Ashford ACC 205 complete class work from week1 to wee5
clarahelen1234Ashford University ACC 205 Week 1 to 5 Discussion Questions Complete Set
Wk 1 DQ
DQ 1 Accounting and the Business Environment
Accounting and the Business Environment. From Chapter 1, Ethical Issue 1-1, page 59. Complete all parts of the case and respond to at least two of your classmates’ postings.
Ethical Issue 1-1 The board of directors of Xiaping Trading Company is meeting to discuss the past year's results before releasing financial statements to the bank. The discussion includes this exchange:
Wai Lee, company owner: “This has not been a good year! Revenue is down and expenses are way up. If we are not careful, we will report a loss for the third year in a row. I can temporarily transfer some land that I own into the company's name, and that will beef up our balance sheet. Brent, can you shave $500,000 from expenses? Then we can probably get the bank loan that we need.”
Brent Ray, company chief accountant: “Wai Lee, you are asking too much. Generally accepted accounting principles are designed to keep this sort of thing from happening.”
Requirements
1. What is the fundamental ethical issue in this situation?
2. How do the two suggestions of the company owner differ?
DQ 2Recording Business Transactions
Recording Business Transactions. Define the terms “debit” and “credit”. Explain how debits and credits affect the following: assets, liabilities, owner’s capital account, revenues and expenses. Respond to at least two of your classmates’ postings
Week2
The Adjusting Process
From Chapter 3, Ethical Issue 3-1.Complete all parts of the case and respond to at least two of your classmates’ postings.
Ethical Issue 3-1
The net income of Steinbach & Sons, a department store, decreased sharply during 2014. Mort Steinbach, manager of the store, anticipates the need for a bank loan in 2015. Late in 2014, Steinbach instructs the store's accountant to record a $2,000 sale of furniture to the Steinbach family, even though the goods will not be shipped from the manufacturer until January 2015. Steinbach also tells the accountantnot to make the following December 31, 2014, adjusting entries:
Salaries owed to employees $900
Prepaid insurance that has expired 400
Requirements
1. Compute the overall effects of these transactions on the store's reported income for 2014.
2. Why is Steinbach taking this action? Is his action ethical? Give your reason, identifying the parties helped and the parties harmed by Steinbach's action. (Challenge)
3. As a personal friend, what advice would you give the accountant? (Challenge)
Completing the Accounting Cycle
Explain the purpose of adjusting entries.
How is net income affected if adjusting entries are not made?
Describe the four closing entries and explain their purpose.
Week 3
DQ 1 Merchandising Operations
From Chapter 5, Ethical Issue 5-1. Complete all parts of the case and respond to at least two of your classmates’ postings.
Dobbs Wholesale Antiques makes all sales under terms of FOB shipping point. The company usually ships inventory to customers approximately one week after receiving the order. For orders received late in December, Kathy Dobbs, the owner, decides when to ship the goods. If profits are already at an acceptable level, Dobbs delays shipment until January. If profits for the current year are lagging behind expectations, Dobbs ships the goods during December.
Requirements
1. Under Dobbs’ FOB policy, when should the company record a sale?
2. Do you approve or disapprove of Dobbs’ manner of deciding when to ship goods to customers and record the sales revenue? If you approve, give your reason. If you disapprove, identify a better way to decide when to ship goods.
DQ 2 Merchandise Inventory
Merchandise Inventory.
Describe the inventory valuation methods FIFO and LIFO.
Which items are included in ending inventory under each method?
Wk 4 DQ
DQ 1 Internal Control and Cash
From Chapter 7, Fraud Case 7-1. Complete all parts of the case and respond to at least two of your classmates’ postings.
Levon Helm was a kind of one-man mortgage broker. He would drive around Tennessee looking for homes that had second mortgages, and if the criteria were favorable, he would offer to buy the second mortgage for “cash on the barrelhead.” Helm bought low and sold high, making sizable profits. Being a small operation, he employed one person, Cindy Patterson, who did all his bookkeeping. Patterson was an old family friend, and he trusted her so implicitly that he never checked up on the ledgers or the bank reconciliations. At some point, Patterson started “borrowing” from the business and concealing her transactions by booking phony expenses. She intended to pay it back someday, but she got used to the extra cash and couldn’t stop. By the time the scam was discovered, she had drained the company of funds that it owed to many of its investors. The company went bankrupt, Patterson did some jail time, and Helm lost everything.
