Describe workers compensation and explain why it is important. Also, what is Washington state’s worker’s compensation requirements. Summarize your findings

On April 6, 2018, Home Furnishings purchased $41,000 of merchandise from Una's Imports, terms 3/10 n/45. On April 8, Home Furnishings returned $8,600 of the merchandise to Una's Imports for credit. Home Furnishings paid cash for the merchandise on April 15, 2018.

Required

1. What is the amount that Home Furnishings must pay Una's Imports on April 15?

   	Net amount due.

2. Record the events in a horizontal statements model. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, or NC for net change in cash. If the element is not affected by the event, leave the cell blank

   HOME FURNISHINGS Effect of Events on the Financial Statements Events Balance Sheet Income Statement Statement of Cash Flows Assets = Liabilities + Stockholders’ Equity Revenue – Expenses = Net Income Cash + Merchandise Inventory = Accounts Payable + Common Stock + Retained Earnings Purchase inventory + = + + – = Return inventory + = + + – = Discount percentage + = + + – = Paid accounts payable + = + + – =

   
   
3. How much must Home Furnishings pay for the merchandise purchased if the payment is not made until April 20, 2018?

1. 	Payment

2. Record the payment of the merchandise in Requirement (c) in a horizontal statements. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, NC for net change in cash and NA to indicate the element is not affected by the event.

   	HOME FURNISHINGS Effect of Events on the Financial Statements Events Balance Sheet Income Statement Statement of Cash Flows Assets = Liabilities + Stockholders’ Equity Revenue – Expenses = Net Income Cash + Merchandise Inventory = Accounts Payable + Common Stock + Retained Earnings Paid accounts payable + = + + – =

For each transaction below, write the net effect on Current Assets (CA), Total Assets, Net Income Before Taxes (NI pretax), Cash flows from operating activities (CFO), and Cash flows from investing activities (CFI).

• Write only the effect for the current period.
• Assume the company is a merchandising firm.
• If the net effect is negative, include a negative sign. If no effect, write 0.
• For CFO and CFI, positive net inflows are positive, net cash outflows are negative.
• For classifying interest expense, assume U.S. GAAP conventions.

12-3

Forten Company, a merchandiser, recently completed its calendar-year 2017 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company’s income statement and balance sheets follow.

Additional Information on Year 2017 Transactions

1. The loss on the cash sale of equipment was $5,125 (details in b).
2. Sold equipment costing $46,875, with accumulated depreciation of $30,125, for $11,625 cash.
3. Purchased equipment costing $96,375 by paying $30,000 cash and signing a long-term note payable for the balance.
4. Borrowed $4,000 cash by signing a short-term note payable.
5. Paid $50,125 cash to reduce the long-term notes payable.
6. Issued 2,500 shares of common stock for $20 cash per share.
7. Declared and paid cash dividends of $50,100.

Required:
1. Prepare a complete statement of cash flows; report its operating activities using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

FORTEN COMPANYStatement of Cash FlowsFor Year Ended December 31, 2017Cash flows from operating activitiesNet income$114,975Adjustments to reconcile net income to net cash provided by operations:Accounts payable decrease20,750Accounts receivable increase5,125Cash paid for dividendsCash borrowed on short-term note$140,850Cash flows from investing activities0Cash flows from financing activities:0Net increase (decrease) in cash$140,850Cash balance at beginning of yearCash balance at end of year$140,850

9-4

On October 29, 2016, Lobo Co. began operations by purchasing razors for resale. Lobo uses the perpetual inventory method. The razors have a 90-day warranty that requires the company to replace any nonworking razor. When a razor is returned, the company discards it and mails a new one from Merchandise Inventory to the customer. The company's cost per new razor is $14 and its retail selling price is $90 in both 2016 and 2017. The manufacturer has advised the company to expect warranty costs to equal 9% of dollar sales. The following transactions and events occurred.

2016

2017

2. How much warranty expense is reported for November 2016 and for December 2016

3. How much warranty expense is reported for January 2017?
  4. What is the balance of the Estimated Warranty Liability account as of December 31, 2016?
  

5. What is the balance of the Estimated Warranty Liability account as of January 31, 2017?
  

Problem 21A-6 b-f (Part Level Submission)

Stellar Leasing Company agrees to lease equipment to Pearl Corporation on January 1, 2017. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2. The cost of the machinery is $520,000, and the fair value of the asset on January 1, 2017, is $737,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $110,000. Pearl estimates that the expected residual value at the end of the lease term will be 110,000. Pearl amortizes all of its leased equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2017. 5. The collectibility of the lease payments is probable. 6. Stellar desires a 10% rate of return on its investments. Pearl’s incremental borrowing rate is 11%, and the lessor’s implicit rate is unknown. (Assume the accounting period ends on December 31.)

