Caroline Palmer uses the following accounts in her San Francisco–Los Angeles commuter shuttle service.

$$\begin{matrix} \text{General Ledger} & \text{ }\\ \hline \text{Cash in Bank} & \text{Caroline Palmer, Capital}\\ \text{Advertising Expense} & \text{Accounts Receivable}\\ \text{Caroline Palmer, Withdrawals} & \text{Food Expense}\\ \text{Airplanes} & \text{Flying Fees}\\ \text{Fuel and Oil Expense} & \text{Accounts Payable}\\ \text{Repairs Expense} & \text{ }\\ \end{matrix}$$

In the form provided in your working papers, provide the following information for each account. The first account is completed as an example. 1. Classify the account as an asset, liability, owner’s equity, revenue, or expense account. 2. Indicate whether the increase side is a debit or a credit. 3. Indicate whether the decrease side is a debit or a credit. 4. Indicate whether the account has a normal debit balance or a normal credit balance.

$$\begin{matrix} \text{Account} & \text{Account} & \text{Increase} & \text{Decrease} & \text{Normal}\\ \text{Name} & \text{Classification} & \text{Side} & \text{Side} & \text{Balance}\\ \hline \text{Cash in Bank} & \text{Asset} & \text{Debit} & \text{Credit} & \text{Debit}\\ \end{matrix}$$

Ronald Hicks uses these accounts in his business, Wilderness Rentals.

$$\begin{matrix} \text{General Ledger} & \text{ }\\ \hline \text{101 Cash in Bank} & \text{301 Ronald Hicks, Capital}\\ \text{105 Accounts Receivable—} & \text{305 Ronald Hicks, Withdrawals}\\ \text{Helen Katz} & \text{401 Equipment Rental Revenue}\\ \text{120 Office Equipment} & \text{505 Maintenance Expense}\\ \text{125 Camping Equipment} & \text{525 Utilities Expense}\\ \end{matrix}$$

Analyze each of the following trans actions using the format shown in the example. Record your answers in your working papers. a. Explain the debit. b. Explain the credit. On Jan. 2 Ronald Hicks paid the bill for office cleaning, $100. a. The expense account 505 Maintenance Expense is increased. Increases in expenses are recorded as debits. b. The asset account 101 Cash in Bank is decreased. Decreases in assets are recorded as credits.$

$$\begin{array}{rl} \text{Date} & \text{Transactions}\\ \hline \text{Jan. 3} & \text{1. Ronald Hicks withdrew $\$500$ from his business for his own use, Check 225.}\\ \text{8} & \text{2. The business received $\$1,200$ cash in rental fees from various customers. }\\ \text{12} & \text{3. The business paid a telephone bill of $\$85$, Check 226.}\\ \end{array}$$

$

Juanita Ortega operates Outback Guide Service. She uses the following accounts to record and summarize her business transactions.

$$\begin{matrix} \text{General Ledger} & \text{ }\\ \hline \text{101 Cash in Bank} & \text{301 Juanita Ortega, Capital}\\ \text{105 Accounts Receivable—} & \text{302 Juanita Ortega, Withdrawals}\\ \text{Mary Johnson} & \text{401 Guide Service Revenue}\\ \text{150 Rafting Equipment} & \text{505 Maintenance Expense}\\ \text{205 Accounts Payable—} & \text{515 Rent Expense}\\ \text{Peak Equipment Inc.} & \text{520 Utilities Expense}\\ \end{matrix}$$

For each transaction: 1. Prepare a T account for each account the business uses. 2. Analyze and record each of the following transactions using the appropriate T accounts. Identify each transaction by number. 3. After recording all transactions, compute and record the account balance on the normal balance side of each T account. 4. Test for the equality of debits and credits.

