Regis University
Regis College Division of Business
AC 320B – Principles of Accounting II
Fall Term 2004
Instructor:
Phone:
E-Mail:
Web page:
J. Daniel Daly, S.J.
(303) 964-5113
jddaly@regis.edu
academic.regis.edu/ddaly
Office: Main Hall 214M
Hours: MF
9:00 a.m. – 10:15 a.m.
W
2:00 p.m. - 4:00 p.m.
TTh
1:30 p.m. – 3:00 p.m.
Principles of Accounting II is the second semester of the introductory accounting class. One
third of the class completes the broad overview of financial accounting begun in the first
semester. Topics considered include the sale of stock, the purchase of investments, and the
statement of cash flows. The remainder of the class provides an overview of managerial
accounting, which is concerned with the use of accounting information by managers for analysis,
planning and control. Topics in managerial accounting include product costing, cost-volumeprofit relationships, cash budgeting, profit planning, and performance evaluation.
The textbook used in this course is:
Weygandt, Jerry J., Donald E. Kieso, and Paul D. Kimmel. Accounting Principles, Sixth
Edition. (New York: John Wiley & Sons, Inc., 2002.)
Daily Assignments and Class Participation
A schedule of classes and assignments is provided on the following pages. In preparation for
class, students should read the assigned material, complete the written work, and prepare an
answer to the discussion question by the date indicated. During class students will be asked to
contribute to discussions, raise questions and explain their solutions to the assigned exercises.
Class Notes
PowerPoint slides used in class presentations are available on the web page listed above. These
slides are provided as an optional study aid; students are not required to have copies of the slides
for class. When printing the slides, it works best to request “Handouts” with 2 slides per page.
To save color ink, print using “Grayscale.”
Project
Each student will be asked to work as a member of a team in preparing a managerial accounting
project during the semester. Part 1 of the project is due November 3. Each team will meet with
the instructor to discuss the initial submission and to outline a plan for completing the project.
The entire project is due November 22. Teams will make project presentations to the class
December 1-3. A description of the project will be distributed later in the term. The project
provides students with an opportunity to apply accounting skills and insights to a business
problem that is more extensive and more complex than those found in the textbook exercises.
1
Quizzes
Eight quizzes will be given during the semester. Each quiz will cover the reading material,
written work, and discussion questions assigned for that class and the preceding class. For
example, the quiz on September 8 will cover the material assigned for September 3 and 8.
Students who are unable to take a quiz at the scheduled time due to a pre-excused absence
should arrange to take the quiz at another time. Absences are generally pre-excused for schoolsponsored activities, serious illnesses, and personal / family emergencies provided the student
talks with the instructor before the class begins. Students who miss the quiz without being
excused beforehand will not be able to make-up the quiz.
Exams
Two midterm examinations are scheduled during class time. The final exam schedule is:
Course
Class time
Final Exam Day
Final Exam Time
AC320B RU01
AC320B RU02
MWF 10:30
MWF 11:30
Friday, December 17
Friday, December 17
10:10 am – 12:10 am
8:00 am – 10:00 am
The exams will consist of multiple choice questions, problems, and short essays based on
assignments, lectures, and class discussions. The final exam will be cover all managerial
accounting material (covered after the first midterm exam) and will emphasize the last portion of
the class. Students unable to take an exam at the designated time must contact the instructor
before the exam and make alternative arrangements.
Accommodations for Students with Disabilities
A student with a documented disability requiring accommodations for this class should meet
with the director of Disability Services (303-458-4941). Following the meeting the student
should make an appointment with me to discuss the accommodation request. Students are
encouraged to self-disclose and request special arrangements as soon as possible because
accommodations are not provided retroactively and adequate lead-time is required.
Grades
In the determination of grades, the following weighting will be used:
First midterm examination
20%
Second midterm examination
20%
Final examination
20%
Quizzes
10%
Homework
10%
Project
10%
Attendance and participation
10%
In determining the quiz average, the lowest two quiz grades will be dropped. A missed quiz, for
which no prior arrangements have been made, counts as a zero.
2
Homework assignments will be collected on a random basis. Late assignments will not be
accepted. If a student fails to submit an assignment due to a pre-excused absence, that
assignment will be dropped in the determination of the homework grade. Otherwise, missed
assignments count as a zero.
A penalty will be assessed on the grades of those projects submitted late.
Attendance will be taken at the beginning of each class. Students that arrive to class after
attendance is taken will be marked absent.
Academic Integrity
Students are expected to maintain high standards of academic integrity in this class. Cheating on
a quiz or an exam is a serious violation of these standards. Cheating includes providing or
obtaining confidential information about a quiz or an exam to/from another student in Principles
of Accounting II.
