You have conducted several interviews with department supervisors who oversee the acquisition/payment process. The following is a summary of your discussions. Use this narrative to prepare a system flowchart to depict Plume’s acquisition/payment system.

checks are issued by the cash disbursements department. When the payment
authorization is received from accounts payable, the information is entered and used to
update the accounts payable and cash disbursements master files. A check is then
generated (with 1 copy). A copy of the check is filed with the payment authorization by
date. The check is then forwarded to the Treasurer. Additionally, a weekly cash
disbursements report is generated and is forwarded to the controller department.
The Treasurer verifies the check information by looking up the authorization
information in the accounts payable system. If the check information is correct, the
treasurer signs the check and sends it to the vendor. If there are any discrepancies, the
check is forwarded to the Controller.

Splish Company invests $10,400,000 in 5% fixed rate corporate bonds on January 1, 2017. All the bonds are classified as available-for-sale and are purchased at par. At year-end, market interest rates have declined, and the fair value of the bonds is now $11,078,000. Interest is paid on January 1.

Prepare journal entries for Splish Company to (a) record the transactions related to these bonds in 2017, assuming Splish does not elect the fair option; and (b) record the transactions related to these bonds in 2017, assuming that Splish Company elects the fair value option to account for these bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.	Date	Account Titles and Explanation	Debit	Credit
(a)	Jan. 1, 2017Dec. 31, 2017
	Jan. 1, 2017Dec. 31, 2017
		(To record interest revenue)
		(To record fair value adjustment)

No.	Date	Account Titles and Explanation	Debit	Credit
(b)	Jan. 1, 2017Dec. 31, 2017
	Jan. 1, 2017Dec. 31, 2017
		(To record interest revenue)
		(To record fair value adjustment)

a) Must consideration always be present to render a promise enforceable?

b) Does the magnitude of consideration matter? Explain.

c) how have the common law courts in some cases permitted a debtor to enforce a creditor’s gratuitous promise to reduce a debt?

A COMPREHENSIVE ACCOUNTING CYCLE PROBLEM - NEED ASAP! THANK YOU

On December 1, 2018, John and Maggie Driscoll formed Cape Clear Island, LLC. They began operations using the following accounts:

Cash

Accounts Receivable

Prepaid Rent

Unexpired Insurance

Office Supplies

Rental Equipment

Accumulated Depreciation:

    Rental Equipment

Notes Payable

Accounts Payable

Interest Payable

Salaries Payable

Dividends Payable

Unearned Rental Fees

Income Taxes Payable

Capital Stock

Retained Earnings

Dividends

Income Summary

Rental Fees Earned

Salaries Expense

Maintenance Expense

Utilities Expense

Rent Expense

Office Supplies Expense

Depreciation Expense

Interest Expense

Income Taxes Expense

The LLC performs adjusting entries monthly. Closing entries are performed annually on December 31.

During December, the LLC entered into the following transactions:

Dec. 1      Issued to John and Maggie Driscoll 20,000 shares of capital stock in exchange for a total of $200,000 cash.

Dec. 1      Purchased for $240,000 the equipment formally owned by a competitor named Achill, LLP. Paid $140,000 cash and issued a one year note payable for $100,000. The note, plus all 12 months of accrued interest, are due November 30, 2019.

Dec. 1     Paid $12,000 to Corrigan Realty, LLP as three months’ advance rent on the rental yard and office formerly occupied by Achill, LLP.

Dec. 4       Purchased office supplies on account from the Castlebar Office Company for $1,000. Payment due in 30 days. (These supplies are expected to last for several months.)

Dec. 8       Received $8,000 cash as advance payment on equipment rental from McGinty Construction Company.

Dec. 12     Paid salaries for the first two weeks in December of $5,200.

Dec. 15    Excluding the McGinty advance, equipment rental fees earned during the first 15 days of December amounted to $18,000, of which $12,000 was received in cash.

Dec. 17     Purchased on account from Donegal, LLP, $600 in parts needed to repair a rental tractor. Payment is due in 10 days.

Dec. 23    Collected $2,000 of the accounts receivable recorded on December 15.

