Bali Sales Company experienced the following events:
Purchased merchandise inventory for cash.
Purchased merchandise inventory on account.
Returned merchandise purchased on account.
Sold merchandise inventory for cash. Label the revenue recognition 4a and the expense recognition 4b.
Paid cash on accounts payable not within the discount period.
Sold merchandise inventory on account. Label the revenue recognition 6a and the expense recognition 6b.
Paid cash for selling and administrative expenses.
Paid cash for transportation-in.
Collected cash from accounts receivable.
Paid cash for transportation-out.
Required:
Identify each event as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). Also explain how each event affects the financial statements by placing a + for increase, -for decrease, or NA for not affected under each of the components in the following statements model. Assume the use of the perpetual inventory system. The first event is recorded as an example.
Event Event Assets = Liab. + Equity Rev. - Exp. = Net Inc. Cash Flow
Type Type
1 AE + - = NA + NA NA - NA = NA -0A

Answer:

Bali Sales Company

Identifying events as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE):

Event Type Assets = Liab. + Equity Rev. - Exp. = Net Inc. Cash Flow Type

1.  AE             + -      = NA    + NA      NA   - NA  = NA           -0A

2. CE             +        = +       +  NA     NA   -  NA =  NA          -OA

3. CE             -         = -       +  NA     NA   -  NA =  NA          +OA

4a. AS           +        =  NA   +  +         +     -  NA =  +              +OA

4b. AU          -         =  NA   +  -         NA   -  +   =  -                -OA

5. CE            -         =  -       +  NA     NA   -  NA =  NA          -OA

6a. AS           +        =  NA   +  +         +     -  NA =  +              +OA

6b. AU          -         =  NA   +  -         NA   -  +   =  -                -OA

7. AU            -         =  NA   +  -         NA   -  -   =   -                -OA

8. AU            -         =  NA   +  -         NA   -  -   =   -                -OA

9. AE            +-       =  NA    + NA     NA   - NA  = NA            -OA

10. AU            -       =  NA   +  -         NA   -  -   =   -                -OA

Explanation:

All the events are classified under operating activities for the cash flow type.  There are no investing activities (IA) nor financing activities (FA) in any of the events listed.  The workings above show the accounting equation in operation as it affects elements of the financial statements.

The account balances of Paradise Travel Service for the year ended May 31, 20Y6, follow:
Fees earned $900,000
Office expense 300,000
Miscellaneous expense 15,000
Wages expense 450,000
Accounts payable 18,000
Accounts receivable 38,000
Cash 52,000
Common Stock 100,000
Land 450,000
Supplies 3,000
$10,000 of dividends were paid during the year. Retained earnings as of June 1, 20Y5, were $300,000. Prepare a balance sheet as of May 31, 20Y6. When entering assets, enter them in order of liquidity.

Damon Industries manufactures 20,000 components per year. The manufacturing cost of the components was determined as follows:

Direct materials $100,000
Direct labor 160,000
Variable manufacturing overhead 60,000
Fixed manufacturing overhead 80,000

An outside supplier has offered to sell the component for $17. If Damon purchases the component from the outside supplier, the manufacturing facilities would be unused and could be rented out for $10,000. If Damon purchases the component from the supplier instead of manufacturing it, the effect on income would be:

a. a $30,000 increase.
b. a $50,000 decrease.
c. a $70,000 increase.
d. a $10,000 decrease.

Carmen Camry operates a consulting firm called Help Today, which began operations on August 1. On August 31, the company's records show the following accounts and amounts for the month of August.
Cash $ 25,420 C. Camry,
Withdrawals $6,070
Accounts receivable 22,430
Consulting fees earned 27,070
Office supplies 5,330
Rent expense 9,630
Land 44,070
Salaries expense 5,670
Office equipment 20,080
Telephone expense 950
Accounts payable 10,550
Miscellaneous expenses 570
Use the above information to prepare an August statement of owner's equity for Help Today. The owner's capital account balance at July 31 was $0, and the owner invested $102,600 cash in the company on August 1.

