How legal issues may impact on a business ? Provide an example

Problem 14-18 Common-Size Statements and Financial Ratios for a Loan Application [LO14-1, LO14-2, LO14-3, LO14-4]

Paul Sabin organized Sabin Electronics 10 years ago to produce and sell several electronic devices on which he had secured patents. Although the company has been fairly profitable, it is now experiencing a severe cash shortage. For this reason, it is requesting a $570,000 long-term loan from Gulfport State Bank, $135,000 of which will be used to bolster the Cash account and $435,000 of which will be used to modernize equipment. The company’s financial statements for the two most recent years follow:

During the past year, the company introduced several new product lines and raised the selling prices on a number of old product lines in order to improve its profit margin. The company also hired a new sales manager, who has expanded sales into several new territories. Sales terms are 3/10, n/30. All sales are on account.

Required:

To assist in approaching the bank about the loan, Paul has asked you to compute the following ratios for both this year and last year:

a. The amount of working capital.
b. The current ratio. (Round your answers to 2 decimal places.)
c. The acid-test ratio. (Round your answers to 2 decimal places.)
d. The average collection period. (The accounts receivable at the beginning of last year totaled $320,000.) (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal place.)
e. The average sale period. (The inventory at the beginning of last year totaled $570,000.) (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal place.)
f. The operating cycle. (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal place.)
g. The total asset turnover. (The total assets at the beginning of last year were $2,630,000.) (Round your answers to 2 decimal places.)
h. The debt-to-equity ratio. (Round your answers to 2 decimal places.)
i. The times interest earned ratio. (Round your answers to 2 decimal places.)
j. The equity multiplier. (The total stockholders’ equity at the beginning of last year totaled $1,599,000.) (Round your answers to 2 decimal places.)

2. For each of the situations below, indicate, by letter, the type of report most likely to be issued. (5 points)
A. Unqualified opinion, no modification.
B. Unqualified opinion, modification for consistency.
C. Unqualified opinion, modification for Rule 203.
D. Unqualified opinion, modification for emphasis of a matter.
E. Unqualified opinion, modification for a going-concern uncertainty.
F. Unqualified opinion, modification for going concern.
G. "Except for" qualified opinion.
___ 1. The entity has a lawsuit pending against them. There is significant uncertainty about the outcome of the lawsuit, which could have a significant impact on the viability of the entity. Management has provided adequate disclosure of the lawsuit in the footnotes accompanying the financial statements.
___ 2. The entity has a lawsuit pending against them. It is probable that the entity will lose the suit. Management has accrued the best estimate of the loss and provided adequate disclosure. It is not expected that this lawsuit will have a significant effect on the entity's ability to continue as a going concern.
___ 3. The entity has a lawsuit pending against them. It is probable that the entity will lose the suit. Management has not accrued the best estimate of the loss, but has provided information in the footnotes. It is not expected that this lawsuit will have a significant effect on the entity's ability to continue as a going concern.
___ 4. Based on recent analysis of usage, the entity has changed the useful life of its office equipment from five to four years. This change is reflected in the depreciation amounts computed for the current year.
___ 5. The entity uses an accounting principle for a class of transactions that is not acceptable under current GAAP. The entity believes, and the auditors concur, that the financial statements would be misleading if GAAP were to be followed

Toy Truck Corporation produces children's toy trucks using a continuous production process. All direct materials are added at the beginning of the process. In November, the beginning work in process inventory was 420 units, which were 50 percent complete; the ending balance was 400 units, which were 70 percent complete. During November, 15,000 units were started into production. The Work in Process Inventory account had a beginning balance of $937 for direct materials costs and $370 for conversion costs. In the course of the month, $35,300 of direct materials were added to the process, and $31,689 of conversion costs were assigned.

Using the data given and assuming that the company uses the average costing method, prepare a process cost report that computes the equivalent units for November, the product unit cost for the toys, and the ending balance in the Work in Process Inventory account. Round cost per equivalent unit to the five decimal places. For the percentages, do not enter the percent sign. For example, 60% would be entered as 60.

Problem 12-6A Liquidation of a partnership LO P5

Kendra, Cogley, and Mei share income and loss in a 3:2:1 ratio. The partners have decided to liquidate their partnership. On the day of liquidation their balance sheet appears as follows.
  

Required:
For each of the following scenarios, complete the schedule allocating the gain or loss on the sale of inventory. Prepare journal entries to record the below transactions. (Do not round intermediate calculations. Amounts to be deducted or Losses should be entered with a minus sign. Round your final answers to the nearest whole dollar.)

(1) Inventory is sold for $621,000.
(2) Inventory is sold for $468,000.
(3) Inventory is sold for $329,400 and any partners with capital deficits pay in the amount of their deficits.
(4) Inventory is sold for $240,600 and the partners have no assets other than those invested in the partnership.

Complete this question by entering your answers in the tabs below.

• Required 1 Inventory
• Required 1 GJ
• Required 2 Inventory
• Required 2 GJ
• Required 3 Inventory
• Required 3 GJ
• Required 4 Inventory
• Required 4 GJ

Complete the schedule allocating the gain or loss on the sale of inventory is $329,400 and any partners with capital deficits pay in the amount of their deficits.

