• Assess the key ratios for profitability, liquidity, and solvency used by financial analysts to evaluate the financial performance of a company. Next, indicate one (1) ratio from each of the three (3) categories (profitability, liquidity, and solvency) that you believe to be most indicative of future performance. Use actual ratios from a company of your choice to provide support for your rationale.

Activity-Based Budget

Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are 15,350 for the Sleepeze, 12,280 for the Plushette, and 5,400 for the Ultima. Gene Dixon, vice president of sales, has provided the following information:

1. Salaries for his office (including himself at $65,000, a marketing research assistant at $41,400, and an administrative assistant at $27,450) are budgeted for $133,850 next year.
2. Depreciation on the offices and equipment is $22,750 per year.
3. Office supplies and other expenses total $23,500 per year.
4. Advertising has been steady at $22,850 per year. However, the Ultima is a new product and will require extensive advertising to educate consumers on the unique features of this high-end mattress. Gene believes the company should spend 15 percent of first-year Ultima sales for a print and television campaign.
5. Commissions on the Sleepeze and Plushette lines are 6 percent of sales. These commissions are paid to independent jobbers who sell the mattresses to retail stores.
6. Last year, shipping for the Sleepeze and Plushette lines averaged $55 per unit sold. Gene expects the Ultima line to ship for $70 per unit sold since this model features a larger mattress.

Suppose that Gene is considering three sales scenarios as follows:

Suppose Gene determines that next year's Sales Division activities include the following:

Research—researching current and future conditions in the industry

On July 1, Year 1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $3,000,000 of 6-year, 9% bonds at a market (effective) interest rate of 10%, receiving cash of $2,867,050. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.

Required:

1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1. For a compound transaction, if an amount box does not require an entry, leave it blank.

2. Journalize the entries to record the following: For a compound transaction, if an amount box does not require an entry, leave it blank. Round your answer to the nearest dollar.

a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method.

b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method.

3. Determine the total interest expense for Year 1. Round to the nearest dollar.
$

4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest?
Yes

5. Compute the price of $2,867,050 received for the bonds by using Table 1, Table 2, Table 3 and Table 4. (Round to the nearest dollar.) Your total may vary slightly from the price given due to rounding differences.

The client has inventory at approximately 50 locations in a three-province region. The inventory is difficult to count and can be observed only by travelling by automobile. The internal controls over acquisitions, cash disbursements, and perpetual records are considered effective. This is the fifth year that you have done the audit, and audit results in past years have always been excellent. The client is in excellent financial condition.

Required

Recommend an evidence mix for the five types of tests for the audit of inventory and cost of goods sold. Justify your answer. Include in your recommendations both tests of controls and substantive tests.

Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $405,000 in cash. The subsidiary's stockholders' equity accounts totaled $389,000 and the noncontrolling interest had a fair value of $45,000 on that day. However, a building (with a nine-year remaining life) in Brey's accounting records was undervalued by $27,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (four-year remaining life).

Brey reported net income from its own operations of $71,000 in 2016 and $87,000 in 2017. Brey declared dividends of $22,500 in 2016 and $26,500 in 2017.

At December 31, 2018, Pitino owes Brey $23,000 for inventory acquired during the period.

The following separate account balances are for these two companies for December 31, 2018, and the year then ended.

Note: Parentheses indicate a credit balance.

1. What amounts make up the $85,320 Equity Earnings of Brey account balance for 2018?

2. What is the net income attributable to the noncontrolling interest for 2018?

3. What amounts make up the $528,300 Investment in Brey account balance as of December 31, 2018?

4. Prepare the 2018 worksheet entry to eliminate the subsidiary’s beginning owners’ equity balances.

5. Without preparing a worksheet or consolidation entries, determine the consolidation balances for these two companies.

Quality Brick Company produces bricks in two processing departments—Molding and Firing. Information relating to the company’s operations in March follows:

1. Raw materials used in production: Molding Department, $26,100; and Firing Department, $4,300.
2. Direct labor costs incurred: Molding Department, $19,900; and Firing Department, $4,700.
3. Manufacturing overhead was applied: Molding Department, $23,100; and Firing Department, $36,200.
4. Unfired, molded bricks were transferred from the Molding Department to the Firing Department. According to the company’s process costing system, the cost of the unfired, molded bricks was $69,400.
5. Finished bricks were transferred from the Firing Department to the finished goods warehouse. According to the company’s process costing system, the cost of the finished bricks was $107,700.
6. Finished bricks were sold to customers. According to the company’s process costing system, the cost of the finished bricks sold was $105,000.

Required:

Prepare journal entries to record items (a) through (f) above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Pina Colada Corp. had the following long-term receivable account balances at December 31, 2016.

Transactions during 2017 and other information relating to Pina's long-term receivables were as follows:

Determine the amount of interest income that should be reported in 2017. (Do not round intermediate calculations. Round answers to 0 decimal places, e.g. 8,971.)

Determine the portion of the note and any interest that should be reported in current assets at December 31, 2017.

Determine the portion of the note that should be reported as a long-term investment at December 31, 2017.

Prepare a schedule showing the current portion of the long-term receivables and accrued interest receivable that would appear in Pina's statement of financial position at December 31, 2017.

Determine the total interest income from the long-term receivables that would appear on Pina's income statement for the year ended December 31, 2017.

