Additional Information you need to know about WWC:

Below are transactions for February 2018:

1. Prepare all February journal entries and adjusting entries

The following transactions occurred during March 2018 for the Wainwright Corporation. The company owns and operates a wholesale warehouse. 1. Issued 40,000 shares of common stock in exchange for $400,000 in cash. 2. Purchased equipment at a cost of $60,000. $15,000 cash was paid and a note payable was signed for the balance owed. 3. Purchased inventory on account at a cost of $122,000. The company uses the perpetual inventory system. 4. Credit sales for the month totaled $170,000. The cost of the goods sold was $102,000. 5. Paid $5,500 in rent on the warehouse building for the month of March. 6. Paid $6,550 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2018. 7. Paid $102,000 on account for the merchandise purchased in 3. 8. Collected $76,500 from customers on account. 9. Recorded depreciation expense of $1,500 for the month on the equipment. Prepare journal entries to record each of the transactions listed above

A pizza delivery company classifies its customers by gender and location of residence. The research department has gathered data from a random sample of 2001 customers. The data is summarized in the table below.

Gender and Residence of Customers

Residence Males Females

Apartment 233 208

Dorm 159 138

With Parent(s) 102 280

Sorority/Fraternity House 220 265

Other 250 146

What is the probability that a customer is male and lives in 'Other' or is male and lives in a fraternity house? Express your answer as a fraction or a decimal number rounded to four decimal places.

Description:
Sprint Nextel has the highest rate of customer churn (the number of customers who discontinue a service) in the cell phone industry, amounting to 2.45 percent. Over the past two years, Sprint has lost 7 million subscribers. Management wants to know why so many customers are leaving Sprint and what can be done to woo them back.

Requirement:
Does Data Mining help the company in unfolding the reasons behind why their customers are leaving? Explain why or why not.

Based on the information provided in the the beginning, answer the question

Edmonds, Christopher T., Ryan D. Leece, Beth Y. Vermeer, and Thomas E. Vermeer (2020). The Information Value of Qualified and Adverse Audit Reports: Evidence from the Municipal Sector. Auditing: a Journal of Practice & Theory 39(1), February, 21-41.

1. Based on a review of the abstract, summarize the findings in one or two sentences.

2. Read Section II, Institutional Background. Summarize it in around 100 words using your own language. Be sure to mention the Single Audit Act of 1984.

Over the past 40 years, the SEC and others have consistently asserted that the information contained in an independent audit report is important to investors and, further, that expanded audit reporting enhances the transparency and stability of municipal markets (GFOA 2015; SEC 2012). Although the SEC cites anecdotal evidence to support the importance of the information provided by municipal independent audit reports, to our knowledge, there is no recent U.S. empirical evidence on the information value of qualified/adverse audit reports in the municipal sector. Using hand-collected data from 2000 to 2012, we find that municipal bond markets penalize governments with qualified/ adverse audit opinions for both primary market issuances and secondary trading. Specifically, in our propensity score matched sample, we find that municipalities receiving a qualified/adverse opinion suffer borrowing costs that are 34 basis points, on average, higher than municipalities receiving an unqualified opinion, holding all else constant. Overall, the weight of evidence is consistent with rejecting the null hypothesis that audit opinions on the fairness of GAAP financial statements are independent of borrowing costs in municipal markets. However, our archival research design cannot completely eliminate the threat of a correlated omitted variable. To our knowledge, recent research has not examined whether investors value the information content of qualified/adverse opinions on the fairness of the financial statements. Our results suggest that these auditor assurances are value relevant and that municipal investors differentiate between governments receiving unqualified and qualified/adverse opinions. However, similar to the for-profit sector, most governments receive an unqualified opinion (97 percent of our sample), which does not allow for differentiation among the majority of municipal audit reports. Our finding that the audit report is value relevant to municipal investors should be of interest to the SEC as they consider expanding municipal audit reporting, such as including communication of critical audit matters and auditor tenure (similar to the PCAOB auditor reporting standard adopted on June 1, 2017 ). Future research should examine whether the impact on municipal debt costs depends on the type of opinion received (i.e., qualified versus adverse) and/or the specific reasons provided (i.e., scope restriction versus departure from GAAP) for the nonstandard opinion. In an untabulated analysis, we found that the average yield for adverse audit opinions is higher than the average yield for qualified audit opinions (4.4 compared to 3.99, t-test statistic 1⁄4 1.95; p , 0.0653). However, we were unable to find significant differences in a multivariate model. Small samples also prevented us from determining whether investors differentiate based on the specific reasons provided (i.e., scope restriction versus departure from GAAP) for the nonstandard opinion. We also found no association between the choice of an independent CPA firm/state auditor and municipal debt costs (p-value 1⁄4 0.127). Future research should further explore this question as more data become available.

