One of the differences between Managerial Accounting and Financial Accounting is reporting flexibility. Financial reporting is restricted by Generally Accepted Accounting Principles whereas reporting in Managerial Accounting has fewer rules.

Why is it permissible to violate Generally Accepted Accounting Principles when preparing reports used strictly by company management? Should external users always have the same information as internal users?

On April 1, 2017, Jiro Nozomi created a new travel agency, Adventure Travel. The following transactions occurred during the company’s first month.

The company's chart of accounts follows:

Use the following information:

1. Two-thirds (or $128) of one month’s insurance coverage has expired.
2. At the end of the month, $700 of office supplies are still available.
3. This month’s depreciation on the computer equipment is $500.
4. Employees earned $600 of unpaid and unrecorded salaries as of month-end.
5. The company earned $1,750 of commissions that are not yet billed at month-end.

Required:
1. & 2. Prepare journal entries to record the transactions for April and post them to the ledger accounts in Requirement 6b. The company records prepaid and unearned items in balance sheet accounts.
3. Using account balances from Requirement 6b, prepare an unadjusted trial balance as of April 30.
4. Journalize and post the adjusting entries for the month and prepare the adjusted trial balance.
5a. Prepare the income statement for the month of April 30, 2017.
5b. Prepare the statement of retained earnings for the month of April 30, 2017.
5c. Prepare the balance sheet at April 30, 2017.
6a. Prepare journal entries to close the temporary accounts and then post to Requirement 6b.
6b. Post the journal entries to the ledger.
7. Prepare a post-closing trial balance.

Average Rate of Return Method, Net Present Value Method, and Analysis

The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows:

Each project requires an investment of $400,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 10% for purposes of the net present value analysis.

Required:

1a. Compute the average rate of return for each investment. If required, round your answer to one decimal place.

1b. Compute the net present value for each investment. Use the present value of $1 table above. If required, use the minus sign to indicate a negative net present value.

2. The warehouse has a   net present value as tracking technology cash flows occur   in time. Thus, if only one of the two projects can be accepted, the   would be the more attractive.

Due to erratic sales of its sole product—a high-capacity battery for laptop computers—PEM, Inc., has been experiencing financial difficulty for some time. The company’s contribution format income statement for the most recent month is given below: Sales (13,200 units × $30 per unit) $ 396,000 Variable expenses 237,600 Contribution margin 158,400 Fixed expenses 176,400 Net operating loss $ (18,000 ) Required: 1. Compute the company’s CM ratio and its break-even point in unit sales and dollar sales. 2. The president believes that a $6,100 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $82,000 increase in monthly sales. If the president is right, what will be the increase (decrease) in the company’s monthly net operating income? 3. Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $30,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)? 4. Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would grow sales. The new package would increase packaging costs by 0.50 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,000? 5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $59,000 each month. a. Compute the new CM ratio and the new break-even point in unit sales and dollar sales. b. Assume that the company expects to sell 21,000 units next month. Prepare two contribution format income statements, one assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, as well as in total, for each alternative.) c. Would you recommend that the company automate its operations (Assuming that the company expects to sell 21,000)?

1. Explain some of the differences between Dow Jones Industrial Average (DJIA) and the NASDAQ index?
2. With respect to bank capitalization, what are the “Basel I” rules? Describe the weightings given to different types of debt.

If you were an auditor, how would you review a company’s accounting related records to identify potential liabilities which were not reported on the company’s balance sheet?

Cost Assignment and JIT

Bunker Company produces two types of glucose monitors (basic and advanced). Both pass through two producing departments: Fabrication and Assembly. Bunker also has an Inspection Department that is responsible for testing monitors to ensure that they perform within prespecified tolerance ranges (a sampling procedure is used). Budgeted data for the three departments are as follows:

In the Fabrication Department, the basic model requires 1 hour(s) of direct labor and the advanced model requires 2 hour(s). In the Assembly Department, the basic model requires 1.2 hour(s) of direct labor and the advanced model requires 2.25 hours. There are 60,000 basic units produced and 32,000 advanced units.

Immediately after preparing the budgeted data, a consultant suggests that two manufacturing cells be created: one for the manufacture of the basic model and the other for the manufacture of the advanced model. Raw materials would be delivered to each cell, and goods would be shipped immediately to customers upon completion. Workers within each cell would also be trained to perform monitor testing. The total direct overhead costs estimated for each cell would be $304,000 for the basic cell and $960,000 for the advanced cell.

Required:

1. Allocate the inspection costs to each department.

Compute the overhead cost per unit for each monitor. Overhead rates use direct labor hours. Round your intermediate calculations and final answers to the nearest cent.

2. Compute the overhead cost per unit if manufacturing cells are created. If required, round your intermediate calculations and final answers to the nearest cent.

Which unit overhead cost do you think is more accurate—the one computed with a departmental structure, or the one computed using a cell structure?

