Premium Essay

Intermediated Accounting Solution Chapter 8

In: Business and Management

Submitted By DoraLeigh
Words 20989
Pages 84
CHAPTER 8
Valuation of Inventories: A Cost-Basis Approach
ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)
Topics

Questions

Brief
Exercises

Exercises

Problems

Concepts for Analysis
1, 2, 3, 5

1.

Inventory accounts;
1, 2, 3, 4, determining quantities,
5, 6, 8, 9 costs, and items to be included in inventory; the inventory equation; balance sheet disclosure.

1, 3

1, 2, 3,
4, 5, 6

1, 2, 3

2.

Perpetual vs. periodic.

2

9, 13,
17, 20

4, 5, 6

3.

Recording of discounts.

10, 11

7, 8

3

4.

Inventory errors.

7

4

5, 10,
11, 12

2

5.

Flow assumptions.

12, 13, 16,
18, 20

5, 6, 7

9, 13, 14,
15, 16, 17,
18, 19, 20,
21, 22

1, 4, 5,
6, 7

5, 6, 7, 8, 11

6.

Inventory accounting changes. 18

7

6, 7, 10

7.

Dollar-value LIFO methods. 22, 23, 24,
25, 26

1, 8, 9,
10, 11

8, 9

Copyright © 2013 John Wiley & Sons, Inc.

14, 15, 17,
18, 19

8, 9

Kieso, Intermediate Accounting, 15/e, Solutions Manual

4

(For Instructor Use Only)

8-1

ASSIGNMENT CLASSIFICATION TABLE (BY LEARNING OBJECTIVE)
Learning Objectives
Questions

Brief
Exercises

Exercises

Problems

Concepts for Analysis

1.

Identify major classifications of inventory.

1

1

2.

Distinguish between perpetual and periodic inventory systems.

3

2

4, 9, 13,
17

4, 5, 6

3.

Determine the goods included in inventory and the effects of inventory errors on the financial statements.

4, 5, 6, 7

4

5, 10, 11,
12

2

CA8-3,
CA8-5

4.

Understand the items to include as inventory cost.

8

3

1, 2, 3, 4,
5, 6, 7, 8

1, 2, 3

CA8-1,
CA8-2,
CA8-4

5.

Describe and compare the cost flow assumptions used to account for inventories. 9, 10, 11,
12

5, 6, 7

9, 13, 14,
1, 4, 5, 6,
15, 16, 17, 7
18, 19,…...

Similar Documents

Premium Essay

Audit Chapter 8 Solutions Manual

...Solutions for Chapter 8 Tools to Gather Audit Evidence Review Questions: 8-1. The three main tools the auditor might use in gathering and evaluating audit evidence are: • Audit sampling • Generalized Audit Software • Analytical procedures 8-2. Non-sampling risk is the risk that the auditor makes an improper assessment of inherent and/or control risk or did not apply audit procedures carefully. It can be minimized through: (1) Good hiring, training and supervision practices; and (2) Careful and knowledgeable review of audit documentation and audit procedures. Sampling risk is the risk that the misstatement projections based on the sample results lead to the wrong conclusion about the population because of a non-representative sample. Sampling risk can be reduced by increasing the sample size – to the extreme of auditing the entire population therefore eliminating sampling risk altogether. 8-3. Factors to consider when choosing between statistical and nonstatistical sampling include: • Need to quantify and control sampling risks. • Additional cost of designing, selecting, and evaluating a statistical sample. • Availability of computer software to assist in designing, selecting, and/or evaluating the sample. • Ability of the audit staff to properly implement statistical sampling. 8-4. a. Tolerable deviation rate depends on the significance of the control procedure being......

