The following unadjusted trial balance is for Ace Construction Co. as of the end of its 2019 fiscal year. The June 30, 2018, credit balance of the owner’s capital account was $52,500, and the owner invested $20,000 cash in the company during the 2019 fiscal year.

Adjustments:

1. The supplies available at the end of fiscal year 2019 had a cost of $3,240.
2. The cost of expired insurance for the fiscal year is $3,465.
3. Annual depreciation on equipment is $8,500.
4. The June utilities expense of $520 is not included in the unadjusted trial balance because the bill arrived after the trial balance was prepared. The $520 amount owed needs to be recorded.
5. The company’s employees have earned $1,700 of accrued and unpaid wages at fiscal year-end.
6. The rent expense incurred and not yet paid or recorded at fiscal year-end is $500.
7. Additional property taxes of $700 have been assessed for this fiscal year but have not been paid or recorded in the accounts.
8. The $230 accrued interest for June on the long-term notes payable has not yet been paid or recorded.

Required:
1. Prepare a 10-column work sheet for fiscal year 2019, starting with the unadjusted trial balance and including adjustments based on the additional facts. The June 30, 2018, credit balance of the owner’s capital account was $52,500, and the owner invested $20,000 cash in the company during the 2019 fiscal year.
2a. Prepare the adjusting entries. (all dated June 30, 2019).
2b. Prepare the closing entries. (all dated June 30, 2019):
3a. Prepare the income statement for the year ended June 30, 2019.
3b. Prepare the statement of owner's equity for the year ended June 30, 2019.
3c. Prepare the classified balance sheet at June 30, 2019.

The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2016. The accounting department of Thompson has started the fixed-asset and depreciation schedule presented below. You have been asked to assist in completing this schedule. In addition to ascertaining that the data already on the schedule are correct, you have obtained the following information from the company's records and personnel (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.):

Depreciation is computed from the first of the month of acquisition to the first of the month of disposition.

Land A and Building A were acquired from a predecessor corporation. Thompson paid $872,500 for the land and building together. At the time of acquisition, the land had a fair value of $76,800 and the building had a fair value of $883,200.

Land B was acquired on October 2, 2016, in exchange for 3,600 newly issued shares of Thompson’s common stock. At the date of acquisition, the stock had a par value of $5 per share and a fair value of $31 per share. During October 2016, Thompson paid $11,000 to demolish an existing building on this land so it could construct a new building.

Construction of Building B on the newly acquired land began on October 1, 2017. By September 30, 2018, Thompson had paid $270,000 of the estimated total construction costs of $360,000. Estimated completion and occupancy are July 2019.

Certain equipment was donated to the corporation by the city. An independent appraisal of the equipment when donated placed the fair value at $18,400 and the residual value at $2,600.

Machine A’s total cost of $109,000 includes installation charges of $610 and normal repairs and maintenance of $12,500. Residual value is estimated at $5,200. Machine A was sold on February 1, 2018.

On October 1, 2017, Machine B was acquired with a down payment of $4,600 and the remaining payments to be made in 10 annual installments of $4,600 each beginning October 1, 2018. The prevailing interest rate was 8%.

Required:

Supply the correct amount for each answer box on the schedule. (Round your final answers to nearest whole dollar.)

                                        Thompson Corporation

                          Fixed Asset and depreciation schedule

                       For fiscal year ended september 30, 2017, and september 30, 2018

Problem 4-2A Preparing a work sheet, adjusting and closing entries, and financial statements LO C3, P1, P2

The following unadjusted trial balance is for ACE CONSTRUCTION CO. as of the end of its 2017 fiscal year. The June 30, 2016, credit balance of the owner’s capital account was $52,300, and the owner invested $24,000 cash in the company during the 2017 fiscal year.

Adjustments:
  

1. The supplies available at the end of fiscal year 2017 had a cost of $2,880.
2. The cost of expired insurance for the fiscal year is $4,095.
3. Annual depreciation on equipment is $8,000.
4. The June utilities expense of $600 is not included in the unadjusted trial balance because the bill arrived after the trial balance was prepared. The $600 amount owed needs to be recorded.
5. The company’s employees have earned $1,200 of accrued wages at fiscal year-end.
6. The rent expense incurred and not yet paid or recorded at fiscal year-end is $100.
7. Additional property taxes of $600 have been assessed for this fiscal year but have not been paid or recorded in the accounts.
8. The long-term note payable bears interest at 12% per year. The unadjusted Interest Expense account equals the amount paid for the first 11 months of the 2017 fiscal year. The $240 accrued interest for June has not yet been paid or recorded. (The company is required to make a $5,500 payment toward the note payable during the 2018 fiscal year.)

Required:
1. Prepare a 10-column work sheet for fiscal year 2017, starting with the unadjusted trial balance and including adjustments based on the additional facts.
2a. Prepare the adjusting entries. (all dated June 30, 2017).
2b. Prepare the closing entries. (all dated June 30, 2017):
3a. Prepare the income statement for the year ended June 30.
3b. Prepare the statement of owner's equity for the year ended June 30.
3c. Prepare the classified balance sheet at June 30, 2017.

The BakFirn Corporation, a publicly traded firm, has contracted with YOUCPA, your public accounting firm, for an audit. The BakFirn Corporation manufactures specialty construction tools. The tools are used in the unique construction of homes, warehouses, and multiunit dwellings. The prices range from $1,000 to $5,000 per unit.

During the audit, the audit team has determined the risk assessment of the client. Consequently, the audit has to respond to the assessed risks of material misstatement at the financial statement and assertion levels. The YOUCPA audit team has asked you, the auditor, to prepare a list of actions that you will take to assess the audit risk.

