ACC 290 Week 5 Assignment
BE5-1 Presented here are the components in Korinek Company’s income statement. Determine the missing amounts.
Sales Cost of Gross Operating Net
Revenue Goods Sold Profit Expenses Income
$ 71,200 (b) $ 30,000 (d) $12,100
$108,000 $70,000 (c) (e) $29,500
(a) $71,900 $109,600 $46,200 (f )
Click here for the solution: Presented here are the components in Korinek Company’s income statement
Showing posts with label here. Show all posts
Showing posts with label here. Show all posts
Friday, October 9, 2015
Monday, October 5, 2015
The trial balance for the General Fund of the City of Fairfield as of December 31, 2008, is presented here
Balance Sheet, Statement of Revenues, Expenditures, and Changes in Fund Balance
The trial balance for the General Fund of the City of Fairfield as of December 31, 2008, is presented here:
City of Fairfield
The General Fund
Adjusted Trial Balance
December 31, 2008
Debit Credit
Cash $430,000
Property Tax Receivable 45,000
Estimated Uncollectible Taxes $ 20,000
Due from Trust Fund 50,000
Vouchers Payable 60,000
Reserve for Encumbrances 30,000
Unreserved Fund Balance 415,000
$525,000 $525,000
Transactions for the year ended December 31, 2009, are summarized as follows:
1. The City Council adopted a budget for the year with estimated revenue of $735,000 and appropriations of $700,000.
2. Property taxes in the amount of $590,000 were levied for the current year. It is estimated that $24,000 of the taxes levied will prove to be uncollectible.
3. Proceeds from the sale of equipment in the amount of $35,000 were received by the General Fund. The equipment was purchased 10 years ago with resources of the General Fund at a cost of $150,000. On the date of purchase, it was estimated that the equipment had a useful life of 15 years.
4. Licenses and fees in the amount of $110,000 were collected.
5. The total amount of encumbrances against fund resources for the year was $642,500.
6. Vouchers in the amount of $455,000 were authorized for payment. This was $15,000 less than the amount originally encumbered for these purchases.
7. An invoice in the amount of $28,000 was received for goods ordered in 2008. The invoice was approved for payment.
8. Property taxes in the amount of $570,000 were collected.
9. Vouchers in the amount of $475,000 were paid.
10. Fifty thousand dollars was transferred to the General Fund from the Trust Fund.
11. The City Council authorized the write-off of $30,000 in uncollected property taxes.
Required:
A. Prepare entries in general journal form to record the transactions for the year ended December 31, 2009.
B. Prepare a preclosing trial balance for the General Fund as of December 31, 2009.
C. Prepare the necessary closing entries for the year ended December 31, 2009.
D. Prepare a balance sheet and a statement of revenues, expenditures, and changes in fund balance for the General Fund for the year ended December 31, 2009.
Click here for the solution: The trial balance for the General Fund of the City of Fairfield as of December 31, 2008, is presented here
The trial balance for the General Fund of the City of Fairfield as of December 31, 2008, is presented here:
City of Fairfield
The General Fund
Adjusted Trial Balance
December 31, 2008
Debit Credit
Cash $430,000
Property Tax Receivable 45,000
Estimated Uncollectible Taxes $ 20,000
Due from Trust Fund 50,000
Vouchers Payable 60,000
Reserve for Encumbrances 30,000
Unreserved Fund Balance 415,000
$525,000 $525,000
Transactions for the year ended December 31, 2009, are summarized as follows:
1. The City Council adopted a budget for the year with estimated revenue of $735,000 and appropriations of $700,000.
2. Property taxes in the amount of $590,000 were levied for the current year. It is estimated that $24,000 of the taxes levied will prove to be uncollectible.
3. Proceeds from the sale of equipment in the amount of $35,000 were received by the General Fund. The equipment was purchased 10 years ago with resources of the General Fund at a cost of $150,000. On the date of purchase, it was estimated that the equipment had a useful life of 15 years.
4. Licenses and fees in the amount of $110,000 were collected.
5. The total amount of encumbrances against fund resources for the year was $642,500.
6. Vouchers in the amount of $455,000 were authorized for payment. This was $15,000 less than the amount originally encumbered for these purchases.
7. An invoice in the amount of $28,000 was received for goods ordered in 2008. The invoice was approved for payment.
8. Property taxes in the amount of $570,000 were collected.
9. Vouchers in the amount of $475,000 were paid.
10. Fifty thousand dollars was transferred to the General Fund from the Trust Fund.
11. The City Council authorized the write-off of $30,000 in uncollected property taxes.
Required:
A. Prepare entries in general journal form to record the transactions for the year ended December 31, 2009.
B. Prepare a preclosing trial balance for the General Fund as of December 31, 2009.
C. Prepare the necessary closing entries for the year ended December 31, 2009.
D. Prepare a balance sheet and a statement of revenues, expenditures, and changes in fund balance for the General Fund for the year ended December 31, 2009.