Let x1 represent a typical good (i.e., consumers prefer more of good x1 to less). Let x2 represent a second good in a two-good world. Both goods have continuous indifference curves and income, m, is greater than $0. Under which of the following situations would consumers spend all of their income on just x1?

a. X1 and x2 are perfect complements.
b. The consumer has Cobb-Douglas preferences, and p2 > p1.
c. xi and x2 are perfect substitutes at a 1-to-1 ratio, and p2 > p1.
d. x2 is a bad, meaning less is preferred to more.
e. x2 is a neutral good.

Avery Corporation's target capital structure is 35% debt, 10% preferred, and 55% common equity. The interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, the cost of common from reinvested earnings is 11.25%, and the tax rate is 25%. The firm will not be issuing any new common stock. What is Avery's WACC

Rushing River Boats has the following data in its Social Security tax payable General Ledger account:
Social Security tax payable ACCOUNT NO. 221
DATE DESCRIPTION POST REF. DEBIT CREDIT DEBIT CREDIT BALANCE
Jan 31 J4 420 1,620
Feb 15 J5
It is a monthly schedule depositor. What entry should appear in the General Ledger to reflect the tax remittance on February 15?
a) Credit $420
b) Debit $420
c) Credit $1,620
d) Debit $1,620

A good time to find a bargain on a swimsuit is at at

When overhead is underapplied: A. Cost of Goods Sold is understated B. Work in Process inventory is overstated C. Finished Goods inventory is overstated D. Gross Profit is understated

The LFH corporation makes and sells a single product, product t. each unit of product t requires 1.5 direct labor-hours at a rate of 10.50 per direct labor hour the company has budgeted to produce 28,000 units of Product T in June. The finished goods inventories on June 1 and June 30 were budgeted at 800 and 600 units, respectively. Budgeted direct labor costs for June would be:_____.
a. $294,000.
b. $441,000.
c. $444,150.
d. $437,850.

The Best Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated here. The corporate tax rate is 34%. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project.
Year 0 Year 1 Year 2 Year 3 Year 4
Investment $40,000
Sales revenue $20,500 $21,000 $21,500 $18,500
Operating costs 4,300 4,400 4,500 3,700
Depreciation 10,000 10,000 10,000 10,000
Change in NWC 460 510 560 460 ?
Change in NWC in year 4 will be sum of all the NWC needed in year 0-3.
A. Compute the incremental net income of the investment for each year. Do not intermediate calculations.
Year 1 Year 2 Year 3 Year 4
Net income $ $ $ $
B. Compute the incremental cash flows of the investment for each year. Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.
Year 0 Year 1 Year 2 Year 3 Year 4
Cash Flow $ $ $ $ $
C. Suppose the appropriate discount rate is 12%. What is the NPV of the project? Do not Round intermediate calculations and round your final answer to 2 decimal places.
NPV $____

On January 1, Year 1, a contractor began work on a $3.2 million construction contract that is expected to be completed in 3 years. The contractor concludes that it is appropriate to recognize revenue over time using the input method based on costs incurred (cost-to-cost method). At the inception date, the estimated cost of construction was $2.4 million. The following data relate to the actual and expected construction costs:

Year 1 Year 2 Year 3
Costs incurred $720,000 $1,170,000 $1,110,000
Expected future costs $1,680,000 $810,000 $0

For this long-term construction contract, the contractor needs to calculate the estimated dollar values of the revenue and gross profit (loss) to be recognized each year. Complete the contractor's long-term construction contract using the information above. Write the appropriate amounts in the associated cells. Indicate losses by using a leading minus (-) sign. Round all amounts to the nearest dollar. If no entry is necessary, enter a zero (0).

