Ch 6. Questions for Review and Discussion
6. How should governments report their capital projects and debt service activities in their government-wide statements?
Click here for the solution: How should governments report their capital projects and debt service activities in their government-wide statements?
Showing posts with label statements. Show all posts
Showing posts with label statements. Show all posts
Monday, April 18, 2016
Wednesday, April 13, 2016
Allen Labinski has prepared the following list of statements about process cost accounting
E3-1 Allen Labinski has prepared the following list of statements about process cost accounting. Identify each statement as true or false. If false, indicate how to correct the statement.
1. Process cost systems are used to apply costs to similar products that are mass-produced in a continuous fashion.
2. A process cost system is used when each finished unit is indistinguishable from another.
3. Companies that produce soft drinks, motion pictures, and computers chips would all use process cost accounting.
4. In a process cost system, costs are tracked by individual jobs.
5. Job order costing and process costing track different manufacturing costs elements.
6. Both job order costing and process costing account for direct materials, direct labor, and manufacturing overhead.
7. Costs flow through the accounts in the same basic way for both job order costing and process costing.
8. In a process cost system, only one work in process account is used.
9. In a process cost system, costs are summarized in a job cost sheet.
10. In a process cost system, the unit cost is total manufacturing costs for the period divided by the units produced during the period.
NOTE: Fill in the table below with your responses; write correction for false statements below the table:
Click here for the solution: Allen Labinski has prepared the following list of statements about process cost accounting
1. Process cost systems are used to apply costs to similar products that are mass-produced in a continuous fashion.
2. A process cost system is used when each finished unit is indistinguishable from another.
3. Companies that produce soft drinks, motion pictures, and computers chips would all use process cost accounting.
4. In a process cost system, costs are tracked by individual jobs.
5. Job order costing and process costing track different manufacturing costs elements.
6. Both job order costing and process costing account for direct materials, direct labor, and manufacturing overhead.
7. Costs flow through the accounts in the same basic way for both job order costing and process costing.
8. In a process cost system, only one work in process account is used.
9. In a process cost system, costs are summarized in a job cost sheet.
10. In a process cost system, the unit cost is total manufacturing costs for the period divided by the units produced during the period.
NOTE: Fill in the table below with your responses; write correction for false statements below the table:
Click here for the solution: Allen Labinski has prepared the following list of statements about process cost accounting
Wednesday, November 11, 2015
Selected balances from a company's financial statements are shown below. Calculate the following ratios for 2012
Selected balances from a company's financial statements are shown below. Calculate the following ratios for 2012:
(a) accounts receivable turnover
(b) inventory turnover
(c) days' sales uncollected
(d) days' sales in inventory
(e) profit margin.
(f) return on total assets.
December 31 December 31
For the 2012 2011 Year 2012
Accounts receivable……………………. $ 27,000 $ 24,000
Merchandise inventory………………. 25,000 20,000
Total assets…………………………………. 296,000 244,000
Accounts payable………………………… 26,000 32,000
Salaries payable…………………………… 3,000 4,400
Sales (all on credit)………………………. $312,000
Cost of goods sold……………………….. 165,600
Salaries expenses………………………… 48,000
Other expenses…………………………… 75,000
Net income………………………………….. 24,000
Click here for the solution: Selected balances from a company's financial statements are shown below. Calculate the following ratios for 2012
(a) accounts receivable turnover
(b) inventory turnover
(c) days' sales uncollected
(d) days' sales in inventory
(e) profit margin.
(f) return on total assets.
December 31 December 31
For the 2012 2011 Year 2012
Accounts receivable……………………. $ 27,000 $ 24,000
Merchandise inventory………………. 25,000 20,000
Total assets…………………………………. 296,000 244,000
Accounts payable………………………… 26,000 32,000
Salaries payable…………………………… 3,000 4,400
Sales (all on credit)………………………. $312,000
Cost of goods sold……………………….. 165,600
Salaries expenses………………………… 48,000
Other expenses…………………………… 75,000
Net income………………………………….. 24,000
Click here for the solution: Selected balances from a company's financial statements are shown below. Calculate the following ratios for 2012
Tuesday, November 10, 2015
Selected balances from a company's financial statements are shown below
Selected balances from a company's financial statements are shown below. Calculate the following ratios for 2012:
(a) accounts receivable turnover
(b) inventory turnover
(c) days' sales uncollected
(d) days' sales in inventory
(e) profit margin.
(f) return on total assets.
December 31 December 31
For the 2012 2011 Year 2012
Accounts receivable……………………. $ 27,000 $ 24,000
Merchandise inventory………………. 25,000 20,000
Total assets…………………………………. 296,000 244,000
Accounts payable………………………… 26,000 32,000
Salaries payable…………………………… 3,000 4,400
Sales (all on credit)………………………. $312,000
Cost of goods sold……………………….. 165,600
Salaries expenses………………………… 48,000
Other expenses…………………………… 75,000
Net income………………………………….. 24,000
Click here for the solution: Selected balances from a company's financial statements are shown below
(a) accounts receivable turnover
(b) inventory turnover
(c) days' sales uncollected
(d) days' sales in inventory
(e) profit margin.
