Fall Semester Distinction: Accounting Research Paper tricks
Pat Goodly accepted the CAE position at a large, global organization with a well-established internal audit function. The organization is admired as an industry leader and as having very strong corporate governance practices. The organization's board is predominantly made up of outside, independent directors. The audit committee is comprised of outside, independent directors, all of whom are qualified. The chair of the audit committee is designated as the audit committee's "financial expert. " The organization's fiscal year-end is approaching; only a little over a month away. After a brief two months in the new position, Pat is preparing for the upcoming audit committee meeting. This typically is the meeting at which next year's internal audit plan and budget would be presented for approval by the audit committee, as well as any necessary fiscal year-end reporting. Recently, Pat received a "welcome" call from the audit committee chair, indicating "full "support for Pat and the internal audit function. The audit committee chair excreted an interest in meeting Pat and gaining an understanding of the vision and direction Pat has for the internal audit function going forward. The audit committee chair indicated that periodic communications between them were important and would allow for open and candid dialog in the future. Pat was hired by. and currently reports to, the chief financial officer (CFO). Historically, the audit committee meeting agenda, and related topic selections for such, have been performed by the CFO. The CFO also has presided over the meetings in the past. Senior management, including the CFO and the CFO, expressed support for the internal audit function and Pat's vision for the function both during the recruiting process and subsequent to Pat's joining the organization. However, the CFO firmly stated hi a recent staff meeting. "I know everyone is very busy and things are going to get even more hectic with year-end upon us. I think it is in everyone's best interest not to make any 'radical' changes in our organizational reporting structure until we get through the fiscal year-end closing and reporting cycle. If we keep our heads down and work hard, we should be able to get through this year-end okay." In preparation for the upcoming audit committee meeting, Pat contemplated the CFO's comments and reflected on The IIA's professional standards as they relate to the CAF's reporting responsibilities to management and the board. Put yourself in Pat's position as the newly hired CAF and consider the following: How should Pat proceed with the audit committee chair? What obligations does Pat have, if any, to the audit committee chair? As the CAE, what are Pat's role and responsibilities with respect to the audit committee and the audit committee chair? Discuss the key issues that must be understood and addressed (and with whom) to properly discharge any reporting responsibilities noted.
33. 91. Equipment with a cost of $160,000 has an estimated residual value of $10,000 and an...
91. Equipment with a cost of $160,000 has an estimated residual value of $10,000 and an estimated life of 5 years or 12,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours?
A. $30,000
B. $32,500
C. $34,000
D. $40,000
92. A machine with a cost of $65,000 has an estimated residual value of $5,000 and an estimated life of 4 years or 18,000 hours. What is the amount of depreciation for the second full year, using the double declining-balance method?
A. $15,000
B. $30,000
C. $16,250
D. $32,500
93. The most widely used depreciation method is
A. straight-line
B. sum-of-the-years-digits
C. declining-balance
D. units-of-production
94. Equipment with a cost of $80,000, an estimated residual value of $5,000, and an estimated life of 15 years was depreciated by the straight-line method for 5 years. Due to obsolescence, it was determined that the useful life should be shortened by 5 years and the residual value changed to zero. The depreciation expense for the current and future years is
A. $5,500
B. $11,000
C. $10,000
D. $5,000
95. The depreciation method that does not use residual value in calculating the first year's depreciation expense is
A. straight-line
B. units-of-production
C. double-declining-balance
D. none of the above
96. If a fixed asset, such as a computer, were purchased on January 1st for $1,950 with an estimated life of 3 years and a salvage or residual value of $150, the journal entry for monthly expense under straight-line depreciation is:
(Note: EOM indicates the last day of each month.)
A. EOM Depreciation Expense 50.00
Accumulated Depreciation 50.00
B. EOM Depreciation Expense 600.00
Accumulated Depreciation 600.00
C. EOM Accumulated Depreciation 600.00
Depreciation Expense 600.00
D. EOM Accumulated Depreciation 50.00
Depreciation Expense 50.00
97. The proper journal entry to purchase a computer on account to be utilized within the business would be:
A. Jan 2 Office Supplies 1,250.00
Accounts Payable 1,250.00
B. Jan 2 Office Equipment 1,250.00
Accounts Payable 1,250.00
C. Jan 2 Office Supplies 1,250.00
Accounts Receivable 1,250.00
D. Jan 2 Office Equipment 1,250.00
Accounts Receivable 1,250.00
98. Residual value is also known as all of the following except
A. scrap value
B. trade in value
C. salvage value
D. net book value
99. The formula for depreciable cost is
A. initial cost + residual value
B. initial cost - residual value
C. initial cost - accumulated depreciation
D. depreciable cost = initial cost
100. Expected useful life is
A. calculated when the asset is sold.
B. estimated at the time that the asset is placed in service.
C. determined each year that the depreciation calculation is made.
D. none of the answers are correct.
34. Operating leverage. Cover Rugs is holding a 2-week carpet sale at Josh’s Club, a local warehouse...
Operating leverage. Cover Rugs is holding a 2-week carpet sale at Josh’s Club, a local warehouse store. Cover Rugs plans to sell carpets for $950 each. The company will purchase the carpets from a local distributor for $760 each, with the privilege of returning any unsold units for a full refund. Josh’s Club has offered Cover Rugs two payment alternatives for the use of space.
