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You have been given responsibility for overseeing a bank’s small business loans division. The bank has included loan covenants requiring a minimum current ratio of 1.4 in all small business loans. When you ask which inventory costing method the covenant assumes, the previous loans manager gives you a blank look. To explain to him that a company’s inventory costing method is important, you present the following balance sheet information. |
| Current assets other than inventory | $ | 22 | |
| Inventory | (a | ) | |
| Other (noncurrent) assets | 131 | ||
| Total assets | $ | (b | ) |
| Current liabilities | $ | 60 | |
| Other (noncurrent) liabilities | 68 | ||
| Stockholders’ equity | (d | ) | |
| Total liabilities and stockholders’ equity | $ | (c | ) |
|
You ask the former loans manager to find amounts for (a), (b), (c), and (d) assuming the company began the year with 5 units of inventory at a unit cost of $12, then purchased 8 units at a cost of $13 each, and finally purchased 6 units at a cost of $17 each. A year-end inventory count determined that 4 units are on hand. |
| 1. Determine the amount for (a) using Weighted Average, and then calculate (b) through (d). |
|
Inventory Total Assets Total Liabilities and Stockholders' Equity Stockholders' Equity |
| 2. | Determine the amount for (a) using LIFO, and then calculate (b) through (d). |
|
Inventory Total Assets Total Liabilities and Stockholders' Equity Stockholders' Equity |
|
3. Determine the current ratios using (i) FIFO, (ii) Weighted Average, and (iii) LIFO. (Round your answers to 2 decimal places.) |
|
FIFO Weighted Average LIFO |
In: Accounting
Lindsey Contractors' borrowing agreements make certain demands
on the business. Lindsey's Long-Term Debt may not exceed
Stockholder's Equity, and the current ratio may not fall below
1.50. If Lindsey fails to meet this requirement, the company's
lenders can take over management of the corporation.
Current Liabilities have mounted faster than current assets,
causing the current ratio to fall to 1.47. Before releasing
financial statements, Lindsey management is scrambling to improve
the current ratio. Th controller points out that an investment can
be classified as either long-term or short-term, depending on
management's intention. By deciding to convert an investment to
cash within one year, Lindsey can classify the investment as
short-term - a current asset. On the controller's recommendation,
Lindsey's board of directors votes to reclassify long-term
investments as short-term.
1. Do you think that the actions taken by Lindsey's controller and
board of directors are ethical. Why or why not?
2. Shortly after the financial statements are released, sales
improve and so does the current ratio. As a result, Lindsey
management decides not o sell the investments it had reclassified
as short-term. Accordingly, Lindsey reclassifies the investments as
long-term. Has management behaved unethically? Why or why not?
In: Accounting
Fast Spirit Calendars imprints calendars with college names. The company has fixed expenses of $1,125,000 each month plus variable expenses of $4.50 per carton of calendars. Of the variable expense, 69% is cost of goods sold, while the remaining 31% relates to variable operating expenses. The company sells each carton of calendars for $19.50
1.) The Break Even Sale is ______ Cartoons?
2.) Monthly Sales Needed to Earn $338,000 in Operating Income is ______.
3.) Prepare the Company's Contribution Margin Income Statement for June for Sales of 470,000 Cartoons
Sales Revenue:
Variable Expenses:
Cost of Goods Sold:
Operating Expenses:
Contribution Margin:
Fixed Expenses:
Operating Income:
4.) What is June's margin of safety (in dollars)? What is the operating leverage factor at this level of sales?
5.) By what percentage will operating income change if July's sales volume is 14% higher? Prove your answer. (Round the percentage to two decimal places.
