Assignment

Assignment.docx

Home >Business & Finance homework help >Accounting homework help >Assignment

Question 1 (1 point)

Sasha Goldberg, CPA, is considering various risks in planning the audit of Levine Financial, a securities firm that has recently experienced difficulty due to the global financial crisis.

Question 1 options:

	Decrease inherent risk
	Increase inherent risk
	Decrease control risk
	Have no effect on risk related to the audit
	Increase control risk

Levine replaced a member of the audit committee with an outside board member with significantly more financial experience.

The internal auditor for Levine reports directly to the CFO.

Levine was able to increase coverage of their liability insurance by changing the insurance provider.

Levine has been operating at a loss, but the turnaround in the economy will result in a profitable year.

Levine has received a letter from a federal agency responsible for oversight requesting records of transaction for several significant customer accounts.

Question 2 (1 point)

Agora Co. recorded the following inventory information during the month of March:

	# Units	Unit Cost	Total Cost	# Units, Ending Bal

Balance on 3/1	2,000	$1	$2,000	2,000
Purchased on 3/8	1,200	1	$3,600	3,200
Sold on 3/23	1,800			1,400
Purchased on 3/28	800	5	$4,000	2,200

What amount should Rose report as inventory on March 31 using the periodic LIFO method for recording inventory?

Your Answer:

Question 2 options:

Answer

Question 3 (1 point)

Mauve Company owns 10,000 shares of Teal Corporation’s stock; Teal currently has 40,000 shares outstanding. During the year, Teal had net income of $200000 and paid out $59,000 in dividends. At the beginning of the year, there was a balance of $160,000 in Mauve’s equity method investment in Teal Corporation account. At the end of the year, the balance in this account should be:

Your Answer:

Question 3 options:

Answer

Question 4 (1 point)

Hogan Inc. allocates its accounting department's costs to its production and sales departments based on the number of employees in each department using the direct method. If the accounting department's costs are $2,200,000, use the following information regarding costs and employees to determine how much of the accounting department's costs will be allocated to the production department?

Department	Employees
Accounting	4
Production	33
Sales	26

Your Answer:

Question 4 options:

Answer

Question 5 (1 point)

Victor Koman and his wife had a federal taxable income of $107,000 for the 2019 tax year. What tax will they pay to the federal government?

Your Answer:

Question 5 options:

Answer

Question 6 (1 point)

On January 3, 20X1, Bennett and Malik each owned 100 shares of the 200 issued shares of Fedderman stock. Bennett’s basis in Fedderman shares on that date was $11,300. Bennett sold all of his Fedderman shares to Gibbs on January 31, 20X1, and Fedderman made a valid election to terminate its tax year. Bennett’s share of ordinary income from Fedderman prior to the sale was $1,800. Fedderman made a cash distribution of $1,700 to Bennett on January 30, 20X1.

What was Bennett’s basis in Fedderman shares for determining gain or loss from the sale to Gibbs?

Your Answer:

Question 6 options:

Answer

Question 7 (1 point)

"Karenna Fifeman, a single taxpayer from Florida, purchased a piece of land on Marco Island for $2,400 as an investment back in 20X1. Earlier this year on January 14, 20X6, Karenna purchased $1,100 of stock as an investment. On June 5, 20X6, she donated the land and stock, with fair market values of $14,200 and $2,000 respectively, to her synagogue on Marco Island, FL.

Calculate Karenna Fifeman's charitable contribution deduction for 20X6 assuming her adjusted gross income (AGI) was $75,000 in 20X6."

Your Answer:

Question 7 options:

Answer

Question 8 (1 point)

Sweeting Co. reported the following in its statement of equity on January 1:
Common stock, $5 par value, authorized
200,000 shares, issued 100,000 shares	$ 500,000
Additional paid-in capital	1,500,000
Retained earnings	516,000
	$2,516,000
Less: Treasury stock, at cost, 5,000 shares	-40,000
Total equity	$2,476,000

The following events occurred during the year:
1-May	1,000 shares of treasury stock were sold for $10,000.
9-Jul	10,000 shares of previously unissued common stock sold for $12 per share.
	The distribution of a 2-for-1 stock split resulted in the common stock’s per-share par value being decreased by 1/2.

