Splish Inc. was organized in late 2015 to manufacture and sell
hosiery. At the end of its fourth year of operation, the company
has been fairly successful, as indicated by the following reported
net incomes.
| 2015 | $139,000a | 2017 | $206,000 | |||
| 2016 | 162,000b | 2018 | 279,000 |
a Includes a $10,000 increase because
of change in bad debt experience rate.
b Includes a gain of $30,000.
The company has decided to expand operations and has applied for a
sizable bank loan. The bank officer has indicated that the records
should be audited and presented in comparative statements to
facilitate analysis by the bank. Splish Inc. therefore hired the
auditing firm of Check & Doublecheck Co. and has provided the
following additional information.
| 1. | In early 2016, Splish Inc. changed its estimate from 2% of receivables to 1% on the amount of bad debt expense to be charged to operations. Bad debt expense for 2015, if a 1% rate had been used, would have been $10,000. The company therefore restated its net income for 2015. | |
| 2. | In 2018, the auditor discovered that the company had changed its method of inventory pricing from LIFO to FIFO. The effect on the income statements for the previous years is as follows. |
|
2015 |
2016 |
2017 |
2018 |
||||||
| Net income unadjusted—LIFO basis | $139,000 | $162,000 | $206,000 | $279,000 | |||||
| Net income unadjusted—FIFO basis | 154,000 | 167,000 | 217,000 | 262,000 | |||||
| $15,000 | $5,000 | $11,000 | $(17,000) | ||||||
3. In 2018, the auditor discovered that:
| (a) | The company incorrectly overstated the ending inventory (under both LIFO and FIFO) by $13,000 in 2017. | |
| (b) | A dispute developed in 2016 with the Internal Revenue Service over the deductibility of entertainment expenses. In 2015, the company was not permitted these deductions, but a tax settlement was reached in 2018 that allowed these expenses. As a result of the court’s finding, tax expenses in 2018 were reduced by $55,000. |
(b) Present net income as reported in comparative
income statements for the years 2015 to 2018.
In: Accounting
Question 01. For shutting down, a firm must consider which of the following condition.
a. Revenue and marginal cost
b. Revenue and total cost
c. Revenue and the variable cost.
d. Revenue and fixed cost
.
Question 02: My company's revenue is AED 1000 and fixed cost is AED 600, the variable cost is 1000. I have a loss of AED 600, Should I shut down the company? Justify your reasoning.
In: Economics
English Company billed its customers a total of $1,785,000 for the month of November. The total includes a 5% state sales tax.Instructions(a) Determine the proper amount of revenue to report for the month.(b) Prepare the general journal entry to record the revenue and related liabilities for the month.(c) Assume English does separate revenue from sales tax and the revenue for the month of November is $1,600,000. Prepare the general journal entry to record the revenue and related liabilities for the month.
In: Accounting
73.
In perfect competition, the marginal revenue curve
|
and the demand curve facing the firm are identical. |
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intersects the demand curve when marginal revenue is minimized. |
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is always above the demand curve facing the firm. |
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is always below the demand curve facing the firm. |
75.
Marginal revenue is
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the additional profit the firm earns when it sells an additional unit of output. |
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the added revenue that a firm takes in from selling an additional unit of output. |
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the difference between total revenue and total costs. |
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the ratio of total revenue to quantity. |
76.
Profit-maximizing firms want to maximize the difference between
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total revenue and total cost. |
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total revenue and marginal cost. |
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marginal revenue and marginal cost. |
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marginal revenue and average cost. |
77.
