Pina Colada Corp. had the following long-term receivable account balances at December 31, 2016.
| Notes receivable - Sale of division | $1,809,000 | |
| Notes receivable - Employees | 399,000 |
Transactions during 2017 and other information relating to Pina's long-term receivables were as follows:
| 1. | The $1,809,000 note receivable is dated May 1, 2016, bears interest at 8%, and represents the balance of the consideration received from the sale of Pina's electronics division to Blossom Company. Principal payments of $603,000 plus appropriate interest are due on May 1, 2017, 2018, and 2019. The first principal and interest payment was made on May 1, 2017. Collection of the note instalments is reasonably assured. | |
| 2. | The $399,000 note receivable is dated December 31, 2016, bears interest at 7%, and is due on December 31, 2019. The note is due from Marcia Cumby, president of Pina Colada Corp., and is secured by 11,600 Pina's common shares. Interest is payable annually on December 31, and the interest payment was made on December 31, 2017. The quoted market price of Pina's common shares was $40 per share on December 31, 2017. | |
| 3. | On April 1, 2017, Pina's sold a patent to Sunland Company in exchange for a $201,000 non–interest-bearing note due on April 1, 2019. There was no established exchange price for the patent, and the note had no ready market. The prevailing rate of interest for a note of this type at April 1, 2017, was 12%. The present value of $1 for two periods at 12% is 0.79719 (use this factor). The patent had a carrying amount of $41,300 at January 1, 2017, and the amortization for the year ended December 31, 2017 would have been $7,300. The collection of the note receivable from Sunland is reasonably assured. | |
| 4. | On July 1, 2017, Pina's sold a parcel of land to Kingbird Inc. for $201,500 under an instalment sale contract. Kingbird made a $52,500 cash down payment on July 1, 2017, and signed a four-year, 12% note for the $149,000 balance. The equal annual payments of principal and interest on the note will be $49,056, payable on July 1, 2018, through July 1, 2021. The land could have been sold at an established cash price of $200,000. The cost of the land to Pina's was $141,000. Collection of the instalments on the note is reasonably assured. | |
| 5. | On August 1, 2017, Pina's agreed to allow its customer, Saini Inc., to substitute a six-month note for accounts receivable of $200,000 it owed. The note bears interest at 6% and principal and interest are due on the maturity date of the note. |
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
In: Accounting
The following are errors or fraud and other irregularities that have occurred in Fresh Foods Grocery Store Ltd., a wholesale and retail grocery company.
The incorrect price was used on sales invoices for billing shipments to customers because the incorrect price was entered into a computer file.
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.
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.
During the physical count of inventory of the retail grocery, one counter wrote down the wrong description of several products and miscounted the quantity.
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.
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
For each error or fraud and other irregularity, identify one or more types of controls that were absent.
For each error or fraud and other irregularity, identify the objectives that have not been met.
For each error or fraud and other irregularity, suggest a control to correct the deficiency.
In: Accounting
describe an effective accounting informaion system and explain managements role in it
In: Accounting
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.
In: Accounting
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:
| Activity Cost Pool (Activity Measure) | Total Cost | Total Activity | |||
| Customer deliveries (Number of deliveries) | $ | 616,000 | 7,000 | deliveries | |
| Manual order processing (Number of manual orders) | 365,000 | 5,000 | orders | ||
| Electronic order processing (Number of electronic orders) | 364,000 | 14,000 | orders | ||
| Line item picking (Number of line items picked) | 875,000 | 500,000 | line items | ||
| Other organization-sustaining costs (None) | 660,000 | ||||
| Total selling and administrative expenses | $ | 2,880,000 | |||
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):
|
Activity |
||
| Activity Measure | University | Memorial |
| Number of deliveries | 10 | 20 |
| Number of manual orders | 0 | 45 |
| Number of electronic orders | 15 | 0 |
| Number of line items picked | 130 | 200 |
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.)
