7th EditionBarbara Chiappetta, John J. Wild, Ken W. Shaw1,757 explanations

9th EditionCharles T. Horngren1,143 explanations

16th EditionDonald E. Kieso, Jerry J. Weygandt, Terry D. Warfield2,296 explanations

11th EditionBradford D. Jordan, Randolph W. Westerfield, Stephen A. Ross1,432 explanations

ACCOUNTINGMetrics to minimize inventory buildups. Mountain Press produces textbooks for high school accounting courses. The company recently hired a new editor, Jan Green, to handle production and sales of books for an introductory accounting course. Jan’s compensation depends on the gross margin associated with sales of this book. Jan needs to decide how many copies of the books to produce. The following information is available for the fall semester of 2017:
$$
\begin{matrix}
\text{Estimated sales} & \text{50,000 books}\\
\text{Beginning inventory} & \text{0 books}\\
\text{Average selling price} & \text{\$160 per book}\\
\text{Variable production costs} & \text{\$100 per book}\\
\text{Fixed production costs} & \text{\$750,000 per semester}\\
\text{The fixed-cost allocation rate is based on expected sales and is therefore equal to \$750,000/50,000 books=\$15 per book.}\\
\end{matrix}
$$
Jan has decides to produce either 50,000, 65,000, or 70,000 books. 1. Calculate expected gross margin if Jan produces 50,000, 65,000, 70,000 books. (Make sure you include the production-volume variance as part of cost of goods sold.) 2. Calculate ending inventory in units and in dollars for each production level. 3. Managers who are paid a bonus that is a function of gross margin may be inspired to produce a product in excess of demand to maximize their own bonus. The chapter suggested metrics will accomplish this objective? Show your work. a. Incorporate a charge of 10% of the cost of the ending inventory as an expense for evaluating the manager. b. Include nonfinancial measures when evaluating management and rewarding performance. ACCOUNTINGSelected financial data for Surf City and Paradise Falls are as follows:
$$
\begin{matrix}
\text{(\$ in millions)} & \text{Surf City} & \text{ } & \text{Paradise Falls}\\
\text{ } & \text{2018} & \text{2017} & \text{2018} & \text{2017}\\ \hline
\text{Total assets} & \text{$\$ 19,828$} & \text{$\$ 19,804$} & \text{$\$ 39,161$} & \text{$\$ 38,637$}\\
\text{Total liabilities} & \text{$11,519$} & \text{$11,396$} & \text{$15,232$} & \text{$14,805$}\\
\text{Total stockholders' equity} & \text{$8,309$} & \text{$8,408$} & \text{$23,929$} & \text{$23,832$}\\
\text{Sales revenue} & \text{$\$ 7,688$} & \text{ } & \text{$\$ 15,382$} & \text{ }\\
\text{Interest expense} & \text{356} & \text{ } & \text{336} & \text{ }\\
\text{Tax expense} & \text{$-$} & \text{ } & \text{4} & \text{ }\\
\text{Net income} & \text{18} & \text{ } & \text{$1,298$} & \text{ }\\
\end{matrix}
$$
1. Calculate the debt to equity ratio for Surf City and Paradise Falls for the most recent year. Which company has the higher ratio? 2. Calculate the return on assets for Surf City and Paradise Falls. Which company appears more profitable? 3. Calculate the times interest earned ratio for Surf City and Paradise Falls. Which company is better able to meet interest payments as they become due? ACCOUNTINGThe following transactions related to notes payable and notes receivable were completed by Wolverton Company during April of the current year.
Transactions:
Apr. 5. Signed a 90-day, 10% note, for $30,000.00 with First National Bank. R34.
9. Accepted a 90-day, 15% note from Phillip Majure for an extension of time on his account,$650.00. NR18.
12. Received cash for the maturity value of a 60-day, 18% note for $900.00. R67.
16. Accepted a 60-day, 14% note from Avery Harris for an extension of time on her account,$2,450.00. NR19.
19. Received cash for the maturity value of a 60-day, 18% note for $500.00. R74.
20. Signed a 90-day, 15% note with Rossman Supply for an extension of time on this account payable,$2,500.00. M49.
22. Patrick Isamen dishonored his 90-day, 15% note, for $3,000.00. M53.
27. Signed a 120-day, 12% note for$20,000.00 with First Commerce Bank. R84.
29. Received cash for the maturity value of a 90-day, 18% note for $1,800.00. R89.
Instructions:
1. Journalize each transaction using page 3 of a general journal and page 6 of a cash receipts journal. Source documents are abbreviated as follows: check, C; receipt, R; memorandum, M; note receivable, NR.
2. Determine the maturity date and maturity value of each note signed by Wolverton Company.
3. Journalize the following transactions on page 10 of a cash payments journal. Use the maturity dates and maturity values calculated in Instruction 2.
Transactions:
Paid cash for the maturity value of the$30,000.00 note dated April 5. C452.
Paid cash for the maturity value of the $2,500.00 note dated April 20. C489.
Paid cash for the maturity value of the$20,000.00 note dated April 27. C672.