Completing Financial Statement Analysis Assignments

Published: 1 year ago

Completing Financial Statement Analysis Assignments

31. 1. What is fraud? 2. How does fraud affect individuals, consumers, and organizations? 3. List and...

1.    What is fraud?

2.    How does fraud affect individuals, consumers, and organizations?

3.    List and describe the five different types of frauds.

4.    What is the difference between civil and criminal laws?

32. Tidy House produces a variety of household products. The firm

Tidy House produces a variety of household products. The firm operates 24 hours per day with three daily work shifts. The first-shift workers receive ?oregular pay.?? The second shift receives an 8 percent pay premium, and the third shift receives a 12 percent pay premium. In addition, when production is scheduled on weekends, the firm pays an overtime premium of 50 percent (based on the pay rate for first-shift employees). Labor premiums are included in overhead. The October 2010 factory payroll is as follows:

Total wages for October for 32,000 hours ………………………………$435,600

Normal hourly wage for first-shift employees ………………………….. $12

Total regular hours worked, split evenly among the three shifts ……….. 27,000

a. How many overtime hours were worked in October?

b. How much of the total labor cost should be charged to direct labor? To overhead?

c. What amount of overhead was for second-shift and third-shift premiums? For overtime premiums?

33. Balance sheet preparation Use the appropriate items from the following list to prepare in...

 Balance sheet preparation Use the appropriate items from the following list

to prepare in good form? Mellark's Baked Goods balance sheet at December? 31, 2015.

Complete the fragment of the balance sheet below? ($000): ?(Select the correct account from the? drop-down menu and round to the nearest? dollar.)

PLEASE PREPARE A FULL BALANCED SHEET FROM THE TABLE ABOVE

34. 1.4 For each of the following variables, determine whether the variable is categorical or numerical.

1.4 For each of the following variables, determine whether the variable is categorical or numerical. If the variable is numerical, determine whether the SELF Test variable is discrete or continuous. In addition, determine the measurement scale. a. Number of telephones per household b. Length (in minutes) of the longest telephone call made in a month c. Whether someone in the household owns a Wi-Fi-capable cell phone d. Whether there is a high-speed Internet connection in the household1.3 Suppose that you measure the time it takes to download a video from the Internet. a. Explain why the download time is a continuous numerical variable. b. Explain why the download time is a ratio scaled variable

35. Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of ...

Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $87,000. The machine's useful life is estimated at 20 years, or 395,000 units of product, with a $8,000 salvage value. During its second year, the machine produces 33,500 units of product. Determine the machine’s second-year depreciation and year end book value under the straight-line method.

36. M. Bonzales has the following transactions during August of the current year. Indicate the effect...

M. Bonzales has the following transactions during August of the current year. Indicate the effect on the accounting equation and on the debit-credit analysis. Aug. 1 opens an office as a financial advisor, investing $8,000 in cash. 4 Pays insurance in advance for 6 months, $1, 800 cash. 16 Receives $3, 600 from clients for services performed. 27 Pays secretary $1,000 salary.

37. Nascar Motors assembles and sells motor vehicles and uses

Nascar Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2008 are:





The selling price per vehicle is $24,000. The budgeted level of production used to calculate the bud; fixed manufacturing cost per unit is 500 units. There are no price efficiency, or spending variances. Any production-volume variance is written off to cost of goods sold in the month in which it occurs. If you want to use Excel to solve this exercise, go to the Excel Lab at www.prenhall.com/hornqren/costl3e and download the template for Exercise 9-16.

1. Prepare April and May 2008 income statements for Nascar Motors under

(a) Variable costing and

(b) Absorption costing.

2. Prepare a numerical reconciliation and explanation of the difference between operating income each month under variable costing and absorptioncosting.

38. Sarah Edwards, division manager for Pillows Plus, is speaking to

Sarah Edwards, division manager for Pillows Plus, is speaking to the controller, Diana Rothman, about the budgeting process. Sarah states, ?oI’m not an accountant, so can you explain the three main parts of the master budget to me and tell me their purpose???