Requirements
1. What was the key control weakness in this case?
2. Many small businesses cannot afford to hire enough people for adequate separation of duties. What can they do to compensate for this?
DQ 2 Receivables
Discuss the allowance method and the direct write-off method of accounting for bad debts. When is the expense for uncollected accounts receivable recognized under each method?
WK 5 DQ
DQ 1 Plant Assets and Intangibles
From Chapter 9, Fraud Case 9-1. Complete all parts of the case and respond to at least two of your classmates’ postings.
Jim Reed manages a fleet of utility trucks for a rural county government. He's been in his job 30 years, and he knows where the angles are. He makes sure that when new trucks are purchased, the salvage value is set as low as possible. Then, when they become fully depreciated, they are sold off by the county at salvage value. Jim makes sure his buddies in the construction business are first in line for the bargain sales, and they make sure he gets a little something back. Recently, a new county commissioner was elected with vows to cut expenses for the taxpayers. Unlike other commissioners, this man has a business degree, and he is coming to visit Jim tomorrow.
Requirements
1. When a business sells a fully depreciated asset for its salvage value, is a gain or loss recognized?
2. How do businesses determine what salvage values to use for their various assets?
3. How would an organization prevent the kind of fraud depicted here?
DQ 2 Current Liabilities and Payroll
There are two types of current liabilities that must be estimated. Describe them and explain why they must be estimated. How are the financial statements affected if they are not estimated?
ACC 205 -Week 1 Assignment - Ashford University
Week One Exercise Assignment
Basic Accounting Equations
1. Recognition of normal balances
The following items appeared in the accounting records of Triguero's, a retail music store that also sponsors concerts. Classify each of the items as an asset, liability; revenue; or expense from the company's viewpoint. Also indicate the normal account balance of each item.
a. Amounts paid to a mall for rent.
b. Amounts to be paid in 10 days to suppliers.
c. A new fax machine purchased for office use.
d. Land held as an investment.
e. Amounts due from customers.
f. Daily sales of merchandise sold.
g. Promotional costs to publicize a concert.
h. A long-term loan owed to Citizens Bank.
i. The albums, tapes, and CDs held for sale to customers.
2.Basic journal entries
The following transactions pertain to the Jennifer Royall Company:
May 1 | Jennifer Royall invested cash of $25,000 and land valued at $15,000 into the business. |
5 | Provided $1,000 of services to Jason Ratchford, a client, on account. |
9 | Paid $1,250 of salaries to an employee. |
14 | Acquired a new computer for $4,200, on account. |
20 | Collected $800 from Jason Ratchford for services provided on May 5. |
24 | Borrowed $2,500 from BestBanc by securing a six-month loan. |
Prepare journal entries (and explanations) to record the preceding transactions and events.
3. Balance sheet preparation. The following data relate to Preston Company as of December 31, 20XX:
Building $40,000 Accounts receivable $24,000
Cash 21,000 Loan payable 30,000
J. Preston, Capital 65,000 Land 21,000
Accounts payable ?
Prepare a balance sheet as of December 31, 20XX. (See Exhibit 1.1 and 1.4)
4. Basic transaction processing. On November 1 of the current year, Richard Simmons established a sole proprietorship. The following transactions occurred during the month:
1: Simmons invested $32,000 into the business for $32,000 in common stock.
2: Paid $5,000 to acquire a used minivan.
3: Purchased $1,800 of office furniture on account.
4: Performed $2,100 of consulting services on account.
5: Paid $300 of repair expenses.
6: Received $800 from clients who were previously billed in item 4.
7: Paid $500 on account to the supplier of office furniture in item 3.
8: Received a $150 electric bill, to be paid next month.
9: Simmons withdrew $800 from the business.
