What is the correct total asset turnover ratio? E4-19 (Algo) Reporting a Correct Income Statement with Earnings per Share to Include the Effects ofAdjusting Entries and Evaluating Total Asset Turnover as an Auditor LO4-1, 4-2, 4-3Jay, Inc., a party rental business, completed its third year of operations on December 31. Because this is the end of the annualaccounting period, the company bookkeeper prepared the following tentative income statement:Income StatementRent revenue$ 106,000Expenses:Salaries and wages expense25,400Maintenance expense11, 200Rent expense7,600Utilities expense3,500Gas and oil expense3,500Miscellaneous expenses (items not listed elsewhere)1,900Total expenses53,100Income$ 52,900You are an independent CPA hired by the company to audit the company's accounting systems and review the financial statements. Inyour audit, you developed additional data as follows:a. Wages for the last three days of December amounting to $630 were not recorded or paid.b. Jay estimated telephone usage at $370 for December, but nothing has been recorded or paid.c. Depreciation on rental autos, amounting to $23,400 for the current year, was not recorded.d. Interest on a $19,000, one-year, 12 percent note payable dated October 1 of the current year was not recorded. The 12 percentinterest is payable on the maturity date of the note.e. Maintenance expense excludes $1,400, representing the cost of maintenance supplies used during the current year.f. The Unearned Rent Revenue account includes $4,700 of revenue to be earned in January of next year.g. The income tax expense is $5,000. Payment of income tax will be made next year.Required:1.adjusting entry for each item (a) through (g) should Jay record at December 31?2. Prepare a corrected income statement for the current year in good form, including earnings per share, assuming that 7,600 sharesof stock are outstanding all year.3. Compute the total asset turnover ratio based on the corrected information. Assume the beginning-of-the-year balance for Jay's totalassets was $59,020 and its ending balance for total assets was $66,180.X Answer is complete but not entirely correct.Complete this question by entering your answers in the tabs below.Required 1 Required 2Required 3Compute the total asset turnover ratio based on the corrected information. Assume the beginning-of-the-year balance forJay's total assets was $59,020 and its ending balance for total assets was $66,180. (Round your answer to 2 decimal places.)Total asset turnover ratio2.11 X< Required 2Required 3 >

Introduction:- Ratio analysis is used to identify financial performance of the company. Financial…

Answered: What is the correct total asset…

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter9: Metric-analysis Of Financial Statements

Section: Chapter Questions

Problem 9.23E: Unusual income statement items Assume that the amount of each of the following items is material to...

