...Depreciation Methods and Inventory Valuation Lab 4.1/Inventory Valuation, Depreciation of Assets, and Intangible Assets Solve the problems given below. Click here to download and save the templates that you must use to perform this week’s lab. 1. Remmers Company manufactures desks. Most of the company’s desks are standard models and are sold on the basis of catalog prices. At December 31, 2012, the following finished desks appear in the company’s inventory. Finished Desks 2012 catalog selling price FIFO cost per inventory list 12/31/12 Estimated current cost to manufacture (at December 31, 2012, and early 2013) Sales commissions and estimated other costs of disposal 2013 catalog selling price $500 $540 $900 $1,200 $50 $60 $80 $130 $460 $430 $610 $1,000 $470 $450 $830 $960 A $450 B $480 C $900 D $1,050 The 2012 catalog was in effect through November 2012, and the 2013 catalog is effective as of December 1, 2012. All catalog prices are net of the usual discounts. Generally, the company attempts to obtain a 20% gross profit on selling price and has usually been successful in doing so. Instructions At what amount should each of the four desks appear in the company’s December 31, 2012, inventory, assuming that the company has adopted a lower-of-FIFO-cost-or-market approach for valuation of inventories on an individual-item basis? 1 AC3225: Week 4 Depreciation Methods and Inventory Valuation Lab 4.1/Inventory Valuation, Depreciation of Assets, and Intangible Assets Source: Kieso...
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...provide? The purpose of a Balance Sheet is to report the financial position of a company at a certain point in time. It is divided into two columns. The first lists what the company owns (assets) on the left. The second shows what the company owes (liabilities and net worth) on the right. At the bottom of each list is the total of that column. As the name implies, the bottom line of the balance sheet must always Balance. In other words, the total assets are equal to the total liabilities plus the net worth. Marianne M. Huey The purpose of a Balance Sheet is to report the financial position of a company at a certain point in time. It is divided into two columns. The first lists what the company owns (assets) on the left. The second shows what the company owes (liabilities and net worth) on the right. At the bottom of each list is the total of that column. As the name implies, the bottom line of the balance sheet must always "balance." In other words, the total assets are equal to the total liabilities plus the net worth. A Snapshot of a Point in Time The particular elements of a balance sheet may vary significantly from day to day. Over time, these "snapshots" of a company, taken on a year-end or monthly basis, can reveal important information about the ability of the company to satisfy its creditors, manage inventory, and collect its...
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...Substantive Procedures for Asset Irregularities University of Phoenix ACC/556 Substantive Procedures for Asset Irregularities In light of the substantive hurdles created by management at Apollo Shoes, Inc. (the “Company”), as the Auditors of the Company, it is incumbent upon us to develop and audit program to manage and perform the most thorough analyses of the books and records so that we can do a thorough job and offer an opinion on the quality of the financial well-being of the Company. We will analyze the Accounts Receivable, Inventory, and Fixed assets of the company and the following describes the way we will attack this assignment. In the accounts receivable, the sales and billing procedures is a section that should call for its immediate consideration. Accounts receivable fraud usually starts with inaccuracies inside the billing procedure and can be looked at by taking a sample of client accounts receivable records and looking over the original transactions data towards the consumer balances. This procedure will reveal fake clients and receivables intended to make the business financial report stronger. The sales and billing procedure has to be accurate in order for the accounts receivable to be right (Wells, 2011). Another problem when the billing is being rectified is the stealing of the payments obtained on a client’s account. The theft usually happens between numerous client accounts where the first payment is taken and the following client’s payment...
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...agency is to track and manage its inventory to include materials, supplies, tools, equipment, vehicles, appliance, etc., while maintaining a strict system of accountability and internal control. It is essential. To any effective public housing operation to have a system in place that ensures that the necessary supplies, parts, tools, and equipment are on hand to perform needed maintenance repairs to the units, buildings, grounds, and other PHA property. Housing Agencies between 250-400 public housing units are required to operate using Project Based Budgeting and Accounting unless they have opted out of asset management (an option under current rules as of the date of this writing). All PHAs are required to manage their inventory regardless of the number of projects and whether or not they are operating under asset management. If they are operating under asset management, they should maintain inventory by project unless utilizing a centralized warehouse for inventory, further discussed below. A. PURPOSE The purpose of this manual is to familiarize you with effective management, tracking, and accountability procedures for both non-expendable and expendable items in accordance with Project Based Budgeting and Accounting requirements. Objectives: Develop an understanding of inventory management requirements under Project Based Budgeting and Accounting. * Use the basic principles of maintaining and tracking available inventory to develop a system which will adequately...
