New revenue accounting standard impact: • What is the potential impact (old vs new) on their revenue recognition of the new standard on the company. It would be better if you provide the resources, websites are enough

Scenario:
* 300-word minimum*

The Chief Financial Officer (CFO), Karl Richland of Semtell Company in Cincinnati, Ohio is asking for your advice. The CFO explains sales are increasing but there is a constant matter of not having enough cash to meet payroll or pay vendors within 30 days.
Checklist: Prepare a business letter (see the rubric) to the CFO to explain:

1. Explain why cash can go down even when sales are up; refer to “receivables.”
2. Analyze the scenario and explain three accounts the CFO should review each day and explain why. Focus on short-term balance sheet accounts, i.e., “receivables and payables.”
3. Your business letter should:
•   Use the accepted business letter format and example as provided above.
•   Utilize Standard English and use correct spelling and grammar.
•   Provide a clearly established and sustained viewpoint and purpose.
•   The writing should be well ordered, logical and unified, as well as original and insightful.

Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow.

Additional Information

1. Sales and production data for these first two years follow.

2. Variable cost per unit and total fixed costs are unchanged during 2016 and 2017. The company's $31 per unit product cost consists of the following.

3. Selling and administrative expenses consist of the following.

1. Complete income statements for the company for each of its first two years under variable costing. (Loss amounts should be entered with a minus sign.)

2. What are the differences between the absorption costing income and the variable costing income for these two years? (Loss amounts should be entered with a minus sign.)

The following are several transactions of Ardery Company that occurred during the current year and were recorded in permanent (that is, balance sheet) accounts unless indicated otherwise:

The following information also is available:

Required:

Answer the following 1-10 questions for intermediate accounting:

1. Companies value and report short-term receivables at net realizable value, the net amount they expect to receive in cash

True

False

2. When should the loss on an uncollectible account receivable be recorded as an expense for accrual accounting purposes?

A. At any day there is an indication that certain customer will not pay

B. At the beginning of accounting period

C. The day the credit sale is recorded

D. At the end of accounting period

E. Never

3. Which of the following is NOT an accurate description of the Allowance for Doubtful Accounts?

A. an income statement account

B. a balance sheet account

C. an estimate of the amount of accounts receivable that will not be collected

D. a contra asset account

4. The following accounts were taken from Starr Co.'s unadjusted trial balance at December 31, 2017:

Accounts receivable, DR $880,000
Allowance for uncollectible accounts, DR 27,000
Net credit sales, CR $2,000,000
Starr estimates that 8% of the gross accounts receivable will become uncollectible. After adjustment at December 31, 2017, the allowance for uncollectible accounts should have a credit balance of

A. 160,000

B. 70,400

C. 27,000

D. 43,400

E. 97,400

5. The following accounts were abstracted from Starr Co.'s unadjusted trial balance at December 31, 2017:

Accounts receivable DR $880,000
Allowance for uncollectible accounts DR 27,000
Net credit sales CR $2,000,000
Starr estimates that 8% of the gross accounts receivable will become uncollectible. What is a bad debt expense for the year?

A. 97,400

B. 70,400

C. 43,400

D. 27,000

E. 160,000

6. Why would a company sell receivables to another company?

A. To limit its legal liability

B. To improve the quality of its credit granting process

C. To comply with customer agreements

D. To accelerate access to amounts collected

7. BobCat Co. uses the GROSS method to record sales made on credit. On Mar 1, 2017, it made sales of $80,000 with terms 3/10 n/30. On Mar 9, 2017, BobCat received full payment for the March 1 sale. The required journal entries for BobCat Inc. on Mar 9 is

A. DR Accounts Receivable 80,000
CR Sales Revenue 80,000

B. DR Accounts Receivable 77,600
CR Sales Revenue 77,600

C. DR Cash….. 77,600
DR Sales Discount 2,400
CR Accounts Receivable 80,000

D. DR Cash….. 77,600
CR Accounts Receivable 77,600

E. DR Cash 80,000
CR Accounts Receivable 80,000

8. The following information relates to Jay Co.’s accounts receivable for the year just ended:

Accounts receivable, 1/1 $ 650,000
Credit sales for the year 2,700,000
Sales returns for the year 75,000
Accounts written off during the year 40,000
Collections from customers during the year 2,150,000
Estimated uncollectible accounts at 12/31 СR 110,000

What amount should Jay report on the Balance Sheet for net realizable value of accounts receivable at December 31?

A. 1,085,000

B. 540,000

C. 2,700,000

D. 975,000

E. 650,000

9. The following are held by BobCat Inc.:
Cash in checking account $6,000
Cash in savings account $12,000
Postdated check from customer dated one month from balance sheet date 2,500
Petty cash 300
Commercial paper (matures in a month, original maturity 3 months) 9,000
Certificate of deposit (matures in six months) 5,000
What amount should be reported as cash and cash equivalents on Smite’s balance sheet?

