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Questions
Q:
The word best associated with price elasticity of demand isA) relative. B) total. C) absolute. D) cumulative.
Q:
On December 31, 2011, Paladium International purchased 70% of the outstanding common stock of Sennex Chemical. Paladium paid $140,000 for the shares and determined that the fair value of all recorded Sennex assets and liabilities approximated their book values, with the exception of a customer list that was not recorded and had a fair value of $10,000, and an expected remaining useful life of 5 years. At the time of purchase, Sennex had stockholders' equity consisting of capital stock amounting to $20,000 and retained earnings amounting to $80,000. Any remaining excess fair value was attributed to goodwill. The separate financial statements at December 31, 2012 appear in the first two columns of the consolidation workpapers shown below.Required:Complete the consolidation working papers for Paladium and Sennex for the year 2012.Paladium
Q:
Parrot Corporation acquired 90% of Swallow Co. on January 1, 2011 for $27,000 cash when Swallow's stockholders' equity consisted of $10,000 of Capital Stock and $5,000 of Retained Earnings. The difference between the fair value and book value of Swallow's net assets was allocated solely to a patent amortized over 5 years. The separate company statements for Parrot and Swallow appear in the first two columns of the partially completed consolidation working papers.Required:Complete the consolidation working papers for Parrot and Swallow for the year 2011.
Q:
According to economic analysis, the optimal quantity of pollution exists at the point at which the
A) total benefit of pollution control is equal to the total cost.
B) marginal benefit of pollution control is equal to the marginal cost.
C) level of pollution is at zero.
D) level of pollution is acceptable to the society.
Q:
When preparing the consolidation workpaper for a company and its controlled subsidiary, which of the following would be used for the entities being consolidated?
A) Post-closing trial balances
B) Adjusted trial balances
C) Unadjusted trial balances
D) The adjusted trial balance for the parent and the unadjusted trial balance for all controlled subsidiaries
Q:
Which of the following groups of U.S. residents would likely qualify for SSI benefits?A) college students B) incarcerated murderersC) the disabled D) new federal retirees
Q:
In a bilateral monopoly, the wage rate that is determined in the marketA) is equal to MFC. B) is equal to MRP. C) is indeterminate.D) is the same as in a perfectly competitive market.
Q:
When preparing consolidated financial statements, which of the following is a subtraction in the calculation of cash flows from operating activities under the indirect method?
A) The change in the balance sheet of the common stock account
B) Noncontrolling interest dividends paid
C) Noncontrolling interest share
D) Undistributed income of equity investees
Q:
Maria Sanchez began business as Sanchez Law Firm on November 1. Record the following November transactions by making entries directly to the T-accounts provided. Then, prepare a trial balance, as of November 30.a) Sanchez invested $15,000 cash and a law library valued at $6,000.b) Purchased $7,500 of office equipment from Johnson Bros. on credit.c) Completed legal work for a client and received $1,500 cash in full payment.d) Paid Johnson Bros. $3,500 cash in partial settlement of the amount owed.e) Completed $4,000 of legal work for a client on credit.f) Sanchez withdrew $2,000 cash for personal use.g) Received $2,500 cash as partial payment for the legal work completed for the client in (e).h) Paid $2,500 cash for the legal secretary's salary.
Q:
Collective bargaining in the United States typically involves negotiations betweenA) the government and management over the minimum wage law.B) the management of a company and the leaders of the union over the wages and fringe benefits to be offered.C) an individual and her boss over the appropriate salary level. D) union and nonunion employees regarding work rules.
Q:
In contrast with single entity organizations, consolidated financial statements include which of the following in the calculation of cash flows from operating activities under the indirect method?
A) Cash paid to employees
B) Noncontrolling interest dividends paid
C) Noncontrolling interest share
D) Proceeds from the sale of land
Q:
Which of the following statements is not true with respect to the statement of cash flows for a consolidated entity?
A) The statement may be prepared using either the direct or the indirect method.
B) Noncontrolling interest share will be added back to cash flows from operating activities under the indirect method.
C) Payment of dividends from the subsidiary to the parent will appear on the statement of cash flows as a financing activity.
D) If the subsidiary does not use the same method (direct or indirect) as the parent, they must convert their separate statement of cash flows first to the same method that the parent uses, and then the two statements are consolidated.
Q:
Leonard Matson completed these transactions during December of the current year:Prepare general journal entries to record these transactions.
