Chapter 10 - Problem Solving

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On January 1, 2020, Novotna Company purchased $400,000, 8% bonds of Aguirre Co. for$369,114. The bonds were purchased to yield 10% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2025. Novotna Company uses the effective-interest method to amortize discount or premium. On January 1, 2022, Novotna Company sold the bonds for $370,726 after receiving interest to meet its liquidity needs.


a. Prepare the journal entry to record the purchase of bonds on January 1. Assume that the bonds are classified as available-for-sale.

b. Prepare the amortization schedule for the bonds.

c. Prepare the journal entries to record the semiannual interest on July 1, 2020, and December 31, 2020.

d. If the fair value of Aguirre bonds is$372,726 on December 31, 2021, prepare the necessary adjusting entry. (Assume the fair value adjustment balance on December 31, 2020, is a debit of $3,375.)

e. Prepare the journal entry to record the sale of the bonds on January 1, 2022.

Why does oil in Angola not always benefit Angolans?

The Work in Process Inventory account for DG Manufacturing follows. Compute the cost of jobs completed and transferred to Finished Goods Inventory.

Work in Process Inventory Beginning = 4,500

Direct materials = 47,100

Direct labor = 29,600

Applied overhead = 15,800

Total Mfg. costs = 97,000

Ending WIP = 8,900

The cost of jobs transferred to finished goods is:


C. $88,100.

Use the P&G example at the beginning of the chapter to explain the benefits to the customer of adopting a business processes perspective. Why might a traditional functional perspective have “blinded” P&G to the problems with the old system?

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University Human Resources

8-step problem solving process, organizational effectiveness.

121 University Services Building, Suite 50 Iowa City , IA 52242-1911 United States

Step 1: Define the Problem

Step 2: Clarify the Problem

Step 3: Define the Goals

Step 4: Identify Root Cause of the Problem

Step 5: Develop Action Plan

Step 6: Execute Action Plan

Step 7: Evaluate the Results

Step 8: Continuously Improve

the final step in the problem solving process is

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Government of Western Australia Department of Health

Problem solving

Sometimes, it is not enough to just cope with the problems – they need to be solved.

Most people engage in problem solving every day. It occurs automatically for many of the small decisions that need to be made on a daily basis.

For example, when making a decision about whether to get up now or sleep in for an extra 10 minutes, the possible choices and the relative risks and benefits of obeying the alarm clock or sleeping later come automatically to mind.

Larger problems are addressed in a similar way. For example: “I have tasks that need to be done by the end of the week. How am I going to get them all done on time?”

After considering the possible strategies, 1 is chosen and implemented. If it proves to be ineffective, a different strategy is tried.

People who can define problems, consider options, make choices, and implement a plan have all the basic skills required for effective problem solving.

Sometimes following a step-by-step procedure for defining problems, generating solutions, and implementing solutions can make the process of problem solving seem less overwhelming.

Six step guide to help you solve problems

Step 1: identify and define the problem.

Step 2: Generate possible solutions

Step 3: Evaluate alternatives      

Step 4: Decide on a solution      

Step 5: Implement the solution

Step 6: Evaluate the outcome

Problem solving is something we do every day.

Some problems are small or easily solved - others are more complicated and can seem overwhelming.

One way of tackling problems is to use a specific and systematic problem solving procedure. If you’ve tried to solve certain problems without much success, try these steps out and see if they help.

Learning to solve problems effectively will help you to minimise the level of stress in your life and improve your overall sense of well-being.

Try it out and see.

Where to get help

Centre for Clinical Interventions (CCI)

See your doctor

Visit healthdirect (external site) or call 1800 022 222, mental health emergency response line (mherl).

This information provided by

Centre for Clinical Interventions logo

This publication is provided for education and information purposes only. It is not a substitute for professional medical care. Information about a therapy, service, product or treatment does not imply endorsement and is not intended to replace advice from your healthcare professional. Readers should note that over time currency and completeness of the information may change. All users should seek advice from a qualified healthcare professional for a diagnosis and answers to their medical questions.

Related sites

Link to HealthyWA Facebook page

Department of Health

ASQ logo

Problem Solving Resources

Case studies, problem solving related topics.

