Problem 1 (50 points) Supreme Company's bookkeeper prepared the bank reconciliation for May 31, 2010. The bookkeeper had the following responsibilities: All bookkeeping, the handling of cash receipts, the preparation of the monthly bank reconciliation and the deposit at the bank. Assume that the bookkeeper prepared of the checks, which were signed by the owner. The owner, on a daily basis verified and signed all checks that were written, counted all cash and verified the debit to cash in the cash receipts journal and the credit to cash in the cash payments journal. Assume that the office manager performed all other duties. May 31 Bank Statement Balance of previous bank statement on 4/30 Six deposits and other credits totaling Eleven Current balance as of this statement 12,760 7,596 4,977 checks and other debts totaling $15, 379 Date Amount Transition Type 51 $ 915 Deposit See Duplicate Deposit Slips Page 2 5/2 $1,000 S 737 Deposit Deposit Deposit 5/5 5/14 $850 5/21 5/28 $ 815 Deposit 5/28 S (581) 5131 $(11) Service Charge $729 (581) Service NSF Check 531 $2.550 Bank Collection (Colcion on note, pindipal $2,500) Date Check # Amount S 125 $ 112 $ 500 394$215 $100 $ 750 See Carbon Copy of Checks Issued Pages 3-5 392 5/2 393 5/4 395 398 400 5/29 402 5/13 399 $1,000 $ 543 5/27 6 5/28 401 $450 $175 $ 415 5/31 403 Font Clipboard Duplicate Deposit Slips Deposit Slip Cash Date Currency Coins 00 00 Total 915 00 Currency Coins 750 00 Total 1000 00 Currency Coins 156 00 List of Checks Deposit Slip Cash Date List of Checks Jones 250 00 Deposit Slip Cash Date 514/10 List of Checks Slade Total 737 00 Deposit Slip Cash Date 5/13/10 Currency Coins 500 00 350 00 Total 850 00 List of Checks De posit Slip Cash Date Coins 600 00 ist of Checks 520/10 Pyle 129 00 Total Deposit Slip Cash Date Curre List of Checks Total 815 Currency Coins eposit Slip Cash 00 Date 531/10 List of Checks 915 00 Total 915 00 Font Clipboard Copies of Written Checks Supreme Company Date: 4/17/10 391 125.00 Pay to the Order of Jones&Company NBT Bank One Hundred Twenty-Five and no cents Memo: Supplies Jill Supreme Supreme Company Date: 4/15/10 392 Pay to the Order of Jordon 112.00 T Bank One Hundred twelve and no cents NB Memo: Invoice 2324 Supreme Company Date: 4/21/10 393 Pay to the Order of Jones & Company $ 500.00 NBT Bank Five Hundred and no cents Memo: Invoice 51 Supreme Company Date: 4/24/10 394 Pay to the Order of King and Company $ 215.00 NBT Bank Two Hundred fifteen and no cents Memo: Invoice 700 Supreme Company Date: 4/2810 395 Pay to the Order of Jones & Company $ 100.00 NBT Bank One Hundred and no cents Memo: Invoice 2360 Jill Supreme Font Clipboard 396 Date: 4/30/10 Supreme Company $514.00 Pay to the Order of Al Kazam Leisure Man Five Hundred fourteen and no cents NBT Bank Jill Supreme Memo: Invoice 010 397 Supreme Company Date: 4/30/10 Pay to the Order of Jones International $ 771.00 NBT Bank Seven Hundred seventy one and no cents Memo: Invoice 010 ill Supreme Supreme Company 398 Date: 5/01/10 Pay to the Order of Carr Office Supplies $ 750.00 NBT Bank Seven Hundred fifty and no cents Memo: Invoice 870 Jill Supreme Supreme Company Date: 5/12/10 399 Pay to the Order of Jill Supreme $ 1,000.00 NBT Bank One Thousand and no cents Memo: Withdrawal Supreme Company Date: 5/20 10 400 Pay to the Order of Hooyah $ 543.00 NBT Bank Five Hundred forty three and no cents Memo: Invoice 571 Jill Supreme Supreme Company Date: 5/22/10 Pay to the Order of King & Company 401 $ 450.00 NBT Bank Four Hundred fifty and no cents Memo: Invoice 556 Jill Supreme Paste Font 402 Date: 5/24/10 Supreme Company 175.00 Pay to the Order of Utility Company One Hundred seventy-five and no cents NBT Bank Memo: May Electric Billill Supreme 403 Date: 5/27/10 Supreme Company $415.00 Pay to the Order of Ollyoop Four Hundred fifteen and no cents NBT Bank ll Supreme Memo: Invoice 5002 404 Supreme Company Date: 5/28/10 Pay to the Order of Gardiner Company $ 300.00 NBT Bank Three Hundred and no cents Memo: Invoice 444 Supreme Supreme Company Date: 5/30/10 405 Pay to the Order of Father &Sons $160.00 Bank One Hundred sity and n onts One Hundred sixty and no cents Memo Supreme Company Date: 5/31/10 406 Pay to the Order of Thomson Learning $514.00 NBT Bank Five Hundred fourteen and no cents Memo: Books Jill Supreme Supreme Company Date: 5/21/10 407 Pay to the Order of Ollyoop NBT Bank $ 800.00 Eight Hundred and no cents Memo: Invoice 5020 Jill Supreme SUPREME COMPANY'S BORKS Font ipboard SUPREME COMPANY'S BOOKS Cash Receipts Recorded in Cash Receipts Journal Date Cash Debit JS 737 5/4 5/9 5/13 $ 850 $ 729 S 81 $ 915 JS JS JS JS 5/27 5/31 Total $ 6,331 Cash Payments Recorded In Cash Payments Journal Check No. Cash Credit $ 750 $ 1,000 $ 345 S 450 $ 175 S 415 S 300 399 401 402 403 404 405 406 407 160 800 Total $4.909 See duplicate deposit slips on page 2. See duplicate carbon copies of checks on pages 3-5. . Assume that owner-Jill S receipts journal and the bookkeeper deposited in bank on the same day ipts any cash Assume that all deposits cleared the bank the day after they were recorded in the cash receipts shr nho weare journal and deposited. (i.e. 5/4 deposit cleared on 5/5-see page 1). Assume that receipt that did not clear the bank by the next day was never deposited in the bank. ( Cash General Ledger Date 4/30 Balance 5/31 Cash Receipts Explanation Debit Credit Balance 11,338 331 Check No. 400 was issued for $543 to Hooyah in payment of an accounts payable. The NSF check returned with the bank statement was received from customer, Pat Slade in payment of his Accounts Receivable. The NSF check has not been recorded in the general ledger db i-.-J 1 B) 1 U.abe X2 X2 A Aa A A Paragraph Styles Editing Paste Font Clipboard The following is the bank reconciation prepared by the bookkeeper for April 30, 20 SUPREME COMPANY BANK RECONCILIATION April 30, 2010 Cash balance a Add Deposits in Transit 4/30 $13,675 Outstanding Checks: 391 $ 125 392 $112 393 $ 500 394 $215 395 $ 100 396 $ 514 397 $ 771 $2 337 11,338 Adjusted Balance balance according to the ledger Add: Addtions to bank sccount not recorded on books proceeds from colilection of note Principal Interest Error in recording check 389 $180 $ 11,930 Deductions by bank not recorded on books 581 Bank Service Charge 592 $ 11,338 Adjusted Balance I U abe X X' A Paragraph Styles Editing Aa A A Font oard SUPREME COMPANY BANK RECONCILIATION May 31, 2010 S 15.379 Cash balance according to bank statement Add: Deposits in Transit 5/31 S915 915 $ 16,294 Less Outstanding Checks 404 $ 300 405 $ 160 406 $ 514 407 $800 $1,774 $ 14,520 Adjusted Balance 2,760 the Add: Additions to bank account not recorded on books proceeds from collection of note Principal $ 2,500 Interest | $ 50 | $ 2,550 Deductions by bank not recorded on books Check Returned NSF $581 Bank Service Charge $11 Error in recording check 400 $ 198 $ 790 $ 14,520 Adjusted Balance Required: 1. Review the Bank Reconciliation prepared by your employee on May 31 above and prepare a corrected bank reconciliation. (Prepare on the Group Project Excel Spreadsheet Problem 1 parts 1 & 4 tab) Explain why you think your corrected bank reconciliation does not balance. How did the employee conceal the embezzlement? (Prepare on the Group Project Excel Spreadsheet Problem 1 parts 2& 3 tab) 2. 3. Recommend any improvements to internal controls to prevent this embezzlement from occurring again. Assume that the only parties who will be working in this business will be Jill Supreme (owner), the new bookkeeper and the office manager Include in your discussion the following: Font ardR Who should receive the cash receipts and make the deposit at the bank when the owner is out of the office? Include the rationale for your answer. Who should prepare the monthly bank reconciliation? Include the rationale for your answer Who should sign the checks? Include the rationale for your answer Who should do the bookkeeping? Include the rationale for your answer. (Prepare Part 3 on the Group Project Excel Spreadsheet Problem 1 parts 2&3 tab) Record all required journal entries for May 31, 2010 related to the bank reconciliation including a journal entry for the embezzlement. Assume the embezzlement was never recovered. (Record the journal entries on the Group Project Excel Spreadsheet Problem 1 1 & 4 tab) 4. Submit one set of answers per group for all four problems. Make sure to include each group members name at the top of each spreadsheet. Problem 2 (40 points) Read the following instructions and enter and submit all information on the Group Project Excel spreadsheet Problem 2 parts 2-6 tab and Problem 2 part 7- 8 tab. 1. 