Assignment Instructions

Resource: ABC Financial Data Excel and ABC Supplemental Data Excel spreadsheets, and the Week 2 HW template for assignment.

Calculate the deferred tax asset or liability of an error for the scenario provided.

Calculate inventory calculation average cost, first-in-first-out (FIFO), and last-in-first-out (LIFO). Record the calculated average cost in the financial statement.

Calculate the straight-line depreciation.

Create an income statement using the results calculated above.

Create a balance sheet using the results calculated above.

Submit the Income Statement and Balance Sheet in a Microsoft Excel spreadsheet that includes the required calculations.

2013 Cash and Cash Equivalents Receivables, net Inventory Other Current Assets Property and Equipment, at cost Accumulated Depreciation and Amortization Goodwill Deferred Tax Asset Accounts Payable Accrued Salaries and Related Expenses Sales Taxes Payable Deferred Revenue Income Taxes Payable Current Installments of Long-Term Debt Other Accrued Expenses Long-Term Debt, excluding current installments Other Long-Term Liabilities Deferred Tax Liability Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income Treasury Stock Common stock Net Sales Cost of Sales Selling, General and Administrative Depreciation and Amortization Interest and Investment Income Interest Expense Provision for Income Taxes Foreign Currency Translation Adjustments Cash Flow Hedges, net of tax Other Comprehensive Income Dividends Tax rate Shares Issued Under Employee Stock Plans Tax Effect of Stock-Based Compensation Restricted Stock Repurchases of Common Stock 4,960.00 1,398.00 2012 (12.00) (10.00) (2,243.00) 40% 103.00 123.00 228.00 (8,500.00) 2,494.00 1,413.00 11,512.00 900.00 38,491.00 (17,473.00) 1,046.00 473.00 5,192.00 1,200.00 472.00 1,262.00 (107.00) (783.00) 1,794.00 9,475.00 2,029.00 545.00 7,948.00 20,038.00 397.00 (10,694.00) 88.00 74,754.00 48,912.00 16,508.00 1,568.00 (87.00) 632.00 (2,686.00) 100.00 5.00 (1.00) (1,743.00) 40% 678.00 82.00 222.00 (4,000.00) 4,523.00 6,739.00 (1,332.00) (987.00) (1,028.00) (275.00) (12.00) (1,389.00) (206.00) 88.00 5,222.00 (1,289.00) (8,546.00) 241.00 (2,243.00) (37.00) 4,356.00 6,038.00 (1,276.00) (905.00) (1,121.00) (204.00) (10.00) (1,312.00) (170.00) 50.00 (32.00) (3,984.00) 784.00 (1,743.00) (59.00) 895.00 36,033.00 (15,684.00) 1,289.00 88.00 5,797.00 1,428.00 396.00 1,337.00 12.00 33.00 1,746.00 14,691.00 2,042.00 8,402.00 23,180.00 46.00 (19,194.00) 88.00 78,812.00 16,597.00 1,595.00 (12.00) 711.00 (3,082.00) Additional Info: Cash Sales Collections on Receivables Purchases Wages Payments to Suppliers Tax Payments Interest payments Capital Expenditures Payments for Businesses Acquired Proceeds from Sales of Property and Equipment Proceeds from Long-Term Borrowings Repayments of Long-Term Debt Repurchases of Common Stock Proceeds from Sales of Common Stock Cash Dividends Paid to Stockholders Other Financing Activities (A) Depreciation Expense Using Straight-Line MethodABC Company has the following assets acquired on January 1, 2013 requiring depreciation calculation: Asset Cost 660 2,250 Land at a cost of $2,250,000 Machinery and Equipment with 20 year life at a cost of 79,000. Truck with a life of 7 years at a cost of $42,000 Life 79 42 3,031 Plant with 30 year life at a cost of $660,000 Annual Dep. Expense 20 30 7 - (B) Inventory CalculationA physical inventory on December 31, 2013, shows 810 units on hand. Calculate Cost of Goods Sold (COGS) using average cost. Purchases Beginning Inventory January 5, 2013 March 25, 2013 June 8, 2013 September 15, 2013 December 15, 2013 (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. Units 