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ACC 206 Week 1 Assignment Chapter One Problems
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Chapter-One-Problems
Ch 1 Critical Thinking Question 5:
Answer the following questions:
Why are noncash transactions, such as the exchange of common stock a
building, included on a statement of cash flows? How are these noncash
transactions disclosed?
Chapter 1 Exercise 1:
1. Classification of activities
Classify each of the following transactions as arising from an operating (O),
investing (I), financing (F), or noncash investing/financing (N) activity.
a. Received $80,000 from the sale of land.
b. Received $3,200 from cash sales.
c. Paid a $5,000 dividend.
d. Purchased $8,800 of merchandise for cash.
e. Received $100,000 from the issuance of common stock.
f. Paid $1,200 of interest on a note payable.

g. Acquired a new laser printer by paying $650.
h. Acquired a $400,000 building by signing a $400,000 mortgage
note.
4. Overview of direct and indirect methods
Evaluate the comments that follow as being True or False. If the comment is
false, briefly explain why.
a. Both the direct and indirect methods will produce the same cash flow
from operating activities.
b. Depreciation expense is added back to net income when the indirect
method is used.
c.One of the advantages of using the direct method rather than the
indirect method is that larger cash flows from financing activities will be
reported.
d.The cash paid to suppliers is normally disclosed on the statement of cash
flows when the indirect method of statement preparation is employed.
e. The dollar change in the Merchandise Inventory account appears on the
statement of cash flows only when the direct method of statement
preparation is used.
6. Equipment transaction and cash flow reporting
New equipment purchased during 20x4 totaled $280,000. The 20x4 income
statement disclosed equipment depreciation expense of $41,000 and a
$9,000 loss on the sale of equipment.

a. Determine the cost and accumulated depreciation of the equipment
sold during 20X4.
b. Determine the selling price of the equipment sold.
c. Show how the sale of equipment would appear on a statement of cash
flows prepared by using the indirect method.
Chapter 1 Problem 3:
3. Cash flow information: Direct and indirect methods
The comparative year-end balance sheets of Sign Graphics, Inc., revealed the
following activity in the company's current accounts.

ACC 206 Week 1 DQ 1 Cash Flows Information
What information does the cash flow statement
provide that you cannot see in the other
financial statements (income statement, balance
sheet, owner’s equity)? What elements of the
cash flow statement do you think are most
important for company management to monitor
and why? Is this different for investors?
http://www.assignmentcloud.com/ACC-206/
ACC-206-Week-1-DQ-1-Cash-Flows-Information

ACC 206 Week 1 DQ 2 Apple's Cash
Go to http://finance.yahoo.com. Enter in “AAPL” and
click on the “get quote” button, and it will bring up
information on Apple. On the left hand side you’ll see
a section on Financials. Within that section, click on
the cash flow. Review the cash flow statement for
Apple. How would you summarize Apple’s cash flow
position and what does this statement tell you about
where the money is coming from and where it’s
going? What should Apple do to improve its cash
position and why?
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206-Week-1-DQ-2-Apples-Cash

ACC 206 Week 2 Assignment Chapter Two and
Three Problems
ACC-206-Week-2-Assignment-Chapter-Two-and-
Three-Problems
Chapter Two and Three Problems
Please complete the following 7 exercises below
in either Excel or a word document (but must be
single document). You must show your work
where appropriate (leaving the calculations
within Excel cells is acceptable). Save the
document, and submit it in the appropriate week
using the Assignment Submission button.
Chapter 2 Exercise 1
1. Issuance of stock

Prepare journal entries to record the issuance of
100,000 shares of common stock at $20 per
share for each of the following independent
cases:
a. Jackson Corporation has common
stock with a par value of $1 per share.
b. Royal Corporation has no-par common with
a stated value of $5 per share.
c. French Corporation has no-par common; no
stated value has been assigned
3. Analysis of stockholders' equity
Star Corporation issued both common and
preferred stock during 20X6. The stockholders'
equity sections of the company's balance sheets
at the end of 20X6 and 20X5 follow.
20X6 20X5

