Asset misappropriation fraud refers to the fraud where third-parties or workers of the entity misuse their position for pilfering or exploitation of the assets of the organization. It includes embezzlement of cash, assets stolen, and various other related losses. Fraudulent financial reporting refers to manipulations of income earned by the management in order to have personal gains or to prevent an organization from bankruptcy or any other negative financial results. To explain: The reporter’s observation in small organizations where asset misappropriation is more likely to be found, while in large organization, fraudulent financial reporting is more likely to be found.

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Diana and Ryan Workman were married on January 1 of last year. Ryan has an eight-year-old son, Jorge, from his previous marriage. Diana works as a computer programmer at Datafile Incorporated (DI) earning a base salary of $98,000. Ryan is self-employed and runs a day care center. The Workmans reported the following financial information pertaining to their activities during the current year. a. Diana earned a $98,000 base salary for the year (not including any taxable benefits). b. Diana borrowed $12,400 from DI to purchase a car. DI charged her 2 percent interest ($248) on the loan, which Diana paid on December 31. DI would have charged Diana $760 if interest had been calculated at the applicable federal interest rate. Assume that tax avoidance was not a motive for the loan. c. Ryan received $2,200 in alimony and $4,900 in child support payments from his former spouse. They divorced in 2016. d. Ryan won a $940 cash prize at his church-sponsored Bingo game. e. The Workmans received…

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Chapter 2, Problem 3RQSC

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Introduction: Asset misappropriation fraud refers to the fraud where third-parties or workers of the entity misuse their position for pilfering or exploitation of the assets of the organization. It includes embezzlement of cash, assets stolen, and various other related losses.

Fraudulent financial reporting refers to manipulations of income earned by the management in order to have personal gains or to prevent an organization from bankruptcy or any other negative financial results.

To explain: The reporter’s observation in small organizations where asset misappropriation is more likely to be found, while in large organization, fraudulent financial reporting is more likely to be found.

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Diana and Ryan Workman were married on January 1 of last year. Ryan has an eight-year-old son, Jorge, from his previous marriage. Diana works as a computer programmer at Datafile Incorporated (DI) earning a base salary of $98,000. Ryan is self-employed and runs a day care center. The Workmans reported the following financial information pertaining to their activities during the current year. a. Diana earned a $98,000 base salary for the year (not including any taxable benefits). b. Diana borrowed $12,400 from DI to purchase a car. DI charged her 2 percent interest ($248) on the loan, which Diana paid on December 31. DI would have charged Diana $760 if interest had been calculated at the applicable federal interest rate. Assume that tax avoidance was not a motive for the loan. c. Ryan received $2,200 in alimony and $4,900 in child support payments from his former spouse. They divorced in 2016. d. Ryan won a $940 cash prize at his church-sponsored Bingo game. e. The Workmans received…

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ABC Company produces a single product. Operating data for the company and its absorption costing income statement for the last year are presented below: Particulars Units in beginning inventory Units produced Amount 0 9,000 Units sold 7,000 Sales 1,00,000 Less: Cost of goods sold: Beginning inventory Add: Cost of goods manufactured 54,000 Goods available for sale 54,000 Less: Ending inventory 12,000 Cost of goods sold 42,000 Gross margin 58,000 Less: Selling and administrative expenses 28,000 Net operating income 30,000 Variable manufacturing costs are $4 per unit. Fixed manufacturing overhead totals $18,000 for the year. The fixed manufacturing overhead was applied at a rate of $2 per unit. Variable selling and administrative expenses were $1 per unit sold Required: Prepare a new income statement for the year using variable costing.