Describe what Mandatory and voluntary deductions are?

Give two examples of each

5. Describe measures to collect monies and features of recovery plans

Accounting for foreign currency transactions

MyBeauty Ltd is an Australian company which specialises in manufacturing and distributing health and beauty products to both local and international clients. The company has a reporting period which ends on 30 June and the Australian dollar is the functional and presentation currency.

For the financial year ending 30 June 2019, MyBeauty LTd has entered into two independent transactions denominated in foreign currency as follows.

Transaction A

MyBeauty Ltd sells some goods on credit to Bristol Industries, a British company. The contract, dated 1 January 2019, is denominated in United Kingdom pounds and the contract amounts to £150,000. Bristol Industries settles the contract on 29 January 2019.

The relevant exchange rates are as follows:

3 January 2019	A$1.00 = £0.5684
29 January 2019	A$1.00 = £0.5892

Transaction B

On 1 July 2017, MyBeauty Ltd entered into a loan denominated in Euros, borrowing €300,000 from a European Bank. The following summarises the bank loan statements over the period 1 July 2017 to 30 June 2019.

Date	Details	Amount	Balances
		€	€
1 July 2017	Loan contract – principal	300,000	300,000 DR
30 June 2018	Interest	33,000	333,000 DR
30 June 2019	Interest	37,000	370,000 DR

The relevant exchange rates are as follows:

1 July 2017	A$1.00 = €0.6545
30 June 2018	A$1.00 = €0.6045
30 June 2019	A$1.00 = €0.6419

Required:

In accordance with AASB 121, prepare all relevant journal entries of MyBeauty Ltd to account for the above transactions for the financial years ending 30 June 2018 and 2019, where relevant.

On January 1, Year 1, Friedman Company purchased a truck that cost $52,000. The truck had an expected useful life of 200,000 miles over 8 years and an $9,000 salvage value. During Year 2, Friedman drove the truck 27,000 miles. Friedman uses the units-of-production method. What is depreciation expense in Year 2? (Do not round intermediate calculations.): rev: 11_10_2018_QC_CS-147760

Multiple Choice

$5,805

$7,020

$5,375

$6,500

17)Dinkins Company purchased a truck that cost $72,000. The company expected to drive the truck 100,000 miles over its 5-year useful life, and the truck had an estimated salvage value of $11,000. If the truck is driven 32,000 miles in the current accounting period, what would be the amount of depreciation expense for the year? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.)

• $19,520

• $23,040

• $12,200

• $28,800

  On January 1, Year 1, the City Taxi Company purchased a new taxi cab for $39,000. The cab has an expected salvage value of $4,000. The company estimates that the cab will be driven 200,000 miles over its life. It uses the units-of-production method to determine depreciation expense. The cab was driven 48,000 miles the first year and 51,000 the second year. What is the amount of depreciation expense reported on the Year 2 income statement and the book value of the taxi at the end of Year 2, respectively? (Do not round intermediate calculations.)

• $9,945 and $19,695

• $9,945 and $15,695

• $8,925 and $21,675

• $8,925 and $17,675

On April 1, Year 1, Fossil Energy Company purchased an oil producing well at a cash cost of $8,370,000. It is estimated that the oil well contains 720,000 barrels of oil, of which only 620,000 can be profitably extracted. By December 31, Year 1, 31,000 barrels of oil were produced and sold. What is depletion expense for Year 1 on this well? (Do not round intermediate calculations.):

• $418,500

• $558,000

• $139,500

• $360,375

Glick Company purchased oil rights on July 1, Year 1 for $2,800,000. A total of 200,000 barrels of oil are expected to be extracted over the assets life, and 50,000 barrels are extracted and sold in Year 1. Which of the following correctly summarizes the effect of the Year 1 depletion expense on the elements of the financial statements? (Do not round intermediate calculations.):

• A decrease in stockholders’ equity of $200,000.

• A decrease in assets of $500,000.

• A decrease in assets of $700,000.

• An increase in stockholders’ equity of $740,000.

The balance sheet of Flo's Restaurant showed total assets of $480,000, liabilities of $152,000 and stockholders’ equity of $378,000. An appraiser estimated the fair value of the restaurant assets at $565,000. If Alice Company pays $745,000 cash for the restaurant, what is the amount of goodwill?