A. 27,300

B. 18,000

C. 18,300

D. 27,000

10. Hilltop Co.’s monthly bank statement shows a balance of $52,200.
Reconciliation of the statement with company books reveals the following information:
Bank service charge $ 10
   Insufficient funds check 650
Checks outstanding 1,500
Deposits in transit 1300
Check deposited by Hilltop and cleared by the bank for $125, but improperly recorded by Hilltop as $152.

What is the TRUE cash balance after the reconciliation?_______________

A. 54,200

B. 52,000

C. 52,027

D. 51,973

Badlands, Inc. manufactures a household fan that sells for $20 per unit. All sales are on account, with 45 percent of sales collected in the month of sale and 55 percent collected in the following month. The data that follow were extracted from the company’s accounting records.

• Badlands maintains a minimum cash balance of $30,000. Total payments in January 20x1 are budgeted at $205,000.
• A schedule of cash collections for January and February of 20x1 revealed the following receipts for the period:

  	Cash Receipts
  	January			February
  From December 31 accounts receivable	$	110,000
  From January sales		96,000		$	154,000
  From February sales					64,800

• March 20x1 sales are expected to total 11,000 units.
• Finished-goods inventories are maintained at 20 percent of the following month’s sales.
• The December 31, 20x0, balance sheet revealed the following selected figures: cash, $24,500; accounts receivable, $110,000; and finished goods, $25,350.

Required:

1. Determine the number of units that Badlands sold in December 20x0.

2. Compute the sales revenue for March 20x1.

3. Compute the total sales revenue to be reported on Badlands’ budgeted income statement for the first quarter of 20x1.

4. Determine the accounts receivable balance to be reported on the March 31, 20x1, budgeted balance sheet.

5. Calculate the number of units in the December 31, 20x0, finished-goods inventory.

6. Calculate the number of units of finished goods to be manufactured in January 20x1.

7. Calculate the financing required in January, if any, to maintain the firm’s minimum cash balance.

Problem 23-4A (Part Level Submission) Kansas Company uses a standard cost accounting system. In 2017, the company produced 27,600 units. Each unit took several pounds of direct materials and 1.6 standard hours of direct labor at a standard hourly rate of $13.00. Normal capacity was 49,700 direct labor hours. During the year, 130,800 pounds of raw materials were purchased at $0.91 per pound. All materials purchased were used during the year. (a) Your answer is correct. If the materials price variance was $5,232 favorable, what was the standard materials price per pound? (Round answer to 2 decimal places, e.g. 2.75.) Standard materials price per pound $ Click if you would like to Show Work for this question: Open Show Work Show Solution Show Answer Link to Text Link to Text Attempts: 1 of 3 used (b) Your answer is correct. If the materials quantity variance was $14,136 unfavorable, what was the standard materials quantity per unit? (Round answer to 1 decimal place, e.g. 1.5.) Standard materials quantity per unit Click if you would like to Show Work for this question: Open Show Work Show Solution Show Answer Link to Text Link to Text Attempts: 2 of 3 used (c) Your answer is correct. What were the standard hours allowed for the units produced? Standard hours allowed Click if you would like to Show Work for this question: Open Show Work Show Solution Show Answer Link to Text Link to Text Attempts: 1 of 3 used (d) Your answer is correct. If the labor quantity variance was $5,200 unfavorable, what were the actual direct labor hours worked? Actual hours worked Click if you would like to Show Work for this question: Open Show Work Show Solution Show Answer Link to Text Link to Text Attempts: 1 of 3 used (e) Your answer is correct. If the labor price variance was $8,912 favorable, what was the actual rate per hour? (Round answer to 2 decimal places, e.g. 2.75.) Actual rate per hour $ Click if you would like to Show Work for this question: Open Show Work Show Solution Show Answer Link to Text Link to Text Attempts: 1 of 3 used (f) If total budgeted manufacturing overhead was $323,050 at normal capacity, what was the predetermined overhead rate? (Round answer to 2 decimal places, e.g. 2.75.) Predetermined overhead rate $

Give five examples of organizational forms used to produce goods and services. What tax characteristics distinguish one from the other?

Why is an investment more attractive to management if it has a shorter payback period? Should this be the only consideration? Explain.

How did the TCJA alter the relative preferences in terms of organizational form? Illustrate this using a simple example where a business has pretax taxable income of $100 and operates:

a. A C corporation subject to a 21% tax rate, that pays out all after-tax earnings as dividends, and in which the shareholders are all taxable at 20% on qualified dividends and 37% on ordinary income

b. A pass-through that does not qualify for the QBI deduction

c. A pass-through that does qualify for the QBI deduction Tax-Planning Problems

1. What are the rules regarding an auditor's responsibility to detect fraud? In what situations could the auditor be liable?

