(ACC 560 Week 6) Roche and Young, CPAs, are preparing their service revenue (sales) budget for the coming year (2008)

ACC 560 Week 6 Assignment

E9-3 Roche and Young, CPAs, are preparing their service revenue (sales) budget for the coming year (2008). The practice is divided into three departments: auditing, tax, and consulting. Billable hours for each department, by quarter, are provided below.

Department Quarter 1 Quarter 2 Quarter 3 Quarter 4
Auditing 2,200 1,600 2,000 2,400
Tax 3,000 2,400 2,000 2,500
Consulting 1,500 1,500 1,500 1,500
Average hourly billing rates are: auditing $80, tax $90, and consulting $100.

Instructions
Prepare the service revenue (sales) budget for 2008 by listing the departments and showing for each quarter and the year in total, billable hours, billable rate, and total revenue.

Click here for the solution: (ACC 560 Week 6) Roche and Young, CPAs, are preparing their service revenue (sales) budget for the coming year (2008)

Would it be considered unusual to find debits to fixed assets coming from a journal entry source

1. Would it be considered unusual to find debits to fixed assets coming from a journal entry source rather than a purchase journal? Explain.

2. Would it be normal to find entries to accumulated depreciation and depreciation expense to come from a journal entry source rather than another source?

3. Assume you were auditing FedEx and in your sample of debits to fixed assets, you find an entry for $500,000 with the following notation: "Capitalization of line capacity per CFO, amounts were originally in corrected recorded as an expense." Explain what you would do to complete the audit of this item. What evidence would you need to see to either corroborate or question the entry?


Click here for the solution: Would it be considered unusual to find debits to fixed assets coming from a journal entry source

Longchamps Electric is faced with a capital budget of $150,000 for the coming year

Longchamps Electric is faced with a capital budget of $150,000 for the coming year. It is considering six investment projects and has a cost of capital of 7%. The six projects are listed in the following table, along with their initial investments and their IRRs. Using the data given, prepare an investment opportunities schedule (IOS). Which projects does the IOS suggest be funded? Does this group of projects maximize NPV? Explain.

Project Initial Investment IRR
1 $75,000 8%
2 40,000 10%
3 35,000 7%
4 50,000 11%
5 45,000 9%
6 20,000 6%


Click here for the solution: Longchamps Electric is faced with a capital budget of $150,000 for the coming year

An analyst predicted last year that the stock of Logistics, Inc., would offer a total return of at least 10% in the coming year

E8–1 An analyst predicted last year that the stock of Logistics, Inc., would offer a total return of at least 10% in the coming year. At the beginning of the year, the firm had a stock market value of $10 million. At the end of the year, it had a market value of $12 million even though it experienced a loss, or negative net income, of $2.5 million. Did the analyst’s prediction prove correct? Explain using the values for total annual return.

Click here for the solution: An analyst predicted last year that the stock of Logistics, Inc., would offer a total return of at least 10% in the coming year