Prepare journal entries to record the inventory is sold for $329,400 and any partners with capital deficits pay in the amount of their deficits.

Complete the schedule allocating the gain or loss on the sale of inventory $240,600 and the partners have no assets other than those invested in the partnership.

Prepare journal entries to record the inventory is sold for $240,600 and the partners have no assets other than those invested in the partnership.

Choose at least two concepts you have learned in Intermediate Accounting, 2nd edition from the list below and explain how you may use them in your present or future accounting position. Make sure you provide details on how each concept will help you support the financial goals of the company you currently work for or will work for in the future.

PS: Please I need a complete answer. Thanks

The concepts are as follow:

retained earnings

Earnings per share

Statement of retained earnings

Stock option

Memo writing

Stockholders' equity

Revenue reognition

Contributed capital

Accounting for income tax

Accounting for postretirement benefits

Accounting for leases

Capital lease

Operating lease

Statement of cash flows

Accounting for changes and errors

Change in an Accounting Principle

Change in an Accounting Estimate

Change in a Reporting Entity.

Errors

retrospective adjustment method

prospective method

direct effect of a change in accounting principle

indirect effect of a change in accounting principle

Please prepare the journal entries for the transactions below:

Joan Miller Advertising Agency

This comprehensive problem involving the Joan Miller Advertising Agency covers all the learning objectives on measuring business transactions and measuring business income. The July 31, 20xx, post-closing trial balance for the Joan Miller Advertising Agency appears at the bottom of the next page. During August, the agency engaged in these transactions:

Aug.1   Received an additional investment of cash from Joan Miller, $6,300.

Purchased additional office equipment with cash, $1,200.

5    Received art equipment transferred to the business from Joan Miller $1,400

6    Purchased additional office supplies with cash, $90

7    Purchased additional art supplies on credit from Taylor Supply Company, $450.

8    Completed the series of advertisements (total price $800) for Marsh Tire Company that began on July 31.   The July 31 portion was $200.

Paid the secretary for two weeks’ wages, $1,200. The last pay period ended Friday July 26.

Paid the amount due to Morgan Equipment for the office equipment purchased last month $1,500.

Accepted an advance in cash for artwork to be done for another agency, $1,600.

Purchased a copier (office equipment) from Morgan Equipment for $2,100, paying $350 in cash and agreeing to pay the rest in equal payments over the next five months.

Performed advertising services and received a cash fee, $1,450.

Received payment on account from Ward Department Stores for services for services performed last month, $2,800.

Paid amount due for the telephone bill that was received and recorded at the end  of July $140.

Performed advertising services for Ward Department Stores and agreed to Accept payment next month, $3,200.

Performed art services for cash, $580.

Received and paid the utility bill August, $220.

Paid the secretary for two weeks’ wages, $1,200.

Paid the rent for September in advance, $800.

Received the telephone bill for August, which is to be paid next month, $160.

Paid cash to Joan Miller as a withdrawal for personal expenses, $1,400.

REQUIRED

Record the transactions for August in journal form

Creative Computing sells a tablet computer called the Protab. The $620 sales price of a Protab Package includes the following: One Protab computer. A 6-month limited warranty. This warranty guarantees that Creative will cover any costs that arise due to repairs or replacements associated with defective products for up to six months. A coupon to purchase a Creative Probook e-book reader for $125, a price that represents a 50% discount from the regular Probook price of $250. It is expected that 20% of the discount coupons will be utilized. A coupon to purchase a one-year extended warranty for $40. Customers can buy the extended warranty for $40 at other times as well. Creative estimates that 45% of customers will purchase an extended warranty. Creative does not sell the Protab without the limited warranty, option to purchase a Probook, and the option to purchase an extended warranty, but estimates that if it did so, a Protab alone would sell for $600. Required: 1. & 2. Indicated below whether each item is a separate performance obligation and allocate the transaction price of 120,000 Protab Packages to the separate performance obligations in the contract. 3. Prepare a journal entry to record sales of 120,000 Protab Packages (ignore any sales of extended warranties).

[The following information applies to the questions displayed below.]

National League Gear has two classes of stock authorized: 5%, $20 par preferred, and $5 par value common. The following transactions affect stockholders’ equity during 2018, National League’s first year of operations:

February 2 Issue 1.5 million shares of common stock for $15 per share.

February 4 Issue 400,000 shares of preferred stock for $24 per share.

June 15 Repurchase 150,000 shares of its own common stock for $10 per share.

August 15 Reissue 112,500 shares of treasury stock for $25 per share.

November 1 Declare a cash dividend on its common stock of $1.50 per share and a $400,000 (5% of par value) cash dividend on its preferred stock payable to all stockholders of record on November 15. (Hint: Dividends are not paid on treasury stock.)

November 30 Pay the dividends declared on November 1.

15.

value:
1.25 points

Required information

Required:

1. Record each of these transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

References

eBook & Resources

General Journal

22. Rhianna is a calendar-year taxpayer who owns a 40% capital and profits interest in the RM Partnership. Magdalena sells the remaining 60% capital and profits interest to Syed on November 30. The partnership year-end is May 31 as permitted by the IRS for business purpose reasons. The RM Partnership

A) terminates on September 30.

