Following are account balances (in millions of dollars) from a recent FedEx annual report, followed by several typical transactions. Assume that the following are account balances on May 31, 2014:


Property and equipment (net) $15,543
Retained earnings 12,716
Accounts payable 1702
Prepaid expenses 329
Accrued expenses payable 1894
Long-term notes payable 1667
Other noncurrent assets 3557
Common stock ($0. 10 par value) 32
Receivables $4,581
Other current assets 610
Cash 2328
Spare parts, supplies, and fuel 437
Other noncurrent liabilities 5616
Other current liabilities 1286
Additional paid-in capital 2472

These accounts are not necessarily in good order and have normal debit or credit balances. Assume the following transactions (in millions) occurred the next year ending May 31, 2015:

a. Provided delivery service to customers, receiving $21,704 in accounts receivable and $17,600 in cash.
b. Purchased new equipment costing $3,434; signed a long-term note.
c. Paid $13,864 cash to rent equipment and aircraft, with $10,136 for rental this year and the rest for rental next year.
d. Spent $3,864 cash to maintain and repair facilities and equipment during the year.
e. Collected $24,285 from customers on account.
f. Repaid $350 on a long-term note (ignore interest).
g. Issued 20 shares of additional stock for $16.
h. Paid employees $15,276 during the year.
i. Purchased for cash and used $8,564 in fuel for the aircraft and equipment during the year.
j. Paid $784 on accounts payable. Ordered $88 in spare parts and supplies.

Question Completion:

Prepare the necessary journal entries without the narration.

Answer:

FedEx

a. Debit Cash $17,600

Debit Accounts Receivable $21,704

Credit Service Revenue $39,304

b. Debit Equipment $3,434

Credit Note Payable (long-term) $3,434

c. Debit Rent Expense $10,136

Debit Prepaid Rent $3,728

Credit Cash Account $13,864

d. Debit Maintenance Expense $3,864

Credit Cash Account $3,864

e. Debit Cash Account $24,285

Credit Accounts Receivable $24,285

f. Debit Long-term Notes Payable $350

Credit Cash Account $350

g. Debit Cash Account $320

Credit Common Stock $2

Credit Additional paid-in capital $318

h. Debit Salaries and Wages Expense $15,276

Credit Cash Account $15,276

i.  Debit Spare parts, supplies, and fuel Expense $8,564

Credit Cash Account $8,564

j. Debit Accounts Payable $784

Credit Cash Account $784

k. No journal is required.

Explanation:

With the above journal entries, the accountants at FedEx have recorded the listed business transactions for the first time in the accounts of FedEx.  From the entries, these transactions will then be posted to the general ledger where accounts, transactions, and business events are summarized.

Marc and Michelle are married and earned salaries this year of $64,000 and $12,000, respectively. In addition to their salaries, they received interest of $350 from municipal bonds and $500 from corporate bonds. Marc contributed $2,500 to an individual retirement account, and Marc paid alimony to a prior spouse in the amount of $1,500 (under a divorce decree effective June 1, 2005). Marc and Michelle have a 10-year-old son, Matthew, who lived with them throughout the entire year. Thus, Marc and Michelle are allowed to claim a $1,000 child tax credit for Matthew. Marc and Michelle paid $6,000 of expenditures that qualify as itemized deductions and they had a total of $5,500 in federal income taxes withheld from their paychecks during the course of the year. (use the 2016 tax rate schedules).
1. What is the total amount of Marc and Michelle’s deductions from AGI?
2. What is Marc and Michelle’s taxable income?
3. What is Marc and Michelle’s taxable income?

On January 1, 2020, Meeks Corporation issued $5,000,000, 10-year, 4% bonds at 102. Interest is payable annually on January 1. The journal entry to record this transaction on January 1, 2020 is

a. Cash........................................................................................ 5,000,000
Bonds Payable............................................................... 5,000,000

b. Cash........................................................................................ 5,100,000
Bonds Payable............................................................... 5,100,000

c. Premium on Bonds Payable ................................................... 100,000
Cash........................................................................................ 5,000,000
Bonds Payable............................................................... 5,100,000

d. Cash........................................................................................ 5,100,000
Bonds Payable............................................................... 5,000,000
Premium on Bonds Payable .......................................... 100,000

Swifty Company purchased equipment for $256,800 on October 1, 2020. It is estimated that the equipment will have a useful life of 8 years and a salvage value of $12,000. Estimated production is 48,000 units and estimated working hours are 20,400. During 2020, Swifty uses the equipment for 600 hours and the equipment produces 1,000 units.

