The Daily Show. A 2010 Pew Research foundation poll indicates that among 1,099 college graduates, 33% watch The Daily Show. Meanwhile, of the 1,110 people in the poll with a high school degree but no college degree, 22% watch The Daily Show. A 95% confidence interval for pCollegeGrad−pHighSchoolpCollegeGrad−pHighSchool, where pp is the proportion of those who watch The Daily Show, is (0.07, 0.15). Based on this information, determine if the following statements are true or false, and explain your reasoning if you identify the statement as false.

1. At the 5% significance level, the data provide convincing evidence of a difference between the proportions of college graduates and those with a high school degree or less who watch The Daily Show.  ? True False

2. We are 95% confident that 7% less to 15% more college graduates watch The Daily Show than those with a high school degree or less.  ? True False

3. 95% of random samples of 1,099 college graduates and 1,110 people with a high school degree or less will yield differences in sample proportions between 7% and 15%.  ? True False

4. 90% confidence interval for pCollegeGrad−pHighSchoolpCollegeGrad−pHighSchool would be wider.  ? True False

5. A 95% confidence interval for pHighSchool−pCollegeGradpHighSchool−pCollegeGrad is (-0.15,-0.07).  ? True False

Pool Corporation, Inc., reported in its recent annual report that "In 2010, our industry experienced some price deflation. . . . In 2011, our industry experienced more normalized price inflation of approximately 3.5% overall despite price deflation for certain chemical products.'' This suggests that in some years Pool’s overall inventory costs rise, and in some years they fall. Furthermore, in many years, the costs of some inventory items rise while others fall. Assume that Pool has only two product items in its inventory this year.

Purchase and sales data are presented below.

Required:

1. Compute cost of goods sold for each of the two items separately using the FIFO and LIFO inventory costing methods.

2. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow)?

Consider each of the following independent and material situations. In each case:

• the financial report date is 31 December 2019;

• the field work was completed on 12 February 2020;

• the directors declaration and the audit report were signed on 19 February 2020; and

• the completed financial report accompanied by the signed audit report were mailed to shareholders on 18 March 2020

A. You are an auditor pf PP Limited (PP), a company specialising in industrial property development. On 10 February 2020, you become aware that a major overseas investor has informed the management of PP of their intention to withdraw their investment in a proposed major development. On the basis of its discussions with the investor and previously pledged funds from them, PP has incurred substantial costs in feasibility studies, structural engineering reports and architectural plans. A significant portion of these costs has been capitalised. The management is dependent on finding a new investor to be able to meet these expenses and to continue with the project.

B. You are the auditor of XY Limited (XY), a manufacturing client. XY has plans to upgrade its manufacturing process and plans to finance this by a sale of property which is superfluous to its needs, situated next to its head office. The property has been subdivided for the purposes of the sale and placed on the market in December 2019. On 25 January 2020, the state government approved a plan for the construction of an express freeway. The plan will result in the appropriation of a portion of the property owned by XY and subdivided for the purpose of sale. Construction of the freeway will begin in late 2020. No estimate of the compensation payment is available.

C. You are an auditor of Q limited (Q), a major public company involved in the property development industry. Prior to signing your audit report you sought a letter of comfort from Q’s bankers that the bank would continue to support Q by providing finance over the coming year. The bank agrees that it would continue to provide finance. It was your view that without such support Q had severe cash flow problems and the financial report would need to be modified with respect to a going concern assumption. On 15 March 2020, the company’s bankers wrote to you advising that the company had breached its loan covenant with the bank in February 2020 and that the loan facility was now due and payable and would not be renewed.

D. You are the auditor of Turbo Limited (Turbo), a professional services client. On 15 January 2020, Turbo settled and paid a personal injury claim to a former employee as the result of an accident that occurred in September 2017. The company had not previously recorded a liability for the claim.

E. You are the auditor of Charge Limited (Charge), an automobile parts manufacturer. On 2 February 2020, Charge agreed to purchase for cash the outstanding shares of Electronic Fuel Injection Limited. The acquisition is likely to double the sales volume of Charge.

Required: For each of the events A to E:

1. Outline the required treatment in the financial report, if any. Justify your answer. (5 X 2 Marks = 10 Marks)

2. Determine whether additional audit evidence needs to be obtained. If so, describe the nature of the audit evidence to be obtained and the audit procedures used to obtain it. (5 X 2 Marks = 10 Marks)

3. If no action is taken by management, determine the most appropriate audit report to be issued.

Beniluz Company was formed on July 1, 2016. It was authorized to issue 1,000,000 shares of $5 par value common stock and 200,000 shares of 4% $100 par value, cumulative and nonparticipating preferred stock. Beniluz Company has a July 1-June 30 fiscal year. The following information relates to the stockholders’ equity accounts of Penn Company: Common Stock Prior to the 2020-21 fiscal year, Beniluz Company had 304,000 shares of outstanding common stock issued as follows: 1. 220,000 shares were issued for cash on July 1, 2016, at $24 per share. 2. On August 4, 2018, 24,000 shares were exchanged for an office building and warehouse which had a book value in the seller’s book of $431,000 and had an estimated fair value of $627,000 on August 4, 2018. 3. 60,000 shares were issued on November 1, 2019, for $29 per share. During the 2020-21 fiscal year, the following transactions regarding common stock took place: 1. August 31, 2020 - Beniluz purchased 5,000 shares of its own stock on the open market at $30 per share. Beniluz uses the cost method for treasury stock. 2. December 1, 2020 - Beniluz declared a 6% stock dividend for stockholders of record on December 20, 2020, to be issued on January 15, 2021. Beniluz was having a liquidity problem and could not afford a cash dividend at the time. Beniluz ‘s common stock was selling at $28 per share on December 1, 2020. 3. June 20, 2021 - Beniluz sold 1,500 shares of its own common stock that it had purchased on August 31, 2020 for $36,000. Preferred Stock Beniluz issued 20,000 shares of preferred stock at $105 per share on October 1, 2019. 2 Cash Dividends Beniluz has followed a schedule of declaring cash dividends in December and June, with payment being made to stockholders of record in the following month. The cash dividends which have been declared since inception of the company through June 30, 2021, are shown below. Date Common Preferred 6/1/2018 $ 0.50 $ 2.00 12/1/2019 $ 0.50 $ 2.00 6/1/2020 $ 0.40 $ 2.00 12/1/2020 - $ 2.00 Dividend per Share No cash dividends were declared during June 2021 due to the company’s liquidity problems. Retained Earnings As of June 30, 2020, Beniluz Retained Earnings account had a balance of $824,000 and the Accumulated Other Comprehensive Income account had a credit balance of $136,000. For the fiscal year ending June 30, 2021, Beniluz reported net income of $32,000 and an unrealized loss correctly recorded as Other Comprehensive Income for the amount of $12,000. Instructions Prepare, in good form, the Stockholders’ Equity section of the Balance Sheet, including appropriate notes, for Beniluz Company as of June 30, 2021, as it should appear in its annual report to the shareholders.

19. Consider a company which purchases a machine for £25′000. The machine can be used to produce a good for 4 years. After 4 years, it has a disposal or resell value of x which is subject to taxation. The company operates in a country where the tax code allows for a 20% Writing Down Allowance (WDA) on capital expenditures. Which of the following statements is not correct?

    1. a) The Written Down Value at the end of Year 1 is £20′000, with a Writing Down Allowance in Year 1 of 5000.

    2. b) The Written Down Value at the end of Year 4 is £9980.

    3. c) If we have for the resell value x that x= 8000, the company is eligible for a balancing

       allowance in Year 4.

    4. d) If we have for the resell value x that x= 12′000, the company is liable for a balancing charge in Year 4.

    5. e) The Writing Down Allowance in Year 3 is 3200.