Requirement

1. Answer Sarah’s question.

39. Multiple Choice Questions 1. If a company uses the direct write-off method of accounting for bad...

Multiple Choice Questions 1. If a company uses the direct write-off method of accounting for bad debts, a. It is applying the matching principle. b. It will reduce the accounts receivable account at the end of the accounting period for estimated uncollectible accounts. c. It will report accounts receivable in the balance sheet at their net realizable value. d. It will record bad debt expense only when an account is determined to be uncollectible. 2. Which of the following best describes the objective of estimating bad debt expense with the percentage of credit sales method? a. To estimate bad debt expense based on a percentage of credit sales made during the period b. To estimate the amount of bad debt expense based on an aging of accounts receivable c. To determine the amount of uncollectible accounts during a given period d. To facilitate the use of the direct write-off method 3. Which of the following best describes the concept of the aging method of receivables? a. Accounts receivable should be directly written off when the due date arrives and the customers have not paid the bill. b. An accurate estimate of bad debt expense may be arrived at by multiplying historical bad debt rates by the amount of credit sales made during a period. c. Estimating the appropriate balance for the allowance for doubtful accounts results in the appropriate value for net accounts receivable on the balance sheet. d. The precise amount of bad debt expense may be ar

40. Quentin's December 31, 2003 inventory T-account debit balance was also $56,000. During 2004, its...

Quentin's December 31, 2003 inventory T-account debit balance was also $56,000. During 2004, its inventory purchases amounted to $25,000, and there were no inventory-related write-downs or losses. What was Quentin's 2004 cost of goods sold expense?

$5,000

$67,000

$20,000

$45,000

41. On January 1, 2016, Gless Textiles issued $21 million of 10%, 10-year convertible bonds at 101. T...

only

On January 1, 2016, Gless Textiles issued $21 million of 10%, 10-year convertible bonds at 101. The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 40 shares of Gless's no par common stock. Bonds that are similar in all respects, except that they are nonconvertible, currently are selling at 99 (that is, 99% of face amount). Century Services purchased 15% of the issue as an investment. Required: 1. Prepare the journal entries for the issuance of the bonds by Gless and the purchase of the bond investment by Century. (Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) view general journal view transaction list Credit Date General Journal Debit 21,210,000 January 01, 2016 Cash 21,000,000 Convertible bonds payable 210,000 Premium on bonds payable 3,150,000 January 01, 2016 Investment in convertible bonds Premium on bond investment 31,500 Cash 3,181,500

42. Melton River Resort opened for business on June 1 with

Melton River Resort opened for business on June 1 with eight air-conditioned units. Its trial balance before adjustment on August 31 is as follows.



In addition to those accounts listed on the trial balance, the chart of accounts for Melton River Resort also contains the following accounts and account numbers: No. 112 Accounts Receivable, No. 144 Accumulated Depreciation—Buildings, No. 150 Accumulated Depreciation—Equipment, No. 212 Salaries and Wages Payable, No. 230 Interest Payable, No. 620 Depreciation Expense, No. 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense. Other data:

1. Insurance expires at the rate of $300 per month.

2. A count on August 31 shows $800 of supplies on hand.

3. Annual depreciation is $6,000 on buildings and $2,400 on equipment.

4. Unearned rent revenue of $4,800 was earned prior to August 31.

5. Salaries of $400 were unpaid at August 31.

6. Rentals of $4,000 were due from tenants at August 31. (Use Accounts Receivable)

7. The mortgage interest rate is 9% per year. (The mortgage was taken out on August 1.)

Instructions

(a) Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31.

(b) Prepare a ledger using the three-column form of account. Enter the trial balance amounts and post the adjusting entries. (Use J1 as the posting reference.)

(c) Prepare an adjusted trial balance on August 31.

(d) Prepare an income statement and an owner’s equity statement for the 3 months ending August 31 and a balance sheet as of August31.