Warnerwoods Company uses a periodic inventory system. It entered into the following purchases and sales transactions for March. Date Activities Units Acquired at Cost Units Sold at Retail Mar. 1 Beginning inventory 140 units @ $75 per unit Mar. 5 Purchase 440 units @ $80 per unit Mar. 9 Sales 460 units @ $110 per unit Mar. 18 Purchase 200 units @ $85 per unit Mar. 25 Purchase 280 units @ $87 per unit Mar. 29 Sales 240 units @ $120 per unit Totals 1,060 units 700 units For specific identification, the March 9 sale consisted of 90 units from beginning inventory and 370 units from the March 5 purchase; the March 29 sale consisted of 80 units from the March 18 purchase and 160 units from the March 25 purchase. 3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification.

What are some patterns that could be found using diagnostic analysis? Between which types of variables?

A lease agreement that qualifies as a finance lease calls for annual lease payments of $20,000 over a eight-year lease term (also the asset’s useful life), with the first payment at January 1, 2016, the beginning of the lease. The interest rate is 4%. The lessor’s fiscal year is the calendar year. The lessor manufactured this asset at a cost of $128,000. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: a. Determine the price at which the lessor is “selling” the asset (present value of the lease payments). b. Create a partial amortization schedule through the second payment on January 1, 2017. c. What would be the amounts related to the lease that the lessor would report in its income statement for the year ended December 31, 2017 (ignore taxes)?

Subsequent Events Facts:

You are performing an annual audit of a company with a December 31, 20X1 year-end. Your firm is planning to complete the audit on March 1, 20X2 and release the report on March 31, 20X2. On March 15, 20X2, two material subsequent events occur:

• A fire caused extensive damage to the company’s manufacturing plant in New Jersey.

• A large customer went bankrupt. At December 31, 20X1, the Company had a receivable of $2,500,000 from this customer; at December 31, 20X1 the Company had established an allowance for doubtful accounts of $700,000 for this customer.

Required:

1. Explain whether each subsequent event is a Type 1 or Type 2 Subsequent Event.

2. What is the impact of each subsequent event on the company’s audited financial statements for the year ended December 31, 20X1? Be specific as to whether (a) there will be an adjustment which will cause the company’s balance sheet and / or income statement to change plus footnote disclosure, (b) there will only be footnote disclosure, or (c) there will be no impact to either the financial statements or the footnote disclosures.

3. How should your Audit Firm date its audit report?

25

Chhom, Inc., manufactures and sells two products: Product F9 and Product U4. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:

The direct labor rate is $24.40 per DLH. The direct materials cost per unit is $258 for Product F9 and $215 for Product U4.

The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:

The overhead applied to each unit of Product U4 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)

I am supposed to provide verbiage (shown below) and a chart to support the verbiage. I need your help in making a chart that I can paste into my word document from the current ratios from PepsiCo and Coca-Cola provided below. I know very little about excel or charts and hope you can assist me in learning this process. It will definitely be worth a 5-star rating for you. Thank you for your time and support.

The current ratio is enumerated from the balance sheet and is a comparison of the current assets to current liabilities which is calculated by dividing the two numbers (Law, 2016). PepsiCo’s total current assets for 2017 were $31,027,000 and the total current liabilities for the same period was $20,502,000. When these two numbers are divided, the current ratio is 1.51: 1 (PepsiCo, 2019). Coca-Cola’s total current assets for the same time frame were $36,545,000 and their total current liabilities in 2017 equaled $27,194,000. The partition of the statistics is equivalent to the current ratio of 1.34: 1 (Coca-Cola, 2018).

One Friday afternoon years ago I was sitting in my office as the CEO of a young software company, when my department heads of software development and finance came in separately to each request an additional $125,000 in funding. My software development director wanted new product testing equipment and my CFO wanted to upgrade our accounting and business systems software. Both were legitimate requests that would help move the business forward. I couldn’t help but laugh: In the span of 10 minutes I was being asked to approve two unplanned expenses of $125,000, and they were as different as apples and oranges. Framing the Problem This story captures the dilemma faced by CEOs every day and is unique to the job. How do you compare two expenses that have almost no relation to each other?

When you have to decide between two expenses, you choose the one that you think based upon your experience will generate the most.

True or False and why please:)

On May 31, 2016, Sandals report purchased a truck at a cost of $160,000. before placing the truck into service, The company spend $2,500 painting it, $500 replacing tires, and $5,000 overhauling the engine. The truck should remain in service for 5 years and have a residual value of $7,500. The truck’s annual mileage is expected to be 15,000 in each of the first two years and 10,000 miles in the next three years. In deciding which depreciation method to use, the general manager request depreciation schedule for each of the depreciation methods (straight line, unit-of production, and double – declining-balance). work out each depreciation in the depreciation schedule. pass all transaction in the journal entry. journal entry must be included. show working out for each depreciation.

work out the unit of production depreciation in the depreciation schedule. should work out based off the following information listed below

Miles                                       60,000

Cost                                         165,000                                  

Residual value                        7,500                                      

Depreciable amount                $165,000 - $7,500 = $157,500

Depreciation per unit             157,500 / 60,000 = 2.63