Define NAFTA, the European Union, and MERCOSUR.
What are trade sanctions and embargos.
List and describe an example of a global company that faces ethical issues for its operations outside the US.
In: Operations Management
Part of the accounting records for the last quarter of 2017 of Boswell Corp., a Canadian private company applying IFRS, were destroyed due to a software malfunction. You have been tasked with reconstructing the accounting records related to inventory and receivables.
The following information has been salvaged:
Extract from the Quarterly Statement of Financial Position as at December 31, 2017
|
Oct 1, 2017 |
Dec 31, 2017 |
|
|
Current Assets |
||
|
Net realizable value of Accounts receivable |
$9,400 |
? |
|
Inventory |
600 |
? |
Aging of receivables analysis as at December 31, 2017 (Incomplete)
|
Days past due |
Amount |
Estimated uncollectible % |
Estimated uncollectible amount |
Observations |
|
0-30 |
3% |
|||
|
30-120 |
10% |
|||
|
>120 |
$2,000 |
50% |
$500 of the $2,000 were deemed completely uncollectible |
By talking to the CEO, the controller, and other employees of the accounting department you were also able to gather the following information:
Firm’s Accounting Policies:
a) The company uses the periodic inventory system and the FIFO cost flow assumption.
b) The company applies the aging of receivables analysis to adjust the AFDA at year-end.
The only inventory and sale-related transactions during the quarter were:
1. On October 15, 2017, Boswell Corp. sold 160 units at $20 each, shipped on the same day, FOB destination, and arrived 3 days later, freight-out of $80 for the entire shipment, and payment within 30 days. As at December 31, 2017, the client had still not paid.
2. On November 10, Boswell Corp. received from its supplier a shipment of 2,000 units costing $10 each. Boswell Corp. also had to cover shipping costs of $1,000, import duty taxes of $200 (non-refundable).
3. On December 1, Boswell Corp. sold 1,000 units at $20 each, 2/10, n/30. The client paid half of the total amount on December 5, but made no other payment since.
4. On December 15, 2017, Boswell Corp. signed a contract for the purchase of 1,000 units of inventory from a Canadian supplier at a price of $13 per unit. The supplier shipped the goods FOB destination on December 27. On December 31, 2017, the goods had not yet been delivered, and no invoice had been received.
Other information:
a) The physical count of inventory at the end of the previous quarter was 200 units. The physical count of inventory at the end of December 2017 was 1,040 units.
b) The beginning balance for Gross Accounts Receivable for the quarter was $10,000.
c) The CEO estimates that inventory on hand at the end of 2017 could be sold for a per unit price of $11, with $0.20 per unit costs to sell.
Required:
1. Re-construct the journal entries for the transactions during the quarter.
2. Make ALL necessary quarter-end adjusting entries as at December 31, 2017. Show your computation. (Hint: there are 4 adjusting entries needed to (1) record the write-down of inventory (2) record COGS and update ending inventory (3) record write-off (4) record bad debt expense using aging analysis.)
3. Present to the CEO the calculation of gross profit for the last quarter in 2017.
In: Accounting
Part of the accounting records for the last quarter of 2014 of Alexandra Corp., a Canadian private company applying IFRS, were destroyed due to a software malfunction. You have been tasked with reconstructing the accounting records related to inventory and receivables.
The following information has been salvaged:
Extract from the Quarterly Statement of Financial Position as at December 31, 2014
|
Oct 1, 2014 |
Dec 31, 2014 |
|
|
Current Assets |
||
|
Net realizable value of Accounts receivable |
$4,700 |
? |
|
Inventory |
300 |
? |
Aging of receivables analysis as at December 31, 2014 (Incomplete)
|
Days past due |
Amount |
Estimated uncollectible % |
Estimated uncollectible amount |
Observations |
|
0-30 |
3% |
|||
|
30-120 |
10% |
|||
|
>120 |
$2,000 |
50% |
$500 of the $2,000 were deemed completely uncollectible |
By talking to the CEO, the controller, and other employees of the accounting department you were also able to gather the following information:
Firm’s Accounting Policies:
a) The company uses the periodic inventory system and the FIFO cost flow assumption.
b) The company applies the aging of receivables analysis to adjust the AFDA at year-end.