What is Problem Solving?.

Quality Glossary Definition: Problem solving

Problem solving is the act of defining a problem; determining the cause of the problem; identifying, prioritizing, and selecting alternatives for a solution; and implementing a solution.

Problem Solving visual

Problem Solving Chart

The Problem-Solving Process

In order to effectively manage and run a successful organization, leadership must guide their employees and develop problem-solving techniques. Finding a suitable solution for issues can be accomplished by following the basic four-step problem-solving process and methodology outlined below.

1. Define the problem

Diagnose the situation so that your focus is on the problem, not just its symptoms. Helpful problem-solving techniques include using flowcharts to identify the expected steps of a process and cause-and-effect diagrams to define and analyze root causes .

The sections below help explain key problem-solving steps. These steps support the involvement of interested parties, the use of factual information, comparison of expectations to reality, and a focus on root causes of a problem. You should begin by:

2. Generate alternative solutions

Postpone the selection of one solution until several problem-solving alternatives have been proposed. Considering multiple alternatives can significantly enhance the value of your ideal solution. Once you have decided on the "what should be" model, this target standard becomes the basis for developing a road map for investigating alternatives. Brainstorming and team problem-solving techniques are both useful tools in this stage of problem solving.

Many alternative solutions to the problem should be generated before final evaluation. A common mistake in problem solving is that alternatives are evaluated as they are proposed, so the first acceptable solution is chosen, even if it’s not the best fit. If we focus on trying to get the results we want, we miss the potential for learning something new that will allow for real improvement in the problem-solving process.

3. Evaluate and select an alternative

Skilled problem solvers use a series of considerations when selecting the best alternative. They consider the extent to which:

4. Implement and follow up on the solution

Leaders may be called upon to direct others to implement the solution, "sell" the solution, or facilitate the implementation with the help of others. Involving others in the implementation is an effective way to gain buy-in and support and minimize resistance to subsequent changes.

Regardless of how the solution is rolled out, feedback channels should be built into the implementation. This allows for continuous monitoring and testing of actual events against expectations. Problem solving, and the techniques used to gain clarity, are most effective if the solution remains in place and is updated to respond to future changes.

You can also search articles , case studies , and publications  for problem solving resources.

Innovative Business Management Using TRIZ

Introduction To 8D Problem Solving: Including Practical Applications and Examples

The Quality Toolbox

Root Cause Analysis: The Core of Problem Solving and Corrective Action

One Good Idea: Some Sage Advice ( Quality Progress ) The person with the problem just wants it to go away quickly, and the problem-solvers also want to resolve it in as little time as possible because they have other responsibilities. Whatever the urgency, effective problem-solvers have the self-discipline to develop a complete description of the problem.

Diagnostic Quality Problem Solving: A Conceptual Framework And Six Strategies  ( Quality Management Journal ) This paper contributes a conceptual framework for the generic process of diagnosis in quality problem solving by identifying its activities and how they are related.

Weathering The Storm ( Quality Progress ) Even in the most contentious circumstances, this approach describes how to sustain customer-supplier relationships during high-stakes problem solving situations to actually enhance customer-supplier relationships.

The Right Questions ( Quality Progress ) All problem solving begins with a problem description. Make the most of problem solving by asking effective questions.

Solving the Problem ( Quality Progress ) Brush up on your problem-solving skills and address the primary issues with these seven methods.

Refreshing Louisville Metro’s Problem-Solving System  ( Journal for Quality and Participation ) Organization-wide transformation can be tricky, especially when it comes to sustaining any progress made over time. In Louisville Metro, a government organization based in Kentucky, many strategies were used to enact and sustain meaningful transformation.


Quality Improvement Associate Certification--CQIA

Certified Quality Improvement Associate Question Bank

Lean Problem-Solving Tools

Problem Solving Using A3

NEW   Root Cause Analysis E-Learning

Quality 101

Making the Connection In this exclusive QP webcast, Jack ReVelle, ASQ Fellow and author, shares how quality tools can be combined to create a powerful problem-solving force.

Adapted from The Executive Guide to Improvement and Change , ASQ Quality Press.

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