7.

Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31):

On July 1, 2018, the company adopted a plan to discontinue a division that qualifies as a component of an entity as defined by GAAP. The assets of the component were sold on September 30, 2018, for $54,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows:

In addition to the account balances above, several events occurred during 2018 that have not yet been reflected in the above accounts:

A fire caused $51,000 in uninsured damages to the main office building. The fire was considered to be an infrequent but not unusual event.

Inventory that had cost $41,000 had become obsolete because a competitor introduced a better product. The inventory was sold as scrap for $5,000.

Income taxes have not yet been recorded.

Required:
Prepare a multiple-step income statement for the Reed Company for 2018, showing 2017 information in comparative format, including income taxes computed at 40% and EPS disclosures assuming 400,000 shares of common stock. (Amounts to be deducted should be indicated with a minus sign. Round EPS answers to 2 decimal places.)

Navajo Company’s financial statements show the following. The company recently discovered that in making physical counts of inventory, it had made the following errors: Inventory on December 31, 2015, is understated by $63,000, and inventory on December 31, 2016, is overstated by $33,000.

  
Required:

1. For each key financial statement figure—(a), (b), (c), and (d) below—prepare a table to show the adjustments necessary to correct the reported amounts. (Amounts to be deducted must be entered with a minus sign.)

2. What is the error in total net income for the combined three-year period resulting from the inventory errors?

Assume that ACW Corporation has 2020 taxable income of $1,540,000 for purposes of computing the §179 expense. The company acquired the following assets during 2020 (assume no bonus depreciation): (Use MACRS Table 1, Table 2, and Table 5).

1. What is the maximum amount of §179 expense ACW may deduct for 2020?
2. What is the maximum total depreciation that ACW may deduct in 2020 on the assets it placed in service in 2020? (Round your intermediate calculations and final answer to the nearest whole dollar amount.)

Shown below are comparative balance sheets for Flint Corporation.

Additional information:

Prepare a statement of cash flows for 2022 using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -45,000, or in parenthesis e.g. (45,000)).

Record the following transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) (a) Started business by issuing 10,000 shares of common stock for $20,000. (b) Hired Rebecca as an administrative assistant, promising to pay her $2,700 every two weeks. (c) Rented a building for three years at $590 per month and paid six months' rent in advance. (d) Purchased equipment for $5,100 cash. (e) Purchased $2,100 of supplies on account. (f) Provided services to customers for $7,600 cash. (g) Paid employees’ salaries, $5,900. (h) Paid for supplies purchased in item (e). (i) Paid $900 for current advertising in a local newspaper. (j) Paid utility bill of $1,900 for the current month.

CA4-5

identifiy the weaknesses and describe why it is a weakness and what should be done to correct the issue: On a income satement

Sales Taxes

Purchase Discounts

Recoveries of accounts written off in prior years

Delivery Expense

Loss on discontinued styles

Loss on sale of marketable securities

Loss on sale of warehouse

Federal Income Taxes

Big Sky Sports sells hunting and fishing equipment and provides guided hunting and fishing trips. Big Sky Sports is owned and operated by Joe Flannery, a well-known sports enthusiast and hunter. Joe’s wife, Pam, owns and operates Glacier Boutique, a women’s clothing store. Joe and Pam have established a trust fund to finance their children’s college education. The trust fund is maintained by Kalispell State Bank in the name of the children, Trey and Brooke.

a. For each of the following transactions, identify which of the entities listed should record the transaction in its records:
Glacier Boutique
Kalispell State Bank
Big Sky Sports
None of the above

1. Pam deposited a $2,000 personal check in the trust fund at Kalispell State Bank.

2. Pam purchased two dozen spring dresses from a Spokane designer for a special spring sale.

3. Joe paid a breeder’s fee for an English Springer Spaniel to be used as a hunting guide dog.

4. Pam authorized the trust fund to purchase mutual fund shares.

5. Joe paid a local doctor for his annual physical, which was required by the workmen’s compensation insurance policy carried by Big Sky Sports.