Click here for the solution: The trial balance for the General Fund of the City of Fairfield as of December 31, 2008, is presented here
Sunday, September 27, 2015
Here are the comparative income statements of Winfrey Corporation
E13-6 Here are the comparative income statements of Winfrey Corporation.
WINFREY CORPORATION
Comparative Income Statements
For the Years Ended December 31
2010 2009
Net sales $598,000 $520,000
Cost of goods sold 477,000 450,000
Gross profit $121,000 $ 70,000
Operating expenses 80,000 45,000
Net income $ 41,000 $ 25,000
Instructions
(a) Prepare a horizontal analysis of the income statement data for Winfrey Corporation using 2009 as a base. (Show the amounts of increase or decrease.)
(b) Prepare a vertical analysis of the income statement data for Winfrey Corporation for both years.
Click here for the solution: Here are the comparative income statements of Winfrey Corporation
WINFREY CORPORATION
Comparative Income Statements
For the Years Ended December 31
2010 2009
Net sales $598,000 $520,000
Cost of goods sold 477,000 450,000
Gross profit $121,000 $ 70,000
Operating expenses 80,000 45,000
Net income $ 41,000 $ 25,000
Instructions
(a) Prepare a horizontal analysis of the income statement data for Winfrey Corporation using 2009 as a base. (Show the amounts of increase or decrease.)
(b) Prepare a vertical analysis of the income statement data for Winfrey Corporation for both years.
Click here for the solution: Here are the comparative income statements of Winfrey Corporation
The comparative balance sheets of Nike, Inc. are presented here
E13-5 The comparative balance sheets of Nike, Inc. are presented here.
NIKE, INC.
Comparative Balance Sheets
May 31
($ in millions)
Assets
2007 2006
Current assets $ 8,076 $7,346
Property, plant, and equipment (net) 1,678 1,658
Other assets 934 866
Total assets $10,688 $9,870
Liabilities and Stockholders’ Equity
Current liabilities $ 2,584 $2,612
Long-term liabilities 1,079 973
Stockholders’ equity 7,025 6,285
Total liabilities and stockholders’ equity $10,688 $9,870
Instructions
(a) Prepare a horizontal analysis of the balance sheet data for Nike using 2006 as a base. (Show the amount of increase or decrease as well.)
(b) Prepare a vertical analysis of the balance sheet data for Nike for 2007.
Click here for the solution: The comparative balance sheets of Nike, Inc. are presented here
NIKE, INC.
Comparative Balance Sheets
May 31
($ in millions)
Assets
2007 2006
Current assets $ 8,076 $7,346
Property, plant, and equipment (net) 1,678 1,658
Other assets 934 866
Total assets $10,688 $9,870
Liabilities and Stockholders’ Equity
Current liabilities $ 2,584 $2,612
Long-term liabilities 1,079 973
Stockholders’ equity 7,025 6,285
Total liabilities and stockholders’ equity $10,688 $9,870
Instructions
(a) Prepare a horizontal analysis of the balance sheet data for Nike using 2006 as a base. (Show the amount of increase or decrease as well.)
(b) Prepare a vertical analysis of the balance sheet data for Nike for 2007.
Click here for the solution: The comparative balance sheets of Nike, Inc. are presented here
Thursday, September 24, 2015
The current sections of Bellinham Inc.'s balance sheets at December 31, 2007 and 2008, are presented here
ACC 560 Week 9 Assignment
E13-5 The current sections of Bellinham Inc.'s balance sheets at December 31, 2007 and 2008, are presented here.
Bellinham's net income for 2008 was $153,000. Depreciation expense was $24,000.
2008 2007
Current assets
Cash $105,000 $99,000
Accounts receivable 110,000 89,000
Inventory 158,000 172,000
Prepaid expenses 27,000 22,000
Total current assets $400,000 $382,000
Current liabilities
Accrued expenses payable $15,000 $5,000
Accounts payable 85,000 92,000
Total current liabilities $100,000 $97,000
Instructions
Prepare the net cash provided by operating activities section of the company's statement of cash flows for the year ended December 31, 2008, using the indirect method.
Click here for the solution: The current sections of Bellinham Inc.'s balance sheets at December 31, 2007 and 2008, are presented here
E13-5 The current sections of Bellinham Inc.'s balance sheets at December 31, 2007 and 2008, are presented here.
