ABC Financial Data Excel spreadsheet, ABC Supplemental Data, and the values from the Week 2 Individual Assignment

Prepare a statement of Retained Earnings and Comprehensive Income using the values.

• Apply error corrections to the retained earnings statement.
• Calculate foreign currency translation.
• Apply hedging or derivative transaction into statement.

Prepare a Statement of Owner's Equity, referring to the balance sheet results as well as the statements prepared for the Week 2 Individual Assignment.

Week #3-
With the general data provided the following Financial Statements for ABC Company:
-Statement of Retained Earnings
-Statement of Owners Equity
-Apply error corrections to appropriate statement
-Calculate foreign currency translation and apply to appropriate statement
-Apply Hedging/Derivative transaction to appropriate statement
ABC Company			ABC Company
Statement of Retained Earnings			Statement of Owners Equity
For the Year Ended December 31, 2013			For the Year Ended December 31, 2013
January 1, as Reported	20,038.00
Correction of depreciation error			Capital Stock:
Cumulative increase in income			Preferred Stock	- 0
from inventory method change			Common Stock
January 1, as adjusted
			Additional Paid in Capital
Net Income
			Retained Earnings
Dividends
Balance, December 31			Accumulated Other
			Comprehensive Income
			Treasury Stock
ABC Company			Total Shareholder's Equity
Statement of Comprehensive Income
For the Year Ended December 31, 2013
Net Earnings
Other Comprehensive (Loss) Income:
Foreign Currency Translation Adjustments
Cash Flow Hedges, net of tax
Other Comprehensive Income
Total Other Comprehensive (Loss) Income
COMPREHENSIVE INCOME
Foreign Currency Translation-
Date	Exchange Rate	CA $ Cost of Land	Conversion to US $	Comprehensive Income on Land
12/31/10
12/31/11
12/31/12
12/31/13
ABC Company acquired a Canadian Subsidiary whose only asset was land.
ABC Company purchased the subsidiary on 12/31/10 for CA $5,250 and retaines 100% interest in the subsidiary.
Go to www.x-rates.com and use the historic lookup feature to determine the exact exchange rates on 12/31/10, 12/31/11, 12/31/12 and 12/31/13.
		ABC Company
		Statement of Owners Equity
		For the Year Ended December 31, 2013
	Common Stock					Treasury Stock
	Shares	Amount	Paid-In Capital	Retained Earnings	Other Comp Income	Shares	Amount	Stockholders Equity
Balance as of January 1, 2012	1733	87.00	6,966.00	17,246.00	293.00	-196	(6,694.00)	17,898.00
Net Earnings
Shares Issued Under Employee Stock Plans
Tax Effect of Stock-Based Compensation
Foreign Currency Translation Adjustments
Cash Flow Hedges, net of tax
Stock Options, Awards and Amortization of
Restricted Stock
Repurchases of Common Stock
Cash Dividends
Other
Balance as of January 1, 2013	1733	87.00	6,966.00	17,246.00	293.00	-196	(6,694.00)	17,898.00
Net Earnings
Shares Issued Under Employee Stock Plans
Tax Effect of Stock-Based Compensation
Correction of depreciation error
Cumulative increase in income from inventory
Foreign Currency Translation Adjustments
Cash Flow Hedges, net of tax
Stock Options, Awards and Amortization of
Restricted Stock
Repurchases of Common Stock
Cash Dividends
Other
Balance as of December 31, 2013	1733	87.00	6,966.00	17,246.00	293.00	-196	(6,694.00)	1

