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Excavation Co., a publicly-traded company, has a December 31 year end. For the 2020 fiscal year,...

Excavation Co., a publicly-traded company, has a December 31 year end. For the 2020 fiscal year, there were 100,000 common shares outstanding all year. Net income for the year ended December 31, 2020 was $900,000. The company’s income tax rate is 25%. During 2019, Spade issued a $5,000,000, 5% convertible bond at par. Each $1,000 bond is convertible into 20 common shares. No bonds have been converted as of December 31, 2020. Also during 2019, Spade issued 100,000, $2 cumulative, convertible preferred shares. Two preferred shares are convertible into one common share. The preferred share dividend was declared and paid in June, 2020. Required : Calculate basic and diluted earnings per share for 2020.

In: Accounting

The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December...

The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2017:

	Plant Asset		Accumulated Depreciation
Land	$	520,000	$	—
Land improvements		265,000		62,000
Building		2,350,000		367,000
Machinery and equipment		1,192,000		422,000
Automobiles		235,000		129,000

Transactions during 2018 were as follows:

On January 2, 2018, machinery and equipment were purchased at a total invoice cost of $345,000, which included a $7,200 charge for freight. Installation costs of $44,000 were incurred.
On March 31, 2018, a small storage building was donated to the company. The person donating the building originally purchased it three years ago for $36,000. The fair value of the building on the day of the donation was $23,000.
On May 1, 2018, expenditures of $67,000 were made to repave parking lots at Pell’s plant location. The work was necessitated by damage caused by severe winter weather.
On November 1, 2018, Pell acquired a tract of land with an existing building in exchange for 10,000 shares of Pell's common stock that had a market price of $39 per share. Pell paid legal fees and title insurance totaling $40,000. Shortly after acquisition, the building was razed at a cost of $52,000 in anticipation of new building construction in 2019.
On December 31, 2018, Pell purchased a small storage building by giving $16,950 cash and an old automobile purchased for $26,500 in 2014. Depreciation on the old automobile recorded through December 31, 2018, totaled $15,200. The fair value of the old automobile was $5,450.

In: Accounting

Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The...

Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparing the master budget for the first quarter:

As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances:


Cash	$	58,000
Accounts receivable		214,400
Inventory		60,450
Buildings and equipment (net)		368,000
Accounts payable			$	90,525
Common stock				500,000
Retained earnings				110,325
	$	700,850	$	700,850

Actual sales for December and budgeted sales for the next four months are as follows:


December(actual)	$	268,000
January	$	403,000
February	$	600,000
March	$	315,000
April	$	211,000

Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at December 31 are a result of December credit sales.
The company’s gross margin is 40% of sales. (In other words, cost of goods sold is 60% of sales.)
Monthly expenses are budgeted as follows: salaries and wages, $33,000 per month: advertising, $63,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $44,980 for the quarter.
Each month’s ending inventory should equal 25% of the following month’s cost of goods sold.
One-half of a month’s inventory purchases is paid for in the month of purchase; the other half is paid in the following month.
During February, the company will purchase a new copy machine for $2,800 cash. During March, other equipment will be purchased for cash at a cost of $79,000.
During January, the company will declare and pay $45,000 in cash dividends.
Management wants to maintain a minimum cash balance of $30,000. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.

Required:

Using the data above, complete the following statements and schedules for the first quarter:

1. Schedule of expected cash collections:

2-a. Merchandise purchases budget:

2-b. Schedule of expected cash disbursements for merchandise purchases:

3. Cash budget:

4. Prepare an absorption costing income statement for the quarter ending March 31.

5. Prepare a balance sheet as of March 31.

mplete the cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.)