Plagiarism is presenting work done by someone else as one’s own. Submitting a paper written
by someone else is a serious violation of academic integrity. Plagiarism also includes copying or
paraphrasing written material without proper attribution. Students should clearly distinguish
their own ideas from the ideas of someone else.
Students who violate integrity standards are likely to lose credit for the quiz, exam, or assignment
and may be prohibited from completing the course.
AC 320B – Principles of Accounting II
Fall Term 2004
Schedule of Assignments
Monday
8/30/04
Introduction
Wednesday
9/1/04
Chapter 14: Corporate Form of Organization & Issuance of Common Stock
READING
pp. 558-571
pp. 571-572
The Corporate Form of Organization (entire section)
Accounting for Common Stock Issues
Issuing Par Value Common Stock for Cash
WRITTEN
Q14-8, Q14-9, Q14-10, BE 14-2, E14-1 [Part (a) only]
QUESTION
Which of the following organizations would be more likely to form a corporation: an
architectural firm or an Internet startup? Explain.
3
Friday
9/3/04
Chapter 14: Treasury Stock, Preferred Stock, & Statement Presentation
READING
pp. 574-576
pp. 578-580
pp. 581-585
Accounting for Treasury Stock
Purchase of Treasury Stock
Preferred Stock
Dividend Preferences
Liquidation Preference
Statement Presentation and Analysis (entire section)
WRITTEN
Q14-7, Q14-14, E14-5, P14-5A
QUESTION
Scientific Enterprises has 6,000 shares of 10%, $80 par value, cumulative preferred stock
outstanding. What is the annual preferred dividend? Assume that there were no dividends in
arrears at the end of 2000 but that the company paid no dividends in 2001 and 2002. If
$100,000 in dividends are paid in 2003, how much of that will go to the preferred shareholders?
Wednesday
9/8/04
Chapter 15: Dividends and Stock Splits
READING
pp. 600-609
WRITTEN
Chapter 14: E14-11; Chapter 15: Q15-4, Q15-5, E15-1, E15-3, E15-4
QUESTION
Holiday Corporation had exceptionally high net income in 2003 and plenty of cash at the end of
the year. However, the company declared a cash dividend only slightly higher than the dividend
in 2002. What might have been the reason for not declaring a larger dividend?
Friday
9/10/04
Dividends (entire section)
Quiz #1
Chapter 15: Retained Earnings, Income Statement, Earnings per Share
READING
pp. 610-614
pp. 615-616
pp. 620-621
WRITTEN
Q15-15, Q15-22, E15-8, E15-10, E15-14, P15-1A [Part (a) only]
QUESTION
Illustration 15-8 shows that Amazon.com had a negative balance for Retained Earnings and a
positive balance for cash. How is that possible?
Monday
9/13/04
READING
Retained Earnings (entire section)
Corporate Income Statements (introductory material only)
Earnings per Share
EPS and Preferred Dividends
Chapter 16: Bonds
pp. 638-645
pp. 645-650
p. 653
Bond Basics (entire section)
Accounting for Bond Issues
Issuing Bonds at Face Value
Discount or Premium on Bonds
Issuing Bonds at a Discount (exclude amortizing discount)
Issuing Bonds at a Premium (exclude amortizing premium)
Accounting for Bond Retirements
Redeeming Bonds at Maturity
WRITTEN
Chapter 15: P15-3A [Parts (a) and (b) only]; Chapter 16: Q16-5, Q16-6, Q16-8, E16-1, E16-2
QUESTION
Which is a thief more likely to steal, registered bonds or bearer bonds? Explain.
4
Wednesday
9/15/04
Chapter 16: Other Long-term Liabilities; Analysis of Debt
READING
pp. 655-656
pp. 659
Accounting for Other Long-term Liabilities
Long-Term Notes Payable
Statement Presentation and Analysis (entire section)
WRITTEN
Q16-15, E16-3 [Part (a) only], E16-4 [Part (a) only], E16-7 [Prepare a installment payment
schedule similar to Illustration 16-18 for the first four payments and then prepare journal entries
as instructed.]
QUESTION
Suppose that the debt to total assets ratio for Lands’ End increases from 35% to 40%. Is this
good news or bad news for the company? What might have caused the increase?
Friday
9/17/04
Chapter 17: Investments and Basic Accounting
Why Corporations Invest (entire section)
Accounting for Debt Investments (entire section)
Accounting for Stock Investments
Holdings of Less than 20%
Quiz #2
READING
pp. 680-684
pp. 684-686
pp. 687-688
WRITTEN
Chapter 16: P16-4A; Chapter 17: E17-1, E17-2
QUESTION
Some corporations pay their CEOs unreasonably high salaries. Pension fund companies have
complained against this practice. Why would pension fund companies care what other firms are
doing? Why would these other firms listen to the pension fund companies?