The profit maximizing behavior of a monopoly is different from that of a perfectly competitive firm in that a monopoly can
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control the position of its demand schedule, but a competitive firm cannot. |
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only choose the desired output, while a competitive firm can control only price. |
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control the desired price and output to maximize profits, but a perfectly competitive firm can only choose the desired output. |
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only choose the desired price, while a competitive firm can control only output. |
In: Economics
The following information applies to the questions displayed below.] The cash records and bank statement for the month of May for Diaz Entertainment are shown below. DIAZ ENTERTAINMENT Cash Account Records May 1, 2021, to May 31, 2021 Cash Balance Cash Balance May 1, 2021 + Cash Receipts − Cash Disbursements = May 31, 2021 $5,280 $12,040 $12,220 $5,100 Cash Receipts Cash Disbursements Date Desc. Amount Date Check# Desc. Amount 5/3 Sales $ 1,460 5/7 471 Legal fees $ 1,300 5/10 Sales 1,890 5/12 472 Property tax 1,670 5/17 Sales 2,520 5/15 473 Salaries 3,600 5/24 Sales 2,990 5/22 474 Advertising 1,500 5/31 Sales 3,180 5/30 475 Supplies 550 5/31 476 Salaries 3,600 $ 12,040 $ 12,220 P.O. Box 162647 Midwest Bank Member FDIC Bowlegs, OK 74830 Looking Out For You (405) 369-CASH Account Holder: Diaz Entertainment Account Number: 7772854360 124 Saddle Blvd, Bowlegs, OK 74830 Statement Date: May 31, 2021 Account Summary Beginning Balance Deposits and Credits Withdrawals and
Debits Ending Balance May 1, 2021 NO. Total NO. Total May 31, 2021 $6,260 7 $10,050 9 $10,100 $6,210 Account Details Deposits and Credits Withdrawals and Debits Daily Balance Date Amount Desc. Date No. Amount Desc. Date Amount 5/4 $ 1,460 DEP 5/1 469 $ 550 CHK 5/1 $ 5,710 5/11 1,890 DEP 5/2 470 430 CHK 5/2 5,280 5/18 2,520 DEP 5/9 471 1,300 CHK 5/4 6,740 5/20 1,100 NOTE 5/11 400 NSF 5/9 5,440 5/20 60 INT 5/12 472 1,670 CHK 5/11 6,930 5/25 2,990 DEP 5/18 473 3,600 CHK 5/12 5,260 5/31 30 INT 5/20 600 EFT 5/18 4,180 5/25 474 1,500 CHK 5/20 4,740 5/31 50 SF 5/25 6,230 $ 10,050 $ 10,100 5/31 $ 6,210 Desc. DEP Customer deposit INT Interest earned SF Service fees NOTE Note collected CHK Customer check NSF Nonsufficient funds EFT Electronic funds transfer Additional information: The difference in the beginning balances in the company’s records and the bank statement relates to checks #469 and #470, which are outstanding as of April 30, 2021 (prior month). The bank made the EFT on May 20 in error. The bank accidentally charged Diaz for payment that should have been made on another account. 2. Record the necessary cash adjustments. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Total entries to the same account together when entering in the journal entry carousel.)
In: Accounting
Quality Control and the Boeing 787
Source: McCartney, Scott. "How to Inspect Every Piece of a Widebody Airplane." http://www.cetusnews.com/life/How-to-Inspect-Every-Piece-of-a-Widebody-Airplane.B1xPm2I4t-.html, posted
8/30/2017.
Imagine you're buying a $270 million car. You'd want to kick the tires pretty hard. That's what airlines do with new airplanes. Delivering one widebody airplane is a big
deallong dash—each
plane has a list price roughly the cost of a high-rise hotel.
Carriers like American Airlines station their own engineers at Boeing factories to watch their flying machines get built and check parts as they arrive. Then they send flight attendants, mechanics and pilots for what are called shakedown inspections.
"The rubber meets the road here," says an American manager, as he begins checking a brand new Boeing 787. "It's inspected and it's inspected and it's inspected. And yet we still find things." American is taking delivery of 57 new planes this year. Boeing does its own testing, but buyers do their own extra
inspectionlong dash—and
note an average of 140 items on a plane's punchlist.
Five flight attendants, a couple of mechanical experts and an American test pilot attack the 285-passenger plane. All the doors and panels are opened for inspection. Flight attendants shake each seat violently, grab the headrest and pull it up and jerk the cord on each entertainment controller. They test power ports, USB ports, audio jacks and the entertainment system. They open all tray tables, turn all lights on and off. They recline each seat with knee-knocking force. They flush all the toilets, blow fake smoke into smoke alarms, make sure all prerecorded emergency messages sound when required.
Inside the cockpit, an American test pilot flies the jet to its limits, making sure alarms sound when he increases air speed or slows the plane down to stall speed. He turns it sharply until "bank angle" warnings sound. Each engine gets shut down and restarted in the air. Every backup and emergency system is put into use to make sure it works.