Requirement 3

Hillyard Company
Cash Budget
	January	February	March	Quarter
Beginning cash balance	$58,000	$30,560	$31,860
Add cash collections	295,000	442,400	543,000	1,280,400
Total cash available	353,000	472,960	574,860	1,280,400
Less cash disbursements:
Inventory purchases	226,200	(294,300)	(245,325)	(765,825)
Selling and administrative expenses	128,240		(33,000)
Equipment purchases			(79,000)	(79,000)
Cash dividends	45,000		(9,450)
Total cash disbursements	399,440	(294,300)	(366,775)	(844,825)
Excess (deficiency) of cash	(46,440)	178,660	208,085	435,575
Financing:
Borrowings	77,000		(79,000)
Repayments		(31,860)
Interest			(79,310)
Total financing	77,000		(158,310)	0
Ending cash balance	$30,560	$178,660	$49,775	$435,575

Requirement 4

pare an absorption costing income statement for the quarter ending March 31.

Hillyard Company
Income Statement
For the Quarter Ended March 31
Sales
Cost of goods sold:
Beginning inventory
Purchases
Ending inventory	0
Goods available for sale		0
Gross margin		0
Selling and administrative expenses:
Salaries and wages	33,000
Advertising	63,000
Shipping
Depreciation
Other expenses

		96,000
Net operating income		(96,000)
Interest expense
Net income		$(96,000

Requirement 5:

Prepare a balance sheet as of March 31.

Hillyard Company
Balance Sheet
March 31
Assets
Current assets:
Cash		$790,800
Accounts receivable
Inventory


Total current assets		790,800
Buildings and equipment, net
Total assets		$790,800
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable

Stockholders' equity:
Common stock
Retained earnings

		0
Total liabilities and stockholders’ equity		$0

NOTE__ some of my numbers already imputted could be wrong.

In: Accounting

You are hired as a junior manager at a state-owned institution at the beginning of 2021...

You are hired as a junior manager at a state-owned institution at the beginning of 2021 with a salary of $100,000. You must choose between two retirement plans in the first week of your employment. This choice cannot be reversed. The two alternatives are:

• the state’s defined benefit plan (DBP): under which you will receive annual retirement benefits determined by the following formula: 1.5% * years of service * salary at retirement.

• a defined contribution plan (DCP): under which the institution will contribute each year an amount equal to 8% of your salary to your retirement fund.

You assume that salaries will rise by 3% a year, the interest rate and return of retirement assets will roughly match the market index return of 8%, you will retire after 35 years (end of 2055), and receive retirement payment for the subsequent 25 years (between the end of 2055 and the end of 2080).

What is the amount of PBO under the DBP for your employer at the end of 2021? Hint: present value at the end of 2021

In: Accounting

FASB CODIFICATION RESEARCH- provide references CE11.3 Your great-uncle, who is a CPA, is impressed that you...

FASB CODIFICATION RESEARCH- provide references
CE11.3

Your great-uncle, who is a CPA, is impressed that you are majoring in accounting. However, he believes that depreciation is something that companies do based on past practice, not on the basis of any authoritative guidance. Provide the authoritative literature to support the practice of fixed-asset depreciation.

CE11.4

What is the nature of SEC guidance concerning property, plant, and equipment disclosures?

In: Accounting

How should I record the journal entries for convertible bonds at time of issuance? Specifically that...

How should I record the journal entries for convertible bonds at time of issuance? Specifically that separation of debt and equity accounts

In: Accounting

Miller Company’s contribution format income statement for the most recent month is shown below: Total Per...

Miller Company’s contribution format income statement for the most recent month is shown below:

	Total		Per Unit
Sales (38,000 units)	$	228,000	$	6.00
Variable expenses		114,000		3.00
Contribution margin		114,000	$	3.00
Fixed expenses		48,000
Net operating income	$	66,000

Required:

(Consider each case independently):

1. What is the revised net operating income if unit sales increase by 20%?

2. What is the revised net operating income if the selling price decreases by $1.40 per unit and the number of units sold increases by 16%?

3. What is the revised net operating income if the selling price increases by $1.40 per unit, fixed expenses increase by $9,000, and the number of units sold decreases by 4%?

4. What is the revised net operating income if the selling price per unit increases by 10%, variable expenses increase by 30 cents per unit, and the number of units sold decreases by 10%?

In: Accounting

Case 17-10 ABC Retailers — Internal Controls ABC Retailers Inc. (ABC or the "Company") is a...

