below
to answer the following questions.

In the No-Trade Equilibrium a. What is the marginal product of labor for TVs and cars in the
Home country? What is the no-trade relative price of TVs at Home? b. What is the marginal
product o

If a portfolio had a return of 8%, the risk free asset return was 3%, and the standard deviation of
the portfolio's excess returns was 20%, calculate the Sharpe measure.

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Please prepare the homework problems in the form of a Word and/or Excel file. Try to use one
file to submit your answers, if possible, and include the questions with your answers. Be sure to
include your name and "Week 2" at the top of the first page of the document. Explain the
difference between the accrual basis of

Suppose that in 1984 the total output in a single-good economy was 7000 buckets of chicken.
Also suppose that in 1984 each bucket of chicken was priced at $10. Finally, assume that in 2004
the price per bucket of chicken was $16 and that 22,000 buckets were produced. Determine real
GDP for 1984 and 2004, in 1984 prices

Suppose the banking system’s non borrowed reserves total $48.3 billion with total legal
reserves standing at $51.2 billion. What must borrowed reserves be? This morning the Federal
Reserve decided to undertake the sale of $500 million in government securities through open
market operations. What will be the new level

Which of the following are characteristic of principal–agent conflicts that often exist in a firm?
(Note: The entire statement must be true in order to be a correct answer.) a. Managers do not
always operate in the best interest of owners because owners are generally more risk averse than
managers. b. Managers genera

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You hold an auction on eBay and expect two bidders to show up. You estimate that each bidder
has a value of either $5 or $8 for the item, and you attach probabilities to each value of 50%.
Your own value for the item is zero. You can set a reserve price, a price below which you will
not accept bids for the item. What r

1. Suppose that, during the day, the station owner’s demand is given by PD = 2.06 - .
00025QD. The marginal cost of selling gasoline is $1.31 per gallon. At his current $1.69 price,
he sells 1,500 gallons per week. Is this price-output combination optimal? Explain. 2. The station
owner sells an equal number of gallon

You have just inherited $100,000 from your rich uncle Sam. Being the conservative sort, you
rush to your local bank and deposit the entire windfall. The reserve requirement is currently 10
percent. What is the immediate impact on the balance sheet of the bank? Mention each account
affected and the appropriate amount. A

Currently, at a price of $1 each, 100 popsicles are sold per day in the perpetually hot town of
Rostin. Consider the elasticity of supply. In the short run, a price increase from $1 to $2 is unit-
elastic (Es = 1.0). So how many popsicles will be sold each day in the short run if the price rises
to $2 each? In the long

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How inflation is typically measured? What are the different types of inflation? Why is it
important to know which type of inflation we may be experiencing?
I have an equation that goes like this: P - 2.7 = 40 x P I know the next step is: .60p = 2.7Â And
the answer is p = 4.5Â But I don't understand how P became to be .60 in the second step.

What are some ways in which accounting for healthcare organizations (HCOs), especially not-
for-profit (NFP) ones, tends to differ from accounting in other industries?

Discuss the advantages and disadvantages of using divisional profit as the basis of incentive
compensation for division managers compared to using company profit as the basis.

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1. What is the equilibrium of the following game? a. Up, Left b. Down, Left c. Up, Right d.
Down, Right 2. In a strategic game, if the other player has adopted a Nash equilibrium strategy,
you should a. also adopt a Nash equilibrium strategy. b. use a strategy that delivers you a higher
payoff than the Nash equilib

At the profit-maximizing output the price of Tommy jeans is twice as high as marginal cost.
What is the elasticity of demand?

The manager of a corporate division faces the possibility of an audit every year. She prefers to
spend time preparing if she will be audited; otherwise, she would prefer to invest her time
elsewhere. The auditor, who gets recognized for uncovering problems, prefers to audit
unprepared clients. If the players match thei

Tennessee just instituted a state lottery. The initial jackpot is $100,000. If the first week yields no
winners, the next week’s jackpot goes up, depending on the number of previous players who
placed the $1 lottery bets. The probability of winning is one in a million (1 – 10-6). What must
the jackpot be before the

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You now expect three bidders to show up. What reserve price should you set, and what is your
expected revenue from auctioning the item with a reserve price?

