Give an example of a company that reports positive accrual-basis net income but at the same time shows negative cash flows from operating activities.
In: Accounting
The
Westover
Company manufactures and sells pens. Present sales output is
5,300,000
units per year at a selling price of
$0.50
per unit. Fixed costs are
$910,000
per year. Variable costs are
$0.30
per unit.Required
LOADING...
Requirement 1. (a) What is the present operating income for a year?
Start by determining the formula to calculate operating income.
|
[ |
Units sold |
x ( |
Selling price |
- |
Variable costs |
) ] - |
Fixed costs |
= |
Operating income |
The current annual operating income is
$150000150000.
Requirement 1. (b) What is the present breakeven point in revenues?
Determine the formula to calculate the breakeven point in revenues.
|
Breakeven units |
x |
Selling price |
= |
Breakeven revenues |
The present breakeven point in revenues equals
$22750002275000.
(Hold all decimals in interim calculations. Round your final answer to the nearest whole dollar.)
Requirement 2. Compute the new operating income or loss for cases a, b, and c. (Use parentheses or a minus sign to show an operating loss.)
a. A
$0.05
per unit increase in variable costs results in a new operating income or loss of
$(115,000)(115,000).
b. A
10%
increase in fixed costs and a
10%
increase in units sold results in a new operating income or loss of
$nothing.
please send me the whole answer
In: Accounting
Freedom Co. purchased a new machine on July 2, 2016, at a total installed cost of $49,000. The machine has an estimated life of five years and an estimated salvage value of $6,700.
Required:
a-1. Calculate the depreciation expense for each year of the asset's life using Straight-line depreciation.
| Year | Depreciation Expense |
| 1 | $8,460 |
| 2 | $8,460 |
| 3 | $8,460 |
| 4 | $8,460 |
| 5 | $8,460 |
a-2. Calculate the depreciation expense for each year of the asset's life using Double-declining-balance depreciation.
| Year | Depreciation Expense |
| 1 | $19,600 |
| 2 | $11,760 |
| 3 | $7,056 |
| 4 | $3,884 |
| 5 | $0 |
b. How much depreciation expense should be recorded by Freedom Co. for its fiscal year ended December 31, 2016, under each method? (Note: The machine will have been used for one-half of its first year of life.)
| Depreciation Expense | |
| Straight‑line | $4,230 |
| Double-declining balance | $9,800 |
c. Calculate the accumulated depreciation and net book value of the machine at December 31, 2017, under each method.
| Cost | Accumulated Depreciation | Net Book Value | |
| Straight‑line | $49,000 | $0 | $0 |
| Double-declining‑balance | 49,000 | 0 | 0 |
In: Accounting
If net cash flows from operating activities were $187,000, net income were $50,000, and net sales were $600,000, the cash flow yield would equal (Round to on decimal place)
a.$137,000
b.$237,000
c.3.7 times
d. $413,000
In: Accounting
Use the following information to prepare a multi-step income
statement and a balance sheet for Sherman Equipment Co. for Year 2.
(Hint: Some of the items will not appear on
either statement, and ending retained earnings must be calculated.)
(Balance Sheet only: Items to be deducted must be indicated
with a minus sign.)
| Salaries Expense | $ | 75,000 | Operating Expenses | $ | 68,000 | |||
| Common Stock | 100,000 | Cash Flow from Investing Activities | 84,400 | |||||
| Notes Receivable (short term) | 30,000 | Prepaid Rent | 13,100 | |||||
| Allowance for Doubtful Accounts | 8,400 | Land | 46,000 | |||||
| Uncollectible Accounts Expense | 8,700 | Cash | 48,700 | |||||
| Supplies | 1,800 | Inventory | 98,900 | |||||
| Interest Revenue | 6,000 | Accounts Payable | 52,000 | |||||
| Sales Revenue | 344,000 | Salaries Payable | 18,000 | |||||
| Dividends | 4,100 | Cost of Goods Sold | 154,000 | |||||
| Interest Receivable (short term) | 2,100 | Accounts Receivable | 62,000 | |||||
| Beginning Retained Earnings | 84,000 | |||||||
In: Accounting
Why financial statement users generally unfavorably view negative cash flows from operating activities, but may view positively negative cash flows from investing and financing activities
In: Accounting
A publically traded company more than doubled its EPS by changing depreciation methods. In justifying the change, management supported the change as follows: In comparison to direct competitors, the previous depreciation method was more conservative and thus had a negative impact on earnings. Although difficult to prove, there is considerable evidence that accounting changes are made for reasons other than improved financial reporting. GAAP are flexible in the initial selection of accounting methods and in making subsequent changes. However, the accounting standards specifically require that only changes to preferable accounting methods be made. Does this violate GAAP? Is this ethical? What would be an alternative course of action?
In: Accounting
The beginning inventory in Year 2 is under by 3000 and in Year 3 under by 2000. The purchases in Year 2 are over by 4000, and the purchases in Year 3 are also over by 4000. You find these errors in Year 3 after the books of the previous years have closed. What's the correcting entry
In: Accounting
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In: Accounting
The company the team chose is Alphabet formally Google, and competitor is Yahoo
You are a senior manager for the highly successful regional CPA firm of Fine, Dee, Evah, Dense, LLP (Fine). Since its inception nearly 30 years ago, Fine's audit practice has exclusively consisted of auditing private and not-for-profit organizations. Recently, the partners have been considering an opportunity to audit a publically-traded company for the company your team has selected.
