FIN ACCT 557 (ACC 557)
Axia College of University of Phoenix (UoP)
Accounting Principles
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting
Decision Making Across The Organization
BYP 13-4 At the beginning of the question and answer portion of the annual stockholders' meeting of Kemper Corporation, stockholder Mike Kerwin asks, “Why did management sell the holdings in UMW Company at a loss when this company has been very profitable during the period its stock was held by Kemper?”
Since president Tony Chavez has just concluded his speech on the recent success and bright future of Kemper, he is taken aback by this question and responds, “I remember we paid $1,300,000 for that stock some years ago, and I am sure we sold that stock at a much higher price. You must be mistaken.”
Kerwin retorts, “Well, right here in footnote number 7 to the annual report it shows that 240,000 shares, a 30% interest in UMW, were sold on the last day of the year. Also, it states that UMW earned $520,000 this year and paid out $160,000 in cash dividends. Further, a summary statement indicates that in past years, while Kemper held UMW stock, UMW earned $1,240,000 and paid out $440,000 in dividends. Finally, the income statement for this year shows a loss on the sale of UMW stock of $180,000. So, I doubt that I am mistaken.”
Red-faced, president Chavez turns to you.
Instructions
(a) What dollar amount did Kemper receive upon the sale of the UMW stock? Please explain
(b) Explain why both stockholder Kerwin and president Chavez are correct.
Click here for the SOLUTION
Thursday, August 12, 2010
BYP 8-5 BYP8-5 Communication Activity CPA firm of Croix, Marais, and Kale
FIN ACCT 557 (ACC 557)
Axia College of University of Phoenix (UoP)
Accounting Principles
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting
Communication Activity
BYP 8-5 As a new auditor for the CPA firm of Croix, Marais, and Kale, you have been assigned to review the internal controls over mail cash receipts of Manhattan Company. Your review reveals the following: Checks are promptly endorsed "For Deposit Only," but no list of the checks is prepared by the person opening the mail. The mail is opened either by the cashier or by the employee who maintains the accounts receivable records. Mail receipts are deposited in the bank weekly by the cashier.
Instructions:
Write a letter to Jerry Mays, owner of the Manhattan Company, explaining the weaknesses in internal control and your recommendations for improving the system.
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Accounting Principles
Financial Accounting
Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting
Communication Activity
BYP 8-5 As a new auditor for the CPA firm of Croix, Marais, and Kale, you have been assigned to review the internal controls over mail cash receipts of Manhattan Company. Your review reveals the following: Checks are promptly endorsed "For Deposit Only," but no list of the checks is prepared by the person opening the mail. The mail is opened either by the cashier or by the employee who maintains the accounts receivable records. Mail receipts are deposited in the bank weekly by the cashier.
Instructions:
Write a letter to Jerry Mays, owner of the Manhattan Company, explaining the weaknesses in internal control and your recommendations for improving the system.
Click here for the SOLUTION
BYP 9-6 BYP9-6 Ethics Case Ruiz Co
ACC 280 / XACC 280
Axia College of University of Phoenix (UoP)
Principles of Accounting
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008). Financial Accounting (6th ed.). Hoboken, NJ: Wiley.
ACC 280 / XACC 280 Solution
Help in ACC 280
Help in XACC 280
Ethics Case BYP 9-6 The controller of Ruiz Co. believes that the yearly allowance for doubtful accounts for Ruiz. co. should be 2% of net credit sales. The presdident of Ruiz Co., nervous that the stockholders might expect the company to sustain its 10% growth rate, suggests that the controller increase the allowance for doubtful accounts to 4%. The president thinks that the lower net income, which refects a 6% growth rate, will be a more sustainable rate for Ruiz Co.
Instructions:
a) Who are the stakeholders in this case?
b) Does the president's request pose an ethical dilemma for the controller?
c) Should the controller be concerned with Ruiz co.'s growth rate? Explain your answer.
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Principles of Accounting
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008). Financial Accounting (6th ed.). Hoboken, NJ: Wiley.
ACC 280 / XACC 280 Solution
Help in ACC 280
Help in XACC 280
Ethics Case BYP 9-6 The controller of Ruiz Co. believes that the yearly allowance for doubtful accounts for Ruiz. co. should be 2% of net credit sales. The presdident of Ruiz Co., nervous that the stockholders might expect the company to sustain its 10% growth rate, suggests that the controller increase the allowance for doubtful accounts to 4%. The president thinks that the lower net income, which refects a 6% growth rate, will be a more sustainable rate for Ruiz Co.
Instructions:
a) Who are the stakeholders in this case?
b) Does the president's request pose an ethical dilemma for the controller?
c) Should the controller be concerned with Ruiz co.'s growth rate? Explain your answer.