(f) return on total assets.
December 31 December 31
For the 2012 2011 Year 2012
Accounts receivable……………………. $ 27,000 $ 24,000
Merchandise inventory………………. 25,000 20,000
Total assets…………………………………. 296,000 244,000
Accounts payable………………………… 26,000 32,000
Salaries payable…………………………… 3,000 4,400
Sales (all on credit)………………………. $312,000
Cost of goods sold……………………….. 165,600
Salaries expenses………………………… 48,000
Other expenses…………………………… 75,000
Net income………………………………….. 24,000
Click here for the solution: Selected balances from a company's financial statements are shown below
Saturday, October 17, 2015
Given the following financial statements (below and on page 96), historical ratios, and industry averages, calculate Sterling Company’s financial ratios
Integrative—Complete ratio analysis
Given the following financial statements (below and on page 96), historical ratios, and industry averages, calculate Sterling Company’s financial ratios for the most recent year. (Assume a 365-day year.) Analyze its overall financial situation from both a cross-sectional and a time-series viewpoint. Break your analysis into evaluations of the firm’s liquidity, activity, debt, profitability, and market.
Click here for the solution: Given the following financial statements (below and on page 96), historical ratios, and industry averages, calculate Sterling Company’s financial ratios
Given the following financial statements (below and on page 96), historical ratios, and industry averages, calculate Sterling Company’s financial ratios for the most recent year. (Assume a 365-day year.) Analyze its overall financial situation from both a cross-sectional and a time-series viewpoint. Break your analysis into evaluations of the firm’s liquidity, activity, debt, profitability, and market.
Click here for the solution: Given the following financial statements (below and on page 96), historical ratios, and industry averages, calculate Sterling Company’s financial ratios
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
During her first quarter review of the financial statements, Debra Bell, the CFO of HAL Computer Corporation
Problem 12-7 Foreign Currency Risk
During her first quarter review of the financial statements, Debra Bell, the CFO of HAL Computer Corporation, was distressed to notice the company’s transaction loss had been steadily increasing each month. HAL is a publicly held manufacturer of “PC clone” personal computers. Like most manufacturers of its kind, HAL does not manufacture domestically but utilizes lower cost offshore suppliers for components and subcontractors for assembly. As it is HAL’s policy to denominate foreign contracts in U.S. dollars whenever possible, the increase in transaction losses was particularly puzzling. Subsequent conversations with HAL’s controller, Tom Stewart, revealed all new contracts had been denominated in foreign currencies (primarily the South Korean won and Taiwanese dollar) in order to obtain more favorable purchase terms. Further, Mr. Stewart believed that the U.S. dollar would strengthen due to it being an election year. Since these contracts specify delivery and payment at various dates over the next 12 months, tremendous potential for exposure exists for the company if the dollar continues to decline against the major foreign currencies.
Required:
A. Mr. Stewart executed all new foreign contracts in foreign currencies in the belief it would help the company. (1) Do you think he was justified in his actions given the company policy? (2) On what basis did you decide if the controller was justified or not? (3) Was the loss a factor in your decision? Is this appropriate?
B. A substantial amount of foreign denominated contracts already exist for goods and services not yet received. (1) What actions may HAL take to minimize potential losses? (2) What are the advantages and disadvantages of these actions? (3) What implication does each of these scenarios have for financial statement disclosure?
C. Assume that you are Ms. Bell, and you are concerned about how the Board of Directors and the stockholders may react. Additionally, you are about to purchase a new home and are planning to sell some HAL stock for the down payment. (1) After carefully considering all of your options, what action do you decide to take? (2) Did concern over the Board, stockholders, or HAL’s stock price enter into your decision? Why or why not?
Click here for the solution: During her first quarter review of the financial statements, Debra Bell, the CFO of HAL Computer Corporation
During her first quarter review of the financial statements, Debra Bell, the CFO of HAL Computer Corporation, was distressed to notice the company’s transaction loss had been steadily increasing each month. HAL is a publicly held manufacturer of “PC clone” personal computers. Like most manufacturers of its kind, HAL does not manufacture domestically but utilizes lower cost offshore suppliers for components and subcontractors for assembly. As it is HAL’s policy to denominate foreign contracts in U.S. dollars whenever possible, the increase in transaction losses was particularly puzzling. Subsequent conversations with HAL’s controller, Tom Stewart, revealed all new contracts had been denominated in foreign currencies (primarily the South Korean won and Taiwanese dollar) in order to obtain more favorable purchase terms. Further, Mr. Stewart believed that the U.S. dollar would strengthen due to it being an election year. Since these contracts specify delivery and payment at various dates over the next 12 months, tremendous potential for exposure exists for the company if the dollar continues to decline against the major foreign currencies.
