Based on information given in the attached Excel document, 1. Prepare journal entries and adjusting entries for September 2019 for your company. 2. Set up T-accounts and post your journal entries and adjusting entries to T-accounts. 3. Prepare your company’s pre-closing trial balance, as of September 30, 2019. 4. Prepare an income statement, in a good format, for the month of September 2019 for your company. 5. Prepare a statement of retained earnings, in a good format, for the same period. 6. Prepare a balance sheet, in a good format, as of September 30, 2019 for your company. 7. Prepare closing entries and a post-closing trial balance, as of September 30, 2019.

Description of the Business Activity:

1. You, the owner(s), contributed $1,000 cash to the business on September 1. 2. On September 1, your company borrowed $21,000 from a local bank, on a 10% note for 5 years. The interest would be paid semi-annually on each March 1 and September 1. 3. On September 1, your company paid $900 fees to local government agencies for business licenses and permits, for a period of one year. 4. On September 1, your company acquired a mobil cart, a business sign, and some other equipment for a total of $4,200 (all paid in cash). You estimated that the lifetime of these PP&E was 2 years with a residual value of $200. 5. On September 1, your company also paid $1,500 for its annual insurance, starting September 1. 6. During September, your company acquired merchandise, totaled $35,000. At the time of purchases, 70% of the merchandise was acquired on account. Your company promised to pay the remaining balances in 20 days. 7. For merchandise purchases in Transaction 6, toward the end of September, your company also paid in cash, an additional 20% of the total merchandise prices to its suppliers. 8. During September, your company delivered merchandise and earned $50,000 sales revenue, of which 30% was on credit. Cost, to your company, of the merchandise sold, was $27,000. 9. On September 26, your company also signed a sales contract with a customer, Mini-Soda Company to deliver a total of $5,000 merchandise on October 7, 2019. Your company collected $2,000 cash in advance from this customer on September 26. 10. By the end of September, your company collected 50% of its accounts receivables from various customers from the abovementioned Transaction 8. 11. By the end of September, your company incurred and paid a total of $8,000 in cash for its other selling expenses (including advertising, marketing, payroll, cart transportation, trailer rental, etc.).

Additional Information:

12. Your company incurred monthly interest expense on its debt borrowing as described in Transaction 2. 13. At the end of September, your prepayment, from Transaction 3, on business licenses and permits expired for the month. 14. As described in Transaction 4, your company's PP&E had an estimated life of 2 years with a $200 residual value. Your company used the straight-line depreciation method. 15. At the end of September, your prepayment, from Transaction 5, on insurance expired for the month. 16. At the end of September, your company estimated 10% of its outstanding accounts receivables as possible uncollectible. 17. The income tax rate was 20% for your company, which would be paid in March 2020.

