Planner Corporation owns 60 percent of Schedule Company’s voting shares. During 20X3, Planner produced 25,000 computer desks at a cost of $82 each and sold 10,000 of them to Schedule for $94 each. Schedule sold 7,000 of the desks to unaffiliated companies for $130 each prior to December 31, 20X3, and sold the remainder in early 20X4 for $140 each. Both companies use perpetual inventory systems.

Required:
a. What amounts of cost of goods sold did Planner and Schedule record in 20X3?

b. What amount of cost of goods sold must be reported in the consolidated income statement for 20X3? (Do not round intermediate calculations.)

c. Prepare the worksheet consolidation entry or entries needed in preparing consolidated financial statements at December 31, 20X3, relating to the intercorporate sale of inventory. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.)

d. Prepare the worksheet consolidation entry or entries needed in preparing consolidated financial statements at December 31, 20X4, relating to the intercorporate sale of inventory. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.)

e. Prepare the worksheet consolidation entry or entries needed in preparing consolidated financial statements at December 31, 20X4, relating to the intercorporate sale of inventory if the sales were upstream. Assume that Schedule produced the computer desks at a cost of $82 each and sold 10,000 desks to Planner for $94 each in 20X3, with Planner selling 7,000 desks to unaffiliated companies in 20X3 and the remaining 3,000 in 20X4. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.)

1. Because of the small size of the company and the limited number of accounting personnel, Dry Goods Wholesale Company Ltd. initially records all acquisitions of goods and services at the time that cash disbursements are made. At the end of each quarter when financial statements for internal purposes are prepared, accounts payable are recorded by adjusting journal entries. The entries are reversed at the beginning of the subsequent period. Except for the lack of a purchasing system, the controls over acquisitions are excellent for a small company. (There are adequate prenumbered documents for all receipt of goods, proper approvals, and adequate internal verification wherever possible.)

   Before the auditor arrives for the year-end audit, the bookkeeper prepares adjusting entries to record the accounts payable as of the balance sheet date. The aged trial balance is listed as of the year-end, and a manual schedule is prepared adding the amounts that were entered in the following month. Thus, the accounts payable balance equals the aged trial balance plus the following month’s journal entry for invoices received after the year-end. All vendors’ invoices supporting the journal entry are retained in a separate file for the auditor’s use.

   In the current year, the accounts payable balance has increased dramatically because of a severe cash shortage. (The cash shortage apparently arose from expansion of inventory and facilities rather than lack of sales.) Many accounts have remained unpaid for several months, and the client is getting pressure from several vendors to pay the bills. Since the company had a relatively profitable year, management is anxious to complete the audit as early as possible so that the audited statements can be used to obtain a larger bank loan.

Required

1. Explain how the lack of a complete aged accounts payable trial balance will affect the auditor’s tests of controls for acquisitions and cash disbursements.

2. What should the auditor use as a sampling unit in performing tests of acquisitions?

3. Assume that no misstatements are discovered in the auditor’s tests of controls for acquisitions and cash disbursements. How will that assumption affect the verification of accounts payable?

4. Discuss the reasonableness of the client’s request for an early completion of the audit and the implications of the request from the auditor’s point of view.

5. List the audit procedures that should be performed in the year-end audit of accounts payable to meet the cutoff objective.

6. State your opinion as to whether it is possible to conduct an adequate audit in these circumstances.

Using the Aggregate Demand-Aggregate Supply graphical analysis, show what happens in the short and long-run if the fiscal policy authorities increase government spending. Start your analysis in long-run equilibrium and label this point A. Does crowding out happen here? Explain.

Which one of the factors is not likely to be associated with the large US trade deficit:

a. Low savings rate in the US

b. High spending rate, relative to income levels in the US

c. Low investment opportunity in the US

d. High value of the US dollar

please explain!

Answer the following questions assuming known IS and LM curves.

Derive the associated aggregate demand (AD) curve.

Why does it have a negative slope?

What is the effect of an increase in government spending on the AD curve?
  

What is the effect of an increase in real money balances on the AD curve?

Visit the Fed's Summary of Commentary on Current Economic Conditions (Links to an external site.)Links to an external site., also known as the Beige Book. Prepare a proposal recommending monetary policy actions designed to correct problems with spending, employment, and prices. Defend your choices. 2019

Does fiscal policy have a strong impact on aggregate demand? Did the shift of the federal budget from deficit to surplus during the 1990s weaken aggregate demand? Did the government spending increases and large budget deficit of 2008-2011 strengthen aggregate demand? Discuss.

What are the four components of GDP?, Which is the largest component?, What does this largest component's spending represent? What is the largest component of the largest component? What effect do changes is this component have on overall GDP? Why? Do you think the economy is in a recession? Why?

The current healthcare reform (i.e. Trumpcare) removes the ACA penalty on uninsured and provides more tax credits (health spending and saving deduction) ) to encourage purchase of health insurance. How will it work better or worse in covering more insured? Please explain briefly in language of economics.