19. Consider a company which purchases a machine for 35000. The machine can be used to produce a good for 5 years. After 5 years, it has a disposal or resell value of x which is subject to taxation. The company operates in a country where the tax code allows for a 20% Writing Down Allowance (WDA) on capital expenditures. Which of the following statements is not correct?

    1. a) The Written Down Value at the end of Year 1 is 28000, with a Writing Down Allowance in Year 1 of 7000.

    2. b) The Written Down Value at the end of Year 5 is 11468.80.

    3. c) If we have for the resell value x that x= 20000, the company is liable for a balancing charge

       in Year 5.

    4. d) If we have for the resell value x that x= 15000, the company is liable for a balancing allowance in Year 5.

    5. e) The Writing Down Allowance in Year 2 is 5600.

1. In a system design the electrons are accelerated from rest through a potential difference of 250 V. The electrons travel along a curved path because of the magnetic force exerted on them, and the radius of the path is measured to be 5 cm long. If the magnetic field is perpendicular to the beam what is the linear speed of the electrons, what is the angular speed of the electrons and what is the magnitude of the magnetic field in this system, respectively?

A. 9.4 x 106 m/s, 188 x 106 rad/s, 107.5 x 10-6 T
B. 2.4 x 103 m/s, 2.61 x 105 rad/s, 13.6 x 10-4 T
C. 6.8 x 107 m/s, 1.82 x 107 rad/s, 22.7 x 10-3 T
D. 1.2 x 107 m/s, 214 x 107 rad/s, 9.4 x 10-4 T

2. What is the direction of magnetic force created by a moving particle?
A. Same direction with the velocity of the particle
B. Same direction with the magnetic field
C. Direction of the vectoral product of charge of the particle and the magnetic field
D. Direction of the vectoral product of velocity of the particle and the magnetic field

3.

What is the magnetic force created by a current carrying wire? (Please choose two corrert answers)

A. Different than zero on a closed loop  
B. Zero on a closed loop  
C. Depends on the angle between the length vector and magnetic field lines  
D. Depends on the angle between the length vector and velocity vector

4.

What did Oersted discovered?

A. Magnetic force created by a closed loop
B. Magnetic force of a charged particle
C. Compass needle is deflected by a current carrying wire
D. Magnetism of a charged particle

The following transactions occurred for White Rock Ltd during year ended May 31, 2020.

As of the start of the year, June 1, 2019, White Rock had $3,500 of automotive

supplies on hand. During the year, it purchased $9,100 in automotive supplies. At

year end, $1,300 of automotive supplies were on hand.

On October 31, 2019, White Rock purchased $88,000 of automotive repair

equipment on account. The equipment has an 8-year useful life.

White Rock signed an agreement to rent warehouse space, starting on February 1,

2020. White Rock paid $8,250 to its new landlord on that date, for six months of

rent paid in advance.

White Rock sold equipment it doesn’t need to another business for $45,000 (e.g.

credit equipment) on March 1, 2020. The buyer paid $5,000 in cash and signed a

9%, 9-month promissory note for the remaining $40,000. The amount owed plus

accrued interest will be received from the buyer on November 30, 2020.

White Rock is open seven days a week. Employees are paid $4,900 in salaries

every two weeks. Employees were last paid on Friday, May 25 (up to and

including Friday of that week). Employees will next be paid on Friday, June 8.

For journal entries, write all your calculations instead of explanations. Record the

journal entries in proper form using the attached blank general journal sheets. Do

not abbreviate the names of the ledger accounts. Marks may be deducted for any

journal entries that do not show calculations.

REQUIRED

(a) Prepare the journal entries to record transactions on October 31, 2019, and

March 1, 2020.

(b) Prepare year-end adjusting journal entries that should be made on May 31,

2020.

(c) Show the presentation of the automotive repair equipment on the May 31,

2020 classified balance. sheet in proper form (e.g. don’t forget the

classification name).

(d) Prepare the journal entry to record payment of employee salaries on Friday,

June 8th