"Audit Judgment" Please respond to the following:
In: Accounting
Grouper Inc. reported income from continuing operations before
taxes during 2017 of $791,900. Additional transactions occurring in
2017 but not considered in the $791,900 are as follows.
| 1. | The corporation experienced an uninsured flood loss in the amount of $91,900 during the year. | |
| 2. | At the beginning of 2015, the corporation purchased a machine for $81,000 (salvage value of $13,500) that had a useful life of 6 years. The bookkeeper used straight-line depreciation for 2015, 2016, and 2017, but failed to deduct the salvage value in computing the depreciation base. | |
| 3. | Sale of securities held as a part of its portfolio resulted in a loss of $62,300 (pretax). | |
| 4. | When its president died, the corporation realized $162,700 from an insurance policy. The cash surrender value of this policy had been carried on the books as an investment in the amount of $48,960 (the gain is nontaxable). | |
| 5. | The corporation disposed of its recreational division at a loss of $112,400 before taxes. Assume that this transaction meets the criteria for discontinued operations. | |
| 6. | The corporation decided to change its method of inventory pricing from average-cost to the FIFO method. The effect of this change on prior years is to increase 2015 income by $59,080 and decrease 2016 income by $21,140 before taxes. The FIFO method has been used for 2017. The tax rate on these items is 40%. |
Prepare an income statement for the year 2017 starting with income
from continuing operations before taxes. Compute earnings per share
as it should be shown on the face of the income statement. Common
shares outstanding for the year are 129,730 shares. (Assume a tax
rate of 30% on all items, unless indicated otherwise.)
(Round earnings per share to 2 decimal places, e.g.
1.48 and all other answers to 0 decimal places, e.g.
5,275.)
In: Accounting
impco, a retailer, makes both cash and credit sales (i.e., sales on open account). Information regarding budgeted sales for the last quarter of the year is as follows: October November December Cash sales $ 140,000 $ 115,000 $ 105,000 Credit sales 140,000 138,000 115,500 Total $ 280,000 $ 253,000 $ 220,500 Past experience shows that 5% of credit sales are uncollectible. Of the credit sales that are collectible, 60% are collected in the month of sale; the remaining 40% are collected in the month following the month of sale. Customers are granted a 1.5% discount for payment within 10 days of billing. Approximately 75% of collectible credit sales take advantage of the cash discount. Inventory purchases each month are 100% of the cost of the following month’s projected sales. (The gross profit rate for Timpco is approximately 30%.) All merchandise purchases are made on credit, with 20% paid in the month of purchase and the remainder paid in the following month. No cash discounts for early payment are in effect. Required: 1. Calculate the budgeted total cash receipts for November and December. (Round your intermediate calculations and final answers to the nearest whole dollar amount.) 2. Calculate budgeted cash disbursements for November and December (budgeted total sales for January of the coming year equals $205,000).
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In: Accounting
Compute and Interpret Liquidity, Solvency and Coverage
Ratios
Balance sheets and income statements for Lockheed Martin
Corporation follow. Refer to these financial statements to answer
the requirements.
