Below are comparative financial ratio analyzes for two companies, Eads Heater, Inc and Glenwood Heating, Inc. Appendices A and B contain financial statements reflecting the economic transactions that occurred during the first year of operation of the two companies. In conclusion, Glenwood Heating, Inc has generally higher profitability ratios compared to Eads Heater, Inc, which makes Glenwood Heating, Inc a better company to invest or lend.
After analyzing the results of the financial performance of both Glenwood Heating, Inc. and Ead's Heater, Inc. in their first fiscal year and based on my best professional judgment, I would recommend investing in or lending to Glenwood Heating, Inc rather than Ead's Heater, Inc. Although Ead's Heater, Inc. maintained a higher cash balance compared to that of Glenwood Heating, Inc., the company's performance lagged behind that of Glenwood; Glenwood Heating, Inc was the most profitable and efficient company overall. Under the current ratio test, which measures a company's ability to pay its short-term obligations using its short-term assets, Glenwood was 4.89 times as likely to meet its short-term obligations compared to Eads' 4.63.
Additionally, Glenwood had a net income of 23 cents for every dollar of revenue earned, while Ead's net income per dollar of revenue earned was 18 cents. However, given that Glenwood's return on equity, which is the amount of net profit a shareholder receives as a percentage of equity, is 40 percent compared to Eads' 34 percent, it is reasonable to conclude that Glenwood Heating, Inc. is the better company in which to invest funds. 16-JanCash Accounts Receivable Inventory Land Construction Equipment Payables Payables Interest Common Stock Payable Retained Earnings.
Below is an analysis and recommendation of how the operating financial transactions should be presented on the income statement.
Analysis and Recommendation
20 presented on separate line items on the face of the income statement for all periods presented.. b) Totz's cost of sales calculation excludes depreciation; consequently and according to Article 255-10-S99-8 of the FASB codification, "if costs of sales or operation. For the purpose of clarity and in efforts to ensure that the income statement is prepared in the best understandable way for potential creditors and investors becomes, I recommend that the terminology read: Cost of Goods Sold (excluding depreciation shown separately below).As such, Totz should not report a gross profit subtotal because the excluded depreciation is attributable to cost of sales.
An unusual item is defined as an 'underlying event or transaction that exhibits a high degree of abnormality and is of a type that is clearly unrelated to, or only incidentally related to, the ordinary and typical activities of the entity, taking into account the environment in which the entity is located. entity is active.” A rare item: “an underlying event or transaction that is of a type that cannot reasonably be expected to repeat in the foreseeable future, taking into account the environment in which the entity operates.” If the realized profit is unusual in nature and occurs rarely, the transaction should be disclosed in the notes to the annual accounts. To properly place this item on the income statement, we need to identify the reasons why Totz has moved, whether or not it has moved in the past, and whether or not it can be reasonably predicted whether it company would choose to move again in the future. The FASB codification illustrates an example of a gain on the sale of a building as a direct result of a relocation.
It has not moved a factory in 20 years and has no plans to do so in the foreseeable future. Regardless of the frequency of occurrence of the event in relation to this particular subject, moving from one place to another is a phenomenon that is a consequence of ordinary and continuous business activities, some of which are finding more favorable labor markets , the most modern facilities. and proximity to customers or suppliers. Further, ASC-605-10-S99-1 states, "Gains or losses on the sale of assets should be reported as 'other general expenses.'
A defect in the composition of products often results in legal proceedings against the supplier companies, often by a series of defendants, i.e. class actions. Since Totz is a manufacturing company and given the nature of its business, I believe it is reasonably understood that the class action is reported on the income statement as operating income. The third example required us as students to read several economic transactions of The Rocky Mountain Company.
Below, in Appendix A, are journal entries and financial statements that I have prepared to reflect all the financial transactions that occurred in a particular period. To record the cost of sale of inventory Operating, non-cash 4 To record payment of accounts to suppliers Operating. 6 To record payment and accrual of various expenses Business/Business, non-cash 7 To record cash payment of accrued salaries and wages Business.
Accy 420 Case 4 Solution
Internal Controls
Prepared by Christopher Feazell
Analysis and Recommendations
In other words, inventory balances are net of valuation for obsolete and unmarketable inventory. iii. a). These calculations are the product of the inventory holding period ratio, which divides 365 days by the inventory turnover ratio. As an investor and analyst, I wish the company had disclosed the amount of compensation for obsolete inventory, as well as a year's worth of the account.
Future income from the investment of the asset should match the latter expenses; otherwise, all costs must be expensed in the period in which they are incurred. ii. GAAP, "the Company" must first acknowledge and correct the mistake it made with the timeframe of the communication date to affected employees. The financial notes must also include detailed information about the costs expected to be incurred as a result of the.
Therefore, training and relocation costs should be reported as incurred and specifically in the discontinued operations section of the income statement. Xilinx's stock options, in particular, are intended to attract employees, consultants, and non-employee directors and to maintain the associates' interest in the overall benefit of the company. ii. The Company records all anticipated employee equity awards at fair value as of the date of award.
The exercise price assigned to stock options is always equal to the market price of the company's common stock. we. one. On the profit and loss account, the sum of the expenses is calculated in part i distributed among the following expense accounts: "Costs to income". 55 Unlike stock options, restricted stock units give an employee the full value of the stock on the expiration date.
Step One: In “Part 1,” the contract involves the student walking into Bier Haus (“The Company”) and ordering a large plastic cup of beer. Step Four: The $5 dollar transaction fee is directly related to the performance obligation of the beer being handed to the student. Step four of the costs relates to the beer, and since the customer received the beer, that portion of the transaction should be recorded as sales revenue.
Instead, the bartender will recognize accrued unearned revenue as sales revenue as a result of the transaction that occurred in part III. The prepayment amount will be reflected on the balance sheet, but not on the income statement, because the revenue recognition rule states that revenue should be recognized only when a performance obligation is satisfied. This breakdown helps a financial user better see which part of the asset is actually being realized as the breakdown more accurately reflects the company's financial position.
This type of lease usually involves real estate and results in the transfer of ownership to the lessee until the end of the term. iii.
