...Mary E. Jones 2/27/2011 ACC 560 Week 8: Case 4 Greetings Inc: Capital Budgeting 1. Calculate the net present value using the numbers provided. Assume that annual cash flows occur at the end of the year. Initial investment $800,000 Estimated useful life 5 years Estimated salvage value -0- Estimated annual cash flows Annual cash flow savings for Wall Décor $175,000 Annual additional store cash flow from increased sales 100,000 Sale of ink and paper supplies 10,000 Net annual cash flow $285,000 Present Value at 12% Discount factor for 5 periods 3.60478 Present value of net cash flows $$285,000 X 3.60478 $1,027,362 12% Present value of net cash flows $1,027,362 Capital investment 800,000 Net present value $ 227,362 2. Mr. Burns is concerned that the original estimates may be too optimistic. He has suggested that you do a sensitivity analysis assuming all costs are 10% higher than expected and that all inflows are 10% less than expected. Initial investment $880,000 Estimated useful life 5 years Estimated salvage value -0- Estimated annual cash flows Annual cash flow savings for Wall Décor $157,500 Annual additional store cash flow from increased sales 90,000 Sale of ink and paper supplies 9,000 Net annual cash flow $256,500 Present Value ...
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...correctly. Vendor rebates should be recorded as a decrease to cost of goods sold. Instead, Sunbeam presented the vendor rebates in the financial statements as an increase to sales revenue. Although this would not impact net income, this was an incorrect procedure that resulted in overstating sales revenue. In addition, Sunbeam did not record some of the vendor rebates in the correct accounting period. Vendor rebates should be recorded as the vendor rebates are received. Instead, Sunbeam recorded the vendor rebates all at once. Some of the vendor rebates should not have been recorded until future periods. This was also an incorrect procedure that resulted in overstating sales revenue as well as net income....
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...CHAPTER 20 Accounting for Pensions and Postretirement Benefits SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 20-1 Service cost $ 333,000,000 Interest on PBO 712,000,000 Return on plan assets (566,000,000) Amortization of prior service cost 13,000,000 Amortization of net loss 145,000,000 Pension expense $ 637,000,000 BRIEF EXERCISE 20-2 Ending plan assets $ 2,000,000 Beginning plan assets 1,780,000 Increase in plan assets 220,000 Deduct: Contributions $120,000 Less: Benefits paid 200,000 (80,000) Actual return on plan assets $ 300,000 BRIEF EXERCISE 20-3 BEATY COMPANY | |General Journal Entries |Memo Record | | | | | |Projected Benefit | | | |Pension Expense | |Pension |Obligation |Plan Assets | |Items | |Cash |Asset /Liability | | | |1/1/12 | | | |280,000 Cr. |280,000 Dr. | |Service cost |27,500 Dr. | |...
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...rel ated to this section 5.6 Sarbox Scooter, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 185 Scoping and Evaluation Judgments in the Audit of Internal Control over Financial Reporting 12.1 EyeMax Corporation . . . Evaluation of Audit Differences . . . . . . . . . . . . . . . . . . . . . . . 369 12.2 Auto Parts, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 379 Considering Materiality When Evaluating Accounting Policies and Footnote Disclosures Instructor Resource Manual — Do Not Copy or Redistribute Instructor Resource Manual — Do Not Copy or Redistribute Anne Aylor, Inc. C a s e 7.1 Determination of Planning Materiality and Tolerable Misstatement Mark S. Beasley · Frank A. Buckless · Steven M. Glover · Douglas F. Prawitt Ins tr uc t ional O b je c t ive s [1] To provide experience with establishing planning materiality. [2] To provide experience with establishing tolerable misstatement for individual financial statement accounts. [3] To illustrate factors considered when establishing planning materiality. To illustrate different materiality bases considered when establishing planning materiality. [5] To illustrate factors considered when determining tolerable misstatement for individual accounts. [6] To illustrate reasons why the sum of tolerable misstatements commonly exceeds planning...
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...memo Comments: Dear Mr. CEO of Company G As per your request I have done an evaluation of the company G financials, comparing Fiscal year 11and Fiscal year 12. I have chosen to evaluate the financials through thirteen (13) key financial Ratios. Below, you will find all thirteen (13) Ratios along with an explanation of those ratios, an evaluation and justification of all thirteen (13) ratios as a strength, weakness or satisfactory condition, and I will compare (where possible) these ratios to available information from other companies within the home center industry. Any and all financial information of Home Depot, Lowes and Orchard Supply Hardware Stores was retrieved from either www.nasdaq.com, or www.morningstar.com and I did use data sets from their fiscal year 2012 numbers. The evaluation of all thirteen (13) ratios is as follows. Current Ratio: For fiscal year 12 the current ratio is 1.77, and in year 11 it was 1.86. In my opinion, this ratio is a weakness, and should be watched as it shows a downward trend from the previous fiscal year. While any ratio over one represents that the company could repay their debt if required to, it is not as stringent of an indicator as the acid test ratio. It does take into account inventory which is up approximately 32 percent, and even with the increase in inventory and an increase in net sales, gross profit and Net Earnings, the current ratio shows a decrease year over year. In comparison with comparable companies such as Home Depot...