The following information is available in the year just finished:

• The BakFirn Corporation end-of-year is 12/31/20XX.
• Sales for the previous year were $10,000,000. Sales this year are coming in at $9,500,000.
• The firm is in the construction machine industry, making specialty tools.
• Account receivable days sales outstanding (DSO) has been averaging 90–120 days. The year before, it was 80–90 days.
• Inventory turns have decreased from 3 to 2 per year.
• Account receivable and inventory make up 80% of total assets.
• Internal auditing has been reduced by one person to reduce costs.
• An initial test of controls in cash receipt indicated a lack of following procedures.
• The construction industry is in the third year of a downturn. It is forecasted to last two more years.
• The audit team has defined materiality to be focused on account receivable and inventory with $3,000 being the initial threshold. Net income for last year was $1,000,000.
• Inventory at the end of the year was $2,500,000.
• Account receivable at the end of the year was $2,740,000, or 100 DSO.
• The previous auditors did not disclose any fraud or any management issues at the meeting with BakFirn and YOUCPA. The reason for the auditor change was explained as a costs reduction program

Questions: Audit Assessment Steps:

1. What is the initial audit risk? High, medium or low?
2. What factors made you decide on this level?

USING UNITED STATES IBC CHAPTER 6

1. An exterior wall is defined as a building enclosing wall that has a minimum slope of ____ degrees with the horizontal plane.

A. 45               B. 60               C. 75               D. 90

2. Veneer secured and supported through the adhesion of an approved bonding material applied to an approved backing is considered as _______ veneer.

A. adhered                  B. anchored                 C. attached                  D. spandrel

3. A minimum of _________ shall be attached to exterior sheathing in order to provide a continuous water-resistant barrier behind the exterior wall veneer.

A. one layer of No. 15 asphalt felt

B. one layer of No. 30 asphalt felt

C. two layers of No. 15 asphalt felt applied shingle fashion

D. two layers of No. 15 asphalt felt applied shingle fashion

4. Precast stone facing shall be a minimum of ____ inch in thickness in order to be acceptable as an approved weather covering.

A. ½                            B. 5/8                          C. ¾                            D. 1

5. When installed in a compliant manner, exterior masonry veneer having a maximum installed weight of ____ pounds per square foot may be supported on wood construction.

A. 15                           B. 20                           C. 25                           D. 40

6. What is the minimum permitted thickness for metal veneer mounted on approved sheathing on wood construction?

A. 0.0149 in                B. 0.0224 in                C. 0.0478 in                D. 0.0630 in

7. List the performance requirement(s) of weather protection of exterior walls as per code.

8. Use of wood, masonry, concrete and several other materials are permitted in the code for the construction of exterior walls. Name five (5) more approved materials.

9. List the specifications for the wood veneers on exterior walls of Types I, II, III & IV buildings.

10. The code permits the use of combustible materials in the construction of exterior walls of Types I, II, III & IV buildings, however, with some limitations. List four (4) such limitations.

Blue Co. has a patent on a communication process. The company has amortized the patent on a straight-line basis since 2017, when it was acquired at a cost of $39 million at the beginning of that year. Due to rapid technological advances in the industry, management decided that the patent would benefit the company over a total of six years rather than the nine-year life being used to amortize its cost. The decision was made at the end of 2021 (before adjusting and closing entries). What is the appropriate patent amortization expense in 2021? (Do not round your intermediate calculation.)

$21.67 million.

$5.42 million.

$10.83 million.

$4.33 million.

Which of the following is not a change in estimate?

A change in the useful life of a depreciable asset.

A change in the mortality rate used for pension computations.

A change from the cost to the equity method in accounting for investments.

A change in the warranty expense percentage.

Gross Profit Method: Estimation of Theft Loss You are requested by a client on September 28 to prepare an insurance claim for a theft loss that occurred on that day. You immediately take an inventory and obtain the following data: Inventory, September 1 $38,000 Sales, September 1–September 28 $51,000 Purchases, September 1–September 28 19,000 The inventory on September 28 indicates that an inventory of $15,000 remains after the theft. During the past year, net sales were made at 50% above the cost of goods sold. Required: 1. Compute the inventory lost during the theft. Round the gross profit percentage to 3 decimal places.

19)

If fixed costs are $274,000, the unit selling price is $124, and the unit variable costs are $79, the break-even sales (units) is

a.3,468 units

b.1,350 units

c.6,089 units

d.2,210 units

18)

Strait Co. manufactures office furniture. During the most productive month of the year, 3,400 desks were manufactured at a total cost of $83,000. In the month of lowest production, the company made 1,140 desks at a cost of $64,400. Using the high-low method of cost estimation, total fixed costs are

a.$55,018

b.$18,600

c.$64,400

d.$83,000

17)

Variable costs as a percentage of sales for Lemon Inc. are 78%, current sales are $577,000, and fixed costs are $180,000. How much will operating income change if sales increase by $49,600?

a.$10,912 increase

b.$38,688 increase

c.$10,912 decrease

d.$38,688 decrease

Gunes Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 800 units. The costs and percentage completion of these units in beginning inventory were:

A total of 8,500 units were started and 7,400 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:

The ending inventory was 50% complete with respect to materials and 35% complete with respect to conversion costs.

The total cost transferred from the first processing department to the next processing department during the month is closest to: (Do not round intermediate calculations.)

Multiple Choice

• $476,929

• $525,000

• $599,376

• $501,600