Required:
Prepare a complete statement of cash flows using a spreadsheet; report its operating activities using the indirect method. (Enter all amounts as positive values.)

Please use the indirect method

Required information

Use the following information for the Problems below.

[The following information applies to the questions displayed below.]

Forten Company, a merchandiser, recently completed its calendar-year 2017 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company’s income statement and balance sheets follow.

Problem 12-4AA Indirect: Cash flows spreadsheet LO P1, P2, P3, P4

Additional Information on Year 2017 Transactions

1. Net income was $114,575.
2. Accounts receivable increased.
3. Inventory increased.
4. Prepaid expenses decreased.
5. Accounts payable decreased.
6. Depreciation expense was $21,750.
7. Sold equipment costing $49,875, with accumulated depreciation of $31,125, for $12,625 cash. This yielded a loss of $6,125.
8. Purchased equipment costing $97,375 by paying $32,000 cash and (i.) by signing a long-term note payable for the balance.
9. Borrowed $4,100 cash by signing a short-term note payable.
10. Paid $50,625 cash to reduce the long-term notes payable.
11. Issued 2,600 shares of common stock for $20 cash per share.
12. Declared and paid cash dividends of $50,300.

Required information Comprehensive Problem 8-85 (LO 8-1, LO 8-2, LO 8-3, LO 8-4, LO 8-5) [The following information applies to the questions displayed below.] John and Sandy Ferguson got married eight years ago and have a seven-year-old daughter, Samantha. In 2018, John worked as a computer technician at a local university earning a salary of $152,000, and Sandy worked part-time as a receptionist for a law firm earning a salary of $29,000. John also does some Web design work on the side and reported revenues of $4,000 and associated expenses of $750. The Fergusons received $800 in qualified dividends and a $200 refund of their state income taxes. The Fergusons always itemize their deductions and their itemized deductions were well over the standard deduction amount last year. The Fergusons had qualifying insurance for purposes of the Affordable Care Act (ACA). Use Exhibit 8-9, Tax Rate Schedule, Dividends and Capital Gains Tax Rates for reference. The Fergusons reported making the following payments during the year: State income taxes of $4,400. Federal tax withholding of $21,000. Alimony payments to John’s former wife of $10,000 (divorced in 2014). Child support payments for John’s child with his former wife of $4,100. $12,200 of real property taxes. Sandy was reimbursed $600 for employee business expenses she incurred. She was required to provide documentation for her expenses to her employer. $3,600 to Kid Care day care center for Samantha’s care while John and Sandy worked. $14,000 interest on their home mortgage ($400,000 acquisition debt). $3,000 interest on a $40,000 home-equity loan. They used the loan to pay for a family vacation and new car. $15,000 cash charitable contributions to qualified charities. Donation of used furniture to Goodwill. The furniture had a fair market value of $400 and cost $2,000. What is the Fergusons' 2018 federal income taxes payable or refund, including any self-employment tax and AMT, if applicable? (Round your intermediate computations to the nearest whole dollar amount.)

Bellingham Company produces a product that requires 2 standard direct labor hours per unit at a standard hourly rate of $21.00 per hour. If 2,700 units used 5,600 hours at an hourly rate of $19.95 per hour, what is the direct labor (a) rate variance, (b) time variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

a. Direct labor rate variance $

b. Direct labor time variance $

c. Direct labor cost variance $

Smith Enterprises manufactures tires for the Formula 1 motor racing circuit. For August 2017​, it budgeted to manufacture and sell 3 comma 700 tires at a variable cost of $ 76 per tire and total fixed costs of $ 54 comma 000. The budgeted selling price was $ 108 per tire. Actual results in August 2017 were 3 comma 400 tires manufactured and sold at a selling price of $ 110 per tire. The actual total variable costs were $ 282 comma 200​, and the actual total fixed costs were $ 50 comma 500.

1. Prepare a performance report that uses a flexible budget and a static budget.

2. Comment on the results in requirement 1.

Statement of Cash Flows—Indirect Method

The comparative balance sheet of Olson-Jones Industries Inc. for December 31, 20Y2 and 20Y1, is as follows:

The following additional information is taken from the records:

1. Land was sold for $55.
2. Equipment was acquired for cash.
3. There were no disposals of equipment during the year.
4. The common stock was issued for cash.
5. There was a $133 credit to Retained Earnings for net income.
6. There was a $41 debit to Retained Earnings for cash dividends declared.

a. Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.

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b. Was Olson-Jones Industries Inc.’s net cash flow from operations more or less than net income?
Less

Wolfpack Enterprises plans to issue $1,000,000, 5-year, bonds payable with a stated
interest rate of 12%. The bonds pay interest semi-annually and the market rate is 10%.
What amount of money can Wolfpack Enterprises expect to receive when they sell their bonds?

