Question 1
Case 1.1 Even though accounting records go back hundreds of years, there was little effort to develop accounting standards until the 1900s. The first major effort to develop accounting standards in the United States came in 1939 when the American Institute of Certified Public Accountants formed the Committee on Accounting Procedures. As the number of standards increased, an issue called ?standards overload? emerged. Essentially, the charge of ?standards overload? is that there are too many accounting standards and that the standards are too complicated. Many individuals charging that standards overload is a problem maintain that more professional judgment should be allowed in financial accounting. Some individuals take a position that selected standards should not apply to nonpublic companies. Others take a position that ?little? companies should be exempt from selected standards. There has been some selective exclusion from standards in the past. Examples of selective exclusion are the following: 1. Statement of Financial Accounting Standards No. 21, ?Suspension of the Reporting of Earnings per Share and Segment Information by Nonpublic Enterprises.? ?Although the presentation of earnings per share and segment information is not required in the financial statements of nonpublic enterprises, any such information that is presented in the financial statements of nonpublic enterprises shall be consistent with the requirements of APB Opinion No. 15 and FASB Statement No. 14.? 2. Statement of Financial Accounting Standards No. 33, ?Financial Reporting and Changing Prices.? This statement required supplemental reporting on the effects of price changes. Only large public companies were required to present this information on a supplementary basis. Required a. Financial statements should aid the user of the statements in making decisions. In your opinion, would the user of the statements be aided if there were a distinction between financial reporting standards for public vs. nonpublic companies? Between little and big companies? b. In your opinion, would CPAs favor a distinction between financial reporting standards for public vs. nonpublic companies? Discuss. c. In your opinion, would small business owner-managers favor a distinction between financial reporting standards for small and large companies? Discuss. d. In your opinion, would CPAs in a small CPA firm view standards overload as a bigger problem than CPAs in a large CPA firm? Discuss. e. Comment on standards overload, considering Statement of Financial Accounting Concepts No. 1, ?Objectives of Financial Reporting by Business Enterprises.? Particularly consider the following objective: Financial reporting should provide information useful to present and potential investors and creditors and other users in making rational investment, credit, and similar decisions. The information should be comprehensible to those having a reasonable understanding of business and economic activities and willing to study the information with reasonable diligence.
Question 2
Please see attachment: (1) The production department of Celltronics International wants to explore the relationship between the number of employees who assemble a subassembly and the number produced. As an experiment, 3 employees were assigned to assemble the subassemblies. They produced 8 during a one-hour period. Then 5 employees assembled them. They produced 13 during a one-hour period. The complete set of paired observations follows. Number of Assemblers One-Hour Production (units) 3 8 5 13 2 5 6 23 4 16 ________________________________________ The dependent variable is production; that is, it is assumed that different levels of production result from a different number of employees. (b) A scatter diagram is provided below. Based on it, does there appear to be any relationship between the number of assemblers and production? , as the number of assemblers , so does the production. (c) Compute the coefficient of correlation. (Negative amount should be indicated by a minus sign. Round sx, sy and r to 3 decimal places.) X Y ( )2 ( )2 ( )( ) 3 8 -5 25 5 13 1 1 0 2 5 -8 64 6 23 2 4 20 4 16 3 0 0 ________________________________________ = = sx = sy = r = A study of 16 worldwide financial institutions showed the correlation between their assets and pretax profit to be .77. (1) State the decision rule for .05 significance level: Ho: ? ? 0; H1: ? > 0 (Round your answer to 3 decimal places.) Reject Ho if t> (2) Compute the value of the test statistic. (Round your answer to 3 decimal places.) Value of the test statistic (3) Can we conclude that the correlation in the population is greater than zero? Use the .05 significance level Ho . It is to conclude that there is positive association in the population between assets and pretax profit. (2) A study of 16 worldwide financial institutions showed the correlation between their assets and pretax profit to be .77. (1) State the decision rule for .05 significance level: Ho: ? ? 