Preferred stock, $100 par value, 10% $580,000
$500,000
Common stock, $10 par value 2,350,000
1,750,000
Paid-in capital in excess of par value
Preferred 24,000 —
Common 4,620,000 3,600,000
Retained earnings 8,470,000 6,920,000
Total stockholders' equity $16,044,000
$12,770,000
a. Compute the number of preferred shares
that were issued during 20X6.
b. Calculate the average issue price of the
common stock sold in 20X6.
c. By what amount did the company's paid-in
capital increase during 20X6?

d. Did Star's total legal capital increase or
decrease during 20X6? By what amount?
Chapter 2 Problem 1
1.Bond computations: Straight-line amortization
Southlake Corporation issued $900,000 of 8%
bonds on March 1, 20X1. The bonds pay interest
on March 1 and September 1 and mature in 10
years. Assume the independent cases that
follow.
• Case A—The bonds are issued at 100.
• Case B—The bonds are issued at 96.
• Case C—The bonds are issued at 105.
Southlake uses the straight-line method of
amortization.
Instructions:
Complete the following table:

Case A Case B Case C
a. Cash inflow on the issuance date
b. Total cash outflow through maturity
c. Total borrowing cost over the life of the bond
issue
d. Interest expense for the year ended December
31, 20X1
e. Amortization for the year ended December 31,
20X1
f. Unamortized premium as of December 31,
20X1
g. Unamortized discount as of December 31,
20X1
h. Bond carrying value as of December 31, 20X1

1. Product costs and period costs
The costs that follow were extracted from the
accounting records of several different
manufacturers:
1. Weekly wages of an
equipment maintenance
worker
2. Marketing costs of a soft drink bottler
3. Cost of sheet metal in a Honda automobile
4. Cost of president's subscription to Fortune
magazine
5.Monthly operating costs of pollution
control equipment used in a steel mill
6. Weekly wages of a seamstress employed by
a jeans maker
7. Cost of compact discs (CDs) for newly
recorded releases of Rush, Billy Joel, and Bryan
Adams
a. Determine which of these costs are product
costs and which are period costs.

b. For the product costs only, determine those
that are easily traced to the finished product and
those that are not.
2. Definitions of manufacturing concepts
Interstate Manufacturing produces brass
fasteners and incurred the following costs for the
year just ended:
Materials and supplies used
Brass $75,000
Repair parts 16,000
Machine lubricants 9,000
Wages and salaries Machine operators 128,000
Production supervisors 64,000
Maintenance personnel 41,000
Other factory overhead Variable 35,000
Fixed 46,000

Sales commissions 20,000
Compute:
a. Total direct materials consumed
b. Total direct labor
c. Total prime cost
d. Total conversion cost
5. Schedule of cost of goods manufactured,
income statement
The following information was taken from the
ledger of Jefferson Industries, Inc.:
Direct labor $85,000 Administrative expenses
$59,000
Selling expenses 34,000 Work in. process
Sales 300,000 Jan. 1 29,000
Finished goods Dec. 31 21,000
Jan. 1 115,000 Direct material purchases 88,000

Dec. 31 131,000 Depreciation: factory 18,000
Raw (direct) materials on hand Indirect materials
used 10,000
Jan. 1 31,000 Indirect labor 24,000
Dec. 31 40,000 Factory taxes 8,000
Factory utilities 11,000
Prepare the following:
a. A schedule of cost of goods manufactured
for the year ended December 31.
b. An income statement for the year ended
December 31.
Chapter 3 Problem 3
3. Manufacturing statements and cost behavior
Tampa Foundry began operations during the
current year, manufacturing various products for
industrial use. One such product is light-gauge
aluminum, which the company sells for $36 per

roll. Cost information for the year just ended
follows.
Per Unit Variable Cost Fixed Cost
Direct materials $4.50 $ —
Direct labor 6.5 —
Factory overhead 9 50,000
Selling — 70,000
Administrative — 135,000
Production and sales totaled 20,000 rolls and
17,000 rolls, respectively There is no work in
process. Tampa carries its finished goods
inventory at the average unit cost of production.
Instructions:
a. Determine the cost of the finished goods
inventory of light-gauge aluminum.
b. Prepare an income statement for the
current year ended December 31

c. On the basis of the information presented:
1. Does it appear that the company pays
commissions to its sales staff? Explain.
2.What is the likely effect on the $4.50 unit cost
of direct materials if next year's production
increases? Why?