? Option 1: A fixed payment of $7,410 for the sale period
? Option 2: 10% of total revenues earned during the sale period
Assume Cover Rugs will incur no other costs.
1. Calculate the breakeven point in units for (a) Option 1 and (b) Option
2. 2. At what level of revenues will Cover Rugs earn the same operating income under either option?
a. For what range of unit sales will Cover Rugs prefer Option 1?
b. For what range of unit sales will Cover Rugs prefer Option 2?
3. Calculate the degree of operating leverage at sales of 65 units for the two rental options.
4. Briefly explain and interpret your answer to requirement 3.
Compute the product margins for the B300 and T500 under the company’s traditional costing system. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole dollars.)
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Income Statement 1,697,400 Sales 1,231,470 Cost of goods sold Gross margin 465,930 630,000 Selling and administrative expenses (164,070) Net operating loss Hi-Tek produced and sold 60,300 units of B300 at a price of $20 per unit and 12,600 units of T500 at a price of $39 per unit. The company's traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the company's two product lines is shown below: B300 T500 Total Direct materials 401,000 162,600 563,600 120,500 42,400 162,900 Direct labor 504,970 Manufacturing overhead Cost of goods sold 1,231,470 The company has created an activity-based costing system to evaluate the profitability of its products. Hi- Tek's ABC implementation team concluded that $50,000 and $106,000 of the company's advertising expenses could be directly traced to B300 and T500, respectively. The remainder of the selling and administrative expenses was organization-sustaining in nature. The ABC team also distributed the company's manufacturing overhead to four activities as shown below: Activity Manufacturing Activity Cost Pool (and Activity Measure) Overhead B300 T500 Total Machining (machine-hours) 206,550 90,300 62,700 153,000 136,920 Setups (setup hours) 76 250 326 Product sustaining (number of products) 101,400 Other (organization-sustaining costs) 60,100 NA NA NA 504.970 Total manufacturing overhead cost
36. A sum of Rs 2,000 was spent on painting the factory.
How would you classify the following? State reasons, if necessary.
- Freight and cartage on the new machine Rs 700.
- Erection charges of machine Rs 1,300.
- A sum of Rs 2,000 was spent on painting the factory.
- Fixtures of the book value of Rs 2,200 were sold off at Rs 1,600.
- New fixtures of the value of Rs 3,000 were acquired, cartage on purchase Rs 300.
37. Auxier Manufacturing Company has a current ratio of 4 to 1 but is unable to pay its bills. Why?
Auxier Manufacturing Company has a current ratio of 4 to 1 but is unable to pay its bills. Why?
38. Jim’s Hat Shop received a shipment of hats for which
Jim’s Hat Shop received a shipment of hats for which it paid the wholesaler $2,970. The price of the hats was $3,000 but Jim’s was given a $30 cash discount and required to pay freight charges of $50. In addition, Jim’s paid $130 to cover the travel expenses of an employee who negotiated the purchase of the hats. What amount will Jim’s record for inventory? Why?
39. On January 1, 2012, the first day of its fiscal
On January 1, 2012, the first day of its fiscal year, the City of Carter received notification that a federal grant in the amount of $650,000 was approved. The grant was restricted for the payment of wages to teenagers for summer employment. The terms of the grant permitted reimbursement only after qualified expenditures have been made; the grant could be used over a two-year period in equal amounts of $325,000 each. The following data pertain to operations of the Summer Employment Grant Fund, a special revenue fund of the City of Carter, during the year ended December 31, 2012. Show entries in general journal form to record the following events and transactions in the accounts of the Summer Employment Grant Fund:
1. The budget was recorded. It provided for Estimated Revenues for the year in the amount of $325,000, and for Appropriations in the amount of $325,000.
2. A temporary loan of $325,000 was received from the General Fund.
3. During the year, teenagers earned and were paid $312,000 under terms of the Summer Employment program. An additional $5,000 is accrued as payable on December 31. Recognize the receivable and revenue (include the $5,000 of wages payable).
4. Each month a properly documented request for reimbursement was sent to the federal government; checks for $298,000 were received.