Click here for the SOLUTION
BYP 7-1 BYP7-1 Financial Reporting Problem Bluma Co
ACC 280 / XACC 280
Axia College of University of Phoenix (UoP)
Principles of Accounting
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008). Financial Accounting (6th ed.). Hoboken, NJ: Wiley.
ACC 280 / XACC 280 Solution
Help in ACC 280
Help in XACC 280
Financial Reporting Problem - Mini Case
BYP 7-1 Bluma Co. uses a perpetual inventory system and both an accounts receivable and an accounts payable subsidiary ledger. Balances related to both the general ledger and the subsidiary ledger for Bluma are indicated in the working papers. Presented below are a series of transactions for Bluma Co. for the month of January.
AND SO ON
Hint: Trial Balance Totals are $202,900, Adjusted Trial Balance Totals are $203,075, Net Income is $20,755, Total Assets are $143,505 and Post Closing Trial Balance Totals are $145,130.
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Principles of Accounting
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008). Financial Accounting (6th ed.). Hoboken, NJ: Wiley.
ACC 280 / XACC 280 Solution
Help in ACC 280
Help in XACC 280
Financial Reporting Problem - Mini Case
BYP 7-1 Bluma Co. uses a perpetual inventory system and both an accounts receivable and an accounts payable subsidiary ledger. Balances related to both the general ledger and the subsidiary ledger for Bluma are indicated in the working papers. Presented below are a series of transactions for Bluma Co. for the month of January.
AND SO ON
Hint: Trial Balance Totals are $202,900, Adjusted Trial Balance Totals are $203,075, Net Income is $20,755, Total Assets are $143,505 and Post Closing Trial Balance Totals are $145,130.
Click here for the SOLUTION
Monday, August 9, 2010
BYP 14-7 BYP14-7 BYP 14-7 BYP14-7 Tappit Corp. is a medium-sized wholesaler of automotive parts
ACC 280 / XACC 280
Axia College of University of Phoenix (UoP)
Principles of Accounting
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008). Financial Accounting (6th ed.). Hoboken, NJ: Wiley.
ACC 280 / XACC 280 Solution
Help in ACC 280
Help in XACC 280
Ethics Case
BYP 14-7 Tappit Corp. is a medium-sized wholesaler of automotive parts. It has 10 stockholders who have been paid a total of $1 million in cash dividends for 8 consecutive years. The board’s policy requires that, for this dividend to be declared, net cash provided by operating activities as reported in Tappit’s current year’s statement of cash flows must exceed $1 million. President and CEO Willie Morton’s job is secure so long as he produces annual operating cash flows to support the usual dividend. At the end of the current year, controller Robert Jennings presents president Willie Morton with some disappointing news: The net cash provided by operating activities is calculated by the indirect method to be only $970,000. The president says to Robert, “We must get that amount above $1 million. Isn’t there some way to increase operating cash flow by another $30,000?” Robert answers, “These figures were prepared by my assistant. I’ll go back to my office and see what I can do.” The president replies, “I know you won’t let me down, Robert.”
Upon close scrutiny of the statement of cash flows, Robert concludes that he can get the operating cash flows above $1 million by reclassifying a $60,000, 2-year note payable listed in the financing activities section as “Proceeds from bank loan—$60,000.” He will report the note instead as “Increase in payables—$60,000” and treat it as an adjustment of net income in the operating activities section. He returns to the president, saying, “You can tell the board to declare their usual dividend. Our net cash flow provided by operating activities is $1,030,000.”
“Good man, Robert! I knew I could count on you,” exults the president.
Instructions
(a) Who are the stakeholders in this situation?
(b) Was there anything unethical about the president’s actions? Was there anything unethical about the controller’s actions?
(c) Are the board members or anyone else likely to discover the misclassification?
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Principles of Accounting
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008). Financial Accounting (6th ed.). Hoboken, NJ: Wiley.
ACC 280 / XACC 280 Solution
Help in ACC 280
Help in XACC 280
Ethics Case
BYP 14-7 Tappit Corp. is a medium-sized wholesaler of automotive parts. It has 10 stockholders who have been paid a total of $1 million in cash dividends for 8 consecutive years. The board’s policy requires that, for this dividend to be declared, net cash provided by operating activities as reported in Tappit’s current year’s statement of cash flows must exceed $1 million. President and CEO Willie Morton’s job is secure so long as he produces annual operating cash flows to support the usual dividend. At the end of the current year, controller Robert Jennings presents president Willie Morton with some disappointing news: The net cash provided by operating activities is calculated by the indirect method to be only $970,000. The president says to Robert, “We must get that amount above $1 million. Isn’t there some way to increase operating cash flow by another $30,000?” Robert answers, “These figures were prepared by my assistant. I’ll go back to my office and see what I can do.” The president replies, “I know you won’t let me down, Robert.”