ACC 206 Week 2 DQ 1 Stock Features
What is callable preferred stock? Why do
corporations issue such stock? Given the
different features that are associated with stock
(callable, cumulative, preferred, etc.), what type
of stock would you want to buy personally and
why?
ACC-206-Week-2-DQ-1-Stock-Features

ACC 206 Week 2 DQ 2 Role of Management
Review the roles of management accounting
within a company. What is the most important
role of management accounting? How is that
different than financial accounting?
ACC-206-Week-2-DQ-2-Role-of-Management

ACC 206 Week 2 Journal Institute of
Management Accounting
While there are many instances of overlap
between financial accounting and management
accounting, each group’s primary focus is
different. Review the Institute of Management
Accounting’s (IMA) website, specifically the
“About IMA” and the “Resources and
Publications” sections of the website. Are you
surprised by the topics that management
accountants are focusing on? Why or why not?
What interests you more, financial accounting or
management accounting?
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Week-2-Journal-Institute-of-Management-
Accounting

ACC 206 Week 3 Assignment Chapter Four and
Five Problems
ACC-206-Week-3-Assignment-Chapter-Four-and-
Five-Problems
Chapter 4 and 5 Problems
3. Cost flows and overhead application

Cleveland Metals uses a job cost system and
applies factory overhead to production at a
predetermined rate of 180% of direct labor cost.
Data pertaining to recent operations follow.
• Job no. 636 was the only job in process on
January 1 of the current year. The Work in
Process account contained a $24,600 balance on
this date.
• Jobs no. 637, 638, and 639 were started
during January.
• Total direct material requisitions and
directlabor incurred during January amounted to
$89,200 and $114,500, respectively.
•The only job that remained in process on
January 31 was job no. 638, with costs of $15,000
for direct materials and $20,000 for direct labor.
a. Compute the total cost of the work in
process inventory on January 31.
b.Compute the cost of jobs completed during
January, and present the proper journal entry to
reflect job completion.

7. Overhead application: Working backward
The Towson Manufacturing Corporation applies
overhead on the basis of machine hours. The
following divisional information is presented for
your review:
Division A Division B
Actual machine hours 22,500 ?
Estimated machine hours 20,000 ?
Overhead application rate $4.50 $5.00
Actual overhead $110,000 ?
Estimated overhead ? $90,000
Applied overhead ? $86,000
Over- (under-) applied overhead ? $6,500
Find the unknowns for each of the divisions.
Chapter 4 Problem 2

2. Computations using a job order system
General Corporation employs a job order cost
system. On May 1 the following balances were
extracted from the general ledger;
Work in process$ 35,200
Finished goods 86,900
Cost of goods sold 128,700
Work in Process consisted of two jobs, no. 101
($20,400) and no. 103 ($14,800). During May,
direct materials requisitioned from the
storeroom amounted to $96,500, and direct
labor incurred totaled $114,500. These figures
are subdivided as follows:
Direct Materials Direct Labor

Job No. Amount Job No. Amount
101 $5,000 101 $7,800
115 19,500 103 20,800
116 36,200 115 42,000
Other 35,800 116 18,000
$96,500 Other 25,900
$114,500
Job no. 115 was the only job in process at the
end of the month. Job no. 101 and three "other"
jobs were sold during May at a profit of 20% of
cost. The "other" jobs contained material and
labor charges of $21,000 and $17,400,
respectively.
General applies overhead daily at the rate of
150% of direct labor cost as labor summaries are
posted to job orders. The firm's fiscal year ends
on May 31.
Instructions:
a. Compute the total overhead applied to
production during May.

