Sales Order Processing System

The customer sales order is received via phone or through the mail. Gus Grinwich, the sales clerk, receives the sales order and checks the customer’s credit record. Once Grinwich checks the customer’s credit record, he prepares the sales order. From this sales order, Grinwich prepares a customer copy, stock release, shipping notice, two copies of the invoice, ledger copy, packing slip, and the file copy. One of the invoice copies, the ledger copy, and the file copy go to the billing department. The other copy of the invoice and the shipping notice are sent to the shipping department. The stock release and the file copy are sent to the warehouse department.

In the warehouse department, Steve Rossini, the warehouse clerk, receives the stock release and Phil Denuto, the stocker, checks the shelves to pick the gloves for the sales order. Once the goods are taken off the shelf in the warehouse, the stock release is sent to the billing department. Sparky Littleton, the billing clerk, reconciles the invoice, ledger copy, and stock release to make sure that the amount of inventory taken from the shelves is the same as the amount listed in the invoice. Littleton bills the customer for the goods released from the warehouse department. Littleton prepares the sales journal and makes the journal voucher. The journal voucher is sent to the general ledger department. The stock release is sent to the inventory control. The invoice is then filed in the billing department’s file and the ledger copy is sent to the general ledger department.

The shipping department receives the invoice and the shipping notice. They send the goods to the carrier along with the invoice, the packing slip, and the two copies of the bill of lading. The invoice states the amount and quantity of goods that the customer requested in the sales order form. The shipping department files the shipping notice from the customer’s order.

Inventory control receives the stock release form from the billing department. With the stock release form, Bobby Higgins, the inventory clerk, updates the inventory subsidiary ledger relating to the goods that have been released from the warehouse. The ledger copy arrives at the general ledger department from the billing department. Dave Fielder, the general ledger clerk, uses the ledger copy to update the accounts receivable subsidiary ledger. Periodically, Fielder prepares the accounts receivable summary and reconciles it with the journal voucher from the inventory subsidiary ledger and the journal voucher produced by the sales journal in the billing department in order to update the general ledger. These three forms are then filed by Fielder.

The Cash Receipts System

The cash receipts system starts when the wholesalers send back the remittance advice with their payment. This allows Craig Nelson, the mail room clerk, to collect the payment from the customer and process the cash receipt. Nelson then records the cash receipts in the cash receipts journal. Nelson prepares the deposit slips for the funds to be

deposited into the bank along with the checks. The remittance advice is sent to the general ledger department to update the accounts receivable records and is then filed in the billing department. Finally, Nelson prepares the cash receipt journal, out of which comes a journal voucher that is sent to the general ledger department.

Luis Gonzalez, the general ledger clerk, prepares the account summary and journal voucher, which is used to update the general ledger. The account summary and journal voucher is put into the files for record. Gonzalez uses the remittance advice copy sent from the mail room, the deposit slip copy from the bank, and the journal voucher from the account summary to reconcile the deposit slips. He then reconciles the deposit slips from the bank with the totals from the accounts receivable and mail room.

1. Analyze the current system and identify specific internal control problems.

On December 31, 2017, Dow Steel Corporation had 710,000 shares of common stock and 41,000 shares of 7%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $510,000 and $80,000 to common and preferred shareholders, respectively, on December 15, 2018. On February 28, 2018, Dow sold 63,000 common shares. In keeping with its long-term share repurchase plan, 4,000 shares were retired on July 1. Dow's net income for the year ended December 31, 2018, was $2,650,000. The income tax rate is 40%. Required: Compute Dow's earnings per share for the year ended December 31, 2018

As part of an incentive compensation plan, Dow granted incentive stock options to division managers at December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and common share prices follows:

Date Granted Options granted Share Price

Dec 31, 2016 18,000 $28

Dec 31, 2017. 13,000 $37

Dec 31, 2018 16,500 $36

The market price of the common stock averaged $36 per share during 2018.

Compute Dow's earnings per share for the year ended December 31, 2018.