2. Open the following selected accounts recording the opening balances as of January 1 of the current year. In the (Group Project Excel Spreadsheet Problem 2 Parts 2-6 tab). 114.1Allowance for doubtful accounts12.200 Credit 313 Retained Earnings Bad debts expense 3. Record the following transactions in general journal form in the Group Project Excel 4. Post these transactions to the three selected accounts above and to Accounts receivable in the 5. Enter the ending balances in the three accounts above and enter the ending balance in the Spreadsheet Problem 2 Parts 2 -6 tab. Group Project Excel Spreadsheet Problem 2 parts 2-6 tab. Accounts Receivable account. Enter those balances in the Group Project Excel Spreadsheet Problem 2 parts 2-6 tab. Apr 1 09 Accepted a $20,000, one-year, 8% note dated April 1 from Bruce Hanson for the sale of inventory Cost of Goods Sold was $16,500 Wrote off the $2,375 balance owed by Miller Corp, which has no assets June 27 Oct. 5 Received 25% of the $12,000 balance owed by F M. Knox Co., a bankrupt. and wrote off the remainder as uncollectible. Dec. 31 Based on an analysis of the $257,724 of accounts receivable, it was estimated that $14,500 will be uncollectible. Record the adjusting entry using the Aging method Dec. 31 Record the adjusting entry for interest accrued on the Bruce Hanson note -116 Arial I U abe X XParagraph Styles Editing aste Font lipboard Dec. 31 Record the entries to close the appropriate accounts into Retained Eamings April 1, 10 ected the maturity value on the Hanson note. Determine the net accounts receivable (the amount Summer expects to collect as of December 31 and enter in the Group Project Spreadsheet Problem 2 Parts 2 -6 tab). 6. 7. Compute the accounts receivable turnover and the day's sales in receivables for the year Assume that there were $1,800,000 sales account. (You will need to refer to the Group Project Excel Spreadsheet Problem 2 part 7-8 tab). 8. How is Summer Company doing with collection of their accounts receivable compared to the industry? Assume the industry average for the accounts receivable turnover is 11 and the industry average for the day's sales in receivables is 37 days? (Enter in the Group Project Excel Spreadsheet Problem 2 part 7- 8 tab). Submit one set of answers per group for all four problems. Make sure to include each group members name at the top of each spreadsheet Problem 3 (30 points) Part 1 New tire re-treading equipment, acquired at a cost of $120,000 on 1/2/06, has an estimated useful life of 5 years and an estimated residual value of $10,000. The manager requested information regarding the alternative methods on the amount of depreciation expense each year. Instructions: Determine the amount of depreciation expense, accumulated depreciation, and book value for the years ended December 31, 2006, 2007,2008, 2009, 2010 by the straightline method the double declining balance method units of production Assume that it is estimated that the equipment will be used for 10,000 operating hours. (2,500 (06), 3,000 (07), 2,750 (08), 1,500 (09), 250 (2010). (Present and submit all of your work in the Problem 3 Part 1 Tab) Part 2 Assume that the manager decided to use the double declining balance method for the tire re- treading equipment above. Record the following journal entries: On 4/15/2006, the company paid $1,000 for an ordinary repair. On 1/1/07, the company paid $10,000 for a major engine overhaul. 1. 2. Font board 3. On 7/01/2009, the company sold the equipment for $20,000 (Present and submit all of your work in the Problem 3 Part 2 Tab) Submit one set of answers per group for all four problems. Make sure to include each group members name at the top of each spreadsheet. Problem 4 (30 points) Evaluate the financial performance of Coca-Cola; (KO) and Pepsi (PEP) for the year ended December 31, 2018. Follow the instructions below to access each company's information and perform a financial analysis based on the financial measures we have learned in this course. 