GPS Tracking: You work for a midsize freight delivery company that has been using text messaging as the primary communication channel between drivers and the central dispatch office. Drivers send a message to confirm the time and location whenever they’ve made a delivery or a pickup, and whenever dispatchers get an urgent request from a customer, they send messages to the trucks to find out who is nearby and available. This manual system is clumsy and prone to errors, and the company’s owners want to replace it with a fully computerized mapping system that uses the global positioning system (GPS) to automatically monitor the location of every truck in the fleet. Some drivers are in an uproar over the plan, saying it invades their privacy by tracking their every move all day long. Should the company proceed with the plan even though some drivers object? What are some of the issues to consider here?

The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand for the company’s products is increasing and management requests assistance from you in determining an economical sales and production mix for the coming year. The company has provided the following data:

The following additional information is available:  

1. The company’s plant has a capacity of 130,000 direct labor-hours per year on a single-shift basis. The company’s present employees and equipment can produce all five products.

2. The direct labor rate of $16 per hour is expected to remain unchanged during the coming year.

3. Fixed manufacturing costs total $520,000 per year. Variable overhead costs are $2 per direct labor-hour.

4. All of the company’s nonmanufacturing costs are fixed.

5. The company’s finished goods inventory is negligible and can be ignored.

Required:

1. Assuming that the company has made optimal use of its 130,000 direct labor-hours, what is the highest direct labor rate per hour that Walton Toy Company would be willing to pay for additional capacity (that is, for added direct labor time)?

Briefly discuss each of these principles and explain why they are so important to accountants

1. Responsibilities –

2. The public interest

3. Integrity

4. Objectivity and independence

5. Due care

6. Scope and nature of services

Activity-Based Supplier Costing

Clearsound uses Alpha Electronics and La Paz Company to buy two electronic components used in the manufacture of its cell phones: Component 125X and Component 30Y. Consider two activities: testing components and reordering components. After the two components are inserted, testing is done to ensure that the two components in the phones are working properly. Reordering occurs because one or both of the components have failed the test and it is necessary to replenish component inventories. Activity cost information and other data needed for supplier costing are as follows:

I. Activity Costs Caused by Suppliers (testing failures and reordering as a result)

II. Supplier Data

Required:

Determine the cost of each supplier by using ABC. Round Test and Reorder rates to the nearest dollar, and final answers to the nearest cent.

Delay in Posting of a Journal Entry

As assistant controller for a small firm, you are responsible for recording and posting of the daily cash receipts and disbursements to the ledger account. After you have posted the entries, your boss, the controller, prepares a trial balance and the financial statements. You make the following entries on June 30.

Cash                        1,430

Account Receivable 1,950

            Service Revenue       3,380

To record daily cash sales and sales on account

Advertising Exp        12,500

Utilities Exp               22,600

Rent Exp                   24,000

Salary & Wage Exp 17,400

          Cash                             76,500

To record daily cash disbursement

The daily cash disbursements are much larger on June 30 than on any other day because many of the company's major bills are paid on the last day of the month. After you have recorded these two transactions and before you have posted them to the ledger accounts, your boss comes to you with the following request:

As you are aware, the first half of the year has been a tough one in the consulting industry and for our business.  With first-half bonuses based on net income, I am wondering whether you or I will get a bonus this time around. However, I have a suggestion that should allow us to receive something for our hard work and at the same time not hurt anyone. Go ahead and post the June 30 cash receipts to the ledger, but don't bother to post that day's cash disbursements. Even though the treasurer writes checks on the last day of the month and you normally journalize the transaction on the same day, it is silly to bother posting entry to the ledger since it takes at least a week for the checks to clear the bank.

1. Recognize an ethical dilemma: Explain why the controller's request will result in an increase in net income. On the basis of your answer, what ethical dilemma(s) do you now face?

2. a. Do you agree with the controller that the omission of the journal entry on June 30 " will not hurt anyone"? Who may benefit from the omission of the entry? Who may be harmed?

     b. How are they likely to benefit or be harmed?

     c. What rights or claims may be violated?

     d. What specific interest are in conflict?

    e. What are your responsibilities and obligations?

3. As assistant controller, what are your options in dealing with the ethical dilemma(s) you identified in (1) above?

   Which provide stockholders and other outsiders with information that is most relevant, most complete, most neutral, and most free from error?

4. Among the alternatives, which one would you select? explain why?

​(Related to Checkpoint 9.2 and Checkpoint​ 9.3)  ​(Bond valuation)  The 8​-year ​$1 comma 000 par bonds of Vail Inc. pay 12 percent interest. The​ market's required yield to maturity on a​ comparable-risk bond is 11 percent. The current market price for the bond is $ 1 comma 150. a.  Determine the yield to maturity. b.  What is the value of the bonds to you given the yield to maturity on a​ comparable-risk bond? c.  Should you purchase the bond at the current market​ price? a. What is your yield to maturity on the Vail bonds given the current market price of the​ bonds? nothing​% ​ (Round to two decimal​ places.)

After reviewing the following calculation, provide a brief analysis of each of the ratios. Also provide a brief evaluation regarding the company’s performance as it relates to the four categories listed above, plus the DuPont Equation. Finally, discuss how these ratios will help make appropriate financial decisions as they relate to the role as a financial manager, and also assist in achieving the firm’s financial management goals.