Numerator / Denominator = EPS

Dow's Basic

Dow's Diluted

Question 1:
Use the following information about the economy of Guyana in 2018 to answer the below question (NOTE - values are in Guyanese dollars):

2018 GDP - $689 billion

2018 Taxes - $117 billion
2018 Investment - $345 billion
2018 Government Spending - $144 billion
2018 Consumption - $454 billion

What was the value of net capital inflow in 2018? (You can assume no transfer payments.)

(Answers should be in the form "Z billion." Just enter "Z.")

Question 2:
In November, 2019, the IMF announced that it believed Guyana could see economic growth of 86% in 2020 (this was before the current crisis), driven by its new discovery of oil and creation of an oil export sector. The Bank of Guyana therefore expected the overall price level to _____.

However, one of the Bank of Guyana's stated policy objectives is stable prices. As a result, it was anticipating conducting _____ monetary policy.
       
a) fall; contractionary
b) fall; expansionary
c) rise; contractionary
d) rise; expansionary
Question 3:
Use the following information about the economy of Guyana in February 2020 to answer the below question (NOTE - values are in Guyanese dollars):

Deposits in checking accounts - $133 billion
Deposits in savings accounts - $210 billion
Deposits in other, illiquid accounts - $112 billion
Small time deposits - $9 billion
Currency - $116 billion
Bank reserves - $92 billion

What is the size of the monetary base in Guyana for February 2020?

(Answers should be in the form "Z billion". Just enter "Z".)

Belden, Inc. acquires 30 percent of the outstanding voting shares of Sheffield, Inc. on January 1, 2017, for $306,000, which gives Belden the ability to significantly influence Sheffield. Sheffield has a net book value of $784,000 at January 1, 2017. Sheffield's asset and liability accounts showed carrying amounts considered equal to fair values except for a copyright whose value accounted for Belden's excess cost over book value in its 30 percent purchase. The copyright had a remaining life of 16 years at January 1, 2017. No goodwill resulted from Belden's share purchase. Sheffield reported net income of $182,000 in 2017 and $244,000 of net income during 2018. Dividends of $64,000 and $90,000 are declared and paid in 2017 and 2018, respectively. Belden uses the equity method. On its 2018 comparative income statements, how much income would Belden report for 2017 and 2018 in connection with the company's investment in Sheffield? If Belden sells its entire investment in Sheffield on January 1, 2019, for $412,000 cash, what is the impact on Belden's income? Assume that Belden sells inventory to Sheffield during 2017 and 2018 as follows. What amount of equity income should Belden recognize for the year 2018? Year Cost to Belden Price to Sheffield Year-End Balance (at Transfer Price) 2017 $36,000 $60,000 $20,000 (sold in following year) 2018 34,160 61,000 38,000 (sold in following year)

Corbit Corporation’s 2018 financial statements include the following discussion regarding its use of put options (from Note 9):

During 2016, the company implemented a stock repurchase program to repurchase up to 500,000 shares of stock. In conjunction with the company’s stock repurchase program, the company issues put options that give the purchaser the right to sell shares of Corbit stock to the company at specified prices on specific dates. Recent plan activity is as follows:

                                                                                              Outstanding

                                                                                              Put Options      

      Balance, December 31, 2016                                              500,000

            Options issued                                                                         0

            Options exercised                                                        (100,000)

      Balance, December 31, 2017                                              400,000

            Options issued                                                                         0

            Options exercised                                                                    0

      Balance, December 31, 2018                                              400,000

Corbit’s stock price was $30 per share on 12/31/18, and the company’s stock price averaged $32 per share during 2018. Assume that all outstanding put options are freely exercisable and that all of the outstanding put options on 12/31/18 have an exercise price of $36 per share. Also, assume that Corbit’s net income for 2018 was $10 million and that the company’s weighted-average number of common shares outstanding for 2018 was 4.5 million. Corbit has no other potential common shares.