B) terminates on October 31.

C) terminates on December 31.

D) does not terminate.

In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2020. Information related to the contract is as follows: 2018 2019 2020 Cost incurred during the year $ 2,604,000 $ 4,032,000 $ 1,940,400 Estimated costs to complete as of year-end 5,796,000 1,764,000 0 Billings during the year 2,040,000 4,596,000 3,364,000 Cash collections during the year 1,820,000 4,000,000 4,180,000 Westgate recognizes revenue over time according to percentage of completion. Required: 1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. 2-a. In the journal below, complete the necessary journal entries for the year 2018 (credit "Various accounts" for construction costs incurred). 2-b. In the journal below, complete the necessary journal entries for the year 2019 (credit "Various accounts" for construction costs incurred). 2-c. In the journal below, complete the necessary journal entries for the year 2020 (credit "Various accounts" for construction costs incurred). 3. Complete the information required below to prepare a partial balance sheet for 2018 and 2019 showing any items related to the contract. 4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. 2018 2019 2020 Cost incurred during the year $ 2,604,000 $ 3,820,000 $ 3,220,000 Estimated costs to complete as of year-end 5,796,000 3,120,000 0 5. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. 2018 2019 2020 Cost incurred during the year $ 2,604,000 $ 3,820,000 $ 3,960,000 Estimated costs to complete as of year-end 5,796,000 4,140,000 0

No external link is required.

Choose at least two concepts you have learned in Intermediate Accounting, 2nd edition and explain how you may use them in your present or future accounting position. Make sure you provide details on how each concept will help you support the financial goals of the company you currently work for or will work for in the future.

PS: I need a complete answer. Thank you. And do not waste my question

The concepts are as follow:

retained earnings

Earnings per share

Statement of retained earnings

Stockholders' equity

Revenue reognition

Contributed capital

Accounting for income tax

Accounting for postretirement benefits

Accounting for leases

Capital lease

Operating lease

Statement of cash flows

Accounting for changes and errors

Change in an Accounting Principle

Change in an Accounting Estimate

Change in a Reporting Entity.

Errors

retrospective adjustment method

prospective method

direct effect of a change in accounting principle

indirect effect of a change in accounting principle

The Converting Department of Hopkinsville Company had 1,000 units in work in process at the beginning of the period, which were 70% complete. During the period, 20,800 units were completed and transferred to the Packing Department. There were 1,120 units in process at the end of the period, which were 70% complete. Direct materials are placed into the process at the beginning of production.

Determine the number of equivalent units of production with respect to direct materials and conversion costs. If an amount is zero, enter in "0".

Financial Accounting 17th edition chapter 5 5PSA step by step solution

Next Job, Inc., provides employment consulting services. The company adjusts its accounts monthly but performs closing entries annually on December 31. The firm’s unadjusted trial balance dated December 31, current year, is shown as follows.

Other Data

Accrued but unrecorded and uncollected consulting fees earned total $25,000 at December 31, current year.

The company determined that $15,000 of previously unearned consulting services fees had been earned at December 31, current year.

Office supplies on hand at December 31 total $300.

The company purchased all of its equipment when it first began business. At that time, the estimated useful life of the equipment was six years (72 months).

The company prepaid its nine-month rent agreement on June 1, current year.

The company prepaid its six-month insurance policy on December 1, current year.

Accrued but unpaid salaries total $12,000 at December 31, current year.

On September 1, current year, the company borrowed $60,000 by signing an 8-month, 4 percent note payable. The entire amount, plus interest, is due on March 1, next year.

The company’s accounting firm estimates that income taxes expense for the entire year is $50,000. The unpaid portion of this amount is due early in the next year.

page 243

NEXT JOB, INC.

UNADJUSTED TRIAL BALANCE

DECEMBER 31, CURRENT YEAR

Cash $276,500

Accounts receivable 90,000

Office supplies 800

Prepaid rent 3,600

Unexpired insurance 1,500

Office equipment 72,000

Accumulated depreciation: office equipment $?24,000

Accounts payable 4,000

Notes payable (due 3/1/16) 60,000

Interest payable 600

Income taxes payable 9,000

Dividends payable 3,000

Unearned consulting fees 22,000

Capital stock 200,000

Retained earnings 40,000

Dividends 3,000

Consulting fees earned 500,000

Rent expense 14,700

Insurance expense 2,200

Office supplies expense 4,500

Depreciation expense: office equipment 11,000

Salaries expense 330,000

Utilities expense 4,800

Interest expense 3,000

Income taxes expense 45,000 ???????

Totals $862,600 $862,600

Instructions

Prepare the necessary adjusting journal entries on December 31, current year. Also prepare an adjusted trial balance dated December 31, current year.

From the adjusted trial balance prepared in part a, prepare an income statement and statement of retained earnings for the year ended December 31, current year. Also prepare the company’s balance sheet dated December 31, current year.

Prepare the necessary year-end closing entries.

Prepare an after-closing trial balance.