Case 17-10 ABC Retailers — Internal Controls ABC Retailers Inc. (ABC or the "Company") is a U.S. public company that files quarterly and annual reports with the Securities and Exchange Commission (SEC). ABC is a leading retail chain operating more than 100 department stores across the continental United States. ABC department stores offer customers a variety of nationally advertised products, including clothing, shoes, jewelry, and other accessories. The Company's supply chain of products is managed through a single warehouse and distribution facility located in Kansas City, Missouri. ABC has a centralized accounting and finance structure at its corporate headquarters, where all processes and controls related to all substantive account balances occur, including controls related to accounts payable and the Vendor Master File. ABC recognizes revenues from retail sales at the point of sale to its customers. Discounts provided to customers by the Company at the point of sale, including discounts provided in connection with loyalty cards, are recognized as a reduction in sales as the products are sold. Cost of goods sold for the Company primarily consist of inbound freight and costs relating to purchasing and receiving, inspection, depreciation, warehousing, internal transfer, and other costs of distribution. Case Facts Audit Issue On June 1, 20X2, the Accounts Payable (AP) Manager received an e-mail inquiry about the process required for a vendor to change its bank account information. The e-mail was sent from John Smith at a domain address listed as "Watch-Makers." Watch Makers is a manufacturer that supplies ABC-branded watches to ABC's west region department stores. In addition, John Smith is the primary contact at Watch Makers with whom the Company typically interacts. The AP Manager responded to the e-mail request on June 15, 20X2, with the procedures required of the vendor, which include completing a vendor bank account request form. On June 20, 20X2, the AP Manager received a reply e-mail from John Smith at "WatchMakers" with a completed vendor bank account request form, which included John Smith's signature, new bank account information, and other related information. Upon receiving the vendor bank account request form, the AP Manager completed a separately required Vendor Change Form for internal processing. The Vendor Change Form is completed for new vendors or changes to existing vendors' information, including bank account information. The AP Manager sent the completed Vendor Change Form to ABC's Assistant Controller, who reviewed and approved the request on June 24, 20X2. The bank account information was updated within the Vendor Master File on June 26, 20X2. Throughout the month of July, valid Watch Makers invoices were processed through the Company's accounts payable process, and the valid invoices were paid in accordancewith the Company's processes for cash disbursements and wire transfers. However, because the bank account information for Watch Makers was changed (as a result of the June 1, 20X2, e-mail request) approximately $2 million in payments was wired to an incorrect bank account. On August 2, 20X2, the Company received an inquiry from Watch Makers about the expected timing of the $2 million in outstanding invoices. As a result of the direct interaction with Watch Makers' employee John Smith, the Company determined that the previous vendor bank account change form was received from a fraudulent domain name with the intent to defraud the Company. The e-mail domain for Watch Makers is "Watch Makers," with no hyphen, rather than "Watch-Makers," with a hyphen. Both e-mails received from "Watch-Makers" were determined to be from a fraudulent source (that also fraudulently used John Smith's name in the e-mail). As noted above, there are two employees within the Company that were involved in processing and approving the Vendor Change Form. The Company's policy on bank account change requests was communicated by ABC's Assistant Controller in an August 20X1 e-mail that indicated that for each Vendor Change Form requesting a vendor bank account change, the accounts payable department was required to (1) obtain a previously processed and paid invoice from the vendor requesting the bank account change, (2) call the vendor using the contact information obtained from the prior invoice, (3) verify the authenticity of the requested bank account change request by directly contacting the vendor, and (4) include all relevant information obtained in steps (1) through (3) as an attachment to the Vendor Change Form. The Company's control description relating to the review of a Vendor Change Form by the Assistant Controller is not explicit regarding the specific attributes of the review. However, because the policy was distributed by the Assistant Controller and the Assistant Controller is also the control owner (e.g., performs the review), there is a presumption that the Assistant Controller would understand that as part of her review, she should evaluate whether the AP Manager obtained sufficient information to confirm the authenticity of the bank account change request. Other Relevant Facts • Materiality — $8 million. • The Company processed approximately 105 vendor requested bank account changes during FYX2 before the realization that the request from "Watch-Makers" was