0; H1: ? > 0 (Round your answer to 3 decimal places.) Reject Ho if t> (2) Compute the value of the test statistic. (Round your answer to 3 decimal places.) Value of the test statistic (3) Can we conclude that the correlation in the population is greater than zero? Use the .05 significance level Ho . It is to conclude that there is positive association in the population between assets and pretax profit. (3) The following sample observations were randomly selected. (Round your answers to 2 decimal places.) X: 4 5 3 6 10 Y: 10.8 12.6 8 15.4 18.6 (a) The regression equation is Y' = + X (b) When X is 9.5 this gives Y' = (4) Given the following ANOVA table: Source DF SS MS F Regression 1 1,250 1,250.00 24.00 Error 12 625 52.08 ________________________________________ ________________________________________ Total 13 1,875 ________________________________________ (a) Determine the coefficient of determination.(Round your answer to 3 decimal places.) Coefficient of determination (b) Assuming a direct relationship between the variables, what is the correlation coefficient? (Round your answer to 2 decimal places.) Coefficient of correlation (c) Determine the standard error of estimate. (Round your answer to 2 decimal places.) Standard error of estimate (5) Waterbury Insurance Company wants to study the relationship between the amount of fire damage and the distance between the burning house and the nearest fire station. This information will be used in setting rates for insurance coverage. For a sample of 30 claims for the last year, the director of the actuarial department determined the distance from the fire station (X) and the amount of fire damage, in thousands of dollars (Y). The MegaStat output is reported below. ANOVA table Source SS df MS F Regression 1,864.5782 1 1,864.5782 38.83 Residual 1,344.4934 28 48.0176 Total 3,209.0716 29 ________________________________________ Regression output Variables Coefficients Std. Error t(df=28) Intercept 12.3601 3.2915 3.755 Distance-X 4.7956 0.7696 6.23 ________________________________________ (a-1) Write out the regression equation. (Round your answers to 3 decimal places.) Y = + X. (a-2) Is there a direct or indirect relationship between the distance from the fire station and the amount of fire damage? The relationship between distance and damage is . (b) How much damage would you estimate (in dollars) for a fire 5 miles from the nearest fire station? (Round your answer to the nearest dollar amount. Omit the "$" sign in your response.) Estimated damage $ (c-1) Determine the coefficient of determination. (Round your answer to 3 decimal places.) Coefficient of determination (c-2) Fill in the blank below. (Round your answer to 1 decimal place. Omit the "%" sign in your response.) % of the variation in damage is explained by variation in distance. (d-1) Determine the coefficient of correlation. (Round your answer to 3 decimal places.) Coefficient of correlation (d-2) Choose the right option. There is a fairly solid link between the variables. (d-3) How did you determine the sign of the correlation coefficient? It is because the slope is . (e-1) State the decision rule for .01 significance level: H0 : ? = 0; H1 : ? ? 0. (Negative amounts should be indicated by a minus sign. Round your answers to 3 decimal places.) Reject H0 if t (e-2) Compute the value of the test statistic. (Round your answer to 2 decimal places.) Value of the test statistic (e-3) Is there any significant relationship between the distance from the fire station and the amount of damage? Use the .01 significance level. H0. There is relationship between distance and fire damage. (6) The following sample observations were randomly selected. (Do not round the intermediate values. Round your answers to 2 decimal places.) X: 4 5 3 6 10 Y: 7.7 5 8.9 15.3 22.5 (a) Determine the 0.95 confidence interval for the mean predicted when X = 6 ( , ) (b) Determine the 0.95 prediction interval for an individual predicted when X = 6 ( , )
Question 3