Bellinham's net income for 2008 was $153,000. Depreciation expense was $24,000.
2008 2007
Current assets
Cash $105,000 $99,000
Accounts receivable 110,000 89,000
Inventory 158,000 172,000
Prepaid expenses 27,000 22,000
Total current assets $400,000 $382,000
Current liabilities
Accrued expenses payable $15,000 $5,000
Accounts payable 85,000 92,000
Total current liabilities $100,000 $97,000
Instructions
Prepare the net cash provided by operating activities section of the company's statement of cash flows for the year ended December 31, 2008, using the indirect method.
Click here for the solution: The current sections of Bellinham Inc.'s balance sheets at December 31, 2007 and 2008, are presented here
The income statement of Elbert Company is presented here
P13-3A The income statement of Elbert Company is presented here.
ELBERT COMPANY
Income Statement
For the Year Ended November 30, 2008
Sales $7,700,000
Cost of goods sold
Beginning inventory $1,900,000
Purchases 4,400,000
Goods available for sale 6,300,000
Ending inventory 1,400,000
Total cost of goods sold 4,900,000
Gross profit 2,800,000
Operating expenses
Selling expenses 450,000
Administrative expenses 700,000 1,150,000
Net income $1,650,000
Additional information:
1. Accounts receivable increased $250,000 during the year, and inventory decreased $500,000.
2. Prepaid expenses increased $150,000 during the year.
3. Accounts payable to suppliers of merchandise decreased $340,000 during the year.
4. Accrued expenses payable decreased $100,000 during the year.
5. Administrative expenses include depreciation expense of $90,000.
Instructions
Prepare the operating activities section of the statement of cash flows for the year ended November 30, 2008, for Elbert Company, using the indirect method.
Click here for the solution: The income statement of Elbert Company is presented here
ELBERT COMPANY
Income Statement
For the Year Ended November 30, 2008
Sales $7,700,000
Cost of goods sold
Beginning inventory $1,900,000
Purchases 4,400,000
Goods available for sale 6,300,000
Ending inventory 1,400,000
Total cost of goods sold 4,900,000
Gross profit 2,800,000
Operating expenses
Selling expenses 450,000
Administrative expenses 700,000 1,150,000
Net income $1,650,000
Additional information:
1. Accounts receivable increased $250,000 during the year, and inventory decreased $500,000.
2. Prepaid expenses increased $150,000 during the year.
3. Accounts payable to suppliers of merchandise decreased $340,000 during the year.
4. Accrued expenses payable decreased $100,000 during the year.
5. Administrative expenses include depreciation expense of $90,000.
Instructions
Prepare the operating activities section of the statement of cash flows for the year ended November 30, 2008, for Elbert Company, using the indirect method.
Click here for the solution: The income statement of Elbert Company is presented here
Friday, September 18, 2015
(Week 5 Assignment ACC 291) Here are comparative balance sheets for Taguchi Company
ACC 291 Week 5 Assignment
E13-8 Here are comparative balance sheets for Taguchi Company.
TAGUCHI COMPANY
Comparative Balance Sheets
December 31
Assets 2011 2010
Cash $ 73,000 $ 22,000
Accounts receivable 85,000 76,000
Inventories 170,000 189,000
Land 75,000 100,000
Equipment 260,000 200,000
Accumulated depreciation (66,000) (32,000)
Total $597,000 $555,000
Liabilities and Stockholders’ Equity
Accounts payable $ 39,000 $ 47,000
Bonds payable 150,000 200,000
Common stock ($1 par) 216,000 174,000
Retained earnings 192,000 134,000
Total $597,000 $555,000
Additional information:
1. Net income for 2011 was $103,000.
2. Cash dividends of $45,000 were declared and paid.
3. Bonds payable amounting to $50,000 were redeemed for cash $50,000.
4. Common stock was issued for $42,000 cash.
5. No equipment was sold during 2011, but land was sold at cost.
Instructions
Prepare a statement of cash flows for 2011 using the indirect method.
TAGUCHI COMPANY
Comparative Balance Sheets
December 31
Assets 2011 2010
Cash $ 73,000 $ 22,000
Accounts receivable 85,000 76,000
Inventories 170,000 189,000
Land 75,000 100,000
Equipment 260,000 200,000
Accumulated depreciation (66,000) (32,000)
Total $597,000 $555,000
Liabilities and Stockholders’ Equity
Accounts payable $ 39,000 $ 47,000
Bonds payable 150,000 200,000
Common stock ($1 par) 216,000 174,000
Retained earnings 192,000 134,000
Total $597,000 $555,000
Additional information:
1. Net income for 2011 was $103,000.
2. Cash dividends of $45,000 were declared and paid.
3. Bonds payable amounting to $50,000 were redeemed for cash $50,000.
4. Common stock was issued for $42,000 cash.
5. No equipment was sold during 2011, but land was sold at cost.
Instructions
Prepare a statement of cash flows for 2011 using the indirect method.