Required:
A. Mr. Stewart executed all new foreign contracts in foreign currencies in the belief it would help the company. (1) Do you think he was justified in his actions given the company policy? (2) On what basis did you decide if the controller was justified or not? (3) Was the loss a factor in your decision? Is this appropriate?
B. A substantial amount of foreign denominated contracts already exist for goods and services not yet received. (1) What actions may HAL take to minimize potential losses? (2) What are the advantages and disadvantages of these actions? (3) What implication does each of these scenarios have for financial statement disclosure?
C. Assume that you are Ms. Bell, and you are concerned about how the Board of Directors and the stockholders may react. Additionally, you are about to purchase a new home and are planning to sell some HAL stock for the down payment. (1) After carefully considering all of your options, what action do you decide to take? (2) Did concern over the Board, stockholders, or HAL’s stock price enter into your decision? Why or why not?
Click here for the solution: During her first quarter review of the financial statements, Debra Bell, the CFO of HAL Computer Corporation
Thursday, September 24, 2015
Presented below are the financial statements of Weller Company
ACC 560 Week 9 Assignment
P13-7A Presented below are the financial statements of Weller Company.
WELLER COMPANY
Comparative Balance Sheets
December 31
Assets 2008 2007
Cash $ 35,000 $ 20,000
Accounts receivable 33,000 14,000
Merchandise inventory 27,000 20,000
Property, Plant and Equipment 60,000 78,000
Accumulated depreciation (29,000) (24,000)
Total $126,000 $108,000
Liabilities and Stockholders' Equity
Accounts payable $ 29,000 $ 15,000
Income taxes payable 7,000 8,000
Bonds payable 27,000 33,000
Common stock 18,000 14,000
Retained earnings 45,000 38,000
Total $126,000 $108,000
WELLER COMPANY
Income Statement
For the Year Ended December 31, 2008
Sales $242,000
Cost of goods sold 175,000
Gross profit 67,000
Selling expenses $18,000
Administrative expenses 6,000 24,000
Income from operations 43,000
Interest expense 3,000
Income before income taxes 40,000
Income tax expense 8,000
Net income $ 32,000
Additional data:
1. Dividends declared and paid were $25,000.
2. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had a book value of $8,500 at the time of sale.
3. All depreciation expense, $14,500, is in the selling expense category.
4. All sales and purchases are on account.
Instructions
Prepare a statement of cash flows using the indirect method.
Click here for the solution: Presented below are the financial statements of Weller Company
P13-7A Presented below are the financial statements of Weller Company.
WELLER COMPANY
Comparative Balance Sheets
December 31
Assets 2008 2007
Cash $ 35,000 $ 20,000
Accounts receivable 33,000 14,000
Merchandise inventory 27,000 20,000
Property, Plant and Equipment 60,000 78,000
Accumulated depreciation (29,000) (24,000)
Total $126,000 $108,000
Liabilities and Stockholders' Equity
Accounts payable $ 29,000 $ 15,000
Income taxes payable 7,000 8,000
Bonds payable 27,000 33,000
Common stock 18,000 14,000
Retained earnings 45,000 38,000
Total $126,000 $108,000
WELLER COMPANY
Income Statement
For the Year Ended December 31, 2008
Sales $242,000
Cost of goods sold 175,000
Gross profit 67,000
Selling expenses $18,000
Administrative expenses 6,000 24,000
Income from operations 43,000
Interest expense 3,000
Income before income taxes 40,000
Income tax expense 8,000
Net income $ 32,000
Additional data:
1. Dividends declared and paid were $25,000.
2. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had a book value of $8,500 at the time of sale.
3. All depreciation expense, $14,500, is in the selling expense category.
4. All sales and purchases are on account.
Instructions
Prepare a statement of cash flows using the indirect method.
Click here for the solution: Presented below are the financial statements of Weller Company
Sunday, September 20, 2015
Jim Thome has prepared the following list of statements about bonds
ACC 291 Week 3 Assignment
E10-8 Jim Thome has prepared the following list of statements about bonds.
1. Bonds are a form of interest bearing notes payable.
2. When seeking long term financing, an advantage of issuing bonds over issuing common stock is that stockholder control is not affected.
3. When seeking long term financing, an advantage of issuing common stock over issuing bonds is that tax savings result.
4. Secured bonds have specific assets of the issuer pledged as collateral for the bonds.
5. Secured bonds are also known as debenture bonds.
6. Bonds that mature in installments are called term bonds.
7. A conversion feature may be added to bonds to make them more attractive to bond buyers.
8. The rate used to determine the amount of cash interest the borrower pays is called the stated rate.
9. Bond prices are usually quoted as a percentage of the face value of the bond.
10. The present value of a bond is the value at which it should sell in the marketplace.
Instructions
Identify each statement above as true or false. If false, indicate how to correct the statement.
Click here for the solution: Jim Thome has prepared the following list of statements about bonds
E10-8 Jim Thome has prepared the following list of statements about bonds.