| Consolidated Statements of Earnings | |||
|---|---|---|---|
| Year Ended December 31 (In millions) | 2012 | 2011 | 2010 |
| Net sales | |||
| Products | $ 37,817 | $ 36,925 | $ 36,380 |
| Services | 9,365 | 9,574 | 9,291 |
| Total net sales | 47,182 | 46,499 | 45,671 |
| Cost of sales | |||
| Products | (33,495) | (32,968) | (32,539) |
| Services | (8,383) | (8,514) | (8,382) |
| Severance and other charges | (48) | (136) | (220) |
| Other unallocated costs | (1,060) | (1,137) | (686) |
| Total cost of sales | (42,986) | (42,755) | (41,827) |
| Gross Profit | 4,196 | 3,744 | 3,844 |
| Other income, net | 238 | 276 | 261 |
| Operating profit | 4,434 | 4,020 | 4,105 |
| Interest expense | (383) | (354) | (345) |
| Other non-operating income (expense), net | 21 | (35) | 18 |
| Earnings before taxes | 4,072 | 3,631 | 3,778 |
| Income tax expense | (1,327) | (964) | (1,164) |
| Net earnings from continuing operations | 2,745 | 2,667 | 2,614 |
| Net (loss) earnings from discontinued operations | -- | (12) | 264 |
| Net earnings | $ 2,745 | $ 2,655 | $ 2,878 |
| Consolidated Balance Sheets | ||
|---|---|---|
| December 31 (in millions, except par value) | 2012 | 2011 |
| Assets | ||
| Current Assets | ||
| Cash and cash equivalents | $ 1,898 | $ 3,582 |
| Receivables, net | 6,563 | 6,064 |
| Inventories, net | 2,937 | 2,481 |
| Deferred income taxes | 1,269 | 1,339 |
| Other current assets | 1,188 | 628 |
| Total current assets | 13,855 | 14,094 |
| Property, plant and equipment, net | 4,675 | 4,611 |
| Goodwill | 10,370 | 10,148 |
| Deferred income taxes | 4,809 | 4,388 |
| Other noncurrent assets | 4,948 | 4,667 |
| Total assets | $ 38,657 | $ 37,908 |
| Liabilities and stockholders' equity | ||
| Current Liabilities | ||
| Accounts payable | $ 2,038 | $ 2,269 |
| Customer advances and amounts in excess of costs incurred | 6,503 | 6,399 |
| Salaries, benefits and payroll taxes | 1,649 | 1,664 |
| Current maturities of long-term debt | 150 | -- |
| Other current liabilities | 1,815 | 1,798 |
| Total current liabilities | 12,155 | 12,130 |
| Long-term debt | 6,158 | 6,460 |
| Accrued pension liabilities | 15,278 | 13,502 |
| Other post-retirement benefit liabilities | 1,220 | 1,274 |
| Other noncurrent liabilities | 3,807 | 3,541 |
| Total Liabilities | 38,618 | 36,907 |
| Stockholders' equity | ||
| Common stock, $1 par value per share | 321 | 321 |
| Additional paid-in capital | -- | -- |
| Retained earnings | 13,211 | 11,937 |
| Accumulated other comprehensive loss | (13,493) | (11,257) |
| Total stockholders' equity | 39 | 1,001 |
| Total liabilities and stockholders' equity | $ 38,657 | $ 37,908 |
| Consolidated Statement of Cash Flows | |||
|---|---|---|---|
| Year Ended December 31 (in millions) | 2012 | 2011 | 2010 |
| Operating Activities | |||
| Net earnings | $ 2,745 | $ 2,655 | $ 2,878 |
| Adjustments to reconcile net earnings to net cash provided by operating activities: | |||
| Depreciation and amortization | 988 | 1,008 | 480 |
| Stock-based compensation | 167 | 157 | 129 |
| Deferred income taxes | 930 | (2) | 467 |
| Severance and other charges | 48 | 136 | |
| Reduction in tax expense from resolution of certain tax matter | -- | (89) | (258) |
| Tax expense related to Medicare Part D reimbursement | -- | -- | (94) |
| Net adjustments related to discontinued operations | -- | (16) | 330 |
| Changes in operating assets and liabilities: | |||
| Receivables, net | (460) | (363) | 3 |
| Inventories, net | (422) | (74) | (207) |
| Accounts payable | (236) | 609 | (364) |
| Customer advances and amounts in excess of costs incurred | 57 | 502 | 706 |
| Post-retirement benefit plans | (1,883) | (393) | (1,027) |
| Income taxes | (535) | 304 | 70 |
| Other, net | 162 | (181) | 21 |
| Net cash provided by operating activities | 1,561 | 4,253 | 3,801 |
| Investing Activities | |||
| Capital expenditures | (942) | (987) | (1,074) |
| Acquisition of business/investments in affiliated | (304) | (649) | (148) |
| Net proceeds from sale of EIG | -- | -- | 798 |
| Net cash provided by (used for) short-term investment transactions | -- | 510 | (171) |
| Other,net | 24 | 313 | 22 |
| Net cash used for investing activities | (1,222) | (813) | (573) |
| Financing Activities | |||
| Repurchases of common stock | (990) | (2,465) | (2,420) |
| Proceeds from stock option exercises | 440 | 116 | 59 |
| Dividends paid | (1,352) | (1,095) | (969) |
| Premium paid on debt exchange | (225) | -- | -- |
