REVISED 1 2015 AN 1 TIR AN WS wy Cell G + wy C GEL 500 Being IH BRE ch - RS C JALCI ta March INCH TOT TER Com SI X 23 105 DES DES -Y C ST 2 2305 10 2017 mo HAT 30 1 Erling CA T! 1. LT HETTE LE SEE TOLT HERE IN RE - Toga T. 1.12 LIST LASTE E 34 M. Ad Catnar | Kaap 20 20 2. 12200 SSD t 6 16 Portal Sebris 5 NE RE JALTE MT TA NREINT Nel PRESSED Inceperea de tataglaydada Caderne. Bak PROSE 2015 . SELE ch 24.EE wol Total grow profil 311313 4.130 24.12 27699 27 2031 2414 3,503 1,921 12.000 10.450 IOS 2013 13.000 Espen Administration for Advertisement Cash overshan Credit card foes Real Equipment are repair Experie item Insurance NSFcheckout Payroll xp Permisel Salaries Taxes Utilities Tool All TISHI 398 IL SU 51 INS 91 ANS 354 34.814 2.105 11.16 173 470 350 5.95 2.1 12210 Net Profi REPORTED Net Profil REVISED) Difference Reported. Las Estimated Ending leventory Estimated using Cost of Goods Sold Gross Receipts Method 2013 2014 PROOF 2015 Em Cost of Grosserie Food 2011.30 PRECOGG Cost of larger Gross leverages 2013-20 PRCOGS Group Cost of tobacco Gro ReceTisacco 2011-20 Preces DAYS SALES OF INVENTORY CALCULATION 2014 RES Required PROOF 2015 Estimated 0 TOTAL INVENTORY inny Cast of Sales X 365 Days Sales of lovely 2732575 1,120,04 214416 1.137,90 LOST 0 GROCERIES INVENTORY Inventory Cos of Sales X 365 Days Sales of bly BEVERAGES INVENTORY imentary Cost of Sales x 35 Days Sales of Seventy TORACCO INVENTORY wy Cost of Sales ]X 365 Days Sales of lovely OTHER INCOME TAX RETURN INFORMATION. NOT IN SCHEDULESC 2013 2014 2015 Rapur Wager, Interest Estimated Tax Payne 1. Input the IRS Schedules C from the 2013-2015 income tax returns into a spreadsheet. a. Add percent columns to the right of dollar column for each year. b. Calculate common-sized percentages in the percent columns [divide each number for that year (e.g., 2013) by gross receipts for that year (e.g., 2013)] c. Review the dollars horizontally across the three years and vertically down each year and identify any material irregularities. d. Review the percentages horizontally across the three years and verti- cally down each year and identify any material irregularities. e. Are there any material trends or material single-year changes (e.g., material increases or decreases)? 2. Input the other metrics from the individual tax returns (e.g., income from wages and salaries, interest earned, and estimated tax payments). a. Review the dollars horizontally across the three years and vertically down each year and identify any material irregularities. b. Compare estimated tax payments with total taxes for the year (vertically during the same year). c. Are there any material trends or material single-year changes (e.g.. material increases or decreases)? 3. Because you did not observe the inventory, which was destroyed in the fire, estimate ending inventory using the 2013 and 2014 dollars and percent- ages (Method #1: Cost of goods sold to gross receipts ratio). 20 a. Because you did not observe the inventory estimate the ending invet- tory for 2015 by: 1 Averaging the 2013 and 2014 cost of goods sold and 2013 and 2014 gross receipts, and then dividing the average cost of goods sold by the average gross receipts. You cannot use an average of an average (eg. Cost of goods sold/Gross receipts ratios for 2013 and 2014), which can distort the average. You must calculate the average for each and then the Cost of goods sold/Gross receipts ratio. ii. Multiply the resultant percentage from 3.a.i. by the 2015 gross receipts to get an estimated 2015 cost of goods sold total in dollars. 4. How does the estimated ending inventory impact the individual income tax return ending inventory.cost of goods sold. net profit, and net income? Find out by adding an additional column for 2015 and recalculate cost of goods sold using the estimates calculated above. Every number in that column is identical to the recorded 2015 column except estimated inventory, cost of goods sold, gross profit, and net profit. 5. Compare your recalculated ending inventory to that given to Sharptop Bank and to Southern Appalachian Insurance. Is either estimated end- ing inventory materially different from that reported on the 2015 IRS Schedule C? 6. OPTIONAL (extra credit points determined by professor) Because you did not observe the inventory, which was destroyed in the fire, estimate ending inventory by rolling the October 31, 2015. physical inventory totals forward (method #2). a. Starting with the October 31, 2015, physical inventory, roll the inven- tory forward cost by adding the purchases from November 1, 2015. through December 31, 2015 (according to the various wholesaler purchase records) to the December 31, 2015. physical inventory totals. This results in the inventory available for sale during 2015. b. Then, reduce the inventory available for sale by the sales from November and December 2015 Georgia Sales and Use Tax Returns. Note: These sales are at retail price and must be reduced to wholesale cost. Use the Cost of goods sold/Gross receipts ratio determined in 3.a.i. 7. OPTIONAL (extra credit points determined by professor) Go to a business library or university librarian and locate RMA Annual Financial State- ment Studies or a similar publication and locate convenience stores and comparable ratios (e.g., cost of goods sold to total revenues). How does the cost of goods sold to total receipts ratio in that publication compare the ratios on the 2015 IRS Schedule C? to REVISED 1 2015 AN 1 TIR AN WS wy Cell G + wy C GEL 500 Being IH BRE ch - RS C JALCI ta March INCH TOT TER Com SI X 23 105 DES DES -Y C ST 2 2305 10 2017 mo HAT 30 1 Erling CA T! 1. LT HETTE LE SEE TOLT HERE IN RE - Toga T. 1.12 LIST LASTE E 34 M. Ad Catnar | Kaap 20 20 2. 