In: Accounting
NEED PARAGRAPH NUMBERS!!!!!! This problem requires you to access PCAOB Auditing Standards (pcaobus.org) to answer each of the following questions. You can access those standards by viewing content found under the link “Standards.” For each answer, document the paragraph(s) in the relevant standard supporting your answer. Review PCAOB auditing standards related to the auditor’s consideration of fraud in a financial statement audit, to answer questions in parts a. through d. Review PCAOB Auditing Standard No. 12, Identifying and Assessing Risks of Material Misstatement, to answer parts e. and f. a. You have determined that there is a fraud risk related to the existence and accuracy of inventory. Review the guidance in PCAOB auditing standards to provide examples of auditor responses involving changes to the nature, timing, and extent of audit procedures related to this assessed fraud risk for inventory. b. What do PCAOB auditing standards say about how the auditor should assess risk related to revenue recognition? c. What examples of auditor responses to fraud risk related to revenue recognition are provided in PCAOB auditing standards? d. What kind of documentation is required for the auditor’s consideration of fraud? e. What kinds of inquiries about fraud risks are required by PCAOB Standard No. 12? f. How does PCAOB Standard No. 12 define “fraud risk factors”? Do all conditions have to be present for fraud risk to exist?
In: Accounting
Problem 17-6 Determine the PBO; plan assets; pension expense; two years [LO17-3, 17-4, 17-6]
Stanley-Morgan Industries adopted a defined benefit pension plan
on April 12, 2018. The provisions of the plan were not made
retroactive to prior years. A local bank, engaged as trustee for
the plan assets, expects plan assets to earn a 10% rate of return.
The actual return was also 10% in 2018 and 2019.* A consulting
firm, engaged as actuary, recommends 4% as the appropriate discount
rate. The service cost is $150,000 for 2018 and $280,000 for 2019.
Year-end funding is $160,000 for 2018 and $170,000 for 2019. No
assumptions or estimates were revised during 2018.
*We assume the estimated return was based on the actual return on
similar investments at the inception of the plan and that, since
the estimate didn’t change, that also was the actual rate in
2019.
Required:
Calculate each of the following amounts as of both December 31,
2018, and December 31, 2019: (Enter your answers in
thousands (i.e., 200,000 should be entered as
200).)
In: Accounting
explain utility theory and apply it to decision under risk
In: Accounting
1.
Requirement 1. Record each transaction in the journal. Explanations are not required. (Record debits first, then credits. Exclude explanations from journal entries.)
Requirement 1) Dec.1:Murphy Delivery Service began operations by receiving $13,000 cash and a truck with a fair value of $9,000 from Russ Murphy.The business issued Murphy
shares of common stock in exchange for this contribution.
-----------------------------------------------
Requirement 2)
Record each transaction in the journal using the following chart of accounts. Explanations are not required.
|
Cash |
Retained Earnings |
|
|
Accounts Receivable |
Dividends |
|
|
Office Supplies |
Income Summary |
|
|
Prepaid Insurance |
Service Revenue |
|
|
Truck |
Salaries Expense |
|
|
Accumulated Depreciation—Truck |
Depreciation Expense—Truck |
|
|
Accounts Payable |
Insurance Expense |
|
|
Salaries Payable |
Fuel Expense |
|
|
Unearned Revenue |
Rent Expense |
|
|
Common Stock |
Supplies Expense |
------------------------------------------------------------------------------------------------
2.
Post the transactions in the T-accounts.
-----------------------------------------------------------------------
3.
Prepare an unadjusted trial balance as of December 31 , 2018.
----------------------------------------
4.
Prepare a worksheet as of December 31 ,2018.
-------------------------------
5.
Journalize the adjusting entries using the following adjustment data and also by reviewing the journal entries prepared in Requirement 1. Post adjusting entries to the T-accounts.
Adjustment data:
|
a. |
Accrued Salaries Expense,
$ 800. |
|
b. |
Depreciation was recorded on the truck using the straight-line
method. Assume a useful life of
5 years and a salvage value of$3,000. |
|
c. |
Prepaid Insurance for the month has expired. |
|
d. |
Office Supplies on hand,
$ 450 |
|
e. |
Unearned Revenue earned during the month,
$ 700 |
|
f. |
Accrued Service Revenue,
$ 450 |
6.
Prepare an adjusted trial balance as of
December 31 ,2018
7.