| Issuance of long-term debt, net of related costs | -- | 1,980 | -- |
| Repayments of long-term debt | -- | (632) | -- |
| Other, net | (104) | (23) | (28) |
| Net cash used for financing activities | (2,023) | (2,119) | (3,358) |
| Net change in cash and cash equivalents | (1,684) | 1,321 | (130) |
| Cash and cash equivalents at beginning of year | 3,582 | 2,261 | 2,391 |
| Cash and cash equivalents at end of year | $ 1,898 | $ 3,582 | $ 2,261 |
| 2012 total liabilities-to-stockholders' equity | |
| 2011 total liabilities-to-stockholders' equity | |
| 2012 total debt-to-equity | |
| 2011 total debt-to-equity | |
| 2012 times interest earned | |
| 2011 times interest earned | |
| 2012 cash from operations to total debt | |
| 2011 cash from operations to total debt | |
| 2012 free operating cash flow to total debt | |
| 2011 free operating cash flow to total debt |
In: Accounting
You are the manager of a local factory that produces plastic bottles for soft drink manufacturers. Your colleague brings an assembly line project to a meeting with the following data:
Estimated life of assembly line: 5 years
Initial investment cost: $740,000
Estimated salvage value: none
Current interest rates: 15 percent
Estimated Cash Flow Analysis
Year Expected Cash Flow
1 $360,000
2 240,000
3 100,000
4 25,000
5 20,000
a) As your colleague begins going through the analysis with the CEO, you wait until he pauses and state, “I can tell already this is not an investment we should pursue.” Your colleague asks how you could possible know that from looking at the data for one minute. How DO you know?
b) Suppose you are given the same assembly line data, but now interest rates have fallen to 0.05 percent. Do you think the company should purchase the new line? How can you know that for certain?
In: Accounting
Bowie Sporting Goods manufactures sleeping bags. The manufacturing standards per sleeping bag, based on 5,000 sleeping bags per month, are as follows:
Direct material of 4.00 yards at $5.00 per yard
Direct labor of 3.00 hours at $19.00 per hour
Overhead applied per sleeping bag at $18
In the month of April, the company actually produced 5,100 sleeping bags using 26,800 yards of material at a cost of $5.50 per yard. The labor used was 12,250 hours at an average rate of $20.50 per hour. The actual overhead spending was $96,200. Determine the labor quantity variance and round to the nearest whole dollar. Enter a favorable variance as a negative number. Enter an unfavorable variance as a positive number.
In: Accounting
Selected financial information for the Adelphi Company for the fiscal years ended December 31, 2018 and 2017 follows. Prepare a cash flow statement using the indirect method. Properly title the statement.
|
2017 |
2018 |
|
|
Net income |
$142,500 |
$162,000 |
|
Depreciation Expense |
42,000 |
35,000 |
|
Purchase of Plant Assets |
135,000 |
125,000 |
|
Disposal of Plant Assets |
40,000 |
50,000 |
|
Gain (Loss) on Disposal of Plant Assets |
(10,000) |
5,000 |
|
Accounts Receivable Balance |
64,500 |
58,000 |
|
Accounts Payable Balance |
42,000 |
39,000 |
|
Interest Expense |
8,000 |
6,000 |
|
Income Taxes Paid |
35,000 |
28,000 |
|
Dividends Paid |
30,000 |
25,000 |
|
Common Stock Issued for Cash |
20,000 |
0 |
In: Accounting
The shareholders’ equity section of Superior Corporation’s balance sheet as of December 31, 2015, is as follows: Shareholders’ Equity Preferred stock, $100 par value; authorized, 300,000 shares; issued, 33,000 shares $3,300,000 Common stock, $5 par value; authorized, 2,000,000 shares; issued, 377,000 shares 1,885,000 Paid-in capital in excess of par—preferred 96,000 Paid-in capital in excess of par—common 825,000 Retained earnings 2,920,000 $9,026,000 The following events occurred during 2016: Jan. 5 10,500 shares of authorized and unissued common stock were sold for $7 per share. 16 10,000 shares of authorized and unissued preferred stock were sold for $108 per share. Apr. 1 79,000 shares of common stock were repurchased for the treasury at a price of $21 per share. Superior uses the cost method to account for treasury stock. Sept. 1 3,500 shares of preferred stock are issued in exchange for a piece of land. The land has an appraised value of $389,500. The preferred stock currently trades on the New York Stock Exchange at a price of $109 per share. Dec. 1 24,000 shares of treasury stock are reissued at a price of $24 per share.
