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ACC305 Wk 1 Assignments - E3-18, E3-20, JCase 3-5


ACC305 Wk 1 Assignments - E3-18, E3-20, JCase 3-5 fin571

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ACC305 Wk 1 Assignments - E3-18, E3-20, JCase 3-5
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This 0 page Study Guide was uploaded by an elite notetaker on Monday November 9, 2015. The Study Guide belongs to fin571 at Kaplan University taught by in Fall 2015. Since its upload, it has received 23 views.

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Date Created: 11/09/15
E318 Page 152 The current asset section of the Excalibur Tire Company39s balance sheet consists of cash marketable securities accounts receivable and inventories The December 31 2011 balance sheet revealed the following Required Determine the following 2011 balance sheet items 1 Current assets 2 Shareholders39 equity 3 Noncurrent assets 4 Longterm liabilities Exercise 318 1 Acid test ratio Quick assets Current liabilities 120 Quick assets Current assets Inventories Quick assets Current assets 840000 Current assets Current liabilities 225 Current assets 840000 Current liabilities 120 840000 Current liabilities 105 Current liabilities 800000 Current assets 800000 225 Current assets 1800000 2 Debt to equity ratio Total liabilities Shareholders equity 18 Total liabilities Shareholders39 equity Total assets Total liabilities Shareholders39 equity 2800000 Let X equal Shareholders39 equity 18 X X 2800000 X 1000000 Shareholders39 equity 3 Noncurrent assets Total assets Current assets Noncurrent assets 2800000 1800000 1000000 4 Long term liabilities Total assets Current liabilities Shareholders39 equity Long term liabilities 2800000 800000 1000000 1000000 E320 Page 152 Most decisions made by management impact the ratios analysts use to evaluate performance Indicate by letter whether each of the actions listed below will immediately increase I decrease D or have no effect N on the ratios shown Assume each ratio is less than 10 before the action is taken Exercise 320 Current Acidtest Debt to Action Ratio Ratio Equity Ratio 1 Issuance of longterm bonds I I I 2 Issuance of shortterm notes I I I 3 Payment of accounts payable L L L 4 Purchase of inventory on account I L I 5 Purchase of inventory for cash L L N 6 Purchase of equipment with a 4year note L L I 7 Retirement of bonds L L L 8 Sale of common stock I I L 9 Writeoff of obsolete inventory L L I 10 Purchase of shortterm investment for cash L L N 11 Decision to re nance on a longterm basis some currently maturing debt I I N Judgment Case 35Page 161 You recently joined the internal auditing department of Marcus Clothing Corporation As one of your rst assignments you are examining a balance sheet prepared by a staff accountant Required Identify and explain the de ciencies in the statement prepared by the company39s accountant Include in your answer items that require additional disclosure either on the face of the statement or in a note Judgment Case 35 DEFICIENCIES l 2 10 11 Accounts receivable if material the allowance for uncollectible accounts should be disclosed Note receivable only the interest receivable of 3000 should be classified as a current asset The 50000 note receivable should be classified in the noncurrent Investments category Inventories the method used to cost inventory should be disclosed in a note Investments should be classified in the noncurrent Investments category Also disclosures include information about the types of investments and the accounting method used to value the investments Prepaid expenses in the absence of information to the contrary should be classified as a current asset Land should be classified in the noncurrent Investments category Equipment net should be classified in the Property plant and equipment category Original cost should be disclosed along with the accumulated depreciation to arrive at the net amount Also the method used to compute depreciation should be disclosed in a note Patent should be classified in the Intangible assets category of noncurrent assets Note payable 20000 the next installment should be classified as a current liability as current maturities of long term debt Also note disclosure is required for the note and bonds payable that provides information such as payment terms interest rates and collateral pledged as security for the debt Interest payable should be classified as a current liability Common stock the par value if any and the number of shares authorized issued and outstanding should be disclosed


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