Financial Statement Fraud: Tips for Student Assignments
31. Valenko Company provided the following account balances for the year ended December 31 (all ...
Selling expenses | $ | 215,000 |
Purchases of raw materials | $ | 260,000 |
Direct labor | ? | |
Administrative expenses | $ | 160,000 |
Manufacturing overhead applied to work in process | $ | 340,000 |
Total actual manufacturing overhead costs | $ | 350,000 |
Inventory balances at the beginning and end of the year were as follows: |
Beginning of Year | End of Year | |||||
Raw materials | $ | 50,000 | $ | 40,000 | ||
Work in process | ? | $ | 33,000 | |||
Finished goods | $ | 30,000 | ? | |||
The total manufacturing costs for the year were $675,000; the cost of goods available for sale totaled $720,000; the unadjusted cost of goods sold totaled $665,000; and the net operating income was $35,000. The company's overapplied or underapplied overhead is closed entirely to cost of goods sold. |
Required: |
a. | Prepare a schedule of cost of goods manufactured. (Input all amounts as positive values. Omit the "$" sign in your response.) |
Valenko Company | ||
Direct materials: | ||
(Click to select)Ending work in process inventoryFinished goods inventory, beginningRaw materials inventory, beginningBeginning work in process inventoryRaw materials inventory, ending | $ | |
(Click to select)DeductAdd : (Click to select)Beginning work in process inventoryEnding work in process inventoryPurchases of raw materialsRaw materials inventory, endingFinished goods inventory, beginning | ||
Total raw materials available | ||
(Click to select)DeductAdd : (Click to select)Raw materials inventory, endingPurchases of raw materialsBeginning work in process inventoryRaw materials inventory, beginningEnding work in process inventory | ||
Raw materials used in production | ||
(Click to select)Direct laborEnding work in process inventoryPurchases of raw materialsRaw materials inventory, endingRaw materials inventory, beginning | ||
(Click to select)Manufacturing overhead applied to work in process inventoryRaw materials inventory, endingRaw materials inventory, beginningDirect laborPurchases of raw materials | ||
Total manufacturing cost | ||
(Click to select)AddDeduct : (Click to select)Purchases of raw materialsRaw materials inventory, endingBeginning work in process inventoryEnding work in process inventoryRaw materials inventory, beginning | ||
(Click to select)DeductAdd : (Click to select)Ending work in process inventoryRaw materials inventory, beginningBeginning work in process inventoryPurchases of raw materialsRaw materials inventory, ending | ||
Cost of goods manufactured | $ | |
b. | Prepare a schedule of cost of goods sold. (Input all amounts as positive values. Omit the "$" sign in your response.) |
Valenko Company | |
(Click to select)Finished goods inventory, endingOverapplied overheadCost of goods manufacturedFinished goods inventory, beginningCost of goods available for sale | $ |
(Click to select)AddDeduct : (Click to select)Cost of goods available for saleCost of goods manufacturedOverapplied overheadUnadjusted cost of goods soldUnderapplied overhead | |
(Click to select)Finished goods inventory, endingUnadjusted cost of goods soldCost of goods manufacturedFinished goods inventory, beginningCost of goods available for sale | |
(Click to select)AddDeduct : (Click to select)Cost of goods available for saleCost of goods manufacturedOverapplied overheadFinished goods inventory, endingUnderapplied overhead | |
(Click to select)Cost of goods manufacturedFinished goods inventory, endingFinished goods inventory, beginningUnderapplied overheadUnadjusted cost of goods sold | |
(Click to select)DeductAdd : (Click to select)Cost of goods manufacturedOverapplied overheadCost of goods available for saleFinished goods inventory, endingUnderapplied overhead | |
Adjusted cost of goods sold | $ |
c. | Prepare an income statement for the year. (Input all amounts as positive values. Omit the "$" sign in your response.) |
Valenko Company | ||
(Click to select)Depreciation expenseSalesSelling expensesAdministrative expenseCost of goods sold | $ | |
(Click to select)Administrative expenseSelling expensesDepreciation expenseSalesCost of goods sold | ||
(Click to select)Gross lossGross margin | ||
Selling and administrative expenses: | ||
(Click to select)Depreciation expenseRent expenseSelling expensesInsurance expenseAdministrative expense | $ | |
(Click to select)Insurance expenseDepreciation expenseSelling expensesRent expenseAdministrative expense | ||
(Click to select)Net operating incomeNet operating loss | ||
32. 1. Jackson Corporation’s bonds have 12 years remaining to maturity. Interest is paid annually, the..