$$\begin{array}{rl} \text{Date} & \text{Transactions}\\ \hline \text{Jan. 2} & \text{1. Juanita Ortega invested $\$ 12,000$ cash in her business.}\\ \text{7} & \text{2. Purchased two new whitewater rafts on account for $\$ 3,750$ from Peak Equipment Inc.}\\ \text{10} & \text{3. Billed, but did not collect, $\$ 750$ for guide services provided to Mary Johnson.}\\ \text{12} & \text{4. Repaired a raft at a cost of $\$ 123$ , Check 411.}\\ \text{14} & \text{5. Wrote Check 412 to pay the electric bill of $\$ 95$.}\\ \text{17} & \text{6. Received $\$ 225$ for guide service fees.}\\ \text{21} & \text{7. Paid the $\$ 225$ rent for the month, Check $413 .$}\\ \text{24} & \text{8. Paid $\$ 1,750$ toward the rafts bought on account, Check $414 .$}\\ \text{27} & \text{9. Juanita Ortega withdrew $\$ 250$ cash for personal use, Check $415 .$}\\ \text{29} & \text{10. Received guide service fees of $\$ 250 .$}\\ \end{array}$$

National Motors has equipped the $\text{ZX}-900$ with a new disk brake system. We define the stopping distance for a $\text{ZX}-900$ to be the distance (in feet) required to bring the automobile to a complete stop from a speed of $35 \mathrm{~mph}$ under normal driving conditions using this new brake system. In addition, we define $\mu$ to be the mean stopping distance of all $\text{ZX}-900\text{s}$. One of the $\text{ZX}-900$'s major competitors is advertised to achieve a mean stopping distance of $60$ feet. National Motors would like to claim in a new advertising campaign that the $\text{ZX}-900$ achieves a shorter mean stopping distance.

Suppose that National Motors randomly selects a sample of $81 \mathrm{ZX}-900$ s. The company records the stopping distance of each automobile and calculates the mean and standard deviation of the sample of 81 stopping distances to be $57.8 \mathrm{~ft}$ and $6.02 \mathrm{~ft}$., respectively.

Using the sample of $81$ stopping distances as a preliminary sample, find the sample size necessary to make National Motors $95$ percent confident that $\overline{x}$ is within a margin of error of one foot of $\mu$.

Lambert Department Store is located in midtown Metropolis. During the past several years, net income has been declining because suburban shopping centers have been attracting business away from city areas. At the end of the company’s fiscal year on November 30, 2014, these accounts appeared in its adjusted trial balance.

Accounts Payable                     $   26,800
Accounts Receivable                      17,200
Accumulated Depreciation—Equipment       68,000
Cash                                      8,000
Common Stock                             35,000
Cost of Goods Sold                      614,300
Freight-Out                               6,200
Equipment                               157,000
Depreciation Expense                     13,500
Dividends                                12,000
Gain on Disposal of Plant Assets          2,000
Income Tax Expense                       10,000
Insurance Expense                         9,000
Interest Expense                          5,000
Inventory                                26,200
Notes Payable                            43,500
Prepaid Insurance                         6,000
Advertising Expense                      33,500
Rent Expense                             34,000
Retained Earnings                        14,200
Salaries and Wages Expense              117,000
Sales Revenue                           904,000
Salaries and Wages Payable                6,000
Sales Returns and Allowances             20,000
Utilities Expense                        10,600

Additional data: Notes payable are due in 2018.

Instructions

(a) Prepare a multiple-step income statement, a retained earnings statement, and a classified balance sheet.

$$\begin{array}{c} \text{HAMILTON NEWS ADVERTISING RATES}\\ ~~~~~~~~~~~~~~~~~~\hspace{50pt}\text{Per Column Inch}\\ \end{array}$$

$$\begin{array}{l r r} & & \text{Daily} & \text{Sunday} \\ \text{Noncontract rates} & & \$45.54 & \$55.28\\[10pt] \text{Weekly Contract rates} & & \\ ~~~\text{1 inch} & & 35.57 & 43.52\\ ~~~ \text{2 inches}& & 35.42 & 43.36\\ ~~~ \text{4 inches} & & 35.28 & 43.36\\ ~~~ \text{8 inches} & & 35.15 & 43.07\\ ~~~ \text{16 inches} & & 34.90 & 42.80\\ ~~~ \text{31 inches} & & 34.65 & 42.53\\ ~~~ \text{63 inches} & & 34.40 & 42.26\\ ~~~ \text{94 inches} & & 34.15 & 41.99\\ ~~~ \text{126 inches} & & 33.90 & 41.72\\ ~~~ \text{252 inches} & & 33.65 & 41.46\\ \end{array}$$

Use the table above to find the advertisement cost per run.

$$\begin{array}{|c| c| c c c c c|} \hline \textbf{Weekly} & & \textbf{Number of} & \times & \textbf{Rate per} & = & \textbf{Advertisement}\\ \textbf{Contract} & \textbf{Edition} & \textbf{Column Inches} & & \textbf{Column Inch} & & \textbf{Cost}\\ \hline \text{31 inches} & \text{Daily} & 9 & \times & ? & = & ? \\ \hline \end{array}$$

Corning-Howell reported taxable income in 2018 of $120 million. At December 31, 2018, the reported amount of some assets and liabilities in the financial statements differed from their tax bases as indicated below:

The total deferred tax asset and deferred tax liability amounts at January 1,2018 , were$\$250$ million and $\$ 40$ million, respectively. The enacted tax rate is $40 \%$ each year.

Required:

1. Determine the total deferred tax asset and deferred tax liability amounts at December $31,2018$.
2. Determine the increase (decrease) in the deferred tax asset and deferred tax liability accounts at December 31, 2018.
3. Determine the income tax payable currently for the year ended December 31, 2018.
4. Prepare the journal entry to record income taxes for 2018.

(Preparation of a Classified Balance Sheet, Periodic Inventory) Presented below is a list of accounts in alphabetical order.

Instructions

Prepare a classified balance sheet in good form (No monetary amounts are to be shown.

The following accounts are denominated in rubles as of December 31, 2020. For reporting purposes, these accounts need to be stated in U.S. dollars. For each account, indicate the exchange rate that would be used to translate the ruble balance into U.S. dollars under the current rate method. Then, again for each account, indicate the exchange rate that would be used to remeasure the ruble balance to U.S. dollars applying the temporal method. The company was started in 2015. The buildings were acquired in 2016 and the patents in 2018.

Exchange rates for 1 ruble are as follows:

based on the following information about Gell Corporation’s manufacturing of computers. Assume that Gell

• allocates manufacturing overhead based on machine hours.
• estimated 12,000,000 machine hours and $93,000,000 of manufacturing overhead costs.
• Actually used 16,000,000 machine hours and incurred the following actual costs:

$$\begin{array}{lr} \hline \text { Indirect labor } & \$ 11,000,000 \\ \text { Depreciation on plant } & 48,000,000 \\ \text { Machinery repair } & 11,000,000 \\ \text { Direct labor } & 75,000,000 \\ \text { Plant supplies } & 6,000,000 \\ \text { Plant utilities } & 7,000,000 \\ \text { Advertising } & 35,000,000 \\ \text { Sales commissions } & 27,000,000 \\ \hline \end{array}$$

What entry would Gell make to close the manufacturing overhead account?

$$\begin{array}{llrr} \text{a. Manufacturing overhead }&&10,000,000&\\ &\text{Cost of goods sold}&&10,000,000\\ \end{array}$$

$$\begin{array}{llrr} \text{b. Manufacturing overhead }&&41,000,000&\\ &\text{Cost of goods sold}&&41,000,000\\ \end{array}$$

$$\begin{array}{llrr} \text{c. Cost of goods soldb }&&41,000,000&\\ &\text{Manufacturing overhead}&&41,000,000\\ \end{array}$$

$$\begin{array}{llrr} \text{d. Cost of goods soldb }&&10,000,000&\\ &\text{Manufacturing overhead}&&10,000,000\\ \end{array}$$

A statistician chooses to investigate the correlation between magazine price and the proportion of ad space that is present while perusing the magazine rack at a bookstore. The following table provides the information gathered for eight periodicals.

$$\begin{array}{l|rrrrrrrr} \hline \text { Percentage containing ads } & 37 & 43 & 58 & 49 & 70 & 28 & 65 & 32 \\ \hline \text { Price (S) } & 5.50 & 6.95 & 4.95 & 5.75 & 3.95 & 8.25 & 5.50 & 6.75 \\ \hline \end{array}$$

a. Create a scatter diagram using these data, step 1. Does the scatter diagram show a linear relationship between the cost of a magazine and the proportion of its space that is taken up by advertisements? b. Determine the estimated regression equation between pricing and the proportion of space taken up by advertisements. c. Provide a brief explanation of how the numbers $a$ and $b$ calculated in part $mathrmb$ should be understood. d. Draw vertical lines between the scatter points and the predictive regression line to illustrate the mistakes. Plot the estimated regression line on the scatter diagram from section a. e. Estimate the cost of a magazine with ads taking up $50\%$ of the available space. f. Calculate the cost of a magazine with $99 worth of advertising space. Speculate on this discovery.

LLAP Company manufactures a specialized hoverboard. LLAP began 2017 with an inventory of 240 hoverboards. During the year, it produced 1,200 boards and sold 1,300 for $800 each. Fixed production costs were$319,000, and variable production costs were $375 per unit. Fixed advertising, marketing, and other general and administrative expenses were$150,000, and variable shipping costs were $20 per board. Assume that the cost of each unit in beginning inventory is equal to 2017 inventory cost. 1. Prepare an income statement assuming LLAP uses variable costing. 2. Prepare an income statement assuming LLAP uses absorption costing. LLAP uses a denominator level of 1.100 units. Production-volume variances are written off to cost of goods sold. 3. Compute the breakeven points in units sold assuming LLAP uses the following: a. Variable costing. b. Absorption costing (Production=1.200 boards). 4. Provide proof of your preceding breakeven calculations. 5. Assume that$44.000 of fixed administrative costs were reclassified as fixed production costs. Would this reclassification affect the breakeven point using variable costing? What if absorption costing were used? Explain.

The first seven transactions of Everett Advertising, Inc., have been posted to the company’s accounts as follows:

$$\begin{matrix} \text{Cash} & \quad & \text{Supplies} & \quad & \text{Equipment} & \quad & \text{Land}\\ \text{(1) 9,800} & \text{(3) 4,000} & \text{(4) 400} & \text{(5) 110} & \text{(6) 5,300} & \quad & \text{(3) 32,000}\\ \text{(2) 7,000} & \text{(6) 5,300} & \quad & \quad & \quad & \quad & \quad\\ \text{(5) 110} & \text{(7) 150} & \quad & \quad & \quad & \quad & \quad\\ \quad & \quad & \quad & \quad & \quad & \quad & \quad\\ \text{Accounts Payable} & \quad & \text{Note Payable} & \quad & \text{Common Stock} & \quad & \quad\\ \text{(7) 150} & \text{(4) 400} & \quad & \text{(2) 7,000} & \quad & \text{(1) 9,800}\\ \quad & \quad & \quad & \text{(3) 28,000}\\ \end{matrix}$$

Prepare the journal entries that served as the sources for the seven transactions. Include an explanation for each entry. As Everett moves into the next period, how much cash does the business have? How much does Everett owe in total liabilities?

$$\begin{array}{c} \text{HAMILTON NEWS ADVERTISING RATES}\\ ~~~~~~~~~~~~~~~~~~\hspace{50pt}\text{Per Column Inch}\\ \end{array}$$

$$\begin{array}{l r r} & & \text{Daily} & \text{Sunday} \\ \text{Noncontract rates} & & \$45.54 & \$55.28\\[10pt] \text{Weekly Contract rates} & & \\ ~~~\text{1 inch} & & 35.57 & 43.52\\ ~~~ \text{2 inches}& & 35.42 & 43.36\\ ~~~ \text{4 inches} & & 35.28 & 43.36\\ ~~~ \text{8 inches} & & 35.15 & 43.07\\ ~~~ \text{16 inches} & & 34.90 & 42.80\\ ~~~ \text{31 inches} & & 34.65 & 42.53\\ ~~~ \text{63 inches} & & 34.40 & 42.26\\ ~~~ \text{94 inches} & & 34.15 & 41.99\\ ~~~ \text{126 inches} & & 33.90 & 41.72\\ ~~~ \text{252 inches} & & 33.65 & 41.46\\ \end{array}$$

Use the table above to find the advertisement cost per run.

$$\begin{array}{|c| c| c c c c c|} \hline \textbf{Weekly} & & \textbf{Number of} & \times & \textbf{Rate per} & = & \textbf{Advertisement}\\ \textbf{Contract} & \textbf{Edition} & \textbf{Column Inches} & & \textbf{Column Inch} & & \textbf{Cost}\\ \hline \text{No Contract} & \text{Daily} & 5 & \times & ? & = & ? \\ \hline \end{array}$$