Question 1
Nordham Corporation's trial balance at December 31, 2008, is presented below. All 2008 transactions have been recorded except for the items described below and on the next page. Debit Credit Cash $ 23,000 Accounts Receivable 51,000 Merchandise Inventory 22,700 Land 65,000 Building 95,000 Equipment 40,000 Allowance for Doubtful Accounts $ 450 Accumulated Depreciation?Building 30,000 Accumulated Depreciation?Equipment 14,400 Accounts Payable 19,300 Bond Interest Payable ?0? Dividends Payable ?0? Unearned Rent Revenue 8,000 Bonds Payable (10%) 50,000 Common Stock ($10 par) 30,000 Paid-in Capital in Excess of Par?Common Stock 6,000 Preferred Stock ($20 par) ?0? Paid-in Capital in Excess of Par?Preferred Stock ?0? Retained Earnings 75,050 Treasury Stock ?0? Dividends ?0? Sales 570,000 Rent Revenue ?0? Bad Debts Expense ?0? Bond Interest Expense 2,500 Cost of Goods Sold 400,000 Depreciation Expense?Buildings ?0? Depreciation Expense?Equipment ?0? Other Operating Expenses 39,000 Salaries Expense 65,000 Total $803,200 $803,200 Unrecorded transactions 1. On January 1, 2008, Nordham issued 1,000 shares of $20 par, 6% preferred stock for $22,000. 2. On January 1, 2008, Nordham also issued 1,000 shares of common stock for $23,000. 3. Nordham reacquired 300 shares of its common stock on July 1, 2008, for $49 per share. 4. On December 31, 2008, Nordham declared the annual preferred stock dividend and a $1.50 per share dividend on the outstanding common stock, all payable on January 15, 2009. 5. Nordham estimates that uncollectible accounts receivable at year-end is $5,100. 6. The building is being depreciated using the straight-line method over 30 years. The salvage value is $5,000. 7. The equipment is being depreciated using the straight-line method over 10 years. The salvage value is $4,000. 8. The unearned rent was collected on October 1, 2008. It was receipt of 4 months' rent in advance (October 1, 2008 through January 31, 2009). 9. The 10% bonds payable pay interest every January 1 and July 1. The interest for the 6 months ended December 31, 2008, has not been paid or recorded. Instructions (Ignore income taxes.) a. Prepare journal entries for the transactions listed above. b. Prepare an updated December 31, 2008, trial balance, reflecting the unrecorded transactions. c. Prepare a multiple-step income statement for the year ending December 31, 2008. d. Prepare a statement of retained earnings for the year ending December 31, 2008. e. Prepare a classified balance sheet as of December 31, 2008.
Question 2
1. pete parlor started business january 1,2010. on that day the company issued common stock in exchange for $45,000. prepare the journal entry for this transaction. 2.pete parlor started business january 1,2010. at the beginning of january, pete pd $3,400 for supplies. prepare the journal entry for this transaction. 3. pete parlor started business january 1,2010.during january pete sold watches costing the company a total of $63,000 to produce. prepare the journal entry for this transaction 4.pete parlor started business january 1,2010.during january,pete sold watches to customers for $70,000 cash. prepare the journal entry for this transaction. 5.pete parlor started business january 1,2010. during january, pete customers pd $24,000 for services that will not be performed untill february.prepare the journal entry for this transaction 6.pete parlor started business january 1,2010. during janaury, pete purchased supplies for $15,000. at the end of the month, pete takes inventory and finds out the remaining supplies are worth $5,000. prepare the adjusting journal entry to reflect this information. 7.pete parlor had a balance of $15,000 in unearned revenue on february 1st. at the end of february, the unearned revenue balance was $7,000. prepare the adjusting journal entry to reflect this information. 8.pete parlor started business january 1,2010.At the start of february, pete had salaries payable outstanding of $17,000. on february 4th,pete sent out paychecks to its employees valued at $20,000. prepare the journal entry for this transaction. 9.pete parlor started business january 1,20xx. during january, pete had earned revenues of $50,000. the customers pd 30 percent cash and the remaining amount on account. prepare the journal entry for this transaction 10.pete parlor started business january 1,20xx. during january, pete purchased suplies for $6,000. pete pd the supplier 75 percent in cash and the remaining on account.prepare the journal entry for this transaction. 11.pete parlor had a credit balance of $20,000 in its income summary account at the end of june. prepare the closing journal entry for closing the income summary account to retained earnings.,I am hopeful you can get it to me by 8pm... Thanks Michael...,Can you please send me the answers? Thanks,Michael, Thank you very much... I need to send you a few more and hope you can help me with them. All the best, Manny
Question 3
