3 The Aledo Company, which has only been in business since 2017, decided to change from the Average Cost to the FIFO inventory cost flow assumption for financial reporting purposes. The following data are available in regard to its pretax operating income and cost of goods sold:

                        Average Cost             

                        Net Income                  FIFO Income

Year                As Reported                Net Income

2017                $40,000                        $48,000

2018                46,000                        56,000

2019                  50,000                        62,000

Required

1. Ignoring tax effects. Compute the cumulative effect of the change of accounting principle at the beginning of 2019 and record the journal entry to reflect the change.

2. What net income would be reported in the financial statements presented for the years prior to 2019 after the accounting change?

In your own words write and discuses the components of the accounting equation and its importance? and

in which financial statement, we can apply the accounting equation components?

Discuss the structure of financial statements and how they interact with each other. Why is a cash flow statement considered an accurate indicator to evaluate a company? Locate financial statements for a company of your choice, and review the cash flow statement. What insights does it provides about the company’s performance, in relation to other its other financial statements?

o   Examine the five (5) steps to managing accounts receivable. Speculate on the step that is most vulnerable to fraud. Suggest at least two (2) actions that a company can take in order to protect this step from fraud.

o   Imagine that your company has tasked you with developing a plan for factoring accounts receivables. Create one (1) scenario that demonstrates the key benefits and / or detriments to your company from factoring accounts receivable.

Gallerani Corporation has received a request for a special order of 5,400 units of product A90 for $28.40 each. Product A90's unit product cost is $27.85, determined as follows:

Direct materials	$	3.30
Direct labor		8.60
Variable manufacturing overhead		7.70
Fixed manufacturing overhead		8.25
Unit product cost	$	27.85

Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product A90 that would increase the variable costs by $4.70 per unit and that would require an investment of $14,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be:

Multiple Choice

• $(36,410)

• $8,140

• $2,970

• $(98,550)

Bruce Corporation makes four products in a single facility. These products have the following unit product costs:

	Products
	A		B		C		D
Direct materials	$	13.70	$	9.60	$	10.40	$	10.00
Direct labor		18.80		26.80		33.00		39.80
Variable manufacturing overhead		3.70		2.10		2.00		2.60
Fixed manufacturing overhead		25.90		34.20		26.00		36.60
Unit product cost	$	62.10	$	72.70	$	71.40	$	89.00

Additional data concerning these products are listed below.

	Products
	A		B		C		D
Grinding minutes per unit		3.20		4.40		3.70		2.80
Selling price per unit	$	75.50	$	92.90	$	86.80	$	103.60
Variable selling cost per unit	$	1.60	$	0.60	$	2.70	$	1.00
Monthly demand in units		3,400		3,400		2,400		2,600

The grinding machines are potentially the constraint in the production facility. A total of 53,100 minutes are available per month on these machines.

Direct labor is a variable cost in this company.

How many minutes of grinding machine time would be required to satisfy demand for all four products?

Multiple Choice

• 42,000

• 53,100

• 31,120

• 8,980

Bruce Corporation makes four products in a single facility. These products have the following unit product costs:

	Products
	A		B		C		D
Direct materials	$	15.90	$	19.80	$	12.80	$	15.50
Direct labor		17.90		21.30		15.70		9.70
Variable manufacturing overhead		4.70		5.90		8.40		5.40
Fixed manufacturing overhead		27.80		14.70		14.80		16.80
Unit product cost		66.30		61.70		51.70		47.40

Additional data concerning these products are listed below.

	Products
	A		B		C		D
Grinding minutes per unit		2.15		1.25		0.85		0.45
Selling price per unit	$	80.20	$	72.60	$	69.40	$	64.10
Variable selling cost per unit	$	2.90	$	3.40	$	3.10	$	3.80
Monthly demand in units	3,300		2,300		2,300		4,300

The grinding machines are potentially the constraint in the production facility. A total of 10,500 minutes are available per month on these machines.

Direct labor is a variable cost in this company.

Which product makes the MOST profitable use of the grinding machines? (Round your intermediate calculations to 2 decimal places.)

Multiple Choice

• Product B

• Product A

• Product C

• Product D

Bruce Corporation makes four products in a single facility. These products have the following unit product costs:

	Products
	A		B		C		D
Direct materials	$	15.30	$	11.20	$	12.00	$	11.60
Direct labor		20.40		28.40		34.60		41.40
Variable manufacturing overhead		5.30		3.70		3.60		4.20
Fixed manufacturing overhead		27.50		35.80		27.60		38.20
Unit product cost		68.50		79.10		77.80		95.40

Additional data concerning these products are listed below.

	Products
	A		B		C		D
Grinding minutes per unit		4.80		6.30		5.30		4.40
Selling price per unit	$	77.10	$	94.50	$	88.40	$	105.20
Variable selling cost per unit	$	3.20	$	2.20	$	4.30	$	2.60
Monthly demand in units		5,000		5,000		4,000		3,000

The grinding machines are potentially the constraint in the production facility. A total of 89,600 minutes are available per month on these machines.

