You have been appointed as a financial analyst by Ramada Co. Ramada Co has identified Applied Co as a possible acquisition within the same industry. Your role is to critically assess the financial performance and conditions of Applied Co and highlights area of concerns to the members of Ramada’s board of directors.

The following are the key financial data and information for recent years ending 31 December

Required:

Prepare a report for the Ramada’s board of directors. In your report you should  

1. Critically analyze and discuss the recent financial performance and financial conditions of Squair Co and highlight areas of concern for the future
2. State clearly any limitations and assumptions that you made in your calculations.
3. Marks will be awarded for Professional format, structure and presentation of the report.

Milan Clothing Co. bought a machine for $40,000 on January 1, 2020. The machine has a useful life of 4 years, and a residual value of $3,000.

Part A Assume that Milan Clothing Co. uses the double-declining balance method for depreciation. Calculate depreciation expense for Year 1 and Year 2 of the machine’s useful life. Please show your calculations (i.e., each piece and the total).

Part B . Assume that this part is unrelated to Part A. That is, forget that you even did Part A.

Again, assume that Milan Clothing Co. bought a machine for $40,000 on January 1, 2020. The machine has a useful life of 4 years, and a residual value of $3,000.

Now, assume that Milan Clothing Co. uses the straight line method for depreciation. Milan Clothing Co. sold the machine on April 1, 2021 for $30,000. Record the journal entry that Milan Clothing Co. would record for the transaction of selling the machine. Please show and label your calculations (i.e., showing your logic and the pieces behind the amount in each account that is affected when you are recording this transaction).

Sunland Well Services Ltd. purchased equipment for $904,000 on September 30, 2021. The equipment was purchased with a $139,000 cash down payment and through the issue of a $765,000, 5-year, 3.6% mortgage note payable for the balance. The terms provide for the mortgage to be repaid in monthly blended payments of $13,951 starting on October 31.Record the first two instalment payments on October 31 and November 30.

Sleepy chairs company manufacturers a standard recliner. During October, the firm's Assembly Department started production of 85,000 chairs. During the month, the firm completed 95,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. There were 20,000 chairs in beginning inventory. The number of chairs started and completed in October is 75,000 chairs.

True

False

James Company expects the following sales in the next few months:

                        Month                         Units               Selling Price

                        July                              50,000             $ 8.10

                        August                        80,000             $ 8.10

                        September                   40,000             $ 8.60

                        October                       30,000             $ 8.60

James expects to collect 60 % of sales in the month of sale, 30 % in the following month, 5 % in the next month, with 5 % remaining uncollected.

Required:

Prepare a schedule of cash receipts for September and October.

Jane Company expects the following sales in the next few months:

                        Month                         Units               Selling Price

                        July                              50,000             $ 8.10

                        August                        80,000             $ 8.10

                        September                   40,000             $ 8.60

                        October                       30,000             $ 8.60

Jane expects to collect 60 % of sales in the month of sale, 30 % in the following month, 5 % in the next month, with 5 % remaining uncollected. Prepare a schedule of cash receipts for September and October.

What is the opinion based on the Treadway Commission? (See paragraphs below) Please raise thoughtful questions, analyze relevant issues, build on ideas, synthesize across readings and discussions, expand the class perspective, and appropriately challenge assumptions and perspectives in own words.

What is the opinion based on the Treadway Commission? (See paragraphs below) Please raise thoughtful questions, analyze relevant issues, build on ideas, synthesize across readings and discussions, expand the class perspective, and appropriately challenge assumptions and perspectives.

The National Commission on Fraudulent Financial Reporting (The Treadway Commission) was formed in 1985 in response to a growing concern over fraudulent financial reporting in corporations and corruption and waste within public sector organizations. The commission was also a response to the 1977 Foreign Corrupt Practices Act (FCPA), which criminalized shady, transnational business practices and required companies under the jurisdiction of the Securities and Exchange Commission (SEC) to tighten and monitor their internal controls. The commission was created and funded by the five major accounting associations at the time: the American Institute of Certified Public Accountants (AICPA), the American Accounting Association (AAA), the Financial Executives Institute (FEI), the Institute of Internal Auditors (IIA), and the National Association of Accountants (NAA).