Critical Thinking Questions
1. Why do airlines feel the need to make quality inspections?
A. The $270 million price tag.
B. Pilots like to check emergency systems.
C. Manufacturers sometimes miss errors.
D. All of the above.
2. Who participates in shakedown inspections?
A. Flight attendants only.
B. Boeing engineers.
C. Top management from the airline buying the plane.
D. Test pilots and other company representatives.
3. Flight attendants test the 787s
A. exterior paint.
B. seats, entertainment systems, and power parts.
C. air speed.
D. legroom.
4. Inspection on a commercial jet takes place
A. before delivery to the customer.
B. during the first scheduled flight.
C. before the contract is signed.
D. at the part supplier's shipping dock.
In: Operations Management
Casino Ltd is a company that owns a large holiday resort on Queensland’s Gold Coast. Casino Ltd employs 100 people who work in the catering, cleaning and the hospitality outlets of the resort. The company and its employees have had a history of industrial disputes involving wages and conditions. After the most recent dispute, Casino Ltd and its employees came to an agreement on 1 July 2005, under which it was agreed that all of its employees were to be paid wages and salaries that are in excess of other employees working in similar resorts in Australia. One month after the agreement was made, a new company was incorporated which is a wholly owned subsidiary of Casino Ltd. The new company is called Caterers Ltd. It has three directors, all of whom are appointed from the board of five directors of Casino Ltd. Caterers Ltd.’s constitution had a clause which stated that all of the profits of Caterers Ltd will be distributed as dividend to Casino Ltd. The incorporation of Caterers Ltd was preceded by a meeting between the board of directors and the senior managers of Casino Ltd where the reason for the creation of the new entity was discussed. The senior managers of Casino Ltd devised a strategic plan which called for a new corporate structure which will take into account that the catering and entertainment services of Casino Ltd has the potential to become a significant operation in its own right both within and outside the resort. The directors of Casino Ltd were genuinely impressed with the plan and believed it was in the long term interests of the company. They passed a resolution that the management of Casino Ltd put into place matters that will allow Caterers Ltd to pursue this new strategic objective. The redevelopment of the current resort was central to the management plan approved by the board of Casino Ltd in relation to the creation of Caterers. This meant closure of many of the restaurants in the resort and the redundancy of 60 employees. These redundant employees were offered new, but identical, positions working in Caterers Ltd. Faced with the choice of an uncertain future, all 60 employees accepted the job offer with Caterers Ltd. As a result, the redundant employees no longer work under the previous 1 July 2005 contract of employment they had while working for Casino Ltd. Instead, they work under wages and conditions that are not as favourable as they had while working for Casino Ltd. However, these wages and conditions are comparable to people who work in similar industries. Caterers Ltd, through its employees, started running the catering and entertainment services in the resort and due to the huge success of the business, Caterers expanded beyond the resort and started leasing outside premises to run a bigger catering and entertainment business. The Trade Union, on behalf of the 60 employees working for Caterers Ltd is concerned about the practical effect of this corporate reorganization on employment conditions. Assuming that the 1 July 2005 agreement between Casino Ltd and its employees is valid and that Caterers Ltd has been validly incorporated, advice the trade union as to its chances of success in enforcing that agreement. Refer to relevant statutes and case law based on Company Law.
In: Operations Management
All Tunes Satellite Radio (ATS) provides a subscription service to satellite radio channels. Customers can pay for a subscription on a monthly basis, or pay for a year in advance and receive a 15% discount. Approximately 53% of customers pay in advance. When ATS receives payment in advance, a deferred revenue account (Unearned Revenue) is credited. At the end of each month as the satellite radio service is provided to customers, ATS makes an adjusting entry to recognize subscription revenue. The audit team is planning a reliance on controls strategy to obtain evidence of revenue recognition for ATS. The team will be testing internal controls over the recognition of subscription revenue during interim.
Explain the type of audit strategy planned by the audit team for
gathering evidence about revenue recognition.
Suppose during the interim testing of internal controls the team
discovers a significant number of instances in which subscription
revenue received in advance is recognized immediately as revenue.
Analyze how the audit strategy will be impacted.
In: Accounting
Pierce Manufacturing determines that the daily revenue, in dollars, from the sale of x lawn chairs is R(x)equals0.005 x cubed plus 0.05 x squared plus 0.4 x. Currently, Pierce sells 80 lawn chairs daily. a) What is the current daily revenue? b) How much would revenue increase if 85 lawn chairs were sold each day? c) What is the marginal revenue when 80 lawn chairs are sold daily? d) Use the answer from part (c) to estimate R(81), R(82), and R(83).
a) find current revenue in dollars
b) the revenue would increase by $?
c)the marginal revenue is ? when 80 lawn chairs are sold daily
d) R(81) =?
R(82)=?
R(83)=?
In: Math
In: Economics