Question 1
3-28) For the following independent situations, assume that you are the audit partner on the engagement: 1- During your audit of Debold. com, Inc, you conclude that there is apossibility that inventory is materially overstated. The client refuses to allow you to expand the scope of your audit suffucuently to verify whether the balance is actually misstated, 2- Four weeks after the year-end date, a major customer of Prince construction Co, declared bankruptcy. because the customer had confirmed the balance due to Prince at the balance sheet date, management refuses to charge off the account or otherwise disclose the information. The receivable represents approximately 10% of accounts receivable and 20% of net earning before taxes., 3-You complete the audit of Johnson Department store, and in your opinion, the financial statements are fairly presented. On the last day of the audit, you discover that one of your supevisors assigned to the audit has a material investment in Johnson. 4. Auto Delivery Company has a fleet of several delivery trucks. In the past, Auto Delivery had followed the policy of purchasing all equipment. In the current year, they decided to lease the trucks. The method of accounting for the trucks is there- fore changed to lease capitalization. This change in policy is fully disclosed in foot- notes. 5. You are auditing Woodcolt Linen Services for the first time. Woodcolt has been in business for several years but has never had an audit befor .After the audit is completed, you conclude that the current year balance sheet is stated correctly in accordance with GAAO. the client didn't recognize you to do test work for any of the previous years. 6. You were engaged to audit the Cutter Steel Companys finantial statements after the close of the corporation's fiscal year Because you were not engaged until after the balance sheet date, you were not able phisically observe inventory, which is highly material. on the completion of your audit, you are satisfied that Cutter's financial statements are presented fairly, including inventory about which you were able to satisfy yourself by the use of alternative audit procedure.you were For each situation, do the following: a) Identify which of the conditions requiring a modification of or adeviation from unqualified standard report is applicable. b) State the level of materiality as immaterial, material ? n from an decide the level of materiality, state the additional inror hlghly material I sion. If you Cannot decide the level of materiality,state th eadditional information needed to make a decision. c)Given your answers in parts a and b, state the type of audit report that should be issied. if you have not decide on one level of materiality in part b, state the appropriate repot for each altenative materiality level.
Question 2
"Focus of the Summary Marketing Plan: Choose a marketing plan project from any one of the topics listed below: *Using Aleve now that Vioxx and Bextra have been taken off the market. *Use of genuine Harley parts for repairs as opposed to less expensive after-market parts. *Flying on a full-service airline as opposed to a low-fare discount carrier. *Staying with Cable-based television instead of switching to satellite TV. *Pursuing an online MBA program over an on-site program. The Summary Marketing Plan must incorporate at least 4 resources, 2 from ProQuest. Each paper will contain the following elements: 0.1 Company Overview 0.2 Executive Summary of Marketing Plan 1.0 Description of the Target Market 2.0 Description of Competitors 3.0 Description of Product or Service 4.0 Marketing Budget 5.0 Description of Location 6.0 Pricing Strategy 7.0 Summary and Implementation Plan Writing the Summary Paper The Summary Paper: Must be eight (8) double-spaced-pages in length, exclusive of Appendix, References, Exhibits, etc., and formatted according to APA style as outlined in the approved APA style guide. Must address the topic of the paper with critical thought. Must use APA style as outlined in the approved APA style guide to document all sources. Must include, on the final page, a Reference List that is completed according to APA style as outlined in the approved APA style guide and incorporates at least 4 resources, 2 from ProQuest.",Hi, this will be ready by Monday right? Can I ask what topic you picked? Thanks again!!