Words: 11678 - Pages: 47

Premium Essay

Accounting Harrison Chapter 2 Solutions

...Chapter 2 Transaction Analysis Short Exercises (5 min.) S 2-1 The transaction had a financial impact on the business and should be recorded. The payment for the computer was not an expense. The payment related to the purchase of an asset, “Equipment,” because the computer is an economic resource of the business. The computer will provide benefit over more than one fiscal period. (5 min.) S 2-2 a. $12,000 (Cash $10,000–$5,000; Supplies $2,000, Computer $5,000) b. $2,000 Accounts Payable Chapter 2 Transaction Analysis Copyright © 2012 Pearson Canada Inc. 65 (5-10 min.) Cash 25,000 2,000 23,000 Supplies 9,000 S 2-3 4,000 Accounts Receivable 6,000 Bal. Accounts Payable 9,000 Rent 4,000 Service Revenue 8,000 Common Shares 25,000 (5 min.) S 2-4 Increased total assets: May 1 (Cash) May 1 (Medical supplies) May 3 (Cash, Accounts receivable) Decreased total assets: May 2 (Cash) 66 Financial Accounting Fourth Canadian Edition Instructor’s Solutions Manual Copyright © 2012 Pearson Canada Inc. (10 min.) S 2-5 CREDIT Journal DATE ACCOUNT TITLES AND EXPLANATION DEBIT June 15 Cash ................................................. Note Payable ............................... Borrowed money from the bank. 25,000 25,000 22 Accounts Receivable ...................... 9,000 Service Revenue ......................... Delivered portrait to be paid on account. 28 Cash .................................................

Words: 5295 - Pages: 22

Premium Essay

Chapter 4 Solution Accounting

...CHAPTER 4 Accrual Accounting Concepts Study Objectives 1. Explain the revenue recognition principle and the matching principle. 2. Differentiate between the cash basis and the accrual basis of accounting. 3. Explain why adjusting entries are needed, and identify the major types of adjusting entries. 4. Prepare adjusting entries for deferrals. 5. Prepare adjusting entries for accruals. 6. Describe the nature and purpose of the adjusted trial balance. 7. Explain the purpose of closing entries. 8. Describe the required steps in the accounting cycle. 9. Understand the causes of differences between net income and cash provided by operating activities. 10. Describe the purpose and the basic form of a worksheet. Summary of Questions by Study Objectives and Bloom’s Taxonomy |Item | | 1. | | 1. | | 1. | | 1. ...

Words: 9678 - Pages: 39

Premium Essay

Financial Accounting Harrison Solution Manual Chapter 7

...Chapter 7 Plant Assets & Intangibles Short Exercises (5 min.) S 7-1 |1. |Property and Equipment, at Cost | | | | |Millions | | |Aircraft………………………………………………… |$ 2,392 | | |Package handling and ground support | | | | equipment………………………………………… |12,229 | | |Computer and electronic equipment……………. |28,159 | | |Vehicles………………………………………………. |581 | | |Facilities and other…………………………………. | 1,432 | | | Total cost………………………………………….. |44,793 | | |Less: Accumulated depreciation…………………. ...

Words: 9421 - Pages: 38

Premium Essay

Managerial Accounting Chapter 8 Exercise

...MANAGERIAL ACCOUNTING CHAPTER 8 1. Is Granger Stokes using budges as a planning and control tool? Granger Stokes is behaving like an activist shareholder more concerned with short term gain than a management executive whose primary goal should be positioning the firm for a better competitive outlook over the long term. He is not using the company budgets as a planning and control tool, but is instead using them to boost sales at literally any costs. More specifically, he is impairing the budgetary control effect and essentially unleashing his managers to take aggressive action in pursuit of sales targets. 2. What are the behavioral consequences of the way budgets are being used at PrimeDrive? The behavioral consequences are that managers will take shortcuts to achieve their short term sales targets. So much so that quality control measures are circumvented, and well established business procedures are ignored. The fact that defective drives are knowingly shipped to new customers is a huge red flag. The warranty costs alone will hit the firm when it least expects it because it is highly likely that no reserve provisions are being made since this issue is being swept under the rug, so to speak. When it becomes time to file company financial reports for the period, the figures will be inaccurate and misleading because any financial losses related to the defective drives are not being reported properly. 3. What, if anything, do you think Keri Kalani should do? ...

Words: 379 - Pages: 2

Premium Essay

Managerial Accounting Chapter 8.

...Problem 8-21 (45 minutes) Calculation of predetermined fixed overhead rate: Predetermined fixed overhead rate | = | | | | | | = | = $2 per unit | Cost per Unit | Direct material | $ 6 | | Direct labor |   4 | | Variable overhead |   3 | | a. Cost per unit under variable costing | $13 | | Fixed overhead per unit under absorption costing |   2 | | b. Cost per unit under absorption costing | $15 | 2. | a. Delizioso S.p.A. Absorption-Costing Income Statement For the Year Ended December 31, 20x1 | | | | | | Sales revenue (130,000 units sold at $20 per unit) | $2,600,000 | | Less: Cost of goods sold (at  absorption cost of $15 per unit) |  1,950,000 | | Gross margin | $  650,000 | | Less: Selling and administrative expenses: | | | Variable (at $1 per unit) | 130,000 | | Fixed |     150,000 | | Operating income | $  370,000 | Problem 8-21 (Continued) | b. Delizioso S.p.A. Variable-Costing Income Statement For the Year Ended December 31, 20x1 | | | | | Sales revenue (130,000 units sold at $20 per unit) | $2,600,000 | | Less: Variable expenses: | | | Variable manufacturing costs  (at variable cost of $13 per unit) | 1,690,000 | | Variable selling and administrative costs  (at $1 per unit) |    130,000 | | Contribution margin | $  780,000 | | ...