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...submitted or for the entire course. It may also result in academic dismissal from the University. | | | |Course ID SKS7000-8-3 |Instructor: Instructor: Milton Kabia , PhD | | | | |Course Title: Executive Concepts in Business Strategy. |Assignment Number 3 | Faculty Use Only Assignment #3 You are to create response in the form of a memo for a business finance and accounting. The only required references for this assignment are the chapters...
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...Memo to Shareholders with Financials Financial Accounting February 5, 2011 Memo to Shareholders 2011 was a strong year for Mucho Gracias Company financially. Even though uncertainty in the economy prevails, our business fundamentals remain strong. We expect to grow into the future as we maintain strong earnings, positive operating cash flow, and a healthy balance sheet. Our 2011 financials are presented for your reference following this memo. Fiscal year 2011 produced earnings in excess of $2.23 million. The rate of return on equity was 16.4% this year, and we feel confident we can continue to provide shareholders with a return that makes investment in our company a sound choice. Cash generated from operations in 2011 was $1.5 million. The current cash debt coverage ratio of 0.20 and cash debt coverage ratio of 0.08 are not at optimal levels (Kimmel, Weygandt & Kieso, 2007). However, we view our balance sheet as a competitive advantage, and our liquidity and solvency are solid. We maintained a 3.89 current ratio in 2011 indicating we have adequate resources to pay our debts (Kimmel et al., 2007). Our 50.2% debt to total asset ratio further indicates our long-term solvency is sufficient. We obtained $4 million in a financing note during 2011; if more funds are needed, additional credit should be adequately obtainable (Kimmel, et al., 2007). Our success in delivering strong operating free cash flow of $1.3 million will enhance our ability to grow in...
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...Restaurant Development Group’s Winston-Salem Project Paul E. Juras The Wayne Calloway School of Business and Accountancy Wake Forest University P.O. Box 7285 Reynolda Station Winston-Salem, NC 27109-7285 E-Mail: JURAS@WFU.EDU James F. Cotter The Wayne Calloway School of Business and Accountancy Wake Forest University P.O. Box 7285 Reynolda Station Winston-Salem, NC 27109-7285 Restaurant Development Group Memo To: Date: Re: Registered Students March 1st 2006 Restaurant Development Group’s Winston-Salem Project From: Mr. Bobbie Filet Introduction Restaurant Development Group (RDG) is considering opening a new restaurant in conjunction with the “Winston-Salem Partnership” group that is attempting develop a center of entertainment in downtown Winston-Salem, NC. As part of the project, the company plans to renovate an existing restaurant space in the downtown area and begin operations in six months. RDG has decided to hire several teams of professionals to handle various facets of the project. One team will work closely with city and county government officials to insure the project has strong support from all relevant government agencies. Another team will be responsible for developing the marketing plan and handling media and public relations to insure the project has a positive reception within the media. Finally, the finance and accounting team has responsibility for examining the financial viability of renovating the restaurant and developing a cash flow budget to...
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...Income statement recognition, computation of pension expense. Balance sheet recognition, computation of pension expense. Minimum liability computation. Corridor calculation. Reconciliation schedule. Prior service cost. 10, 11, 12, 14, 17, 18 3 1, 4 2. 3. 3, 4, 7, 10, 15 1, 2, 3, 6, 12, 13, 14, 15, 16, 17, 20, 21 4. 16, 20, 21, 22, 23 20, 22 2 3, 9, 11, 13, 1, 2, 3, 4, 5, 2, 5, 7 14, 15, 17, 6, 7, 8, 9 18, 19 11, 12, 13, 14, 16, 17, 18, 19 8, 14, 20, 21 3, 4, 5, 6, 7, 8 2, 3, 5, 6, 7, 8, 9 2, 4, 5 5. 8, 9, 10 6. 7. 8. 19 25 13, 14, 21, 23 7 6 5, 8, 9, 10 3, 4, 5, 6 3, 9, 10, 14, 1, 2, 3, 15, 19 6, 8, 9 1, 2, 3, 5, 9, 11, 12, 13, 14, 15, 18, 19, 21 1, 2, 3, 4, 5, 6, 7, 8, 9 1, 4 9. 10. Unrecognized net gain or loss. Disclosure issues. 15 25 26 27, 28, 29, 30 7 8, 9, 14, 15, 1, 2, 3, 5, 19, 20, 21 6, 7, 8, 9 9, 12, 13 4, 5, 6 3, 4 *11. Special Issues. *12. Postretirement benefits. 11, 12 22, 23, 24, 25 10 *This material is dealt with in an Appendix to the chapter. 20-1 ASSIGNMENT CLASSIFICATION TABLE (BY LEARNING OBJECTIVE) Learning Objectives 1. Distinguish between accounting for the employer’s pension plan and accounting for the pension fund. Identify types of pension plans and their characteristics. Explain alternative measures for valuing the pension obligation. List the components of pension expense. Use a worksheet for employer’s pension plan entries. Describe the amortization of unrecognized prior...
