College Accounting, Chapters 1-27
23rd Edition
ISBN: 9781337794756
Author: HEINTZ, James A.
Publisher: Cengage Learning,
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 25, Problem 1EC
1.
To determine
Indicate the reaction to the idea of MS, the department head of H Toy.
2.
To determine
Indicate the impact on department H Store, if JO decides to charge all the indirect expenses to the department H Store for the first quarter.
3.
To determine
Indicate the short-term and long-term implications of MS’s idea of charging all the indirect expenses to the department H Store for the first quarter.
4.
To determine
List few suggestions for the improvement of both the departments towards earning revenue.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Boxes-and-Stuff, a box-packing and mailing company in a small town along the Gulf Coast, lost a key employee last month when its accounting manager was fired for embezzling company money. Now, the owners of Boxes-and-Stuff, Jerome and Natalia, need to find another accounting manager fast. But as they hurry to fill the position, they don't want to select a dishonest or incompetent employee. They need to be cautious. Fortunately, the police chief found the embezzled funds in a bank account set up by the former employee and authorized the return of the money. This means that Boxes-and-Stuff will not lose the embezzled amount, after all. However, Jerome and Natalia are already thinking of ways to protect their company from other risks. They want to be prepared for risky situations in the future. Questions: 1. Which risks do you think Boxes-and-Stuff might face?
Boxes-and-Stuff, a box-packing and mailing company in a small town along the Gulf Coast, lost a key employee last month when its accounting manager was fired for embezzling company money. Now, the owners of Boxes-and-Stuff, Jerome and Natalia, need to find another accounting manager—fast. But as they hurry to fill the position, they don’t want to select a dishonest or incompetent employee. They need to be cautious. Fortunately, the police chief found the embezzled funds in a bank account set up by the former employee and authorized the return of the money. This means that Boxes-and-Stuff will not lose the embezzled amount, after all. However, Jerome and Natalia are already thinking of ways to protect their company from other risks. They want to be prepared for risky situations in the future.
1. Which risks do you think Boxes-and-Stuff might face?
2. How do you think the company should handle the risks you’ve identified?
A local pharmacy company has been in business for many years. Recently the company got into some trouble because investors wanted to know why the profits were trending downward. So the management of this company decided they were going to change a few things. The management has decided that the new policy for recognizing revenues for the pharmacy businesses will be when the customer drops off the prescription. The controller, William asked about what if the customer does not pick up their prescription. The management stated that we don’t get a lot of people that don’t pick up their prescriptions. Management states this will recognize our revenue quicker and hopefully this will increase our cash flow. We must keep our investors happy. William, the controller has come to you as an outside CPA to research this change in revenue recognition.
Please explain the 5-step revenue recognition policy that is now GAAP.
Demonstrate how this follows this revenue recognition rule.
Please provide…
Chapter 25 Solutions
College Accounting, Chapters 1-27
Ch. 25 - A department that incurs costs and generates...Ch. 25 - Departmental gross profit is the difference...Ch. 25 - Prob. 3TFCh. 25 - Direct expenses are operating expenses incurred...Ch. 25 - Departmental direct operating margin is the...Ch. 25 - A department that incurs costs but does not...Ch. 25 - The difference between a departments net sales and...Ch. 25 - Prob. 3MCCh. 25 - The difference between a departments gross profit...Ch. 25 - The difference between a departments gross profit...
Ch. 25 - Prob. 1CECh. 25 - Prob. 2CECh. 25 - Prob. 3CECh. 25 - Prob. 1RQCh. 25 - Prob. 2RQCh. 25 - Prob. 3RQCh. 25 - Prob. 4RQCh. 25 - Prob. 5RQCh. 25 - Prob. 6RQCh. 25 - Prob. 7RQCh. 25 - Prob. 8RQCh. 25 - Distinguish between departmental gross profit,...Ch. 25 - Prob. 10RQCh. 25 - GROSS PROFIT SECTION OF DE PART MENT AL INCO ME ST...Ch. 25 - ALLOCATING OPERATING EXPENSESQUARE FEET Weaverling...Ch. 25 - ALLOCATING OPERATING EXPENSERELATIVE NET SALES...Ch. 25 - ALLOCATING OPERATING EXPENSEMILES DRIVEN Mercado...Ch. 25 - COMPUTING OPERATING INCOME The sales, cost of...Ch. 25 - Prob. 6SEACh. 25 - INCOME STATEMENT WITH DEPART MENTAL GROSS PROFIT...Ch. 25 - INCOME STATE MENT WITH DEPARTMENTAL OPERATING...Ch. 25 - INCOME STATEMENT WITH DEPART MENTAL DIRECT...Ch. 25 - Prob. 10SPACh. 25 - GROSS PROFIT SECTION OF DEPART MENTAL INCOME...Ch. 25 - Prob. 2SEBCh. 25 - ALLOCATING OPERATING EXPENSERELATIVE NET SALES...Ch. 25 - ALLOCATING OPERATING EXPENSEMILES DRIVEN Herbert...Ch. 25 - Prob. 5SEBCh. 25 - Prob. 6SEBCh. 25 - INCOME STATEMENT WITH DEPART MENTAL GROSS PROFIT...Ch. 25 - Prob. 8SPBCh. 25 - Prob. 9SPBCh. 25 - Prob. 10SPBCh. 25 - Prob. 1MYWCh. 25 - Prob. 1ECCh. 25 - MASTERY PROBLEM Bobs Acme Supermarket has been in...Ch. 25 - CHALLENGE PROBLEM This problem challenges you to...