1. Bonds are a form of interest bearing notes payable.
2. When seeking long term financing, an advantage of issuing bonds over issuing common stock is that stockholder control is not affected.
3. When seeking long term financing, an advantage of issuing common stock over issuing bonds is that tax savings result.
4. Secured bonds have specific assets of the issuer pledged as collateral for the bonds.
5. Secured bonds are also known as debenture bonds.
6. Bonds that mature in installments are called term bonds.
7. A conversion feature may be added to bonds to make them more attractive to bond buyers.
8. The rate used to determine the amount of cash interest the borrower pays is called the stated rate.
9. Bond prices are usually quoted as a percentage of the face value of the bond.
10. The present value of a bond is the value at which it should sell in the marketplace.
Instructions
Identify each statement above as true or false. If false, indicate how to correct the statement.
Click here for the solution: Jim Thome has prepared the following list of statements about bonds
Friday, September 18, 2015
The comparative condensed income statements of Hendi Corporation are shown below
E15-4 The comparative condensed income statements of Hendi Corporation are shown below.
HENDI CORPORATION
Comparative Condensed Income Statements
For the Years Ended December 31
2009 2008
Net sales $600,000 $500,000
Cost of goods sold 483,000 420,000
Gross profit 117,000 80,000
Operating expenses 57,200 44,000
Net income $ 59,800 $ 36,000
Instructions
a) Prepare a horizontal analysis of the income statement data for Hendi Corporation using 2008 as a base. (Show the amounts of increase or decrease.)
b) Prepare a vertical analysis of the income statement data for Hendi Corporation in columnar form for both years.
Click here for the solution: The comparative condensed income statements of Hendi Corporation are shown below
HENDI CORPORATION
Comparative Condensed Income Statements
For the Years Ended December 31
2009 2008
Net sales $600,000 $500,000
Cost of goods sold 483,000 420,000
Gross profit 117,000 80,000
Operating expenses 57,200 44,000
Net income $ 59,800 $ 36,000
Instructions
a) Prepare a horizontal analysis of the income statement data for Hendi Corporation using 2008 as a base. (Show the amounts of increase or decrease.)
b) Prepare a vertical analysis of the income statement data for Hendi Corporation in columnar form for both years.
Click here for the solution: The comparative condensed income statements of Hendi Corporation are shown below
Friday, September 11, 2015
Allison, CPA has completed the audit of the financial statements of Optima Corporation as of and for the year ended December 31, 2009
Auditing P 3-27 Allison, CPA has completed the audit of the financial
statements of Optima Corporation as of and for the year ended December
31, 2009. Allison also audited and reported on the Optima financial
statements for the prior year. Allison drafted the following report for
2009.
We have audited the balance sheet and statements of income and retained earnings of Optima Corporation as of December 31, 2009. We conducted our audit in accordance with generally accepted accounting standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of misstatement.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly the financial position of Optima Corporation as of December 31, 2009, and the results of its operations for the year then ended in conformity with generally accepted auditing standards, applied on a basis consistent with those of the preceding year.
Allison, CPA
(signed)
Other Information
-Optima is presenting comparative financial statements.
-Optima does not wish to present a statement of cash flows for either year.
-During 2009, Optima changed its method of accounting for long-term construction contracts and properly reflected the effect of the change in the current year's financial statements and restated the prior year's statements. Allison is satisfied with Optima's justification for making the change. The change is discussed in footnote 12.
- Allison was unable to perform normal accounts receivable confirmation procedures, but alternative procedures were used to satisfy Allison as to the existence of the receivables.
-Optima Corporation is the defendant in a litigation, the outcome of which is highly uncertain. If the case is settled in favor of the plaintiff, Optima will be required to pay a substantial amount of cash, which might require the sale of certain fixed assets. The litigation and the possible effects have been properly disclosed in footnote 11.
-Optima issued debentures on January 31, 2008, in the amount of $10 million. The funds obtained from the issuance were used to finance the expansion of plant facilities. The debenture agreement restricts the payment of future cash dividends to earnings after December 31, 2013. Optima declined to disclose this essential data in the footnotes to the financial statements.
Required:
a. Identify and explain any items included in "Other Information" that need not be part of the auditor's report.
b. Explain the deficiencies in Allison's report as drafted.
Click here for the solution: Allison, CPA has completed the audit of the financial statements of Optima Corporation as of and for the year ended December 31, 2009
We have audited the balance sheet and statements of income and retained earnings of Optima Corporation as of December 31, 2009. We conducted our audit in accordance with generally accepted accounting standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of misstatement.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly the financial position of Optima Corporation as of December 31, 2009, and the results of its operations for the year then ended in conformity with generally accepted auditing standards, applied on a basis consistent with those of the preceding year.
Allison, CPA
(signed)
Other Information
-Optima is presenting comparative financial statements.
-Optima does not wish to present a statement of cash flows for either year.