9-4

On October 29, 2016, Lobo Co. began operations by purchasing razors for resale. Lobo uses the perpetual inventory method. The razors have a 90-day warranty that requires the company to replace any nonworking razor. When a razor is returned, the company discards it and mails a new one from Merchandise Inventory to the customer. The company's cost per new razor is $14 and its retail selling price is $90 in both 2016 and 2017. The manufacturer has advised the company to expect warranty costs to equal 9% of dollar sales. The following transactions and events occurred.

2016

2017

1.1 Prepare journal entries to record above transactions and adjustments for 2016.
  

• 1Record the sales revenue of 50 razors for $4,500 cash.

• 2Record the cost of goods sold for 50 razors.

• 3Record the estimated warranty expense at 9% of November sales.

• 4Record the replacement of 10 razors that were returned under the warranty.

• 5Record the sales revenue of 150 razors for $13,500 cash.

• 6Record the cost of goods sold for 150 razors.

• 7Record the replacement of 20 razors that were returned under the warranty.

• 8Record the estimated warranty expense at 9% of December sales.

• 1Record the sales revenue of 100 razors for $9,000 cash.

• 2Record the cost of goods sold for 100 razors.

• 3Record the replacement of 25 razors that were returned under the warranty.

• 4Record the adjusting entry for warranty expense for the month of January 2017.

The Ageless Child, Inc. (“TAC” or “the Company”) is a public company that sells children’s fashions and educational toys and games. As an incentive to its employees, TAC established a compensation incentive plan in which a total of 100,000 options were granted on January 1, 2019. TAC’s stock price was $15.00 per share on that date. 718-20-55-10 The significant terms of the incentive plan are as follows: • The options have a $15.00 “strike” or exercise price. • For the options to vest, the following must occur: o The employee must continue to provide service to the Company throughout the entire explicit service period of five years (i.e., a five-year “cliff-vesting” award). o TAC must achieve annual sales of at least $20 million during the fifth year (2023) of the explicit service period. o TAC’s share price must increase by at least 25% over the five-year explicit service period. • In addition, if the Company achieves sales of at least $25 million during the fifth year (2023) of the explicit vesting period, the strike price of the options will decrease from $15 to $10. • The options expire after 10 years following the grant date. • The options are classified as equity awards. Additional Facts: • Assume it is probable at all times that 100% of the employees receiving the awards will continue providing service to the Company as employees for the entire five-year explicit service period and that the five-year explicit service period is determined to be the requisite service period. • On the grant date, TAC’s management determine that it is probable that the Company’s sales in 2023 will be $30 million, and therefore it is probable on the grant date that sales are greater than or equal to at least $25 million in the fifth year. • The grant-date fair value of the options assuming a strike price of $15 is $8 per option. The grant-date fair value assuming a strike price of $10 per option is $12 per option. The CFO, Jayne Wilson, has come to you, the controller, and asked you to gather some information for her. First, she wants the types of conditions (i.e., service, performance, market, or other) present in the plan for the vesting of the units. Second, she wants to know how the service, performance, and market conditions affect vesting of the units. That is, of the various conditions present in the award, which conditions affect the vesting of the award and which affect factors other than vesting of the award (and what is their accounting treatment). Third, she would like to know the accounting impact if TAC’s share price remains steady at $15 through the end of the fifth year. Bonus (5 points) As described above, on January 1, 2019 (the grant date), $30 million of sales were probable for the fifth year (2023). During 2019, 2020, and 2021 $30 million of sales for 2023 remained probable. At the beginning of 2022 (the fourth year), management determines that it is probable that only $22 million of sales will occur for 2023. What are the journal entries for each year? Cite references from the FASB Accounting Standards Codification.

Below is a partial list of cost associated with Company X                                                                           

Required:                                                                                                      

Categorize each Cost as either: Direct material, Direct labor, Manufacturing overhead, or period cost.

