What are the primary responsibilities of a "concurring partner" under current U.S. auditing standards?

Which of the following is assessed using the debt​ ratio?

A.

net income

B.

profitability

C.

revenues

D.

risk of default

1. Following a style similar to the technique set forth in Legal Research, Writing & Analysis, prepare a brief of the following case:

   Moline Properties, Inc. v. Commissioner of Internal Revenue

319 U. S. 436 (1943).

Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparing the master budget for the first quarter:

1. As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances:

2. Actual sales for December and budgeted sales for the next four months are as follows:

3. Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at December 31 are a result of December credit sales.

4. The company’s gross margin is 40% of sales. (In other words, cost of goods sold is 60% of sales.)

5. Monthly expenses are budgeted as follows: salaries and wages, $15,000 per month: advertising, $55,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $42,100 for the quarter.

6. Each month’s ending inventory should equal 25% of the following month’s cost of goods sold.

7. One-half of a month’s inventory purchases is paid for in the month of purchase; the other half is paid in the following month.

8. During February, the company will purchase a new copy machine for $1,000 cash. During March, other equipment will be purchased for cash at a cost of $70,000.

9. During January, the company will declare and pay $45,000 in cash dividends.

10. Management wants to maintain a minimum cash balance of $30,000. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.

Required:

Using the data above, complete the following statements and schedules for the first quarter:

1. Schedule of expected cash collections:

2-a. Merchandise purchases budget:

2-b. Schedule of expected cash disbursements for merchandise purchases:

3. Cash budget:

4. Prepare an absorption costing income statement for the quarter ending March 31.

5. Prepare a balance sheet as of March 31.

Required information [The following information applies to the questions displayed below.] The following financial statements and additional information are reported. IKIBAN INC. Comparative Balance Sheets June 30, 2019 and 2018 2019 2018 Assets Cash $ 96,700 $ 62,000 Accounts receivable, net 92,000 69,000 Inventory 81,800 113,500 Prepaid expenses 6,200 9,000 Total current assets 276,700 253,500 Equipment 142,000 133,000 Accum. depreciation—Equipment (36,000 ) (18,000 ) Total assets $ 382,700 $ 368,500 Liabilities and Equity Accounts payable $ 43,000 $ 57,000 Wages payable 7,800 18,600 Income taxes payable 5,200 7,400 Total current liabilities 56,000 83,000 Notes payable (long term) 48,000 78,000 Total liabilities 104,000 161,000 Equity Common stock, $5 par value 256,000 178,000 Retained earnings 22,700 29,500 Total liabilities and equity $ 382,700 $ 368,500 IKIBAN INC. Income Statement For Year Ended June 30, 2019 Sales $ 768,000 Cost of goods sold 429,000 Gross profit 339,000 Operating expenses Depreciation expense $ 76,600 Other expenses 85,000 Total operating expenses 161,600 177,400 Other gains (losses) Gain on sale of equipment 3,800 Income before taxes 181,200 Income taxes expense 45,690 Net income $ 135,510 Additional Information A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash. The only changes affecting retained earnings are net income and cash dividends paid. New equipment is acquired for $75,600 cash. Received cash for the sale of equipment that had cost $66,600, yielding a $3,800 gain. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement. All purchases and sales of inventory are on credit.

Required:

(1) Prepare a statement of cash flows using the indirect method for the year ended June 30, 2019. (Amounts to be deducted should be indicated with a minus sign.)

which statement is true?
a.customer do not pay sales tax
b.A transaction entered in the sales receipt window will not be tracked through the accounts receivable or customer report.
c.all customer sales arerecordedin the sales receipt window.
d.all customer sales are recorded in the invoice window.