b. Compute the cost of the ending work in
process inventory.
c. Compute the cost of jobs completed during
May.
d. Compute the cost of goods sold for the year
ended May 31.
1. High-low method
The following cost data pertain to 20X6
operations of Heritage Products:
Quarter 1 Quarter 2 Quarter 3 Quarter 4
Shipping costs $58,200 $58,620$60,125
$59,400
Orders shipped 120 140 175 150
The company uses the high-low method to
analyze costs.

a. Determine the variable cost per order
shipped.
b. Determine the fixed shipping costs per
quarter.
c.If present cost behavior patterns continue,
determine total shipping costs for 20X7 if activity
amounts to 570 orders.
The treasurer anticipates the following costs for
the event, which will be held at the Regency
Hotel:
Room rental $300
Dinner cost (per person) 25
Chartered buses 500
Favors and souvenirs (per person) 5
Band 900
Each person would pay $40 to attend; 200
attendees are expected.

a. Will the event be profitable for the
sorority? Show computations.
b. How many people must attend for the
sorority to break even?
c. Suppose the sorority encouraged its
members to drive to the hotel and did not
charter the buses. Further, a planned menu
change will reduce the cost per meal by $2. If
each member will still be charged $40, compute
the contribution margin per person.
3. Break-even and other CVP relationships
Cedars Hospital has average revenue of $180 per
patient day. Variable costs are $45 per patient
day; fixed costs total $4,320,000 per year.
a. How many patient days does the hospital
need to break even?
b. What level of revenue is needed to earn a
target income of $540,000?

c. If variable costs drop to $36 per patient day,
what increase in fixed costs can be tolerated
without changing the break-even point as
determined in part (a)?
Chapter 5 Problem 6
6. Direct and absorption costing
The information that follows pertains to
Consumer Products for the year ended
December 31, 20X6.
Inventory, 1/1/X6 24,000 units
Units manufactured 80,000
Units sold 82,000
Inventory, 12/31/X6 ? units
Manufacturing costs:
Direct materials $3 per unit
Direct labor $5 per unit
Variable factory overhead $9 per unit

Fixed factory overhead $280,000
Selling & administrative expenses:
Variable $2 per unit
Fixed $136,000
The unit selling price is $26. Assume that costs
have been stable in recent years.
Instructions:
a. Compute the number of units in the ending
inventory.
b. Calculate the cost of a unit assuming use of:
1. Direct costing.
2. Absorption costing.
c. Prepare an income statement for the year
ended December 31, 20X6, by using direct
costing.
d.Prepare an income statement for the year
ended December 31, 20X6, by using absorption
costing.

ACC 206 Week 3 DQ 1 Issues In Costing
Describe three issues/problems that a company
could encounter when trying to determine the
actual cost of a good or service to be used in the
cost of goods sold. For each of your issues,
provide an example of a company or industry
where these issues could be present.
ACC-206-Week-3-DQ-1-Issues-In-Costing

ACC 206 Week 3 DQ 2 CVP and The Airline
Industry
ACC-206-Week-3-DQ-2-CVP-and-The-Airline-
Industry
We have all experienced (or heard about) the
challenges that the airlines have been facing.
Read the Zacks Investment Research article,
“Airline Industry Stock Outlook – August 2012”
Identify three factors that are affecting airline
company’s ability to break even. For each of your
factors, discuss how these have an impact on the
breakeven (contribution margin, fixed costs,
variable costs, a combination, etc.), and what
happens if these factors increase or decrease.

ACC 206 Week 3 Journal Hershey Company
Go the Hershey website to learn how to make
Hershey chocolate. Review the process and take
a look at some of the videos. Pay particular
attention to the process steps of milling and
pressing, mixing the ingredients, and refining.
In at least one paragraph, describe the costing
system that you would recommend Hershey use
to account for its cost of goods sold and why.
Include a few product costs you think would be
traceable, which costs should be allocated, and
how Hershey should account and apply the
manufacturing overhead costs.
ACC-206-Week-3-Journal-Hershey-Company

ACC 206 Week 4 Assignment Chapter Six and
Seven Problems
ACC-206-Week-4-Assignment-Chapter-Six-and-
Seven-Problems
Chapter 6 and 7 Problems
Schedule of cash collections

Sugarland Company sells a single product and
anticipates opening a new facility in Charlotte on
May 1 of the current year. Expected sales during
the first three months of activity are: May,
$60,000; June, $80,000; and July, $85,000. Thirty
percent of all sales are for cash; the remaining
70% are on account. Credit sales have the
following collection pattern:
Production and cash-outlay computations
RPR, Inc., anticipates that 120,000 units of
product K will be sold during May. Each unit of
product K requires four units of raw material A.
Actual inventories as of May 1 and budgeted
inventories as of May 31 follow.
Abbreviated cash budget; financing emphasis
An abbreviated cash budget for Big Chuck
Enterprises follows.

