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Respond to the following ethical issue concerning the reclassification of receivables in your initial post: Moss Exports is having a bad year. Net income is only $60,000. Also, two important overseas customers are falling behind in their payments to Moss, and Moss's accounts receivable are ballooning.
The company desperately needs a loan. The Moss Exports board of directors is considering ways to put the best face on the company's financial statements. Moss's bank closely examines cash flow from operations. Daniel Peavey, Moss's controller, suggests reclassifying as long-term the receivables from the slow-paying clients. He explains to the board that removing the $80,000 rise in accounts receivable from current assets will increase net cash provided by operations. This approach may help Moss get the loan. 1. Using only the amounts given, compute net cash provided by operations, both without and with the reclassification of the receivables. Which reporting makes Moss look better? 2. Under what condition would the reclassification of the receivables be ethical? Unethical? Support your response.
Crystal Company's ledger on July 31, its fiscal year-end, includes the following selected accounts that have normal balances (Crystal uses the perpetual inventory system).
Joan purchases a government bond for $10,000 that pays 7 percent annual interest. Jim purchases $20,000 worth of corporate bonds that pay 10 percent annual interest. Joan's goal is to earn $700 per year on her investment, and Jim's goal is to earn..
Pursuant to a complete liquidation, Oriole Corporation distributes to its shareholders land with a basis of $450,000 and a fair market value of $550,000. The land is subject to a liability of $600,000. What is Orioles's recognized gain or loss on ..
Using the installment-sales method, make summary entries to record: (a) the installment sales and cash collections; (b) the cost of installment sales; (c) the unrealized gross profit; (d) the realized gross profit.
Ruben Company purchased $100,000 of Evans Company bonds at 100 plus $1,500 in accrued interest. The bond interest rate is 8% and interest is paid semi-annually.
Which of the following statements concerning the impairment of fixed assets is true under US GAAP?
Prepare the stockholders' equity section of the Barnes Communications, Inc., balance sheet at December 31.
What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and factory overhead cost?
Some Keynesian economists criticize the official unemployment statistics for understating the extent of joblessness in the United States. Which of the following statements represent shortcomings of the official unemployment rate reported by the Bu..
Explain why a firm like Grate Care might decide to use both residual income and return on investment as measures of performance.
Corans delivery company and Enrights express delivery changed delivery trucks on Jan 1, 2010. Coran's truck cost $22,000. It has accumulated depreciation of $15,000 and a fair market value of $4000. Enrights truck cost $10,000. It has accumulated ..
Analyze the accounting requirements for the business combination and discuss challenges in preparing the financial statements for the consolidation of subsidiaries on the date of acquisition.
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