Click here for the solution: (Week 5 Assignment ACC 291) Here are comparative balance sheets for Taguchi Company
Thursday, September 10, 2015
Presented here are several transactions and events of the General Fund of Johnson County
3–10. Presented here are several transactions and events of the General
Fund of Johnson County. All transactions and events relate to calendar
year 2009.
1. Estimated revenues from the following sources were legally budgeted.
Sales taxes $ 6,000,000
Fines and forfeits 2,000,000
Licenses and permits 1,750,000
Intergovernmental revenues 350,000
Total $10,100,000
2. Appropriations for the following functions were legally budgeted .
General government $2,100,000
Public safety 3,890,000
Culture and recreation 700,000
Health and welfare 3,000,000
Total $9,690,000
3. During the year, revenues were received in cash from the following sources:
Sales taxes $ 5,930,000
Fines and forfeits 1,990,000
Licenses and permits 1,740,000
Intergovernmental revenues 385,000
Total $10,045,000
4. During the year, contracts and purchase orders were issued as follows:
General government $ 450,000
Public safety 800,000
Culture and recreation 280,000
Health and welfare 500,000
Total $2,030,000
5. Goods and services (these are a portion of the total ordered in transaction 4) were received, as follows:
Estimated Actual
General government $ 450,000 $ 452,000
Public safety 500,000 510,000
Culture and recreation 275,000 276,000
Health and welfare 500,000 500,000
Total $1,725,000 $1,738,000
6. A budget revision was approved by the County Commission. Estimated revenues for intergovernmental revenues were increased by $35,000. Appropriations for general government were increased by $100,000.
7. Vouchers were issued for items not previously encumbered, primarily personal services, in the following amounts:
General government $1,747,000
Public safety 3,080,000
Culture and recreation 418,000
Health and welfare 2,500,000
Total $7,745,000
a. Record the transactions in general journal form. Include subsidiary accounts as illustrated in this chapter.
b. Open budgetary, revenue, expenditure, and encumbrance general ledger control accounts and post the transactions. You may use T-accounts.
c. Open Revenue and Appropriations, Expenditures, and Encumbrances subsidiary ledgers. Post the transactions. Prove that the control account balances agree with the related subsidiary ledger accounts.
d. Assume a beginning Fund Balance—Unreserved of $150,000. Prepare a budgetary comparison schedule for the General Fund. Include encumbrances with expenditures. Use Illustration 3–4 as an example.
e. Assuming that encumbered appropriations do not lapse at the end of the budget year, how much of the 2009 appropriations, by function, did lapse at the end of 2009? Show computations in good form.
Click here for the solution: Presented here are several transactions and events of the General Fund of Johnson County
1. Estimated revenues from the following sources were legally budgeted.
Sales taxes $ 6,000,000
Fines and forfeits 2,000,000
Licenses and permits 1,750,000
Intergovernmental revenues 350,000
Total $10,100,000
2. Appropriations for the following functions were legally budgeted .
General government $2,100,000
Public safety 3,890,000
Culture and recreation 700,000
Health and welfare 3,000,000
Total $9,690,000
3. During the year, revenues were received in cash from the following sources:
Sales taxes $ 5,930,000
Fines and forfeits 1,990,000
Licenses and permits 1,740,000
Intergovernmental revenues 385,000
Total $10,045,000
4. During the year, contracts and purchase orders were issued as follows:
General government $ 450,000
Public safety 800,000
Culture and recreation 280,000
Health and welfare 500,000
Total $2,030,000
5. Goods and services (these are a portion of the total ordered in transaction 4) were received, as follows:
Estimated Actual
General government $ 450,000 $ 452,000
Public safety 500,000 510,000
Culture and recreation 275,000 276,000
Health and welfare 500,000 500,000
Total $1,725,000 $1,738,000
6. A budget revision was approved by the County Commission. Estimated revenues for intergovernmental revenues were increased by $35,000. Appropriations for general government were increased by $100,000.