• $180,000

• $265,000

• $367,000

• $332,000

On January 1, Year 1, Stiller Company paid $192,000 to obtain a patent. Stiller expected to use the patent for 5 years before it became technologically obsolete. The remaining legal life of the patent was 8 years. Based on this information, what is the amount of amortization expense during Year 3 and the book value of the patent as of December 31, Year 3, respectively?

• $24,000 and $72,000

• $38,400 and $76,800

• $24,000 and $120,000

• $38,400 and $115,200

In January 2018, Dunder Mifflin Inc. bought property in downtown Scranton. The property contains land, a warehouse, and some limited equipment. Property values in the area have been increasing rapidly over the past decade. The price paid for the property needs to be allocated to the items purchased and the controller and financial vice president are having that discussion. Dunder Mifflen’s controller wants to allocate the largest proportion of the cost to the warehouse and equipment while the financial VP, David Wallace, argues that the allocation should recognize the steadily increasing value of the land by allocating the highest value to the land. Assume that the same depreciation methods are used for financial and tax return purposes.

-What are the pros and cons of a proportionally higher allocation of the purchase cost to the land and a proportionally lower allocation to building and equipment?

-Assume the equipment and warehouse have the same useful life. The company plans to sell the equipment after it has been fully depreciated and the land will be sold after the warehouse is fully depreciated. Assuming no change in tax rates over the life of the warehouse, how will this allocation decision affect Retained Earnings in the long-run, after the assets have been sold? Explain in depth.

Review the Discussion FAQs Module.

Respond to the following:

The president of your company wants you to count merchandise inventory from the factory in preparation for a visit from stockholders. The president asks you to make the inventory a bit heavy by counting one row twice to cause the net income to show a higher number. What should you do?

Okay let's talk first about what we are not interested in:

1) Your moral compass or ethics. I'm not being sarcastic but it really doesn't matter in this instance. We don't care about whether you personally think it is right or wrong. The only thing that matters is GAAP-and whether we are accurately reporting if we do this.

2) Reporting to anyone, law enforcement, SEC, upper management. We aren't going to have a conversation about reporting it to anyone and documenting this request. It doesn't matter. These types of issues are almost never a legal issue anyway.  

3) Effects on financial statements in vague terms such as "thrown off", "out of balance", or any other term that does not state specifically how the statement is inaccurate.

Here's what we do care about:

1) What does GAAP principles say about this type of action?

2) How is the income statement affected? Is gross profit understated or overstated or just right? Is net income overstated or understated or just right? Is the balance sheet correct? If not, what account(s) are off specifically. For example, you can't just say assets-you have to say exactly which asset. You can't just say equity, you have to say which equity account. Are they overstated or understated?  

Information related to equipment owned by Brownfield Company follows:

Original cost $900,000

Accumulated depreciation to date $100,000

Expected future cash flows $825,000

Fair value $790,000

Value in use $785,000

Selling costs $30,000

Assuming Brownfield will continue to use the equipment, test the asset for impairment under both IFRS and U.S. GAAP and discuss the results.

Paloma Co. has four employees. FICA Social Security taxes are 6.2% of the first $128,400 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. Also, for the first $7,000 paid to each employee, the company’s FUTA taxes are 0.6% and SUTA taxes are 5.4%. The company is preparing its payroll calculations for the week ended August 25. Payroll records show the following information for the company’s four employees.

Name	Gross Pay Through August 18	Gross Pay for Current Week	Income Tax Withholding
Dali	124,800	5,000	469
Trey	126,000	2,400	354
Kiesha	8,400	2,000	50
Chee	2,350	1,400	40

In addition to gross pay, the company must pay one-half of the $86 per employee weekly health insurance; each employee pays the remaining one-half. The company also contributes an extra 8% of each employee’s gross pay (at no cost to employees) to a pension fund.

Required:
Compute the following for the week ended August 25. (Round your intermediate calculations and final answers to 2 decimal places.):

Find...

1. Employee's FICA withholdings for social security

2. employee's FICA withholdings for Medicare

3. employer's FICA taxes for social security

4. employer's FICA taxes for medicare

5. employer's FUTA Taxes

6. employer's SUTA taxes

7. each employee's net (take home) pay

8. employers total payroll related expense for each employee

Musich Corporation has an activity-based costing system with three activity cost pools--Machining, Setting Up, and Other. The company's overhead costs, which consist of equipment depreciation and indirect labor, have been allocated to the cost pools already and are provided in the table below.