Prepare Murphy Delivery Service's income statement and statement of retained earnings for the month ended December 31 2018
and the classified balance sheet on that date.On the income statement, list expenses in decreasing order by
amount—that is, the largest expense first, the smallest expense last.
8.
Journalize the closing entries and post to the T-accounts.
9.
Prepare a post-closing trial balance as of
December 31, 2018
In: Accounting
On January 1, 2020, Sarasota Company purchased 8% bonds having a maturity value of $280,000, for $303,589.66. The bonds provide the bondholders with a 6% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Sarasota Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.
Prepare the journal entry at the date of the bond purchase.
(Enter answers to 2 decimal places, e.g.
2,525.25. Credit account titles are
automatically indented when amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the
account titles and enter 0 for the
amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Jan. 1, 2020 |
enter an account title to record the transaction on January 1, 2020 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on January 1, 2020 |
enter a debit amount |
enter a credit amount |
Prepare a bond amortization schedule. (Round answers
to 2 decimal places, e.g. 2,525.25.)
|
Schedule of Interest Revenue and Bond Premium
Amortization |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
|
|
Cash |
Interest |
Premium |
Carrying Amount |
|||||
|
1/1/20 |
$enter a dollar amount rounded to 2 decimal places |
$enter a dollar amount rounded to 2 decimal places |
$enter a dollar amount rounded to 2 decimal places |
$enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/21 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/22 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/23 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/24 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
|
1/1/25 |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 2 decimal places |
|||||
Prepare the journal entry to record the interest revenue and the
amortization at December 31, 2020. (Round answers to 2
decimal places, e.g. 2,525.25. Credit account titles are
automatically indented when amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the
account titles and enter 0 for the
amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31, 2020 |
enter an account title to record the transaction on December 31, 2020 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on December 31, 2020 |
enter a debit amount |
enter a credit amount |
|
|
enter an account title to record the transaction on December 31, 2020 |
enter a debit amount |
enter a credit amount |
Prepare the journal entry to record the interest revenue and the
amortization at December 31, 2021. (Round answers to 2
decimal places, e.g. 2,525.25. Credit account titles are
automatically indented when amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the
account titles and enter 0 for the
amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31, 2021 |
enter an account title to record the transaction on December 31, 2021 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction on December 31, 2021 |
enter a debit amount |
enter a credit amount |
|
|
enter an account title to record the transaction on December 31, 2021 |
enter a debit amount |
enter a credit amount |
In: Accounting
Melissa Corporation makes a special-purpose machine, D4H, used in the textile industry. Melissa has designed the D4H machine for 2017 to be distinct from its competitors. It has been generally regarded as a superior machine. Melissa presents the following data for 2016 and 2017.
Suppose that during 2017, the market for Melissa's special-purpose machines grew by 4%. All increases in market share (that is, sales increases greater than 4%) are the result of Melissa's strategic actions.
requirements : Calculate how much of the change in operating income from 2016 to 2017 is due to the industry-market-size factor, product differentiation, and cost leadership. How successful has Melissa been in implementing its strategy? Explain.
In: Accounting
Part 1 Milltown Company specializes in selling used cars. During
the month, the dealership sold 31 cars at an average price of
$15,900 each. The budget for the month was to sell 29 cars at an
average price of $16,900. Compute the dealership's sales price
variance for the month.
$31,000 unfavorable.
$10,900 favorable.
$31,000 favorable.
$33,800 unfavorable.
$33,800 favorable.
Part 2 A company’s flexible budget for 22,000 units of production showed sales, $105,600; variable costs, $33,000; and fixed costs, $28,000. The fixed costs expected if the company produces and sells 28,000 units is:
$28,000.
$133,600.
$105,600.
$42,000.
$33,000.
Part 3 Georgia, Inc. has collected the following data on one of
its products. The direct materials price variance is:
| Direct materials standard (4 lbs @ $1/lb) | $4 | per finished unit |
| Total direct materials cost variance—unfavorable | $15,750 | |
| Actual direct materials used | 125,000 | lbs. |
| Actual finished units produced | 25,000 | units |
Multiple Choice
$9,250 favorable.