Total interest income for year ended 12/31/17

1. The following are errors or fraud and other irregularities that have occurred in Fresh Foods Grocery Store Ltd., a wholesale and retail grocery company.

   1. The incorrect price was used on sales invoices for billing shipments to customers because the incorrect price was entered into a computer file.

   2. A vendor’s invoice was paid twice for the same shipment. The second payment arose because the vendor sent a duplicate copy of the original two weeks after the payment was due.

   3. Employees in the receiving department stole some sides of beef. When a shipment of meat was received, the receiving department filled out a receiving report and forwarded it to the accounting department for the amount of goods actually received. At that time, two sides of beef were put in an employee’s pickup truck rather than in the storage freezer.

   4. During the physical count of inventory of the retail grocery, one counter wrote down the wrong description of several products and miscounted the quantity.

   5. A salesperson sold several hundred kilograms of lamb at a price below cost because she did not know that the cost of lamb had increased in the past week.

   6. On the last day of the year, a truckload of beef was set aside for shipment but was not shipped. Because it was still on hand, it was counted as inventory. The shipping document was dated the last day of the year, so it was also included as a current-year sale.

Required

1. For each error or fraud and other irregularity, identify one or more types of controls that were absent.

2. For each error or fraud and other irregularity, identify the objectives that have not been met.

3. For each error or fraud and other irregularity, suggest a control to correct the deficiency.

describe an effective accounting informaion system and explain managements role in it

Please explain about Purchases Discounts and Purchases Returns and Allowances. Please indicate the purpose of these accounts. Do they appear on the Financial Statements?

2. Please explain about Sales Discounts. Why are they necessary? Does this account appear on the Financial Statements?

3. How are sales to customers using credit cards recorded?

4. Please create an example of an Income Statement for a merchandising business.

Worley Company buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundreds of hospitals. Worley sets its prices for all hospitals by marking up its cost of goods sold to those hospitals by 10%. For example, if a hospital buys supplies from Worley that cost Worley $100 to buy from manufacturers, Worley would charge the hospital $110 to purchase these supplies.

For years, Worley believed that the 10% markup covered its selling and administrative expenses and provided a reasonable profit. However, in the face of declining profits, Worley decided to implement an activity-based costing system to help improve its understanding of customer profitability. The company broke its selling and administrative expenses into five activities as shown:

Worley gathered the data below for two of the many hospitals that it serves—University and Memorial (each hospital purchased medical supplies that had cost Worley $39,000 to buy from manufacturers):

Required:

1. Compute the total activity costs that would be assigned to University and Memorial.

2. Compute Worley’s customer margin for University and Memorial. (Hint: Do not overlook the $39,000 cost of goods sold that Worley incurred serving each hospital.)

Paul Sabin organized Sabin Electronics 10 years ago to produce and sell several electronic devices on which he had secured patents. Although the company has been fairly profitable, it is now experiencing a severe cash shortage. For this reason, it is requesting a $530,000 long-term loan from Gulfport State Bank, $115,000 of which will be used to bolster the Cash account and $415,000 of which will be used to modernize equipment. The company’s financial statements for the two most recent years follow:

During the past year, the company introduced several new product lines and raised the selling prices on a number of old product lines in order to improve its profit margin. The company also hired a new sales manager, who has expanded sales into several new territories. Sales terms are 3/10, n/30. All sales are on account.

Required:

1. To assist in approaching the bank about the loan, Paul has asked you to compute the following ratios for both this year and last year:

a. The amount of working capital.

b. The current ratio.

c. The acid-test ratio.

d. The average collection period. (The accounts receivable at the beginning of last year totaled $280,000.)

e. The average sale period. (The inventory at the beginning of last year totaled $530,000.)

f. The operating cycle.

g. The total asset turnover. (The total assets at the beginning of last year were $2,510,000.)

h. The debt-to-equity ratio.

i. The times interest earned ratio.

j. The equity multiplier. (The total stockholders’ equity at the beginning of last year totaled $1,361,000.)

2. For both this year and last year:

a. Present the balance sheet in common-size format.

b. Present the income statement in common-size format down through net income.

NB: Please I need all parts to be answered

For public companies, Section 301 of the Sarbanes-Oxley Act has specific requirements for the composition and duties of the audit committee. Describe three of those requirements.

Worley Company buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundreds of hospitals. Worley sets its prices for all hospitals by marking up its cost of goods sold to those hospitals by 9%. For example, if a hospital buys supplies from Worley that cost Worley $100 to buy from manufacturers, Worley would charge the hospital $109 to purchase these supplies.

For years, Worley believed that the 9% markup covered its selling and administrative expenses and provided a reasonable profit. However, in the face of declining profits, Worley decided to implement an activity-based costing system to help improve its understanding of customer profitability. The company broke its selling and administrative expenses into five activities as shown:

Worley gathered the data below for two of the many hospitals that it serves—University and Memorial (each hospital purchased medical supplies that had cost Worley $33,000 to buy from manufacturers):

Required:

1. Compute the total revenue that Worley would receive from University and Memorial.

2. Compute the activity rate for each activity cost pool.

3. Compute the total activity costs that would be assigned to University and Memorial.

4. Compute Worley’s customer margin for University and Memorial. (Hint: Do not overlook the $33,000 cost of goods sold that Worley incurred serving each hospital.)