Buzzy Company sold $400,000 worth of 12%, ten year bonds on July1st, 2019, at a time when the market rate of interest on similar investments was 10%. The semiannual bonds pay interest on December 31st and June 30th . (a) Using the appropriate Present Value Table(s), determine the amount the bonds should sell for; their present value. (b) Journalize the necessary entry for the sale of the bonds. (c) Journalize the first interest payment on December 31, 2019 including the discount (or premium?) amortization assuming the company makes use of the straight-line method of bond interest amortization.

Make-or-Buy Decision: Zion Manufacturing had always made its components in-house. However, Bryce Component Works had recently offered to supply one component, K2, at a price of $28 each. Zion uses 12,500 units of Component K2 each year. The cost per unit of this component is as follows:

Assume that 75% of Zion Manufacturing's fixed overhead for Component K2 would be eliminated if that component were no longer produced.

Required:

1. CONCEPTUAL CONNECTION: If Zion decides to purchase the component from Bryce, by how much will operating income increase or decrease?

Which alternative is better?
Purchase the component from Bryce

2. CONCEPTUAL CONNECTION: Briefly explain how increasing or decreasing the 75% figure affects Zion’s final decision to make or purchase the component.

As the percentage of avoidable fixed cost increases (above 75%), total relevant costs of making the component increase, causing the “purchase” decision to be more  financially appealing (compared to the “make” option) than it was when the percentage was 75%. In other words, as the percentage increases, difference between the “purchase” and “make” options increases resulting in the “purchase” decision being even more  attractive. Alternatively, as the percentage of avoidable fixed costs decreases, the “make” option eventually is equally  costly and as equally appealing financially as the “purchase” option. Finally, as the percentage of avoidable fixed cost decreases low enough and the total relevant costs of making the component decrease, the “make”  option becomes the more financially appealing option

3. CONCEPTUAL CONNECTION: By how much would the per-unit relevant fixed cost have to decrease before Zion would be indifferent (i.e., incur the same cost) between “making” versus “purchasing” the component? If necessary, round your answer to two decimal places.

%

Required:  Prepare a combined Governmental Funds Balance Sheet/Statement of Net Position in the format presented in Illustration 9-1 from your textbook.

Additional information:

• Capital assets net of accumulated depreciation amounted to $475,000 at year-end.
• The liability for long-term compensated absences is estimated to be $73,000 at year-end.
• Long-term notes payable amounted to $423,000 at year-end.

1. Belmain Co. expects to maintain the same inventories at the end of 20Y7 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows:

   		Estimated Fixed Cost			Estimated Variable Cost (per unit sold)
   Production costs:
   	Direct materials				$26
   	Direct labor				17
   	Factory overhead	$114,300			13
   Selling expenses:
   	Sales salaries and commissions	23,700			6
   	Advertising	8,000
   	Travel	1,800
   	Miscellaneous selling expense	2,000			5
   Administrative expenses:
   	Office and officers' salaries	23,200
   	Supplies	2,900			2
   	Miscellaneous administrative expense	2,660			3
   	Total	$178,560			$72

   It is expected that 5,580 units will be sold at a price of $144 a unit. Maximum sales within the relevant range are 7,000 units.

   Required:

   1. Prepare an estimated income statement for 20Y7.

   Belmain Co.
   Estimated Income Statement
   For the Year Ended December 31, 20Y7
   			$
   Cost of goods sold:
   		$
   Cost of goods sold
   Gross profit			$
   Expenses:
   Selling expenses:
   	$
   Total selling expenses		$
   Administrative expenses:
   	$
   Total administrative expenses
   Total expenses
   Income from operations			$

   2. What is the expected contribution margin ratio? Round to the nearest whole percent.
   %

   3. Determine the break-even sales in units and dollars.

   Units	units
   Dollars	units

   4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales?
   $

   5. What is the expected margin of safety in dollars and as a percentage of sales?

   Dollars:	$
   Percentage: (Round to the nearest whole percent.)		%

   6. Determine the operating leverage. Round to one decimal place.

Lorge Corporation has collected the following information after its first year of sales. Sales were $2,875,000 on 115,000 units; selling expenses $250,000 (40% variable and 60% fixed); direct materials $1,655,900; direct labor $250,000; administrative expenses $270,000 (20% variable and 80% fixed); and manufacturing overhead $343,000 (70% variable and 30% fixed). Top management has asked you to do a CVP analysis so that it can make plans for the coming year. It has projected that unit sales will increase by 10% next year.