-During 2009, Optima changed its method of accounting for long-term construction contracts and properly reflected the effect of the change in the current year's financial statements and restated the prior year's statements. Allison is satisfied with Optima's justification for making the change. The change is discussed in footnote 12.
- Allison was unable to perform normal accounts receivable confirmation procedures, but alternative procedures were used to satisfy Allison as to the existence of the receivables.
-Optima Corporation is the defendant in a litigation, the outcome of which is highly uncertain. If the case is settled in favor of the plaintiff, Optima will be required to pay a substantial amount of cash, which might require the sale of certain fixed assets. The litigation and the possible effects have been properly disclosed in footnote 11.
-Optima issued debentures on January 31, 2008, in the amount of $10 million. The funds obtained from the issuance were used to finance the expansion of plant facilities. The debenture agreement restricts the payment of future cash dividends to earnings after December 31, 2013. Optima declined to disclose this essential data in the footnotes to the financial statements.
Required:
a. Identify and explain any items included in "Other Information" that need not be part of the auditor's report.
b. Explain the deficiencies in Allison's report as drafted.
Click here for the solution: Allison, CPA has completed the audit of the financial statements of Optima Corporation as of and for the year ended December 31, 2009
The client has presented all required financial statements with the exception of the statement of cash flows
MULTIPLE CHOICE
Question 1
The client has presented all required financial statements with the exception of the statement of cash flows. The auditor has completed the audit and is satisfied that all other statements are presented fairly. The auditor:
Question 2
A CPA may wish to emphasize specific matters regarding the financial statements even though an unqualified opinion will be issued. Normally, such explanatory information is:
Question 3
Examples of unqualified opinions which contain modified wording (without adding an explanatory paragraph) include:
Question 4
When the auditor determines the financial statements are fairly stated and then determines that the auditor lacks independence, the auditor should issue:
Question 5
Which of the following is not a change that affects consistency and, therefore, does not
require an explanatory paragraph?
Question 6
The audit report date on a standard unqualified report indicates:
Question 7
GAAP requires that changes in accounting principles be to a:
Question 8
If the balance sheet of a company is dated December 31, 2009, the audit report is dated February 8, 2010, and both are released on February 15, 2010, this indicates that the auditor has searched for subsequent events that occurred up to:
Question 9
The purpose of the introductory paragraph in the standard unqualified report is:
Question 10
The introductory paragraph of the standard audit report states that the auditor is:
Click here for the solution: The client has presented all required financial statements with the exception of the statement of cash flows
Question 1
The client has presented all required financial statements with the exception of the statement of cash flows. The auditor has completed the audit and is satisfied that all other statements are presented fairly. The auditor:
Question 2
A CPA may wish to emphasize specific matters regarding the financial statements even though an unqualified opinion will be issued. Normally, such explanatory information is:
Question 3
Examples of unqualified opinions which contain modified wording (without adding an explanatory paragraph) include:
Question 4
When the auditor determines the financial statements are fairly stated and then determines that the auditor lacks independence, the auditor should issue:
Question 5
Which of the following is not a change that affects consistency and, therefore, does not
require an explanatory paragraph?
Question 6
The audit report date on a standard unqualified report indicates:
Question 7
GAAP requires that changes in accounting principles be to a:
Question 8
If the balance sheet of a company is dated December 31, 2009, the audit report is dated February 8, 2010, and both are released on February 15, 2010, this indicates that the auditor has searched for subsequent events that occurred up to:
Question 9
The purpose of the introductory paragraph in the standard unqualified report is:
Question 10
The introductory paragraph of the standard audit report states that the auditor is:
Click here for the solution: The client has presented all required financial statements with the exception of the statement of cash flows
Wednesday, September 2, 2015
The following General Fund information is available for the preparation of the financial statements for the city of Eastern Shores for the year ended September 30, 2012
2-9 The following General Fund information is available for the preparation of the financial statements for the city of Eastern Shores for the year ended September 30, 2012:
Revenues:
Property taxes $27,000,000
Sales taxes 13, 216,000
Fees and fines 1,124,000
Licenses and permits 1,921,000
Intergovernmental 868,000
Investment earnings 654,000
Expenditures:
Current:
General government 8,192,000
Public safety 24,444,000
Public works 6,211,000
Health and sanitation 1,693,000
Culture and recreation 2,154,000
Debt service – principal 652,000
Debt service – interest 821,000
Proceeds of long-term, capital-related debt 2,210,000
Transfer to special revenue fund 1,119,000
Special item – proceeds from sale of land 821,000
Fund balance, October 1, 2011
From the information given above, prepare, in good form, a General Fund Statement of Revenue, Expenditures, and Changes in Fund Balances for the City of Eastern Shores General Fund for the Year Ended September 30, 2012.