10: Received $250 in cash from clients for consulting services rendered.
Instructions
a. Arrange the following asset, liability, and owner’s equity elements of the accounting equation: Cash, Accounts Receivable, Office Furniture, Van, Accounts Payable, Common Stock/Dividends, and Revenues/Expenses. (See Exhibit 1.5)
b. Record each transaction on a separate line. After all transactions have been recorded, compute the balance in each of the preceding items.
c. Answer the following questions for Simmons.
(1) How much does the company owe to its creditors at month-end? On which financial statement(s) would this information be found?
(2) Did the company have a “good” month from an accounting viewpoint? Briefly explain.
5. Transaction analysis and statement preparation. The transactions that follow
relate to Burton Enterprises for March 20X1, the company’s first month of activity.
3/1 | Joanne Burton, the owner, invested $20,000 cash into the business. |
3/4 | Performed $2,400 of services on account. |
3/7 | Acquired a small parcel of land by paying $6,000 cash |
3/12 | Received $500 from a client who was billed previously on March 4. |
3/15 | Paid $200 to the Journal Herald for advertising expense. |
3/18 | Acquired 9,000 of equipment from Park Central Outfitters by Paying |
$7,000 down and agreeing to remit the balance owed within two weeks (A/P). | |
3/22 | Received $300 cash from clients for services. |
3/24 | Paid $1,500 on account to Park Central Outfitters in partial settlement of |
the balance due from the transaction on March 18. | |
3/28 | Rented a car from United Car Rental for use on March 28. Total charges |
amounted to $125, with United billing Burton for the amount due. | |
3/31 | Paid $600 for March wages |
3/31 |
Processed a $600 cash withdrawal (dividend) from the business for Joanne Burton |
Instructions
a. Determine the impact of each of the preceding transactions on Burton’s assets,
liabilities, and owner’s equity. See exhibit 1.5. Use the following format:
Assets= Liabilities+ Owner’s Equity
Cash, Accounts Receivable, Land, EquipmentAccounts Payable(+)Common Stock (+) Revenues
(-) Dividends(-) Expenses
a. Record each transaction on a separate line. Calculate balances only after the last transaction has been recorded.
b. Prepare an income statement, a statement of retained earnings, and a balance sheet, (See Exhibit 1.2, 1.3 and 1.4)
6.Entry and trial balance preparation. Lee Adkins is a portrait artist. The following schedule represents Lee’s combined chart of accounts and trial balance as of May 31.
Account numberAccount nameDebitCredit
110 | Cash | $ 2,700 | ||
120 | Accounts Receivable | 12,100 | ||
130 | Equipment and Supplies | 2,800 | ||
140 | Studio | 45,000 | ||
210 | Accounts Payable | $2,600 | ||
310 | Lee Adkins, Capital | 57,400 | ||
320 | Lee Adkins, Drawing | 30,000 | ||
410 | Professional Fee Revenue | 39,000 | ||
510 | Advertising Expense | 2,300 | ||
520 | Salaries Expense | 2,100 | ||
540 | Utilities Expense | 2,000 | ||
$99,000 | $99,000 | |||
The general ledger also revealed account no. 530, Legal and Accounting Expense. The following transactions occurred during June:
6/2 | Collected $3,000 on account from customers | ||||
6/7 | Sold 25% of the equipment and supplies to a young artist for $700 cash | ||||
6/10 |
Received a $300 invoice from the accountant for preparing last quarter's financial Statements. | ||||
6/15 | Paid $1,900 to creditors on account. | ||||
6/27 | Adkins withdrew $2,000 cash for personal use. | ||||
6/30 | Billed a customer $3,000 for a portrait painted this month. | ||||
a. Record the necessary journal entries for June on page 2 of the company’s general journal. (See Exhibit 2.6)
b. Open running balance ledger “T” accounts by entering account titles, account numbers, and May 31 balances. (See exhibit 2.3 and 2.4)
c. Post the journal entries to the “T” accounts.
b. Prepare a trial balance as of June 30. (See exhibit 2.9)
7. Journal entry preparation.On January 1 of the current year, Peter Houston invested $80,000 cash into his company MuniServ. The cash was obtained from an owner investment by Peter Houston of $50,000 and a $30,000 bank loan. Shortly thereafter, the company acquired selected assets of a bankrupt competitor. The acquisition included land ($10,000), a building ($40,000), and vehicles ($10,000). MuniServ paid $45,000 at the time of the transaction and agreed to remit the remaining balance due of $15,000 (an account payable) by February 15.
