Awree Natcacnotus Inc.: Unadjusted Trial Balance

Inventory Method: The inventory amount for the year ended 12/31/2016 is $14,760,000,000 which is an $759,000,000 increase from the previous year. CVS uses the lesser of the weighted average cost or market value when determining the value of inventory. Inventory is verified for accuracy by regularly doing physical counts in all locations. Between physical counts, CVS uses sales results from previous years to accrue the estimated physical loss. These estimates are determined for each individual store and warehouse separately to ensure the most accurate information possible is reported. CVS has decided to use a new method available after annual periods beginning after 12/15/2016 known as the lower of cost and net realizable value to replace using

1. The first step to evaluating the cash flows is to conduct the depreciation tax flow analysis. Depreciation is not a cash flow, but the depreciation expense lows the taxes payable for the company. As a result, the tax effect of deprecation needs to be calculated as a cash flow. There are two depreciable items on the company's balance sheet the building and the equipment. The equipment is known to have a seven year depreciable life, which will be assumed to be straight line. The building is also assumed to be subject to straight line depreciation, this time of forty years. The tax saving reflects the depreciation expense multiplied by the tax rate, which in this case is assumed to be 28%. The following table illustrates the tax effect in future dollars of the depreciation expense:

Rent is due by the 1st of each month. A finance charge of up to 10% ($62.50) of rent not paid will be automatically charged to the Roommates account after the tenth day of the month unless extension is approved by Adam & Summer-Lynn.

After reading Chapter 6 of the textbook and the materials I found that I was struggling to understand the material more than usual. Before reading this chapter I had a slight idea of how much effort went into keeping track of the costs and inventory. The most that I knew was that you had to keep track of it, I didn’t know that there are different ways to keep track of those costs. After reading more into the different ways to keep track of inventory I found that the one that stuck out most to me and was the one that I spent the most time trying to understand was the LIFO (Last In First Out).

There is no need to make a journal entry for the 2,500 spent on disposing of capital assets because it was correctly recorded as a Repairs and Maintenance expense.

4. What inventory method is used to value inventories? Does this method reflect current cost at year-end?

Petty cash fund is not to be used for personal items, IOU’s, office party favors, lunches, taxi fare, or cashing checks etc.

Lastly, please find attached a PDF with ALE receipts from 2/24-3/22 for the amount of…

(b) Compute Jones' accounts receivable turnover ratio for the year. The company does not believe it will have any bad debts. (Round answer to 2 decimal places.)

Lessee entered into a 5-year noncancelable lease for machinery having an estimated economic life of 15 years and a fair value to the lessor at the lease inception of $420,000. Lessor’s implicit rate is unknown, and Lessee’s incremental borrowing rate is 12%. Lessee uses the straight-line method to depreciate property and equipment. The lessee will pay rental payments of $5,300 per month, including $300 for property taxes and insurance, payable at the end of each month.

Natalie estimates that all of her baking equipment will have a useful life of 5 years or 60 months and no salvage value. (Assume Natalie decides to record a full month’s worth of depreciation, regardless of when the equipment was obtained by the business.)

The allowance for doubtful accounts is lower than last year even though the receivables and the revenue are higher. This does not follow any form of consistency in that case. GAAP only allows the establishment of the allowance for doubtful accounts that are supported by appropriate analyses and that the policy is well documented and applied consistently from period to period. Again, without additional information the consistency item is an issue here.

relative to sales dollar volume. The new facilities were depreciated using a 25-year life from the date of

Inventories: Managerial choices about whether to use the first-in, first-out (FIFO) or last-in, first-out (LIFO) method of inventory valuation and how to treat obsolescence, spoilage, shrinkage, and even outright fraud, affect estimates of inventory values.

5) Assuming that the ideal measure of short-term receivables in the balance sheet is the discounted value of the cash to be received in the future, failure to follow this practice usually does NOT make the balance sheet misleading because