The Sheffield Company has just completed a physical inventory
count at year end, December 31, 2022. Only the items on the
shelves, in storage, and in the receiving area were counted and
costed on the FIFO basis. The inventory amounted to $75,500. During
the audit, the independent CPA discovered the following additional
information:
|
(a) |
There were goods in transit on December 31, 2022, from a supplier with terms FOB destination, costing $10,500. Because the goods had not arrived, they were excluded from the physical inventory count. |
||
|
(b) |
On December 27, 2022, a regular customer purchased goods for cash amounting to $1,050 and had them shipped to a bonded warehouse for temporary storage on December 28, 2022. The goods were shipped via common carrier with terms FOB shipping point. The customer picked the goods up from the warehouse on January 4, 2023. Sheffield Company had paid $525 for the goods and, because they were in storage, Sheffield included them in the physical inventory count. |
||
|
(c) |
Sheffield Company, on the date of the inventory, received notice from a supplier that goods ordered earlier, at a cost of $4,300, had been delivered to the transportation company on December 28, 2022; the terms were FOB shipping point. Because the shipment had not arrived on December 31, 2022, it was excluded from the physical inventory. |
||
|
(d) |
On December 31, 2022, there were goods in transit to customers, with terms FOB shipping point, amounting to $760 (expected delivery on January 8, 2023). Because the goods had been shipped, they were excluded from the physical inventory count. |
||
|
(e) |
On December 31, 2022, Sheffield Company shipped $2,900 worth of goods to a customer, FOB destination. The goods arrived on January 5, 2023. Because the goods were not on hand, they were not included in the physical inventory count. |
||
|
(f) |
Sheffield Company, as the consignee, had goods on consignment that cost $3,200. Because these goods were on hand as of December 31, 2022, they were included in the physical inventory count. |
Analyze the above information and calculate a corrected amount for
the ending inventory.
In: Accounting
he Monty Company has just completed a physical inventory count
at year end, December 31, 2022. Only the items on the shelves, in
storage, and in the receiving area were counted and costed on the
FIFO basis. The inventory amounted to $81,600. During the audit,
the independent CPA discovered the following additional
information:
| (a) | There were goods in transit on December 31, 2022, from a supplier with terms FOB destination, costing $9,800. Because the goods had not arrived, they were excluded from the physical inventory count. | ||
| (b) | On December 27, 2022, a regular customer purchased goods for cash amounting to $1,150 and had them shipped to a bonded warehouse for temporary storage on December 28, 2022. The goods were shipped via common carrier with terms FOB shipping point. The customer picked the goods up from the warehouse on January 4, 2023. Monty Company had paid $575 for the goods and, because they were in storage, Monty included them in the physical inventory count. | ||
| (c) | Monty Company, on the date of the inventory, received notice from a supplier that goods ordered earlier, at a cost of $3,500, had been delivered to the transportation company on December 28, 2022; the terms were FOB shipping point. Because the shipment had not arrived on December 31, 2022, it was excluded from the physical inventory. | ||
| (d) | On December 31, 2022, there were goods in transit to customers, with terms FOB shipping point, amounting to $790 (expected delivery on January 8, 2023). Because the goods had been shipped, they were excluded from the physical inventory count. | ||
| (e) | On December 31, 2022, Monty Company shipped $2,400 worth of goods to a customer, FOB destination. The goods arrived on January 5, 2023. Because the goods were not on hand, they were not included in the physical inventory count. | ||
| (f) | Monty Company, as the consignee, had goods on consignment that cost $3,400. Because these goods were on hand as of December 31, 2022, they were included in the physical inventory count. |
Analyze the above information and calculate a corrected amount for
the ending inventory.
| Corrected inventory | $enter corrected inventory in dollars |
In: Accounting
You have been recently assigned as the manager for the audit of Layton Co, a software engineering company whose securities are publicly traded. You are filling in for your colleague, Luke Paolo, who has taken a sick leave at short notice.
The company's audit for the financial year ended 30 June 20Y0 is nearing completion and its draft financial statements recognize a profit before tax of $65.4 million and total assets of $27.9 million.
You are in the midst of reviewing the audit working papers and have come across the following comments from the audit senior, a part-qualified accountant:
It is a relief to have you on the team. I was starting to get anxious that our working papers would not have been reviewed in time for the clearance meeting with Layton Co's management next week. The audit junior and I have tried our level best to complete all of the procedures outlined in the audit programme but it was difficult to do so considering that Luke had already taken ill at the commencement of the audit and there was no one supervise our work. The only guidance provided by Luke during a short briefing meeting with him was to 'refer to the prior year's audit file' should we have doubts on how to proceed with the audit.