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Judy Baresford, the store manager of Comfort Futons, noticed that the amount of time the two bookkeepers were spending on accounts receivable, accounts payable, and cash receipts was increasing due to the stores increase in sales. A friend of Judys who is also a store manager suggested that she might want to have some special journals designed that would reduce the amount of work involved in the day-to-day bookkeeping at her store. Judy approached Jon Fortner and Sue Stavio, the bookkeepers, and asked them to come up with a proposal for special journals. During lunch, Jon told Sue he thought designing special journals would be a lot of work and it was not in his job description. Sue told him not to worry because she would just copy pages of special journals from her accounting textbook and they could submit these journals as their own design. Jon liked the idea and they agreed to meet the next night, scan the journals into Word, and submit them to Judy the following morning. 1. Do you think Sues suggestion is unethical? Why or why not? 2. In using the generic special journals from Sues accounting textbook, what possible problems can you foresee? 3. If you were Judy, how would you respond to Sue and Jons plan?arrow_forwardA payday loan company has decided to open several new locations in a city and hires consultants to decide where to open these locations. The consultants are paid per store that is opened, and at the end of the quarter, the company notices a many of the new stores' sales volume fail to meet expectations. To incentivize the consultants to instead focus on opening profitable stores, the company decided to alter the compensation to a percentage of the profit earned per new store. This puts the consultants_ and the payday loan company should expect to compensate for this change. to Group of answer choices 1. In a less risky position; pay the consultants more than they would in the per- store scheme 2. A more risky position; pay the consultants less than they would in the per- store scheme 3. In a less risky position; pay the consultants less than they would in the per- store scheme 4. A more risky position; pay the consultants more than they would in the per- store schemearrow_forwardXYZ Bakery's general manager was puzzled by the results of the income statement for the month which showed a net loss for the bakery. The owner is puzzled because of the volume of customers who flood the bakery each day for baked goods. The owner calculated the cost of direct materials and direct labor and was sure the prices were set right and overhead was estimated based on prior year expenses. How is it possible that volumes could be high but the store could lose money? What are other factors the owner should consider to make sure next year's financial statements report net income?arrow_forward
- Ethics Case Electronics, Inc. is a high-volume, wholesale merchandising company. Most of its inventory turns over four or five times a year. The company has had 50 units of a particular brand of computers on hand for over a year. These computers have not sold and probably will not sell unless they are discounted 60 to 70%. The accountant is carrying them on the books at cost and intends to recognize the loss when they are sold. This way, she can avoid a significant write-down in inventory on the current year’s financial statements. 1. Is the accountant correct in her treatment of the inventory? Why or why not? 2. If the computers cost $1,000 each and their market value is 40% of their cost, journalize the entry necessary for the write-down. 3. In groups of three or four, make a list of reasons why inventories of electronic equipment might have to be written down.arrow_forwardAmeen trading company is a popular distributor in the Nizwa region having years of experience in the field of logistics and marketing. Over these years, the company has gained a very good public opinion and quiet a big number of loyal customers. During the last year, the company has faced some financial struggles due to the pandemic – crisis. The company has decided to plan well for the current year based on the past performance so that the company will be able to regain its status. The management of the company has given with you the Income statement for the last year and asked you to calculate the gross profit and net profit margin. Particular OMR Particular OMR Opening Stock Purchases Carriage and Freight Wages Gross Profit b/d To 76,250 By Sales 3,15,250 "Closing stock 2,000 5,000 2,00,000 5,98,500 1,01,000 By Gross Profit b/d 12,000 "Non-operating incomes: 2,000 " Interest on Securities 7,000 " Dividend on shares 84,000 " Profit on sale of shares 2,06,000 5,00,000 98,500 5,98,500…arrow_forwardHarmony is the Senior accountant of a Bank. Junior accountants of all the branches reportto her. While preparing for the final quarter sales report, she finds that two out of the fourbranches have failed to achieve the sales targets for the second consecutive quarter.According to the company policy, the branches that fail to achieve targets in twoconsecutive quarters have to be closed. Harmony feels sad for all the people losing theirjobs and decides that she will overstate the sales revenue generated by every branch andreport manipulated figures in the financial statements. Answer the following questions. Describe Harmony’s actions from ethical standpoint. Is she doing the right thing? What can be the consequences of Harmony’s actions. What are the risks involved? What would you suggest to Harmony? (please cite paragraph according to the MLA citation? Please note this is not an essay.arrow_forward