Words: 1015 - Pages: 5

Premium Essay

Acc 102 Chapter 8 Answer Solution

...Chapter 8 PROBLEM SET B Problem 8-1B (20 minutes) 1. Violates both applying technological control and effective segregation of duties. It is safe to assume that Latisha Tally has knowledge of employee passwords since she implemented the system of password protection companywide. It is a potentially insecure situation that Latisha processes payroll and can now probably change employee pay rates at will, or add a fictitious employee to the file. The company should hire an outside consultant to rework the password protection system so Latisha will not have the knowledge that she currently possesses. 2. Violates applying technological controls. The theater’s system needs to be backed up at least daily, not weekly. The theater needs to change the backup policy and make sure the backup copies are stored off premises. 3. Violates segregation of duties. The company needs to have three employees handle these functions instead of two. One employee should place purchase orders, one should receive merchandise, and the third should pay vendors. 4. Violates applying technological controls. The use of the check protector is a good internal control. However the company needs to keep the checks and check protector in a locked environment to prevent unauthorized use. 5. Violates segregation of duties. It is good internal control to separate duties for cash receipts and cash disbursements. Moreover, an employee independent of these two functions should......

Words: 3277 - Pages: 14

Premium Essay

Chapter 21 Solutions-Intermediate Accounting

...CHAPTER 21 Accounting for Leases SOLUTIONS TO EXERCISES EXERCISE 21-1 (15–20 minutes) (a) This is a capital lease to Adams since the lease term (5 years) is greater than 75% of the economic life (6 years) of the leased asset. The lease term is 831/3% (5 ÷ 6) of the asset’s economic life. (b) Computation of present value of minimum lease payments: $9,968 X 4.16986* = $41,565 *Present value of an annuity due of 1 for 5 periods at 10%. (c) 1/1/12 Leased Equipment................................... Lease Liability.................................. Lease Liability.......................................... Cash................................................... 12/31/12 Depreciation Expense............................. Accumulated Depreciation— Capital Leases.............................. ($41,565 ÷ 5 = $8,313) Interest Expense...................................... Interest Payable................................ [($41,565 – $9,968) X .10] 1/1/13 Lease Liability.......................................... Interest Payable....................................... Cash................................................... 41,565 41,565 9,968 9,968 8,313 8,313 3,160 3,160 6,808 3,160 9,968 21-1 EXERCISE 21-2 (20–25 minutes) (a) To Brecker, the lessee, this lease is a capital lease because the terms satisfy the following criteria: 1. 2. The lease term is greater than 75% of the economic life of the leased asset; that is, the lease term is 831/3 % (50/60) of the economic life.......

Words: 6910 - Pages: 28

Premium Essay

Financial Accounting by Decision Chapter 8

...Exercise 8-1 Acquisition Cost Discount of purchase, freight cost, pollution control device installed fee and architect’s fee should be considered as acquisition cost. So the acquisition cost=$60,000-2%*60,000+1,000+2,500+6,000=$68,300 Exercise 8-2 Lump-Sum Purchase The total market value of land, building and equipment is $200,000+150,000+250,000=$600,000 So the acquisition cost allocate to each assets is as following: Land=$520,000*200,000/600,000=$173,333 Building=$520,000*150,000/600,000=$130,000 Equipment=$520,000*250,000/600,000=$216.667 The journal entry to record the acquisition: January 1, 2014 Land $173,333 Building $130,000 Equipment $216.667 Cash $520,000 Exercise 8-6 Asset Disposal 1. Depreciation expense per year= ($60,000-6,000)/6=$9,000 So, depreciation expense for 2014=$9,000/2= $4,500 Journal entry to record depreciation for 2014: July 1, 2014 Depreciation Expense $4,500 Accumulated Depreciation—Assets $4,500 Journal entry to record transaction for the sale of assets: July 1, 2014 Cash $40,000 Accumulated Depreciation—Assets $22,500 Assets $60,000 Gain on Sale of Assets $2,500 2. Gain and loss on sale of assets is recorded under Other Income/Expense section in Income Statement. Gain and loss on sale of assets is non-operating income/expense. Gain occurs when the selling price of the asset higher than its book value, while a......

