Resource: ABC Financial Data Excel® spreadsheet, ABC Supplemental Data, and the values from the Week 2 Individual Assignment Prepare a statement of Retained Earnings and Comprehensive Income using the values from Week 2. Apply error corrections to the re

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Home>Business & Finance homework help>Accounting homework help>Resource: ABC Financial Data Excel® spreadsheet, ABC Supplemental Data, and the values from the Week 2 Individual Assignment Prepare a statement of Retained Earnings and Comprehensive Income using the values from Week 2. Apply error corrections to the re

Data Sheet

2013 2012
Cash and Cash Equivalents 4,960.00 2,494.00
Receivables, net 1,398.00 1,413.00
Inventory 11,512.00
Other Current Assets 895.00 900.00
Property and Equipment, at cost 36,033.00 38,491.00
Accumulated Depreciation and Amortization (15,684.00) (17,473.00)
Goodwill 1,289.00 1,046.00
Deferred Tax Asset 88.00 473.00
Accounts Payable 5,797.00 5,192.00
Accrued Salaries and Related Expenses 1,428.00 1,200.00
Sales Taxes Payable 396.00 472.00
Deferred Revenue 1,337.00 1,262.00
Income Taxes Payable 12.00 (107.00)
Current Installments of Long-Term Debt 33.00 (783.00)
Other Accrued Expenses 1,746.00 1,794.00
Long-Term Debt, excluding current installments 14,691.00 9,475.00
Other Long-Term Liabilities 2,042.00 2,029.00
Deferred Tax Liability 545.00
Paid-In Capital 8,402.00 7,948.00
Retained Earnings 23,180.00 20,038.00
Accumulated Other Comprehensive Income 46.00 397.00
Treasury Stock (19,194.00) (10,694.00)
Common stock 88.00 88.00
Net Sales 78,812.00 74,754.00
Cost of Sales 48,912.00
Selling, General and Administrative 16,597.00 16,508.00
Depreciation and Amortization 1,595.00 1,568.00
Interest and Investment Income (12.00) (87.00)
Interest Expense 711.00 632.00
Provision for Income Taxes (3,082.00) (2,686.00)
Foreign Currency Translation Adjustments 100.00
Cash Flow Hedges, net of tax (12.00) 5.00
Other Comprehensive Income (10.00) (1.00)
Dividends (2,243.00) (1,743.00)
Tax rate 40% 40%
Shares Issued Under Employee Stock Plans 103.00 678.00
Tax Effect of Stock-Based Compensation 123.00 82.00
Restricted Stock 228.00 222.00
Repurchases of Common Stock (8,500.00) (4,000.00)
Additional Info:
Cash Sales 4,523.00 4,356.00
Collections on Receivables 6,739.00 6,038.00
Purchases (1,332.00) (1,276.00)
Wages (987.00) (905.00)
Payments to Suppliers (1,028.00) (1,121.00)
Tax Payments (275.00) (204.00)
Interest payments (12.00) (10.00)
Capital Expenditures (1,389.00) (1,312.00)
Payments for Businesses Acquired (206.00) (170.00)
Proceeds from Sales of Property and Equipment 88.00 50.00
Proceeds from Long-Term Borrowings 5,222.00 - 0
Repayments of Long-Term Debt (1,289.00) (32.00)
Repurchases of Common Stock (8,546.00) (3,984.00)
Proceeds from Sales of Common Stock 241.00 784.00
Cash Dividends Paid to Stockholders (2,243.00) (1,743.00)
Other Financing Activities (37.00) (59.00)