SECTION 2:

The overall purpose of an audit is to express an opinion on whether the historical financial statements are fairly stated in accordance with applicable accounting standards (Arens, Elder, and Beasley 2013). In both governmental and non-publicly traded companies, audits of historical financial statements must comply with generally accepted auditing standards (GAAS) and 8 statements on auditing standards (SASs) established by the American Institute of Certified Public Accountants. Although independent CPA firms audit most local governments, some municipalities are either audited by state audit agencies or the state agency reviews reports prepared by independent public auditors to ensure compliance with standards. While audits of governments, non-publicly traded companies, and U.S. publicly traded companies share a similar purpose, the municipal securities market has not been subject to the same level of audit regulation as other sectors of the U.S. capital market (SEC 2012). U.S. publicly traded companies are required to have audits under the Securities Act of 1933 and the Securities and Exchange Act of 1934 (1933 and 1934 Acts). Furthermore, an audit opinion that is qualified due to a scope limitation or departure from GAAP will not meet the stringent requirements under Rule 2-02(b) of Regulation S-X. While the SEC has broad regulatory control over the for-profit sector, the 1933 and 1934 Acts were passed with expansive exemptions for the municipal securities market (Gellis 1996). In fact, except for the antifraud provisions contained in these Acts, current federal securities laws do not provide the authority to the SEC or the Municipal Securities Rulemaking Board (MSRB) to require audited financial statements for municipal securities issuers. Although the SEC and MSRB have no direct authority to require municipal audited financial statements, larger municipal issuers typically have their financial statements audited due to rating agency requirements, other regulatory requirements, and voluntary disclosure guidelines from industry groups. Rating agencies generally demand audited financial statements to assign or maintain ratings. For example, Moody’s Investors Service requires audited financial statements within 12 months after the end of the fiscal year to assign or maintain a general obligation (GO) bond rating (Moody’s 2016). Further, Moors & Cabot, Inc., a leading financial advisor of municipal securities in the United States, notes that most analysts require audited financial statements as a condition of buying GO obligations. The two primary regulatory statutes requiring audited financial statements from local governments are the Single Audit Act of 1984 (federal government level regulation) and local government statutes (state level regulation). The Single Audit Act of 1984 requires that local governments with federal expenditures of $500,000 or more of federal financial assistance within a fiscal year have a Single Audit that includes an audit opinion on the historical financial statements. The Single Audit Act covers all 50 states and many of the more than 80,000 local governmental units (Freeman, Shoulders, Allison, and Smith 2013). In a similar manner, at the state level, the Utah State Auditor requires an annual financial statement audit for local government entities with greater than $750,000 in total annual revenues or expenses (Office of the Utah State Auditor 2016). In addition to the regulatory requirements of the Single Audit Act of 1984 and individual states, the Government Finance Officers Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting is the primary voluntary industry group program requiring audited financial statements. Established in 1945 to encourage state and local governments to go beyond the minimum requirements of generally accepted accounting principles, the GFOA awarded the Certificate of Achievement to 4,231 organizations in 2015 (GFOA 2018). Although the SEC and MSRB cannot require audited financial statements from municipal issuers, rating agencies, other regulatory requirements, and voluntary industry programs ensure that local governments that issue GO bonds have their financial statements audited. Overall, the absence of audited municipal financial statements is more prevalent with less sophisticated issuers and non-governmental conduit borrowers (SEC 2012).