There is an issue that I wanted to run by you. During the year, Layton Co introduced a share-based payment scheme in which it granted its senior executives share appreciation rights (SARs). This area was not highlighted as being high risk during the audit planning meeting. The SARs were granted at the beginning of the financial year and their fair value as at that date was determined by an independent valuation firm. A copy of the valuation report is on file and judging by a quick search I did online, I can safely say that they are competent in doing their job as their website seems to be professionally designed.
The fair value of the SARS at the grant date was amortized over a five-year vesting period, resulting in the recognition of a straight line expense of $235,000 and a corresponding credit entry to equity reserves has been in the financial statements during the year. The amounts appear to have been appropriately recognized in the financial statements and given their immateriality, I believe that no disclosures in the notes to the financial statements are necessary in respect of the share-based scheme.'
Required:
Comment on the quality control and other professional issues that have arisen during the planning and performance of the audit of Layton Co for the financial year ended 30 June 20Y0.
In: Accounting
On 2001/6/1, Peter borrowed $6000, agreeing to pay interest at 1.7%/year compounded monthly. He paid $1200 on 2005/2/1, and $1500 on 2007/8/1. What equal payments on 2011/6/01, and 2013/12/01 will be needed to settle the debt?
Remark: Dates are given in the format YYYY/MM/DD
In: Finance
Cincinnati Paint Company sells quality brands of paints through hardware stores throughout the United States. The company maintains a large sales force who call on existing customers and look for new business. The national sales manager is investigating the relationship between the number of sales calls made and the miles driven by the sales representative. Also, do the sales representatives who drive the most miles and make the most calls necessarily earn the most in sales commissions? To investigate, the vice president of sales selected a sample of 25 sales representatives and determined:
| Commissions ($000) | Calls | Driven | Commissions ($000) | Calls | Driven |
| 19 | 140 | 2,374 | 37 | 147 | 3,293 |
| 11 | 133 | 2,227 | 43 | 146 | 3,106 |
| 33 | 146 | 2,732 | 26 | 150 | 2,127 |
| 38 | 143 | 3,354 | 39 | 146 | 2,793 |
| 25 | 145 | 2,292 | 35 | 152 | 3,211 |
| 44 | 144 | 3,451 | 12 | 132 | 2,290 |
| 29 | 139 | 3,114 | 32 | 148 | 2,852 |
| 39 | 139 | 3,347 | 25 | 135 | 2,693 |
| 39 | 145 | 2,843 | 27 | 132 | 2,935 |
| 29 | 134 | 2,627 | 22 | 129 | 2,671 |
| 22 | 139 | 2,123 | 40 | 158 | 2,991 |
| 12 | 139 | 2,224 | 35 | 148 | 2,834 |
| 46 | 149 | 3,465 |
Develop a regression equation including an interaction term. (Negative amount should be indicated by a minus sign. Round your answers to 3 decimal places.)
| Commissions = | + | Calls + | Miles + | x1x2 |
Complete the following table. (Negative amounts should be indicated by a minus sign. Round your answers to 3 decimal places.)
| Predictor | Coefficient | SE Coefficient | t | p-value |
| Constant | ||||
| Calls | ||||
| Miles | ||||
| X1X2 |
Compute the value of the test statistic corresponding to the interaction term. (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places.)
Value of the test statistic
At the 0.05 significance level is there a significant interaction between the number of sales calls and the miles driven?
| This is | , so we conclude that there | . |
In: Math
Business Forms and the Accounting Equation
A business is an organization in which basic resources (inputs), such as materials and labor, are assembled and processed to provide goods or services (outputs) to customers. A business entity may take the form of a sole proprietorship, partnership, or corporation. Regardless of the business form, the accounting equation shows the relationship among the entity's assets, liabilities, and equity.
The Accounting Equation
The details of the activities of a company, or transactions, are recorded in a company's accounting system. These transactions are summarized in a set of reports known as the financial statements. The foundation for the accounting system and the financial statements is the accounting equation.
|
Assets |
= | Liabilities + Equity |
| The left side of the accounting equation shows the economic resources of the company (what the company has). |
= | The right side of the accounting equation summarizes who provided those assets: Creditors or the owners. |
When a business is first formed, both sides of the equation are equal to zero. As transactions occur, they affect the accounting equation, but the accounting equation must always stay in balance. A transaction can increase both sides or decrease both sides. A transaction could also affect only one side by increasing and decreasing one side at the same time.