If the government decides to spend an extra $5 billion on health care that they would otherwise
have spent on road construction, and the MPC = 0.75, what is the effect on AD?Â

a. It has no effect. b. It increases by $5 billion. c. It increases by $15 billion. d. It increases by

$20 billion.

Should owners of a private company contemplating an IPO (a sale of stock to the public) release
information about the company, or keep as much of it as they can to themselves?

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You’re the manager of global opportunities for a U.S. manufacturer, who is considering
expanding sales into Europe. Your market research has identified three potential market
opportunities: England, France, and Germany. If you enter the English market, you have a 0.5
chance of big success (selling 100,000 units at a

How do we use correlation and covariance to manage the tradeoff between risk and return?
Provide an example

Chillman Motors, Inc., believes it faces the following segmented demand function: PÂ Â = 150
- 0.5Q when 0 ≤ Q ≤ 50 P  = 200 – 1.5Q      for Q > 50 a) Indicate
both verbally and graphically why such a segmented demand function is likely to exist. What
type of industry structure is indicated by this

Suppose the government increases education spending by $20 billion. How much additional
consumption will this increase cause? Show your work.

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Suppose a copy machine manufacturer uses independent service operators (ISOs) to service its
copiers. Recently, its machines have become more complex and difficult to service, and the
manufacturer is concerned that the ISOs lack the necessary expertise to service the machines
correctly. The manufacturer is especially c

You’ve entered into a contract to purchase a new house, and the closing is scheduled for next
week. It’s typical for some last-minute bargaining to occur at the closing table, where sellers
often try to tack on extra fees. You have three options for the closing: 1) Attend yourself, 2) Send
an attorney authorized t

Firm X is a small environmental consulting firm. The firm pays employees according to how
much time they bill on projects. Because they are out in the field, in close contact with clients,
employees also have opportunities to recognize client demands for new projects and to
“sell” more projects to the clients. Howe

Explain your reasoning and interpret your results.

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You have been hired by Southwest Airlines. Your primary task is to keep the Airfares low and
the company profitable. In the prior years, Southwest has extensively bought forward contracts
of barrels of Oil at low prices between $20 to $40 a year However currently the fuel price in the
past year has fluctuated wildly be

Suppose the herbicide manufacturer mentioned in the chapter can vertically integrate into just
one of the downstream retail businesses, either home gardening or farming, but not both. Which
one would allow the manufacturer to price discriminate?
Why do regulations on alcohol purchasing vary state to state?

Various financial data for SunPath Manufacturing for 2009 & 2010 follows:What is the percent
change in total productivity factor?

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Two airlines, A and B, are deciding to choose whether Atlanta or Chicago should be their major
hub. Given the diagram here, find all equilibria of thisgame.

A transparent adhesive tape manufacturer produces a wide array of products, including sticky
notes, as well as branded and unbranded adhesive tape of different sizes and shapes. Large office
supply retailers, like Office Depot and Staples, carry only the most popular SKUs (shop keeping
units—a unique product with its

1. For threats or commitments to be effective, they must be a. irrational. b. rational. c. credible. d.

None of the above. 2. How many pure strategy equilibria does the following game have? a. 0 b. 1
c. 2 d. 3 3. Consider a vendor–buyer relationship. Which of the following conditions would
lead to the buyer havin

What is the relationship between GDP and the business cycle? How can you use information
about the business cycle when making a decision about a large purchase?