Direct labor is a variable cost in this company.

Up to how much should the company be willing to pay for one additional minute of grinding machine time if the company has made the best use of the existing grinding machine capacity? (Round your intermediate calculations to 2 decimal places.) 1_04_2014_QC_58425, 11_17_2014_QC_58425,Garrison 16e Rechecks 2017-09-13

Multiple Choice

• $10.32

• $3.20

• $6.40

• $8.85

In divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $64,560, and the Purchasing Department had expenses of $40,000 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records:

		Residential		Commercial		Government Contract
Sales		$2,000,000		$3,250,000		$2,900,000
Number of employees:
	Weekly payroll (52 weeks per year)	400		250		150
	Monthly payroll	80		30		10
Number of purchase requisitions per year		7,500		3,000		2,000

a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division.

	Residential	Commercial	Government Contract	Total
Number of payroll checks:
Weekly payroll
Monthly payroll
Total
Number of purchase requisitions per year

b. Using the activity base information in (a), determine the annual amount of payroll and purchasing costs charged back to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services. Do not round interim calculations. Round your answers to two decimal places.

Service department charge rates:
Payroll Department	$ per payroll check
Purchasing Department	$ per purchase requisition

	Residential	Commercial	Government Contract	Total
Service department charges:
Payroll Department	$	$	$	$
Purchasing Department
Total	$	$	$

c. Residential's service department charge is _______ than the other two divisions because Residential is a   user of service department services. Residential has many employees on a weekly payroll, which translates into a ________ number of payroll transactions.

wk 5-1 Please explain and provide explanation

the concept of basis, differentiating between outside basis and inside basis. Then explain how two partners, each with a 50% interest in a partnership, can have different amounts of outside basis at the formation of the partnership. Shouldn’t the two partners contribute the same amount to have the same interest?

fraud auditing and IT auditing. 1-Describe the different kinds of fraud andthe Fraud Triangle, an auditor's responsibility to identify and assess fraud. 2-Describe the specific risks, benefits, and internal controls associated with IT functions.

During the first month of operations ended August 31, Kodiak Fridgeration Company manufactured 40,000 mini refrigerators, of which 36,000 were sold. Operating data for the month are summarized as follows:

1	Sales		$8,280,000.00
2	Manufacturing costs:
3	Direct materials	$2,800,000.00
4	Direct labor	1,200,000.00
5	Variable manufacturing cost	800,000.00
6	Fixed manufacturing cost	440,000.00	5,240,000.00
7	Selling and administrative expenses:
8	Variable	$540,000.00
9	Fixed	216,000.00	756,000.00

	Required:
1.	Prepare an income statement based on the absorption costing concept.*
2.	Prepare an income statement based on the variable costing concept.*
3.	Explain the reason for the difference in the amount of income from operations reported in (1) and (2). * Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon (:) will automatically appear if required. Enter Inventory, August 31 as a negative number using a minus sign. If a net loss is incurred, enter that amount as a negative number using a minus sign.

Prepare an income statement based on the absorption costing concept. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon (:) will automatically appear if required. Enter Inventory, August 31 as a negative number using a minus sign. If a net loss is incurred, enter that amount as a negative number using a minus sign.

Kodiak Fridgeration Company

Absorption Costing Income Statement

1
2
3
4
5
6
7
8

Prepare an income statement based on the variable costing concept. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon (:) will automatically appear if required. Enter Inventory, August 31 as a negative number using a minus sign. If a net loss is incurred, enter that amount as a negative number using a minus sign.

Kodiak Fridgeration Company

Variable Costing Income Statement

1
2
3
4
5
6
7
8
9
10
11
12
13

Labels
August 31
Cost of goods sold
Fixed costs
For the Month Ended August 31
Variable cost of goods sold
Amount Descriptions
Contribution margin
Contribution margin ratio
Cost of goods manufactured
Fixed manufacturing costs
Fixed selling and administrative expenses
Gross profit
Income from operations
Inventory, August 31
Loss from operations
Manufacturing margin
Planned contribution margin
Sales
Sales mix
Selling and administrative expenses
Total cost of goods sold
Total fixed costs
Total variable cost of goods sold
Variable cost of goods manufactured
Variable selling and administrative expenses

Which format do you prefer, direct or indirect?  Why?  What advantages & disadvantages are there for the method you prefer?

Presented below is selected information from the Larry Company’s current period accounting records:

Sales		$12,000
Raw Materials Used		2,500
Direct labor		3,000
Allocated overhead Selling and Administrative		4,500 2,500
Beginning Raw Material Inventory		300
Ending Raw Material Inventory		1,000
Beginning Work-in-Process Inventory		800
Ending Work-in-Process Inventory		300
Beginning Finished Goods Inventory		700
Ending Finished Goods Inventory		400

Required:

1. Prepare statement of cost of goods manufactured in good form.
2. Prepare income statement in good form (ignore income tax expense).