APPLYING THE CONCEPTS: Analyzing Changes to Assets, Liabilities and Equity
Thomas Company: The table below demonstrates the effect of the first three transactions for Thomas Company. Review the details of each transaction and determine the effect on the accounting equation. Then, enter the updated amounts for the assets, liabilities, and equity accounts (do not record the the transaction). Enter all amounts as positive numbers. If an updated balance is zero, enter "0".
| Transaction | Assets | = | Liabilities | + | Equity |
| Beginning | $0 | = | $0 | + | $0 |
| Investment in the Business The company issue stock in exchange for $16,000 cash. This increases the assets of the business from its zero balance. The owners (stockholders) have a claim on the assets, so equity also increases from its zero balance. Make sure the equation stays in balance. | $ | = | $ | + | $ |
| Borrow Cash The company borrows $8,000 cash from the local bank. This increases the assets from its balance after the first transaction. The company now owes the bank; therefore, the bank also has a claim on the assets. Thus, liabilities increase from their zero balance. Notice this transaction did not affect equity. The equation still needs to balance. | $ | = | $ | + | $ |
| Purchase equipment The company pays cash for a piece of equipment costing $5,000. Make sure that the equation stays in balance. Remember, the left side of the equation summarizes the total assets. The company has merely exchanged one asset (cash) for another asset (equipment); the value of each asset is the same. | $ | = | $ | + | $ |
Jones Company: Analyze the accounting equation for another business, Jones Company. Assume that the assets are $45,000 and the liabilities are $18,000. By rearranging the accounting equation, you determine that equity is $ .
During the year, the company issued additional stock for $4,000. The company also paid off $2,500 of its debt. What would the accounting equation look like at the end of the year for Jones Company? Enter the updated amounts for Jones' accounting equation below.
| Assets | = | Liabilities | + | Equity |
| $ | = | $ | + | $ |
APPLYING THE CONCEPTS: Analyzing the Effect of Revenues and Expenses
The equity component of the accounting equation can be affected by more than owner contributions. In any form of business, the owners take all revenues and expenses. Therefore, equity increases for revenue earned and decreases for expenses incurred. Also in any form of business, money can be distributed from the business to the owners. Distributions (in the form of cash or other assets) to the owners (stockholders) decrease the equity account. Smith Company had transactions affecting equity during the past year. The table below demonstrates the effect of these transactions for Smith Company. Review the details of each transaction and determine the effect on the accounting equation. Then, enter the updated amounts for the assets, liabilities, and equity accounts (do not record the the transaction). Enter all amounts as positive numbers.
| Transaction | Assets | = | Liabilities | + | Equity |
| Beginning of the year | $350,000 | = | $105,000 | + | $245,000 |
| Revenues earned: During the year, Smith Company earned revenues totalling $210,000. The cash has been collected from the customers for all revenue earned this year. | $ | = | $ | + | $ |
| Expenses incurred: Smith Company incurred expenses totalling $147,000 during that same year. All of the expenses incurred this year were paid in cash. | $ | = | $ | + | $ |
| Distributions: At the end of each quarter, the company paid dividends to the stockholders. The sum of those quarterly dividends was $6,300. | $ | = | $ | + |
$ |
In: Accounting
Construct a critique of the following including at least 1 strength and 1 weakness of the proposed new strategy.
CVS is a very successful company that has been one of the leading publicity owned companies in the US. There headquarters is based out of Woonsocket, R.I. A company that has over 290, 000 employees that help to ensure the success of the company everyday. CVS aims to be a leading company that will provide the testing that is needed globally for the corona virus by allowing drive in testing. By providing testing to those that may not be able to get it regularly they will be able to save more individuals. This company always go up and beyond for their customers they provide services that are able to be affordable for the purchase of their medications. I use them on a regular basics when I need a prescription refills they are very professional and they never disappoint. The company should do a review of how their profit is doing every five years so that they can get a idea of new methods or ideas that can be introduced.