7. Vouchers were issued for items not previously encumbered, primarily personal services, in the following amounts:
General government $1,747,000
Public safety 3,080,000
Culture and recreation 418,000
Health and welfare 2,500,000
Total $7,745,000
a. Record the transactions in general journal form. Include subsidiary accounts as illustrated in this chapter.
b. Open budgetary, revenue, expenditure, and encumbrance general ledger control accounts and post the transactions. You may use T-accounts.
c. Open Revenue and Appropriations, Expenditures, and Encumbrances subsidiary ledgers. Post the transactions. Prove that the control account balances agree with the related subsidiary ledger accounts.
d. Assume a beginning Fund Balance—Unreserved of $150,000. Prepare a budgetary comparison schedule for the General Fund. Include encumbrances with expenditures. Use Illustration 3–4 as an example.
e. Assuming that encumbered appropriations do not lapse at the end of the budget year, how much of the 2009 appropriations, by function, did lapse at the end of 2009? Show computations in good form.
Click here for the solution: Presented here are several transactions and events of the General Fund of Johnson County
Wednesday, September 2, 2015
The current sections of Bellinham Inc.'s balance sheets at December 31, 2009 and 2010, are presented here
The current sections of Bellinham Inc.'s balance sheets at December 31, 2009 and 2010, are presented here.
Bellinham's net income for 2010 was $153,000. Depreciation expense was $24,000.
2010 2009
Current assets
Cash $105,000 $99,000
Accounts receivable 110,000 89,000
Inventory 158,000 172,000
Prepaid expenses 27,000 22,000
Total current assets $400,000 $382,000
Current liabilities
Accrued expenses payable $15,000 $5,000
Accounts payable 85,000 92,000
Total current liabilities $100,000 $97,000
Prepare the net cash provided by operating activities section of the company's statement of cash flows for the year ended December 31, 2010, using the indirect method. (List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. If amount decreases cash flow, use either a negative sign preceding the number eg -45 or parentheses eg (45).)
Click here for the solution: The current sections of Bellinham Inc.'s balance sheets at December 31, 2009 and 2010, are presented here
Bellinham's net income for 2010 was $153,000. Depreciation expense was $24,000.
2010 2009
Current assets
Cash $105,000 $99,000
Accounts receivable 110,000 89,000
Inventory 158,000 172,000
Prepaid expenses 27,000 22,000
Total current assets $400,000 $382,000
Current liabilities
Accrued expenses payable $15,000 $5,000
Accounts payable 85,000 92,000
Total current liabilities $100,000 $97,000
Prepare the net cash provided by operating activities section of the company's statement of cash flows for the year ended December 31, 2010, using the indirect method. (List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. If amount decreases cash flow, use either a negative sign preceding the number eg -45 or parentheses eg (45).)
Click here for the solution: The current sections of Bellinham Inc.'s balance sheets at December 31, 2009 and 2010, are presented here
16-41 (Choosing the Type of Opinion) Several independent audit situations are presented here
16-41 (Choosing the Type of Opinion) Several independent audit situations are presented here. Assume that everything other than what is described would have resulted in an unqualified opinion.
Required
Indicate the type of opinion you believe should be expressed in each situation, and explain your choice. If an explanatory paragraph is needed, indicate whether it should precede or follow the opinion paragraph.
a. The auditor was unable to obtain confirmations from two of the client's major customers that were included in the sample. These customers wrote on the confirmation letters that they were unable to confirm the balances because of their accounting systems. The auditor was able to become satisfied by other audit procedures.
b. The client treated a lease as an operating lease, but the auditor believes it should have been accounted for as a capital lease.The effects are material.
c. The client changed from FIFO to LIFO this year.The effect is material. Assume:
1. The change was properly accounted for, justified, and disclosed.
2. The change was properly accounted for and disclosed, but was not properly justified.
d. The client restricted the auditor from observing the physical inventory. Inventory is a material item.
e. The client is engaged in a product liability lawsuit that is properly accounted for and adequately described in the footnotes. The lawsuit does not threaten the going concern assumption, but an adverse decision by the court could create a material obligation for the client.
f. The status of the client as a going concern is extremely doubtful. The problems are properly described in the footnotes.
g. One of your client's subsidiaries was audited by another audit firm, whose opinion was qualified because of a GAAP violation.You do not believe that the GAAP violation is material to the consolidated financial statements on which you are expressing an opinion.
h. You are convinced that your client is violating another company's patent in the process of manufacturing its only product.The client will not disclose this, because it does not want to wave a red flag and bring this violation to the other company's attention.
i. The client, with reasonable justification, has changed its method of accounting for depreciation for all factory and office equipment.The effect of this change is not material to the current year financial statements, but is likely to have a material effect in future years. The client's management will not disclose this change because of the immaterial effect on the current-year statements.You have been unable to persuade management to make the disclosure.
