Edington Company combines its operating expenses for budget purposes in a selling and administrative expense budget

ACC 560 Week 6 Assignment

E9-9 Edington Company combines its operating expenses for budget purposes in a selling and administrative expense budget. For the first 6 months of 2008, the following data are available.

1. Sales: 20,000 units quarter 1; 22,000 units quarter 2.
2. Variable costs per dollar of sales: Sales commissions 5%, delivery expense 2%, and advertising 3%.
3. Fixed costs per quarter: Sales salaries $10,000, office salaries $6,000, depreciation $4,200, insurance $1,500, utilities $800, and repairs expense $600.
4. Unit selling price: $20.

Instructions
Prepare a selling and administrative expense budget by quarters for the first 6 months of 2008.

Click here for the solution: Edington Company combines its operating expenses for budget purposes in a selling and administrative expense budget

What advantages does a cash method taxpayer gain by electing to accrue foreign taxes for foreign tax credit purposes?

C:16-8 What advantages does a cash method taxpayer gain by electing to accrue foreign taxes for foreign tax credit purposes?


Click here for the solution: What advantages does a cash method taxpayer gain by electing to accrue foreign taxes for foreign tax credit purposes?

Which of the following is NOT one of the purposes of internal control?

MULTIPLE CHOICE

1. Which of the following is NOT one of the purposes of internal control? (Points : 1)

2. Journal entries must be made to record the reconciling items on the bank side of the reconciliation. (Points : 1)

3. If the bank reconciliation includes a deposit in transit, a journal entry is required which includes a debit to cash. (Points : 1)

4. Check Number 6135 for $576 was incorrectly entered as $657. Which adjustment needs to be made? (Points : 1)

5. The Allowance for uncollectible accounts currently has a credit balance of $200. The company's management estimates that 2.5% of net credit sales will be uncollectible. Net credit sales are $115,000. What will be the amount of Uncollectible account expense reported on the income statement? (Points : 1)

6. The Allowance for uncollectible accounts currently has a credit balance of $900. After analyzing the accounts in the accounts receivable subsidiary ledger using the aging method, the company's management estimates that uncollectible accounts will be $15,000. What will be the balance of the Allowance for uncollectible accounts reported on the balance sheet? (Points : 1)

7. Which of the following is NOT a key element of good internal control? (Points : 1)

8. The Allowance for uncollectible accounts currently has a credit balance of $900. After analyzing the accounts in the accounts receivable subsidiary ledger using the aging method, the company's management estimates that uncollectible accounts will be $15,000. What will be the amount of Uncollectible accounts expense reported on the income statement? (Points : 1)

9. A petty cash fund was established with a $400 balance. It currently has cash of $10 and petty cash tickets as shown below.
Travel expense $120
Office supplies $200
Equipment rental expense $70
The journal entry to replenish the account would be which of the following: (Points : 1)

10. In a bank reconciliation, an NSF check will be shown on the bank side of the reconciliation. (Points : 1)


Click here for the solution: Which of the following is NOT one of the purposes of internal control?

Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes

E9-12 (Gross Profit Method) Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May.

Inventory, May 1 $ 160,000
Purchases (gross) 640,000
Freight-in 30,000
Sales 1,000,000
Sales returns 70,000
Purchase discounts 12,000

Instructions
(a) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales.
(b) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.

Click here for the solution: Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes

Wynn Sheet Metal reported an operating loss of $160,000 for financial reporting and tax purposes in 2011

E 16-22 Operating loss carryback and carryforward

(This exercise is based on the situation described in the previous exercise, modified to include a carryforward in addition to a carryback.)

