Whispering Company has two classes of capital stock outstanding: 8%, $20 par preferred and $5 par common. At December 31, 2017, the following accounts were included in stockholders’ equity.

The following transactions affected stockholders’ equity during 2018.

Prepare the stockholders’ equity section for Whispering Company at December 31, 2018. (Enter account name only and do not provide descriptive information.)

Sorfina Berhad, a diversified manufacturer has four divisions that operate throughout Malaysia. The company has historically allowed its divisions to operate autonomously. Corporate intervention occurred only when planned results were not obtained. Corporate management has high integrity, but the board of directors and audit committee are not very active. Sorfina Berhad has a policy of hiring competent people. The company has a code of conduct, but there is little monitoring of compliance by employees. Management is fairly conservative in terms of accounting standards and practices, but employee compensation packages depend highly on performance. The company does not have an internal audit department, and it relies on external auditor to review the controls in each division. Shahrul is the general manager of the Fabricator Division. This division produces a variety of standardised parts for small appliances. Shahrul has been the general manager for the last ten years, and each year he has been able to improve the profitability of the division. He is compensated based largely on the division’s profitability. Much of the improvement in profitability has come through aggressive cost cutting, including substantial reduction in control procedures over inventory. During the last year a new competitor has entered Fabricator’s markets and has offered substantial price reductions in order to gain market share. Shahrul has responded to the competitor’s actions by matching the price cuts in the hope of maintaining market share. He is very concerned because he cannot see any other areas where costs can be reduced so that the division’s growth and profitability can be maintained. If profitability is not maintained, his salary and bonus will be reduced. BAC5083 AUDITING AND ASSURANCE JULY-SEPT 20Final AssessmentCONFIDENTIAL Page 6 of 7 2020 Turn Over Shahrul has decided that one way to make the division more profitable is to manipulate inventory because it represents a large amount of the division’s balance sheet. He also knows that controls over inventory are weak. He views this inventory manipulation as a short-run solution to the profit decline due to the competitor’s price cutting. He is certain that once the competitor stops cutting prices or goes bankrupt, the misstatement in inventory can be corrected with little impact on the bottom line. Required: (a) Discuss FIVE (5) strengths and FIVE (5) weaknesses of Sorfina Berhad’s internal control. [20 marks] (b) Identify the control environmental factors that causes that Shahrul’s manipulation of inventory in Sorfina Berhad

b:

The Companies Act 2016 requires a company to appoint an approved company
auditor. The final responsibility of the auditor is to issue a written report expressing
an opinion on whether the financial statements give a true and fair view.
i. Explain the term 'true' and 'fair' view.

ii. Explain THREE (3) rights that enable auditors to carry out their duties.

(b) Discuss the differences between errors, frauds, and illegal acts. Give an example of
each.

(c) Discuss THREE (3) reasons why auditors are responsible for "reasonable" but not
"absolute" assurance.

Charleston Corporation operates a branch operation in a foreign country. Although this branch operates in euros, the U.S. dollar is its functional currency. Thus, a remeasurement is necessary to produce financial information for external reporting purposes. The branch began the year with 504,000 euros in cash and no other assets or liabilities. However, the branch immediately used 312,000 euros to acquire a warehouse. On May 1, it purchased inventory costing 127,000 euros for cash that it sold on July 1 for 182,000 euros cash. The branch transferred 26,000 euros to the parent on October 1 and recorded depreciation on the warehouse of 11,000 euros for the year. Currency exchange rates for 1 euro follow: January 1 $1.47 = 1 euro May 1 1.51 = 1 July 1 1.53 = 1 October 1 1.51 = 1 December 31 1.41 = 1 Average for the year 1.49 = 1 What is the remeasurement gain or loss to be recognized in the consolidated income statement? rev: 07_22_2017_QC_CS-91913 Multiple Choice $18,060 gain. $18,060 loss. $190 loss. $190 gain.

The Filling Department of Eve Cosmetics Company had 3,300 ounces in beginning work in process inventory (50% complete). During the period, 37,000 ounces were completed. The ending work in process inventory was 2,600 ounces (50% complete).

What are the total equivalent units for conversion costs?