Dec. 26     Rented a backhoe to Dever Landscaping at a price of $250 per day, to be paid when the backhoe is returned. Dever Landscaping expects to keep the backhoe for about two or three weeks.

Dec. 26    Paid biweekly salaries, $5,200.

Dec. 27    Paid the account payable to Donegal, LLP, $600.

Dec. 28    Declared a dividend of 10 cents per share, payable on January 15, 2019.

Dec. 29    Cape Clear Island, LLC was named, along with Dever Landscaping and Westport Construction as a co-defendant in a $25,000 lawsuit filed. Dever Landscaping had left the rented backhoe in a fenced construction site owned by Westport Construction. After working hours on December 26, kids had climbed the fence to play on parked construction equipment. While playing on the backhoe, one fell and broke his arm. The extent of the company’s legal and financial responsibility for this accident, if any, cannot be determined at this time.

Dec. 29     Purchased a 12-month public liability insurance policy for $9,600. This policy protects the company against liability for injuries and property damage caused by its equipment. However, the policy goes into effect on January 1, 2019, and affords no coverage for the injuries sustained by the kids on December 26.

Dec. 31    Received a bill from Corraun Utilities for the month of        December for $700. Payment is due in 30 days.

Dec. 31     Equipment rental fees earned during the second half of December amounted to $20,000, of which $15,600 was received in cash.

Data for Adjusting Entries:

1. The advance payment of rent on December 1 covered a period of three months.

2. The annual interest rate on the note payable to Achill, LLP is 6 percent.

3. The rental equipment is being depreciated by the straight-line method over a period of 8 years.

4. Office supplies on hand at December 31 are estimated at $600.

5. During December, the company earned $3,700 of the rental fees paid in advance by McGinty Construction Company on December 8.

6. As of December 31, six days’ rent on the backhoe rented to Dever Landscaping on December 26 has been earned.

7. Salaries earned by employees since the last payroll date (December 26) amounted to $1,400 at month-end.

8. It is estimated that the company is subject to a combined federal, state and local income tax rate of 45 percent of income before income taxes (total revenue minus all expenses other than income taxes). These taxes will be payable in 2019.

Instructions:

1. Perform the following steps of the accounting cycle for the month of December:

1. Record in the general journal the December transactions and post to the appropriate ledger accounts.

2. Prepare the unadjusted trial balance on a 10-column worksheet for the year ended December 31. See example on page 134 (Exhibit 3B.1) in our text book.

3. Prepare the necessary adjusting entries for December.

4. Post the December adjusting entries to the appropriate ledger accounts.

5. Complete the 10-column worksheet for the year ended December 31.

b. In professional format, prepare an Income Statement and Statement of Shareholders’ Equity for the year ended December 31, and a Balance Sheet as of December 31.

c. Prepare required footnote disclosures to accompany the December 31 financial statements. Your solution should include a separate footnote addressing each of the following areas: (1) depreciation policy, (2) maturity dates of major liabilities, and (3) potential liability due to pending litigation. Look at the Facebook annual report’s footnotes posted to our Black Board homepage.

d. Prepare closing entries and post to ledger accounts.

e. Prepare an after closing trial balance as of December 31.

f. During December, this company’s cash balance has fallen from $200,000. Does it appear headed for insolvency in the near future? Explain your reasoning.

g. Would it be ethical for Maggie Driscoll to maintain the accounting records for this company, or must they be maintained by someone who is independent of the organization?