Wynn Sheet Metal reported an operating loss of $160,000 for financial reporting and tax purposes in 2011. The enacted tax rate is 40%. Taxable income, tax rates, and income taxes paid in Wynn's first four years of operation were as follows:

Taxable income Tax rates Income taxes paid
2007 60,000 30% 18,000
2008 70,000 30% 21,000
2009 80,000 40% 32,000
2010 60,000 45% 27,000

Required:
1. Prepare the journal entry to recognize the income tax benefit of the operating loss. Wynn elects the carryback option.
2. Show the lower portion of the 2011 income statement that reports the income tax benefit of the operating loss.

Click here for the solution: Wynn Sheet Metal reported an operating loss of $160,000 for financial reporting and tax purposes in 2011

The qualitative characteristics that make accounting information useful for decision-making purposes are as follows

E2-2 (Qualitative Characteristics) The qualitative characteristics that make accounting information useful for decision-making purposes are as follows.

Relevance Timeliness Representational faithfulness
Reliability Verifiability Comparability
Predictive value Neutrality Consistency
Feedback value

Instructions
Identify the appropriate qualitative characteristic(s) to be used given the information provided below.
(a) Qualitative characteristic being employed when companies in the same industry are using the same accounting principles.
(b) Quality of information that confirms users' earlier expectations.
(c) Imperative for providing comparisons of a company from period to period.
(d) Ignores the economic consequences of a standard or rule.
(e) Requires a high degree of consensus among individuals on a given measurement.
(f) Predictive value is an ingredient of this primary quality of information.
(g) Two qualitative characteristics that are related to both relevance and reliability.
(h) Neutrality is an ingredient of this primary quality of accounting information.
(i) Two primary qualities that make accounting information useful for decision-making purposes.
(j) Issuance of interim reports is an example of what primary ingredient of relevance?

Click here for the solution: The qualitative characteristics that make accounting information useful for decision-making purposes are as follows

(Qualitative Characteristics) The qualitative characteristics that make accounting information useful for decision-making purposes are as follows

Exercise 2-2 (E2-2). Qualitative Characteristics. The qualitative characteristics that make accounting information useful for decision-making purposes are as follows.

Relevance Timeliness Representational faithfulness
Reliability Verifiability Comparability
Predictive value Neutrality Consistency
Feedback value

Instructions
Identify the appropriate qualitative characteristic(s) to be used given the information provided below.
(a) Qualitative characteristic being employed when companies in the same industry are using the same accounting principles.
(b) Quality of information that confirms users' earlier expectations.
(c) Imperative for providing comparisons of a company from period to period.
(d) Ignores the economic consequences of a standard or rule.
(e) Requires a high degree of consensus among individuals on a given measurement.
(f) Predictive value is an ingredient of this primary quality of information.
(g) Two qualitative characteristics that are related to both relevance and reliability.
(h) Neutrality is an ingredient of this primary quality of accounting information.
(i) Two primary qualities that make accounting information useful for decision-making purposes
(j) Issuance of interim reports is an example of what primary ingredient of relevance

Click here for the solution: (Qualitative Characteristics) The qualitative characteristics that make accounting information useful for decision-making purposes are as follows

The Hunter Company purchased a light truck on January 2, 2010 for $18,000

Problem 11-11 (P11-11) Depreciation for Financial Statements and Income Tax Purposes

The Hunter Company purchased a light truck on January 2, 2010 for $18,000. The truck, which will be used for deliveries, has the following characteristics: Estimated life: 5 years Estimated residual value: $3,000 Depreciation for financial statements: straight-line Depreciation for income tax purposes: MARCS (three- year-life) From 2010 through 2014, each year, the company had sales of $100,000, cost of goods sold of $60,000, and operating expenses (excluding depreciation) of $15,000. The truck was disposed of on December 31, 2014 for $2,000.

1. Prepare an income statement for financial reporting through pretax accounting income for each of the five years, 2010 through 2014.
2. Prepare, an income statement for income tax purposes through taxable income for each of the five years, 2010 through 2014.
3. Compare the total income for all five years under requirement 1 and Requirement 2.

Click here for the solution: The Hunter Company purchased a light truck on January 2, 2010 for $18,000