During January, the company had additional cash outlays for the following items:
Purchases of store equipment | $4,600 |
Note payment | 500 |
Salaries expense | 2,300 |
Advertising expense | 700 |
The January utility bill of $200 was received on January 31 and will be paid next month. MuniServ rendered services to clients on account amounting to $9,400. All customers have been billed; by month end, $3,700 had been received in settlement of account balances.
a. Present journal entries that reflect MuniServ's January transactions, including the $80,000 raised from the owner investment and loan. (See exhibit 2.6)
ACC 205 -Week 2 Assignment - Ashford University
1. Recognition of concepts. Jim Armstrong operates a small company that books entertainers for theaters, parties, conventions, and so forth. The company’s fiscal year ends on June 30. Consider the following items and classify each as either (1) prepaid expense, (2) unearned revenue, (3) accrued expense, (4) accrued revenue, or (5) none of the foregoing.
a Interest owed on the company's bank loan, to be paid in early July
b Professional fees earned but not billed as of June 30
c Office supplies on hand at year-end
d An advance payment from a client for a performance next month at a convention
e The payment in part (d) from the client's point of view
f Amounts paid on June 30 for a 1-year insurance policy
g The bank loan payable in part (a)
h Repairs to the firm's copy machine, incurred and paid in June
2. Understanding the closing process. Examine the following list of accounts:
Note Payable | Accumulated Depreciation: Building |
Alex Kenzy, Drawing | Accounts Payable |
Product Revenue | Cash |
Accounts Receivable | Supplies Expense |
Utility Expense | |
Which of the preceding accounts
a. appear on a post-closing trial balance?
b. are commonly known as temporary, or nominal, accounts?
c. generate a debit to Income Summary in the closing process?
d. are closed to the capital account in the closing process?
3. Adjusting entries and financial statements. The following information pertains to Sally Corporation:
· The company previously collected $1,500 as an advance payment for services to be rendered in the future. By the end of December, one half of this amount had been earned.
· Sally Corporation provided $1,500 of services to Artech Corporation; no billing had been made by December 31.
· Salaries owed to employees at year-end amounted to $1,000.
· The Supplies account revealed a balance of $8,800, yet only $3,300 of supplies were actually on hand at the end of the period.
· The company paid $18,000 on October 1 of the current year to Vantage Property Management. The payment was for 6 months’ rent of Sally Corporation’s headquarters, beginning on November 1.
Sally Corporation’s accounting year ends on December 31.
Instructions
Analyze the five preceding cases individually and determine the following:
a. The type of adjusting entry needed at year-end (Use the following codes: A, adjustment of a prepaid expense; B, adjustment of an unearned revenue; C, adjustment to record an accrued expense; or D, adjustment to record an accrued revenue.)
b. The year-end journal entry to adjust the accounts
c. The income statement impact of each adjustment (e.g., increases total revenues by $500)
• The company previously collected $1,500 as an advance payment for services to be rendered in the future. By the end of December, one half of this amount had been earned.
1.) Sally Corporation provided $1,500 of services to Artech Corporation; no billing had been made by December 31.
Salaries owed to employees at year-end amounted to $1,000.
2.) The Supplies account revealed a balance of $8,800, yet only $3,300 of supplies were actually on hand at the end of the period.
3.) The company paid $18,000 on October 1 of the current year to Vantage Property Management. The payment was for 6 months’ rent of Sally Corporation’s headquarters, beginning on November 1.
Sally Corporation’s accounting year ends on December 31.
