UOP ACC545 week 2 assignment
ABC Company History
The ABC Company is a mid-sized company that manufactures goods in the United States and has begun to expand the operation overseas. The company maintains a healthy balance sheet and has reported positive net income since inception.
Currently, the organization utilizes the average cost inventory method and is exploring a change in accounting principle to maximize net income and attract new stockholders. Also, the company utilizes the straight-line method of depreciating fixed assets, which are primarily machinery/equipment and several large production facilities.
The organization is a publically–traded company that sells its stock on the open market. Demand for the stock has caused an increase in the price per share, and if the trend continues, the organization is considering splitting the stock to encourage investment. The company is having success selling preferred stock on the open market as well.
ABC Company offers its employees a generous pension plan, but it is currently investigating pension plan changes that will benefit both the employees and the stockholders. Also, the company offers a 401k and an employee stock purchase plan to encourage employees to be owners of their company.
Finally, the company finances some of the major investments it has made, including warehouses and land. To accomplish company goals, it has issued bonds in which the company is now considering restructuring.
000’s Omitted.
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Trial Balance (Balance Sheet Accounts Only) |
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) |
|
Total |
(11,025.00) |
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|
Data Needed For Preparation of Week 2 Income Statement |
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|
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) |
|
Additional Data needed for week 3-6 |
||
|
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 |
- |
|
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 Assignment:
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With the general data provided the following Financial Statements for ABC Company: |
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-Balance Sheet |
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-Income Statement |
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-Calculate Cost of Goods Sold Using Average Cost Method |
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-Calculate Depreciation Expense using the straight-line method |
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-Calculate Deferred tax asset/liability |
a. The following data is available for your computation of the cost of goods sold and the ending inventory.
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A physical inventory on December 31, 2013, shows 810 units on hand. |
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Calculate Cost of Goods Sold (COGS) using average cost. |
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Purchases |
Units |
Cost |
|
|
|
Beginning Inventory |
800 |
14.39 |
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January 5, 2014 |
950 |
13.46 |
Purchase |
|
|
March 25, 2014 |
950 |
12.81 |
Purchase |
|
|
June 8, 2014 |
745 |
13.65 |
Purchase |
|
|
September 15, 2014 |
625 |
13.25 |
Purchase |
|
|
December 15, 2014 |
505 |
14.97 |
Purchase |
Note your computation from the above data should yield your ending inventory (which you will insert in the trial balance in the appropriated category) and the cost of goods sold which you will use in the income statement develop from the data given. Don’t forget to post your Journal Entry for this one booking your cost of goods and your ending inventory.
b. The following data will be used for your computation of depreciation expense using the straight line method.
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ABC Company has the following assets acquired on January 1, 2013 requiring depreciation calculation: |
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Asset |
Cost |
Life |
|
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Plant with 30 year life at a cost of $660,000 |
660 |
30 |
|
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Land at a cost of $2,250,000 |
2,250 |
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Machinery and Equipment with 20 year life at a cost |
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of 79,000. |
79 |
20 |
|
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Truck with a life of 7 years at a cost of $42,000 |
42 |
7 |
From the above data you are given the information required the depreciation expense for the assets acquired on January 1, 2013. Please compute the above depreciation expense and add this to the depreciation expense given in the data above at 1595. Your depreciation expense computed plus the 1595 will be inserted into the Income Statement you develop.
c. The following data is available showing error corrections and change in inventory method needed for the 12/31/2013 statements to be booked against retained earnings since these errors were just discovered and occurred in prior years. The change in accounting method should be booked against Retained Earnings per GAAP.
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(C ) Error Corrections and change in accounting method- |
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(1) An error was discovered during 2013 relating to the understatement of depreciation expense in 2011 |
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resulting in a Prior Period Adjustment of $1,505 before taxes. Guidance: See our “Intermediate Text” Chapter 22, Illustration 20. |
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(2) ABC Company changed its method of valuing inventory during 2013. The cumulative increase in income |
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from the change in inventory methods was $1,285 before taxes. Guidance: someone in our class should attempt EX 22-2 from our Intermediate text Chapter 22. Post this in the week 2 forum. |
Requirement: Please provide the Journal Entry for the above 2 items and insert your results in the appropriate accounts in the balance sheet provided above and in the excel sheet.
Overall assignment guidance: this assignment in the attached excel sheet. Please create a tab in the excel sheet and name it week 2. Please insert the required assignment from the above data in the week 2 tab and submit your completed assignment.
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Solution: UOP ACC545 week 2 assignment