Pearl Company sells one product. Presented below is information for January for Pearl Company. Jan. 1 Inventory 105 units at $4 each 4 Sale 83 units at $8 each 11 Purchase 162 units at $7 each 13 Sale 132 units at $9 each 20 Purchase 160 units at $7 each 27 Sale 97 units at $10 each Pearl uses the FIFO cost flow assumption. All purchases and sales are on account.

a. Assume Pearl uses a perpetual system. Prepare all necessary journal entries. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

b. Compute gross profit using the perpetual system.

Gross profit= $

Bug-Off Exterminators provides pest control services and sells extermination products manufactured by other companies. Following is the company's unadjusted trial balance as of December 31, 2019. December 31, 2019 Unadjusted Trial Balance Cash $ 20,000 Accounts receivable 5,500 Allowance for doubtful accounts $ 858 Merchandise inventory 16,200 Trucks 47,000 Accum. depreciation—Trucks 0 Equipment 92,400 Accum. depreciation—Equipment 24,200 Accounts payable 5,750 Estimated warranty liability 2,150 Unearned services revenue 0 Interest payable 0 Long-term notes payable 30,000 Common stock 25,000 Retained earnings 68,800 Dividends 25,000 Extermination services revenue 90,000 Interest revenue 902 Sales (of merchandise) 109,826 Cost of goods sold 50,800 Depreciation expense—Trucks 0 Depreciation expense—Equipment 0 Wages expense 50,000 Interest expense 0 Rent expense 24,000 Bad debts expense 0 Miscellaneous expense 1,286 Repairs expense 15,500 Utilities expense 9,800 Warranty expense 0 Totals $ 357,486 $ 357,486 The following information in a through h applies to the company at the end of the current year. The bank reconciliation as of December 31, 2019, includes the following facts. Cash balance per bank $ 16,600 Cash balance per books 20,000 Outstanding checks 2,550 Deposit in transit 3,200 Interest earned (on bank account) 82 Bank service charges (miscellaneous expense) 30 Reported on the bank statement is a canceled check that the company failed to record. (Information from the bank reconciliation allows you to determine the amount of this check, which is a payment on an account payable.) An examination of customers’ accounts shows that accounts totaling $694 should be written off as uncollectible. Using an aging of receivables, the company determines that the ending balance of the Allowance for Doubtful Accounts should be $775. A truck is purchased and placed in service on January 1, 2019. Its cost is being depreciated with the straight-line method using the following facts and estimates. Original cost $ 39,500 Expected salvage value $ 14,000 Useful life (years) 4 Two items of equipment (a sprayer and an injector) were purchased and put into service in early January 2017. They are being depreciated with the straight-line method using these facts and estimates. Sprayer Injector Original cost $ 39,000 $ 21,000 Expected salvage value $ 3,000 $ 4,000 Useful life (years) 8 5 On September 1, 2019, the company is paid $20,700 cash in advance to provide monthly service for an apartment complex for one year. The company began providing the services in September. When the cash was received, the full amount was credited to the Extermination Services Revenue account. The company offers a warranty for the services it sells. The expected cost of providing warranty service is 2.5% of the extermination services revenue of $76,200 for 2019. No warranty expense has been recorded for 2019. All costs of servicing warranties in 2019 were properly debited to the Estimated Warranty Liability account. The $22,500 long-term note is an 8%, five-year, interest-bearing note with interest payable annually on December 31. The note was signed with First National Bank on December 31, 2019. The ending inventory of merchandise is counted and determined to have a cost of $16,200. Bug-Off uses a perpetual inventory system. Required: 1. Determine amounts for the following items: Correct (reconciled) ending balance of Cash; and the amount of the omitted check. Adjustment needed to obtain the correct ending balance of the Allowance for Doubtful Accounts. Depreciation expense for the truck used during year 2019. Depreciation expense for the two items of equipment used during year 2019. The adjusted 2019 ending balances of the Extermination Services Revenue and Unearned Services Revenue accounts. The adjusted 2019 ending balances of the accounts for Warranty Expense and Estimated Warranty Liability. The adjusted 2019 ending balances of the accounts for Interest Expense and Interest Payable. 2. Use the results of part 1 to complete the six-column table by first entering the appropriate adjustments for items a through g and then completing the adjusted trial balance columns. Hint: Item b requires two adjustments. 3. Prepare journal entries to record the adjustments entered on the six-column table. Assume Bug-Off’s adjusted balance for Merchandise Inventory matches the year-end physical count. 4a. Prepare a single-step income statement for year 2019. 4b. Prepare the statement of retained earnings (cash dividends during 2019 were $25,000) for 2019. 4c. Prepare a classified balance sheet as at 2019.

An established corporation currently pays out 50% of earnings as dividends. The CFO asks you whether paying dividends to shareholders other than corporations is advantageous. How do you respond?