Required:

1.   Explain and illustrate how the outstanding put options should be reflected in the 2018 diluted EPS calculation (provide the full citation(s) from the FASB codification that supports your answer).

2.   Calculate Corbit’s basic and diluted EPS for 2018.

Corbit Corporation’s 2018 financial statements include the following discussion regarding its use of put options (from Note 9):

During 2016, the company implemented a stock repurchase program to repurchase up to 500,000 shares of stock. In conjunction with the company’s stock repurchase program, the company issues put options that give the purchaser the right to sell shares of Corbit stock to the company at specified prices on specific dates. Recent plan activity is as follows:

                                                                                              Outstanding

                                                                                              Put Options      

      Balance, December 31, 2016                                              500,000

            Options issued                                                                         0

            Options exercised                                                        (100,000)

      Balance, December 31, 2017                                              400,000

            Options issued                                                                         0

            Options exercised                                                                    0

      Balance, December 31, 2018                                              400,000

Corbit’s stock price was $30 per share on 12/31/18, and the company’s stock price averaged $32 per share during 2018. Assume that all outstanding put options are freely exercisable and that all of the outstanding put options on 12/31/18 have an exercise price of $36 per share. Also, assume that Corbit’s net income for 2018 was $10 million and that the company’s weighted-average number of common shares outstanding for 2018 was 4.5 million. Corbit has no other potential common shares.

Required:

1.   Explain and illustrate how the outstanding put options should be reflected in the 2018 diluted EPS calculation (provide the full citation(s) from the FASB codification that supports your answer).

2.   Calculate Corbit’s basic and diluted EPS for 2018.

Belden, Inc. acquires 30 percent of the outstanding voting shares of Sheffield, Inc. on January 1, 2017, for $310,000, which gives Belden the ability to significantly influence Sheffield. Sheffield has a net book value of $808,000 at January 1, 2017. Sheffield's asset and liability accounts showed carrying amounts considered equal to fair values except for a copyright whose value accounted for Belden's excess cost over book value in its 30 percent purchase. The copyright had a remaining life of 16 years at January 1, 2017. No goodwill resulted from Belden's share purchase.

Sheffield reported net income of $168,000 in 2017 and $222,000 of net income during 2018. Dividends of $76,000 and $62,000 are declared and paid in 2017 and 2018, respectively. Belden uses the equity method.

1. On its 2018 comparative income statements, how much income would Belden report for 2017 and 2018 in connection with the company's investment in Sheffield?

2. If Belden sells its entire investment in Sheffield on January 1, 2019, for $422,000 cash, what is the impact on Belden's income?

3. Assume that Belden sells inventory to Sheffield during 2017 and 2018 as follows. What amount of equity income should Belden recognize for the year 2018?

The following two tables are used in all the following questions. Thus, part of the following questions involve determining exactly what you need for each question. Please assume that for GDP calculations, only two things are produced in this economy: houses (a good) and dog walking (a service). Please ignore coffee for the GDP calculations. Also, assume that 2018 is the base year for GDP calculations. The base year for the CPI is not given.

1. How much did the real price of coffee change from 2018 to 2019?
2. Without making a calculation, which did you think increased more from 2018 to 2019 -- real or nominal GDP? Why?
3. Convert the nominal price of coffee from 1989 to 2019 prices.
4. What was the economy's growth rate from 2018 to 2019?
5. Given the data in these tables, can you compute the value of the market basket in the base year of the CPI?
6. What was the economy's inflation rate from 2018 to 2019?

Problem 19-8 (Part Level Submission)

The following information was disclosed during the audit of Elbert Inc.

E. Prepare the journal entry to record income taxes for 2018.

F. Draft the income tax section of the income statement for 2018, beginning with “Income before income taxes.”

On January 1, 2017, Riverbed Company issued $ 1,930,000 face value,  9%,  10-year bonds at $ 2,059,503. This price resulted in a  8% effective-interest rate on the bonds. Riverbed uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest on each January 1.

Prepare the journal entries to record the following transactions. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)