1. Profitability Ratios
   1. Gross Margin Percentage-

Gross Margin Percentage = Net Income/Sales

For 2018: Gross Profit is 58.26B, Sales 130.86B

Gross Margin Percentage = 58.26B/130.86B

= 0.44520861989

For 2017: Gross Profit 57.52B, Sales 126.03B

Gross Margin Percentage = 57.52B/126.03B

= 0.45639927001

2. EBIT Margin Percentage

EBIT Margin Percentage = EBIT/Sales

For 2018: EBIT Margin Percentage = 2.88B/130.86B

EBIT Margin Percentage =: 2.88B/130.86B

= 0.02200825309

For 2017: EBIT Margin Percentage = 23.45B/126.03B

EBIT Margin Percentage = 23.45B/126.03B

= 0.18606680949

2. Resource Management Ratios:
   1. Age of Inventory – Measure the Firm’s management of its inventory

Age of Inventory (Days’ of Inventory) = 365/Inventory Turnover

Inventory Turnover = COGS/Inventory

For 2018: COGS = 72.61B, Inventory = 1.34B

Age of Inventory = 365days/Inventory Turnover

Inventory Turnover = COGS/Inventory

= 54.1865671642

365/54.1865671642

= 6.73B

For 2017: COGS=68.51B, Inventory 1.03B

=68.51/1.03

=66.5145631068

365/66.5145631068

=5.48752007006

2. Age of Accounts Receivable

Age of Accounts Receivables = 365days / AR Turnover

AR Turnover = Sales / Receivables

For 2018: Sales=130.86B, Receivables=25.86B

130.86/25.86=

AR Turnover= 5.06032482599

365/ 5.06032482599

= 72.1297569921

For 2017: Sales=126.03B, Receivables=23.49B

126.03/23.49=

5.36526181354

365/ 5.36526181354

=68.0302308974

3. Age of Accounts Payable

Age of Accounts Payable = 365 / AP Turnover

AP Turnover = Purchases / Payables

For 2018: Cost of Goods Sold- 72.61B

For 2017: Cost of Goods Sold- 68.51B

Inventory Purchases = (Ending Inventory – Beginning Inventory) + Cost of Goods Sold

For 2017: (1.03B – 1.2B) + 68.51

=68.34B

68.34B/7.06B

AP Turnover= 9.67988668555

365/9.67988668555

Age of AP = 37.70705297

For 2018: (1.03B-1.34B) + 72.61B

=72.3B/7.23B

=10B

365/10

=36.5

3. Liquidity Ratio:
   1. Current Ratio
4. Leverage Ratios
   1. Debt-to-Assets Ratio
   2. Debt-to-Equity Ratio
   3. Interest Coverage

In addition, you have decided to evaluate the Return on Equity (ROE) of the company by calculating the DuPont Ratio, including the Profit Margin, Asset Turnover, and Financial Leverage Ratios.

Year 2017:

Return on Equity (DuPont Ratio) = Profit Margin x Total Asset Turnover x Financial Leverage

Profit Margin = Net Income / Net Sales

=30.1B/126.03B

= 0.238832024121241

Total Asset Turnover = Net Sales / Average Total Assets

Average total Assets= 2016 Total Assets + 2017 Total Assets / 2

(244.18B+257.14B) /2

=250.66

TAT= 126.03/250.66

TAT= 0.5027926274634964

Financial Leverage = Total Assets / Total Equity

257.14B/44.69B

= 5.75385992392034

Profit Margin x Total Asset Turnover x Financial Leverage

0.238832024121241 x 0.5027926274634964 x 5.75385992392034

Return on Equity (DuPont Ratio) =0.6909406515199963

Adger Corporation is a service company that measures its output based on the number of customers served. The company provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results for May as shown below:

When preparing its planning budget the company estimated that it would serve 35 customers per month; however, during May the company actually served 40 customers.

1. What amount of revenue would be included in Adger’s flexible budget for May?

2. What amount of employee salaries and wages would be included in Adger’s flexible budget for May?

3. What amount of travel expenses would be included in Adger’s flexible budget for May?

4. What amount of other expenses would be included in Adger’s flexible budget for May?

5. What net operating income would appear in Adger’s flexible budget for May?

6. What is Adger’s revenue variance for May? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

7. What is Adger’s employee salaries and wages spending variance for May? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

8. What is Adger’s travel expenses spending variance for May? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

14. What activity variance would Adger report in May with respect to its revenue? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

On January 1, 2019, the Julbeth Corporation grants its executives options to purchase 10,000 shares of the company’s $1 par common stock at a price of $25 per share. The options are exercisable beginning in two years and expire in four years. The fair value of the options is estimated to be $60,000 based on an appropriate option pricing model.

Required:

1. Create the journal entries to record compensation expense in each applicable year.

2. Create the journal entries to record the exercise of 7,000 options in 2019.

Requirement 1- Entry to record expense for both 12/31/19 and 12/31/20:

Requirement 2 - Entry to record exercise of options: