Tag Archives: teaching accounting

How would Kraft account for the contingent liability arising from a class action lawsuit alleging that it takes more than the advertised 3 ½ minutes to prepare Velveeta Microwaveable Shells & Cheese cups?

On the packaging of Velveeta Microwaveable Shells & Cheese cups, it says that it takes three and a half minutes to cook to the right consistency of cheese. However, for one upset Florida woman, it seems to be untrue. According to the South Florida Sun-Sentinel, Amanda Ramirez has filed a proposed class-action lawsuit accusing Kraft […]

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How does shifting the sales mix at Ford Motor Company to more F-150 trucks affect Ford’s break even sales volume?

Ford Motor Company (FORD) sales jumped 31.5 % during June 2022 in the United States as compared to the prior month. Sales of Ford’s F-series trucks and the Explorer, Expedition, and Navigator SUV models drove the sales growth. According to a Bloomberg article (link) earlier this year, the F-150 Series product line is Ford’s most […]

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What impact do higher fuel costs and other changes have on American Airline’s break even point?

American Airlines Group (AAL), the world’s biggest airline, posted a loss in the first quarter of 2022, but expects to return to profitability as early as the second quarter of 2022. Despite the large profit, airlines have been experiencing a large increase in the cost of oil. The price of oil has risen during 2022; […]

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What expenditures would have been capitalized versus expensed in converting a church building to Belltower Brewing Co.?

What expenditures would have been capitalized versus expensed in converting a church building to Bell Tower Brewing Co.? The owners of Bell Tower Brewing Co. in Kent, Ohio, purchased a 150-year-old church a few years ago. Over a three-year period, they converted the church building into a two-story, 9,000-square foot brewery. Pews from the church […]

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New! Word Search Puzzle to Review PP&E and More in Financial Accounting

Below are links to a word search puzzle to review Property, Plant & Equipment and Intangible Assets in financial accounting. Both links are to the same puzzle, but one has a solution button enabled and the other does not. PP&E and Intangible Assets word search puzzle (student version): Share this link with your students to […]

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How will Stack Investors use the relative sales value method to allocate the purchase price of a rental property it purchased?

How will Stack Investors use the relative sales value method to allocate the purchase price of a rental property it purchased? Stack Investors is a real estate company, specializing in student housing rentals. Black Squirrel Rentals recently purchased a house at 121 Crain Avenue in Kent for $55,000. Rooms in the house will be rented […]

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Did Subway franchisees profit from the $10 for two footlong subs during the pandemic?

Subway, the fast-food restaurant franchise, came out with a promotion offering two footlong subs for $10 during the early days of the Covid-19 pandemic as a way to drive traffic to its restaurants. Franchise owners were not happy with the promotion, claiming they lost money on every sub sold. Assume that the costs related to […]

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How could the different inventory costing methods used by CVS, Walmart, and Walgreens impact their respective income statements and balance sheets?

Three pharmacy giants, CVS Health, Walmart, and Walgreens Boots Alliance each use a different inventory costing method. CVS uses weighted-average cost, Walmart uses FIFO, and Walgreens uses LIFO. Here is a hypothetical example that highlights the potential differences in income statements and balance sheets that could arise simply because of the use of a different […]

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Are the articles of secondhand clothing offered for sale on ThredUp’s online store included in inventory on ThredUp’s balance sheet?

ThredUp Inc. is a startup online consignment and thrift store. Customers can buy like-new, carefully vetted brand-name clothing from ThredUp’s online store at discounts of up to 90% off of the original retail prices.  Customers can also send in their unwanted clothing articles for ThredUp to resell.  tThredUp’s professional buyers go through the articles of […]

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Crossword puzzle to review job costing in managerial accounting

Below are links to a crossword puzzle to review job costing in managerial accounting. Both links are to the same puzzle, but one has a solution enabled and the other does not. Job costing crossword puzzle: Share this link with your students to have them work on the puzzle without access to the solution. Job […]

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