Chapter 5: Customer and Sales
Additionally, please refer to Chapter 6 in your Cengage Accounting eText, accessible from the eText link in the Course Navigation Panel to the left of your screen.
Requirement 1:
Margie Johnson is a staff accountant at ToolEx Company, a manufacturer of tools and equipment. The company is under pressure from investors to increase earnings, and the president of the company expects the accounting department to “make this happen.” Margie's boss, who has been a mentor to her, is concerned that if earnings do not increase, he will be terminated.
Shortly after the end of the fiscal year, the company performs a physical count of the inventory. When Margie compares the physical count to the balance in the inventory account, she finds a significant amount of inventory shrinkage. The amount is so large that it will result in a significant drop in earnings this period. Margie's boss asks her not to make the adjusting entry for shrinkage this period. He assures her that they will get “caught up” on shrinkage in the next period, after the pressure is off to reach this period's earnings goal. Margie's boss asks her to do this as a personal favor to him.
What should Margie do in this situation? Why?
Requirement 2:
On April 18, 2020, Bontanica Company, a garden retailer, purchased $9,800 of seed, terms 2/10, n/30, from Whitetail Seed Co. Even though the discount period had expired, Shelby Davey subtracted the discount of $196 when he processed the documents for payment on May 1, 2020.
Discuss whether Shelby Davey behaved in a professional manner by subtracting the discount even though the discount period had expired.
Responses to Classmates:
Please let your classmates know if you agree or disagree with the information that they provided in Requirement 1 or Requirement 2 and explain why.
Response to Instructor:
Please check your thread for questions or comments from me and be sure to provide a comprehensive response, as requested.
Writing:
Please make sure that your initial post contains a properly cited reference. Please use APA style. You should cite your text as a minimum. Additionally, check your spelling and proofread your post before you hit the submit button.
In: Accounting
Ponpon produces cans of jelly. The company would like to purchase a canning machine. The machine costs $25,000 and the company needs a loan to make the purchase. Before agreeing to the loan, their bank requires Ponpon to provide both current (2020) and budgeted (3 months in 2021) financial statements.
Use the following information from Ponpon to provide the bankers with the 2021 budgeted financial states.
Balance Sheet
Cash $50,000
Accounts Receivable $31,000
Inventory $12,000
Fixed Assets $37,000
Total Assets $130,000
Accounts Payable $22,500
Accrued Credit Fees $9,200
Common Stock $46,800
Retained Earnings $$51,500
Total Liabilities & Equity $130,000
2021 Sales Forecast
January $74,000
February $82,000
March $58,000
April $54,000
May $80,000
June $67,000
July $70,500
Additional Info:
a. Ponpon only accepts credit cards when selling their jelly. Ponpon collects 35% of the sales on account in the month of the sale and 65% in the month after the sale.
b. Unfortunately, the credit card companies pass along a 6.2% sales fee to Ponpon for the convenience and safety of their transactions on account. The sales fee is due one month after the sale.
c. The cost of sales is 42% of (current month) sales.
d. Ponpon maintains an inventory at all times at the sales requirements (COS) for the months’ budgeted sales. This provides assurance that they won’t run out of jelly.
e. Ponpon uses a credit card for all their purchases. The company pays off their credit card balance in full the following month.
f. Ponpon pays 5% of sales each month to Jako Co. for the CEO’s security service.
g. In addition to the carriable security cost, Ponpon incurs fixed expenses of $22,000 per month, $1500 of which is for depreciation of fixed assets.
1. Prepare the budgeted Balance Sheet for March 31, 2021.
Balance Sheet
December 31, 2020 and March 31, 2021
12/31/20 3/31/21
Assets:
Cash 50,000
Accounts Receivable 31,000
Inventory 12,000
Fixed Assets 37,000
Total Assets $130,000
Liabilities & Equity:
Accounts Payable 22,500
Accrued Credit Fees 9,200
Common Stock 46,800
Retained Earnings 51,500
Total Liabilities & Equity $130,000
In: Accounting
Swifty Corporation has one temporary difference at the end of 2017 that will reverse and cause taxable amounts of $49,800 in 2018, $54,700 in 2019, and $59,300 in 2020. Swifty’s pretax financial income for 2017 is $285,000, and the tax rate is 40% for all years. There are no deferred taxes at the beginning of 2017. Compute taxable income and income taxes payable for 2017.
Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017.
Prepare the income tax expense section of the income statement for 2017, beginning with the line “Income before income taxes.”.
In: Accounting
Topic background: First reported to the World Health Organisation as an unknown virus in late December 2019, coronavirus/COVID19 developments throughout 2020 are causing great uncertainty for the global economy. This uncertainty is creating risks that entities may not have encountered before, and gives rise to new and rapidly changing conditions that auditors may not have previously encountered. Required: Conduct research on the impact of coronavirus/COVID19 on external financial report audits, then answer the following questions:
5. What are the obligations of the auditor under section 311 of the Corporations Act 2001 in relation to solvency and going concern? (100 words).
In: Accounting
Exercise 3-20 (Algorithmic) (LO. 6) Compute the 2020 tax liability and the marginal and average tax rates for the following taxpayers. If required, round the tax liability to the nearest dollar. When required, round the average rates to four decimal places before converting to a percentage (i.e. .67073 would be rounded to .6707 and entered as 67.07%).
a. Chandler, who files as a single taxpayer, has taxable income of $110,800.
Tax liability: $
Marginal rate: %
Average rate: %
b. Lazare, who files as a head of household, has a taxable income of $75,000.
Tax liability: $
Marginal rate: %
Average rate: %
In: Finance
A special power tool for plastic products costs $400,000 and has a 4-year useful life, no salvage value, and a 2-year before-tax payback period. Assume uniform annual end-of-year benefits.
(a) Compute the before-tax rate of return.
(b) Compute the after-tax rate of return, based on MACRS depreciation and a 22.98% combined corporate income tax rate
In: Economics
In: Accounting
In: Finance
Consider each of the following independent and material situations, identified below (i-v). In each case: • the balance date is 30 June 2020; • the field work was completed on 12 August 2020; • the Directors’ Declaration and the Audit report were signed on 19 August 2020; • the completed financial report accompanied by the signed Audit report was mailed to the shareholders on 25 August 2020. (i) On 29 September 2020, you discovered that a debtor at 30 June 2020 had gone bankrupt on 1 September 2020. The debt had appeared collectible at 30 June 2020 and 19 August 2020. (ii) On 12 August 2020, you discovered that a debtor had gone bankrupt on 1 August 2020. The sale took place on 15 July 2020. The cause of the bankruptcy was a major uninsured fire at one of the debtor’s premises on 1 July 2020. (iii) On 13 August 2020, you discovered that a debtor at 30 June 2020 had gone bankrupt on 5 August 2020. The cause of the bankruptcy was an unexpected loss of a major lawsuit issued against the debtor on 10 June 2020. (iv) On 20 August 2020, the company settled a legal action out of court that had originated in 2016 and was listed as a contingent liability at 30 June 2020. (v) On 1 September, you found a letter dated 15 August with a $2 million fine from Environmental Protection Agency. The letter stated that company had illegally dumped chemicals on 15 May 2020. Required: 1. For each of the events described above (i-v), select the appropriate action from the list below, and justify your response. A. Adjust the 30 June 2020 financial report. B. Disclose the information in the notes to the 30 June 2020 financial report. C. Request that the client recall the 30 June 2020 financial report for revision. D. No action is required. (5*1.5= 7.5 marks) 2. If no action is taken by management for each of the events described above (i-v), determine the most appropriate audit opinion to be issued.
In: Accounting
PLEASE ANSWER PARTS A, B, C, D, AND E.
A rocket is launched straight up with a constant acceleration of 25 m/s2. Six seconds after liftoff, a bolt falls off the side of the rocket.
(a) Determine the velocity of the bolt just before it falls off the side of the rocket.
(b) Determine the altitude of the bolt (measured from the ground) just before it falls off the side of the rocket.
(c) How long is the bolt in the air (from the instant it falls off the rocket to just before it hits the ground below)?
(d) What is the maximum altitude reached by the bolt?
(e) What is the velocity of the bolt just before it hits the
ground?
In: Physics