Prepare a schedule for each cost category.                                                                                                                                                                               

Cost

1.            Identifiable material used to Manufacture a product .   1,000,000

2.            Unidentifiable material used in the manufacture of product                                                                                     500,000

3.            labor used to assemble a product                                                                                                                                     750,000

4.            labor used to clean the floor in a manufacturing plant                                                                                                50,000

5.            Labor to move product from point A to point B                                                                                                            45,000

6.            Insurance on the production equipment                                                                                                                          20,000

7.            Depreciation on the production equipment                                                                                                                    100,000

8.            Security personnel for the production facility                                                                                                                30,000

9.            Chief executive salary                                                                                                                                                           150,000

10.         Salary of the secretary to the production manager                                                                                                      30,000

Jordana Woolens is a manufacturer of wool cloth. The information for March is as follows:

Beginning work in process was 50% complete for conversion cost and 100% complete for DM. All conversion costs are incurred evenly throughout the process. Ending work in process was 60% complete for Conversion cost and 100% complete for DM.

Required: Prepare a production cost worksheet using the FIFO method.

Steve Woods performed an audit on the ABC corporation and issued an unqualified report. Steve performed the audit with due care and in accordance with GAAS. Three months later, he discovers on the news that the CEO of ABC, has been stealing small amounts of inventory. The amount was not material compared to the overall inventory of the corporation. The CFO, Mr. Big called Steve and he asks for Steve to refund the audit fees because Steve did not perform the audit properly and discover this fraud. How should Steve Woods, auditor, respond? Please write at least 300 words.

Eban Corporation uses the FIFO method in its process costing system. The first processing department, the Welding Department, started the month with 22,200 units in its beginning work in process inventory that were 50% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $66,200. An additional 69,000 units were started into production during the month. There were 18,800 units in the ending work in process inventory of the Welding Department that were 20% complete with respect to conversion costs. A total of $312,160 in conversion costs were incurred in the department during the month.

The cost per equivalent unit for conversion costs is closest to:

On 1/1/16, R-U Ready leased a car with a FMV of $45,000 for 5 years with a commitment to make 5 annual payments of $8,000 with the first payment due immediately and the remaining payments due on 12/31 of each year. R-U ready’s incremental borrowing rate is 12%. The estimated life of the car is 10 years. The car ownership does not transfer to R-U Ready at the end of the lease and there is no bargain purchase option.

Requirement: Present the accounts and dollar amounts that would appear on comparative balance sheets and income statements for the years ending 12/31/16 and 12/31/15.

Mary Burden is the CFO of Tidewell Corporation and Tommy Brown is the Treasurer. Mary has been with the company for seven years and Tommy just started earlier this year. They meet to discuss the classification of the corporation's investment portfolio. Mary notes that Tidewell Corporation is having a good year and net income is already more than was forecasted, so she proposes investments that have increased in value since last year be classified as available-for-sale. She also proposes that any that have decreased in value be classified as trading securities. Her logic is that this will result in some amount of reported loss, but that net income will still be more than forecasted. Also, by classifying the securities that have increased in value as available fore sale, Tidewell Corporation will have some reserve gains for future periods. Tommy is not sure about Mary's proposal and thinks it would make more sense to classify the investments that have increased in value as trading, and subsequently sell them to capture the profit. He also believes that classifying the investments that have decreased in value as trading makes more sense, which will give the investments time to recover and not impact net income.

Answer the following questions:

#1Will what Mary and Tommy each suggest have the effect on net income that they suggest? Why or why not?

#2Is what Mary and Tommy each propose ethical? Why or why not?

#3If Tommy prevails and they classify the securities as he proposes for the end of the year, what would you expect Tidewell Corporation to do with the two types of investments shortly after the classification decision is made?

#4If what should happen in #3 doesn't occur, is the classification decision ethical? Why or why not?

On January 1, 2004, Bentham Company sells office furniture for $60,000 cash. The office furniture orginally cost $150,000 when purchased on January 1, 1997. Depreciation is recorded by the straight-line method over 10 years with a salvage value of $15,000. What gain or loss on sale should be recorded on this asset in 2004?

Bruno Company purchased equipment on January 1, 2009 at a total invoice cost of $280,000; additional costs of $5,000 for freight and $25,000 for installation were incurred. The equipment has an estimated salvage value of $10,000 and an estimated useful life of five years. The amount of accumulated depreciation at December 31, 2010 if the straight-line method of depreciation is used is:

Equipment with an invoice cost of $20,000 was placed in service on January 3, 2009. Installation costs of $8,000 were added to Repairs Expense. These cost should have been added to the Equipment account. Depreciation for 2009 was computed using the straight-line method, and an estimated useful life of five years, with no salvage value expected. The net income reported for 2009 was: