You are on the staff of a member of the U.S. Senate who is considering a bill that would provide government-sponsored insurance for nursing-home care. You report that 1128 letters and emails have been received on the issue, of which 871 (77%) oppose the legislation. "I'm surprised that most of my constituents oppose the bill. I thought it would be quite popular," says the senator. Explain why this sampling method is biased. Is 77% likely greater than or less than the percentage of all the senator's constituents who oppose the legislation?

Family Furniture Corporation incurred the following costs.

1. Wood used in the production of furniture.
2. Fuel used in delivery trucks.
3. Straight-line depreciation on factory building.
4. Screws used in the production of furniture.
5. Sales staff salaries.
6. Sales commissions.
7. Property taxes.
8. Insurance on buildings.
9. Hourly wages of furniture craftsmen.
10. Salaries of factory supervisors.
11. Utilities expense.
12. Telephone bill.

Instructions Identify the costs above as variable, fi xed, or mixed.

An automobile insurance company has compiled the information summarized below on its policy-holders. Suppose someone calls to file a claim. To which age group does he or she most likely belong?

$$\scriptstyle\begin{array}{lcc} \hline & \% \text { of } & \% \text { Involved in } \\ \text { Age Group } & \text { Policyholders } & \text { Accidents Last year } \\ \hline \text { young }(<30) & 20 & 35 \\ \text { Middle-aged }(30-64) & 50 & 15 \\ \text { Elderly }(65+) & 30 & 25 \\ \hline \end{array}$$

The unadjusted trial balance and adjustment data of Mark's Motors at December 31, 2016, follow:

$$\begin{array}{c} \textbf{FARMER INVESTMENT ADVISERS}\\ \text{Unadjusted Trial Balance}\\ \text{December 31, 2016}\\ \end{array}$$

$$\begin{array}{lrr} &\textbf{Balance}\\ \textbf{Account Title}&\textbf{Debit}&\textbf{Credit}\\ \text{Cash}&\$4,800\\ \text{Accounts Receivable}&26,600\\ \text{Office Supplies}&600\\ \text{Prepaid Insurance}&2,400\\ \text{Equipment}&53,900\\ \text{Accumulated Depreciation - Equipment}&&\$41,500\\ \text{Accounts Payable}&&13,500\\ \text{Wages Payable}&&\\ \text{Unearned Revenue}&&5,500\\ \text{Common Stock}&&18,900\\ \text{Dividends}&4,200\\ \text{Service Revenue}&&16,300\\ \text{Depreciation Expense - Equipment}\\ \text{Wages Expense}&1,500\\ \text{Insurance Expense}&\\ \text{Utilities Expense}&1,700\\ \text{Supplies Expense}&\\ \text{Total}&\underline{\underline{\$95,700}}&\underline{\underline{\$95,700}}\\ \end{array}$$

Adjustment data at December 31, 2016: a. Depreciation on equipment, $1,600. b. Accrued Wages Expense,$1,000. c. Office Supplies on hand, $100. d. Prepaid Insurance expired during December,$200. e. Unearned Revenue earned during December, $4,400. f. Accrued Service Revenue,$800.

2017 transactions: a. On January 4, Mark's Motors paid wages of $1,200. Of this,$1,000 related to the accrued wages recorded on December 31. b. On January 10, Mark's Motors received $1,500 for Service Revenue. Of this,$800 related to the accrued Service Revenue recorded on December 31.

Requirements

1. Journalize adjusting entries.
2. Journalize reversing entries for the appropriate adjusting entries.
3. Refer to the 2017 data. Journalize the cash payment and the cash receipt that occurred in 2017.

The following account balances were taken from the adjusted trial balance for Shanghai Messenger Service, a delivery service firm, for the current fiscal year ended September 30, 2014:

$$\begin{array}{lrlr} \text { Depreciation Expense } & \$ 7,250 & \text { Rent Expense } & \$ 36,000 \\ \text { Fees Earned } & 440,000 & \text { Salaries Expense } & 265,150 \\ \text { Insurance Expense } & 1,200 & \text { Supplies Expense } & 2,200 \\ \text { Miscellaneous Expense } & 7,100 & \text { Utilities Expense } & 28,500 \end{array}$$

Prepare an income statement.

Claxon Company owns a machine with a cost of $305,000 and accumulated depreciation of$65,000 that can be sold for $262,000$, less a 5% sales commission. Alternatively, the machine can be leased by Claxon Company for three years for a total of $272,000, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Claxon Company on the machine would total$21,600 over the three years. Prepare a differential analysis on January 12 as to whether Claxon Company should lease (Alternative 1) or sell (Alternative 2) the machine.

A life insurance company needs a model to approximate the death rate of citizens during the years they are in the work force. The table gives the death rate $R$ per 1000 for individuals of age $x$. (Source: Department of Health and Human Services)

A model for these data is

$$\begin{aligned} & R=-91.1-6.313 x+0.035 x^2+45.794 \sqrt{x} \\ & 20 \leq x \leq 60 \end{aligned}$$

Use a graphing utility to plot the data and graph the model.

Inman Construction Company is considering selling excess machinery with a book value of $\$ 280,000$ (original cost of $\$ 400,000$ less accumulated depreciation of $\$ 120,000$ ) for $\$ 292,000$, less a $5 \%$ brokerage commission. Alternatively, the machinery can be leased for a total of $\$ 312,000$ for five years, after which it is expected to have no residual value. During the period of the lease, Inman Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $\$ 36,000$.

Prepare a differential analysis report, dated January $3$, $2010$, for the lease or sell decision.

On January 15, the end of the first pay period or the year. North Company's employees earned $35,000 of sales salaries. Withholdings from the employees' salaries include FICA Social Security taxes at the rate of 6.2%, FICA Medicare taxes at the rate or 1.45%,$6,500 of federal income taxes, $772.50 of medical insurance deductions, and$120 of union dues. No employee earned more than $7,000 in this first period. Prepare the journal entry to record North Company's January 15 salaries expense and related liabilities. (Round amounts to cents.)

Adams Co. reports the following balance sheet accounts as of December 31. Prepare a classified balance sheet.

Salaries payable                       $ 6,000
Buildings                               55,000
Prepaid rent                             7,000
Merchandise inventory                   14,000
Accounts payable                        10,000
Prepaid insurance                        3,000
Accounts receivable                      4,000
Common stock                            10,000
Retained earnings                       50,000
Notes payable {due in 9 years)          30,000
Office supplies                          2,000
Land                                    22,000
Accumulated depreciation-Building        5,000
Mortgages payable (due in 5 years)      12,000
Cash                                    16,000

$$\begin{matrix} \text{Estimated uncollectible accounts based} & \text{}\\ \text{on aging accounts receivable} & \text{\$ 3,796.00}\\ \text{Accrued interest income} & \text{80.00}\\ \text{Merchandise inventory} & \text{98,996.13}\\ \text{Supplies inventory} & \text{401.25}\\ \text{Jalue of prepaid insurance} & \text{600.00}\\ \text{Annual depreciation expense- equipment} & \text{7,345.00}\\ \text{Accrued interest expense} & \text{150.00}\\ \text{Prepaid rent income earned} & \text{2,000.00}\\ \end{matrix}$$

Post the adjusting entries to the T accounts.

A payroll register for Russell Company is provided in the Working Papers.

1. Complete the payroll register for the semimonthly pay period ended July 15, 20--. Use the federal income tax withholding tables in the previous lesson. Use tax rates of 6.2% for social security tax and 1.45% for medicare tax. Round dollar amounts to the nearest cent. Withhold $75.00 for health insurance and$30.00 for a Roth IRA for each employee. The voluntary deductions are not eligible to be deducted from total earnings to calculate payroll taxes.

Item X is a standard item stocked in a company's inventory of component parts. Each year, the firm, on a random basis, uses about $2,000$ of item X, which costs $\$ 25$ each. Storage costs, which include insurance and cost of capital, amount to $\$ 5$ per unit of average inventory. Every time an order is placed for more of item $X$, it costs $\$ 10$.

a. Whenever item X is ordered, what should the order size be?

b. What is the annual cost for ordering item X?

c. What is the annual cost for storing item X ?

The following unadjusted trial balance is for Power Demolition Company as of the end of its April 30, 2017, fiscal year. The April 30, 2016, credit balance of the owner's capital account was $46,900, and the owner invested$40,000 cash in the company during the 2017 fiscal year.

$$\begin{array}{c} \textbf{POWER DEMOLITION COMPANY}\\ \textbf{Unadjusted Trial Balance}\\ \textbf{June 30, 2017} \end{array}$$

Required

1. Prepare and complete a 10-column work sheet for fiscal year 2017, starting with the unadjusted trial balance and including adjustments based on these additional facts.
 a. The supplies available at the end of fiscal year 2017 had a cost of $7,900.
 b. The cost of expired insurance for the fiscal year is$10,600.
 c. Annual depreciation on equipment is $7,000.
 d. The April utilities expense of$650 is not included in the unadjusted trial balance because the bill arrived after the trial balance was prepared. The $800 amount owed needs to be recorded.
 e. The company's employees have earned$2,000 of accrued wages at fiscal year-end.
 f. The rent expense incurred and not yet paid or recorded at fiscal year-end is $3,000.
 g. Additional property taxes of$550 have been assessed for this fiscal year but have not been paid or recorded in the accounts.
 h. The long-term note payable bears interest at 12% per year. The unadjusted Interest Expense account equals the amount paid for the first 11 months of the 2017 fiscal year. The $300 accrued interest for April has not yet been paid or recorded. (The company is required to make a$10,000 payment toward the note payable during the 2018 fiscal year.)
2. Using information from the completed 10-column work sheet in part 1, journalize the adjusting entries and the closing entries.
3. Prepare the income statement and the statement of owner's equity for the year ended April 30 and the classified balance sheet at April 30, 2017.

Analysis Component
4. Analyze the following separate errors and describe how each would affect the 10-column work sheet. Explain whether the error is likely to be discovered in completing the work sheet and, if not, the effect of the error on the financial statements.
 a. Assume the adjusting entry to reflect expiration of insurance coverage for the period was recorded with a $2,000 credit to Prepaid Insurance and a$2,000 debit to Insurance Expense. The adjustment should have been for $10,600.
 b. When the adjusted trial balance in the work sheet was completed, assume that the$4,700 Repairs Expense account balance is extended to the Debit column of the Balance Sheet columns.