Chapter 6 Problem 3
Comprehensive budgeting
The balance sheet of Watson Company as of
December 31, 20X1, follows.
Variances for direct materials and direct labor
Banner Company manufactures flags of various
countries. Each flag has a standard of eight
square feet of fabric and three hours of direct
labor time. Information about recent production
activity follows.
Overhead variances
Nova Manufacturing applies factory overhead to
products on the basis of direct labor hours. At
the beginning of the current year, the company's
accountant made the following estimates for the
forthcoming period:

• Estimated variable overhead: $500,000
• Estimated fixed overhead: $400,000
• Estimated direct labor hours: 40,000
It is now 12 months later. Actual total overhead
incurred in the manufacture of 7,900 units
amounted to $895,100. Actual labor hours
totaled 39,800. Assuming a direct labor standard
of five hours per finished unit, calculate the
following:
a. Variable overhead efficiency variance
b. Fixed overhead volume variance
c. Overhead spending variance
Chapter 7 Problem 1
1. P26-A1 Basic flexible budgeting (L.O. 2)
Centron, Inc., has the following budgeted
production costs:
Direct materials $0.40 per unit

Direct labor 1.80 per unit
Variable factory overhead 2.20 per unit
Fixed factory overhead
Supervision $24,000
Maintenance 18,000
Other 12,000
The company normally manufactures between
20,000 and 25,000 units each quarter. Should
output exceed 25,000 units, maintenance and
other fixed costs are expected to increase by
$6,000 and $4,500, respectively.
During the recent quarter ended March 31,
Centron produced 25,500 units and incurred the
following costs:
Direct Materials $10,710
Direct Labor 47,175
Variable factory overhead 51,940

Fixed factory overhead
Supervision 24,500
Maintenance 23,700
Other 16,800
Total production costs $174,825
Instructions:
a. Prepare a flexible budget for 20,000,
22,500, and 25,000 units of activity.
b.Was Centron's experience in the quarter
cited better or worse than anticipated? Prepare
an appropriate performance report and explain
your answer.
c. Explain the benefit of using flexible budgets
(as opposed to static budgets) in the
measurement of performance.
Chapter 7 Problem 5

5. P26-B3 Straightforward variance analysis (L.O.
5)
Arrow Enterprises uses a standard costing
system. The standard cost sheet for product no.
549 follows.

ACC 206 Week 4 DQ 1 Issues In Standard Costs
And Budgeting
Review the Standard costs: wake up and smell
the coffee.article. When evaluating performance,
many organizations compare current results with
the actual results of previous accounting periods.
Is an organization that follows this approach
likely to encounter any problems? Explain.
ACC-206-Week-4-DQ-1-Issues-In-Standard-Costs-
And-Budgeting

ACC 206 Week 4 DQ 2 Flexible Budgets
Flexible budgets provide different information
than static budgets. Discuss some of these
differences. Is a flexible budget always better?
Are there times when you’d recommend using a
static budget over a flexible budget?
ACC-206-Week-4-DQ-2-Flexible-Budgets

ACC 206 Week 5 Assignment Chapter Eight
Problems
ACC-206-Week-5-Assignment-Chapter-Eight-
Problems
Chapter Eight Problems
Basic present value calculations