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...IRCO 421B Finance Spring 2013 IRPS, UC San Diego Krislert Samphantharak Assignment 1 Due April 19, 11.59 pm, by email (“Finance B Turnin” on FirstClass) This assignment serves three main objectives. First, it allows you to review various present value and discounting concepts and how to compute them using relevant functions in Excel. Second, it helps you review some crucial concepts in financial accounting that you studied in the last quarter. Finally, it guides you through the calculation of NPV and other investment criteria we discuss in class. Although the case is from a privately-owned company in the US, it serves as an illustrative example on how we compute NPV, IRR, payback period, and profitability index in practice. This procedure could be applied (with appropriate adjustments) to other investment decision making by other forms of organizations, including households, publicly-traded companies, not-for-profit organizations, or governments, both in the US and elsewhere. Instruction 1. Read “New Heritage Doll Company: Capital Budgeting” case. The case can be purchased from Harvard Business School Press at https://cb.hbsp.harvard.edu/cbmp/access/19276442 You need to register on the site to create a user name if you do not already have one. After you register, you can get to the coursepack at any time by doing the following: 1. Visit hbsp.harvard.edu and log in. 2. Click “My Coursepacks”, and then click “Finance B”...
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...Sales AED 500,000 Cost of Sales 345,000 Gross Profit 155,000 Selling Expenses 55,000 General & Admin Expenses 20,000 Total Operating Expenses 75,000 Net Income AED 80,000 Additional Information: 1. Sales and Cost of Sales are expected to increase by 10 percent in each of the next two quarters 2. 80% of the sales are collected in the quarter of sales and the balance in the quarter following sales 3. The balance in Accounts Receivable at the end of fourth quarter of 2011 relates to the sales in the fourth quarter of 2011 4. Purchases in the fourth quarter of 2011 was AED 346,976 5. The balance in accounts payable at the end of 2011 refers to the purchases made during that quarter 6. Inventory at the end of 2011 was AED 17,000. The company plans to hold ending inventory equal to 5% of the subsequent quarters cost of sales 7. Selling expense is expected to increase by AED 18,000 due to salaries and advertising 8. Admin Expenses are expected to increase by AED 7,500 due to increase in rent 9. 75% of inventory purchases are paid in the quarter of purchase and the balance in the following quarter 10. Selling expense include AED 3,000 as depreciation of Store furniture and equipment with a book value (net of accumulated depreciation) of AED 60,000. 11. The company expects to purchase additional furniture for AED 20,000 during the end of March 2012 12. The cash balance at the end of 2011 was...
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...Accountant SUBJECT: Reporting of Comprehensive Income This memo is in response to your questions regarding the reporting of comprehensive income on the financial statements of the Lennon Company. Comprehensive Income Comprehensive Income includes Net Income and Other Comprehensive Income. Purpose of reporting comprehensive income is to “report a measure of all changes in equity of an entity that result from recognized transactions and other economic events of the period other than transactions with owners in their capacity as owners.” Other Comprehensive Income (OCI) and impact on balance sheet OCI includes revenue, expenses, gains and losses that change shareholders’ equity but are not included in net income. OCI is reported in the balance sheet under shareholders equity as accumulated other comprehensive income (AOCI: a cumulative presentation of OCI period over period). AOCI is shown separate from retained earnings and additional paid in capital. The following items are considered as OCI (net of tax): (a) Net unrealized holdings gains (losses) on available-for-sale (AFS). (b) Debt securities transferred from held to maturity (HTM) to AFS. (c) Portion of other-than-temporary impairments (OTTI) for debt securities held as AFS or HTM not recognized in earnings. (d) Subsequent decrease (if not OTTI) or increase in fair value of AFS securities previously written down as impaired. (e) Deferred gains and losses on derivatives cash flow hedge resulting...