Required: 1. Prepare journal entries for each of the above transactions.
2. Calculate the number of authorized, issued, and outstanding common shares as of December 31, 2016.
3. Calculate Superior’s legal capital at December 31, 2016.
In: Accounting
Campbell Chemical Company makes three products, B7, K6, and X9, which are joint products from the same materials. In a standard batch of 339,500 pounds of raw materials, the company generates 75,300 pounds of B7, 162,100 pounds of K6, and 102,100 pounds of X9. A standard batch costs $2,037,000 to produce. The sales prices per pound are $5, $15, and $20 for B7, K6, and X9, respectively.
Required
Allocate the joint product cost among the three final products using weight as the allocation base.
Allocate the joint product cost among the three final products using market value as the allocation base
FILL IN CHARTS
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In: Accounting
Unit Cost, Ending Work-in-Process Inventory, Journal Entries
During August, Skyler Company worked on three jobs. Data relating to these three jobs follow:
| Job 39 | Job 40 | Job 41 | |
| Units in each order | 60 | 100 | 80 |
| Units sold | — | 100 | — |
| Materials requisitioned | $700 | $680 | $800 |
| Direct labor hours | 360 | 400 | 200 |
| Direct labor cost | $1,980 | $2,480 | $1,240 |
Overhead is assigned on the basis of direct labor hours at a rate of $2.30 per direct labor hour. During August, Jobs 39 and 40 were completed and transferred to Finished Goods Inventory. Job 40 was sold by the end of the month. Job 41 was the only unfinished job at the end of the month.
Required:
1. Calculate the per-unit cost of Jobs 39 and 40. Round unit costs to nearest cent.
| Job 39 | $ per unit |
| Job 40 | $ per unit |
2. Compute the ending balance in the
work-in-process inventory account.
$
Feedback
1. Manufacturing cost comes from totaling direct materials, direct labor, and overhead on each job. The grand total can be divided by the number of units to determine per-unit cost.
2. Determine which jobs are still in work-in-process and compute the balance.
3. Prepare the journal entries reflecting (a.) the completion of Jobs 39 and 40 and (b.) the sale of Job 40. Make the entry to record the cost of Job 40 first, followed by the entry to record the revenue from its sale. The selling price is 140 percent of cost.
| a. | Finished Goods | ||
| Work in Process | |||
| b (1). | Cost of Goods Sold | ||
| Finished Goods | |||
| b (2). | Accounts Receivable | ||
| Sales Revenue |
In: Accounting
1) Net income:
A) is calculated by subtracting total expenses and total dividends from total revenues.
B) occurs when total revenues are less than total expenses.
C) is often referred to as the "bottom line" on an income statement.
D) decreases total stockholders' equity.
2) On January 1, 2017, total assets for Wininger Technologies were $140,000; on December 31, 2017, total assets were $155,000. On January 1, 2017, total liabilities were $111,000; on December 31, 2017, total liabilities were $118,000. What is the amount of the change and the direction of the change in Wininger Technologies' owners' equity for 2017?
