In: Finance
Pitman Company is a small editorial services company owned and operated by Jan Pitman. On October 31, 2019 the end of the current year, Pitman Company’s accounting clerk prepared the following unadjusted trial balance:
Pitman Company
UNADJUSTED TRIAL BALANCE
October 31, 2019
| ACCOUNT TITLE | DEBIT | CREDIT | |
|---|---|---|---|
|
1 |
Cash |
7,710.00 |
|
|
2 |
Accounts Receivable |
37,935.00 |
|
|
3 |
Prepaid Insurance |
7,070.00 |
|
|
4 |
Supplies |
2,125.00 |
|
|
5 |
Land |
108,400.00 |
|
|
6 |
Building |
145,300.00 |
|
|
7 |
Accumulated Depreciation-Building |
85,610.00 |
|
|
8 |
Equipment |
134,800.00 |
|
|
9 |
Accumulated Depreciation-Equipment |
96,100.00 |
|
|
10 |
Accounts Payable |
12,625.00 |
|
|
11 |
Unearned Rent |
6,340.00 |
|
|
12 |
Jan Pitman, Capital |
219,690.00 |
|
|
13 |
Jan Pitman, Drawing |
15,120.00 |
|
|
14 |
Fees Earned |
323,700.00 |
|
|
15 |
Salaries and Wages Expense |
196,770.00 |
|
|
16 |
Utilities Expense |
42,265.00 |
|
|
17 |
Advertising Expense |
23,135.00 |
|
|
18 |
Repairs Expense |
17,195.00 |
|
|
19 |
Miscellaneous Expense |
6,240.00 |
|
|
20 |
Totals |
744,065.00 |
744,065.00 |
The data needed to determine year-end adjustments are as follows:
| a. | Unexpired insurance at October 31, $6,105. |
| b. | Supplies on hand at October 31, $485. |
| c. | Depreciation of building for the year, $7,140. |
| d. | Depreciation of equipment for the year, $4,445. |
| e. | Unearned rent at October 31, $1,890. |
| f. | Accrued salaries and wages at October 31, $3,330. |
| g. | Fees earned but unbilled on October 31, $11,475. |
| Required: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1. | Journalize the adjusting entries using the following additional accounts: Salaries and Wages Payable; Rent Revenue; Insurance Expense; Depreciation Expense—Building; Depreciation Expense—Equipment; and Supplies Expense. Refer to the Chart of Accounts for exact wording of account titles. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2. |
Determine the balances of the accounts affected by the adjusting entries, and prepare an adjusted trial balance.
2. Determine the balances of the accounts affected by the adjusting entries, and prepare an adjusted trial balance. Pitman Company ADJUSTED TRIAL BALANCE October 31, 2019
|
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In: Accounting
You have been conducting an audit of the financial reports of Rainbow Forest Ltd (Rainbow Forest). Rainbow Forest Ltd is a publishing company, specialising in books and other promotional material for special industry sectors and professional bodies. Over the last three years Rainbow Forest has been experiencing difficult trading conditions resulting in operating losses and deferred dividends. In particular, Rainbow Forest has had difficulty managing its cash flow. Book sales are down on the prior year and longstanding customers are no longer making bulk purchases, but instead they are producing e-books which are emailed to members on the mailing list. Whilst Rainbow Forest can still provide online technical support services and web design advice, they have lost a major source of revenue and 20% of employees have been made redundant. You have been told by different sources that Senior Management is under a lot of pressure to turn this difficult situation around and improve both sales and profitability. You note that some of the reports you have been provided are either incomplete or are not consistent with what you have been told. Based on your initial understanding of the entity and its environment, you have concluded that Rainbow Forest Ltd is a going concern risk.
In: Accounting
The Diversified Portfolio Corporation provides investment advice
to customers. A condensed income statement for the year ended
December 31, 2021, appears below:
| Service revenue | $ | 1,080,000 |
| Operating expenses | 790,000 | |
| Income before income taxes | 290,000 | |
| Income tax expense | 72,500 | |
| Net income | $ | 217,500 |
The following balance sheet information also is
available:
| 12/31/2021 | 12/31/2020 | ||||
| Cash | $ | 399,500 | $ | 79,000 | |
| Accounts receivable | 138,000 | 109,000 | |||
| Accrued liabilities (for operating expenses) | 88,000 | 69,000 | |||
| Income taxes payable | 19,000 | 33,000 | |||
In addition, the following transactions took place during the
year:
Required:
1. Please help me prepare a statement of cash
flows for 2021 for the Diversified Portfolio Corporation. Use the
direct method for reporting operating activities.
2. Please help me prepare the cash flows from
operating activities section of Diversified’s 2021 statement of
cash flows using the indirect method.
In: Accounting
Problem 4-9 (Algo) Statement of cash flows [LO4-8]
The Diversified Portfolio Corporation provides investment advice
to customers. A condensed income statement for the year ended
December 31, 2021, appears below:
| Service revenue | $ | 1,080,000 |
| Operating expenses | 790,000 | |
| Income before income taxes | 290,000 | |
| Income tax expense | 72,500 | |
| Net income | $ | 217,500 |
The following balance sheet information also is
available:
| 12/31/2021 | 12/31/2020 | ||||
| Cash | $ | 399,500 | $ | 79,000 | |
| Accounts receivable | 138,000 | 109,000 | |||
| Accrued liabilities (for operating expenses) | 88,000 | 69,000 | |||
| Income taxes payable | 19,000 | 33,000 | |||
In addition, the following transactions took place during the
year:
Required:
1. Prepare a statement of cash flows for 2021 for
the Diversified Portfolio Corporation. Use the direct method for
reporting operating activities.