Monday
9/20/04
Chapter 17: Investment Valuation & Reporting
READING
pp. 692-697
WRITTEN
Q17-13, Q17-14, E17-8, P17-3A
QUESTION
If your company had a large, unrealized loss on investments, would you rather record the loss to
income or to equity? Explain.
Wednesday
9/22/04
Valuing and Reporting Investments (entire section)
Chapter 18: The Statement of Cash Flows
READING
pp. 714-722
pp. 723-727
The Statement of Cash Flows: Purpose and Format (entire section)
Indirect Method: First Year of Operations (entire section)
WRITTEN
E18-1, E18-3
QUESTION
Simplicity Corporation had only three transactions for the entire year. The company paid wages
of $30,000, sold services on account for $50,000, and bought a car at the end of the year for
$15,000 cash. What is the total net income? What is the total increase or decrease in cash?
5
Friday
9/24/04
Chapter 18: Preparing the Statement of Cash Flows
READING
pp. 727-734
WRITTEN
Q18-13, E18-5 [Part (a) only], E18-6
QUESTION
Prepare the statement of cash flows (indirect method) for Simplicity Corp. described above.
Monday
9/27/04
Chapter 18: Analysis
READING
pp. 748-750
WRITTEN
E18-11, P18-5A
Wednesday
9/29/04
Review for midterm exam
Monday
10/4/04
Midterm Examination #1
Wednesday
10/6/04
Chapter 20: Overview of Managerial Accounting
READING
pp. 826-833
WRITTEN
Q20-1, Q20-13, E20-1, P20-1A
QUESTION
A sporting goods store is (1) losing customers because of poor service and (2) losing inventory
because of employee theft. How might accounting information direct the owner’s attention to
these two problems?
Second Year of Operations (entire section)
Quiz #3
Analysis of the Statement of Cash Flows (entire section)
Friday
10/8/04
Chapter 20: Cost Concepts
READING
pp. 834-839
WRITTEN
Q20-16, E20-5, E20-7, E20-10 [Part (a) only]
QUESTION
In a potato chip factory what are raw materials purchased, raw materials used, factory overhead,
work in process, and finished goods? How would the value of each of these be determined?
Monday
10/11/04
Chapter 20: Contemporary Developments
in Managerial Accounting
READING
pp. 839-843
WRITTEN
P20-4A
QUESTION
What information does Boeing need to decide how much to charge for a 737? What
information does a hospital need to decide how much to charge for a heart bypass operation?
Quiz #4
How is the JIT inventory method different from the conventional inventory method? Explain a
potential advantage and a potential disadvantage of JIT.
Sunbeam manufactures toasters. Do you think that Sunbeam tries to make toasters of the
highest possible quality? Why or why not?
6
Wednesday
10/13/04
Chapter 23: Cost Behavior Analysis
READING
pp. 944-952
WRITTEN
Q23-8, E23-1, E23-2
QUESTION
At Southwest Airlines, which costs are likely to increase in proportion to aircraft capacity?
Which costs are likely to increase in proportion to the number of passengers?
Friday
10/15/04
Chapter 23: Estimating Cost Functions
READING
Supplemental material
WRITTEN
Special Assignment
QUESTION
What are some of the advantages of graphing cost data?
Monday
10/18/04
Chapter 23: Cost-Volume-Profit Analysis
READING
pp. 953-960
WRITTEN
Q23-11, Q23-13, E23-3, E23-4, P23-1A
QUESTION
An entrepreneur has been packaging homemade chocolates for sale in early February. What
information does she need to determine the break-even point for her business?
Wednesday
10/20/04
Chapter 23: Target Net Income
READING
pp. 960-966
WRITTEN
Q23-16, E23-6, E23-7, P23-2A
QUESTION
An electronic components supplier plans to automate an assembly line. What impact will this
have on variable expenses, fixed expenses, and the break-even point?
Quiz #5
Friday
10/22/04
Chapter 21: Job Order Costing
READING
pp. 862-873
WRITTEN
Chapter 23: P23-3A; Chapter 21: E21-1, E21-2 [Do the following only: Prepare journal entries
for requisition sheets and time tickets]
QUESTION
A company manufactures custom-made windows. How does the company keep track of the
glass and the labor that go into each job?
7
Wednesday
10/27/04
Chapter 21: Overhead Application
READING
pp. 873-879
WRITTEN
E21-2 [complete the exercise], E21-8, P21-1A [Parts (a), (b), and (c) only]
QUESTION
A company manufactures custom-made windows. Each new batch of windows requires a new
set-up for the cutting and assembly machines. The company applies overhead to batches at
$1300 per set-up plus $2.20 per window. How did the manufacturer determine these rates?