If required, round to the nearest unit.

a. Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafeteria. Direct costs for each department and the proportion of service costs used by the various departments for the month of August follow:

Exercise 11-27 (Algo) Cost Allocation: Direct Method (LO 11-2)

Required:

Compute the allocation of service department costs to producing departments using the direct method. (Do not round intermediate calculations.)

b. Assume that both Machining and Assembly work on just two jobs during the month of August: CM-22 and CM-23. Costs are allocated to jobs based on machine-hours in Machining and labor-hours in Assembly. The number of labor- and machine-hours worked in each department are as follows:

Required:
How much of the service department costs allocated to Machining and Assembly in the direct method should be allocated to Job CM-22? How much should be allocated to Job CM-23?

Part #4: E Company has budgeted sales revenues of $160,000 for May, $210,000 for June, $235,000 for July, and $172,000 for August. To prepare a cash budget, the company must determine the budgeted cash collections from sales. Generally the trend has been 55 percent collected in the month of sale, 25 percent collected in the month following sale, 18 percent collected in the second month following sale, and 2 percent uncollectible. Also, E Company grants a 2 percent cash discount to customers who pay in the month of sale (so they only collect 98 percent of the total amount for those sales instead of the usual 100 percent). Prepare a schedule of cash collections for the month of July only. Part #5: At the beginning of September, L Company had 1,600 finished goods units. Budgeted sales for October, November, December, and January are 8,000 units and 10,200 units and 13,600 units and 7,400 units respectively. L Company wants to have sufficient units on hand at the end of each month to meet 20 percent of the following month’s budgeted sales. Prepare a Production Budget with columns for October, November, December and Total 4th Quarter.Part #6: H Company’s Direct Labor Budget indicates the number of direct labor hours to be used in July, August, and September are 20,000 and 19,100 and 22,900 respectively. Variable overhead is expected to be $0.80 per direct labor hour. Fixed overhead per month is expected to be $6,200. Prepare an Overhead Budget with columns for July, August, September, and Total 3rd Quarter.   

Part #5: At the beginning of September, L Company had 1,600 finished goods units. Budgeted sales for October, November, December, and January are 8,000 units and 10,200 units and 13,600 units and 7,400 units respectively. L Company wants to have sufficient units on hand at the end of each month to meet 20 percent of the following month’s budgeted sales. Prepare a Production Budget with columns for October, November, December and Total 4^th Quarter.

Part #6: H Company’s Direct Labor Budget indicates the number of direct labor hours to be used in July, August, and September are 20,000 and 19,100 and 22,900 respectively. Variable overhead is expected to be $0.80 per direct labor hour. Fixed overhead per month is expected to be $6,200. Prepare an Overhead Budget with columns for July, August, September, and Total 3^rd Quarter.

1. Lessee enters into a four-year lease of equipment and concludes that the agreement is a finance lease because the lease contains an option for Lessee to purchase the equipment at the end of the lease and the Lessee is reasonably certain to exercise that option. The arrangement provides the following:

Complete the following schedule to show the impact on the income statement and balance sheet.

• Prepare the journal entries at the time of the lease commencement and for Year 1 of the lease term.

Southwestern Wear Inc. has the following balance sheet:

The trustee's costs total $290,500, and the firm has no accrued taxes or wages. Southwestern has no unfunded pension liabilities. The debentures are subordinated only to the notes payable. If the firm goes bankrupt and liquidates, how much will each class of investors receive if a total of $2.3 million is received from sale of the assets? Round your answers for monetary values to the nearest dollar and for percentage values the nearest whole number. If your answer is zero, enter “0”. Enter your answers as positive values.

Distribution of proceeds on liquidation:

Distribution to general creditors:

Round your answer for monetary value to the nearest dollar and for percentage value to two decimal places.

The remaining $   will go to the common stockholders. They will receive only   % of the amount of equity on the balance sheet.

[The following information applies to the questions displayed below.]
  