Yes No Are you placed under pressure to meet demanding work targets or deadlines? If yes, is the pressure a result of external sources or your own disorganisation? Has there been consistency in workload recently? (this is preferable to sudden increases in workload or working overtime) Have work pauses been taken as appropriate? Is the chair easily adjusted from a seated position? Can you get close to the workstation without impediment? Is the seat height adjustable so that your thighs are parallel to the floor, with feet resting on the floor or a footrest? Is the backrest height-adjusted to fit into the small of your back and adequately support your spine? Is the backrest angle-adjusted so that you are sitting upright while typing? Are your forearms parallel with the floor or slightly angled downward? Is the desk height adjustable? If yes, is the adjustment easily operated? If no, do you have a footrest? If there is a footrest, is it large enough to support both feet and allow a change of position? When sitting tall and looking straight ahead, are you looking at the top edge of the screen? Is the screen at a comfortable reading distance? Are all characters in the display easily legible and the image stable? Can the position and contrast of the screen be adjusted by the user? Is the keyboard detached from the screen to ensure a comfortable working position? Is the keyboard thin enough for comfortable positioning of the arms (it should be less than 30mm thick at the home row of keys)? Is the keyboard matte finished to prevent irritation from glare and reflection? Are all commonly used items within easy reach (normal arm reach with minimal truck movement)? Is there sufficient space for large documents, completed work or writing? Is there sufficient space for CAD furniture, equipment and hardcopy materials? Is the workstation designed to prevent undue twisting of the neck and trunk? Do you find the lighting satisfactory? Do you find the noise level conducive to concentration? Do you find the temperature and airflow in the room comfortable?

Service Department Charges

In divisional income statements prepared for LeFevre Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $39,208, and the Purchasing Department had expenses of $19,430 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records:

		Residential		Commercial		Government Contract
Sales		$406,000		$538,000		$1,236,000
Number of employees:
	Weekly payroll (52 weeks per year)	225		60		65
	Monthly payroll	36		47		34
Number of purchase
	requisitions per year	2,800		2,000		1,900

a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division.

	Residential	Commercial	Government Contract	Total
Number of payroll checks:
Weekly payroll
Monthly payroll
Total
Number of purchase requisitions per year:

b. Using the activity base information in (a), determine the annual amount of payroll and purchasing costs charged back to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services. If required, round your answers to two decimal places. Do not round your interim calculations, round your answers to two decimal places, if required.

Service department charge rates:
Payroll Department	$ payroll distribution
Purchasing Department	$ per requisition

	Residential	Commercial	Government Contract	Total
Service department charges:
Payroll Department	$	$	$	$
Purchasing Department
Total	$	$	$

c. Residential's service department charge is ___ than the other two divisions because Residential is a ____ user of service department services. Residential has many employees on a weekly payroll, which translates into a ___ number of check-issuing transactions.

A company produces a product which has a standard variable production cost of $8 per unit made up as

follows:

                                                               $ Per Unit

Direct material                                 $4.60 (2kg X $2.30 per kg)

Direct labour                                     $2.10 (0.7 hours x $3.00 per hour)

Variable overhead                          $1.3

Fixed manufacturing costs are treated as period costs. The following information is available for the period just ended,

Variable manufacturing cost of sales (at standard cost)                                  $263,520

Opening stock of finished goods (at standard cost)                                         $120,800

Closing stock of finished goods (at standard cost)                                          $146,080

Direct material price variance                                                                          $2,571 U

Raw materials used in manufacture (at actual cost)                                        $170,310

Direct labour rate variance                                                                               $4,760 U

Direct labour efficiency variance                                                                      $3,240 F

Required:

(a)   Determine for the period ended.

(i)              The total actual direct labour cost, and

(ii)              The actual cost per kg of raw material used.

(b)   Outline the possible causes of the raw materials variances

The company exchanged an asset for a similar asset. The exchange was with another company in the same line of business. The old asset had a cost of $1,000 and accumulated depreciation of $850. The old asset had a market value of $400 on the date of the exchange.

Make the journal entry necessary to record the exchange assuming that the company received the new machine and no cash. [Hint: The total market value of assets received (cash plus new asset) is the same as the market value of the asset given up ($400).] If an amount box does not require an entry, leave it blank.

Make the journal entry necessary to record the exchange assuming that the company received the new machine and a "large" amount of cash of $300. [Hint: The total market value of assets received (cash plus new asset) is the same as the market value of the asset given up ($400).] If an amount box does not require an entry, leave it blank.

Make the journal entry necessary to record the exchange assuming that the company received the new machine and a "small" amount of cash of $80. [Hint: The total market value of assets received (cash plus new asset) is the same as the market value of the asset given up ($400).] If an amount box does not require an entry, leave it blank.