1. Select Http:/www.yahoo.com/ and then select Finance. In the Search section at the top of the screen select KO for Coca-Cola and PEP for Pepsi 2. Select 'Financials' and select Income Statement when accessing the Income Statement 3. Select 'Financials and select Balance Sheet when accessing the Balance Sheet 4. Do the following for KO and PEP for the year ended 12/31/18 only Perform a vertical analysis of the Income Statement for KO and PEP for the year ended 12/31/18. . Include in your vertical analysis all of following as a % of total revenue: Cost of Revenue as a % of Total Revenue Gross Profit as a % of Total Revenue Selling, gen and administrative expenses as a % of Total Revenue Operating income as a % of Total Revenue Net Income as a % of Total Revenue o Current Ratio Accounts Receivable turnover. Assume the total revenue on the income statement represents all sales on account for the year Average collection period Merchandise Inventory turnover. Assume the Cost of Revenue on the Income . . Statement is the same as the Cost of Goods Sold Debt to Asset Ratio . Return on Assets Ratio .Asset Turnover In preparing the vertical analysis and other financial analysis above; define each measure and identify the strengths and weaknesses of KO and PEP as related to each other. Below is an example of you should set it up. should set it up. Working Capital Current Assets - Current Liabilities KO PEP $ 30,634,000 $21,893,000 $29,223,000 $ 22,138,000 $1,411,000(245,000) Net Working Capital Strength or Weakness Working Capital measures the ability of a company to meet its short-term obligations with current assets. Coke is performing a little better since they have a positive net working capital contrasted with Pepsi's negative working capital. Requirements 1. The vertical analysis prepared in 4 A above. 2. All of your computations for the financial analysis. (4 B through 4 H) 3. Identification of strengths and weaknesses. (Include a definition of each financial measure, a description of which company is doing better in each financial measure including the vertical analysis and explain why) Problem 1 (50 points) Supreme Company's bookkeeper prepared the bank reconciliation for May 31, 2010. The bookkeeper had the following responsibilities: All bookkeeping, the handling of cash receipts, the preparation of the monthly bank reconciliation and the deposit at the bank. Assume that the bookkeeper prepared of the checks, which were signed by the owner. The owner, on a daily basis verified and signed all checks that were written, counted all cash and verified the debit to cash in the cash receipts journal and the credit to cash in the cash payments journal. Assume that the office manager performed all other duties. May 31 Bank Statement Balance of previous bank statement on 4/30 Six deposits and other credits totaling Eleven Current balance as of this statement 12,760 7,596 4,977 checks and other debts totaling $15, 379 Date Amount Transition Type 51 $ 915 Deposit See Duplicate Deposit Slips Page 2 5/2 $1,000 S 737 Deposit Deposit Deposit 5/5 5/14 $850 5/21 5/28 $ 815 Deposit 5/28 S (581) 5131 $(11) Service Charge $729 (581) Service NSF Check 531 $2.550 Bank Collection (Colcion on note, pindipal $2,500) Date Check # Amount S 125 $ 112 $ 500 394$215 $100 $ 750 See Carbon Copy of Checks Issued Pages 3-5 392 5/2 393 5/4 395 398 400 5/29 402 5/13 399 $1,000 $ 543 5/27 6 5/28 401 $450 $175 $ 415 5/31 403 Font Clipboard Duplicate Deposit Slips Deposit Slip Cash Date Currency Coins 00 00 Total 915 00 Currency Coins 750 00 Total 1000 00 Currency Coins 156 00 List of Checks Deposit Slip Cash Date List of Checks Jones 250 00 Deposit Slip Cash Date 514/10 List of Checks Slade Total 737 00 Deposit Slip Cash Date 5/13/10 Currency Coins 500 00 350 00 Total 850 00 List of Checks De posit Slip Cash Date Coins 600 00 ist of Checks 520/10 Pyle 129 00 Total Deposit Slip Cash Date Curre List of Checks Total 815 Currency Coins eposit Slip Cash 00 Date 531/10 List of Checks 915 00 Total 915 00 Font Clipboard Copies of Written Checks Supreme Company Date: 4/17/10 391 125.00 Pay to the Order of Jones&Company NBT Bank One Hundred Twenty-Five and no cents Memo: Supplies Jill Supreme Supreme Company