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State utility commissions typically regulate local phone companies, but local phone companies
also offer long-distance service to their customers. Rival long-distance carriers also connect to
local phone lines to provide long-distance service to customers. Recently, the rival long-distance
carriers have complained that

Anticipated sales for Sale Ride ‘Tire Company were 36,000 passenger car tires and 16,000
truck tires. Beginning and ending finished goods inventories for both products were negligible,
and thus were omitted from the sales budget. Rubber and steel belts are used in producing
passenger car and truck according to the fo

Banks earn money by borrowing from depositors at low interest rates and lending to individuals
and businesses at high interest rates. As banks grow, they split into functional divisions that
either generate deposits or make loans. To measure the profitability of each division, banks use
transfer pricing. For example, i

Suppose after submitting your sealed bid in a Vickrey auction you find out that you have lost the
auction (you were not the highest bidder); however, you have the opportunity to revise your bid.
Would you go ahead and change your bid? Why or why not?

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A man earned $80,000 when the Consumer Price Index was 200. What were his earnings in
terms of $2,000 if the base period was 2000?

A. $160,000Â

B. $80,000Â

C. $40,000Â

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D. $60,000

You are given an offer to split a $20 bill. The other player offers you $1. If you accept the offer,
you keep the $1, and the other player keeps $19. If you reject the offer, neither of you will get
anything. Do you take the offer?

Executive Inn, Inc., operates a downtown hotel property that has 200 rooms. On average, 90% of
Executive Inn’s rooms are occupied on weekdays, and 60% are occupied during the
weekend. The manager has asked yow to develop a direct labor budget for the house-keeping and
restaurant staff for weekdays and weekends. You h

(a) How are cash equivalents reported in the financial statements? (b) What are some examples
of cash equivalents?

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Prepare journal entries for each of the following a. Issued a check to establish a petty cash fund
of $750. b. The amount of cash in the petty cash fund is $325. Issued a check to replenish the
fund based on the following summary of petty cash receipts: repair expense $300, and
miscellaneous selling expense $100. Recor

Prepare a journal entry for the purchase of office equipment on office supplies on August 7 for
$4,000, paying $1,000 cash and the remainder on account.

The following data were adapted from the financial statements of Kmart Corporations, prior to
its filing for bankruptcy: a. Prepare a horizontal analysis for the income statement showing the
amount and percent of change in each of the following. 1. Sales 2. Cost of sales 3. Selling,
general, and administrative expense

Net vision uses flexible budgets that are based on the following data: Sales
commissions ............... 10% of sales Advertising expense .............18% of sales Miscellaneous
selling expense ......... $ 2,800 per month plus 4% of sales Office salaries expense .............. $
18,000 per month Office supplies expense

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The controller of Fleet Shoes Inc. instructs you to prepare a monthly cash budget for the next
three months. You are presented with the following budget information: The company expects
to sell about 10% of its merchandise for cash. Of sales on account, 60% are expected to be
collected in full in the month following

Banks charge fees for “bounced” checks—that is, checks that exceed the balance in the
account. It has been estimated that processing bounced checks costs a bank roughly $1.50 per
check. Thus, the profit margin on bounced checks is very high. Recognizing this, some banks
have started to process checks from largest

Assume that when a purchase of supplies of $3,100 for cash was recorded, both the debit and the
credit were journalized and posted as $1,300. (a) Would this error cause the trial balance to be
out of balance? (b) Would the trial balance be out of balance if the $3,100 entry had been
journalized correctly but the credit

Why should the employee who handles cash receipts not have the responsibility for maintaining
the accounts receivable records? Explain.

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The following data were gathered to use in reconciling the bank account of Azalea Company:
Balance per bank $25,000 Balance per company records 27,475 Bank service charges 75 Deposit
in transit 7,500 NSF check 3,400 Outstanding checks 9,000 a. What is the adjusted balance on
the

Assume that Peggy Gyger, accounts payable clerk for Patmen Inc., stole $193,750 by paying
fictitious invoices for goods that were never received. The clerk set up accounts in the name of
the fictitious companies and cashed the checks at a local bank. Describe a control procedure that
would have prevented or detected th