a.) issued 14,500 shares of $30 par common stock at $48, receiving cash. b.) issued 8,000 shares of $120 par preferred 6% stock at $130, receiving cash. c.) issued $8,000,000 of 10-year, 7%bonds at 110, with interest payable semiannually. d.) declared a dividend of $.65 per share on common stock and $1.80 per share on preferred stock. On the date of record, 120,000 shares of common stock were outstanding, no treasury shares were held, and 22,500 shares of preferred stock were outstanding. e.) paid the cahs dividends declared in (d) f.) purchased 12,000 shares of Avocado Corp. at $31 per share, plus a $2,400 brokerage commission. The investment is classified as an available-for-sale investment. g.) purchased 9,500 shares of treasury common stock at $52 per share. h.) purchased 340,000 shares of Amigo Co. stock directly form the founders for $21 per share. Amigo has 1,000,000 shares issued and outstanding. Jordon Products Inc treated the investment as an equity method investment. i.) Declared a 2% stock divided on common stock and a $1.80 cash dividend per share on preferred stock. On the date of record, 120,000 shares of common stock had been issued, 9,500 shares of treasury stock were held, and 22,500 shares of preferred stock had been issued. j.) Issued the stock certificates for the stock dividends declared in (h) and paid the cash dividends to the preferred stockholders. k.) received $272,000 dividend from Amigo Co. investment in (h) l.) Purchased $86,000 of Game Gear Inc. 1-year, 6% bonds, directly from the issuing company at par value, plus accrued interest of $950. The bonds are classifed as a held-to-maturity long-term investment. m.) Sold, at $59.50 per share. 3,800 shares of treasury common stock purchased in (g). n.) Received a dividend of $1.45 per share from the Avacodo Corp. investment in (f). o.) Sold 2,000 shares of Avocado Corp. at $32.80, including commission. p.) Recorded the payment of semiannual interest on the bonds issued in (c) and the amortization of the premium for six months. The amortization was determined using the straight-line method. q.) Accrued interest for three months on the Game Gear Inc. bonds purchased in (1). r.) Amigo Co. recorded total earnings of $478,000. jordon Products recorded equity earnings for its share of Amigo Co. net income. s.) the fair value for Avocado Corp. stock was $28.50 per share on December 31, 2010. The investment is adjusted to fair value using a valuation allowance account. Assume the Valution Allowance for Avaible-for-Sale Investments had a beginning balance of zero. Journalize all transactions,Hi How is my assignment coming alone?,Hi these are the checkpoints that my professor game us and I don't see any of them in your answer. Income Statement - Net income $788,820. Retained Earnings Statement - Ending Retained Earnings: $4,609,760 Balance Sheet - Investment in Amigo co. stock $ 7,030,520 Total Assets: $20,668,160 Total Liabilites: $ 8,995,000
Question 4
1. An analysis of a firm's financial ratios over time that is used to determine the improvement or deterioration in its financial situation is called (Points : 5) sensitivity analysis DuPont chart ratio analysis progress chart trend analysis 5. Which of the following statements is most correct? (Points : 5) An increase in a firm's debt ratio, with no changes in its sales and operating costs, could be expected to lower its profit margin on sales. An increase in DSO, other things held constant, would generally lead to an increase in the total asset turnover ratio. An increase on the DSO, other things held constant, would generally lead to an increase in the ROE. In a competitive economy, where all firms earn similar returns on equity, one would expect to find lower profit margins for airlines, which require a lot of fixed assets relative to sales, than for fresh fish markets. It is more important to adjust the Debt/Asset ratio than the inventory turnover ratio to account for seasonal fluctuations 9. What is the term used to describe an annuity with an infinite life? (Points : 5) perpetuity infinuity infinuity due There is no special term for an infinite annuity
Question 5
Gerrad Manufacturing has projected sales of its product for the next six months as follows: January 300 units February 700 units March 1,000 units April 900 units May 400 units June 300 units Th e fi nished product requires 3 pounds of raw material and 10 hours of direct labor. Gerrad tries to maintain a Finished Goods ending inventory equal to the next two months of sales and a Raw Material ending inventory equal to one-half of the current month?s production needs. January?s beginning inventories are expected to conform to company policy. a. Prepare a production budget for February, March, and April. b. Prepare a forecast of the units and cost of raw material that will be required for February, March, and April. Th e expected cost per pound of raw material is expected to be $2 in February, $2.30 in March, and $2.40 in April. c. Prepare a direct labor budget (assuming a $12 per hour rate) for February, March, and April. " 1. Prepare a Production Budget for February, March, and April; include a totals column for the period. 2. Prepare a forecast (Purchases Budget) of the units and cost of raw material that will be required for February, March, and April; include a totals column for the period. 3. Prepare a Direct Labor Budget for February, March, and April; include a totals column for the period. 4. All schedules should be in Excel and in a format appropriate for presentation to management.
