Pro-Weave manufactures stadium blankets by passing the products through a weaving department and a sewing department. The following information is available regarding its June inventories: Beginning Inventory Ending Inventory Raw materials inventory $ 138,000 $ 277,000 Work in process inventory—Weaving 335,000 350,000 Work in process inventory—Sewing 630,000 800,000 Finished goods inventory 1,306,000 1,316,000 The following additional information describes the company’s manufacturing activities for June: Raw materials purchases (on credit) $ 700,000 Factory wages cost (paid in cash) 3,440,000 Other factory overhead cost (Other Accounts credited) 162,000 Materials used Direct—Weaving $ 274,000 Direct—Sewing 117,000 Indirect 172,000 Labor used Direct—Weaving $ 1,400,000 Direct—Sewing 485,000 Indirect 1,500,000 Overhead rates as a percent of direct labor Weaving 90 % Sewing 150 % Sales (on credit) $ 4,050,000 1. Compute the (a) cost of products transferred from weaving to sewing, (b) cost of products transferred from sewing to finished goods, and (c) cost of goods sold. 2. Prepare journal entries dated June 30 to record (a) goods transferred from weaving to sewing, (b) goods transferred from sewing to finished goods, and (c) sale of finished goods.

Accountants generally follow the lower of cost or market (LCM) basis of inventory valuations. a. Define cost as applied to the valuation of inventories b. Define market as applied to the valuation of inventories. c. Why are inventoies valued at the lower of cost or market? d. List the arguments against the use of the LCM method of valuing inventories.

Accountants have advocated two types of income statements based on differing views of the concept of income: the current operating performance and all-inclusive concepts of income. How would the following items be handled under each concept? 1. Cost of Goods Sold 2. Selling expenses 3. Prior period Adjustments

Hamilton Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 1: Units Unit Cost Inventory, December 31, prior year 1,930 $ 6 For the current year: Purchase, March 21 6,010 5 Purchase, August 1 4,120 3 Inventory, December 31, current year 2,900 Required: Compute ending inventory and cost of goods sold under FIFO, LIFO, and average cost inventory costing methods.

Macondo, Inc. is a wholesaler located in Aguadilla. During its current fiscal year, ended December 31, 2019, Macondo Inc. completed the following selected transactions:

Feb. 3 Purchased 2,500 shares of its own common stock at $26, recording the stock at cost. (Prior to the purchase, there were 40,000 shares of $20 par common stock outstanding.

May 1 Declared a semiannual dividend of $1 on the 10,000 shares of preferred stock a $.30 dividend on the common stock to stockholders of record on May 31, payable on June 15.

June 15 Paid the cash dividends.

Sept. 23 Sold 1,000 shares of treasury stock at $28, receiving cash.

Nov. 1 Declared semiannual dividends of $1 on the preferred and $.30 declared on the common stock, In addition, a 5% common stock dividend was declared on the common stock outstanding, to be capitalized at the fair market value of the common stock, which is estimate at $30.

Dec. 1 Paid the cash dividends and issued the certificates for the common stock dividend.

Instructions: Journalize the transactions.

2. What if the U.S. tax structure moved away from taxing income to taxing the value a company added? Do you think Apple would prefer:

(a) tax on income (at 2018 rate)

(b) a Value Add Tax (VAT) (enacted in other countries and being considered for the U.S.)

and/or (c) goods and services taxes (GST)?

Gary Theater is in the Hoosier Mall. A cashier's booth is located near the entrance to the theater. Two cashiers are employed. One works from 1:00 to 5:00 p.m., the other from 5:00 to 9:00 p.m. Each cashier is bonded. The cashiers receive cash from customers and operate a machine that ejects serially numbered tickets. The rolls of tickets are inserted and locked into the machine by the theater manager at the beginning of each cashier's shift. After purchasing a ticket, the customer takes the ticket to a doorperson stationed at the entrance of the theater lobby some 60 feet from the cashier's booth. The doorperson tears the ticket in half, admits the customer, and returns the ticket stub to the customer. The other half of the ticket is dropped into a locked box by the doorperson. At the end of each cashier's shift, the theater manager removes the ticket rolls from the machine and makes a cash count. The cash count sheet is initialed by the cashier. At the end of the day, the manager deposits the receipts in total in a bank night deposit vault located in the mall. In addition, the manager sends copies of the deposit slip and the initialed cash count sheets to the theater company treasurer for verification and to the company's accounting department. Receipts from the first shift are stored in a safe located in the manager's office. (a)Identify the internal control principles and their application to the cash receipts transactions of Gary Theater. (b)If the doorperson and cashier decided to collaborate to misappropriate cash, what actions might they take?

The Regal Cycle Company manufactures three types of bicycles—a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow:

*Allocated on the basis of sales dollars.

Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out.

Required:

1. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes?

2. Should the production and sale of racing bikes be discontinued?

3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines.

Outline five (5) reasons for the discrepancy between the cash book and the bank statement.

What are the answers? Royals Incorporated leases a piece of equipment to Polar Corporation on January 1, 2017. The lease agreement called for annual rental payments of $8,648 at the beginning of each year of the 3-year lease. The equipment has a fair value of $35,000, a book value of $20,000, and an economic useful life of 5 years after which the residual value will be zero. Both parties expect a residual value of $12,500 at the end of the lease term, though this amount is not guaranteed. Royals set the lease payments with the intent of earning a 6% return, and Polar is aware of this rate. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature. PV Annuity Due PV Ordinary Annuity PV Single Sum 6%, 3 periods 2.83339 2.67301 .83962 6%, 5 periods 4.46511 4.21236 .74726 (

a) Describe the nature of the lease to Polar.