By using SWOT analysis identify 6 strengths, 3weaknesses, 1 opportunity, and 2 threats. Then to write an analytical text for the case study. Johnson & Johnson Consumer Products, INC. Johnson & Johnson is a household name in baby-care as well as medical products. Nearly every family in the United States has in its house at least one product made by this company. Founded in 1885, Johnson & Johnson is currently an international enterprise, with 170 affiliated companies in fifty-five countries. J&J enjoys a reputation for high-quality products and business integrity. Consumers feel that they can trust J&J products. Trust is a big issue for a firm that makes pharmaceuticals. Customers must believe that the products improve, not endanger, their health. J&J makes a big thing of its credo statement, a four-paragraph guiding philosophy that outlines a commitment to business integrity. According to its credo, the J&J company is required to place a high priority on the needs of customers. Protecting customers is the company’s first concern. All was well until J&J received news that its leading product, Tylenol capsules, had been contaminated with lethal poison. In the United States, Tylenol and other mild pain relievers are sold in the pharmacies and other stores over-the-counter, that is, without a doctor’s prescription. Mr. David Clare, the president of J&J, said that someone had opened the capsules and poisoned them with cyanide. The fact that seven people in the Chicago area died when they took Extra-Strength Tylenol, a common pain-relieving medicine made by J&J, shocked people all over the world. People all over the world were horrified by the deaths of seven innocent people who took Tylenol capsules laced with deadly cyanide. It seemed that anyone could have bought those deadly pills, and anyone could have died from ingesting them. This element of randomness was particularly frightening. After seven innocent people died from taking contaminated Tylenol, sales of the painkiller fell dramatically. The non-aspirin drug’s share of the $1.2 billion painkiller market fell from 35 percent to 7 percent. In a poll, a majority of Tylenol users said they probably would never return to the capsule. But J&J responded to the frightening incident in a notable way. Its executives took a decision that turned out to be not only ethical but profitable, too. Going against all odds, the chairman of J&J decided to spend whatever millions it would cost to recall 31 million bottles of Tylenol capsules from store shelves across the United States. The day after J&J learned that some of its popular Tylenol capsules had been poisoned, the company started withdrawing 31 million bottles of Tylenol from country. They were afraid that other bottles might have been tampered with. Official at the Food and Drug Administration, the U.S. government agency that approves products for sale to the public, feared that the recall would increase the panic already touched off by the poisoning deaths of seven Chicago-area residents who had taken capsules that had been laced with cyanide. The FBI argued that such an expensive action would demonstrate to potential terrorists that they could bring a $5.9 billion corporation to its knees . But J&J chairman’s decision prevailed, and his move proved to be decisive in a remarkable and unparalleled win back of public confidence in his company’s product… Tylenol regained more than 80 percent of the market share it held before the still unsolved poisoning. As a result of the seven deaths in Chicago, Illinois, J&J was able to play a significant role in affecting positive changes in the U.S. pharmaceutical industry and in government regulation of that industry. The company began redesigning the package to restore public confidence. Within twenty-four hours, J&J had contacted many of the companies that would be involved in the redesign. By the end of the week, J&J had decided that the new Tylenol bottle would have three barriers to prevent tampering: a glued box, a ‘shrink’ neckband and an inner seal. To get Tylenol back on the market, J&J spent $ 1 million on engravers to redesign 650 pieces of artwork for the product. Cartons and sealing equipment cost more than $ 5 million during the first few weeks. By the fifth week after the Chicago deaths, the first 500,000 units of the new tamper-resistant Tylenol package were produced. While J&J led industry efforts to protect consumers, the Food and Drug Administration began developing stronger packaging regulations. As a result, all capsules and liquid drugs must now come in tamper-resistant packages. These guidelines do not only protect the consumer but also the pharmaceutical companies such as J&J. Four years after the first incident, another person died after taking poisoned Tylenol from so-called tamper-resistant package. J&J is faced again with the problem of winning back the public trust. To do this, it must get the media on its side.

Your firm is the incumbent auditor on Biotech Ltd, a pharmaceutical company. Since the previous audit, the company has listed on the Australian Securities Exchange which means the company has to meet additional reporting regulations. Due to rapid growth, Biotech Ltd is financially stretched and its accounting systems are struggling to cope with the growth in the business. You recently read an article in the Australian Financial Review, which stated that Biotech Ltd is currently under investigation by the Australian Taxation Office (ATO) for alleged failure to pay the appropriate amount of Pay As You Go (PAYG) tax on their payroll.

Biotech Ltd is a pharmaceutical company, developing drugs to be licensed for use around the world. Products include medicines such as tablets, medical gels and creams. The market is very competitive, encouraging rapid product innovation. New products are continually in development and improvements are made to existing formulations. Drugs must meet very stringent regulatory requirements prior to being licensed for production and sale. You are aware that during the 2020 financial year, Biotech Ltd lost several customer contracts to overseas competitors.

Biotech Ltd approached its bank during the year to extend its borrowing facilities. An extension of $20 million was sought to its existing loan to support the on-going development of new drugs. The long-term borrowings are subject to debt covenants in which the company must maintain a current ratio of 3.5:1.

In addition, the company asked the bank to make cash of $5 million available if an existing court case against the company is successful. The court case is being brought by an individual who suffered severe side effects when participating in a clinical trial in 2016.

On 8 June 2020, the Company announced to the market it had been the victim of a cyber-security incident that resulted in supplier and customer details being disclosed on the dark web. The Company is assessing the costs of the incident and the subsequent reduction in revenue. The Company expects this to have a material impact on future earnings.

