accounting final project

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Homework #6 (due on 5/4/2020 at the beginning of class) [20 POINTS IN TOTAL]

PART A (RECEIVABLES): CNL Company uses the aging of account receivable approach to

estimate bad debt expense. The balance of each account receivable is grouped on the basis of

three time periods: (1) not year due, $550,000, (2) up to 120 days past due, $100,000, and (3)

more than 120 days past due, $40,000. Experience has shown that for each age group, the

average loss rate on the amount of the receivables at year-end due to uncollectability is (1) 3.5

percent, (2) 10 percent, and (3) 30 percent, respectively. At December 31, 2013, the Allowance

for Doubtful Accounts balance is $800 (debit) before the end-of-period adjusting entry is made.

1. What is the ending balance for account receivable (gross)? [3 POINTS]

2. What is the ending balance for Allowance for Doubtful Accounts after the adjusting entry? [5

POINTS]

3. Prepare the appropriate bad debt expense adjusting entry for the year 2013. [3 POINTS]

PART B (TSLA): Extract the most recent 10-K form (filed 02/13/20) for Tesla via EDGAR or

Tesla’s website (https://ir.tesla.com/sec-filings/sec-filing/10-k/0001564590-20-004475). Answer

the following questions:

1. As of December 31, 2019, what is the balance for Tesla’s finished goods inventory [2

POINTS]

2. Which class of inventory has the smaller balance as of December 31, 2019? How much is the

balance? [3 POINTS]

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3. What is the total automotive cost of revenues reported by Tesla for the most recent year? [2

POINTS]

4. How much did Tesla write down in excess or obsolete inventories in the year ended December

31, 2019? [2 POINTS]

PART C (DIRECTIONS FOR GROUP REPORT, THE REPORT IS DUE ON MAY 6TH, 2020 AT

THE BEGINNING OF CLASS, UPLOAD YOUR REPORT ON NYU CLASS > ASSIGNMENT): There is no additional requirement from this homework. Below you will see a complete list of the

requirements for the group report. Please include a cover page that lists all group members’ names, N-

numbers, email addresses, and the industry and company names you have selected. The report should be

no more than 10 pages. Please organize your report clearly in the order of the requirements. Please set

your report with Font 12, 1.5 spaced between lines, and 1 inch margin on all four sides.

Requirement 1 (from HW1): Please form a group of two or three students for your group report. Discuss

with your team members to decide on an industry that you would like to focus on for your group report. A

few suggested industries (example firms) include: RETAIL (Walmart), AIRLINE (Delta), TECH

(Facebook), MANUFACTURE (GE), AUTO (GM), and so on. I do NOT recommend industries with

special rules such as the financial or utility industry. Once you decide on a given industry, please pick

three U.S. public companies you think are the most important in the industry and explain why you choose

this industry and these firms. What do you think are the most important ASSETS for these firms and why?

This part should not exceed 2 pages.

Requirement 2 (from HW2): For the top three companies that you have chosen in your interested

industry, please pull up their latest 10-K reports (either SEC filings or press releases are OK). Take a look

at their income statements and think about their business models. What is their most important source of

revenues? What are their most important expenses? How do these three companies compare in terms of

controlling their costs and explain why by showing relevant calculations? In order to compare income

statements across companies, you may want to use the “common size” income statements (that is,

dividing all the numbers on income statements by total revenues). This part should not exceed 2 pages.

Requirement 3 (from HW3): For the top three companies that you have chosen in your interested

industry, please pull up their latest 10-K reports (either SEC filings or press releases are OK). Take a look

at their statements of cash flows and think about their business models. Do they use the direct or indirect

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method to compute CFFO? What can you learn about their CFFI and CFFF? Please explain why by

showing relevant calculations. This part should not exceed 2 pages.

Requirement 4 (from HW4): For the top three companies that you have chosen in your interested

industry, please pull up their latest 10-K reports (either SEC filings or press releases are OK). Please

calculate the cash conversion cycle (and its three components) for each company and comment on their

efficiency in managing working capital. Then please calculate the gross margin, operating margin, and net

margin for each company and comment on their profitability. This part should not exceed 2 pages.

Requirement 5 (from HW5): For the top three companies that you have chosen in your interested

industry, please pull up their latest 10-K reports (either SEC filings or press releases are OK). Take a look

at the shareholders’ equity section of their balance sheets, the EPS section of their income statements,

their CFFF sections on their statements of cash flows, and think about their financing choices. Did they

issue any equity or debt recently? Did they pay any dividend? Did they repurchase any stock? This part

should not exceed 1 page.

Grading Guidelines: Each group report will be graded from 0.0 to 5.0. All members in the same group

will receive the same score. The point allocation is: content (4.0 points), and writing/format (1.0 point).

Content includes completeness, depth of analyses, and adequate discussion. Writing/format includes

adhering to the format guideline, correct grammar, and clarity.