4. Adjusting entries. You have been retained to examine the records of Mary’s Day Care Center as of December 31, 20X3, the close of the current reporting period. In the course of your examination, you discover the following:
On January 1, 20X3, the Supplies account had a balance of $1,350. During the year, $5,520 worth of supplies was purchased, and a balance of $1,620 remained unused on December 31.
· Unrecorded interest owed to the center totaled $275 as of December 31.
· All clients pay tuition in advance, and their payments are credited to the Unearned Tuition Revenue account. The account was credited for $65,500 on August 31. With the exception of $15,500 all amounts were for the current semester ending on December 31.
· Depreciation on the school’s van was $3,000 for the year.
· On August 1, the center began to pay rent in 6-month installments of $24,000. Mary wrote a check to the owner of the building and recorded the check in Prepaid Rent, a new account.
· Two salaried employees earn $400 each for a 5-day week. The employees are paid every Friday, and December 31 falls on a Thursday.
· Mary’s Day Care paid insurance premiums as follows, each time debiting Prepaid Insurance:
Date Paid | Policy No. | Length of Policy | Amount |
Feb. 1, 20X2 | 1033MCM19 | 1 year | $540 |
Jan. 1, 20X3 | 7952789HP | 1 year | 912 |
Aug. 1, 20X3 | XQ943675ST | 2 years | 840 |
Instructions
The center’s accounts were last adjusted on December 31, 20X2. Prepare the adjusting entries necessary under the accrual basis of accounting.
A. On January 1, 20X3, the Supplies account had a balance of $1,350. During the year, $5,520 worth of supplies was purchased, and a balance of $1,620 remained unused on December 31.
B. Unrecorded interest owed to the center totaled $275 as of December 31
C. All clients pay tuition in advance, and their payments are credited to the Unearned Tuition Revenue account. The account was credited for $65,500 on August 31. With the exception of $15,500 all amounts were for the current semester ending on December 31.
D. Depreciation on the school’s van was $3,000 for the year.
E. On August 1, the center began to pay rent in 6-month installments of $24,000. Mary wrote a check to the owner of the building and recorded the check in Prepaid Rent, a new account.
F. Two salaried employees earn $400 each for a 5-day week. The employees are paid every Friday, and December 31 falls on a Thursday.
G. Mary’s Day Care paid insurance premiums as follows, each time debiting Prepaid Insurance:
Date Paid Policy No. Length of Policy Amount
Feb. 1, 20X2 1033MCM19 1 year $540
Jan. 1, 20X3 7952789HP 1 year 912
Aug. 1, 20X3 XQ943675ST 2 years 840 .
5. Bank reconciliation and entries. The following information was taken from the accounting records of Palmetto Company for the month of January:
Balance per bank | $6,150 |
Balance per company records | 3,580 |
Bank service charge for January | 20 |
Deposits in transit | 940 |
Interest on note collected by bank | 100 |
Note collected by bank | 1,000 |
NSF check returned by the bank with the bank statement | 650 |
Outstanding checks | 3,080 |
Instructions:
a. Prepare Palmetto’s January bank reconciliation.
b. Prepare any necessary journal entries for Palmetto.
6. Direct write-off method. Harrisburg Company, which began business in early 20X7, reported $40,000 of accounts receivable on the December 31, 20X7, balance sheet. Included in this amount was $550 for a sale made to Tom Mattingly in July. On January 4, 20X8, the company learned that Mattingly had filed for personal bankruptcy. Harrisburg uses the direct write-off method to account for uncollectibles.
a. Prepare the journal entry needed to write off Mattingly’s account.
b. Comment on the ability of the direct write-off method to value receivables on the year-end balance sheet.
7. Allowance method: analysis of receivables. At a January 20X2 meeting, the president of Sonic Sound directed the sales staff “to move some product this year.” The president noted that the credit evaluation department was being disbanded because it had restricted the company’s growth. Credit decisions would now be made by the sales staff.