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...Part One. Read each transaction and record the appropriate journal entry for Morrison Consultants, which has a June 30 year end. Explanations are NOT required 1. On June 30 2012, Morrison prepares an aging schedule of accounts receivable that shows estimated uncollectible accounts of $5,200. Before journal entries, the Allowance for Doubtful accounts has a debit balance of $300 and Accounts Receivable has a balance of $85,000. 2. On July 5, Morrison was notified that Sperry Ltd has declared bankruptcy and Morrison writes off its A/R of $800. 3. On September 12, Sperry notifies Morrison that it can pay its $800 debt and includes a cheque for the entire amount. Part Two. 1. What is the net realizable value of the accounts receivable at June 30, 2012? ______________ 2. What is the net realizable value of the accounts receivable at July 5, 2012? _______________ Date Account Debit Credit Calculations: There is no representation that the practice questions reflect the actual exam questions. 1|Page Camosun College W13 Acct110 COMPREHENSIVE PRACTICE Final Exam B. Edwards Question Two: Capital Assets and amortization. (30 minutes) Townsend Engineers owns a piece of machinery that it purchased 3 years ago for $40,000. The machinery has an estimated salvage value of $5,000 and an estimated useful life of 10 years. Straight-line amortization is used. At December 31, 2011, the accumulated amortization account had a balance of $10,500. On April 1, 2013...
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...APTITUDE EXAMINER SUBMITTED BY Umera Pawar Seat no : Uzaira Sayyed Seat no : 2010-2011 Under the guidance of Mrs. Anupama Bali Submitted in partial fulfillment of the requirements for qualifying B.Sc. (I.T.), Semester – VI Examination Vivek College of Commerce Vivek College Road, Siddharth Nagar, Goregaon (West), MUMBAI - 400 062. ACKNOWLEDGEMENT Acknowledgement We would like to take this opportunity to express our deep regards towards all those who offered valuable guidelines in our hour of need. We like to express our gratitude to, The Management of Vivek College of Commerce for its valuable co-operation and our respected Principle, Dr.Nandita Roy, for her continuous support and guidance which helped us to keep our focus and achieve excellence in our endeavor. We are greatly thankful to Vivek College Library for providing us with the required books and articles. Our sincere thanks to the librarian Mrs. Bindu Varma for being supportive and co-operative. We would also like to acknowledge the valuable support extended by Prof. Anupama Bali ( Head Of Department ), Prof. Aparna Padte, Prof. Maria Muthukumar, Prof. Mohnish Dukhande, Prof. Murugesh Chandran for their valuable suggestion rendered throughout the course of project. We would also like to take this opportunity to express our sincere gratitudeto Ms. Sayyed Humera our project guide for bestowing belief in our talent...
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...L V/J_ X \ Checkpoint Contents Federal Library Federal Source Materials Federal Tax Decisions Tax Court Memorandum Decisions Tax Court & Board of Tax Appeals Memorandum Decisions (Prior Years) 1995 TC Memo 1995-448 - TC Memo 1995-409 Jose A. Alvarez, et ux., TC Memo 1995-414, Code Sec(s). 6013; 6501; 6651; 6653; 6661; 6662, 8/24/1995 Tax Court & Board of Tax Appeals Memorandum Decisions Jose A. Alvarez, et ux. v. Commissioner, TC Memo 1995-414 , Code Sec(s) 6501. JOSE A. ALVAREZ AND WANDA ALVAREZ. Case Information: Code Sec(s): | 6501 | Docket: | Dkt. No. 2849-91. | Date Issued: | 8/24/1995. | Judge: | Opinion by Laro, J. | Tax Year(s): | Years 1982, 1983, 1984, 1985, 1986, 1987, 1989. | Disposition: | Decision for Commissioner. | | Related Proceedings at Jose A. Alvarez v. Commissioner, [S| T.C. Memo. 1995-414 [1995 RIATC Memo U95,414], Tax Ct. Dkt. No. 22719-93 | Cites: | TC Memo 1995-414, RIATC Memo P 95414, 70 CCH TCM 518. | HEADNOTE 1. Tax Court — arbitrary deficiency notice. Deficiency notice wasn't arbitrary, so burden of proof didn't shift to IRS: IRS'sYiet worth calcuJatfonssrnatched taxpayefs^net^Korth Iedger>d€f1ciertoes in taxpayer husband's income computed under^ank-deposifSsQTettiecrwere prima facieVaTld; and taxpayers kept inadequate records and stip&taled the accuracy of IRS's tracing of ledger entries to specific bank account balances. Husband's testimony that source of unreported income was a gift was unsupported...
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