Click here for the solution: The following General Fund information is available for the preparation of the financial statements for the city of Eastern Shores for the year ended September 30, 2012
Revenues:
Property taxes $27,000,000
Sales taxes 13, 216,000
Fees and fines 1,124,000
Licenses and permits 1,921,000
Intergovernmental 868,000
Investment earnings 654,000
Expenditures:
Current:
General government 8,192,000
Public safety 24,444,000
Public works 6,211,000
Health and sanitation 1,693,000
Culture and recreation 2,154,000
Debt service – principal 652,000
Debt service – interest 821,000
Proceeds of long-term, capital-related debt 2,210,000
Transfer to special revenue fund 1,119,000
Special item – proceeds from sale of land 821,000
Fund balance, October 1, 2011
From the information given above, prepare, in good form, a General Fund Statement of Revenue, Expenditures, and Changes in Fund Balances for the City of Eastern Shores General Fund for the Year Ended September 30, 2012.
Click here for the solution: The following General Fund information is available for the preparation of the financial statements for the city of Eastern Shores for the year ended September 30, 2012
Monday, August 31, 2015
Match the numbered statements below with the lettered terms
Match the numbered statements below with the lettered terms. An answer (letter) may used more than once, and some terms require more than one answer (letter).
1. Key ingredients in quality of relevance.
2. Traditional assumptions that influence the FASB's conceptual framework.
3. The idea that information should represent what it purports to represent.
4. An important constraint relating to costs and benefits.
5. An example of conservatism
6. The availability of information when it is needed.
7. Recording an item in the accounting records.
8. Determines the threshold for recognition.
9. Implies consensus.
10. Transactions between independent parties.
a) Cost-effectiveness
b) Representational faithfulness
c) Recognition
d) Verifiability
e) Time periods
f) Unrealized
g) Completeness
h) Timeliness
i) Materiality
j) Predictive value
k) Economic entity
l) Lower-of-cost-or-market rule
m) Phrenology
n) Arm's-length transactions
Click here for the solution: Match the numbered statements below with the lettered terms
1. Key ingredients in quality of relevance.
2. Traditional assumptions that influence the FASB's conceptual framework.
3. The idea that information should represent what it purports to represent.
4. An important constraint relating to costs and benefits.
5. An example of conservatism
6. The availability of information when it is needed.
7. Recording an item in the accounting records.
8. Determines the threshold for recognition.
9. Implies consensus.
10. Transactions between independent parties.
a) Cost-effectiveness
b) Representational faithfulness
c) Recognition
d) Verifiability
e) Time periods
f) Unrealized
g) Completeness
h) Timeliness
i) Materiality
j) Predictive value
k) Economic entity
l) Lower-of-cost-or-market rule
m) Phrenology
n) Arm's-length transactions
Click here for the solution: Match the numbered statements below with the lettered terms
Sunday, August 23, 2015
(Consolidated Financial Statements: Various Issues) Algo Company and Bevo Corporation
Case 16-1 Consolidated Financial Statements: Various Issues
Because of irreconcilable differences of opinion, a dissenting group within the management and board of directors of the Algo Company resigned and formed the Bevo Corporation to purchase a manufacturing division of the Algo Company. After negotiation of the agreement, but just before closing and actual transfer of the property, a minority stockholder of Algo notified Bevo that a prior stockholder’s agreement with Algo empowered him to prevent the sale. The minority stockholder’s claim was acknowledged by Bevo’s board of directors. Bevo’s board then organized Casco, Inc. to acquire the minority stockholder’s interest in Algo for $75,000, and Bevo advanced the cash to Casco. Bevo exercised control over Casco as a subsidiary corporation with common officers and directors. Casco paid the minority stockholder $75,000 (about twice the market value of the Algo stock) for his interest in Algo. Bevo then purchased the manufacturing division from Algo.
Required:
a. What expenditures are usually included in the cost of property, plant, and equipment acquired in a purchase?
b. i. What are the criteria for determining whether to consolidate the financial statements of Bevo Corporation and Casco, Inc.?
ii. Should the financial statements of Bevo and Casco be consolidated? Discuss.
c. Assume that unconsolidated financial statements are prepared. Discuss the propriety of treating the $75,000 expenditure in the financial statements of the Bevo as
i. an account receivable from Casco
ii. an investment in Casco
iii. part of the cost of the property, plant, and equipment
iv. a loss
Click here for the solution: (Consolidated Financial Statements: Various Issues) Algo Company and Bevo Corporation
Because of irreconcilable differences of opinion, a dissenting group within the management and board of directors of the Algo Company resigned and formed the Bevo Corporation to purchase a manufacturing division of the Algo Company. After negotiation of the agreement, but just before closing and actual transfer of the property, a minority stockholder of Algo notified Bevo that a prior stockholder’s agreement with Algo empowered him to prevent the sale. The minority stockholder’s claim was acknowledged by Bevo’s board of directors. Bevo’s board then organized Casco, Inc. to acquire the minority stockholder’s interest in Algo for $75,000, and Bevo advanced the cash to Casco. Bevo exercised control over Casco as a subsidiary corporation with common officers and directors. Casco paid the minority stockholder $75,000 (about twice the market value of the Algo stock) for his interest in Algo. Bevo then purchased the manufacturing division from Algo.