By the end of the year, Sonic had generated significant gains in sales, and the president was very pleased. The following data were provided by the accounting department:
20X2 | 20X1 | |||
Sales | $23,987,000 | $8,423,000 |
| |
Accounts Receivable, 12/31 | 12,444,000 | 1,056,000 |
| |
Allowance for Uncollectible Accounts, 12/31 | ? | 23,000 cr. |
| |
The $12,444,000 receivables balance was aged as follows:
Age of Receivable | Amount | Percentage of Accounts Expected to Be Collected |
Under 31 days | $4,321,000 | 99% |
31260 days | 4,890,000 | 90 |
61290 days | 1,067,000 | 80 |
Over 90 days | 2,166,000 | 60 |
Assume that no accounts were written off during 20X2.
Instructions
a. Estimate the amount of Uncollectible Accounts as of December 31, 20X2.
b. What is the company’s Uncollectible Accounts expense for 20X2?
c. Compute the net realizable value of Accounts Receivable at the end of 20X1 and 20X2.
d. Compute the net realizable value at the end of 20X1 and 20X2 as a percentage of respective year-end receivables balances. Analyze your findings and comment on the president’s decision to close the credit evaluation department.
ACC 205 Week 3 Assignment
Week Three Exercise Assignment
Inventory
1. Specific identification method. Boston Galleries uses the specific identification method for inventory valuation. Inventory information for several oil paintings follows.
Painting
Cost
1/2 Beginning inventory
Woods
$21,000
4/19 Purchase
Sunset
21,800
6/7 Purchase
Earth
31,200
12/16 Purchase
Moon
4,000
Woods and Moon were sold during the year for a total of $35,000. Determine the firm’s
a. cost of goods sold.
b. gross profit.
c. ending inventory.
2. Inventory valuation methods: basic computations. The January beginning inventory of the Gilette Company consisted of 300 units costing $40 each. During the first quarter, the company purchased two batches of goods: 700 Units at $44 on February 21 and 800 units at $50 on March 28. Sales during the first quarter were 1,400 units at $75 per unit. The White Company uses a periodic inventory system. Using the White Company data, fill in the following chart to compare the results obtained under the FIFO, LIFO, and weighted-average inventory methods.
FIFO | LIFO | Weighted Average | |||
|
|
| |||
Goods available for sale | $ | $ | $ | ||
Ending inventory, March 31 | |||||
Cost of goods sold | |||||
3. Perpetual inventory system: journal entries. At the beginning of 20X3, Beehler Company implemented a computerized perpetual inventory system. The first transactions that occurred during 20X3 follow:
1/2/20X3 Purchases on account: 500 units @$6 = $3,000
1/15/20X3 Sales on account: 300 units @ $8.50 = $2,550
1/20/20X3 Purchases on Account: 200 units @ 5 = $1,000
1/25/20X3 Sales on Account: 300 units @ $8.50 = $2,550
The company president examined the computer-generated journal entries for these transactions and was confused by the absence of a Purchases account.
a. Duplicate the journal entries that would have appeared on the computer printout under FIFO & LIFO
b. Calculate the balance in the firm’s Inventory account under each method.
c. Briefly explain the absence of the Purchases account to the company president.
4. Inventory valuation methods: computations and concepts.
Wild Riders Surfboard Company began business on January 1 of the current year. Purchases of surfboards were as follows:
Date | Quantity | Unit Cost | Total Cost |
1/3 | 100 | $125 | $12,500 |
4/3 | 200 | $135 | $27,000 |
6/3 | 100 | $145 | $14,500 |
7/3 | 100 | $155 | $15,500 |
Total | 500 |
| $69,500 |
Wild Riders sold 400 boards at $250 per board on the dates listed below. The company uses a perpetual inventory system.
Date | Quantity Sold | Unit Price | Total Sales |
3/17 | 50 | $250 | $12,500 |
5/17 | 75 | $250 | $18,750 |
8/10 | 275 | $250 | $68,750 |
Total | 400 |
| $100,000 |
Instructions
Calculate cost of goods sold, ending inventory, and gross profit under each of the following inventory valuation methods:
First-in, first-out
Last-in, first-out
Weighted average
b. Which of the three methods would be chosen if management’s goal is to
(1) produce an up-to-date inventory valuation on the balance sheet?
(2) show the lowest net income for tax purposes?