Q:
Suppose that in a computer factory, if there is 1 worker, 80 computers are produced per week.If there are 2 workers, 150 computers are produced per week. If there are 3 workers, 210 computers are produced per week. Given this information and the fact that the firm receives $200 per computer, the marginal revenue product of the third worker isA) $4,200. B) $12,000. C) $10,000. D) $14,000.
Q:
Suppose OSHA requires a factory to install specific safety equipment to reduce the number of injuries in the factory. Would the number of accidents necessarily decline? Why or why not?
Q:
Which one of the following will increase consolidated retained earnings?
A) An increase in the value of goodwill associated with a subsidiary subsequent to the parent's date of acquisition
B) The amortization of a $10,000 excess in the fair value of a note payable over its recorded book value
C) The depreciation of a $10,000 excess in the fair value of equipment over its recorded book value
D) The sale of inventory by a subsidiary that had a $10,000 excess in fair value over recorded book value on the parent's date of acquisition
Q:
Flora Accounting Services completed these transactions in February:a. Purchased office supplies on account, $300.b. Completed work for a client on credit, $500.c. Paid cash for the office supplies purchased in (a).d. Completed work for a client and received $800 cash.e. Received $500 cash for the work described in (b).f. Received $1,000 from a client for accounting services to be performed in March.Prepare journal entries to record the above transactions. Explanations are not necessary.
Q:
Refer to the above payoff matrix for the profits (in $ millions) of two firms (X and Y) and two product formats (A and B) in an industry. A possible outcome of the dominant strategy is:A) Both firm X and firm Y choose product format A. B) Both firm X and firm Y choose product format B.C) Firm X would be willing to choose product format A as long as firm Y simultaneously would be willing to choose format A.D) Firm X would be willing to choose product format A, while firm Y simultaneously would be willing to choose format B.
Q:
On consolidated working papers, a subsidiary's net income is
A) deducted from beginning consolidated retained earnings.
B) deducted from ending consolidated retained earnings.
C) allocated between the noncontrolling interest share and the parent's share.
D) only an entry in the parent company's general ledger.
Q:
Krenz Car Care, owned and operated by Karl Krenz, began business in September of the current year. Karl, a master mechanic, had no experience with keeping a set of books. As a result, Karl entered all of September's transactions directly to the ledger accounts. When he tried to locate a particular entry he found it confusing and time consuming. He has hired you to improve his accounting procedures. The accounts in his General Ledger follow:Prepare the general journal entries, in chronological order (a) through (e), from the T-account entries shown. Include a brief description of the probable nature of each transaction.
Q:
Pigeon Corporation acquired an 80% interest in Statue Company on January 1, 2011, for $90,000 cash when Statue had Capital Stock of $60,000 and Retained Earnings of $40,000. The fair value/book value differential was attributable to equipment with a 10-year (straight-line) life. Statue suffered a $10,000 net loss in 2011 and paid no dividends. At year-end 2011, Statue owed Pigeon $18,000 on account. Pigeon's separate income for 2011 was $150,000. Controlling interest share of consolidated net income for 2011 was
A) $140,000.
B) $141,000.
C) $142,000.
D) $150,000.
Q:
Which of the following is NOT a common characteristic of oligopoly?
A) strategic dependence among firms in the industry
B) product differentiation
C) barriers to entry
D) marginal cost pricing.
Q:
On February 5, Textron Stores purchased a van that cost $35,000. The firm made a down payment of $5,000 cash and signed a long-term note payable for the balance. Show the general journal entry to record this transaction.
Q:
A parent company uses the equity method to account for its wholly-owned subsidiary, but has applied it incorrectly. In each of the past four full years, the company adjusted the Investment account when it received dividends from the subsidiary but did not adjust the account for any of the subsidiary's profits. The subsidiary had four years of profits and paid yearly dividends in amounts that were less than reported net incomes. Which one of the following statements is correct if the parent company discovered its mistake at the end of the fourth year, and is now preparing consolidation working papers?
A) The parent company's Retained Earnings will be increased by the cumulative total of four years of subsidiary profits.
B) The parent company's Retained Earnings will be increased by the cumulative total of the first three years of subsidiary profit, and the Subsidiary Income account will be increased by the profit for the current year.
C) The parent company's Subsidiary Income account will be increased by the cumulative total of four years of subsidiary profits.
D) A prior period adjustment must be recorded for the cumulative effect of four years of accounting errors.
Q:
Advertising is used by firms in a monopolistic competitive industry to
A) differentiate their product from those of competitors.
B) increase brand loyalty.