(b) Prepare all necessary journal entries for Polar in 2017.

(c)Show how the rental payment is determined by lessor (show your works).

(d)Suppose that the residual value is guaranteed by Polar. All other facts being equal, how would Royals change the amount of the annual rental payment?

What can we say about the increase of the dividend payout ratio for a company.Is it a good sign and which is the impact on the free cash flows?

Whitt Valley Presbyterian Hospital is a nonprofit initial care facility. For the hospital’s calendar year ending December 31, 2019, prepare (I) journal entries to record the transactions listed in a. through n. below, (II) a trial balance based on your entries and the beginning balances listed at o. below, and (III) a Statement of Operations and a Statement of Changes in Net Assets for the hospital.

1. Third-parties payers and direct-pay patients were billed $6,500,000 at the hospital's established billing rates
2. The hospital determined that certain of its patients qualified for charity care and that it would not seek to collect $950,000 at established billing rates from direct-pay patients
3. The hospital estimated contractual adjustments for the year of $1,600,000
4. The hospital originally estimated uncollectible amounts from direct-pay patients to be $250,000 (recall that original estimated uncollectible amounts reduce revenue; only estimates specific to an individual patient are reported as bad debt expense).
5. The hospital received capitation premiums of $2,500,000. It estimated that the cost of providing this care was $1,800,000
6. The hospital received payments from third-party payers and direct-pay patients totaling $3,500,000
7. The hospital received contributions of $1,100,000 that were restricted by donors for building a new urgent care wing
8. The hospital paid salaries and wages of $4,500,000 in cash; these amounts are reported as patient care expense
9. The fair value of investments required to be held in perpetuity increased by $25,000
10. The hospital received cash from interest and dividend income of $10,000 on investments without donor restrictions
11. The hospital used $1,375,000 of net assets with donor restrictions to construct a new urgent care wing, consistent with the restrictions created by the donors
12. The hospital reported depreciation expense of $475,000
13. The hospital used drug inventories of $365,000
14. The hospital incurred other operating costs for patient care of $275,000 on credit
15. The hospital’s beginning of the year trial balance at January 1, 2019 was as follows:

Whitt Valley Presbyterian Hospital
Trial Balance
As of January 1, 2019

1.a.)When using FIFO for inventories, market value generally refers to ________ under U.S. GAAP and ________ under IFRS.

A) current replacement cost; historical cost

B) historical cost; net realizable value

C) historical cost; current replacement cost

D) net realizable value; net realizable value

b. Margaret Company reported the following information for the current year:

Industry Averages available are:

How do the inventory turnover and gross profit percentage for Margaret Company compare to the industry averages for the same ratios? (Round inventory turnover to two decimal places. Round gross profit percentage to the nearest percent.)

A) Margaret Company has superior gross profit percentage and inventory turnover.

B) Margaret Company has superior gross profit percentage and inferior inventory turnover.

C) Margaret Company has inferior gross profit percentage and superior inventory turnover.

D) Margaret Company has inferior gross profit percentage and inventory turnover.

c.)Ending inventory for the year ended December 31, 2019, is understated by $8,000. How will this affect net income for 2019 and 2020?

A) Net income will be understated by $8,000 in 2019 and 2020.

B) Net income will be overstated by $8,000 in 2019 and 2020.

C) Net income will be understated by $8,000 in 2019 and overstated by $8,000 in 2020.

D) Net income will be overstated by $8,000 in 2019 and understated by $8,000 in 2020.

d.) Ending inventory for the year ended December 31, 2019, is understated by $23,000. How will this error affect net income for 2020?

A) Net income will be understated by $46,000.

B) Net income will be overstated by $46,000.

C) Net income will be understated by $23,000.

D) Net income will be overstated by $23,000.

e.) Beginning inventory for the year ended December 31, 2019, is understated. How will this error affect net income for 2019 and 2020?

A) 2019 overstated; 2020 understated

B) 2019 understated; 2020 overstated

C) 2019 overstated; 2020 no effect

D) 2019 understated; 2020 no effect

f.)Beginning inventory for the year ended December 31, 2019, is understated. How will this error affect net income for 2019 and 2020?

A) 2019 overstated; 2020 understated

B) 2019 understated; 2020 overstated

C) 2019 overstated; 2020 no effect

D) 2019 understated; 2020 no effect

A not-for-profit organization receives a restricted gift. When and in which type of fund should it recognize the revenue? When and in which type of fund should it recognize the related expense? What is the reason for the apparent inconsistencies between the fund types in which the revenue and expenses are reported?

1. Audit sampling requires that the auditor collect only a relatively small sub-sample of data, thereby initiating detection risk, i.e., the risk. . . that, based on the sample the auditor takes, the auditor will fail to detect a material misstatement in the financial statements. Data analytics seems to present a panacea to that notion of risk because, by auditing 100% of the sample, detection risk by definition is lower.
   1. It seems like data analytics is the perfect answer to the audit risk problem. So, comment on a variety of reasons that auditors might not be willing to rely on data analytics to drive audit risk down.
   2. Which do you think is costlier: sampling or data analytics? What are the different costs between sampling and data analytics?
   3. What role does cost-benefit play in the choice between employing statistical sampling versus data analytics?
2. Data analytics enables auditors to audit all transactions, rather than just a sample of transactions.
   1. Do you think that as the use of data analytics increases on audit engagements, the need for sampling will decrease?
   2. What role might the PCAOB or AICPA play in helping auditors determine when and how to incorporate data analytics into the audit?