5. Depreciation methods. Mike Davis Enterprises purchased a delivery van for $40,000 in January 20X7. The van was estimated to have a service life of 5 years and a residual value of $6,000. The company is planning to drive the van 20,000 miles annually. Compute depreciation expense for 20X8 by using each of the following methods:
a. Units-of-output, assuming 17,000 miles were driven during 20X8
b. Straight-line
c. Double-declining-balance
6. Depreciation computations. Alpha Alpha Alpha, a college fraternity, purchased a new heavy-duty washing machine on January 1, 20X3. The machine, which cost $2,000, had an estimated residual value of $100 and an estimated service life of 4 years (1,800 washing cycles). Calculate the following:
a. The machine’s book value on December 31, 20X5, assuming use of the straight-line depreciation method
b. Depreciation expense for 20X4, assuming use of the units-of-output depreciation method. Actual washing cycles in 20X4 totaled 500.
c. Accumulated depreciation on December 31, 20X5, assuming use of the double-declining-balance depreciation method.
7. Depreciation computations: change in estimate. Aussie Imports purchased a specialized piece of machinery for $50,000 on January 1, 20X3. At the time of acquisition, the machine was estimated to have a service life of 5 years (25,000 operating hours) and a residual value of $5,000. During the 5 years of operations (20X3 - 20X7), the machine was used for 5,100, 4,800, 3,200, 6,000, and 5,900 hours, respectively.
Instructions
a. Compute depreciation for 20X3 - 20X7 by using the following methods: straight line, units of output, and double-declining-balance.
b. On January 1, 20X5, management shortened the remaining service life of the machine to 15 months. Assuming use of the straight-line method, compute the company’s depreciation expense for 20X5.
c. Briefly describe what you would have done differently in part (a) if Aussie Imports had paid $47,800 for the machinery rather than $50,000 In addition, assume that the company incurred $800 of freight charges $1,400 for machine setup and testing, and $300 for insurance during the first year of use.
- LIFO vs. FIFO
The controller of Sagehen Enterprises believes that the company should switch from the LIFO method to the FIFO method. The controller’s bonus is based on the next income. It is the controller’s belief that the switch in inventory methods would increase the net income of the company. What are the differences between the LIFO and FIFO methods?
Guided Response:
Analyze several of your peers’ posts. Let at least two of your peers know if a company is better off it switches from a LIFO method to a FIFO method? Explain your reasoning. - Depreciation
A variety of depreciation methods are used to allocate the cost of an asset to all of the accounting periods benefited by the use of the asset. Your client has just purchased a piece of equipment for $100,000. Explain the concept of depreciation. Which of the following depreciation methods would you recommend: straight-line depreciation, double declining balance method, or an alternative method?
ACC 205 Week 4 Exercises (Ashford University) (100% Accurate)
Week Four Exercise Assignment
Liability
1. Payroll accounting. Assume that the following tax rates and payroll information pertain to Brookhaven Publishing:
· Social Security taxes: 4% on the first $55,000 earned per employee
· Medicare taxes: 1.5% on the first $130,000 earned per employee
· Federal income taxes withheld from wages: $7,500
· State income taxes: 4% of gross earnings
· Insurance withholdings: 1% of gross earnings
· State unemployment taxes: 5.4% on the first $7,000 earned per employee
· Federal unemployment taxes: 0.8% on the first $7,000 earned per employee
The company incurred a salary expense of $50,000 during February. All employees had earned less than $5,000 by month-end and no wages have been paid during the month.