Click here for the solution: 16-41 (Choosing the Type of Opinion) Several independent audit situations are presented here
Required
Indicate the type of opinion you believe should be expressed in each situation, and explain your choice. If an explanatory paragraph is needed, indicate whether it should precede or follow the opinion paragraph.
a. The auditor was unable to obtain confirmations from two of the client's major customers that were included in the sample. These customers wrote on the confirmation letters that they were unable to confirm the balances because of their accounting systems. The auditor was able to become satisfied by other audit procedures.
b. The client treated a lease as an operating lease, but the auditor believes it should have been accounted for as a capital lease.The effects are material.
c. The client changed from FIFO to LIFO this year.The effect is material. Assume:
1. The change was properly accounted for, justified, and disclosed.
2. The change was properly accounted for and disclosed, but was not properly justified.
d. The client restricted the auditor from observing the physical inventory. Inventory is a material item.
e. The client is engaged in a product liability lawsuit that is properly accounted for and adequately described in the footnotes. The lawsuit does not threaten the going concern assumption, but an adverse decision by the court could create a material obligation for the client.
f. The status of the client as a going concern is extremely doubtful. The problems are properly described in the footnotes.
g. One of your client's subsidiaries was audited by another audit firm, whose opinion was qualified because of a GAAP violation.You do not believe that the GAAP violation is material to the consolidated financial statements on which you are expressing an opinion.
h. You are convinced that your client is violating another company's patent in the process of manufacturing its only product.The client will not disclose this, because it does not want to wave a red flag and bring this violation to the other company's attention.
i. The client, with reasonable justification, has changed its method of accounting for depreciation for all factory and office equipment.The effect of this change is not material to the current year financial statements, but is likely to have a material effect in future years. The client's management will not disclose this change because of the immaterial effect on the current-year statements.You have been unable to persuade management to make the disclosure.
Click here for the solution: 16-41 (Choosing the Type of Opinion) Several independent audit situations are presented here
Thursday, August 13, 2015
Epson, Inc., has the common stock accounts shown here
A4. (Accounting for a stock dividend) Epson, Inc., has the common stock accounts shown here. The stock has a $38 per share market value. If Epson pays a 10% stock dividend, show the revised common stock accounts.
Paid-in capital ($0.50 par value, 10,000,000 shares) $ 5,000,000
Capital contributed in excess of par value 13,000,000
Retained earnings 60,000,000
Common stockholders’ equity $78,000,000
Click here for the solution: Epson, Inc., has the common stock accounts shown here
Paid-in capital ($0.50 par value, 10,000,000 shares) $ 5,000,000
Capital contributed in excess of par value 13,000,000
Retained earnings 60,000,000
Common stockholders’ equity $78,000,000
Click here for the solution: Epson, Inc., has the common stock accounts shown here
Tuesday, August 4, 2015
The income statement of Mazor Company is presented here
P12-3A The income statement of Mazor Company is presented here.
MAZOR COMPANYIncome Statement
For the Year Ended November 30, 2012
Sales $7,600,000
Cost of goods sold
Beginning inventory $1,900,000
Purchases 4,400,000
Goods available for sale 6,300,000
Ending inventory 1,600,000
Total cost of goods sold 4,700,000
Gross profit 2,900,000
Operating expenses
Selling expenses 450,000
Administrative expenses 700,000 1,150,000
Net income $1,750,000
Additional information:
1. Accounts receivable decreased $380,000 during the year, and inventory decreased $300,000.
2. Prepaid expenses increased $150,000 during the year.
3. Accounts payable to suppliers of merchandise decreased $350,000 during the year.
4. Accrued expenses payable decreased $100,000 during the year.
5. Administrative expenses include depreciation expense of $110,000.
Prepare the operating activities section—indirect method.
Instructions
Prepare the operating activities section of the statement of cash flows for the year ended November 30, 2012, for Mazor Company, using the indirect method.
Check: Cash from operations $1,940,000
Click here for the solution: The income statement of Mazor Company is presented here
MAZOR COMPANYIncome Statement
For the Year Ended November 30, 2012
Sales $7,600,000
Cost of goods sold
Beginning inventory $1,900,000
Purchases 4,400,000
Goods available for sale 6,300,000
Ending inventory 1,600,000
Total cost of goods sold 4,700,000
Gross profit 2,900,000
Operating expenses
Selling expenses 450,000
Administrative expenses 700,000 1,150,000
Net income $1,750,000
Additional information:
1. Accounts receivable decreased $380,000 during the year, and inventory decreased $300,000.
2. Prepaid expenses increased $150,000 during the year.
3. Accounts payable to suppliers of merchandise decreased $350,000 during the year.
4. Accrued expenses payable decreased $100,000 during the year.
5. Administrative expenses include depreciation expense of $110,000.
Prepare the operating activities section—indirect method.