Zugar Company is domiciled in a country whose currency is the dinar. Zugar begins 2017 with three assets: cash of 25,800 dinars, accounts receivable of 81,500 dinars, and land that cost 215,000 dinars when acquired on April 1, 2016. On January 1, 2017, Zugar has a 165,000 dinar note payable, and no other liabilities. On May 1, 2017, Zugar renders services to a customer for 135,000 dinars, which was immediately paid in cash. On June 1, 2017, Zugar incurred a 115,000 dinar operating expense, which was immediately paid in cash. No other transactions occurred during the year. Currency exchange rates for 1 dinar follow:

April 1, 2016	$0.48	=	1 dinar
January 1, 2017	0.51	=	1
May 1, 2017	0.52	=	1
June 1, 2017	0.54	=	1
December 31, 2017	0.56	=	1

1. Assume that Zugar is a foreign subsidiary of a U.S. multinational company that uses the U.S. dollar as its reporting currency. Assume also that the dinar is the subsidiary’s functional currency. What is the translation adjustment for this subsidiary for the year 2017?

2. Assume that Zugar is a foreign subsidiary of a U.S. multinational company that uses the U.S. dollar as its reporting currency. Assume also that the U.S. dollar is the subsidiary’s functional currency. What is the remeasurement gain or loss for 2017?

3. Assume that Zugar is a foreign subsidiary of a U.S. multinational company. On the December 31, 2017, balance sheet, what is the translated value of the Land account? On the December 31, 2017, balance sheet, what is the remeasured value of the Land account?

(Input all amounts as positive.)

Albright Chemical Company currently operates three manufacturing plants in​Colorado, Utah, and Arizona. Annual carbon emissions for these plants in the first quarter of 2018 are120,000metric tons per quarter​ (or 480,000 metric tons in 2018​). Albright management is investigating improved manufacturing techniques that will reduce annual carbon emissions to below 456,000metric tons so that the company can meet Environmental Protection Agency guidelines by 2019. Costs and benefits are as​ follows: Total cost to reduce carbon emissions $9 per metric ton reduced in 2019 below 480,000 metric tons Fine in 2019 if EPA guidelines are not met $423,000 Albright Management has chosen to use Kaizen budgeting to achieve its goal for carbon emissions. 1. If Albright reduces emissions by 2 % each​ quarter, beginning with the second quarter of 2018, will the company reach its goal of 456,000 metric tons by the end of 2019​? 2. What would be the net financial cost or benefit of their​ plan? Ignore the time value of money. 3. What factors other than cost might weigh into Albright​'s decision to carry out this​ plan? Requirement 1. If Albright reduces emissions by 2 % each​ quarter, beginning with the second quarter of 2018, will the company reach its goal of 456,000 metric tons by the end of 2019? ​(Round all intermediary calculations and the amounts you input in the cells to the nearest​ dollar.) Begin by calculating the quarterly emissions for each quarter through the end of 2019. Quarterly emissions Quarter (metric tons) 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 Will the company reach its goal of 456,000 metric tons by the end of 2019​? Yes, Albright will / No, Albright will not reach its goal of 456,000 metric tons by the end of 2019. Requirement 2. What would be the net financial cost or benefit of their​ plan? Ignore the time value of money. ​(Use parentheses or a minus sign to show a net​ benefit.) _______________ _______________ _______________ ________________ Net cost (benefit) of plan _________________ Requirement 3. What factors other than cost might weigh into Albright​'s decision to carry out this​ plan? Avoidance of the EPA fine should / should not be the​ company's sole motivation in carrying out this plan. Reducing carbon emissions has no impact on the environment is good for the environment, and will contribute to a smaller impact on climate change / is too costly and may not contribute to a smaller impact on climate change. Albright may be able to share this plan with the public to gain favorable publicity / petition the EPA for a waiver. Albright could choose to end this plan at the end of 2019​, and still avoid the EPA fine / pay the EPA fine​; ​however, company management has no obligation to reduce carbon emissions should / strive to continue reducing carbon emissions if they have the technology to do so.

Explain the auditors’ responsibilities when planning the audit

1. What is the balance in a bank account at the end of 10 years if $2,500 is deposited today and the account earnd 4% interest compounded annually? Quarterly?

2. If you deposit $10 in an account that pays 5% inteterst, compounded annually, how much will you have at the end of 10 years? 20 years? 50 years?