1. Jackson Corporation’s bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 8%. The bonds have a yield to maturity of 9%. What is the current market price of these bonds? 2. Wilson Wonders’s bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. The bonds sell at a price of $850. What is their yield to maturity? 3. The real risk-free rate is 3%, and inflation is expected to be 3% for the next 2 years. A 2-year Treasury security yields 6.3%. What is the maturity risk premium for the 2-year security? 4. Renfro Rentals has issued bonds that have a 10% coupon rate, payable semiannually. The bonds mature in 8 years, have a face value of $1,000, and a yield to maturity of 8.5%. What is the price of bonds? 5. You just purchased a bond that matures in 5 years. The bond has a face value of $1,000 and has an 8% annual coupon. The bond has a current yield of 8.21%. What is the bond’s yield to maturity? 6. If a company’s beta were to double, would its expected return double?
Document Preview:
1. Jackson Corporation’s bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 8%. The bonds have a yield to maturity of 9%. What is the current market price of these bonds?
2. Wilson Wonders’s bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. The bonds sell at a price of $850. What is their yield to maturity?
3. The real risk-free rate is 3%, and inflation is expected to be 3% for the next 2 years. A 2-year Treasury security yields 6.3%. What is the maturity risk premium for the 2-year security?
4. Renfro Rentals has issued bonds that have a 10% coupon rate, payable semiannually. The bonds mature in 8 years, have a face value of $1,000, and a yield to maturity of 8.5%. What is the price of bonds?
5. You just purchased a bond that matures in 5 years. The bond has a face value of $1,000 and has an 8% annual coupon. The bond has a current yield of 8.21%. What is the bond’s yield to maturity?
6. If a company’s beta were to double, would its expected return double?
7. The probability distribution of a less risky return is more peaked than that of a riskier return. What shape would the probability distribution have for (a) completely certain returns and (b) completely uncertain returns?
8. In the real world, is it possible to construct a portfolio of stocks that has an expected return equal to the risk-free rate?
9. Define the following terms, using graphs or equations to illustrate your answers where feasible.
a. Risk in general; stand-alone risk; probability distribution and its relation to risk
b. Expected rate of return.
c. Continuous probability distribution
d. Standard deviation, variance, coefficient of variation, CV
e. Risk aversion; realized rate of return
f. Risk premium for Stock i, RP; market risk premium, RPm
g. Capital Asset Pricing Model (CAPM)
h. Expected return on a...
33. FINANCIAL LEVERAGE EFFECTS The Neal Company wants to estimate next year’s return on equity (ROE)...
FINANCIAL LEVERAGE EFFECTS The Neal Company wants to estimate next year’s return on equity (ROE) under different financial leverage ratios. Neal’s total capital is $14 million, it currently uses only common equity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 40%. The CFO has estimated next year’s EBIT for three possible states of the world: $42 million with a 0 2 probability, $2 8 million with a 0 5 probability, and $700,000 with a 0 3 probability. Calculate Neal’s expected ROE, standard deviation, and coefficient of variation for each of the following debt-to-capital ratios; then evaluate the results:
34. (Periodic versus Perpetual Entries) Fong Sai-Yuk Company sells one product. Presented below is...
(Periodic versus Perpetual Entries) Fong Sai-Yuk Company sells one product. Presented below is information for January for Fong Sai-Yuk Company.
Fong Sai-Yuk uses the FIFO cost flow assumption. All purchases and sales are on account.
Instructions
(a) Assume Fong Sai-Yuk uses a periodic system. Prepare all necessary journal entries, including the end-of-month closing entry to record cost of goods sold. A physical count indicates that the ending inventory for January is 110 units.