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Adjustment for depreciation The estimated amount of depredation on equipment for the current year is $133,000. a. How is the adjustment recorded? Indicate each account affected, whether the account is increased or decreased, and the amount of the increase or decrease. b. If the adjustment in (a) was omitted, which items would be erroneously stated on (1) the income statement for the year and (2) the balance sheet as of December 31?
Shannon Corporation began operations on January 1, 2019. Financial statements for the years ended December 31, 2019 and 2020, contained the following errors: In addition, on December 31, 2020, fully depreciated machinery was sold for 10,800 cash, but the sale was not recorded until 2021. There were no other errors during 2019 or 2020, and no corrections have been made for any of the errors. Refer to the information for Shannon Corporation above. Ignoring income taxes, what is the total effect of the errors on the amount of working capital (current assets minus current liabilities) at December 31, 2020? a. working capital overstated by 4,200 b. working capital understated by 5,800 c. working capital understated by 6,000 d. working capital understated by 9,800
Unusual income statement items Assume that the amount of each of the following items is material to the financial statements. Classify each item as either normally recurring (NR) or unusual (U) items. If unusual item, then specify if it is a discontinued operations item (DO). a. Interest revenue on notes receivable. b. Gain on sale of segment of the company's operations that manufactures bottling equipment. c.Loss on sale of investments in stocks and bonds. d. Uncollectible accounts expense. e. Uninsured flood loss. (Hood insurance is unavailable because of periodic Hooding in the area.)
Norse Manufacturing Inc. prepares an annual single, continuous statement of income and comprehensive income.The following situations occurred during the company’s 2018 fiscal year:1. Restructuring costs were incurred due to the closing of a factory.2. Investments were sold, and a loss was recognized.3. A positive foreign currency translation adjustment was recognized.4. Interest expense was incurred.5. A division was sold that qualifies as a separate component of the entity according to GAAP.6. Obsolete inventory was written off.7. The controller discovered an error in the calculation of 2017’s patent amortization expense.Required:1. For each situation, identify the appropriate reporting treatment from the list below (consider each event to bematerial):a. As a component of operating incomeb. As a nonoperating income item (other income or expense)c. As a discontinued operationd. As an other comprehensive income iteme. As an adjustment to retained earnings2. Identify the situations that…
Dayton Corporation began the current year with a retained earnings balance of $32,000. During the year, the company corrected an error made in the prior year, which was a failure to record a depreciation expense of $3,000 on equipment. Also, during the current year, the company earned net income of $12,000 and declared cash dividends of $7,000. Compute the year-end retained earnings balance. a.$37,000 b.$34,000 c.$44,000 d.$41,000
Soon after December 31, 2019, the auditor requested a depreciation schedule for trucks of Jarrett Trucking Company, showing the additions, retirements, depreciation, and other data affecting the income of the company in the 4 year period 2016 to 2019 inclusive. The following data were in the Trucks account as of January 1, 2016: 1. Next Level For eacl1 of the 4 years, calculate separately the increase or decrease in earnings arising from the company’s errors in determining or entering depreciation or in recording transactions affecting trucks. 2. Prove your work by one compound journal entry as of December 31, 2019; the adjustment of the Trucks account is to reflect the correct balances, assuming that the books have not been closed for 2019.
You are the auditor for Sigma Pty Ltd.As part of your preliminary work, you have obtained the following information: Current Year (unaudited) Previous Year(audited) Industry average i) Current ratio (Working capital ratio) 1.91 2.35 2.91 ii) Receivables turnover 57 days 51 days 73 days iii) Inventory turnover 72 days 65 days 96 days iv) Gross profit margin 20% 18% 20% v) Net profit margin 4% 4% 6% In addition you have found that: The financial controller resigned during the year and the company has yet to hire another financial controller. The accounts of the current year were prepared by the assistant accountant. For situation mentioned above: i). Which component of the Audit Risk Model (ARM) would be affected, and how? ii). Discuss how your audit plan would be affected. Note:Prepare your answers in a tabular format as follows: Component of ARM Effect on Audit Plan
As of Dec. 31, 2020, ABC Corporation reported total assets of P600,000 and totalliabilities of P250,000. During the audit, the following were determined:Advertising expense amounting to P45,000 was recorded on Jan. 1, 2020 but the contractis good for three years.The Supplies account balance was not yet established. It should be reported as P2,000.Unearned revenue of P70,000 is recorded in the books but this has decreased to P50,000as year-end.A write-off of P30,000 should be recorded. The allowance for bad debts is correctlystated even after this adjustment.Accounts payable amounting to P23,000 was settled but it was recorded as P32,000.What is the correct equity balance as of Dec. 31, 2020?
The ledger of AISExperts Inc. contained the following balances after adjustment, but before closing, on December 31, 2021, the end of the current year. This means the below account balances are normal balances: Accounts payable 80400 Accounts receivable 115580 Sales returns and allowances 20000 Accumulated depreciation – equipment 27540 Depreciation expense 800 Interest revenue 1100 Unearned sales revenue 2000 Cash 75470 Common stock (10,000 shares outstanding) 100000 Sales discounts 12000 Cost of goods sold 632150 Dividends declared 18100 Equipment 140450 Insurance expense 4500 Dividends payable 2000 Allowance for doubtful accounts 9500 General expenses 114250 Interest expense 4600 Merchandise inventory 154250 Prepaid insurance 12325 Retained earnings ? Marketable securities 10000 Dividend revenue 10000 Treasury stock 1000 Salaries payable 18560 Sales 1018250 Selling expenses 140210 a statement of retained earnings
[The following information applies to the questions displayed below.] One Product Corporation (OPC) incorporated at the beginning of last year. The balances on its post-closing trial balance prepared on December 31, at the end of its first year of operations, were: Cash $ 19,500 Accounts Receivable 8,250 Allowance for Doubtful Accounts 885 Inventory 12,060 Prepaid Rent 1,600 Equipment 25,000 Accumulated Depreciation 2,400 Accounts Payable 0 Sales Tax Payable 500 FICA Payable 600 Withheld Income Taxes Payable 500 Salaries and Wages Payable 1,600 Unemployment Tax Payable 300 Deferred Revenue 4,500 Interest Payable 495 Notes Payable (long-term) 22,000 Common Stock 13,300 Additional Paid-In Capital, Common 19,210 Retained Earnings 4,120 Treasury Stock 4,000 The following information is relevant to the first month of operations in the following year: OPC sells its inventory at $150 per unit, plus sales tax of 6 percent. OPC’s January 1…
JUBILEE is a quoted company reporting under IFRSs. During the year end 31 December 2012, the company changed its accounting policy with respect to property valuation. There are also a number of other issues that need to be finalised before the financial statements can be published.JUBILEE’s trial balance from the general ledger at 31 December 2012 showed the following balances:GH¢’mGH¢’mRevenue 2,648Loan note interest paid3Purchases1,669Distribution costs514Administrative expenses345Interim dividend paid6Inventories at 1 January 2012444Trade receivables545Trade payables434Cash and cash equivalents2850Gp ordinary shares100Capital surplus814Retained earnings at 1 January 20123494% loan note repayable 2018 (issued 2010)150Land and buildings: Cost (including GH¢60m land) 380 Accumulated depreciation at 1/1/201264Plant and equipment: Cost 258 Accumulated depreciation at 1/1/2012126Investment property at 1 January 2012548Rental income48Proceeds from sale of equipment7,4,7404,740Further…
The following data were ascertained for the month of September in the Statement of realization and liquidation of Enron Corp.: Assets to be realized for October were P18,000. Assets realized during the month were P338,000. Unrecorded assets during the month were P25,000. Assets not sold or collected at the end of August were P380,000. Liabilities assumed were P28,000. Liabilities not liquidated at the end of August were P350,000. Liabilities paid were P268,800. Supplementary charges were 86,350 and supplementary credits were P59,700. Cash balance at the beginning of the month was P10,500. What is the estate equity at the end of September? 116,150(35,150)(60,150)20,850

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