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...Goodner Brothers, Inc. Internal Control Issues 1.List what you believe should have been the three to five key internal control objectives for Goodner’s Huntington sales office. 1. Assets Safeguard The padlock and other some security are used as a physical protection of Goodner’s inventory from stolen by unauthorized person. 2. Authorization of Transaction Goodner’s policy said that the new customer required an approval of the sale manager for the credit sale. The objective of this policy is to control the authorization of employee by using an approval from the senior manager to determine the credit term of new customer. 3. Top-level reviews Annual review by the internal audit is used in order to inspire the operation and compare the performance with a plan of the business, so that the company can find out that there are any problems or fraud or not. 4. Human Resource Policies and Practices Goodner’s policy about hiring an employee is relied on honesty and integrity of the employee which is required 3 strong as references and preferably from reputable individual with some connection to Goodner Brother. 5. Adequate Document and Records The computerized accounting system is used at each Goodner sales outlet. The system will record the sale and purchase transactions which were recorded by the bookkeeper and sales representative. So the company can record all transaction from each sale outlet. 2. List the key internal control weaknesses that were evident...
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...III Sheila Dunn ACC 546 May 13, 2013 Cecil Lucy Audit Program Design Part III Inventory and Warehouse Cycle The inventory and warehouse cycle can be divided into five sections: acquire and record raw materials, labor, and overhead, internally transfer assets and costs, ship goods and record revenue and costs, physically observe inventory, and price and compile inventory. The following will be the tests of control, substantive tests of transactions, and analytical procedures. 1. Acquire and record raw materials, labor, and overhead a. Tests of control i. Check to make sure that all materials ordered have been accounted for ii. Check to make sure that there are records for all orders iii. Check payroll from payroll and personnel cycle iv. Check to make sure that the inventory is not overstocked b. Substantive test of transactions i. Take a sample of the orders placed ii. Make sure that the sample reflects that all material were received iii. Sample the payroll to make sure there are no discrepancies iv. Sample the inventory to make sure that it is replenished and constantly moving c. Analytical procedures i. Compare the results to prior years to ensure that the data matches up ii. Determine if there any risks 2. Internally transfer assets and costs a. Tests of controls i. Check financial statements to ensure assets were transferred ii. Check for the costs related to the business b. Substantive...
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...ratios included in KBR to assist you in determining the financial health of a company. Solvency Ratios – Six key ratios measuring financial soundness Efficiency Ratios – Five key ratios measuring asset management, suppliers, and equity Profitability Ratios – Three key ratios measuring profit according to sales, total assets, and net worth. Median Values & Industry Quartiles Solvency Ratios Solvency ratios measure the financial soundness of a business and how well a company can satisfy its short- and long-term obligations. D&B uses six key financial business ratios to measure a company’s solvency: • Quick Ratio, also called “acid test” or “liquid” ratio, considers only cash, marketable securities and accounts receivable because they are considered to be the most liquids forms of current assets. A Quick Ratio less that 1.0 implies “dependency” on inventory and other current assets to liquidate short-term debt. Cash + Accounts Receivable ÷ Current Liabilities • Current Ratio is a comparison of current assets to current liabilities, commonly used as a measure of short-run solvency, i.e., the immediate ability of a business to pay its current debts as they come due. Potential creditors use this ratio to measure a company’s liquidity or ability to pay off short-term debts. Current Assets ÷ Current Liabilities • Current Liabilities to Net Worth Ratio indicates the amount due creditors within a year as a percentage of the owners or stockholders investment. The smaller the net worth...