week_2s_hw_janm.xls

Data Sheet

	2013	2012
Cash and Cash Equivalents	4,960.00	2,494.00
Receivables, net	1,398.00	1,413.00
Inventory		11,512.00
Other Current Assets	895.00	900.00
Property and Equipment, at cost	36,033.00	38,491.00
Accumulated Depreciation and Amortization	(15,684.00)	(17,473.00)
Goodwill	1,289.00	1,046.00
Deferred Tax Asset	88.00	473.00
Accounts Payable	5,797.00	5,192.00
Accrued Salaries and Related Expenses	1,428.00	1,200.00
Sales Taxes Payable	396.00	472.00
Deferred Revenue	1,337.00	1,262.00
Income Taxes Payable	12.00	(107.00)
Current Installments of Long-Term Debt	33.00	(783.00)
Other Accrued Expenses	1,746.00	1,794.00
Long-Term Debt, excluding current installments	14,691.00	9,475.00
Other Long-Term Liabilities	2,042.00	2,029.00
Deferred Tax Liability		545.00
Paid-In Capital	8,402.00	7,948.00
Retained Earnings	23,180.00	20,038.00
Accumulated Other Comprehensive Income	46.00	397.00
Treasury Stock	(19,194.00)	(10,694.00)
Common stock	88.00	88.00
Net Sales	78,812.00	74,754.00
Cost of Sales		48,912.00
Selling, General and Administrative	16,597.00	16,508.00
Depreciation and Amortization	1,595.00	1,568.00
Interest and Investment Income	(12.00)	(87.00)
Interest Expense	711.00	632.00
Provision for Income Taxes	(3,082.00)	(2,686.00)
Foreign Currency Translation Adjustments		100.00
Cash Flow Hedges, net of tax	(12.00)	5.00
Other Comprehensive Income	(10.00)	(1.00)
Dividends	(2,243.00)	(1,743.00)
Tax rate	40%	40%
Shares Issued Under Employee Stock Plans	103.00	678.00
Tax Effect of Stock-Based Compensation	123.00	82.00
Restricted Stock	228.00	222.00
Repurchases of Common Stock	(8,500.00)	(4,000.00)
Additional Info:
Cash Sales	4,523.00	4,356.00
Collections on Receivables	6,739.00	6,038.00
Purchases	(1,332.00)	(1,276.00)
Wages	(987.00)	(905.00)
Payments to Suppliers	(1,028.00)	(1,121.00)
Tax Payments	(275.00)	(204.00)
Interest payments	(12.00)	(10.00)
Capital Expenditures	(1,389.00)	(1,312.00)
Payments for Businesses Acquired	(206.00)	(170.00)
Proceeds from Sales of Property and Equipment	88.00	50.00
Proceeds from Long-Term Borrowings	5,222.00	- 0
Repayments of Long-Term Debt	(1,289.00)	(32.00)
Repurchases of Common Stock	(8,546.00)	(3,984.00)
Proceeds from Sales of Common Stock	241.00	784.00
Cash Dividends Paid to Stockholders	(2,243.00)	(1,743.00)
Other Financing Activities	(37.00)	(59.00)