12200 SSD t 6 16 Portal Sebris 5 NE RE JALTE MT TA NREINT Nel PRESSED Inceperea de tataglaydada Caderne. Bak PROSE 2015 . SELE ch 24.EE wol Total grow profil 311313 4.130 24.12 27699 27 2031 2414 3,503 1,921 12.000 10.450 IOS 2013 13.000 Espen Administration for Advertisement Cash overshan Credit card foes Real Equipment are repair Experie item Insurance NSFcheckout Payroll xp Permisel Salaries Taxes Utilities Tool All TISHI 398 IL SU 51 INS 91 ANS 354 34.814 2.105 11.16 173 470 350 5.95 2.1 12210 Net Profi REPORTED Net Profil REVISED) Difference Reported. Las Estimated Ending leventory Estimated using Cost of Goods Sold Gross Receipts Method 2013 2014 PROOF 2015 Em Cost of Grosserie Food 2011.30 PRECOGG Cost of larger Gross leverages 2013-20 PRCOGS Group Cost of tobacco Gro ReceTisacco 2011-20 Preces DAYS SALES OF INVENTORY CALCULATION 2014 RES Required PROOF 2015 Estimated 0 TOTAL INVENTORY inny Cast of Sales X 365 Days Sales of lovely 2732575 1,120,04 214416 1.137,90 LOST 0 GROCERIES INVENTORY Inventory Cos of Sales X 365 Days Sales of bly BEVERAGES INVENTORY imentary Cost of Sales x 35 Days Sales of Seventy TORACCO INVENTORY wy Cost of Sales ]X 365 Days Sales of lovely OTHER INCOME TAX RETURN INFORMATION. NOT IN SCHEDULESC 2013 2014 2015 Rapur Wager, Interest Estimated Tax Payne 1. Input the IRS Schedules C from the 2013-2015 income tax returns into a spreadsheet. a. Add percent columns to the right of dollar column for each year. b. Calculate common-sized percentages in the percent columns [divide each number for that year (e.g., 2013) by gross receipts for that year (e.g., 2013)] c. Review the dollars horizontally across the three years and vertically down each year and identify any material irregularities. d. Review the percentages horizontally across the three years and verti- cally down each year and identify any material irregularities. e. Are there any material trends or material single-year changes (e.g., material increases or decreases)? 2. Input the other metrics from the individual tax returns (e.g., income from wages and salaries, interest earned, and estimated tax payments). a. Review the dollars horizontally across the three years and vertically down each year and identify any material irregularities. b. Compare estimated tax payments with total taxes for the year (vertically during the same year). c. Are there any material trends or material single-year changes (e.g.. material increases or decreases)? 3. Because you did not observe the inventory, which was destroyed in the fire, estimate ending inventory using the 2013 and 2014 dollars and percent- ages (Method #1: Cost of goods sold to gross receipts ratio). 20 a. Because you did not observe the inventory estimate the ending invet- tory for 2015 by: 1 Averaging the 2013 and 2014 cost of goods sold and 2013 and 2014 gross receipts, and then dividing the average cost of goods sold by the average gross receipts. You cannot use an average of an average (eg. Cost of goods sold/Gross receipts ratios for 2013 and 2014), which can distort the average. You must calculate the average for each and then the Cost of goods sold/Gross receipts ratio. ii. Multiply the resultant percentage from 3.a.i. by the 2015 gross receipts to get an estimated 2015 cost of goods sold total in dollars. 4. How does the estimated ending inventory impact the individual income tax return ending inventory.cost of goods sold. net profit, and net income? Find out by adding an additional column for 2015 and recalculate cost of goods sold using the estimates calculated above. Every number in that column is identical to the recorded 2015 column except estimated inventory, cost of goods sold, gross profit, and net profit. 5. Compare your recalculated ending inventory to that given to Sharptop Bank and to Southern Appalachian Insurance. Is either estimated end- ing inventory materially different from that reported on the 2015 IRS Schedule C? 6. OPTIONAL (extra credit points determined by professor) Because you did not observe the inventory, which was destroyed in the fire, estimate ending inventory by rolling the October 31, 2015. physical inventory totals forward (method #2). a. Starting with the October 31, 2015, physical inventory, roll the inven- tory forward cost by adding the purchases from November 1, 2015. through December 31, 2015 (according to the various wholesaler purchase records) to the December 31, 2015. physical inventory totals. This results in the inventory available for sale during 2015. b. Then, reduce the inventory available for sale by the sales from November and December 2015 Georgia Sales and Use Tax Returns. Note: These sales are at retail price and must be reduced to wholesale cost. Use the Cost of goods sold/Gross receipts ratio determined in 3.a.i. 7. OPTIONAL (extra credit points determined by professor) Go to a business library or university librarian and locate RMA Annual Financial State- ment Studies or a similar publication and locate convenience stores and comparable ratios (e.g., cost of goods sold to total revenues). How does the cost of goods sold to total receipts ratio in that publication compare the ratios on the 2015 IRS Schedule C? to