In: Accounting
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:
| Sabin Electronics | ||||
| Comparative Balance Sheet | ||||
| This Year | Last Year | |||
| Assets | ||||
| Current assets: | ||||
| Cash | $ | 82,000 | $ | 180,000 |
| Marketable securities | 0 | 21,000 | ||
| Accounts receivable, net | 516,000 | 330,000 | ||
| Inventory | 980,000 | 625,000 | ||
| Prepaid expenses | 22,000 | 25,000 | ||
| Total current assets | 1,600,000 | 1,181,000 | ||
| Plant and equipment, net | 1,570,200 | 1,400,000 | ||
| Total assets | $ | 3,170,200 | $ | 2,581,000 |
| Liabilities and Stockholders Equity | ||||
| Liabilities: | ||||
| Current liabilities | $ | 815,000 | $ | 460,000 |
| Bonds payable, 12% | 750,000 | 750,000 | ||
| Total liabilities | 1,565,000 | 1,210,000 | ||
| Stockholders' equity: | ||||
| Common stock, $15 par | 720,000 | 720,000 | ||
| Retained earnings | 885,200 | 651,000 | ||
| Total stockholders’ equity | 1,605,200 | 1,371,000 | ||
| Total liabilities and stockholders' equity | $ | 3,170,200 | $ | 2,581,000 |
| Sabin Electronics | ||||
| Comparative Income Statement and Reconciliation | ||||
| This Year | Last Year | |||
| Sales | $ | 5,150,000 | $ | 4,440,000 |
| Cost of goods sold | 3,905,000 | 3,480,000 | ||
| Gross margin | 1,245,000 | 960,000 | ||
| Selling and administrative expenses | 659,000 | 554,000 | ||
| Net operating income | 586,000 | 406,000 | ||
| Interest expense | 90,000 | 90,000 | ||
| Net income before taxes | 496,000 | 316,000 | ||
| Income taxes (30%) | 148,800 | 94,800 | ||
| Net income | 347,200 | 221,200 | ||
| Common dividends | 113,000 | 92,000 | ||
| Net income retained | 234,200 | 129,200 | ||
| Beginning retained earnings | 651,000 | 521,800 | ||
| Ending retained earnings | $ | 885,200 | $ | 651,000 |
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
In: Accounting
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.
In: Accounting
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:
| Activity Cost Pool (Activity Measure) | Total Cost | Total Activity | |||
| Customer deliveries (Number of deliveries) | $ | 516,000 | 6,000 | deliveries | |
| Manual order processing (Number of manual orders) | 420,000 | 6,000 | orders | ||
| Electronic order processing (Number of electronic orders) | 220,000 | 11,000 | orders | ||
| Line item picking (Number of line items picked) | 1,081,000 | 460,000 | line items | ||
| Other organization-sustaining costs (None) | 620,000 | ||||
| Total selling and administrative expenses | $ | 2,857,000 | |||
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):
|
Activity |
||
| Activity Measure | University | Memorial |
| Number of deliveries | 19 | 22 |
| Number of manual orders | 0 | 47 |
| Number of electronic orders | 16 | 0 |
| Number of line items picked | 110 | 290 |
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.)
In: Accounting
Presented below are several facts related to ABC Company. Assume that no mention of these facts was made in the financial statements and the related notes. Your job is to determine the appropriate accounting treatment and disclosure to the notes to the financial statements. You must be specific on what details should be included to the notes of the financial statements.
In: Accounting
1. An individual who is eligible to be claimed as a dependent on another's return and has $1,000 of earned income may claim a standard deduction of $1,350.
True
False
Andres and Lakeisha are married and file jointly. Andres is 72 years old and in good health. Lakeisha is 62 years old and blind. What amount of standard deduction can Andres and Lakeisha claim in 2019?
|
$27,700. |
||
|
$25,700. |
||
|
$27,000. |
||
|
$25,850. |
||
|
None of the choices are correct. |
Angelena files as a head of household. In 2019, she reported $53,450 of taxable income, including a $10,000 qualified dividend. What is her gross tax liability, rounded to the nearest whole dollar amount? (Use the Tax rate schedules, long-term capital gains tax brackets.)