October 1:
Sweeting accounts for treasury stock under the cost method. Laws in the state of Sweeting’s incorporation protect shares held in treasury from dilution when stock dividends or stock splits are declared.

The number of outstanding common shares at December 31 should be

Your Answer:

Question 8 options:

Answer

Question 9 (1 point)

Which of the following are consistent with the Laffer Curve?

Question 9 options:

	When the JFK taxes cuts lowered the top Federal Marginal rate from 91% to 77%, the tax revenues from the federal government went up.
	Increasing marginal tax rates will always increase tax revenues.
	Decreasing marginal tax rates will always increase tax revenues.
	Decreasing marginal tax rates will always decrease tax revenues.

Question 10 (1 point)

You should assume that the following independent situations are material. Assume that U.S. GAAP is the applicable financial reporting framework. Which of the following situations would result in an unmodified audit opinion?

Question 10 options:

The client changed its accounting policy for recognition of bad debt expense from the allowance method to the direct write-off method during the period covered by the audit.

Management did not provide the auditor his/her personal financial statements.

The client did not provide the audited financial statements of his/her subsidiary to the auditor.

The client's legal counsel refused to respond to the auditor's letter of inquiry.

The client's current-year income statement includes amortization expense of goodwill.

The CEO of the client refuses the auditor access to minutes of board directors meetings.

Question 11 (1 point)

Fedderman Corp., an accrual-basis calendar year repair-service corporation, began business on Monday, January 3, 20X1. Fedderman’s valid S corporation election took effect retroactively on January 3, 20X1.
For questions 1 through 4, determine the amount, if any, using the fact pattern for each item.

Assume the following facts:
Fedderman’s 20X1 books recorded the following items:
Gross receipts	$9,600
Interest income on investments	50
Charitable contributions	600
Supplies	2,500

What amount of net business income should Fedderman report on its 20X1 Form 1120S, U.S. Income Tax Return for an S Corporation, Schedule K?

Your Answer:

Question 11 options:

Answer

Question 12 (1 point)

For each independent situation below, select from the option lists provided the appropriate inherent risk factor and the effect of the inherent risk, if any, on the company's net income.

Question 12 options:

	Volume: Overstatement
	Complexity: Overstatement
	Estimates: Understatement
	Susceptibility of an asset to theft: Overstatement

Sales orders for an Internet textbook distributor have increased 100% over the last year. Additionally, the company's asset turnover ratio also doubled since the previous year.

SLL Co. recorded its first hedging transaction for mortgage-backed securities in 20X1. At the end of 20X1, the fair value of mortgage-backed securities had decreased significantly.

Jeweler's Supply House, Inc., supplies silver and gold to high end jewelry designers. During 20X1, the price of gold doubled and silver prices tripled. Given that three of its major competitors went out of business last year, Jeweler's Supply House maintains a significant amount of inventory in one warehouse outside Baltimore city.

Anton's Technology Sales and Repair Shop provides three-year money back warranties on all sales and repairs . During 20X1, warranty claims decreased significantly. Anton's did not reduce the warranty reserve.

Question 13 (1 point)

Using the theory behind Cressey's fraud triangle, select the appropriate risk factor that is associated with the scenario provided on the left.

Question 13 options:

	Attitudes/Rationalizations
	Incentives/pressures
	Opportunities

1.	Significant related-party transactions not in the ordinary course of business.
2.	Promotions, compensations, or other rewards inconsistent with expectations.
3.	Excessive interest by management in maintaining or increasing the entity's stock price.

Question 14 (1 point)

As of January 3, 20X1, Bennett and Malik each owned 100 shares of the 200 issued shares of Fedderman stock. On January 31, 20X1, Bennett and Malik each sold 10 shares to Gibbs. No election was made to terminate the tax year. Fedderman had net business income of $20,000 for the year ended December 31, 20X1, and made no distributions to its shareholders. Fedderman’s 20X1 calendar year had 363 days.