43. Strauderman Delivery Company, Inc., was organized in 2011 in Wisconsin...

Analyzing the Effects of Transactions Using T-Accounts, Preparing a Balance Sheet, and

Evaluating the Current Ratio over Time as a Bank Loan Officer

Strauderman Delivery Company, Inc., was organized in 2011 in Wisconsin. The following transactions occurred during year 2011:

a. Received $40,000 cash from organizers in exchange for stock in the new company.

b. Purchased land in Wisconsin for $16,000, signing a one-year note (ignore interest).

c. Bought two used delivery trucks for operating purposes at the start of the year at a cost of $10,000 each; paid $4,000 cash and signed a note due in three years for the rest (ignore interest).

d. Paid $1,000 cash to a truck repair shop for a new motor for one of the trucks. ( Hint: Increase the account you used to record the purchase of the trucks since the productive life of the truck has been improved.)

e. Sold one-fourth of the land for $4,000 to Pablo Moving, which signed a six-month note.

f. Stockholder Melissa Strauderman paid $27,600 cash for a vacant lot (land) in Canada for her personal use.

Required:

1. Set up appropriate T-accounts with beginning balances of zero for Cash, Short-Term Notes Receivable, Land, Equipment, Short-Term Notes Payable, Long-Term Notes Payable, and Contributed Capital. Using the T-accounts, record the effects of these transactions by Strauderman Delivery Company.

2. Prepare a classified balance sheet for Strauderman Delivery Company at December 31, 2011.

3. At the end of the next two years, Strauderman Delivery Company reported the following amounts on its balance sheets:



Compute the company’s current ratio for 2011, 2012, and 2013. What is the trend and what does this suggest about the company?

4. At the beginning of year 2014, Strauderman Delivery Company applied to your bank for a $50,000 short-term loan to expand the business. The vice president of the bank asked you to review the information and make a recommendation on lending the funds based solely on the results of the current ratio. What recommendation would you make to the bank’s vice president about lending the money to Strauderman DeliveryCompany?

44. 11) Ratios that test liquidity include all of the following EXCEPT: A) acid-test ratio. B) current..

11) Ratios that test liquidity include all of the following EXCEPT:

A) acid-test ratio.

B) current ratio.

C) debt to total assets.

D) inventory turnover.

12) To compute operating income (profit) percentage, divide:

A) sales by cost of goods sold.

B) gross profit by net sales.

C) net income by stockholders' equity.

D) operating income by net sales.

13) A measure of a company's ability to collect cash from credit customers is the:

A) accounts receivable turnover.

B) earnings per share.

C) inventory turnover.

D) acid-test ratio.

14) Kaufman's Department Store had net sales of $20 million and cost of goods sold of $14 million for the year. The average inventory for the year was $4 million. What was the average number of days in inventory?

A) 46

B) 104

C) 92

D) 52

15) Depots Clothing Store had an accounts receivable balance of $420,000 at the beginning of the year and a year-end balance of $510,000. Net sales for the year totaled $2,100,000. The average collection period of the receivables was:

A) 162 days.

B) 41 days.

C) 51 days.

D) 81 days.

16) The ratio that provides an estimate of the number of days, on average, that it takes for customers to pay their account is the:

A) days' sales in receivables

B) current ratio.

C) accounts receivable turnover.

D) acid-test ratio.

17) The ratio that measures a company's success in using its assets to earn income for the persons who finance the business is the:

A) leverage.

B) rate of return on total assets.

C) debt ratio.

D) times-interest-earned ratio.

18) The ratio that measures the number of times that operating income can cover interest expense is the:

A) leverage.

B) rate of return on total assets.

C) debt ratio.

D) times-interest-earned ratio.

19) The amount of a company's net income earned for each share of its outstanding common stock is termed the:

A) return on equity.

B) price/earnings ratio.

C) earnings per share.

D) dividend yield.

45. What is wrong with the following statement? The market supply for natural gas is the sum of all...

What is wrong with the following statement? The market supply for natural gas is the sum of all prices that natural gas producers are willing and able to sell at for every quantity

46. 6.3 Assume that the hospital uses the direct method for cost allocation. Furthermore, the cost dr...