Words: 316 - Pages: 2

Premium Essay

Intermediate Financial Accounting Chapter 1 Solution

...Chapter 1 Environment and Theoretical Structure of Financial Accounting AACSB assurance of learning standards in accounting and business education require documentation of outcomes assessment. Although schools, departments, and faculty may approach assessment and its documentation differently, one approach is to provide specific questions on exams that become the basis for assessment. To aid faculty in this endeavor, we have labeled each question, exercise and problem in Intermediate Accounting, 7e with the following AACSB learning skills: Questions 1–1 1–2 1–3 1–4 1–5 1–6 1–7 1–8 1–9 1–10 1–11 1–12 1–13 1–14 1–15 1–16 1–17 1–18 1–19 1–20 1–21 1–22 1–23 1–24 1–25 1–26 1–27 1–28 1–29 AACSB Tags Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking 1–30 1–31 1–32 Reflective thinking Reflective thinking Reflective thinking Brief Exercises 1–1 1–2 1–3 1–4 1–5 1–6 AACSB Tags Analytic Reflective thinking Reflective thinking Reflective......

Words: 7572 - Pages: 31

Premium Essay

Financila Accounting Chapter 3 Solution

...Tutorial Chapter 3 Solution Accounting Cycle II Question 1 Selected transactions for Anna, an interior decorator, in her first month of business, are as follows. Jan 2 Invested RM25,000 cash in business. 3 Purchased used car for RM6,000 cash for use in business. 9 Purchased supplies on account for RM1,000. 12 Billed customer RM2,000 for service performed. 16 Paid RM250 cash for advertising expenses. 18 Received RM1,000 cash from customers billed on January 12. 24 Paid creditor RM500 cash on balance owed. 28 Withdrew RM1,500 cash for personal use of owner. 29 Paid salary RM1,000 cash. 29 Paid RM200 cash for utilities. 31 Received RM2,000 cash for the service performed. Instruction Journalize the above transactions. Answer 1 Anna, General Journal |Date |Account Titles and Explanation |Ref |Debit |Credit | |Jan 2 |Cash | |25,000 | | | |Anna, Capital | | |25,000 | |3 |Car | |6,000 | | | |Cash | | ......

Words: 1923 - Pages: 8

Premium Essay

Solution Accounting 7-8

...Fixed manufacturing overhead cost deferred in inventory under absorption costing (5,000 units × $4 per unit in fixed manufacturing cost) = $20,000 | | | | | Question 6: Score 3.06/5 | | | Your response | Correct response | Exercise 7-8 Variable Costing Unit Product Cost and Income Statement; Break-Even [LO1, LO2] | Chuck Wagon Grills, Inc., makes a single product—a handmade specialty barbecue grill that it sells for $210. Data for last year's operations follow: | |   |   |   | Units in beginning inventory | | 0 | Units produced | | 20,000 | Units sold | | 19,000 | Units in ending inventory | | 1,000 | Variable costs per unit: | | | Direct materials | $ | 50 | Direct labor | | 80 | Variable manufacturing overhead | | 20 | Variable selling and administrative | | 10 | Total variable cost per unit | $ | 160 | Fixed costs: | | | Fixed manufacturing overhead | $ | 700,000 | Fixed selling and administrative | | 285,000 | Total fixed costs | $ | 985,000 | Requirement 1: | Assume that the company uses variable costing. Compute the unit product cost for one barbecue grill. (Omit the "$" sign in your response.) | | Unit product cost | $ | 150 (100%) | | Exercise 7-8 Variable Costing Unit Product Cost and Income Statement; Break-Even [LO1, LO2] | Chuck Wagon Grills, Inc., makes a single product—a handmade specialty barbecue grill that it sells for $210. Data for last year's operations follow: | |   |......