C) increase demands for their individual products.
D) all of the above
Q:
On December 3, the Matador Company paid $5,400 cash in salaries to office personnel. Prepare the general journal entry to record this transaction.
Q:
PQTC$1310$8$1215$30$1120$68$1025$128$930$208$835$308Refer to the above table. Given the demand and cost schedules, what is the profit -maximizing price for this monopolist?A) $13 B) $12 C) $11 D) $10
Q:
At the beginning of 2011, Parling Food Services acquired a 90% interest in Simmons' Orchards when Simmons' book values of identifiable net assets equaled their fair values. On December 26, 2011, Simmons declared dividends of $50,000, and the dividends were unpaid at year-end. Parling had not recorded the dividend receivable at December 31. A consolidated working paper entry is necessary to
A) enter $50,000 dividends receivable in the consolidated balance sheet.
B) enter $45,000 dividends receivable in the consolidated balance sheet.
C) reduce the dividends payable account by $45,000 in the consolidated balance sheet.
D) eliminate the dividend payable account from the consolidated balance sheet.
Q:
A business paid $100 cash to Karen Smith (the owner of the business) for her personal use. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.
Q:
When performing a consolidation, if the balance sheet does not balance,
A) that indicates that the Investment in Subsidiary account on the parent's books should not be adjusted to -0-, because there is excess value represented in the investment.
B) it is usually because of the noncontrolling interest, as these amounts do not appear on the companies' general ledgers.
C) the debit and credit totals of the adjusting/eliminating columns of the consolidation working paper should be checked to confirm that they balance, and if so, then there is no need to check the individual line items.
D) the amount that it is "off" will always equal the noncontrolling interest in the current year net income of the subsidiary.
Q:
If a firm is earning short-run economic profits shown in the above figure, in the long runA) firms exit the industry, the market supply curve shifts rightward, and the market price falls.B) firms enter the industry, the market supply curve shifts rightward, and the market price falls.C) firms exit the industry, the market supply curve shifts leftward, and the market price falls.D) firms enter the industry, the market supply curve shifts rightward, and the market price rises.
Q:
A company paid $2,500 cash to satisfy a previously recorded account payable. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.
Q:
Bird Corporation has several subsidiaries that are included in its consolidated financial statements and several other investments in corporations that are not consolidated. In its year-end trial balance, the following intercompany balances appear. Ostrich Corporation is the unconsolidated company; the rest are consolidated.
Due from Pheasant Corporation $25,000
Due from Turkey Corporation 5,000
Cash advance to Skylark Company 8,000
Cash advance to Starling 15,000
Current receivable from Ostrich 10,000
What amount should Bird report as intercompany receivables on its consolidated balance sheet?
A) $0
B) $10,000
C) $30,000
D) $63,000
Q:
Which of the following is true for the perfectly competitive firm?A) Price and MR are always equal. B) AR is less than price.C) AR is more than price. D) Price elasticity of demand is equal to 1.
Q:
A company sends a $1,500 bill to a customer for delivery services rendered. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.
Q:
As a firm continues to produce additional output, which of the following will continue to decline as output expands?A) average total costs B) marginal costsC) average fixed costs D) opportunity costs
Q:
Use the following information to answer question(s) below.On January 1, 2011, Punch Corporation purchased 80% of the common stock of Soopy Co. Separate balance sheet data for the companies at the acquisition date(after the acquisition) are given below:Punch SoopyCash $34,000 $206,000Accounts Receivable 144,000 26,000Inventory 132,000 38,000Land 68,000 32,000Plant assets 700,000 300,000Accum. Depreciation (240,000) (60,000)Investment in Soopy 392,000Total assets $ 1,230,000 $ 542,000Accounts payable $206,000 $142,000Capital stock 800,000 300,000Retained earnings 224,000 100,000Total liabilities & equities $ 1,230,000 $ 542,000At the date of the acquisition, the book values of Soopy's net assets were equal to the fair value except for Soopy's inventory, which had a fair value of $60,000.Determine below what the consolidated balance would be for each of the requested accounts.What is the amount of total assets?A) $1,380,000B) $1,402,000C) $1,470,000D) $1,875,000
Q:
Dolly Barton began Barton Office Services in October and during that month completed these transactions:a. Invested $10,000 cash, and $15,000 of computer equipment.b. Paid $500 cash for an insurance premium covering the next 12 months.c. Completed a word processing assignment for a customer and collected $1,000 cash.d. Paid $200 cash for office supplies.e. Paid $2,000 for October's rent.Prepare journal entries to record the above transactions. Explanations are unnecessary.