The Public Company Accounting Oversight Board (PCAOB) was created as a result of the
Sarbanes-Oxley Act. It has oversight and enforcement responsibilities over accounting firms in
the U.S. Instructions Answer the following questions. (a) What is the mission of the PCAOB? (b)
Briefly summarize its responsibilities rela

The following selected transactions were completed during August of the current year: 1. Billed
customers for fees earned, $35,700. 2. Purchased supplies on account, $2,000. 3. Received cash
from customers on account, $26,150. 4. Paid creditors on accounts, $800. a. Journalize the above
transactions in a two-column jou

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The following items may appear on a ban statement: 1. NSF check 2. Bank correction of an error
from posting another customer’s check to the company’s account 3. Loan proceeds 4.
EFT deposit Using the format shown below, indicate whether each item would appear as a debit
or credit memo on the bank statement and whet

Breeze beverage company manufacturing soft drinks, information about two products is as
follows: It is known that both products have the same direct materials and direct labor costs per
case. Breeze beverage allocates factory overheads to products by using a single plantwide factory
overhead rate, based on direct la

(a) Name and describe the five elements of internal control. (b) Is any one element of internal
control more important than another?

Based upon the data presented in Exercise 2-13, (a) Prepare an unadjusted trial balance, listing
the accounts in their proper order. (b) Based upon the unadjusted trial balance, determine the net
income or net loss.

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Bank have variety of product, such as savings accounts, checking accounts, certificates of
deposit (CDs), and loans. Assume that you were assigned the task of determining the
administrative costs of “savings accounts” as a complete product line. What are some of
the activities associated with savings accounts? In a

Financial data for Preston Company are shown below. For Year Ending December 31, 2012
Cash on December 31, 2012 $184,800 Cash flow from operations (158,400) a. Compute the ratio
of cash to monthly cash expense. b. Interpret the results computed in (a)

Some people argue that the internal control requirements of the Sarbanes-Oxley Act (SOX) put
U.S. companies at a competitive disadvantage to companies outside the United States. Discuss
the competitive implications (both pros and cons) of SOX.

Domino’s Pizza LL.C, operates pizza delivered and carry-out restaurants. The annual report
describes its business as follows: We offer a focused menu of bigb-quality, value-priced pizza
with three types of crust (Hand-Tossed, Tbin Crust, and Deep Dish), along with Buffalo wings,
bread sticks, cheesy bread, CinnaStix,

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Wells Fargo insurance Services (WFIS) is an insurance brokerage company that classified
insurance products as either “easy” or “difficult”. Easy and difficult products were
defined as follows: Easy: Electronic claims, few inquiries, mature product Difficult: Paper
claims, complex claims to process, many inquiri

Audio Mechanics, Inc. manufactures two models of speakers, DL and XL. Based on the
following production and sales data for September 2012, prepare (a) A sales budget and (b) A
production budget.
Resource Services Company performed services in February for a specific customer, for a fee of
$11,250. Payment was received the following March. (a) Was the revenue earned in February or
March? (b) What accounts should be debited and credited in (1) February and (2) March?

As a new auditor for the CPA firm of Ticke and Tie, you have been assigned to review the
internal controls over mail cash receipts of Perso Company. Your review reveals that checks are
promptly endorsed “For Deposit Only,” but no list of the checks is prepared by the person
opening the mail. The mail is opened eith

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Assume that Western Realty Co. borrowed $200,000 from Mountain First Bank and Trust. In
recording the transaction, Western erroneously recorded the receipt as a debit to Cash, $200,000,
and a credit to Fees Earned, $200,000. (a) How would this error affect the equality of the trial
balance? (b) How would this error aff

Checking accounts are the most common form of deposits for banks. Assume that Village
Storage has a checking account at Camino Savings Bank. What type of accounts (asset, liability,
capital stock, retained earnings, dividends, revenue, expense) does the account balance of $8,750
represent from the viewpoint of? (a) Vi

Assume that Timberline Consulting erroneously recorded the payment of $9,000 of dividends as
a debit to Salary Expense. (a) How would this error affect the equality of the trial balance? (b)
How would this error affect the income statement, retained earnings statement, and balance
sheet?