Required:
Compute depreciation expense under each of the following methods. Swifty is on a calendar-year basis ending December 31.

a. Straight-line method for 2020 $enter a dollar amount.
b. Activity method (units of output) for 2020 $enter a dollar amount.
c. Activity method (working hours) for 2020 $enter a dollar amount.
d. Sum-of-the-years'-digits method for 2022 $enter a dollar amount (e) Double-declining-balance method for 2021

Which factors influence changes in consumer demand? Check all that apply.
market share
elasticity
O international trade
O clearance sales
O income

Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2021 with a refund liability of $360,000. During 2021, Halifax sold merchandise on account for $12,100,000. Halifax's merchandise costs is 70% of merchandise selling price. Also during the year, customers returned $594,000 in sales for credit, with $328,000 of those being returns of merchandise sold prior to 2021, and the rest being merchandise sold during 2021. Sales returns, estimated to be 5% of sales, are recorded as an adjusting entry at the end of the year.

Required:
1. Prepare entries to (a) record actual returns in 2021 of merchandise that was sold prior to 2021; (b) record actual returns in 2021 of merchandise that was sold during 2021, and (c) adjust the refund liability to its appropriate balance at year-end.
2. What is the amount of the year-end refund liability after the adjusting entry is recorded?

1a. Record the actual sales return of merchandise sold prior to 2021.
1b. Record the cost of merchandise returned for goods sold prior to 2021.
1c. Record the actual sales return of merchandise sold during 2021.
1d. Record the cost of merchandise returned for goods sold during 2021.
1e. Record the year-end adjusting entry for estimated returns.
1f. Record the adjusting entry for the estimated return of merchandise to inventory.

3. What is the amount of the year-end refund liability after the adjusting entry is recorded?

a worker produced four components during an 8-hour shift in which he earned $96. What is his labor cost per unit?

Martinez Corp. has the following beginning-of-the-year present values for its projected benefit obligation and market-related values for its pension plan assets.

Projected Benefit Obligation Plan Assets Value
2019 $2,340,000 $2,223,000
2020 2,808,000 2,925,000
2021 3,451,500 3,042,000
2022 4,212,000 3,510,000

The average remaining service life per employee in 2019 and 2020 is 10 years and in 2021 and 2022 is 12 years. The net gain or loss that occurred during each year is as follows:

2019, $327,600 loss; 2020, $105,300 loss; 2021, $12,870 loss; and 2022, $29,250 gain. (In working the solution, the gains and losses must be aggregated to arrive at year-end balances.)

Required:
Using the corridor approach, compute the amount of net gain or loss amortized and charged to pension expense in each of the four years, setting up an appropriate schedule.

Year Minimum Amortization of Loss
2013 $
2014 $
2015 $
2016 $

Mattola Company is giving each of its employees a holiday bonus of $200 on December 13, 20-- (a nonpayday). The company wants each employee's check to be $200. The supplemental tax percent is used.


Nobody has capped for OASDI prior to the bonus check.


a. What will be the gross amount of each bonus if each employee pays a state income tax of 2.8% (besides the other payroll taxes)? You may need to add one penny to the gross so that net bonus exactly equals $200. Round your calculations and final answers to the nearest cent.


b. What would the net amount of each bonus check be if the company did not gross-up the bonus? Round your intermediary calculations to the nearest cent.