The only inventory and sale-related transactions during the quarter were:
1. On October 15, 2014, Alexandra Corp. sold 80 units at $10 each, shipped on the same day, FOB destination, and arrived 3 days later, freight-out of $30 for the entire shipment, and payment within 30 days. As at December 31, 2014, the client had still not paid.
2. On November 10, Alexandra Corp. received from its supplier a shipment of 1,000 units costing $5 each. Alexandra Corp. also had to cover shipping costs of $500, import duty taxes of $100 (non-refundable).
3. On December 1, Alexandra Corp. sold 500 units at $10 each, 2/10, n/30. The client paid half of the total amount on December 5, but made no other payment since.
4. On December 15, 2014, Alexandra Corp. signed a contract for the purchase of 500 units of inventory from a Canadian supplier at a price of $6.50 per unit. The supplier shipped the goods FOB destination on December 27. On December 31, 2014, the goods had not yet been delivered, and no invoice had been received.
Other information:
a) The physical count of inventory at the end of the previous quarter was 100 units. The physical count of inventory at the end of December 2014 was 520 units.
b) The beginning balance for Gross Accounts Receivable for the quarter was $5,000.
c) The CEO estimates that inventory on hand at the end of 2014 could be sold for a per unit price of $5.50, with $0.10 per unit costs to sell.
Required:
1. Re-construct the journal entries for the transactions during the quarter.
2. Make ALL necessary quarter-end adjusting entries as at December 31, 2014. Show your computation. (Hint: there are 4 adjusting entries needed to (1) record the write-down of inventory (2) record COGS and update ending inventory (3) record write-off (4) record bad debt expense using aging analysis.)
3. Present to the CEO the calculation of gross profit.
(Please use the Gross Method to record the sales discount)
In: Accounting
Problem 23-04
Sarasota Company had the following information available at the end of 2020.
|
SARASOTACOMPANY |
||||||
|
2020 |
2019 |
|||||
| Cash |
$10,060 |
$4,000 |
||||
| Accounts receivable |
20,520 |
12,890 |
||||
| Short-term investments |
22,080 |
30,280 |
||||
| Inventory |
41,830 |
34,940 |
||||
| Prepaid rent |
3,020 |
11,990 |
||||
| Prepaid insurance |
2,100 |
91 |
||||
| Supplies |
1,000 |
75 |
||||
| Land |
124,360 |
174,960 |
||||
| Buildings |
349,270 |
349,270 |
||||
| Accumulated depreciation—buildings |
(105,830 |
) |
(87,870 |
) |
||
| Equipment |
530,150 |
397,390 |
||||
| Accumulated depreciation—equipment |
(131,220 |
) |
(112,770 |
) |
||
| Patents |
45,430 |
49,870 |
||||
| Total assets |
$912,770 |
$865,116 |
||||
| Accounts payable |
$22,060 |
$31,980 |
||||
| Income taxes payable |
5,000 |
4,000 |
||||
| Salaries and wages payable |
4,960 |
2,980 |
||||
| Short-term notes payable |
9,920 |
9,920 |
||||
| Long-term notes payable |
59,540 |
69,710 |
||||
| Bonds payable |
403,870 |
403,870 |
||||
| Premium on bonds payable |
19,410 |
20,646 |
||||
| Common stock |
239,730 |
221,960 |
||||
| Paid-in capital in excess of par—common stock |
25,160 |
17,490 |
||||
| Retained earnings |
123,120 |
82,560 |
||||
| Total liabilities and stockholders’ equity |
$912,770 |
$865,116 |
||||
|
SARASOTA COMPANY |
||||||
| Sales revenue |
$1,167,020 |
|||||
| Cost of goods sold |
750,580 |
|||||
|
416,440 |
||||||
| Gross margin | ||||||
| Operating expenses | ||||||
| Selling expenses |
$79,080 |
|||||
| Administrative expenses |
158,020 |
|||||
| Depreciation/Amortization expense |
40,850 |
|||||
| Total operating expenses |
277,950 |
|||||
| Income from operations |
138,490 |
|||||
| Other revenues/expenses | ||||||
| Gain on sale of land |
8,020 |
|||||
| Gain on sale of short-term investment |
3,960 |
|||||
| Dividend revenue |
2,390 |
|||||
| Interest expense |
(52,260 |
) |
(37,890 |
) |
||
| Income before taxes |
100,600 |
|||||
| Income tax expense |
39,110 |
|||||
| Net income |
61,490 |
|||||
| Dividends to common stockholders |
(20,930 |
) |
||||
| To retained earnings |
$40,560 |
|||||
Prepare a statement of cash flows for Sarasota Company using the
direct method accompanied by a reconciliation schedule. Assume the
short-term investments are debt securities, classified as
available-for-sale. (Show amounts in the investing and
financing sections that decrease cash flow with either a - sign
e.g. -15,000 or in parenthesis e.g. (15,000).)