Activity Cost Pools

Machining

Setting Up

Other

Total

Equipment depreciation

$

9400

$

48,700

$

23,800

$

81,900

Indirect labor

4500

2900

4100

11,500

Total

$

13,900

$

51,600

$

27,900

$

93,400

                                       

Costs in the Machining cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the two products and the company's costs appear below:

MHs

Batches

Product Z3

6000

750

Product T1

6200

1350

Total

12,200

2100

Product Z3 Product T1

Sales (total)

$

230,800

$

255,500

Direct materials (total)

$

84,000

$

97,600

Direct labor (total)

$

110,000

$

105,200

Required:

Calculate the following:

Machining Activity Rate

$
Setting up Activity Rate

$

Amount of OH applied to product Z3 (round to the nearest dollar)

$
Amount of OH applied to product T1 (round to the nearest dollar)

$

Product Margin – Z3 (round to the nearest dollar)

$
Product Margin – T1 (round to the nearest dollar)

$

The ____ basis of accounting is not a generally accepted method of determining profit for a businesses that have significant credit transactions.

What is the nominal rate of interest compounded monthly at which payments of $200 made at the end of every three months accumulate to $9200 in eight years?

Show the financial calculator (BA II Plus) steps with values so I can see how to do the question as they need just the financial calculations for the midterm (and timeline if needed).

Reynolds Corporation's comparative balance sheets are presented below.

	Reynolds CORPORATION
	Balance Sheets
	December 31
		2018		2017
	Cash	$ 10,000		$ 9,000
	Accounts receivable	35,000		30,000
	Inventory	25,500		20,000
	Land	15,000		15,000
	Building	90,000		90,000
	Accumulated depreciation	(27,000)		(25,000)
	Total	$148,500		$139,000
	Accounts payable	$ 50,000		$ 45,000
	Common stock	65,000		60,000
	Retained earnings	33,500		34,000
	Total	$148,500		$139,000

Reynolds' 2018 income statement included net credit sales of $200,000, cost of goods sold of $120,000, and net income of $30,000.

Instructions:
Compute the following ratios for 2018. (a) Current ratio. (b) Acid-test ratio. (c) Receivables turnover. (d) Profit margin. (e)Return on assets. (Round ratios to 2 decimal places and percentages to 1 decimal place.)

Douglas Toys is a manufacturer that uses the weighted-average process costing method to account for costs of production. It produces a plastic toy in three separate departments: Molding, Assembling, and Finishing. The following information was obtained for the Assembling Department for the month of September.

Work in process on September 1 had 114,000 units made up of the following:

		Amount		Degree of Completion
Prior department costs transferred in from the Molding Department	$	163,020		100	%
Costs added by the Assembling Department
Direct materials	$	108,300		100	%
Direct labor		40,688		60	%
Manufacturing overhead		28,374		50	%
	$	177,362
Work in process, September 1	$	340,382

During September, 514,000 units were transferred in from the Molding Department at a cost of $735,020. The Assembling Department added the following costs:

Direct materials	$	467,970
Direct labor		213,022
Manufacturing overhead		138,996
Total costs added	$	819,988

Assembling finished 414,000 units and transferred them to the Finishing Department.

At September 30, 214,000 units were still in work-in-process inventory. The degree of completion of work-in-process inventory at September 30 was as follows:

Direct materials	90	%
Direct labor	70
Manufacturing overhead	30

Required:

Prepare a production cost report using the weighted-average method. (Round "cost per equivalent unit" to 2 decimal places.)

Big Inc. is considering Two Projects X and Y, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. The CEO believes the IRR is the best selection criterion, while the CFO advocates other methods.

WACC:	8.00%
Year	0	1	2	3	4
CFx	−$1,100	$450	$500	$100	$100
CFy	−$2,750	$625	$725	$800	$1,400

4. What are the MIRR’s? Discuss the importance of the MIRR method over IRR.

5. If these projects are mutually exclusive which should be selected and why? If they are in depended which project(s) should be selected and why?

6. Discuss your results of the methods used above and make a recommendation on the projects to the CEO using the different methods?

