Each chapter of my thesis is in case format, reflecting the given case format that I used for my study. With the help of professors, textbooks, and scientific and professional research, I was able to form informed opinions and assumptions about the treatment of the subjects discussed in my collection of case studies. From the evidence in these statements, it can be concluded that Glenwood is the more profitable company of the two, making it more desirable to potential investors.
Most of its money is provided by financing activities, which shows that it is active among investors. Overall, Glenwood is the superior company in terms of net income, gross profit and retained earnings, which provide key information about a company's health. Depreciation(E(equipment(Accounts(Interest Payable(Note Payable(Ordinary Note Payable(Cost of Sale of Stock Dividends(of(Goods Sold(Bad Goods(Debt(Depreciation Expense(Interest Expense (Other (operative).
Accounts%Paid Interest%Paid Note%Paid Lease%Payable Common%Inventory Dividend Cost of Sales%of%Goods%Sold Bad%Debt%Expense Depreciation%Expense Interest%Expense.
Summary
Income Statement Presentation
Gross profit, which is calculated as net sales minus cost of sales, is one of the best ways to determine the success of a business. Cost of sales also increased directly with gross profit, increasing by $9.6 million from $46.5 million in 2015 to. These costs must be recorded in the "Sales costs" section of the income statement.
It should be noted that depreciation is not included in cost of sales under ASC-225-10-S99-8. The gross profit is equal to the net turnover of both Totz and Doodlez minus the sales costs of the same groups. According to ASC d) and ASC, the profit on this sale should not be classified as an extraordinary item and should be included in the operating income section of the profit and loss account.
This amount would fall under non-operating income under “Miscellaneous income,” with the nature of the gain disclosed in a note (ASC-225-10-S99-2(7d).
Unadjusted Trial Balance
Adjusted Trial Balance
Income Statement
Statement of Retained Earnings
Balance Sheet
Cash Flow Classification
To ensure the operation of the craft store, Kayla should implement internal control systems that include checks and balances set up to prevent and detect fraud. Segregation of Duties – Kayla should separate responsibility for receiving, depositing, recording and reconciling cash so that one employee cannot both commit and conceal fraud. Segregation of functions – Although it may be difficult to divide all responsibilities since the company is small, segregation of duties provides greater internal control.
Segregation of Duties - One clerk will order inventory with Kayla's authorization, and another clerk will record the inventory as it arrives in the store. So no one has enough power to steal stock and hide such behavior in the records. Clerks may enter false or inaccurate transactions as they are authorized to enter all types of transactions in the registers.
Access Control – The types of transactions clerks can enter should be limited and employees should receive authorization before issuing a refund or entering an irregular transaction into the cash register. Physical Check – Kayla should move the credit card machine next to the cash registers to ensure that the credit card is swiped and the transaction is completed correctly at the correct price. The recorded amount of sales or cash earned may be manipulated or presented inaccurately as the store's information system automatically updates inventory accounts while Lucy manually records sales in the accounting software.
Application and Access Control – Kayla may consider purchasing more sophisticated software that automatically records sales to prevent data manipulation. Application Control – Kayla should use software that indexes each sale with details such as transaction number, date, amount and clerk name. This internal control provides unaltered evidence of sales for audits and allows actual cash balances to be reconciled with register tape sales.
Physical Control – Each business premises is company property and Kayla needs a key to Lucy's office to deter unauthorized actions. Independent Verification – Kayla should consider hiring an objective accountant to ensure the integrity of financial data.
Raw Materials – Procurement/purchasing from supplier, storage
There are three categories of inventory involved, but the most important category that can be affected if it becomes obsolete is finished goods inventory. Companies must find ways to reduce obsolete inventory to ensure their end products can be purchased by customers.
A company is looking to analyze the effects of obsolete and/or unmarketable inventory on their financial statements and the health of their company. Most, if not all, of the reserve for obsolete inventory should be allocated to finished goods because there is a greater chance that inventory in this category has been lost in some way. Work in process is unlikely to have an obsolescence reserve because labor and overhead are unlikely to become obsolete.
An estimate of the amount of obsolete inventory in finished goods is around 8%
SCON 6, in my interpretation, defines assets as something a business has from a past event that is capable of producing benefits for the business in some way in the near or distant future (CON 6-1). The net income on the income statement will initially be higher because costs are not booked as costs, therefore the costs are underestimated. These "line charges" are the fees charged by the telephone service provider for telephone usage for the business.
The types of cost that were improperly capitalized by WorldCom were expenses, specifically, paid for changes to telephone networks. This money-saving decision made by Sullivan was driven by the thought that costs could be spread over time, rather than calculated. His decision clearly violated accounting rules in that ongoing costs such as telephone line costs should be expensed, rather than capitalized as long-term investments.
Executive Summary
Employee Benefits
Targa Company also released a statement saying that these employee terminations are a one-time event, meaning employees will not be laid off in waves, but all at once. The company decided to lay off all employees at once, most likely due to the circumstances of closing a facility that housed the discontinued business line. With these employee terminations, there are several guidelines that must be followed to be in compliance with FASB standards.
According to the FASB, "a lump-sum employee severance agreement exists on the date of the termination plan, meets all of the following criteria, and has been communicated to employees on the date of the communication." (ASC. The plan sets forth the terms of the benefit arrangement, including the benefits employees will receive upon termination (including, but not limited to, cash payments), in sufficient detail to allow employees to determine the type and amount of benefits they will receive. if they are involuntarily terminated. The actions required to complete the plan indicate that it is unlikely that significant changes to the plan will occur or that the plan will be withdrawn.” (ASC.
At the date of termination communication, the License Plate Company must know how to correctly calculate the cost of the benefits. Benefits provided by the company such as bonuses and salary compensation have a monetary value that must be recognized. An employer that offers, for a short period of time, special termination benefits to employees, will not recognize a loss on the date the offer is made based on the estimated take-up rate.
As a result of these standards, a liability must be recognized in the balance sheet at 27 December 20X1 and a loss must be recognized in the income statement for the year ended 31 December 20X1.
Retraining and Relocation Costs
However, if the stock price exceeds the stock option threshold, it can make people. Grant Date – The grant date is the first day of the stock option offering period. Accounting for stock options required measuring the cost of employee equity, which was to be applied to the fair value of the awards.
The company must also record the outstanding, undistributed part of the awards in compensation costs. Cash flows from excess tax benefits must be included in the financing section of the statement of cash flows. The exercise price of stock options must be equal to the current market price of the common stock.
The amount of payment may vary depending on the nature of the contract. The beer and pretzel coupons were awarded based on percentages of the $8.50 total, which includes the stand alone prices for the beer and pretzel coupons. These accounts must be added on the debit side with the income tax expense to equal the credit side of the income tax liability account in order to balance properly.
The present value of the minimum lease payments is equal to or greater than 90% of the fair value of the leased property. Operating Lease – An operating lease is a lease that does not meet any of the above criteria. Capital Lease – A capital lease is a lease that is non-cancellable and meets at least one of the following criteria above.
Sale-like lease – a sale-like lease is a lease where the present value of minimum lease payments is higher than the carrying amount of the asset. In this type of lease, the income earned is interest and the profit is recorded as the difference between the minimum lease payments and the carrying amount of the asset. No profit is recognized at the beginning of the leasing agreement, in contrast to the direct financing lease.
Each payment is multiplied by its corresponding present value factor to obtain the true dollar amount value, which is reflected in the "Payment PV" column.