In: Accounting
Ivanhoe Company had the following information available at the
end of 2020.
|
IVANHOECOMPANY |
||||||
|
2020 |
2019 |
|||||
| Cash |
$10,010 |
$3,990 |
||||
| Accounts receivable |
20,570 |
12,850 |
||||
| Short-term investments |
21,930 |
30,060 |
||||
| Inventory |
41,700 |
35,280 |
||||
| Prepaid rent |
3,000 |
12,030 |
||||
| Prepaid insurance |
2,080 |
90 |
||||
| Supplies |
1,010 |
75 |
||||
| Land |
124,150 |
175,280 |
||||
| Buildings |
349,500 |
349,500 |
||||
| Accumulated depreciation—buildings |
(105,270 |
) |
(88,250 |
) |
||
| Equipment |
522,870 |
401,710 |
||||
| Accumulated depreciation—equipment |
(130,840 |
) |
(111,260 |
) |
||
| Patents |
44,830 |
49,560 |
||||
| Total assets |
$905,540 |
$870,915 |
||||
| Accounts payable |
$21,890 |
$32,290 |
||||
| Income taxes payable |
5,030 |
4,020 |
||||
| Salaries and wages payable |
4,970 |
2,970 |
||||
| Short-term notes payable |
9,990 |
9,990 |
||||
| Long-term notes payable |
60,590 |
70,620 |
||||
| Bonds payable |
400,040 |
400,040 |
||||
| Premium on bonds payable |
17,390 |
22,175 |
||||
| Common stock |
238,100 |
221,930 |
||||
| Paid-in capital in excess of par—common stock |
25,040 |
17,560 |
||||
| Retained earnings |
122,500 |
89,320 |
||||
| Total liabilities and stockholders’ equity |
$905,540 |
$870,915 |
||||
|
IVANHOE COMPANY |
||||||
| Sales revenue |
$1,162,530 |
|||||
| Cost of goods sold |
743,150 |
|||||
|
419,380 |
||||||
| Gross margin | ||||||
| Operating expenses | ||||||
| Selling expenses |
$79,810 |
|||||
| Administrative expenses |
156,410 |
|||||
| Depreciation/Amortization expense |
41,330 |
|||||
| Total operating expenses |
277,550 |
|||||
| Income from operations |
141,830 |
|||||
| Other revenues/expenses | ||||||
| Gain on sale of land |
7,970 |
|||||
| Gain on sale of short-term investment |
4,020 |
|||||
| Dividend revenue |
2,380 |
|||||
| Interest expense |
(51,610 |
) |
(37,240 |
) |
||
| Income before taxes |
104,590 |
|||||
| Income tax expense |
39,020 |
|||||
| Net income |
65,570 |
|||||
| Dividends to common stockholders |
(32,390 |
) |
||||
| To retained earnings |
$33,180 |
|||||
Prepare a statement of cash flows for Ivanhoe Company using the
direct method accompanied by a reconciliation schedule. Assume the
short-term investments are debt securities, classified as
available-for-sale. (Show amounts in the investing and
financing sections that decrease cash flow with either a - sign
e.g. -15,000 or in parenthesis e.g. (15,000).)
In: Accounting
The Whit company, a manufacture and the berry company, a retailer , entered into a business combination whereby whit acquired for cash all the outstanding voting common stock of Berry.
The Whit company is preparing consolidated financial statements immediately after the sonsummation of the newly formed business combination. How should whit determin in general the amounts to be reported for the assets and liabilities of Berry compnay? Assuming that the business combination resulted in good will, infdicate how the amount of good will is determined.
b. Why and under what circumstances should Berry be included in the entity's consolidated financial statements?
In: Accounting
Fallon Company uses flexible budgets to control its selling
expenses. Monthly sales are expected to range from $169,900 to
$211,000. Variable costs and their percentage relationship to sales
are sales commissions 7%, advertising 4%, travel 4%, and delivery
1%. Fixed selling expenses will consist of sales salaries $34,700,
depreciation on delivery equipment $7,500, and insurance on
delivery equipment $1,900.
Prepare a monthly selling expense flexible budget for each $13,700
increment of sales within the relevant range for the year ending
December 31, 2020.
In: Accounting
A mature company on Beverage and Food Industry, with stable earnings expects to have earnings per share (EPS) of 30 AED in the coming year and its current stock price is 280 AED. The management must decide between the following alternatives: Pay all of its earnings as dividends and abandon the new investment in Dubai or Cut its dividend payout rate to 75% and implement the Dubai Project. If the second policy is followed there is a divergence in the estimation of the Return on New Investment.
(i). Pay all of its earnings as dividends. Because of the status of the company and its strength in the market, the CEO believes that cash flow from operations is sufficient to continue to reinvest in growth, though has to abandon Dubai Project for next year, and decided to pay out all of its earnings to investors. Besides that, current economic conditions are weak due to the crisis, and the CEO is more willing to pay dividends than to enter a program of share buybacks.
(ii). Cut its dividend payout rate to 75%. On the other hand, the company’s manager has negative expectations regarding the recent financial crisis and advise to cut dividends even if this is not consistent with its long-run growth in earnings. He believes that it is better to reinvest some of the earnings to open new stores in Dubai, a project that will last 2 years and hence, it is advisable to safeguard its financial reserves for future expenses. If the firm follows this program the return on investment is expected to be 17%. Suppose that the required rate of return is the same as calculated in Question (2) above.
Questions:
(5) Justify the dividend policy of the firm for both cases (i) and (ii).
(6) What would be the total return of a stockholder under conditions (ii)?
(iii). Expected return on New investment is 9% rather than 17%. Financial crisis is severe and persist. The manager of the company estimates that in this case the return on the new investment will be 9% rather than 17%.
Questions:
(7) What effect would this change have on the company’s stock price?
(8) Should the company implement the new investment project and open new stores in Dubai?
In: Finance
“Today, less than two decades after the arrival of the internet, Google and Facebook together command more advertising dollars than all print media on the planet.In 2017, Google’s ad campaign revenue totalled over $95 billion, while Facebook’s reached more than 39 billion. Taken together, this is roughly 25% of all global advertising expenditure.Fuelled by open source e-commerce platforms, mobile devices, and advances in online payment infrastructure, social media marketing has replaced virtually the entire traditional advertising industry. That took fewer than fifteen years.And the numbers are huge. In 2018, the global advertising industry surpassed $550 billion, driving Google’s valuation north of $700 billion and Facebook’s above $500 billion.All this value is fuelled by our searches: our likes and dislikes, what we desire, who our friends are, and what we (and they) are clicking on these days.But with a blitzkrieg of technologies converging on the industry, advertising will continue to change. It’s likely to get a little more invasive and a lot more personal.”
Peter Diamandis, co-founder Singularity University
In: Operations Management
Omega Coffee Shop enters into a contract with Software Wizards
Co. on May 15, 2020, to deliver 100 bags of ground coffee beans to
Software on June 1. Software agrees to pay $1,000 for the coffee
beans, which cost Omega $6 each. Omega delivers the bags of coffee
beans on June 1, 2020, and receives payment from Software on June
20, 2020.
Prepare the journal entries for Omega Coffee Shop related to this
contract.
In: Accounting