Definition of economic costs
Darnell lives in Philadelphia and runs a business that sells pianos. In an average year, he receives $842,000 from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $452,000; he also pays wages and utility bills totaling $301,000. He owns his showroom; if he chooses to rent it out, he will receive $38,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Darnell does not operate this piano business, he can work as an accountant and receive an annual salary of $48,000 with no additional monetary costs. No other costs are incurred in running this piano business.
Identify each of Darnell's costs in the following table as either an implicit cost or an explicit cost of selling pianos.
Implicit Cost
Explicit Cost
The wholesale cost for the pianos that Darnell pays the manufacturer
The salary Darnell could earn if he worked as an accountant
The wages and utility bills that Darnell pays
The rental income Darnell could receive if he chose to rent out his showroom
Complete the following table by determining Darnell's accounting and economic profit of his piano business.
Profit
(Dollars)
Accounting Profit
Economic Profit
If Darnell's goal is to maximize his economic profit, he( should, should not) stay in the piano business because the economic profit he would earn as an accountant would be $______.

Which example is not an advantage of b entrepreneurship’s

The Titanic Shipbuilding Company has a noncancelable contract to build a small cargo vessel. Construction involves a cash outlay of $273,000 at the end of each of the next two years. At the end of the third year the company will receive payment of $650,000. Assume the IRR of this option exceeds the cost of capital. The company can speed up construction by working an extra shift. In this case there will be a cash outlay of $595,000 at the end of the first year followed by a cash payment of $650,000 at the end of the second year. Use the IRR rule to show the (approximate) range of opportunity costs of capital at which the company should work the extra shift.

The company should work the extra shift if the cost of capital is between ___________ % and ___________ %

What are the limitations and risks of a marketing strategy that does not contemplate the responses of your competitors

Sparky Corporation uses the weighted-average method of process costing. The following information is available for February in its Molding Department:

Units:

Beginning Inventory: 30,000 units, 100% complete as to materials and 55% complete as to conversion.
Units started and completed: 120,000.
Units completed and transferred out: 150,000.
Ending Inventory: 32,500 units, 100% complete as to materials and 30% complete as to conversion.

Costs:
Costs in beginning Work in Process - Direct Materials: $48,000.
Costs in beginning Work in Process - Conversion: $53,850.
Costs incurred in February - Direct Materials: $328,050.
Costs incurred in February - Conversion: $604,150.

Required:
Calculate the cost per equivalent unit of materials.

Many assets provide a series of cash inflows over time; and many obligations require a series of payments. When the payments are equal and are made at fixed intervals, the series is an annuity. There are three types of annuities: (1) __________ (2)_________, and (3) __________-. One can find an annuity's future and present values, the interest rate built into annuity contracts, and the length of time it takes to reach a financial goal using an annuity.

Prepare an answer sheet with the column headings that follow. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on assets, liabilities, and net income by entering for each account affected the account name and amount and indicating whether it is an addition (+) or a subtraction (-). Transaction a has been done as an illustration. Net income is not affected by every transaction. In some cases, only one column may be affected because all of the specific accounts affected by the transaction are included in that category.
Assest Liaabilities Net income

a. Recorded $200 Accumulated Depreciation

of depreciation Depreciation Expense

expense. -200 -200

a. Recorded $200 of depreciation expense.
b. Sold land that had originally cost $9,000 for $12,000 in cash.
c. Acquired a new machine under a financing lease.
d. The present value of future lease payments, discounted at 11%, was $11,000. Recorded the first annual payment of $2,500 for the leased machine (in part c).
e. Recorded a $6,600 payment for the cost of developing and registering a trademark. Recognized periodic amortization for the trademark (in part e) using a 40-year useful life. Sold used production equipment for $16,000 in cash.
f. The equipment originally cost $44,000, and the accumulated depreciation account has an unadjusted balance of $23,400.
g. It was determined that a $1,300 year-to-date depreciation entry must be recorded before the sale transaction can be recorded. Record the adjustment and the sale.

Jim's Espresso expects sales to grow by 10.3 % next year. Using the following statements and the percent of sales​ method, forecast:

a. Costs
b. Depreciation
c. Net Income
d. Cash
e. Accounts receivable
f. Inventory
g.​ Property, plant, and equipment ​(​Note: Make sure to round all intermediate calculations to at least five decimal​ places.)