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...A QUICKBOOKS ACCOUNTING PRIMER By Jeanie R. Hoshor, M.S. Accounting Introduction Businesses run on information: information about the purchase of goods and services from their vendors, about the sale of goods and services to their customers, about their inventories of products, about their employees and the services they perform and the wages they earn, about all the things (cash, buildings, equipment, patents, supplies, etc.) they use to carry on their operations and activities. Most of this information deals with things that have a value that can be measured in dollars and cents; this is financial information. This course (OAS 120) and your textbook deal with the keeping of financial (accounting) records, using a software package for personal computers called QuickBooks (QB). CHAPTER 1: BASIC CONCEPTS IN ACCOUNTING The Two Main Financial Statements The two main end products of accounting are the two financial statements which are presented to investors and creditors outside the business: the Balance Sheet and the Income Statement (which QB calls Profit & Loss). All the other reports you prepare in this course are for internal use by accountants and managers. The Profit & Loss report shows the revenues (QB calls them income) the business earned by performing services or delivering goods to customers during a given period of time, together with the expenses incurred (what was used up) in the process of earning the revenues. Revenues and expenses are...
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...were the company’s total current assets at the end of its most recent annual reporting period? The total current assets for Kroger Company most recent annual reporting period 2014 are $29.28Bfor period ending January 30, 2014. The "Marketwatch.com” (2015) The contributions for the total current assets are cash at $401 Million cash on hand with the highest amount listed, other accounts are short-term investments, accounts receivable, financing receivables, inventories all are net totals. The total current assets for Kroger previous annual reporting period are $24.65 Billion for period ending February 1, 2014. The increase in total current assets from year ending 2013 to the current reporting period of January 30, 2014 is $24.65 Billion. The largest swing in current assets was accounts receivable. The total decreased from $5,961 million to $4,731 million, a decrease of $1,230 million. The lowest swing was the financing receivable asset from $1,732 million to $1,712 million. This was a decrease of $20 million. Kroger Company. lists their assets in the order of liquidity. Their balance sheet lists cash first, then short-term investments, accounts receivable, financing receivables, inventories, and other current assets. Since assets on the balance sheet are listed in the order of liquidity, Kroger has correctly listed their assets in the proper order. Kroger Company. classifies their assets in this way. Under Current Assets is listed: Cash and cash equivalent...
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...1. What is risk management? The process of identifying risk, as represented by vulnerabilities, to an organization’’s information assets and infrastructure, and taking steps to reduce this risk to an acceptable level. Why is the identification of risks, by listing assets and their vulnerabilities, so important to the risk management process? It is a starting point for the next step in the risk management process –– risk assessment. 2. According to Sun Tzu, what two key understandings must you achieve to be successful in battle? Know the enemy and know yourself. 3. Who is responsible for risk management in an organization? Each community of interest has a role to play in managing the risks that an organization encounters. Which community of interest usually takes the lead in information security risk management? information security community 4. In risk management strategies, why must periodic review be a part of the process? To verify the completeness and accuracy of the asset inventory, review and verify the threats to and vulnerabilities in the asset inventory, as well as the current controls and mitigation strategies. Must also review the cost effectiveness of each control and revisit decisions on deployment of controls. Managers at all levels must regularly verify the ongoing effectiveness of every control deployed. 5. Why do networking components need more examination from an information security perspective than from a systems development perspective? Networking...
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... | | | | | | |2. Give examples of tests of controls for auditing the controls |6, 7, 8, 9 |42, 43 | |over conversion of materials and labor in a production process. | | | | | | | |3. Identify and describe considerations involved in the observation|10, 11, 12, 13, 14, 15, 16, 17 |44, 45, 46, 47, 48, 49, 50, 51,| |of physical inventory and tests of inventory pricing and | |52, 56 | |compilation. | | | | |...
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...Target Corp. & J.C. Penney Company Inc. MAURICE D. ALFORD FINC 350 BUSINESS FINANCE 5/11/2013 TABLE OF CONTENTS Executive Summary……………………………………………………………………2 Profitability………………………………………………………………………………..3 Asset Reutilization……………………………………………………………………..3 Capital Accounts…………………………………………………………………………4 – 5 Fixed Assets………………………………………………………………………………..5 – 6 Non-Current Assets…………………………………………………………………….6 Deferred Tax Accounts……………………………………………………………….7 Liquidity……………………………………………………………………………………..7 – 8 Debt Utilization…………………………………………………………………………..8 Recommendation……………………………………………………………………….8 -10 Resources……………………………………………………………………………………………………………….. EXECUTIVE SUMMARY The bottom line up front, J.C. Penney Company Inc. would present a more attractive acquisition than Target Corp. J.C. Penney Company Inc. has a strong brand that is widely known and has all the tools to once again become a prominent organization within the retail industry. The organization’s recent purchase of Liz Claiborne, another well-known brand in addition to their real estate value, helps strengthen the decision to acquire this business. J.C. Penney has recently garnered the attention of a major investor, Soros Fund Management LLC. Soros has acquired a 7.91 percent stake in J.C. Penney. The billionaire investor George Soros acquired 17,386,361 shares reported by the Securities and Exchange Commission. The business community is starting to sniff something here...