Instructions
Prepare the operating activities section of the statement of cash flows for the year ended November 30, 2012, for Mazor Company, using the indirect method.
Check: Cash from operations $1,940,000
Click here for the solution: The income statement of Mazor Company is presented here
Saturday, August 1, 2015
Several independent audit situations are presented here
16-41: Several independent audit situations are presented here. Assume that everything other than what is described would have resulted in an unqualified opinion on the company’s financial statements.
Required
Indicate the type of opinion you believe should be expressed in each situation and explain your choice. If an explanatory paragraph is needed, indicate whether it should precede or follow the opinion paragraph.
a. The auditor was unable to obtain confirmations from two of the client’s major customers that were included in the sample. These customers wrote on the confirmation letters that they were unable to confirm the balances because of their accounting systems. The auditor was able to achieve satisfaction through other audit procedures.
b. The client treated a lease as an operating lease, but the auditor believes it should have been accounted for as a capital lease. The effects are material.
c. The client changed from FIFO to LIFO this year. The effect is material. Address each of the following situations:
(i) The change was properly accounted for, justified, and disclosed.
(ii) The change was properly accounted for and disclosed but was not properly justified.
d. The client restricted the auditor from observing the physical inventory. Inventory is a material item.
e. The client is engaged in a product liability lawsuit that is properly accounted for and adequately described in the footnotes. The lawsuit does not threaten the going-concern assumption, but an adverse decision by the court could create a material obligation for the client.
f. The status of the client as a going concern is extremely doubtful. The problems are properly described in the footnotes.
g. One of your client’s subsidiaries was audited by another audit firm, whose opinion was qualified because of a GAAP violation. You do not believe that the GAAP violation is material to the consolidated financial statements on which you are expressing an opinion.
h. You are convinced that your client is violating another company’s patent in the process of manufacturing its only product. The client will not disclose this because it does not want to wave a red flag and bring this violation to the other company’s attention. A preliminary estimate is that the royalty payments required would be material to the financial statements.
i. The client, with reasonable justification, has changed its method of accounting for depreciation for all factory and office equipment. The effect of this change is not material to the current
year financial statements, but is likely to have a material effect in future years. The client’s management will not disclose this change because of the immaterial effect on the current-year
statements. You have been unable to persuade management to make the disclosure.
Click here for the solution: Several independent audit situations are presented here
Required
Indicate the type of opinion you believe should be expressed in each situation and explain your choice. If an explanatory paragraph is needed, indicate whether it should precede or follow the opinion paragraph.
a. The auditor was unable to obtain confirmations from two of the client’s major customers that were included in the sample. These customers wrote on the confirmation letters that they were unable to confirm the balances because of their accounting systems. The auditor was able to achieve satisfaction through other audit procedures.
b. The client treated a lease as an operating lease, but the auditor believes it should have been accounted for as a capital lease. The effects are material.
c. The client changed from FIFO to LIFO this year. The effect is material. Address each of the following situations:
(i) The change was properly accounted for, justified, and disclosed.
(ii) The change was properly accounted for and disclosed but was not properly justified.
d. The client restricted the auditor from observing the physical inventory. Inventory is a material item.
e. The client is engaged in a product liability lawsuit that is properly accounted for and adequately described in the footnotes. The lawsuit does not threaten the going-concern assumption, but an adverse decision by the court could create a material obligation for the client.
f. The status of the client as a going concern is extremely doubtful. The problems are properly described in the footnotes.
g. One of your client’s subsidiaries was audited by another audit firm, whose opinion was qualified because of a GAAP violation. You do not believe that the GAAP violation is material to the consolidated financial statements on which you are expressing an opinion.
h. You are convinced that your client is violating another company’s patent in the process of manufacturing its only product. The client will not disclose this because it does not want to wave a red flag and bring this violation to the other company’s attention. A preliminary estimate is that the royalty payments required would be material to the financial statements.
i. The client, with reasonable justification, has changed its method of accounting for depreciation for all factory and office equipment. The effect of this change is not material to the current
year financial statements, but is likely to have a material effect in future years. The client’s management will not disclose this change because of the immaterial effect on the current-year
statements. You have been unable to persuade management to make the disclosure.
Click here for the solution: Several independent audit situations are presented here
Thursday, July 30, 2015
Presented here are the components in Pedersen Company’s income statement
BE5-1 Presented here are the components in Pedersen Company’s income statement. Determine the missing amounts.