(a)

Compute (1) the contribution margin for the current year and the projected year, and (2) the fixed costs for the current year. (Assume that fixed costs will remain the same in the projected year.)

Compute the break-even point in units and sales dollars for the first year.

Break-even point units
Break-even point $
   

The company has a target net income of $ 318,060 . What is the required sales in dollars for the company to meet its target?

Sales dollars required for target net income $

If the company meets its target net income number, by what percentage could its sales fall before it is operating at a loss? That is, what is its margin of safety ratio?

Margin of safety ratio %

The company is considering a purchase of equipment that would reduce its direct labor costs by $ 106,704 and would change its manufacturing overhead costs to 30% variable and 70% fixed (assume total manufacturing overhead cost is $ 369,360 , as above). It is also considering switching to a pure commission basis for its sales staff. This would change selling expenses to 90% variable and 10% fixed (assume total selling expense is $ 246,240 , as above). Compute (1) the contribution margin and (2) the contribution margin ratio, and recompute (3) the break-even point in sales dollars. (Round contribution margin ratio to 0 decimal places, e.g. 25% and all other answers to 0 decimal places, e.g. 2,520.)

1. Contribution margin
2. Contribution margin ratio %
3. Break-even point

Superior Markets, Inc., operates three stores in a large metropolitan area. A segmented absorption costing income statement for the company for the last quarter is given below:

The North Store has consistently shown losses over the past two years. For this reason, management is giving consideration to closing the store. The company has asked you to make a recommendation as to whether the store should be closed or kept open. The following additional information is available for your use:

1. The breakdown of the selling and administrative expenses that are shown above is as follows:

*Allocated on the basis of sales dollars.

*Allocated on the basis of sales dollars.

2. The lease on the building housing the North Store can be broken with no penalty.

3. The fixtures being used in the North Store would be transferred to the other two stores if the North Store were closed.

4. The general manager of the North Store would be retained and transferred to another position in the company if the North Store were closed. She would be filling a position that would otherwise be filled by hiring a new employee at a salary of $12,000 per quarter. The general manager of the North Store would continue to earn her normal salary of $13,000 per quarter. All other managers and employees in the North store would be discharged.

5. The company has one delivery crew that serves all three stores. One delivery person could be discharged if the North Store were closed. This person’s salary is $5,300 per quarter. The delivery equipment would be distributed to the other stores. The equipment does not wear out through use, but does eventually become obsolete.

6. The company pays employment taxes equal to 15% of their employees' salaries.

7. One-third of the insurance in the North Store is on the store’s fixtures.

8. The “General office salaries” and “General office—other” relate to the overall management of Superior Markets, Inc. If the North Store were closed, one person in the general office could be discharged because of the decrease in overall workload. This person’s compensation is $6,500 per quarter.

Required:

1. How much employee salaries will the company avoid if it closes the North Store?

2. How much employment taxes will the company avoid if it closes the North Store?

3. What is the financial advantage (disadvantage) of closing the North Store?

4. Assuming that the North Store's floor space can’t be subleased, would you recommend closing the North Store?

5. Assume that the North Store's floor space can’t be subleased. However, let's introduce three more assumptions. First, assume that if the North Store were closed, one-fourth of its sales would transfer to the East Store, due to strong customer loyalty to Superior Markets. Second, assume that the East Store has enough capacity to handle the increased sales that would arise from closing the North Store. Third, assume that the increased sales in the East Store would yield the same gross margin as a percentage of sales as present sales in the East store. Given these new assumptions, what is the financial advantage (disadvantage) of closing the North Store?

Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 48,000 Rets per year. Costs associated with this level of production and sales are given below:

The Rets normally sell for $60 each. Fixed manufacturing overhead is $336,000 per year within the range of 41,000 through 48,000 Rets per year.

Required:

1. Assume that due to a recession, Polaski Company expects to sell only 41,000 Rets through regular channels next year. A large retail chain has offered to purchase 7,000 Rets if Polaski is willing to accept a 16% discount off the regular price. There would be no sales commissions on this order; thus, variable selling expenses would be slashed by 75%. However, Polaski Company would have to purchase a special machine to engrave the retail chain’s name on the 7,000 units. This machine would cost $14,000. Polaski Company has no assurance that the retail chain will purchase additional units in the future. What is the financial advantage (disadvantage) of accepting the special order? (Round your intermediate calculations to 2 decimal places.)

2. Refer to the original data. Assume again that Polaski Company expects to sell only 41,000 Rets through regular channels next year. The U.S. Army would like to make a one-time-only purchase of 7,000 Rets. The Army would pay a fixed fee of $1.80 per Ret, and it would reimburse Polaski Company for all costs of production (variable and fixed) associated with the units. Because the army would pick up the Rets with its own trucks, there would be no variable selling expenses associated with this order. What is the financial advantage (disadvantage) of accepting the U.S. Army's special order?

3. Assume the same situation as described in (2) above, except that the company expects to sell 48,000 Rets through regular channels next year. Thus, accepting the U.S. Army’s order would require giving up regular sales of 7,000 Rets. Given this new information, what is the financial advantage (disadvantage) of accepting the U.S. Army's special order?

MANAGERIAL ACCOUNTING - TRUE OR FALSE STATEMENTS.

(PLEASE SKIP IF YOU ARE NOT ABLE TO ANSWER THEM ALL. THANK YOU!)

1. If volume increases, all costs will increase.

2. The relevant range of activity is the activity level where the firm will earn income.

3. The high-low method is used in classifying a mixed cost into its variable and fixed elements.

4. Contribution margin is the amount of revenues remaining after deducting cost of goods sold.

5. Both variable and fixed costs are included in calculating the contribution margin.

6. The break-even point is where total sales equal total variable costs.

7. If the unit contribution margin is $1 and unit sales are 10,000 units above the break-even volume, then net

          income will be $10,000.

8. The contribution margin ratio of 40% means that 60 cents of each sales dollar is available to cover fixed costs and to produce a profit.

9. The margin of safety ratio is equal to the margin of safety in dollars divided by the actual or (expected) sales.

10. If the activity index decreases, total variable costs will decrease proportionately.
11. A mixed cost has both selling and administrative cost elements.

12. The difference between the costs at the high and low levels of activity represents the fixed cost element of a mixed cost.

13. Unit contribution margin is the amount that each unit sold contributes towards the recovery of fixed costs and to income.

14. Net income can be increased or decreased by changing the sales mix.

15. If a company has limited machine hours available for production, it is generally more profitable to produce and sell the product with the highest contribution margin per machine hour.

16. According to the theory of constraints, a company must identify its constraints and find ways to reduce or

eliminate them.

17. Cost structure refers to the relative proportion of product versus period costs that a company incurs.

18. Variable costing is the approach used for external reporting under generally accepted accounting principles.

19. The difference between absorption costing and variable costing is the treatment of fixed manufacturing

overhead.

20. Manufacturing cost per unit will be higher under variable costing than under absorption costing.

21. When absorption costing is used for external reporting, variable costing can still be used for internal reporting purposes.

22. Sales mix is a measure of the percentage increase in sales from period to period.

23. If a company has limited machine hours available for production, it is generally more profitable to produce and sell the product with the highest contribution margin per machine hour.

24. Cost structure refers to the relative proportion of fixed versus variable costs that a company incurs.