a. Prepare the necessary entry to record Brookhaven’s February payroll. The entry will include deductions for the following:
· Social Security taxes
· Medicare taxes
· Federal income taxes withheld
· State income taxes
· Insurance withholdings
b. Prepare the journal entry to record Brookhaven’s payroll tax expense. The entry will include the following:
· Matching Social Security taxes
· Matching Medicare taxes
· State unemployment taxes
· Federal unemployment taxes
2. Current liabilities: entries and disclosure. A review of selected financial activities of Visconti’s during 20XX disclosed the following:
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|
| |||
| 1-Dec: Borrowed $10,000 from the First City Bank by signing a 3-month, 15% note payable. | ||||
| Interest and principal are due at maturity. | ||||
| 10-Dec: Established a warranty liability for the XY-80, a new product. Sales are expected to | ||||
| total 1,000 units during the month. Past experience with similar products indicates | ||||
| that 3% of the units will require repair, with warranty costs averaging $27 per unit (parts only). | ||||
| 22-Dec: Purchased $16,000 of merchandise on account from Oregon Company, terms 2/10, n/30. | ||||
| 26-Dec: Borrowed $5,000 from First City Bank; signed a 15% note payable due in 60 days. (Assume 360 day year for interest) | ||||
| 31-Dec: Repaired six XY-80s during the month at a total cost of $162 | ||||
| 31-Dec: Accrued three days of salaries at a total cost of $1,400. | ||||
Instructions
a. Prepare journal entries to record the transactions.
b. Prepare adjusting entries on December 31 to record accrued interest.
c. Prepare the Current Liability section of Red Bank’s balance sheet as of December 31. Assume that the Accounts Payable account totals $203,600 on this date.
3. Notes payable. Red Bank Enterprises was involved in the following transactions during the fiscal year ending October 31:
2-Aug: Borrowed $55,000 from the Bank of Kingsville by signing a 90-day, 12% note. |
20-Aug: Issued a $50,000 note to Harris Motors for the purchase of a $50,000 delivery truck. The note is due in 180 days and carries a 12% interest r ate. |
10-Sep: Purchased merchandise from Pans Enterprises in the amount of $15,000. Issued |
a 30-day, 12% note in settlement of the balance owed. |
11-Sep: Issued a $60,000 note to Datatex Equipment in settlement of an overdue account |
payable of the same amount. The note is due in 30 days and carries a 14% interest rate. |
10-Oct: The note to Pans Enterprises was paid in full. |
11-Oct: The note to Datatex Equipment was paid in full. |
30-Oct: Paid note to Bank of Kingsville. |
Ashford ACC 205 Week 5 Final paper
Final Paper
Focus of the Final Paper
Write a five to seven page financial statement analysis of a public company, and formatted according to APA style as outlined in the Ashford Writing Center. In this analysis you will discuss the financial health of this company with the ultimate goal of making a recommendation to other investors. Your paper should consist of the following sections: introduction, company overview, horizontal analysis, ratio analysis, final recommendation, and conclusions.
Here is a breakdown of the sections within the body of the assignment:
Company Overview
Provide a brief overview of your company (one to two paragraphs at most). What industry is it in? What are its main products or services? Who are its competitors?
Horizontal Analysis of Income Statement and Balance Sheet
Prepare a three-year horizontal analysis of the income statement and balance sheet of your selected company. Discuss the importance and meaning of horizontal analysis. Discuss both the positive and negative trends presented in your company.
Ratio Analysis
Calculate the current ratio, quick ratio, cash to current liabilities ratio, over a two year period. Discuss and interpret the ratios that you calculated. Discuss potential liquidity issues based on your calculations of the current and quick ratios. Are there any factors that could be erroneously influencing the results of the ratios? Discuss liquidity issues of competitive companies within the same industry.
Recommendation
Based on your analysis would you recommend an individual invest in this company? What strengths do you see? What risks do you see? It is perfectly acceptable to state that you would recommend avoiding this company as long as you provide support for your position.
Writing the Final Paper
1. Must be five to seven double-spaced pages in length, and formatted according to APA style as outlined in the Ashford Writing Center.
2. Must include a title page with the following:
a. Title of paper
b. Student’s name
c. Course name and number
d. Instructor’s name
e. Date submitted
3. Must begin with an introductory paragraph that has a succinct thesis statement.
4. Must address the topic of the paper with critical thought.
5. Must end with a conclusion that reaffirms your thesis.
6. Must document all sources in APA style, as outlined in the Ashford Writing Center.
7. Must include a separate reference page, formatted according to APA style as outlined in the Ashford Writing Center.
Carefully review the Grading Rubric for the criteria that will be used to evaluate your assignment.
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