Week 2

Week #2-
With the general data provided the following Financial Statements for ABC Company:
-Balance Sheet
-Income Statement
-Calculate Cost of Goods Sold Using Average Cost Method
-Calculate Depreciation Expense using the straight-line method
-Calculate Deferred tax asset/liability
	ABC Company
	Consolidated Balance Sheet
	For the Year Ended December 31, 2013
		2013	2012
	ASSETS:
	Current Assets:
	Cash and Cash Equivalents	4,960.00	2,494.00
	Receivables, net	1,398.00	1,413.00	(15.00)
	Inventory	12,347.00	11,512.00	835.00
	Inventory Correction		- 0
	Other Current Assets	895.00	900.00	(5.00)
	Total Current Assets	19,600.00	16,319.00
	Property and Equipment, at cost	36,033.00	38,491.00
	Less: Accumulated Depreciation and Amortization	(17,189.00)	(17,473.00)	284.00
	Accumulated depreciation correction		- 0
	Net Property and Equipment	18,844.00	21,018.00
	Goodwill	1,289.00	1,046.00
	Deferred Tax Asset	88.00	473.00
	Total Assets	39,821.00	38,856.00
	LIABILITIES AND STOCKHOLDERS’ EQUITY:
	Current Liabilities:
	Accounts Payable	5,797.00	5,192.00	605.00
	Accrued Salaries and Related Expenses	1,428.00	1,200.00	228.00
	Sales Taxes Payable	396.00	472.00
	Deferred Revenue	1,337.00	1,262.00	75.00
	Income Taxes Payable	12.00	(107.00)	119.00
	Current Installments of Long-Term Debt	33.00	(783.00)
	Other Accrued Expenses	1,746.00	1,794.00	(48.00)
	Total Current Liabilities:	10,749.00	9,030.00
	Long-Term Debt, excluding current installments	14,691.00	9,475.00
	Other Long-Term Liabilities	2,042.00	2,029.00	13.00
	Deferred Tax Liability	457.00	545.00	(88.00)
	Total Liabilities:	27,939.00	21,079.00
	STOCKHOLDERS’ EQUITY:
	Common Stock	88.00	88.00
	Paid-In Capital	8,402.00	7,948.00
	Retained Earnings	22,540.00	20,038.00
	Accumulated Other Comprehensive Income	46.00	397.00
	Treasury Stock	(19,194.00)	(10,694.00)
	Total Stockholders’ Equity	11,882.00	17,777.00
	Total Liabilities and Stockholders’ Equity	39,821.00	38,856.00
	ABC Company
	Income Statement
	For the Year Ended December 31, 2013
		2013	2012
	NET SALES	78,812.00	74,754.00
	Cost of Goods Sold	(51,417.00)	48,912.00
	GROSS PROFIT	130,229.00	25,842.00
	Operating Expenses:
	Selling, General and Administrative	16,597.00	16,508.00
	Depreciation and Amortization	1,627.00	1,568.00
	Total Operating Expenses	18,224.00	18,076.00
	OPERATING INCOME	112,005.00	7,766.00
	Interest and Other (Income) Expense:
	Interest and Investment Income	(12.00)	(87.00)
	Interest Expense	711.00	632.00
	Interest and Other, net	699.00	545.00
	EARNINGS BEFORE PROVISION FOR INCOME TAXES	111,306.00	7,221.00
	Income Taxes	(3,082.00)	(2,686.00)
	NET INCOME	108,224.00	4,535.00
	(A) Depreciation Expense Using Straight-Line Method-
	ABC Company has the following assets acquired on January 1, 2013 requiring depreciation calculation:
	Asset	Cost	Life	Annual Dep. Expense		Depreciation Expense	31,950
	Plant with 30 year life at a cost of $660,000	660,000	30	22,000		Accumulated Depreciation on Plant		22,000
	Land at a cost of $2,250,000					Accumulated Depreciation on Machinery & equipment		3,950
	Machinery and Equipment with 20 year life at a cost	79,000	20	3,950		Accumulated Depreciation on Truck		6,000
	of 79,000.
	Truck with a life of 7 years at a cost of $42,000	42,000	7	6,000
		781,000		31,950
	(B) Inventory Calculation-
	A physical inventory on December 31, 2013, shows 810 units on hand.
	Calculate Cost of Goods Sold (COGS) using average cost.
	Purchases	Units	Cost	Total		a) First in First Out
	Beginning Inventory	800	14.39	11,512			Units	Amount $
	January 5, 2014	950	13.46	12,787	Purchase	Cost of Goods Sold	3,765	50877.75
	March 25, 2014	950	12.81	12,170	Purchase	Ending Inventory	810	11,601.10
	June 8, 2014	745	13.65	10,169	Purchase
	September 15, 2014	625	13.25	8,281	Purchase	b) Last in First out
	December 15, 2014	505	14.97	7,560	Purchase
		4,575		62,479	Total Purchases	Cost of Goods Sold	3,765	50,832.25
						Ending Inventory	810	11,646.60
	COGS as of 12/31/2013
	Average Cost	810			11,062	c) Average cost method
	Entry to update CGS:					Cost of Goods Sold	3,765	51,417.02
						Ending Inventory	810	11,061.83
		11,062
		51,417
			50,967
			11,512
	(C ) Error Corrections-
	(1) An error was discovered during 2013 relating to the understatement of depreciation expense in 2011
	resulting in a Prior Period Adjustment of $1,505 before taxes.
	(2) ABC Company changed its method of valuing inventory during 2013. The cumulative increase in income
	from the change in inventory methods was $1,285 before taxes.
	Retained Earnings	903
	Deferred Tax Liability	602
	Accumulated Depreciation		1,505
	Inventory	1,285
	Deferred Tax Liability		514
	Retained earnings		771
	Footnotes:
	Note #1: Error Correction to Depreciation Expense
	During an expansive review of the Financial Statements of ABC Company, an error was discovered that underestimated the effect of depreciation expense by $1,505 on the Income Statement and accumulated depreciation on the Balance Sheet. The addition of the expense to the prior period increases the Depreciation and Amortization expense on account by $1,505 from the 2011 audited financial figure. As a result of the error, Management has applied the effect of the error retrospectively to all periods that have been affected to date. Current year earnings have not been impacted, but the application of Retained Earnings has been adjusted to date.
	Note #2: Property, Plant and Equipment
	The following table summarizes our property, plant and equipment:
	December 31,	Estimated Useful Lives in Years		2013		2012
						(restated)*
	Land		2,250,000.00		n/a
	Plants	30	660,000.00		n/a
	Machinery and Equipment	20	115,033.00		38491
	Vehicles	7	42,000.00		n/a
	Total Property, Plant and Equipment		3,067,033.00		38491
	Less accumulated depreciation		49139		$18,978.00
	Property, plant and equipment — net		$3,017,894.00		$21,018
	The depreciation expense was calculated using the straight line method of determination. An adjustment had to be made for a prior year understatement of the depreciation expense. The result was the accumulated depreciation decreased (income went up, increased) and the retained earnings increased by 1505.00.
	Note# 3: Changed the Value of Measuring Inventory During 2013
		At the fiscal year end for 2012, it was decided that the method of inventory valuation from the average cost method to a method which wasn’t either LIFO or FIFO. It couldn’t be determined what this method was, it did result in an increase to net income before taxes of 1285.00 in the 2013 year. Below is a comparison of the overall changes this caused:
	Remaining inventory using AVG Cost Method			11062
	Remaining inventory if First in First Out Was Used			11601.1
	Remaining inventory if Last in First Out Was Used			11579.3
	Remaining inventory after whatever this method was			12347
	Units Remaining			810
	Adjusted Estimated Cost Each			15.24
		The reason why it was determined that a change of this nature was required was because of a sudden increase in demand for ABC’s products available for sale. It would seem they have acquired a form of collectable value which is indeterminable from the normal cost methods.
	I made up these amounts based on total amount for PPE on B/S