(b) Compute gross profit using the periodic system.
(c) Assume Fong Sai-Yuk uses a perpetual system. Prepare all necessary journal entries.
(d) Compute gross profit using the perpetual system.
35. The Weber Company purchased a mining site for $1,750,000 on July 1, 2014. The company expects to...
The Weber Company purchased a mining site for $1,750,000 on July 1, 2014. The company expects to mine ore for the next 10 years and anticipates that a total of 400,000 tons will be recovered. The estimated residual value of the property is $150,000. During 2014 the company extracted 6,500 tons of ore. The depletion expense for 2014 is
36. the mortgage on your house is five years old. It required monthly payments of $1402, hadan...
the mortgage on your house is five years old. It required monthly payments of $1402, hadan original term of 30 years & had an interest rate of 10%. In the intervening five years, interestrates have fallen & so you have decided to refinance- that is, you will roll over the outstandingbalance into a new mortgage. The new mortgage has a 30-year term, requires monthly payments &and has an interest rate of 6.625%Required:a)What monthly repayments will be required with the new loan?b)If you still want to pay off the mortgage in 25 years, what monthly payments should youmake after you refinance?
37. The formula = $A$3*B3 is located in cell C3. If this was copied and pasted into cell C4, what wou...
The formula = $A$3B3 is located in cell C3. If this was copied and pasted into cell C4, what would the resulting formula be: = $A$3B4 = A4B4 = $A$4B4 =$A$3*C4 The formula = B5/C6 is located in cell A4. If this cell was copied to D5 the resulting formula would be: = E6/F7 = B5/C6 = D6/E7 = C6/D7 The formula = $Z$231 + $Q$342 is located in cell B3. If this cell was copied cell C4 what would the resulting formula be? = $Z$231 + $Q$342 = Z231 + Q342 = AA232 + R343 = $AA$231 + $R$343
38. 1 If it is required to maintain fixed capitals then the partners’ shares of profits must be (A)...
1 If it is required to maintain fixed capitals then the partners’ shares of profits must be
(A) Debited to capital accounts
(B) Credited to capital accounts
(C) Debited to partners’ current accounts
(D) Credited to partners’ current accounts
2 You are to buy an existing business which has assets valued at Buildings £50,000, Motor
vehicles £15,000, Fixtures £5,000 and Stock £40,000. You are to pay £140,000 for the business. This
means that
(A) You are paying £40,000 for Goodwill
(B) Buildings are costing you £30,000 more than their value
(C) You are paying £30,000 for Goodwill
(D) You have made an arithmetical mistake
39. 85.A company uses the following standard costs to produce a single unit of output. Direct materials6
85.A company uses the following standard costs to produce a single unit of output.
Direct materials6 pounds at $0.90 per pound=$5.40
Direct labor0.5 hour at $12.00 per hour=$6.00
Manufacturing overhead0.5 hour at $4.80 per hour=$2.40
During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. Based on this information, the direct materials quantity variance for the month was:
A.$1,800 favorable
B.$5,800 unfavorable
C.$5,800 favorable
D.$1,800 unfavorable
E.$1,000 favorable
86.A company uses the following standard costs to produce a single unit of output.
Direct materials6 pounds at $0.90 per pound=$5.40
Direct labor0.5 hour at $12.00 per hour=$6.00
Manufacturing overhead0.5 hour at $4.80 per hour=$2.40
During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. Based on this information, the direct labor rate variance for the month was:
A.$1,200 favorable
B.$3,650 favorable
C.$2,450 favorable
D.$3,650 unfavorable
E.$1,200 unfavorable
87.A company uses the following standard costs to produce a single unit of output.
Direct materials6 pounds at $0.90 per pound=$5.40
Direct labor0.5 hour at $12.00 per hour=$6.00
Manufacturing overhead0.5 hour at $4.80 per hour=$2.40
During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. Based on this information, the direct labor efficiency variance for the month was:
A.$3,650 favorable
B.$2,450 favorable
C.$1,200 unfavorable