What is the purpose of preparing a bank reconciliation?

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A bank manager of City savings bank Inc. uses the managerial accounting system to track the
costs of operating the various departments with in the bank. The departments include Cash
Management, Trust, Commercial Loans, Mortgage Loans, Operations, Credit card, and Branch
Services. The budget and actual results for the O

If the two totals of a trail balance are equal, does it mean that there are no errors in the
accounting records? Explain.

Rite Weight, Inc. produces a small and large version of its popular electronic scale. The
anticipated unit sales for the scales by sales region are as follows: The finished goods inventory
estimated for May 1, 2013, for the small and large scale models is 1,500 and 2,300 units,
respectively. The desired finished goo

Romano’s Frozen Pizza Inc. has determine from its production budget the following estimate
production volumes for 12’ and 16” frozen pizzas for June 2012: There are three direct
materials used in producing the two types of Pizza. The quantities of direct material expected to
be used for each pizza are as follow

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Based upon the T accounts in Exercise 2-15, prepare the nine journal entries from which the
postings were made. Journal entry explanations may be omitted.

The management of Gourmet Appliance Company in Exercise 26-14 has asked you to use
activity-based costing to allocate factory overhead costs to the two products. You have
determined that $57,000 of factory overhead from each of the production departments can be
associated with setup activity ($ 114,000 in total). Compa

Prepare a journal entry on February 3 for the payment of dividends of $7,500.

Identify the errors in the following trial balance. All accounts have normal balances.

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The following data were gathered to use in reconciling the bank account of Bradford Company:
Balance per bank............... $17,000 Balance per company records.......... 5,765 Bank service
charges.............. 125 Deposit in transit............... 3,000 Note collected by bank with $360
interest.....

On February 3, 2012, Wilco Co. purchased $3,250 of supplies on account. In Wiko Co.’s
chart of accounts, the supplies account in No. 15, and the accounts payable account is No. 21. (a)
Journalize the February 3, 2012, transaction on page 19 of Wilco Co.’s two-column journal.
Include an explanation of the entry. (b)

Do the terms debit and credit signify increase or decrease or can they signify either? Explain

Based on the data in Exercise 21-7 and assuming that the average compensation per hour for
staff is $40 and for partners is $150, prepare a professional labor cost budget for each department
for Perez and Ford, CPAs, for the year ending December 31, 2012. Use the following column
heading: Staff Partner

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Two income statements for Boyer Company are shown on the following.

Weir Company adheres to a policy of depositing all cash receipts in a bank account and making
all payments by check. The cash account as of December 31 has a credit balance of $3,190, and
there is no undeposited cash on hand. (a) Assuming no errors occurred during journalizing or
posting, what caused this unusual balan
As of January 1, retained earnings had a credit balance of $125,000. During the year, dividends
totaled $7,000, and the business incurred a net loss of $130,000. (a) Compute the balance of
retained earnings as of the end of the year. (b) Assuming that there have been no recording
errors, will the balance sheet prepared

The ticket seller at a movie theater doubles as a ticket taker for a few minutes each day while the
ticket taker is on a break. Which control procedure of a business’s system of internal control
is violated in this situation?

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State for each account whether it is likely to have (a) Debit entries only, (b) Credit entries only,
or (c) Both debit and credit entries also, indicate its normal balance. 1. Accounts Payable 2. Cash
3. Dividends 4. Miscellaneous Expense 5. Insurance Expense 6. Fees Earned

Volt-Gear, Inc., manufactures power equipment. Volt-Gear has two primary products-generators
and air compressors. The following report was prepared by the controller for Volt-Gear senior
marketing management: The marketing management team was concerned that the selling that
the selling and administrative expenses we

State for each account whether it is likely to have (a) Debit entries only, (b) Credit entries only,
or (c) Both debit and credit entries. Also, indicate its normal balance 1. Accounts Receivable 2.
Capital Stock 3. Commissions Earned 4. Notes Payable 5. Rent Revenue 6. Wages Expense

