Revenue and Related Transactions. During its current fiscal year, Evanston General Hospital, a not-for-profit health care organization, had the following revenue-related transactions (amounts summarized for the year).

Services provided to inpatients and outpatients amounted to $9,520,000, of which $550,000 was for charity care, $970,000 was paid by uninsured patients, and $8,000,000 was billed to Medicare, Medicaid, and insurance companies.

Donated pharmaceutical and medical supplies valued at $340,000 were received and utilized as general expenses.

Medicare, Medicaid, and third-party payors (insurance companies) approved and paid $6,000,000 of the $8,000,000 billed by the hospital during the year (see transaction 1).

An unconditional contribution of $6,000,000 was received in cash from a donor to construct a new facility for care of Alzheimers patients. The full amount is expendable for that purpose. No activity occurred on this project during the current year.

A total of $965,000 was received from the following activities/sources: cafeteria and gift shop sales, $710,000; medical seminars, $125,000; unrestricted transfers from the Evanston General Hospital Foundation, $75,000; and fees for medical transcripts, $55,000.

Uncollectible accounts totaling $4,250 were written off. The allowance for uncollectible receivables was increased by $1,000.

Using this information:

Record the preceding transactions in general journal form.

Prepare the unrestricted revenues, gains, and other support section of Evanston Dearborn General Hospital's statement of operations for the current year, following the format in Illustration 16­4.

On which statement would restricted contributions be reported? Explain.

Island Novelties, Inc., of Palau makes two products, Hawaiian Fantasy and Tahitian Joy. Present revenue, cost, and sales data on the two products follow:

                                                          Hawaiian Fantasy      Tahitian Joy

   Selling price per unit                                     $15                        $100

   Variable expenses per unit                               9                           20

   Number of units sold annually              20,000                      5,000

Fixed expenses total $475,800 per year. The Republic of Palau uses the U.S. dollar as its currency.

1. Assuming the sales mix given above, do the following:

1. Prepare a contribution income statement showing both dollar and percent columns for each product and for the company as a whole.
2. Compute the break-even point in dollars for the company as a whole and the margin of safety in both dollars and percent.

2. Another product, Samoan Delight, has just come onto the market. Assume that the company could sell 10,000 units at $45 each. The variable expenses would be $36 each. The company's fixed expenses would not change.

1. Prepare another contribution income statement, including sales of the Samoan Delight (sales of the other two products would not change). Carry percentage computations to one decimal place.
2. Compute the company’s new break-even point in dollars and the new margin of safety in both dollars and percent.

Katerah City maintains the following funds: a) General b) Special revenue c) Capital projects d) Debt service e) Enterprise f) Investment trust g) Permanent h) Agency For each of the following transactions, indicate which fund would most likely be used to report the transaction (each fund will be used once): 1. The city collects $1 million of taxes for an independent fire district located within the city. 2. The city spends $1.2 million on street maintenance using the proceeds of a city gas tax dedicated for road and highway maintenance and improvements. 3. The city receives a bequest of $1.5 million. The donor’s will, requires that the principal amount be invested in perpetuity and that the earnings on the investment be used to maintain a city park to be renamed for the donor. 4. The city collects water and sewer fees of $4.2 million. 5. The city pays $4 million to a contractor for work on a new bridge. 6. The city receives $1.3 million to invest on behalf of the county. 7. The city pays its police officers wages of $325,000. 8. The city pays $2.2 million in bond interest on its general obligation debt. I need help. Thank you

Major "Big 6" Certified Public Accounting firms have three sources of revenue or three divisions: Audit, tax, and Management Consulting. But the real power resides in the Audit Department because the Audit Partners earn between $100,000-750,000 per year. An annual audit of a large U.S. corporation can cost over $500,000 each year.

The Securities and Exchange Commission (SEC) of the federal government requires that all corporations selling stock on the New York Stock Exchange be audited annually by an independent national CPA firm. The Audit Partner in-charge of the engagement directs the staff auditors to keep audit workpapers for evidence in case of a law suit. These workpapers show that the corporation is or is not maintaining generally accepted accounting principles (GAAP).