Question 3
"All of these questions need to be done in Excel PROBLEM # 1: You have just turned 22, and you intend to start saving for your retirement. You plan to retire in 40 years when you turn 62. During your retirement you would like to have an annual income of $140,000 per year for the next 30 years (until age 92). Calculate how much you would have to save annually between now and age 62 in order to finance your retirement income. Make the following assumptions: ? Assume that the relevant compounded interest rate is 9 percent per year. ? You make the first payment today and the last payment on the day of your turn 62. ? You make the first withdrawal when you turn 62 and the last withdrawal when you turn 92. PROBLEM # 2: You are offered an asset that costs $8,000 and has cash flows of $500 every three month (end of period) of the next 10 years. a) If your cost of capital is 8 percent, should you purchase it? b) What is the IRR of the asset? c) What is the NPV of the asset? (Setup cash flows in Excel spreadsheets and use the following Excel Financial functions, IRR and NPV, to derive your answers. PROBLEM # 3: Use Excel to construct an amortization table for the following mortgage. In the amortization table, provide all the information listed below. (Assuming interest is compounded monthly and payments are due at the end of the month). For a 10-year variable-rate-level-payment mortgage (VRM) of $480,000 with the following mortgage rates: Years 1-2: 4.20%, Years 3-5: 5.45%, Years 6-10: 6.75% Compute and illustrate the following in an amortization table: ? Monthly Payment of the mortgage. ? Mortgage Balance Remaining at the end of each month (Total 120 months) ? Principal Repayment for each month. ? Interest Expenses for each month and the life of the loan.
Question 4
Rees Corporation's comparative balance sheets are presented below. REES CORPORATION Comparative Balance Sheets December 31 2011 2010 Cash $ 15,200 $ 17,700 Accounts receivable 25,200 22,300 Investments 20,000 16,000 Equipment 60,000 70,000 Accumulated depreciation (14,000) (10,000) Total $106,400 $116,000 Accounts payable $ 14,600 $ 11,100 Bonds payable 10,000 30,000 Common stock 50,000 45,000 Retained earnings 31,800 29,900 Total $106,400 $116,000 Additional information: Net income was $18,300. Dividends declared and paid were $16,400. Equipment which cost $10,000 and had accumulated depreciation of $1,200 was sold for $3,300. All other changes in noncurrent account balances had a direct effect on cash flows, except the change in accumulated depreciation. Prepare a statement of cash flows for 2011 using the indirect method. (List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. If amount decreases cash flow, use either a negative sign preceding the number eg. -45 or parentheses eg (45).) REES CORPORATION Statement of Cash Flows For the Year Ended December 31, 2011 Cash flows from operating activities $ Adjustments to reconcile net income to net cash provided by operating activities $ Net cash by operating activities Cash flows from investing activities Net cash by investing activities Cash flows from financing activities Net cash by financing activities Net in cash Cash at beginning of period Cash at end of period $
Question 5
You are Chief Financial Officer of the ABC Corporation. ABC has two divisions, one of which distributes alcohol, while the other manufactures bottles for brewers and beverage companies. The company is considering a capacity expansion project in the alcohol distribution division, and the Board of Directors has asked you to provide a financial analysis of the project. ? The project would require an initial investment of $100 million for a new distribution center. In addition, $20 million in additional working capital would need to be committed to the project. The working capital will be recovered at the end of the project life. ? The distribution center facilities would be depreciated on a straight-line basis over five years. At the end of five years, you estimate that the center will be sold for $20 million. ? The distribution center is expected to generate cash revenues of $85 million per year and cash operating costs of $50 million per year in each of the next five years. ? The corporate tax rate is 40%. ? The book value of ABC?s assets is $20 billion, while the book value of its outstanding debt is $5 billion. ABC?s equity has an estimated beta of 1.2. ? The expected return on the market portfolio is 15%, while the risk-free rate of return is 5%. ? ABC could issue new debt at a yield to maturity of 8%. ? Companies that operate purely in the bottle manufacturing industry have an average beta of 1.5 and an average debt-equity ratio (measured at market value) of one quarter. ? Companies that operate purely in the alcohol distribution industry have an average beta of 0.5 and an average debt-equity ratio (measured at market value) of two-thirds. Based on information above, you are to complete the project analysis to present the Board meeting that is scheduled tomorrow. a) Calculate the weighted average cost of capital. b) Calculate the free cash flow of each year for the expansion project. c) What is the NPV for the project?