fraudulent (from September 25, 20X1, to August 2, 20X2). After the identification of the misappropriation of assets, the Company's internal audit department obtained and reviewed all 105 Vendor Change Forms reviewed by the Assistant Controller, noting that only five Vendor Change Forms contained the information required by the policy. In addition, internal audit determined that the primary review procedure performed by the Assistant Controller related to the verification that the bank account number was appropriately included on the Vendor Change Form. This procedure was performed in all cases before the bank account information was input into the accounts payable system. • The total wire transfer payments made to the 105 vendors that requested bank account changes in FYX2 totaled approximately $56.2 million (based on an analysis prepared by Internal Audit of the invoices processed and paid by the Company after the processing of a Vendor Change Form for the 105 vendors). • There are more than 30 vendors with annual purchase activity of over $20 million (12 of which have purchase activity of over $40 million); thus, the amount of payments made to any single vendor in a payables cycle could approximate $2 million, assuming a cycle of 30 days. • The Company's Chief Security Officer completed an internal investigation and concluded that there was no indication that the AP Manager and Assistant Controller were involved in the scheme that resulted in the $2 million misappropriation. • After the determination on August 2, 20X2, that the Vendor Change Form was from a fraudulent source, the Company ceased processing additional Vendor Change Forms until it could understand the root cause of the deficiency. On September 10, 20X2, the Assistant Controller sent a reminder regarding the importance of following the vendor bank account request change policy. The e-mail also highlighted an enhancement to the process, which primarily included an enhancement to the Vendor Change Form. The form was revised to include the following three new, explicit sections that are required to be completed: (1) contact phone number pulled from previously processed and paid vendor invoice, (2) name of individual at the vendor (from a previous invoice) that was contacted, and (3) date discussed/contacted. The policy e-mail reiterated the requirement to include a copy of the previously processed vendor invoice with the Vendor Change Form. • Internal Audit performed a thorough evaluation of the competency of the Assistant Controller and concluded that notwithstanding the Assistant Controller's lack of historical performance, the Assistant Controller was suitably competent to perform the control Engagement Team Note In planning the 20X2 audit, the engagement team obtained an understanding of the internal controls related to cash disbursements. This understanding was developed through the engagement team's walkthrough of the cash disbursements process. As part of its walkthrough procedures, the engagement team made inquiries of appropriate personnel, inspected relevant documentation, and in certain cases, observed the control performers carrying out required control procedures. As a result, the engagement team concluded that there were no significant changes to the cash disbursements process in the current year. The engagement team identified four risks of material misstatement relating to the cash disbursements process. For each risk identified, the team documented the control activity that addresses the risk of material misstatement in the excerpted worksheet (see Handout 1). As a result of the Audit Issue described above, the engagement team identified a control deficiency in the following control: CD5C — The accounts payable department is required to complete the following for each Vendor Change Form requesting a bank account change: 1. Obtain a previously processed and paid invoice from the vendor requesting the bank account change. 2. Call the vendor using the contact information from the obtained invoice. 3. Verify the authenticity of the requested bank account change request. 4. Attach all relevant information obtained in steps (1) through (3) to the Vendor Change Form for review and approval. The Company's control description regarding the Assistant Controller's review of the Vendor Change Form is not prescriptive regarding the specific attributes of the review. However, there is a presumption that the Assistant Controller would understand the primary objective of the control, which is to evaluate whether sufficient information was obtained by the AP Manager to confirm that the bank account change request was authentic. Required: 1. What are the key considerations when evaluating the severity of a deficiency in a control that directly addresses a risk of material misstatement? 2. Does the Assistant Controller's failure to adequately review the Vendor Change Form represent a deficiency in the design or operating effectiveness of the control? 3. Is the failure in the vendor request change form control indicative of a material weakness in internal control over financial reporting? 4. Would the deficiency warrant disclosure in the Company's Form 10-K, Item 9A? If so, what information would the Company be expected to disclose? 5. What implications does the deficiency have on other direct or indirect controls