Friday
10/29/04
Chapter 21: Reporting Job Cost Data
READING
pp. 879-884
WRITTEN
E21-5, P21-1A [complete the problem], P21-4A
QUESTION
What does it mean for a window manufacturer to overapply overhead during the year? How
does such a thing happen?
Monday
11/1/04
Quiz #6
Chapter 22: Just-in-Time Processing and Activity-Based Costing
READING
pp. 917-921
pp. 925-928
Contemporary Developments
Appendix: Case Example of ABC
WRITTEN
E22-11
QUESTION
A plant manager determines the following manufacturing costs per bag: potato chips=$0.33,
pretzels=$0.28. The company treasurer determines different amounts: potato chips=$0.35,
pretzels=$0.39. Who cares? What difference does it make?
The purpose of JIT process is to reduce or eliminate manufacturing inventories. What costs are
associated with keeping inventories on hand?
Illustration 22-25 lists a number of business activities. What are the costs associated with
ordering raw materials, machine setups, and machining?
Wednesday
11/3/04
Chapter 22: Activity-Based Costing (cont.)
WRITTEN
P22-7A
Friday
11/5/04
Review for midterm exam
Monday
11/8/04
Midterm Examination #2
8
Part 1 of Project Due
Wednesday
11/10/04
Chapter 24: Operating Budget
READING
pp. 980-992
WRITTEN
Q24-10, Q24-11, Q24-12, Q24-13, Q24-14, E24-2
Friday
11/12/04
Chapter 24: Cash Budget
READING
pp. 993-998
WRITTEN
Q24-18, E24-4, E24-5, E24-9
QUESTION
A ski resort in Utah prepares a budgeted income statement each September. All the resort’s
customers pay with cash or credit card. Is there any reason for the resort to prepare a cash
budget? Explain.
Monday
11/15/04
Chapter 24: Budgeting in Nonmanufacturing Companies
READING
pp. 998-1001
WRITTEN
P24-2A, P24-4A
QUESTION
In December, the manager of a courier service sets the monthly expense budgets for the
upcoming calendar year. The budgets are set equal to the actual expenses for November of the
current year. What’s wrong with this procedure?
Quiz #7
The director of a soft drink bottler will almost certainly earn a bonus this fiscal year (ending
March 31) because she is significantly under budget. Among other things, her purchases of
computers and supplies were far less than anticipated. What might she want to do before the
end of March? Explain.
Wednesday
11/17/04
Chapter 25: Budgetary Control
READING
pp. 1018-1029
WRITTEN
Q25-7, Q25-8, E25-1, E25-2 [Part (a) only]
Friday
11/19/04
Chapter 25: Budgetary Control (cont.)
READING
pp. 1029-1030
WRITTEN
E25-6, P25-1A [Part (a) only]
Monday
11/22/04
Chapter 25: Responsibility Accounting
READING
pp. 1030-1039
WRITTEN
E25-8, P25-3A [Parts (a) and (b) only], P25-4A
9
Part 2 of Project Due
Monday
11/29/04
Chapter 25: Measuring Performance
READING
pp. 1039-1045
WRITTEN
E25-10, P25-5A
QUESTION
For an Applebee’s Restaurant some marketing and purchasing decisions are best made by the
local manager. Others are best made by the corporate offices. Give an example of each.
The owner of a transmission repair shop pays the shop manager a small base salary plus a fixed
percentage of shop income. What are the advantages and disadvantages of this pay scheme?
Wednesday
12/1/04
Project Presentations
Friday
12/3/04
Project Presentations
Monday
12/6/04
Chapter 27: Management Decision-Making
READING
pp. 1102-1110
WRITTEN
E27-1, E27-2, E27-3
QUESTION
Two years ago a Littleton fitness center purchased 10 treadmills at a cost of $32,000. The
treadmills perform poorly and have required numerous repairs. They can be replaced with much
better ones for $58,000. What information is relevant in deciding whether or not to replace the
treadmills?
Wednesday
12/8/04
Chapter 27: Incremental Analysis
READING
pp. 1110-1114
WRITTEN
E27-4, E27-5, E27-6, P27-1A
QUESTION
An office furniture manufacturer sells a complete line of products in Colorado. Management of
the company is considering dropping office chairs from its product line since fierce competition
in this segment of the market keeps profit margins relatively low. What information should be
considered before making the decision?
Quiz #8
Friday
12/10/04
Chapter 27: Evaluating Capital Investments
READING
pp. 1114-1116 (including “Cash Payback”)
WRITTEN
E27-7, P27-3A[Parts (a) and (b) only]
QUESTION
A shoe manufacturer is planning to replace one of two identical machines, both purchased seven
years ago. One machine cost $300,000 and has accumulated depreciation of $210,000. The
other machine cost $320,000 and has accumulated depreciation of $224,000. Which machine
should be replaced if neither has any salvage value? Explain.
10