Date: 4/15/10 392 Pay to the Order of Jordon 112.00 T Bank One Hundred twelve and no cents NB Memo: Invoice 2324 Supreme Company Date: 4/21/10 393 Pay to the Order of Jones & Company $ 500.00 NBT Bank Five Hundred and no cents Memo: Invoice 51 Supreme Company Date: 4/24/10 394 Pay to the Order of King and Company $ 215.00 NBT Bank Two Hundred fifteen and no cents Memo: Invoice 700 Supreme Company Date: 4/2810 395 Pay to the Order of Jones & Company $ 100.00 NBT Bank One Hundred and no cents Memo: Invoice 2360 Jill Supreme Font Clipboard 396 Date: 4/30/10 Supreme Company $514.00 Pay to the Order of Al Kazam Leisure Man Five Hundred fourteen and no cents NBT Bank Jill Supreme Memo: Invoice 010 397 Supreme Company Date: 4/30/10 Pay to the Order of Jones International $ 771.00 NBT Bank Seven Hundred seventy one and no cents Memo: Invoice 010 ill Supreme Supreme Company 398 Date: 5/01/10 Pay to the Order of Carr Office Supplies $ 750.00 NBT Bank Seven Hundred fifty and no cents Memo: Invoice 870 Jill Supreme Supreme Company Date: 5/12/10 399 Pay to the Order of Jill Supreme $ 1,000.00 NBT Bank One Thousand and no cents Memo: Withdrawal Supreme Company Date: 5/20 10 400 Pay to the Order of Hooyah $ 543.00 NBT Bank Five Hundred forty three and no cents Memo: Invoice 571 Jill Supreme Supreme Company Date: 5/22/10 Pay to the Order of King & Company 401 $ 450.00 NBT Bank Four Hundred fifty and no cents Memo: Invoice 556 Jill Supreme Paste Font 402 Date: 5/24/10 Supreme Company 175.00 Pay to the Order of Utility Company One Hundred seventy-five and no cents NBT Bank Memo: May Electric Billill Supreme 403 Date: 5/27/10 Supreme Company $415.00 Pay to the Order of Ollyoop Four Hundred fifteen and no cents NBT Bank ll Supreme Memo: Invoice 5002 404 Supreme Company Date: 5/28/10 Pay to the Order of Gardiner Company $ 300.00 NBT Bank Three Hundred and no cents Memo: Invoice 444 Supreme Supreme Company Date: 5/30/10 405 Pay to the Order of Father &Sons $160.00 Bank One Hundred sity and n onts One Hundred sixty and no cents Memo Supreme Company Date: 5/31/10 406 Pay to the Order of Thomson Learning $514.00 NBT Bank Five Hundred fourteen and no cents Memo: Books Jill Supreme Supreme Company Date: 5/21/10 407 Pay to the Order of Ollyoop NBT Bank $ 800.00 Eight Hundred and no cents Memo: Invoice 5020 Jill Supreme SUPREME COMPANY'S BORKS Font ipboard SUPREME COMPANY'S BOOKS Cash Receipts Recorded in Cash Receipts Journal Date Cash Debit JS 737 5/4 5/9 5/13 $ 850 $ 729 S 81 $ 915 JS JS JS JS 5/27 5/31 Total $ 6,331 Cash Payments Recorded In Cash Payments Journal Check No. Cash Credit $ 750 $ 1,000 $ 345 S 450 $ 175 S 415 S 300 399 401 402 403 404 405 406 407 160 800 Total $4.909 See duplicate deposit slips on page 2. See duplicate carbon copies of checks on pages 3-5. . Assume that owner-Jill S receipts journal and the bookkeeper deposited in bank on the same day ipts any cash Assume that all deposits cleared the bank the day after they were recorded in the cash receipts shr nho weare journal and deposited. (i.e. 5/4 deposit cleared on 5/5-see page 1). Assume that receipt that did not clear the bank by the next day was never deposited in the bank. ( Cash General Ledger Date 4/30 Balance 5/31 Cash Receipts Explanation Debit Credit Balance 11,338 331 Check No. 400 was issued for $543 to Hooyah in payment of an accounts payable. The NSF check returned with the bank statement was received from customer, Pat Slade in payment of his Accounts Receivable. The NSF check has not been recorded in the general ledger db i-.-J 1 B) 1 U.abe X2 X2 A Aa A A Paragraph Styles Editing Paste Font Clipboard The following is the bank reconciation prepared by the bookkeeper for April 30, 20 SUPREME COMPANY BANK RECONCILIATION April 30, 2010 Cash balance a Add Deposits in Transit 4/30 $13,675 Outstanding Checks: 391 $ 125 392 $112 393 $ 500 394 $215 395 $ 100 396 $ 514 397 $ 771 $2 337 11,338 Adjusted Balance balance according to the ledger Add: Addtions to bank sccount not recorded on books proceeds from colilection of note Principal Interest Error in recording check 389 $180 $ 11,930 Deductions by bank not recorded on books 581 Bank Service Charge 592 $ 11,338 Adjusted Balance I U abe X X' A Paragraph