The Tax Cuts and Jobs Act of 2017 temporarily allows​ 100% bonus depreciation​ (effectively expensing capital​ expenditures). However, we will still include depreciation forecasting in this chapter and in these problems in anticipation of the return of standard depreciation practices during your career.



Balance Sheet
Assets
Cash and Equivalents $15,050
Accounts Receivable 2070
Inventories 4090
Total Current Assets $21,210
Property, Plant and Equipment 10050
Total Assets $31,260

Liabilities and Equity:
Accounts Payable $1,580
Debt 3930
Total Liabilities $5,510
Stockholders' Equity 25750
Total Liabilities and Equity $31,260

Income Statement:
Sales $204,560
Costs Except Depreciation (99,880)
EBITDA $104,680
Depreciation (5,960)
EBIT $98,720
Interest Expense (net) (410)
Pretax Income $98,310
Income Tax (34,409)
Net Income $63,901

The forecasted costs will be :___________

After conducting research, you will need to generate ideas and organize the collected data. Simple organizational techniques will help provide structure and direction as you prepare to compose. To compose simple messages, you may need only to make a scratch list of your ideas before writing. Many messages, however, may require you to make an outline to organize your thoughts. Use the scratch list to answer the question that follows.

The Boston Hotel

a. High-end linens
b. 600-thread-count sheets
c. Coffee maker with selected teas
d. Imported beer
e. Fresh-squeezed juices
f. Affordability
g. Food and drink
h. Double-thick bath towels
i. Silk pillowcases
j. Raw silk curtains with gold embellishments
k. $100/night four-star rooms
l. Free snacks, shampoo, and conditioner
m. Free wireless Internet

Required:
What are the three major components in the preceding scratch list?

Journalize the following transactions for Cullumber Company.

Sept. 1 Purchased supplies for $1,100 cash.
5 Paid $490 cash dividend to stockholders.
7 Received $6,300 down payment from customer for services to be provided in the future.
16 Received $850 cash from a previously billed customer for payment of services provided in the prior month.
22 Purchased equipment for $3,800 by paying $1,500 cash and issued a note payable for the balance.

The following is a list of accounts and adjusted amounts for Rollcom, Inc., for the fiscal year ended September 30, 2018. The accounts have normal debit or credit balances.

Accounts Payable $39,000
Accounts Receivable 66,400
Accumulated Depreciation 21,400
Cash 80,200
Common Stock 94,700
Equipment 90,600
Income Tax Expense 10,490
Notes Payable (long-term) 1,490
Office Expenses 6,290
Rent Expense 164,100
Retained Earnings 99,790
Salaries and Wages Expense 128,600
Sales Revenue 325,400
Supplies 35,100

Required:
Prepare an adjusted trial balance at September 30, 2018.

Eulis Co. has identified an investment project with the following cash flows. YearCash Flow 1 $1,130 2 1,000 3 1,510 4 1,870 If the discount rate is 9 percent, what is the present value of these cash flows

when the business cycle or economic activity is declining the economy is said to be what

Pargo Company is preparing its master budget for 2020. Relevant data pertaining to its sales, production, and direct materials budgets are as follows. Sales. Sales for the year are expected to total 1,900,000 units. Quarterly sales are 22%, 27%, 25%, and 26%, respectively. The sales price is expected to be $40 per unit for the first three quarters and $45 per unit beginning in the fourth quarter. Sales in the first quarter of 2021 are expected to be 10% higher than the budgeted sales for the first quarter of 2020.
Production Management desires to maintain the ending finished goods inventories at 25% of the next quarter's budgeted sales volume. Direct materials. Each unit requires 2 pounds of raw materials at a cost of $11 per pound. Management desires to maintain raw materials inventories at 10% of the next quarter's production requirements. Assume the production requirements for first quarter of 2021 are 495,000 pounds me Prepare the sales, production, and direct materials budgets by quarters for 2020

The Talbot Corporation makes wheels that it uses in the production of bicycles. Talbot's costs to produce 180,000 wheels annually are:

Direct materials $36,000
Direct labor $54,000
Variable manufacturing overhead $27,000
Fixed manufacturing overhead $66,000