5. Necessary closing entries were made.
I need help to solve this problem, Can someone explain me step by step how to solve it? Wendy Epstein, a sales representative, earns an annual salary of $29,500 and receives a commission on that portion of her annual sales that exceeds $150,000. The commission is 8.5% on all sales up to $50,000 above the quota. Beyond that amount, she receives a commission of 10%. Her total sales for the past year were $295,000. Compute: a.The regular annual salary b.The commission c.The total annual earnings
41. If the work in process inventory has increased during the period, (a) cost of goods sold will be
If the work in process inventory has increased during the period, (a) cost of goods sold will be greater than cost of goods manufactured; (b) cost of goods manufactured will be greater than cost of goods sold; (c) manufacturing costs for the period will be greater than cost of goods manufactured; or (d) manufacturing costs for the period will be less than cost of goods manufactured. Which of the above is correct?
Q3
The gross profit of the Garrard Company for 19-is $56,000; the cost of goods manufactured is $300,000; the beginning inventories of work in process and finished goods are $18,000 and $25,000, respectively; and the ending inventories of work in process and finished goods are $28,000 and $30,000, respectively. Determine the company's sales for 19-
Q4
A corporation's annual financial statements and reports were criticized because it was claimed that the income statement does not by any means give a clear picture of annual earning power, and the balance sheet does not disclose the true value of the fixed assets. Considering the criticism made, offer an explanation of the nature and purpose of the income statement and of the balance sheet, together with comments on their limitations.
Q5
The president of the New Haven Products Co., Inc. requests your advice with respect to the following situation : The company's chief accountant has been telling the president each year that "the business has just about been breaking even." This statement has been puzzling to the president because inventories, receivables, and payables have not varied much since the company was organized over ten years ago. In fact, cash has been increasing constantly. The president thinks that the business has been making money and that the chief accountant is wrong. Furthermore, no sale of assets, no refinancing of indebtedness, nor any change in the corporate structure, such as a sale of stock, has taken place in these years.
Required: (1) An explanation to the president for the continued increase in cash.
(2) Examples of transactions that illustrate the explanation given in (1).
(3) A recommendation for any additional financial statements for the use of the president.
Q6
Income Statement. Kingsley Inc. submits the following data for September:
Direct labor cost, $30,000.
Cost of goods sold, $111,000.
Factory overhead is applied at the rate of 150% of direct labor cost.
Inventory accounts showed these opening and closing balances
Sept. 1 | Sept. 30 | |
Raw materials | $ 7,000 | $ 7,400 |
Work in process | 9,600 | 13,000 |
Finished goods | 15,000 | 17,500 |
Other data: | ||
Marketing expenses | $ 14,100 | |
General and administrative expenses | 22,900 | |
Sales for the month | 182,000 |
Required: An income statement with schedule showing cost of goods manufactured and sold.
Q7
Income Statement; Profit Percentage. The Cherokee Manufacturing Company submits the following information on December 31, 19-
:
Sales for the year: $314,000
Inventories at the beginning of the year:
Work in process : $4,600
Finished goods: $5,900
Purchases of materials for the year: $140,000
Materials inventory:
Beginning of the year: $3,800
End of the year: $4,300
Direct labor: $67,350
Factory overhead : one half of the labor cost
Inventories at the end of the year:
Work in process: $6,200
Finished goods: $9,270
Other expenses for the year:
Marketing expenses : $23,115
Administrative expenses : $ 1 7,650
Required: (1) An income statement for the year ended December 31,19-.
(2) The percentage of net income to sales, before income taxes.
Q8
Statement of Cost of Goods Sold. The accountant of the Sonnenberg Corporation has submitted the following summary to the executive management:
Inventories at September 1,19— | ||
Raw materials | $36,000 | |
Work in process | 1 5,000 | |
Fuel | 3,400 | |
Factory repair parts | 2,600 | |
Finished goods | 12,000 | $ 69,000 |
Raw materials purchases | $58,000 | |
Fuel purchases | 5,200 | |
Direct labor | 83,100 | |
Miscellaneous factory overhead | 2,300 | |
Repairs to factory (including purchase of parts) | 4,200 | |
Depreciation of plant | 2,700 | |
Superintendence | 2,200 | |
Transportation out | 1,100 | |
Purchases discounts lost | 800 | |
Indirect factory labor | 2,000 | 161,600 |
Total costs | $230,600 | |
Inventories at September 30, 19— | ||
Raw materials | $40,000 | |
Work in process | 12,000 | |
Fuel | 2,000 | |
Factory repair parts | 2,800 | |
Finished goods | 14,000 | 70,800 |
Total | $159,800 | |
Required: The management returns the summary with the request for a statement showing cost of goods sold in proper form.
Q9