A) decrease of $8000
B) increase of $8000
C) increase of $22,000
D) decrease of $22,000
3) Golden Company had the following accounts and balances at the end of the year. What are total assets at the end of the year?
|
Cash |
$75,000 |
|
Accounts Payable |
$14,000 |
|
Common Stock |
$21,000 |
|
Cost of Goods Sold |
$95,000 |
|
Dividends Declared and Paid |
$12,000 |
|
Operating Expenses |
$12,000 |
|
Accounts Receivable |
$55,000 |
|
Inventory |
$42,000 |
|
Long-term Notes Payable |
$33,000 |
|
Revenues |
$130,000 |
|
Salaries Payable |
$28,000 |
A) $75,000
B) $117,000
C) $130,000
D) $172,000
4) The CORRECT data flow from one financial statement to the next is:
A) statement of retained earnings, income statement, balance sheet, statement of cash flows.
B) balance sheet, statement of retained earnings, income statement, statement of cash flows.
C) statement of retained earnings, income statement, statement of cash flows, balance sheet.
D) income statement, statement of retained earnings, balance
sheet, statement of cash flows.
5) Potter Company reports the following line items:
|
Long-Term Notes Payable |
$50,000 |
|
Accounts Receivable |
$28,000 |
|
Accounts Payable |
$37,000 |
|
Building |
$55,000 |
|
Cash and Cash Equivalents |
$80,000 |
|
Salaries Expense |
$25,500 |
|
Service Van |
$26,000 |
|
Interest Payable |
$1,500 |
|
Land |
$40,000 |
|
Short-term Investments |
$5,000 |
|
Income Taxes Payable |
$10,000 |
|
Equipment |
$59,500 |
|
Supplies |
$5,000 |
|
Service Revenue |
$104,000 |
|
Supplies Expense |
$20,000 |
|
Utilities Expense |
$11,500 |
|
Income Tax Expense |
$13,000 |
What is net income?
A) $26,000
B) $34,000
C) $59,500
D) $104,000
6) Analyze each of the following transactions in terms of their effects on the accounting equation of Osgood Delivery Service. The company is a sole proprietorship. Enter the correct amounts in the columns of the spreadsheet.
a) James Osgood contributes $75,000 cash to the business in exchange for capital.
b) The business purchases $750 of office supplies on account.
c) The business pays cash to purchase a delivery van for $25,000.
d) Services are performed for clients and $5,000 cash is received.
e) Cash is paid for rent expense, $800 and utilities expense, $400.
f) James Osgood withdraws $1,000 from the business for personal use.
|
Cash |
Accts. Receiv- able |
Office Supplies |
Delivery Van |
Accts. Payable |
Osgood, Capital |
Osgood, With- drawals |
Service Revenue |
Rent Expense |
Utilities Expense |
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a |
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b |
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c |
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d |
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e |
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f |
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In: Accounting
Which of the following statements is true of a nonqualified plan?
(A) The employer receives a tax deduction only when the employee reports income.
(B) The contributions are tax deductible to the employer and to the employee at the time the employer makes them.
(C) The contributions are deductible to the employer at the time the employer makes them and taxable to the employee.
(D) The contributions are deductible to the employer at the time the employer makes them and the employee is not taxed until benefits are distributed.
Which of the following advantages is (are) obtained from installation of a defined-benefit retirement plan?
I. The plan will increase employees’ take-home pay.
II. The plan will help the employer to attract needed employees.
III.The plan will minimize the employer’s investment risk.
IV. The plan will allow the employer to deduct contributions in the year made.
(A) II only (B) II and IV only (C) I and III only (D) I, II, III and IV
Which of the following statements concerning a qualified plan is (are) correct?
(A) Qualified plans do not provide protection for plan benefits from bankruptcy of the business.
(B) Qualified plans provide a tax shelter for the investment income earned by the plan assets.
(C) Qualified plans are not limited on the amount of benefits when the plan includes immediate vesting.
(D) Qualified plans are not subject to ERISA rules when the plan includes immediate vesting.
Which of the following statements best describes the advantages of a qualified money-purchase pension plan?
(A) It is designed to adequately protect against inflation.
(B) Older employees can be more readily provided with adequate retirement benefits.
(C) Tax sheltering is enhanced because an annuity can be purchased for each employee.
(D) Costs are predictable, and the design is simple and understandable.
Which of the following statements concerning a cash balance plan is correct?
(A) The employer assumes the investment risk.
(B) There are individual account balances in a cash balance plan.
(C) A cash balance plan is a profit sharing plan.