$25,000 unfavorable.
$20,750 favorable.
$15,750 unfavorable.
$9,250 unfavorable.
Part 3 Fletcher Company collected the following data regarding
production of one of its products. Compute the variable overhead
cost variance.
| Direct labor standard (2.0 hrs. @ $13.00/hr.) | $ | 26.00 | per finished unit | |
| Actual direct labor hours | 98,500 | hrs. | ||
| Budgeted units | 50,500 | units | ||
| Actual finished units produced | 48,500 | units | ||
| Standard variable OH rate (2 hrs. @ $14.00/hr.) | $ | 28.00 | per finished unit | |
| Standard fixed OH rate ($353,500/50,500 units) | $ | 7.00 | per unit | |
| Actual cost of variable overhead costs incurred | $ | 1,351,000 | ||
| Actual cost of fixed overhead costs incurred | $ | 560,000 | ||
Multiple Choice
$14,100 favorable.
$7,000 favorable.
$20,750 unfavorable.
$20,750 favorable.
$21,100 unfavorable.
In: Accounting
What is the overall aim of project governance? Explain the principles of the governance of project management that would help avoid common causes of project failure
In: Accounting
A company is considering outsourcing their HR function. The reliability of the firm the company is considering would be [a] consideration.
In: Accounting
In: Accounting
Problem 15 Check course schedule for due date. Use the working papers provided.
The following data were taken from the records of Flexsteel Manufacturing Company for the year ended August 31, 2019.
|
Raw Materials Inventory 9/1/18 |
$60,000 |
Factory Property Taxes |
$8,000 |
|
Raw Materials Inventory 8/31/19 |
50,000 |
Factory Repairs |
4,000 |
|
Finished Goods Inventory 9/1/18 |
100,000 |
Raw Materials Purchases |
100,000 |
|
Finished Goods Inventory 8/31/19 |
95,000 |
Accounts Receivable |
30,000 |
|
Work in Process Inventory 9/1/18 |
15,000 |
Sales Revenue |
775,000 |
|
Work in Process Inventory 8/31/19 |
10,000 |
Sales Discounts |
6,000 |
|
Direct Labor |
180,000 |
Cash |
50,000 |
|
Indirect Labor |
22,000 |
Prepaid expenses |
3,000 |
|
Factory Insurance |
7,000 |
Operating expenses |
200,000 |
|
Factory Mach-Depreciation |
9,000 |
Income tax expense |
5,000 |
|
Plant Manager’s Salary |
46,000 |
Interest expense |
1,000 |
|
Factory Utilities |
17,000 |
Instructions
(a) Prepare a cost of goods manufactured schedule. (Assume all raw materials used were direct materials.)
(b) Prepare an entire income statement through net income for the year ended August 31, 2019.
(c) Prepare the current asset section of the balance sheet at August 31, 2019.
In: Accounting
What is the normal due date for the tax return of calendar-year taxpayers? What happens to the due date if it falls on a Saturday, Sunday, or holiday?
A. The normal due date for calendar-year individuals, partnerships and calendar-year corporations is April 30. The normal due date is delayed to the next Tuesday that is not a Saturday, Sunday or holiday. If the normal due date falls on Saturday, Sunday, or holiday, it is delayed to the next Tuesday.
B. The normal due date for individuals and partnerships is April 30. The normal due date for calendar-year corporations is March 31. The normal due date is delayed to the next Tuesday that is not a Saturday, Sunday or holiday. If the normal due date falls on Saturday, Sunday, or holiday, it is delayed to the next Tuesday.
C. The normal due date for individuals, partnerships and calendar-year corporations is April 15. If the normal due date falls on Saturday, Sunday, or holiday, it is delayed to the next day that is not a Saturday, Sunday, or holiday.
D. The normal due date for calendar-year individuals and C corporations is April 15. The normal due date for calendar-year partnerships and S corporations is March 15. If the normal due date is a Saturday, Sunday, or holiday, the normal due date is delayed to the next day that is not a Saturday, Sunday, or holiday.
In: Accounting