An outside supplier has offered to sell Talbot similar wheels for $0.80 per wheel. If the wheels are purchased from the outside supplier, $21,000 of annual fixed overhead could be avoided and the facilities now being used could be rented to another company for $51,000 per year. Direct labor is a variable cost. If Talbot chooses to buy the wheel from the outside supplier, then annual net operating income would: __________

Balance Sheet Data Income Statement Data
Cash $600,000 Accounts payable $720,000 Sales $12,000,000
Accounts receivable 1,200,000 Accruals 240,000 Cost of goods sold 7,200,000
Inventory 1,800,000 Notes payable 960,000 Gross profit 4,800,000
Current assets 3,600,000 Current liabilities 1,920,000 Operating expenses 3,000,000
Long-term debt 2,400,000 EBIT 1,800,000
Total liabilities 4,320,000 Interest expense 403,200
Common stock 720,000 EBT 1,396,800
Net fixed assets 3,600,000 Retained earnings 2,160,000 Taxes 488,880
Total equity 2,880,000 Net income $907,920
Total assets $7,200,000 Total debt and equity $7,200,000
If I remember correctly, the DuPont equation breaks down our ROE into three component ratios: the turnover ratio, and the the total asset And, according to my understanding of the DuPont equation and its calculation of ROE, the three ratios provide insights into the company's effectiveness in using the company's assets, and Hydra Cosmetics Inc. DuPont Analysis Ratios Value Correct/Incorrect Value Correct/Incorrect Ratios Asset management ratio Total assets turnover 1.67 Profitability ratios Gross profit margin (%) Operating profit margin (%) Net profit margin (%) Return on equity (%) 40.00 11.64 14.55 40.58 Financial ratios Equity multiplier 1.67 Do not round intermediate calculations and round your final answers up to two decimals. Hydra Cosmetics Inc. DuPont Analysis Calculation Value Numerator Denominator Ratios Profitability ratios Gross profit margin (%) Operating profit margin (%) Net profit margin (%) Return on equity (%) Asset management ratio Total assets turnover Financial ratios Equity multiplier Check all that apply. Reduce the company's operating expenses, its cost of goods sold, and/or the interest rate on its borrowed funds because this will increase the company's net profit margin. Increase the cost and amount of assets necessary to generate each dollar of sales because it will increase the company's total assets turnover. Increase the efficiency of its assets so that it generates more sales with each dollar of asset investment and increases the company's total assets turnover. Increase the interest rate on its notes payable or long-term debt obligations because it will reduce the company's net profit margin.

The following ledger accounts are used by the Heartland Race Track
Accounts Receivable
Prepaid Advertising
Prepaid Rent
Unearned Sales Revenue
Sales Revenue
Advertising Expense
Rent Expense
For each of the following transactions below, prepare the journal entry (if one is required) to record the initial transaction and then prepare the adjusting entry, if any, required on November 30, the end of the fiscal year.
A) On November 1, paid rent on the track facility for three months, $180,000.
B) On November 1, sold season tickets for admission to the racetrack. The racing season is year-round with 25 racing days each month. Season ticket sales totaled $1,152,000.
C) On November 1, borrowed $300,000 from First National Bank by issuing a 6% note payable due in three months.
D) On November 5, programs for 20 racing days in November, 25 racing days in December and 15 racing days in January were printed for $3,600.
E) The accountant for the concessions company reported that gross receipts for November were $168,000. 10% is due to Heartland and will be remitted by December 10.
Prepare the journal entry (if one ls required) to record the Initial transaction.
Prepaid Rent 150,000
Cash 150,000
Cash 960,000
Unearned Sales
Revenue 960,000
Cash 250,000
Notes Payable 250,000
Prepaid
Advertising 3,000
Cash 3,000

Some recent financial statements for Smolira Golf Corp. follow.
SMOLIRA GOLF CORP.
2017 and 2018 Balance Sheets
Assets Liabilities and Owners’ Equity
2017 2018 2017 2018
Current assets Current liabilities
Cash $23,046 $25,100 Accounts payable $24,184 $28,100
Accounts
receivable 13,448 16,200 Notes payable 20,000 11,800
Inventory 26,822 28,100 Other 12,571 19,100
Total $63,316 $69,400 Total $56,755 $59,000
Long-term debt $79,000 $83,424
Owners’ equity
Common stock and
paid-in surplus $48,000 $48,000
Accumulated retained
earnings 214,256 243,576
Fixed assets
Net plant and
equipment $334,695 $364,600 Total $262,256 $291,576
Total assets $398,011 $434,000 Total liabilities and
owners’ equity $398,011 $434,000
SMOLIRA GOLF CORP.
2018 Income Statement
Sales $349,760
Cost of goods sold 241,500
Depreciation 27,200
Earnings before
interest and taxes $81,060
Interest paid 15,300
Taxable income $65,760
Taxes (25%) 16,440
Net income $49,320
Dividends $20,000
Retained earnings 29,320
Find the following financial ratios for Smolira Golf Corp. (use year-end figures rather than average values where appropriate):
Short-term solvency ratios: 2014 2015
A. Current ratio times times
B. Quick ratio times times
C. Cash ratio times times
Asset utilization ratios:
D. Total asset turnover times
E. Inventory turnover times
F. Receivables turnover times
Long-term solvency ratios: 2014 2015
G. Total debt ratio times times
H. Debt–equity ratio times times
I. Equity multiplier times times
J. Times interest earned times
K. Cash coverage ratio times
Profitability ratios:
L. Profit margin
M. Return on assets
N. Return on equity

Payton Inc. reports in its Year 7 annual report, sales of $6,544 million and cost of goods sold of $2,618 million. For next year, you project that sales will grow by 3% and that cost of goods sold percentage will be 1 percentage point higher. Projected cost of goods sold for Year 8 will be:

Assume General Electric Company agreed in May 2016 to construct a nuclear generator for NSTAR, a utility company serving the Boston area. General Electric Company estimated that its construction costs would be $960 million. The contract price of $1,200 million is to be paid as follows: $400 million at the time of signing; $400 million on December 31, 2016; and $400 million at completion in May 2017. General Electric incurred the following costs in constructing the generator: $384 million in 2016 and $576 million in 2017.

Required:
Compute the amount of General Electric's revenue, expense, and income for both 2016 and 2017, and for both years combined, under the cost-to-cost revenue recognition method. Enter dollar amounts in millions.

Darby Company, operating at full capacity, sold 500,000 units at a price of $94 per unit during the current year. Its income statement is as follows:
Sales $47,000,000
Cost of goods sold 25,000,000
Gross profit $22,000,000
Expenses:
Selling expenses $4,000,000
Administrative expenses 3,000,000
Total expenses 7,000,000
Income from operations $15,000,000
The division of costs between variable and fixed is as follows:
Variable Fixed
Cost of goods sold 70% 30%
Selling expenses 75% 25%
Administrative expenses50% 50%
Management is considering a plant expansion program for the following year that will permit an increase of $3,760,000 in yearly sales. The expansion will increase fixed costs by $1,800,000 but will not affect the relationship between sales and variable costs.
Required:
1. Determine the total variable costs and the total fixed costs for the current year.
Total variable costs $_____
Total fixed costs $_____
2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year.
Unit variable cost $_____
Unit contribution margin $_____
3. Compute the break-even sales (units) for the current year.
4. Compute the break-even sales (units) under the proposed program for the following year.
5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $15,000,000 of income from operations that were earned in the current year.
6. Determine the maximum income from operations possible with the expanded plant.
7. If the proposal is accepted and sales remain at the current level, what will the income or loss from operations be for the following year?
8. Based on the data given, would you recommend accepting the proposal?
a. In favor of the proposal because of the reduction in break-even point.
b. In favor of the proposal because of the possibility of increasing income from operations.
c. In favor of the proposal because of the increase in break-even point.
d. Reject the proposal because if future sales remain at the current level, the income from operations will increase.
e. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales.

1. Accrual accounting is used by the vast majority of companies. *
O
True
O False​