2. Prepare the cash flows from operating
activities section of Diversified’s 2021 statement of cash flows
using the indirect method.
In: Accounting
Women have been encouraged throughout the world to be
entrepreneurs. Many reasons, some of them being to support
themselves and their families; to attain the fulfillment of having
started something on their own and to satisfy their desire for
financial independence. Women not only create jobs for themselves
and others, but also work toward growing their businesses, and
constantly innovating new products and services. One such example
was the partnership venture of Ms. Rihab, Ms. Shaima, Ms. Yumna and
Ms Zahra. This partnership firm was called as “Family Events”.
Based in Bawsher since inception in 2009, this SME concentrated on
management and arrangement of family functions namely marriage
parties, birthday parties etc. Further, they expanded their
business and entered into managing events such as pre marriage
shoots, new born photography and outdoor catering service. In 2020,
this firm has failed to live up to the expectations of their
customers in terms of quality, innovation and cost. This has caused
huge loss in sales revenue, brand value and profits of the company.
Out of the four partners, two opine closure and settlement, while
the other two are devising ways to keep the firm afloat.
You are an Independent advisor based in Muscat and are required to
explain and critically compare the different situations that crop
up on following both opinions individually.
In: Accounting
Problem 4-9 Statement of cash flows [LO4-8]
The Diversified Portfolio Corporation provides investment advice
to customers. A condensed income statement for the year ended
December 31, 2018, appears below:
| Service revenue | $ | 1,180,000 |
| Operating expenses | 840,000 | |
| Income before income taxes | 340,000 | |
| Income tax expense | 68,000 | |
| Net income | $ | 272,000 |
The following balance sheet information also is
available:
| 12/31/18 | 12/31/17 | ||||
| Cash | $ | 469,000 | $ | 84,000 | |
| Accounts receivable | 148,000 | 114,000 | |||
| Accounts payable (operating expenses) | 98,000 | 74,000 | |||
| Income taxes payable | 24,000 | 43,000 | |||
In addition, the following transactions took place during the
year:
Common stock was issued for $128,000 in cash.
Long-term investments were sold for $64,000 in cash. The original cost of the investments also was $64,000.
$94,000 in cash dividends was paid to shareholders.
The company has no outstanding debt, other than those payables listed above.
Operating expenses include $44,000 in depreciation expense.
Required:
1. Prepare a statement of cash flows for 2018 for
the Diversified Portfolio Corporation. Use the direct method for
reporting operating activities.
2. Prepare the cash flows from operating
activities section of Diversified’s 2018 statement of cash flows
using the indirect method.
In: Accounting
QUESTION 1
Lucy Brown is the manager of one department in a big store. In this capacity, which of the following kinds of information would he be interested in?
| A. | Financial, economic, and nonfinancial data | |
| B. | Economic data | |
| C. | Nonfinancial Data | |
| D. | Financial Data |
QUESTION 2
A company has high operating leverage when:
| A. | small percentage changes in revenue produce large percentage changes in profit. | |
| B. | the organization makes purchases on credit instead of paying cash. | |
| C. | a company utilizes debt to finance its assets. | |
| D. | management buys enough of the company's shares of stock to take control of the corporation. |
QUESTION 3
In the graph below, which depicts the relationship between units produced and unit cost, the dotted line depicts which type ofcost per unit?
| A. | Mixed cost | |
| B. | Fixed cost | |
| C. | Variable cost | |
| D. | None of these |
In: Accounting
The trial balance before adjustment for W. Company shows the
following balances.
|
Dr. |
Cr. |
|||
| Accounts Receivable | $83,000 | |||
| Allowance for Doubtful Accounts | 2,140 | |||
| Sales Revenue | $477,700 |
Using the data above, give the journal entries required to record
each of the following cases. (Each situation is
independent.)
| 1. | To obtain additional cash, W. factors without recourse $26,900 of accounts receivable with S. Finance. The finance charge is 10% of the amount factored. | |
| 2. | To obtain a 1-year loan of $59,400, W. assigns $71,800 of specific receivable accounts to C. Financial. The finance charge is 9% of the loan; the cash is received and the accounts turned over to C. Financial. | |
| 3. | The company wants to maintain the Allowance for Doubtful Accounts at 6% of gross accounts receivable. | |
| 4. | Based on an aging analysis, an allowance of $6,306 should be
reported. Assume the allowance has a credit balance of
$1,078. |
In: Accounting
The accounting records of Ortiz Manufactoring Company (OMC) revealed that the company incurred $3 million of materials, $5 of production labor, $4 million of manufacturing overhead, and $6 million of selling, general, and administrative expense during 2014. It was discovered that OMC's chief financial officer (CFO) included $1.5 million dollars of upstream research and development expense in the manufacturing overhead account when it should have been classified as selling, general, and administrative expense . OMC made 5,000 units of product and sold 4,000 units of product in 2014.
A, Indicate whether the elements on the 2014 financial statements (i.e., assets, liabilities, equity, revenue, expense, and net income) would be overstated or understated as a result of the misclassification of the upstream research and development expense. Determine the amount of the overstatement for each element.
B. Speculate as to what would cause the CFO to intentionally misclassify the research and development expense.
In: Accounting