Cost of Gross Operating Net
Sales Goods Sold Profit Expenses Income
$ 71,200 (b) $ 30,000 (d) $10,800
$108,000 $70,000 (c) (e) $29,500
(a) $71,900 $109,600 $46,200 (f )
Click here for the solution: Presented here are the components in Pedersen Company’s income statement
Cost of Gross Operating Net
Sales Goods Sold Profit Expenses Income
$ 71,200 (b) $ 30,000 (d) $10,800
$108,000 $70,000 (c) (e) $29,500
(a) $71,900 $109,600 $46,200 (f )
Click here for the solution: Presented here are the components in Pedersen Company’s income statement
Monday, June 29, 2015
The most recent financial information for Golf Pro Inc. are shown here
The most recent financial information for Golf Pro Inc. are shown here:
Income Statement
Sales $3,400
Costs 2,800
Taxable Income 600
Taxes @ 34% 204
Net Income $ 396
Balance Sheet
Current Assets $4,400 Current Liabilities $880
Fixed Assets 5,700 Long Term Debt 3,580
Equity 5,640
Total 10,100 Total $10,100
Assets, costs and current liabilities are proportional to sales. Long–term debt and equity are not. The company maintains a constant 50% dividend payout ratio. As with every other firm in its industry, the next year’s sales are projected to increase by exactly 15%. What is the external financing needed?
Wednesday, June 24, 2015
Selected financial data of Target and Wal-Mart for a recent year are presented here (in millions)
Problem 18–5A (P18-5A) Selected financial data of Target and Wal-Mart for a recent year are presented here (in millions).
Target Wal-Mart
Corporation Stores, Inc.
Income Statement Data for Year
Net sales $61,471 $374,526
Cost of goods sold 41,895 286,515
Selling and administrative expenses 16,200 70,847
Interest expense 647 1,798
Other income (expense) 1,896 4,273
Income tax expense 1,776 6,908
Net income $ 2,849 $ 12,731
Balance Sheet Data (End of Year)
Current assets $18,906 $ 47,585
Noncurrent assets 25,654 115,929
Total assets $44,560 $163,514
Current liabilities $ 11,782 $ 58,454
Long-term debt 17,471 40,452
Total stockholders' equity 15,307 64,608
Total liabilities and stockholders' equity $44,560 $163,514
Beginning-of-Year Balances
Total assets $37,349 $151,587
Total stockholders' equity 15,633 61,573
Current liabilities 11,117 52,148
Total liabilities 21,716 90,014
Other Data
Average net receivables $7,124 $ 3,247
Average inventory 6,517 34,433
Net cash provided by operating activities 4,125 20,354
Instructions
For each company, compute the following ratios. (Round answers to 1 decimal place, e.g. 10.5.)
Target Walmart
(1) Current
(2) Receivables turnover
(3) Average collection period
(4) Inventory turnover
(5) Days in inventory
(6) Profit margin
(7) Asset turnover
(8) Return on assets
(9) Return on common stockholders' equity
(10) Debt to total assets
(11) Times interest earned
Click here for the solution: Selected financial data of Target and Wal-Mart for a recent year are presented here (in millions)
Target Wal-Mart
Corporation Stores, Inc.
Income Statement Data for Year
Net sales $61,471 $374,526
Cost of goods sold 41,895 286,515
Selling and administrative expenses 16,200 70,847
Interest expense 647 1,798
Other income (expense) 1,896 4,273
Income tax expense 1,776 6,908
Net income $ 2,849 $ 12,731
Balance Sheet Data (End of Year)
Current assets $18,906 $ 47,585
Noncurrent assets 25,654 115,929
Total assets $44,560 $163,514
Current liabilities $ 11,782 $ 58,454
Long-term debt 17,471 40,452
Total stockholders' equity 15,307 64,608
Total liabilities and stockholders' equity $44,560 $163,514
Beginning-of-Year Balances
Total assets $37,349 $151,587
Total stockholders' equity 15,633 61,573
Current liabilities 11,117 52,148
Total liabilities 21,716 90,014
Other Data
Average net receivables $7,124 $ 3,247
Average inventory 6,517 34,433
Net cash provided by operating activities 4,125 20,354
Instructions
For each company, compute the following ratios. (Round answers to 1 decimal place, e.g. 10.5.)
Target Walmart
(1) Current
(2) Receivables turnover
(3) Average collection period
(4) Inventory turnover
(5) Days in inventory
(6) Profit margin
(7) Asset turnover
(8) Return on assets
(9) Return on common stockholders' equity
(10) Debt to total assets
(11) Times interest earned
Click here for the solution: Selected financial data of Target and Wal-Mart for a recent year are presented here (in millions)
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