Week 2

Week #2-
With the general data provided the following Financial Statements for ABC Company:
-Balance Sheet
-Income Statement
-Calculate Cost of Goods Sold Using Average Cost Method
-Calculate Depreciation Expense using the straight-line method
-Calculate Deferred tax asset/liability
ABC Company
Consolidated Balance Sheet
For the Year Ended December 31, 2013
2013 2012
ASSETS:
Current Assets:
Cash and Cash Equivalents 4,960.00 2,494.00
Receivables, net 1,398.00 1,413.00 (15.00)
Inventory 12,347.00 11,512.00 835.00
Inventory Correction - 0
Other Current Assets 895.00 900.00 (5.00)
Total Current Assets 19,600.00 16,319.00
Property and Equipment, at cost 36,033.00 38,491.00
Less: Accumulated Depreciation and Amortization (17,189.00) (17,473.00) 284.00
Accumulated depreciation correction - 0
Net Property and Equipment 18,844.00 21,018.00
Goodwill 1,289.00 1,046.00
Deferred Tax Asset 88.00 473.00
Total Assets 39,821.00 38,856.00
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current Liabilities:
Accounts Payable 5,797.00 5,192.00 605.00
Accrued Salaries and Related Expenses 1,428.00 1,200.00 228.00
Sales Taxes Payable 396.00 472.00
Deferred Revenue 1,337.00 1,262.00 75.00
Income Taxes Payable 12.00 (107.00) 119.00
Current Installments of Long-Term Debt 33.00 (783.00)
Other Accrued Expenses 1,746.00 1,794.00 (48.00)
Total Current Liabilities: 10,749.00 9,030.00
Long-Term Debt, excluding current installments 14,691.00 9,475.00
Other Long-Term Liabilities 2,042.00 2,029.00 13.00
Deferred Tax Liability 457.00 545.00 (88.00)
Total Liabilities: 27,939.00 21,079.00
STOCKHOLDERS’ EQUITY:
Common Stock 88.00 88.00
Paid-In Capital 8,402.00 7,948.00
Retained Earnings 22,540.00 20,038.00
Accumulated Other Comprehensive Income 46.00 397.00
Treasury Stock (19,194.00) (10,694.00)
Total Stockholders’ Equity 11,882.00 17,777.00
Total Liabilities and Stockholders’ Equity 39,821.00 38,856.00
ABC Company
Income Statement
For the Year Ended December 31, 2013
2013 2012
NET SALES 78,812.00 74,754.00
Cost of Goods Sold (51,417.00) 48,912.00
GROSS PROFIT 130,229.00 25,842.00
Operating Expenses:
Selling, General and Administrative 16,597.00 16,508.00
Depreciation and Amortization 1,627.00 1,568.00
Total Operating Expenses 18,224.00 18,076.00
OPERATING INCOME 112,005.00 7,766.00
Interest and Other (Income) Expense:
Interest and Investment Income (12.00) (87.00)
Interest Expense 711.00 632.00
Interest and Other, net 699.00 545.00
EARNINGS BEFORE PROVISION FOR INCOME TAXES 111,306.00 7,221.00
Income Taxes (3,082.00) (2,686.00)
NET INCOME 108,224.00 4,535.00
(A) Depreciation Expense Using Straight-Line Method-
ABC Company has the following assets acquired on January 1, 2013 requiring depreciation calculation:
Asset Cost Life Annual Dep. Expense Depreciation Expense 31,950
Plant with 30 year life at a cost of $660,000 660,000 30 22,000 Accumulated Depreciation on Plant 22,000
Land at a cost of $2,250,000 Accumulated Depreciation on Machinery & equipment 3,950
Machinery and Equipment with 20 year life at a cost 79,000 20 3,950 Accumulated Depreciation on Truck 6,000
of 79,000.
Truck with a life of 7 years at a cost of $42,000 42,000 7 6,000
781,000 31,950
(B) Inventory Calculation-
A physical inventory on December 31, 2013, shows 810 units on hand.
Calculate Cost of Goods Sold (COGS) using average cost.
Purchases Units Cost Total a) First in First Out
Beginning Inventory 800 14.39 11,512 Units Amount $
January 5, 2014 950 13.46 12,787 Purchase Cost of Goods Sold 3,765 50877.75
March 25, 2014 950 12.81 12,170 Purchase Ending Inventory 810 11,601.10
June 8, 2014 745 13.65 10,169 Purchase
September 15, 2014 625 13.25 8,281 Purchase b) Last in First out
December 15, 2014 505 14.97 7,560 Purchase
4,575 62,479 Total Purchases Cost of Goods Sold 3,765 50,832.25
Ending Inventory 810 11,646.60
COGS as of 12/31/2013
Average Cost 810 11,062 c) Average cost method
Entry to update CGS: Cost of Goods Sold 3,765 51,417.02
Ending Inventory 810 11,061.83
11,062
51,417
50,967
11,512
(C ) Error Corrections-
(1) An error was discovered during 2013 relating to the understatement of depreciation expense in 2011
resulting in a Prior Period Adjustment of $1,505 before taxes.
(2) ABC Company changed its method of valuing inventory during 2013. The cumulative increase in income
from the change in inventory methods was $1,285 before taxes.
Retained Earnings 903
Deferred Tax Liability 602
Accumulated Depreciation 1,505
Inventory 1,285
Deferred Tax Liability 514
Retained earnings 771
Footnotes:
Note #1: Error Correction to Depreciation Expense
During an expansive review of the Financial Statements of ABC Company, an error was discovered that underestimated the effect of depreciation expense by $1,505 on the Income Statement and accumulated depreciation on the Balance Sheet. The addition of the expense to the prior period increases the Depreciation and Amortization expense on account by $1,505 from the 2011 audited financial figure. As a result of the error, Management has applied the effect of the error retrospectively to all periods that have been affected to date. Current year earnings have not been impacted, but the application of Retained Earnings has been adjusted to date.
Note #2: Property, Plant and Equipment
The following table summarizes our property, plant and equipment:
December 31, Estimated Useful Lives in Years 2013 2012
(restated)* 
Land 2,250,000.00 n/a
Plants 30 660,000.00 n/a
Machinery and Equipment 20 115,033.00 38491
Vehicles 7 42,000.00 n/a
Total Property, Plant and Equipment 3,067,033.00 38491
Less accumulated depreciation 49139 $18,978.00
Property, plant and equipment — net $3,017,894.00 $21,018
The depreciation expense was calculated using the straight line method of determination. An adjustment had to be made for a prior year understatement of the depreciation expense. The result was the accumulated depreciation decreased (income went up, increased) and the retained earnings increased by 1505.00.
Note# 3: Changed the Value of Measuring Inventory During 2013
At the fiscal year end for 2012, it was decided that the method of inventory valuation from the average cost method to a method which wasn’t either LIFO or FIFO. It couldn’t be determined what this method was, it did result in an increase to net income before taxes of 1285.00 in the 2013 year. Below is a comparison of the overall changes this caused:
Remaining inventory using AVG Cost Method 11062
Remaining inventory if First in First Out Was Used 11601.1
Remaining inventory if Last in First Out Was Used 11579.3
Remaining inventory after whatever this method was 12347
Units Remaining 810
Adjusted Estimated Cost Each 15.24
The reason why it was determined that a change of this nature was required was because of a sudden increase in demand for ABC’s products available for sale. It would seem they have acquired a form of collectable value which is indeterminable from the normal cost methods.
 I made up these amounts based on total amount for PPE on B/S