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anyanavicka [17]
3 years ago
14

Big Tommy Corporation is a local grocery store organized seven years ago as a corporation. The bookkeeper prepared the following

statement at year-end (assume that all amounts are correct, but note the incorrect format): BIG TOMMY CORPORATION Profit and Loss December 31 Debit Credit Net Sales $ 404,000 Cost of Goods Sold $ 279,000 Salaries and Wages Expense 58,000 Office Expenses 16,000 Travel Expenses 1,000 Income Tax Expense 15,000 Net Profit 35,000 Totals $ 404,000 $ 404,000 PA6-5 Part 1 Required: Prepare a properly formatted multistep income statement that would be used for external reporting purposes.
Business
1 answer:
Natali [406]3 years ago
7 0

Answer:

                        Big Tommy Corporation

      Profit and Loss for the year ended December 31

Sales                                                                         404,000

Cost of Goods Sold                                                 279,000

Gross Profit                                                               125,000

<em>Operating Expenses:</em>

Salaries and Wages Expense                   58,000

Office Expenses                                         16,000

Travel Expenses                                           1,000    75,000

Operating Income:                                                     50,000

Non-Operating Expenses

Income Tax Expense                                 15,000     15,000

Net Income                                                                 35,000

Explanation:

Multistep income statement makes a clear distinction on Operating Incomes and Expenses and Non-Operating Incomes and Expenses

Operating income is Profit generated from Primary activities of the company

Non-Operating Incomes and Expenses do not relate to the Primary activities of the firm.They occur as a result of secondary activities.

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Ace Products has a bond issue outstanding with 15 years remaining to maturity, a coupon rate of 7.4% with semiannual payments of
frutty [35]

Answer:

Current yield is 6.17%

<em>YTD is 5.43%</em>

<em>YTC is 4.26%</em>

Explanation:

Tenor: 15 years

-> number of payment (NPer) is 30 (= 15 years * 2 for semiannual)

Coupon rate: 7.4%

- > semiannual payments (PMT): $37 = ($1000*7.4%/2)

Future value (FV): $1000

Present value (PV): $1200

Current yield = annual coupon/ current price = $37*2/$1200 = 6.17%

<u>Extra: </u>

We use excel to calculate  yield to date (YTD) or nominal yield:

= Rate(Nper, PMT, - PV,FV) = Rate(30,37,-1200,1000) = 2.717% semiannual

-> annual rate is 5.43%

The bond issue is callable in 5 years at a call price of $1,074, then FV is $1074

Yield to call = rate(10,37,-1200,1074) = 2.13% semiannual

-> annual rate is 4.26%

5 0
3 years ago
Treetopplers, a U.S. lumber company, produces wood at a plant in Oregon on September 13, 2017. It sells the wood to Buildit and
Iteru [2.4K]

Answer:

The answer is: Treetopplers's wood production is not included in the GDP

Explanation:

The GDP includes all the domestic production of final and legal goods and services.

The value of final goods is included, but not the parts that go into them (intermediate goods). In this case, the wood Treetopplers produce is used by other companies (e.g. Buildit and Partners) to build final goods such as new houses. So the wood is an intermediate good.

4 0
3 years ago
By offering a free dog biscuit with each cup of coffee, the Coffee Collective entices customers to visit its shop during the pet
Anna [14]

Answer:

b. Sales promotion

Explanation:

Sale promotions are activities that a company engages in to persuade a potential customer to buy its products. Sale promotions  are short-term tactics to boost sales.  Although a business may get long-term customers through sales promotions, there are designed to entice new customers in the short-run.

Sales promotions encourage customers to switch brands or try out a different product. They are ideal when introducing new products in the market. Howerver, they are costly, and sometimes have a short term effect on sales.

This case uses a free sample technique ( free dog biscuits) as the promotion method. Other ways of conducting sales promotions include discount vouchers, free money coupons, and competitions.

5 0
3 years ago
The auditor begins selecting controls to test by _______. by understanding the entity and the business and determining the risk
Gemiola [76]

Answer:

by understanding the entity and the business and determining the risk of material fraud or error at the financial statement level.

Explanation:

An auditor refers to an authorized individual who review, examine and verify the authenticity and accuracy of business financial records or transactions.

Internal controls can be defined as the policies, set of rules, and procedures implemented or put in place by an organization to protect its assets, boost efficiency, enhance financial accountability, enforce adherence to company policies and prevent fraudulent behaviors among the employees.

The main purpose of internal controls is to guarantee that loss is eliminated by ensuring that there is an accurate and reliable accounting system.

An internal control involves the timely use of both internal and external sources of auditing or financial reporting and as such enhance the maintenance of accurate and proper financial records which would also improve their operational efficiency.

Hence, internal controls if properly executed helps to increase operational efficiency, protect and safeguard assets, provides accurate financial information, prevents fraudulent or unlawful behaviors, timeliness of financial records and reporting.

In order to start the selection of controls to test, an auditor has to understand the entity and the business, as well as determine the risk of material fraud or error at the financial statement level.

Financial statements can be defined as a document used for the formal communication or disclosure of financial information and statements to present and potential users such as investors and creditors. These includes balance sheet, statement of retained earnings and income statement.

A standard unmodified opinion is an opinion where financial statements are presented free of any misinterpretation, in all material respects, in accordance with standards known as Generally Accepted Accounting Principles (GAAP) to provide a high level of assurance.

The standard unmodified opinion comprises of report title, audit report address, introduction paragraph, managements responsibility, auditor's responsibility, opinion paragraph, audit report date and signature and address of certified public accountant firm.

Additionally, an unmodified opinion on financial statements can be defined as an opinion issued by an auditor stating that there are no material misstatements and this simply implies that the, the financial statement represents a true and fair perspective of the accounting information of a business.

6 0
3 years ago
Assume that you are a high-level manager for a shoe manufacturer. You know that your firm could increase its profit margin by pr
Vesnalui [34]

Answer:

The issue here is that you need to balance your company's profits and possible negative due to bad press.

On one side (the good and righteous side), if you do not produce shoes in Asia, your long term survival economic is doubtful, but people view your company as a company that does the right thing no matter what. Will it increase sales? Theoretically it should, but in practice it doesn't. Are Nike sales hurt because each shoe is produced in an Asian country that pays $0.25 per day? No, they aren't. The same applies to Reebok, Adidas, Puma, New Balance and every single major shoe manufacturer in the world. Bad press hurt tuna back in the 80's, but some companies are not affected by it.

The alternative (the evil, dark side of the force side) results in your company being able to survive on the long term. It will not necessarily mean that your company will grow and become the world's largest shoe manufacturer, but you will be able to survive and continue to operate.

There is also a trick that you can use to avoid reputational damage and bad press, and that is to establish a foreign subsidiary in Indonesia using a different name. Then your foreign subsidiary sells you the manufactured goods, and the blame fall son the subsidiary. Believe it or not, that simple solution is used by most corporations including clothing manufacturers, electronics, toys, etc.

If you analyze this from an ethical point of view, the alternative is much simpler. Producing in Indonesia (or India, or Burma, or Pakistan, or Vietnam, etc.) and paying a $100 salary will allow a family to live a very decent life and probably even prosper. They will have a much better lifestyle than the rest of their neighborhood. Each Indonesian worker represents one less poor family in Indonesia. On the other hand, American families will probably get hurt, but it is also much easier for an American worker to get another job that pays a normal wage (in US standards) and allows them to live well.

6 0
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