Required:
a. What expenditures are usually included in the cost of property, plant, and equipment acquired in a purchase?
b. i. What are the criteria for determining whether to consolidate the financial statements of Bevo Corporation and Casco, Inc.?
ii. Should the financial statements of Bevo and Casco be consolidated? Discuss.
c. Assume that unconsolidated financial statements are prepared. Discuss the propriety of treating the $75,000 expenditure in the financial statements of the Bevo as
i. an account receivable from Casco
ii. an investment in Casco
iii. part of the cost of the property, plant, and equipment
iv. a loss
Click here for the solution: (Consolidated Financial Statements: Various Issues) Algo Company and Bevo Corporation
Saturday, August 22, 2015
Cohen and Single, LLP, are auditing the ICFR and financial statements of Copley and Sons, a public company that sells supplies to government agencies
Problem 11-28 Cohen and Single, LLP, are auditing the ICFR and financial statements of Copley and Sons, a public company that sells supplies to government agencies. Copley and Sons has a 12/31 fiscal year end. Cohen and Single conclude that the financial statements for the current and prior year are fairly stated. However, they found a material weakness in ICFR. There is a lack of separation of duties because the companys’ CFO has the ability to change passwords on employee’s computer identification numbers and has unlimited access to a computer terminal through which any journal entry can be entered without approval and review. Management’s evaluation of ICFR is also as of 12/31, and management’s report states that ICFR is not effective due to the computer security problem causing the lack of separation of duties. Draft Cohen and Single’s combined audit report with opinions on the financial statements and ICFR as described.
Click here for the solution: Cohen and Single, LLP, are auditing the ICFR and financial statements of Copley and Sons, a public company that sells supplies to government agencies
Click here for the solution: Cohen and Single, LLP, are auditing the ICFR and financial statements of Copley and Sons, a public company that sells supplies to government agencies
Tuesday, August 4, 2015
Presented below are the financial statements of Helwany Company
P12-7A Presented below are the financial statements of Helwany Company.
HELWANY COMPANY
Comparative Balance Sheets
December 31
Assets 2012 2011
Cash $ 35,000 $ 20,000
Accounts receivable 20,000 14,000
Inventory 28,000 20,000
Property, plant, and equipment 60,000 78,000
Accumulated depreciation (32,000) (24,000)
Total $111,000 $108,000
Liabilities and Stockholders’ Equity
Accounts payable $ 19,000 $ 15,000
Income taxes payable 7,000 8,000
Bonds payable 17,000 33,000
Common stock 18,000 14,000
Retained earnings 50,000 38,000
Total $111,000 $108,000
HELWANY COMPANY
Income Statement
For the Year Ended December 31, 2012
Sales $242,000
Cost of goods sold 175,000
Gross profit 67,000
Selling expenses $18,000
Administrative expenses 6,000 24,000
Income from operations 43,000
Interest expense 3,000
Income before income taxes 40,000
Income tax expense 8,000
Net income $ 32,000
Additional data:
1. Depreciation expense was $17,500.
2. Dividends declared and paid were $20,000.
3. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had accumulated depreciation of $9,500 at the time of sale.
Instructions
a. Prepare a statement of cash flows using the indirect method.
b. Compute these cash-based measures:
a. Current cash debt coverage ratio.
b. Cash debt coverage ratio.
c. Free cash flow.
Check: (a) Cash from operations $38,500
Click here for the solution: Presented below are the financial statements of Helwany Company
HELWANY COMPANY
Comparative Balance Sheets
December 31
Assets 2012 2011
Cash $ 35,000 $ 20,000
Accounts receivable 20,000 14,000
Inventory 28,000 20,000
Property, plant, and equipment 60,000 78,000
Accumulated depreciation (32,000) (24,000)
Total $111,000 $108,000
Liabilities and Stockholders’ Equity
Accounts payable $ 19,000 $ 15,000
Income taxes payable 7,000 8,000
Bonds payable 17,000 33,000
Common stock 18,000 14,000
Retained earnings 50,000 38,000
Total $111,000 $108,000
HELWANY COMPANY
Income Statement
For the Year Ended December 31, 2012
Sales $242,000
Cost of goods sold 175,000
Gross profit 67,000
Selling expenses $18,000
Administrative expenses 6,000 24,000
Income from operations 43,000
Interest expense 3,000
Income before income taxes 40,000
Income tax expense 8,000
Net income $ 32,000
Additional data:
1. Depreciation expense was $17,500.
2. Dividends declared and paid were $20,000.
3. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had accumulated depreciation of $9,500 at the time of sale.
Instructions
a. Prepare a statement of cash flows using the indirect method.
b. Compute these cash-based measures:
a. Current cash debt coverage ratio.
b. Cash debt coverage ratio.
c. Free cash flow.