what are the key considerations when evaluating the severity of a deficiency in a control that directly addresses a risk of material misstatement?

2. does the assistant controller’s failure to adequately review the vendor change form represent a deficiency in the design or operating effectiveness of the control?

3. is the failure in the vendor request change form control indicative of a material weakness in internal control over financial reporting?

4. would the deficiency warrant disclosure in the company’s form 10-k, item 9a? if so, what information would the company b

In: Accounting

How data analytics and AI (Artificial Intelligence) can improve the audit process

In: Accounting

48. Zed and Jaffry are married and file jointly every year. They have 3 children (ages...

48. Zed and Jaffry are married and file jointly every year. They have 3 children (ages 6, 10 and 17) who are dependents. They have a W-2 income of $92,000. They have $11,000 in Federal taxes withheld. Zed and Jaffry have the following expenses for the year: Interest on a home equity loan taken out in 2018 (loan issued for $100,000, used solely for college education) $1,900 Interest on first mortgage (original loan balance $450,000) $11,400 Property taxes on personal residence $8,600 State income tax $7,200 State sales tax $3,900 What is Zed and Jaffry’s taxable income?

In: Accounting

Do you think that auditors are hesitant to recognize a going concern in case they are...

Do you think that auditors are hesitant to recognize a going concern in case they are wrong? Why or why not ?

In: Accounting

Tami Tyler opened Tami’s Creations, Inc., a small manufacturing company, at the beginning of the year....

Tami Tyler opened Tami’s Creations, Inc., a small manufacturing company, at the beginning of the year. Getting the company through its first quarter of operations placed a considerable strain on Ms. Tyler’s personal finances. The following income statement for the first quarter was prepared by a friend who has just completed a course in managerial accounting at State University.

Tami’s Creations, Inc. Income Statement For the Quarter Ended March 31
Sales (28,350 units)			$	1,134,000
Variable expenses:
Variable cost of goods sold	$	473,445
Variable selling and administrative		192,780		666,225
Contribution margin				467,775
Fixed expenses:
Fixed manufacturing overhead		266,800
Fixed selling and administrative		220,975		487,775
Net operating loss			$	( 20,000)

Ms. Tyler is discouraged over the loss shown for the quarter, particularly because she had planned to use the statement as support for a bank loan. Another friend, a CPA, insists that the company should be using absorption costing rather than variable costing and argues that if absorption costing had been used the company probably would have reported at least some profit for the quarter.

At this point, Ms. Tyler is manufacturing only one product—a swimsuit. Production and cost data relating to the swimsuit for the first quarter follow:


Units produced	33,350
Units sold	28,350
Variable costs per unit:
Direct materials		$	7.60
Direct labor		$	7.30
Variable manufacturing overhead		$	1.80
Variable selling and administrative		$	6.80

Required:

1. Complete the following:

a. Compute the unit product cost under absorption costing.

b. What is the company’s absorption costing net operating income (loss) for the quarter?

c. Reconcile the variable and absorption costing net operating income (loss) figures.

3. During the second quarter of operations, the company again produced 33,350 units but sold 38,350 units. (Assume no change in total fixed costs.)

a. What is the company’s variable costing net operating income (loss) for the second quarter?

b. What is the company’s absorption costing net operating income (loss) for the second quarter?

c. Reconcile the variable costing and absorption costing net operating incomes for the second quarter.

In: Accounting

During 2018, Pina Inc., a furniture store, issued two different series of bonds, details of which...

During 2018, Pina Inc., a furniture store, issued two different series of bonds, details of which follow:

First issue: 670 $100, 10% bonds, at par, each convertible into 6 common shares.

Second issue: 390 $100, 7% bonds, at par, each convertible into 3 common shares.

For the year ended December 31, 2020, the company had net income of $53,850. Throughout 2020, 2,500 common shares were outstanding; none of the bonds were converted or redeemed. The company’s tax rate was 19%. (For simplicity, ignore the requirement to record the debt and equity portions of the convertible bond separately).