During an audit in Hollywood, California a staff auditor was completing an audit of a home health care corporation. During the investigation it was noticed that some of the accounting records were missing. It was common knowledge that the prior corporate controller had embezzled hundreds of thousands of dollars from the corporation and had fled the United States. The staff auditor commented in the workpapers that the missing files could be due to the embezzlement. Upon reviewing the workpapers, the Audit Manager rebuked the staff auditor for mentioning the embezzlement in the workpapers.

Questions:

1          What are the issues involved here? Explain in your own words

2          Should the audit workpapers be re-done? Explain in your own words

3          What would you do? Explain in your own words

4          What are the short and long term consequences of not reporting the embezzlement in the workpapers? Explain in your own words

5          What are the legal ramifications of this case? Explain in your own words

6          Who is affected by the note in the papers: stockholders, employees, auditors, the community in general? Explain in your own words

Question 1
Neelo Mbiganyi received a notice of assessment from Botswana Unified Revenue Service (BURS) and the Commissioner General had
disallowed some of the expenditures that she had claimed. Discuss the appeals and objection processes that Neelo can follow explaining in detail the rights and obligations that both Neelo and the Commissioner General have in these processes. In your answer, also explain what the Commissioner General should do suppose Neelo wins the case.

Problem 6-2B Calculate ending inventory, cost of goods sold, sales revenue, and gross profit for four inventory methods (LO6-3, 6-4, 6-5)

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

Pete’s Tennis Shop has the following transactions related to its top-selling Wilson tennis racket for the month of August. Pete’s Tennis Shop uses a periodic inventory system.

For the specific identification method, the August 4 sale consists of rackets from beginning inventory, the August 13 sale consists of rackets from the August 11 purchase, and the August 26 sale consists of one racket from beginning inventory and 10 rackets from the August 20 purchase.

How much output should a perfectly competitive firm should produce?

1  Profit = Total Revenue – Total Cost

a  Compute total revenue and total cost for each level of output

b   Subtract total cost from total revenue, yielding the profit possible at each level of output

c  Select that level of output for which profit is greatest.

2. Compute MC at each level of output and compare MC with each MR at each price.

Select that level of output for which MR is greater or equal to MC at each level of output. (MR is equal to price at each price level).

Gunst Company produces three video games: Android, Bio-Mutant, and Cyclops. Cost and revenue data pertaining to each product are as follows.

Android Bio-Mutant Cyclops

Selling price $100 $65 $125

Direct labor 48 24 60

Direct materials 9 8 16  

Variable overhead 7 4 9

At the present time, demand for each of the company's products far exceeds its capacity to produce them. Thus, management is trying to determine which of its games to concentrate on next week in filling its backlog of orders. Gunst's direct labor rate is $12 per hour, and only 1,000 hours of direct labor are available each week.

Determine the maximum total contribution margin the company can make by its best use of the 1,000 available hours. (Do not round intermediate calculations.)

Total contribution Margin ________________?

CA 4-2, p. 190

Instructions

Indicate the deficiencies in the income statement presented above. Assume that the corporation desires a single-step income statement.

CA4-2 GROUPWORK (Earnings Management) Bobek Inc. has recently reported steadily increasing income. The company reported income of $20,000 in 2014, $25,000 in 2015, and $30,000 in 2016. A number of market analysts have recommended that investors buy the stock because they expect the steady growth in income to continue. Bobek is approaching the end of its fiscal year in 2017, and it again appears to be a good year. However, it has not yet recorded warranty expense.

Based on prior experience, this year's warranty expense should be around $5,000, but some managers have approached the controller to suggest a larger, more conservative warranty expense should be recorded this year. Income before warranty expense is $43,000. Specifically, by recording a $7,000 warranty accrual this year, Bobek could report an increase in income for this year and still be in a position to cover its warranty costs in future years.

Instructions

(a)What is earnings management?

(b)Assume income before warranty expense is $43,000 for both 2017 and 2018 and that total warranty expense over the 2-year period is $10,000. What is the effect of the proposed accounting in 2017? In 2018?

(c)What is the appropriate accounting in this situation?