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...EAST COAST YACHTS 1. The calculations for the ratios listed are: Current ratio = $11,270,000 / $15,030,000 Current ratio = 0.75 times Quick ratio = ($11,270,000 – 4,720,000) / $15,030,000 Quick ratio = 0.44 times Total asset turnover = $128,700,000 / $83,550,000 Total asset turnover = 1.54 times Inventory turnover = $90,070,000 / $4,720,000 Inventory turnover = 19.22 times Receivables turnover = $128,700,000 / $4,210,000 Receivables turnover = 30.57 times Total debt ratio = ($83,550,000 – 42,570,000) / $83,550,000 Total debt ratio = 0.49 times Debt-equity ratio = ($15,030,000 + 25,950,000) / $42,570,000 Debt-equity ratio = 0.96 times Equity multiplier = $83,550,000 / $42,570,000 Equity multiplier = 1.96 times Interest coverage = $18,420,000 / $2,315,000 Interest coverage = 7.96 times Profit margin = $9,663,000 / $128,700,000 Profit margin = 7.51% Return on assets = $9,663,000 / $83,550,000 Return on assets = 11.57% Return on equity = $9,663,000 / $42,570,000 Return on equity = 22.70% 2. Regarding the liquidity ratios, East Coast Yachts current ratio is below the median industry ratio. This implies the company has less liquidity than the industry in general. However, the current ratio is above the lower quartile, so there are companies in the industry with lower liquidity than East Coast Yachts. The company...
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...of improved fixed asset management is often overlooked. It’s difficult to find the time and tools to devote the attention to fixed assets that they deserve. Yet assets like land, buildings, transportation, and manufacturing equipment, represent the largest investments most companies make. Sound fixed asset management can yield substantial tax savings in depreciation deductions. Conversely, sub-optimal fixed asset practices can threaten the accuracy of financial reports and negatively impact your bottom line body : There is nothing more critical to effective management of fixed assets than beginning with an accurate fixed asset inventory. Without it, no amount of added processes, controls, or correct calculations can ensure the accuracy of fixed asset accounting. The only reliable way to verify and validate the fixed asset information is to conduct a physical inventory. Eliminate “ghost” assets: A “ghost” asset is property that is lost, stolen, or unusable, but is still listed as an active fixed asset in the system.If 10-30 percent of fixed assets on the books are ghost assets, a company might be overpaying taxes and insurance on those assets by up to 30 percent. Ghost assets that are not identified can cause lost productivity because missing or unusable assets are not available when needed. Tag assets appropriately: When a company owns multiple fixed assets that are nearly identical, it can be very easy to make mistakes by creating duplicate asset records or failing...
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...What factors influence management’s decision? What are the likely behavioral side effects of each choice? What implications do those side effects have for the long-run usefulness of activity-based cost systems? It will often be easier to identify opportunities to downsize and eliminate jobs than to find creative value-adding activities for excess capacity. Thus, management may be more likely to eliminate excess capacity than to redirect it to new tasks. This can have serious negative effects on both employee morale and the long-run survival of the firm. When employees are let go, their knowledge and customer relationships go with them. Some consultants argue that such soft knowledge is a company’s most valuable asset and, therefore, that downsizing is likely to have negative long-run consequences. If management uses ABC systems to justify downsizing, there is likely to be a backlash against and distrust of such systems by many managers. Instead, managers should seek to find new opportunities to productively make use of excess capacity. This can involve creating teams to look for ways to improve processes and cut costs. It is also useful to build-in resources for ongoing maintenance. Finally, it is critical to focus on “practical” capacity rather than “theoretical” capacity, recognizing that neither humans nor machines can function productively 100% of the time –...
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