Cost: $1/ units Average Cost: $6‚ 50/ unit Average Inventory: EOQ/2 Cost of Goods Sold= 65% of Net Sales General and Administrative Expenses= 10% of Net Sales Interest on Increase in Accounts Receivable and Inventory= 12% Taxes= 25% of Before- Tax Income QUESTIONS a. Compute the accounts receivable balance before and after the change in the cash discount policy. Use the net sales (total sales2cash discounts) to determine the
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credit what goes out [Real Account] Real Accounts – All tangible assets like cash‚ car‚ furniture and intangible assets like goodwill‚ patents (2) Debit the Receiver & Credit the giver [Personal Account] Personal Accounts – Jose‚ cyndie or any other person or any company’s account in business (3) Debit all the Expenses and losses & Credit all the Incomes and gains. [Nominal Account] Nominal Accounts – All Income‚ Expenses‚ Profit‚ Losses Accounts Note:- (1) Debit if there
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organization issued shares of stock to stockholders for $20‚000 cash 2. The organization bought $5‚000 machines on account with $1‚000 paid in cash accruing a balance of $4‚000 3. The organization paid $750 for materials 4. The organization receives $4‚100 of cash in return for services provided‚ together with charging $5‚400 from 5. The organization paid $1‚500 with cash on accounts payable. 6. The organization paid a $2‚000 dividend. 7. The organization paid $800 for this month rent. 8. The
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that there is a risk of loss due to irregularities in cash outflows‚ accounts payable‚ and payroll. Substantive procedures for cash outflows‚ accounts payable‚ and payroll are needed to detect irregularities in each of these. Failure to implement appropriate procedures will lead to loss irregularities. Substantive Procedures to Evaluate Cash Irregularities Substantive procedures for detecting irregularities in the cash cycle follow normal audit procedures of testing internal controls over cash
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creditworthy customers. The average customer can expect to pay one or two percent (or more) above prime. In competitive markets banks may actually charge preferred customers less than prime. 8-4. The use of a compensating balance or minimum required account balance allows the banker to generate a higher return on a loan because not all funds are actually made available to the borrower. A $125‚000 loan with a $25‚000 compensating balance requirement means only $100‚000 is being provided on a net basis
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reported as cash. 1.Checking account balance $925‚000; certificate of deposit $1‚400‚000; cash advance to subsidiary of $980‚000; utility deposit paid to gas company $180. $ 2‚325‚000 Cash balance of $925‚000. Only the checking account balance should be reported as cash. The certificates of deposit should be reported as a temporary investment‚ the cash advance to subsidiary should be reported as accounts receivable‚ and the utility deposit should be identified as a receivable from the gas company.
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controller of Stern Corporation had ascertained the changes in accounts receivable and the allowance for doubtful accounts in 1998‚ a similar analysis was made of property‚ plant‚ and equipment and accumulated depreciation accounts. Again the controller examined the December 31‚ 1997‚ balance sheet [see Exhibit 1 of Stern Corporation (A)]. Also reviewed were the following company transactions that were found to be applicable to these accounts: 1. On January 2‚ 1998‚ one of the factory machines was sold
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implemented which can give immediate effect in order to avoid devastating FCB reputation as well as allowing FCB remained as the nation’s leading air cargo carrier. Issue Uncollectible debts‚ improper sales transaction‚ incorrectly recorded debtors’ account and abnormal transaction had caused Air Flat Cargo involved the possibility of fraud in a financial audit engagement. Problem Identified in Flat Cargo Berhad In 2006‚ during a routine financial audit‚ the auditors identified several suspicious
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Lecture 6 Receivables 1. Types of receivables (1)Accounts receivable: the amounts owed to the firm by customers on account from the sale of goods or services (2)Notes receivable: the amounts owing to the firm outside normal trade for which formal instruments of credit are issued evidencing the debt‚ and on which interest is generally payable (3) Other receivables include non-trade receivables such as interest receivable‚ loans‚ advances and GST receivable. 2. Accounting for A/R Accounts receivables are
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as debits. Asset accounts: Cash‚ bank‚ accounts receivable‚ inventory‚ land‚ buildings/plant‚ machinery‚ furniture‚ equipment‚ vehicles‚ trademarks and patents‚ goodwill‚ prepaid expenses‚ debtors (people who owe us money)‚ etc. Liability accounts: Accounts payable‚ salaries and wages payable‚ income taxes‚ bank overdrafts‚ trust accounts‚ accrued expenses‚ sales taxes‚ advance payments (unearned revenue)‚ debt and accrued interest on debt‚ etc. All of the accounts listed in this subsection
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