- Thom Lutz started a retail clothing business two years ago. Lutz’s first year was very successful, but sales dropped 50 percent in the second year. A friend who is a business consultant analyzed Lutz’s business and came up with two basic reasons for the decline in sales: (1) Lutz has been placing orders late in each season, and (2) shipments of clothing have been arriving late and in poor condition. What measures can Lutz take to improve his business and persuade customers to return?arrow_forwardMorgan Williams Ltd (MWL) is a long-established department store in central Wellington and was for many years highly profitable. One way in which it rewarded its directors was to employ their children, who were students, over the summer break. The company paid these student-employees wages far in excess of market rates. In recent years, MWL became heavily reliant on cruise ship passengers to maintain its business. Due to the Covid 19 pandemic, the last cruise ship visited in March 2020. MWL was slow to develop an online presence. Also, many people, whose offices are in central Wellington, started to work from home. By June 2020, MWL’s sales were down by 90%, and by September 2020, MWL was in serious financial difficulty. December is usually MWL’s best month for sales, but December 2020 was a disaster and the company started to lay off staff. In March 2021, MWL failed to pay its GST and other tax liabilities. Southpac, the company’s bank, threatened to seize MWL’s stock, in terms of a…arrow_forwardIn 1998 a council-owned factory began selling replacement windows to outside customers for the first time. At the time the factory was making losses and the council needed to make severe budget cuts. The new customers have helped to reduce the losses in 1999 and a return to profits is required in 2000.An order for a special type of window has been received. The factory manufactures this type of window very occasionally and there is some partially completed inventory from last year. The inventory relates to an order from the council that was cancelled to save costs. The special windows are typically 30% complete and some of the material can be used for the new order. The accountant still has detailed records of the work done last year.The accountant has provided the following information for the factory managers.Costs incurred last year on special windows now held in inventoryPVC material = £5,000Labour = £3,000(i) The factory was planning to sell the inventory of special windows to a…arrow_forward
- In 1998 a council-owned factory began selling replacement windows to outside customers for the first time. At the time the factory was making losses and the council needed to make severe budget cuts. The new customers have helped to reduce the losses in 1999 and a return to profits is required in 2000.An order for a special type of window has been received. The factory manufactures this type of window very occasionally and there is some partially completed inventory from last year. The inventory relates to an order from the council that was cancelled to save costs. The special windows are typically 30% complete and some of the material can be used for the new order. The accountant still has detailed records of the work done last year.The accountant has provided the following information for the factory managers.Costs incurred last year on special windows now held in inventoryPVC material = £5,000Labour = £3,000(i) The factory was planning to sell the inventory of special windows to a…arrow_forwardAmeen trading company is a popular distributor in the Nizwa region having years of experience in the field of logisties and marketing. Over these years, the company has gained a very good public opinion and quiet a big number of loyal customers. During the last year, the company has faced some financial struggles due to the pandemic - crisis. The company has decided to plan well for the current year based on the past performance so that the company will be able to regain its status. The management of the company has given with you the Income statement for the last year and asked you to calculate the gross profit and net profit margin. Partkular OMR Particular OMR Opening Stock Purchases Carriage and Freight Wages Gross Profit bd To 76,250 By Sales 315 250 "Closing stock 2,000 5,000 2,00,000 5,98500 1,01,000 By Gross Profit b/d 12000 Non-operating incomes 2,000 7 p00 *Dividend on shares 84 000 Profit on sale of shares 2,06,000 5,00,000 98,500 5,98,500 2,00,000 To Administration expenses…arrow_forwardBernice Mountaindog was glad to be back at Sea Shore Salt. Employees were treated well. When she had asked a year ago for a leave of absence to complete her degree in finance, top management promptly agreed. When she returned with a honors degree, she was promoted form administrative assistant (she had been secretary to Joe-Bob Brinepool, the president) to treasury analyst.Bernice thought the company’s prospect were good. Sure, table salt was a mature business, but Sea Shore Salt had grown steadily at the expense of its less well known competitors. The company’s brand name was an important advantage, despite the difficulty most customers had in pronouncing it rapidly.Bernice started work on January 2, 2009. The first 2 weeks went smoothly. Then Mr. Brinepool’s cost of capital to other managers. The memo came as a surprise to Bernice, so she stayed late to prepare for the questions that would surely come the next day. The company’s bank charged interest at current market rates, and the…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning
Chapter 6 Merchandise Inventory; Author: Vicki Stewart;https://www.youtube.com/watch?v=DnrcQLD2yKU;License: Standard YouTube License, CC-BY
Accounting for Merchandising Operations Recording Purchases of Merchandise; Author: Socrat Ghadban;https://www.youtube.com/watch?v=iQp5UoYpG20;License: Standard Youtube License