Upon close scrutiny of the statement of cash flows, Robert concludes that he can get the operating cash flows above $1 million by reclassifying a $60,000, 2-year note payable listed in the financing activities section as “Proceeds from bank loan—$60,000.” He will report the note instead as “Increase in payables—$60,000” and treat it as an adjustment of net income in the operating activities section. He returns to the president, saying, “You can tell the board to declare their usual dividend. Our net cash flow provided by operating activities is $1,030,000.”
“Good man, Robert! I knew I could count on you,” exults the president.
Instructions
(a) Who are the stakeholders in this situation?
(b) Was there anything unethical about the president’s actions? Was there anything unethical about the controller’s actions?
(c) Are the board members or anyone else likely to discover the misclassification?
Click here for the SOLUTION
BYP1-7 BYP 1-7 BYP1-7 BYP 1-7 Wayne Terrago Wayne Terrago, controller for Robbin Industries, was reviewing production cost reports for the year
ACC 280 / XACC 280
Axia College of University of Phoenix (UoP)
Principles of Accounting
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008). Financial Accounting (6th ed.). Hoboken, NJ: Wiley.
ACC 280 / XACC 280 Solution
Help in ACC 280
Help in XACC 280
Ethics Case
BYP 1-7 Wayne Terrago, controller for Robbin Industries, was reviewing production cost reports for the year. One amount in these reports continued to bother him-advertising. During the year, the company had instituted an expensive advertising campaign to sell some of its slower-moving products. It was still too early to tell whether the advertising campaign was successful. There had been much internal debate as how to report advertising cost. The vice president of finance argued that advertising costs should be reported as a cost of production, just like direct materials and direct labor. He therefore recommended that this cost be identified as manufacturing overhead and reported as part of inventory costs until sold. Others disagreed. Terrago believed that this cost should be reported as an expense of the current period, based on the conservatism principle. Others argued that it should be reported as Prepaid Advertising and reported as a current asset.
The president finally had to decide the issue. He argued that these costs should be reported as inventory. His arguments were practical ones. He noted that the company was experiencing financial difficulty and expensing this amount in the current period might jeopardize a planned bond offering. Also, by reporting the advertising costs as inventory rather than as prepaid advertising, less attention would be directed to it by the financial community.
Instructions
(a) Who are the stakeholders in this situation?
(b) What are the ethical issues involved in this situation?
(c) What would you do if you were Wayne Terrago?
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Principles of Accounting
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008). Financial Accounting (6th ed.). Hoboken, NJ: Wiley.
ACC 280 / XACC 280 Solution
Help in ACC 280
Help in XACC 280
Ethics Case
BYP 1-7 Wayne Terrago, controller for Robbin Industries, was reviewing production cost reports for the year. One amount in these reports continued to bother him-advertising. During the year, the company had instituted an expensive advertising campaign to sell some of its slower-moving products. It was still too early to tell whether the advertising campaign was successful. There had been much internal debate as how to report advertising cost. The vice president of finance argued that advertising costs should be reported as a cost of production, just like direct materials and direct labor. He therefore recommended that this cost be identified as manufacturing overhead and reported as part of inventory costs until sold. Others disagreed. Terrago believed that this cost should be reported as an expense of the current period, based on the conservatism principle. Others argued that it should be reported as Prepaid Advertising and reported as a current asset.
The president finally had to decide the issue. He argued that these costs should be reported as inventory. His arguments were practical ones. He noted that the company was experiencing financial difficulty and expensing this amount in the current period might jeopardize a planned bond offering. Also, by reporting the advertising costs as inventory rather than as prepaid advertising, less attention would be directed to it by the financial community.
Instructions
(a) Who are the stakeholders in this situation?
(b) What are the ethical issues involved in this situation?
(c) What would you do if you were Wayne Terrago?