On January 1, 2021, Red Flash Photography had the following balances: Cash, $25,000; Supplies, $9,300; Land, $73,000; Deferred Revenue, $6,300; Common Stock $63,000; and Retained Earnings, $38,000. During 2021, the company had the following transactions:

The following information is available on December 31, 2021:

1. Employees are owed an additional $5,300 in salaries.
2. Three months of the rental space has expired.
3. Supplies of $6,300 remain on hand.
4. All of the services associated with the beginning deferred revenue have been performed.

Required:

1. Record the transactions that occurred during the year. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
  

2. Record the adjusting entries at the end of the year. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)
  

3. Prepare an adjusted trial balance.

4. Prepare an income statement, statement of stockholders’ equity, and classified balance sheet.

5. Prepare closing entries. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared monthly for each department. The planning budget and flexible budget for the Production Department are based on the following formulas, where q is the number of labor-hours worked in a month:

The Production Department planned to work 4,300 labor-hours in March; however, it actually worked 4,100 labor-hours during the month. Its actual costs incurred in March are listed below:

Required:

1. Prepare the Production Department’s planning budget for the month.

2. Prepare the Production Department’s flexible budget for the month.

3. Prepare the Production Department’s flexible budget performance report for March, including both the spending and activity variances.

Garrison 16e Rechecks 2018-12-18

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Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense).

a. sales are 20% for cash and 80% on account

b. sales on account are collected over a three month period with 10% collected in the month of sale: 70% in the first month following the sale, and the remaining 20% collected in the second month following the sale. Feb. sales were 200,000 and march was 300,000

c. Inventory purchases are paid within 15 days therefore, 50% of a month's inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable on March 31 for the month of March was 126,000

d. Each month's ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. the merchandise inventory at march 31 was 84,000

e. dividends of 49,000 will be declared and paid in April

f. Land costing 16,000 will be purchased for cash in May

g. The cash balance at March 31 is 52,000 the company must maintain a cash balance of at least 40,000 at the end of each month.

h. the company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of 200,000. The interest rate on these loans is 1% each month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan, plus accumulated interest at the end of each quarter.

1. Prepare a merchandise purchase budget for April, May and June.

2. Prepare a schedule of expected cash disbursements for merchandise purchases for April, May and June and for the quarter in total.

3. Prepare a cash budget for the month of May

On January 1, 2017, Skysong Company purchased 11% bonds, having a maturity value of $274,000, for $295,314.87. The bonds provide the bondholders with a 9% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest received on January 1 of each year. Skysong Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows.

Part #1: K Company is planning its cash disbursements for the upcoming months. In June, it anticipates $72,000 in Purchases, $130,000 in Payroll, and $40,000 in Loan Payments. In July, it anticipates $77,000 in Purchases, $140,000 in Payroll, and $35,000 in Loan Payments. In August, it anticipates $84,000 in Purchases, $150,000 in Payroll, and $30,000 in Loan Payments. Purchases are usually paid half in the current month and half in the following month. Payroll is paid 70 percent in the current month and 30 percent in the following month. Loan Payments are paid in the month due. Prepare a schedule of cash disbursements for the month of July only.

Part #2: Q Company anticipates production for its second quarter to be 18,000 units in April, 28,400 units in May, and 36,000 units in June. Each unit of finished product requires four pounds of raw materials. Q Company maintains raw materials inventories equal to 25 percent of the following month’s pounds needed for production. The April 1 inventories are in line with Q Company’s inventory policy. The anticipated cost per pound in April is $6 while the anticipated cost per pound in May is $6.25. Prepare a Direct Materials Purchases Budget with columns for April and May only.

Part #3: F Company’s Production Budget indicates that 13,000 units will be produced in April and 12,300 units in May. Workers are paid $19 per hour. It generally takes a worker 15 minutes (which is .25 hours) to make a unit. Prepare a Direct Labor Budget with columns for April and May only.

Port Ormond Carpet Company manufactures carpets. Fiber is placed in process in the Spinning Department, where it is spun into yarn. The output of the Spinning Department is transferred to the Tufting Department, where carpet backing is added at the beginning of the process and the process is completed. On January 1, Port Ormond Carpet Company had the following inventories:

Departmental accounts are maintained for factory overhead, and both have zero balances on January 1. Manufacturing operations for January are summarized as follows: