COST ACCOUNTING
16th Edition
ISBN: 9781323169261
Author: Horngren
Publisher: PEARSON C
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Chapter 13, Problem 13.2Q
“Relevant costs for pricing decisions are full costs of the product.” Do you agree? Explain.
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Indigo Corporation purchased for $277,000 a 30% interest in Murphy, Inc. This investment enables Indigo to exert significant
influence over Murphy. During the year, Murphy earned net income of $183,000 and paid dividends of $64,000.
Prepare Indigo's journal entries related to this investment. (List all debit entries before credit entries. Credit account titles are automatically
indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the
amounts.)
Account Titles and Explanation
(To record the purchase.)
(To record the net income.)
(To record the dividend.)
Debit
Credit
Indigo Corporation purchased for $277,000 a 30% interest in Murphy, Inc. This investment enables Indigo to exert significant
influence over Murphy. During the year, Murphy earned net income of $183,000 and paid dividends of $64,000.
Prepare Indigo's journal entries related to this investment. (List all debit entries before credit entries. Credit account titles are automatically
indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the
amounts.)
Account Titles and Explanation
(To record the purchase.)
(To record the net income.)
(To record the dividend.)
Debit
Credit
Cheyenne Corporation purchased 400 shares of Sherman Inc. common stock for $12,900 (Cheyenne does not have significant
influence). During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $37.00 per
share.
Prepare Cheyenne' journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value
adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (List all debit entries before credit entries. Credit account titles
are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and
enter O for the amounts.)
No. Account Titles and Explanation
(a)
Debt Investments
Cash
(b)
Cash
Dividend Revenue
(c)
Fair Value Adjustment
Unrealized Holding Gain or Loss - Income
Debit
Credit
Chapter 13 Solutions
COST ACCOUNTING
Ch. 13 - What are the three major influences on pricing...Ch. 13 - Relevant costs for pricing decisions are full...Ch. 13 - Describe four purposes of cost allocation.Ch. 13 - How is activity-based costing useful for pricing...Ch. 13 - Describe two alternative approaches to long-run...Ch. 13 - What is a target cost per unit?Ch. 13 - Describe value engineering and its role in target...Ch. 13 - Give two examples of a value-added cost and two...Ch. 13 - It is not important for a company to distinguish...Ch. 13 - Prob. 13.10Q
Ch. 13 - Describe three alternative cost-plus pricing...Ch. 13 - Give two examples in which the difference in the...Ch. 13 - What is life-cycle budgeting?Ch. 13 - What are three benefits of using a product...Ch. 13 - Prob. 13.15QCh. 13 - Which of the following statements regarding price...Ch. 13 - Value-added, non-value-added costs. The Magill...Ch. 13 - Target operating income, value-added costs,...Ch. 13 - Target prices, target costs, activity-based...Ch. 13 - Target costs, effect of product-design changes on...Ch. 13 - Target costs, effect of process-design changes on...Ch. 13 - Cost-plus target return on investment pricing....Ch. 13 - Cost-plus, target pricing, working backward....Ch. 13 - Life-cycle budgeting and costing. Arnold...Ch. 13 - Considerations other than cost in pricing...Ch. 13 - Cost-plus, target pricing, working backward. The...Ch. 13 - Value engineering, target pricing, and target...Ch. 13 - Target service costs, value engineering,...Ch. 13 - Cost-plus, target return on investment pricing....Ch. 13 - Cost-plus, time and materials, ethics. C S...Ch. 13 - Cost-plus and market-based pricing. Georgia Temps,...Ch. 13 - Cost-plus and market-based pricing. (CMA, adapted)...Ch. 13 - Life-cycle costing. Maximum Metal Recycling and...Ch. 13 - Airline pricing, considerations other than cost in...Ch. 13 - Prob. 13.35PCh. 13 - Ethics and pricing. Instyle Interior Designs has...Ch. 13 - Value engineering, target pricing, and locked-in...
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- Crane Corporation purchased 360 shares of Sherman Inc. common stock for $11,800 (Crane does not have significant influence). During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $34.50 per share. Prepare Crane' journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) No. Account Titles and Explanation Debit Credit (a) (b) (c)arrow_forwardIndigo Corporation purchased trading investment bonds for $65,000 at par. At December 31, Indigo received annual interest of $2,600, and the fair value of the bonds was $62,200. Prepare Indigo' journal entries for (a) the purchase of the investment, (b) the interest received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) No. Account Titles and Explanation Debit Credit (a) (b) (c)arrow_forwardSwifty Corporation purchased trading investment bonds for $40,000 at par. At December 31, Swifty received annual interest of $1,600, and the fair value of the bonds was $37,600. Prepare Swifty' journal entries for (a) the purchase of the investment, (b) the interest received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) No. Account Titles and Explanation Debit Credit (a) (b) (c)arrow_forward
- about investment securities owned by a company, what do we mean by “significant influence”?arrow_forwardwhat is the working capital?arrow_forwardStatement of Financial position as at September 30 for 2023 and 2024 Assets 2023 2024 Cash and equivalents………………………………………. $56,100 $37,694 Receivables, Trade, less allowances of $1,104 and $991 respectively 47,753 37,645 Other Receivables…………………………………………………… 233 516 Inventories…………………………………………………………… 29,587 23,202 Prepaid expenses and other………………………………………….. 4,739 4,143 Total current assets…………………………………………………... 138,412 103,200 Property, plant and equipment, at cost………………………………. 314,880 298,609 Less accumulated depreciation………………………………………. (225,406) (211,494) Property, plant and equipment net…………………………………… 89,474 87,115 Other assets Goodwill……………………………………………………………...…arrow_forward
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Pricing Decisions; Author: Rutgers Accounting Web;https://www.youtube.com/watch?v=rQHbIVEAOvM;License: Standard Youtube License