Revenue Gross profit (loss)
Year 1
Year 2

Jamie is considering leaving her current job, which pays $75,000 per year, to start a new company that develops applications for smartphones. Based on market research, she can sell about 50,000 units during the first year at a price of $4 per unit. With annual overhead costs and operating expenses amounting to $145,000. Jamie expects a profit margin of 20 percent. This margin is 5 percent larger than that of her largest competitor, Apps. Inc.
a. If Jamie decides to embark on her new venture, What will her accounting cost be during the first year of operation? Her implicit costs? Her opportunity costs?
Accounting costs: $_____
Implicit costs: $_____
Opportunity costs: $_____
b. Suppose that Jamie's estimated selling price is lower than originally projected during the first year. How much revenue would she need in order to earn positive accounting profits? Positive economic profits?
Revenue needed to earn positive accounting profits: $______
Revenue needed to earn positive economic profits:

A business owner is aware that the Department of Labor has created rules
that require overtime pay for employees. When he works his employees more
than 40 hours in one week, he makes sure that he works them less than 40
hours the following week. The business owner feels that it is fair to average
the number of hours worked over the two weeks covered by the pay period
and use that number for calculating overtime pay. A representative of the
Department of Labor informs him that their regulations do not permit this,
Which of the following is true in this situation?

Distributors of cigarettes earn some monopoly profits in their local markets but see them slowly erode as substitutes enter the market. Suppose Nebraska has scheduled a vote on the legalization of marijuana. Additionally, suppose that marijuana and cigarettes are substitutes and that the legalization of marijuana would lead to a decrease in the price of marijuana.

Given the relationship between marijuana and cigarettes, the legalization of marijuana would lead to_______in demand for cigarettes. Thus, distributors of cigarettes would likely____the legalization of marijuana.

Olmsted Co. has small computer chips assembled in Poland and transports the final assembled products to the parent, where they are sold by the parent in the U.S. The assembled products are invoiced in dollars. It uses Polish currency (the zloty) to produce these chips, and assemble them in Poland. The Polish subsidiary pays the employees in the local currency (zloty). Olmsted Co. finances its subsidiary operations with loans from a Polish bank (in zloty). The parent of Olmsted will send sufficient monthly payments (in dollars) to the subsidiary in order to repay the loan and other expenses incurred by the subsidiary. If the Polish zloty depreciates against the dollar over time, will that have a favorable, unfavorable, or neutral effect on the value of Olmsted Co.? Briefly explain.

The name preferred stock is in reference to the fact that:_____.
a. it is a type of corporate debt.
b. it is treated like debt for tax purposes.
c. preferred dividends must be paid in full before any additional interest may be paid.
d. preferred dividends must be paid in full before any common stock dividends can be paid.
e. fixed income traders prefer it to bonds.

Starbucks opened its first store in Seoul, Korea in October 2002. The price of a tall vanilla latte is 3,000 Korean Won. In New York City, the price of a tall vanilla latte is $3.00. The exchange rate between Korean Won and U.S. dollars is Won 1,150/$. According to purchasing power parity, is the Korean Won overvalued or undervalued

5. Calculating tax incidence Suppose that the U.S. government decides to charge beer consumers a tax. Before the tax, 30 billion cases of beer were sold every year at a price of $5 per case. After the tax, 25 billion cases of beer are sold every year; consumers pay $7 per case (including the tax), and producers receive $4 per case.

A researcher wants to understand how customers' social interaction with online retailers impact their loyalty to online retailers. This researcher understands that extraneous variables such as gender and age could influence the result, but these variables cannot be eliminated and their effects cannot be canceled out in this case. In order to deal with extraneous variables, which of the following techniques this researcher can choose?

a. Randomization
b. Inclusion
c. Statistical Control
d. Elimination
e. Induction
f. Manipulation

A senior executive is offered a buyout package by his company that will pay him a monthly benefit for the next 20 years. Monthly benefits will remain constant within each of the 20 years. At the end of each 12-month period, the monthly benefits will be adjusted upwards to reflect the percentage increase in the CPI. You are given: The first monthly benefit is R and will be paid one month from today. The CPI increases 3.2% per year forever. At an annual effective interest rate of 6%, the buyout package has a value of 100,000. Calculate R.

Catherine inherited a lot of money and decided to start a business. She has purchased a building, bought tools and machinery, and hired employees. Her main problem is that she has no business experience, no ideas, and no experience creating products. Which category of economic resource does she require?