6. Received a cash advance from customers for a guided hunting trip.

7. Pam paid her dues to the YWCA.

8. Pam donated several dresses from inventory for a local charity auction for the benefit of a women’s abuse shelter.

9. Joe paid for dinner and a movie to celebrate their thirtieth wedding anniversary.

10. Joe paid for an advertisement in a hunters’ magazine.

b. What is a business transaction?

Describe the differences between a flexible budget and a static budget. Use your own example to discuss how to compute and use Net Present Value (NPV), Internal Rate of Return (IRR), and payback period to evaluate a project in capital budgeting.

[For Indian companies]

I am planning to start my starup food delivery business in 2 weeks. Even though I have made a study on all these, I would like to get as much advice as possible.

What all registers should I keep so that I can keep track of all expenses and use that details for auditing purposes?

Bradley-Link’s December 31, 2018, balance sheet included the following items:

Note 8: Bonds (in part)
The 11.0% bonds were issued in 2005 at 97.0 to yield 10%. Interest is paid semiannually on June 30 and December 31. Each $1,000 bond is convertible into 50 shares of the Company’s no par common stock.

The 11.0% bonds were issued in 2009 at 105 to yield 10%. Interest is paid semiannually on June 30 and December 31. Each $1,000 bond was issued with 50 detachable stock warrants, each of which entitles the holder to purchase one share of the Company’s no par common stock for $25, beginning 2019.

On January 3, 2019, when Bradley-Link’s common stock had a market price of $32 per share, Bradley-Link called the convertible bonds to force conversion. 90% were converted; the remainder were acquired at the call price. When the common stock price reached an all-time high of $37 in December of 2019, 40% of the warrants were exercised.

Required:
1. Prepare the journal entries that were recorded when each of the two bond issues was originally sold in 2005 and 2009.
2. Prepare the journal entry to record (book value method) the conversion of 90% of the convertible bonds in January 2019 and the retirement of the remainder.
3. Assume Bradley-Link induced conversion by offering $150 cash for each bond converted. Prepare the journal entry to record (book value method) the conversion of 90% of the convertible bonds in January 2019.
4. Assume Bradley-Link induced conversion by modifying the conversion ratio to exchange 55 shares for each bond rather than the 50 shares provided in the contract. Prepare the journal entry to record (book value method) the conversion of 90% of the convertible bonds in January 2019.
5. Prepare the journal entry to record the exercise of the warrants in December 2019.

[For Indian companies]

Is the mail invoice enough as the invoice for a food delivery startup?

Is there a need of giving printed invoice for all customers?

Can we use that invoice for our auditing purposes?

Elaborate.

If the answer is a NO, elaborate the other options that can be chosen.

Pavone Corp. has prepared a preliminary cash budget for the third quarter as shown​ below:

​Subsequently, the marketing department revised its figures for cash collections. New data are as​ follows: $53,000 in​ July, $56,000 in​ August, and​ $43,000 in September. Based on the new​ data, calculate the new projected cash balance at the end of September.

A.

​$16,300

B.

​$19,500

C.

​$13,300

D.

​$12,000

Exercise 16-11 Indirect: Preparing statement of cash flows LO P1, P2, P3, A1

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

The following financial statements and additional information are reported.

Additional Information

1. A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash.
2. The only changes affecting retained earnings are net income and cash dividends paid.
3. New equipment is acquired for $59,600 cash.
4. Received cash for the sale of equipment that had cost $50,600, yielding a $2,200 gain.
5. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
6. All purchases and sales of inventory are on credit.

Exercise 16-11 Part 1

Required:

(1) Prepare a statement of cash flows for the year ended June 30, 2017, using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
(2) Compute the company's cash flow on total assets ratio for its fiscal year 2017.

PLEASE USE CHARTS I PROVIDED

On January 1, 20Y2, Hebron Company issued a $242,000, five-year, 11% installment note to Ventsam Bank. The note requires annual payments of $65,478, beginning on December 31, 20Y2.

Journalize the entries to record the following transactions. Refer to the Chart of Accounts for exact wording of account titles.

a. Journalize the entries to record the transactions for the year 20Y2. Refer to the Chart of Accounts for exact wording of account titles.

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ACCOUNTING EQUATION

b. Journalize the entries to record the transactions for the year 20Y5. Refer to the Chart of Accounts for exact wording of account titles.

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ACCOUNTING EQUATION