800 950 950 745 625 505 4,575 Cost 14.39 13.46 12.81 13.65 13.25 14.97 Total 11,512 12,787 12,170 10,169 8,281 7,560 50,967 Purchase Purchase Purchase Purchase Purchase Total Purchases Assignment Instruction Resource: ABC Financial Data Excel and ABC Supplemental Data Excel spreadsheets, and the Week 2 HW template for assignment. Calculate the deferred tax asset or liability of an error for the scenario provided. Calculate inventory calculation average cost, first-in-first-out (FIFO), and last-in-first-out (LIFO). Record the calculated average cost in the financial statement. Calculate the straight-line depreciation. Create an income statement using the results calculated above. Create a balance sheet using the results calculated above. Submit the Income Statement and Balance Sheet in a Microsoft Excel spreadsheet that includes the required calculations. HINTS FOR ASSIGNMENT For the individual assignment, you should complete 2013's balance sheet and income statement by using the data provided on the spreadsheet for ABC financial data. To complete these, you need to work out some of the data, such as inventory, CGS, deferred tax liability, retained earnings. You should also complete the supporting calculation for CGS, the entry to update CGS, and the entries to adjust for the prior period error related to depreciation and for the inventory method change. The journal entries to correct the depreciation error and the inventory change should both go through RE. The tax impact should be considered for both adjustments. The inventory method change information tells us, e.g., that the pretax increase in income from the change in method is 1285, which means the total amount of increase in inventory should be 1285 (the higher the ending inventory, the lower the CGS, thus the higher the pretax income), while the adjustment to RE should be 1285 minus the tax impact (40%). The amount of the tax impact should go to deferred tax liability. Please use these numbers for the following accounts. The data provided on the "information sheet" do not seem to support these numbers, but these are on the solutions: Cash 1929 Property, plant, equipment 39064 Accumulated depreciation 15716 Depreciation and amortization expense 1627 Retained earnings should be used as a plug figure at the end for the balance sheet. 2013 Cash and Cash Equivalents Receivables, net Inventory Other Current Assets Property and Equipment, at cost Accumulated Depreciation and Amortization Goodwill Deferred Tax Asset Accounts Payable Accrued Salaries and Related Expenses Sales Taxes Payable Deferred Revenue Income Taxes Payable Current Installments of Long-Term Debt Other Accrued Expenses Long-Term Debt, excluding current installments Other Long-Term Liabilities Deferred Tax Liability Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income Treasury Stock Common stock Net Sales Cost of Sales Selling, General and Administrative Depreciation and Amortization Interest and Investment Income Interest Expense Provision for Income Taxes Foreign Currency Translation Adjustments Cash Flow Hedges, net of tax Other Comprehensive Income Dividends Tax rate Shares Issued Under Employee Stock Plans Tax Effect of Stock-Based Compensation Restricted Stock Repurchases of Common Stock 4,960.00 1,398.00 2012 (12.00) (10.00) (2,243.00) 40% 103.00 123.00 228.00 (8,500.00) 2,494.00 1,413.00 11,512.00 900.00 38,491.00 (17,473.00) 1,046.00 473.00 5,192.00 1,200.00 472.00 1,262.00 (107.00) (783.00) 1,794.00 9,475.00 2,029.00 545.00 7,948.00 20,038.00 397.00 (10,694.00) 88.00 74,754.00 48,912.00 16,508.00 1,568.00 (87.00) 632.00 (2,686.00) 100.00 5.00 (1.00) (1,743.00) 40% 678.00 