Q:
Efficient markets theory suggests that purchasing the published reports of financial analystsA) is likely to increase oneʹs returns by an average of 5 percent.B) is likely to increase oneʹs returns by an average of about 3 to 5 percent.C) is not likely to increase financial returns.D) will increase financial returns in the first year but not in following years.
Q:
The following is a list of accounts and identification letters A through J for Shannon Management Co.:Use the form below to identify the type of account and its normal balance. The first item is filled in as an example.
Q:
The most likely source of investment funds for a proprietorship isA) sales of stocks. B) sales of bonds.C) loans from banks. D) the personal funds of the owner.
Q:
Indicate whether a debit or credit entry would be made to record the following changes in each account.
a. To decrease Cash
b. To increase Owner, Capital
c. To decrease Accounts Payable.
d. To increase Salaries Expense.
e. To decrease Supplies.
f. To increase Revenue.
g. To decrease Accounts Receivable.
h. To increase Owner, Withdrawals.
Q:
In a map showing three indifference curves a consumer is most well off onA) the curve which is closest to the origin of the coordinate axes.B) the curve which is most farther away from the coordinate axes. C) The curve that is in the middle.D) none of the above
Q:
Identify each of the following items would likely serve as a source document by marking an X in the appropriate column. The first one is done as an example
Q:
If marginal utility is negative,A) total utility increases at a decreasing rate.B) the consumer considers extra units of the commodity to be a ʺbad.ʺC) the consumer will want to consume the unit only if it is free.D) the consumer likes the commodity, but not as much as he or she once did.
Q:
Describe the link between the income statement, the statement of owner's equity, and the balance sheet.
Q:
If personal computer prices rise by 1 percent, we would expect the number of color printers purchased toA) increase. B) decrease.C) be equal to ten. D) be equal to one.
Q:
What is a trial balance? What is its purpose?
Q:
The responsiveness of quantity demanded of a good to changes in its price is the A) cross elasticity of demand. B) price elasticity of supply. C) income elasticity. D) price elasticity of demand.
Q:
A parent corporation owns 55% of the outstanding voting common stock of one domestic subsidiary. The parent has control over the subsidiary. Which of the following statements is correct?
A) The parent corporation must prepare consolidated financial statements for the economic entity.
B) The parent corporation must use the fair value method.
C) The parent company may use the equity method but the subsidiary cannot be consolidated.
D) The parent company can use the equity method or the fair value/cost method.
Q:
Explain the recording and posting processes.
Q:
A parent company uses the equity method to account for its wholly-owned subsidiary. Which of the following will be a correct procedure for the Investment account?
A) A debit for a subsidiary loss and a credit for dividends received
B) A credit for subsidiary income and a debit for dividends received
C) A debit for subsidiary dividends received and a credit for a subsidiary loss
D) A credit for a subsidiary loss and a credit for dividends received
Q:
In the above figure, if a firm is cleaning up Q3 units of pollution, it is anA) efficient solution because marginal social benefits are greater than marginal social costs.B) efficient solution because marginal social benefits are equal to marginal social costs.C) inefficient solution because marginal social benefits are greater than marginal social costs.D) inefficient solution because marginal social costs are greater than marginal social benefits.
Q:
Explain the debt ratio and its use in analyzing a company's financial condition.
Q:
The USDA threshold income level was originally based on the cost ofA) housing. B) transportation.C) basic clothing. D) a nutritionally adequate food plan.
Q:
Which of the following will be debited to the Investment account when the equity method is used?
A) Investee net losses
B) Investee net profits
C) Investee declaration of dividends
D) Depreciation of excess purchase cost attributable to investee equipment
Q:
Explain debits and credits and their role in the accounting system.
Q:
The MFC curveA) lies below the labor supply curve, when the labor supply curve is upward sloping.B) lies above the labor supply curve, when the labor supply curve is upward sloping. C) is the labor supply curve.D) is parallel to the labor supply curve, when the labor supply curve is downward sloping.
Q:
Pattalle Co purchases Senday, Inc. on January 1 of the current year for $70,000 more than the fair value of Senday's net assets. Push-down accounting is used. At that date, the following values exist:Requirement: Determine what amounts will appear in the listed accounts on Pattalle's general ledger, on Senday's general ledger, and on the consolidated balance sheet immediately following the acquisition. Make sure you post the entry to record the investment on Pattalle's books.