I believe the most important achievement of the Treadway Commission was the creation of the Committee of Sponsoring Organizations, known as the COSO Committee. In 1992, the COSO Committee issued a landmark study in the field of internal controls, titled "Internal Control: Integrated Framework," known as the COSO report. The four-volume report defines the five main components of internal controls: the control environment, risk assessment, control activities, information and communication, and monitoring. At the time, the report was one standard used by corporations and governments to assess their compliance with the FCPA. Although not 100% effective in stamping out corruption and financial fraud (see, for example, the Enron accounting scandal of the early 2000s), the COSO report was successful in that it brought the field of internal controls out of its infancy of the 1950s through 1970s. It solidified the definition of internal controls and provided sound guidance - backed by the five major accounting associations - for corporations and governments to follow. Today, per our text book, it remains the seminal document on internal controls in the U.S.

Market Research–Round 1: In the late 1950s, when Americans were trading in their old cars for new ones every year or two, American automobiles were getting bigger and bigger. The demand for ever-larger, more powerful V-8 engine cars seemed unstoppable. At least one American auto manufacturer, Ford, realized the trend could not continue indefinitely, and that at some point consumers would begin to prefer smaller cars again. The question was when that shift would occur—and how to be ready for it. At the time, Ford was concerned enough that it conducted market research on consumers to determine their preferences for the cars Ford would be producing in the next few years (designing a new model of car takes several years). By the early 1960s, Ford had determined through extensive personal interviews of consumers that demand was building for a “simple, compact, no-frills, fuel-efficient sedan.” Accordingly, Ford introduced the Ford Falcon, a compact new model with a relatively low price because of its having few options, a manual transmission, and a small engine size (good for fuel efficiency). By keeping the car styling plain, Ford also kept the cost of the car down. However, sales of the new Falcon were not very successful, so Ford once again conducted market research to understand why. Market Research–Round 2: This time, when interviewing consumers Ford did not ask “Describe the kind of new car you would look to buy,” as they had the first time. Instead, it asked the consumers to “Describe the kind of new car your next door neighbor would look to buy.” On the basis of their responses, Ford introduced yet another new model, the sporty-looking, 2-door Ford Mustang. [Historical note: The new Mustang was essentially the same car as the Falcon—just the body shape of the car was changed, little else.] The Mustang was very successful (it is still in production today). A few years later the Falcon was phased out of production. Today, the Falcon is widely regarded as a failure and the Mustang as a great success story. Question: (a) How would you explain what Ford’s error was when it conducted its first round of marketing research? (b) How did it correct that error in the second round?

ABCD Corp prepares its master budget on a quarterly basis and has a September 30 year end. The following data and information has been prepared to help you prepare the master budget for the first quarter of the fiscal year (October thru December). Info provided as follows:

1.

Actual Sales for September, 2019 and projected sales for October, November and December, 2019 and January 2020 are as follows:

September $280,000

October $400,000

November $600,000

December $1,800,000

January $700,000

2.

Monthly sales are 32% on cash and 68% on credit. Customer payments on credit sales are collected as follows: 27% in the month of sale and 73% in the month following the month of sale.

3.

At September 30 ABCD Corp had outstanding accounts receivable of $190,400 and are a result of September credit sales. This amount will be collected as follows: 100% in October.

4.

ABCD Corp’s Gross Profit Percentage is 63%. Therefore Cost of Goods Sold comprise 37% of monthly sales.

5.

Monthly Expenses are budgeted as follows. All expense amounts are paid in the month they are incurred.

a. Sales and Wages: $31,000 per month

b. Advertising: $74,000 per month

c. Shipping: 7% of Sales

d. Miscellaneous Expenses: $10,000 + 6% of sales

6.

Depreciation Expense is expected to be $42,000 each quarter.

7.

ABCD’s Ending Inventory at September 30 is $44,400. Ending Inventory for October, November and December should equal 30% of the following month’s Cost of Goods Sold.

8.

60% of inventory purchases are paid for in the month of purchase; the remaining 40% paid for in the following month. At September 30 the Company still owed $72,000 to vendors for their September inventory purchases---this amount will be paid in October.

9.

During October, the company plans to purchase a new copy machine for $200,000 cash. During December, other equipment will be purchased for cash at a cost of $30,000.

10.

During November, the company will declare and pay $100,000 in cash dividends.

11.

ABCD’s Cash balance at September 30 is $40,000.

12.

Has an agreement with a local bank that allows them to borrow in increments of $1,000 at the beginning of each month. The interest rate on the on loans is 1% per month and for simplicity we’ll assume the loan is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of each quarter to the extent it has available funds exceeded the $40,000 minimum balance amount.

Prepare the following Schedules for October, November and December.

a. INVENTORY PURCHASES CASH DISBURSEMENTS BUDGET

b. CASH (RECEIPTS AND DISBURSEMENTS) BUDGET