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Generally accepted modified accrual accounting practices pertaining to inventories may not fulfill the objectives of financial reporting. Scenario 2: The following is an excerpt from a note to the financial statements of the city of Dallas (dates changed): The city prepares its annual appropriated general fund, debt service fund, and proprietary operating funds budgets on a basis (budget basis) which differs from generally accepted accounting principles (GAAP basis). The major differences between the budget and GAAP bases are that encumbrances are recorded as the equivalent of expenditures (budget) rather than a commitment of fund balance (GAAP) in the governmental funds. The city accounts for inventories on the purchases basis. One of the city's departments, which is accounted for in the general fund, budgeted $195,000 in supplies expenditures for fiscal 2015. It began the 2015 fiscal year with $30,000 of supplies on hand. It also had $12,000 of supplies on order. During the year it ordered an additional $180,000 of supplies, received (and paid for in cash) $185,000 of supplies, and consumed $178,000 of supplies. Instructions: Prepare all journal entries, consistent with GAAP, including budgetary and encumbrance entries that the department should make in 2015. Indicate the accounts and amounts related to supplies that the city would report on its year-end statement of revenues, expenditures, and changes in fund balance and balance sheet. By how much did the department over- or under-spend its supplies budget (on a budget basis)? Comment on the extent to which the city's statement provides a basis to: Assess the ''true'' economic costs associated with supplies Determine whether the city adhered to budgetary spending mandates Suppose that in the last quarter of the year, department officials realized that the department was about to overspend its supplies budget. They therefore ceased placing new orders for supplies. However, they imposed no restrictions on the use of supplies and thereby allowed the supplies inventory to decline to near zero. What impact would these cost-cutting measures have on supplies expenditures as reported in an actual-to budget comparison (on a budget basis)? What impact would the year-end measures have on reported supplies expenditures (per GAAP)? Would your response be different if the city accounted for supplies on the consumption basis?
The rules are specific. How are extraordinary items different from some other irregular items that you occasionally see on a corporate income statement?
Prepare the journal entry for Sorter Company to write off the Ordonez receivable. When writing the journal entry use Dr. for debit and Cr. for credit.
Nelson Company purchased equipment on July 1 for $27,500 and decided to depreciate the equipment on the straight-line method over its useful life of five years. Assuming the equipment's salvage value is $3,500, the amount of monthly depreciation e..
An investor purchased 500 shares of common stock, $25 par, for $21,750. Subsequently, 100 shares were sold for $47.50 per share. What is the amount of gain or loss on the sale?
Prepare a journal entry for the taxes of Winston County's General Fund on July 1, 2005, the date on which the property taxes for the fiscal ending June 30, 2006, were billed to taxpayers.
Franklin Company has the following four items in its ending inventory as of December 31, 2012. The company uses the lower-of-cost-or-net realizable value approach for inventory valuation following IFRS.
Sears issuses 4.5% five-year bonds dated january 1, 2010, with $230,000 par value. The bonds pay intrest on june and december 31 and are issued at a price of $235,160. The annual market rate is 4% on the issued date. Calculate the total bond intre..
present value what is the present value of a. 8000 in 10 years at 6 percent? b. 16000 in 5 years at 12 percent? c.
nbspcrane company makes four products in a single facility. data concerning these products appear belowproductnbspnbsp
Examine the work sheet and the general ledger accounts. Make a list of the errors you find. Prepare a corrected work sheet. Correct any errors you find in the general ledger accounts.
Prepare the journal entries necessary to bring the company's book balance of cash into conformity with the reconciledcash balance as of July 31, 2009.
Using a present value table, calculator, or a computer program present value function, calculate the present value for the following: (Use appropriate factor(s) from the tables provided.)
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