Q:
Explain the difference between a ledger and a chart of accounts.
Q:
On January 1, 2011, Pinnead Incorporated paid $300,000 for an 80% interest in Shalle Company. At that time, Shalle's total book value was $300,000. Patents were undervalued in the amount of $10,000. Patents had a 5-year remaining useful life, and any remaining excess value was attributed to goodwill. The income statements for the year ended December 31, 2011 of Pinnead and Shalle are summarized below:
Pinnead Shalle
Sales $800,000 $300,000
Income from Shalle 78,400
Cost of sales (100,000) (100,000)
Depreciation (70,000) (30,000)
Other Expenses (130,000) (70,000)
Net Income $578,400 $100,000
Requirements:
1. Calculate the goodwill that will appear in the consolidated balance sheet of Pinnead and Subsidiary at December 31, 2011.
2. Calculate consolidated net income for 2011.
3. Calculate the noncontrolling interest share for 2011.
Q:
According to the text, private sector union membership has fallen toA) about 8 percent of the private -sector labor force. B) zero.C) about 25 percent of all U.S. workers.D) about 12 percent of the entire workforce.
Q:
Explain how accounts are used in recording information about transactions.
Q:
Petra Corporation paid $500,000 for 80% of the outstanding voting common stock of Sizable Corporation on January 2, 2011 when the book value of Sizable's net assets was $460,000. The fair values of Sizable's identifiable net assets were equal to their book values except as indicated below.
Book Fair
Value Value
Inventories (sold in 2011) $80,000 $112,000
Buildings-net (15-year life) 200,000 170,000
Note Payable (paid in 2011) 20,000 21,250
Sizable reported net income of $75,000 during 2011; dividends of $35,000 were declared and paid during the year.
Required:
1. Prepare a schedule to allocate the fair value/book value differential to the specific identifiable assets and liabilities.
2. Determine Petra's income from Sizable for 2011.
3. Determine the correct balance in the Investment in Sizable account as of December 31, 2011.
Q:
Suppose that in a computer factory, if there is 1 worker, 80 computers are produced per week.If there are 2 workers, 150 computers are produced per week. If there are 3 workers, 210 computers are produced per week. Given this information, the marginal product of the third worker isA) 210 computers per week. B) 70 computers per week. C) 60 computers per week. D) 50 computers per week.
Q:
Describe source documents and their purpose.
Q:
Passcode Incorporated acquired 90% of Safe Systems International for $540,000, the market value at that time. On the date of acquisition, Safe Systems showed the following balances on their ledger:
Book Value Fair Value
Current Assets $200,000 $200,000
Buildings 290,000 320,000
Equipment 410,000 430,000
Liabilities (350,000) (360,000)
Safe Systems has determined that their buildings have a remaining life of 10 years, and their equipment has a remaining useful life of 8 years.
Requirement 1: Calculate the amount of goodwill that will appear on the general ledger of Passcode and Safe Systems, as well as the amount that will appear on the consolidated financial statements.
Requirement 2: Calculate the amount of amortization that will appear on the consolidated financial statements for buildings and equipment, and explain how this amortization of excess fair value is shown on the separate general ledgers of Passcode and Safe Systems.
Q:
How does social regulation differ from economic regulation?
Q:
List the steps in processing transactions.
Q:
Pool Industries paid $540,000 to purchase 75% of the outstanding stock of Swimmin Corporation, on December 31, 2011. Any excess fair value over the identified assets and liabilities is attributed to goodwill. The following year-end information was available just before the purchase:Using the data provided above, assume that Pool decided rather than paying $540,000 cash, Pool issued 10,000 shares of their own stock to the owners of Swimmin. At the time of issue, the $10 par value stock had a market value of $60 per share.Required: Prepare Pool's consolidated balance sheet on December 31, 2011.
Q:
David Roberts is a real estate appraiser. Shown below are (a) several accounts in his ledger with each account preceded by an identification number, and (b) several transactions completed by Roberts. Indicate the accounts debited and credited when recording each transaction by placing the proper account identification numbers to the right of each transaction.
Q:
An industry battle between incompatible product formats can occur if competing firms selling compatible products
A) take into account network effects.
B) fail to take into account network effects.
C) take into account economies of scale.
D) fail to take into account economies of scale.