|
$5,042 |
||
|
$4,937 |
||
|
$6,437 |
||
|
$6,137 |
Assuming the kiddie tax applies, what amount of a child's income is subject to the kiddie tax?
|
The net unearned income |
||
|
Taxable income less the standard deduction |
||
|
All of the unearned income |
||
|
All of the child's income |
In: Accounting
Internal Rate of Return
A project is estimated to cost $537,280 and provide annual net cash flows of $73,000 for 10 years.
| Present Value of an Annuity of $1 at Compound Interest | |||||
| Year | 6% | 10% | 12% | 15% | 20% |
| 1 | 0.943 | 0.909 | 0.893 | 0.870 | 0.833 |
| 2 | 1.833 | 1.736 | 1.690 | 1.626 | 1.528 |
| 3 | 2.673 | 2.487 | 2.402 | 2.283 | 2.106 |
| 4 | 3.465 | 3.170 | 3.037 | 2.855 | 2.589 |
| 5 | 4.212 | 3.791 | 3.605 | 3.353 | 2.991 |
| 6 | 4.917 | 4.355 | 4.111 | 3.785 | 3.326 |
| 7 | 5.582 | 4.868 | 4.564 | 4.160 | 3.605 |
| 8 | 6.210 | 5.335 | 4.968 | 4.487 | 3.837 |
| 9 | 6.802 | 5.759 | 5.328 | 4.772 | 4.031 |
| 10 | 7.360 | 6.145 | 5.650 | 5.019 | 4.192 |
Determine the internal rate of return for this project, using
the Present Value of an Annuity of $1 at Compound
Interest table shown above.
In: Accounting
A comparative balance sheet and an income statement for Burgess Company are given below:
| Burgess Company Comparative Balance Sheet (dollars in millions) |
|||||
| Ending Balance | Beginning Balance | ||||
| Assets | |||||
| Current assets: | |||||
| Cash and cash equivalents | $ | 48 | $ | 99 | |
| Accounts receivable | 730 | 669 | |||
| Inventory | 695 | 646 | |||
| Total current assets | 1,473 | 1,414 | |||
| Property, plant, and equipment | 1,595 | 1,565 | |||
| Less accumulated depreciation | 824 | 678 | |||
| Net property, plant, and equipment | 771 | 887 | |||
| Total assets | $ | 2,244 | $ | 2,301 | |
| Liabilities and Stockholders' Equity | |||||
| Current liabilities: | |||||
| Accounts payable | $ | 278 | $ | 169 | |
| Accrued liabilities | 189 | 161 | |||
| Income taxes payable | 95 | 81 | |||
| Total current liabilities | 562 | 411 | |||
| Bonds payable | 460 | 690 | |||
| Total liabilities | 1,022 | 1,101 | |||
| Stockholders' equity: | |||||
| Common stock | 190 | 190 | |||
| Retained earnings | 1,032 | 1,010 | |||
| Total stockholders' equity | 1,222 | 1,200 | |||
| Total liabilities and stockholders' equity | $ | 2,244 | $ | 2,301 | |
| Burgess Company Income Statement (dollars in millions) |
||
| Sales | $ | 3,970 |
| Cost of goods sold | 2,720 | |
| Gross margin | 1,250 | |
| Selling and administrative expenses | 898 | |
| Net operating income | 352 | |
| Nonoperating items: | ||
| Gain on sale of equipment | 2 | |
| Income before taxes | 354 | |
| Income taxes | 130 | |
| Net income | $ | 224 |
Burgess also provided the following information:
The company did not issue any new bonds during the year.
The company paid a cash dividend during the year.
The company did not complete any common stock transactions during the year.
Required:
Using the indirect method, prepare a statement of cash flows for the year. (Enter your answers in millions not in dollars. List any deduction in cash and cash outflows as negative amounts.)
