ACC 400 Final Exam / 100% correct answers

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This Comprehensive Problem is to acquaint you with the content of the 2012 financial statements

11. Investors and creditors are particularly interested in this financial statement because it tells them what is happening to the company’s most important resource?

The process of transferring the cost of metal ores and other minerals removed from the earth to an

Star Corporation issued both common and preferred stock during 20X6. The stockholders' equity sections of the company's balance sheets at the end of 20X6 and 20X5 follow.

The company position is strong enough so its better that company should use debt financing instead of equity financing.

5. (TCOs 1, 2, 8, 9, and 10) One of your best individual clients is thinking about starting up a new business, and he is seeking your advice on which business form he should select. In particular, he’s trying to decide whether to operate the business as a partnership or a C corporation. Explain to him the significant tax and nontax issues that will arise from choosing each of these entities compared to the other, including how

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Assume that next year management wants the company to earn a minimum profit of $162,000. How many units be sold to meet this target profit figure? [3 points]

Under the percentage of sales method the company would calculate the percentage of sales that are expected to be uncollectable. This information is determined based off of prior year information and the credit policy and once calculated it is reported as an allowance for doubtful debts, which is an expense. If our percentage was determined to be 2% we would multiply that by the amount of total credit sales. If we have 500,000 in credit sales then 2% of that is 10,000 we journal this by matching expenses with revenues

Item 7.|  |MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS|  | |25|  |

financial statements” (Waxman, 2013, p. xiii). It is the purpose of this paper to discuss some of

Current and historical Financial Statements (Income Statement (I/S), Balance Sheet (B/S) and Statement of Cash Flows) from the three most current years for the firm

* We assumed the required working capital in table 2 and 3 is the amount required in 2010, for further years we computed the WCR based on the ratio’s of minimum cash balance, number of days sales outstanding, inventory turnover and days payable outstanding (deducting the depreciation as instructed)

To determine the proportion of allowable amount on a customer, the company checks the number of days the debt has been pending before payment. Equally, financial conditions of the customers, macroeconomic factors and the weighted-average risk trend trends are considered.