Check: (a) Cash from operations $38,500
Click here for the solution: Presented below are the financial statements of Helwany Company
Indicate whether each of the following statements is true or false
DO IT! 11-1
Indicate whether each of the following statements is true or false.
1. The corporation is an entity separate and distinct from its owners.
2. The liability of stockholders is normally limited to their investment in the corporation.
3. The relative lack of government regulation is an advantage of the corporate form of business.
4. There is no journal entry to record the authorization of capital stock.
5. No-par value stock is quite rare today.
Click here for the solution: Indicate whether each of the following statements is true or false
Indicate whether each of the following statements is true or false.
1. The corporation is an entity separate and distinct from its owners.
2. The liability of stockholders is normally limited to their investment in the corporation.
3. The relative lack of government regulation is an advantage of the corporate form of business.
4. There is no journal entry to record the authorization of capital stock.
5. No-par value stock is quite rare today.
Click here for the solution: Indicate whether each of the following statements is true or false
Monday, August 3, 2015
The comparative statements of Villa Tool Company are presented below
P14-2A The comparative statements of Villa Tool Company are presented below.
VILLA TOOL COMPANY
Income Statement
For the Year Ended December 31
2012 2011
Net sales $1,818,500 $1,750,500
Cost of goods sold 1,011,500 996,000
Gross profit 807,000 754,500
Selling and administrative expense 516,000 479,000
Income from operations 291,000 275,500
Other expenses and losses
Interest expense 18,000 14,000
Income before income taxes 273,000 261,500
Income tax expense 81,000 77,000
Net income $ 192,000 $ 184,500
VILLA TOOL COMPANY
Balance Sheets
December 31
Assets 2012 2011
Current assets
Cash $ 60,100 $ 64,200
Short-term investments 69,000 50,000
Accounts receivable (net) 117,800 102,800
Inventory 123,000 115,500
Total current assets 369,900 332,500
Plant assets (net) 600,300 520,300
Total assets $970,200 $852,800
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $160,000 $145,400
Income taxes payable 43,500 42,000
Total current liabilities 203,500 187,400
Bonds payable 200,000 200,000
Total liabilities 403,500 387,400
Stockholders' equity
Common stock ($5 par) 280,000 300,000
Retained earnings 286,700 165,400
Total stockholders' equity 566,700 465,400
Total liabilities and stockholders' equity $970,200 $852,800
Compute the following ratios for 2012. (Weighted average common shares in 2012 were 57,000, and all sales were on account.)
(a) Earnings per share
(b) Return on common stockholders' equity
(c) Return on assets
(d) Current
(e) Acid-test
(f) Receivables turnover times
(g) Inventory turnover times
(h) Times interest earned times
(i) Asset turnover times
(j) Debt to total assets
Click here for the solution: The comparative statements of Villa Tool Company are presented below
VILLA TOOL COMPANY
Income Statement
For the Year Ended December 31
2012 2011
Net sales $1,818,500 $1,750,500
Cost of goods sold 1,011,500 996,000
Gross profit 807,000 754,500
Selling and administrative expense 516,000 479,000
Income from operations 291,000 275,500
Other expenses and losses
Interest expense 18,000 14,000
Income before income taxes 273,000 261,500
Income tax expense 81,000 77,000
Net income $ 192,000 $ 184,500
VILLA TOOL COMPANY
Balance Sheets
December 31
Assets 2012 2011
Current assets
Cash $ 60,100 $ 64,200
Short-term investments 69,000 50,000
Accounts receivable (net) 117,800 102,800
Inventory 123,000 115,500
Total current assets 369,900 332,500
Plant assets (net) 600,300 520,300
Total assets $970,200 $852,800
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $160,000 $145,400
Income taxes payable 43,500 42,000
Total current liabilities 203,500 187,400
Bonds payable 200,000 200,000
Total liabilities 403,500 387,400
Stockholders' equity
Common stock ($5 par) 280,000 300,000
Retained earnings 286,700 165,400
Total stockholders' equity 566,700 465,400
Total liabilities and stockholders' equity $970,200 $852,800
Compute the following ratios for 2012. (Weighted average common shares in 2012 were 57,000, and all sales were on account.)
(a) Earnings per share
(b) Return on common stockholders' equity
(c) Return on assets
(d) Current
(e) Acid-test
(f) Receivables turnover times
(g) Inventory turnover times
(h) Times interest earned times
(i) Asset turnover times
(j) Debt to total assets
Click here for the solution: The comparative statements of Villa Tool Company are presented below
Sunday, July 12, 2015
At what value would a government report bonds payable on its government-wide statements?
At what value would a government report bonds payable on its government-wide statements? Why might this value differ from the bonds' face value? Why might it differ from their market value?
Click here for the solution: At what value would a government report bonds payable on its government-wide statements?
Click here for the solution: At what value would a government report bonds payable on its government-wide statements?
Subscribe to:
Posts (Atom)