A.
labor

B.
entrepreneurial ability

C.
land

D.
capital

5. Destiny is asked if she wants to open a Macy's credit card on the spot when she is checking out.
Macys is influencing which part of demand by this offer?
A. desire
B. ability to pay
C. willingness to pay
D.
none of the above

The debt ratio is calculated by dividing total assets by total liabilities.

True
OR
False

Please match term with the correct definition.

The difference between the amount the government collects and how much it spends is known as the:_______
When the preceding term is combined with all of the privately held savings from across the country, it is known as the:__________
If the government spends more money than it takes in through taxes, it will experience a:_________

a. Budget surplus
b. National savings
c. Capital inflow
d. Budget deficit
e. Budget balance

A corporation sold 14,000 shares of its $10 par value common stock at a cash price of $13 per share. The entry to record this transaction would include: A credit to Paid-in Capital in Excess of Par Value, Common Stock for $42,000. A debit to Cash for $140,000. A credit to Common Stock for $182,000. A credit to Cash for $182,000.

Suppose that you have been given a summer job as an intern at Issac Aircams, a company that manufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately owned, has approached a bank for a loan to help finance its growth. The bank requires financial statements before approving the loan.

Required:
Classify each cost listed below as either a product cost or a period cost for the purpose of preparing financial statements for the bank.

1. Depreciation on salespersonsâ cars.
2. Rent on equipment used in the factory.
3. Lubricants used for machine maintenance.
4. Salaries of personnel who work in the finished goods warehouse.
5. Soap and paper towels used by factory workers at the end of a shift.
6. Factory supervisorsâ salaries.
7. Heat, water, and power consumed in the factory.
8. Materials used for boxing products for shipment overseas. (Units are not normally boxed.)
9. Advertising costs.
10. Workersâ compensation insurance for factory employees.
11. Depreciation on chairs and tables in the factory lunchroom.
12. The wages of the receptionist in the administrative offices.
13. Cost of leasing the corporate jet used by the companyâs executives.
14. The cost of renting rooms at a Florida resort for the annual sales conference.
15. The cost of packaging the companyâs product.

Rosita purchased 300 shares of a stock for $37 a share. Today, the stock is selling for $41 a share. The initial margin requirement is 70 percent and the maintenance margin is 30 percent. Rosita had to pay _____ in cash to purchase the stock and must have at least _____ in equity today.

The advantage of having many potential suppliers is their willingness to A. provide technical expertise. B. participate in JIT. C. provide innovations. D. offer lower prices in the short term.

Referring to the information below, indicate the income statement and balance sheet impacts in each case a through e if Walker Corp. failed to record the necessary adjusting entries.
a. Interest expense of $120 for the month of December 2020 will be paid in January 2021.
b. Unbilled revenue for services performed in December 2020 is $400. The company will prepare and forward invoices for this amount in January 2021 to customers with a 30-day collection term.
c. $1,200 cash was received in advance on November 30, 2020, for future services to be performed by Walker Corp. and was recorded as deferred service revenue. The services were performed on December 20, 2020.
d. Walker Corp. acquired a two-year insurance policy on January 1, 2020, for $3,840 cash that was recorded initially as prepaid insurance.
e. Depreciation on equipment is $4,800 for 2020.

Hubbard, Inc. received the following information from its pension plan trustee concerning the operation of the company's defined-benefit pension plan for the year ended December 31, 2015. 1/1/15 12/31/15 Projected benefit obligation $11,400,000 $11,760,000 Pension assets (at fair value) 6,000,000 6,900,000 Accumulated benefit obligation 2,400,000 2,760,000 Net (gains) and losses -0- 240,000 The service cost component of pension expense for 2015 is $890,000 and the amortization of prior service cost due to an increase in benefits is $180,000. The settlement rate is 10% and the expected rate of return is 8%. What is the amount of pension expense for 2015?
a. $1,766,000
b. $1,730,000
c. $1,658,000
d. $1,490,000