Industry downsizing became a major part of the corporate world in the 1990?s. Given current economic conditions, government agencies are now downsizing. There is some concern that excessive cuts in some government programs, especially defense spending, will have an important effect on the country's ability to respond to military crises. GovEx.com, which maintains a ?management concepts? website, puts out a weekly email newsletter. The website also includes an article (accessible at http://www.govexec.com/reinvent/downsize/0795mgmt.htm) entitled ?Industry's Downsizing Lessons,? dated July 1, 1997, from Government Executive Magazine, that emphasizes the effects of the reduction in operating leverage (reduction in fixed costs). Read the article and answer the following questions: A. Which industries have substantially reduced fixed cost commitments? Do you believe this reduction in costs has substantially impaired the ability of these industries to meet the needs of their customers? B. The article also mentions an auto company which downsized and suffered negative consequences. If possible find out why this company suffered a downfall. C. The public utility industry is listed as an industry with high fixed costs. The article notes that this industry has not had to undergo downsizing. Is this statement still true? (Note: how about Enron? How about the California Electricity Outages in 2001?) D. The article lists the four lessons of operating leverage. The lessons revolve around the costs (or benefits) associated with downsizing. Review one (or two) of these lessons, and comment on the lesson(s). E. Briefly discuss the articles' concern that excessive cutting of fixed costs (best described as the cost of preparedness) has (or could) substantially impair the country's ability to respond to "problems" in several different parts of the world at the same time. Does the group think that cuts in defense department spending are "riskier" than cuts in the private sector? Why?
Question 4
11-34 (Objectives 11-2, 11-3) In Parts I (pp.245?247) and II (pp. 287?288) of this case you performed preliminary analytical procedures and assessed acceptable audit risk and inherent risk for Pinnacle Manufacturing. In Part III (pp. 332?333) of the case, you obtained an understanding of internal control and assessed control risk for acquisition and cash disbursement transactions. The auditor also assesses fraud risk as part of risk assessment procedures performed during audit planning. You have been invited by the audit partner on the Pinnacle engagement to participate in the fraud brainstorming session conducted as part of audit planning. The purpose of Part IV is to identify fraud risks and the response to these fraud risks in the audit of Pinnacle Manufacturing. Required a. Use the fraud triangle and information from Parts I through III of this case to identify incentives/pressures, opportunities, and attitudes/rationalizations for Pinnacle to engage in fraudulent financial reporting. b. Identify one or more fraud risks that you believe exist due to the nature of Pinnacle?s industry. Indicate the accounts most likely to be affected by the identified fraud risks. c. Auditors must generally identify a fraud risk for revenue recognition. Indicate at least two ways that Pinnacle might engage in revenue recognition fraud. Identify the specific nature of the potential fraud, and an audit procedure that you would perform to determine whether fraud is occurring. d. In Part I of this case you performed preliminary analytical procedures on Pinnacle?s financial statements. Identify changes in account balances or ratios that you believe indicate the potential for fraud, and describe the nature of the potential fraud. e. Part II of the case includes 11 situations that you encountered in audit planning. For each situation, describe whether it indicates a potential fraud risk. For each potential fraud risk, identify the related fraud risk triangle element(s).
Question 5
The five advertising functions, which might be more important to the retailers, are: Informing: Brand awareness in an important concept in advertisements which helps educating customers about the new brand and their features and also helps in increasing the demand for existing brands. Influencing: Advertisements should be effective enough to make people try the new products and services offered by the brand. Reminding and increasing salience: The brand has to be reminded at periodic intervals in order to have a fresh memory in the minds of the people, which can result in the likelihood of purchasing that brand. Adding value: The brand must focus on innovation, quality improvement and changing customer?s perceptions to add value to it. Assisting other company?s efforts: Advertisement for a brand helps in building relationships with the prospective consumers, prior to the direct contact of their sales representatives. This reduces the sales effort, time and costs involved in it. Research results were presented showing that sales volume is about 14.6 times more responsive, on average, to changes in price than to changes in advertising. Data in this same section indicated that nondurable retail goods (versus durable retail goods) are relatively more responsive to price cuts than advertising increases. Create an explanation for this differential. 75 words