Ashton Mills. President of Smart Calc Inc., was reviewing the product profitability reports with
the controller, Andrew Scott. The following conversation took place. Ashton: I’ve been
reviewing the product profitability reports. Our high-volume calculator, the T-100, appears to be
unprofitable, white some of our lowe

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For each of the following errors, considered individually, indicate whether the error would cause
the trial balance totals to be unequal. If the error would cause the trial balance totals to be
unequal, indicate whether the debit or credit total is higher and by how much. (a) The payment of
an insurance premium of $4,8

The following errors occurred is posting from a two-column journal: 1. A credit of $7,150 to
Accounts Payable was not posted. 2. An entry debiting Accounts Receivable and crediting Fees
Earned for $11,000 was not posted. 3. A debit of $1,000 to Accounts Payable was posted as a
credit. 4. A debit of $800 to Supplies was

If the working papers correlating with this textbook are not used, omit Problem 2-5A. The
following records of A-Aall Electronic Repair are presented in the working papers; Journal
containing entries for the period May 1-31 Ledger to which the May entries have been posted
Preliminary trial balance as of May 31, which d

Prepare a journal entry on September 6 for fees earned on account, $8,000.

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Identify each of the following as relating to (a) The control environment, (b) Control procedures,
or (c) Monitoring. 1. Personnel policies 2. Safeguarding inventory in a locked warehouse 3.
Hiring of external auditors to review the adequacy of controls

Prepare a journal entry on December 22 for the payment of dividends of $10,000.

During the month, Lathers Co. received $400,000 in cash and paid out $290,000 in cash. (a) Do
the data indicate that Lathers Co. had net income of $110,000 during the month? Explain. (b) If
the balance of the cash account is $185,000 at the end of the month, what was the cash balance at
the beginning of the month?

The productions supervisor of the Machining department for Cramer Company agreed to the
following monthly static budget for the up coming year: Cramer Company Machining
Department Monthly Production Budget Wages ................... $552,000 Utilities .....................
48,300 Depreciation ................... 60,000

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Prepare a journal entry on May 29 for cash received for services rendered, $5,000.

The following errors took place in journalizing and posting transactions: (a) Cash of $12,975
received on account was recorded as a debit to Fees Earned and a credit to Cash. (b) A $3,200
purchase of supplies for cash was recorded as a debit to Supplies Expense and a credit to
Accounts Payable. Journalize the entries t

The following errors took place in journalizing and posting transactions: (a) The receipt of
$5,800 for services rendered was recorded as a debit to Accounts Receivable and a credit to Fees
Earned. (b) The purchased of supplies of $1,800 on account was recorded as a debit to office
Equipment and a credit to Supplies. J

Whirlpool Corporation conducted an activity-based costing study of its Evansville, Indiana, plant
in Order to identity its most profitable products. Assume that we select three representative
refrigerators (out of 333): One low-, one medium-, and one high-volume refrigerator.
Additionally, we assume the following activ

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State whether each of the following is true or false. For those that are false, explain why. (a) A
proposed new financial accounting standard would not allow cash equivalents to be reported in
combination with cash. (b) Perspectives on bribery and penalties for engaging in bribery are the
same across all countries. (c

The accounts in the ledger of Dive Co. as of July 31, 2012, are listed in alphabetical order as
follows. All accounts have normal balances. The balance of the cash account has been
intentionally omitted. Prepare an unadjusted trial balances, listing the accounts in their normal
order and inserting the missing figure

Perez and Ford, CPAs, offer three types of services to clients: auditing, tax, and small business
accounting. Based on experience and projected growth, the following billable hours have been
estimated for the year ending December 31, 2012: The average billing rate for staff is $120 per
hour, and the average billing ra

The following preliminary unadjusted trial balance of Seats-For-You Co, a sports ticket agency,
does not balance: When the ledger and other records are reviewed, you discover the following:
(1) the debits and credits in the cash account total $98,000 and $82,500, respectively: (2) a
billing of $8,000 to a customer on

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If your school has a subscription to the FASB Codification, to log in and prepare responses to the
following. (a) How is cash defined in the Codification? (b) How are cash equivalents defined in
the Codification? (c) What are the disclosure requirements related to cash and cash equivalents?