Where i currently work at we have a Suggestion box that my Director always check to get an idea of what the customers will like to see change or use it as way that they can show their employees that they are appreciated by appointing an employee of the month by doing so that may drive the employees that may not feel appreciated to see that the company that they give all they time that they could be spending with their families especially on holidays. I also feel that the company should come up with in store events that would draw the attention to customers that may not be a regular customer. When i was in the Navy there were times that I really regretted signing up because I felt like my command didn't appreciate me so i was ready to get out, then i met a manager that appreciated his employees and would constantly tell us without us he wouldn't be anything.
In: Operations Management
A juice manufacturer conducted a marketing study three years ago to determine the consumers’ preferences for different type of juices including organic juices. This study was very extensive and detrimental in their decision to start a new organic juice division today. It cost them $1,000,000 to perform this study.
The company is considering introducing organic juices. The company will add a new assembly line in order to produce the organic juices separate from their existing assembly line for regular non-organic juices.
The project has an anticipated life of 4 years.
The new assembly line has a cost of $1,500,000. It will require $500,000 to customize it to the new specifications for organic juice production, and $100,000 for transportation and shipping to the company’s plant.
The new machine falls into 5-years MACRS category (20%, 32%, 19.2%, 11.52%, 11.52% and 5.76%).
The organic juice production will require inventories to increase by $1,000,000 at time 0; in addition, accounts payables and accruals will increase by $450,000 and $150,000 respectively.
The organic juice is expected to generate sales revenue of $700,000 million the first year. The revenue is expected to increase by $300,000 every year. Each year the operating costs (excluding depreciation) are expected to equal 50 percent of sales revenue.
In order to do this expansion, the company will borrow $3 million. The annual interest expense on this borrowing $400,000.
The organic juice is expected to decrease the company’s existing non-organic juice sale by $350,000 per year before tax basis.
The company can sell the new machine at the end of 4 years for $50,000 in the market. The company’s cost of capital is 12 percent. The company’s tax rate is 40 percent.
What is the initial investment CF0?
What is the CF1 to be used in NPV calculations?
What is the non-operating cash flow for year 4?
What is cash flow 4 to be used in NPV calculations?
What is the NPV of the project?
In: Finance
| During its first month of operation, the Bethany's Bicycle Corporation, which specializes in bicycle repairs, completed the following transactions. | ||||
| March Transactions | ||||
| Date | Transaction Description | |||
| March 1 | Began business by making a deposit in a company bank account of $20,000, in exchange for 2,000 shares of $10 par value common stock. | |||
| March 1 | Paid the premium on a 1-year insurance policy, $2,400. | |||
| March 1 | Paid the current month's store rent expense, $1,900. | |||
| March 3 | Purchased repair equipment from Andrew Company, $5,800. Paid $1,000 down and the balance was placed on account. Payments will be $400.00 per month for 12 months. The first payment is due 4/1. Note: Use Accounts Payable for the Balance Due. | |||
| March 8 | Purchased repair supplies from Jackson Company on credit, $650. | |||
| March 10 | Paid telephone bill for March, $340. | |||
| March 11 | Cash bicycle repair revenue for the first third of March, $1,650. | |||
| March 18 | Made payment to Jackson Company, $400. | |||
| March 20 | Cash bicycle repair revenue for the second third of March, $2,450. | |||
| March 31 | Cash bicycle repair revenue for the last third of March, $1,250. | |||
| March 31 | Paid the current month's electice bill, $250. | |||
| March 31 | Declared and paid cash dividend of $1,000. | |||
|
Requirement #8: Prepare the closing entries at
March 31 in the General Journal below. Hint:Use the
balances for each account which appear on the
Adjusted Trial Balance for your closing entries. |
||||
| Requirement #9: Post the closing entries to the T-Accounts on the General Ledger ( Step 2) worksheet and compute ending balances. Just add to the adjusted balances already listed. |
In: Accounting
The average expenditure on Valentine's Day was expected to be $100.89 (USA Today, February 13, 2006). Do male and female consumers differ in the amounts they spend? The average expenditure in a sample survey of 58 male consumers was $139, and the average expenditure in a sample survey of 33 female consumers was $61.31. Based on past surveys, the standard deviation for male consumers is assumed to be $33, and the standard deviation for female consumers is assumed to be $20. The z value is 2.576 . Round your answers to 2 decimal places. a. What is the point estimate of the difference between the population mean expenditure for males and the population mean expenditure for females? b. At 99% confidence, what is the margin of error? c. Develop a 99% confidence interval for the difference between the two population means. to
In: Statistics and Probability