6.3 Assume that the hospital uses the direct method for cost allocation. Furthermore, the cost driver for general administration and financial services is patient services revenue, while the cost driver for facilities is space utilization. a. What are the appropriate allocation rates? b. Use an allocation table similar to Exhibit 6.7 to allocate the hospital's overhead costs to the patient services departments.

47. Projecting NOPAT and NOA Using Parsimonious Forecasting Method Assume the following are 3M's sal...

Projecting NOPAT and NOA Using Parsimonious Forecasting Method



Assume the following are 3M's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) for its fiscal year ended 2010 ($millions).

Forecast 3M's sales, NOPAT and NOA for fiscal years 2011 through 2014 using the following assumptions:

*Use Sales - rounded nearest whole number to calculate NOPAT and NOA.

48. The Riteway Ad Agency provides cars for its sales staff. In the past, the company has always purc...

The Riteway Ad Agency provides cars for its sales staff. In the past, the company has always purchased its cars from a dealer and then sold the cars after three years of use. The company’s present fleet of cars is three years old and will be sold very shortly. To provide a replacement fleet, the company is considering two alternatives:

Problem 8-25 Net Present Value Analysis of a Lease or Buy Decision LL08-2] The Riteway Ad Agency provides cars for its sales staff. In the past, the company has always purchased its cars from a dealer and then sold the cars after three years of use. The company's present fleet of cars is three years old and will be sold very shortly. To provide a replacement fleet, the company is considering two alternatives: Purchase alternative: The company can purchase the cars, as in the past, and sell the cars after three years of use. Ten cars will be needed, which can be purchased at a discounted price of $16,000 each. If this alternative is accepted, the following costs will be incurred on the fleet as a whole: Annual cost of servicing, taxes, and licensing 3,200 Repairs, first year 1,100 Repairs, second year 600 Repairs, third year 600 At the end of three years, the fleet could be sold for one-half of the original purchase price. Lease alternative: The company can lease the cars under a three-year lease contract. The lease cost would be $51,000 per year (the first payment due at the end of Year 1). As part of this lease cost, the owner would provide all servicing and repairs license the cars, and pay all the taxes Riteway would be required to make a $11,000 security deposit at the beginning of the lease period, which would be refunded when the cars were returned to the owner at the end of the lease contract. Riteway Ad Agency's required rate of return is 14% Click here to view Exhibit 8B-1 and Exhibit 8B-2, to determine the appropriate discount factor(s) using tables. Required 1. Use the total-cost approach to determine the present value of the cash flows associated with each alternative. (Any cash outflows should be indicated by a minus sign. Round discount factor(s) to 3 decimal places.)

49. Janet Enterprises incorporated on May 3, 2015. The company engaged in the following transactions dur

50. Melton River Resort opened for business on June 1 with

Melton River Resort opened for business on June 1 with eight air-conditioned units. Its trial balance before adjustment on August 31 is as follows.



In addition to those accounts listed on the trial balance, the chart of accounts for Melton River Resort also contains the following accounts and account numbers: No. 112 Accounts Receivable, No. 144 Accumulated Depreciation—Buildings, No. 150 Accumulated Depreciation—Equipment, No. 212 Salaries and Wages Payable, No. 230 Interest Payable, No. 620 Depreciation Expense, No. 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense. Other data:

1. Insurance expires at the rate of $300 per month.

2. A count on August 31 shows $800 of supplies on hand.

3. Annual depreciation is $6,000 on buildings and $2,400 on equipment.

4. Unearned rent revenue of $4,800 was earned prior to August 31.

5. Salaries of $400 were unpaid at August 31.

6. Rentals of $4,000 were due from tenants at August 31. (Use Accounts Receivable)

7. The mortgage interest rate is 9% per year. (The mortgage was taken out on August 1.)

Instructions

(a) Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31.

(b) Prepare a ledger using the three-column form of account. Enter the trial balance amounts and post the adjusting entries. (Use J1 as the posting reference.)

(c) Prepare an adjusted trial balance on August 31.

(d) Prepare an income statement and an owner’s equity statement for the 3 months ending August 31 and a balance sheet as of Au