Minutes from the Audit Planning meeting with Simon Jones (Finance Director of Biotech Ltd) held on 30^th April 2020:

Due to the current government restrictions, the planning meeting with Simon Jones was held via Zoom. In attendance at the meeting was the Audit Partner (Michael), the Audit Manager (Amanda) and the Audit Senior (David).

The following key items were discussed during the meeting:

• Mr Jones raised concerns about the conduct of the previous audit, stating numerous examples of when he and his staff had been interrupted when they were busy. He stated that he wanted guarantees that this year's audit will be more efficient, less intrusive and cheaper, otherwise he will seek an alternative auditor in future.
• Michael reminded Mr Jones that fees relating to the audit engagement from the previous year were still outstanding.
• Both Michael and Mr Jones also discussed the range of non-audit services provided to Biotech Ltd, which includes payroll preparation, tax computation and advice.
• Mr Jones gave the audit team an update on the court case pertaining to the individual who suffered severe side effects from a company trial (refer above). According to legal advice provided to Mr Jones by the company’s legal counsel, it is more likely than not that Biotech will lose the court case, which would result in a significant amount of cash having to be paid as a settlement.
• Amanda asked Mr Jones if he considered the decline in profitability as an indicator of a material uncertainty surrounding the going concern assumption. Mr Jones responded by saying, “Look, everything might seem dire, but we have it under control. We will be here this time next year, so keep that in mind”. Michael then looked at Amanda and David and said, “Make sure that you mention the conversation that we have just had with Mr Jones about the appropriateness of the going concern assumption in the audit working papers. This should be sufficient enough audit evidence for us.”
• Mr Jones also mentioned the following: “As you know, Biotech Ltd has a Goodwill asset on the balance sheet. This is an indefinite useful life intangible asset. In accordance with the Accounting Standards (AASB 138), we are required to test the asset for impairment every year. We usually prepare a Value in Use calculation based on discounted future cash flows that we expect to generate in the next five years. I have completed this year’s calculation by rolling forward the prior year’s calculation and have just updated the dates. There was no need to update the future cash flow figures.”

The Audit Team

The audit team consists of 4 people. The partner is Michael. He has been the audit partner on the Biotech Ltd audit for 6 years. The audit manager is Amanda. This is Amanda’s first time on the Biotech Ltd audit. David is the audit senior and is responsible for the initial audit planning. David has recently completed the Graduate Diploma of Chartered Accounting. David has just been offered a well-paying accountant position at Biotech but he has not yet decided whether to accept the position. The graduate on the audit is Audrey. Audrey’s friend is the receptionist at Biotech Ltd. The receptionist has no accounting knowledge and has no involvement with the recording or processing of accounting transactions.

Accounts Receivable / Sales Accounting Cycle and Internal Control System

At the end of each month, the sales manager determines the amount of products required to meet sales demand for the following month based on sales orders received. He reviews the sales orders received from customers and then prepares the pre-numbered inventory requisition forms, which he then sends to the warehouse managers so that they can prepare the goods for delivery. One copy of the sales order and inventory requisition form is sent to the warehouse, one copy is sent to the accounts receivable department and one copy is filed in the sales department.

The warehouse prepares the goods for delivery to the customers and generates the delivery document. When the goods have been delivered, the signed delivery document, which includes the delivery details, is forwarded to the accounts receivable department. The other copy is filed in the warehouse. The accounts receivable clerk matches the signed delivery document with the sales order and inventory requisition form. Once satisfied that all of the details agree, the clerk generates the sales invoice. Once generated, the clerk does another check to ensure that all details per the sales invoice agrees to the delivery document and sales order. Once satisfied, she writes “checked” on the sales invoice and sends it to the customer. At the end of every week, a different clerk in the Accounts Receivable team reviews the bank statements for receipt of payments from customers and performs a reconciliation against the sales invoices. Once a customer has paid the sales invoice, the clerk stamps “received” on the sales invoice and files that along with all the other documents in date order.

The walk-through of the accounts receivable/sales cycle confirmed that the accounting and internal control system was working as documented above.

Test of control:

As part of the audit, Audrey tested the controls over the accounts receivable system. She selected a sample of twenty sales transactions and tested the control that all details had been checked. Out of the 20 sales transactions that were selected for testing, 5 sales invoices in the sample did not have the word “checked” written on them. When documenting the results of the test performed, Audrey concluded that the internal control did not operate effectively and consistently throughout the year but that no further audit work is required.