(a) During October, $90,000 was paid to creditors on account, and purchases on account where
$125,000. Assuming the October 31 balance of Accounts Payable was $40,000 determine the
accounts balance on October 1. (b) On May 1, the accounts receivable account balance was
$25,000. During May, $240,000 was collected from c

Before a voucher for the purchase of merchandise is approved for payment, supporting
documents should be compared to verify the accuracy of the liability. Give an example of
supporting documents for the purchase of merchandise.

Using Wikipedia (www.wikipedia.org), look up the entry for Sarbanes-Oxley Act. Look over the
table of contents and find the section that describes Section 404. What does section 404 require
of management’s internal control report?

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On June 1, the cash account balance was $17,200. During June, cash payments totaled $178,300,
and the June 30 balance was $23,900. Determine the cash receipts during June.
Children’s Hospital of the King’s Daughters Health system in Norfolk, Virginia,
introduced a new budgeting method that allowed the hospital’s annual plan to be updated for
changes in operating plans. For example, if the budget was based on 400 patient-days (number of
patients × number of days in hospital) and th

Prepare a journal entry for the purchase of office equipment on March 4 for $27,150, paying
$5,000 cash and the remainder on account.

The following data (in millions) is taken from the financial statements of Target Corporation. a.
For Target Corporation, comparing 2009 with 2008, determine the amount of change in millions
and the percent of change for: 1. Net sales (revenues) 2. Total operating expenses b. What
conclusions can you draw from your an

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The following errors took place in journalizing and posting transactions: (a) Advertising expense
of $2,700 paid for the current month was recorded as a debit to Miscellaneous Expense and a
credit to Advertising Expense. (b) The payment of $3,950 from a customer on account was
recorded as a debit to Cash and a credit t

Financial data for Hauser company are shown below. For Year Ending December 31, 2012 Cash
on December 31, 2012 $58,800 Cash flow from operations (72,000) a. Compute the ratio of cash
to monthly cash expense. b. Interpret the results computed in (a)

The balance of Cash is likely to differ from the bank statement balance. What two factors are
likely to be responsible for the difference?

The following items may appear on a ban statement: 1. EFT payment 2. Note collected for
company 3. Bank correction of an error from recording a $7,200 deposit as $2,700 4. Service
charge using the format shown below, indicate whether each item would appear as a debit or
credit memo on the bank statement and whether the

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Southwest Tours Co. is travel agency. The nine transactions recorded by Southwest Tours during
May 2012, its first month of operations, are indicated in the following T accounts: Indicate for
each debit and each credit: (a) Whether an asset, liability, capital stock, dividends, revenue, or
expense account was affected

Ace Racket Company manufactures two types of tennis rackets, the Junior and Pro Striker
models. The Production budget for May for the two rackets is as follows: Both rackets are
produced in two departments, Forming and Assembly. The Direct labor hours required for each
racket are estimate as follows: The direct l
Indicate which of the following errors, each considered individually, would cause the trial
balance totals to be unequal: a. A fee of $15,000 earned and due from a client was not debited to
Accounts Receivable or credited to a revenue account, because the cash has not been received. b.
A receipt of $6,000 from an accou

Coca-Cola Enterprises is the largest bottler o Coca-Cola in Western Europe, The company
purchases Coke and Sprite concentrate from The Coca-Cola Company, dilutes and mixes the
concentrate with carbonated water, and then tills the blended beverage into cans or plastic two-
liter bottles. Assume that the estimated product

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Why should the responsibility for maintaining the accounting records be separated from the
responsibility for operations? Explain.