3. Suppose you deposit $100,000 in an account today that pays 6% interest, compounded annually. How long does it take before the balance in your account is $500,000?

7.  An intercompany sale took place whereby the book value exceeded the transfer price of a depreciable asset. Which statement is true for the year following the sale?

a A worksheet entry is made with a debit to retained earnings for an upstream transfer.

b A worksheet entry is made with a debit to retained earnings for a downstream transfer.

c A worksheet entry is made with a debit to investment in the subsidiary for a downstream transfer.

d A worksheet entry is made with a credit to retained earnings for an upstream transfer.

e No worksheet entry is necessary.

8. A net asset balance sheet exposure exists, and the foreign currency depreciates. Which of the following statements is true?

a There is no translation adjustment.

b There is a negative translation adjustment.

c There is a positive translation adjustment.

d There is a transaction loss.

e There is a transaction gain.

9. Cline, Watters, and Nettles formed a partnership on January 1, 20X1, with investments of $100,000, $150,000, and $200,000, respectively. For division of income, they agreed to

(1) an interest of 10% of the beginning capital balance each year;
(2) an annual compensation of $10,000 to Watter; and
(3) sharing the remainder of the income or loss in a ratio of 20% for Cline and 40% each for Watters and Nettles.

Net income was $150,000 in 20X1 and $180,000 in 20X2. Each partner withdrew $1,000 for personal use every month during 20X1 and 20X2.

What was Watters's capital balance at the end of 20X1?

a $150,000

b $160,000

c $165,000

d $201,000

e $213,000

Differential Analysis for a Discontinued Product

The condensed product-line income statement for Suffolk China Ware Company for the month of May is as follows:

Suffolk China Ware Company Product-Line Income Statement For the Month Ended May 31
	Bowls			Plates			Cups
Sales	$64,900			$89,400			$26,700
Cost of goods sold	25,700			33,400			14,300
Gross profit	$39,200			$56,000			$12,400
Selling and administrative expenses	30,200			35,000			15,700
Income from operations	$9,000			$21,000			$(3,300)

Fixed costs are 12% of the cost of goods sold and 41% of the selling and administrative expenses. Suffolk China Ware assumes that fixed costs would not be materially affected if the Cups line were discontinued.

a. Prepare a differential analysis dated May 31 to determine if Cups should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential Analysis
Continue Cups (Alt. 1) or Discontinue Cups (Alt. 2)
For the Month Ended May 31
	Continue Cups (Alternative 1)	Discontinue Cups (Alternative 2)	Differential Effect on Income (Alternative 2)
Revenues	$	$	$
Costs:
Variable cost of goods sold
Variable selling and admin. expenses
Fixed costs
Income (Loss)	$	$	$

b. Should the Cups line be retained? Explain.
Yes or No

As indicated by the differential analysis in part (a), the income will __________ by $______ if the Cups line is discontinued.

______     8.      Assume the offer price for an IPO is set at $25 per share and the shares issued in the IPO is 10 million. The lead underwriter, however, sells 11.5 million shares to investors at the $25 offer price, planning to use the overallotment option, if needed, to satisfy its short position. Assume that the IPO firm’s stock starts trading on the stock exchange at either $23 per share or $27 per share. In which of these two possible stock prices will the lead underwriter most likely exercise its overallotment option?

A. If the stock starts trading at $23 per share.

B. If the stock starts trading at $27 per share.

______     1.      The following are four dates that are related to a firm’s regular quarterly cash dividend equal to $1 per share. Assume you want to receive the $1 dividend, but you don’t currently own the stock. What is the latest day that you can buy the stock and still ensure that you will receive the $1 dividend? (Assume all the days listed below and all the days given in the possible answers are business days in which the stock market is open.)

Declaration date	Ex-Date	Record Date	Payment Date
Jan 31, 2018 (Wed)	Feb 14, 2018 (Wed)	Feb 15, 2018 (Thurs)	Feb 28, 2018 (Wed)

______     2.      Assume a company pays a $2.5 dividend. The stock’s price is $20 per share on the day before the stock’s ex-dividend day and $19 on the ex-dividend date. What is the stock’s return for this one-day period?