Monthly Archives: May 2014

Your accounts receivable clerk, Mary Herman, to whom you pay (A+ Guaranteed)

Your accounts receivable clerk, Mary Herman, to whom you pay a salary of $3,495 per month, has just purchased a new Audi. You decided to test the accuracy of the accounts receivable balance of $272,610 as shown in the ledger. … Continue reading

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Hinton Company is considering purchasing new equipment for $570,000 (A+ Guaranteed)

Hinton Company is considering purchasing new equipment for $570,000. It is expected that the equipment will produce annual net income of $66,500 over its 20-year useful life. Annual depreciation will be $28,500. Compute the cash payback period Here’s the SOLUTION

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Beamer Manufacturing incurs unit costs of $6 (A+ Guaranteed)

Beamer Manufacturing incurs unit costs of $6 ($5 variable and $1 fixed) in making a subassembly part for its finished product. A supplier offers to make 19,000 of the part at $6.10 per unit. If the offer is accepted, Beamer … Continue reading

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Knudsen Corporation was organized on January 1, 2013 (A+ Guaranteed)

Knudsen Corporation was organized on January 1, 2013. During its first year, the corporation issued 2,000 shares of $50 par value preferred stock and 109,600 shares of $10 par value common stock. At December 31, the company declared the following … Continue reading

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Wilson Co. purchased land as a factory site for $900,000 (A+ Guaranteed)

Wilson Co. purchased land as a factory site for $900,000. Wilson paid $80,000 to tear down two buildings on the land. Salvage was sold for $5,400. Legal fees of $3,480 were paid for title investigation and making the purchase. Architect’s … Continue reading

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Anderson Company uses the indirect method of preparing the Statement of Cash Flows (A+ Guaranteed)

Anderson Company uses the indirect method of preparing the Statement of Cash Flows and reports the following comparative balance sheet information. As customary, the most recent data is in the first column. Balance Sheets 12-31-2012 12-31-2011 Cash $50,000 $20,000 Inventory … Continue reading

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On August 1, 2011, Airport Company sold Paxton Company $1,000,000 (A+ Guaranteed)

On August 1, 2011, Airport Company sold Paxton Company $1,000,000 of 10-year, 6% bonds, dated July 1 at 100 plus accrued interest. On March 1, 2012, Paxton sold half of the bonds for $520,000 plus accrued interest. Present entries to … Continue reading

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Why did the SEC impose a temporary ban on short sales of specific stocks (A+ Guaranteed)

Ban on Short Selling – Why did the SEC impose a temporary ban on short sales of specific stocks in 2008? Do you think a ban on short selling is effective? Here’s the SOLUTION

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Your friend just told you about a penny stock he purchased (A+ Guaranteed)

Bid–Ask Spread of Penny Stocks – Your friend just told you about a penny stock he purchased, which increased in price from $0.10 to $0.50 per share. You start investigating penny stocks and, after conducting a large amount of research, … Continue reading

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Briefly describe the structure and role of the Securities and Exchange Commission (A+ Guaranteed)

SEC Structure and Role – Briefly describe the structure and role of the Securities and Exchange Commission (SEC). Here’s the SOLUTION

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