The primary reason Fine has not heretofore ventured into auditing public-traded companies is because of the potential risk and legal liability associated with auditing public companies. However, Fine has been a bit stagnant, business-wise, for the past few years, and some of the older and more risk adverse partners are beginning to retire. Consequently, the lure of the often-lucrative and prestigious opportunity to audit a public company has become to hard to resist, so the partners have decided to pursue the chance to audit this company.
On a beautiful early-september morning you are called into the senior partner's office and told you and your team have been selected to lead the first-ever effort to audit a public-traded company for Fine. You are honored, but also know auditing a public company is a bit more tricky and complicated than auditing private and not-for-profit organizations. Fortunately, the senior partner had considerable experience early in his career with another firm in auditing public companies and told you he would be with you all the way. Relieved, you asked him what he wanted you to do. He tossed you the most recent Form 10-K of the company you selected and gave you the following assignments:
Review and discuss the Form 10-K for the company you
have selected.
Create a report that will have 4 Sections.
Section 1. Initial Risk Assessment
Hint: The business and risk information is usually found in the first part of the risks, do not simply restate what is in the Form 10-K. Think like a senior manager at a CPA firm-what accounts (cash, A/R, Inventory,etc.) might be the most potentially risky and Why? For example an airline might not have the same inventory considerations found with a retail outlet like Wal-Mart.
Describe the following issues:
Ethics and legal Issues
1. The ETHICS and sophistication of top management and cultures where the company operates.
2. Have there been significant auditing or accounting issues raised in the recent past?
3. Did they have disputes with their previous audit
firm?
4. IS this company or industry particularly susceptible to lawsuits
or other legal proceedings?
Evaluate the regulatory and compliance and
requirements of this company.
1. The compliance requirements of this company.
2. is it subject to a high-level of governmental regulation?
3. Are employees unionized? Are they generally compliant with Sarbanes-Oxley and other regulatory rules?
Section 2. Analytical Procedures
Based on Table 8-1 Examples of Planning Analytical Procedures and the sections on Analytical Procedures, select three ratios ( current, ratio, Inventory turnover, debt to equity, return on assets). calculate these ratios for the most recent year and compare the results.
Write a 350 to 525 word analysis of your findings
Section 3. Materiality and Risk
The senior partner wants to confirm your understanding
of key concept.
Summarize each concept 90 to 175 words each.
materiality
misstatement
audit risk
audit risk model
inherent risk.
relationship of risk to audit evidence
In: Accounting
I need a weekly (2-3 paragraphs for one week) accounting internship report which will include; what you did, what you learned and what problem you faced during that week
In: Accounting
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In: Accounting
In: Accounting
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| 1 | Chapter 5: Applying Excel | |||
| 2 | ||||
| 3 | Data | |||
| 4 | Unit sales | 30,000 | units | |
| 5 | Selling price per unit | $70 | per unit | |
| 6 | Variable expenses per unit | $42 | per unit | |
| 7 | Fixed expenses | $420,000 | ||
| 8 |
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If your formulas are correct, you should get the correct answers to the following questions. |
| (a) | What is the break-even in dollar sales? |
| (b) |
What is the margin of safety percentage? |
| (c) |
What is the degree of operating leverage? (Round your answer to 2 decimal places.) |
| 3. |
Using the degree of operating leverage and without changing anything in your worksheet, calculate the percentage change in net operating income if unit sales increase by 20%. |
| 4. |
Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet by 20% so that the Data area looks like this: |
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| (a) |
What is net operating income? (Negative amount should be indicated by a minus sign.) |
| (b) |
By what percentage did the net operating income increase? |
| 5. |
Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre brand of cycle that was popular in the 1930s. The retro-look cycle would be sold for $17,000 and at that price, Thad estimates 400 units would be sold each year. The variable cost to produce and sell the cycles would be $13,600 per unit. The annual fixed cost would be $1,224,000. |
| a. | What is the break-even in unit sales? |
| b. |
What is the margin of safety in dollars? |
| c. | What is the degree of operating leverage? (Round your answer to 2 decimal places.) |
| Thad is worried about the selling price. Rumors are circulating that other retro brands of cycles may be revived. If so, the selling price for the Western Hombre would have to be reduced to $14,200 to compete effectively. In that event, Thad would also reduce fixed expenses to $1,139,000 by reducing advertising expenses, but he still hopes to sell 400 units per year. |
| d. | What would the net operating income be in this situation? (Negative amount should be indicated by a minus sign.) |
In: Accounting
Product AG52 has revenues of $195,600, variable cost of goods sold of $114,200, variable selling expenses of $31,600, and fixed costs of $58,100, creating a loss from operations of $8,300.
a. Prepare a differential analysis as of October 7 to determine if Product AG52 should be continued (Alternative 1) or discontinued (Alternative 2), assuming fixed costs are unaffected by the decision. If an amount is zero, enter "0". Use a minus sign to indicate a loss.
| Differential Analysis | |||
| Continue Product AG52 (Alt. 1) or Discontinue Product AG52 (Alt. 2) | |||
| October 7 | |||
| Continue Product AG52 (Alternative 1) | Discontinue Product AG52 (Alternative 2) | Differential Effect on Income (Alternative 2) | |
| Revenues | $ | $ | $ |
| Costs: | |||
| Variable cost of goods sold | |||
| Variable selling expenses | |||
| Fixed costs | |||
| Income (Loss) | $ | $ | $ |
b. Determine if Product AG52 should be continued (Alternative 1) or discontinued (Alternative 2).
In: Accounting