Solutions – Chapter 5 Chapter 5 Financial Analysis Question 1. Which of the following types of firms do you expect to have particularly high or low asset turnover? Explain why. Supermarket—High asset turnover. Supermarkets tend to be high volume businesses. Many of the food products in supermarkets are perishable‚ and freshness is often used to differentiate products‚ forcing a certain amount of inventories turnover. The typical consumer buys groceries on a regular basis‚ guaranteeing grocery
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CHAPTER 5 Solutions—Series A Problems 5–1A.(a)Net FUTA tax $123‚400 × 0.006=$740.40 (b)Net SUTA tax$123‚400 × 0.048=5‚923.20 (c)Total unemployment taxes$6‚663.60 5–2A.Earnings subject to FUTA and SUTA: $737‚910 – $472‚120 = $265‚790 (a)Net FUTA tax$265‚790 × 0.006=$1‚594.74 (b)Net SUTA tax$265‚790 × 0.029=7‚707.91 (c)Total unemployment taxes$9‚302.65 5–3A.(a)Net FUTA tax$67‚900 × 0.006=$407.40 (b)Net SUTA tax$83‚900 × 0.037=$3‚104.30 5–4A.(a)SUTA taxes paid to Massachusetts$18‚000 × 0
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Chapter 5 |Activity-Based Cost Systems |[pic] | QUESTIONS 5-1 Traditional volume-based cost allocation systems that use only drivers that vary directly with the volume of products produced—such as direct labor dollars‚ direct labor hours‚ or machine hours—are likely to systematically distort product costs because they break the link between the cause for the costs and the basis for assignment
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CHAPTER 5: ACCOUNTING FOR GENERAL CAPITAL ASSETS AND CAPITAL PROJECTS OUTLINE Number Topic Type/Task Status (re: 13/e) Questions: 5-1 Distinguishing general capital assets from fund capital assets Describe New 5-2 Capital asset disclosures Explain New 5-3 Modified approach for infrastructure Describe New 5-4 Capital lease accounting Describe 5-8 revised 5-5 Asset impairment Explain New 5-6 Use of capital projects funds Explain 5-4 revised 5-7 Encumbrances Explain Same 5-8 Construction
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account for its merchandise. On May 1‚ it returned $50 of merchandise due to a defect. Assuming that the purchase was originally bought on credit‚ demonstrate the required journal entry. -Account Payable DR: 50 -Merchandise inventory CR: 50 On June 5‚ X-mart purchased $400 of merchandise with terms of 2/10‚ n/30. If payment is made on June 11‚ calculate the purchase discount that may be taken by X-mart. 400*.02=$8 FOB destination: The seller is responsible for the shipping costs of merchandise sold
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Chapter 10 Plant Assets‚ Natural Resources‚ and Intangibles QUESTIONS 1. A plant asset is tangible; it is used in the production or sale of other assets or services; and it has a useful life longer than one accounting period. 2. The cost of a plant asset includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use. 3. Land is an asset with an unlimited life and‚ therefore‚ is not subject to depreciation. Land improvements have
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BUS-A 328 Fall 2013 – Chapter 5 classwork 27. Otto and Fiona are negotiating the terms of their divorce. Otto has agreed to transfer property to Fiona over the next two years‚ but he has reserved the right to make cash payments in lieu of property transfers. Will tax considerations play a role in Otto’s decision to transfer property or pay cash? How will Otto’s choice affect the combined gross income and income taxes paid by Otto and Fiona? Explain. Under the proper conditions (under a written
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CHAPTER 20 INVENTORY MANAGEMENT‚ JUST-IN-TIME‚ AND SIMPLIFIED COSTING METHODS 20-1 Cost of goods sold (in retail organizations) or direct materials costs (in organizations with a manufacturing function) as a percentage of sales frequently exceeds net income as a percentage of sales by many orders of magnitude. In the Kroger grocery store example cited in the text‚ cost of goods sold to sales is 76.8%‚ and net income to sales is 0.1%. Thus‚ a 10% reduction in the ratio of cost of goods sold to sales
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CHAPTER 5: ACCOUNTING FOR GENERAL CAPITAL ASSETS AND CAPITAL PROJECTS OUTLINE |Number |Topic |Type/Task |Status | | | | |(re: 14/e) | |Questions: | |
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can this statement relateto accounting? A syntactic theory is one that is capable of testing on the basis that it is valid in terms of itslogical consistency. Thus the calculation of accounting profit and determination of assetvaluation can be valid in relation to their conformity with rules prescribing the measurementof accounting profit and asset valuations. This can be described as sterile as it does notnecessarily relate to the real world. Historical cost accounting has been represented as being purely
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