Charfauros acc280 wk4b. Copyright 2013 Edward F. T. Charfauros. Reference, www.YourBlogorResume.net.

257 views

Published on

Edward F. T. Charfauros, inspiring author, assists fellow students with their presentation for a successful grade. He also blogs upon his own inspiring blog, where you'll discover life changing stuff. Sign up for his blog by sending him an email~

Copyright 2013 Edward F. T. Charfauros. Reference, www.YourBlogorResume.net.

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
257
On SlideShare
0
From Embeds
0
Number of Embeds
8
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Charfauros acc280 wk4b. Copyright 2013 Edward F. T. Charfauros. Reference, www.YourBlogorResume.net.

  1. 1. 1 Chapter 7, 8 & 15 Textbook Exercises Edward Charfauros Principles of Accounting ACC/280 February 7, 2012 Kurt Meyer
  2. 2. 2 Chapter 7: 1. (a) What are generally accepted accounting principles (GAAP)? (b)What bodies provide authoritative support for GAAP? 1(a) Generally Accepted Accounting Principles (GAAP) is a set of principles recognized as a general guide providing standardized rules with substantial authoritative support for reporting organization’s finances. 1(b) GAAP’s governing bodies providing authoritative support is the Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC). 2. What elements comprise the FASB’s conceptual framework? Four elements make up FASB’s conceptual framework: elements of financial statements, objectives of financial statements, qualitative characteristics of accounting information, and operating guidelines (Principles, Constraints and Assumptions). Chapter 8: Exercise E8-5 Listed below are five procedures followed by The Beat Company. 1. Several individuals operate the cash register using the same register drawer. 2. A monthly bank reconciliation is prepared by someone who has no other cash responsibilities. 3. Ellen May writes checks and also records cash payment journal entries. 4. One individual orders inventory, while a different individual authorizes payments. 5. Unnumbered sales invoices from credit sales are forwarded to the accounting department every four weeks for recording.
  3. 3. 3 Procedure IC Good or Weak? Related Internal Control Principle 1. Weak Establishment of responsibility 2. Good Independent internal verification 3. Weak Segregation of duties 4. Good Segregation of duties 5. Good Documentation procedures Chapter 15: Exercise E15-1 December 31, 2009 December 31, 2008 Current assets $125,000 $100,00 Plant assets (net) 396,000 330,000 Current liabilities 91,000 70,000 Long-term liabilities 133,000 95,000 Common stock, $1 par 161,000 115,000 Retained earnings 136,000 150,000 Amount Percentage Current assets: $25,000 25% Plant assets (net): $66,000 20% Current liabilities: $21,000 30% Long-term liabilities: $38,000 40% Common stock, $1 par: $46,000 40%
  4. 4. 4 Retained earnings: ($14,000) -9.3% Exercise E15-2 2009 2008 Sales $750,000 600,000 Cost of goods sold 465,000 390,000 Selling expenses 1 20,000 72,000 Administrative expenses 60,000 54,000 Income tax expense 33,000 24,000 Net income 72,000 60,000 2009 Amount Percent 2008 Amount Percent Sales $750,000 100.0%, $600,000 100.0%, Cost of goods sold $465,000 62.0%, $390,000 65.0% Selling expenses 1 $20,000 16.0%, $72,000 12.0% Administrative expenses $60,000 8.0%, $54,000 9.0% Income tax expense $33,000 4.4%, $24,000 4.0% Net income $72,000 9.6% $60,000 Exercise E15-11 SCULLY CORPORATION Balance Sheets December 31 2008 Cash 2007 $ 4,300 $ 3,700 10.0%
  5. 5. 5 Accounts receivable $21,200 $23,400 Inventory $10,000 $7,000 Land $20,000 $26,000 Building $70,000 $70,000 Accumulated depreciation ($15,000) ($10,000) Total $110,500 $120,100 Accounts payable $12,370 $ 31,100 Common stock $75,000 $69,000 Retained earnings $23,130 $20,000 Total $110,500 $120,100 Scully’s 2008 income statement included net sales of $100,000, cost of goods sold of $60,000, and net income of $15,000. (a) Current ratio = (4300 + 21200 + 10000) 35,500/12,370 = 2.87:1 (b) Acid-test ratio = (4300 + 21200) 25,500/12,370 = 2.06:1 (c) Receivables turnover = 100,000/22,300 [(21200 + 23400)/2] = 4.48 (d) Inventory turnover = 60,000/8,500 [(10000 + 7000)/2] = 7.06 (e) Profit margin = 15,000/100,000 = 15% (f) Asset turnover = 100,000/115,300 [(110500 + 120100)/2] = 0.87 (g) Return on assets = 15,000/115,300 [(110500 + 120100)/2] = 13.01% (h) Return on common stockholders’ equity = 15,000/93,565 [(98130 + 89000)/2] = 16.03% (i) Debt to total assets ratio = 12,370/110,500 = 11.19%
  6. 6. 5 Accounts receivable $21,200 $23,400 Inventory $10,000 $7,000 Land $20,000 $26,000 Building $70,000 $70,000 Accumulated depreciation ($15,000) ($10,000) Total $110,500 $120,100 Accounts payable $12,370 $ 31,100 Common stock $75,000 $69,000 Retained earnings $23,130 $20,000 Total $110,500 $120,100 Scully’s 2008 income statement included net sales of $100,000, cost of goods sold of $60,000, and net income of $15,000. (a) Current ratio = (4300 + 21200 + 10000) 35,500/12,370 = 2.87:1 (b) Acid-test ratio = (4300 + 21200) 25,500/12,370 = 2.06:1 (c) Receivables turnover = 100,000/22,300 [(21200 + 23400)/2] = 4.48 (d) Inventory turnover = 60,000/8,500 [(10000 + 7000)/2] = 7.06 (e) Profit margin = 15,000/100,000 = 15% (f) Asset turnover = 100,000/115,300 [(110500 + 120100)/2] = 0.87 (g) Return on assets = 15,000/115,300 [(110500 + 120100)/2] = 13.01% (h) Return on common stockholders’ equity = 15,000/93,565 [(98130 + 89000)/2] = 16.03% (i) Debt to total assets ratio = 12,370/110,500 = 11.19%

×