Substantive test

In order to test the occurrence of the sales transactions, Audrey selected a sample of sales invoices and traced them to the General Ledger to test that they were properly recorded.

Subsequent events not previously mentioned

• One of Biotech Ltd’s major customers went into liquidation in July 2020. The balance due from the customer at 30 June 2020 was $564,000. This is a material amount. There has been no provision/allowance for doubtful debts raised for this debtor in the financial statements for the year ended 30 June 2020. Biotech Ltd’s legal adviser stated in a telephone call that that the probability of any funds being received from the debtor is remote.

• On 2 July 2020, Biotech Ltd declared a one-for-five rights issue of 100,000 shares at $2.20. These shares were payable in full on 31 July 2020.

Misstatements identified

What is the audit opinion for the above case study?

It is understandable why we have insurance to cover catastrophic losses. Not many of us have hundreds of thousands of dollars laying around. Interestingly, there are many individuals who have insurance to cover small expenses (i.e. dental. Vision). This will be the topic of this week’s discussion. First, discuss the reasons why a person would purchase insurance vs being self-insured. Next discuss why someone would choose to have coverage for a small claim. Be sure to briefly mention the three reasons listed in your textbook. Do you think the cost of the premium is worth it based upon how much it would cost out of pocket to get dental, vision, etc.?

Your firm has a client who has been a management accountant for many years and is now also teaching part-time at TAFE and has recently acquired a rental property. We prepared his Tax Return, sent it out for signature. He has sent the Tax Return back to us unsigned, saying that we had made an error in claiming a tax deduction for the interest and expenses for the first four months that he owned the rental property, as it was not earning income at the time, as it runs counter to the matching principle. Required: Your manager has asked you to prepare an essay exploring this issue. Explaining to the client diplomatically that he is in error

The day after Pres. Trump was surprisingly elected in 2016, the US Treasuries yield curve got steeper. There was no change in short-term interest rates. Trump’s election surprised everyone. Trump, unlike his opponent Secretary Clinton, had promised a big tax cut. Why did the surprise election of a candidate who promised a big cut in taxes cause the yield curve to get steeper, even though it would be a full year before the tax cut bill was written, voted on, signed into law, and implemented? Would the effect on the yield curve have been the same if Trump’s election had been widely anticipated, rather than the surprise it was? Explain.

1. Mainstream economics teaches us that market competition is the most efficient way to regulate the production and distribution of commodities. And yet, many who are critical of President Trump’s policies have argued for the government to command enterprises to produce what is needed for this public health emergency and then distribute the goods according to need.

In one paragraph, briefly give me at least two reasons why it might make sense for the government to suspend the market and take control of the production and distribution of goods.

In a second paragraph, explain what problems a government’s command and control policies might cause.

In a final paragraph, tell me whether or not you think the critics of President Trump are correct.

1. An example of a tangible product is a) consulting advice b) the symphony c) banking d) clothing e) travel

2. What are the most important demographic trends to be considered by toy manufacturers? a) Extending life expectancy b) Growing urban population c) Declining birth rates d) Growing international migration e) Rise of single-women households

3. An example of a tangible product is a) consulting advice b) the symphony c) banking d) clothing e) travel

4. The US-China trade war and tariffs will mostly affect companies who manufacture their products in the US a) True b) False

5. Brands depicted as points in the positioning matrix close together are those perceived as a) expensive b) high-quality c) similar d) different

6. Recent outbreak of coronavirus COVID-19 can be classified as a __________ environment factor a) Technological b) Economic c) Political d) Demographic e) Natural

7. Jen is developing the positioning for a new line of sunglasses. In a meeting, the marketing team tells Jen that she has clearly expressed the competitive advantage of the brand so that it can be used in dialogues and communications. Which element of crafting the positioning has Jen’s team just approved? a) positioning statement b) target marketing c) target segmenting d) unique selling proposition

8. P&G introduced Folger’s Instant Coffee Singles for people who live alone and don’t need to brew a full pot of coffee at a time. This is segmentation based on: a) Income b) Social class c) Family life cycle d) Culture e) Personality