Calculate the present value of the following cash
flows, rounding to the nearest dollar:
a. A single cash inflow of $12,000 in five years,
discounted at a 12% rate of return.
b. An annual receipt of $16,000 over the next
12 years, discounted at a 12% rate of return.
c. A single receipt of $15,000 at the end of
Year 1 followed by a single receipt of $10,000 at
the end of Year 3. The company has a 10% rate
of return.
d. An annual receipt of $8,000 for three years
followed by a single receipt of $10,000 at the end
of Year 4. The company has a 12% rate of return.
Cash flow calculationsand net present value
On January 2, 20X1, Bruce Greene invested
$10,000 in the stock market and purchased 500
shares of Heartland Development, Inc. Heartland
paid cash dividends of $2.60 per share in 20X1
and 20X2; the dividend was raised to $3.10 per

share in 20X3. On December 31, 20X3, Greene
sold his holdings and generated proceeds of
$13,000. Greene uses the net-present- value
method and desires a 16% return on
investments.
a. Prepare a chronological list of the
investment's cash flows. Note: Greene is entitled
to the 20X3 dividend.
b.Compute the investment's net present
value, rounding calculations to the nearest
dollar.
c. Given the results of part (b), should Greene
have acquired the Heartland stock? Briefly
explain.
Chapter 8 exercise 5:
Straightforwardnet present value and internal
rate of return
The City of Bedford is studying a 600-acre site on
Route 356 for a new landfill. The startup cost has
been calculated as follows:

Purchase cost: $450 per acre
Site preparation: $175,000
The site can be used for 20 years before it
reaches capacity. Bedford, which shares a facility
in Bath Township with other municipalities,
estimates that the new location will save
$40,000 in annual operating costs.
a. Should the landfill be acquired if Bedford
desires an 8% return on its investment? Use the
net-present-value method to determine your
answer.
Straightforward net-present-value and payback
computations
STL Entertainment is considering the acquisition
of a sight-seeing boat for summer tours along
the Mississippi River. The following information
is available:

Cost of boat $500,000
Service life 10 summer seasons
Disposal value at the end of 10 seasons
$100,000
Capacity per trip 300 passengers
Fixed operating costs per season (including
straight-line depreciation) $160,000
Variable operating costs per trip $1,000
Ticket price $5 per passenger
All operating costs, except depreciation, require
cash outlays. On the basis of similar operations
in other parts of the country, management
anticipates that each trip will be sold out and
that 120,000 passengers will be carried each
season. Ignore income taxes.
Instructions:

By using the net-present-value method,
determine whether STL Entertainment should
acquire the boat. Assume a 14% desired return
on all investments,- round calculations to the
nearest dollar.
Equipment replacement decision
Columbia Enterprises is studying the
replacement of some equipment that originally
cost $74,000. The equipment is expected to
provide six more years of service if $8,700 of
major repairs are performed in two years.
Annual cash operating costs total $27,200.
Columbia can sell the equipment now for
$36,000; the estimated residual value in six years
is $5,000.
New equipment is available that will reduce
annual cash operating costs to $21,000. The
equipment costs $103,000, has a service life of
six years, and has an estimated residual value of
$13,000. Company sales will total $430,000 per
year with either the existing or the new

equipment. Columbia has a minimum desired
return of 12% and depreciates all equipment by
the straight-line method.
Instructions:
a.By using the net-present-value method,
determine whether Columbia should keep its
present equipment or acquire the new
equipment. Round all calculations to the nearest
dollar, and ignore income taxes.
b.Columbia's management feels that the time
value of money should be considered in all long-
term decisions. Briefly discuss the rationale that
underlies management's belief.

ACC 206 Week 5 DQ 2 Responsibilities In
Management Accounting
Review the rights and responsibilities of Certified
Management Accountants:
http://www.imanet.org/PDFs/Public/CMA/RIght
s_Responsibility_CMA.pdf
What are some of the ethical responsibilities and
obligations that management accountants have
within an organization? Provide some examples.
Are these responsibilities different than the
obligations for financial accountants?
ACC-206-Week-5-DQ-2-Responsibilities-In-
Management-Accounting

ACC 206 Week 5 DQ 1 Long-Term Decision
Making
List a few of the issues and considerations
businesses should have when it comes to the
selection of long-term investments and how
those issues impact the various financial
statements.
ACC-206-Week-5-DQ-1-Long-Term-Decision-
Making

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