Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Chapter 16, Problem 25E
a)
To determine
Report whether CC has reported the clerical error.
b)
To determine
Report the change of method of accounting.
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Explain whether Colston Company correctly reported the following items in the financial statements:a. In a recent year, the company discovered a clerical error in the prior year’s accounting records. As a result, the reported net income for the previous year was overstated by $45,000. The company corrected this error by restating the prior-year financial statements.b. In a recent year, the company voluntarily changed its method of accounting for longterm construction contracts from the percentage of completion method to the completed contract method. Both methods are acceptable under generally acceptable accounting principles. The cumulative effect of this change was reported as a separate componentof income in the current period income statement.
(Change in Estimate) Mike Crane is an audit senior of a large public accounting firm who has just been assigned to the Frost Corporation’s annual audit engagement. Frost has been a client of Crane’s firm for many years. Frost is a fastgrowing business in the commercial construction industry. In reviewing the fixed asset ledger, Crane discovered a series of unusual accounting changes, in which the useful lives of assets, depreciated using the straight-line method, were substantially lowered near the midpoint of the original estimate. For example, the useful life of one dump truck was changed from 10 to 6 years during its fifth year of service. Upon further investigation, Mike was told by Kevin James, Frost’s accounting manager, “I don’t really see your problem. After all, it’s perfectly legal to change an accounting estimate. Besides, our CEO likes to see big earnings!”InstructionsAnswer the following questions.(a) What are the ethical issues concerning Frost’s practice of changing the…
You were engaged by Lanao Company to audit its financial statements for the first time. In
examining the books, you found out that certain adjustments had been overlooked at the end of
2014 and 2015. You also discovered that other items had been improperly recorded. These omissions and
other failures for each year are summarized below:
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P780,000 P873,600
213,000
307,800
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259,200
384,000
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recorded as sales but should have been recognized as advances from
customers because goods were not shipped until the following year)
Machinery
(Capital expenditures had been recorded as repairs but should have
been charged to Machinery; the depreciation rate is 10% per year, but
depreciation in the year of expenditure is to be recognized at 5%)
561,000
470,400
522,000
564,000
Based on the above and the result of your audit, answer the following:
1. What is the total effect…
Chapter 16 Solutions
Managerial Accounting
Ch. 16 - Prob. 1DQCh. 16 - What is the advantage of using comparative...Ch. 16 - Prob. 3DQCh. 16 - Prob. 4DQCh. 16 - Prob. 5DQCh. 16 - What do the following data, taken from a...Ch. 16 - Prob. 7DQCh. 16 - Prob. 8DQCh. 16 - The dividend yield of Suburban Propane Partners,...Ch. 16 - Prob. 10DQ
Ch. 16 - Prob. 1BECh. 16 - Prob. 2BECh. 16 - The following items are reported on a companys...Ch. 16 - Prob. 4BECh. 16 - Prob. 5BECh. 16 - Prob. 6BECh. 16 - Prob. 7BECh. 16 - Prob. 8BECh. 16 - Prob. 9BECh. 16 - Prob. 10BECh. 16 - Prob. 11BECh. 16 - Prob. 1ECh. 16 - The following comparative income statement (in...Ch. 16 - Prob. 3ECh. 16 - Prob. 4ECh. 16 - Prob. 5ECh. 16 - The following data were taken from the balance...Ch. 16 - PepsiCo, Inc. (PEP), the parent company of...Ch. 16 - Current position analysis The bond indenture for...Ch. 16 - Prob. 9ECh. 16 - Accounts receivable analysis Xavier Stores Company...Ch. 16 - Prob. 11ECh. 16 - Prob. 12ECh. 16 - Ratio of liabilities to stockholders equity and...Ch. 16 - Hasbro, Inc. (HAS), and Mattel, Inc. (MAT), are...Ch. 16 - Recent balance sheet information for two companies...Ch. 16 - Prob. 16ECh. 16 - Prob. 17ECh. 16 - Prob. 18ECh. 16 - Prob. 19ECh. 16 - Prob. 20ECh. 16 - Prob. 21ECh. 16 - Prob. 22ECh. 16 - Prob. 23ECh. 16 - Prob. 24ECh. 16 - Prob. 25ECh. 16 - Comprehensive income Anson Industries, Inc.,...Ch. 16 - Prob. 1PACh. 16 - Prob. 2PACh. 16 - Prob. 3PACh. 16 - Measures of liquidity, solvency, and profitability...Ch. 16 - Prob. 5PACh. 16 - Prob. 1PBCh. 16 - Prob. 2PBCh. 16 - Prob. 3PBCh. 16 - Prob. 4PBCh. 16 - Prob. 5PBCh. 16 - Prob. 1MADCh. 16 - Prob. 2MADCh. 16 - Deere Company (DE) manufactures and distributes...Ch. 16 - Marriott International, Inc. (MAR), and Hyatt...Ch. 16 - Prob. 1TIFCh. 16 - Real-world annual report The financial statements...Ch. 16 - Prob. 3TIF
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