Words: 13831 - Pages: 56

Premium Essay

Accounting Chapter 7 Solutions

...------------------------------------------------- Chapter 7 Stocks, Stock Valuation, and Stock Market Equilibrium ------------------------------------------------- ANSWERS TO END-OF-CHAPTER QUESTIONS 7-1 a. A proxy is a document giving one person the authority to act for another, typically the power to vote shares of common stock. If earnings are poor and stockholders are dissatisfied, an outside group may solicit the proxies in an effort to overthrow management and take control of the business, known as a proxy fight. The preemptive right gives the current shareholders the right to purchase any new shares issued in proportion to their current holdings. The preemptive right may or may not be required by state law. When granted, the preemptive right enables current owners to maintain their proportionate share of ownership and control of the business. It also prevents the sale of shares at low prices to new stockholders which would dilute the value of the previously issued shares. Classified stock is sometimes created by a firm to meet special needs and circumstances. Generally, when special classifications of stock are used, one type is designated “Class A”, another as “Class B”, and so on. Class A might be entitled to receive dividends before dividends can be paid on Class B stock. Class B might have the exclusive right to vote. Founders’ shares are stock owned by the firm’s founders that have sole voting rights but restricted dividends for a......

Words: 5843 - Pages: 24

Free Essay

Chapter 8 Brooks Introductory Econometrics for Finance Solutions

...Solutions to the Review Questions at the End of Chapter 8 1. (a). A number of stylised features of financial data have been suggested at the start of Chapter 8 and in other places throughout the book: - Frequency: Stock market prices are measured every time there is a trade or somebody posts a new quote, so often the frequency of the data is very high - Non-stationarity: Financial data (asset prices) are covariance non-stationary; but if we assume that we are talking about returns from here on, then we can validly consider them to be stationary. - Linear Independence: They typically have little evidence of linear (autoregressive) dependence, especially at low frequency. - Non-normality: They are not normally distributed – they are fat-tailed. - Volatility pooling and asymmetries in volatility: The returns exhibit volatility clustering and leverage effects. Of these, we can allow for the non-stationarity within the linear (ARIMA) framework, and we can use whatever frequency of data we like to form the models, but we cannot hope to capture the other features using a linear model with Gaussian disturbances. (b) GARCH models are designed to capture the volatility clustering effects in the returns (GARCH(1,1) can model the dependence in the squared returns, or squared residuals), and they can also capture some of the unconditional leptokurtosis, so that even if the residuals of a linear model of the form given by the first part of the equation in part......

Words: 1541 - Pages: 7

Premium Essay

Chapter 8 Solution

...8-1 = (0.1)(-50%) + (0.2)(-5%) + (0.4)(16%) + (0.2)(25%) + (0.1)(60%) = 11.40% 2 = (-50% – 11.40%)2(0.1) + (-5% – 11.40%)2(0.2) + (16% – 11.40%)2(0.4) + (25% – 11.40%)2(0.2) + (60% – 11.40%)2(0.1) 2 = 7.12%; = 26.69% CV = 26.69%/11.40% CV = 2.34 8-2 | Investment | Ratio | Beta | | A | $ 35,000 | 47% | 0.8 | 0.37 | B | $ 40,000 | 53% | 1.4 | 0.75 | | $ 75,000 | 100% | | 1.12 | The portfolio’s beta is 1.12. 8-3 r = rRF + (rM – rRF)b = 6% + (13% – 6%) (0.7) = 10.9% 8-4 r = rRF + (rM – rRF)b = 5% + (11% – 5%) (1.2) = 12.20% 8-5 a.) r = rRF + (market risk premium)b 11% =7% + (4%)(beta) Beta = (11%-7%)/4% Beta = 1.0 b.) r = rRF + (market risk premium)b =7% + (6%) (1) r = 13% The stock’s required rate of return will increase to 13%. There is an increase of 2% on the required rate of return. 8-6 Computations for stock Y = (0.1)(-35%) + (0.2)(0%) + (0.4)(20%) + (0.2)(25%) + (0.1)(45%) = 14 % 2 = (-35% – 14 %)2(0.1) + (0% – 14 %)2(0.2) + (20% – 14 %)2(0.4) + (25% – 14 %)2(0.2) + (45% – 14 %)2(0.1) 2 = 4.14 %; = 20.35% CV = 20.35%/14% CV = 1.45 Computations for stock X = (0.1)(-10%) + (0.2)(2%) + (0.4)(12%) + (0.2)(20%) + (0.1)(38%) = 12 % 2 = (-10% – 12 %)2(0.1)...

Words: 310 - Pages: 2