You are an experienced audit manager at Samway Baker Fitzgerald (SBF), an accounting firm with offices in Orange, Wagga Wagga, Tamworth, Port Macquarie and Albury in NSW, Toowoomba in Queensland and Ballarat in Victoria. In the next 18 months, you hope to be promoted to partner at the Orange office. Although a medium-sized firm by national standards, SBF includes Australia’s largest regionally-based auditing practice. Most of SBF’s audit clients are in the mining, manufacturing and agriculture industries. For various reasons all of those industries are currently under pressure: mining from a downturn in commodity prices, manufacturing from fierce overseas competition, and agriculture from a devastating drought that continues to grip Eastern Australia. It is a cold Thursday evening in July 2019 and you are meeting with your audit team to finalise the 30 June 2019 year-end audit for Far Faraway Pastoral Limited (FFA), a major agricultural company based in Orange, listed on the Australian Stock Exchange (ASX), and one of SBF’s largest clients by fee revenue. During the meeting, three of your audit seniors each bring a potential issue to your attention. Samantha Gabrielle was responsible for reviewing FFA’s corporate governance arrangements and reports that ‘at 30 June 2019 the board of FFA comprises: CEO Bruce Blanch, the CFO Alexandra Rose and three non-executive directors: Kevin Oliver (a former executive at Macquarie Bank who has an 11 percent shareholding in FFA and is Chair of the Board), Matthew James (a retired farmer who was a major supplier to FFA), and Jacqueline Grace (an Orange-based orthopaedic surgeon).’ Steve Barker was responsible for reviewing the revenue cycle and argues that ‘an ASIC report on their recent review of the financial statements of some major agricultural companies now means that FFA’s method for recognising revenues on its sale of cattle is very questionable’. In the 30 June 2019 financial year just ended, cattle sales constituted nearly 50% of all revenue recorded by FFA. Steve reports that he has already discussed the matter with the senior partner on the FFA audit, Skye Martin, who said that the method has been used for 10 years and that no adjustments to the 30 June 2019 financial statements were to be made. Steve reports that he then told Skye Martin he accepted her decision but wanted to include a dissenting statement in the audit working papers. She refused to permit such a statement in the working papers but offered to write a letter to you as the FFA audit manager acknowledging full responsibility for the 30 June 2019 audit. Steve alleges that as he left his meeting with Skye Martin, she made some negative comments about your chances of being promoted to partner in the near future. Kate Hammond was responsible for reviewing the operations of an FFA subsidiary based in Western Australia (WA), called TRC, that sells rural and farm supplies. You are aware that whilst TRC is the market leader in WA and has a strong balance sheet, it was making losses for the past two years. During the previous financial year ended 30 June 2018, TRC significantly upgraded its accounting information system to more effectively manage inventory sales. TRC hired a well-regarded IT consultant to undertake the upgrade which was completed on 31 March 2018. As SBF did not have offices in WA, you organised an independent expert based in Perth to review and evaluate the accounting information system. The independent expert concluded that the system appeared reliable and that the changeover was correctly carried out. At 30 June 2018 year-end, this new system had been in place for 3 months, and TRC management reported that they were happy with the way it was operating. In early 2019, given drought pressures on its core business in Eastern Australia, FFA accepted an offer from WA-based agricultural company McCarran Pastoral, who already owned 15% of TRC, to sell their remaining 85% interest to them. The agreed sale price was $45.8m, equivalent to FFA’s 85% share of TRC’s net assets. The sale was finalised on 15 April 2019, but half the sale price is not due to be paid until 15 August 2019, after the 30 June 2019 audit of FFA has been completed. Kate reports that significant errors in the changeover of the accounting information system back in March 2018 have only just been discovered in July 2019, more than 15 months later. The errors resulted in the inventory at TRC stores being misstated by $16.6m and net assets by the same amount. As a result McCarran Pastoral is planning to withhold most of its remaining settlement payment to FFA, and FFA is planning to sue SBF for negligence for its loss of that payment. Required: Question 1 (4%) Based on the information she has provided, advise Samantha Gabrielle on which, if any, ASX Corporate Governance Principles and Recommendations FFA may have breached and what action, if any, FFA would need to take in response. Question 2 (5%) What should you do in response to the information provided by Steve Barker? With reference to the Code of Ethics for Professional Accountants, use the following American Accounting Association (AAA) Model template to guide your answer: American Accounting Association Model Decision-making process 1. Determine the facts The facts are ... 2. Define the ethical issues 3. Identify the major principles, rules, and values 4. Specify the alternatives 5. Compare values and alternatives 6. Assess the consequences 7. Make your decision Question 3 (6%) With reference to case law and the auditing standards, prepare a report to the managing partner of SBF that indicates whether or not: • SBF failed to exercise ‘due care’ in the audit of TRC; • FFA is guilty of contributory negligence; • SBF owes a duty of care to McCarran Pastoral.