1. Calculate basic earnings per share for the year ended December 31, 2020.

2. Calculate diluted earnings per share for the year ended December 31, 2020.

In: Accounting

1. A company has bonds with a principal value of $1,000,000 outstanding. The unamortized premium on...

A company has bonds with a principal value of $1,000,000 outstanding. The unamortized premium on the bonds is $14,400. The company redeemed the bonds at 101. What is the company’s gain or loss on the redemption?

Group of answer choices

$4,400 gain

$4,400 loss

$10,000 loss

$10,000 gain

In the current year, a corporation had sales of $500,000, net income of $150,000, interest expense of $30,000, and tax expense of $20,000. Its net sales were $1,000,000 and its cost of goods sold was $200,000. What was its times interest earned for the year?

Group of answer choices

5.00

4.00

7.50

6.67

5.55

In: Accounting

Construction (Nailed It! or the “Company”), an SEC registrant, is a construction company that manufactures commercial...

Construction (Nailed It! or the “Company”), an SEC registrant, is a construction company that manufactures commercial and residential buildings. On March 1, 20X1, the Company entered into an agreement with a customer, Village Apartments, to construct a residential apartment building for a fixed price of $1.5 million. The Company estimates that it will incur costs of $1 million to complete construction of the apartment building. The apartment building will only transfer to Village Apartments once the construction of the entire building is complete. In addition, Village Apartments has various design requirements that would require Nailed It! to incur significant costs to rework the building prior to selling it to a customer other than Village Apartments. To construct the apartment building, Nailed It! acquires standard materials that it regularly uses in construction contracts for both residential and commercial buildings. These materials are used to manufacture generic component parts for inclusion in Village Apartments’ residential buildings. These standard materials remain interchangeable with other items until they are deployed in a Village Apartments building. The Company has made the following purchases and incurred the following costs throughout the construction progress:

•As of June 30, 20X1, in total, Nailed It! has purchased $75,000 of component parts. As of June 30, 20X1, $25,000 of component parts remain in inventory and $50,000 have been integrated into the project. Further, Nailed It! has incurred $12,500 of direct costs to integrate the component parts into the Village Apartments construction project during the three months ended June 30, 20X1.

•During the three months ended September 30, 20X1, Nailed It! purchased an additional $500,000 of component parts ($575,000 in total). Of the $575,000 of component parts, $325,000 remain in inventory and $200,000 have been integrated into the project during the three months ended September 30, 20X1. During the three months ended September 30, 20X1, Nailed It! incurred an additional $50,000 of direct costs to integrate the component parts into the Village Apartments construction project.

•As of September 30, 20X1, Nailed It! determined that the project was over budget and revised its cost estimate from $1 million to $1.25 million.

•As of December 31 20X1, the construction project was completed. During the three months ended December 31, 20X1, Nailed It! purchased an additional $425,000 of generic component parts ($1 million in total). Of the $1 million component parts, $0 remain in inventory and $750,000 were integrated into the project during the three months ended December 31, 20X1. Nailed It! has incurred $187,500 of direct costs to integrate the component parts into the Village Apartments construction project during the three months ended December 31, 20X1.

If Village Apartments cancels the contract, Nailed It! will be entitled to reimbursement for costs incurred for work completed to date plus a margin of 20 percent, which is
Case 7: Nailed It! Construction Page 2 Copyright 2018 Deloitte Development LLC All Rights Reserved. considered to be a reasonable margin. Nailed It! will not be reimbursed for any materials that have been purchased for use in the contract but have not yet been used and are still controlled by Nailed It!.

Required:

1.Does the performance obligation meet any of the criteria or recognition of revenue over time?

2.How should the entity recognize revenue for the satisfaction of its performance obligation? What amount of revenue should be recognized for the following periods:

2a.The three months ended June 30, 20X1?

2b.The three months ended September 30, 20X1?

2c.The three months ended December 31, 20X1?

In: Accounting

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