What amount of net business income should have been reported on Gibbs’s 20X1 Schedule K-1 from Fedderman? (20X1 is a 363-day tax year.)

Your Answer:

Question 14 options:

Answer

Question 15 (1 point)

Select the type of misstatement, error, or fraud from the drop down list that best matches the definitions in the first column.

Question 15 options:

Projected misstatements

Judgmental misstatements

Errors

None of the options

Factual misstatements

Fraud

Differences specifically identified during the audit that are not in doubt

Differences between the auditor's and management's evaluations of accounting estimates

Results of analytical procedures

Extrapolations from audit evidence

Unintentional misstatements

Intentional acts involving deception

Question 16 (1 point)

Select the appropriate tax treatment with the list of various types of individual or business entity transactions.

Question 16 options:

	Ordinary Income or loss
	Section 1231 gain or loss
	Section 1250 gain
	Not deductible
	Short term capital gain
	Long-term capital gain

Gains from sale of stock held for 9 months.

Gains are long-term capital gains and losses are ordinary if held for more than one year.

Results from the recapture of depreciation on real property.

Gain on the sale of personal jewelry held long term.

Loss on the sale of the personal residence lived in by the taxpayer and held long term.

Results from the sale of assets, such as land, buildings, or equipment, used in a trade or business for one year or less.

Question 17 (1 point)

Taupe Corporation’s schedule of depreciable assets on December 31, 20X3, is shown below. Taupe takes a full year’s depreciation expense in the year of an asset’s acquisition and no depreciation expense in the year of an asset’s disposition. The estimated useful life of each depreciable asset is 5 years.

Asset	Depreciation Method *	Cost	Acquisition Date	Salvage Value
Concrete mixer	DDB	$18,000	20X2	$20,000
Delivery Truck	SYD	55,000	20X1	10,000
Company Van	SL	64,000	20X1	13,000
		$225,000		$44,000

DDB = double declining balance

Taupe depreciates the Company Van by the straight-line method. On June 30, Year 4, Taupe sold the Company Van for $20,000 cash. How much gain or (loss) should Taupe record in 20X4 on the disposal of the Company Van?

Your Answer:

Question 17 options:

Answer

Question 18 (1 point)

Linaweaver Inc. has $6.10 per unit in variable costs and $1.40 per unit in fixed costs and a production volume of 100,000 units per year. If Linaweaver marks up total cost by 0.30, what sale price in dollars should be charged if 45,000 units are expected to be sold each year?

Please round your answer to two decimal places.

Your Answer:

Question 18 options:

Answer

Question 19 (1 point)

The comparative balance sheet for an entity that had profit of $157,000 for the year ended December 31, 20X2, and paid $125,000 of dividends during 20X2 is as follows:
Paz, Inc.
Balance Sheet
At December 31,

	12/31 20X2	12/31/20X1
Cash	$150,000	$180,000
Accounts receivable	200,000	220,000
Total assets	$350,000	$400,000

Payables	80,000	$160,000
Share capital	130,000	125,000
Retained earnings	140,000	115,000
Total liabilities and stockholders’ equity	$350,000	$400,000

If dividends paid are treated as an operating item, the amount of net cash from operating activities during 20X2 was

Your Answer:

Question 19 options:

Answer

Question 20 (1 point)

Taupe Corporation’s schedule of depreciable assets at December 31, 20X3, is shown below. Taupe takes a full year’s depreciation expense in the year of an asset’s acquisition and no depreciation expense in the year of an asset’s disposition. The estimated useful life of each depreciable asset is 5 years.

Asset	Depreciation Method *	Cost	Acquisition Date	Salvage Value
Concrete mixer	DDB	$193,000	20X2	$20,000
Delivery Truck	SYD	55,000	20X1	10,000
Company Van	SL	66,000	20X1	14,000
		$225,000		$44,000

DDB = double declining balance
SYD = sum of the years digits
SL = straight line
Taupe depreciates the concrete mixer on the double-declining-balance method. How much depreciation expense should Taupe record in 20X4 for the concrete mixer?