Q:
Patterson Company acquired 90% of Starr Corporation on January 1, 2011 for $2,250,000. Starr had net assets at that time with a fair value of $2,500,000. At the time of the acquisition, Patterson computed the annual excess fair-value amortization to be $20,000, based on the difference between Starr's net book value and net fair value. Assume the fair value exceeds the book value, and $20,000 pertains to the whole company. Separate from any earnings from Starr, Patterson reported net income in 2011 and 2012 of $550,000 and $575,000, respectively. Starr reported the following net income and dividend payments:
2011 2012
Net Income $150,000 $180,000
Dividends $30,000 $30,000
Required: Calculate the following:
Investment in Starr shown on Patterson's ledger at December 31, 2011 and 2012.
Investment in Starr shown on the consolidated statements at December 31, 2011 and 2012.
Consolidated net income for 2011 and 2012.
Noncontrolling interest balance on Patterson's ledger at December 31, 2011 and 2012.
Noncontrolling interest balance on the consolidated statements at December 31, 2011 and 2012.
Q:
Vicki Lake is a computer consultant. Shown below are (a) several accounts in her ledger with each account preceded by an identification number, and (b) several transactions completed by Lake. Indicate the accounts debited and credited when recording each transaction by placing the proper account identification numbers to the right of each transaction.
Q:
An oligopoly is a market situation in whichA) there are many firms producing differentiated products.B) there is a single firm producing several varieties of a product. C) all the sellers act independently of the others.D) there are very few sellers and they recognize their strategic dependence on one another.
Q:
Polaris Incorporated purchased 80% of The Solar Company on January 2, 2011, when Solar's book value was $800,000. Polaris paid $700,000 for their acquisition, and the fair value of noncontrolling interest was $175,000. At the date of acquisition, the fair value and book value of Solar's identifiable assets and liabilities were equal. At the end of the year, the separate companies reported the following balances:
Polaris Solar
Current assets 5,700,000 1,250,000
Plant & equipment 15,200,000 3,400,000
Investment in Solar 780,000 0
Goodwill 0 0
Current liabilities 3,600,000 950,000
Long-term debt 11,680,000 2,800,000
Stockholder's Equity 6,400,000 900,000
Requirement 1: Calculate consolidated balances for each of the accounts as of December 31, 2011.
Requirement 2: Assuming that Solar has paid no dividends during the year, what is the ending balance of the noncontrolling interest in the subsidiary?
Q:
The following accounts appear on either the Income Statement (IS) or Balance Sheet (BS). In the space provided next to each account write the letters, IS or BS, that identify the statement on which the account appears.1. Owner, Capital2. Wages Payable3. Cash4. Rent Expense5. Unearned Fees Revenues6. Accounts Payable7. Office Equipment8. Notes Receivable9. Rent Expense10. Fees Revenue
Q:
When Crest claims that its toothpaste product whitens teeth more than the products of its competitors, Crest is practicingA) product differentiation. B) libel.C) marginal revenue pricing. D) marginal cost pricing.
Q:
The consolidated balance sheet of Pasker Corporation and Shishobee Farm, its 80% owned subsidiary, as of December 31, 2011, contains the following accounts and balances:
Pasker Corporation and Subsidiary
Consolidated Balance Sheet
at December 31, 2011
Balances
Cash $57,000
Accounts receivable-net 210,000
Inventories 330,000
Other current assets 255,000
Plant assets-net 870,000
Goodwill from consolidation 117,000
$1,839,000
Accounts payable $219,000
Other liabilities 210,000
Capital stock 1,050,000
Retained earnings 240,000
Noncontrolling interest 120,000
$1,839,000
Pasker Corporation acquired its interest in Shishobee Farm on January 1, 2011, when Shishobee Farm had $450,000 of Capital Stock and $210,000 of Retained Earnings. Shishobee Farm's net assets had fair values equal to their book values when Pasker acquired its interest. No changes have occurred in the amount of outstanding stock since the date of the business combination. Pasker uses the equity method of accounting for its investment.
Required: Determine the following amounts:
1. The balance of Pasker's Capital Stock and Retained Earnings accounts at December 31, 2011.
2. Cost of Pasker's purchase of Shishobee Farm on January 1, 2011.
Q:
Identify each of the following accounts as a revenue (R), expense (E), asset (A), liability (L), or equity (OE) by placing initials (R,E,A,L or OE) in the blanks.1. Unearned Fee Revenue2. Fees Revenue3. Owner, Capital4. Supplies5. Salary Expense6. Cash7. Accounts Receivable8. Prepaid Insurance9. Accounts Payable10. Office Furniture11. Equipment12. Owner, Withdrawals