82.00 222.00 (4,000.00) 4,523.00 6,739.00 (1,332.00) (987.00) (1,028.00) (275.00) (12.00) (1,389.00) (206.00) 88.00 5,222.00 (1,289.00) (8,546.00) 241.00 (2,243.00) (37.00) 4,356.00 6,038.00 (1,276.00) (905.00) (1,121.00) (204.00) (10.00) (1,312.00) (170.00) 50.00 (32.00) (3,984.00) 784.00 (1,743.00) (59.00) 895.00 36,033.00 (15,684.00) 1,289.00 88.00 5,797.00 1,428.00 396.00 1,337.00 12.00 33.00 1,746.00 14,691.00 2,042.00 8,402.00 23,180.00 46.00 (19,194.00) 88.00 78,812.00 16,597.00 1,595.00 (12.00) 711.00 (3,082.00) Additional Info: Cash Sales Collections on Receivables Purchases Wages Payments to Suppliers Tax Payments Interest payments Capital Expenditures Payments for Businesses Acquired Proceeds from Sales of Property and Equipment Proceeds from Long-Term Borrowings Repayments of Long-Term Debt Repurchases of Common Stock Proceeds from Sales of Common Stock Cash Dividends Paid to Stockholders Other Financing Activities Week #2With 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 Receivables, net Inventory Inventory Correction Other Current Assets Total Current Assets - 2,494.00 1,413.00 11,512.00 900.00 16,319.00 - 38,491.00 (17,473.00) 21,018.00 - 1,046.00 473.00 38,856.00 - 5,192.00 1,200.00 472.00 1,262.00 (107.00) (783.00) 1,794.00 9,030.00 - 9,475.00 2,029.00 545.00 21,079.00 Common Stock Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income Treasury Stock Total Stockholders' Equity - 88.00 7,948.00 20,038.00 397.00 (10,694.00) 17,777.00 Total Liabilities and Stockholders' Equity - 38,856.00 Property and Equipment, at cost Less: Accumulated Depreciation and Amortization Accumulated depreciation correction Net Property and Equipment Goodwill Deferred Tax Asset Total Assets (1,413.00) (11,512.00) (900.00) 17,473.00 LIABILITIES AND STOCKHOLDERS' EQUITY: Current Liabilities: Accounts Payable Accrued Salaries and Related Expenses Sales Taxes Payable Deferred Revenue Income Taxes Payable Current Installments of Long-Term Debt Other Accrued Expenses Total Current Liabilities: Long-Term Debt, excluding current installments Other Long-Term Liabilities Deferred Tax Liability Total Liabilities: STOCKHOLDERS' EQUITY: (5,192.00) (1,200.00) (1,262.00) 107.00 (1,794.00) (2,029.00) (545.00) ABC Company Income Statement For the Year Ended December 31, 2013 2013 NET SALES Cost of Goods Sold GROSS PROFIT 2012 - 74,754.00 48,912.00 25,842.00 Operating Expenses: Selling, General and Administrative Depreciation and Amortization Total Operating Expenses - 16,508.00 1,568.00 18,076.00 OPERATING INCOME - 7,766.00 Interest and Other (Income) Expense: Interest and Investment Income Interest Expense Interest and Other, net - (87.00) 632.00 545.00 EARNINGS BEFORE PROVISION FOR INCOME TAXES - 7,221.00 Income Taxes NET INCOME (2,686.00) - 4,535.00 (A) Depreciation Expense Using Straight-Line MethodABC Company has the following assets acquired on January 1, 2013 requiring depreciation calculation: Asset Cost Life Annual Dep. Expense Plant with 30 year life at a cost of $660,000 Land at a cost of $2,250,000 Machinery and Equipment with 20 year life at a cost of 79,000. Truck with a life of 7 years at a cost of $42,000 0 (B) Inventory CalculationA physical inventory on December 31, 2013, shows 810 units on hand. Calculate Cost of Goods Sold (COGS) using average cost. Purchases Beginning Inventory January 5, 2014 March 25, 2014 June 8, 2014 September 15, 2014 December 15, 2014 COGS as of 12/31/2013 Average Cost Units Cost 800 950 950 745 625 505 4,575 Total 14.39 13.46 12.81 13.65 13.25 14.97 810 Entry to update CGS: - (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. Purchase Purchase Purchase Purchase Purchase - Total Purchases