1. A company's fiscal year may:

Select one:

A. Be any portion of a year including a month or quarter

B. Be for a period either greater or less than 12 months

C. Be the same as the calendar year

D. All of the above are true of a company's fiscal year

2. David Bash's Landscaping Company has compiled the following list of account balances of various assets, liabilities, revenues and expenses on December 31, 2016, the end of its first year of operations.

The retained earnings for David Bash’s Landscaping on December 31, 2016 are:

Select one:

A. $12,600

B. $56,400

C. $36,400

D. $ 2,800

3.

In computing the price-earnings ratio, the current per share market price of the firm's common stock is divided by the:

Select one:

A. Earnings per common share

B. Net income for the year

C. Dividends per common share

D. Par value per common share

4.

The 2016 financial statements for Bloomington Company show the following:

Cash paid for merchandise is:

Select one:

A. $248,000

B. $244,000

C. $240,000

D. $236,000

5.

The full disclosure principle:

Select one:

A. States that personal contact and financial information for each member of senior management for the company be disclosed.

B. Requires that company maintain a record of activities separate from the economic and personal activities of its owners.

C. Requires that a business disclose all significant financial facts and circumstances in a company’s annual report.

D. States that sales revenue should be recorded when services are performed or goods are sold.

E. None of the above

6.

The revenue recognition principle:

Select one:

A. States that the recording of revenue should be based on reliable and verifiable evidence.

B. Only requires that sales revenue must be earned before it is recorded on the income statement.

C. Only requires that sales revenue must be realized or realizable before it is recorded on the income statement.

D. States that sales revenue should be recorded when services are performed or goods are sold.

E. None of the above

This exercise can improve your understanding of various strategies by giving you experience classifying strategies. This skill will help you use the strategy-formulation tools presente later. Consider the following 12 (actual or possible) year - 2005 strategies by various firms.

The wholesale retailer, Big Lots, expands into Mexico

The food manufacturer, Campbell Soup, begins massive tomato farming operations.

Delta Air Lines acquires an ocean cruise lines company

The specialty retailer, Gap, enters the radio broadcasting business.

The online auction company, eBay, acquires an online auction firm in Russia

The food giant, McDonald's, closes 100 restaurants and lays off 2,000 employees.

General Electric sells its NBC Broadcasting division

Hilton Hotels acquires a large furniture manufacturer

Ford Motor Company acquires its automobile manufacturer

The appliance maker, Maytag, introduces a wireless refrigerator

The drug firm, Eli Lilly , doubles its number of salespersons

The sports firm, Nike, enters the boat manufacturing business.

A credit card company wants to test whether, on average, male customers make larger payments on their outstanding credit balance each month compared to female customers. Random, independent samples of 20 males and 20 females are selected and monthly payments are compared. Average payment from males = $129.00 with a sample standard deviation of $23.90, and average payments from females = $113.00 with a sample standard deviation of $21.60 (both sigmas unknown).

a. Write out Ho and Ha to test if male customers make larger average payments.

b. Using MegaStat, calculate the p-value and provide MegaStat output for documentation. Assume the population variances are NOT equal.

c. Can we reject Ho at the 95% confidence level? Can we be 95% confident male customers make larger monthly payments than female customers? CAREFULLY EXPLAIN WHY OR WHY NOT.

The records at the end of January of the current year for Young Company showed the following for a particular kind of merchandise:

Beginning Inventory at FIFO: 18 Units @ $18 = $324

Beginning Inventory at LIFO: 18 Units @ $14 = $252

Required:

1. Compute the inventory turnover ratio for the month of January under the FIFO and LIFO inventory costing methods.