Styles Editing Aa A A Font oard SUPREME COMPANY BANK RECONCILIATION May 31, 2010 S 15.379 Cash balance according to bank statement Add: Deposits in Transit 5/31 S915 915 $ 16,294 Less Outstanding Checks 404 $ 300 405 $ 160 406 $ 514 407 $800 $1,774 $ 14,520 Adjusted Balance 2,760 the Add: Additions to bank account not recorded on books proceeds from collection of note Principal $ 2,500 Interest | $ 50 | $ 2,550 Deductions by bank not recorded on books Check Returned NSF $581 Bank Service Charge $11 Error in recording check 400 $ 198 $ 790 $ 14,520 Adjusted Balance Required: 1. Review the Bank Reconciliation prepared by your employee on May 31 above and prepare a corrected bank reconciliation. (Prepare on the Group Project Excel Spreadsheet Problem 1 parts 1 & 4 tab) Explain why you think your corrected bank reconciliation does not balance. How did the employee conceal the embezzlement? (Prepare on the Group Project Excel Spreadsheet Problem 1 parts 2& 3 tab) 2. 3. Recommend any improvements to internal controls to prevent this embezzlement from occurring again. Assume that the only parties who will be working in this business will be Jill Supreme (owner), the new bookkeeper and the office manager Include in your discussion the following: Font ardR Who should receive the cash receipts and make the deposit at the bank when the owner is out of the office? Include the rationale for your answer. Who should prepare the monthly bank reconciliation? Include the rationale for your answer Who should sign the checks? Include the rationale for your answer Who should do the bookkeeping? Include the rationale for your answer. (Prepare Part 3 on the Group Project Excel Spreadsheet Problem 1 parts 2&3 tab) Record all required journal entries for May 31, 2010 related to the bank reconciliation including a journal entry for the embezzlement. Assume the embezzlement was never recovered. (Record the journal entries on the Group Project Excel Spreadsheet Problem 1 1 & 4 tab) 4. Submit one set of answers per group for all four problems. Make sure to include each group members name at the top of each spreadsheet. Problem 2 (40 points) Read the following instructions and enter and submit all information on the Group Project Excel spreadsheet Problem 2 parts 2-6 tab and Problem 2 part 7- 8 tab. 1. 2. Open the following selected accounts recording the opening balances as of January 1 of the current year. In the (Group Project Excel Spreadsheet Problem 2 Parts 2-6 tab). 114.1Allowance for doubtful accounts12.200 Credit 313 Retained Earnings Bad debts expense 3. Record the following transactions in general journal form in the Group Project Excel 4. Post these transactions to the three selected accounts above and to Accounts receivable in the 5. Enter the ending balances in the three accounts above and enter the ending balance in the Spreadsheet Problem 2 Parts 2 -6 tab. Group Project Excel Spreadsheet Problem 2 parts 2-6 tab. Accounts Receivable account. Enter those balances in the Group Project Excel Spreadsheet Problem 2 parts 2-6 tab. Apr 1 09 Accepted a $20,000, one-year, 8% note dated April 1 from Bruce Hanson for the sale of inventory Cost of Goods Sold was $16,500 Wrote off the $2,375 balance owed by Miller Corp, which has no assets June 27 Oct. 5 Received 25% of the $12,000 balance owed by F M. Knox Co., a bankrupt. and wrote off the remainder as uncollectible. Dec. 31 Based on an analysis of the $257,724 of accounts receivable, it was estimated that $14,500 will be uncollectible. Record the adjusting entry using the Aging method Dec. 31 Record the adjusting entry for interest accrued on the Bruce Hanson note -116 Arial I U abe X XParagraph Styles Editing aste Font lipboard Dec. 31 Record the entries to close the appropriate accounts into Retained Eamings April 1, 10 ected the maturity value on the Hanson note. Determine the net accounts receivable (the amount Summer expects to collect as of December 31 and enter in the Group Project Spreadsheet Problem 2 Parts 2 -6 tab). 6. 7. Compute the accounts receivable turnover and the day's sales in receivables for the year Assume that there were $1,800,000 sales account. (You will need to refer to the Group Project Excel Spreadsheet Problem 2 part 7-8 tab). 