Questions

This questions are multiple choice:

1. The lower of cost or market rules apply when:
   1. The market value of the inventory is higher than the cost in the books
   2. The market value of the inventory is lower than the cost in the books
   3. The market value of the inventory is higher than the cost to the consumer
   4. The market value of the inventory is lower than the cost to the consumer
2. Special Journals are used to:
   1. Increase efficiency
   2. Reduce costs
   3. Reduce the number of similar journal entries prepared
   4. All of the above
   5. None of the above
3. Segregation of duties is one example of:
   1. Generally Accepted Accounting Principles
   2. FASB
   3. Internal Controls
   4. Accounting Cycle
4. Which of the following is NOT a generally accepted accounting principle:
   1. Balance Principle
   2. Matching Principle
   3. Revenue recognition principle
   4. Consistency principle
5. When preparing bank reconciliation, you notice that a $500 check for rent cleared the bank correctly but was only listed on the books as $50. Which of the following is needed?
   1. Add to the bank balance
   2. Subtract from the bank balance
   3. Add to the book balance
   4. Subtract from the book balance

1-Search the EDGAR database to find a 10-K that reports a contingent liability. Write a paragraph summarizing one of the liabilities found in the financial statements. Did the company disclose the liability in the footnotes only, or did it recognize the liability in the financial statements?

2-What procedures might the auditors use to search for the contingent liabilities listed in part (1)? Explain the steps in the procedure in detail, as well as how they would provide the outcome desired.

What additional procedure could be performed? List the procedure, explain how it is performed, and discuss why it would be appropriate.

You work for a manufacturing company and have just completed the budget process for the upcoming business year. At the end of the first quarter you take the actuals and compare them to the budget. You notice there are differences which need explanation and create the static and flexible budget variances. You present this to management and they request you to explain the variances in more detail.

You go and create the Flexible Budget Performance Report and present this. You also need to explain the reasons for the variances and who is responsible. Explain the calculations used to create this report.

Explain why the variances using standard costs better reflect the actual variance and how to determine who is responsible for each variance

You are an Audit Senior currently planning the 30 June 20X8 audit of Almond Limited, an Australian-owned company that produces and exports Almond milk to China. The milk is subjected to ultra-high temperature (UHT) pasteurization processing before being packaged in cartons so that it can last six months at ambient temperatures if unopened. At a recent planning meeting with Almond Limited’s senior staff, you obtained the following overview of this year’s operations: Tight checks by Australian custom officials have delayed several shipments of Almond milk. These delays have angered Chinese customers who are threatening to deduct 20% from the amounts owing as compensation for lost production time. Almond Limited’s main competitor, Tasty Milk has taken advantage of this and started supplying to the Chinese market from its New Zealand branch for quicker deliveries and at prices lower than those offered by Almond Limited. One of Almond Limited’s customers, Super Dairy Limited (SDL), is claiming that the latest batch of milk it received was found to have very high levels of carrageenan, a seaweed derivative commonly used as a stabilizer in beverages. The presence of carrageenan has been widely associated with gastrointestinal inflammation. SDL is refusing to pay its account, which is allegedly six months overdue. Almond Limited has claimed to have launched an investigation into the allegations, but as yet not been able to substantiate them. 60% of the suppliers from which Almond Limited sources it’s almonds are owned by US firms, which demand payment in $US prior to the almonds being supplied. In January, Almond Limited upgraded its accounts payable system to a fully integrated package that automatically updates the general ledger when creditor entries are made. Some problems have been experienced with the creditors ledger, which is split into $US and $AUD amounts. In some cases, $US amounts have been recorded as $AUD, resulting in inaccurate creditor balances. Month-end rollovers have also proved problematic, with creditor balances being incorrectly reset to zero at the first of every month. This has required each creditor’s history to be re-entered manually each month, a time-consuming process that is taking accounting staff away from their normal duties. During the period, the Australian dollar has remained steady against the Chinese Yuan, although it fell by about 3% against the US dollar. Debtors are invoiced in $US at the time of shipment, and payment is received in $US one month after the shipment is delivered. It takes around four weeks for the charter vessels to travel from Almond Limited’s shipyard at Dockland Bay to China. A recent downturn in the Chinese economy is affecting forward orders, which have fallen by 15%. A team of internal auditors was hired 10 months ago by Almond Limited to improve on its existing internal control. The process of revamping the internal control has been dragging because the CEO has kept on declining the internal auditors’ suggestions for improvement. The accountant of Almond Limited has been notorious for finding gaps in the legislations in order to make its clients’ financial statements look presentable as desired by the clients themselves. In the past few years, Almond Limited has always been required by the Australian Tax Office to provide additional supporting information after the lodgement of its tax returns.

Required: Prepare a memorandum to the audit manager, outlining your risk assessment relating to Almond Limited. When making your risk assessment:

(a) Identify three (3) key account balances from the information provided that are subjected to an increase in audit risk. Briefly explain what factors increase the audit risk associated with the three (3) accounts identified. In your explanation, please mention the key assertion(s) at risk of material misstatement and the components of the audit risk model affected for each account identified.

(b) Identify how the audit plan will be affected and recommend specific audit procedures to address the risks associated with each account identified.