Click here for the SOLUTION
BYP3-6 BYP 3-6 Bluestem Company BYP3-6 BYP 3-6 Bluestem Company BYP3-6 BYP 3-6 Bluestem Company BYP3-6 BYP 3-6 Bluestem Company BYP3-6 BYP 3-6
ACCT 100 : Introduction to Financial Accounting
San Francisco State University (SFSU)
Financial Accounting
Jerry J. Weygandt
Ethics Case
BYP 3-6 Bluestem Company is a pesticide manufacturer. Its sales declined greatly this year due to the passage of legislation outlawing the sale of several of Bluestem’s chemical pesticides. In the coming year, Bluestem will have environmentally safe and competitive chemicals to replace these discontinued products. Sales in the next year are expected to greatly exceed any prior year’s. The decline in sales and profits appears to be a one-year aberration. But even so, the company president fears a large dip in the current year’s profits. He believes that such a dip could cause a significant drop in the market price of Bluestem’s stock and make the company a takeover target. To avoid this possibility, the company president calls in Cathi Bell, controller, to discuss this period’s year-end adjusting entries. He urges her to accrue every possible revenue and to defer as many expenses as possible. He says to Cathi, “We need the revenues this year, and next year can easily absorb expenses deferred from this year.We can’t let our stock price be hammered down!” Cathi didn’t get around to recording the adjusting entries until January 17, but she dated the entries December 31 as if they were recorded then. Cathi also made every effort to comply with the president’s request.
Instructions
(a) Who are the stakeholders in this situation?
(b) What are the ethical considerations of (1) the president’s request and (2) Cathi’s dating the adjusting entries December 31?
(c) Can Cathi accrue revenues and defer expenses and still be ethical?
Click here for the SOLUTION
San Francisco State University (SFSU)
Financial Accounting
Jerry J. Weygandt
Ethics Case
BYP 3-6 Bluestem Company is a pesticide manufacturer. Its sales declined greatly this year due to the passage of legislation outlawing the sale of several of Bluestem’s chemical pesticides. In the coming year, Bluestem will have environmentally safe and competitive chemicals to replace these discontinued products. Sales in the next year are expected to greatly exceed any prior year’s. The decline in sales and profits appears to be a one-year aberration. But even so, the company president fears a large dip in the current year’s profits. He believes that such a dip could cause a significant drop in the market price of Bluestem’s stock and make the company a takeover target. To avoid this possibility, the company president calls in Cathi Bell, controller, to discuss this period’s year-end adjusting entries. He urges her to accrue every possible revenue and to defer as many expenses as possible. He says to Cathi, “We need the revenues this year, and next year can easily absorb expenses deferred from this year.We can’t let our stock price be hammered down!” Cathi didn’t get around to recording the adjusting entries until January 17, but she dated the entries December 31 as if they were recorded then. Cathi also made every effort to comply with the president’s request.
Instructions
(a) Who are the stakeholders in this situation?
(b) What are the ethical considerations of (1) the president’s request and (2) Cathi’s dating the adjusting entries December 31?
(c) Can Cathi accrue revenues and defer expenses and still be ethical?
Click here for the SOLUTION
BYP9-6 BYP 9-6 Ruiz Co BYP9-6 BYP 9-6 Ruiz Co BYP9-6 BYP 9-6 Ruiz Co BYP9-6 BYP 9-6 Ruiz Co BYP9-6 BYP 9-6 Ruiz Co
ACC 280 / XACC 280
Axia College of University of Phoenix (UoP)
Principles of Accounting
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008). Financial Accounting (6th ed.). Hoboken, NJ: Wiley.
ACC 280 / XACC 280 Solution
Help in ACC 280
Help in XACC 280
Ethics Case BYP 9-6 The controller of Ruiz Co. believes that the yearly allowance for doubtful accounts for Ruiz. co. should be 2% of net credit sales. The presdident of Ruiz Co., nervous that the stockholders might expect the company to sustain its 10% growth rate, suggests that the controller increase the allowance for doubtful accounts to 4%. The president thinks that the lower net income, which refects a 6% growth rate, will be a more sustainable rate for Ruiz Co.
Instructions:
a) Who are the stakeholders in this case?
b) Does the president's request pose an ethical dilemma for the controller?
c) Should the controller be concerned with Ruiz co.'s growth rate? Explain your answer.
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Principles of Accounting
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008). Financial Accounting (6th ed.). Hoboken, NJ: Wiley.
ACC 280 / XACC 280 Solution
Help in ACC 280
Help in XACC 280
Ethics Case BYP 9-6 The controller of Ruiz Co. believes that the yearly allowance for doubtful accounts for Ruiz. co. should be 2% of net credit sales. The presdident of Ruiz Co., nervous that the stockholders might expect the company to sustain its 10% growth rate, suggests that the controller increase the allowance for doubtful accounts to 4%. The president thinks that the lower net income, which refects a 6% growth rate, will be a more sustainable rate for Ruiz Co.
Instructions:
a) Who are the stakeholders in this case?
b) Does the president's request pose an ethical dilemma for the controller?
c) Should the controller be concerned with Ruiz co.'s growth rate? Explain your answer.
Click here for the SOLUTION
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