(D) The cash balance plan is generally less expensive plan to install than a money purchase plan.
Which of the following statements concerning the nondiscrimination requirements of profit-sharing and stock bonus 401(k) plans is correct?
(A) The actual deferral percentage of the highly-paid employees may not exceed 100% of that of the nonhighly-paid.
(B) The actual deferral percentage of the highly-paid employees may not be more than 200% of that of the nonhighly-paid, and the difference between the two percentages may not exceed 2%.
(C) The use of a safe-harbor provision is prohibited.
(D) In addition to the ADP test, the plans must satisfy both the ratio percentage test and the average benefit test.
Which of the following statements concerning funding policy and objectives is (are) correct?
I. Defined-benefit plans are required to adopt a funding policy, but it is optional for defined-contribution plans.
II. In defined-contribution plans, the objective may be to offer investment vehicles so that participants can make up their own portfolios.
(A)I only(C)Both I and II
(B)II only(D)Neither I nor II
Which of the following statements concerning selection of investments for qualified plans is (are) correct?
I. Tax-exempt bonds are generally not appropriate investments for qualified plans.
II. Money market instruments are appropriate for long-term capital growth.
(A) I only (C) Both I and II
(B) II only (D) Neither I nor II
All the following statements concerning mutual fund investments for qualified plans are correct, EXCEPT:
(A)The availability of participant-directed investments relieves the sponsor of all fiduciary liability.
(B)Management and acquisition fees are important factors.
(C)Debt portfolios may be used in addition to equity-based funds.
(D)Both small and large plans can participate in mutual fund investments.
In: Accounting
Retail sales on the Internet:
| a. |
Are growing rapidly |
|
| b. |
Have only been achieved by major retailers such as Wal-Mart |
|
| c. |
Were growing at first, but are now declining |
|
| d. |
Are not possible on the Internet |
It is always best to extract all data from the source data store during ETL.
True
False
Resolving issues related to harmonizing field formats and data duplication would be addressed in which phase of the ETL process?
| a. |
TRANSFORM |
|
| b. |
EXTRACT |
|
| c. |
These issues would be considerations during all phases of ETL |
|
| d. |
LOAD |
The term cloud computing refers to services that organizations can access on the Internet.
True
False
In: Accounting
Companies are not required to, but have the option to, value some or all of their financial assets and liabilities at fair value. a- True b- false
In: Accounting
1. Compliance with the IFRS is enforced by:
a. FASB, b. government regulators, c. IAS, or d. IASB
2. Under IFRS unrealized holding gains and losses on held-for-trading equity investments of less than 20 percent are recorded in _____, and unrealized holding gains and losses on non-trading equity investments of less than 20 percent are recorded in _______.
a. net income; net income. b. net income; other comprehensive income. c. other comprehensive income; net income. d. other comprehensive income; other comprehensive income
3. ABC co. purchases XYZ Co. for less than the fair value of XYZ Co.'s net assets (ie. a bargain purchase). How should ABC co. record the difference between the fair value of XYZ Co's net assets and the purchase price?
a. amortization expense. b. gain. c. goodwill. d. loss
4. On December, 31 2018, Buthainah Corp. owned a patent. The carrying amount of the patent (following the amortization journal entry on December 31, 2018) is 100,000/ The recoverable amount of the patent is determined to be $70,000. Which of the following is true regarding the journal entry that Buthainah Corp. should record on December 31, 2018.
a. Debit to loss on impairment of $30,000. b. credit to patent of $30,000. c. debit to goodwill of $30,000. d. both A and B are correct
5. Danah Corp. has three intangible assets (two patents and goodwill) on December 31, 2018. There is no impairment of any of the three intangible assets/ One patent has a carrying value of $20,000, one patent has a carrying value of $30,000, and the goodwill amount is $10,000. How should the three intangible assets be presented on the statement of financial position?
a. each intangible asset should be listed separately. b. all intangible assets should be grouped together in one intangible assets account. c. the two patents should be grouped together in one intangible assets account and goodwill should be listed separately. d. the threee intangible assets do NOT belong on the statement of financial position.
In: Accounting