In: Accounting
Joyner Company’s income statement for Year 2 follows:
| Sales | $ | 719,000 |
| Cost of goods sold | 177,000 | |
| Gross margin | 542,000 | |
| Selling and administrative expenses | 216,000 | |
| Net operating income | 326,000 | |
| Nonoperating items: | ||
| Gain on sale of equipment | 6,000 | |
| Income before taxes | 332,000 | |
| Income taxes | 132,800 | |
| Net income | $ | 199,200 |
Its balance sheet amounts at the end of Years 1 and 2 are as follows:
| Year 2 | Year 1 | ||||
| Assets | |||||
| Cash and cash equivalents | $ | 137,800 | $ | 32,000 | |
| Accounts receivable | 278,000 | 145,000 | |||
| Inventory | 319,000 | 285,000 | |||
| Prepaid expenses | 9,000 | 18,000 | |||
| Total current assets | 743,800 | 480,000 | |||
| Property, plant, and equipment | 621,000 | 519,000 | |||
| Less accumulated depreciation | 165,000 | 131,500 | |||
| Net property, plant, and equipment | 456,000 | 387,500 | |||
| Loan to Hymans Company | 48,000 | 0 | |||
| Total assets | $ | 1,247,800 | $ | 867,500 | |
| Liabilities and Stockholders' Equity | |||||
| Accounts payable | $ | 317,000 | $ | 262,000 | |
| Accrued liabilities | 47,000 | 52,000 | |||
| Income taxes payable | 84,200 | 80,500 | |||
| Total current liabilities | 448,200 | 394,500 | |||
| Bonds payable | 203,000 | 103,000 | |||
| Total liabilities | 651,200 | 497,500 | |||
| Common stock | 334,000 | 275,000 | |||
| Retained earnings | 262,600 | 95,000 | |||
| Total stockholders' equity | 596,600 | 370,000 | |||
| Total liabilities and stockholders' equity | $ | 1,247,800 | $ | 867,500 | |
Equipment that had cost $30,500 and on which there was accumulated depreciation of $11,400 was sold during Year 2 for $25,100. The company declared and paid a cash dividend during Year 2. It did not retire any bonds or repurchase any of its own stock.
Required:
1. Using the indirect method, compute the net cash provided by/used in operating activities for Year 2.
2. Prepare a statement of cash flows for Year 2.
3. Compute the free cash flow for Year 2.
Using the indirect method, compute the net cash provided by/used in operating activities for Year 2. (List any deduction in cash outflows as negative amounts.)
|
||||||||||||||||||||||||||||||||||||||||||||||
Prepare a statement of cash flows for Year 2. (List any deduction in cash and cash outflows as negative amounts.)
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
compute the free cash flow for Year 2. (Negative amount should be indicated by a minus sign.)
|
In: Accounting
Glade, Inc. is trying to decide whether to increase the
commission-based pay of its salespeople. Currently, each of its
five salespeople earns a 12% commission on the units they sell for
$100 each, plus a fixed salary of $41,100 per person. Glade hopes
that by increasing commissions to 17% and decreasing each
salesperson’s salary to $21,700, sales will increase because
salespeople will be more motivated. Currently, sales are 17,000
units. Glade’s other fixed costs, NOT including the salespeople’s
salaries, total $595,000. Glade’s other variable costs, NOT
including commissions, total $16 per unit.
a. What is the current profit?
| Current Profit | ? |
b. What is the current break-even point in units?
(Round your answer to the nearest whole
number.)
| Break-Even Point | ? unit |
c. What would the break-even point in units be if
commissions are increased and salaries decreased? (Round
your answer to the nearest whole number.)
| Break-Even Point | ? unit |
d. If sales increase by 9,000 units, what will
profit be under the new plan?
| Profit under the new plan | ? |
e. At what sales level would Glade be indifferent
between the lower-commission plan and the higher-commission
plan?
| Point of Indifference | ? unit |
Juniper Enterprises sells handmade clocks. Its variable cost per
clock is $6.80, and each clock sells for $17.00. The company’s
fixed costs total $7,446.
How many units must Juniper sell to earn a profit of at least
$6,834?
| Sales | ? units |
In: Accounting
Explain why it is important for the board of directors to have a
mixture of executive and non-executive members.
In: Accounting