8. How is Summer Company doing with collection of their accounts receivable compared to the industry? Assume the industry average for the accounts receivable turnover is 11 and the industry average for the day's sales in receivables is 37 days? (Enter in the Group Project Excel Spreadsheet Problem 2 part 7- 8 tab). Submit one set of answers per group for all four problems. Make sure to include each group members name at the top of each spreadsheet Problem 3 (30 points) Part 1 New tire re-treading equipment, acquired at a cost of $120,000 on 1/2/06, has an estimated useful life of 5 years and an estimated residual value of $10,000. The manager requested information regarding the alternative methods on the amount of depreciation expense each year. Instructions: Determine the amount of depreciation expense, accumulated depreciation, and book value for the years ended December 31, 2006, 2007,2008, 2009, 2010 by the straightline method the double declining balance method units of production Assume that it is estimated that the equipment will be used for 10,000 operating hours. (2,500 (06), 3,000 (07), 2,750 (08), 1,500 (09), 250 (2010). (Present and submit all of your work in the Problem 3 Part 1 Tab) Part 2 Assume that the manager decided to use the double declining balance method for the tire re- treading equipment above. Record the following journal entries: On 4/15/2006, the company paid $1,000 for an ordinary repair. On 1/1/07, the company paid $10,000 for a major engine overhaul. 1. 2. Font board 3. On 7/01/2009, the company sold the equipment for $20,000 (Present and submit all of your work in the Problem 3 Part 2 Tab) Submit one set of answers per group for all four problems. Make sure to include each group members name at the top of each spreadsheet. Problem 4 (30 points) Evaluate the financial performance of Coca-Cola; (KO) and Pepsi (PEP) for the year ended December 31, 2018. Follow the instructions below to access each company's information and perform a financial analysis based on the financial measures we have learned in this course. 1. Select Http:/www.yahoo.com/ and then select Finance. In the Search section at the top of the screen select KO for Coca-Cola and PEP for Pepsi 2. Select 'Financials' and select Income Statement when accessing the Income Statement 3. Select 'Financials and select Balance Sheet when accessing the Balance Sheet 4. Do the following for KO and PEP for the year ended 12/31/18 only Perform a vertical analysis of the Income Statement for KO and PEP for the year ended 12/31/18. . Include in your vertical analysis all of following as a % of total revenue: Cost of Revenue as a % of Total Revenue Gross Profit as a % of Total Revenue Selling, gen and administrative expenses as a % of Total Revenue Operating income as a % of Total Revenue Net Income as a % of Total Revenue o Current Ratio Accounts Receivable turnover. Assume the total revenue on the income statement represents all sales on account for the year Average collection period Merchandise Inventory turnover. Assume the Cost of Revenue on the Income . . Statement is the same as the Cost of Goods Sold Debt to Asset Ratio . Return on Assets Ratio .Asset Turnover In preparing the vertical analysis and other financial analysis above; define each measure and identify the strengths and weaknesses of KO and PEP as related to each other. Below is an example of you should set it up. should set it up. Working Capital Current Assets - Current Liabilities KO PEP $ 30,634,000 $21,893,000 $29,223,000 $ 22,138,000 $1,411,000(245,000) Net Working Capital Strength or Weakness Working Capital measures the ability of a company to meet its short-term obligations with current assets. Coke is performing a little better since they have a positive net working capital contrasted with Pepsi's negative working capital. Requirements 1. The vertical analysis prepared in 4 A above. 2. All of your computations for the financial analysis. (4 B through 4 H) 3. Identification of strengths and weaknesses. (Include a definition of each financial measure, a description of which company is doing better in each financial measure including the vertical analysis and explain why)